<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 5, 1995
REGISTRATION NO. 33-56595
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------
AMENDMENT NO. 2
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------
GREAT DANE HOLDINGS INC.
(Exact name of Registrant as specified in its charter)
<TABLE>
<S> <C> <C>
DELAWARE 3715 54-0698116
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of Classification Code Number) Identification No.)
incorporation or
reorganization)
</TABLE>
2016 NORTH PITCHER STREET
KALAMAZOO, MICHIGAN 49007
(616) 343-6121
(Address, including zip code, and telephone number, including
area code, of Registrant's principal executive offices)
DAVID R. MARKIN
PRESIDENT AND CHIEF EXECUTIVE OFFICER
GREAT DANE HOLDINGS INC.
2016 NORTH PITCHER STREET
KALAMAZOO, MICHIGAN 49007
(616) 343-6121
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
--------------
THE COMMISSION IS REQUESTED TO SEND COPIES OF ALL COMMUNICATIONS TO:
<TABLE>
<S> <C>
Paulette Kendler, Esq. Valerie Ford Jacob, Esq.
Hutton Ingram Yuzek Gainen Carroll & Fried, Frank, Harris, Shriver & Jacobson
Bertolotti One New York Plaza
250 Park Avenue New York, New York 10004
New York, New York 10177 (212) 859-8000
(212) 907-9650
</TABLE>
--------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
AS SOON AS PRACTICABLE AFTER THIS REGISTRATION STATEMENT BECOMES EFFECTIVE.
--------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
GREAT DANE HOLDINGS INC.
FORM S-1 CROSS REFERENCE SHEET
<TABLE>
<CAPTION>
REGISTRATION STATEMENT ITEM AND HEADING LOCATION IN PROSPECTUS
- ------------------------------------------------------------- --------------------------------------------------------
<C> <S> <C>
1. Forepart of the Registration Statement and Outside
Front Cover Page of Prospectus................... Outside Front Cover Page
2. Inside Front and Outside Back Cover Pages of
Prospectus....................................... Inside Front Cover and Outside Back Cover Pages
3. Summary Information, Risk Factors and Ratio of
Earnings to Fixed Charges........................ Prospectus Summary; Risk Factors
4. Use of Proceeds................................... Prospectus Summary; Use of Proceeds; Capitalization
5. Determination of Offering Price................... Risk Factors; Underwriting
6. Dilution.......................................... Risk Factors; Dilution
7. Selling Security Holders.......................... Not Applicable
8. Plan of Distribution.............................. Outside Front Cover Page; Underwriting
9. Description of Securities to be Registered........ Description of Capital Stock
10. Interests of Named Experts and Counsel............ Not Applicable
11. Information with Respect to the Registrant........ Outside Front Cover Page; Prospectus Summary; Risk
Factors; Dilution; Selected Consolidated Financial
Data; Management's Discussion and Analysis of Financial
Condition and Results of Operations; Shares Eligible
for Future Sale; Business; Management; Compensation
Committee Interlocks and Insider Participation; Certain
Relationships and Related Transactions; Ownership of
Common Stock; Financial Statements
12. Disclosure of Commission Position on
Indemnification for Securities Act Liabilities... Not Applicable
</TABLE>
<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE>
SUBJECT TO COMPLETION
APRIL 5, 1995
4,000,000 SHARES
GREAT DANE HOLDINGS INC.
COMMON STOCK
All of the shares of common stock, $.01 par value per share, offered hereby
(the "Common Stock") are being sold by Great Dane Holdings Inc. ("Holdings" or
the "Company"). Prior to this Offering, there has been no public market for the
Common Stock of the Company. It is currently estimated that the initial public
offering price will be $11.00 per share. See "Underwriting" for the factors to
be considered in determining the initial public offering price. The Common Stock
has been approved for quotation, upon official notice of issuance, on the Nasdaq
Stock Market (National Market) under the symbol "DANE."
--------------
THE COMMON STOCK OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK. SEE "RISK
FACTORS."
--------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE COMMISSIONER OF INSURANCE OF THE STATE OF NORTH CAROLINA HAS NOT APPROVED
OR DISAPPROVED THIS OFFERING NOR HAS THE COMMISSIONER PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
<TABLE>
<CAPTION>
PRICE UNDERWRITING PROCEEDS
TO DISCOUNTS AND TO
PUBLIC COMMISSIONS COMPANY(1)
<S> <C> <C> <C>
Per Share................................. $ $ $
Total(2).................................. $ $ $
<FN>
(1) Before deducting offering expenses payable by the Company estimated at
$ .
(2) The Company has granted the Underwriters a 30-day option to purchase up to
600,000 additional shares of Common Stock solely to cover over-allotments,
if any. To the extent that the option is exercised, the Underwriters will
offer the additional shares to the public at the Price to Public shown
above. If the option is exercised in full, the total Price to Public,
Underwriting Discounts and Commissions and Proceeds to Company will be
$ , $ and $ , respectively. See "Underwriting."
</TABLE>
--------------
The shares of Common Stock are offered by the several Underwriters, subject
to prior sale, when, as and if delivered to and accepted by them, and subject to
the right of the Underwriters to reject any order in whole or in part. It is
expected that delivery of the shares of Common Stock will be made at the offices
of Alex. Brown & Sons Incorporated, Baltimore, Maryland, on or about
, 1995.
ALEX. BROWN & SONS SMITH BARNEY INC.
INCORPORATED
The date of this Prospectus is , 1995.
<PAGE>
[INSIDE FRONT COVER]
[PHOTOGRAPH OF A CUSTOMIZED
REFRIGERATED VAN] [PHOTOGRAPH OF A FREIGHT VAN]
GREAT DANE'S MULTI-TEMP,
CUSTOMIZED REFRIGERATED VANS GREAT DANE'S FREIGHT VANS ARE
ARE WIDELY USED IN FOOD LIGHTWEIGHT, HIGH CUBE AND
SERVICE DELIVERY. DURABLE.
[GREAT DANE LOGO]
[PHOTOGRAPH OF A LOCOMOTIVE
PULLING DOUBLE STACKED
[PHOTOGRAPH OF A PLATFORM INTERMODAL CONTAINERS ON RAIL
TRAILER] CARS]
GREAT DANE UTILIZES ITS
GREAT DANE'S PLATFORM TRAILERS ENGINEERING EXPERTISE TO
ARE USED FOR HAULING BUILDING DESIGN INTERMODAL CONTAINERS
MATERIALS, COILED STEEL AND THAT MEET THE SPECIFIC
HEAVY MACHINERY. REQUIREMENTS OF ITS CUSTOMERS.
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and the rules and
regulations promulgated thereunder, and in accordance therewith files reports,
proxy statements (if required) and other information with the Securities and
Exchange Commission (the "Commission"). Such reports, proxy statements and other
information, including a Registration Statement on Form S-1 filed in connection
with this Offering, may be inspected and copied (at prescribed rates) at the
public reference facilities maintained by the Commission at 450 Fifth Street,
N.W., Room 1024, Washington, D.C. 20549 and at the Commission's Regional Offices
located at Suite 1400, Northwestern Atrium Center, 500 West Madison Street,
Chicago, Illinois 60661 and Seven World Trade Center, Suite 1300, New York, New
York 10048. The Company's 12 3/4% Senior Subordinated Debentures due 2001 (the
"12 3/4% Debentures") and Subordinated Discount Debentures due January 1, 2006
are listed on the American Stock Exchange. Reports, proxy statements, and other
information can also be inspected at the office of the American Stock Exchange,
86 Trinity Place, New York, New York 10006-1881.
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK AT
A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
TRANSACTIONS MAY BE EFFECTED IN THE OVER-THE-COUNTER MARKET OR OTHERWISE. SUCH
STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
2
<PAGE>
PROSPECTUS SUMMARY
THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE MORE DETAILED
INFORMATION AND FINANCIAL STATEMENTS AND NOTES THERETO APPEARING ELSEWHERE IN
THIS PROSPECTUS. EXCEPT AS OTHERWISE INDICATED, INFORMATION CONTAINED IN THIS
PROSPECTUS GIVES EFFECT TO (I) THE REINCORPORATION OF HOLDINGS (FORMERLY
INTERNATIONAL CONTROLS CORP.) IN DELAWARE IN OCTOBER 1994 AND (II) A 16,800 FOR
1 STOCK SPLIT OF HOLDINGS' COMMON STOCK (THE "COMMON STOCK") WHICH OCCURRED ON
MARCH 27, 1995. UNLESS THE CONTEXT OTHERWISE REQUIRES, (A) REFERENCES IN THIS
PROSPECTUS TO THE COMPANY ARE TO GREAT DANE HOLDINGS INC. (AND ITS PREDECESSOR,
INTERNATIONAL CONTROLS CORP.) AND ITS CONSOLIDATED SUBSIDIARIES AND (B)
REFERENCES IN THIS PROSPECTUS TO HOLDINGS ARE TO GREAT DANE HOLDINGS INC. (AND
ITS PREDECESSOR, INTERNATIONAL CONTROLS CORP.). UNLESS OTHERWISE SPECIFIED, THE
INFORMATION SET FORTH IN THIS PROSPECTUS ASSUMES NO EXERCISE OF THE
UNDERWRITERS' OVER-ALLOTMENT OPTION (THE "OVER-ALLOTMENT OPTION").
THE COMPANY
OVERVIEW
Through Great Dane Trailers, Inc. ("Great Dane"), the Company is one of the
largest manufacturers of truck trailers and intermodal containers and chassis in
the United States. In addition, through Checker Motors Corporation's ("Motors")
subsidiaries, CMC Kalamazoo Inc. ("CMC") and South Charleston Stamping &
Manufacturing Company ("SCSM"), the Company is one of the leading independent
manufacturers of sheet metal stampings for automotive components and
subassemblies for sale to North American original equipment manufacturers
("OEMs"). For the year ended December 31, 1994, these two principal lines of
business accounted for approximately 93% of the Company's revenues and 93% of
the Company's total segment operating profit (segment gross profit less selling,
general and administrative expenses). The Company's other operations consist of
its vehicular operations, primarily Yellow Cab Company ("Yellow Cab"), which is
currently the largest owner of taxicabs and provider of taxi-related services in
Chicago, Illinois, and its insurance operations, American Country Insurance
Company ("Country"), which underwrites property and casualty insurance.
The Company's objective is to expand its transportation related
manufacturing businesses, Great Dane, CMC and SCSM, primarily through internal
growth. In addition, the Company will consider strategic acquisitions, should
opportunities arise. The Company will also focus on reducing its aggregate
indebtedness and believes that Yellow Cab and Country provide a consistent
source of cash flow for debt repayment.
TRAILER MANUFACTURING
Great Dane designs, manufactures and distributes a full line of truck
trailers (including dry freight vans, refrigerated trailers ("reefers") and
platform trailers) and intermodal containers and chassis. In 1994, Great Dane
was one of the largest manufacturers of truck trailers in the United States,
accounting for approximately 13.0% of the new truck trailer market, including
11.5% of the new van market, 11.5% of the new platform trailer market and 38.4%
of the new reefer market. Great Dane is also one of the leading producers of
domestic intermodal containers and chassis, with a market share of 18.8% in
1994.
In 1991, Great Dane assembled a new senior management team and initiated a
strategic plan designed to improve its competitive position by (i) reducing
operating costs; (ii) increasing manufacturing efficiencies and flexibility;
(iii) developing new products; and (iv) expanding its large order customer base.
Accordingly, Great Dane reduced overhead, reconfigured plants to increase
capacity, re-designed assembly lines to improve efficiencies, re-engineered
certain products to reduce material and manufacturing costs, initiated new
product development programs and began to develop relationships with large order
customers including J.B. Hunt Transport ("J.B. Hunt") and XTRA Corporation. From
1991 to 1994, Great Dane's revenues increased from $400.2 million to $859.1
million and segment operating profit increased from $7.1 million to $58.6
million. In addition, Great Dane's operating profit margin increased from 1.8%
in 1991 to 6.8% in 1994.
3
<PAGE>
Great Dane believes that these initiatives combined with its strong brand
name and reputation for manufacturing high quality products have positioned it
for continued growth. The key elements of its growth strategy are as follows:
- PRODUCT INNOVATION. Great Dane's engineering and flexible
manufacturing expertise enable it to produce higher-margin, custom-designed
products rapidly and efficiently while incorporating distinctive features
through computer aided design technologies. Recent product innovations marketed
by Great Dane include its proprietary, lightweight Thermacube van and reefer,
and unique intermodal containers and chassis which initiated Great Dane's entry
into the growing intermodal market. New products planned for introduction during
1995 include a proprietary, ultra-lightweight flatbed trailer and a new reefer
product which incorporates a unique floor design.
- INCREASE MARKET SHARE WITH LARGE ORDER FLEET CUSTOMERS. Great Dane is
actively seeking to increase its sales to large order fleet customers which
accounted, during 1993, for approximately 43% of total U.S. van trailer
purchases. The Company believes that these customers are the fastest growing
segment of the industry and estimates that its share of fleet orders
approximated 10% during 1993. The balance of the U.S. van trailer market
consists of small and medium sized customers (approximately 30%) and leasing
companies (approximately 27%) where Great Dane estimates it had, during 1993, a
27% and 17% market share, respectively. In order to increase its market share
with large order fleet customers, Great Dane has acquired the property and
buildings in Terre Haute, Indiana for a 500,000 square foot manufacturing and
product distribution facility, a portion of which will be equipped during 1995
with two high speed, more cost efficient assembly lines dedicated to high
volume, standard specification fleet orders.
- STRONG NATIONAL DISTRIBUTION NETWORK. The Company believes that Great
Dane's distribution network, which consists of 17 Company-owned branches and 51
independent dealers, is the largest marketing organization in the North American
trailer industry. This network provides Great Dane with a competitive advantage
in marketing its new and used trailer products and providing higher-margin
aftermarket parts and services. Great Dane believes that its parts and services
business will provide earnings growth in the coming years due to the increasing
size of the Great Dane and U.S. trailer fleets.
- INTERMODAL TRANSPORTATION. In 1992, Great Dane entered the intermodal
transportation market by developing, in conjunction with a leading truckload
carrier, a unique line of intermodal containers and matching ultra-lightweight
chassis. These containers and chassis enable its customer to utilize double
stack rail intermodal service to haul freight loads of similar size and weight
to those it carries with conventional over-the-road trailers. Great Dane's
strategy is to utilize its engineering expertise to design intermodal products
that meet the specific requirements of its customers. Great Dane has also
improved its market responsiveness by adapting certain assembly lines to produce
both trailers and containers.
AUTOMOTIVE PRODUCTS OPERATIONS
Through CMC and SCSM, the Company develops, designs, engineers and
manufactures a broad range of sheet metal automotive components and
subassemblies, including tailgates, fenders, doors, roofs and hoods for sale to
North American OEMs. The majority of the Company's automotive segment revenues
are derived from complex, value-added products, primarily assemblies containing
multiple stamped parts and various welded or fastened components.
The automotive supplier industry is experiencing consolidation as OEMs are
increasingly requiring suppliers to meet more stringent quality standards and to
possess certain full-service capabilities including design, engineering and
project management support. The Company's principal objective is to capitalize
on this trend as follows:
- HIGH GROWTH LIGHT TRUCK/SPORT UTILITY VEHICLE FOCUS. CMC and SCSM
focus on supplying components for light trucks, minivans and sport utility
vehicles due to their high growth rate and long model lives. From 1983 to 1993,
light truck/sport utility vehicles were the fastest growing segment of the
automotive market with a 7.3% compound annual growth rate. The Company currently
supplies parts on
4
<PAGE>
the following light truck/sport utility and minivan vehicles: Suburban,
Tahoe/Yukon, Crew Cab, M Van (Astro and Safari), CK Pickup Truck and CK Sport
Side Pickup. In addition, in 1994, the Company was awarded an eight-year
contract by Mercedes-Benz to produce the majority of the stamping components for
its new sport utility vehicle.
- FULL-SERVICE CAPABILITIES. CMC and SCSM provide a full complement of
services, including design, engineering and manufacturing, which enables them to
play an integral role in the development and execution of product programs for
their customers. CMC and SCSM work with their customers throughout the product
development process and, in some cases, locate employees on site at their
customers' facilities in order to design, engineer and manufacture high quality
products at the lowest possible cost. The Company believes that this close
coordination with its customers allows it to identify business opportunities and
react to customer needs in the early stages of vehicle design and, therefore,
maintain and increase its volume with its customers.
- HIGH QUALITY PRODUCTS. The Company believes SCSM is one of the premier
stamping facilities in the U.S. This is exemplified by SCSM's receipt of
numerous quality awards including the General Motors Mark of Excellence and the
General Motors QSP (quality, service, price) award for being General Motors'
1993 worldwide Supplier of the Year for major metal stampings. SCSM has also
been qualified to produce components which comply with the ISO 9000
international standard. The Company believes that these awards are a critical
factor in securing additional business from OEMs.
- EXPANDING CUSTOMER BASE. CMC and SCSM have developed strong
relationships with their customers based on their long history of supplying high
quality products and their full-service capabilities. The Company's objectives
are to increase volume with existing customers and develop relationships with
new customers. In the last year, the Company's automotive segment has expanded
its business with existing customers including General Motors Corporation
("GM"), Freightliner Corp., Saturn Corporation and Ford Motor Co., and has
secured business with two new customers, Mercedes-Benz and Toyota.
- FOCUS ON HIGHER-MARGIN/VALUE-ADDED PRODUCTS.CMC and SCSM strive to
compete in markets where they can achieve greater profitability by providing
complex, value-added products, primarily assemblies containing multiple stamped
parts and various welded or fastened components. Unlike many of their
competitors, CMC and SCSM presently have the equipment to supply complete
assemblies including large stampings and related assembly parts. As an example,
SCSM currently supplies the sliding door, which is composed of several stampings
and fasteners, for the GM Astro and Safari Vans. The majority of the automotive
segment's revenues are derived from such assemblies.
OTHER OPERATIONS
Yellow Cab is the largest taxicab fleet owner in the City of Chicago
("Chicago") and, as of January 1, 1995, owned 2,271 or 41% of the 5,500 taxicab
licenses ("licenses"or "medallions") available in Chicago. Yellow Cab's primary
business is the leasing of its medallions and vehicles to independent taxi
operators. The Company also provides a variety of other services to taxi drivers
and non-affiliated medallion holders, including insurance coverage through
Country and repair and maintenance services.
Country underwrites property and casualty insurance, including taxicab
insurance, workers' compensation and other commercial and personal lines. During
1994, 75% of Country's total premium revenue was attributable to non-affiliated
property/casualty lines, primarily workers' compensation, commercial automobile
and commercial multiple peril. The remainder of Country's premium revenues was
attributable to affiliated taxi liability and collision insurance in the State
of Illinois and workers' compensation insurance in the States of Illinois and
Michigan. Country is currently rated "A" by A.M. Best.
Holdings was reincorporated in Delaware in 1994. Holdings currently
maintains its principal executive offices at CMC's facility at 2016 North
Pitcher Street, Kalamazoo, Michigan 49007 and its phone number is (616)
343-6121.
5
<PAGE>
RECENT DEVELOPMENTS
The Company's subsidiaries have recently refinanced their credit facilities
(the "Refinancing"). In January 1995, Motors and its subsidiaries entered into a
new loan agreement consisting of a $45 million five-year term loan and a $20
million revolving credit facility, subject to availability. In February 1995,
Great Dane amended its loan and security agreement by entering into a credit
facility of up to $150 million, subject to availability. Proceeds from the
Refinancing were used to refinance subsidiary indebtedness and to retire the $30
million aggregate principal amount of debt outstanding to the Company's
shareholders (the "Note Repayment"). See "Management's Discussion and Analysis
of Financial Condition and Results of Operations" and Note O of Notes to
Consolidated Financial Statements -- December 31, 1994. In December 1994, the
Company redeemed, for $37 million, the minority interest in a subsidiary
partnership (previously held by Executive Life Insurance Company). Subsequent to
the redemption, the subsidiary partnership, Checker Motors Co., L.P. ("Checker
L.P." or the "Partnership"), was dissolved, and its operations are now conducted
by CMC, Yellow Cab, Chicago AutoWerks Inc. ("AutoWerks") and Country, each of
which is a wholly-owned subsidiary of Motors.
RISK FACTORS
The Common Stock offered hereby involves a high degree of risk. See "Risk
Factors."
THE OFFERING
<TABLE>
<S> <C>
Common Stock offered by the Company........................... 4,000,000 shares
Common Stock to be outstanding after the Offering............. 20,800,000 shares (1)
Use of Proceeds............................................... To redeem a portion of the
Company's 12 3/4% Debentures
Proposed Nasdaq Stock Market (National Market) Symbol......... DANE
<FN>
- --------------
(1) Does not include an aggregate of 1,792,500 shares of Common Stock reserved
for issuance under the Company's 1994 Stock Option Plan, its Outside
Directors Option Plan and an option granted to an executive officer. See
"Management -- Compensation Pursuant to Plans" and " -- Employment
Agreements."
</TABLE>
6
<PAGE>
SUMMARY CONSOLIDATED FINANCIAL INFORMATION
The summary consolidated financial information set forth below is derived
from the consolidated financial statements of the Company for the five years
ended December 31, 1994, which have been audited by Ernst & Young LLP,
independent auditors.The following summary information should be read in
conjunction with the Company's Consolidated Financial Statements and Notes
thereto and "Management's Discussion and Analysis of Financial Condition and
Results of Operations" included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------------------------------
1990 1991 1992 1993 1994
--------- --------- --------- --------- ---------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues:
Trailer Manufacturing............ $ 491,532 $ 400,196 $536,336 $ 711,862 $859,089
Automotive Products.............. 133,401 84,401 112,631 127,925 157,568
Other Operations................. 68,278 70,669 67,766 69,539 79,820
--------- --------- --------- --------- ---------
Total Revenues..................... $ 693,211 $ 555,266 $716,733 $ 909,326 $1,096,477
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
Segment Operating Profit (Loss):
(1)
Trailer Manufacturing............ $ 13,109(2) $ 7,059 $ 17,590 $ 32,381 $ 58,619
Automotive Products.............. 9,669 (4,237) 11,622 15,306 19,652
Other Operations (3)............. 8,771 4,267 4,170 4,304 5,908
--------- --------- --------- --------- ---------
Total Segment Operating Profit..... 31,549 7,089 33,382 51,991 84,179
Corporate Expenses................. (8,115) (4,398) (4,396) (4,646) (8,534)(4)
Interest Expense................... (61,596) (47,425) (42,726) (41,614) (40,165)
Interest Income.................... 14,696 11,634 8,895 7,396 7,101
Other Income (Expense)............. (941) (1,078) (2,023) 3,494 1,002
Special Charge (5)................. -- -- -- (7,500) --
--------- --------- --------- --------- ---------
Income (Loss) Before Minority
Equity, Income Taxes,
Extraordinary Items and Accounting
Changes........................... (24,407) (34,178) (6,868) 9,121 43,583
Minority Equity.................... (2,296) 1,931 -- -- (586)
Income Tax Benefit (Expense)....... 6,429 5,241 (687) (5,757) (18,649)
--------- --------- --------- --------- ---------
Income (Loss) Before Extraordinary
Items and Accounting Changes...... (20,274) (27,006) (7,555) 3,364 24,348
Extraordinary Items (6)............ 27,749 31,188 -- -- --
Accounting Changes (7)............. -- -- -- (46,626) --
--------- --------- --------- --------- ---------
Net Income (Loss).................. $ 7,475 $ 4,182 $ (7,555) $ (43,262) $ 24,348
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
Income (Loss) Per Share (8):
Before Extraordinary Items and
Accounting Changes.............. $ (1.21) $ (1.61) $ (.45) $ .20 $ 1.45
Net Income (Loss) Per Share...... $ .45 $ .25 $ (.45) $ (2.58) $ 1.45
<CAPTION>
DECEMBER 31, 1994
---------------------
AS
ACTUAL ADJUSTED(9)
--------- ---------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Total Assets.......................................................... $ 522,051 $522,513
Total Debt............................................................ 293,265 260,172
Shareholders' Deficit................................................. (127,302) (90,093)
<FN>
- ------------------
(1) Segment operating profit (loss) is segment gross profit (loss) less
segment selling, general and administrative expenses.
(2) After deducting $7,500 of plant restructuring costs.
(FOOTNOTES CONTINUED ON THE NEXT PAGE)
</TABLE>
7
<PAGE>
<TABLE>
<S> <C>
(3) Segment operating profit (loss) for other operations does not include the
insurance operations' portfolio interest income.
(4) Corporate expenses for the year ended December 31, 1994 includes $3.5
million of expenses related to the Company's debt refinancing which was
not completed. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations."
(5) Represents cost to the Company of the settlement of certain litigation
with the Boeing Company. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and Note G to Notes to
Consolidated Financial Statements -- December 31, 1994.
(6) Extraordinary items in all years relate to the gains on the repurchase of
indebtedness.
(7) The accounting changes represent the cumulative effect of changes in
accounting principles as a result of the adoption, as of January 1, 1993,
of the provisions of Statement of Financial Accounting Standards ("SFAS")
No. 106, "Employers Accounting for Postretirement Benefits Other Than
Pensions," and SFAS No. 109, "Accounting for Income Taxes." See Notes H
and J to Notes to Consolidated Financial Statements -- December 31, 1994.
(8) The per share information is computed by dividing the respective income
(loss) by the weighted average number of common shares outstanding
(16,800,000 for all periods, after giving effect to the 16,800 to 1 stock
split which occurred on March 27, 1995). The stock options were not taken
into account because the exercise of stock options would not be materially
dilutive.
(9) Adjusted to reflect (i) the sale of the 4,000,000 shares of Common Stock
offered hereby by the Company (at an assumed initial public offering price
of $11 per share) and the application of the estimated net proceeds as
described in "Use of Proceeds," (ii) the Refinancing and (iii) the Note
Repayment. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations."
</TABLE>
8
<PAGE>
RISK FACTORS
In addition to the other information in this Prospectus, the following
factors should be considered carefully in evaluating an investment in the shares
of Common Stock offered by this Prospectus.
CYCLICAL BUSINESS
The truck trailer industry is dependent on the trucking industry in general
and the automotive parts industry is dependent on the automotive industry. Poor
economic conditions in either industry could have a material adverse effect on
the Company. In addition to dependence on general economic conditions, sales of
new truck trailers have historically been subject to cyclical variations based
on a five to seven-year replacement cycle. The poor economic conditions in the
United States in 1990 and 1991 had an adverse effect on demand for the Company's
products. Although sales have rebounded, there can be no assurance that such
growth will continue.
PRIOR LOSSES AND SUBSTANTIAL LEVERAGE
The Company incurred losses before extraordinary items and accounting
changes of approximately $20.3 million, $27.0 million and $7.6 million in 1990,
1991 and 1992, respectively. Although the Company had net income for the year
ended December 31, 1994, and had income before extraordinary items and
accounting changes for the year ended December 31, 1993, there can be no
assurance that the Company will not sustain losses in the future. See
"Management's Discussion and Analysis of Financial Condition and the Results of
Operations."
The Company currently is and, following the completion of this Offering,
will continue to be substantially leveraged. After giving effect to (i) this
Offering and the application of the net proceeds therefrom at an assumed initial
public offering price of $11.00 per share, (ii) the Refinancing and (iii) the
Note Repayment, the Company's consolidated indebtedness would have been
approximately $260.2 million at December 31, 1994. See "Use of Proceeds,"
"Capitalization," and "Selected Consolidated Financial Data."
The degree to which the Company is leveraged could have important
consequences to holders of the Common Stock, including, but not limited to, the
following: (i) the Company's ability to obtain additional financing for working
capital, capital expenditures, acquisitions, general corporate purposes,
refinancing of indebtedness or other purposes may be impaired, thereby limiting
its ability to grow; (ii) a substantial portion of the Company's cash flow from
operations must be dedicated to the payment of the principal of and interest on
its indebtedness, thereby reducing the funds available to the Company for its
operations; (iii) the Company is more highly leveraged than certain of its
competitors, which may place the Company at a competitive disadvantage; (iv)
certain of the Company's borrowings are at variable rates of interest, which
could result in higher interest expense in the event of increases in interest
rates; and (v) the Company's high degree of leverage may make it more vulnerable
to economic downturns and may limit its ability to withstand competitive
pressures.
COMPETITION
The Company's primary businesses, truck trailer manufacturing and automotive
products manufacturing, are highly competitive. The Company competes with other
truck trailer manufacturers and automotive stamping companies of varying sizes
(including the in-house capabilities of certain automotive manufacturers), some
of which have greater financial resources than the Company. In addition,
barriers to entry in the truck trailer manufacturing industry are low and,
therefore, it is possible that additional competitors could enter the market at
any time. Great Dane is, and believes that several of its competitors are, in
the process of adding manufacturing capacity, which may have an adverse effect
on order backlog and pricing throughout the industry. Although Great Dane is
presently one of the largest manufacturers in the truck trailer industry, there
can be no assurance that it will be able to maintain or increase its market
share.
9
<PAGE>
RELIANCE ON MAJOR CUSTOMERS
The Company's automotive products operations rely heavily on sales to GM.
For the year ended December 31, 1994, sales to GM accounted for approximately
93% of the automotive products operations' revenues and approximately 13% of the
Company's total revenues. Suppliers of automotive products have experienced
increased pricing pressure from OEMs which are taking aggressive measures to
reduce their operating costs, including significant price reductions from
suppliers. Although opportunities for new business may arise for the automotive
segment as a result of GM's pressure on other suppliers, future earnings of this
segment of the Company's business may be materially adversely affected by the
price reductions required or requested by GM, by decisions by GM to utilize its
own facilities to manufacture these products or by work stoppages at GM plants.
Although GM provides 13 week forecasts of its purchasing requirements, changes
in its production may result in changes to these requirements. In addition,
although the automotive segment is attempting to diversify its customer base,
there can be no assurance that it will be able to reduce its reliance on GM in
the foreseeable future. The Company does not expect that the strike at the GM
plant in Pontiac, Michigan will have a material adverse effect on its automotive
products operations.
Great Dane entered the intermodal container manufacturing business in
reliance on a large order from J.B. Hunt. There can be no assurance that Great
Dane will be able to attract other substantial customers for these products. For
the year ended December 31, 1994, J.B. Hunt accounted for approximately 10% of
Great Dane's revenues.
GOVERNMENT REGULATION OF TRUCK TRAILERS
The federal and state governments regulate certain safety features
incorporated in the design of truck trailers. Changes or anticipation of changes
in these regulations can have a material impact on the cost of manufacturing
truck trailers and on the purchasing policies of Great Dane's customers. These
factors may adversely affect the financial condition of the Company.
ENVIRONMENTAL MATTERS
The Company's operations are subject to numerous federal, state and local
laws and regulations pertaining to the discharge of materials into the
environment. The Company has taken steps related to such matters in order to
minimize the risks to the environment from potentially harmful aspects of its
operations. From time to time, the Company has incurred expenses to improve its
facilities in accordance with applicable laws and may be required to do so again
in the future. Certain of Great Dane's manufacturing processes formerly involved
the emission of chlorofluorocarbons, but Great Dane has changed those processes
to comply with new regulations.
The Company also remains obligated to indemnify purchasers of certain of its
prior subsidiaries and purchasers of properties sold by prior subsidiaries for
environmental contamination, if any, of properties owned by such subsidiaries.
The Company's expenditures related to the foregoing environmental matters and
indemnification obligations have not had, and the Company does not currently
anticipate that such expenditures will have, a material adverse effect on the
Company's financial condition, although there can be no assurance that this will
remain the case.
IMPACT OF CITY REGULATION AND EXPIRATION OF ANNUAL LIMIT ON NEW MEDALLION
ISSUANCE
Chicago regulates Yellow Cab's operations through maintenance, lease rate,
insurance and inspection requirements, as well as through taxes, license fees
and other means. In 1993, Chicago gave the Commissioner of Consumer Services
broad powers to set maximum lease rates, which, in certain instances, have been
set at lower rates than those currently charged by Yellow Cab. Although Yellow
Cab has filed a petition for higher rates than those set by the Commissioner and
is allowed to continue charging its current rates pending action on its
petition, there can be no assurance that it will be successful or that in the
future it will be able to pass through any increased costs by lease rate
increases or other means.
The agreement between Yellow Cab and Chicago, pursuant to which increases in
the total number of outstanding medallions in Chicago are limited to a maximum
of 100 annually, expires on December 31,
10
<PAGE>
1997. There can be no assurance as to how many medallions Chicago will issue
after the expiration of the agreement, nor as to the effect, if any, on the
Company, of such issuance, including the effect on medallion values. Although
Yellow Cab has sold medallions during the past year at selling prices of
approximately $38,000 per medallion, there can be no assurance that such values
will continue to prevail in the market, especially after December 31, 1997. See
"Business -- Other Operations -- Vehicular --The Medallions" and "-- Regulatory
Issues."
CONTROL OF THE COMPANY
Upon consummation of this Offering, the four current stockholders of
Holdings will own 80.8% of the outstanding Common Stock (78.5% if the
Over-Allotment Option is exercised in full). Therefore, these stockholders,
acting together, effectively will have control of the Company and will have
sufficient voting power to determine the outcome of any corporate transaction or
other matter requiring stockholder approval, including, among other things, the
election of directors. See "Ownership of Common Stock."
NO PRIOR PUBLIC MARKET; DETERMINATION OF OFFERING PRICE
Prior to this Offering, there has been no public market for the Common
Stock. Although the Common Stock has been approved for quotation on the Nasdaq
Stock Market (National Market), subject to official notice of issuance, there
can be no assurance that an active trading market will develop or be sustained
after this Offering or that the market price for the Common Stock will not
decline below the initial public offering price. The initial public offering
price of the Common Stock will be determined solely by negotiations between the
Company and the Underwriters and may not bear any relationship to the market
price for the Common Stock following this Offering. See "Underwriting" for a
discussion of factors to be considered in determining the initial public
offering price.
DILUTION
Purchasers of the Common Stock offered hereby will experience an immediate
and substantial dilution of $18.31 in net tangible book value per share of
Common Stock from the initial public offering price (at an assumed initial
public offering price of $11.00 per share).
SHARES ELIGIBLE FOR FUTURE SALE
Currently, all of the outstanding capital stock of the Company is owned by
four persons. Upon completion of this Offering, 20,800,000 shares of Common
Stock will be issued and outstanding, 16,800,000 of which will be owned by these
four persons. The Company and these stockholders have each agreed not to offer,
sell, contract to sell, or otherwise dispose of any shares of Common Stock for a
period of 180 days after the date of this Prospectus (other than shares acquired
in this Offering) without the prior written consent of the Representatives of
the Underwriters. After expiration of that time period, shares owned by such
stockholders may only be sold pursuant to an effective registration statement in
compliance with the Securities Act of 1933, as amended (the "Securities Act"),
or an applicable exemption from the registration requirements thereunder. The
Company has also (i) adopted a stock option plan for key employees and directors
(the "1994 Option Plan"), subject to stockholder approval and approval of the
Compensation Committee of the Board of Directors (the "Compensation Committee"),
(ii) adopted a stock option plan for its independent directors who will serve on
the Board of Directors after the consummation of this Offering (the "Outside
Directors Option Plan") and (iii) granted an option to Jay H. Harris, the
Executive Vice President and Chief Operating Officer of the Company (the "Harris
Option"). A total of 1,792,500 shares of common stock have been reserved for
issuance upon exercise of options. See "Management -- Compensation Pursuant to
Plans" and "-- Employment Agreements ." No prediction can be made as to the
effect, if any, that future sales of shares of Common Stock, or the availability
of shares of Common Stock for future sales, will have on the market price of the
Common Stock prevailing from time to time. Sales of substantial amounts of
Common Stock (including shares issued upon the exercise of stock options to be
granted under the 1994 Option Plan, the Outside Directors Option Plan and the
Harris Option), or the perception that such sales could occur, could adversely
affect prevailing market prices for the Common Stock. See "Shares Eligible for
Future Sale."
11
<PAGE>
FUTURE COMPENSATION EXPENSE
The options granted (subject to certain conditions) to employees pursuant to
the 1994 Option Plan and the Harris Option were granted at less than fair market
value. See "Management -- Compensation Pursuant to Plans" and " --Employment
Agreements." Therefore, the Company will recognize compensation expense in the
period in which all conditions to the grants of the options have been satisfied.
With respect to the Harris Option, this is expected to result in a charge to net
income of approximately $0.3 million in the first or second quarter of 1995
(assuming a fair market value of $11 per share of Common Stock). With respect to
options granted pursuant to the 1994 Option Plan, this is expected to result in
a charge to net income of approximately $0.6 million at the time of approval of
the plan by the stockholders of the Company (assuming a fair market value of $11
per share of Common Stock at that time).
USE OF PROCEEDS
The net proceeds to be received by the Company from the sale of the
4,000,000 shares of Common Stock offered hereby are estimated to be
approximately $40.0 million, assuming an initial public offering price of $11.00
per share, and after deducting an estimated $4.0 million in offering expenses
and underwriting discounts and commissions payable by the Company estimated to
be incurred in connection with the Offering. The Company intends to use all of
the net proceeds of this Offering to redeem 12 3/4% Debentures. The Company
intends, promptly after consummation of this Offering, to issue a notice of
redemption with respect thereto. The funds required for the redemption will be
held in escrow until the requisite 30-day redemption notice period has expired
(during which time interest will continue to accrue) and payment can be made.
Interest on the 12 3/4% Debentures for such period is expected to be
approximately $0.2 million, net of estimated interest earnings from the escrow
account. The net proceeds from the exercise of the Over-Allotment Option would
be used for general corporate purposes which may include the repurchase of
additional 12 3/4% Debentures pursuant to the redemption described above or
subsequently in privately negotiated transactions and/or open market purchases.
DIVIDEND POLICY
The Company intends to retain any future earnings to provide funds for the
operation and expansion of its business and does not anticipate paying any cash
dividends in the foreseeable future. As a holding company, the ability of
Holdings to pay dividends is dependent upon the receipt of dividends or other
payments from its subsidiaries. Although the subsidiaries are not prohibited by
the terms of their bank loans from paying dividends to Holdings, their
continuing ability to access lines of credit thereunder is conditioned on
meeting certain financial covenants. Payments of substantial dividends could
result in a violation of those covenants. The payment of dividends by Holdings
is also subject to certain restrictions under the indenture pursuant to which
the 12 3/4% Debentures were issued. Subject to such restrictions, any
determination to pay dividends in the future will be at the discretion of
Holdings' Board of Directors and will be dependent upon the Company's results of
operations, financial condition, contractual restrictions, and other facts
deemed relevant at that time by Holdings' Board of Directors.
12
<PAGE>
CAPITALIZATION
The following table sets forth the unaudited consolidated capitalization of
Holdings and its subsidiaries as of December 31, 1994, and as adjusted to give
effect to (i) the Refinancing, (ii) the Note Repayment in February of 1995 and
(iii) the sale by Holdings of the 4,000,000 shares of Common Stock offered
hereby (assuming an initial public offering price of $11.00 per share and after
deduction of underwriting commissions and discounts and the estimated expenses
of this Offering) and the application of the estimated net proceeds as described
in "Use of Proceeds." The table should be read in conjunction with "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
the Company's Consolidated Financial Statements and Notes thereto appearing
elsewhere in this Prospectus.
<TABLE>
<CAPTION>
DECEMBER 31, 1994
--------------------------
HISTORICAL AS ADJUSTED
------------ ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Debt (including current maturities):
Subsidiary Debt.................................................................. $85,938 $119,938(1)
Shareholders' Notes.............................................................. 30,000 0 (2)
12 3/4% Senior Subordinated Debentures (net of unamortized discount)............. 122,315 85,222
14 1/2% Subordinated Discount Debentures (net of unamortized discount)........... 55,012 55,012
------------ ------------
Total Debt..................................................................... 293,265 260,172
Minority Interest.................................................................. 586 586
Shareholders' Deficit:
Common Stock, par value $0.01.................................................... 168 208
Additional paid-in capital....................................................... 14,832 54,834
Retained earnings deficit........................................................ (11,869) (14,702 )(3)
Notes receivable from shareholders............................................... (625) 0 (4)
Amounts paid in excess of Motors' net assets..................................... (127,748) (128,373 )(4)
Unrealized depreciation on Insurance Subsidiary's investments in certain debt and
equity securities............................................................... (2,060) (2,060)
------------ ------------
Total Shareholders' Deficit.................................................... (127,302) (90,093)
------------ ------------
Total Capitalization......................................................... $166,549 $170,665
------------ ------------
------------ ------------
<FN>
- --------------
(1) The increase in subsidiary debt resulted from the Refinancing which
occurred in January and February of 1995. Proceeds of the Refinancing were
used to repay existing debt, fund the Note Repayment and pay fees and
expenses.
(2) Reflects the Note Repayment which occurred in February of 1995.
(3) The increase in retained earnings deficit results from an extraordinary
charge to earnings from:
</TABLE>
<TABLE>
<S> <C>
(a) Write off of debt discount on repurchased 12 3/4% Debentures.......... $ (2,949)
(b) Premium paid on repurchase of 12 3/4% Debentures...................... (849)
(c) Write off of unamortized debt issue costs; and........................ (561)
(d) Tax effect of above adjustments....................................... 1,526
---------
Increase in historical retained earnings deficit........................... $ (2,833)
---------
---------
</TABLE>
(4) The notes receivable from shareholders represented amounts payable, on
demand, to Motors solely to enable Motors to meet certain net worth
requirements in its capacity as general partner of Checker L.P. when Checker
L.P. was formed. The notes receivable were included in Motors' net assets
when the determination of the amount paid in excess of Motors' net assets
was made. With the liquidation of Checker L.P. in 1995, the notes were
cancelled. Accordingly, an adjustment to the amount paid in excess of
Motors' net assets has been made.
13
<PAGE>
DILUTION
The deficit in net tangible book value of the Company at December 31, 1994
was ($185.8) million or ($11.06) per share of Common Stock. The deficit in net
tangible book value represents the excess of the Company's total liabilities
over its total tangible assets, divided by the number of outstanding shares of
Common Stock. After giving effect to (i) the Refinancing, (ii) the Note
Repayment and (iii) the sale of the 4,000,000 shares of Common Stock being
offered hereby (assuming a public offering price of $11.00 per share and after
deduction of the underwriting discounts and commissions and estimated expenses
of this Offering) and the application of the estimated net proceeds therefrom,
the pro forma deficit in net tangible book value at December 31, 1994 would have
been $(152.0) million or $(7.31) per share. This represents an immediate
decrease of $3.75 in the deficit in net tangible book value per share to the
current stockholders and immediate dilution of $18.31 per share to persons
purchasing the shares offered hereby. The following table illustrates the per
share dilution with respect to a new investor's purchase of a share of Common
Stock on a pro forma basis at December 31, 1994.
<TABLE>
<S> <C> <C>
Assumed initial public offering price
per share.............................. $ 11.00
Deficit in net tangible book value per
share before this Offering........... $ (11.06)
Decrease per share in the deficit in
net tangible book value attributable
to new investors..................... $ 3.75
Pro forma deficit in net tangible book
value per share after this Offering.... (7.31)
Dilution per share to new investors..... $ 18.31
</TABLE>
14
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
The following table presents selected consolidated financial data derived
from the consolidated financial statements of Great Dane Holdings Inc. and
subsidiaries for the five years ended December 31, 1994, which have been audited
by Ernst & Young LLP, independent auditors. The following financial data should
be read in conjunction with the Consolidated Financial Statements and Notes
thereto and "Management's Discussion and Analysis of Financial Condition and
Results of Operations" included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------------------------
1990 1991 1992 1993 1994
---------- ---------- ---------- ---------- ----------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues.................................................... $ 693,211 $ 555,266 $ 716,733 $ 909,326 $1,096,477
Cost of Revenues............................................ 584,680 480,543 610,870 778,805 929,232
---------- ---------- ---------- ---------- ----------
Gross Profit................................................ 108,531 74,723 105,863 130,521 167,245
Selling, General and Administrative Expense................. 77,597 72,032 76,877 83,176 91,600(1)
Plant Restructuring Costs................................... 7,500 -- -- -- --
---------- ---------- ---------- ---------- ----------
Income from Operations...................................... 23,434 2,691 28,986 47,345 75,645
Interest Expense............................................ (61,596) (47,425) (42,726) (41,614) (40,165)
Interest Income............................................. 14,696 11,634 8,895 7,396 7,101
Other Income (Expense)...................................... (941) (1,078) (2,023) 3,494 1,002
Special Charge (2).......................................... -- -- -- (7,500) --
---------- ---------- ---------- ---------- ----------
Income (Loss) Before Minority Equity, Income Taxes,
Extraordinary Items and Accounting Changes................. (24,407) (34,178) (6,868) 9,121 43,583
Minority Equity............................................. (2,296) 1,931 -- -- (586)
Income Tax Benefit (Expense)................................ 6,429 5,241 (687) (5,757) (18,649)
---------- ---------- ---------- ---------- ----------
Income (Loss) Before Extraordinary Items and Accounting
Changes.................................................... (20,274) (27,006) (7,555) 3,364 24,348
Extraordinary Items (3)..................................... 27,749 31,188 -- -- --
Accounting Changes (4)...................................... -- -- -- (46,626) --
---------- ---------- ---------- ---------- ----------
Net Income (Loss)........................................... $ 7,475 $ 4,182 $ (7,555) $ (43,262) $ 24,348
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
Income (Loss) Per Share (5):
Before extraordinary items and accounting changes......... $ (1.21) $ (1.61) $ (.45) $ .20 $ 1.45
Net income (loss) per share............................... $ .45 $ .25 $ (.45) $ (2.58) $ 1.45
<CAPTION>
DECEMBER 31,
----------------------------------------------------------
1990 1991 1992 1993 1994
---------- ---------- ---------- ---------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Total Assets................................................ $ 537,677 $ 481,305 $ 493,763 $ 517,336 $522,051
Total Debt.................................................. 376,692 316,324 310,368 296,273 293,265
Shareholders' Deficit....................................... (104,745) (98,374) (106,296) (149,517) (127,302)
<FN>
- ------------------
(1) Selling, general and administrative expenses for the year ended December 31,
1994 includes $3.5 million of expenses related to the Company's debt
refinancing which was not completed. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations."
(2) Represents cost to the Company of the settlement of certain litigation with
the Boeing Company. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and Note G to Notes to Consolidated
Financial Statements -- December 31, 1994.
(3) Extraordinary items in all years relate to the gains on the repurchase of
indebtedness.
(4) The accounting changes represent the cumulative effect of changes in
accounting principles as a result of the adoption, as of January 1, 1993, of
the provisions of Statement of Financial Accounting Standards ("SFAS") No.
106, "Employers Accounting for Postretirement Benefits Other Than Pensions,"
and SFAS No. 109, "Accounting for Income Taxes." See Notes H and J to Notes
to Consolidated Financial Statements -- December 31, 1994.
(5) The per share information is computed by dividing the respective income
(loss) by the weighted average number of common shares outstanding
(16,800,000 for all periods, after giving effect to the 16,800 to 1 stock
split which occurred on March 27, 1995). The stock options were not taken
into account because the exercise of stock options would not be materially
dilutive.
</TABLE>
15
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
1994 COMPARED TO 1993:
Revenues increased $187.2 million and gross profit increased $36.7 million
during the year ended December 31, 1994, as compared to the same period of 1993.
The higher revenues are principally attributed to higher Trailer Manufacturing
revenues ($147.2 million), primarily associated with a higher volume of sales
within the segment. Automotive Products revenues increased $29.6 million during
the year ended December 31, 1994, as compared to the same period in 1993.
General increases in volumes to accommodate automotive customers' demands and
additional jobs were the principal reasons for the revenue increases.
The Company's operating profit (gross profit less selling, general and
administrative expenses) increased $28.3 million in 1994 compared to 1993. This
increase is attributed to an increase of Trailer Manufacturing operating profits
($26.2 million) which is principally due to higher volumes of sales and higher
margins, and an increase of Automotive Products operating profits ($4.3 million)
principally due to higher sales and higher margins. These increases in operating
profits were offset by higher corporate costs due principally to the refinancing
which was not completed ($3.5 million).
Sales, general and administrative ("SG&A") expenses were $8.4 million higher
in 1994 as compared to 1993, but as a percentage of sales, SG&A was 0.8
percentage points lower in 1994 as compared to 1993.
During the year ended December 31, 1994, a $0.6 million charge was recorded
to reflect a minority equity in SCSM.
Income tax expense is higher for financial statement purposes than would be
computed if the statutory rate were used because of state income taxes, as well
as the impact of the reporting of certain income and expense items in the
financial statements which are not taxable or deductible for income tax
purposes.
Net income was $24.3 million for the year ended December 31, 1994, as
compared to a $43.3 million net loss for the prior year. The improvement in net
income is attributed to the reasons mentioned above, as well as a one-time
charge ($46.6 million) incurred for the implementation of SFAS Nos. 106 and 109
which was recorded in the first quarter of 1993.
1993 COMPARED TO 1992:
During 1993, revenues increased $192.6 million and gross profit increased
$24.7 million as compared to 1992. The Truck Trailer Manufacturing and the
Automotive Products segment operations benefited from increased demand for their
products. Truck Trailer Manufacturing revenues increased by $175.5 million as
compared to 1992, primarily due to the sale of containers and chassis which were
introduced in late 1992 and sold principally to one customer, and a higher
volume of truck trailer sales. Automotive Products revenues increased $15.3
million as compared to 1992. Increased production of the General Motors Blazer
and Suburban models and crew cab products and other general increases in volumes
to accommodate automotive customers' demands are the principle reasons for the
increase. Vehicular Operations revenues increased $1.5 million in 1993 as
compared to 1992. The increase was attributed to lease rate increases obtained
in 1993 to cover certain Vehicular Operations cost increases. The revenue
increase was somewhat offset by the impact of tendering medallions to the City
of Chicago.
The factors impacting sales, as discussed previously, had the effect of
increasing the Company's 1993 operating profit by $18.4 million as compared to
1992. Truck Trailer Manufacturing operating profit increased by $14.8 million as
compared to 1992. This increase is principally due to higher volumes, partly
offset by SG&A expenses. Higher volumes were also the principal reason for an
increase of $3.7 million of Automotive Products operating profits as compared to
1992.
16
<PAGE>
SG&A expenses were $6.3 million higher in 1993 as compared to 1992, but as a
percentage of sales, SG&A expense is 1.6 percentage points lower in 1993 as
compared to 1992.
Other expenses decreased $5.5 million in 1993 as compared to 1992. The
decrease in expense resulted primarily from $1.4 million income from the
settlement of a dispute in 1993 and $2.8 million income from sales of taxi
medallions in 1993.
On February 8, 1989, the Boeing Company ("Boeing") filed a lawsuit naming
the Company, together with three prior subsidiaries of the Company, as
defendants in Case No. CV89-199MA, United States District Court for the District
of Oregon. In that lawsuit, Boeing sought damages and declaratory relief for
past and future costs resulting from alleged groundwater contamination at a
location in Gresham, Oregon, where the three prior subsidiaries of the Company
formerly conducted business operations. On December 22, 1993, the Company
entered into a settlement with Boeing, settling all claims asserted by Boeing in
the lawsuit. Pursuant to the settlement terms, the Company will pay Boeing $12.5
million over the course of five years, at least $5 million of which has been
committed by certain insurance carriers in the form of cash or irrevocable
letters of credit. Accordingly, the Company recorded a $7.5 million special
charge during 1993 to provide for the cost associated with this legal
proceeding. In accordance with the settlement agreement, Boeing's claims against
the Company and the three former subsidiaries have been dismissed and Boeing has
released and indemnified the Company with respect to certain claims.
Net loss was $43.3 million for the year ended December 31, 1993, as compared
to a $7.6 million net loss for the year ended December 31, 1992. The
fluctuations in net loss between the years are attributed to the reasons
discussed above, as well as the one-time charge ($46.6 million) incurred for the
implementation of SFAS Nos. 106 and 109 which was recorded in 1993.
FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
Available cash and cash equivalents, cash flow generated from operations
($25.2 million, $30.7 million and $56.4 million for the years ended December 31,
1992, 1993 and 1994, respectively), proceeds from borrowings and proceeds from
disposal of assets have provided sufficient liquidity and capital resources for
the Company to conduct its operations during each of these years.
From the time that present management assumed control of the Company in
January 1989, it has been continually reassessing the Company's financial
condition and prospects. The Company was hampered in its efforts to achieve a
refinancing of its debt in recent years, in part because of litigation with the
Boeing Company which was settled in December 1993 and in part because of
litigation with the Conservator of Executive Life Insurance Company ("ELIC"), a
limited partner in the Partnership. A settlement with ELIC, agreed to in
principle in early 1994, was consummated in December 1994. See "Business --
Legal Proceedings -- Executive Life Litigation."
In February 1994, the Company filed a Registration Statement on Form S-1
with the Securities and Exchange Commission in connection with an overall
refinancing of the Company's outstanding indebtedness. On August 10, 1994, the
Company announced that, due to market conditions, it had postponed the proposed
refinancing and would not complete the transaction on the terms described in its
registration statement. Certain costs were incurred in connection with the
refinancing efforts which would have been capitalized and amortized over the
life of the new loans. Because this refinancing was not completed, those costs,
which totaled approximately $3.5 million (pre-tax), were expensed against income
in the quarter ended September 30, 1994.
On November 23, 1994, the Company filed a Registration Statement on Form S-1
with the Securities and Exchange Commission in connection with this Offering.
All of the net proceeds are intended to be used to redeem 12 3/4% Senior
Subordinated Debentures due 2001. If successfully completed, the principal
effect of this Offering will be to reduce the cash flow necessary from its
subsidiaries to meet the Company's obligations. Any excess proceeds from this
Offering as a result of the sale of the over-allotment will be utilized to
retire additional debentures or for working capital.
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The Company is a holding company and is, therefore, dependent on cash flow
from its subsidiaries in order to meet its obligations. The Company's operating
subsidiaries are required, pursuant to financing agreements with third parties,
to meet certain covenants, which may have the effect of limiting cash available
to the Company. The operating subsidiaries' plans indicate that sufficient funds
are anticipated to be available to the Company to meet its short-term
obligations.
In December 1994, the Company purchased ELIC's interest in the Partnership
for $37 million. $30 million of this payment was provided by a subsidiary
through borrowings on its revolving credit facility and the balance was paid
from available cash.
In January 1995, Motors and its subsidiaries finalized a refinancing with a
bank whereby Motors entered into a loan agreement providing for a $45 million
term loan and a $20 million revolving credit facility. The funds from the term
loan were used to repay approximately $27 million of bank debt, including the
Partnership term loan, the equipment term loan and the notes payable to the
bank, provide $15 million to the Company to retire a portion of certain notes
outstanding to the Company's shareholders and pay fees and expenses.
Availability under the revolving credit facility is based on the amount of
eligible trade accounts receivable and inventory, and may be used for working
capital needs, as well as for general corporate purposes. The new term loan
requires twenty quarterly principal payments of approximately $2.3 million,
commencing June 30, 1995, plus interest at either the bank's prime rate plus
1.25% (subject to reductions of up to 0.5% upon the occurrence of certain
events) or a selected Eurodollar contract rate plus 300 basis points (subject to
reductions of up to 50 basis points upon the occurrence of certain events). The
same interest rates are applicable to the revolving credit facility. The new
loan is secured by substantially all of Motors' assets including the stock of
Country and Motors' other subsidiaries. The new loan agreement requires Motors
to, among other things, comply with certain financial covenants, limits
additions to and sales of Motors' fixed assets and limits additional borrowings
by Motors.
In February 1995, Great Dane amended its loan and security agreement.
Pursuant to the amended agreement, the Lenders have loaned $28 million as a term
loan and have agreed to provide, at any given time, up to $150 million (less
amounts then outstanding as a term loan) as a revolving credit facility (subject
to availability based on the amount of eligible trade accounts receivable and
inventory) to be used as working capital by Great Dane and for general corporate
purposes. The term loan is subject to further increases as final collateral
appraisals are completed and as equipment for the new facility in Terre Haute,
Indiana is purchased. The Company believes that the term loan will be increased
to between $33 million and $38 million. The initial term loan proceeds, which
were drawn immediately upon closing, were used, together with drawings under the
revolver, to repay approximately $17 million of bank debt, provide $15 million
to the Company to retire the balance of the shareholder notes and pay fees and
expenses. The term loan requires monthly principal payments of $0.3 million plus
interest on the unpaid principal amount of the loan in arrears at a rate equal
to 1% above the prime rate of interest charged from time to time by Bank of
America or a rate equal to 2.5% above a selected Eurodollar contract rate with
the unpaid principal balance due five years after the closing date. The same
interest rates are applicable to the revolving credit facility. The loans are
secured by substantially all of the assets of Great Dane and its subsidiaries,
including the stock of Great Dane's subsidiaries. The loan agreement requires
Great Dane to, among other things, comply with certain financial covenants,
limits the amount of loans and transfers to the Company, limits additions to and
sales of Great Dane's fixed assets and limits additional Great Dane borrowings.
The refinancing of the Motors and Great Dane bank debt, as well as the
expansion of each of these entities' availabilities under their respective
credit facilities, improves the Company's liquidity.
Effective January 1, 1994, the Company adopted the provisions of SFAS No.
115, "Accounting for Certain Investments in Debt and Equity Securities." In
accordance with this statement, prior period financial statements have not been
restated to reflect the change in accounting principle. The opening balance of
shareholders' deficit was decreased by $1.4 million (net of $0.8 million in
deferred income
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taxes) to reflect the net unrealized holding gains on securities classified as
available-for-sale previously carried at amortized cost or lower of cost or
market. The adoption of this SFAS has not adversely affected liquidity and
capital resources.
Purchases of property, plant and equipment have averaged approximately $18.6
million per year over the past three years and have been funded principally by
cash flow generated from operations, as well as proceeds from disposal of
assets. Purchases of property, plant and equipment for 1995 are anticipated to
be approximately $38.3 million and are expected to be funded principally by cash
flow generated from operations and borrowings.
General Motors Corporation ("GM"), a major customer of the Company's
automotive products segment, is resorting to many measures, including obtaining
significant price reductions from its suppliers, in an effort to reduce its
operating costs. Automotive products segment management believes that it has
adequately provided in its financial plans for any price reductions which may
result from its current discussions with GM. However, price reductions in excess
of those anticipated could have a material adverse effect on the automotive
products operations.
IMPACT OF INFLATION
Recently, due to competitive market conditions, the Company has been unable
to factor all cost increases into selling prices for its products and services.
The Company does not believe that the impact of inflation affects the Company
any more than it affects the Company's competitors.
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BUSINESS
GENERAL
Through Great Dane, the Company is the one of the largest manufacturers of
truck trailers and intermodal containers and chassis in the United States. In
addition, through Motors' subsidiaries, CMC and SCSM, the Company is one of the
leading independent manufacturers of sheet metal stampings for automotive
components and subassemblies for sale to North American OEMs. For the year ended
December 31, 1994, these two principal lines of business accounted for
approximately 93% of the Company's revenues and 93% of the Company's total
segment operating profit. The Company's other operations consist of its
vehicular operations, primarily Yellow Cab, which is currently the largest owner
of taxicabs and provider of taxi-related services in Chicago, Illinois and its
insurance operations, Country, which underwrites property and casualty
insurance.
The Company's objective is to expand its transportation related
manufacturing businesses, Great Dane, CMC and SCSM, primarily through internal
growth. In addition, the Company will consider strategic acquisitions, should
opportunities arise. The Company will also focus on reducing its aggregate
indebtedness and believes that Yellow Cab and Country provide a consistent
source of cash flow for debt repayment.
TRAILER MANUFACTURING OPERATIONS
OVERVIEW
Great Dane designs, manufactures and distributes a full line of truck
trailers (including dry freight vans, refrigerated trailers and platform
trailers) and domestic intermodal containers and chassis. In 1994, Great Dane
was one of the largest manufacturers of truck trailers in the United States,
accounting for approximately 13.0% of the new truck trailer market, including
11.5% of the new van market, 11.5% of the new platform trailer market and 38.4%
of the new reefer market. Great Dane is also one of the leading producers of
intermodal containers and chassis, with a market share of 18.8% in 1994. For the
year ended December 31, 1994, Great Dane generated approximately 78% of the
Company's revenues and 70% of the Company's total segment operating profit.
INDUSTRY OVERVIEW
The new truck trailer industry, with estimated annual revenues for 1994 of
approximately $3.8 billion, is cyclical and competitive and closely tied to
overall economic conditions as well as to regulatory changes. In addition, new
truck trailers have traditionally had a five to seven-year replacement cycle. In
1990 and 1991, the industry experienced a severe downturn due to the recession
in the United States. The industry recovered during the period from 1992 through
1994 due in large part to the general improvement in the U.S. economy, the
replacement of a large number of truck trailers sold in the mid-1980's and, to a
lesser extent, new regulations in certain states permitting longer truck
lengths.
The national truck trailer market is highly fragmented, with approximately
180 companies operating in the truck trailer manufacturing industry. In 1994,
the two largest companies, Great Dane and Wabash National Corporation,
accounted, based on registrations, for approximately 24% of the market and the
ten largest companies accounted for approximately 66% of sales. The basis of
competition in the truck trailer industry is product quality and durability,
price, flexibility in design and engineering, warranties, service and
relationships. Due in large part to the quality of its products and its strong
distribution system, the Company believes that Great Dane has built sustainable
competitive advantages in each of these important areas.
Recently, the transportation industry has increased its use of intermodal
containers and chassis. Since 1988, intermodal container traffic has grown by a
compounded annual growth rate of approximately 11%. "Intermodal" refers to the
transition from one mode of transportation to another and, as used in this
Prospectus, refers to the transition from rail to road. "Intermodal containers,"
as used in this Prospectus, refers to containers which are designed to travel
principally on rail, and which, when removed from the rail car, can be placed on
a chassis for transportation by truck to and from a rail yard.
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BUSINESS STRATEGIES
In 1991, Great Dane assembled a new senior management team and initiated a
strategic plan designed to improve its competitive position by (i) reducing
operating costs; (ii) increasing manufacturing efficiencies and flexibility;
(iii) developing new products; and (iv) expanding its large order customer base.
Accordingly, Great Dane reduced overhead, reconfigured plants to increase
capacity, re-designed assembly lines to improve efficiencies, re-engineered
certain products to reduce material and manufacturing costs, initiated new
product development programs and began to develop relationships with large order
customers, including J.B. Hunt and XTRA Corporation. From 1991 to 1994, Great
Dane's revenues increased from $400.2 million to $859.1 million and segment
operating profit increased from $7.1 million to $58.6 million. In addition,
Great Dane's operating profit margin increased from 1.8% in 1991 to 6.8% for
1994.
Great Dane believes that these initiatives combined with its strong brand
name and reputation for manufacturing high quality products have positioned it
for continued growth. The key elements of its growth strategy are as follows:
- PRODUCT INNOVATION. Great Dane emphasizes the production of
custom-designed and proprietary products which generally produce higher
margins than standard products. Great Dane's engineering and flexible
manufacturing expertise enable it to produce custom-designed products
rapidly and efficiently while incorporating distinctive features through
computer aided design technologies. Recent product innovations marketed by
Great Dane include its proprietary, lightweight Thermacube van and reefer
which utilize a high density foam technology that yields superior cargo
space, strength, and thermal properties, and unique intermodal containers
and chassis which initiated Great Dane's entry into the growing intermodal
market. New products planned for introduction during 1995 include a
proprietary, ultra-lightweight flatbed trailer which employs a new
technology that uses foam plus minimal amounts of steel (instead of
aluminum), and a new reefer product which incorporates a unique floor
design that offers superior thermal efficiencies, longevity and cargo
space.
- INCREASE MARKET SHARE WITH LARGE ORDER FLEET CUSTOMERS.Great Dane is
actively seeking to increase its sales to large order fleet customers
which accounted, during 1993, for approximately 43% of total U.S. van
trailer purchases. The Company believes that these customers are the
fastest growing segment of the industry and estimates that its share of
fleet orders approximated 10% during 1993. The balance of the U.S. van
trailer market consists of small and medium sized customers (approximately
30%) and leasing companies (approximately 27%) where Great Dane estimates
it had, during 1993, a 27% and 17% market share, respectively. In order to
increase its market share with large order fleet customers, Great Dane has
acquired the property and buildings in Terre Haute, Indiana for a 500,000
square foot manufacturing and product distribution facility, a portion of
which will be equipped during 1995 with two high speed, more cost
efficient assembly lines dedicated to high volume, standard specification
fleet orders. This new manufacturing facility will be located near the
existing Brazil, Indiana plant and Great Dane expects to utilize its
Brazil, Indiana management team to help contain overhead expenses.
- STRONG NATIONAL DISTRIBUTION NETWORK. The Company believes that Great
Dane's distribution network, which consists of 17 Company-owned branches
and 51 independent dealers, is the largest marketing organization in the
North American trailer industry. This network provides Great Dane with a
competitive advantage in marketing its new and used trailer products and
providing higher-margin aftermarket parts and services. Great Dane
believes that its parts and services business will provide earnings growth
in the coming years due to the increasing size of the Great Dane and U.S.
trailer fleets.
- INTERMODAL TRANSPORTATION. In 1992, Great Dane entered the intermodal
transportation market by developing, in conjunction with a leading
truckload carrier, a unique line of intermodal containers and matching
ultra-lightweight chassis. These containers and chassis enable its
customers to utilize double stack rail intermodal service to haul freight
loads of similar size and weight to
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those it carries with conventional over-the-road trailers. Great Dane's
strategy is to utilize its engineering expertise to design intermodal
products that meet the specific requirements of its customers. Great Dane
has also improved its market responsiveness by adapting certain assembly
lines to produce both trailers and containers.
PRODUCTS
GENERAL. Great Dane's principal products include vans, reefers, platform
trailers and intermodal containers and chassis. During 1994, the sale of these
products accounted for approximately 83% of Great Dane's revenues. Great Dane's
trailers and intermodal containers are manufactured in sizes ranging from 28 to
57 feet. Great Dane offers 11 versions of its various trailers and sells
virtually all of these versions on a regular basis. In addition to this standard
line of products, its flexible assembly operations enable Great Dane to
customize products for its customers at premium prices.
Set forth below is a description of Great Dane's share of the market for its
principal products during 1994. All figures are based on estimated shipments.
<TABLE>
<CAPTION>
GREAT DANE INDUSTRY GREAT DANE
PRODUCT TYPE UNIT SALES UNIT SALES(1) SHARE
- ------------------------------------------------------------- ----------- ------------- ---------------
<S> <C> <C> <C>
Vans......................................................... 17,449 151,280 11.5%
Reefers...................................................... 9,576 24,950 38.4%
Platform Trailers............................................ 2,431 21,080 11.5%
Intermodal Containers and Chassis............................ 8,910 47,330 18.8%
<FN>
- --------------
(1) Source: The WEFA Group, January 1995.
</TABLE>
VANS. Vans are used primarily for the transportation of dry freight. Great
Dane believes that it offers the greatest variety of vans in the industry with
four primary styles: sheet and post, aluminum plate, ThermaCube and Fiberglass
Reinforced Plastic Plywood. Great Dane sells vans primarily to for-hire
truckload carriers, private carriers and leasing companies.
Great Dane's highest volume van product is the sheet and post van. These
trailers haul general non-refrigerated freight. Great Dane's models offer custom
design features in order to improve their appearance, durability and resale
value when compared to certain competitors' models.
Great Dane's aluminum plate vans were developed in late 1991. These vans,
considered to be a premium product, utilize thicker and more durable sidewalls
than sheet and post vans and offer significantly more interior space since they
are constructed without interior liners.
Great Dane's ThermaCube van was developed and brought to market in late
1990. The ThermaCube van currently uses a technology licensed to Great Dane by
Graaff KG ("Graaff"), a German limited partnership. The ThermaCube process
involves injecting high density foam between two thin skins of aluminum or other
suitable material and bonding them into a single panel. ThermaCube vans are
lightweight and offer superior width, space, strength and thermal properties.
Since it has paid the maximum royalty due under its agreement with Graaff, Great
Dane's current and future usage of this technology for trailers is royalty free.
Fiberglass Reinforced Plastic Plywood vans account for a small percentage of
Great Dane's van sales. They offer increased inside width but are 300 pounds
heavier than sheet and post vans. These vans are very durable and therefore are
used predominantly in large metropolitan areas.
REEFERS. Great Dane's reefers are specialized products that command premium
pricing. The Company believes that it is one of the largest supplier of reefers
in the industry (with an estimated 38.4% share in 1994) and the only company to
offer more than one type of reefer. Great Dane currently sells three types of
reefers: Classic (either aluminum or stainless steel), Superseal and ThermaCube.
The refrigeration cooling units are not manufactured by Great Dane.
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The Classic reefer, essentially a sheet and post reefer, is particularly
suitable for the food distribution market because it has been engineered to
accept numerous structural modifications such as side doors and
multi-temperature refrigeration compartments. Classic reefers are sold primarily
to private carriers and truck leasing companies.
The Superseal reefer is Great Dane's lightweight, lower-priced model. This
product offers fewer options than the Classic reefer but is most popular with
for-hire carriers. Since its purchase by Great Dane in 1988, its market share
has steadily increased due to product improvements and the use of Great Dane's
national distribution network.
Great Dane believes that its proprietary ThermaCube reefer is the most
efficient and technologically advanced reefer in the industry. It offers large
cubic capacity and inside width, side wall strength and superior thermal
properties. It is currently the flagship of two of the largest reefer carriers
in the U.S. and it is gaining popularity among medium-sized carriers.
PLATFORM TRAILERS. Platform trailers are flatbeds or open deck trailers.
Great Dane offers a full line of platform trailers, consisting of drop frame,
extendible, curtainside and straight frame trailers. Drop frame flatbeds are
designed for heavy duty hauling where low deck heights are required. Extendible
flatbeds are used for self-supporting loads (e.g., pre-stressed concrete).
Curtainside flatbeds are used where side loading and cover is required. The
primary customers for Great Dane's platform trailers are for-hire material
haulers, which would include steel haulers, pre-stressed concrete carriers and
builders. Great Dane is developing and testing a new line of ultra-lightweight
flatbeds intended to increase substantially its market share.
INTERMODAL CONTAINERS AND CHASSIS. In conjunction with the growth of
intermodal container transportation, Great Dane's engineers developed a
specialized container (which can be double stacked during rail transport) and
chassis that allow a trucking company to haul containerized loads which are
similar in size and weight to those carried on conventional over the road
trailers. These containers use either aluminum plate or the ThermaCube
technology, which is Great Dane's composite wall construction, to offer greater
inside width, higher cubic capacity and greater strength than can be obtained by
conventional sheet and post construction. Further, these containers are 500 to
1,000 pounds lighter and the chassis are 1,000 to 1,500 pounds lighter than
products now in use with similar carrying capacities. The Company believes that
it is one of the two largest U.S. manufacturers of intermodal containers and
chassis and the only domestic producer of reefer containers.
SERVICES
GENERAL. Great Dane's business includes aftermarket parts and accessories
sales, used trailer sales and retail services (including repair and maintenance)
which enable it to be a full-service provider. The parts and service operations
have historically been a stable source of higher margin business.
AFTERMARKET PARTS AND ACCESSORIES SALES. Sales of replacement parts and
accessories are an important source of higher margin revenues for Great Dane,
and provide a value-added service which attracts and maintains Great Dane's
customer base. Parts and accessories are marketed through 51 full-line dealers,
17 parts-only dealers and 17 Great Dane-owned branch operations. Dealers and
branches sell parts either over-the-counter or through their respective retail
services.
USED TRAILERS. To be competitive in the sale of new trailers, it is often
necessary to accept used trailers in trade. Great Dane's larger retail branches
employ individuals who are responsible for trade-in appraisals and selling used
trailers. Great Dane believes that its nationwide distribution system provides
it with superior used trailer marketing capabilities.
RETAIL SERVICES. Great Dane owns and operates 17 full-service retail
branches, which provide repair and maintenance services. These retail branches
also provide warranty support to Great Dane's customers.
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The chart below sets forth the percentage of Great Dane's total sales and
gross profit represented by each product or service category.
<TABLE>
<CAPTION>
% OF % OF
SALES GROSS PROFITS
-------------------- --------------------
PRODUCT OR SERVICE CATEGORY 1993 1994 1993 1994
- ------------------------------------------------------------------------- --------- --------- --------- ---------
<S> <C> <C> <C> <C>
New Truck Trailers and Containers and Chassis............................ 82.5 82.7 63.5 68.9
Parts Sales.............................................................. 9.3 8.6 23.0 19.1
Used Trailers............................................................ 6.0 6.7 3.7 3.3
Retail Services.......................................................... 2.2 2.0 9.8 8.7
</TABLE>
BACKLOG
At December 31, 1994, Great Dane's backlog totalled $515 million and
consisted of approximately $465 million of trailer orders and $50 million of
container and chassis orders. At December 31, 1993, Great Dane's backlog
totalled $365 million and consisted of approximately $295 million of trailer
orders and approximately $70 million of container and chassis orders, while at
December 31, 1992, the backlog totalled $255 million and consisted of
approximately $134 million of trailer orders and approximately $121 million of
container and chassis orders.
MARKETING, DISTRIBUTION AND SALES
Great Dane believes it has the largest marketing organization in the United
States trailer industry. Sales and comprehensive support service functions are
implemented through 17 Company-owned branches (accounting for 50% of unit sales
excluding J.B. Hunt), 51 independent dealers throughout the United States,
Canada and Mexico (accounting for 50% of unit sales excluding J.B. Hunt), and 17
parts-only dealers. Great Dane's nationwide distribution system enables it to
reach a diversified customer base consisting of: for-hire carriers (such as J.B.
Hunt, Direct Transit, KLLM and Landair), private carriers (such as Pepsico,
Burger King, Publix, Winn Dixie and Food Lion) and leasing companies (such as
Ryder, Penske, Rollins, XTRA and Ruan). Except for J.B. Hunt, no customer
accounted for more than 5% of total revenues in 1994. The vast majority of Great
Dane's sales are made through its distribution system.
Great Dane's sales force includes approximately 119 sales representatives in
dealerships and 51 sales representatives in its branches. The Company's sales
force is given incentives to meet revenue and/or profitability targets.
Under an agreement with Associates Corporation of North America
("Associates"), Great Dane has agreed to refer to Associates, until the last
quarter of 1996, those of Great Dane's customers who request financing and Great
Dane has guaranteed 50% of Associates' losses (to a potential maximum of $1.25
million each year) if a trailer is repossessed. Great Dane has not experienced
any material losses under this agreement.
Great Dane provides five year warranties to its customers and estimates its
warranty costs are only 1.1% of its sale price.
MANUFACTURING AND OPERATIONS
MANUFACTURING. Great Dane has four manufacturing facilities, located in
Savannah, Georgia; Memphis, Tennessee; Wayne, Nebraska; and Brazil, Indiana and
has acquired property and buildings for an additional manufacturing facility in
Terre Haute, Indiana. The Company expects that the Terre Haute facility will
become operational during 1995 and will increase Great Dane's production
capacity by approximately 24% by the end of 1995. Certain of Great Dane's
manufacturing operations include flexible assembly lines that allow Great Dane
to customize its products in a cost-efficient manner.
Great Dane exercises strict quality control by screening suppliers and
conducting inspections throughout the production process. Great Dane is
currently implementing a total quality management program that endorses employee
involvement, empowerment and continuous cost improvement.
RESEARCH AND DEVELOPMENT. Great Dane currently employs a corporate
engineering department with 35 employees, which is higher than the industry
average. Great Dane makes extensive use of
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<PAGE>
computer-aided design ("CAD") technology to support production engineering.
Great Dane's use of CAD technology accelerates the development of product
innovations and manufacturing efficiencies. Great Dane's new products must meet
strict quality and durability standards and must pass strenuous road test
procedures. Great Dane believes that it is the only trailer manufacturer with
on-site road simulation testing capability.
Great Dane has developed a new proprietary floor for its ThermaCube and
certain Classic reefers which will eliminate wood components, thereby increasing
the life of the floor, increasing the capacity of the reefer, simplifying the
manufacturing process and reducing the cost to manufacture the reefer. The
warranty on the new floor will be seven years. Great Dane is also developing and
testing a new line of ultra-lightweight flatbeds intended to increase its market
share.
SUPPLIES AND RAW MATERIALS. Purchased materials represent approximately 80%
of direct cost of goods sold and are purchased on a centralized basis in order
to achieve economies of scale. Great Dane purchases a variety of raw materials
and sub-assemblies from various vendors with short-term contracts. Aluminum,
wood, tires and steel account for a significant portion of materials costs.
Great Dane has not experienced major shortages in these materials, but prices
may fluctuate. However, Great Dane attempts to minimize purchased material price
fluctuations by utilizing just-in-time inventory systems, thereby coordinating
the purchase of certain materials with customer orders.
ENVIRONMENTAL. Certain of Great Dane's manufacturing processes involve the
emission of chlorofluorocarbons, but Great Dane has changed those processes to
comply with new regulations and does not believe that this change will have a
material adverse effect on its operations. The manufacturing process generates
nominal volumes of waste materials, which are disposed of in accordance with
applicable regulations.
Great Dane is involved in a small number of environmental matters.
Management believes that the expenses associated with Great Dane's involvement
are not material in the aggregate.
PATENTS, LICENSES AND TRADEMARKS
The Company believes its "Great Dane" trademark, which identifies all of its
products, to be of value and to contribute significantly to the wide acceptance
of its products.
AUTOMOTIVE PRODUCTS OPERATIONS
OVERVIEW
Through Motors' subsidiaries, CMC and SCSM, the Company develops, designs,
engineers and manufactures a broad range of sheet metal automotive components
and subassemblies, including tailgates, fenders, doors, roofs and hoods for sale
to North American OEMs. The majority of the Company's automotive segment
revenues are derived from complex, value-added products, primarily assemblies
containing multiple stamped parts and various welded or fastened components. For
the year ended December 31, 1994, these operations generated approximately 14%
of the Company's revenues and 23% of the Company's total segment operating
profit.
INDUSTRY OVERVIEW
The North American automotive parts industry is composed of two distinct
sectors, the original equipment market and the automotive aftermarket.
Substantially all of the Company's automotive segment's sales are to the
original equipment market. Industry factors which affect the automotive
segment's current and future competitiveness, growth and performance include,
among others, trends in the automotive market and policies of OEMs with respect
to suppliers.
The overall market for new cars and light trucks in the United States and
Canada is large and cyclical, with a trend line annual growth of 2.3% from 1983
to 1993. While the trend line demand for cars has remained relatively flat over
this period, demand for minivan, sport utility vehicles and light trucks has
grown at a compound annual growth rate of 7.3% over this period. The Company
believes it is well positioned as a supplier of sheet metal components and
subassemblies to the OEMs in this high-growth market segment.
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<PAGE>
Because of ever-increasing global competition, OEMs are continually
upgrading their supplier policies. The criteria for selection include not only
cost, quality and responsiveness, but also certain full-service capabilities
including design, engineering and project management support. OEMs have
developed rigorous programs for evaluating and rating suppliers. Suppliers that
obtain superior ratings are considered for sourcing new business; those that do
not may continue their existing contracts but normally do not receive additional
business. These criteria can best be satisfied by full-service suppliers with
sufficient size and financial resources to meet such demands. For full-service
suppliers such as CMC and SCSM, the new environment provides an opportunity to
grow by obtaining business previously provided by other suppliers and by
acquiring suppliers that further enhance product, manufacturing and service
capabilities.
BUSINESS STRATEGY
The automotive supplier industry is experiencing consolidation as OEMs are
increasingly requiring suppliers to meet more stringent quality standards and to
possess certain full-service capabilities including design, engineering and
project management support. The Company's principal objective is to capitalize
on this trend as follows:
- HIGH GROWTH LIGHT TRUCK/SPORT UTILITY VEHICLE FOCUS. CMC and SCSM focus
on supplying components for light trucks, minivans and sport utility vehicles
due to their high growth rate and long model lives. From 1983 to 1993, light
truck/sport utility vehicles were the fastest growing segment of the automotive
market with a 7.3% compound annual growth rate. The Company currently supplies
parts on the following light truck/sport utility and minivan vehicles: Suburban,
Tahoe/Yukon, Crew Cab, M Van (Astro and Safari), CK Pickup Truck and CK
Sportside Pickup. In addition, during 1994, SCSM was awarded an eight-year
contract by Mercedes-Benz to produce the majority of the stamping components for
its new sport utility vehicle.
- FULL-SERVICE CAPABILITIES. CMC and SCSM provide a full complement of
services, including design, engineering and manufacturing, which enables them to
play an integral role in the development and execution of product programs for
their customers. CMC and SCSM work with their customers throughout the product
development process and, in some cases, locate employees on site at their
customers' facilities in order to design, engineer and manufacture high quality
products at the lowest possible cost. The Company believes that this close
coordination with its customers allows it to identify business opportunities and
react to customer needs in the early stages of vehicle design and, therefore,
maintain and increase its volume with its customers.
- HIGH QUALITY PRODUCTS. The Company believes SCSM is one of the premier
stamping facilities in the U.S. This is exemplified by SCSM's receipt of
numerous quality awards including the GM Mark of Excellence and the GM QSP
(quality, service, price) award for being GM's 1993 worldwide Supplier of the
Year for major metal stampings. SCSM has also been qualified to produce
components which comply with the ISO 9000 international standard. The Company
believes that these awards are a critical factor in securing additional business
from OEMs.
- EXPANDING CUSTOMER BASE. CMC and SCSM have developed strong relationships
with their customers based on their long history of supplying high quality
products and full-service capabilities. The Company's objectives are to increase
volume with its existing customers and develop relationships with new customers.
In the last year, the Company's automotive segment has expanded its business
with existing customers including GM, Freightliner Corp., Saturn Corporation and
Ford Motor Co., and has secured business with two new customers, Mercedes-Benz
and Toyota.
- FOCUS ON HIGHER-MARGIN/VALUE-ADDED PRODUCTS. CMC and SCSM strive to
compete in markets where they can achieve greater profitability by providing
complex, value-added products, primarily assemblies containing multiple stamped
parts and various welded or fastened components. Unlike many of their
competitors, CMC and SCSM presently have the equipment to supply complete
assemblies
26
<PAGE>
including large stampings and related assembly parts. As an example, SCSM
currently supplies the sliding door, which is composed of several stampings and
fasteners, on the GM Astro and Safari Vans. The majority of the automotive
segment's revenues are derived from such assemblies.
MANUFACTURING
Unlike certain of its smaller competitors, the Company's automotive products
group has the equip-
ment and versatility to produce a wide variety of automotive stamping products,
carrying out substantially all phases of a project. SCSM produces approximately
150 products at its over 900,000 square foot modernized facility. Its principal
products include tailgate and liftgate assemblies, door assemblies, hood
assemblies, fender assemblies, wheelhouses, pillars, back panels, floor panels,
deck lids, body side panels, roof outer panels and related parts. SCSM currently
processes 9,000 tons of steel per month for 325 part numbers and currently ships
between 30,000 and 35,000 pieces per day to its customers from 600 dies. Volume
fluctuations at SCSM are managed by use of overtime and temporary manpower.
Management is pursuing new long-term commitments to utilize SCSM's available
capacity.
The major portion of tooling design, build and prototype for SCSM is
performed by selected suppliers under close supervision. Die maintenance and
engineering changes are completed in SCSM's own 60,000 square foot die room
which houses approximately 60 tool and die makers. The tool room handles all die
maintenance and engineering changes in-house, including all serious die trouble
such as major breaks.
CMC also fabricates and assembles automotive products for those jobs whose
end product must be delivered in the surrounding Midwest region, since
transportation is a growing cost in this industry.
MARKETING AND CUSTOMERS
The automotive segment focuses on the higher-growth light truck, sport
utility vehicle and van segments of the market and currently supplies products
primarily for GM. At the present time, the Company is supplying parts on the
following GM vehicles, among others: Suburban, Tahoe/Yukon, Crew Cab, M Van
(Astro and Safari), full-size G Van, CK Pickup Truck, CK Sport Side Pickup, C
Car and H Car. The automotive segment also supplies parts for GM's service
organization.
The Company is also currently supplying parts to Freightliner Corp. (Class 6
and 7 Truck), Saturn Corporation (station wagon), Ford Motor Co. (Cougar) and
Toyota (Camry and Avalon). In addition, the automotive segment signed a contract
in March 1994 with Mercedes-Benz to produce the majority of the stamped parts
for its new sport utility vehicle for which production is expected to begin in
1997. Mercedes-Benz is providing the funding necessary for the tooling to
produce these parts. Although the Company expects these new customers to help
expand the automotive segment's business, they are not expected to reduce
significantly its substantial reliance on GM.
Shipments of customer orders from both CMC and SCSM are made on a daily or
weekly basis as required by the customer. GM provides an estimated 13-week
shipping forecast which is used for material and fabrication planning purposes.
Nevertheless, changes in production by the customer may be reflected in
increases or decreases of these forecasts.
CMC and SCSM are committed to customer satisfaction by producing parts and
providing the necessary support systems to assure conformity to customer
requirements. As evidence of success in these areas, SCSM has been awarded GM's
"Mark of Excellence" Award, and the GM Q.S.P. (quality, service, price) award
for being GM's 1993 worldwide Supplier of the Year for major sheet metal
stampings. In addition, SCSM has been awarded ISO 9000 Certification by the
International Standards Organization (ISO 9002) and CMC and SCSM have each begun
the process necessary to obtain the QS 9000 Certification.
27
<PAGE>
OTHER OPERATIONS
VEHICULAR
OVERVIEW
For the year ended December 31, 1994, the vehicular operations generated
approximately 4% of the Company's revenues and 8% of the Company's total segment
operating profit. Yellow Cab is the largest taxicab fleet owner in Chicago and
as of January 1, 1995, owned 2,271 or 41% of the 5,500 medallions available in
Chicago. Yellow Cab's primary business is the leasing of its medallions and
vehicles to independent taxi operators through two programs: the owner-operator
program and the daily lease program. The Company also provides a variety of
other services to taxi drivers and non-affiliated medallion holders, including
insurance coverage through Country and repair and maintenance services through
AutoWerks.
THE OWNER-OPERATOR AND DAILY LEASE PROGRAMS
Pursuant to Yellow Cab's owner-operator program, an independent,
non-employee taxi operator leases from Yellow Cab a license and vehicle, with an
option to purchase the vehicle beginning at the end of the second year. During
the lease term (generally five years), Yellow Cab receives a weekly lease
payment for the vehicle as well as a weekly fee to cover the use of Yellow Cab's
license and other services provided by Yellow Cab and its affiliates, including
use of its colors and tradename, liability insurance coverage, radio dispatch,
repair and maintenance. Most operators also purchase the required collision
insurance from Country. See "Business --Other Operations -- Insurance." As of
January 1, 1995, approximately 62% of the Company's medallions were leased under
the owner-operator program. The daily lease program, which allows drivers to
lease a medallion and a vehicle for 12 hours, 24 hours, or for a weekend, has
been used largely as a source and training operation for new owner-operators.
MAINTENANCE, REPAIR AND PARTS SALES
AutoWerks provides preventive and other maintenance services, primarily to
Yellow Cab and non-affiliated taxi drivers, and also, as a licensed full-line
auto repair shop, to the public. AutoWerks maintains a body shop at which major
repairs can be made. As an authorized Chevrolet and Ford warrantor, AutoWerks
also repairs those manufacturers' vehicles that are under warranty and invoices
the manufacturers directly.
AutoWerks serves the dispatching needs of Yellow Cab and non-affiliated
drivers, maintains the radios in their taxicabs and supplies the emergency radio
services they require. AutoWerks also sells automotive parts.
THE MEDALLIONS
As of January 1, 1995, Yellow Cab owned 2,271 of the 5,500 medallions
available in Chicago. In order to retain these licenses, the Company must comply
with the regulations of Chapter 9-112 of the Municipal Code of Chicago
(governing public passenger vehicles), including the payment of annual taxicab
license fees, currently $500 per vehicle.
Pursuant to a 1988 agreement with Chicago to settle various lawsuits, Yellow
Cab is required to relinquish to Chicago and not renew 100 taxicab licenses on
January 1 of each year through 1997 (the "Agreement"). In addition, the
Agreement limits to 100 per year the number of new licenses that Chicago may add
to the total outstanding through 1997, bringing the total number of available
licenses to a maximum of 5,700 on December 31, 1997. At the required surrender
rate, assuming no additional medallions are sold by Yellow Cab, Yellow Cab would
hold 2,071 medallions after January 1, 1997, or approximately 36% of the maximum
number of medallions to be outstanding during 1997. There is currently no limit,
however, on the number of medallions Chicago may issue after December 31, 1997.
Under the Agreement, no person other than Motors and its affiliated companies
can own more than 25% of the licenses in Chicago.
The scheduled decline in the number of licenses allowed to be held by Yellow
Cab pursuant to the Agreement has had, and will continue to have, a negative
effect on the revenue-generating capability of
28
<PAGE>
the taxi leasing operations. Although Yellow Cab has been able to offset these
declines to some extent through increases in the average lease rates charged to
its customers, in December 1993, Chicago passed an ordinance which gives the
Commissioner of Consumer Services broad powers to set maximum lease rates. See "
- -- Regulatory Issues." The Company has also sought to increase its vehicular
operations' revenues by offering ancillary services to the increasing number of
unaffiliated taxi drivers through AutoWerks. At the same time, as the number of
medallions held by Yellow Cab declines, Yellow Cab will require fewer new
vehicles to support its taxi leasing operations and, consequently, decreased
capital spending.
The Agreement has also had the effect of allowing the Company to sell
licenses in the open market for the first time since 1982. In 1993 and 1994, the
Company sold 73 and 4 medallions, respectively, at an average price of $38,000
each, a historical high. There can be no assurance that such values will
continue to prevail in the market, especially after December 31, 1997. Although
the value of Yellow Cab's fleet of vehicles is reflected on the Company's
balance sheet, the significant value of its medallions is not.
LIABILITY INSURANCE
Yellow Cab currently maintains liability insurance coverage for losses of up
to $350,000 per occurrence as well as an "excess layer" of coverage for losses
over $600,000 and up to $29,000,000. The initial $350,000 layer of insurance is
issued by Country. See "Business -- Other Operations -- Insurance." During
several periods in the past, Yellow Cab did not maintain the level of coverage
that Yellow Cab currently maintains. As a result, there were, as of December 31,
1994, outstanding claims against Yellow Cab for which it is not fully covered by
third-party insurance. As of that date, Yellow Cab maintained balance sheet
reserves totalling approximately $2,175,000 for these claims. Management
believes that these reserves will be sufficient to cover its outstanding claims.
REGULATORY ISSUES
Yellow Cab's operations are regulated extensively by the Department of
Consumer Services of Chicago which regulates Chicago taxicab operations with
regard to certain matters including, among others, vehicle maintenance,
insurance and inspections. The City Council of Chicago has authority for setting
taxicab rates of fare. Effective December 1, 1993, lessors had the right to
increase, until May 1, 1994, the rates paid by lessee drivers by not more than
2.8% of the lease rate in effect on December 1, 1993. After May 1, 1994, lessors
may not charge more than the rates prescribed by the Commissioner (which, in
certain categories, are less than the rates currently charged by Yellow Cab)
without the consent of the City of Chicago. The rates in effect on May 1, 1994,
including the 2.8% increase, may remain in effect pending a petition and appeal
for a higher rate. Yellow Cab increased its rates by the maximum allowed 2.8%
prior to May 1, 1994 and has filed, in a timely manner, a petition to increase
its rates still further. Yellow Cab intends to pursue that proposal to final
hearing.
INSURANCE
For the year ended December 31, 1994, Country generated approximately 3% of
the Company's revenues and an aggregate of $4.6 million of pre-tax income
(comprising approximately $0.9 million of segment operating loss and
approximately $5.5 million of portfolio interest income). Country is currently
rated "A" by A.M. Best.
All policies which Country writes for affiliated taxicabs are reinsured for
amounts above $350,000; non-affiliated taxicab policies carry a maximum limit of
$350,000. Limousine and other commercial and personal policies which, until
December 31, 1994, were reinsured for amounts in excess of $150,000, are
currently reinsured for amounts in excess of $250,000. In addition, Country
makes collision insurance available to licensees and owner-operators at premium
rates which are comparable to the rates charged by competitors for equivalent
coverage. Country also writes full lines of commercial and personal property and
casualty insurance for risks located in Chicago and the surrounding metropolitan
area.
Country is domiciled in the State of Illinois and is a licensed carrier in
Michigan and Indiana as well as being admitted as an excess and surplus lines
carrier in 32 other states. Country has commenced expansion of its business in
Southern Illinois by contracting with established agencies in Peoria, Decatur
29
<PAGE>
and Champaign, Illinois and intends to emphasize personal lines of insurance,
such as homeowners and commercial multiple peril and automobile liability and
physical damage. Country is also applying for licenses in other states, such as
Wisconsin and Iowa. To the best of management's knowledge, Country is in
compliance with all applicable statutory requirements and regulations.
INFORMATION CONCERNING BUSINESS SEGMENTS
Certain financial data with respect to the Company's business segments
appear in Note L of Notes to Consolidated Financial Statements --December 31,
1994 and are incorporated herein by reference.
EMPLOYEES AND LABOR RELATIONS
As of December 31, 1994, the Company had a total of 5,784 employees. The
table below details the number of persons employed as of that date in each of
the Company's business segments:
<TABLE>
<CAPTION>
ADMINISTRATIVE
HOURLY AND EXECUTIVE
--------- -----------------
<S> <C> <C>
Trailer Manufacturing Operations........................................... 3,756 571
Automotive Products Operations............................................. 888 163
Other Operations........................................................... 231 175
</TABLE>
Approximately 315 employees in the Company's trailer manufacturing
operations, 322 in the Company's automotive products operations, and 60 in the
Company's vehicular operations are covered by collective bargaining agreements.
During 1993, Motors entered into a new contract with the Allied Industrial
Workers of America, AFL-CIO, Local 682 in Kalamazoo, Michigan, currently known
as Local Union No. 7682 of The United Paperworkers International Union, AFL-CIO,
which expires in May 1996. Yellow Cab is party to a contract with D.U.O.C. Local
777, a division of National Production Workers of Chicago and Vicinity, Local
777, which expires in November 1995. During 1993, Great Dane Trailers Tennessee,
Inc., a subsidiary of Great Dane, negotiated a new contract (expiring in January
1996) with Talbot Lodge No. 61 of the International Association of Machinists
and Aerospace Workers. In general, the Company believes its relationship with
its employees to be satisfactory. Although there have been attempts to unionize
various of the Company's divisions in the past few years, including SCSM and the
Great Dane plant in Brazil, Indiana, such attempts have, to date, been
unsuccessful.
30
<PAGE>
PROPERTIES
Holdings currently maintains its principal executive offices at CMC's
facility in Kalamazoo, Michigan.
The location and general description of the principal properties owned or
leased by the Company are as follows:
<TABLE>
<CAPTION>
OWNED OR LEASED;
AREA/FACILITY IF LEASED,
LOCATION TYPE OF FACILITY SQUARE FOOTAGE EXPIRATION YEAR
- ------------------------------ ------------------------------- ---------------------------- ------------------
<S> <C> <C> <C>
TRAILER MANUFACTURING
OPERATIONS:
Savannah, Georgia............. Manufacturing Plant and Office 61 acres/471,000 sq. ft. Owned
Brazil, Indiana............... Manufacturing Plant and Office 80 acres/564,000 sq. ft. Owned
Memphis, Tennessee............ Manufacturing Plant 8 acres/107,000 sq. ft. Leased; 2003
3.5 acres/13,000 sq. ft. Owned
Wayne, Nebraska............... Manufacturing Plant and Office 35 acres/197,000 sq. ft. Owned
Terre Haute, Indiana.......... Manufacturing Plant and Parts 113 acres/500,000 sq. ft. Owned
Distribution Center
(approximately 250,000 sq. ft.
currently under development)
14 Locations in 10 States..... Sales and Service Branches 98 acres/303,000 sq. ft. Owned
18 Locations in 12 States..... Sales and Service Branches 36 acres/238,000 sq. ft. Leased; 1995 to
2015
AUTOMOTIVE PRODUCTS
OPERATIONS:
Kalamazoo, Michigan........... Manufacturing Plant and Office 71 acres/750,000 sq. ft. Owned
South Charleston,
West Virginia................ Manufacturing Plant and Office 922,000 sq. ft. Leased; 2028
OTHER OPERATIONS:
VEHICULAR
Chicago, Illinois
(15 Locations)............... Garages, Parking Lots and 735,000 sq. ft. 14 Owned; 1
Offices Leased; 2012
INSURANCE
Chicago, Illinois
(3 Locations)................ Offices/Storage Facility 39,332 sq. ft. Leased; 1995 to
2002
</TABLE>
The principal facilities owned by the Company are considered by the Company
to be well maintained, in good condition and suitable for their intended use.
LEGAL PROCEEDINGS
EXECUTIVE LIFE LITIGATION
By order of the Superior Court of Los Angeles County (the "California
Court"), on April 11, 1991, Case No. B5-006-912 (the "California Order"), the
California State Insurance Commissioner was appointed Conservator for ELIC, a
limited partner in the Partnership. By letter dated May 20, 1991, Motors and the
Partnership advised ELIC and the Conservator that the appointment of the
Conservator pursuant to the California Order constituted an "Event of Default"
under the Partnership Agreement, and that,
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<PAGE>
therefore, ELIC's rights under the Partnership Agreement and interest in the
Partnership were altered. More specifically, Motors and the Partnership asserted
that ELIC's rights, as of April 11, 1991, were limited to the right to receive a
payout of its capital account, calculated as of that date, in quarterly
installments over approximately a 23-year period. On June 28, 1991, the
Conservator notified Motors and the Partnership that he did not accept that
position set forth in the May 20 letter and that, in his view, ELIC's status as
a limited partner had not been altered. In March 1992, Motors and the
Partnership were added as parties to the Order which sought damages from them in
an unspecified amount for, among other things, their alleged "forfeiture" of
ELIC's interest, breach of fiduciary duties, interference with the
conservatorship proceedings and waste of conservatorship assets. In this
litigation, each of Motors, the Partnership and the Conservator was also
seeking, among other things, a declaration of its rights under the Partnership
Agreement.
On May 26, 1994, the California Court approved a settlement of this
litigation. Pursuant to the Settlement Agreement, on December 22, 1994, Motors
redeemed ELIC's interest in the Partnership for $37.0 million (the "Minority
Interest Redemption") and the litigation was thereafter dismissed with
prejudice. Under certain circumstances, if all or substantially all of the
assets of the Partnership are sold within five years of the consummation of the
Minority Interest Redemption, ELIC may be entitled to receive a payment equal to
the positive difference, if any, between (x) the distribution ELIC would have
received upon liquidation of the Partnership as a result of such transaction,
calculated in accordance with the provisions of the Partnership Agreement as if
it had continued to hold its partnership interest, and (y) the future value of
$37.0 million calculated at 15% per annum from the date of the Minority Interest
Redemption to the date of such transaction. The Company has guaranteed the
obligations of its subsidiaries under the Settlement Agreement.
CERTAIN ENVIRONMENTAL MATTERS
Within the past five years, Great Dane and Motors have entered into certain
consent decrees with federal and state governments relating to the cleanup of
waste materials. The aggregate obligations of Great Dane and Motors pursuant to
these consent decrees are not material.
In May 1988, Holdings sold all of the stock of its subsidiaries, Datron
Systems, Inc. and All American Industries, Inc., and in connection therewith
agreed to indemnify the purchaser for, among other things, certain potential
environmental liabilities. The purchaser has put Holdings on notice of certain
alleged environmental and other matters for which it intends to seek
indemnification as costs are incurred. Holdings does not believe that its
obligations, if any, to pay these claims will be material.
Yellow Cab owns fourteen parcels of real estate, all situated in Chicago.
Some of these sites have previously been used for the storage and servicing of
taxicabs and some of the sites continue to be so used. These sites, therefore,
involve gasoline and oil underground storage tanks which may create a hazardous
waste product if the tanks on any parcel now leak or have in the past leaked.
Yellow Cab has registered in accordance with law all of its underground
tanks with the Office of the State Fire Marshall for the State of Illinois and
has secured site assessments from environmental engineers and consultants
concerning the nature and extent of any hazardous discharge. Under the Illinois
Underground Storage Tank Fund Law, virtually all clean-up costs associated with
leaking tanks are covered by a guaranty fund, which is administered by the
Illinois Environmental Protection Agency and reimburses these costs except for
the first $10,000 per site. Even assuming reimbursement is denied or unavailable
from this guaranty fund, the Company believes that the liability for clean-up
expenses on sites which have not already been cleaned up will not be material.
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<PAGE>
MANAGEMENT
EXECUTIVE OFFICERS AND DIRECTORS
The following table sets forth the name, age and principal position of each
of the executive officers and directors of the Company as of December 31, 1994
and each of those persons who has been elected a director, effective upon
consummation of this Offering:
<TABLE>
<CAPTION>
NAME AGE POSITION
- --------------------------------------------- --- ------------------------------------------------------
<S> <C> <C>
David R. Markin.............................. 64 President, Chief Executive Officer and Director of
Holdings
Allan R. Tessler............................. 58 Chairman of the Board of Holdings
Martin L. Solomon............................ 58 Vice Chairman and Secretary of Holdings
Wilmer J. Thomas, Jr......................... 68 Vice Chairman of Holdings
Jay H. Harris................................ 58 Executive Vice President and Chief Operating Officer
of Holdings
Marlan R. Smith.............................. 51 Treasurer of Holdings
Kevin J. Hanley.............................. 39 Controller of Holdings
Willard R. Hildebrand........................ 55 President and Chief Executive Officer of Great Dane
Larry D. Temple.............................. 48 Group Vice President of Motors
John T. Wise................................. 49 President of SCSM
Jeffrey M. Feldman........................... 44 President of Yellow Cab
Miles Berger................................. 64 Director upon Consummation of this Offering
Leonard Gubar................................ 57 Director upon Consummation of this Offering
Alan Hirschfield............................. 59 Director upon Consummation of this Offering
</TABLE>
BIOGRAPHICAL INFORMATION
David R. Markin, President and Chief Executive Officer of Holdings since
January 11, 1989, has been President and Chief Executive Officer of Motors since
1970. Mr. Markin serves on the Boards of Directors of Jackpot Enterprises, Inc.,
an operator of gaming machines, Enhance Financial Services Group Inc., a
reinsurance company, and Data Broadcasting Corporation, a provider of market
data services to the investment community.
Allan R. Tessler, Chairman of the Board of Holdings since January 11, 1989,
is also Chairman of the Boards of Directors of International Financial Group,
Inc., a merchant banking firm ("IFG"), Enhance Financial Services Group Inc., a
reinsurance company, Allis-Chalmers Corporation, a manufacturer of miscellaneous
fabricated textile products ("Allis-Chalmers"), and Jackpot Enterprises, Inc.,
an operator of gaming machines, and has been Chief Executive Officer of IFG
since 1987 and of Allis-Chalmers since 1994. Mr. Tessler serves on the Board of
Directors of The Limited, Inc., a manufacturer and retailer of apparel. From
December 1991 through September 1993, Mr. Tessler was Chairman of the Board and
Chief Executive Officer of Ameriscribe Corporation, a national provider of
facilities management services. Mr. Tessler is also an attorney and from 1976
through 1988, he was a member of the Executive Committee of the law firm of Shea
& Gould; from 1989 through March 1, 1993, he was of counsel to that firm.
Beginning in 1990, Mr. Tessler and Mr. Hirschfield were retained by
Infotechnology, Inc. and Financial News Network Inc. ("FNN") as a restructuring
team and to serve as Co-Chief Executive Officers during the restructuring of
those companies. As part of the plan implemented by the restructuring team,
those companies were placed in bankruptcy. FNN emerged from bankruptcy in 1992
as Data Broadcasting Corporation, a provider of market data services to the
investment community. Mr. Tessler continues to serve, with Mr. Hirschfield, as
Co-Chairman of the Board and Co-Chief Executive Officer of the restructured
company.
Martin L. Solomon, Vice Chairman and Secretary of Holdings since January 11,
1989, is a private investor and also serves as general partner in a variety of
investment partnerships managed by Wexford Capital Corporation. Mr. Solomon was
employed as a securities and portfolio analyst at Steinhardt Partners, an
investment firm, from 1985 through 1987. From 1988 through September 1990, he
was the Managing Partner and Director at Value Equity Associates I, Limited
Partnership, an investment firm. Mr. Solomon serves on the Board of Directors of
XTRA Corporation, a truck leasing company.
33
<PAGE>
Wilmer J. Thomas, Jr., Vice Chairman of Holdings since January 11, 1989, is
a private investor. Mr. Thomas served as Treasurer of Holdings from January 1989
to January 1994. Mr. Thomas serves on the Boards of Directors of Moore Medical
Corp., a pharmaceutical and surgical supply company and Oak Hills Sportswear
Corp., a clothing company.
Jay H. Harris has been Executive Vice President and Chief Operating Officer
of Holdings for more than the past five years and a Vice President of Motors
since May 1991. Mr. Harris was a director of Holdings from 1978 until January
11, 1989.
Marlan R. Smith has been Treasurer of Holdings since January 1994 and Vice
President and Treasurer of Motors since March 1988. Prior to being elected
Treasurer of Holdings, he served as Assistant Treasurer since January 1989.
Kevin J. Hanley has been Controller of Holdings since January 1994 and
Secretary and Controller of Motors since December 1989.
Willard R. Hildebrand was elected as President and Chief Executive Officer
of Great Dane effective January 1, 1992. Mr. Hildebrand had served as President
and Chief Operating Officer of Fiatallis North America, Inc., a manufacturer of
heavy construction and agricultural equipment, for more than five years prior
thereto.
Larry D. Temple has been Group Vice President of Motors since September
1989. Mr. Temple served as Vice President of Manufacturing from 1988 to 1989.
John T. Wise has been President of SCSM since July 31, 1992. He was Vice
President -- General Manager from 1989 to 1992, and prior thereto served as
Plant Manager.
Jeffrey M. Feldman has been President of Yellow Cab since 1983 and Vice
President of Motors since January 1988.
Miles Berger has been elected to become a director, effective upon the
consummation of this Offering. Mr. Berger has been with Heitman Financial Ltd.,
a real estate investment and financial services firm, since 1968. Mr. Berger is
also a director of Innkeeper's U.S.A., a real estate investment trust which
operates hotels in Florida, New York and Pennsylvania, Chairman of the Boards of
Directors of Berger Financial Services and Midtown Bank and Trust Company and
Vice Chairman of Columbia National Bank of Chicago.
Leonard Gubar has been elected to become a director, effective upon
consummation of this Offering. Mr. Gubar is a partner in the law firm of Reid &
Priest and was a member of the law firm of Spengler Carlson Gubar Brodsky &
Frischling from 1969 until he joined Reid & Priest in August 1992. Mr. Gubar
currently serves as director of Warner Insurance Services, Inc., a provider of
automobile insurance services to the insurance industry, and of Career Horizons,
Inc., a provider of temporary personnel services.
Alan Hirschfield has been elected to become a director, effective upon
consummation of this Offering. From January 1990 to November 1990, Mr.
Hirschfield served as a managing director of Wertheim Schroder, Inc., an
investment banking firm. From 1985 to October 1990, he was a private investor
and a consultant to the entertainment and media industries. Messrs. Hirschfield
and Tessler were retained by Infotechnology, Inc. and Financial News Network
Inc. as a restructuring team and to serve as Co-Chief Executive Officers during
the restructuring of those companies. As mentioned above, those companies were
placed in bankruptcy, from which they emerged in 1992 as Data Broadcasting
Corporation and Mr. Hirschfield continues to serve, with Mr. Tessler, as
Co-Chairman of the Board and Co-Chief Executive Officer of the restructured
company. Mr. Hirschfield also serves on the Board of Directors of Cantel
Industries, Inc., a manufacturer and distributor of scientific and consumer
products in Canada, since January 1988.
34
<PAGE>
BOARD OF DIRECTORS; COMMITTEES
All directors of Holdings hold office until the next annual meeting of
stockholders of Holdings or until their successors are duly elected and
qualified. Officers are elected annually by the Board of Directors of Holdings
and hold office until their successors are duly elected and qualified.
Holdings has undertaken to add three independent directors to its Board of
Directors, as described above, and has elected Messrs. Berger, Gubar and
Hirschfield to serve as such, effective upon consummation of this Offering. In
connection with this undertaking, the Board will increase the number of
directors from four to seven. The Board of Directors has created an Audit
Committee and a Compensation Committee. When the independent directors take
office, a majority of the Audit Committee will be composed of independent
directors and will be charged with reviewing the Company's annual audit and
meeting with the Company's independent auditors to review the Company's internal
controls and financial management practices. If the 1994 Option Plan is approved
by both the Compensation Committee and the stockholders of Holdings, the
Compensation Committee, which will also be composed exclusively of the
independent directors, will administer the 1994 Option Plan. See "--
Compensation Pursuant to Plans."
The directors did not receive any fees for their services as directors in
1993. See "-- Compensation Committee Interlocks and Insider Participation." Upon
consummation of this Offering, each of Holdings' directors will receive an
annual director's fee of $30,000, plus reimbursement of expenses incurred in
attending meetings.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Prior to the consummation of this Offering, the Company has had no separate
compensation committee or other committee providing equivalent functions. Each
of Messrs. Markin, Solomon, Tessler and Thomas is an executive officer of
Holdings and participates, as a director, in the deliberations concerning
executive officer compensation. During 1994, Mr. Markin served on the
compensation committee of Enhance Financial Services Group Inc. and Data
Broadcasting Corporation and Mr. Tessler served as an executive officer of each
of these companies.
As of December 31, 1994, Country holds $0.6 million principal amount of 7%
Notes due December 1, 1996, issued by Enhance Financial Services Group Inc. Mr.
Markin is a director of and served on the compensation committee of that
company.
During 1994, 1993 and 1992, the Company used, on a month-to-month basis, an
airplane owned by a corporation of which Mr. Tessler is the sole shareholder.
The Company paid $60,000 per month for such use during 1992 and 1993 and $90,000
per month for such use during 1994.
Each of Messrs. Markin, Solomon, Tessler and Thomas provides consulting
services to Yellow Cab and each received for such services (commencing in
January 1988) $10,000 per month. Messrs. Solomon, Tessler and Thomas also
provide consulting services (a) to Motors for which they each received monthly
fees of $5,000 (commencing in January 1988) and (b) to Country for which they
each received monthly fees of approximately $18,300 in each of 1994, 1993 and
1992. Mr. Markin serves as a consultant to AutoWerks, for which he received
monthly fees of approximately $1,200 (commencing in January 1988), and to
Country, for which he received monthly fees of approximately $4,600. Upon
consummation of this Offering, these fees will be reduced to an aggregate fee of
$50,000 per year for each of Messrs. Markin, Solomon, Tessler and Thomas, in
payment for consulting services to Country.
On September 24, 1992, American Country Financial Services Corp. ("AFSC"), a
subsidiary of Country, purchased from The Mid City National Bank of Chicago the
promissory note dated July 30, 1992, made by Checker Services, Inc., formerly
King Cars, Inc. ("Services"), in the principal amount of $381,500 plus accrued
interest in the amount of $3,560. The note, which was renewed several times, had
outstanding principal and accrued interest as of September 30, 1994, of
approximately $430,000 and matured in December 1994. Until October 1994, when
Checker Taxi Association purchased 45% of Services for $250,500 (which amount
was used by Services to pay accrued interest and to reduce the principal amount
of the note), Services was owned by Messrs. Markin, Solomon, Tessler, Thomas and
Feldman. The balance of the note (except for $57,300 which was forgiven) was
paid prior to December 31, 1994. Services is a party to an agreement dated
December 15, 1992 with Yellow Cab pursuant to
35
<PAGE>
which Yellow Cab purchases from Services display frames for installation in its
taxicabs and Services furnishes Yellow Cab advertising copy for insertion into
the frames. Services receives such advertising copy as an agent in Chicago for
an unrelated company which is in the business of selling and arranging for local
and national advertising. Of the revenues generated from such advertising, 30%
will be retained by Services and the balance will be delivered to Yellow Cab
until such time as Yellow Cab has recovered costs advanced by it for the
installation of advertising frames in 500 of its taxicabs (approximately
$78,000). The Company has been advised that the terms to Yellow Cab are the same
or more favorable than those offered by Services to unrelated third parties.
Each of Messrs. Markin, Solomon, Tessler and Thomas received from Holdings
interest payments of $790,428 in 1994, $704,795 in 1993 and $733,356 in 1992,
pursuant to the terms of the senior notes held by them (see Note F of the Notes
to Consolidated Financial Statements -- December 31, 1994).
During 1992 and until March 1, 1993, Mr. Tessler was of counsel to Shea &
Gould, a law firm retained by the Company for certain matters.
Frances Tessler, the wife of Allan R. Tessler, is employed by Smith Barney
Inc. as a financial consultant. Smith Barney Inc. is one of the Underwriters for
this Offering and also executes trades for Country's investment portfolio.
During 1994, 1993 and 1992, Mrs. Tessler received for her investment advisory
services to the Company approximately $36,500, $78,000 and $69,000,
respectively, of the commissions paid by the Company to Smith Barney Inc. for
such services.
Jeffrey M. Feldman is the nephew of David R. Markin.
COMPENSATION
The following table sets forth the 1994 annual compensation for the Chief
Executive Officer of Holdings and the six highest paid executive officers of
Holdings, other than the Chief Executive Officer, whose total annual salary and
bonus exceeded $100,000, as well as the total compensation paid to each
individual for the two previous fiscal years:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
OTHER ANNUAL ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION COMPENSATION
- -------------------------------------------- --------- ------------- ----------- -------------- --------------
<S> <C> <C> <C> <C> <C>
David R. Markin............................. 1994 $ 1,230,000 $ 300,000 $ 247,007(1) $ 1,500(5)
President, Chief Executive Officer 1993 1,230,000 250,000 246,519(1) 2,249(5)
and Director 1992 1,230,000 150,000 239,594(1) 2,182(5)
Jay H. Harris............................... 1994 431,250 250,000 0 1,500(5)
Executive Vice President and Chief 1993 350,000 250,000 0 2,249(5)
Operating Officer 1992 326,016 125,000 0 2,182(5)
Willard R. Hildebrand....................... 1994 287,725 225,000 15,463(2) 0
President and Chief Executive Officer 1993 203,500 150,000 7,304(2) 0
of Great Dane 1992 190,175 105,000 4,133(2) 106,368(6)
Jeffrey M. Feldman.......................... 1994 220,500 150,000 86,263(3) 1,500(5)
President of Yellow Cab 1993 210,000 150,000 85,008(3) 2,249(5)
1992 186,667 150,000 77,755(3) 2,182(5)
Martin L. Solomon........................... 1994 0 0 400,000(4) 0
Vice Chairman and Secretary 1993 0 0 400,000(4) 0
1992 0 0 400,000(4) 0
Allan R. Tessler............................ 1994 0 0 400,000(4) 0
Chairman of the Board 1993 0 0 400,000(4) 0
1992 0 0 400,000(4) 0
Wilmer J. Thomas, Jr........................ 1994 0 0 400,000(4) 0
Vice Chairman 1993 0 0 400,000(4) 0
1992 0 0 400,000(4) 0
</TABLE>
36
<PAGE>
<TABLE>
<S> <C>
<FN>
- --------------
(1) Other compensation for Mr. Markin includes:
1992 1993 1994
--------- --------- ---------
Consulting fees......................... $ 190,000 $ 190,000 $ 190,000
Life insurance.......................... 37,023 41,027 41,710
Automobile.............................. 5,100 8,125 9,750
Club dues............................... 7,471 7,367 5,547
--------- --------- ---------
$ 239,594 $ 246,519 $ 247,007
--------- --------- ---------
--------- --------- ---------
Effective upon consummation of this Offering, consulting fees paid to Mr.
Markin will be reduced
to a fee of $50,000 per year in payment for consulting services to
Country. See " -- Compensation Committee Interlocks and Insider
Participation."
(2) Other compensation for Mr. Hildebrand includes:
1992 1993 1994
--------- --------- ---------
Life insurance.......................... $ 806 $ 1,560 $ 3,474
Automobile.............................. 927 2,324 3,316
Club dues............................... 2,400 3,420 5,887
Other................................... 0 0 2,786
--------- --------- ---------
$ 4,133 $ 7,304 $ 15,463
--------- --------- ---------
--------- --------- ---------
(3) Other compensation for Mr. Feldman includes:
1992 1993 1994
--------- --------- ---------
Consulting fees......................... $ 57,000 $ 57,000 $ 59,000
Life insurance.......................... 10,739 11,253 11,973
Automobile.............................. 1,537 1,748 4,335
Club dues............................... 8,479 15,007 10,955
--------- --------- ---------
$ 77,755 $ 85,008 $ 86,263
--------- --------- ---------
--------- --------- ---------
(4) Consulting fees. Effective upon consummation of this Offering, consulting
fees paid to each of Messrs. Solomon, Tessler and Thomas will be reduced to
a fee of $50,000 per year in payment for consulting services to Country. See
" -- Compensation Committee Interlocks and Insider Participation."
(5) Matching contributions under the Motors 401(k) plan.
(6) Relocation expenses.
</TABLE>
EMPLOYMENT AGREEMENTS
Motors, as successor to the Partnership, is party to an Amended and Restated
Employment Agreement dated as of November 1, 1985, as further amended, with
David R. Markin pursuant to which Mr. Markin is to serve as President, Chief
Executive Officer and Chief Operating Officer of Motors until April 30, 1996,
subject to extension (the "Termination Date"), at a minimum salary of $600,000
per annum, together with the payment of certain insurance premiums, the value of
which have been included in the Summary Compensation Table above. The
beneficiaries of these insurance policies are designated by Mr. Markin. Mr.
Markin continues to be eligible to participate in profit sharing, pension or
other bonus plans of Motors. Pursuant to the Amended and Restated Employment
Agreement, in the event of Mr. Markin's death, Motors shall pay Mr. Markin's
estate the compensation which would otherwise be payable to him for the period
ending on the last day of the month in which death occurs. In addition, Motors
shall pay to Mr. Markin's beneficiaries deferred compensation from the date of
his death through the Termination Date in an annual amount equal to one-third of
his base salary at the date of his death. In the event of termination of the
Amended and Restated Employment Agreement for any reason other than cause,
disability or death, Mr. Markin shall continue to serve as a consultant to
Motors for a period of five years, for which he shall receive additional
compensation in the amount of $50,000 per annum. Motors has agreed to indemnify
Mr. Markin from certain liabilities arising out of his service to
37
<PAGE>
Motors, except for liabilities resulting from his gross negligence or willful
misconduct. Effective January 1, 1994, Mr. Markin and Holdings memorialized in
writing their agreement, pursuant to which Mr. Markin has also been compensated
by Holdings since January 11, 1989, on substantially the same terms as are set
forth above.
Holdings entered into an employment agreement as of July 1, 1992, with Jay
H. Harris pursuant to which Mr. Harris serves as Executive Vice President and
Chief Operating Officer of Holdings until June 30, 1995, subject to extension or
earlier termination, at a minimum salary of $350,000 per annum, an incentive
bonus to be determined by the Board of Directors, and such other fringe benefits
and plans as are available to other executives of Holdings. Upon the happening
of certain events, including a change in control (as defined therein) of
Holdings or retirement after June 30, 1994, Mr. Harris is entitled to
compensation in an amount equal to the greater of (a) five percent of the
increase in the Company's retained earnings, subject to certain adjustments,
during the period commencing on March 31, 1992, and ending on the last day of
the month preceding the event which triggers the payment (the "Termination
Payment") and (b) 2.99 times his then base salary. If Mr. Harris were to die or
become disabled, he or his estate would receive the greater of (a) one year's
base compensation or (b) the Termination Payment. Payments in either case would
be made over a period of time, the length of which would be dependent on the
amount due to Mr. Harris. Mr. Harris has agreed to serve as a consultant to the
Company during the first year after termination for no compensation beyond his
expenses incurred in connection with rendering such services. Holdings has
agreed to indemnify Mr. Harris for certain liabilities to the full extent
allowed by law. Motors has guaranteed Holdings' obligations. Mr. Harris' current
annual salary is $500,000.
Holdings has also entered into an option agreement with Mr. Harris, pursuant
to which Mr. Harris was granted an option to purchase an aggregate of 52,500
shares of Common Stock at an exercise price of $1.00 per share. The options
granted to Mr. Harris will become exercisable in three equal installments on
each of the date of the consummation of this Offering and the first two
anniversaries thereafter. The Harris Option terminates on the earlier of (i)
January 17, 2005 and (ii) the termination of Mr. Harris' employment with the
Company; provided, however, that any portion of the option which is exercisable
on the date of such termination (other than termination for cause) will remain
exercisable for a period of three months. Mr. Harris also has certain piggyback
registration rights under the Harris Option.
Yellow Cab, as assignee of Motors, is party to an Amended and Restated
Employment Agreement dated as of June 1, 1992, with Jeffrey Feldman pursuant to
which Mr. Feldman serves as President of Yellow Cab until February 1, 1996,
subject to extension (the "Termination Date"), at a minimum salary of $200,000
per annum, together with the payment of certain insurance premiums, the value of
which have been included in the Summary Compensation Table above. The
beneficiaries of these insurance policies are designated by Mr. Feldman. Mr.
Feldman is eligible to participate in profit sharing, pension or other bonus
plans implemented by Yellow Cab or Motors. Pursuant to the Amended and Restated
Employment Agreement, in the event of Mr. Feldman's death, Yellow Cab shall pay
Mr. Feldman's estate the amount of compensation which would otherwise be payable
to him for the period ending on the last day of the month in which death occurs.
In addition, Yellow Cab shall pay to Mr. Feldman's estate deferred compensation
from the date of his death to the Termination Date in an annual amount equal to
one-third of his base salary at the date of his death. In the event of the
termination of the Amended and Restated Employment for any reason other than
cause, disability or death, Mr. Feldman shall continue to serve as a consultant
to Yellow Cab for a period of five years (if terminated by Mr. Feldman) or seven
years (if terminated by Yellow Cab), for which he shall receive compensation in
the amount of $75,000 per annum. Yellow Cab has agreed to indemnify Mr. Feldman
from certain liabilities, except for those resulting from his gross negligence
or willful misconduct. Mr. Feldman's annual salary for 1995 is $231,000.
COMPENSATION PURSUANT TO PLANS
GREAT DANE PENSION AND EXCESS BENEFIT PLANS
Great Dane has in effect a defined benefit employee pension plan entitled
Retirement Plan For Great Dane Trailers, Inc. (the "Retirement Plan") covering
substantially all of its employees. Pension benefits
38
<PAGE>
are subject to limitations imposed by the Internal Revenue Code of 1986, as
amended (the "Code") and the Employee Retirement Income Security Act of 1974, as
amended, with respect to the annual amount of benefits provided by employer
contributions. Effective January 1, 1994, Great Dane adopted the Supplemental
Retirement Income Plan (the "Great Dane Excess Benefit Plan") for officers of
Holdings who are participants in the Checker Motors Pension Plan and officers of
Great Dane, in each case whose annual compensation exceeds $150,000. The Great
Dane Excess Benefit Plan provides benefits which cannot be provided under the
Retirement Plan because of the $150,000 compensation limit under the Code.
Considered compensation under the Great Dane Excess Benefit Plan is limited to
$242,280 (adjusted for inflation) per year. The benefits under the Great Dane
Excess Benefit Plan are not funded and will be paid from Great Dane's general
assets.
Effective as of July 1, 1988, the assets and the liabilities attributable to
active and former employees under the Amended and Restated International
Controls Corp. Pension Plan as of June 30, 1988 were transferred to the
Retirement Plan and Holdings adopted the Retirement Plan for the benefit of its
employees. With respect to benefits accruing after June 30, 1984, to a
participant who was a participant under the Amended and Restated International
Controls Corp. Pension Plan as of June 30, 1988, the following table shows the
estimated annual benefits payable under the plan to a person with the specified
average final annual compensation and years of benefit service.
<TABLE>
<CAPTION>
YEARS OF BENEFIT SERVICE
-----------------------------------------------------------
AVERAGE ANNUAL COMPENSATION 1 5 10 15 20
- ---------------------------------------------------- --------- --------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
$100,000............................................ $ 2,000 $ 10,000 $ 20,000 $ 30,000 $ 40,000
150,000............................................ 3,000 15,000 30,000 45,000 60,000
200,000............................................ 4,000 20,000 40,000 60,000 80,000
250,000............................................ 4,846 24,228 48,456 72,684 96,912
300,000............................................ 4,846 24,228 48,456 72,684 96,912
</TABLE>
The amounts shown in the above table are the estimated annual benefits
payable for life assuming retirement in 1994 at age 65, and would be reduced by
a Social Security offset and the amount of benefits under annuity contracts
distributed in connection with the termination of a prior plan in 1985. Final
average annual compensation is the average of a participant's five highest
consecutive years of compensation (including salary at the rate in effect at the
end of the year, plus bonus and incentive compensation) out of the last ten
years of service. For a participant with less than five years of service, the
average is based on all years of service.
For Mr. Hildebrand, the following are credited years of service under the
Retirement Plan and 1994 salary covered by the Retirement Plan and the Great
Dane Excess Benefit Plan:
<TABLE>
<CAPTION>
CREDITED YEARS OF EXPECTED CREDITED YEARS OF 1994 COVERED
SERVICE SERVICE AT 65 COMPENSATION
--------------------- ----------------------------- ----------------
<S> <C> <C> <C>
Willard R. Hildebrand........... 4 14 $ 242,280
</TABLE>
Mr. Harris has an aggregate of 24 years of benefit service under the
Retirement Plan (8 years) and the Amended and Restated International Controls
Corp. Pension Plan (16 years) and will receive benefits of approximately $74,000
per year at age 65.
MOTORS PENSION AND EXCESS BENEFIT PLANS
Motors maintains a defined benefit employee pension plan entitled Checker
Motors Pension Plan (the "Pension Plan") covering substantially all of its
non-union employees, and, effective January 1, 1992, the employees of Holdings.
Motors, as successor in interest to Checker L.P., also maintains the Checker
Motors Co., L.P. Excess Benefit Retirement Plan (the "Checker L.P. Excess
Benefit Plan"). The Checker L.P. Excess Benefit Plan provides benefits which
cannot be provided under the Pension Plan because of the annual benefit limit
under the Code, which generally limits benefit payments to $118,000 per year. A
$300,000 limitation on considered compensation has been applied under the
Checker L.P. Excess Benefit Plan. At the present time, David R. Markin and
Jeffrey M. Feldman are the only individuals named above who would receive
benefits under the Checker L.P. Excess Benefit Plan. The benefits under the
Checker L.P. Excess Benefit Plan are not funded and will be paid from Motors'
general assets.
39
<PAGE>
Set forth below are the estimated annual benefits for participants in the
Pension Plan (including benefits payable under the Checker L.P. Excess Benefit
Plan) who have been employed by Checker L.P. and its predecessors for the
indicated number of years prior to retirement, assuming retirement at age 65 in
1994, and the final average annual compensation indicated:
<TABLE>
<CAPTION>
AVERAGE COMPENSATION (AS DEFINED IN PLAN) ESTIMATED ANNUAL BENEFITS FOR YEARS OF SERVICE INDICATED
- ------------------------------------------------------------ --------------------------------------------------------------
10 20 30 40 45
------- ------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
$100,000.................................................... $13,864 $28,670 $ 46,938 $ 66,073 $ 75,784
150,000.................................................... 21,364 46,170 74,438 103,573 118,284
200,000.................................................... 28,864 63,670 101,938 141,073 160,784
250,000.................................................... 36,364 81,170 129,438 178,573 203,284
300,000.................................................... 43,864 98,670 156,938 216,073 245,784
400,000.................................................... 43,864 98,670 156,938 216,073 245,784
</TABLE>
The above benefit projections are the estimated annual benefits payable for
life and were prepared on the assumption that the participant made participant
contributions to the Pension Plan for all years in which he was eligible to
contribute, and that Social Security covered compensation is $24,312. The
benefit projection would be reduced by a Social Security offset. Final average
annual compensation is the average of a participant's total taxable compensation
(including salary reduction amounts, but excluding taxable fringe benefits,
deferred compensation and any stock options) for the five consecutive years out
of the last ten years of service that produce the highest average.
For those executive officers named above, the following are credited years
of service under the Pension and Excess Benefit Plans and 1994 compensation
covered by the Pension Plan and the Excess Benefit Plan:
<TABLE>
<CAPTION>
CREDITED YEARS EXPECTED CREDITED YEARS 1994 COVERED
OF SERVICE OF SERVICE AT 65 COMPENSATION
--------------- ----------------------- --------------------
<S> <C> <C> <C>
David R. Markin......................... 40 41 $300,000
Jay H. Harris........................... 3 10 300,000
Jeffrey M. Feldman...................... 16 37 300,000
</TABLE>
SALARY CONTINUATION PLAN
Motors entered into Stated Benefit Salary Continuation Agreements (the
"Agreements") with certain officers and employees (the "Salary Plan") pursuant
to which such participants will receive benefits upon attaining age 65 (or their
beneficiaries will receive benefits upon their death prior to or within 120
months after such executives or employees attain age 65).
For those executive officers named above, the following table sets forth the
benefits payable pursuant to the Salary Plan:
<TABLE>
<CAPTION>
ANNUAL SURVIVOR
BENEFIT PAYABLE TOTAL
ANNUAL BENEFIT TOTAL BENEFIT UPON DEATH PRIOR SURVIVORSHIP
PAYABLE UPON PAYABLE OVER TO ATTAINING AGE BENEFIT PAYABLE
ATTAINING AGE 65 TEN YEARS 65 OVER THREE YEARS
---------------- -------------- ---------------- -----------------
<S> <C> <C> <C> <C>
David R. Markin......................... $ 240,000 $ 2,400,000 $ 368,000 $ 1,104,000
Jeffrey M. Feldman...................... 19,950 199,500 79,800 239,400
</TABLE>
STOCK OPTION PLANS
1994 OPTION PLAN. On November 16, 1994, the Board of Directors adopted the
1994 Option Plan, subject to approval by the Compensation Committee (the
composition of which committee is described below) and by the stockholders at
the first annual meeting of stockholders after the consummation of this
Offering. The 1994 Option Plan provides for the granting of incentive stock
options within the meaning of Section 422 of the Code to employees of the
Company and for the granting of nonstatutory stock options and stock
appreciation rights ("Rights") to employees, consultants, non-employee directors
and other persons providing goods or services to the Company. Under the 1994
Option Plan, a total of 1,680,000 shares of Common Stock have been reserved for
issuance. The maximum number of shares of
40
<PAGE>
Common Stock with respect to which options or Rights may be granted during the
life of the 1994 Option Plan to any employee cannot exceed 400,000. On January
25, 1995, the Board of Directors granted nonstatutory options under the 1994
Option Plan to certain employees to purchase an aggregate of 174,500 shares of
Common Stock at 50% of the initial public offering price for this Offering. The
grants are subject to the consummation of this Offering, approval of the 1994
Option Plan by the Compensation Committee and the stockholders and ratification
of the grants by the Compensation Committee. The options will be exercisable for
a period of five years commencing one year after the date on which this Offering
is consummated.
The 1994 Option Plan will be administered by the Compensation Committee
which, when constituted, will consist of persons who are "disinterested persons"
within the meaning of Rule 16(b) promulgated under the Securities Exchange Act
of 1934, as amended (the "Exchange Act"). The Compensation Committee will have
the power, subject to the terms of the 1994 Option Plan, to determine the
recipients and terms of any options or Rights granted, including the exercise
price, number of shares subject to the option or Rights and the exercisability
thereof. Options and Rights granted under the 1994 Option Plan may not be
transferred except by will or the laws of descent and distribution and, during
the lifetime of the optionee, may be exercised only by such optionee or such
optionee's guardian or legal representative. If an optionee's employment or
other relationship with the Company terminates for any reason, the employee's
options and Rights shall immediately terminate, except that: (i) upon
termination of employment due to disability or retirement, an optionee may
generally exercise options or Rights that have not expired on such date for a
period of two years after the date of termination of employment; and (ii) upon
termination of employment as a result of death, or in the event of the
employee's death within the periods described in (i), above, an optionee's legal
representative may generally exercise options or Rights that have not expired on
such date for a period of 12 months after the date of death. Options granted to
non-employee directors, consultants and other persons providing goods and
services to the Company will be subject to such terms as the Compensation
Committee shall determine.
The exercise price of all incentive stock options granted under the 1994
Option Plan must be at least equal to the fair market value of the shares of
Common Stock subject to the option on the date the option is granted. The
exercise price of all nonstatutory stock options granted under the 1994 Option
Plan is to be determined by the Compensation Committee but cannot be less than
the minimum required to comply with any applicable law, rule or regulation. The
term of options granted under the 1994 Option Plan may not exceed 10 years.
Notwithstanding the above, incentive stock options granted to an employee that
owns more than 10% of the voting power of all classes of stock of the Company
must have an exercise price at least equal to 110% of the fair market value of
the stock subject to the option on the date the option is granted and must have
a term that does not exceed five years. Options may be exercised either in cash
or with Common Stock having a fair market value equal to the exercise price of
the option on the date the option is exercised.
Each option and Right granted under the 1994 Option Plan is exercisable in
whole or in part at any time, or from time to time, as determined by the
Compensation Committee, provided that the election to exercise an option or a
Right is made in accordance with applicable federal and state laws and
regulations, and, unless the optionee dies or becomes disabled, the option or
Right cannot be exercised during the first six months of the option period. An
option is vested and becomes immediately exercisable if: any person within the
meaning of Sections 13(d) and 14(d) of the Exchange Act, other than the Company
or the current stockholders of the Company, becomes the beneficial owner, within
the meaning of Rule 13d-3 of the Exchange Act, of 75% or more of the Company's
outstanding voting securities, unless such ownership has been approved by the
Board of Directors of the Company; the first day on which shares of Common Stock
are purchased pursuant to a tender offer or exchange offer, unless the offer is
made by the Company or approved by its Board of Directors; the stockholders of
the Company have approved an agreement to merge or consolidate with or into
another corporation (and the Company is not the survivor of the merger or
consolidation), or an agreement to sell or otherwise dispose of all or
substantially all of the Company's assets (which includes a plan of
liquidation), unless the Board of
41
<PAGE>
Directors has resolved that options do not automatically vest; or during any
period of two consecutive years, individuals who at the beginning of the period
constituted a majority of the Board of Directors cease to constitute a majority
thereof, unless the election or the nomination for the election by the Company's
stockholders of each new director was approved by a vote of at least a majority
of the directors then still in office who were directors at the beginning of the
period. In addition, the Compensation Committee has the authority at any time or
from time to time to accelerate the vesting of any individual option and to
permit any option not yet exercisable to become immediately exercisable.
Unless terminated sooner, the 1994 Option Plan will terminate 10 years from
the Effective Date. The Board of Directors has authority to amend or terminate
the 1994 Option Plan, provided no such action may impair the rights of the
holder of any outstanding option or Rights.
No Right can be exercised by an optionee unless the Company has been subject
to the reporting requirements of Section 12 of the Exchange Act for at least one
year prior to the date of exercise and has filed all reports and statements
required to be filed during that period, and the Company on a regular basis
releases for publication quarterly and annual summary statements of sales and
earnings. No Common Stock can be delivered by the Company pursuant to the
exercise of an option or a Right until qualified for delivery under applicable
securities laws and regulations, as determined by the Compensation Committee,
until the Common Stock is listed on each securities exchange on which the Common
Stock may then be listed, and until the exercise price of the option is received
by the Company either in cash or in Common Stock.
OUTSIDE DIRECTORS OPTION PLAN. The Outside Directors Option Plan provides
for the grant of options to acquire Common Stock to directors of the Company who
have no employment or consulting relationship with the Company (the "Outside
Directors"). A total of 60,000 shares of Common Stock are reserved for issuance
under the Outside Directors Option Plan.
Under the Outside Directors Option Plan, each individual who is an Outside
Director of the Company on June 30 of any year beginning on June 30, 1995
(whether or not such person is currently an Outside Director) is automatically
granted an option on June 30 of each such year at a price equal to the fair
market value of the Common Stock on the date of grant. Fair market value on the
date of grant is the closing trading price, as reported in The Wall Street
Journal, on the day preceding the date of grant. Such options will become
exercisable one year after the date of grant (subject to certain acceleration
events) and will be exercisable for a period of ten years from the date of
grant, unless such Outside Director ceases to be a member of the Board of
Directors of the Company, in which case (a) all options which are not then
exercisable shall expire and (b) those options which are then exercisable shall
remain exercisable for a period of one year.
The Company has also granted an option to purchase an aggregate of 52,500
shares of Common Stock to Jay H. Harris. See "Management -- Employment
Agreements."
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
See "Management -- Compensation Committee Interlocks and Insider
Participation."
42
<PAGE>
OWNERSHIP OF COMMON STOCK
The following table sets forth information, immediately prior to and
immediately after completion of this Offering, regarding the beneficial
ownership of the Common Stock of Holdings.
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP BENEFICIAL OWNERSHIP
OF COMMON STOCK PRIOR OF COMMON STOCK
TO OFFERING AFTER OFFERING
--------------------- --------------------
NUMBER OF NUMBER OF
NAME SHARES PERCENT SHARES PERCENT
- ------------------------------ ---------- --------- ---------- --------
<S> <C> <C> <C> <C>
David R. Markin............... 5,460,000 32.5 5,460,000 26.2
Martin L. Solomon............. 3,780,000 22.5 3,780,000 18.2
Allan R. Tessler.............. 3,780,000 22.5 3,780,000 18.2
Wilmer J. Thomas, Jr.......... 3,780,000 22.5 3,780,000 18.2
Jay H. Harris................. 0 0 17,500 (1) *
---------- --------- ---------- ---
16,800,000 100.0 16,817,500(1) 80.8
---------- --------- ---------- ---
---------- --------- ---------- ---
<FN>
- --------------
* Less than one percent.
(1) Includes 17,500 shares of Common Stock which Mr. Harris has the right to
acquire, upon consummation of this Offering, through the exercise of stock
options. See "Management -- Employment Agreements."
</TABLE>
The address of each of these stockholders is c/o Great Dane Holdings Inc.,
2016 North Pitcher Street, Kalamazoo, Michigan 49007.
DESCRIPTION OF CAPITAL STOCK
Upon completion of this Offering, the authorized capital stock of Holdings
will consist of 50,000,000 shares of Common Stock, par value $.01 per share, and
5,000,000 shares of Preferred Stock, par value $1.00 per share. There will be
20,800,000 shares of Common Stock outstanding (21,400,000 if the Over-Allotment
Option is exercised in full).
PREFERRED STOCK
As of October 19, 1994, the date of Holdings' reincorporation in Delaware,
Holdings was not authorized to issue shares of Preferred Stock. On March 27,
1995, Holdings' Certificate of Incorporation was amended to authorize the
issuance of up to 5,000,000 shares of Preferred Stock. Although Holdings has no
present plans to issue such shares, Holdings' Certificate of Incorporation will
provide that Holdings may issue shares of Preferred Stock in one or more series.
The Board of Directors will be authorized to establish from time to time the
number of shares to be included in any such series, to fix or alter the rights,
preferences and privileges of the shares of each wholly unissued series and any
restrictions thereon, and to increase or decrease the number of shares of any
such series without any further vote or action by the stockholders of Holdings.
The Board of Directors may authorize and issue Preferred Stock with voting or
conversion rights that could adversely affect the voting power or other rights
of the holders of Common Stock. In addition, the issuance of Preferred Stock
could have the effect of delaying, deferring or preventing a change in control
of Holdings.
COMMON STOCK
As of October 19, 1994, the date of Holdings' reincorporation in Delaware,
there were 1,000 shares of Common Stock, par value $1.00 per share, outstanding.
On March 27, 1995, Holdings' Certificate of Incorporation was amended to
authorize the issuance of up to 50,000,000 shares of Common Stock, par value
$.01 per share, and the shares currently outstanding were split 16,800 for 1 and
converted into an aggregate of 16,800,000 shares of Common Stock, par value $.01
per share. Upon completion of this Offering, the holders of outstanding shares
of Common Stock are entitled to receive dividends out of assets legally
available therefor at such times and in such amounts as the Board of Directors
may, from time to time, determine. Holdings has not paid cash dividends on its
capital stock in recent years and
43
<PAGE>
does not intend to pay cash dividends on the Common Stock in the foreseeable
future. See "Dividend Policy." Each stockholder is entitled to one vote for each
share of Common Stock held by such stockholder. Holdings' Certificate of
Incorporation does not provide for cumulative voting. The Common Stock is not
entitled to preemptive rights and is not subject to redemption. Upon
liquidation, dissolution or winding up of Holdings, the assets legally available
for distribution to stockholders are distributable ratably among the holders of
the Common Stock outstanding at that time after payment of liquidation
preferences, if any, on any outstanding Preferred Stock. Each outstanding share
of Common Stock is fully paid and non-assessable and the shares of Common Stock
to be issued on completion of this Offering will be fully paid and
non-assessable.
CERTAIN PROVISIONS OF THE CERTIFICATE OF INCORPORATION
INDEMNIFICATION. The Certificate of Incorporation provides that directors
and officers of the Company will be indemnified by the Company to the full
extent then permitted by Delaware law, against all expenses and liabilities
incurred in connection with service for or on behalf of the Company. The
Certificate of Incorporation also provides that the right of directors and
officers to indemnification is not exclusive of any other right now possessed or
hereafter acquired under any statute, agreement or otherwise. Holdings has also
entered into indemnification agreements with its directors and its executive
officers. There is no pending litigation or proceeding involving a director,
officer, employee or other agent of the Company as to which indemnification is
being sought, and the Company is not aware of any pending or threatened
litigation that may result in claims for indemnification by a director, officer,
employee or other agent.
LIMITATION OF LIABILITY. In addition, the Certificate of Incorporation
provides that directors of Holdings will not be personally liable for monetary
damages to Holdings or its stockholders for certain breaches of their fiduciary
duty as directors, unless they violated their duty of loyalty to Holdings or its
stockholders, acted in bad faith, authorized illegal dividends or redemptions or
derived an improper personal benefit from their action as directors. This
provision would have no effect on the availability of equitable remedies or
non-monetary relief, such as an injunction or rescission for breach of the duty
of care. In addition, the provision applies only to claims against a director
arising out of his role as a director and not in any other capacity (such as an
officer or employee of the Company). Further, liability of a director for
violations of the federal securities laws will not be limited by this provision.
Directors will, however, no longer be liable for monetary damages arising from
decisions involving violations of the duty of care which could be deemed grossly
negligent.
STATUTORY BUSINESS COMBINATION PROVISION
Holdings is subject to the provisions of Section 203 of the Delaware General
Corporation Law ("Section 203"). Section 203 provides, with certain exceptions,
that a Delaware corporation may not engage in any of a broad range of business
combinations with a person or affiliate, or associate of such person, who is an
"interested stockholder" for a period of three years from the date that such
person became an interested stockholder unless: (i) the transaction resulting in
a person becoming an interested stockholder, or the business combination, is
approved by the board of directors of the corporation before the person become
an interested stockholder; (ii) the interested stockholder acquired 85% or more
of the outstanding voting stock of the corporation in the same transaction that
makes it an interested stockholder (excluding shares owned by persons who are
both officers and directors of the corporation, and shares held by certain
employee stock ownership plans); or (iii) on or after the date the person
becomes an interested stockholder, the business combination is approved by the
board of directors and by the holders of at least 66 2/3% of the corporation's
outstanding voting stock, excluding shares owned by the interested stockholder,
at an annual or special meeting. Under Section 203, an "interested stockholder"
is defined as any person that is (i) the owner of 15% or more of the outstanding
voting stock of the corporation or (ii) an affiliate or associate of the
corporation and was the owner of 15% or more of the outstanding voting stock of
the corporation at any time within the three year period immediately prior to
the date on which it is sought to be determined whether such person is an
interested stockholder.
44
<PAGE>
A corporation may, at its option, exclude itself from the coverage of
Section 203 by amending its certificate of incorporation or bylaws by action or
its stockholders to exempt itself from coverage, provided that such bylaws or
charter amendment may not become effective until 12 months after the date it is
adopted. Holdings has not adopted such an amendment to its Certificate of
Incorporation or Bylaws.
TRANSFER AGENT AND REGISTRAR
The Transfer Agent and Registrar for the Common Stock is American Stock
Transfer & Trust Company, New York, New York.
SHARES ELIGIBLE FOR FUTURE SALE
Prior to this Offering, there has been no public market for the Common
Stock. Sales of a substantial number of shares in the public market could
adversely affect the market price of the Common Stock and may make it more
difficult for the Company to sell equity securities in the future at a time and
price which it deems appropriate.
Upon completion of this Offering, Holdings will have 20,800,000 shares of
Common Stock outstanding (21,400,000 if the Over-Allotment Option is exercised),
and an additional 1,792,500 shares reserved for issuance upon the exercise of
options which have been or may be granted under the 1994 Option Plan, the
Outside Directors Option Plan and the Harris Option. Of these shares of Common
Stock, the 4,000,000 shares of Common Stock offered hereby will be freely
transferable without restriction or further registration under the Securities
Act of 1933, as amended (the "Securities Act"), except that any shares purchased
by affiliates of the Company will be subject to the limitations of Rule 144
under the Securities Act. The remaining 16,800,000 shares of Common Stock and
the 1,792,500 shares of Common Stock issuable upon exercise of options available
for grant under the 1994 Option Plan, the Outside Directors Option Plan and the
Harris Option will be "restricted securities" within the meaning of Rule 144 and
may be sold only pursuant to an effective registration statement or an
applicable exemption from the registration requirements of the Securities Act,
including Rule 144 thereunder.
In general, under Rule 144 as currently in effect, a person (or persons
whose shares are aggregated), including a person who may be deemed to be an
"affiliate" of Holdings as that term is defined under the Securities Act, is
entitled to sell, within any three-month period, a number of restricted shares
as to which at least two years have elapsed from the later of the acquisition of
such shares from Holdings or an affiliate of Holdings in an amount that does not
exceed the greater of (i) one percent of the then outstanding shares of Common
Stock (208,000 shares based upon 20,800,000 shares to be outstanding immediately
after this Offering), or (ii) if the Common Stock is quoted on the Nasdaq Stock
Market (National Market) or a stock exchange, the average weekly trading volume
of the Common Stock during the four calendar weeks preceding such sale. Sales
under Rule 144 are also subject to certain requirements as to the manner of
sale, notice, and the availability of current public information about the
Company. However, a person who is not deemed to have been an affiliate of
Holdings during the 90 days preceding a sale by such person and who has
beneficially owned shares as to which at least three years have elapsed from the
later of the acquisition of such shares from Holdings or an affiliate of
Holdings is entitled to sell them without regard to the volume, manner of sale,
or notice requirements of Rule 144. Certain of the restricted shares may also be
sold in reliance on Rule 144A, which allows sales to certain institutional
investors.
In addition, the Company intends to register all shares of Common Stock
which underly options granted under the 1994 Option Plan, the Outside Directors
Option Plan and the Harris Option. Such shares will, therefore, upon such
registration and subject to certain restrictions relating to affiliates of the
Company, be freely tradeable. Holdings and its four current stockholders holding
an aggregate of 16,800,000 shares of Common Stock following this Offering have
agreed not to offer, sell, or otherwise dispose of any shares upon completion of
this Offering for a period of 180 days from the date of this Prospectus, without
the prior written consent of the Representatives of the Underwriters. See
"Underwriting."
45
<PAGE>
CERTAIN UNITED STATES TAX CONSEQUENCES TO
NON-UNITED STATES HOLDERS
The following is a discussion of certain anticipated United States income
and estate tax consequences of the ownership and disposition of the Common Stock
by a "Non-United States Holder." For the purpose of this discussion, a
"Non-United States Holder" is any person or entity that is, as to the United
States, a foreign corporation, a non-resident alien individual, a foreign
partnership or a non-resident fiduciary of a foreign estate or trust as such
terms are defined in the Code. This discussion does not deal with all aspects of
United States income and estate taxation and does not address foreign, state and
local tax consequences that may be relevant to Non-United States Holders
including certain U.S. expatriates in light of their personal circumstances.
Furthermore, the following discussion is based on current provisions of the Code
and administrative and judicial interpretations as of the date hereof, all of
which are subject to change. Prospective foreign investors are urged to consult
their tax advisors regarding the United States federal, state, local and
Non-United States income and other tax consequences of owning and disposing of
Common Stock.
DIVIDENDS
Generally, any dividend paid to a Non-United States Holder of Common Stock
will be subject to United States withholding tax either at a rate of 30% of the
gross amount of the dividend or at a lesser applicable treaty rate. Under
current United States Treasury regulations, dividends paid to an address in a
country other than the United States are presumed to be paid to a resident of
such country for purposes of the withholding discussed above (unless the payor
has knowledge to the contrary) and, under the current interpretation of United
States Treasury regulations, for purposes of determining the applicability of a
tax treaty rate. However, under proposed United States Treasury regulations not
currently in effect, a Non-United States Holder of Common Stock who wishes to
claim the benefit of an applicable treaty rate would be required to satisfy
applicable certification and other requirements. Dividends received by a
Non-United States Holder that are effectively connected with a United States
trade or business conducted by such Non-United States Holder generally are
exempt from such withholding tax. However, such effectively connected dividends,
net of certain deductions and credits, are taxed at the same graduated rates
applicable to United States persons. A Non-United States Holder may claim
exemption from withholding under the effectively connected income exception by
filing Form 4224 (Statement Claiming Exemption from Withholding of Tax on Income
Effectively Connected With the Conduct of Business in the United States) with
the Company or its paying agent.
In addition to the graduated tax described above, dividends received by a
corporate Non-United States Holder that are effectively connected with a United
States trade or business of the corporate Non-United States Holder may also be
subject to a branch profits tax at a rate of 30% or at a lesser applicable
treaty rate.
DISPOSITION OF COMMON STOCK
A Non-United States Holder generally will not be subject to United States
federal income tax on any gain realized upon the sale or other disposition of
Common Stock unless (i) such gain is effectively connected with a United States
trade or business of the Non-United States Holder, or, if a tax treaty applies,
is attributable to a U.S. permanent establishment of the Non-United States
Holder, (ii) in the case
of certain Non-United States Holders who are non-resident alien individuals and
hold the Common Stock as a capital asset, such individuals are present in the
United States for 183 or more days in the taxable year of disposition, and
certain other conditions are met or (iii) the Company is or has been a "United
States real property holding corporation" for federal income tax purposes at any
time within the shorter of the five-year period preceding such disposition or
such holder's holding period. The Company has determined that it is not and does
not believe that it will become a "United States real property holding
corporation" for federal income tax purposes. If the Company were to become a
"United States real property holding corporation," a Non-United States Holder
which did not directly or indirectly own more than 5% of the Common Stock during
this period would not be subject to U.S. federal income tax, provided that the
Common Stock is regularly traded on an established securities market. If a
Non-United
46
<PAGE>
States Holder falls under clause (i) above, the holder will be taxed on the net
gain derived from the sale under regular graduated United States federal income
tax rates (and, with respect to corporate Non-United States Holders, may also be
subject to the branch profits tax described above). If an individual Non-United
States Holder falls under clause (ii) above, the holder generally will be
subject to a 30% tax on the gain derived from the sale, which gain may be offset
by U.S. capital losses recognized within the same taxable year of such sale.
BACKUP WITHHOLDING AND INFORMATION REPORTING
Dividends paid to a Non-United States Holder at an address within the United
States may be subject to backup withholding at a rate of 31% if the Non-United
States Holder fails to establish that it is entitled to an exemption or to
provide a correct taxpayer identification number and other information to the
payor. Generally, the Company must report to the U.S. Internal Revenue Service
the amount of dividends paid, the name and address of the recipient, and the
amount, if any, of tax withheld. A similar report is sent to the holder.
Pursuant to tax treaties or other agreements, the U.S. Internal Revenue Service
may make its reports available to tax authorities in the recipient's country of
residence.
The payment of the proceeds of the disposition of Common Stock to or through
the United States office of a broker is subject to information reporting and
backup withholding at a rate of 31% unless the holder certifies its non-United
States status under penalties of perjury or otherwise establishes an exemption.
Generally, U.S. information reporting and backup withholding will not apply to a
payment of disposition proceeds if the payment is made outside the United States
through a non-U.S. office of a non-U.S. broker. However, information reporting
requirements (but not backup withholding) will apply to a payment of disposition
proceeds outside the United States through an office outside the United States
of a broker that is (a) a United States person, (b) a United States controlled
foreign corporation or (c) a foreign person 50% or more of whose gross income
for certain periods is from a United States trade or business unless such broker
has documentary evidence in its files of the owner's foreign status and has no
actual knowledge to the contrary.
Backup withholding is not an additional tax. Rather, the tax liability of
persons subject to backup withholding will be reduced by the amount of tax
withheld. If withholding results in an overpayment of taxes, a refund may be
obtained, provided that the required information is furnished to the U.S.
Internal Revenue Service.
ESTATE TAX
An individual Non-United States Holder who owns Common Stock at the time of
his death or has made certain lifetime transfers of an interest in Common Stock
will be required to include the value of such Common Stock in his gross estate
for United States federal estate tax purposes, unless an applicable estate tax
treaty provides otherwise.
47
<PAGE>
UNDERWRITING
Subject to the terms and conditions of the Underwriting Agreement, the
Underwriters named below (the "Underwriters"), through their Representatives,
Alex. Brown & Sons Incorporated and Smith Barney Inc., have severally agreed to
purchase from Holdings the following respective number of shares of Common Stock
at the public offering price less the underwriting discounts and commissions set
forth on the cover page of this Prospectus:
<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITER SHARES
- --------------------------------------------------------------------------------- -----------
<S> <C>
Alex. Brown & Sons Incorporated..................................................
Smith Barney Inc.................................................................
-----------
Total........................................................................ 4,000,000
-----------
-----------
</TABLE>
The Underwriting Agreement provides that the obligations of the Underwriters
are subject to certain conditions precedent and that the Underwriters will
purchase all shares of the Common Stock offered hereby if any of such shares are
purchased.
Holdings has been advised by the Representatives of the Underwriters that
the Underwriters propose to offer the shares of Common Stock to the public at
the public offering price set forth on the cover page of this Prospectus and to
certain dealers at such price less a concession not in excess of $. per share.
The Underwriters may allow, and such dealers may reallow, a concession not in
excess of $. per share to certain other dealers. After commencement of the
initial public offering, the offering price and other selling terms may be
changed by the Representatives of the Underwriters.
Holdings has granted to the Underwriters an option, exercisable not later
than 30 days after the date of this Prospectus, to purchase up to 600,000
additional shares of Common Stock at the initial public offering price less the
underwriting discounts and commissions set forth on the cover page of this
Prospectus. To the extent that the Underwriters exercise such option, each of
the Underwriters will have a firm commitment to purchase approximately the same
percentage thereof that the number of shares of Common Stock to be purchased by
it shown in the above table bears to 600,000 and Holdings will be obligated,
pursuant to the option, to sell such shares to the Underwriters. The
Underwriters may exercise such option only to cover over-allotments made in
connection with the sale of Common Stock offered hereby. If purchased, the
Underwriters will offer such additional shares on the same terms as those on
which the 4,000,000 shares are being offered.
Smith Barney Inc. executes trades for Country's investment portfolio for
which it receives customary compensation.
Holdings has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act.
The Company and its four current stockholders have agreed not to offer, sell
or otherwise dispose of any shares of Common Stock for a period of 180 days
after the date of this Prospectus without the prior written consent of the
Representatives of the Underwriters.
There are restrictions on the offer and sale of Common Stock offered hereby
in the United Kingdom. All applicable provisions of the Financial Services Act
of 1986 and the Companies Act of 1985 with respect to anything done by any
person in relation to the Common Stock in, from or otherwise involving the
United Kingdom must be complied with.
Prior to this Offering, there has been no public market for the Common
Stock. Consequently, the initial price to the public for the Common Stock will
be determined through negotiations between the Company and the Representatives
of the Underwriters. Among the factors to be considered in such negotiations
will be prevailing market conditions, the results of operations of the Company
in recent periods, the market capitalizations and stages of development of other
companies which the Company and the Representatives of the Underwriters believe
to be comparable to the Company, estimates of the business potential of the
Company, the present state of the Company's development and other factors deemed
relevant.
48
<PAGE>
LEGAL MATTERS
The validity of the Common Stock offered hereby and certain legal matters
will be passed upon for the Company by Hutton Ingram Yuzek Gainen Carroll &
Bertolotti, New York, New York. Certain legal matters in connection with this
Offering will be passed upon for the Underwriters by Fried, Frank, Harris,
Shriver & Jacobson (a partnership including professional corporations), New
York, New York.
EXPERTS
The consolidated financial statements of the Company as of December 31, 1993
and 1994, and for each of the three years in the period ended December 31, 1994,
appearing in this Prospectus and Registration Statement have been audited by
Ernst & Young LLP, independent auditors, as set forth in their reports thereon
appearing elsewhere herein and in the Registration Statement, and are included
in reliance upon such reports given upon the authority of such firm as experts
in accounting and auditing.
ADDITIONAL INFORMATION
The Company has filed with the Commission a Registration Statement on Form
S-1 (together with all amendments and exhibits thereto, the "Registration
Statement") under the Securities Act, with respect to the Common Stock offered
hereby. This Prospectus does not contain all of the information set forth in the
Registration Statement, certain parts of which are omitted in accordance with
the rules and regulations of the Commission. Statements made in this Prospectus
as to the contents of any contract, agreement or other document are not
necessarily complete; with respect to each such contract, agreement or other
document filed as an exhibit to the Registration Statement, reference is made to
the exhibit for a more complete description of the matters involved, and each
such statement shall be deemed qualified in its entirety by this reference.
The Company intends to furnish its stockholders with annual reports
containing audited financial statements and an opinion thereon expressed by
independent auditors and with quarterly reports containing unaudited financial
information for each of the first three quarters of each fiscal year.
49
<PAGE>
INDEX TO FINANCIAL STATEMENTS
COVERED BY REPORT OF INDEPENDENT AUDITORS
The following consolidated financial statements of Great Dane Holdings Inc.
and subsidiaries are submitted herewith in response to Item 8:
<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
- -- Report of Independent Auditors............................................................. F-2
- -- Consolidated Balance Sheets as of December 31, 1993 and 1994............................... F-3
- -- Consolidated Statements of Shareholders' Deficit for the Years Ended December 31, 1992,
1993 and 1994............................................................................. F-4
- -- Consolidated Statements of Operations for the Years Ended December 31, 1992, 1993 and
1994...................................................................................... F-5
- -- Consolidated Statements of Cash Flows for the Years Ended December 31, 1992, 1993 and
1994...................................................................................... F-6
- -- Notes to Consolidated Financial Statements --December 31, 1994............................. F-7
</TABLE>
F-1
<PAGE>
REPORT OF INDEPENDENT AUDITORS
Board of Directors
Great Dane Holdings Inc.
We have audited the accompanying consolidated balance sheets of Great Dane
Holdings Inc. and subsidiaries as of December 31, 1993 and 1994, and the related
consolidated statements of operations, shareholders' deficit and cash flows for
each of the three years in the period ended December 31, 1994. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
Great Dane Holdings Inc. and subsidiaries at December 31, 1993 and 1994, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended December 31, 1994, in conformity with generally
accepted accounting principles.
ERNST & YOUNG LLP
Kalamazoo, Michigan
February 14, 1995, except for Note A,
as to which the Date is March 27, 1995
F-2
<PAGE>
GREAT DANE HOLDINGS INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
ASSETS:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1993 1994
--------- ---------
<S> <C> <C>
Cash and cash equivalents................................................... $ 40,078 $ 34,875
Accounts receivable, less allowance for doubtful accounts of $748 (1993)
and $1,342 (1994) (Note F)................................................. 75,701 90,076
Inventories (Notes C and F)................................................. 94,112 96,580
Other current assets........................................................ 11,823 19,729
--------- ---------
TOTAL CURRENT ASSETS.................................................... 221,714 241,260
Property, plant and equipment, net (Notes D, F and G)....................... 122,355 113,948
Insurance Subsidiary's investments (Note E)................................. 90,838 91,094
Cost in excess of net assets acquired, net of accumulated amortization of
$6,252 (1993) and $7,502 (1994)............................................ 43,743 42,493
Trademark, net of accumulated amortization of $1,750 (1993) and $2,100
(1994)..................................................................... 11,696 11,346
Other assets................................................................ 26,990 21,910
--------- ---------
TOTAL ASSETS............................................................ $ 517,336 $ 522,051
--------- ---------
--------- ---------
</TABLE>
LIABILITIES AND SHAREHOLDERS' DEFICIT:
<TABLE>
<S> <C> <C>
Accounts payable............................................................ $ 77,876 $ 80,863
Notes payable (Note F)...................................................... 5,000 5,000
Income taxes payable (Note J)............................................... 7,726 12,663
Accrued compensation........................................................ 15,838 17,955
Accrued interest............................................................ 11,746 11,802
Customer deposits........................................................... 730 14,113
Other accrued liabilities................................................... 37,341 36,402
Current portion of long-term debt........................................... 14,321 13,613
--------- ---------
TOTAL CURRENT LIABILITIES............................................... 170,578 192,411
Long-term debt, excluding current portion (Note F):
Shareholders.............................................................. 30,000 30,000
Other..................................................................... 246,952 244,652
--------- ---------
276,952 274,652
Insurance Subsidiary's unpaid losses and loss adjustment expenses........... 71,179 69,318
Unearned insurance premiums................................................. 9,547 12,203
Deferred income taxes....................................................... 9,803 2,750
Postretirement benefits other than pensions (Note H)........................ 49,609 51,061
Other noncurrent liabilities................................................ 39,053 46,372
Minority interest (Notes G and I)........................................... 40,132 586
--------- ---------
TOTAL LIABILITIES....................................................... 666,853 649,353
Shareholders' deficit (Notes A, E and F):
Common stock, par value $.01:
Authorized 50,000,000 shares
Outstanding 16,800,000 shares........................................... 168 168
Additional paid-in capital................................................ 14,832 14,832
Retained earnings (deficit)............................................... (36,217) (11,869)
Unrealized appreciation (depreciation) on Insurance Subsidiary's
investments in certain debt and equity securities........................ 73 (2,060)
Notes receivable from shareholders........................................ (625) (625)
Amount paid in excess of Motor's net assets............................... (127,748) (127,748)
--------- ---------
TOTAL SHAREHOLDERS' DEFICIT............................................. (149,517) (127,302)
Commitments and contingencies (Note G)......................................
--------- ---------
TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIT............................. $ 517,336 $ 522,051
--------- ---------
--------- ---------
</TABLE>
See notes to consolidated financial statements.
F-3
<PAGE>
GREAT DANE HOLDINGS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' DEFICIT
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
UNREALIZED
APPRECIATION
(DEPRECIATION) AMOUNT PAID
ADDITIONAL ON INVESTMENTS NOTES IN EXCESS OF
COMMON PAID-IN RETAINED IN CERTAIN RECEIVABLE MOTOR'S NET
STOCK CAPITAL EARNINGS SECURITIES FROM ASSETS (NOTE
(NOTE A) (NOTE A) (DEFICIT) (NOTE E) SHAREHOLDERS A)
----------- ----------- ---------- --------------- ----------------- ------------
<S> <C> <C> <C> <C> <C> <C>
BALANCES AT JANUARY 1, 1992.......... $ 168 $ 14,832 $ 14,600 $ 399 $ (625) $ (127,748)
Unrealized depreciation on investment
in equity securities................ -- -- -- (367) -- --
Net loss............................. -- -- (7,555) -- -- --
----- ----------- ---------- ------- ------ ------------
BALANCES AT DECEMBER 31, 1992........ $ 168 $ 14,832 7,045 32 (625) (127,748)
Unrealized appreciation on investment
in equity securities................ -- -- -- 41 -- --
Net loss............................. -- -- (43,262) -- -- --
----- ----------- ---------- ------- ------ ------------
BALANCES AT DECEMBER 31, 1993........ $ 168 $ 14,832 (36,217) 73 (625) (127,748)
Unrealized depreciation on investment
in certain debt and equity
securities.......................... -- -- -- (2,133) -- --
Net income........................... -- -- 24,348 -- -- --
----- ----------- ---------- ------- ------ ------------
BALANCES AT DECEMBER 31, 1994........ $ 168 $ 14,832 $ (11,869) $ (2,060) $ (625) $ (127,748)
----- ----------- ---------- ------- ------ ------------
----- ----------- ---------- ------- ------ ------------
</TABLE>
See notes to consolidated financial statements.
F-4
<PAGE>
GREAT DANE HOLDINGS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------
1992 1993 1994
------------ ------------ ------------
<S> <C> <C> <C>
REVENUES:
Trailer manufacturing and distribution................................ $ 536,336 $ 711,862 $ 859,089
Automotive products manufacturing..................................... 112,631 127,925 157,568
Vehicular operations including rental income of $37,382 (1992);
$38,360 (1993) and $38,712 (1994).................................... 40,580 42,103 43,653
Insurance premiums earned............................................. 27,186 27,436 36,167
------------ ------------ ------------
Total revenues...................................................... 716,733 909,326 1,096,477
COST OF REVENUES:
Cost of sales......................................................... (561,546) (728,471) (870,656)
Cost of vehicular operations.......................................... (30,120) (30,916) (32,066)
Cost of insurance operations.......................................... (19,204) (19,418) (26,510)
------------ ------------ ------------
Total cost of revenues.............................................. (610,870) (778,805) (929,232)
------------ ------------ ------------
GROSS PROFIT............................................................ 105,863 130,521 167,245
Selling, general and administrative expense............................. (76,877) (83,176) (91,600)
Interest expense........................................................ (42,726) (41,614) (40,165)
Interest income......................................................... 8,895 7,396 7,101
Other income (expense), net............................................. (2,023) 3,494 1,002
Special charge -- Note G................................................ -- (7,500) --
------------ ------------ ------------
INCOME (LOSS) BEFORE MINORITY EQUITY, INCOME TAXES, AND ACCOUNTING
CHANGES................................................................ (6,868) 9,121 43,583
Minority equity (Notes B and I)......................................... -- -- (586)
------------ ------------ ------------
INCOME (LOSS) BEFORE INCOME TAXES AND ACCOUNTING CHANGES................ (6,868) 9,121 42,997
Income tax expense (Note J)............................................. (687) (5,757) (18,649)
------------ ------------ ------------
INCOME (LOSS) BEFORE ACCOUNTING CHANGES................................. (7,555) 3,364 24,348
Accounting changes (Notes H and J)...................................... -- (46,626) --
------------ ------------ ------------
Net income (loss)....................................................... $ (7,555) $ (43,262) $ 24,348
------------ ------------ ------------
------------ ------------ ------------
Weighted average number of shares used in per share computations (Note
A)..................................................................... 16,800 16,800 16,800
------------ ------------ ------------
------------ ------------ ------------
INCOME (LOSS) PER SHARE:
Income (loss) before accounting changes............................... $ (.45) $ .20 $ 1.45
Accounting changes.................................................... -- (2.78) --
------------ ------------ ------------
Net income (loss) per share......................................... $ (.45) $ (2.58) $ 1.45
------------ ------------ ------------
------------ ------------ ------------
</TABLE>
See notes to consolidated financial statements.
F-5
<PAGE>
GREAT DANE HOLDINGS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------
1992 1993 1994
---------- ---------- ----------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)......................................................... $ (7,555) $ (43,262) $ 24,348
Adjustment to reconcile net income (loss) to net cash provided by
operating activities:
Accounting changes...................................................... -- 46,626 --
Depreciation and amortization........................................... 21,054 23,295 22,594
Deferred income tax benefit............................................. (4,311) (8,512) (9,044)
Amortization of cost in excess of net assets acquired................... 1,250 1,250 1,250
Amortization of debt discount........................................... 1,181 1,372 1,595
(Gain) loss on sale of property, plant and equipment.................... 217 207 (376)
Investment gains........................................................ (690) (1,079) (276)
Increase in minority equity............................................. -- -- 586
Other noncash charges................................................... 6,386 7,562 10,203
Changes in operating assets and liabilities:
Accounts receivable................................................... (12,788) (11,970) (15,140)
Finance lease receivables............................................. 5,131 4,408 1,511
Inventories........................................................... (7,820) (22,251) (2,468)
Other assets.......................................................... (5,634) 679 (2,463)
Accounts payable...................................................... 8,281 21,193 2,987
Income taxes.......................................................... 4,489 824 6,037
Unpaid losses and loss adjustment expenses............................ 5,046 (4,601) (1,861)
Unearned insurance premiums........................................... 4,673 (917) 2,656
Postretirement benefits other than pension............................ -- 4,497 1,452
Other liabilities..................................................... 6,288 11,359 12,760
---------- ---------- ----------
NET CASH FLOW PROVIDED BY OPERATING ACTIVITIES.............................. 25,198 30,680 56,351
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment................................ (17,549) (20,006) (18,209)
Proceeds from disposal of property, plant and equipment and other
productive assets........................................................ 2,783 2,599 1,979
Purchase of investments available for sale................................ -- -- (10,124)
Purchase of investments held to maturity.................................. (32,190) (64,052) (13,220)
Proceeds from sale of investments available for sale...................... -- -- 2,769
Proceeds from maturity and redemption of investments held to maturity..... 31,617 65,019 17,567
---------- ---------- ----------
NET CASH FLOW USED IN INVESTING ACTIVITIES.................................. (15,339) (16,440) (19,238)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings.................................................. 32,090 2,500 10,069
Repayments of borrowings.................................................. (39,772) (17,967) (14,672)
Return of limited partner's capital....................................... (1,035) (894) (37,713)
---------- ---------- ----------
NET CASH FLOW USED IN FINANCING ACTIVITIES.................................. (8,717) (16,361) (42,316)
---------- ---------- ----------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS............................ 1,142 (2,121) (5,203)
Beginning cash and cash equivalents......................................... 41,057 42,199 40,078
---------- ---------- ----------
ENDING CASH AND CASH EQUIVALENTS............................................ $ 42,199 $ 40,078 $ 34,875
---------- ---------- ----------
---------- ---------- ----------
</TABLE>
See notes to consolidated financial statements.
F-6
<PAGE>
GREAT DANE HOLDINGS INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1994
NOTE A -- ORGANIZATION
On October 19, 1994, International Controls Corp. ("ICC") changed its name
and its jurisdiction of incorporation through a merger into its wholly-owned
subsidiary, Great Dane Holdings Inc. (the "Company"), a Delaware corporation.
Each of the outstanding shares of common stock of ICC was converted into a pro
rata portion of 1,000 shares of common stock, $1 par value per share, of the
Company. As a result of the above, the Company has 3,000 shares of $1 par value
common stock authorized and 1,000 shares issued and outstanding. On March 27,
1995, the Company filed an amendment to its Certificate of Incorporation
increasing the number of authorized shares of common stock to 50 million,
reducing the par value to $0.01 per common share and splitting the shares 16,800
for 1. This resolution also authorized 5 million shares of $1 par value
preferred stock. All share and per share data and affected amounts have been
adjusted to reflect these changes as though they had occurred at the beginning
of the earliest period presented.
The Company has two operating subsidiaries, Great Dane Trailers, Inc.
("Great Dane") and Checker Motors Corporation ("Motors"). During 1989, the
Company purchased all of the common stock of Motors, the general partner of
Checker Motors Co., L.P. (the "Partnership"), a Delaware limited partnership
(the "Motors acquisition").
Immediately after the Motors acquisition, substantially all of Motors'
former shareholders purchased, through Checker Holding Corp. ("Holding"), all of
the outstanding common stock of the Company (the "Holding buyout"). Holding was
created solely for the purpose of acquiring the stock of the Company and was
subsequently merged into the Company. The Holding buyout has been accounted for
as if Motors acquired the Company (a "reverse acquisition"), since there was no
significant change in control of Motors.
Under generally accepted accounting principles for reverse acquisitions, the
net assets of Motors acquired in the Motors acquisition cannot be revalued to
estimated fair value. Accordingly, the $127.7 million excess of the amount paid
over the historical book value of Motors' net assets has been accounted for as a
separate component reducing shareholders' equity and is not subject to
amortization. The fair value of Motors' net assets, as estimated by management,
is significantly greater than historical book value, but no appraisal of fair
value is available.
NOTE B -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION: The consolidated financial statements include
the accounts of Great Dane Holdings Inc. and its subsidiaries, including the
Partnership and the Partnership's wholly-owned subsidiaries, including American
Country Insurance Company ("Insurance Subsidiary"). All significant intercompany
accounts and transactions have been eliminated.
CASH EQUIVALENTS: The Company considers all highly liquid investments,
other than Insurance Subsidiary investments, with a maturity of three months or
less when purchased to be cash equivalents.
INVENTORIES: Inventories are stated at the lower of cost or market. The
cost of inventories is determined principally on the last-in, first-out ("LIFO")
method.
PROPERTY, PLANT AND EQUIPMENT: Property, plant and equipment are stated at
cost. Depreciation is provided based on the assets' estimated useful lives,
principally by the straight-line method.
Estimated depreciable lives are as follows:
<TABLE>
<S> <C>
Buildings...................................................... 10-40 years
Transportation equipment....................................... 2-6 years
Machinery, equipment, furniture and fixtures................... 3-12 years
</TABLE>
F-7
<PAGE>
GREAT DANE HOLDINGS INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE B -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
INTANGIBLE ASSETS: Intangible assets, principally cost in excess of net
assets acquired and a trademark, are being amortized on the straight-line basis
over periods of 5 to 40 years.
CUSTOMER DEPOSITS: Substantially all customer deposits represent advanced
payments from a customer in connection with tooling production for this
customer.
MINORITY INTEREST: Minority interest represents the limited partner's
allocable share of the Partnership's net assets (see Notes G and I) and the
share of net assets of South Charleston Stamping & Manufacturing Company
("SCSM") allocable to the minority interest holder.
REVENUE RECOGNITION: Revenues from sales of trailers that are manufactured
in response to customers' orders are recorded when such products are completed
and invoiced. Rental income from vehicle leases is recognized as earned.
Vehicles are generally leased on a daily or weekly basis to unaffiliated
operators. Insurance Subsidiary premiums are recognized as income ratably over
the period covered by the policies. Unearned premium reserves are calculated on
the monthly pro-rata basis. Realized gains and losses on investments are
determined on a specific identification basis and are included in the
determination of net income.
DEBT ISSUE EXPENSE: Expenses incurred in connection with the issuance of
debt are capitalized and amortized as interest expense over the life of the
debt.
LOSSES AND LOSS ADJUSTMENT EXPENSES: The Insurance Subsidiary's liability
for unpaid losses and loss adjustment expenses represents an estimate of the
ultimate net costs of all losses which are unpaid at the balance sheet dates,
and is determined using case-basis evaluations and statistical analysis. These
estimates are continually reviewed and any adjustments which become necessary
are included in current operations. Since the liability is based on estimates,
the ultimate settlement of losses and the related loss adjustment expenses may
vary from the amounts included in the consolidated financial statements.
RECLASSIFICATION: Certain 1993 amounts have been reclassified to conform to
the 1994 classification.
NOTE C -- INVENTORIES
Inventories are summarized below (dollars in thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1993 1994
--------- ---------
<S> <C> <C>
Raw materials................................................................. $ 53,105 $ 60,998
Work-in-process............................................................... 10,956 15,877
Finished goods................................................................ 30,051 19,705
--------- ---------
$ 94,112 $ 96,580
--------- ---------
--------- ---------
</TABLE>
Inventories would not differ materially if the first-in, first-out costing
method were used for inventories costed by the LIFO method.
F-8
<PAGE>
GREAT DANE HOLDINGS INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE D -- PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are summarized below (dollars in thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------
1993 1994
----------- ------------
<S> <C> <C>
Land and buildings........................................................ $ 54,167 $ 56,430
Transportation equipment.................................................. 32,830 31,597
Machinery, equipment, furniture and fixtures.............................. 125,067 129,085
----------- ------------
212,064 217,112
Less accumulated depreciation and amortization............................ (89,709) (103,164)
----------- ------------
$ 122,355 $ 113,948
----------- ------------
----------- ------------
</TABLE>
NOTE E -- INVESTMENTS
Effective January 1, 1994, the Company adopted the provisions of Statement
of Financial Accounting Standards ("SFAS") No. 115, "Accounting for Certain
Investments in Debt and Equity Securities." In accordance with this statement,
prior period financial statements have not been restated to reflect the change
in accounting principle. The opening balance of shareholders' deficit was
decreased by $1.4 million (net of $0.8 million in deferred income taxes) to
reflect the net unrealized holding gains on securities classified as
available-for-sale previously carried at amortized cost or lower of cost or
market.
Insurance company management evaluated the investment portfolio and, based
on the Insurance Subsidiary's ability and intent, has classified securities
between the held-to-maturity and available-for-sale categories. Held-to-maturity
securities are stated at amortized cost. Debt securities not classified as held-
to-maturity and marketable equity securities are classified as
available-for-sale. Available-for-sale securities are stated at fair value, with
the unrealized gains and losses, net of tax, reported as a separate component of
shareholders' deficit.
Following is a summary of held-to-maturity and available-for-sale securities
of the Insurance Subsidiary, which are generally reserved for Insurance
Subsidiary operations, as of December 31, 1994:
<TABLE>
<CAPTION>
HELD-TO-MATURITY
---------------------------------------------------
GROSS GROSS ESTIMATED
UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
--------- ------------- ------------ -----------
<S> <C> <C> <C> <C>
U.S. Treasury securities and obligations of U.S.
Government corporations and agencies............. $ 7,285 $ 73 $ 143 $ 7,215
Obligations of states and political
subdivisions..................................... 8,828 51 367 8,512
Mortgage-backed securities........................ 3,142 -- 200 2,942
Corporate and other debt securities............... 25,943 88 1,005 25,026
--------- ----- ------------ -----------
$ 45,198 $ 212 $ 1,715 $ 43,695
--------- ----- ------------ -----------
--------- ----- ------------ -----------
</TABLE>
<TABLE>
<CAPTION>
AVAILABLE-FOR-SALE
---------------------------------------------------
GROSS GROSS ESTIMATED
UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
--------- ------------- ------------ -----------
<S> <C> <C> <C> <C>
Obligations of states and political subdivisions.. $ 9,958 $ 10 $ 689 $ 9,279
Corporate and other debt securities............... 23,198 272 1,148 22,322
--------- ----- ------------ -----------
Total debt securities......................... 33,156 282 1,837 31,601
Equity securities................................. 15,994 227 1,926 14,295
--------- ----- ------------ -----------
Total available-for-sale...................... $ 49,150 $ 509 $ 3,763 $ 45,896
--------- ----- ------------ -----------
--------- ----- ------------ -----------
</TABLE>
F-9
<PAGE>
GREAT DANE HOLDINGS INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE E -- INVESTMENTS (CONTINUED)
The amortized cost and estimated market value of debt securities at December
31, 1994, by contractual maturity, are shown below. Expected maturities will
differ from contractual maturities because borrowers may have the right to call
or prepay obligations with or without call or prepayment penalties.
<TABLE>
<CAPTION>
HELD-TO-MATURITY
--------------------
ESTIMATED
FAIR
COST VALUE
-------- --------
<S> <C> <C>
Due in one year or less...................................................... $ 7,300 $ 7,314
Due after one year through five years........................................ 28,338 27,512
Due after five years through ten years....................................... 4,424 4,074
Due after ten years.......................................................... 1,994 1,853
-------- --------
42,056 40,753
Mortgage-backed securities................................................... 3,142 2,942
-------- --------
$ 45,198 $43,695
-------- --------
-------- --------
</TABLE>
<TABLE>
<CAPTION>
AVAILABLE-FOR-SALE
--------------------
ESTIMATED
FAIR
COST VALUE
-------- --------
<S> <C> <C>
Due in one year or less...................................................... $ 289 $ 284
Due after one year through five years........................................ 2,847 2,833
Due after five years through ten years....................................... 19,296 18,132
Due after ten years.......................................................... 10,724 10,352
-------- --------
$ 33,156 $31,601
-------- --------
-------- --------
</TABLE>
The proceeds from sales of available-for-sale securities was $2.8 million
for the year ended December 31, 1994. No gross gains or gross losses were
realized on those sales during the year ended December 31, 1994.
Bonds with an amortized cost of $2.3 million at December 31, 1994, were on
deposit to meet certain regulatory requirements.
F-10
<PAGE>
GREAT DANE HOLDINGS INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE F -- BORROWINGS
Long-term debt is summarized below (dollars in thousands) (see Note O):
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------
1993 1994
----------- -----------
<S> <C> <C>
12 3/4% Senior Subordinated Debentures less debt discount of $11,124 (1993)
and $9,725 (1994)......................................................... $ 120,916 $ 122,315
14 1/2% Subordinated Discount Debentures less debt discount of $6,531
(1993) and $6,335 (1994).................................................. 54,816 55,012
Notes payable to shareholders.............................................. 30,000 30,000
Great Dane term loan payable............................................... 21,511 17,411
Great Dane Revolving credit line........................................... 17,132 27,201
Partnership term loan payable.............................................. 22,500 16,500
Equipment term loan........................................................ 5,500 3,500
Economic Development term loan............................................. 10,909 10,375
Installment notes.......................................................... 979 --
Other debt................................................................. 7,010 5,951
----------- -----------
291,273 288,265
Less current portion....................................................... (14,321) (13,613)
----------- -----------
$ 276,952 $ 274,652
----------- -----------
----------- -----------
</TABLE>
Interest on the $132 million face value of 12 3/4% Senior Subordinated
Debentures is payable semiannually at the stated rate. The recorded debt
discount is being amortized as interest expense over the expected life of the
debentures using an imputed interest rate of approximately 15% compounded
semiannually. Under the terms of the debentures, the Company's payment of
dividends is limited to, among other things, 50% of consolidated net income
subsequent to June 30, 1986, plus $12 million. At December 31, 1994, the Company
was restricted from paying a dividend. The debentures are redeemable at the
option of the Company in whole or in part at a decreasing premium. The
debentures are subject to redemptions through a sinking fund whereby the Company
is required to make five annual sinking fund payments of $18 million commencing
August 1, 1996, with the final payment due August 1, 2001.
Interest on the $61 million face value of 14 1/2% Subordinated Discount
Debentures is payable semiannually at the stated rate. The recorded debt
discount is being amortized as interest expense over the expected life of the
debentures using an imputed interest rate of approximately 16.7% compounded
semiannually. The 14 1/2% debentures are subject to redemption through a sinking
fund whereby the Company is required to redeem, at their face value, on January
1 in each of the years 1997 through 2005, 7 1/2% of the principal amount of the
debentures outstanding on January 1, 1997. The balance of debentures are due
January 1, 2006. The debentures are callable any time at their face value and
are subordinated to all present or future indebtedness of the Company not
expressly subordinated to, or on a parity with, the debentures.
The notes payable to shareholders, which were paid off in February 1995 (See
Note O) bore interest payable quarterly in arrears at an annual rate equal to
the prime rate of a New York bank (8.5% at December 31, 1994) plus 3 1/2%.
In March 1990, Great Dane entered into a five year loan and security
agreement ("Agreement") with certain banks. The Agreement made available to
Great Dane a $33 million five-year term loan and a $47 million revolving credit
line. In 1993, the maximum revolving credit line was increased to $65 million.
The amount available under the revolving credit line is based upon the amount of
Great Dane's eligible trade accounts receivable and inventory as defined in the
Agreement. The additional amount
F-11
<PAGE>
GREAT DANE HOLDINGS INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE F -- BORROWINGS (CONTINUED)
available under the revolving credit line under the borrowing base terms of the
Agreement totaled $30.2 million at December 31, 1994. The term loan is payable
in equal monthly installments of $0.34 million plus interest at the bank's prime
interest rate (8.5% at December 31, 1994) plus 1 1/2%, with the balance due in
March 1995. The revolving credit line is due in 1995 and requires interest
payments at the bank's prime rate (8.5% at December 31, 1994) plus 1 1/2%. In
February 1995, Great Dane entered into an amended and restated loan and security
agreement with certain banks (See Note O). Accordingly, since these obligations
have been refinanced on a long-term basis, the amounts have been classified as
long-term debt as of December 31, 1994.
All borrowings under the Agreement are fully secured by substantially all of
the Great Dane assets. The Agreement requires Great Dane to, among other things,
comply with certain financial covenants, and limits the amount of loans and
transfers to the Company, limits additions to and sales of Great Dane's fixed
assets and limits additional Great Dane borrowings. Under the most restrictive
covenant, no additional transfers of funds to the Company are available until
after December 31, 1994.
During 1992, the Partnership entered into a Loan and Guaranty Agreement with
a bank pursuant to which the bank provided a $30 million term loan to the
Partnership. The term loan requires twenty quarterly principal payments of $1.5
million, plus interest at the bank's prime rate (8.5% at December 31, 1994) plus
1 1/4%, which payments commenced December 31, 1992. The term loan is secured by
substantially all of the Partnership's assets, excluding the stock of the
Insurance Subsidiary. The term loan agreement, which is guaranteed by Motors,
requires Motors to, among other things, comply with certain financial covenants
and limits additional loans to Motors.
The equipment term loan requires quarterly payments of $0.5 million plus
interest at the bank's prime rate (8.5% at December 31, 1994) plus 1 1/4%. The
obligation is secured by certain machinery and equipment with a net carrying
amount of $5.9 million at December 31, 1994.
In connection with the Partnership term loan and the equipment term loan,
Motors is required to comply with certain financial covenants.
The economic development term loan, which is guaranteed by Motors, is
payable by SCSM to the West Virginia Economic Development Authority, and
requires monthly payments of $0.1 million, including interest at 5% with the
unpaid balance due 2008. The interest rate will be adjusted in April 1998 and
2003, so as to remain equal to 75% of the base rate, as defined, plus 1/2%. The
loan is secured by certain machinery and equipment with a net carrying amount of
$22.5 million at December 31, 1994.
Maturities of long-term debt for the four years subsequent to 1995, after
giving effect to the payoff of the notes payable to shareholders and to the
refinancing of Great Dane's and Motors' debt, are as follows: $14.2 million in
1996, $32.2 million in 1997, $32.2 million in 1998 and $29.0 million in 1999.
Interest paid totaled $42.4 million in 1992, $39.8 million in 1993 and $38.5
million in 1994.
SCSM has a line of credit with a bank totaling $7.5 million at December 31,
1994. Borrowing under the line ($5.0 million at December 31, 1994) bears
interest at the bank's prime rate (8.5% at December 31, 1994) plus 1%.
The Partnership has $3.8 million available under a line of credit with a
bank. Borrowings under the line ($0 at December 31, 1994) bear interest at the
bank's prime rate (8.5% at December 31, 1994) plus 1%.
The weighted average interest rate on short-term borrowings outstanding as
of December 31, 1993 and 1994 was 7.25% and 9.75%, respectively.
F-12
<PAGE>
GREAT DANE HOLDINGS INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE G -- COMMITMENTS AND CONTINGENCIES
On February 8, 1989, the Boeing Company ("Boeing") filed a lawsuit naming
the Company, together with three prior subsidiaries of the Company, as
defendants in Case No. CV89-119MA, United States District Court for the District
of Oregon. In that lawsuit, Boeing sought damages and declaratory relief for
past and future costs resulting from alleged groundwater contamination at a
location in Gresham, Oregon, where the three prior subsidiaries of the Company
formerly conducted business operations. On December 22, 1993, the Company
entered into a settlement with Boeing, settling all claims asserted by Boeing in
the lawsuit. Pursuant to the settlement terms, the Company will pay Boeing $12.5
million over the course of five years, at least $5 million of which has been
committed by certain insurance companies in the form of cash or irrevocable
letters of credit. In accordance with the settlement agreement, Boeing's claims
against the Company and the three former subsidiaries have been dismissed with
prejudice and Boeing has released and indemnified the Company with respect to
certain claims. Accordingly, a $7.5 million special charge was recorded in 1993,
to provide for the cost associated with this legal proceeding.
On March 4, 1992, Motors received notice that the Insurance Commissioner of
the State of California, as Conservator and Rehabilitator of ELIC, a limited
partner of the Partnership, had filed an Amendment to the Application for Order
of Conservation filed in Superior Court of the State of California for the
County of Los Angeles. The amendment seeks to add to the Order, dated April 11,
1991, Motors, the Partnership and Checker Holding Corp. III, a limited partner
of the Partnership. The amendment alleges that the action by Motors invoking
provisions of the Partnership Agreement that alter ELIC's rights in the
Partnership upon the occurrence of certain events is improper and constitutes an
impermissible forfeiture of ELIC's interest in the Partnership and a breach of
fiduciary duty to ELIC. The amendment seeks (a) a declaration of the rights of
the parties in the Partnership and (b) damages in an unspecified amount. The
Partnership believes that it has meritorious defenses to the claims of ELIC. On
April 15, 1994, the Company and the Conservator entered into a letter agreement
pursuant to which the Company agreed to purchase ELIC's interest in the
Partnership for $37 million. On May 26, 1994, the California Court approved a
settlement of this litigation. Pursuant to the Settlement Agreement, on December
22, 1994, Motors redeemed ELIC's interest in the Partnership for $37.0 million
(the "Minority Interest Redemption") and the litigation was thereafter dismissed
with prejudice. Under certain circumstances, if all or substantially all of the
assets of the Partnership are sold within five years of the consummation of the
Minority Interest Redemption, ELIC may be entitled to receive a payment equal to
the positive difference between (x) the distribution ELIC would have received
upon liquidation of the Partnership as a result of such transaction, calculated
in accordance with the provisions of the Partnership Agreement as if it had
continued to hold its partnership interest, and (y) the future value of $37.0
million calculated at 15% per annum from the date of the Minority Interest
Redemption to the date of such transaction.
In 1988, Great Dane entered into an operating agreement with the purchaser
of a previously wholly-owned finance company ("Finance"). Under the terms of the
agreement, the purchaser is given the opportunity to finance certain sales of
Great Dane. The 1988 operating agreement requires that Great Dane, among other
things, (i) not finance the sale of its products for the first eight years and
(ii) maintain a minimum net worth as defined in the agreement. In addition,
under this operating agreement, Great Dane is liable to the purchaser for 50% of
losses incurred in connection with the realization of certain new receivables
financed by the purchaser subsequent to the sale of Finance subject to certain
maximums. Failure to comply with these requirements of the agreement would
result in Great Dane having to repay the purchaser varying amounts reducing to
$5 million during the year ending September 8, 1996. At December 31, 1994, Great
Dane was in compliance with the provisions of the operating agreement.
In addition, at December 31, 1994, the Company has guaranteed the
realization of receivables of approximately $0.6 million in connection with the
sale of Finance and is partially responsible for the realization of new
receivables of approximately $156.9 million financed by the purchaser under the
F-13
<PAGE>
GREAT DANE HOLDINGS INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE G -- COMMITMENTS AND CONTINGENCIES (CONTINUED)
operating agreement subject to certain maximums. In addition to Great Dane's
guarantee, these receivables are also collateralized by a security interest in
the respective trailers originally sold by Great Dane. A loss reserve of $3.1
million, for potential losses that may be incurred on the ultimate realization
of these receivables, is included in other accrued and other non-current
liabilities in the December 31, 1994, consolidated balance sheet.
To secure certain obligations, the Company and its subsidiaries had
outstanding letters of credit aggregating approximately $3.4 million at December
31, 1994, which letters of credit were fully secured by cash deposits included
in other assets in the consolidated balance sheets. In addition, Great Dane has
standby letters of credit aggregating approximately $7.6 million and the
Partnership has standby letters of credit aggregating approximately $1.2 million
outstanding at December 31, 1994.
The Company and certain of its subsidiaries have employment agreements with
three officers of the Company that provide for minimum annual compensation of
approximately $1.8 million. The contracts expire on various dates from June 1995
to February 1997.
The Company and its subsidiaries lease real estate and equipment. Certain
leases are renewable and provide for monthly rentals, real estate taxes and
other operating expenses. The Company believes that, in the normal course of
business, leases that expire will be renewed or replaced by other leases. Rental
expense under operating leases was approximately $3.8 million in 1992, $4.8
million in 1993, and $5.5 million in 1994. Minimum rental obligations for all
noncancelable operating leases at December 31, 1994 are as follows: $3.0 million
in 1995, $2.8 million in 1996, $2.6 million in 1997, $2.5 million in 1998, $2.4
million in 1999, and $14.6 million thereafter.
Management believes that none of the above legal actions, guarantees or
commitments will have a material adverse effect on the Company's consolidated
financial position.
NOTE H -- RETIREMENT PLANS
The Company and its subsidiaries have defined benefit pension plans
applicable to substantially all employees. The contributions to these plans are
based on computations by independent actuarial consultants. The Company's
general funding policy is to contribute amounts required to maintain funding
standards in accordance with the Employee Retirement Income Security Act.
Employees' benefits are based on years of service and the employees' final
average earnings, as defined by the plans.
Net periodic pension cost includes the following components (dollars in
thousands):
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------
1992 1993 1994
--------- --------- ---------
<S> <C> <C> <C>
Service cost -- benefits earned (normal cost)...................................... $ 1,473 $ 1,752 $ 2,384
Interest on projected benefit obligation........................................... 3,565 3,972 4,384
Return on investments.............................................................. (2,718) (2,867) (1,007)
Net amortization and deferral...................................................... 129 328 (1,459)
--------- --------- ---------
Net periodic pension cost charged to expense....................................... $ 2,449 $ 3,185 $ 4,302
--------- --------- ---------
--------- --------- ---------
</TABLE>
Gains and losses and prior service cost are amortized over periods ranging
from seven to fifteen years. Other assumptions used in the calculation of the
actuarial present value of the projected benefit obligation were as follows:
<TABLE>
<CAPTION>
1992 1993 1994
------------ ------------ ------------
<S> <C> <C> <C>
Discount rate........................................................... 8 1/4% 7 1/2% 7 1/2% - 8%
Rate of increase in compensation levels................................. 4% - 5% 4% - 4 1/4% 4% - 4 1/4%
Long-term rate of return on assets...................................... 5% - 9 1/2% 5% - 9 1/2% 5% - 9%
</TABLE>
F-14
<PAGE>
GREAT DANE HOLDINGS INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE H -- RETIREMENT PLANS (CONTINUED)
The following table sets forth the plans' funded status and amounts
recognized in the Company's consolidated balance sheets (dollars in thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------
1993 1994
---------- ----------
<S> <C> <C>
Actuarial present value of benefit obligations:
Vested benefit obligations................................................ $ 41,846 $ 44,642
---------- ----------
---------- ----------
Accumulated benefit obligation............................................ $ 44,731 $ 47,836
---------- ----------
---------- ----------
Plan assets (principally guaranteed investment contracts with insurance
companies)................................................................. $ 41,664 $ 43,541
Projected benefit obligation................................................ 54,568 60,655
---------- ----------
Projected benefit obligation in excess of plan assets....................... (12,904) (17,114)
Unrecognized prior service cost............................................. 1,115 778
Unrecognized net loss....................................................... 1,687 6,353
Minimum liability........................................................... (1,450) (2,351)
Unrecognized net obligation at transition................................... 1,819 1,591
---------- ----------
Pension liability recognized in the balance sheets.......................... (9,733) (10,743)
Less noncurrent liability................................................... 6,442 6,943
---------- ----------
Current pension liability................................................... $ (3,291) $ (3,800)
---------- ----------
---------- ----------
</TABLE>
Relative positions and undertakings in multiemployer pension plans covering
certain of the Partnership's employees are not presently determinable. Expenses
related to multiemployer pension plans totaled $0.2 million, $0.2 million and
$0.3 million for the years ended December 31, 1992, 1993 and 1994, respectively.
Expense related to defined contribution plans, which is based on a
stipulated contribution for hours worked or employee contributions, approximated
$0.3 million in 1992, $0.5 million in 1993 and $0.5 million in 1994.
The Company and its subsidiaries provide postretirement health care and life
insurance benefits to eligible retired employees. The Company's policy is to
fund the cost of medical benefits as paid. Prior to 1993, the Company recognized
expense in the year the benefits were provided. The amount charged to expense
for these benefits was approximately $2.5 million in 1992. Effective January 1,
1993, the Company adopted SFAS No.106, "Employers Accounting for Postretirement
Benefits Other Than Pensions." This statement requires the accrual of the cost
of providing postretirement benefits, including medical and life insurance
coverage, during the active service period of the employee. The Company recorded
a charge of $29.7 million (net of taxes of $16.5 million), or $1.78 per share,
during 1993 to reflect the cumulative effect of this change in accounting
principle.
F-15
<PAGE>
GREAT DANE HOLDINGS INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE H -- RETIREMENT PLANS (CONTINUED)
The following table sets forth the plan's funded status reconciled with
amounts recognized in the Company's consolidated balance sheets (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------
1993 1994
---------- ----------
<S> <C> <C>
Accumulated post retirement obligation:
Retirees.................................................................. $ (34,040) $ (32,473)
Fully eligible active plan participants................................... (4,319) (5,315)
Other active plan participants............................................ (11,218) (9,751)
---------- ----------
(49,577) (47,539)
Unrecognized net (gain) loss.............................................. 1,119 (2,568)
Unrecognized prior service cost........................................... (3,432) (3,146)
---------- ----------
Accrued postretirement benefit liability recorded in balance sheets....... (51,890) (53,253)
Less noncurrent liability................................................. 49,609 51,061
---------- ----------
Current postretirement benefit liability.................................. $ (2,281) $ (2,192)
---------- ----------
---------- ----------
</TABLE>
Net periodic postretirement benefit cost includes the following components
(in thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------
1993 1994
---------- ----------
<S> <C> <C>
Service cost................................................................ $ 634 $ 541
Interest cost............................................................... 3,888 3,625
Unrecognized prior service cost............................................. -- (286)
---------- ----------
$ 4,522 $ 3,880
---------- ----------
---------- ----------
</TABLE>
The health care cost trend rate as of December 31, 1994, ranges from 12.6%
down to 5.5% over the next 20 years and remains level thereafter. The health
care cost trend rate assumption has a significant effect on the amounts
reported. For example, increasing the assumed health care cost trend rates by
one percentage point in each year would increase the accumulated postretirement
benefit obligation as of December 31, 1994, by $2.9 million. The
weighted-average discount rate used in determining the accumulated
postretirement benefit obligation was 7.5% and 8.0% at December 31, 1993 and
1994, respectively.
The effect of adopting SFAS No. 106 decreased 1993 pre-tax income by $2.0
million as compared to 1992.
NOTE I -- MINORITY EQUITY
On April 11, 1991, ELIC was placed in conservatorship. In accordance with
the provisions of the Partnership Agreement, the Partnership continues, but
ELIC's interest in the Partnership and rights under the Partnership Agreement
are limited to the right to receive the balance of its capital account as
calculated and on the terms set forth in the Partnership Agreement. On December
22, 1994, the Company purchased ELIC's interest in the Partnership for $37
million.
Minority equity for the year ended December 31, 1994, represents the
minority interest holder's allocable share of SCSM's net income for the period.
F-16
<PAGE>
GREAT DANE HOLDINGS INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
NOTE J -- INCOME TAXES
Effective January 1, 1993, the Company adopted the provisions of Statement
of Financial Accounting Standards No. 109, "Accounting for Income Taxes." As
permitted under the new rules, prior years financial statements have not been
restated. The Company recorded a charge of $16.9 million, or $1.00 per share,
during 1993 to reflect the cumulative effect of this change in accounting
principle. Deferred income taxes reflect the net tax effects of temporary
differences between the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for income tax purposes.
Significant components of the Company's deferred tax assets and liabilities
as of December 31, 1993 and 1994 are as follows (dollars in thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1993 1994
--------- ---------
<S> <C> <C>
Deferred tax assets:
Other postretirement benefits.................................................. $ 18,961 $ 19,675
Pension........................................................................ 3,377 2,799
Reserves....................................................................... 10,986 13,143
Bad debt reserve............................................................... 1,601 1,769
Other.......................................................................... 5,555 6,868
--------- ---------
40,480 44,254
Valuation allowance............................................................ (1,000) (1,000)
--------- ---------
39,480 43,254
Deferred tax liabilities:
Property, plant and equipment.................................................. 31,646 28,519
Finance lease receivables...................................................... 517 --
Debenture discount............................................................. 4,647 4,354
Intangible assets.............................................................. 5,249 4,525
Inventory...................................................................... 3,624 2,530
Other.......................................................................... 645 76
--------- ---------
46,328 40,004
--------- ---------
Net deferred tax assets (liabilities)............................................ $ (6,848) $ 3,250
--------- ---------
--------- ---------
</TABLE>
The components of income tax expense are as follows (dollars in thousands):
<TABLE>
<CAPTION>
LIABILITY METHOD
----------------------
DEFERRED METHOD YEAR ENDED
------------------ DECEMBER 31,
YEAR ENDED ----------------------
DECEMBER 31, 1992 1993 1994
------------------ ---------- ----------
<S> <C> <C> <C>
Current taxes:
Federal.................................................. $ (3,296) $ (10,244) $ (23,395)
State.................................................... (1,702) (4,025) (4,298)
------- ---------- ----------
(4,998) (14,269) (27,693)
Deferred taxes............................................. 4,311 8,512 9,044
------- ---------- ----------
Income tax expense......................................... $ (687) $ (5,757) $ (18,649)
------- ---------- ----------
------- ---------- ----------
</TABLE>
F-17
<PAGE>
GREAT DANE HOLDINGS INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE J -- INCOME TAXES (CONTINUED)
The components of the deferred tax benefit are as follows (dollars in
thousands):
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
1992
--------------
<S> <C>
Tax depreciation less than book depreciation............................................ $ 1,742
Finance leases.......................................................................... (37)
Inventory reserves...................................................................... 505
Financing costs......................................................................... (75)
Warranty reserves....................................................................... 22
Other reserves.......................................................................... 602
Partnership allocation.................................................................. 1,469
Other................................................................................... 83
-------
Deferred tax benefit.................................................................... $ 4,311
-------
-------
</TABLE>
Income tax expense differs from the amount computed by applying the
statutory federal income tax rate to income (loss) before income taxes. The
reasons for these differences are as follows (dollars in thousands):
<TABLE>
<CAPTION>
LIABILITY METHOD
----------------------
DEFERRED METHOD
------------------ YEAR ENDED DECEMBER
YEAR ENDED 31,
DECEMBER 31, ----------------------
1992 1993 1994
------------------ ---------- ----------
<S> <C> <C> <C>
Computed expected tax benefit (expense).................... $ 2,335 $ (3,192) $ (15,049)
(Increase) decrease in taxes resulting from:
State income taxes, net of federal income tax benefit.... (1,123) (2,616) (2,794)
Appraisal depreciation................................... (1,024) -- --
Amortization of goodwill and other items................. (530) (643) (714)
Nontaxable Partnership income............................ 574 446 286
Other.................................................... (919) 248 (378)
------- ---------- ----------
Actual tax expense......................................... $ (687) $ (5,757) $ (18,649)
------- ---------- ----------
------- ---------- ----------
</TABLE>
Income taxes paid totaled $3.9 million in 1992, $13.4 million in 1993 and
$24.5 million in 1994.
NOTE K -- RELATED PARTY TRANSACTIONS
The Company leases an airplane owned by a corporation of which a director is
the sole shareholder. Lease expenses totaled $0.7 million each year in 1992 and
1993 and $1.1 million in 1994.
NOTE L -- INDUSTRY SEGMENT INFORMATION
The Company operates in four principal segments:
TRAILER MANUFACTURING SEGMENT --Manufacturing and distribution of
highway truck trailers.
AUTOMOTIVE PRODUCTS SEGMENT --Manufacturing metal stampings and
assemblies and coordination of related tooling production for motor vehicle
manufacturers.
VEHICULAR OPERATIONS SEGMENT --Leasing taxicabs.
INSURANCE OPERATIONS SEGMENT --Providing property and casualty insurance
coverage to the Partnership and to outside parties.
F-18
<PAGE>
GREAT DANE HOLDINGS INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE L -- INDUSTRY SEGMENT INFORMATION (CONTINUED)
Trailer Manufacturing segment sales to J. B. Hunt totaled approximately
$50.0 million in 1992, $92.3 million in 1993 and $85.3 million in 1994.
Automotive product net sales to General Motors Corporation totaled
approximately $109.1 million in 1992, $121.5 million in 1993 and $145.9 million
in 1994 (includes accounts receivable of $8.9 million, $8.9 million and $13.0
million at December 31, 1992, 1993 and 1994, respectively).
Industry segment data is summarized as follows (dollars in thousands):
<TABLE>
<CAPTION>
TRAILER AUTOMOTIVE VEHICULAR INSURANCE
MANUFACTURING PRODUCTS OPERATIONS OPERATIONS ELIMINATIONS CONSOLIDATED
--------------- ----------- ------------ ------------ ------------- --------------
<S> <C> <C> <C> <C> <C> <C>
1992
Revenues:
Outside customers............. $ 536,336 $ 112,631 $ 40,580 $ 27,186 $ -- $ 716,733
Intersegment sales............ -- 1 4,043 13,161 (17,205 ) --
--------------- ----------- ------------ ------------ ------------- --------------
$ 536,336 $ 112,632 $ 44,623 $ 40,347 $ (17,205 ) $ 716,733
--------------- ----------- ------------ ------------ ------------- --------------
--------------- ----------- ------------ ------------ ------------- --------------
Operating profit (loss)......... $ 17,590 $ 11,622 $ 5,727 $ (1,557 ) $ 33,382
Corporate expenses.............. (4,396 )
Interest income:
Segment....................... 1,168 6,321 7,489
Corporate..................... 1,406
Interest expense:
Segment....................... (5,852 ) (5,852 )
Corporate..................... (36,874 )
Other expenses, net............. (2,023 )
--------------
Loss before income taxes........ $ (6,868 )
--------------
--------------
Identifiable assets............. $ 230,465 $ 66,561 $ 25,516 $ 117,960 $ 440,502
Partnership assets.............. 38,712
Corporate assets................ 14,549
--------------
Total assets at December 31,
1992........................... $ 493,763
--------------
--------------
Depreciation and amortization:
Segment....................... $ 6,303 $ 4,148 $ 10,099 $ 462 $ 21,012
Other......................... 42
Capital expenditures............ 4,996 1,889 10,412 252 17,549
</TABLE>
F-19
<PAGE>
GREAT DANE HOLDINGS INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE L -- INDUSTRY SEGMENT INFORMATION (CONTINUED)
<TABLE>
<CAPTION>
TRAILER AUTOMOTIVE VEHICULAR INSURANCE
MANUFACTURING PRODUCTS OPERATIONS OPERATIONS ELIMINATIONS CONSOLIDATED
--------------- ----------- ------------ ------------ ------------- --------------
1993
<S> <C> <C> <C> <C> <C> <C>
Revenues:
Outside customers............. $ 711,862 $ 127,925 $ 42,103 $ 27,436 $ -- $ 909,326
Intersegment sales............ -- -- 4,346 13,400 (17,746 ) --
--------------- ----------- ------------ ------------ ------------- --------------
$ 711,862 $ 127,925 $ 46,449 $ 40,836 $ (17,746 ) $ 909,326
--------------- ----------- ------------ ------------ ------------- --------------
--------------- ----------- ------------ ------------ ------------- --------------
Operating profit (loss)......... $ 32,381 $ 15,306 $ 6,251 $ (1,947 ) $ -- $ 51,991
Corporate expense............... (4,646 )
Interest income:
Segment....................... 428 5,877 6,305
Corporate..................... 1,091
Interest expense:
Segment....................... (4,811 ) (4,811 )
Corporate..................... (36,803 )
Special charge.................. (7,500 )
Other income, net............... 3,494
--------------
Income before income taxes...... $ 9,121
--------------
--------------
Identifiable assets............. $ 259,837 $ 67,937 $ 20,493 $ 116,692 $ 464,959
Partnership assets.............. 37,701
Corporate assets................ 14,676
--------------
Total assets at December 31,
1993........................... $ 517,336
--------------
--------------
Depreciation and amortization... $ 8,280 $ 4,991 $ 9,530 $ 494 $ 23,295
Capital expenditures............ 7,265 4,728 7,913 100 20,006
</TABLE>
F-20
<PAGE>
GREAT DANE HOLDINGS INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE L -- INDUSTRY SEGMENT INFORMATION (CONTINUED)
<TABLE>
<CAPTION>
TRAILER AUTOMOTIVE VEHICULAR INSURANCE
MANUFACTURING PRODUCTS OPERATIONS OPERATIONS ELIMINATIONS CONSOLIDATED
--------------- ----------- ------------ ------------ ------------- --------------
1994
<S> <C> <C> <C> <C> <C> <C>
Revenues:
Outside customers............. $ 859,089 $ 157,568 $ 43,653 $ 36,167 $ -- $ 1,096,477
Intersegment sales............ -- -- 3,648 12,145 (15,793 ) --
--------------- ----------- ------------ ------------ ------------- --------------
$ 859,089 $ 157,568 $ 47,301 $ 48,312 $ (15,793 ) $ 1,096,477
--------------- ----------- ------------ ------------ ------------- --------------
--------------- ----------- ------------ ------------ ------------- --------------
Operating profit (loss)......... $ 58,619 $ 19,652 $ 6,824 $ (916 ) $ -- $ 84,179
Corporate expenses.............. (8,534 )
Interest income:
Segment....................... 5,510 5,510
Corporate..................... 1,591
Interest expense:
Segment....................... (3,784 ) (3,784 )
Corporate..................... (36,381 )
Other expenses, net............. 1,002
Minority equity................. (586 )
--------------
Income before income taxes...... $ 42,997
--------------
--------------
Identifiable assets............. $ 264,147 $ 81,976 $ 17,827 $ 116,062 $ 480,012
Partnership assets.............. 36,776
Corporate assets................ 5,263
--------------
Total assets at December 31,
1994........................... $ 522,051
--------------
--------------
Depreciation and amortization:
Segment....................... $ 7,876 $ 5,294 $ 8,992 $ 409 $ 22,571
Other......................... 23
Capital expenditures:
Segment....................... 8,937 1,152 7,580 215 17,884
Other......................... 325
</TABLE>
Intersegment sales are accounted for at prices comparable to normal
unaffiliated customer sales. Corporate and Partnership assets consist of
short-term investments, savings deposits and certain other assets.
NOTE M -- FAIR VALUES OF FINANCIAL INSTRUMENTS
The following methods and assumptions were used by the Company in estimating
the fair value of financial instruments:
CASH AND CASH EQUIVALENTS: The carrying amount reported in the balance
sheet for cash and cash equivalents approximates its fair value.
INDEBTEDNESS: The carrying amounts of the Company's notes payable to
shareholders, Great Dane term loan payable, Great Dane revolving credit line,
Partnership term loan payable, equipment term loan, economic development term
loan and line of credit approximate their fair value. The fair
F-21
<PAGE>
GREAT DANE HOLDINGS INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE M -- FAIR VALUES OF FINANCIAL INSTRUMENTS (CONTINUED)
values of the Company's 12 3/4% Senior Subordinated Debentures and 14 1/2%
Subordinated Discount Debentures are based on quoted market prices. The fair
values of the Company's other indebtedness is estimated using discounted cash
flow analyses based on current market rates.
The carrying amount and fair value of the Company's indebtedness at December
31, 1994, are as follows (dollars in thousands):
<TABLE>
<CAPTION>
CARRYING AMOUNT FAIR VALUE
----------------- -----------
<S> <C> <C>
Long-term debt and notes payable..................................... $ 293,265 $ 292,000
</TABLE>
NOTE N -- SELECTED QUARTERLY DATA (UNAUDITED)
<TABLE>
<CAPTION>
1993 QUARTER ENDED 1994 QUARTER ENDED
---------------------------------------------- ---------------------------------------------
SEPTEMBER DECEMBER SEPTEMBER DECEMBER
MARCH 31 JUNE 30 30 31 MARCH 31 JUNE 30 30 31
--------- -------- --------- --------- --------- -------- --------- --------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues............... $204,933 $225,407 $230,655 $248,331 $271,680 $277,622 $256,679 $290,496
Gross profit........... 29,302 33,808 31,126 36,285 40,845 44,969 39,495 41,936
Income (loss) before
accounting changes.... (744) 1,350 (536) 3,294 6,386 8,391 2,310 7,261
Accounting changes..... (46,626) -- -- -- -- -- -- --
Net income (loss)...... (47,370) 1,350 (536) 3,294 6,386 8,391 2,310 7,261
Income (loss) per
share:
Income (loss) before
accounting
changes............. $ (.04) $ .08 $ (.03) $ .19 $ .38 $ .50 $ .14 $ .43
Accounting changes... (2.78) -- -- -- -- -- -- --
Net income (loss).... (2.82) .08 (.03) .19 .38 .50 .14 .43
</TABLE>
NOTE O -- SUBSEQUENT EVENTS
In January 1995, Motors and its subsidiaries finalized a refinancing with a
bank whereby Motors entered into a loan agreement providing for a $45 million
term loan and a $20 million revolving credit facility. The funds from the term
loan were used to repay approximately $27 million of bank debt including the
Partnership term loan, the equipment term loan and the notes payable to the
bank, provide $15 million to the Company to retire a portion of certain notes
outstanding to the Company's shareholders and pay fees and expenses.
Availability under the revolving credit facility is based on the amount of
eligible trade accounts receivable and inventory and may be used for working
capital needs, as well as for general corporate purposes.
The new term loan requires twenty quarterly principal payments of
approximately $2.3 million, commencing June 30, 1995, plus interest at either
the bank's prime rate plus 1.25% (subject to reductions of up to 0.5% upon the
occurrence of certain events) or a selected Eurodollar contract rate plus 300
basis points (subject to reductions of up to 50 basis points upon the occurrence
of certain events). The new term loan is secured by substantially all of Motors'
assets including the stock of the Insurance Subsidiary. The new term loan
agreement requires Motors to, among other things, comply with certain financial
covenants, limits addition to and sales of Motors' fixed assets and limits
additional borrowings by Motors.
In February 1995, Great Dane Trailers amended its loan and security
agreement. Pursuant to the amended agreement, the Lenders have loaned $28
million as a term loan and have agreed to provide, at any given time, up to $150
million (less amounts then outstanding as a term loan) as a revolving credit
facility (subject to availability based on the amount of eligible trade accounts
receivable and inventory) to be used as working capital by Great Dane and for
general corporate purposes. The initial term loan proceeds, which were drawn
immediately upon closing, were used, together with drawings under the revolver,
to repay approximately $17 million of bank debt, provide $15 million to the
Company to retire the balance of the shareholder notes and pay fees and
expenses. The term loan requires monthly
F-22
<PAGE>
GREAT DANE HOLDINGS INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE O -- SUBSEQUENT EVENTS (CONTINUED)
principal payments of $0.3 million plus interest on the unpaid principal amount
of the loan in arrears at a rate equal to 1% above the prime rate of interest
charged from time to time by Bank of America or a rate equal to 2.5% above a
selected Eurodollar contract rate with the unpaid principal balance due five
years after the closing date. The loans are secured by substantially all of the
assets of Great Dane and its subsidiaries. The Agreement requires Great Dane to,
among other things, comply with certain financial covenants, and limits the
amount of loans and transfers to the Company, limits additions to and sales of
Great Dane's fixed assets and limits additional Great Dane borrowings.
In January 1995, Motors liquidated the Partnership.
On November 23, 1994, the Company filed a Registration Statement on Form S-1
with the Securities and Exchange Commission in connection with an initial public
offering ("IPO") of the Company's common stock. All of the net proceeds are
intended to be used to redeem 12 3/4% Senior Subordinated Debentures due 2001.
F-23
<PAGE>
[LARGE AERIAL PHOTOGRAPH OF THE SCSM PLANT SURROUNDED BY INSETS OF (1) 4-DOOR
EXTENDED CAB TRUCK, (2) CHECKER LOGO, (3) 2-DOOR TAHOE TRUCK, (4) PORTION OF THE
SCSM PRESS LINE, (5) SCSM LOGO AND (6) PORTION OF THE SCSM ASSEMBLY LINE]
CMC AND SCSM DEVELOP, DESIGN, ENGINEER AND MANUFACTURE A BROAD RANGE OF
SHEET METAL AUTOMOTIVE COMPONENTS AND SUBASSEMBLIES FOR SALE TO NORTH AMERICAN
OEM'S. CMC AND SCSM FOCUS ON SUPPLYING HIGHER-MARGIN, VALUE-ADDED PRODUCTS TO
THE HIGH GROWTH LIGHT TRUCK AND SPORT UTILITY VEHICLE MARKET.
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NO PERSON HAS BEEN AUTHORIZED IN CONNECTION WITH THE OFFERING MADE HEREBY TO
GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS
PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY UNDERWRITER. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO
BUY ANY OF THE SECURITIES OFFERED HEREBY TO ANY PERSON OR BY ANYONE IN ANY
JURISDICTION IN WHICH IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER
THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS
CORRECT AS OF ANY DATE SUBSEQUENT TO THE DATE HEREOF.
--------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information.......................... 2
Prospectus Summary............................. 3
Risk Factors................................... 9
Use of Proceeds................................ 12
Dividend Policy................................ 12
Capitalization................................. 13
Dilution....................................... 14
Selected Consolidated Financial Data........... 15
Management's Discussion and Analysis of
Financial Condition and Results of
Operations.................................... 16
Business....................................... 20
Management..................................... 33
Certain Relationships and Related
Transactions.................................. 42
Ownership of Common Stock...................... 43
Description of Capital Stock................... 43
Shares Eligible for Future Sale................ 45
Certain United States Tax Consequences to
Non-United States Holders..................... 46
Underwriting................................... 48
Legal Matters.................................. 49
Experts........................................ 49
Additional Information......................... 49
Index to Financial Statements.................. F-1
</TABLE>
4,000,000 SHARES
GREAT DANE
HOLDINGS INC.
COMMON STOCK
-------------
PROSPECTUS
-------------
ALEX. BROWN & SONS
INCORPORATED
SMITH BARNEY INC.
, 1995
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
<TABLE>
<S> <C>
Registration Fee................................................. $ 33,906
NASD Filing Fee.................................................. 10,333
Listing Fees..................................................... 50,000
Legal Fees and Expenses.......................................... 290,000*
Blue Sky Fees and Expenses....................................... 50,000*
Accounting Fees and Expenses..................................... 125,000*
Printing and Engraving Expenses.................................. 215,000*
Transfer Agent and Registrar Fees................................ 3,500
Miscellaneous.................................................... $ 100,000*
---------
Total........................................................ $ 877,739*
---------
---------
</TABLE>
* Estimated
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law ("DGCL") and Article
EIGHTH of the Certificate of Incorporation of Holdings provide for
indemnification of the directors and officers of the Registrant in a variety of
circumstances which may include liabilities under the Securities Act of 1933, as
amended (the "Act").
Article EIGHTH of the Certificate of Incorporation of Holdings provides:
EIGHTH. Any person who was or is a party or is threatened, pending, or
completed action, suit, or proceeding, whether civil, criminal,
administrative, or investigative (whether or not by or in the right of the
Corporation) by reason of the fact that he is or was a director, officer,
incorporator, employee, or agent of the Corporation, or is or was serving at
the request of the Corporation as a director, officer, incorporator,
employee, partner, trustee, or agent of another corporation, partnership,
joint venture, trust, or other enterprise (including an employee benefit
plan), shall be entitled to be indemnified by the Corporation to the full
extent then permitted by law against expenses (including counsel fees and
disbursements), judgments, fines (including excise taxes assessed on a
person with respect to an employee benefit plan), and amounts paid in
settlement incurred by him in connection with such action, suit, or
proceeding. Such right of indemnification shall inure whether or not the
claim asserted is based on matters which antedate the adoption of this
Article EIGHTH. Such right of indemnification shall continue as to a person
who has ceased to be a director, officer, incorporator, employee, partner,
trustee, or agent and shall inure to the benefit of the heirs and personal
representatives of such a person. The indemnification provided by this
Article EIGHTH shall not be deemed exclusive of any other rights which may
be provided now or in the future under any provision currently in effect or
hereafter adopted of the By-laws, by any agreement, by vote of stockholders,
by resolution of disinterested directors, by provision of law, or otherwise.
The general effect of the provisions in the Holdings' Certificate of
Incorporation and the DGCL is to provide that Holdings shall indemnify its
directors and officers against all liabilities and expenses actually and
reasonably incurred in connection with the defense or settlement of any judicial
or administrative proceedings in which they have become involved by reason of
their status as corporate directors or officers, if they acted in good faith and
in the reasonable belief that their conduct was neither unlawful (in the case of
criminal proceedings) nor inconsistent with the best interests of Holdings. With
respect to legal proceedings by or in the right of Holdings in which a director
or officer is adjudged liable for improper performance of his duty to Holdings
or another enterprise which such person served in a similar capacity at the
request of Holdings, indemnification is limited by such provisions to that
amount which is permitted by the court.
II-1
<PAGE>
In addition, Holdings and/or its subsidiaries have entered into employment
agreements with David R. Markin, Jay H. Harris and Jeffrey Feldman which require
the Company to indemnify Messrs. Markin, Harris and Feldman against certain
liabilities that may arise by reason of their status or service as directors or
officers of, or consultants to, the Company or its subsidiaries (other than
liabilities arising from gross negligence or willful misconduct) to the full
extent permitted by law. Holdings has also entered into indemnification
agreements with its officers and directors.
Reference is made to Section 8 of the Underwriting Agreement, a copy of
which is filed as Exhibit 1.1 hereto, which provides for indemnification of the
directors and officers of the Registrant who sign the Registration Statement by
the Underwriters against certain liabilities, including those arising under the
Securities Act, in certain circumstances.
ITEM 15. RECENT ISSUANCES OF UNREGISTERED SECURITIES.
In October 1994 International Controls Corp., a Florida corporation
("International Controls") merged with and into Holdings, its wholly-owned
subsidiary for the purpose of reincorporating in Delaware. Each share of common
stock held by the four shareholders of International Controls was cancelled and
converted into the right to receive a pro rata portion of the 1,000 shares of
Common Stock of Holdings then outstanding. Prior to commencement of this
Offering, each share of Common Stock of Holdings will be split 16,800 for 1,
resulting in 16,800,000 shares outstanding prior to this Offering.
The issuances referenced were not sales of securities, but if characterized
as sales, would be entitled to the exemption from registration set forth in
Section 4(2) of the Securities Act relating to sales not involving a public
offering.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- --------- ---------------------------------------------------------------------------------------------------
<C> <S>
1.1 Form of Underwriting Agreement.**
3.1 Composite Certificate of Incorporation of Holdings reflecting all amendments to date.**
3.2 By-Laws of Holdings.***
4.1 Form of Indenture between International Controls Corp. ("International Controls") and First
Fidelity Bank, National Association ("First Fidelity"), New Jersey, as Trustee relating the
12 3/4% Senior Subordinated Debentures due August 1, 2001 of International Controls (incorporated
herein by reference to Exhibit 4.1 to Registration Statement No. 33-7212 filed with the Securities
and Exchange Commission on July 15, 1986).
4.2 First Supplemental Indenture relating to the 12 3/4% Senior Subordinated Debentures due August 1,
2001 of International Controls dated as of October 19, 1994 among International Controls, the
Registrant and First Fidelity.***
4.3 Form of Indenture between International Controls and Midlantic National Bank ("Midlantic"), as
Trustee, relating to the 14 1/2% Subordinated Discount Debentures due January 1, 2006 of
International Controls (incorporated herein by reference to Exhibit 4.1 to Registration Statement
No. 33-1788 filed with the Securities and Exchange Commission on November 26, 1985).
4.4 First Supplemental Indenture relating to the 14 1/2% Subordinated Discount Debentures due January
1, 2006 of International Controls, dated October 19, 1994 among International Controls, the
Registrant and Midlantic.***
4.5 Form of Common Stock Certificate.**
4.6 Great Dane Holdings Inc. 1994 Stock Option Plan.+
4.7 1995 Outside Directors Stock Option Plan.+
</TABLE>
II-2
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- --------- ---------------------------------------------------------------------------------------------------
<C> <S>
5.1 Opinion of Hutton Ingram Yuzek Gainen Carroll & Bertolotti regarding the legality of the securities
being registered.**
10.1 [Intentionally Left Blank]
10.2 [Intentionally Left Blank]
10.3 [Intentionally Left Blank]
10.4 Amended and Restated Employment Agreement, dated as of November 1, 1985, between Motors (as the
successor to Checker L.P.) and David R. Markin ("Markin Employment Agreement").**
10.5 Amendment, dated as of March 4, 1992, to Markin Employment Agreement (incorporated herein by
reference to Exhibit 10.3 of International Controls' Annual Report on Form 10-K for the year ended
December 31, 1991 (the "1991 10-K")).
10.6 Extension, dated July 12, 1993, of Markin Employment Agreement (incorporated herein by reference to
Exhibit 10.6 of International Controls' Annual Report on Form 10-K for the year ended December 31,
1993 (the "1993 10-K")).
10.7 Amended and Restated Employment Agreement, dated as of June 1, 1992, between Yellow Cab Company (as
the assignee of Motors) and Jeffrey Feldman (incorporated herein by reference to Exhibit 28.2 of
International Controls' Quarterly Report on Form 10-Q for the quarter ended June 30, 1992 (the
"June 1992 10-Q")).
10.8 Form of Motors Stated Benefit Salary Continuation Agreement.**
10.9 Employment Agreement, dated as of July 1, 1992, between Registrant (as the successor to
International Controls) and Jay H. Harris (incorporated herein by reference to Exhibit 28.1 to the
June 1992 10-Q) (the "Harris Employment Agreement").
10.10 Amendment, dated April 6, 1994, to Harris Employment Agreement.***
10.11 [Intentionally Left Blank]
10.12 [Intentionally Left Blank]
10.13 [Intentionally Left Blank]
10.14 [Intentionally Left Blank]
10.15 [Intentionally Left Blank]
10.16 [Intentionally Left Blank]
10.17 [Intentionally Left Blank]
10.18 [Intentionally Left Blank]
10.19 Lease, dated December 1, 1988, between SCSM and Park Corporation.**
10.20 [Intentionally Left Blank]
10.21 [Intentionally Left Blank]
10.22 [Intentionally Left Blank]
10.23 [Intentionally Left Blank]
10.24 [Intentionally Left Blank]
10.25 [Intentionally Left Blank]
10.26 [Intentionally Left Blank]
10.27 [Intentionally Left Blank]
10.28 [Intentionally Left Blank]
10.29 [Intentionally Left Blank]
10.30 [Intentionally Left Blank]
</TABLE>
II-3
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- --------- ---------------------------------------------------------------------------------------------------
<C> <S>
10.31 [Intentionally Left Blank]
10.32 Assumption Agreement dated as of August 1, 1989, by and between Motors and the West Virginia
Economic Development Authority (incorporated herein by reference to Exhibit 10.12 to International
Controls' Annual Report on Form 10-K for the year ended December 31, 1990).
10.33 Agreement, dated as of September 1, 1991, between Yellow Cab (as the assignee of Checker L.P.) and
Jerry E. Feldman (incorporated herein by reference to Exhibit 10.12 to the 1991 10-K).
10.34 Form of Checker Motors Corporation Excess Benefit Retirement Plan, effective January 1, 1983
(incorporated herein by reference to Exhibit 19.9 to the 1991 10-K).
10.35 Amended and Restated License Agreement, dated December 30, 1992, between Motors and Checker Taxi
Association, Inc. (incorporated herein by reference to Exhibit 10.28 of International Controls'
Annual Report on Form 10-K for the period ended December 31, 1992 (the "1992 10-K")).
10.36 Employment Agreement, dated as of January 1, 1994, between Registrant (as successor to
International Controls) and David R. Markin.***
10.37 [Intentionally Left Blank]
10.38 Settlement Agreement, dated as of June 21, 1994, among John Garamendi, as Insurance Commissioner of
the State of California, Base Assets Trust, Checker L.P., Motors, Checker Holding Corp. III and
Registrant (as successor to International Controls).***
10.39 Form of Indemnification Agreement.***
10.40 Sale, Installation and Technical Assistance Agreement, dated November 14, 1983, between Graaff KG
and Great Dane.***
10.41 Form of Great Dane Supplemental Retirement Income Plan, effective January 1, 1994.***
10.42 [Intentionally Left Blank]
10.43 Amended and Restated Operating Agreement, dated as of August 31, 1988, between Associates
Commercial Corporation (as successor to Great Dane Finance Company) and Great Dane (the
"Associates Agreement").***
10.44 Amendment, dated February 7, 1994, to the Associates Agreement.***
10.45 Amendment, dated May 18, 1994, to the Associates Agreement.***
10.46 Stock Option Agreement between Registrant and Jay H. Harris dated as of January 17, 1995.+
10.47 Form of Escrow Deposit Agreement between Registrant and First Fidelity.**
10.48 Loan Agreement, dated January 26, 1995, by and among Motors, Yellow Cab, AutoWerks, CMC, SCSM, the
Lenders therein and NBD Bank, as Agent ("NBD") (the "Loan Agreement") (incorporated herein by
reference to Exhibit 10.23 to Registrant's Annual Report on Form 10-K for the year ended December
31, 1994 (the "1994 10-K")).
10.49 Pledge Agreement and Irrevocable Proxy, dated as of January 26, 1995, given by Motors to NBD
(incorporated herein by reference to Exhibit 10.24 of the 1994 10-K).
10.50 Security Agreement, dated as of January 26, 1995, made by Motors, Yellow Cab, AutoWerks and CMC to
NBD (incorporated herein by reference to Exhibit 10.25 of the 1994 10-K).
</TABLE>
II-4
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- --------- ---------------------------------------------------------------------------------------------------
<C> <S>
10.51 Amended and Restated Loan and Security Agreement dated as of February 14, 1995, by and among Great
Dane, Great Dane Trailers Tennessee, Inc., Great Dane Los Angeles, Inc., the financial
institutions named therein and BankAmerica Business Credit Inc., as Agent ("BABC") (incorporated
herein by reference to Exhibit 10.26 of the 1994 10-K).
10.52 Amended and Restated Pledge Agreement, dated as of February 14, 1995, made by Great Dane Trailers,
Inc., in favor of BABC (incorporated herein by reference to Exhibit 10.27 of the 1994 10-K).
10.53 Amended and Restated Agreement Regarding Stock and Other Matters, dated as of February 14, 1995,
between the Company and BABC (incorporated herein by reference to Exhibit 10.28 of the 1994 10-K).
10.54 Retirement Plan for Great Dane Trailers, Inc., effective as of January 1, 1989.**
10.55 Checker Motors Pension Plan, as amended and restated, effective January 1, 1987.**
10.56 Composite Checker Employees' 401(k) Retirement Benefit Plan, reflecting all amendments to date.**
11.1 Statement re:computation of income (loss) per share.**
21.1 Subsidiaries of Registrant.+
23.1 Consent of Ernst & Young LLP.**
23.2 Consent of Hutton Ingram Yuzek Gainen Carroll & Bertolotti -- see Exhibit 5.1.
23.3 Consent of Miles Berger to become a director of Registrant.+
23.4 Consent of Leonard Gubar to become a director of Registrant.+
23.5 Consent of Alan Hirschfield to become a director of Registrant.+
24.1 Power of Attorney (appears on signature page of the Registration Statement filed on November 23,
1994).
27.1 Financial Data Schedule.+
28.1 Schedule P of Annual Statements provided by Country to Illinois Regulatory Authorities
(incorporated herein by reference to Exhibit 28.1 of the 1994 10-K).
<FN>
- --------------
** Filed herewith.
*** Filed as an exhibit to this Registration Statement on November 23, 1994.
+ Filed as an exhibit to this Registration Statement on February 27, 1995.
</TABLE>
(b) Financial Statement Schedules
The following financial statement schedules are filed as part of the
Registration Statement:
<TABLE>
<C> <C> <S> <C>
Report of Independent Auditors................................................................. S-2
Schedule III -- Condensed Financial Information of Registrant......................... S-3
Schedule -- Valuation and Qualifying Accounts.....................................
VIII S-6
Schedule XIV -- Supplemental Information Concerning Property-Casualty Insurance
Operations............................................................ S-7
</TABLE>
II-5
<PAGE>
ITEM 17. UNDERTAKINGS.
The undersigned Registrant hereby undertakes as follows:
(a) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other
than the payment by the Registrant of expenses incurred or paid by a
director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities
being registered, the Registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such
issue.
(b) (1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed
as part of this registration statement in reliance upon Rule 430A
and contained in a form of prospectus filed by the Registrant
pursuant to Rule 424(b)(1) or (4), or 497(h) under the Securities
Act shall be deemed to be part of this registration statement as of
the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of
such securities at that time shall be deemed to be the initial bona
fide offering thereof.
II-6
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Amendment No. 2 to the Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized, on April 4, 1995.
GREAT DANE HOLDINGS INC.
By: ________/s/_DAVID R. MARKIN_______
David R. Markin,
President and Chief Executive
Officer
Executed in City of New York,
State of New York
Pursuant to the requirements of the Securities Act of 1933, the Registration
Statement has been signed by the following persons in the capacities and on the
dates indicated.
GREAT DANE HOLDINGS INC.:
<TABLE>
<C> <S> <C>
** Chairman of the Board April 4, 1995
Allan R. Tessler
/s/DAVID R. MARKIN President, Chief Executive April 4, 1995
David R. Markin Officer and Director
(Principal Executive
Officer)
** Treasurer (Principal April 4, 1995
Marlan R. Smith Financial and Accounting
Officer)
** Vice Chairman of the Board April 4, 1995
Martin L. Solomon and Secretary
** Vice Chairman of the Board April 4, 1995
Wilmer J. Thomas, Jr.
** By: /s/DAVID R. MARKIN
David R. Markin
Attorney in Fact
</TABLE>
II-7
<PAGE>
INDEX TO FINANCIAL STATEMENT SCHEDULES
COVERED BY REPORTS OF INDEPENDENT AUDITORS
<TABLE>
<C> <C> <S> <C>
Report of Independent Auditors................................................................. S-2
Schedule III -- Condensed Financial Information of Registrant........................ S-3
Schedule VIII -- Valuation and Qualifying Accounts.................................... S-6
Schedule XIV -- Supplemental Information Concerning Property -- Casualty Insurance
Operations........................................................... S-7
</TABLE>
All other schedules for which provision is made in the applicable accounting
regulations of the Securities and Exchange Commission are not required under the
related instructions or are inapplicable, and therefore, have been omitted.
S-1
<PAGE>
REPORT OF INDEPENDENT AUDITORS
Board of Directors
Great Dane Holdings Inc.
We have audited the consolidated financial statements of Great Dane Holdings
Inc. and subsidiaries as of December 31, 1993 and 1994, and for each of the
three years in the period ended December 31, 1994, and have issued our report
thereon dated February 14, 1995, (included elsewhere in this Registration
Statement). Our audits also included the financial statement schedules listed in
Item 16(b) of this Registration Statement. These schedules are the
responsibility of the Company's management. Our responsibility is to express an
opinion based on our audits.
In our opinion, the financial statement schedules referred to above, when
considered in relation to the basic financial statements taken as a whole,
present fairly in all material respects the information set forth therein.
ERNST & YOUNG LLP
Kalamazoo, Michigan
February 14, 1995, except for Note A,
as to which the date is March 27, 1995
S-2
<PAGE>
GREAT DANE HOLDINGS INC.
SCHEDULE III -- CONDENSED FINANCIAL INFORMATION OF REGISTRANT
CONDENSED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------
1993 1994
------------ ------------
<S> <C> <C>
Assets:
Cash and cash equivalents........................................................ $ 1,468 $ 1,401
Accounts receivable.............................................................. 566 535
Other current assets............................................................. 4,345 1,481
------------ ------------
Total Current Assets........................................................... 6,379 3,417
Equipment, net................................................................... -- 302
Investments in subsidiaries...................................................... 91,388 152,873
Other assets..................................................................... 16,331 15,022
------------ ------------
Total Assets....................................................................... $ 114,098 $ 171,614
------------ ------------
------------ ------------
Liabilities and Shareholders' Deficit:
Accounts payable................................................................. $ 34 $ 869
Income taxes payable (recoverable)............................................... (1,702) 9,062
Accrued compensation............................................................. 256 257
Accrued interest................................................................. 11,468 11,468
Other accrued liabilities........................................................ 9,565 7,041
------------ ------------
Total Current Liabilities...................................................... 19,621 28,697
Long-term debt................................................................... 205,732 207,327
Other noncurrent liabilities..................................................... 31,713 29,489
Intercompany accounts with subsidiaries.......................................... 6,622 31,343
Shareholders' deficit:
Common stock................................................................... 168 168
Paid-in capital................................................................ 14,832 14,832
Retained earnings deficit...................................................... (36,217) (11,869)
Amount paid in excess of Motors' net assets.................................... (127,748) (127,748)
Notes receivable from shareholders............................................. (625) (625)
------------ ------------
Total Shareholders' Deficit.................................................... (149,590) (125,242)
------------ ------------
Total Liabilities and Shareholders' Deficit........................................ $ 114,098 $ 171,614
------------ ------------
------------ ------------
</TABLE>
S-3
<PAGE>
GREAT DANE HOLDINGS INC.
SCHEDULE III -- CONDENSED FINANCIAL INFORMATION OF REGISTRANT -- CONTINUED
CONDENSED STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------
1992 1993 1994
---------- ---------- ----------
<S> <C> <C> <C>
Selling, general and administrative expenses................................ $ (4,396) $ (4,646) $ (8,534)
Interest expense............................................................ (30,138) (30,216) (30,812)
Equity in earnings of subsidiaries.......................................... 14,959 29,376 48,323
Other income (expense)...................................................... (99) 211 307
Special charge.............................................................. -- (7,500) --
Intercompany income:
Corporate charges......................................................... 1,008 1,008 1,008
Interest.................................................................. 305 -- --
---------- ---------- ----------
Income (loss) before income taxes and accounting changes.................... (18,361) (11,767) 10,292
Income tax benefit.......................................................... 10,806 15,131 14,056
---------- ---------- ----------
Income (loss) before accounting changes..................................... (7,555) 3,364 24,348
Accounting changes.......................................................... -- (46,626) --
---------- ---------- ----------
Net Income (Loss)........................................................... $ (7,555) $ (43,262) $ 24,348
---------- ---------- ----------
---------- ---------- ----------
</TABLE>
S-4
<PAGE>
GREAT DANE HOLDINGS INC.
SCHEDULE III -- CONDENSED FINANCIAL INFORMATION OF REGISTRANT -- CONTINUED
CONDENSED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------
1992 1993 1994
---------- ---------- ----------
<S> <C> <C> <C>
Net cash flow used in operating activities.................................. $ (20,973) $ (47,640) $ (11,317)
Cash flows from investing activities:
Purchase of equipment..................................................... -- -- (325)
Investment in subsidiaries................................................ -- -- (30,000)
Other..................................................................... (334) 5,900 16
---------- ---------- ----------
Net cash flow provided by (used in) investing activities.................... (334) 5,900 (30,309)
Cash flows from financing activities:
Advances from subsidiaries................................................ 21,284 38,278 41,559
---------- ---------- ----------
Net cash flow provided by financing activities.............................. 21,284 38,278 41,559
---------- ---------- ----------
Decrease in cash and cash equivalents....................................... (23) (3,462) (67)
Beginning cash and cash equivalents......................................... 4,953 4,930 1,468
---------- ---------- ----------
Ending cash and cash equivalents............................................ $ 4,930 $ 1,468 $ 1,401
---------- ---------- ----------
---------- ---------- ----------
</TABLE>
The Registrant's subsidiaries declared dividends totaling $120.9 million in
1992, $22 million in 1993 and $15 million in 1994. These dividends were declared
to offset certain intercompany account balances at the respective dates.
S-5
<PAGE>
GREAT DANE HOLDINGS INC. AND SUBSIDIARIES
SCHEDULE VIII -- VALUATION AND QUALIFYING ACCOUNTS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
COL. A COL. B COL. C COL. D COL. E
- ----------------------------------- ----------- -------------------------- ----------- -----------
ADDITIONS CHARGED TO:
BALANCE AT -------------------------- BALANCE AT
BEGINNING COST AND OTHER END OF
DESCRIPTION OF PERIOD EXPENSES ACCOUNTS DEDUCTIONS(1) PERIOD
- ----------------------------------- ----------- ------------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31, 1992:
Deducted from assets:
Allowance for doubtful accounts
-- trade...................... $ 606 $ 183 $ -- $ (166 ) $ 623
----------- ------------- ----- ----------- -----------
----------- ------------- ----- ----------- -----------
Allowance for doubtful accounts
-- finance lease
receivables................... $ 944 $ 52 $ -- $ (317 ) $ 679
----------- ------------- ----- ----------- -----------
----------- ------------- ----- ----------- -----------
Contract & warranty reserves..... $ 8,263 $ 3,564 $ -- $ (3,452 ) $ 8,375
----------- ------------- ----- ----------- -----------
----------- ------------- ----- ----------- -----------
Workers' compensation............ $ 265 $ 4,584 $ -- $ (3,008 ) $ 1,841
----------- ------------- ----- ----------- -----------
----------- ------------- ----- ----------- -----------
Claims........................... $ 2,717 $ 783 $ -- $ (168 ) $ 3,332
----------- ------------- ----- ----------- -----------
----------- ------------- ----- ----------- -----------
YEAR ENDED DECEMBER 31, 1993:
Deducted from assets:
Allowance for doubtful accounts
-- trade...................... $ 623 $ 234 $ -- $ (109 ) $ 748
----------- ------------- ----- ----------- -----------
----------- ------------- ----- ----------- -----------
Allowance for doubtful accounts
-- finance lease
receivables................... $ 679 $ 52 $ -- $ (572 ) $ 159
----------- ------------- ----- ----------- -----------
----------- ------------- ----- ----------- -----------
Contract & warranty reserves..... $ 8,375 $ 5,439 $ -- $ (3,429 ) $ 10,385
----------- ------------- ----- ----------- -----------
----------- ------------- ----- ----------- -----------
Workers' compensation............ $ 1,841 $ 1,200 $ -- $ (1,927 ) $ 1,114
----------- ------------- ----- ----------- -----------
----------- ------------- ----- ----------- -----------
Claims........................... $ 3,332 $ 1,103 $ -- $ (1,106 ) $ 3,329
----------- ------------- ----- ----------- -----------
----------- ------------- ----- ----------- -----------
YEAR ENDED DECEMBER 31, 1994:
Deducted from assets:
Allowance for doubtful accounts
-- trade...................... $ 748 $ 804 $ -- $ (210 ) $ 1,342
----------- ------------- ----- ----------- -----------
----------- ------------- ----- ----------- -----------
Allowance for doubtful accounts
-- finance lease
receivables................... $ 159 $ (172 ) $ -- $ 13 $ 0
----------- ------------- ----- ----------- -----------
----------- ------------- ----- ----------- -----------
Contract & warranty reserves..... $ 10,385 $ 8,076 $ -- $ (4,016 ) $ 14,445
----------- ------------- ----- ----------- -----------
----------- ------------- ----- ----------- -----------
Workers' compensation............ $ 1,114 $ 956 $ -- $ (435 ) $ 1,635
----------- ------------- ----- ----------- -----------
----------- ------------- ----- ----------- -----------
Claims........................... $ 3,329 $ 1,078 $ -- $ (2,103 ) $ 2,304
----------- ------------- ----- ----------- -----------
----------- ------------- ----- ----------- -----------
<FN>
- --------------
(1) Reclassification to other reserves and utilization of reserves.
</TABLE>
S-6
<PAGE>
GREAT DANE HOLDINGS INC. AND SUBSIDIARIES
SCHEDULE XIV -- SUPPLEMENTAL INFORMATION CONCERNING PROPERTY -- CASUALTY
INSURANCE OPERATIONS
(DOLLARS IN THOUSANDS)
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<CAPTION>
COL. A COL. B COL. C COL. D COL. E COL. F COL. G
- ------------------------------ ------------ -------------- -------------- -------------- -------------- -----------------
RESERVES FOR
UNPAID
DEFERRED CLAIMS DISCOUNT,
POLICY AND CLAIM IF ANY,
AFFILIATION WITH ACQUISITION ADJUSTMENT DEDUCTED IN UNEARNED EARNED NET INVESTMENT
REGISTRANT COSTS EXPENSE(1) COLUMN C PREMIUMS(2) PREMIUMS(3) INCOME
- ------------------------------ ------------ -------------- -------------- -------------- -------------- -----------------
<S> <C> <C> <C> <C> <C> <C>
WHOLLY-OWNED INSURANCE SUBSIDIARY:
Year Ended:
December 31, 1992........... $ 1,832 $ 75,780 $ -- $ 10,463 $ 40,347 $ 8,227
------------ -------------- ------- -------------- -------------- -------
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December 31, 1993........... $ 1,893 $ 71,179 $ -- $ 9,547 $ 40,836 $ 7,838
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December 31, 1994........... $ 2,258 $ 69,318 $ -- $ 12,203 $ 48,312 $ 6,890
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COL. A COL. H COL. I COL. J COL. K
- ------------------------------ ------------------- --------------- ------------- -----------
CLAIMS AND CLAIM
ADJUSTMENT EXPENSES
INCURRED RELATED
TO: AMORTIZATION PAID
------------------- OR DEFERRED CLAIMS
(1) (2) POLICY AND CLAIM
AFFILIATION WITH CURRENT PRIOR ACQUISITION ADJUSTMENT PREMIUM
REGISTRANT YEAR YEARS COSTS EXPENSES WRITTEN
- ------------------------------ -------- --------- --------------- ------------- -----------
<S> <C> <C> <C> <C> <C>
WHOLLY-OWNED INSURANCE SUBSIDI
Year Ended:
December 31, 1992........... $ 30,322 $ 2,043 $ (241 ) $ 27,319 $ 39,238
-------- --------- ------ ------------- -----------
-------- --------- ------ ------------- -----------
December 31, 1993........... $ 33,193 $ (269) $ 61 $ 30,832 $ 39,920
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-------- --------- ------ ------------- -----------
December 31, 1994........... $ 39,517 $ (592) $ 365 $ 37,010 $ 50,652
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<FN>
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(1) Excludes reinsurance recoverable on unpaid claims and claims adjustment
expense of $13,888, $7,195 and $3,419 in 1992, 1993 and 1994, respectively,
in connection with the restatement of the balance sheet loss reserve amounts
as reported in accordance with SFAS No. 113.
(2) Excludes net ceded premiums of $286, $286 and $602 in 1992, 1993 and 1994,
respectively, in connection with the restatement of the balance sheet
unearned premium amounts as reported in accordance with SFAS No. 113.
(3) Includes premiums earned of $13,161, $13,400 and $12,145 in 1992, 1993 and
1994, respectively, in connection with coverage provided to other entities
in the consolidated group which have been eliminated in consolidation.
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S-7
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EXHIBIT INDEX
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EXHIBIT
NO. DESCRIPTION PAGE
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1.1 Form of Underwriting Agreement.**
3.1 Composite Certificate of Incorporation of Holdings reflecting all amendments to date.**
3.2 By-Laws of Holdings.***
4.1 Form of Indenture between International Controls Corp. ("International Controls") and First
Fidelity Bank, National Association ("First Fidelity"), New Jersey, as Trustee relating the
12 3/4% Senior Subordinated Debentures due August 1, 2001 of International Controls
(incorporated herein by reference to Exhibit 4.1 to Registration Statement No. 33-7212
filed with the Securities and Exchange Commission on July 15, 1986).
4.2 First Supplemental Indenture relating to the 12 3/4% Senior Subordinated Debentures due
August 1, 2001 of International Controls dated as of October 19, 1994 among International
Controls, the Registrant and First Fidelity.***
4.3 Form of Indenture between International Controls and Midlantic National Bank ("Midlantic"),
as Trustee, relating to the 14 1/2% Subordinated Discount Debentures due January 1, 2006 of
International Controls (incorporated herein by reference to Exhibit 4.1 to Registration
Statement No. 33-1788 filed with the Securities and Exchange Commission on November 26,
1985).
4.4 First Supplemental Indenture relating to the 14 1/2% Subordinated Discount Debentures due
January 1, 2006 of International Controls, dated October 19, 1994 among International
Controls, the Registrant and Midlantic.***
4.5 Form of Common Stock Certificate.**
4.6 Great Dane Holdings Inc. 1994 Stock Option Plan.+
4.7 1995 Outside Directors Stock Option Plan.+
5.1 Opinion of Hutton Ingram Yuzek Gainen Carroll & Bertolotti regarding the legality of the
securities being registered.**
10.1 [Intentionally Left Blank]
10.2 [Intentionally Left Blank]
10.3 [Intentionally Left Blank]
10.4 Amended and Restated Employment Agreement, dated as of November 1, 1985, between Motors (as
the successor to Checker L.P.) and David R. Markin ("Markin Employment Agreement").**
10.5 Amendment, dated as of March 4, 1992, to Markin Employment Agreement (incorporated herein by
reference to Exhibit 10.3 of International Controls' Annual Report on Form 10-K for the
year ended December 31, 1991 (the "1991 10-K")).
10.6 Extension, dated July 12, 1993, of Markin Employment Agreement (incorporated herein by
reference to Exhibit 10.6 of International Controls' Annual Report on Form 10-K for the
year ended December 31, 1993 (the "1993 10-K")).
10.7 Amended and Restated Employment Agreement, dated as of June 1, 1992, between Yellow Cab
Company (as the assignee of Motors) and Jeffrey Feldman (incorporated herein by reference
to Exhibit 28.2 of International Controls' Quarterly Report on Form 10-Q for the quarter
ended June 30, 1992 (the "June 1992 10-Q")).
10.8 Form of Motors Stated Benefit Salary Continuation Agreement.**
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EXHIBIT
NO. DESCRIPTION PAGE
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10.9 Employment Agreement, dated as of July 1, 1992, between Registrant (as the
successor to International Controls) and Jay H. Harris (incorporated
herein by reference to Exhibit 28.1 to the June 1992 10-Q) (the "Harris
Employment Agreement").
10.10 Amendment, dated April 6, 1994, to Harris Employment Agreement.***
10.11 [Intentionally Left Blank]
10.12 [Intentionally Left Blank]
10.13 [Intentionally Left Blank]
10.14 [Intentionally Left Blank]
10.15 [Intentionally Left Blank]
10.16 [Intentionally Left Blank]
10.17 [Intentionally Left Blank]
10.18 [Intentionally Left Blank]
10.19 Lease, dated December 1, 1988, between SCSM and Park Corporation.**
10.20 [Intentionally Left Blank]
10.21 [Intentionally Left Blank]
10.22 [Intentionally Left Blank]
10.23 [Intentionally Left Blank]
10.24 [Intentionally Left Blank]
10.25 [Intentionally Left Blank]
10.26 [Intentionally Left Blank]
10.27 [Intentionally Left Blank]
10.28 [Intentionally Left Blank]
10.29 [Intentionally Left Blank]
10.30 [Intentionally Left Blank]
10.31 [Intentionally Left Blank]
10.32 Assumption Agreement dated as of August 1, 1989, by and between Motors and
the West Virginia Economic Development Authority (incorporated herein by
reference to Exhibit 10.12 to International Controls' Annual Report on
Form 10-K for the year ended December 31, 1990).
10.33 Agreement, dated as of September 1, 1991, between Yellow Cab (as the
assignee of Checker L.P.) and Jerry E. Feldman (incorporated herein by
reference to Exhibit 10.12 to the 1991 10-K).
10.34 Form of Checker Motors Corporation Excess Benefit Retirement Plan,
effective January 1, 1983 (incorporated herein by reference to Exhibit
19.9 to the 1991 10-K).
10.35 Amended and Restated License Agreement, dated December 30, 1992, between
Motors and Checker Taxi Association, Inc. (incorporated herein by
reference to Exhibit 10.28 of International Controls' Annual Report on
Form 10-K for the period ended December 31, 1992 (the "1992 10-K")).
10.36 Employment Agreement, dated as of January 1, 1994, between Registrant (as
successor to International Controls) and David R. Markin.***
10.37 [Intentionally Left Blank]
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EXHIBIT
NO. DESCRIPTION PAGE
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10.38 Settlement Agreement, dated as of June 21, 1994, among John Garamendi, as
Insurance Commissioner of the State of California, Base Assets Trust,
Checker L.P., Motors, Checker Holding Corp. III and Registrant (as
successor to International Controls).***
10.39 Form of Indemnification Agreement.***
10.40 Sale, Installation and Technical Assistance Agreement, dated November 14,
1983, between Graaff KG and Great Dane.***
10.41 Form of Great Dane Supplemental Retirement Income Plan, effective January
1, 1994.***
10.42 [Intentionally Left Blank]
10.43 Amended and Restated Operating Agreement, dated as of August 31, 1988,
between Associates Commercial Corporation (as successor to Great Dane
Finance Company) and Great Dane (the "Associates Agreement").***
10.44 Amendment, dated February 7, 1994, to the Associates Agreement.***
10.45 Amendment, dated May 18, 1994, to the Associates Agreement.***
10.46 Stock Option Agreement between Registrant and Jay H. Harris dated as of
January 17, 1995.+
10.47 Form of Escrow Deposit Agreement between Registrant and First Fidelity.**
10.48 Loan Agreement, dated January 26, 1995, by and among Motors, Yellow Cab,
AutoWerks, CMC, SCSM, the Lenders therein and NBD Bank, as Agent ("NBD")
(the "Loan Agreement") (incorporated herein by reference to Exhibit 10.23
to Registrant's Annual Report on Form 10-K for the year ended December
31, 1994 (the "1994 10-K")).
10.49 Pledge Agreement and Irrevocable Proxy, dated as of January 26, 1995,
given by Motors to NBD (incorporated herein by reference to Exhibit 10.24
of the 1994 10-K).
10.50 Security Agreement, dated as of January 26, 1995, made by Motors, Yellow
Cab, AutoWerks and CMC to NBD (incorporated herein by reference to
Exhibit 10.25 of the 1994 10-K).
10.51 Amended and Restated Loan and Security Agreement dated as of February 14,
1995, by and among Great Dane, Great Dane Trailers Tennessee, Inc., Great
Dane Los Angeles, Inc., the financial institutions named therein and
BankAmerica Business Credit Inc., as Agent ("BABC") (incorporated herein
by reference to Exhibit 10.26 of the 1994 10-K).
10.52 Amended and Restated Pledge Agreement, dated as of February 14, 1995, made
by Great Dane Trailers, Inc., in favor of BABC (incorporated herein by
reference to Exhibit 10.27 of the 1994 10-K).
10.53 Amended and Restated Agreement Regarding Stock and Other Matters, dated as
of February 14, 1995, between the Company and BABC (incorporated herein
by reference to Exhibit 10.28 of the 1994 10-K).
10.54 Retirement Plan for Great Dane Trailers, Inc., effective as of January 1,
1989.**
10.55 Checker Motors Pension Plan, as amended and restated effective January 1,
1987.**
10.56 Composite Checker Employees' 401(k) Retirement Benefit Plan, reflecting
all amendments to date.**
11.1 Statement re:computation of income (loss) per share.**
21.1 Subsidiaries of Registrant.+
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EXHIBIT
NO. DESCRIPTION PAGE
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<C> <S> <C>
23.1 Consent of Ernst & Young LLP.**
23.2 Consent of Hutton Ingram Yuzek Gainen Carroll & Bertolotti -- see Exhibit
5.1.
23.3 Consent of Miles Berger to become a director of Registrant.+
23.4 Consent of Leonard Gubar to become a director of Registrant.+
23.5 Consent of Alan Hirschfield to become a director of Registrant.+
24.1 Power of Attorney (appears on signature page of the Registration Statement
filed on November 23, 1994).
27.1 Financial Data Schedule.+
28.1 Schedule P of Annual Statements provided by Country to Illinois Regulatory
Authorities (incorporated herein by reference to Exhibit 28.1 of the 1994
10-K).
<FN>
- --------------
** Filed herewith.
*** Filed as an exhibit to this Registration Statement on November 23, 1994.
+ Filed as an exhibit to this Registration Statement on February 27, 1995.
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<PAGE>
4,000,000 Shares
Great Dane Holdings Inc.
Common Stock
($.01 Par Value)
UNDERWRITING AGREEMENT
April ____, 1995
Alex. Brown & Sons Incorporated
Smith Barney Inc.
As Representatives of the Several Underwriters
c/o Alex. Brown & Sons Incorporated
135 East Baltimore Street
Baltimore, Maryland 21202
Ladies and Gentlemen:
Great Dane Holdings Inc., a Delaware corporation (the "Company" or the
"Issuer"), proposes to sell to the several underwriters (the "Underwriters")
named in Schedule 1 hereto for whom you are acting as representatives (the
"Representatives") an aggregate of 4,000,000 shares of the Common Stock, par
value $.01 per share (the "Firm Shares"), of the Company. The respective
amounts of the Firm Shares to be so purchased by the several Underwriters are
set forth opposite their names in Schedule I hereto. The Company also proposes
to sell at the Underwriters' option an aggregate of up to 600,000 additional
shares of the Company's Common Stock (the "Option Shares") as set forth below.
As the Representatives, you have advised the Company (a) that you are
authorized to enter into this Agreement on behalf of the several Underwriters,
and (b) that the several Underwriters are willing, acting severally and not
jointly, to purchase the numbers of Firm Shares set forth opposite their
respective names in Schedule I, plus their pro rata portion of the Option Shares
if you elect to exercise the over-allotment option in whole or in part for the
accounts of the several Underwriters. The Firm Shares and the Option Shares (to
the extent the aforementioned option is exercised) are herein collectively
called the "Shares."
In consideration of the mutual agreements contained herein and of the
interests of the parties in the transactions contemplated hereby, the parties
hereto agree as follows:
<PAGE>
1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants as follows:
(i) A registration statement on Form S-1 (File No. 33-56595)
with respect to the Shares has been prepared by the Company in
conformity with the requirements of the Securities Act of 1933, as
amended (the "Act"), and the Rules and Regulations (the "Rules and
Regulations") of the Securities and Exchange Commission (the
"Commission") thereunder and has been filed with the Commission under
the Act. Copies of such registration statement, including any
amendments thereto, the preliminary prospectuses (meeting the
requirements of Rule 430A of the Rules and Regulations) contained
therein and the exhibits, financial statements and schedules, as
finally amended and revised, have heretofore been delivered by the
Company to you. Such registration statement (including any amendments
thereto), herein referred to as the "Registration Statement," which
shall be deemed to include all information omitted therefrom in
reliance upon Rule 430A and contained in the Prospectus referred to
below, has been declared effective by the Commission under the Act and
no post-effective amendment to the Registration Statement has been
filed as of the date of this Agreement. The form of prospectus first
filed by the Company with the Commission pursuant to its Rule 424(b)
and Rule 430A is herein referred to as the "Prospectus." Each
preliminary prospectus included in the Registration Statement prior to
the time it becomes effective is herein referred to as a "Preliminary
Prospectus." Any reference herein to the Prospectus shall be deemed
to include any supplements or amendments thereto filed with the
Commission after the date of filing of the Prospectus under
Rules 424(b) and 430A, and prior to the termination of the offering of
the Shares by the Underwriters.
(ii) The Company has been duly incorporated, is validly existing
as a corporation in good standing under the laws of the State of
Delaware and has the corporate power and authority to carry on its
business as described in the Prospectus and to own, lease and operate
its properties; the Company is duly qualified and in good standing as
a foreign corporation authorized to do business in each jurisdiction
in which the nature of its business or its ownership or leasing of
property requires such qualification, except where the failure to be
so qualified (singly or in the aggregate) would not have a material
adverse effect on the condition (financial or otherwise), earnings or
business affairs of the Company and its Subsidiaries, considered as
one enterprise.
2
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(iii) Each corporation listed on Schedule I, at least 50% of whose
securities having ordinary voting power (other than securities having
such voting power only by reason of the happening of a contingency)
are directly or indirectly owned by the Company, and each partnership
or joint venture (a "partnership") at least 50% of the equity
ownership of which is directly or indirectly owned by the Company, or
of which the Company directly or indirectly controls the controlling
general partner, whether in the form of a general, special or limited
partnership (each such corporation, or other entity, a "Subsidiary"),
has been duly incorporated or in the case of a partnership organized
and is validly existing as a corporation in good standing under the
laws of its jurisdiction of organization, with the corporate power and
authority to own, lease and operate its properties and conduct its
business as described in the Prospectus and each is duly qualified to
do business as a foreign corporation in good standing in each
jurisdiction in which such qualification is required, whether by
reason of the ownership or leasing of property or conduct of business,
except where the failure to be so qualified or be in good standing
(singly or in the aggregate) would not have a material adverse effect
on the condition (financial or otherwise), earnings or business
affairs of the Company and its Subsidiaries, considered as one
enterprise.
(iv) Each of the Company and International Controls Corp.
("ICC"), a Florida Corporation, had all requisite power and authority
to execute, deliver and perform its obligations under the Agreement
and Plan of Merger of International Controls Corp. into Great Dane
Holdings Inc., (the "Merger Agreement"); the Merger Agreement was duly
and validly authorized, executed and delivered by each of the Company
and ICC and constituted a valid and binding obligation of each of the
Company and ICC and was consummated in accordance with the terms of
the Merger Agreement under Delaware and Florida law.
(v) The outstanding shares of Common Stock of the Company have
been duly authorized and validly issued and are fully paid and non-
assessable; the Shares to be issued and sold by the Company have been
duly authorized and when issued and paid for as contemplated herein
will be validly issued, fully paid and non-assessable; and no
preemptive rights of stockholders exist with respect to any of the
Shares or the issue and sale thereof.
(vi) The Shares conform with the statements concerning them in
the Registration Statement.
3
<PAGE>
(vii) All of the issued and outstanding shares of capital stock of
each of the Company's corporate Subsidiaries have been duly authorized
and are fully paid and non-assessable and all such shares and each of
the equity interests in the Company's partnership Subsidiaries are
validly issued and, except for a 10% equity interest of South
Charleston Stamping & Manufacturing Company, as described in the
Prospectus and directors' qualifying shares of American Country
Insurance Company, are owned by the Company directly or through one or
more Subsidiaries of the Company, free and clear of any security
interest, charge, claim, lien, encumbrance or adverse interest of any
nature, except that (A) the capital stock of Great Dane Trailers
Tennessee, Inc. and Great Dane Los Angeles, Inc. is pledged pursuant
to that certain Amended and Restated Loan and Security Agreement dated
as of February 14, 1995 by and among Great Dane Trailers, Inc. ("Great
Dane"), Great Dane Trailers Tennessee, Inc., Great Dane Los Angeles,
Inc., the financial institutions named therein and BankAmerica
Business Credit, Inc., as Agent (the "BankAmerica Loan"), (B) the
capital stock of Yellow Cab Company, CMC Kalamazoo Inc., Chicago
AutoWerks Inc. and South Charleston Stamping & Manufacturing Company
owned by the Company has been pledged pursuant to that certain Loan
Agreement dated as of January 26, 1995 among those entities, Checker
Motors Corporation, NBD Bank, The Bank of New York Commercial
Corporation, The First National Bank of Boston and NBD Bank, as Agent
(the "NBD Loan"), and (C) the Company has agreed, in connection with
the BankAmerica Loan not to sell, assign, transfer, convey or
otherwise dispose of or grant any option with respect to the stock of
Great Dane, and no options, warrants or other rights to purchase,
agreements or other obligations to issue or other rights to convert
any obligations into shares of capital stock or ownership interests in
the Subsidiaries are outstanding.
(viii) The Commission has not issued an order preventing or
suspending the use of any Preliminary Prospectus relating to the
proposed offering of the Shares nor instituted proceedings for that
purpose. The Registration Statement contains and the Prospectus will
contain all statements which are required to be stated therein by, and
in all material respects conform or will conform, as the case may be,
to the requirements of, the Act and the Rules and Regulations.
Neither the Registration Statement, any amendment thereto, nor the
Prospectus contains or will contain, as the case may be, any untrue
statement of a material fact or omits or will omit to state any
material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances
4
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under which they were made, not misleading; provided, however, that
the Company makes no representations or warranties as to information
contained in or omitted from the Registration Statement or the
Prospectus, in reliance upon, and in conformity with, written
information furnished to the Company by or on behalf of any
Underwriter through the Representatives, specifically for use in the
preparation thereof.
(ix) The consolidated financial statements of the Company and the
Subsidiaries, together with related notes and schedules as set forth
in the Registration Statement and the Prospectus, present fairly the
financial position and the results of operations of the Company and
Subsidiaries consolidated, at the indicated dates and for the
indicated periods. Such financial statements have been prepared in
accordance with United States generally accepted principles of
accounting, consistently applied throughout the periods involved,
except as disclosed therein and all adjustments necessary for a fair
presentation of results for such period have been made. The summary
financial and statistical data included in the Registration Statement
presents fairly the information shown therein and have been compiled
on a basis consistent with the financial statements presented therein
and the other financial and statistical information and data set forth
in the Registration Statement and the Prospectus is, in all material
respects, accurately presented and prepared on a basis consistent with
such financial statements and the books and records of the Company.
The other financial information included in the Prospectus presents
fairly the information shown therein, has been prepared in accordance
with the Rules and Regulations with respect thereto, and, in the
opinion of the Issuer, the assumptions used in the preparation thereof
are reasonable and the adjustments used therein are appropriate to
give effect to the transactions or circumstances referred to therein.
(x) There is no legal or governmental action or proceeding
pending or, to the knowledge of the Company, threatened against the
Company or any of the Subsidiaries, or of which any of their
respective assets or property is the subject, before any court or
administrative agency which might result (singly or in the aggregate)
in any material adverse change in the condition (financial or
otherwise), earnings or business affairs of the Company and its
Subsidiaries, considered as one enterprise, except as set forth in the
Registration Statement. No contract or document of a character
required to be described in the Registration Statement or the
Prospectus or to be filed as an exhibit to the Registration Statement
is not so described or filed as required.
5
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(xi) The Company and the Subsidiaries have good and marketable
title to all of the properties and assets reflected in the financial
statements (or as described in the Registration Statement as being
owned by the Company, its Subsidiaries or by any of the Company's
predecessors) hereinabove described, subject to no lien, mortgage,
pledge, charge or encumbrance of any kind except as set forth in the
Prospectus, other than (i) liens for taxes not yet due and payable and
(ii) other liens not material to the condition (financial or
otherwise), earnings or business affairs of the Company and its
Subsidiaries, considered as one enterprise. The Company and the
Subsidiaries occupy their leased properties under valid and binding
leases and no default has occurred or is continuing thereunder, except
for defaults that will not result (singly or in the aggregate) in any
material adverse change in the condition (financial or otherwise),
earnings or business affairs of the Company and its Subsidiaries,
considered as one enterprise, and the Company and its Subsidiaries
enjoy peaceful and undisturbed possession under all such leases to
which any of them is a party as lessee or an assignee of a lessee with
such exceptions as do not materially interfere with the use made of
such leased property by the Company or its Subsidiaries, as the case
may be.
(xii) The Company and the Subsidiaries have filed all Federal,
State and foreign income tax returns which have been required to be
filed and have paid all taxes indicated by said returns to be due and
all assessments received by them or any of them to the extent that
such taxes have become due and are not being contested in good faith
(with proper reserves in accordance with generally accepted accounting
principles for any such taxes being so contested).
(xiii) Since the respective dates as of which information is given
in the Registration Statement, there has not been (either singly or in
the aggregate) any material adverse change or any development
involving a prospective material adverse change in the condition
(financial or otherwise), earnings or business affairs of the Company
and its Subsidiaries, considered as one enterprise, whether or not
occurring in the ordinary course of business, and there has not been
any material transaction entered into by the Company or the
Subsidiaries, other than transactions in the ordinary course of
business and changes and transactions contemplated by the Registration
Statement, and there has been no dividend or distribution of any kind
declared, paid or made by the Company on the Common Stock. The
Company and the Subsidiaries have no material contingent obligations
which are not disclosed in the Registration Statement, as it may be
amended or supplemented.
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(xiv) Neither the Company nor any of the Subsidiaries is in
default under any agreement, lease, contract, indenture or other
instrument or obligation to which it is a party or by which it or any
of its properties is bound and which default is of material
significance in respect of the condition (financial or otherwise),
earnings or business affairs of the Company and its Subsidiaries,
considered as one enterprise. The consummation of the transactions
herein contemplated and the fulfillment of the terms hereof will not
conflict with or result in a breach of any of the terms or provisions
of, or constitute a default under, any indenture, mortgage, deed of
trust or other agreement or instrument to which the Company or any
Subsidiary is a party, or of the charter or by-laws of the Company or
any order, rule or regulation applicable to the Company or any
Subsidiary of any court or of any regulatory body or administrative
agency or other governmental body having jurisdiction.
(xv) Each approval, consent, order, authorization, designation,
declaration or filing by or with any regulatory, administrative or
other governmental body necessary in connection with the execution and
delivery by the Company of this Agreement and the consummation of the
transactions herein contemplated (except such additional steps as may
be required by the National Association of Securities Dealers, Inc.
(the "NASD") or may be necessary to qualify the Shares for public
offering by the Underwriters under State securities or Blue Sky laws)
has been obtained or made and is in full force and effect.
(xvi) The Company and each of its Subsidiaries have such permits,
licenses, franchises, trademarks and authorizations of governmental or
regulatory authorities ("Permits") as are necessary to own, lease and
operate their respective properties and to conduct their respective
businesses in the manner described in the Prospectus; the Company and
each of its Subsidiaries have fulfilled and performed all of their
material obligations with respect to Permits and no event has occurred
which allows, or after notice or lapse of time would allow, revocation
or termination thereof or result in any other material impairment of
the rights of the holder of any Permit, except for any such
impairments which would not (singly or in the aggregate) have a
materially adverse effect on the condition (financial or otherwise),
earnings or business affairs of the Company and its Subsidiaries,
considered as one enterprise; and, except as described in the
Prospectus, the Permits contain no restrictions that are materially
burdensome to the Company or any of its Subsidiaries, considered as
one enterprise; and neither the Company nor any of the Subsidiaries
has infringed any patents, patent rights, trade names, trademarks or
copyrights,
7
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which infringement is material to the condition (financial or
otherwise), earnings or business affairs of the Company and the
Subsidiaries, considered as one enterprise.
(xvii) Ernst & Young LLP, who have certified certain of the
financial statements filed with the Commission as part of the
Registration Statement, are independent public accountants with
respect to the Issuer as required by the Act and the Rules and
Regulations.
(xviii) This Agreement has been duly authorized, executed and
delivered by the Issuer and constitutes a valid and binding obligation
of the Issuer, enforceable in accordance with its terms, except as
(i) the enforceability hereof may be limited by bankruptcy, insolvency
or similar laws affecting creditors' rights generally; (ii) the
availability of equitable remedies may be limited by equitable
principles of general applicability; and (iii) rights to indemnity and
contribution hereunder may be limited by applicable law.
(xix) The Escrow Deposit Agreement between Great Dane Holdings,
Inc. and First Fidelity Bank, National Association as Escrow Agent
(the "Escrow Agreement") has been duly authorized and, when executed
and delivered by the Issuer and the Escrow Agent, will constitute a
valid and binding obligation of the Issuer enforceable against the
Issuer in accordance with its terms, except as (i) the enforceability
hereof may be limited by bankruptcy, insolvency or similar laws
affecting creditors' rights generally and (ii) the availability of
equitable remedies may be limited by equitable principles of general
applicability.
(xx) Neither the Company nor any of its Subsidiaries has violated
any foreign, federal, state or local law or regulation relating to the
protection of human health and safety, the environment or hazardous or
toxic substances or wastes, pollutants or contaminants, nor any
federal or state law relating to discrimination in the hiring,
promotion or pay of employees nor any applicable federal or state
wages and hours laws, nor any provisions of the Employee Retirement
Income Security Act or the rules and regulations promulgated
thereunder except where any such violations would not (singly or in
the aggregate) have a material adverse effect on the condition
(financial or otherwise), earnings or business affairs of the Company
and its Subsidiaries, considered as one enterprise.
(xxi) The Company and its Subsidiaries have in effect with
insurers of recognized financial responsibility insurance against such
losses and
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risks and in amounts the Company reasonably believes are adequate in
light of the business conducted by the Company and its Subsidiaries
and the properties owned by them.
(xxii) Each of the Company and its Subsidiaries owns or possesses,
or can acquire on reasonable terms, adequate patents, patent rights,
licenses, inventions, copyrights, know-how (including trade secrets
and other patented and/or unpatented proprietary or confidential
information, systems or procedures), trademarks, service marks and
trade names (collectively, "Intellectual Property") presently employed
by them in connection with the business now operated by them, except
where the failure to own or possess or have the ability to acquire any
such Intellectual Property would not (singly or in the aggregate) have
a material adverse effect on the condition (financial or otherwise),
earnings or business affairs of the Company and its Subsidiaries,
considered as one enterprise, and neither the Company nor any of its
Subsidiaries has received any notice of infringement of or conflict
with asserted rights of others with respect to any of the foregoing
that, (singly or in the aggregate), if the subject of an unfavorable
decision, ruling or finding, would result in any material adverse
change in the condition (financial or otherwise), earnings or business
affairs of the Company and its Subsidiaries, considered as one
enterprise.
(xxiii) No labor disturbance, strike or slowdown exists with the
employees of the Company or any of its Subsidiaries or to its
knowledge is imminent, which (singly or in the aggregate), has or
would have a material adverse effect on the condition (financial or
otherwise), earnings or business affairs of the Company and its
Subsidiaries, considered as one enterprise.
(xxiv) The Company and its Subsidiaries each maintain a system of
internal accounting controls sufficient to provide reasonable
assurances that (i) transactions are executed in accordance with
management's general or specific authorization; (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with United States generally accepted accounting principles
and to maintain accountability for assets; (iii) access to assets is
permitted only in accordance with management's general or specific
authorization; and (iv) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and
appropriate action is taken with respect to any difference.
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(xxv) The Issuer is not an "investment company" or a company
"controlled" by an "investment company" within the meaning of the
Investment Company Act of 1940, as amended.
(xxvi) No holder of any security of the Issuer has any right to
have any Common Stock or other securities of the Issuer included in
the Registration Statement or any right, as a result of the filing of
the Registration Statement, to require registration of any Common
Stock or any other security of the Issuer under the Act.
(xxvii) There are no business relationships or related-party
transactions of the nature described in Item 404 of Regulation S-K
involving the Company or any of its Subsidiaries and any person
described in such Item that are required to be disclosed in the
Prospectus and which have not been so disclosed.
2. PURCHASE, SALE AND DELIVERY OF THE FIRM SHARES. On the basis of
the representations, warranties and covenants herein contained, and subject to
the conditions herein set forth, the Company agrees to sell to the Underwriters,
and each Underwriter agrees, severally and not jointly, to purchase, at a price
of $____ per share, the number of Firm Shares set forth opposite the name of
each Underwriter in Schedule I hereof, subject to adjustments in accordance with
Section 9 hereof.
Payment for the Firm Shares to be sold hereunder is to be made in New
York Clearing House funds by certified or bank cashier's checks drawn to the
order of the Company against delivery of certificates therefor to the
Representatives for the several accounts of the Underwriters. Such payment and
delivery are to be made at the offices of Alex. Brown & Sons Incorporated, 135
East Baltimore Street, Baltimore, Maryland, at 10:00 a.m. Baltimore time, on the
fifth business day after the date of this Agreement or at such other time and
date not later than five business days thereafter as you and the Company shall
agree upon, such time and date being herein are referred to as the "Closing
Date." (As used herein, "business day" means a day on which the New York Stock
Exchange is open for trading and on which banks in New York are open for
business and not permitted by law or executive order to be closed.) The
certificates for the Firm Shares will be delivered in such denominations and in
such registrations as the Representatives request in writing not later than the
third full business day prior to the Closing Date, and will be made available
for inspection by the Representatives at least one business day prior to the
Closing Date.
In addition, on the basis of the representations and warranties herein
contained and subject to the terms and conditions herein set forth, the Company
hereby grants an option to the several Underwriters to purchase the Option
Shares at the price per
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share as set forth in the first paragraph of this Section 2. The option granted
hereby may be exercised in whole or in part but only once and at any time upon
written notice given within 30 days after the date of this Agreement, by you, as
Representatives of the several Underwriters, to the Company setting forth the
number of Option Shares as to which the several Underwriters are exercising the
option, the names and denominations in which the Option Shares are to be
registered and the time and date at which such certificates are to be delivered.
The time and date at which certificates for Option Shares are to be delivered
shall be determined by the Representatives but shall not be earlier than three
nor later than 10 full business days after the exercise of such option, nor in
any event prior to the Closing Date (such time and date being herein referred to
as the "Option Closing Date"). If the date of exercise of the option is three
or more days before the Closing Date, the notice of exercise shall set the
Closing Date as the Option Closing Date. The number of Option Shares to be
purchased by each Underwriter shall be in the same proportion to the total
number of Option Shares being purchased as the number of Firm Shares being
purchased by such Underwriter bears to 4,000,000, adjusted by you in such manner
as to avoid fractional shares. The option with respect to the Option Shares
granted hereunder may be exercised only to cover over-allotments in the sale of
the Firm Shares by the Underwriters. You, as Representatives of the several
Underwriters, may cancel such option at any time prior to its expiration by
giving written notice of such cancellation to the Company. To the extent, if
any, that the option is exercised, payment for the Option Shares shall be made
on the Option Closing Date in New York Clearing House funds by certified or bank
cashier's check drawn to the order of the Company against delivery of
certificates therefor at the offices of Alex. Brown & Sons Incorporated, 135
East Baltimore Street, Baltimore, Maryland.
3. OFFERING BY THE UNDERWRITERS. It is understood that the several
Underwriters are to make a public offering of the Firm Shares as soon as the
Representatives deem it advisable to do so. The Firm Shares are to be initially
offered to the public at the initial public offering price set forth in the
Prospectus. The Representatives may from time to time thereafter change the
public offering price and other selling terms. To the extent, if at all, that
any Option Shares are purchased pursuant to Section 2 hereof, the Underwriters
will offer them to the public on the foregoing terms.
It is further understood that you will act as the Representatives for
the Underwriters in the offering and sale of the Shares in accordance with a
Master Agreement Among Underwriters entered into by you and the several other
Underwriters.
4. COVENANTS OF THE COMPANY.
The Company covenants and agrees with the several Underwriters that:
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(i) The Company will (i) prepare and timely file with the
Commission under Rule 424(b) of the Rules and Regulations, a
Prospectus containing information previously omitted at the time of
effectiveness of the Registration Statement in reliance on Rule 430A
of the Rules and Regulations, (ii) not file any amendment to the
Registration Statement or supplement to the Prospectus of which the
Representatives shall not previously have been advised and furnished
with a copy or to which the Representatives shall have reasonably
objected in writing or which is not in compliance with the Rules and
Regulations and (iii) file on a timely basis all reports and any
definitive proxy or information statements required to be filed by the
Company with the Commission subsequent to the date of the Prospectus
and prior to the termination of the offering of the Shares by the
Underwriters.
(ii) The Company will advise the Representatives promptly and, if
requested by the Underwriters will confirm such advise in writing,
when the Registration Statement has become effective and when any
post-effective amendment to it becomes effective, of any request of
the Commission for amendment of the Registration Statement or for
supplement to the Prospectus or for any additional information, or of
the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or the use of the
Prospectus or of the institution of any proceedings for that purpose,
and the Company will use its best efforts to prevent the issuance of
any such stop order preventing or suspending the use of the Prospectus
and to obtain as soon as possible the lifting thereof, if issued.
(iii) The Company will cooperate with the Representatives in
endeavoring to qualify the Shares for sale under the securities laws
of such jurisdictions as the Representatives may reasonably have
designated in writing and will make such applications, file such
documents, and furnish such information as may be reasonably required
for that purpose, provided the Company shall not be required to
qualify as a foreign corporation or to file a general consent to
service of process in any jurisdiction where it is not now so
qualified or required to file such a consent. The Company will, from
time to time, prepare and file such statements, reports, and other
documents as are or may be required to continue such qualifications in
effect for so long a period as the Representatives may reasonably
request for distribution of the Shares.
(iv) The Company will deliver to, or upon the order of, the
Representatives, from time to time, as many copies of any Preliminary
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Prospectus as the Representatives may reasonably request. The Company
will deliver to, or upon the order of, the Representatives during the
period when delivery of a Prospectus is required under the Act, as
many copies of the Prospectus in final form, or as thereafter amended
or supplemented, as the Representatives may reasonably request. The
Company will deliver to the Representatives at or before the Closing
Date, four signed copies of the Registration Statement and all
amendments thereto including all exhibits filed therewith, and will
deliver to the Representatives such number of copies of the
Registration Statement, and of all amendments thereto, as the
Representatives may reasonably request.
(v) If during the period in which a prospectus is required by
law to be delivered by an Underwriter or dealer any event shall occur
as a result of which, in the judgment of the Company or in the opinion
of counsel for the Underwriters, it becomes necessary to amend or
supplement the Prospectus in order to make the statements therein, in
the light of the circumstances existing at the time the Prospectus is
delivered to a purchaser, not misleading, or, if it is necessary at
any time to amend or supplement the Prospectus to comply with any law,
the Company promptly will prepare and file with the Commission an
appropriate amendment to the Registration Statement or supplement to
the Prospectus so that the Prospectus as so amended or supplemented
will not, in the light of the circumstances when it is so delivered,
be misleading, or so that the Prospectus will comply with the law.
(vi) The Company will make generally available to its security
holders, as soon as it is practicable to do so, but in any event not
later than 15 months after the effective date of the Registration
Statement, an earning statement (which need not be audited) in
reasonable detail, covering a period of at least 12 consecutive months
commencing no later than 90 days after the effective date of the
Registration Statement, which earning statement shall satisfy the
requirements of Section 11(a) of the Act and Rule 158 of the Rules and
Regulations and will advise you in writing when such statement has
been so made available.
(vii) The Company will, for a period of five years from the
Closing Date, deliver to the Representatives copies of annual reports
and copies of all other documents, reports and information furnished
by the Company to its stockholders or filed with any securities
exchange pursuant to the requirements of such exchange or with the
Commission pursuant to the Act or the Securities Exchange Act of 1934,
as amended, and the rules and regulations of the Commission thereunder
(the "Exchange Act"). The
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<PAGE>
Company will deliver to the Representatives similar reports with
respect to significant subsidiaries, as that term is defined in the
Rules and Regulations, which are not consolidated in the Company's
financial statements.
(viii) No offering, sale or other disposition of any Common Stock
or securities convertible, exercisable or exchangeable into Common
Stock of the Company will be made for a period of 180 days after the
date of this Agreement, directly or indirectly, by the Company
otherwise than hereunder or options granted as set forth in the
Prospectus or with the prior written consent of the Representatives.
(ix) The Company will use its best efforts to cause the Shares to
be approved for quotation and trading on the NASDAQ National Market
and, if so approved, will comply with all applicable rules of the
NASDAQ National Market in connection with the transactions
contemplated hereby.
(x) The Company will use its best efforts to do and perform all
things required or necessary to be done and performed under this
Agreement by the Issuer prior to the Closing Date and to satisfy all
conditions precedent to the delivery of the Shares.
(xi) The Company will use the net proceeds received from the sale
of the Shares in the manner specified in the Prospectus under the
heading "Use of Proceeds", including executing an escrow deposit
agreement substantially in the form heretofore provided by the
Underwriters (the "Escrow Agreement") and depositing the funds
contemplated thereby with the agent thereunder (the "Escrow Agent")
for the purposes described therein.
(xii) If the Company has elected to rely upon Rule 430A under the
Act, to take such steps as they deem necessary to ascertain promptly
whether the form of prospectus transmitted for filing under Rule
424(b) under the Act was received for filing by the Commission and, in
the event that it was not, to promptly file such prospectus.
(xiii) The Company has complied, and will comply, with all of the
provisions of Florida H.B. 1771, as codified in Sec. 517.075 Florida
Statues, 1987, as amended, and all regulations promulgated thereunder
relating to issuers or their affiliates doing business with the
government of Cuba or with any person or affiliate located in Cuba.
5. COSTS AND EXPENSES. The Company will pay all costs, expenses and
fees incident to the performance of the obligations of the Company under
this
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Agreement, including, without limiting the generality of the foregoing, the
following: accounting fees of the Company; the fees and disbursements of
counsel for the Company; the cost of printing and delivering to, or as
requested by, the Underwriters copies of the Registration Statement,
Preliminary Prospectuses, the Prospectus, this Agreement, the Invitation
Letter, the Listing Application, the Blue Sky Survey and any supplements or
amendments thereto; the filling fees of the Commission; the filing fees and
expenses incident to securing any required review by the National
Association of Securities Dealers, Inc. (the "NASD") of the terms of the
sale of the Shares; the Listing Fee of the NASDAQ National Market; and the
expenses, including the fees and disbursements of counsel for the
Underwriters, incurred in connection with the qualification of the Shares
under State securities or Blue Sky laws. The Company shall not, however,
be required to pay for any of the Underwriters expenses (other than those
related to qualification under State securities or Blue Sky laws) except
that, if this Agreement shall not be consummated because the conditions in
Section 7 hereof are not satisfied, or because this Agreement is terminated
by the Representatives pursuant to Section 6 hereof, or by reason of any
failure, refusal or inability on the part of the Company to perform any
undertaking or satisfy any condition of this Agreement or to comply with
any of the terms hereof on its part to be performed, unless such failure to
satisfy said condition or to comply with said terms be due to the default
or omission of any Underwriter, then the Company shall reimburse the
several Underwriters for reasonable out-of-pocket expenses, including fees
and disbursements of counsel, reasonably incurred in connection with
investigating, marketing and proposing to market the Shares or in
contemplation of performing their obligations hereunder; but the Company
shall not in any event be liable to any of the several Underwriters for
damages on account of loss of anticipated profits from the sale by them of
the Shares.
6. CONDITIONS OF OBLIGATIONS OF THE UNDERWRITERS. The several
obligations of the Underwriters to purchase the Firm Shares on the Closing
Date and the Option Shares, if any, on the Option Closing Date are subject
to the accuracy, as of the Closing Date or the Option Closing Date, as the
case may be, of the representations and warranties of the Company contained
herein, and to the performance by the Company of its covenants and
obligations hereunder and to the following additional conditions:
(a) No stop order suspending the effectiveness of the
Registration Statement, as amended from time to time, shall have been
issued and no proceedings from that purpose shall have been taken or, to
the knowledge of the Company, shall be contemplated by the Commission.
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<PAGE>
(b) Subsequent to the execution and delivery of this Agreement
and prior to the Closing Date, there shall not have been any downgrading,
nor shall any notice have been given of any intended or potential
downgrading or of any review for a possible change that does not indicate
the direction of the possible change, in the rating accorded any of the
Company's securities by any "nationally recognized statistical rating
organization," as such term is defined for purposes of Rule 436(g)(2) under
the Act.
(c) (i) Since the date of the latest balance sheet included in
the Registration Statement and the Prospectus, there shall not have been
(singly or in the aggregate) any material adverse change, or any
development involving a prospective material adverse change, in the
condition (financial or otherwise), or in the earnings or business affairs,
whether or not arising in the ordinary course of business, of the Company
and its Subsidiaries, considered as one enterprise, (ii) since the date of
the latest balance sheet included in the Registration Statement and the
Prospectus, there shall not have been any change, or any development
involving a prospective material adverse change, in the capital stock or in
the long-term debt of the Company from that set forth in the Registration
Statement and Prospectus and (iii) the Company and its Subsidiaries shall
not have any liability or obligation, direct or contingent, which (singly
or in the aggregate) is material to the condition (financial or otherwise),
earnings or business affairs of the Company and its Subsidiaries,
considered as one enterprise, other than those reflected in the
Registration Statement and the Prospectus.
(d) The Underwriters shall have received on the Closing Date an
opinion (satisfactory to the Underwriters and counsel for the
Underwriters), dated the Closing Date, of Hutton Ingram Yuzek Gainen
Carroll & Bertolotti, counsel for the Company, to the effect that:
(i) The Company and each corporate Subsidiary of the
Company listed on Schedule II hereto have been duly incorporated and
are validly existing as corporations in good standing under the laws
of their respective jurisdictions of incorporation, (each Subsidiary
listed on Schedule II hereto, a "Significant Subsidiary"), and each
has the corporate power or partnership power, as the case may be, and
authority required to carry on its business as described in the
Prospectus and to own and lease its properties;
(ii) The Issuer has all requisite corporate power and
authority to execute, deliver and perform its obligations under the
Underwriting Agreement and to issue, sell and deliver the Shares to
the Underwriters as provided herein;
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(iii) Each of the Company and its Significant Subsidiaries is
duly qualified and in good standing as a foreign corporation,
authorized to do business in each jurisdiction in which such counsel
has been advised by the Company, as set forth in an officer's
certificate attached to the opinion, that the Company or such
Significant Subsidiary owns or leases property or employs personnel,
except where the failure to be so qualified would not have (singly or
in the aggregate) a material adverse effect on the condition
(financial or otherwise), earnings or business affairs of the Company
and its Subsidiaries, considered as one enterprise;
(iv) The Company has authorized capital stock as set forth
under the caption "Description of Capital Stock" in the Prospectus;
and, based upon such Counsel's review of the minute book records,
including the stock transfer records, of the Company and the officer's
certificate, the Company has outstanding capital stock as set forth
under the caption "Ownership of Common Stock" in the Prospectus; the
authorized shares of its Common Stock have been duly authorized; and
the outstanding shares of the Company's Common Stock have been duly
authorized, validly issued and are fully paid and non-assessable; all
of the Shares conform to the description thereof contained in the
Prospectus; the certificates for the Shares are in due and proper
form; the shares of Common Stock, including the Option Shares, if any,
to be sold by the Company pursuant to this Agreement have been duly
authorized and will be validly issued, fully paid and non-assessable
when issued and paid for as contemplated by this Agreement; and, to
such counsel's knowledge, no preemptive rights of stockholders exist
with respect to any of the Shares or the issuance and sale thereof.
(v) Based upon such counsel's review of the minute book
records, including the stock transfer records of the Company and each
of its Significant Subsidiaries, all of the issued and outstanding
shares of capital stock of each of the Company's corporate Significant
Subsidiaries have been duly and validly authorized and are fully paid
and non-assessable and to the knowledge of such counsel all such
shares are validly issued and, to such counsel's knowledge are owned
by the Company set forth opposite its name on Schedule IV hereto
except for a 10% equity interest of South Charleston Stamping &
Manufacturing Company and directors' qualifying shares of American
Country Insurance Company, are owned by the Company free and clear of
any security interest, charge, claim, lien, encumbrance or adverse
interest of any nature, except that (x) the shares of stock of
subsidiaries of Checker Motors Corporation have been pledged in
connection with the NBD Loan (y) the shares of stock of Great Dane's
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subsidiaries have been pledged in connection with the BankAmerica Loan
and (z) the Company has agreed, in connection with the BankAmerica
Loan, not to sell, assign, transfer, convey or otherwise dispose of or
grant any option with respect to the stock of Great Dane, and to such
counsel's knowledge, and no options, warrants or other rights to
purchase, agreements or other obligations to issue or other rights to
convert any obligations into any shares of capital stock or of
ownership interests in the Subsidiaries are outstanding;
(vi) The execution, delivery and performance of this
Agreement by the Issuer and the compliance by the Issuer with all the
provisions hereof and thereof and the consummation of the transactions
contemplated hereby and thereby (including, without limitation, the
issuance and sale of the Shares), (A) will not require any consent,
approval, authorization or other order of any court, regulatory body,
administrative agency or other governmental body (except such as may
be required under the Act, the Exchange Act, the securities or Blue
Sky laws of the various states or the by-laws of the NASD) or, if so
required, all such consents, approvals, authorizations and orders have
been obtained and are in full force and effect, (B) will not violate
or constitute a breach of any of the terms or provisions of, or a
default under, the charter or by-laws or other governing documents, as
the case may be, of the Issuer, or any agreement, indenture or other
instrument to which the Issuer is a party or by which the Issuer or
their respective assets or property is bound and which is listed on
Schedule III hereto, which schedule, according to a certificate of the
Issuer dated as of the date of such counsel's opinion, contains all
agreements, indentures or instruments material to the business of the
Company, considered as one enterprise, or (C), to such counsel's
actual knowledge, violate or conflict with any material laws,
administrative regulations or rulings or court decrees applicable to
any of the Issuer or any of their respective assets or properties;
(vii) This Agreement has been duly authorized, executed and
delivered by the Issuer;
(viii) The Escrow Agreement has been duly authorized, executed
and delivered by the Issuer and, assuming due authorization, execution
and delivery by the Escrow Agent, constitutes a valid and binding
obligation of the Issuer, enforceable against the Issuer in accordance
with its terms, except as (A) the enforceability hereof may be limited
by bankruptcy, insolvency or similar laws affecting creditors' rights
generally
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and (B) the availability of equitable remedies may be limited by
equitable principles of general applicability;
(ix) The Registration Statement has become effective under
the Act, and such counsel does not know of the issuance of any stop
order suspending the effectiveness of the Registration Statement by
the Commission or of any proceedings for that purpose under the Act;
(x) The statements in the Prospectus and the statements in
Part II of the Registration Statement insofar as such statements
constitute a summary of written contracts, written agreements or other
legal documents or refers to statements of law or legal conclusions,
present fairly the information called for with respect to such written
contracts, written agreements or other legal documents or refers to
statements of law or legal conclusions;
(xi) Such counsel does not know of any legal or governmental
proceeding to which the Company or any of its Subsidiaries is a party
or of which any of their respective assets or property is the subject
which is required to be described in the Registration Statement or the
Prospectus and is not so described, or of any contract or other
document which is required to be described in the Registration
Statement or the Prospectus or is required to be filed as an exhibit
to the Registration Statement which is not described or filed as
required;
(xii) The Issuer is not an "investment company" or a company
"controlled" by an "investment company" within the meaning of the
Investment Company Act of 1940, as amended;
(xiii) To such counsel's actual knowledge, no holder of any
security of the Issuer has any right to have any shares of Common
Stock or other securities of the Issuer included in the Registration
Statement or any right, as a result of the filing of the Registration
Statement, to require registration of any Common Stock or any other
securities of the Issuer under the Act;
(xiv) The Registration Statement, the Prospectus and each
supplement or amendment thereto (except for financial statements and
notes thereto and other financial and statistical data included
therein as to which no opinion need be expressed) appear on their face
to be appropriately responsive as to form in all material respects
with the Act; and
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Such counsel will state that it has not undertaken, except
as otherwise indicated in their opinion, to determine independently, and
does not assume any responsibility for, the accuracy or completeness of the
statements in the Registration Statement; however, such counsel has
participated in the preparation of the Registration Statement and the
Prospectus, including review and discussion of the contents thereof, and
nothing has come to the attention of such counsel that has caused it to
believe that the Registration Statement at the time the Registration
Statement became effective, contained an untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary to make the statements therein not misleading or that the
Prospectus or any amendment or supplement to the Prospectus, as of its
respective date and as of the Closing Date, contained or contains any
untrue statement of a material fact or omitted or omits to state a material
fact necessary in order to make the statements therein, in the light of the
circumstances under which they are made, not misleading (it being
understood that such counsel need express no comment with respect to the
financial statements and the notes thereto and the financial schedules and
other financial data included in the Registration Statement or the
Prospectus).
In rendering such opinion, counsel may rely as to matters of
fact, to the extent such counsel deems proper, on (1) the representations
and warranties of the Issuer set forth in this Agreement, and (2)
certificates of responsible officers of the Issuer and public officials.
(e) The Underwriters shall have received on the Closing Date an
opinion, dated the Closing Date, of Fried, Frank, Harris, Shriver &
Jacobson, counsel for the Underwriters to the effect that:
(i) The Company is validly existing as a corporation under
the laws of the state of Delaware;
(ii) The shares of Common Stock, including the Option
Shares, if any, to be sold by the Company pursuant to this Agreement
have been duly authorized and will be validly issued, fully paid and
non-assessable when issued and paid for as contemplated by this
Agreement;
(iii) This Agreement has been duly authorized, executed
and delivered by the Issuer;
(iv) The Registration Statement has become effective under
the Act, and such counsel does not know of the issuance of any stop
order suspending the effectiveness of the Registration Statement by
the Commission or of any proceeding for that purpose under the Act;
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(v) The Registration Statement, the Prospectus and each
supplement or amendment thereto (except for financial statements and
notes thereto and other financial and statistical data included
therein as to which no opinion need be expressed) appear on their face
to be appropriately responsive as to form in all material respects
with the Act; and
(vi) The statements in the Prospectus under the captions
"Description of Capital Stock" and "Underwriting," are accurate in all
material respects.
Hutton Ingram Yuzek Gainen Carroll & Bertolotti and Fried, Frank,
Harris, Shriver & Jacobson may state that their respective opinions,
insofar as they relate to matters involving the application of laws other
than the laws of the United States and jurisdictions in which they are
admitted, are made in reliance, to the extent specified in such opinions,
upon the opinion or opinions of (i) Sonnenschein, Nath & Rosenthal as to
matters concerning the laws of the State of Illinois, (ii) McCarter &
English, as to matters concerning the laws of the State of New Jersey;
(iii) Hunter, Maclean, Exley & Dunn, P.C., as to matters concerning the
laws of the State of Georgia; (iv) Tuke, Yopp & Sweeney, as to matters
concerning the laws of the State of Tennessee; (v) Bowles Rice McDavid
Graff & Love, as to matters concerning the laws of the State of West
Virginia; and (vi) an opinion or opinions (in form and substance
satisfactory to Underwriters' counsel) of other counsel acceptable to
Underwriters' counsel, admitted to practice in the governing jurisdiction,
but are without independent check or verification except as specified,
PROVIDED that a copy of all such opinions shall be attached to such
counsel's opinion.
(f) The Underwriters shall have received at or prior to the
Closing Date from Fried, Frank, Harris, Shriver & Jacobson a memorandum or
survey, in form and substance satisfactory to the Underwriters, with
respect to the qualification for offering and sale by the Underwriters of
the Shares under the state securities or Blue Sky laws of such
jurisdictions as the Underwriters may reasonably have designated to the
Issuer.
(g) The Underwriters shall have received on the Closing Date a
certificate or certificates of the President and the Chief Operating
Officer of the Issuer to the effect that, as of the Closing Date, each of
them severally represents as follows:
(i) Confirmation of the matters set forth in paragraphs
(a), (b) and (c) of this Section 6.
21
<PAGE>
(ii) He does not know of any litigation instituted or
threatened against the Issuer of a character required to be disclosed
in the Registration Statement which is not so disclosed; he does not
know of any material contract required to be filed as an exhibit to
the Registration Statement which is not so filed.
(iii) He has carefully examined the Registration
Statement and the Prospectus and, in his opinion, as of the effective
date of the Registration Statement, the statements contained in the
Registration Statement and the Prospectus were true and correct in all
material respects, and such Registration Statement and Prospectus did
not omit to state a material fact required to be stated therein or
necessary in order to make the statements therein (A) with respect to
the Prospectus or any amendment or supplement thereto, in light of the
circumstances under which they were made, and (B) with respect to the
Registration Statement or any amendment or supplement thereto not
misleading and, in his opinion, since the effective date of the
Registration Statement, no event has occurred which should have been
set forth in a supplement to or an amendment of the Prospectus which
has not been so set forth in such supplement or amendment.
(h) The Underwriters shall have received a letter on and as of
the Closing Date, in form and substance satisfactory to the Underwriters,
from Ernst & Young LLP, independent public accountants, with respect to the
financial statements and certain financial information contained in the
Registration Statement and the Prospectus and substantially in the form and
substance of the letter delivered to the Underwriters by Ernst & Young LLP
on the date of this Agreement.
(i) The Issuer shall not have failed at or prior to the Closing
Date to perform or comply with any of the agreements contained herein and
required to be performed or complied with by the Company at or prior to the
Closing Date.
(j) The Company shall have furnished to the Representatives such
further certificates and documents confirming the representations and
warranties contained herein and related matters as the Representatives may
reasonably have requested.
(k) David R. Markin, Martin L. Solomon, Allan R. Tessler and
Wilmer J. Thomas, Jr. shall each have delivered to the Representatives an
agreement not to offer, pledge, sell, contact to sell or otherwise dispose
of any shares of Common Stock (or securities convertible into shares of
Common Stock),
22
<PAGE>
directly or indirectly for a period of 180 days after the date of this
Agreement, without the prior written consent of the Representatives.
(l) The Firm Shares and Option Shares, if any, have been
approved for designation upon notice of issuance on the NASDAQ National
Market System.
If any of the conditions hereinabove provided for in this Section
6 shall not have been fulfilled when and as required by this Agreement to
be fulfilled, the obligations of the Underwriters hereunder may be
terminated by the Representatives by notifying the Company of such
termination in writing or by telegram at or prior to the Closing Date or
the Option Closing Date, as the case may be.
In such event, the Company and the Underwriters shall not be
under obligation to each other (except to the extent provided for in
Sections 5 and 8 hereof or otherwise expressly provided herein).
7. CONDITIONS OF THE OBLIGATIONS OF THE COMPANY. The obligations of
the Company to sell and deliver the portion of the Shares required to be
delivered as and when specified in this Agreement are subject to the
conditions that at the Closing Date or the Option Closing Date, as the case
may be, no stop order suspending the effectiveness of the Registration
Statement shall have been issued and in effect of proceedings therefor
initiated or threatened.
8. INDEMNIFICATION.
(a) The Issuer agrees to indemnify and hold harmless each
Underwriter and each person, if any, who controls any Underwriter within
the meaning of the Act against any losses, claims, damages or liabilities
to which such Underwriter or such controlling person may become subject
under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) arise out of or
are based upon (i) any untrue statement or alleged untrue statement of any
material fact contained in the Registration Statement, any preliminary
prospectus, the Prospectus, or any amendment or supplement thereto or
(ii) the omission or alleged omission to state (A) with respect to the
Prospectus or any amendment or supplement thereto, a material fact required
to be stated therein or necessary to make the statements therein, in light
of the circumstances under which they were made, not misleading and (B)
with respect to the Registration Statement or any amendment or supplement
thereto, a material fact required to be stated therein or necessary to make
the statements therein not misleading, and will reimburse each Underwriter
23
<PAGE>
and each such controlling person for any legal or other expenses reasonably
incurred by such Underwriter or such controlling person in connection with
investigating or defending any such loss, claim, damage, liability, action
or proceeding; provided, however, that the Issuer will not be liable to an
Underwriter or such controlling person of that Underwriter in any such case
to the extent that any such loss, claim, damage or liability arises out of
or is based upon an untrue statement, or alleged untrue statement, or
omission or alleged omission made in the Registration Statement, any
preliminary prospectus, the Prospectus, or such amendment or supplement, in
reliance upon and in conformity with written information furnished to the
Issuer by such Underwriter specifically for use in the preparation thereof;
and further provided that such indemnity with respect to any preliminary
prospectus shall not inure to the benefit of any Underwriter or controlling
person of such Underwriter, if the person asserting any such loss, claim,
damage or liability did not receive a copy of the Prospectus (or the
Prospectus, as amended or supplemented) at or prior to the written
confirmation of the sale of such Shares by such Underwriter to such person
where such delivery of the Prospectus (or the Prospectus, as amended or
supplemented) is required by the Act, unless such failure to deliver was a
result of the Company's failure to deliver the Prospectus to such
Underwriter, and if the untrue statement or omission of a material fact
contained in such preliminary prospectus was corrected in the Prospectus
(or the Prospectus, as amended or supplemented). This indemnity agreement
is in addition to any liability which the Issuer may otherwise have.
(b) The Underwriters agree, severally and not jointly, that they
will indemnify and hold harmless the Company, each of the Company's
directors, each of the Company's officers who have signed the Registration
Statement and each person, if any, who controls the Issuer within the
meaning of the Act, against any losses, claims, damages or liabilities to
which such Issuer or any such director, officer, or controlling person may
become subject under the Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions or proceedings in respect thereof) arise
out of or are based upon (i) any untrue statement or alleged untrue
statement of any material fact contained in the Registration Statement, any
preliminary prospectus, the Prospectus or any amendment or supplement
thereto, or (ii) the omission or the alleged omission to state (A) with
respect to the Prospectus or any amendment or supplement thereto, a
material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were
made, not misleading and (B) with respect to the Registration Statement or
any amendment or supplement thereto, a material fact required to be stated
therein or necessary to make the statements therein not misleading, and
will reimburse any legal or other expenses reasonably incurred by such
Issuer or any such director, officer, or controlling person in connection
with
24
<PAGE>
investigating or defending any such loss, claim, damage, liability, action
or proceeding; PROVIDED, however, that an Underwriter will be liable in
each case to the extent, but only to the extent, that such untrue statement
or alleged untrue statement or omission or alleged omission has been made
in the Registration Statement, any preliminary prospectus, the Prospectus
or such amendment or supplement, in reliance upon and in conformity with
written information furnished to such Issuer by or through such Underwriter
specifically for use in the preparation thereof. This indemnity agreement
is in addition to any liability which the Underwriters may otherwise have.
(c) In case any proceeding (including any governmental
investigation) shall be instituted involving any person in respect of
which indemnity may be sought pursuant to this Section 8, such person (the
"Indemnified Party") shall promptly notify the person against whom such
indemnity may be sought (the "Indemnifying Party") in writing. No
indemnification provided for in Section 8(a) or (b) shall be available to
any party who shall fail to give notice as provided in this Section 8(c) if
the party to whom notice was not given was unaware of the proceeding to
which such notice would have related and was materially prejudiced by
failure to give such notice, but the failure to give such notice shall not
relieve the Indemnifying Party or Parties from any liability which it or
they may have to the Indemnified Party for contribution or otherwise than
on account of the provisions of Section 8(a) or (b). In case any such
proceeding shall be brought against any Indemnified Party and it shall
notify the Indemnifying Party of the commencement thereof, the Indemnifying
Party shall be entitled to participate therein and, to the extent that it
shall wish, jointly with any other Indemnifying Party similarly notified,
to assume the defense thereof, with counsel reasonably satisfactory to such
Indemnified Party and shall pay as incurred the fees and disbursements of
such counsel related to such proceeding. In any such proceeding, any
Indemnified Party shall have the right to retain its own counsel at its own
expense. Notwithstanding the foregoing, the Indemnifying Party shall pay
as incurred the fees and expenses of the counsel retained by the
Indemnified Party in the event (i) the Indemnifying Party and the
Indemnified Party shall have mutually agreed to the retention of such
counsel or (ii) the named parties to any such proceeding (including any
impleaded parties) include both the Indemnifying Party and the Indemnified
Party and representation of both parties by the same counsel would be
inappropriate due to actual or potential differing interests between them.
It is understood that unless representation of more than one Indemnified
Party by the same counsel would be inappropriate due to actual or potential
differing interests between them, the Indemnifying Party shall not, in
connection with any proceeding or related proceedings in the same
jurisdiction, be liable for the reasonable fees and expenses of more than
one separate firm for all
25
<PAGE>
such Indemnified Parties. Such firm shall be designated in writing by the
Underwriters in the case of parties indemnified pursuant to Section 8(a)
and by the Issuer in the case of parties indemnified pursuant to Section
8(b). The Indemnifying Party shall not be liable for any settlement of any
proceeding effected without its written consent but if settled with such
consent or if there be a final judgment for the plaintiff, the Indemnifying
Party agrees to indemnify the Indemnified Party from and against any loss
or liability by reason of such settlement or judgment. Notwithstanding the
foregoing sentence, if at any time an Indemnified Party shall have
requested an Indemnifying Party to reimburse the Indemnified Party for fees
and expenses of counsel as contemplated by the fifth sentence of this
paragraph, the Indemnifying Party agrees that it shall be liable for any
settlement of any proceeding effected without its written consent if
(i) such settlement is entered into more than 60 business days after
receipt by such Indemnifying Party of the aforesaid request and (ii) such
Indemnifying Party shall not have reimbursed the Indemnified Party in
accordance with such request prior to the date of such settlement. No
Indemnifying Party shall, without the prior written consent of the
Indemnified Party, effect any settlement of any pending or threatened
proceeding in respect of which any Indemnified Party is or could have been
a party and indemnity could have been sought hereunder by such Indemnified
Party, unless such settlement includes an unconditional release of such
Indemnified Party from all liability on claims that are the subject matter
of such proceeding.
(d) If the indemnification provided for in this Section 8 is
unavailable to or insufficient to hold harmless an Indemnified Party under
Section 8(a) or (b) above in respect of any losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) referred to
therein, then each Indemnifying Party shall contribute to the amount paid
or payable by such Indemnified Party as a result of such losses, claims,
damages or liabilities (or actions or proceedings in respect thereof) in
such proportion as is appropriate to reflect the relative benefits received
by the Issuer on the one hand and the Underwriters on the other from the
offering of the Common Stock. If, however, the allocation provided by the
immediately preceding sentence is not permitted by applicable law or if the
Indemnified Party failed to give the notice required under Section 8(c)
above, then each Indemnifying Party shall contribute to such amount paid or
payable by such Indemnified Party in such proportion as is appropriate to
reflect not only such relative benefits but also the relative fault of the
Issuer on the one hand and the Underwriters on the other in connection with
the statements or omissions which resulted in such losses, claims, damages
or liabilities (or actions or proceedings in respect thereof), as well as
any other relevant equitable considerations. The relative benefits
received by the Issuer on the one hand and the Underwriters on
26
<PAGE>
the other shall be deemed to be in the same proportion as the total net
proceeds from the offering (before deducting expenses) received by the
Issuer bear to the total underwriting discounts and commissions received by
the Underwriters, in each case as set forth in the table on the cover page
of the Prospectus. The relative fault shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Issuer on the one hand or the
Underwriters on the other and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement
or omission.
The Issuer and the Underwriters agree that it would not be just
and equitable if contributions pursuant to this Section 8(d) were
determined by pro rata allocation or by any other method of allocation
which does not take account of the equitable considerations referred to
above in this Section 8(d). The amount paid or payable by an Indemnified
Party as a result of the losses, claims, damages or liabilities (or actions
or proceedings in respect thereof) referred to above in this Section 8(d)
shall be deemed to include any legal or other expenses reasonably incurred
by such Indemnified Party in connection with investigating or defending any
such action or claim. Notwithstanding the provisions of this subsection
(d), (i) no Underwriter shall be required to contribute any amount in
excess of the underwriting discounts and commissions applicable to the
Shares purchased by such Underwriter and (ii) no person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Act) shall be entitled to contribution from any person who was not guilty
of such fraudulent misrepresentation.
(e) In any proceeding relating to the Registration Statement,
any preliminary prospectus, the Prospectus or any supplement or amendment
thereto, each party against whom contribution may be sought under this
Section 8 hereby consents to the jurisdiction of any court having
jurisdiction over any other contributing party, agrees that process issuing
from such court may be served upon him or it by any other contributing
party and consents to the service of such process and agrees that any other
contributing party may join him or it as an additional defendant in any
such proceeding in which such other contributing party is a party.
9. DEFAULT BY UNDERWRITERS. If on the Closing Date or the Option
Closing Date, as the case may be, any Underwriter shall fail to purchase
and pay for the portion of the Shares which Underwriter has agreed to
purchase and pay for on such date (otherwise than by reason of any default
on the part of the Company), you, as Representatives of the Underwriters,
shall use your best efforts to procure within 24 hours thereafter one or
more of the other Underwriters, or any others, to purchase from the Company
such amounts as may be agreed upon and upon the
27
<PAGE>
terms set forth herein, the Firm Shares or Option Shares, as the case may
be, which the defaulting Underwriter or Underwriters failed to purchase.
If during such 24 hours you, as such Representatives, shall not have
procured such other Underwriters, or any others, to purchase the Firm
Shares or Option Shares, as the case may be, agreed to be purchased by the
defaulting Underwriter or Underwriters, then (a) if the aggregate number of
shares with respect to which such default shall occur does not exceed 10%
of the Firm Shares or Option Shares as the case may be, covered hereby, the
other Underwriters shall be obligated, severally, in proportion to the
respective numbers of Firm Shares or Option Shares, as the case may be,
which they are obligated to purchase hereunder, to purchase the Firm Shares
or Option Shares, as the case may be, which such defaulting Underwriter or
Underwriters failed to purchase, or (b) if the aggregate number of shares
of Firm Shares or Option Shares, as the case may be, with respect to which
such default shall occur exceeds 10% of the Firm Shares or Option Shares,
as the case may be, covered hereby, the Company or you as the
Representatives of the Underwriters will have the right, by written notice
given within the next 24-hour period to the parties to this Agreement, to
terminate this Agreement without liability on the part of the non-
defaulting Underwriters or of the Company except to the extent provided in
Section 8 hereof. In the event of a default by any Underwriter or
Underwriters, as set forth in this Section 9, the Closing Date or Option
Closing Date, as the case may be, may be postponed for such period, not
exceeding seven days, as you, as Representatives, may determine in order
that the required changes in the Registration Statement or in the
Prospectus or in any other documents or arrangements may be effected. The
term "Underwriter" includes any person substituted for a defaulting
Underwriter. Any action taken under this Section 9 shall not relieve any
defaulting Underwriter from liability in respect of any default of such
Underwriter under this Agreement.
10. NOTICES. All communications hereunder shall be in writing and,
except as otherwise provided herein, will be mailed, delivered or
telegraphed and confirmed as follows: if to the Underwriters, to Alex.
Brown & Sons Incorporated, 135 East Baltimore Street, Baltimore, Maryland
21202, Attention: Peter McGowan; if to the Company, to Great Dane Holdings
Inc., 2016 North Pitcher Street, Kalamazoo, Michigan 49007, Attention:
David R. Markin, President and Chief Executive Officer.
11. TERMINATION: This Agreement may be terminated by you by notice
to the Company as follows:
(a) at any time prior to the earlier of (i) the time the Shares are
released by you for the sale by notice to the Underwriters, or (ii) 11:30
a.m. on the first business day following the date of this Agreement;
28
<PAGE>
(b) at any time prior to the Closing Date if any of the following has
occurred: (i) since the respective dates as of which information is given
in the Registration Statement and the Prospectus, any material adverse
change or any development involving a prospective material adverse change
in or affecting the condition, financial or otherwise, of the Company and
its Subsidiaries taken as a whole or the earnings, business affairs,
management or business prospectus of the Company and its Subsidiaries taken
as a whole, whether or not arising in the ordinary course of business, (ii)
any outbreak of hostilities or other national or international calamity or
crisis or change in economic or political conditions if the effect of such
outbreak, calamity, crisis or change on the financial markets of the United
States would, in your reasonable judgment, make the offering or delivery of
the Shares impracticable, (iii) suspension of trading in securities on the
New York Stock Exchange or the American Stock Exchange or limitation on
prices (other than limitations on hours or numbers of days of trading) for
securities on either such Exchange, (iv) the enactment, publication, decree
or other promulgation of any federal or state statute, regulation, rule or
order of any court or other governmental authority which in your reasonable
opinion materially and adversely affects or will materially or adversely
affect the business or operations of the Company, (v) declaration of a
banking moratorium by either federal or New York State authorities, or (vi)
the taking of any action by any federal, state or local government or
agency in respect of its monetary or fiscal affairs which in your
reasonable opinion has a material adverse effect on the securities markets
in the United States; or
(c) as provided in Sections 6 and 9 of this Agreement.
This Agreement also may be terminated by you, by notice of the
Company, as to any obligation of the Underwriters to purchase the Option
Shares, upon the occurrence at any time prior to the Option Closing Date of
any of the events described in subparagraph (b) above or as provided in
Sections 6 and 9 of this Agreement.
12. SUCCESSORS. This Agreement has been and is made solely for the
benefit of the Underwriters and, the Company and their respective
successors, executors, administrators, heirs and assigns, and the officers,
directors and controlling persons referred to herein, and no other person
will have any right or obligation hereunder. The term "successors" shall
not include any purchaser of the Shares merely because of such purchase.
13. MISCELLANEOUS. The reimbursement, indemnification and
contribution agreements contained in this Agreement and the
representations, warranties and covenants in this Agreement shall remain in
full force and effect
29
<PAGE>
regardless of (a) any termination of this Agreement, (b) any investigation
made by or on behalf of any Underwriter or controlling person thereof, or
by or on behalf of the Company or its directors or officers and (c)
delivery of and payment for the Shares under this Agreement.
This Agreement may be executed in two or more counterparts, each
of which shall be deemed and original, but all of which together shall
constitute one and the same instrument.
The letter agreement between the Company and Alex. Brown & Sons
Incorporated dated November 21, 1994 shall remain in full force and effect,
except for the first paragraph of Section 3 of such letter which shall be
superseded by this Agreement.
This Agreement shall be governed by, and construed in accordance
with, the laws of the State of New York without giving effect to the
principles of conflicts of laws thereof.
30
<PAGE>
If the foregoing letter is in accordance with your understanding
of our agreement, please sign and return to us the enclosed duplicates
hereof, whereupon it will become a binding agreement among the Company and
the several Underwriters in accordance with its terms.
Very truly yours,
GREAT DANE HOLDINGS INC.
By:
------------------------------------------
Name
Title
The foregoing Underwriting Agreement
is hereby confirmed and accepted as of
the date first above written.
ALEX. BROWN & SONS INCORPORATED
SMITH BARNEY INC.
- -----------------------------------
As Representatives of the several
Underwriters listed on Schedule I
By: ALEX. BROWN & SONS INCORPORATED
By:
--------------------------------
Name
Title
31
<PAGE>
SCHEDULE I
SCHEDULE OF UNDERWRITERS
Number of Firm Shares
Underwriter to be Purchased
------------- ---------------------
Alex. Brown & Sons Incorporated
Smith Barney Inc.
-------------
Total
-------------
I-1
<PAGE>
SCHEDULE II
SIGNIFICANT SUBSIDIARIES OF
GREAT DANE HOLDINGS INC.
Jurisdiction of
Company Name(1) Incorporation/Organization
- --------------- ---------------------------
Great Dane Trailers, Inc. Georgia
Great Dane Trailers Tennessee, Inc. Tennessee
Great Dane Los Angeles, Inc. Georgia
Checker Motors Corporation New Jersey
CMC Kalamazoo Inc. Delaware
Yellow Cab Company Delaware
Chicago AutoWerks Inc. Delaware
American Country Insurance Company(2) Illinois
South Charleston Stamping & West Virginia
Manufacturing Company(3)
- ---------------
1. American Country Insurance Company ("Country") is 99.96% owned by Checker
Motors Corporation, and .04% owned by Country's directors.
2. South Charleston Stamping & Manufacturing Company is 90% owned by Checker
Motors Corporation and 10% owned by a nominee of Executive Life Insurance
Company.
3. South Charleston Stamping & Manufacturing Company is 90% owned by Checker
Motors Corporation and 10% owned by a nominee of Executive Life Insurance
Company.
II-1
<PAGE> SCHEDULE III
MATERIAL AGREEMENTS,
INDENTURES OR INSTRUMENTS
1. Indenture between ICC and First Fidelity Bank, National Association, New
Jersey, as Trustee, relating to the 12 3/4% Senior Subordinated Debentures
due August 1, 2001 of the Company.
2. First Supplemental Indenture relating to the 12 3/4% Senior Subordinated
Debentures due August 1, 2001 of ICC dated as of October 19, 1994 among
ICC, the Company and First Fidelity.
3. Indenture between ICC and Midlantic National Bank, as Trustee, relating to
the 14 1/2% Subordinated Discount Debentures due January 1, 2006 of the
Company.
4. First Supplemental Indenture relating to the 14 1/2% Subordinated Discount
Debentures due January 1, 2006 of ICC, dated October 19, 1994 among ICC,
the Company and Midlantic.
5. Great Dane Holdings Inc. 1994 Stock Option Plan.
6. Amended and Restated Employment Agreement, dated as of November 1, 1985,
between Motors and David R. Markin, as further amended on March 4, 1992 and
extended on July 12, 1993.
7. Amended and Restated Employment Agreement, dated as of June 1, 1992,
between Checker L.P. and Jeffrey Feldman.
8. Stated Benefit Salary Continuation Agreement.
9. Employment Agreement, dated as of July 1, 1992, between ICC and Jay H.
Harris, as amended April 6, 1994.
10. Loan Agreement, dated January 26, 1995, by and among Motors, Yellow Cab,
AutoWerks, CMC, SCSM, the Lenders therein and NBD Bank, as Agent ("NBD").
11. Pledge Agreement and Irrevocable Proxy, dated as of January 26, 1995, given
by Motors to NBD.
12. Security Agreement, dated as of January 26, 1995, made by Motors, Yellow
Cab, AutoWerks and CMC to NBD.
III-1
<PAGE>
13. Amended and Restated Loan and Security Agreement dated as of February 14,
1995, by and among Great Dane, Great Dane Trailers Tennessee, Inc., Great
Dane Los Angeles, Inc., the financial institutions named therein and
BankAmerica Business Credit Inc., as Agent ("BABC").
14. Amended and Restated Pledge Agreement, dated as of February 14, 1995, made
by Great Dane Trailers, Inc., in favor of BABC.
15. Amended and Restated Agreement Regarding Stock and Other Matters, dated as
of February 14, 1995, between the Company and BABC.
16. Lease, dated December 1, 1988, between SCSM and Park Corporation.
17. Assumption Agreement, dated as of August 1, 1989, by and between Motors and
the West Virginia Economic Development Authority.
18. Agreement, dated as of September 1, 1991, between Checker L.P. and Jerry E.
Feldman.
19. Form of Checker Motors Corporation Excess Benefit Retirement Plan,
effective January 1, 1983.
20. Amended and Restated License Agreement, dated December 30, 1992, between
Checker Motors Corporation and Checker Taxi Association, Inc.
21. Settlement Agreement, dated as of December 22, 1993, between the Company
and The Boeing Company.
22. Employment Agreement, dated as of January 1, 1994, between the Company and
David R. Markin.
23. Employment Agreement, dated as of November 4, 1991, between Great Dane and
Willard R. Hildebrand.
24. Settlement Agreement, dated as of June 21, 1994, among John Garamendi, as
Insurance Commissioner of the State of California, Base Assets Trust,
Checker L.P., Motors, Checker Holding Corp. III and the Company.
25. Form of Indemnification Agreement.
26. Sale, Installation and Technical Assistance Agreement, dated November 14,
1983, between Graaff KG and Great Dane Trailers, Inc.
III-2
<PAGE>
27. Form of Great Dane Trailers, Inc. Supplemental Retirement Income Plan,
effective January 1, 1994.
28. Amended and Restated Operating Agreement, dated as of August 31, 1988,
between Associates Commercial Corporation (as successor to Great Dane
Finance Company) and Great Dane Trailers, Inc. as amended February 7, 1994
and May 18, 1994.
29. 1995 Outside Directors Stock Option Plan.
30. Stock Option Agreement between the Company and Jay H. Harris dated as of
January 17, 1995.
31. Retirement Plan for Great Dane Trailers, Inc. effective January 1, 1989.
32. Checker Motors Pension Plan, as amended and restated effective
January 1, 1987.
33. Composite Checker Employees' 401(k) Retirement Benefit Plan, reflecting all
amendments to date.
III-3
<PAGE>
SCHEDULE IV
Name of Entity Stock Owned By
- -------------- --------------
Checker Motors Corporation Great Dane Holdings
Yellow Cab Company Checkers Motors Corporation
CMC Kalamazoo Inc. Checkers Motors Corporation
Chicago AutoWerks Inc. Checkers Motors Corporation
American Country Insurance Company Checkers Motors Corporation
South Charleston Stamping & Checkers Motors Corporation
Manufacturing Company (90% owned)
Great Dane Trailers, Inc. Great Dane Holdings Inc.
Great Dane Los Angeles, Inc. Great Dane Trailers, Inc.
Great Dane Trailers Tennessee, Inc. Great Dane Trailers, Inc.
IV-1
<PAGE>
EXHIBIT 3.1
COMPOSITE
CERTIFICATE OF INCORPORATION
OF
GREAT DANE HOLDINGS INC.
FIRST. The name of the Corporation is GREAT DANE HOLDINGS INC.
SECOND. The address of the Corporation's registered office in the
State of Delaware is 1209 Orange Street, in the City of Wilmington, County of
New Castle. The name of its registered agent at such address is The Corporation
Trust Company.
THIRD. The purpose of the Corporation is to engage in any lawful act
or activity for which corporations may be organized under the General
Corporation Law of the State of Delaware.
FOURTH: Authorized Stock.
1. The aggregate number of shares which the Corporation shall
have authority to issue is 55,000,000, of which 5,000,000 shares of the par
value of $1.00 per share shall be designated "Preferred Stock" and 50,000,000
shares of the par value of $.01 per share shall be designated "Common Stock."
2. Authority is hereby expressly granted to the Board of
Directors from time to time to issue the Preferred Shares as Preferred Shares of
any series and, in connection with the creation of each such series, to fix by
the resolution or resolutions providing for the issue of shares thereof, the
number of shares of such series, and the designations, powers, preferences, and
rights, and the qualifications, limitations, and restrictions, of such series,
to the full extent now or hereafter permitted by the laws of the State of
Delaware."
FIFTH. The name and mailing address of the incorporator is Warren
E. Friss, c/o Hutton Ingram Yuzek Gainen Carroll & Bertolotti, 250 Park Avenue,
6th Floor, New York, New York 10177.
SIXTH. Election of directors need not be by written ballot.
SEVENTH. The Board of Directors is authorized to adopt, amend, or
repeal By-Laws of the Corporation except as and to the extent provided in the
By-Laws.
<PAGE>
EIGHTH. Any person who was or is a party or is threatened to be made
a party to any threatened, pending, or completed action, suit, or proceeding,
whether civil, criminal, administrative, or investigative (whether or not by or
in the right of the Corporation) by reason of the fact that he is or was a
director, officer, incorporator, employee, or agent of the Corporation, or is or
was serving at the request of the Corporation as a director, officer,
incorporator, employee, partner, trustee, or agent of another corporation,
partnership, joint venture, trust, or other enterprise (including an employee
benefit plan), shall be entitled to be indemnified by the Corporation to the
full extent then permitted by law against expenses (including counsel fees and
disbursements), judgments, fines (including excise taxes assessed on a person
with respect to an employee benefit plan), and amounts paid in settlement
incurred by him in connection with such action, suit, or proceeding. Such right
of indemnification shall inure whether or not the claim asserted is based on
matters which antedate the adoption of this Article EIGHTH. Such right of
indemnification shall continue as to a person who has ceased to be a director,
officer, incorporator, employee, partner, trustee, or agent and shall inure to
the benefit of the heirs and personal representatives of such a person. The
indemnification provided by this Article EIGHTH shall not be deemed exclusive of
any other rights which may be provided now or in the future under any provision
currently in effect or hereafter adopted of the By-Laws, by any agreement, by
vote of stockholders, by resolution of disinterested directors, by provision of
law, or otherwise.
NINTH. No director of the Corporation shall be liable to the
Corporation or any of its stockholders for monetary damages for breach of
fiduciary duty as a director, provided that this provision does not eliminate
the liability of the director (i) for any breach of the director's duty of
loyalty to the Corporation or its stockholders, (ii) for acts or omissions not
in good faith or which involve intentional misconduct or a knowing violation of
law, (iii) under Section 174 of Title 8 of the Delaware Code, or (iv) for any
transaction from which the director derived an improper personal benefit. For
purposes of the prior sentence, the term "damages" shall, to the extent
permitted by law, include, without limitation, any judgment, fine, amount paid
in settlement, penalty, punitive damages, excise or other tax assessed with
respect to an employee benefit plan, or expense of any nature (including,
without limitation, counsel fees and disbursements). Each person who serves as
a director of the Corporation while this Article NINTH is in effect shall be
deemed to be doing so in reliance on the provisions of this Article NINTH, and
neither the amendment or repeal of this Article NINTH, nor the adoption of any
provision of this Certificate of Incorporation inconsistent with this Article
NINTH, shall apply to or have any effect on the liability or alleged liability
of any director or the Corporation for, arising out of, based upon, or in
connection with any acts or omissions of
-2-
<PAGE>
such director occurring prior to such amendment, repeal, or adoption of an
inconsistent provision. The provisions of this Article NINTH are cumulative and
shall be in addition to and independent of any and all other limitations on or
eliminations of the liabilities of directors of the Corporation, as such,
whether such limitations or eliminations arise under or are created by any law,
rule, regulation, by-law, agreement, vote of shareholders or disinterested
directors, or otherwise.
-3-
<PAGE>
EXHITIT 4.5
FORM OF COMMON STOCK CERTIFICATE
GREAT DANE HOLDINGS INC.
A Delaware Corporation
Certificate No._________
No. of Shares _______ CUSIP 39031P 10 5
THIS CERTIFIES THAT __________________________ IS THE OWNER OF ___________
Fully Paid and Nonassessable Shares of Common Stock, $.01 Par Value Per Share,
of GREAT DANE HOLDINGS INC. (the "Company") transferable in person or by duly
authorized attorney upon surrender of his Certificate properly endorsed. This
Certificate is not valid unless countersigned and registered by the Transfer
Agent and Registrar.
WITNESS the facsimile seal of the Company and the facsimile signatures
of its duly authorized officers.
Dated:
Martin L. Solomon SEAL David R. Markin
Secretary President
Countersigned and Registered:
American Stock Transfer and Trust Company (New York, NY)
Transfer Agent and Registrar
By:
---------------------
Authorized Officer
<PAGE>
[Reverse Side of Stock Certificate]
THE CORPORATION WILL FURNISH WITHOUT CHARGE TO EACH STOCKHOLDER WHO SO
REQUESTS, THE POWERS, DESIGNATIONS, PREFERENCES AND RELATIVE, PARTICIPATING,
OPTION OR OTHER SPECIAL RIGHTS OF EACH CLASS OF STOCK OR SERIES THEREOF OF THE
CORPORATION, AND THE QUALIFICATIONS, LIMITATIONS OR RESTRICTIONS OF SUCH
PREFERENCES AND/OR RIGHTS, SUCH REQUEST MAY BE MADE TO THE CORPORATION OR THE
TRANSFER AGENT.
The following abbreviations, when used in the inscription on the face
of this certificate, shall be construed as through they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common
TEN ENT - as tenants by the entireties
JT TEN - as joint tenants with right of
survivorship and not as tenants
in common
UNIF GIFT MIN ACT --________ Custodian_________
(Cust) (Minor)
under Uniform Gifts to Minors
Act _________________________
(State)
Additional abbreviations may also be used through not in the above list.
For value received _________________ hereby sell, assign and transfer
unto _______________________, _______ Shares of the Common Stock represented by
the within Certificate, and do hereby irrevocably constitute and appoint
_____________ to transfer the said stock on the books of the Company will full
power of substitution in the premises.
Date:______________________
Signature:______________________________
NOTICE: The signature of this assignment must correspond with the name as
written upon the face of the Certificate, in any particular without
alteration or enlargement, or any change whatever.
<PAGE>
EXHIBIT 5.1
April 5, 1995
Great Dane Holdings Inc.
2016 North Pitcher Street
Kalamazoo, Michigan 49007
Re: Registration Statement on Form S-1
(Reg. No. 033-56595)
----------------------------------
Dear Sirs:
You have requested our opinion as counsel to Great Dane Holdings Inc.,
a Delaware corporation (the "Company"), in connection with the registration
under the Securities Act of 1933, as amended (the "Securities Act"), of an
aggregate of 4,600,000 shares of the Common Stock, par value $.01 per share of
the Company (the "Shares"), of which (a) 4,000,000 shares will be purchased by
certain underwriters (the "Underwriters") from the Company and (b) up to
600,000 additional shares will be purchased by the Underwriters from the
Company if the Underwriters exercise the option granted to them solely to
cover over-allotments, if any, on Form S-1 (Registration No. 33-56595) filed
with the Securities and Exchange Commission (the "Commission") on
November 23, 1994, as subsequently amended (the "Registration Statement").
In connection with rendering the opinions expressed herein, we have
examined the Registration Statement and such other documents as we have deemed
necessary to enable us to express the opinions hereinafter set forth. Based
upon such examination, it is our opinion that the Shares have been duly
authorized and, when issued, delivered and paid for in the manner described in
the form of Underwriting Agreement filed as Exhibit 1.1 to the Registration
Statement, will be validly issued, fully paid and non-assessable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to this firm under the caption
"Legal Matters" in the Prospectus forming a part of the Registration Statement.
In giving this
<PAGE>
Great Dane Holdings Inc.
April 5, 1995
Page 2
consent, we do not hereby admit that we are in the category of persons whose
consent is required under Section 7 of the Securities Act.
Very truly yours,
Hutton Ingram Yuzek Gainen
Carroll & Bertolotti
<PAGE>
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this "Agreement"), dated
as of November 1, 1985, between CHECKER MOTORS CORPORATION, a New Jersey
corporation, having its principal place of business at 2016 North Pitcher
Street, Kalamazoo, Michigan 49007 ("Checker") and DAVID R. MARKIN, residing at
2121 Winchell Street, Kalamazoo, Michigan 49008 ("Markin").
W I T N E S S E T H:
WHEREAS, Markin is now and has been employed by Checker as Chairman
of the Board of Directors, President, Chief Executive Officer and Chief
Operating Officer;
WHEREAS, Markin is employed by Checker as President and Chief
Operating Officer pursuant to an Employment Agreement ("Employment Agreement"),
dated February 2, 1981, between Checker and Markin, as amended by agreements,
dated July 14, 1982, November 30, 1983, and March 1, 1984, between Checker and
Markin;
WHEREAS, Checker wishes to continue to employ Markin as President
and Chief Operating Officer of Checker and Markin is willing to continue his
employment by Checker in such capacities;
WHEREAS, it is desirable to set forth all of the terms and
conditions of said Employment Agreement, as amended, in a single document;
NOW, THEREFORE, the parties hereto agree as follows:
<PAGE>
1. Checker agrees to employ Markin, and Markin agrees to be employed by
Checker, as President and Chief Executive Officer of Checker, for a term which
commenced on March 4, 1977 and expires on March 4, 1992.
2. Markin shall serve Checker as President, Chief Operating Officer and
Chief Executive Officer, and Markin shall have the right to perform the duties
of his employment hereunder and to have his office and headquarters in
Kalamazoo, Michigan, all subject to the reasonable direction of the Board of
Directors of Checker. This Agreement will be transferred to Checker Motors Co.,
L.P. (the "Partnership") upon consummation of the proposed merger (the "Merger")
of Checker Acquisition Corporation with and into Checker and the transfer (the
"Transfer") of the assets of Checker to the Partnership and thereupon Markin
will become an employee of the Partnership. All references in this Agreement to
Checker shall include the Partnership, as appropriate, upon consummation of the
Transfer.
3. During the term of this Agreement, Markin shall receive as cash
compensation (exclusive of any profit sharing or pension or other fringe benefit
to which he now may be entitled or which he may receive) the amount of $194,040
per annum payable in bi-monthly installments on the 15th and last day of each
month, provided that such amount shall be increased to $600,000 per annum upon
the consummation of the Merger. Markin shall be eligible to receive any future
profit sharing or pension or other bonus compensation
- 2 -
<PAGE>
approved by the Board of Directors of Checker and implemented by Checker. When
deemed appropriate by the Board of Directors of Checker, the Board shall review
Markin's rate of compensation and fringe benefits taking into account, without
limiting the generality of the review, any increases in the cost of living,
compensation paid by competing companies comparable to Checker to executives of
similar rank and the results of operations of Checker during the preceding
years.
4. Markin's employment under this Agreement shall terminate upon his
death or disability and may be terminated for cause, in any one of which events
markin shall have no further rights and Checker shall have no further
obligations under this Agreement, except as set forth in Paragraphs 5 and 15
herein. For purposes of this Paragraph 4, the term "cause" shall mean gross
misconduct or dishonesty and the term "disability" shall mean a physical or
mental condition which, in the reasonable opinion of the Board of Directors of
Checker, shall have prevented Markin from performing his customary duties at his
customary standard for a period of at least six consecutive months and which can
reasonably be expected to continue indefinitely.
5. The death of Markin shall forthwith terminate this Agreement. In
such event, Checker shall pay the Estate of Markin the compensation which would
otherwise be payable to Markin for the period ending on the last day of the
month in which death occurs. In addition, Checker shall pay deferred
compensation from the date
- 3 -
<PAGE>
of Markin's death through March 4, 1992 in an annual amount equal to one-third
of Markin's base salary at the date of his death. Such deferred compensation
shall be payable in bi-monthly installments on the 15th and last day of each
month and in accordance with the terms of the Last Will and Testament of David
R. Markin which establishes the David Robert Markin Charitable Family Trust, or
if no such Last Will and Testament exists upon the death of Markin, to the
Estate of Markin.
6. Markin shall be entitled to a paid vacation of six weeks per year
and to accountable allowances, charges and reimbursements like those now
prevailing at Checker to cover entertainment, travel and other expenses incurred
in connection with the business of Checker. Checker shall continue to provide
him with life insurance in the amount appropriate for his position and
compensation, including the following policies with the Executive Life Insurance
Company:
Policy No. Amount
---------- ------
1361832L $2,000,000
1361838L 650,000
1361836L 858,792
1361834L 1,400,000
and additionally shall fund up to $10,000 per annum to be used as payment for
premiums on a life insurance and/or disability policy to be owned by Markin, the
beneficiaries of said policy to be designated by Markin.
7. Markin shall devote his best efforts and substantially all his
business time to his employment hereunder. During the term
- 4 -
<PAGE>
of his employment pursuant to this Agreement, Markin shall not become an
officer, director or employee or act in an advisory or other capacity for any
individual, firm, corporation or other person not affiliated with Checker which
is engaged in any business which is being conducted in the same geographic area
and which is the same or substantially similar to the business then being
conducted by Checker or any of its divisions, subsidiaries or affiliated
companies, or have any interest as owner, partner, stockholder or other
proprietary interest in such business, but this provision shall not prohibit
Markin from purchasing in the public market not more than 5% of the outstanding
stock or other class of securities of any such corporation if such stock or
other securities are listed on a national securities exchange or are regularly
quoted in the over-the-counter market.
8. Neither this Agreement nor the rights of Markin hereunder shall be
assignable or otherwise transferable by Markin except as expressly provided
herein, without the prior written consent of Checker, and any purported
assignment or other transfer by Markin of this Agreement or such rights, whether
voluntarily or involuntarily, except as expressly provided herein, shall not
vest in the purported assignee or transferee any interest or right herein
whatsoever and any such purported assignment shall be void.
9. In the event that there shall be a future disposition
("Disposition"), of the properties and business of Checker, substantially as an
entirety, by merger, consolidation, sale of
- 5 -
<PAGE>
assets or otherwise, other than as a result of the Merger or Transfer, Markin
shall have the option, at any time after the execution of an agreement or other
definitive act providing for such Disposition, to terminate this Agreement
forthwith upon 30 days written notice to Checker. Within 30 days after such
termination, Checker shall pay Markin in a lump sum the total remaining salary
to which Markin would have been entitled pursuant to Paragraph 3 of this
Agreement had he remained employed by Checker through March 4, 1992 as
contemplated by this Agreement. This Paragraph 9 shall not be applicable at any
time after the consummation of the Transfer.
10. Neither this Agreement nor any provision hereof can be changed,
modified, amended, discharged, terminated or waived orally or by any course or
purported course of dealing, but only by an agreement signed by Checker and
Markin. No such agreement in writing shall extend to or affect any provision of
this Agreement not expressly changed, modified, amended, discharged, terminated
or waived or impair any right consequent on such a provision. The waiver or
failure to enforce any provision of this Agreement shall not be deemed to be a
waiver or acquiescence in any other breach thereof.
11. Every notice relating to or required by this Agreement shall be in
writing and shall be given in person or by registered mail return receipt
requested. All notices to Checker and Markin shall be addressed to their
respective addresses shown in this
- 6 -
<PAGE>
Agreement. Either party may designate a different address to which notices
shall be addressed by giving the other party due notice hereunder of such
different address. Any notice given by Checker to Markin at his last designated
address shall be effective to bind any other person who may acquire rights
hereunder.
12. This Agreement shall be governed by and construed in accordance with
the laws of the State of Michigan without giving effect to conflict of laws.
13. Any controversy or claim arising out of or relating to this
Agreement, or the breach thereof, shall be settled by arbitration in Michigan
before three arbitrators in accordance with the Rules of the American
Arbitration Association, and judgment upon the award rendered by the arbitrators
may be entered in any court having jurisdiction thereof.
14. The covenants, agreements, representations and warranties contained
in or made pursuant to this Agreement shall survive Markin's termination of
employment.
15. In the event that this Agreement is terminated by either Checker or
Markin for any reason other than "cause" or "disability," as defined in
Paragraph 4 hereinabove, or death, then Markin shall continue to serve as a
consultant to Checker for a period of five years from the date of such
termination and Checker shall pay to Markin $50,000 per annum for such services
as may be reasonably requested plus actual travelling and other expenses
incurred by him in performing such services.
- 7 -
<PAGE>
In performing such services, Markin may be required to devote the
equivalent of up to one day per week to the business of Checker and shall not be
required to render such services except at the offices of Checker in Kalamazoo,
Michigan. Markin may terminate this arrangement at any time upon 60 days notice
to Checker.
To the extent permitted by law, Checker shall indemnify and hold
Markin harmless from and against all expenses (including attorneys' fees),
liabilities, damages and amounts paid in settlement incurred by him in any
threatened, pending or completed action, suit or proceeding to which he becomes
a party by reason of any status, service, action or failure to act on his part
in his capacity as consultant hereunder or otherwise on behalf of Checker,
except if such expense, liability, damage or amount results directly from
Markin's gross negligence or willful misconduct.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the date and year first above written.
CHECKER MOTORS CORPORATION
By: /s/ Mark L. Friedman
------------------------
/s/ David Markin
------------------------
David R. Markin
- 8 -
<PAGE>
FORM OF CHECKER MOTORS CORPORATION
STATED BENEFIT SALARY CONTINUATION AGREEMENT
_____________________, hereinafter referred to as the Executive, is
performing and will perform valuable services for Checker Motors Corporation,
hereinafter referred to as the Corporation.
The Executive is highly compensated and a managerial employee. The
Corporation wants these valuable services to continue and, to aid in providing
retirement and death benefits to the Executive and his heirs.
Article 1. RETIREMENT BENEFIT - For purposes of this plan, norman
retirement date ("Normal Retirement Date") will be the later
of the attainment of age 65 or three years of participation in
this plan. The Corporation will pay the Executive, beginning
30 days after his Normal Retirement Date if the Executive is
employed until his Normal Retirement Date by the Corporation,
$______ per month for a total of 120 months.
If the Executive dies after becoming entitled to payments but
before 120 payments have been rendered, the unpaid balance
will continue to be paid by the Corporation to the
beneficiaries named in Supplement A hereto. The Executive's
Normal Retirement Date will be ________________.
<PAGE>
Article 2. DEATH BENEFITS - If the Executive dies before his Normal
Retirement Date, the Corporation will pay $_____ 10 days after
the receipt of funds payable from the life insurance policies
described in Article 4b and $__________ on each of the two
consecutive anniversaries of that date to the beneficiaries
named in Supplement A hereto. Otherwise payments will be made
to the executors or administrators of the last survivor of the
Executive and said beneficiaries. Any named beneficiaries may
be changed by written amendment by the Executive with the
agreement of the Corporation. The Corporation shall agree to
all reasonable beneficiary designation changes.
Article 3. EARLY RETIREMENT BENEFITS - In the event the Executive's
employment with the Corporation is terminated without cause
prior to he Normal Retirement Date for reasons other than
death, then beginning on a date to be determined by the
Corporation, but in no even later than 30 days from such
termination date, the Corporation will commence payments to
the Executive of retirement benefits in monthly installments
as set forth in Table A below:
- 2 -
<PAGE>
TABLE A
Termination Age Monthly Benefit Payment(1)
55 $
62 $
____________________
(1) (Interim Values will be provided upon request).
If the Executive is dismissed for cause by the Corporation, he shall
be entitled to retirement benefits only as determined by special arrangement of
the Directors of the Corporation. For purposes of this paragraph, "dismissed
for cause" is defined as:
- Theft;
- Disclosure of company secrets to
competitors;
- Failure to Satisfactorily perform the
responsibilities of his position.
Article 4. CONDITIONS -
a. The provisions of Section 2 are conditional upon the
continuous employment of the Executive by the
Corporation until death prior to the normal Retirement
Date. If the Executive is not employed by the
Corporation upon death, the Corporation will be under no
obligation to the Executive's beneficiaries regarding
the benefits provided by Section 2.
b. The Corporation has provided a policy of life
- 3 -
<PAGE>
insurance upon the life of the Executive to aid it in
meeting its obligations under this agreement. Such
policy will be identified as such in Supplement A which
is attached hereto and is made part hereof. Further,
any such policy or policies held by the Corporation and
any proceeds therefrom shall be treated as the general
assets of the Corporation; and they shall in no way
represent the vested, secured or preferred interest of
the Executive or his beneficiaries under this agreement;
and, the Corporation shall be under no obligation to
either procure or continue life insurance in force upon
the life of the Executive.
c. The Executive agrees that he has, or will, answer
truthfully and completely any question or request for
information by an insurance company in connection with
the issuance of a policy described in the attached
Supplement A. If the Executive fails to do so, or dies
by suicide, and the liability of the insurer under said
policy or policies, if any, is restricted to any degree
as a result of such failure or suicide, then the
Corporation shall be released from all of its
obligations under this agreement.
- 4 -
<PAGE>
Article 5. LEAVE OF ABSENCE - The Corporation may grant the Executive
one or more leaves of absence during which time the Executive
shall be considered to be in the employ of the Corporation for
purposes of this agreement.
Article 6. ASSIGNABILITY - The benefits provided by Sections 1 and 2 of
this agreement will not be subject to garnishment, attachment
or any other legal process by the creditors of the Executive
or of any person or persons designated as beneficiaries of the
agreement.
Article 7. EMPLOYMENT AND OTHER RIGHTS - This agreement creates no
rights whatsoever in the Executive to continue in the employ
of the Corporation for any length of time, nor does it create
any rights in the Executive or obligations on the part of the
Corporation except as set forth herein.
Article 8. CLAIMS PROCEDURE - In accord with the Employee Retirement
Income Security Act of 1974, the following claims procedure is
hereby adopted by the Corporation as the claims procedure for
this unfunded non-qualified deferred compensation plan; and,
for the purposes of implementing such claims procedure (but
not for any other purpose) ______________ is hereby designated
as the named fiduciary and plan administrator of this plan:
- 5 -
<PAGE>
a. FILING OF A CLAIM FOR BENEFITS. A participant or
beneficiary of the plan shall make a claim for the
benefits provided by delivering a written request to the
plan administrator.
b. NOTIFICATION TO CLAIMANT OF DECISION. If a claim is
wholly or partially denied, notice of the decision,
meeting the requirements of paragraph c following, shall
be furnished to the claimant within a reasonable period
of time after receipt of the claim by the plan
administrator.
c. CONTENT OF NOTICE. The plan administrator shall
provide to every claimant who is denied a claim for
benefits, written notice setting forth in a manner
calculated to be understood by the claimant, the
following:
(1) The specific reason or reasons for the denial;
(2) Specific reference to pertinent plan provisions on
which the denial is based;
(3) A description of any additional material or
information necessary for the claimant to perfect
the claim and an explanation of why any such
material or information is necessary; and
(4) An explanation of the plan's claim review
- 6 -
<PAGE>
procedure, as set forth in paragraphs d and e
following.
d. REVIEW PROCEDURE. The purpose of the review
procedure, set forth in this paragraph and in paragraph
e following, is to provide a procedure by which a
claimant under the plan may have a reasonable
opportunity to appeal a denial of a claim to the named
fiduciary for a full and fair review. To accomplish
that purpose, the claimant or his duly authorized
representative:
(1) May request a review upon written application to
the plan administrator;
(2) May review pertinent plan documents; and
(3) May submit issues and comments in writing.
A claimant (or his duly authorized representative) shall
request a review by filing a written application for
review with the plan administrator any time within 60
days after receipt by the claimant of written notice of
the denial of his claim.
e. DECISION ON REVIEW. The decision on review of a
denied claim shall be made in the following manner:
(1) The decision on review shall be made by
- 7 -
<PAGE>
the plan administrator, who may in his discretion
hold a hearing on the denied claim. The plan
administrator shall make his decision promptly,
and not later than 60 days after receipt of the
request for review, unless special circumstances
(such as the need to hold a hearing) require an
extension of time for processing, in which case a
decision shall be rendered as soon as possible,
but not later than 120 days after receipt of the
request for review.
(2) The decision on review shall be in writing and
shall include specific reasons for the decisions,
written in a manner calculated to be understood by
the claimant, and specific references to the
pertinent plan provisions on which the decision is
based.
This agreement is solely between the Executive and the Corporation.
The Executive and his beneficiaries, designated in Supplement A hereto, shall
have recourse only against the Corporation for enforcement. The terms of this
agreement shall be binding upon the beneficiaries, heirs, executors and
administrators of the Executive and upon the successors and assign of the
Corporation.
- 8 -
<PAGE>
The Corporation requires the Executive to complete 3 years of
participation in the plan OR TO RECEIVE THE APPROVAL OF THE DIRECTORS OF THE
CORPORATION prior to commencement of any benefits as stated.
EXECUTED this ______ day of ______________, 19__
CHECKER MOTORS CORPORATION
WITNESS:
______________________________ By: ________________________________
Name:
Title:
______________________________ ________________________________
Executive
- 9 -
<PAGE>
SUPPLEMENT A
The following insurance policy has been procured by Checker Motors Corporation
(hereinafter referred to as the Corporation) to aid the Corporation in meeting
its obligations under the Stated Benefit Salary Continuation Agreement between
the Corporation and __________________, as Executive which was executed on the
day of ____________, 19___.
Policy Number Face Amount
------------- -----------
This policy will be the policy referred to in the above described agreement.
The Corporation may add policies to an remove policies from this Supplemental in
accordance with the terms of said agreement, but before any policy will be
deemed added or removed, an amended Supplement A must be executed by the
Corporation reflecting such addition or removal.
EXECUTED as of this _____ day of ___________, 19___.
CHECKER MOTORS CORPORATION
WITNESS:
______________________________ By: _______________________________
Name:
Title:
EXECUTIVE BENEFICIARY DESIGNATION:
Primary Beneficiary ___________________ Relationship __________________
Contingent Beneficiary ________________ Relationship __________________
- 10 -
<PAGE>
LEASE
THIS LEASE, is made as of the 1st day of December, 1988, by and
between PARK CORPORATION, a Nevada corporation d.b.a. Charleston Ordnance Center
("Landlord"), Post Office Box 8678, South Charleston, West Virginia 25303, and
SOUTH CHARLESTON STAMPING & MANUFACTURING COMPANY, a West Virginia corporation
("Tenant"), 3100 MacCorkle Avenue, S.W., South Charleston, West Virginia 25303.
W I T N E S S E T H:
Landlord, for and in consideration of the rents, covenants and
agreements hereinafter reserved, mentioned and contained on the part of the
Tenant, to be paid, kept and performed, hereby leases to Tenant, and Tenant
hereby leases from Landlord, for the Term (as defined in Section 2 hereof) and
subject to the terms and conditions hereinafter expressed, the following portion
of the Charleston Ordnance Center located in the City of South Charleston, West
Virginia shown on the plot plan attached hereto as Exhibit A (the "Ordnance
Center") and certain rights related thereto, all of which are more particularly
described as follows:
(a) the land (the "Land") outlined in red on the plot plan of the
Ordnance Center attached hereto as Exhibit A and more particularly described on
Exhibit B attached hereto;
(b) Building No. 307 containing approximately 922,000 square feet of
ground floor space situated on the Land (the "Building" or "Building 307") and
the parking areas, driveways, sidewalks, loading docks, rail spur and other
improvements on the Land (the Land and all of the foregoing, collectively, the
"Demised Premises");
(c) the equipment listed on Exhibit C attached and made a part hereof
(the "Equipment");
(d) exclusive use of the truck loading and unloading ramp (the
"Loading Area") situated on the southerly side of the Building (near the
southwesterly corner thereof), outlined in brown on Exhibit A and located on
land owned by FMC Corporation ("FMC"), to the extent Landlord has such right
pursuant to an agreement between FMC and Landlord dated August 26, 1974, (the
"FMC Agreement"), a true copy of which has been delivered to Tenant prior to the
execution hereof subject, however, to FMC's rights under the FMC Agreement;
(e) a non-exclusive right of ingress and egress by
<PAGE>
motor vehicle over and across those driveway areas shown by cross-hatching on
Exhibit A between MacCorkle Avenue and the Loading Area and the portion of the
Demised Premises southerly of the Building (the "Non-exclusive Asscess Road");
(f) exclusive use of the portion of the existing rail spur extending
between the Demised Premises and a point one inch southerly of the switch
serving Building No. 309 of the Ordnance Center (the "Switch Point"), such
portion being called the "Exclusive Rail Spur";
(g) non-exclusive use, in common with Landlord and other tenants of
the Ordnance Center, of the portion of the existing rail spur extending between
the Switch Point and tracks of the CSX Railway Company ("CSX") shown in orange
on Exhibit A (the "Non-exclusive Rail Spur"); and
(h) the right, for so long as Landlord has such right, to maintain
and operate two wall-mounted fire hydrants and wall-mounted hose cabinets, one
of which is located on the south wall of the Building within 50 feet of its
southwest corner and the other of which is located on the west wall of the south
wing of the building at least 25 feet from the southwest corner of such wing
(the "Encroaching Fire Hydrants").
THIS LEASE IS UPON THE FOLLOWING TERMS AND CONDITIONS, ALL AND EVERY ONE OF
WHICH THE PARTIES HERETO COVENANT AND AGREE TO PERFORM.
1. PRIMARY TERM OF LEASE. The term of this Lease shall be for the
period beginning December 1, 1988, (the "Commencement Date") and ending at 5:00
p.m., local time, on November 30, 2008 the "Primary Term").
2. OPTION TO EXTEND TERM. Provided that no Event of Default then
exists, Tenant shall have the right to extend the term of this Lease for one (1)
additional period of twenty (20) years which shall expire at 5:00 p.m., local
time, on November 30, 2028 (the "Extended Term"). Tenant may exercise its right
to extend by so notifying Landlord in writing prior to June 1, 2007. As used
herein, "Term" shall include both the Primary Term and, if Tenant exercises its
right to extend, the Extended Term.
3. INTERIM OFFICE BUILDING OCCUPANCY. Landlord further grants
Tenant the right to use and occupy the office building containing approximately
7,267 square feet, known as Building No. 341 outlined in purple on Exhibit A,
for a period ending on the earlier of (i) July 31, 1990, or (ii) the date on
which Tenant vacates Building No. 341. Tenant shall use and
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occupy Building No. 341 for office purposes only. In connection with Tenant's
use and occupancy of Building No. 341, Tenant's administrative employees and
invitees may park automobiles adjacent to Building No. 341 and have vehicular
access thereto from the end of the Non-exclusive Access Road. All of the terms
and conditions of this Lease, except with respect to the Term and Fixed Rent,
shall apply to Tenant's use and occupancy of Building No. 341.
4. COVENANT TO PAY FIXED RENT. From and after the Commencement
Date, Tenant shall pay Landlord fixed rent at the annual rate of One Million One
Hundred Six Thousand Four Hundred Dollars ($1,106,400.00) payable in monthly
installments of Ninety-Two Thousand Two Hundred Dollars ($92,200.00) per month
or any increased amount payable as a result of adjustment thereof pursuant to
Section 5 hereof ("Fixed Rent").
Fixed Rent shall be payable in equal monthly installments in advance
and on or before the first day of each and every month during the Term hereof.
The first monthly installment of Fixed Rent shall be due and payable on the
Commencement Date. In the event the term of this Lease commences on a day other
than the first day of a calendar month, Tenant shall pay to Landlord on or
before the Commencement Date, a pro rata portion of the monthly installment of
Fixed Rent, such pro rata portion to be based upon the number of days remaining
in such partial month after the Commencement Date.
Rent shall be payable in lawful money of the United States of America
at the office of Landlord at Charleston Ordnance Center, P.O. Box 8678, South
Charleston, West Virginia 25303, or to such other recipient or at such place as
Landlord shall designate by written notice to Tenant without prior demand
therefore and without any deduction or set off whatsoever, except as otherwise
specifically set forth in this Lease.
Tenant hereby covenants and agrees to pay the Fixed Rent hereby
reserved as and when due, together with all other sums of money, rental
adjustments, charges and other sums required to be paid by Tenant to Landlord or
to another person pursuant to this Lease ("Additional Rent"). Additional Rent
hereunder shall be payable to Landlord with the next installment of Fixed Rent
payable hereunder provided an invoice for such Additional Rent is submitted to
Tenant not less than ten days prior to the date on which such installment is due
and payable. Additional Rent is intended as reimbursement to Landlord for
charges and other sums required to be paid by Tenant and not rent for the
purposes of state and local taxation of rents. Fixed Rent and Additional Rent
are herein collectively referred to as "Rent." The covenant to pay Rent shall
be independent of any other covenant set forth in
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this Lease.
Tenant shall pay Tenant's Share (as defined in Section 19) of all
Taxes (as defined in Section 29) and Ordnance Center Charges referred to in
Section 21 hereof in installments based upon estimates thereof as hereinafter
provided. As promptly as practicable after December 31 of each calendar year
during the Term, Landlord shall provide Tenant with a statement of Taxes and
Ordnance Center Charges for the preceding calendar year during the Term and an
estimate of such Taxes and Ordnance Center Charges for the next succeeding
calendar year. Tenant shall pay to Landlord monthly a sum equal to one-twelfth
(1/12) of the Tenant's Share of Taxes and Ordnance Center Charges provided in
the estimate for the entire calendar year to which such estimate relates, which
amount shall apply on account of the Tenant's Share of such Taxes and Ordnance
Center Charges for the then current calendar year. Landlord shall revise the
amount of such estimate from time to time if Landlord determines that amounts
previously estimated were materially incorrect. If the aggregate of such
monthly payments to Landlord shall be less than the amount of Tenant's Share of
the actual Taxes and Ordnance Center Charges payable by Tenant pursuant to this
Lease, the deficiency shall be payable by Tenant as Additional Rent.
Conversely, if the aggregate of the monthly payments to Landlord shall be more
than the amount of Tenant's Share of the actual Taxes and Ordnance Center
Charges payable by Tenant pursuant to this Lease, the excess shall be deducted
from Rent next due hereunder or, if the Term has expired and no Event of Default
then exists, shall be paid by Landlord to Tenant. If the Landlord secures a
refund of Taxes or any item included in Ordnance Center Charges for any calendar
year for which Tenant shall have paid a share thereof, Tenant's Share of the net
amount of such recovery (less all fees, costs and expenses incurred by Landlord
in obtaining such refund) shall be deducted from Rent next due after receipt of
such recovery or, if the Term has expired and no Event fo Default then exists,
shall be paid by Landlord to Tenant.
Landlord shall make available to Tenant during Landlord's business
office hours such information as Tenant may reasonably request as to any item or
items for which Tenant is invoiced as Additional Rent. If Tenant shall dispute
in writing any specific item or items for which Tenant is invoiced as Additional
Rent, and such dispute is not amicably settled between Landlord and Tenant
within 45 days after statements therefor have been delivered, either party may,
during the 30 days next following the expiration of the above-mentioned 45 days,
refer such disputed item or items to an independent, nationally recognized
accounting firm selected by Landlord, other than Landlord's or Tenant's
regularly engaged accounting firm, for decision, and the decision of such
accounting firm shall be final,
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conclusive and binding upon Landlord and Tenant. Any adjustment required by
such decision shall be made within 30 days after such decision has been
rendered. The expenses involved in such determination shall be borne by the
party against whom a decision is rendered by said accounting firm or, if more
than one item is disputed, the expenses shall be apportioned according to the
number of items decided against each party. If Tenant shall not so dispute any
item or items of any such statement (other than amounts which are estimates of
Taxes or Ordnance Center Charges) within 45 days after such statement has been
rendered, Tenant shall be deemed to have approved such statement. Landlord
shall have the right, for a period of 12 months after the rendering any
statements (or for a longer period, if reasonably required in order to ascertain
the facts as to any change in Taxes or other charges) to send corrected
statements to Tenant, and any adjustments to Rent required thereby shall be made
within 30 days thereafter. This obligation shall survive the termination of
this Lease. Pending the determination of any dispute, Tenant shall promptly pay
the amount included in Additional Rent and, after such determination, any
increase or decrease so determined shall be paid with or credited on the next
invoice for Rent. Regardless of any reduction or revision in Taxes or other
charges under this Section 4, Tenant shall pay Landlord, at a minimum, Fixed
Rent provided in Section 4 hereof.
5. ADJUSTMENT OF FIXED RENT. Effective on and after December 1 in
each of the years 1993, 1998, and 2003 and, if there is an Extended Term, on and
after December 1 in each of the years 2008, 2013, 2018 and 2023 (the "Rent
Adjustment Date"), Fixed Rent shall be adjusted, but only upward, by one hundred
percent (100%) of the increase, if any, in the "Consumer Price Index for Urban
Wage Earners and Clerical Workers" (1982-84=100) specified for "All Items,"
relating to the United States, as issued by the Bureau of Labor Statistics of
the United States Department of Labor ("Index"). The increase in Fixed Rent
applicable to any period shall be determined by multiplying $1,106,400.00 by a
fraction the numerator of which shall be the index for the October immediately
preceding the Rent Adjustment Date less the Index for December, 1988, and the
denominator of which shall be the Index for December, 1988. In the event that
the Bureau of Labor Statistics ceases to use the 1982-84=100 as the basis of
calculation, or if a change is made in the term or number of items contained in
the Index, or if the Index is altered, modified, converted or revised in any
other way, then the Index shall be adjusted to the figure that would have been
arrived at had the change in the manner of computing the Index in effect at the
date of this Lease not been altered. In the event that the Consumer Price Index
of the United States Bureau of Labor Statistics is discontinued, comparable
statistics on the purchasing power of the consumer dollar, as published at the
time of said discontinuation
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by a U.S. Federal Government financial periodical or recognized authority, shall
be used for making such computations.
6. USE OF DEMISED PREMISES. (a) Except as specifically limited
herein with respect to portions of the Demised Premises, Tenant shall use and
occupy the Demised Premises only for metal stamping and related manufacturing
operations conducted by Tenant, warehousing of raw materials required for
Tenant's operations and products produced by Tenant and activities related
thereto including office and employee and visitor parking, all to the extent
permitted by applicable zoning and other governmental regulation and subject to
the limitations herein provided. Tenant shall not store goods for third parties
(other than affiliates of Tenant) as a warehouseman in any manner in connection
with its use and occupancy of the Demised Premises.
(b) Tenant's use of the portion of the Demised Premises outlined in
yellow on Exhibit A (the "Automobile Parking Lot Parcel") shall be limited to
automobile parking for Tenant's employees and invitees.
(c) Tenant's use of the portion of the Demised Premises outlined in
blue on Exhibit A (the "Staging Area") shall be limited to truck loading and
staging and rack and/or die storage.
(d) Tenant's use of the Loading Area shall be for truck parking
during or pending loading and unloading.
7. ENCROACHING FIRE HYDRANTS. Landlord's right to the Encroaching
Fire Hydrants is subject to termination by FMC upon 90 days' notice to Landlord.
If FMC terminates such right, Landlord shall notify Tenant thereof and Tenant
shall remove the hydrants and cabinets within 45 days thereafter. Tenant shall
indemnify, defend and save harmless Landlord and FMC from any and all claims or
causes of action arising out of or in connection with exercise by Tenant, either
directly or indirectly, in any manner, of its rights with respect to the
Encroaching Fire Hydrants.
8. LOADING AREA. The rights granted to Tenant to use the Loading
Area are subject to FMC rights and Landlord has only those rights as are granted
by the FMC Agreement. Tenant shall comply with all requirements of the FMC
Agreement as if Tenant were Landlord and Tenant shall indemnify, defend and save
harmless Landlord and FMC from any and all claims or causes of action arising
out of or in connection with exercise by Tenant, either directly or indirectly,
in any manner, of its rights with respect to the Loading Area. The rights
granted to Tenant to use the Loading Area shall continue if Landlord acquires
the interest of FMC in the Loading Area.
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9. WATER TOWER. If permitted by FMC, the owner of the water tower
(the "Water Tower") and land shown as the water tank tract on Exhibit A, Tenant
shall cause the water tank to be repainted, including, at Tenant's option, its
corporate logo, at least every five years during the Term; provided, however,
that Tenant shall not paint the Water Tower any color other than white without
the prior written consent of Landlord.
10. FIRE PROTECTION WATER. The Building is connected to a system
providing fire protection water furnished by FMC which utilizes the Water Tower.
Landlord makes no warranty or representation as to the availability of fire
protection water through such system; however, Tenant shall have such
availability as is provided so long as the same is provided. FMC charges the
Ordnance Center for the availability of fire protection water and such charges
shall be shared by Tenant in accordance with Section 21 hereof.
11. TRUNK SEWER MAINS. Tenant acknowledges that a trunk storm sewer
main serving the Demised Premises and the balance of the Ordnance Center and
facilities on FMC's land adjoining the Ordnance Center ("FMC's land") underlies
the south wing of the Building and that a trunk sanitary sewer main serving the
Building and the balance of the Ordnance Center FMC's land underlies the
westerly portion of the Building. Tenant shall avoid damaging such sewer mains
in connection with any excavation of the Building floor or installation of any
equipment on or in the Building floor and Tenant shall, at Tenant's expense,
repair any damage to such sewer mains caused by Tenant or resulting from
Tenant's use of the Demised Premises.
12. RAIL SPUR. The Exclusive and Non-exclusive Rail Spurs
(collectively, the "Rail Spur") are the subject of an Easement dated August 26,
1974 ("Rail Easement") from FMC to Landlord for which responsibility for
maintenance, repair and replacement of pavement and railroad track is allocated
between the parties thereto. The Rail Spur is also the subject of the Sidetrack
Agreement dated October 1, 1971, between the Chesapeake and Ohio Railway Company
(now "CSX") and Landlord (the "Sidetrack Agreement"). True copies of the Rail
Easement and Sidetrack Agreement have been delivered to Tenant prior to the date
hereof. Tenant shall comply with all requirements under the Rail Easement and
Sidetrack Agreement relating to use of the Rail Spur and Tenant shall not store
rail cars on the portion of the Exclusive Rail Spur which crosses the Non-
exclusive Access Road or otherwise use the same in a manner which restricts
vehicular traffic over the Non-exclusive Access Road. Passage over the
Exclusive Rail Spur in the normal course of business does not constitute such
restriction. Tenant shall indemnify, defend and save harmless Landlord from any
and all claims or causes of action arising out
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of or in connection with Tenant's use of the Rail Spur.
13. PARKING LOT PARCEL IMPROVEMENTS. Prior to December 31, 1990,
Landlord shall cause the Automobile Parking Lot Parcel to be improved by causing
the following work to be undertaken thereon:
(a) Installation of asphalt paving and striping thereof for parking
for not less than 550 automobiles (the "Parking Lot").
(b) Installation of entrance approaches to the Parking Lot from
MacCorkle Avenue, "F" Street and the Non-exclusive Access Road.
(c) Installation of landscaped areas along frontage abutting
MacCorkle Avenue, "F" Street and the Nonexclusive Access Road,
including a screening earthen mound along MacCorkle Avenue.
(d) Installation of a gate house at the MacCorkle Avenue entrance to
the Parking Lot (the "Gate House").
(e) Installation of electrical conduit for lighting installed to
illuminate the Parking Lot, Building front and the Gate House.
(f) Installation of light poles and fixtures along MacCorkle Avenue
for illumination of the Parking Lot.
(g) Installation of flood lighting to illuminate the MacCorkle Avenue
side of the Building.
(h) Installation of light poles and fixtures at the Parking Lot
entrances.
Tenant shall be responsible for all maintenance of and repairs to all
of the foregoing improvements upon completion of the installation thereof by
Landlord. Upon such completion, Landlord shall assign to Tenant any warranties
relating to the foregoing improvements. Tenant acknowledges that the foregoing
improvements are undertaken as an accommodation to Tenant and Tenant waives any
claim against Landlord with respect thereto.
14. SIGNS. Subject to the requirements of this Section, Tenant may,
at its own cost and expense, place or erect such signs relating to its business
as Tenant may deem appropriate on the Demised Premises. Tenant shall comply
with all applicable requirements of law pertaining to such signs. All signs
placed on
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the exterior of the Building or erected on portions of the Demised Premises not
within the Building must be approved in writing by Landlord prior to placing or
erection thereof, which approval shall not be unreasonably withheld or delayed
so long as they are not inconsistent with the general aesthetic appearance of
the Ordnance Center at the time such approval is requested.
15. CONDITION OF PREMISES. Tenant has examined and accepts the
Demised Premises, Loading Area, and Exclusive Rail Spur "as is" and assumes
responsibility therefor as herein provided. Tenant acknowledges that the
Demised Premises may contain Hazardous Substances such as those listed on
Exhibit D hereto. Tenant further agrees and accepts responsibility for such
Hazardous Substances, if any, and accepts responsibility for any abatement and
removal to the extent required by Section 17 of this Lease.
16. COMPLIANCE WITH LAWS. Tenant shall comply with all federal,
state, county and municipal laws and ordinances and all rules, regulations and
orders of any governmental authority, present or future, affecting or applicable
to the Demised Premises, Loading Area, Non-exclusive Access Road and Exclusive
Rail Spur and Tenant's use thereof. Tenant shall be solely responsible for
obtaining all permits and authorization necessary for the lawful conduct of
Tenant's business on the Demised Premises and Tenant's use of the Demised
Premises.
17. ENVIRONMENTAL MATTERS. For purposes of this Lease, the following
terms shall have the following meanings:
"Hazardous Substance" shall mean any substance regulated by any
federal, state, or local law, regulation, rule or ordinance now or hereafter in
effect, as the same may be amended from time to time.
"Release" shall mean any past or present releasing, spilling, leaking,
pumping, pouring, emitting, emptying, discharging, injecting, escaping,
leaching, disposing or dumping of any Hazardous Substance into the environment.
"Affected Assets" shall mean all the Demised Premises, Loading Area,
Non-exclusive Access Road and Rail Spur or other real or personal property
owned, leased, operated or used by Tenant, and any other real or personal
property used for the treatment, storage, recycling or disposal of Hazardous
Substances that may have been generated by Tenant.
"Environmental Condition" shall mean any condition which caused or may
cause the Release or threatened Release of a Hazardous Substance and which
requires or may require an Environmental Action (as hereinafter defined) and/or
which results or may result in an
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Environmental Claim (as hereinafter defined).
"Environmental Claim" shall mean any summons, citation, complaint,
lien, directive, order, claim, litigation, liability, investigation, removal
action, remedial action, information request, proceeding, judgment, letter or
other communication, written or oral, actual or threatened, from any federal,
state, or local agency or authority or any other person (including, without
limitation, any governmental instrumentality or any corporation, partnership or
other business entity, or individual) concerning an Environmental Condition or
which in any way relates to pollution, natural resource damage, property damage,
or personal injury, illness or death alleged to have occurred, in whole or in
part, by virtue of Tenant's ownership, lease, operation or use of the Affected
Assets or the conduct of an Environmental (as hereinafter defined).
"Environmental Action" shall mean any investigation, removal action,
remedial action, excavation, transportation, handling, treatment, storage,
disposal, testing, environmental sampling, analytical services, consulting
services, or any other type of action reasonably necessary and appropriate to
identify, characterize, correct or dispose of an Environmental Condition
concerning the Affected Assets.
(a) Tenant shall not cause or permit any Hazardous Substances to be
brought upon, kept or used in or about the Demised Premises, Loading Area, Non-
exclusive Access Road or Rail Spur by Tenant, its agents, employees,
contractees, or invitees, except for such Hazardous Substances as are necessary
or useful to Tenant's business, and which have been disclosed in writing to
Landlord before the execution of this Lease and as such list may be amended from
time to time pursuant to subsection (d) below.
(b) Any Hazardous Substance permitted on the Demised Premises,
Loading Area, Non-exclusive Access Road or Rail Spur as provided herein, and all
containers thereof, shall be used, kept, stored, and disposed of in a manner
that complies with all federal, state and local laws or regulations applicable
to the Hazardous Substances involved.
(c) Tenant shall not discharge, leak, or emit, or permit to be
discharged, leaked or emitted, any material into the atmosphere, ground, sewer
system, or any body of water, if that material pollutes or contaminates the
same, or may adversely affect (i) the health, welfare or safety of persons,
whether located on the Demised Premises, Loading Area, Non-exclusive Access Road
or Rail Spur or elsewhere, or (ii) the condition, use or enjoyment of the
building or any other real or personal property.
(d) During July of each year during the Term, Tenant
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shall furnish to Landlord complete copies of all environment reports, filings
and certifications filed with federal, state or local environmental agencies
during the 12-month period preceding July 1 relating to Hazardous Substances
stored, used or disposed of in connection with operations at the Demised
Premises. Upon request from time to time, Tenant shall cooperate with Landlord
in providing to Landlord or any prospective mortgagee or purchaser of the
Demised Premises copies of records relating to Hazardous Substances stored, used
or disposed of in conjunction with operations at the Demised Premises and by
permitting Landlord and its agents to undertake such environmental audits and
testing on the Demised Premises as Landlord may deem reasonably necessary or
desirable.
(e) Tenant has completed, or has had the full opportunity to
complete, an environmental review of the Demised Premises, Loading Area, Non-
exclusive Access Road and Rail Spur and has completely satisfied itself with
respect to any Environmental Condition existing as of the date of this Lease.
(f) Tenant shall be fully liable for all costs and expenses related
to the use, presence, storage, and disposal of Hazardous Substances used in
connection with Tenant's operations at the Demised Premises and Tenant shall
give immediate notice to the Landlord of any violation or potential violation of
the provisions hereof. Except as hereafter otherwise provided in subsections
(g) and (h), Tenant shall defend, indemnify, and hold harmless Landlord and its
agents from and against any claims, demands, penalties, fines, liabilities,
settlements, damages, costs or expenses (including, without limitation,
attorneys' and consultants' fees, court costs, and litigation expenses) of
whatever kind or nature, known or unknown, contingent or otherwise, arising out
of or in any way related to (i) the presence, disposal, Release, or threatened
Release of any such Hazardous Substance that is on, from, or affecting the soil,
water, vegetation, buildings, personal property, persons, animals, or otherwise;
(ii) any personal injury (including wrongful death) or property damage (real or
personal), arising out of or related to that Hazardous Substance; (iii) any
lawsuit brought or threatened, settlement reached, or government order relating
to that Hazardous Substance; or (iv) any violation of any laws applicable
thereto. The provisions of this Section shall be in addition to any other
obligations and liabilities Tenant may have to Landlord at law or in equity and
shall survive the termination of this Lease.
(g) For the purpose of this subsection (g), "Buried Hazardous
Substance" shall mean any Hazardous Substance located on the Demised Premises on
the Commencement Date which is (i) buried on the Demised Premises, Loading Area,
Non-exclusive Access Road and Rail Spur, and (ii) unknown to either party.
Buried Hazardous Substance does not include Hazardous Substance in known pits,
pipes,
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drains, tanks or other enclosures, whether above or below ground or floor levels
other than leaks therefrom. Notwithstanding subsection (f) above, if either
party is required to undertake clean up of any Buried Hazardous Substance by
reason of an order of court or public agency of competent jurisdiction, the
parties shall jointly perform such cleanup and share equally all out-of-pocket
expenses required for the satisfaction of such order. In such event, the
parties shall have the joint right and responsibility to pursue recovery against
former owners or tenants of the Demised Premises, including but not limited to
Volkswagen, Chrysler, American Motors, FMC and/or the U.S. government; any such
recovery shall be shared equally by the parties. Tenant shall have the burden
of proving that a Hazardous Substance was buried on the Demised Premises on the
Commencement Date.
(h) Notwithstanding subsection (f), tenant shall not be liable for
clean up of any Hazardous Substance which migrated from portions of the Ordnance
Center other than the Demised Premises into or upon the Demised Premises and
Landlord shall be solely responsible for clean up of any such Hazardous
Substance. Tenant shall be responsible for demonstrating that a Hazardous
Substance in or on the Demised Premises migrated from other portions of the
Ordnance Center. Landlord shall defend, indemnify and hold harmless Tenant and
its agents from and against any claims, demands, penalties, fines, liabilities,
settlements, damages, costs and expenses (including, without limitation,
attorneys' and consultants' fees, court costs and litigation expenses) incurred
by Tenant in connection with the clean up of Hazardous Substances referred to in
this subsection (h).
18. NET LEASE. This is a net lease. As such, Tenant shall be solely
responsible for the payment of all costs relating to utilities, insurance,
taxes, interior and exterior maintenance and repair of the Demised Premises and
the use of the Demised Premises, all as provided for in this Lease.
19. TENANT'S SHARE. As used in this Lease, "Tenant's Share"
shall be that percentage from time to time which is equal to the ratio of the
number of square feet of ground floor area in the Building to the total number
of square feet of ground floor space in all buildings (including the Building)
located in the Ordnance Center. As of the date of this Lease, the ground floor
area of buildings located in the Ordnance Center is approximately 1,733,000
square feet and Tenant's Share is 53.2% (922,000 DIVIDED BY 1,733,000 = 53.2%).
Landlord shall adjust Tenant's Share as necessary to reflect additional
buildings constructed in the Ordnance Center or additions to existing buildings
(following completion of such construction) and reflect buildings or portions
thereof removed from time to time.
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20. UTILITY SERVICES. Except as specifically provided otherwise
herein, Tenant shall be solely responsible for the cost of bringing any utility
connections to the Demised Premises required for its use and occupancy thereof.
Tenant shall be solely responsible for the payment of all charges relating to
potable water, electricity and gas, which are separately metered by the
furnishing utility provided to or utilized on the Demised Premises. If any
utility or other service benefiting the Demised Premises is metered or otherwise
based upon consumption determined under a formula for purposes of allocating
charges payable to FMC or others, then Tenant shall pay its share of such
charges based upon meter readings or such formula. If a service is not
separately metered or Tenant's share determined by a formula, then Tenant shall
pay to Landlord Tenant's Share of the utilities for which use or consumption is
not otherwise determined.
21. ORDNANCE CENTER CHARGES. Tenant shall pay Tenant's Share of
costs incurred by Landlord from time to time in connection with maintenance
(including snow plowing) and repair of the Non-exclusive Access Road and the
Non-exclusive Rail Spur, maintenance and repair of trunk sanitary and storm
sewer mains within portions of the Ordnance Center which do not include the
Demised Premises (except to the extent maintenance and repair is necessitated by
reason of an act of omission of, and chargeable to, another tenant of the
Ordnance Center), charges by FMC for fire protection water and sanitary Sewer
service to the Ordnance Center.
22. ORDNANCE CENTER ADMINISTRATION BUILDING. The building adjoining
the Non-exclusive Access Road opposite the Water Tank near the northwesterly
corner of the Building is currently used and occupied by Landlord as an
administrative office for the Ordnance Center (the "Administration Building").
Electric, water and gas lines serving the Administration Building are connected
to electric, water and gas lines which are on the Demised Premises. Until
August 1, 1990, electric, water and gas service shall be provided to the
Administration Building without charge therefor by Tenant. On or before August
1, 1990, Landlord shall cause submeters to be installed without cost to Tenant
in order to measure usage of electric, water and gas consumption and from and
after August 1, 1990, Tenant shall have the right to charge for electric, water
and gas service to the Administrative Building based upon usage measured by the
submeters installed by Landlord at the then-prevailing rates for such service by
the utility providing the same to Tenant.
23. SEWER SERVICE. Sanitary and storm sewer service is provided to
Demised Premises through a sanitary sewer system and a storm sewer system
serving the entire Ordnance Center and the adjoining property owned by FMC and
Olin Corporation ("Olin"). Olin is charged by the City of South Charleston for
sanitary service and allocates such costs between the Olin property, on the one
hand, and
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the FMC property and the Ordnance Center, on the other hand, based upon a
formula which takes into account estimated usage of the sanitary sewage system
on each of the benefitted properties. FMC allocates such charges between the
FMC property and the Ordnance Center and invoices Landlord for the Ordnance
Center share of such charges. Tenant shall pay to Landlord Tenant's Share of
charges invoiced to Landlord by FMC for sanitary sewer service. Tenant shall
also pay Tenant's Share of any charges or costs associated with storm sewer
service and of all maintenance and repair of the storm sewer service system.
24. MAINTENANCE AND REPAIRS. Landlord has no obligation to repair or
maintain the Demised Premises, Equipment, Loading Area, or the Exclusive Rail
Spur all of which obligations are intended to be Tenant's under this Section 24.
Tenant expressly waives the benefit of any statute now or hereafter in
effect which would otherwise afford Tenant the right to make repairs at
Landlord's expense or to terminate this Lease because of Landlord's failure to
keep the Demised Premises, Equipment, Loading Area or Exclusive Rail Spur in
good order, condition and repair.
Accordingly, Tenant shall maintain in good condition and make all
necessary repairs to the Demised Premises, Loading Area and Equipment,
including, without limitation, the roof (including all roof drains), the
interior and exterior of the Building and attached structures, perimeter
fencing, fire protection systems, sprinkler systems, heating and cooling units,
air, water and gas piping, sanitary and storm sewers, the Parking Lot and other
paved areas on the Demised Premises, signs and landscaping on the Demised
Premises. Tenant shall repaint or cause to be repainted the exterior of the
Building, as necessary, during the Term; provided, however, that Tenant shall
not have the Building repainted in any color other than the present color
without the prior written consent of Landlord.
Further, Tenant shall, at its sole cost and expense, maintain the
Exclusive Rail Spur in good operating condition and repair. Such repair
obligation includes the switch and the rubber crossing which are a part thereof.
Tenant shall not remove such rubber crossing without Landlord's prior written
consent unless replaced with a comparable rubber crossing.
Tenant shall maintain and replace, as necessary, the concrete
retaining wall and chain link fence with woven screening slats along the
easterly and northerly boundaries of the Staging Area and the paving on the
Staging Area.
Any additions, modifications or changes which, because of Tenant's use
or occupancy of the Demised Premises or the Loading
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Area, are required by any governmental agency, including, but not limited to the
Federal Occupational Safety & Health Act, shall be made by Tenant at its sole
expense.
25. CLEAN AND ORDERLY PREMISES. Tenant shall keep the Demised
Premises and Loading Area, including, without limitation, the Parking Lot and
Staging Area, fences, lawn, lights, signs, Building exterior and siding, in a
clean and orderly condition, free of debris, and perform such maintenance as
Landlord may from time to time reasonably request.
26. ALTERATIONS AND IMPROVEMENTS. (a) Tenant may, from time to time
during the Term make, in a reasonable manner and at its own expense, changes,
improvements, alterations, movements, replacements and additions in and to the
Demised Premises; provided, however, except as specifically provided otherwise
in subsection (e) of this Section 26 the Tenant shall not remove, relocate or
modify columns, foundations, cranes, crane rails or the exterior walls or roof
of the Building nor remove any Equipment without the prior written consent of
Landlord, which shall not be unreasonably withheld or delayed.
Tenant shall construct, at its sole cost and expense, offices in the
Building (the "Offices") for Tenant's business uses. Upon completion of
construction thereof, the Offices shall become a part of the Building and all
heating, air conditioning, electrical, plumbing, lighting and other fixtures
shall be the property of Landlord and shall be deemed to be part of the
Building.
Tenant shall have the right from time to time to install, at its sole
expense, in a reasonable manner, trade fixtures, machinery and equipment
including, without limitation, partitions, racks and shelving. All such trade
fixtures, machinery and equipment shall be and remain the property of Tenant,
notwithstanding that as a matter of law, any such items would otherwise be
deemed a part of the realty, and shall be removed by Tenant prior to the
expiration of the Term or earlier termination of this Lease; provided, however,
that any damage or disfigurement to the Demised Premises caused by such removal
shall be repaired by Tenant prior to the termination. hereof.
(b) No change, alteration or improvement shall be undertaken until
Tenant shall have procured and paid for all required permits and approvals of
governmental authorities having jurisdiction.
(c) No structural change, alteration or improvement shall be
undertaken with respect to the roof, exterior walls, columns or crane rails of
the Building until detailed plans and specifications have first been submitted
to and approved in writing by Landlord,
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which approval shall not be unreasonably withheld or delayed.
(d) As to all other material changes or alterations or improvements,
Tenant shall deliver to Landlord plans and specifications and/or engineering
drawings and/or operating manuals or reports to the extent the same are
available, as Landlord may reasonably request.
(e) Tenant acknowledges that the foundation contains pits in the
floor of the Building which are specially designed for the heavy stamping
presses and other equipment used in Tenant's business. Tenant specifically
agrees to remove all foundations and fill all pits to the floor level regardless
of whether such foundations or pits are or were utilized in conjunction with any
press or equipment used or installed by Tenant, unless Landlord specifically
directs otherwise by written notice to Tenant prior to a date which is no later
than six (6) months prior to the expiration of the Term or, if this Lease is
earlier terminated, prior to a date which is no later than thirty (30) days
after such termination. Notwithstanding the possible termination or expiration
of this Lease, after removal of its equipment, Tenant shall continue to pay
Fixed Rent until such pits are refilled and floors are repaired. Floors and
pits repaired shall be filled and compacted to ninety-five percent (95%)
compaction and surfaced with twelve inches of poured, reinforced concrete floor
of quality standard for such buildings.
(f) All work done in connection with any change, alteration or
improvement shall be done promptly and in a good and workmanlike manner and in
compliance with applicable laws, ordinances, orders, rules, regulations and
requirements of all federal, state and municipal governmental authorities, and
in accordance with the orders, rules and regulations of the Board of Fire
Underwriters, or any other body exercising similar functions. All such work
shall be prosecuted with reasonable dispatch, delays due to strikes, lockouts,
acts of God, inability to obtain labor or materials, governmental restrictions,
or similar causes beyond the control of Tenant excepted. Tenant shall indemnify
Landlord with respect to all liability and expense and obligation arising out of
such work.
(g) If so requested by Tenant from time to time, Landlord shall
permit Tenant to use the services of Landlord's Ordnance Center maintenance
staff if available to undertake maintenance and repair work on the Demised
Premises. Tenant shall pay for such services at the usual and customary rates
charged by Landlord to other tenants of the Ordnance Center. Such personnel
shall be subject to the direction and supervision of Tenant in connection with
any maintenance and repair work on the Demised Premises and Tenant shall not be
relieved of any of Tenant's obligations under
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this Lease by reason of using the services of Landlord's Ordnance Center
maintenance staff.
27. DISCHARGE OF MECHANICS' LIENS. If any mechanic's lien shall at
any time be filed against the Demised Premises or the balance of the Ordnance
Center by reason of any work undertaken for Tenant, Tenant shall cause the same
to be discharged of record within 60 days after Tenant receives notice of filing
of the same. If Tenant shall fail to discharge such mechanic's lien within such
period, then, in addition to any other right or remedy of Landlord, Landlord
may, but shall not be obligated to, discharge the same either by paying the
amount claimed to be due or by procuring the discharge of such lien by bond,
deposit in court or other security or in such other manner as may be permitted
by law. Any amount paid by Landlord for any of the aforesaid purposes, and all
attorneys' fees and other expenses reasonably incurred by Landlord in
discharging such lien shall be payable by Tenant to Landlord on demand together
with interest thereon at the rate of four percent (4%) per annum over the
publicly announced "prime rate" of Charleston National Bank N.A. in effect until
payment by Tenant. Nothing herein contained shall imply any consent or
agreement on the part of Landlord to subject Landlord's interest in the Demised
Premises to any mechanic's lien for work performed or materials furnished to or
at the instance of Tenant.
28. WASTE. Tenant shall not commit or suffer any waste on the
Demised Premises.
29. REAL ESTATE TAXES. Tenant shall pay all real estate taxes
attributable to the separately assessed parcels which include only the Demised
Premises and are known as the BIDCO parcels of 2.24 acres and 2.35 acres,
respectively. Tenant shall pay to Landlord its Tenant's Share of all real
estate taxes net of abatements, if any, and assessments and any use, occupancy
rental tax, levy, or similar charge assessed or charged against the Ordnance
Center ("Taxes") during the Term. Any increase or decrease brought about by any
taxing or assessing authority shall pro rata inure to the benefit or detriment
of Tenant as the case may be. If any Taxes cover any period of time prior to or
after the Term, Tenant's Share thereof shall be equitably prorated to cover only
the period of time within the tax fiscal year during which this Lease is in
effect.
30. PERSONAL PROPERTY TAXES. Tenant shall pay prior to delinquency,
all taxes on the Equipment and on trade fixtures, equipment and other property
owned or leased by Tenant and situated on or in or used at the Demised Premises.
Upon request by Landlord, Tenant shall promptly provide Landlord with official
receipts of the appropriate taxing authority or other proof satisfactory to
Landlord evidencing the payment thereof.
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31. INSURANCE. (a) Tenant will, at Tenant's sole cost and expense,
maintain insurance on the Demised Premises and the Equipment, with an insurance
company licensed to do business in the State of West Virginia and of nationally
recognized financial standing legally qualified to issue such insurance, having
a Best's rating of A or better and reasonably satisfactory to Landlord. The
insurance shall be written on the standard forms used by such companies. The
insurance shall provide coverage:
(i) Against loss or damage by fire, lightning and other risks
including, but not limited to windstorm, hail, earthquake, explosion,
riot and civil commotion, vandalism, damage from aircraft and
vehicles, smoke damage and any other "extended coverage" risks in
amounts not less than the replacement value of the Demised Premises,
exclusive of the Land and the Building foundations and excavations
therein or such lesser amount, not less than $50,000,000, as Landlord
shall approve so long as the insurer waives minimum coinsurance
requirements as to any damage or loss pursuant to an Agreed Amount
endorsement and is obligated to pay for damage or loss suffered on a
replacement cost basis up to the Agreed Amount irrespective of whether
or not the damage is actually repaired or replaced;
(ii) Against claims for bodily injury, death or property damage
occurring on, in or about the Demised Premises and adjoining common
areas and sidewalks, in amounts not less than $5,000,000 for bodily
injury or death to any one person, $10,000,000 for any one accident,
and $5,000,000 for property damage; and
(iii) Against workers' compensation to the extent required by
the laws of West Virginia and to the extent necessary to protect
Landlord and the Demised Premises against all workers' compensation
claims.
The limits of any said insurance shall not limit the liability of Tenant
hereunder.
(b) Every policy of insurance maintained in accordance with clause
(i) of subparagraph (a) shall provide for payment of loss thereunder only to
Landlord. Every policy of insurance maintained in accordance with clause (ii)
of subparagraph (a) shall name Landlord as an additional insured. In addition,
every such policy of insurance (other than any general public liability or
workers' compensation policy) shall bear a mortgage endorsement in favor of the
Mortgagee (as such term is defined in Section 42 hereof) provided that Landlord
has given notice to Tenant of the
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existence of the Mortgage (as defined in Section 42); and any loss under any
such policy shall be payable to the Mortgagee as their interests may appear.
Every policy referred to in subsection (a) shall provide that it will not be
canceled except after not less than thirty (30) days' prior written notice to
Landlord and Mortgagee and that it shall not be invalidated or limited by any
act or negligence of Landlord or Tenant, nor by occupancy of the Demised
Premises nor use of the Equipment for purposes more hazardous than permitted by
such policy, nor by any foreclosure or other proceeding relating to the Demised
Premises, nor by termination of this Lease, nor by change in title to the
Demised Premises.
(c) The minimum amounts of insurance coverage specified in
subparagraph (a) hereof shall be subject to adjustment, but only upwards, at the
same time and in the same manner as the Rent Adjustment provided for in Section
5; provided, however, that the amounts shall be rounded to the nearest
$500,000.00
(d) Tenant shall deliver to Landlord and Mortgagee original or
duplicate policies or certificates of insurance and all renewals thereof,
satisfactory to Landlord and Mortgagee, evidencing the existence of all
insurance which is required to be maintained by Tenant herein; such delivery to
be made (i) promptly after the execution hereof and (ii) within thirty (30) days
prior to the expiration of any such insurance. Tenant shall not obtain or carry
separate insurance concurrent in form or contributing in the event of loss with
that required by this Section unless Landlord is a named insured therein, with
loss payable as provided herein. Tenant shall immediately notify Landlord
whenever any such separate insurance is obtained and shall deliver to Landlord
and Mortgagee the policies or certificates evidencing the same.
(e) Any insurance required hereunder may be provided under blanket
policies which comply with this Section. Insurance which is required by clause
(i) of subparagraph (a) may provide for a deductible in an amount not exceeding
$100,000.00.
(f) In the event Tenant does not obtain or maintain insurance in the
forms and amounts required, Landlord shall have the right to obtain such
insurance on behalf of Tenant and Tenant agrees to repay Landlord the cost
thereof.
32. INDEMNITY. Tenant shall indemnify and save harmless Landlord
against and from any and all liabilities, expenses, losses and claims by or on
behalf of any person or persons, entity or entities, firm or firms, corporation
or corporations arising from any act, omission or negligence of Tenant or any of
Tenant's agents, contractors or employees, or from any activity or work done,
permitted or allowed by Tenant on or about the Demised Premises. Further,
Tenant shall indemnify Landlord against all liabilities,
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expenses and losses incurred by Landlord as a result of (i) failure by Tenant to
perform any covenant required to be performed by Tenant hereunder, (ii) any
accident, injury or damage which shall happen on or about the Demised Premises
or Equipment, the Loading Area, the Non-exclusive Access Road and the Rail Spur
to the extent such accident, injury or damage arose from any act, omission or
negligence of Tenant or any of Tenant's agents, contractors or employees or
(iii) failure by Tenant or any of Tenant's agents, contractors or employees to
comply with any requirements of any governmental authority.
At Tenant's request, Landlord shall cooperate with Tenant in order to
properly prosecute any proceedings against or affecting the Demised Premises,
provided Landlord shall be fully indemnified by Tenant against all costs and
expenses in connection therewith, and provided that Landlord shall not be
subjected to any liability for the payment of any costs or expenses in
connection with any proceedings brought by or against Tenant, except for those
costs or expenses which relate to an occurrence for which Landlord is found to
be liable.
33. INDEMNIFICATION PROCEDURE. The obligation of each party as
indemnitor under this Lease is conditioned upon indemnitor receiving from
indemnitee prompt notice of the assertion or institution of a claim for
indemnification or of the occurrence of an event which indemnitee reasonably
believes could lead to the assertion of such a claim (such claims and events
being hereinafter collectively referred to as a "Claim"). Upon written
unqualified acknowledgement of its indemnification obligation with respect to a
Claim, indemnitor shall have the absolute right, in its sole discretion and
expense, to elect to defend, contest, settle or otherwise protect against any
such Claim with legal counsel of its own selection. Indemnitee shall have the
right, but not the obligation, to participate, at its own expense, in the
defense thereof through counsel of its own choice and shall have the right, but
not the obligation, to assert any and all cross-claims or counterclaims it may
have. Indemnitee shall cooperate in all reasonable ways with, make its relevant
files and records available for inspection and copying by, and make its
employees available or otherwise render reasonable assistance to, indemnitor in
defense of any action being indemnified hereunder. In the event indemnitee,
without the written consent of indemnitor makes any settlement with respect to
any Claim, indemnitor shall not be bound to such settlement. In the event
indemnitor fails timely to defend, contest or otherwise protect against any
suit, action, investigation, claim or proceeding related to a Claim, indemnitee
shall have the right, but not the obligation, to defend, contest, assert cross-
claims or counterclaims or otherwise protect against the same and may make any
compromise or settlement thereof and recover and be indemnified for the entire
cost thereof from indemnitor including, without
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limitation, legal expenses, disbursements and all amounts paid as a result of
such suit, action, investigation, claim, proceeding, cross-claim or counterclaim
or compromise or settlement thereof.
34. DAMAGE OR DESTRUCTION. In case of any damage or loss to the
Demised Premises by reason of fire or otherwise, Tenant shall give immediate
notice thereof to Landlord. If the Demised Premises or any part thereof shall
at any time be damaged or destroyed by fire or otherwise, Tenant shall promptly
repair or rebuild the same at Tenant's expense, so as to make the Demised
Premises at least equal in value to the Demised Premises existing immediately
prior to such occurrence and as nearly similar to it in character as shall be
practicable and reasonable. Landlord shall apply and make available and pay to
Tenant the net proceeds of any fire or other casualty insurance paid to
Landlord, after deduction of any costs of collection including attorneys' fees,
for such repairing or rebuilding as the same progresses, payments to be made
against properly certified vouchers of a competent architect in charge of the
work and approved by Landlord, which approval Landlord shall not unreasonably
withhold. Landlord shall contribute out of such insurance proceeds towards each
payment to be made by or on behalf of Tenant, for the repairing or rebuilding of
the Demised Premises or portion thereof under a schedule of payments to be made
by Tenant and not unreasonably objected to by Landlord, an amount in proportion
to such payment by Tenant as the total net amount received by Landlord from
insurers shall bear to the total estimated cost of the rebuilding or repairing.
Landlord, however, may withhold from each amount to be paid by Landlord fifteen
percent (15%) thereof until the work of repairing or rebuilding shall have been
completed and proof has been furnished to Landlord that no lien or liability has
attached or will attach to the Demised Premises or to Landlord in connection
with such repairing or rebuilding, and that the Demised Premises are free and
clear of security interests and conditional bills of sale, whereupon the balance
of the net proceeds of such insurance shall be paid over to Tenant. If such
proceeds of insurance shall be paid to the Mortgagee, Landlord shall make
available and hold and apply in accordance with the provisions of this Section
34 a sum of money equal to the net proceeds of such insurance. Before beginning
such repairs or rebuilding or letting any contracts in connection therewith,
Tenant shall submit for Landlord's approval, which approval Landlord shall not
unreasonably withhold or delay, complete and detailed plans and specifications
thereof. Promptly after receiving Landlord's approval of said plans and
specifications, Tenant shall begin such repairs or rebuilding and shall
prosecute the same to completion with diligence, subject, however, to strikes,
lockouts, acts of God, embargoes, governmental restrictions, and other causes
beyond the reasonable control of Tenant. In so far as a new certificate of
occupancy may be necessary, Tenant shall obtain and deliver to Landlord a
temporary or final certificate of occupancy before the Demised Premises or
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relevant portion thereof shall be reoccupied for any purpose. Such repairs or
rebuilding shall be completed free and clear of mechanics' or other liens, the
possibility of such liens, conditional bills of sale and security, and in
accordance with the local building code and all applicable laws, ordinances,
regulations or orders of any state, municipal or other public authority
affecting the same, and also in accordance with all requirements of the West
Virginia insurance rating organization, or similar body, and of any liability
insurance company, insuring Landlord or Tenant against liability for accidents
in or connected with the Demised Premises. Any proceeds of insurance which
shall be unexpended after such restoration shall be the property of Tenant.
During the progress of such repairs or rebuilding, Landlord and its
architects and engineers may, from time to time, inspect the Demised Premises
and shall be furnished with copies of all plans, shop drawings and
specifications relating to such repairs or rebuilding, and they may examine at
all reasonable times all plans, shop drawings and specifications. In the event
that during such repairs or rebuilding, Landlord and/or its architects and/or
engineers shall determine that the same is not being done in accordance with the
plans and specifications referred to above, notice shall be given to Tenant,
specifying in detail the particular deficiency, omission or other respect in
which Landlord claims such repairs or rebuilding are not in accordance with the
plans and specifications. Upon the receipt of any such notice, Tenant shall
take steps necessary to cause corrections to be made as to any deficiencies,
omissions, or such other respect.
The charges of any architect or engineer of Landlord employed to pass
upon any plans and specifications and to supervise and approve any construction,
or for any services rendered by such architect or engineer to Landlord as
contemplated by any of the provisions of this Lease, shall be paid by Tenant as
a cost of the repair or rebuilding. The fees of such architect or engineer
shall be such as are customarily paid for comparable services and shall be
reasonable in amount.
There shall be no abatement of Rent pending the repairs or rebuilding.
Notwithstanding the foregoing, in the event the Building is damaged to
such an extent that the cost of repair will exceed $50,000,000.00 and Tenant
determines that repair of the damage and restoration of the Building for
resumption of Tenant's use thereof is economically impracticable, Tenant shall
give Landlord written notice thereof within ninety (90) days after the
occurrence of such damage. Upon (i) payment to Landlord of the sum of
$50,000,000.00, (ii) demolition of the Building to grade and removal of all
debris and (iii) filling of all pits and holes on the Demised Premises with
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compacted clean fill, this Lease shall terminate and Landlord and Tenant shall
thereafter have no further obligation to the other under this Lease. There
shall be no abatement of Rent until such termination.
35. DOLLAR AMOUNT INCREASES. Each dollar amount referred to in
Sections 31 and 34 of this Lease (a "Dollar Amount") shall be adjusted, but only
upward, as of each Rent Adjustment Date by one hundred percent (100%) of the
increase, if any, in the Index referred to in Section 5 hereof. The increase in
each Dollar Amount shall be determined by multiplying the Dollar Amount by a
fraction the numerator of which shall be the Index for the October immediately
preceding the Rent Adjustment Date less the index for December, 1988, and the
denominator of which is the index for December, 1988.
36. EMINENT DOMAIN AND CONDEMNATION. (a) If, during the Term, a
portion of the Demised Premises or the Rail Spur shall be taken by any public
authority under the power of condemnation or eminent domain to such an extent
that Tenant will thereafter be unable to continue to conduct its metal stamping
and manufacturing operations thereon substantially as theretofore conducted,
then this Lease shall terminate as of the date of vesting of title pursuant to
such proceeding, and the amount awarded for compensation for the whole or part
of the Demised Premises or Rail Spur so taken shall be the property of Landlord,
and Tenant heresy expressly grants to Landlord the amount of any award or
compensation to Landlord and agrees that it shall have no claim for any damages
or loss against Landlord by reason of such condemnation or taking.
Notwithstanding the foregoing, Tenant may elect to terminate this Lease in the
event of any taking involving 20% or more of the Building. Notwithstanding the
foregoing, this Lease shall not terminate if the taking involves only the
Parking Lot Parcel and if Landlord makes alternate parking space available for
Tenant's use in the general vicinity of the Demised Premises as a substitute for
any portion of tho Parking Lot Parcel taken. Further, this Lease shall not
terminate if the taking involves only the Rail Spur and if Landlord provides
suitable alternate rail spur to the Building to replace the Rail Spur taken.
Upon such termination, Landlord and Tenant shall be released of and from all
obligations and liabilities to each other. The party receiving notice of the
taking shall give the other party notice thereof promptly after receipt by the
other of notice to that effect from the applicable governmental authority.
Tenant shall pay all Rent payable hereunder and accrued up to the time of
vesting of title, and if any Rent has been paid in advance, Landlord shall
promptly return the same to Tenant.
(b) In the event this Lease is not terminated pursuant to subsection
(a) above, then the Fixed Rent will be reduced based on the ratio of number of
square feet of ground floor space in the
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Building available to Tenant after such taking to the total number of square
feet of ground floor space in the Building prior to such taking, and this Lease
shall continue without interruption.
(c) Tenant shall not be entitled to any portion of the award received
by Landlord in the event any portion of the Demised Premises shall be taken as
the result of any condemnation or the exercise of the right of eminent domain;
provided, however, that Tenant shall have the right to appear in any eminent
domain or condemnation proceeding and to claim and receive any award which may
be made for damages to Tenant's fixtures and equipment, business interruption,
and for moving expenses.
37. LANDLORD'S RIGHT TO PERFORM TENANT'S COVENANTS. If Tenant shall
at any time fail to make any payment or perform any other act on its part to be
made or performed after thirty (30) days' notice thereof to Tenant, then
Landlord, after not less than ten (10) days notice to Tenant (or without notice
if Landlord, in its sole discretion, deems the situation to be an emergency) and
without waiving or releasing Tenant from any obligation of Tenant contained in
this Lease or from any default by Tenant and without waiving Landlord's right to
take such action as may be permissible under this Lease as a result of such
default, may (but shall be under no obligation to) make any payment or perform
any act on Tenant's part to be made or performed as provided herein and may
enter upon the Demised Premises for any such purpose and take all action
thereon, as may be necessary therefor. If in the performance of Tenant's
covenants hereunder, Landlord pays any obligations of Tenant, Tenant shall repay
such amounts to Landlord as Additional Rent.
38. NO WAIVER. No failure to insist upon the strict performance of
any agreement, term, covenant or condition hereof or to exercise any right or
remedy consequent upon a breach thereof, and no acceptance of full or partial
Rent during the continuance of any such breach, shall constitute a waiver of any
such breach or of such agreement, term, covenant or condition. No agreement,
term, covenant or condition hereof to be performed or complied with, and no
breach thereof, shall be waived, altered or modified except by a written
instrument executed by the party to be bound by such waiver, alteration or
modification. No waiver of any breach shall affect or alter this Lease, but
each and every agreement, term, covenant and condition hereof shall continue in
full force and effect with respect to any other then existing or subsequent
breach thereof.
39. EVENTS OF DEFAULT. Any one or more of the following events shall
constitute an Event of Default under this Lease:
(a) the Demised Premises are abandoned by Tenant for a
period in excess of thirty (30) days, or
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(b) if Tenant shall fail to pay Fixed Rent or Additional
Rent for more than ten (10) days, or
(c) if Tenant shall default in the performance or
observance of any other covenant or agreement herein contained for more than
thirty (30) days after written notice of such default to Tenant; provided,
however, that if the covenant or agreement to be performed by Tenant is of such
nature that the same cannot reasonably be performed within such thirty (30) day
period, such default shall be deemed to have been cured if Tenant commences such
performance within said thirty (30) day period and thereafter diligently
undertakes to complete the same; or
(d) if Tenant shall file a voluntary petition in bankruptcy
or shall be adjudicated a bankrupt or insolvent, or shall file any petition or
answer seeking any reorganization, arrangement, composition, readjustment,
liquidation, dissolution or similar relief under the federal Bankruptcy Code or
any other present or future federal, state or other bankruptcy or insolvency
statute or law, or shall seek or consent to or acquiesce in the appointment of
any bankruptcy or insolvency trustee, receiver or liquidator of Tenant or of all
or any substantial part of its properties or of the Demised Premises; or
(e) if within ninety (90) days after the commencement of
any proceeding against Tenant seeking any reorganization, arrangement,
composition, readjustment, liquidation, dissolution or similar relief under the
federal Bankruptcy Code or any other Present or future federal, state or other
bankruptcy or insolvency statute or law, such proceeding shall not have been
dismissed or if, within one hundred twenty (120) days after the appointment,
without the consent or acquiescence of Tenant, of any trustee, receiver or
liquidator of Tenant or of all or substantially all of its properties or of the
Demised Premises, such appointment shall not have been vacated; or
(f) if any guarantor of any of Tenant's obligations under
this Lease (a "Lease Guarantor") shall file a voluntary petition in bankruptcy
or shall be adjudicated a bankrupt or insolvent, or shall file any petition or
answer seeking any reorganization, arrangement, composition, readjustment,
liquidation, dissolution or similar relief under the federal Bankruptcy Code or
any other present or future federal, state or other bankruptcy or insolvency
statute or law, or shall seek or consent to or acquiesce in the appointment of
any bankruptcy or insolvency trustee, receiver or liquidator of Lease Guarantor
or of all or any substantial part of its properties; or
(g) if within ninety (90) days after the commencement of
any proceeding against Lease Guarantor seeking any
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reorganization, arrangement, composition, readjustment, liquidation,
dissolution or similar relief under the federal Bankruptcy Code or any other
present or future federal, state or other bankruptcy or insolvency statute or
law, such proceeding shall not have been dismissed or if, within one hundred
twenty (120) days after the appointment, without the consent or acquiescence of
Lease Guarantor, of any trustee, receiver or liquidator of Lease Guarantor or of
all or substantially all of its properties, such appointment shall not have been
vacated; or
(h) if Landlord discovers that any financial statement
given to Landlord by Tenant or any Lease Guarantor was materially false.
Tenant acknowledges that the occurrence of any of the foregoing Events
of Default shall constitute a material default and breach of this Lease by
Tenant.
40. REMEDIES. (a) Upon the occurrence of an Event of Default,
Landlord may, at any time thereafter while such Event of Default continues, give
written notice to Tenant specifying such Event of Default and stating that this
Lease and the Term shall terminate on the date specified in such notice, which
shall be at least ten (10) days after the giving of such notice, and upon the
date specified in such notice this Lease and the Term and all rights of Tenant
under this Lease, including any option for the Extended Term whether or not
exercised, shall expire and terminate, and Tenant shall remain liable as
hereinafter provided,
(b) Upon any termination of this Lease pursuant to this
Section 40, Tenant shall quit and peacefully surrender the Demised Premises to
Landlord, and Landlord, upon or at any such termination, may without further
notice, enter upon and reenter the Demised Premises and possess and repossess
itself thereof, by force, summary proceedings, ejectment or otherwise, and may
dispossess Tenant and remove Tenant and all other persons and property from the
Demised Premises and may have, hold and enjoy the Demised Premises and the right
to receive all rental income of and from the same.
(c) If this Lease shall be terminated pursuant to this
Section 40, Landlord may in its own name, but as agent for Tenant if this Lease
not be terminated, or if this Lease be terminated, on its own behalf, relet the
Demised Premises or any part thereof, or the Demised Premises, with additional
premises for such term or terms (which may be greater or less than the period
which would otherwise have constituted the balance of the Term) and on such
conditions (which may include concessions or free rent and alterations of the
Demised Premises) as Landlord, in its discretion, may determine and may collect
and receive the rents therefor. Landlord shall in no way be responsible or
liable for any failure to
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relet the Demised Premises or any part thereof, or for any failure to collect
any rent due upon such reletting.
(d) (i) No termination of this Lease pursuant to this
Section 40 shall relieve Tenant of its liability and obligation under this
Lease, whether or not the Demised Premises shall be relet. In any such event,
Tenant shall pay Landlord the Rent required to be paid by Tenant up to the time
of such event. Thereafter:
(A)(1) Tenant, until the end of the Term or what would
have been such Term in the absence of any such event, shall
be liable to Landlord as damages for Tenant's default, the
equivalent of the amount of the Rent which would be payable
under this Lease by Tenant if this Lease were still in
effect, less the net proceeds of any reletting effected
pursuant to the provisions of subparagraph (c) which is
applicable to the Demised Premises, after deducting all
Landlord's expenses in connection with such reletting,
including, without limitation, all repossession costs,
brokerage and management commissions, operating expenses,
legal expenses, reasonable attorneys' fees, alteration
costs, and expenses of preparation for such reletting.
(2) Tenant shall pay such current damages (herein
called "deficiency") to Landlord monthly on the days on
which the Fixed Rent would have been payable under this
Lease if this Lease were still in effect, and Landlord shall
be entitled to recover from Tenant each monthly deficiency
as the same shall arise.
(3) At any time after termination of this Lease
pursuant to this Section 40, in lieu of collecting any
further monthly deficiencies as aforesaid, Landlord shall be
entitled to recover from Tenant, and Tenant shall pay to
Landlord, on demand, as damages, in addition to the damages
provided for in subdivision (iv) below, damages for such
breach, in addition to any damages becoming due under
subdivisions (ii) and (iii) hereof, an amount equal to the
difference between the Rent reserved in this Lease from the
date of the Event of Default which resulted in the
termination to the date of the expiration of the Term and
the then fair and reasonable rental value of the Demised
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Premises for the same period. In the computation of such
damages, the difference between any installment of Fixed
Rent and Additional Rent thereafter becoming due and the
fair and reasonable rental value of the Demised Premises for
the period for which such installment was payable shall be
discounted to present worth.
(ii) If the Demised Premises or any part thereof be relet by
Landlord for the unexpired Term of this Lease, or any part thereof, before
presentation of proof of such liquidated damages to any court, commission or
tribunal, the amount of Rent reserved upon reletting to an unaffiliated third
party shall PRIMA FACIE be the fair and reasonable rental value for the part or
the whole of the Demised Premises so relet during the term of the reletting.
Nothing herein contained shall limit or prejudice the right of Landlord to prove
and obtain as damages by reason of such termination, an amount equal to the
maximum allowed by any statute or rule of law in effect at the time when, and
governing the proceedings in which such damages are to be proved, whether or not
such amount be greater, equal to, or less than the amount of the difference
referred to above.
(iii) If this Lease be terminated pursuant to this Section
40, by summary proceedings or otherwise, and whether or not the Demised Premises
be relet, Landlord shall be entitled to recover from Tenant, and Tenant shall
pay to Landlord, in addition to any damages becoming due under this Section, the
following: an amount equal to all expenses, if any, including reasonable
attorneys' fees, incurred by Landlord in recovering possession of the Demised
Premises, and all reasonable costs and charges for the care of the Demised
Premises while vacant, which damages shall be due and payable by Tenant to
Landlord at such time or times as such expenses are incurred by Landlord.
(iv) If this Lease be terminated pursuant to this Section
40, Tenant covenants and agrees, any other covenant in this Lease
notwithstanding:
(A) That the Demised Premises shall be in the
same condition as that in which Tenant has agreed to
surrender them to Landlord at the expiration of the
Term;
(B) That Tenant on or before such termination,
shall perform all covenants contained in this Lease for
the making of any improvement, alteration or betterment
to the Demised Premises, or for the
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restoring or rebuilding any part thereof, including
without limitation the removal of foundations, filling
of pits and floor repair required by subparagraph (e)
of Section 26 hereof; and
(C) That, for the breach of any covenant above
stated in this subdivision (iv), Landlord shall be
entitled to recover and Tenant shall pay, without
notice or other action by Landlord, the then cost of
performing such covenant.
(v) Tenant hereby expressly waives, so far as permitted by
law, the service of any notice of intention to reenter provided for in any
statute, and except as is herein otherwise provided, Tenant, for and on behalf
of itself and all persons claiming through or under Tenant (including any
Leasehold Mortgagee or other creditor), also waives any and all right of
redemption or re-entry or repossession in case Tenant shall be dispossessed by a
judgment or by warrant of any court or judge or in case of re-entry or
repossession by Landlord or in case of any expiration or termination of this
Lease. The terms "enter," "re-enter," "entry" or "re-entry" as used in this
Lease are not restricted to their technical legal meanings.
(vi) In the event of any Event of Default or threatened
Event of Default by Tenant, Landlord shall be entitled to enjoin such Event of
Default or threatened Event of Default and shall have the right to invoke any
right and remedy allowed at law or in equity or by statute or otherwise as
though reentry, summary proceedings, and other remedies were not provided for in
this Lease.
(vii) Each right and remedy provided for in this Lease
shall be cumulative and shall be in addition to every other right or remedy
provided for in this Lease or now or hereafter existing at law or in equity or
by statute or otherwise, and the exercise or beginning of the exercise by
Landlord or Tenant of any one or more of the rights or remedies provided for
in this Lease or now or hereafter existing at law or in equity or by statute or
otherwise shall not preclude the simultaneous or later exercise by the party in
question of any or all other rights or remedies provided for in this Lease or
now or hereafter existing at law or in equity or by statute or otherwise.
41. WAIVER OF COUNTERCLAIMS. In the event Landlord commences any
proceeding, summary or otherwise, for nonpayment of Rent, Tenant agrees not to
interpose any non-compulsory counterclaim in any such proceeding.
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42. LATE PAYMENTS. Tenant shall pay Landlord for late payments of
Rent a late payment charge equal to three percent (3%) of the amount late for
each thirty (30) day period such payment is late. Acceptance of such late
payment charge by Landlord shall not constitute a waiver of Landlord's rights or
release Tenant from any obligations under this Lease.
43. TRANSFER OF LANDLORD'S INTEREST; ATTORNMENT. If the interests of
Landlord in the Demised Premises and under this Lease are transferred to a
third-party (a "Transferee") of the Demised Premises pursuant to a contract of
sale, foreclosure, deed in lieu of foreclosure or the exercise of a right of a
trustee under a deed of trust or other loan documents, Tenant will attorn to
the Transferee, and the Lease will continue in full accordance with the terms
hereof. Upon transfer of the interest of Landlord in the Demised Premises and
its interest under this Lease to a Transferee and assumption of this Lease in
writing by the Transferee, Tenant shall thereafter look to the Transferee under
this Lease to the extent that the Transferee has assumed this Lease.
44. SUBORDINATION AND NON-DISTURBANCE. This Lease is expressly
subject to the right of the West Virginia Economic Development Authority
("WVEDA") under the terms of that certain Deed of Trust dated April 11, 1988
granting to WVEDA a first mortgage lien and security interest in the Demised
Premises and improvements thereon and the balance of the Ordnance Center.
In addition thereto, this Lease shall, at Landlord's option, be
subordinate to any mortgage (a "Mortgage") or ground lease (a "Ground Lease")
that may now or hereafter be placed on the Demised Premises, the holder of any
such mortgage (including WVEDA) being herein referred to as a "Mortgagee" and
the lessor under any such ground lease being referred to herein as "Ground
Lessor." Tenant will, upon demand, without cost, execute any instrument
necessary to effectuate such subordination required by this Section. If within
five (5) days after submission of such instrument, Tenant fails to execute the
same, Landlord is hereby authorized to execute the same as attorney-in-fact,
coupled with an interest, for Tenant, the cost of such execution to be borne by
Tenant. Notwithstanding the subordination provided for herein, Tenant's right
to quiet possession of the Demised Premises shall not be disturbed if Tenant is
not in default and so long as Tenant shall pay the Rent and observe and perform
all of the provisions of this Lease, unless this Lease is otherwise terminated
pursuant to its terms.
45. MORTGAGE APPROVALS, CONSENTS AND REQUIREMENTS. Any provision of
this Lease requiring the approval or consent of Landlord shall not be deemed to
have been unreasonably withheld or delayed if any Mortgagee or Ground Lessor
shall refuse or withhold
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approval or consent thereto. Any requirement of Landlord pursuant to this Lease
which is imposed pursuant to the direction of any Mortgagee or Ground Lessor
shall be deemed to have been reasonably imposed by Landlord if made in good
faith.
46. FINANCIAL STATEMENTS. If Landlord desires to finance, refinance,
or sell the Demised Premises, the Ordnance Center, or any part thereof, Tenant
hereby agrees to deliver to Landlord and to any lender or purchaser designated
by Landlord such financial statements of Tenant as Tenant is required to provide
to the WVEDA. Such statements shall include the past three years' financial
statements of Tenant. All such financial statements shall be received by
Landlord and such lender or purchaser in confidence and shall be used only for
the purposes herein set forth.
47. LEASEHOLD MORTGAGES. (a) Tenant, without Landlord's consent, may
mortgage the leasehold estate under this Lease without restriction under a
leasehold mortgage or mortgages or other security instrument or instruments, at
any time and from time to time, without limitation as to amount and on any terms
Tenant may deem desirable, and in connection therewith may assign the leasehold
estate to the holder of any such mortgage or security instrument. If more than
one such mortgage or security instrument is at any time in effect, each such
mortgage or other security instrument, at the time in effect, is herein called
"Leasehold Mortgage"; provided, however, that the holder or holders thereof
shall have notified Landlord in writing that it is a holder of such Leasehold
Mortgage and of the name and post office address to which all notices, and other
communications hereunder to it may be addressed; and such a holder of a
Leasehold Mortgage, having given such notice, is herein called "Leasehold
Mortgagee." Landlord and Tenant shall not agree between themselves to any
cancellation, surrender or modification of this Lease without the prior written
consent of any Leasehold Mortgagee. Landlord will give to any Leasehold
Mortgagee a copy of any notice or other communication from Landlord to Tenant
hereunder at the time of giving such notice or communication to Tenant and
notice of any rejection of this Lease by any Trustee in bankruptcy of Tenant.
(b) So long as any Leasehold Mortgage shall remain a lien on Tenant's
leasehold estate, Landlord agrees that simultaneously with the giving of any
such notice of an Event of Default or of termination of this Lease to Tenant,
Landlord will give the Leasehold Mortgagee a duplicate of such notice, provided
the provisions of subsection (a) shall have been complied with.
(c) At any time when any Leasehold Mortgage is in effect, Landlord
will not exercise any right, power or remedy with respect to any Event of
Default hereunder until the expiration of any grace period provided with respect
thereto, plus an additional period of
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thirty (30) days beyond such period or beyond the date on which Landlord has
given to any such Leasehold Mortgagee written notice of such Event of Default or
a copy of its notice to Tenant of such default, whichever is later. Landlord
will not exercise any right, power or remedy with respect to any Event of
Default hereunder if any Leasehold Mortgagee within such 30-day period shall
give to Landlord written notice that it intends to undertake the correction of
such default or to cause the same to be corrected and so long thereafter as such
Leasehold Mortgagee shall prosecute diligently the correction of such default,
whether by exercise on behalf of Tenant of its obligations hereunder, entry on
the Demised Premises, foreclosure, sale or otherwise.
(d) At any time when any Leasehold Mortgage is in effect, any
Leasehold Mortgagee may make any payment or perform any act required hereunder
to be made or performed by Tenant with the same effect as if made or performed
by Tenant (after written notice to Landlord); provided, however, that no entry
by a Leasehold Mortgagee upon the Demised Premises for such purpose shall
constitute or be deemed to be an eviction of Tenant or release Tenant from any
obligation or Event of Default hereunder (except any obligation or default which
shall have been fully performed or corrected by such payment or performance by a
Leasehold Mortgagee).
(e) In the event of termination of this Lease by reason of the
happening of any Event of Default, Landlord shall give written notice thereof to
any Leasehold Mortgagee, who shall have notified Landlord of its name and
address pursuant to subparagraph (a) above. If within thirty (30) days after
the mailing of such notice, such Leasehold Mortgagee shall pay or arrange to the
satisfaction of Landlord for the payment of a sum of money equal to any Fixed
Rent, Additional Rent and other charges due and payable by Tenant hereunder, as
of the date of such termination, in addition to any and all expenses, costs and
fees, including reasonable attorneys' fees, incurred by Landlord in terminating
this Lease and in acquiring possession of the Demised Premises, together with a
sum of money equal to the amount which, but for such termination, would have
become due and payable under this Lease, from such termination date up to and
including a period of sixty (60) days beyond the date of the mailing of such
notice, Landlord shall, upon the written request of such Leasehold Mortgagee
made any time within the first thirty (30) days of such sixty (60) day period,
execute and deliver, within the last thirty (30) days of such sixty (60) day
period, a new lease of the Demised Premises to such Leasehold Mortgagee, or to
the nominee of such Leasehold Mortgagee, for the remainder of the Term;
provided, however, that such Leasehold Mortgagee shall have paid to Landlord a
sum of money equal to all expenses, including reasonable attorneys' fees,
incidental to preparation, execution and delivery of such new lease. Such new
lease shall be the same in form as this Lease, at the same Fixed Rent and on the
same terms as
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contained herein.
(f) Nothing contained herein shall be deemed to impose any obligation
on the part of Landlord to deliver physical possession of the Demised Premises
to a Leasehold Mortgagee or to its nominee. Landlord agrees, however, that
Landlord will, at the sole cost and expense of such Leasehold Mortgagee or
nominee, cooperate in the prosecution of summary proceedings to evict the then-
defaulting Tenant.
48. ESTOPPEL CERTIFICATES. Each party agrees at any time and from
time to time upon not less than 15 days' prior written request by the other, to
execute, acknowledge and deliver to the other a statement in writing certifying
that this Lease is unmodified and in full force and effect (or if there have
been modifications, that the same is in full force and effect as modified and
stating the modifications), and the dates to which the Fixed Rent and Additional
Rent have been paid, if any, and that to the actual knowledge of such Party, no
Event of Default has occurred or, if an Event of Default has occurred,
specifying the same; it being intended that any such statement delivered
pursuant to this Section may be relied upon by any prospective purchaser of the
fee, a Mortgagee, Ground Lessor, Leasehold Mortgagee, or assignee of any of
them.
49. ASSIGNMENT AND SUBLETTING. Assignment of this Lease is
prohibited. Tenant may sublease the Demised Premises or portions thereof for
metal stamping and related manufacturing operations substantially as previously
conducted by Tenant at the Demised Premises. Tenant shall not otherwise
sublease all or any part of the Demised Premises, nor grant any license or
concession for all or any part of the Demised Premises without the prior written
consent of Landlord, which consent shall not be unreasonably withheld or
delayed. Tenant shall not offer to sublease or sublease any portion of the
Demised Premises, or provide services to, any of Landlord's other tenants of
space in the Ordnance Center. Landlord shall, not be obligated to consent to
any subleasing of space in the Demised Premises if the proposed sublessee is a
customer of Landlord. Regardless of Landlord's consent, no subletting shall
release Tenant from Tenant's obligation or alter the primary liability of Tenant
to pay Rent and to perform all other obligations to be performed by Tenant
hereunder. The acceptance of Rent by Landlord from any other person shall not
be deemed to be a waiver by Landlord of any provision hereof. In the event of
Default by any sublessee in the performance of any of the terms hereof, Landlord
may proceed directly against Tenant without the necessity of exhausting remedies
against said sublessee. Any consent by Landlord to subletting, license or
concession under this Lease shall not constitute a waiver of the necessity of
obtaining that consent as to any subsequent sublease, license or concession.
Any attempted assignment for the
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benefit of Tenant's creditors or otherwise by operation of law shall not be
effective to transfer or assign Tenant's interest under this Lease.
If any of the corporate shares of stock of Tenant are transferred, or
if any partnership interests of Tenant are transferred, by sale, assignment,
bequest, inheritance, operation of law, or otherwise, so as to result in a
change of the control or structure of Tenant, same shall be deemed an assignment
for the purposes of this Section.
50. ATTORNEYS' FEES. In the event Tenant shall request the consent
of Landlord to sublet the Demised Premises or if Tenant shall request the
consent of Landlord with respect to any other matter requiring the Landlord's
consent hereunder, then Tenant shall pay Landlord's reasonable attorneys' or
engineering fees incurred in connection with such request.
51. SURRENDER. Upon termination of this Lease for any reason
whatsoever or upon the last day of the Term, as the case may be, Tenant shall
surrender to Landlord, in a "broom clean" and good condition, the Demised
Premises, Equipment, Loading Area and Exclusive Rail Spur at least equivalent to
that existing on the Commencement Date (or in the case of the Automobile Parking
Lot Parcel, as improved pursuant to Section 13 hereof) except for reasonable
wear and tear, together with all additions, alterations, improvements and
replacements thereof installed by Tenant which become the property of Landlord,
subject, however, to such obligation as Tenant may have pursuant to Section 26
hereof to remove foundation and fill pits and otherwise repair the floor of the
Building. Good condition of the Demised Premises, Equipment, Loading Area and
Rail Spur shall mean that all Hazardous Substances and oil and grease (other
than Buried Hazardous Substances) have been removed.
52. QUIET POSSESSION. Landlord represents and warrants that it has
full right and lawful authority to enter into this Lease. Tenant, upon paying
Rent and observing the covenants of this Lease, may lawfully and quietly hold
possession and enjoy the Demised Premises, together with all appurtenances and
rights appertaining thereto, during the Term without hindrance, ejection,
molestation or interruption.
Tenant will cooperate with Landlord in the granting of easements and
other rights in the nature of easements necessary or useful to the business of
the Ordnance Center, provided such grants do not unreasonably restrict the
business of Tenant.
53. ENTRY. (a) Landlord and Landlord's authorized representative or
agent shall have the right to enter the Demised
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Premises during reasonable hours for the purpose of examining the same. Nothing
herein shall imply any duty upon the part of Landlord to do any such work which,
under the provision of this Lease, Tenant may be required to perform, and the
performance thereof by Landlord shall not constitute a waiver of Tenant's
default in failing to perform the same.
(b) Landlord shall have the right to enter the Demised Premises
during the last eighteen (18) months of the Term for the purpose of exhibiting
same, and to display on the Demised Premises in such manner as will not
unreasonably interfere with Tenant's business "For Sale" or "To Let" signs.
54. HOLDING OVER. Should Tenant continue to hold possession of the
Demised Premises after the expiration of the Initial Term without, extension
thereof or after the expiration of the Extended Term, Tenant shall remain a
Tenant at a monthly rental charge of two times the last monthly rent payable
hereunder. Such occupancy shall be a tenancy from month to month and otherwise,
the tenancy shall be upon the same terms and conditions as contained herein,
except such tenancy shall be terminable by either party by giving thirty (30)
days' advance written notice of termination.
55. MODIFICATION OF LEASE. This Lease contains all agreements of the
parties with respect to any matter mentioned herein. No prior agreement or
understanding pertaining to any such matter shall be effective. No agreement
hereafter made between Landlord and Tenant shall be effective to change, modify,
waive, release, discharge, terminate or effect an abandonment of this Lease in
whole or in part, unless such agreement is in writing, refers expressly to this
Lease and is signed by both parties. The failure of either party hereto to
insist in any one or more cases upon the strict performance of any term,
covenant or condition of this Lease to be performed or observed by the other
party hereto shall not constitute a waiver or relinquishment of that party's
right to take recourse for any subsequent failure to perform any such term,
covenant or condition, but the same shall continue and remain in full force and
effect with respect to any subsequent, breach, act or omission.
56. RECORDING. This Lease shall not be recorded. Upon request,
Tenant and Landlord shall execute, acknowledge and deliver to the other a
memorandum of this Lease in form suitable for recording.
57. NOTICES. All notices, demands, directions, requests,
designations, consents, approvals, instructions and other communications
required or permitted by the terms hereof shall be in writing and shall become
effective upon the earlier of its receipt or the lapse of five business days
after being deposited in the
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United States mail, certified or registered, postage prepaid or, if delivered in
person or in the form of telex, telegram, facsimile or cable, when received, and
if mailed, shall be addressed to the party at its address set forth above or at
such other place as the party may from time to time designate by like notice.
58. NAME OF THE ORDNANCE CENTER. Landlord shall have the right to
change the name of the Ordnance Center during the Term of this Lease and shall
have no obligation for any loss or damage to Tenant by reason thereof.
Notwithstanding the foregoing, Landlord shall not rename the Ordnance Center to
a name which includes that of a direct competitor of Tenant.
59. ORDNANCE CENTER RULES AND REGULATIONS. Tenant, its servants,
employees, agents, invitees, licensees, contractors and subcontractors shall
observe and strictly comply with any Rules and Regulations as Landlord or its
agents may, after notice to Tenant, from time to time reasonably adopt.
Landlord shall include in leases of other space in the Ordnance Center a similar
requirement obligating tenants to comply such Rules and Regulations as may be
adopted by Landlord. Landlord shall make reasonable efforts to enforce said
Rules and Regulations, to the extent applicable, and to enforce the terms,
covenants or conditions in any other lease against any other tenant; provided,
however, that Landlord shall not be liable to Tenant for violation of the same
by any other tenant, its servants, employees, agents, invitees or licensees.
60. HEADINGS. The headings herein contained are inserted only for
convenience and reference and in no way define, limit or enlarge the scope or
intent of this Lease or in any way affect the terms and provisions thereof.
61. SEVERABILITY. If any provision of this Lease shall be declared
by proper authority to be invalid or unenforceable, the remainder of this Lease
shall continue in full force and effect.
62. TIME. Time shall be of the essence of the performance by Tenant
of all payments, covenants and agreements in this Lease, subject to grace
periods specifically provided for herein.
63. GOVERNING LAW. This Lease shall be governed by the laws of the
State of West Virginia.
64. SUCCESSORS AND ASSIGNS. The terms, covenants and conditions of
this Lease shall be binding upon and shall inure to the benefit of Landlord and
it successors and assigns and Tenant and its successors.
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65. COUNTERPARTS. This Lease may be executed in one or more
counterparts, each of which shall be deemed an original but which together shall
constitute one and the same document.
IN WITNESS WHEREOF, each of the parties hereto has caused this Lease
to be signed by its duly authorized agents as of the date first above written.
LANDLORD:
PARK CORPORATION d.b.a.
ATTEST: CHARLESTON ORDNANCE CENTER
/s/ Lance B. Johnson By: /s/ Raymond P. Park
- -------------------------- --------------------------
Lance B. Johnson, Raymond P. Park, President
Assistant Secretary
TENANT:
ATTEST: SOUTH CHARLESTON STAMPING &
MANUFACTURING COMPANY
/s/ David M. Hannah By: /s/ John T. Wise
- -------------------------- --------------------------
David M. Hannah, Treasurer John T. Wise, Vice President
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EXHIBIT 10.47
ESCROW DEPOSIT AGREEMENT
Between
GREAT DANE HOLDINGS INC.
And
FIRST FIDELITY BANK, NATIONAL ASSOCIATION
as Escrow Agent
Dated as of ______________, 1995
<PAGE>
ESCROW DEPOSIT AGREEMENT
Escrow Deposit Agreement (the "Escrow Agreement") dated as of
_________ ___, 1995 between Great Dane Holdings Inc., a Delaware corporation,
("Holdings" or the "Company") and First Fidelity Bank, National Association, as
escrow agent (the "Agent").
W I T N E S E T H:
WHEREAS, on the date hereof pursuant to a registration statement on
Form S-1 under the Securities Act of 1933 (the "Offering") Holdings has issued
[5,700,000] shares of common stock, par value $0.01 per share (the "Shares"), of
the Company.
WHEREAS, Holdings has determined that it is in the best interest of
the Company to provide for the repayment or redemption, as the case may be, of
certain indebtedness of the Company as listed on Schedule I hereto (including
interest accrued thereon to the date of repayment or redemption, any prepayment
penalties and any other required payments thereunder) (the "Obligations"); and
WHEREAS, Holdings has elected to deposit a sufficient amount of the
net proceeds from the Offering with an escrow agent to pay the Obligations when
they become due; and
WHEREAS, the Agent has agreed to act as escrow agent in connection
with the repayment or redemption, as the case may be, of the Obligations in
accordance with the terms and conditions specified in the instruments and
agreements listed on Schedule I hereto (the "Agreements");
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants set forth herein, Holdings and the Agent agree as follows:
SECTION 1. PLEDGE OF PROCEEDS. Holdings hereby irrevocably deposits
with the Agent for the benefit of the selected holders ("Holders") of the
Obligations to be selected by the Trustee pursuant to Section 3.02 of the
Indenture dated as of August 1, 1986 between Great Dane Holdings Inc. (as
successor to International Controls Corp.) and First Fidelity Bank, National
Association, as Trustee, and irrevocably appropriates and sets aside
$____________ including any additional deposits made in accordance with this
Escrow Agreement (the "Deposit"), exclusively for the repayment or redemption,
as the case may be, of the Obligations, which Deposit (and any interest or other
income earned thereon) is hereby pledged to, and for the sole benefit of, the
Holders.
<PAGE>
The Agent hereby acknowledges receipt of the Deposit which shall be
deposited by the Agent in the Holdings Escrow Fund (as defined in Section 3
hereof). Holdings represents and warrants that the amount of the Deposit is
sufficient to pay the Obligations when due, without anticipating any interest or
other income being earned on the Deposit and understands that the Holders of the
Obligations are relying upon such representation and warranty.
SECTION 2. NOTICE OF REPAYMENT OR REDEMPTION. Holdings represents to
the Agent that the Company will give irrevocable notice of redemption on a date
which is at least 30 days after the date the notice is delivered (the "Payment
Date"), to the Holders in accordance with the Indenture.
SECTION 3. SPECIAL ESCROW FUND. There is hereby established and
created with the Agent a special and irrevocable fund designated the "Great Dane
Holdings Inc. Escrow Fund" (the "Holdings Escrow Fund") to be held in the
custody of the Agent as a special escrow fund, separate and apart from all other
funds of Holdings or the Agent, solely for the benefit of the Holders. All
Deposits and Authorized Investments (as defined in Section 4(b) hereof) set
aside and held in the Holdings Escrow Fund shall be applied to, and applied
solely for, the repayment or redemption, as the case may be, of the Obligations
and as otherwise provided herein.
SECTION 4. APPLICATION OF MONEYS ON DEPOSIT IN HOLDINGS ESCROW FUND.
(a) Holdings shall not direct the Agent to invest deposits in the Holdings
Escrow Fund at any time in any securities or other investments other than the
Authorized Investments (as defined in Section 4(b) hereof).
(b) The Agent shall act as custodian of the Holdings Escrow Fund
and shall, at the written direction of Holdings, invest and reinvest the
Holdings Escrow Fund solely in the following investments, which constitute
Authorized Investments hereunder: (i) direct obligations of the United States
Government (or agencies or instrumentalities thereof), provided that such
securities are obligations to which the full faith and credit of the United
States of America has been pledged; (ii) certificates of deposit, time deposits
or other interest-bearing deposits of commercial banks having total capital and
surplus of at least $500,000,000 or (iii) the Agent's U.S. Treasury Money Market
Fund provided that such fund maintains the highest ratings established by each
of Moody's and Standard & Poor's, in each case with a maturity or maturities
that would permit the Agent to make cash payments to repay or redeem, as the
case may be, the Obligations on the Payment Date in accordance with Section 5
hereof. The Agent shall have no responsibility for the determination of such
investments and shall have no liability for any investment losses resulting from
the investment,
- 2 -
<PAGE>
reinvestment, sale or liquidation of the Holdings Escrow Fund, except in the
case of its own gross negligence or willful misconduct.
(c) Except as otherwise specifically provided herein, Holdings
covenants and agrees that the Agent (for the benefit of the Holders) shall have
full and complete control and authority over and with respect to the Holdings
Escrow Fund and the moneys deposited therein and that Holdings shall not
exercise any control or authority over or with respect to the Holdings Escrow
Fund or the moneys deposited therein.
SECTION 5. PAYMENT OF OBLIGATIONS. On the Payment Date the Agent
shall apply sufficient funds, to the extent available, from the funds held in
the Holdings Escrow Fund to the payment in full of the Obligations (as such
payment is directed to be made on Schedule I). To the extent sufficient funds
are not available, Holdings agrees to deposit the necessary funds in the
Holdings Escrow Fund in order for such Obligation to be paid in full on the
Payment Date and understands that the Holders of the Obligations are relying
upon such agreement.
SECTION 6. IRREVOCABLE DEPOSIT; RELINQUISHMENT OF RIGHTS OF THE
COMPANY. (a) The Deposit being made into the Holdings Escrow Fund shall
constitute an irrevocable deposit solely for the payment of the Obligations, and
solely for the benefit of the Holders thereof pursuant to the terms of this
Escrow Agreement.
(b) Holdings hereby agrees that it shall not have any beneficial
interest in, or rights to, the Deposit or proceeds thereof (or interest or other
income earned thereon) on deposit in the Holdings Escrow Fund (whether in the
form of cash, Authorized Investments or otherwise) or payments made therefrom so
long as any of the Obligations or any amounts owing to the Agent hereunder
remain unpaid.
SECTION 7. LIABILITY OF AGENT. The liability of the Agent to make
the payments required by this Escrow Agreement with respect to the Obligations
shall be limited to application of the funds deposited with it hereunder and the
Agent shall not be personally liable for any amounts due to the Holders. The
Agent shall not be liable for any loss resulting from any investment made in
accordance with the instructions of Holdings.
SECTION 8. TERMINATION; INCOME FROM AUTHORIZED INVESTMENTS. (a) This
Escrow Agreement shall terminate when all Obligations to the Holders shall have
been paid to the Holders and all fees and expenses of the Agent shall have been
paid in full.
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<PAGE>
(b) Upon termination of this Escrow Agreement in accordance with the
provisions of subsection (a) of this Section 8, any funds in the Holdings Escrow
Fund (including income from all Authorized Investments) shall be promptly paid
to Holdings upon the direction of Holdings.
SECTION 9. FEES OF AGENT. (a) Holdings shall pay upon request all
compensation and expenses of the Agent, including, without limitation,
reasonable compensation for all services rendered by the Agent in the execution,
exercise and performance of any of the duties to be exercised or performed by it
pursuant to the provisions of this Escrow Agreement (including reasonable
counsel fees and expenses). Attached hereto as Schedule II is the Agent's fee
schedule. The Agent shall be entitled to indemnity from Holdings against any
and all losses, claims, liabilities or expenses incurred on the part of the
Agent arising out of or in connection with the acceptance or administration of
its powers and duties under this Escrow Agreement, including the cost and
expense of defending against any such loss, claim or liability, other than
losses, claims, liabilities or expenses arising out of the Agent's gross
negligence or willful misconduct.
(b) Except for the fees which may be paid out of the interest earned
on the funds in the Holdings Escrow Fund (but not under any circumstances out of
the original principal amount of such funds) as expressly set forth on Schedule
II, the Agent has no right to payment for its fees, compensation and expenses
from the Holdings Escrow Fund so long as all of the Obligations shall not have
been paid in full.
(c) All of the rights, entitlements, and protections provided to the
Agent in this Section 9 shall survive its resignation or termination of this
Escrow Agreement, whether by payment of the Obligations or otherwise.
SECTION 10. DUTIES OF AGENT; EVIDENCE UPON WHICH AGENT MAY ACT;
REPLACEMENT OF AGENT. (a) The duties and obligations of the Agent hereunder
shall be determined solely by the express provisions of this Escrow Agreement,
and the Agent shall not be liable except for the performance of its duties and
obligations as specifically set forth herein and to act in good faith in the
performance thereof, and no implied duties, covenants or obligations shall be
incurred by the Agent other than those specified herein, and the Agent shall be
protected when acting or omitting to act in good faith upon the advice of
counsel, who may be counsel to Holdings.
(b) Subject to the requirement under subsection (a) of this Section
10 to act in good faith, the Agent may conclusively rely, as to the correctness
of statements, conclusions and opinions
- 4 -
<PAGE>
therein, upon any certificate, report, opinion or other document furnished to
the Agent pursuant to any provision of this Escrow Agreement. Any request,
consent, certificate, notice, appointment or other direction made or given by
Holdings to the Agent shall be deemed to have been sufficiently made or given by
the proper party or parties if executed by an authorized officer of the Company
on behalf of Holdings.
(c) The Agent may resign and be discharged of its duties as agent
hereunder by giving written notice of such intention to resign to an authorized
officer of Holdings; provided, however, that such resignation shall not become
effective until the later of (i) ten (10) days after the giving of such notice
and (ii) a successor shall have been appointed and the funds held by the Agent
in the Holdings Escrow Fund have been transferred to such successor agent. Any
such successor agent shall be a commercial bank having total capital and surplus
of at least $500,000,000. If no successor shall have been appointed within ten
(10) days after the giving of the aforementioned notice, the Agent may petition
any court of competent jurisdiction for the appointment of such successor.
(d) The recitals contained herein shall be taken as the statements of
Holdings and the Agent assumes no responsibility for their correctness. The
Agent makes no representation as to the validity or sufficiency of this Escrow
Agreement or of the Deposit in the Holdings Escrow Fund.
(e) The Agent may consult with counsel and the advice of such counsel
shall be full and complete authorization and protection in respect of any action
taken, suffered or omitted by it hereunder in good faith and in reliance
thereon.
SECTION 11. AMENDMENTS. This Escrow Agreement shall not be repealed,
revoked, altered or amended or any provisions thereof waived as to any of the
Obligations without the written consent of all Holders of each such Obligation,
the written consent of the Agent and the written consent of Holdings; PROVIDED
HOWEVER, that Holdings and the Agent may, without the consent of, or notice to,
the Holders, enter into such agreements supplemental to this Escrow Agreement as
shall not adversely affect the rights of the Holders, for any one or more of the
following purposes:
(a) to cure any ambiguity, defect or omission in this Escrow
Agreement; or
(b) to grant to, or confer upon the Agent for the benefit of, the
Holders any additional rights, remedies, powers or authority that may lawfully
be granted to, or conferred upon, the Agent.
- 5 -
<PAGE>
The Agent may, but shall not be obligated to, enter into any such amendment or
supplement to this Escrow Agreement which affects the Agent's own rights, duties
or immunities under this Escrow Agreement or otherwise. Holdings shall provide
the Agent with an opinion of counsel that any such amendment or supplement does
not adversely affect the rights of the Holders.
SECTION 12. SEVERABILITY. If any one or more of the covenants or
agreements provided in this Escrow Agreement on the part of Holdings or the
Agent to be performed should be determined by a court of competent jurisdiction
to be contrary to law, such covenant or covenants, or such agreement or
agreements, or such portions thereof, shall be deemed severable from the
remaining covenants and agreements or portions thereof provided in this Escrow
Agreement and the invalidity thereof shall in no way affect the validity of
other provisions of this Escrow Agreement, but the Holders shall retain all the
rights and benefits accorded them hereunder and under applicable provisions of
law.
If any provisions of this Escrow Agreement shall be held or deemed to
be or shall, in fact, be inoperative or unenforceable or invalid as applied in
any particular case in any jurisdiction or jurisdictions or in all
jurisdictions, or in all cases because it conflicts with any constitution or
statute or rule of public policy, or for any other reason, such circumstances
shall not have the effect of rendering the provision in question inoperative or
unenforceable or invalid in any other case or circumstance, or of rendering any
other provision or provisions herein contained inoperative or unenforceable or
invalid to any extent whatever.
SECTION 13. GOVERNING LAW. This Escrow Agreement shall be construed
and interpreted in accordance with the laws of the State of New York, without
regard to its conflict of law principles.
SECTION 14. COUNTERPARTS. This Escrow Agreement may be executed in
several counterparts, all or any of which shall be regarded for all purposes as
one original and shall constitute and be one and the same instrument.
SECTION 15. SECTION HEADINGS. The headings of the several Sections
hereof and the Table of Contents appended hereto shall be solely for convenience
of reference and shall not affect the meaning, construction, interpretation or
effect of this Escrow Agreement.
SECTION 16. BINDING EFFECT, ETC. This Escrow Agreement shall be
binding upon the parties hereto and their respective successors, legal
representatives and permitted assigns.
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<PAGE>
SECTION 17. NOTICES. Any notices or other communications to be given
hereunder by any party hereto to the other party shall be in writing and shall
be given by delivery in person, by electronic facsimile transmission or other
standard forms of written telecommunications, by overnight courier or by
registered or certified mail, postage prepaid, as follows:
if to Holdings, to:
Great Dane Holdings Inc.
2016 North Pitcher Street
Kalamazoo, Michigan 49007
Telecopy number: (616) 343-6823
Attention: David R. Markin
with a copy to:
Hutton Ingram Yuzek Gainen
Carroll & Bertolotti
250 Park Avenue
New York, New York 10177
Telecopy number: (212) 907-9681
Attention: Paulette Kendler, Esq.
if to the Agent, to:
First Fidelity Bank, National Association
765 Broad Street, C76505
Newark, New Jersey 07102
Telecopy number: (201) 430-4963
Attention: Corporate Trust Department
Directions from Holdings to the Agent to be given under the terms of this Escrow
Agent shall only be made on behalf of the Company by the following persons (or
such additional persons as may be appointed by any of the persons named below or
their appointees by written notice to the Agent):
David R. Markin
Jay H. Harris
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<PAGE>
IN WITNESS WHEREOF, the parties have each caused this Escrow Agreement
to be executed by their duly authorized officers as of the date first above
written.
GREAT DANE HOLDINGS INC.
By:
--------------------------
Title:
FIRST FIDELITY BANK, NATIONAL
ASSOCIATION, as Agent
By:
--------------------------
Title:
- 8 -
<PAGE>
SCHEDULE I
HOLDERS OF 12-3/4% SENIOR SUBORDINATED
DEBENTURES DUE 2001 SELECTED FOR REDEMPTION BY
THE TRUSTEE IN ACCORDANCE WITH THE INDENTURE
- 9 -
<PAGE>
SCHEDULE II
AGENT FEE SCHEDULE
See attached Escrow Agreement Fee Agreement
- 10 -
<PAGE>
RETIREMENT PLAN FOR
GREAT DANE TRAILERS, INC.
Effective as of January 1, 1989
<PAGE>
TABLE OF CONTENTS
PAGE
----
ARTICLE I - PREAMBLE/EFFECTIVE DATE OF PLAN................................ 1
ARTICLE II - DEFINITIONS AND CONSTRUCTION.................................. 3
2.1 Definitions.................................................... 3
2.2 Service for Predecessor Employer............................... 22
2.3 Word Usage..................................................... 22
2.4 Calculation of Time............................................ 22
2.5 Construction................................................... 22
ARTICLE III - ELIGIBILITY AND PARTICIPATION................................ 23
3.1 Eligibility.................................................... 23
3.2 Years of Eligibility Service................................... 23
3.3 Participation - Re-Employed Employees.......................... 24
3.4 Re-employment and Service Crediting Rules for Disabled
Participants................................................... 24
3.5 Enrollment..................................................... 25
ARTICLE IV - CONTRIBUTIONS................................................. 26
4.1 Employer Contributions......................................... 26
4.2 Forfeitures.................................................... 26
4.3 Return of Employer Contributions............................... 26
4.4 Participant Contributions...................................... 26
ARTICLE V - REQUIREMENTS FOR RETIREMENT BENEFITS........................... 27
5.1 Normal Retirement.............................................. 27
5.2 Early Retirement............................................... 27
5.3 Late Retirement................................................ 27
5.4 Termination of Service Prior to Normal Retirement Age.......... 28
5.5 Vesting Service................................................ 28
5.6 Included Years of Vesting Service - Certain Terminated
Employees...................................................... 29
5.7 Forfeiture Occurs.............................................. 29
5.8 Limitation on Time of Payment.................................. 29
ARTICLE VI - AMOUNT OF RETIREMENT BENEFIT.................................. 32
6.1 Normal Retirement Pension...................................... 32
6.2 Early Retirement Pension....................................... 35
6.3 Late Retirement Pension........................................ 36
6.4 Disability Pension............................................. 36
6.5 Deferred Vested Pension........................................ 37
6.6 Adjustment of Pension to Reflect Benefits Accrued under the
Prior Plan..................................................... 37
6.7 Maximum Annual Benefit......................................... 38
i
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PAGE
----
6.8 Suspension of Benefits Upon Re-Employment of
Retired Participants........................................... 40
ARTICLE VII - METHOD OF PAYMENT OF PENSION................................. 42
7.1 Normal Form of Pension......................................... 42
7.2 Optional Pension Forms......................................... 43
7.3 Participant Pension Payment Elections.......................... 45
7.4 Qualified Pre-Retirement Survivor Annuity...................... 47
7.5 Methods of Benefit Payment..................................... 48
7.6 Distributions on Termination of Employment for Reasons Other
than Retirement................................................ 49
7.7 Qualified Domestic Relations Orders............................ 50
7.8 Determination of Benefit of Transferred Employees.............. 50
7.9 Cash Withdrawal Benefit........................................ 52
ARTICLE VIII - DEATH BENEFITS.............................................. 53
8.1 Benefit for Pre-Retirement Death............................... 53
8.2 Benefit for Post-Retirement Death.............................. 53
8.3 Pre-1992 Lump Sum Death Benefit................................ 53
8.4 Designation of Beneficiaries................................... 53
8.5 Contingent Beneficiaries....................................... 54
ARTICLE IX - EMPLOYER ADMINISTRATIVE PROVISIONS............................ 56
9.1 Information.................................................... 56
9.2 No Liability................................................... 56
9.3 Employer Action................................................ 56
9.4 Indemnity...................................................... 56
9.5 Amendment to Vesting Schedule.................................. 56
ARTICLE X - ADMINISTRATION AND INVESTMENT PROVISIONS....................... 58
10.1 Appointment of Administration Committee Members................ 58
10.2 Term........................................................... 58
10.3 Compensation................................................... 58
10.4 Powers of the Administration Committee......................... 58
10.5 Manner of Action............................................... 60
10.6 Authorized Representative...................................... 60
10.7 Nondiscrimination.............................................. 60
10.8 Interested Member.............................................. 60
10.9 Funding Policy................................................. 60
10.10 Books and Records.............................................. 61
ARTICLE XI - PARTICIPANT ADMINISTRATIVE PROVISIONS......................... 62
11.1 Personal Data to Administration Committee...................... 62
11.2 Address for Notification....................................... 62
ii
<PAGE>
PAGE
----
11.3 Assignment or Alienation....................................... 62
11.4 Litigation Against the Trust................................... 62
11.5 Information Available.......................................... 63
11.6 Beneficiary's Right to Information............................. 63
11.7 Claims Procedure............................................... 63
11.8 Appeal Procedure for Denial of Benefits........................ 63
11.9 Place of Payment and Proof of Continued Eligibility............ 65
11.10 No Rights Implied.............................................. 65
ARTICLE XII - FIDUCIARIES DUTIES........................................... 66
12.1 Fiduciaries.................................................... 66
12.2 Allocation of Responsibilities................................. 66
12.3 Procedures for Delegation and Allocation of Responsibilities... 67
12.4 General Fiduciary Standards.................................... 68
12.5 Liability Among Co-Fiduciaries................................. 68
ARTICLE XIII - DISCONTINUANCE, AMENDMENT, AND TERMINATION.................. 70
13.1 Discontinuance................................................. 70
13.2 Amendment...................................................... 70
13.3 Merger, Consolidation, or Transfer of Assets................... 70
13.4 Termination.................................................... 71
13.5 Vesting on Termination......................................... 71
13.6 Procedure on Termination....................................... 72
13.7 Partial Termination............................................ 72
13.8 Liquidation of Trust Fund and Insurance Contracts.............. 72
13.9 Successor Employer............................................. 74
13.10 Manner of Distribution......................................... 74
13.11 Residual Amounts............................................... 74
13.12 Transfer of Assets and Liabilities from ICC Plan and
Wescar Plan.................................................... 74
ARTICLE XIV - PLAN TERMINATION............................................. 75
ARTICLE XV - ADOPTION OF PLAN BY AFFILIATE................................. 76
15.1 Adoption by Affiliates......................................... 76
15.2 Withdrawal by Employer......................................... 76
15.3 Adoption Contingent Upon Initial and Continued Qualification... 77
15.4 No Joint Venture Implied....................................... 77
iii
<PAGE>
PAGE
----
ARTICLE XVI - THE TRUST AND INSURANCE CONTRACTS............................ 78
16.1 Purpose of the Trust Fund and Insurance Contracts.............. 78
16.2 Appointment of Trustee......................................... 78
16.3 Exclusive Benefit of Participants.............................. 78
16.4 Benefits Supported Only By the Trust Fund and Insurance
Contracts...................................................... 78
16.5 Rights to Assets of Trust and Proceeds of Insurance Contracts.. 78
ARTICLE XVII - TOP HEAVY PLAN PROVISIONS................................... 80
17.1 Top Heavy Rules Applied........................................ 80
17.2 Additional Definitions......................................... 80
17.3 Additional Limitation - Defined Benefit Plan................... 83
17.4 Termination of Service Prior to Normal Retirement Age.......... 84
17.5 Minimum Benefits............................................... 85
ARTICLE XVIII - MISCELLANEOUS.............................................. 88
18.1 Payment in the Event of Legal Disability....................... 88
18.2 Payments Only from Trust Fund or Insurance Contracts........... 88
18.3 Unclaimed Account Procedure.................................... 88
18.4 Execution of Receipts and Releases............................. 89
18.5 No Guarantee of Interests...................................... 89
18.6 Payment of Expenses............................................ 89
18.7 Employer Records............................................... 90
18.8 Interpretations and Adjustments................................ 90
18.9 Uniform Rules.................................................. 90
18.10 Evidence....................................................... 90
18.11 Severability................................................... 90
18.12 Notice......................................................... 90
18.13 Waiver of Notice............................................... 90
18.14 Successors..................................................... 90
18.15 Headings....................................................... 90
18.16 Governing Law.................................................. 91
iv
<PAGE>
RETIREMENT PLAN FOR
GREAT DANE TRAILERS, INC.
EFFECTIVE AS OF JANUARY 1, 1989
ARTICLE I
PREAMBLE/EFFECTIVE DATE OF PLAN
WHEREAS, effective January 1, 1985, Great Dane Trailers, Inc. (the
"Company") amended and continued the Great Dane Trailers, Inc. Retirement Plan
(the "Prior Plan") which it had previously established to provide retirement
benefits for certain of its employees and their beneficiaries; and
WHEREAS, the Prior Plan was terminated on December 31, 1985; and
WHEREAS, effective January 1, 1986, the Company adopted the Retirement
Plan for Great Dane Trailers, Inc. (the "Plan") to provide retirement benefits
for certain of its employees and their beneficiaries; and
WHEREAS, effective July 1, 1988, the Company accepted the transfer of the
assets and liabilities attributable to active and former employees under the
Amended and Restated International Controls Corp. Pension Plan (other than those
individuals actively employed by International Controls Corp. on January 1,
1988, and who were subject to the provisions of the Stock Purchase Agreement
between International Controls Corp. and Datron Inc. dated May 6, 1988) as of
June 30, 1988, to the Plan and approved the adoption of the Plan by
International Controls Corp. pursuant to Section 15.1 of the Plan; and
WHEREAS, effective July 1, 1988, the Company accepted the transfer of all
of the assets and liabilities attributable to active and former employees under
the Retirement Plan for Wescar Freight System, Inc. as of June 30, 1988, to the
Plan and to approve the adoption of the Plan by Wescar Freight Systems, Inc. and
Transway Intermodal System, Inc. pursuant to Section 15.1 of the Plan; and
WHEREAS, effective January 1, 1986, the Company restated the entry date
requirements of the Plan to ensure that they reflect the intent underlying the
Plan which was covered by the favorable determination letter issued by the
Internal Revenue Service; and
WHEREAS, effective July 1, 1988, the Company adopted an amendment and
restatement of the Plan, the provisions of which applied to all Employees whose
Service with the Employer terminated on or after July 1, 1988. Benefits earned
under the ICC Plan by employees who terminated active service prior to July 1,
1988, will be payable from this Plan but shall be payable only in accordance
with the terms of the ICC Plan and benefits earned under the Wescar Plan by
employees who terminated active service prior to July 1, 1988, will be payable
from this Plan but shall be payable only in accordance with the terms of the
Wescar Plan; and
1
<PAGE>
WHEREAS, effective January 1, 1989, the Company amended and restated the
Plan to comply with the Tax Reform Act of 1986 and related legislation and the
regulations promulgated by the Internal Revenue Service with respect thereto;
and
WHEREAS, effective January 1, 1993, the Company amended the Plan to (i)
clarify certain cross-references in the definition of "Accrued Benefit," (ii)
modify the applicable interest rate for determining the actuarial equivalent of
a Participant's Pension under the Plan, (iii) clarify the Benefit Service of
certain bargaining unit employees who are transferred into or out of an
employment classification that is eligible for participation in the Plan, (iv)
clarify the disability benefits payable under the Plan, and (v) comply with the
withholding and direct transfer requirements enacted by the Unemployment
Compensation Amendments of 1992;
WHEREAS, the Company desires to amend and restate the Plan to incorporate
the prior amendment and to incorporate the limitation on compensation enacted by
the Omnibus Budget Reconciliation Act of 1993;
NOW, THEREFORE, effective January 1, 1989, the Company hereby amends and
restates the Plan, to comply with the Tax Reform Act of 1986 and related
legislation and the regulations promulgated by the Internal Revenue Service with
respect thereto. Except as otherwise provided herein, the provisions of this
Plan as hereby amended and restated shall apply to all Employees whose Service
with the Employer terminates on or after January 1, 1989; provided, however,
that the provisions hereof shall not reduce the Accrued Benefit of any
Participant as of December 31, 1988.
- ------------------------
End of Article I
2
<PAGE>
ARTICLE II
DEFINITIONS AND CONSTRUCTION
2.1 DEFINITIONS. For purposes of this Plan, the following definitions
shall apply, unless the context clearly indicates otherwise:
(a) "ACCRUED BENEFIT" means an amount, determined as of any
specified date on or before a Participant's Normal Retirement Date, which is
equal to:
(i) His annual Normal Retirement Pension, as computed under
Section 6.1(a) of the Plan, but calculated without adjustment for benefits
accrued under the Prior Plan under Section 6.6 of the Plan and on the
assumption that the Participant continued as an Employee until his Normal
Retirement Date, earning the same rate of Compensation that he is earning
on the specified date, multiplied by a fraction, the numerator of which is
the Participant's years of Benefit Service with the Employer as of the
specified date (up to a maximum of thirty (30)), and the denominator of
which is the years of Benefit Service with the Employer the Participant
would have had had he continued in the employment of the Employer until
his Normal Retirement Date (up to a maximum of thirty (30)), except that
the amount determined under clause (B) of the second paragraph of Section
6.1(a) shall not be multiplied by such fraction, minus
(ii) The amount of the Participant's accrued benefit under
the Prior Plan as determined under Section 6.6;
provided, however, that except as provided in Section 6.1(c), regarding
transfers involving collective bargaining employees, no Participant shall have
an Accrued Benefit until he has completed at least two (2) years of Benefit
Service, at which time all years of Benefit Service with the Employer shall be
counted in computing the Participant's Accrued Benefit. In addition, except to
the extent otherwise provided in regulations promulgated by the Secretary of the
Treasury, the term "Accrued Benefit" shall, with respect to benefits
attributable to Service before any amendment of this Plan, include any early
retirement benefit, retirement-type subsidy (as defined in regulations
promulgated by the Secretary of the Treasury), or optional form of benefit. In
the case of a retirement-type subsidy, the preceding sentence shall apply only
with respect to a Participant who satisfies (either before or after the
amendment) the pre-amendment conditions for the subsidy.
Notwithstanding any other provision of the Plan, in no event shall the Accrued
Benefit of an ICC Plan Participant be less than the Accrued Benefit of such ICC
Plan Participant as of June 30, 1988, under the ICC Plan and in no event shall
the Accrued Benefit of a Wescar Plan Participant be less than the Accrued
Benefit of such Wescar Plan Participant as of June 30, 1988, under the Wescar
Plan.
(b) "ACT" means the Employee Retirement Income Security Act of
1974, as amended, and any regulations or rulings issued thereunder.
3
<PAGE>
(c) "ACTUARIAL EQUIVALENCY" or "ACTUARIALLY EQUIVALENT" means
equality in value of the aggregate amounts expected to be received as a benefit
from the Plan under different forms of payment, as determined by the Actuary
based on an interest assumption of:
(i) For purposes of Section 6.7, regarding limitations on
benefits, five percent (5%) interest compounded annually and the UP-1984
Mortality Table; and
(ii) For all other purposes of the Plan, seven percent (7%)
interest compounded annually and the UP-1984 Mortality Table with the age
of the Beneficiary, if applicable, set back five (5) years.
(d) "ACTUARY" means an enrolled actuary, within the meaning of
section 7701(a)(35) of the Code, or a firm of actuaries with which an enrolled
actuary is associated, selected by the Administration Committee to provide
actuarial services in connection with the administration of the Plan.
(e) "ADMINISTRATION COMMITTEE" means the Plan Administration
Committee as from time to time constituted under Article X hereof.
(f) "ALTERNATE PAYEE" means any spouse, former spouse, child, or
other dependent of a Participant who is recognized by a Domestic Relations Order
as having a right to receive all, or a portion of, the benefits payable under
the Plan with respect to such Participant.
(g) "ANNIVERSARY DATE" means January 1st of each year.
(h) "ANNUITY CONTRACT" means the annuity contract or contracts
purchased to provide the Accrued Benefits under the Prior Plan or the Transway
International Corporation Pension Plan as of the date of its termination.
(i) "ANNUITY STARTING DATE" means the first day of the first
month for which an amount is payable to a Participant as an annuity. In the
event that an amount is not payable in the form of an annuity, the Annuity
Starting Date shall mean the first day on which all events (including the
passing of the day on which benefits are scheduled to commence) have occurred
which entitle the Participant to his first benefit payment from the Plan.
(j) "AUTHORIZED LEAVE OF ABSENCE" means any absence authorized
by an Employer. An Authorized Leave of Absence shall be granted by an Employer
for mandatory service in the Armed Forces of the United States and jury duty.
An Authorized Leave of Absence may be granted by an Employer for sickness,
accident, vacation, or Disability, or to comply with the Family and Medical
Leave Act of 1993, or for other reasons under rules established by the Employer
and uniformly applied to all individuals similarly situated.
(k) "AVERAGE MONTHLY COMPENSATION" means the Compensation of an
Employee from the Employer during the five (5) consecutive calendar years within
his last ten (10) calendar years of Service with the Employer that yields the
highest average; provided, however, that if a Participant received Compensation
for a period of less than five (5) calendar years, Average
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Monthly Compensation shall be equal to the Average Monthly Compensation received
in the full consecutive calendar years included in the Participant's period of
Service with the Employer in which Compensation was received; and provided
further that, with respect to an ICC Plan Participant, Compensation prior to
1984 shall be disregarded in determining Average Monthly Compensation.
In calculating the Average Monthly Compensation of a Participant who is employed
by a Related Employer that ceases to maintain this Plan, Average Monthly
Compensation shall equal the GREATER of:
(i) Average Monthly Compensation as calculated above using
Compensation as defined in Section 2.1(r) as of the last day that such
Related Employer maintained this Plan; or
(ii) Average Monthly Compensation as calculated above using
Compensation as defined in Section 2.1(r), but assuming that remuneration
paid to the Participant by such Related Employer after the date such
Related Employer ceased to maintain the Plan is Compensation as defined in
Section 2.1(r) that shall be used for purposes of calculating such
Participant's Average Monthly Compensation.
Notwithstanding the foregoing provisions of this Section 2.1(k), in the event
that a Participant participated in the Plan prior to the Effective Date and
pursuant to the provisions of the Plan in effect during such period such
Participant's Average Monthly Compensation would be greater than his Average
Monthly Compensation calculated pursuant to this Section 2.1(k), such Average
Monthly Compensation shall be used in lieu of the Participant's Average Monthly
Compensation with respect to benefits accrued prior to the Effective Date.
(l) "BENEFICIARY" means any person or fiduciary designated
pursuant to Section 8.4 by a Participant or a Former Participant who is or may
become entitled to receive benefits hereunder following the death of such
Participant or Former Participant.
(m) "BENEFIT SERVICE" means the years of Service included in the
determination of the amount of a Participant's Accrued Benefit, determined in
accordance with Section 6.1(b).
(n) "BOARD OF DIRECTORS" means the Board of Directors of the
Company, or any committee appointed by the Board of Directors and serving at the
pleasure of such Board of Directors which is given authority to exercise some or
all of the powers of such Board of Directors with respect to the Plan and the
Trust.
(o) "BREAK IN SERVICE" means, with respect to periods of time
prior to January 1, 1986, for Participants other than ICC Plan Participants, any
One Year Period of Severance (within the meaning of the Prior Plan or the Wescar
Plan, whichever is applicable) and, with respect to periods of time on and after
January 1, 1986, and with respect to all periods of time for ICC Plan
Participants, any Plan Year during which an Employee or Participant does not
complete more than five hundred (500) Hours of Service.
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(p) "CODE" means the Internal Revenue Code of 1986, as amended,
and any regulations or rulings issued thereunder.
(q) "COMPANY" means Great Dane Trailers, Inc., a Georgia
corporation.
(r) "COMPENSATION" means, for purposes of determining a
Participant's Monthly Compensation under Section 2.1(ss):
(i) With respect to each eligible exempt salaried Employee
except salesmen, the monthly salary rate in effect at the end of a Plan
Year times twelve (12) plus any bonus, incentive compensation, or overtime
earned during the Plan Year;
(ii) Except as provided in Section 2.1(r)(iv), with respect
to each non-exempt hourly Employee, the hourly service rate in effect at
the end of a Plan Year times two thousand eighty (2,080) plus any overtime
earned during the Plan Year;
(iii) With respect to each salesman, basic cash compensation
including commissions, overtime, bonus or any special commission paid to
each such salesman during the Plan Year; or
(iv) With respect to Employees who are not Highly Compensated
Employees and whose primary compensation is based on mileage driven, wages
reported on Form W-2, Wage and Tax Statement, for the Plan Year.
However, any deferred compensation, compensation resulting from the exercise of
stock options and amounts contributed by the Employer under its monthly
investment program shall not be included in "Compensation." The term
"Compensation" for purposes of Section 2.1(ss) shall also include any Employer
Contributions made pursuant to Participant elections to cash or deferred
compensation plan described under section 401(k) of the Code and to a cafeteria
plan described under section 125 of the Code.
For purposes of Section 6.7 regarding the limitations on benefits under section
415 of the Code, "Compensation" shall mean a Participant's earned income, wages,
salaries, fees for professional service and other amounts received for personal
services actually rendered in the course of employment with the Employer
(including, if applicable, but not limited to, commissions paid salesmen,
compensation for services on the basis of a percentage of profits, commissions
on insurance premiums, tips, bonuses, fringe benefits and reimbursements or
other expenses under a nonaccountable plan (as described in section 1.62-2(c) of
the Code)) and excluding the following:
(i) Employer contributions to a plan of a deferred
compensation to the extent that, before the application of the section 415
limits to that plan, the contributions are not included in gross income of
a Participant for the taxable year in which contributed;
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(ii) Employer contributions on behalf of the Participant to a
simplified employee pension plan described in section 408(k) of the Code,
to the extent such contributions are not considered as Compensation for
the taxable year in which contributed; and
(iii) Any distributions from a plan of deferred compensation
whether or not includable in the gross income of the Participant when
distributed;
(iv) Amounts realized from the exercise of a non-qualified
stock option;
(v) When restricted stock (or property) held by the
Participant becomes freely transferable or is no longer subject to a
substantial risk of forfeiture;
(vi) Amounts realized from the sale, exchange or other
disposition of stock acquired under a qualified stock option; and
(vii) Other amounts that 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 Participant) or
contributions made by the Employer (whether or not under a salary
reduction agreement) towards the purchase of an annuity contract under
section 403(b) of the Code (whether or not the contributions are
excludable from the gross income of the Participant).
For all purposes under the Plan, "Compensation" shall exclude amounts in excess
of the limitation prescribed in section 401(a)(17) of the Code. In applying
such limitations, the fresh start rules set forth in section 401(a)(4) and
section 401(a)(17) of the Code shall be applied, in the manner prescribed by
such Code sections. Notwithstanding the foregoing, the Accrued Benefit of a
Participant determined in accordance with this paragraph shall not be less than
the Accrued Benefit determined on May 31, 1989, without regard to this
paragraph. In addition, in accordance with Treasury Regulation section
1.401(a)(4)-13(c)(5)(i), the Accrued Benefit of a Participant who is an Employee
of the Employer and, thus, an active Participant shall be increased to reflect
increases in the limitation prescribed by section 415 of the Code and Section
6.7 of the Plan.
"Compensation" for any Limitation Year is the Compensation actually paid or
includable in gross income during such year.
(s) "CREDITED INTEREST" means interest credited on Participant
contributions, compounded annually, from the end of the Plan Year in which the
Participant's contributions were made to the date with respect to which interest
is calculated, determined as follows:
(i) For Plan Years prior to July 1, 1976, at the rate of
three and one-half percent (3-1/2%) per annum;
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(ii) For Plan Years beginning on or after July 1, 1976, at
the rate of five percent (5%) per annum or such other rate as shall be
required by section 411(c)(2) of the Code.
(t) "DEFERRED VESTED PENSION" means a Pension payable to a
Participant who satisfies the requirements of Section 5.4.
(u) "DISABILITY" means a physical or mental condition that
totally and presumably permanently prevents an individual from engaging
thereafter in any occupation or employment (except rehabilitation employment
approved by the Administration Committee) for which he is reasonably fitted by
training, education or experience. The Administration Committee shall have the
sole responsibility and right to determine whether Disability exists, and for
such purpose may appoint a physician or clinic to render a medical examination
and report to the Administration Committee.
(v) "DOMESTIC RELATIONS ORDER" means any judgment, decree, or
order (including one that approves a property settlement agreement) that relates
to the provision of child support, alimony payments, or marital property rights
to a spouse, former spouse, child, or other dependent of a Participant and is
rendered under a state (within the meaning of section 7701(a)(10) of the Code)
domestic relations law (including a community property law).
(w) "EARLY RETIREMENT DATE" means, in the case of a Participant
who has satisfied the requirements for an Early Retirement Pension and whose
Retirement occurs prior to his Normal Retirement Date and in accordance with
Section 5.2, the date the Participant's Retirement commences in accordance with
Sections 2.1(mmm) and 5.2.
(x) "EARLY RETIREMENT PENSION" means a Pension payable to a
Participant who satisfies the requirements of Section 5.2.
(y) "EFFECTIVE DATE" means January 1, 1989.
(z) "ELIGIBLE EMPLOYEE" means an Employee who is not included in
a unit of Employees covered by an agreement that the Secretary of Labor finds to
be a collective bargaining agreement between employee representatives and the
Employer, if there is evidence that retirement benefits were the subject of good
faith bargaining between such employee representatives and the Employer, unless
the Employees of such units are eligible to participate in the Plan pursuant to
their respective collective bargaining agreements. Notwithstanding the
preceding, a leased employee described in Section 2.1(bb) of the Plan shall not
be treated as an Eligible Employee.
(aa) "ELIGIBLE SPOUSE" means a Participant's spouse to whom the
Participant has been married throughout the one (1) year period ending on the
earlier of (1) the Participant's Annuity Starting Date or (2) the date of the
Participant's death; provided, however, that if a Participant marries within one
(1) year before the Annuity Starting Date and the Participant and the
Participant's spouse in such marriage have been married for at least one (1)
year period ending on or before the date of the Participant's death, such
Participant and such spouse shall be
8
<PAGE>
treated as having been married throughout the one (1) year period ending on the
Participant's Annuity Starting Date.
(bb) "ELIGIBILITY SERVICE" means the years of Service that are
included in the determination of an Employee's eligibility and continued
eligibility to participate herein, determined in accordance with the provisions
of Section 3.2.
(cc) "EMPLOYEE" means any person on the payroll of the Company
and any person on the payroll of the Employer who is an ICC Plan Participant or
a Wescar Plan Participant whose wages from the Employer are subject to
withholding for purposes of Federal income taxes. In addition, the term
"Employee" shall mean any leased employee (within the meaning of section
414(n)(2) of the Code) that section 414(n)(2) of the Code requires the Employer
to treat as an employee.
(dd) "EMPLOYEE ACCRUED BENEFIT" means that portion of an ICC
Plan Participant's Accrued Benefit that is derived from his Participant
Contributions, which contributions ceased with respect to all ICC Plan
Participants with the last paycheck received prior to September 1, 1984. The
Employee Accrued Benefit of an ICC Plan Participant as of any applicable date is
an annual benefit, in the form of a single life annuity (without ancillary
benefits) commencing at Normal Retirement Age equal to the product of:
(i) The Participant's total Participant Contributions made
by such Participant as of the applicable date plus Credited Interest from
the end of the Plan Year when paid to the date on which the Participant
would attain Normal Retirement Age, multiplied by
(ii) The appropriate conversion factor determined pursuant to
rules and regulations promulgated under section 411(c)(2)(b)(ii) of the
Code.
Notwithstanding any of the foregoing, the Participant's Employee Accrued Benefit
shall not exceed the greater of:
(i) The Participant's Accrued Benefit under the Plan, or
(ii) The amount determined above, excluding from such
determination all Credited Interest.
Furthermore, if a Participant's benefit hereunder is payable in any form other
than a single life annuity (without ancillary benefits) commencing at Normal
Retirement Age, such Participant's Employee Accrued Benefit shall be the
Actuarial Equivalent of an annual benefit payable in such form and commencing at
such time. A Participant shall always be one hundred percent (100%) Vested in
his Employee Accrued Benefit.
(ee) "EMPLOYER" means the Company and any Related Employer that
duly joins in the Plan with the approval of the Company as provided in Article
XVI hereof.
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<PAGE>
(ff) "EMPLOYER ACCRUED BENEFIT" means that portion of a
Participant's Accrued Benefit that is derived from Employer contributions. The
Employer Accrued Benefit of a Participant is equal to the excess of the
Participant's Accrued Benefit over his Employee Accrued Benefit.
(gg) "EMPLOYMENT COMMENCEMENT DATE" means the date on which an
Employee first performs an Hour of Service for the Employer, a Related Employer,
or a controlled group member. In the case of an Employee who has terminated
Service and subsequently resumed Service, but not as a Re-Employed Employee,
"Employment Commencement Date" shall mean the date he first performs an Hour of
Service following his termination of Service.
(hh) "FISCAL YEAR" means the Employer's taxable year for Federal
income tax purposes.
(ii) "FORFEITURE" means the portion of a Participant's Accrued
Benefit that does not become a part of the Participant's Vested Accrued Benefit
when his Service with the Employer terminates and the Participant incurs an
aggregate of five (5) or more consecutive Breaks in Service and can no longer
return to Service as a Re-Employed Employee for Vesting purposes.
(jj) "FORMER PARTICIPANT" means any individual, other than a
Re-Employed Employee, who has been a Participant hereunder, but whose Service
with the Employer has been terminated and who has not received the entire
benefit to which he is entitled under the Plan.
(kk) "HIGHLY COMPENSATED EMPLOYEE" means an Employee, a former
Employee who separated from service prior to the beginning of the Plan Year and
who was a Highly Compensated Employee for either (i) the Employee's year of
separation from service or (ii) any Plan Year ending on or after the Employee's
fifty-fifth (55th) birthday, or an Employee of a Related Company, who during the
current Plan Year or the preceding Plan Year:
(i) Was at any time a five percent (5%) owner of the Company
or a Related Company (as defined in section 416(i)(1) of the Code);
(ii) Received "compensation" from the Company or a Related
Company in excess of Seventy-five Thousand Dollars ($75,000) (as adjusted
pursuant to rulings or regulations issued by the Secretary of the
Treasury);
(iii) Received "compensation" from the Company or a Related
Company in excess of Fifty Thousand Dollars ($50,000) (as adjusted
pursuant to rulings or regulations issued by the Secretary of the
Treasury) and was in the top twenty percent (20%) of Employees of the
Company and all Related Companies when ranked on the basis of
"compensation" paid during such Plan Year; or
(iv) Was at any time an officer of the Company or a Related
Company and received "compensation" greater than fifty percent (50%) of
the amount in effect under section 415(b)(1)(A) of the Code.
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However, notwithstanding the above, an Employee described in paragraphs (ii),
(iii), or (iv) of this Section 2.1(kk) shall not be treated as a Highly
Compensated Employee for the current Plan Year unless such Employee is a member
of the group consisting of the one hundred (100) Employees of the Company and
all Related Companies paid the greatest "compensation" during the current Plan
Year (the "Top Paid Group").
For purposes of determining the number of Employees in the Top Paid Group for a
Plan Year, the following Employees, as described in sections 414(q)(8) and (11)
of the Code, shall be excluded:
(i) Those who have not completed six (6) months of service;
(ii) Those who normally work less than seventeen and one-half
(17-1/2) hours per week;
(iii) Those who normally work during not more than six (6)
months during any year;
(iv) Those who have not attained age twenty-one (21);
(v) Those subject to a collective bargaining agreement; and
(vi) Nonresident aliens who receive no earned income from
sources within the United States.
The Administration Committee shall determine whether an Employee is an officer
for purposes of this Section 2.1(kk) based on the responsibilities of the
Employee with the Company or a Related Company. Of those Employees determined
to be officers, no more than fifty (50) Employees (or, if less, the greater of
three (3) Employees or ten percent (10%) of the Employees, excluding all
Employees described in section 414(q)(8) and (11)) of the Code shall be treated
as officers for purposes of this Section 2.1(kk). Further, if no officer
receives the level of "compensation" described in paragraph (iv) of this Section
2.1(kk), the highest paid officer of the Company and all Related Companies
shall be treated as a Highly Compensated Employee described in paragraph (iv)
of this Section 2.1(kk).
If any individual is a member of the family of a five percent (5%) owner or of a
Highly Compensated Employee in the group consisting of the ten (10) Highly
Compensated Employees paid the greatest "compensation" during the Plan Year,
then:
(i) Such individual shall not be considered a separate
Employee; and
(ii) Any "compensation" paid to such individual and the
Employer or Employee contributions made on behalf of such individual shall
be treated as if it were paid to or on behalf of the five percent (5%)
owner or Highly Compensated Employee.
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For purposes of the immediately preceding sentence, the term "family" means,
with respect to any Employee, such Employee's spouse and lineal descendants and
the spouses of such lineal descendants.
The term "compensation" for purposes of this Section 2.1(kk) shall mean
compensation as defined for purposes of Section 6.7 of the Plan, determined
without regard to section 125 of the Code (regarding contributions to a
cafeteria plan), section 402(a)(8) of the Code (regarding contributions to a
section 401(k) plan) and 402(h)(1)(b) of the Code (regarding contributions to a
simplified employee pension plan), and in the case of employer contributions
made pursuant to a salary reduction agreement, without regard to section 403(b)
(regarding annuity contracts).
(ll) "HOUR OF SERVICE" means each hour for which an Employee or
Participant is either directly or indirectly paid or entitled to payment by the
Employer for the performance of duties or for reasons (such as vacation,
holiday, sickness, incapacity, layoff, jury duty, military duty, or leave of
absence) other than for the performance of duties (irrespective of whether the
employment relationship has terminated), and each hour for which back pay,
irrespective of mitigation of damages, has been awarded to the Employee or
Participant or agreed to by the Employer. An Employee or Participant shall be
credited with ten (10) Hours of Service per day, if compensated on a daily
basis, forty-five (45) Hours of Service per week, if compensated on a weekly
basis, ninety-five (95) Hours of Service per semi-monthly period, if compensated
on a semi-monthly basis, or one hundred and ninety (190) Hours of Service per
month, if compensated on a monthly basis, if during any of such periods the
Employee or Participant is entitled to be credited with one Hour of Service
pursuant to the preceding sentence.
The number of Hours of Service to be credited to an Employee or Participant
because of his being entitled to payment for reasons other than for the
performance of duties shall be determined in accordance with section
2530.200b-2(b) of the Department of Labor Regulations. Notwithstanding the
preceding sentence and subject to the following sentence, not more than five
hundred and one (501) Hours of Service shall be credited to any Employee or
Participant for any single, continuous period during which the Employee or
Participant performs no duties. In addition, an hour of service performed for a
Related Employer that if performed for the Employer would be an Hour of Service
and any hour with respect to a Related Employer that would be an Hour of Service
if it were creditable pursuant to this Section 2.1(ll) with respect to the
Employer shall be considered an Hour of Service performed for the Employer.
The Administration Committee shall credit Hours of Service with respect to
any Employee or Participant in the following manner:
(i) Hours of Service for which an Employee or Participant is
either directly or indirectly paid or entitled to payment by the Employer
for the performance of duties shall be credited to the applicable
computation period in which the Employee performs the duties.
(ii) Hours of Service for which an Employee or Participant is
either directly or indirectly paid or entitled to payment by the Employer
for reasons (such as
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<PAGE>
vacation, holiday, sickness, incapacity, layoff, jury duty, military duty,
or leave of absence) other than for the performance of duties shall be
credited as follows:
(A) If payment for such Hours of Service is calculated
on the basis of units of time (such as hours, days, weeks, or
months), such Hours of Service shall be credited to the applicable
computation period or periods in which the period during which no
duties are performed occurs, beginning with the first unit of time
to which the payment relates.
(B) If payment for such Hours of Service is not
calculated on the basis of units of time, such Hours of Service
shall be credited to the applicable computation period in which the
period during which no duties are performed occurs, or, if the
period during which no duties are performed extends beyond one
computation period, such Hours of Service shall be allocated between
not more than the first two computation periods on any reasonable
basis which is consistently applied.
(iii) Hours of Service for which back pay has been awarded to
an Employee or Participant or agreed to by the Employer shall be credited
to the computation period in which the award or the agreement pertains
rather than to the computation period in which the award, agreement, or
payment is made.
The Administration Committee shall credit Hours of Service under only one (1) of
the immediately preceding paragraphs (i), (ii) and (iii).
Solely for purposes of: (i) computing a Participant's Vesting Service under
Section 5.4, and (ii) determining whether an Employee or Participant has
incurred a Break in Service, an Employee or Participant shall be credited with
eight (8) hours for each day to a maximum of forty (40) hours per week that the
Employee or Participant is on any unpaid Authorized Leave of Absence. In no
event shall hours credited under the preceding sentence be counted as Hours of
Service for purposes of computing a Participant's Accrued Benefit. In addition,
an Employee or Participant who incurs a Parental Absence commencing on or after
the first day of the first Plan Year beginning after December 31, 1984, shall be
treated as an Employee or Participant on an Authorized Leave of Absence for
purposes of the first sentence of this paragraph; provided, however, that Hours
of Service credited to an Employee or Participant as a result of a Parental
Absence shall be credited only in the year in which such Parental Absence
commences unless such Employee or Participant would not have incurred a Break in
Service during such year without being credited with Hours of Service for such
Parental Absence, in which case, such Hours of Service shall be credited for the
year immediately following the year in which the Parental Absence commences.
For purposes of the immediately preceding sentence, the term "year" shall mean
the periods of computation used hereunder to determine an Employee's or
Participant's years of Service for purposes of eligibility and vesting. The
Hours of Service to
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<PAGE>
be credited in connection with such Parental Absence shall be the Hours of
Service that otherwise would normally have been credited to the Employee or
Participant but for such absence, or in any case in which the Administration
Committee is unable to determine the number of Hours of Service that would
otherwise normally have been credited to such Employee or Participant, eight (8)
Hours of Service per day of absence, provided that the total number of hours so
treated as Hours of Service for any period of Parental Absence shall not exceed
five hundred and one (501) Hours of Service.
The Administration Committee shall resolve any ambiguity with respect to the
crediting of Hours of Service in favor of the affected Employee.
(mm) "ICC PLAN" means the Amended and Restated International
Controls Corp. Pension Plan as in effect on June 30, 1988.
(nn) "ICC PLAN PARTICIPANT" means a Participant who was a
participant under the Amended and Restated International Controls Corp. Pension
Plan as of June 30, 1988, and who performed services for, or was otherwise
actively employed by International Controls Corp. on such date. Effective
January 1, 1992, an ICC Plan Participant who is not an Employee of the Company
shall not be credited with any additional Years of Benefit Service as defined in
section 6.1(b).
(oo) "INVESTMENT MANAGER" means a person:
(i) Who has the power to manage, acquire, or dispose of any
asset of the Trust;
(ii) Who is a registered investment advisor under the
Investment Advisors Act of 1940, a bank as defined in the Investment
Advisors Act of 1940, or an insurance company qualified to perform
services described in subsection (i) of this Section 2.1(oo) under the
laws of more than one state; and
(iii) Has acknowledged in writing that it is a fiduciary with
respect to the Plan.
(pp) "LATE RETIREMENT DATE" means, in the case of a Participant
whose Retirement occurs after his Normal Retirement Date, the date the
Participant's Retirement commences as provided in Section 2.1(mmm).
(qq) "LATE RETIREMENT PENSION" means a Pension payable to a
Participant who is eligible for a Pension and whose Retirement is on his Late
Retirement Date.
(rr) "LIMITATION YEAR" means the Plan Year or such other
consecutive twelve (12) month period designated by the Board of Directors of the
Company.
(ss) "MONTHLY COMPENSATION" means the total Compensation paid to
the Participant by the Employer during the month, excluding amounts contributed
by the Employer
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under its monthly investment plan program, if any. In determining Monthly
Compensation, the amount of decreases in base salary (I.E., salary exclusive
of bonuses, overtime pay, incentive compensation, commissions, and any other
special or supplemental remuneration) after the attainment of age sixty (60)
shall be disregarded and shall be treated as if actually paid for purposes of
determining the benefit payable to a Participant, other than an ICC Plan
Participant. The amount of decreases in Monthly Salary after attainment of age
sixty (60) shall be taken into account, without regard to when such decrease
occurred, in determining Monthly Compensation for ICC Plan Participants. For
purposes of this Section 2.1(ss), a bonus paid after the end of the calendar
year to which it relates shall be considered paid in December of that year. For
purposes of service in the Armed Forces credited as Benefit Service under
Section 6.1(b), "Monthly Compensation" means an amount equal to the Monthly
Compensation paid to the Participant by the Employer for the last month
preceding his entry into the Armed Forces.
(tt) "NORMAL RETIREMENT AGE" means age sixty-five (65).
(uu) "NORMAL RETIREMENT DATE" means, in the case of a Participant
who attains Normal Retirement Age on the first day of a month, the first day of
such month, and in the case of any other Participant, the first day of the first
month following the day the Participant attains Normal Retirement Age.
(vv) "NORMAL RETIREMENT PENSION" means the Pension payable to a
Participant who satisfies the requirements of Section 5.1.
(ww) "PARENTAL ABSENCE" means any period of absence from the
active Service of the Employer:
(i) By reason of the pregnancy of the Employee;
(ii) By reason of the birth of a child of the Employee;
(iii) By reason of the placement of a child with the Employee
in connection with the adoption of such child by the Employee; or
(iv) For purposes of caring for such child for a period
beginning immediately following such birth or placement.
(xx) "PARTICIPANT" means any Employee or former Employee of the
Employer who has satisfied the eligibility requirements for participation and
has an Accrued Benefit under the Plan, including a Former Participant.
(yy) "PARTICIPANT CONTRIBUTIONS" means the contributions, if any,
made by an ICC Plan Participant pursuant to Article II, Section 1, and Article X
of the International Controls Corp. Pension Plan as in effect on June 30, 1984.
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(zz) "PENSION" means a series of monthly amounts which are
payable to a person who is entitled to receive benefits under the Plan.
(aaa) "PLAN" means the Retirement Plan for Great Dane Trailers,
Inc., as embodied herein and as amended from time to time.
(bbb) "PLAN ENTRY DATE" means the first day of January or July
coincident with or next following the date on which an Eligible Employee
completes requirements of Section 3.1.
(ccc) "PLAN YEAR" means the twelve (12) consecutive month period
beginning each January 1st and ending on the subsequent December 31st.
(ddd) "PRIMARY SOCIAL SECURITY BENEFIT" means the Social Security
benefit payable to a Participant at age sixty-five (65) under the federal Social
Security Act as in effect on the earliest of:
(i) His actual Retirement;
(ii) His Normal Retirement Date;
(iii) His termination of Service;
(iv) His death; or
(v) His date of Disability, as determined by the
Administration Committee without regard for any reduction or loss of
benefits which may result because of other income, delay in making
application, or any other reason.
Notwithstanding the foregoing:
(i) If a Participant terminates Service prior to having
satisfied the eligibility requirements for early retirement, as specified
in Section 5.2, his Primary Social Security Benefit shall be computed
assuming continuation of his Compensation until his Normal Retirement Date
at the rate in effect immediately before such termination;
(ii) If a Participant terminates Service coincident with or
subsequent to having satisfied the eligibility requirements for early
retirement, his Primary Social Security Benefit shall be computed by
assuming that the Participant will not receive any income after such
Retirement which would be treated as wages for purposes of the Social
Security Act; and
(iii) If a Participant terminates Service after his Normal
Retirement Date, his Primary Social Security Benefit shall be the benefit
payable at age sixty-five (65), computed assuming that the Participant
receives no income after his sixty-fifth (65th) birthday.
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A Participant's Primary Social Security Benefit shall be determined by use of
his actual wage history to the extent readily available. If such history is
incomplete, the missing portion shall be determined by assuming that his wages
increased in accordance with the yearly average percentage increases in average
wages as published by the federal Social Security Administration. Each
Participant for whom any estimated wages are used shall be notified of his right
to supply an actual wage history. Any such actual wage history must be provided
by the Participant within the time and in the manner prescribed by the
Administration Committee. If such actual history is supplied, it shall be used
in lieu of the estimated wages.
(eee) "PRIOR PLAN" means the Great Dane Trailers, Inc. Retirement
Plan as in effect on the date immediately prior to January 1, 1986.
(fff) "QUALIFIED DOMESTIC RELATIONS ORDER" means a Domestic
Relations Order entered on or after January 1, 1985, that:
(i) Creates or recognizes the existence of an Alternate
Payee's right to, or assigns to an Alternate Payee the right to, receive
all or a portion of the benefits payable with respect to a Participant
under the Plan;
(ii) Does not require the Plan to provide any type or form of
benefit, or any option, not otherwise provided under the Plan;
(iii) Does not require the Plan to provide increased benefits
(determined on the basis of actuarial value);
(iv) Does not require the payment of benefits to an Alternate
Payee that are required to be paid to another Alternate Payee under
another order previously determined to be a Qualified Domestic Relations
Order; and
(v) That clearly specifies:
(a) The name and last known mailing address (if any)
of the Participant and the name and mailing address of each
Alternate Payee covered by the order;
(b) The amount or percentage of the Participant's
benefits to be paid by the Plan to each such Alternate Payee, or the
manner in which such amount or percentage is to be determined;
(c) The number of payments or payment period to which
such order applies; and
(d) Specifically specifies that it is applicable with
respect to this Plan.
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In the case of any payment before a Participant has separated from Service, a
Domestic Relations Order will not be treated as failing to be a Qualified
Domestic Relations Order solely because such order requires the payment of
benefits be made to an Alternate Payee:
(i) On or after the date on which the Participant attains
(or would have attained) earliest retirement age (within the meaning of
section 414(p)(4)(b) of the Code) under the Plan;
(ii) As if the Participant had retired on the date on which
payment is to commence under such order (taking into account only the
present value of benefits actually accrued as of such date and not taking
into account the present value of any Employer subsidy for early
retirement); and
(iii) In any form in which such benefits may be paid under the
Plan to the Participant (other than in the form of a joint and survivor
annuity with respect to the Alternate Payee and his or her subsequent
spouse).
In addition, the Administration Committee shall treat any Domestic Relations
Order entered prior to January 1, 1985, as a Qualified Domestic Relations Order
if the Administration Committee is paying benefits pursuant to such order on
such date and the Administration Committee may treat any other Domestic
Relations Order entered prior to January 1, 1985, as a Qualified Domestic
Relations Order even if such order does not satisfy the requirements of this
Section 2.1(fff).
(ggg) "QUALIFIED JOINT AND SURVIVOR ANNUITY" means a Pension
payable in accordance with the provisions of Section 7.1(b).
(hhh) "QUALIFIED PRE-RETIREMENT SURVIVOR ANNUITY" means a Pension
payable in accordance with the provisions of Section 7.4.
(iii) "RE-EMPLOYED EMPLOYEE" means:
(i) PARTICIPATION: For purposes of determining an
Employee's eligibility to participate under Article III, an Eligible
Employee who previously separated from Service with the Employer or a
Related Employer:
(a) With any vested interest in his Employer Accrued
Benefit; or
(b) Without a vested interest in his Employer Accrued
Benefit, but who resumes Service before his number of consecutive
One Year Periods of Severance (within the meaning of Article I of
the Prior Plan) exceeds five (5), his consecutive Breaks in Service
exceeds five (5) or the sum of his consecutive One Year Periods of
Severance and Breaks in Service exceeds five (5).
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(ii) VESTING: For purposes of determining a Participant's
Vested Accrued Benefit under Articles V and VI, an Employee who has
previously separated from Service with the Employer or a Related Employer:
(A) With any vested interest in his Employer Accrued
Benefit; or
(B) Without a vested interest in his Employer Accrued
Benefit, but who resumes Service before his number of consecutive
One Year Periods of Severance (within the meaning of Article I of
the Prior Plan) exceeds five (5), his consecutive Breaks in Service
exceeds five (5) or the sum of his consecutive One Year Periods of
Severance and Breaks in Service exceeds five (5).
(iii) BENEFIT SERVICE: For purposes of determining the
amount of a Participant's Normal Retirement Pension under Section 6.1, an
Employee who has previously separated from Service with the Employer or a
Related Employer
(A) With any vested interest in his Accrued Benefit or
an employer accrued benefit under a Related Plan; or
(B) Without a vested interest in his Employer Accrued
Benefit, but who resumes Service before his number of consecutive
One Year Periods of Severance (within the meaning of Article I of
the Prior Plan) exceeds five (5), his consecutive Breaks in Service
exceeds five (5) or the sum of his consecutive One Year Periods of
Severance and Breaks in Service exceeds five (5).
(jjj) "RELATED EMPLOYER" means any business entity that is, along
with the Company:
(i) A member of a controlled group of corporations (as
defined in section 414(b) of the Code, with such section being modified,
for purposes of Section 6.5, in accordance with section 415(h) of the
Code);
(ii) A member of a group of trades or businesses (whether or
not incorporated) that are under common control (within the meaning of
section 414(c) of the Code, with such section being modified, for
purposes of Section 6.5, in accordance with section 415(h) of the Code);
or
(iii) A member of an affiliated service group (within the
meaning of section 414(m) of the Code).
(kkk) "RELATED PLAN" means any other defined benefit plan (as
defined in section 415(k) of the Code) maintained by a Related Employer.
(lll) "REQUIRED COMMENCEMENT DATE" means the April 1st of the
calendar year following the later of:
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<PAGE>
(i) The calendar year in which the Participant attains age
seventy and one-half (70-1/2); or
(ii) The calendar year in which the Participant retires;
provided, however, that if the Participant is a five-percent (5%) owner
(as defined in Section 17.2(f)), clause (ii) of this Section 2.1(lll)
shall not apply.
Further, in the case of a Participant who becomes a five-percent (5%) owner (as
defined in Section 17.2(f)) in a year after the year in which the Participant
attains age seventy and one-half (70-1/2), such Participant's Required
Commencement Date shall be the April 1 of the calendar year following the
calendar year in which the Participant becomes such a five-percent (5%) owner.
(mmm) "RETIREMENT" means the termination of Service for reasons
other than death after a Participant has fulfilled the requirements for a Normal
Retirement Pension or Early Retirement Pension. Retirement shall be considered
as commencing on the day immediately following a Participant's last day of
Service.
(nnn) "SINGLE LIFE ANNUITY" means a Pension payable in accordance
with the provisions of Section 7.1(a).
(ooo) "SERVICE" means, from and after January 1, 1986, any period
of time the Employee is in the employ of the Employer, including any period the
Employee is on Authorized Leave of Absence; provided, however, that an Employee
who is on an Authorized Leave of Absence shall not be credited with Benefit
Service during such leave of absence unless required by law. An Employee's
Service performed prior to January 1, 1986, shall be determined in accordance
with the provisions of the applicable Prior Plan as it existed on the day
immediately preceding January 1, 1986.
(ppp) "SOCIAL SECURITY RETIREMENT AGE" means the age used as the
retirement age under section 216(l) 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(l)(2) of such Act were sixty-two
(62).
(qqq) "TERMINATION DATE" means the date on which a Participant
terminates Service with the Employer, other than by death or Retirement.
(rrr) "TRUST" means the Retirement Trust for Great Dane Trailers,
Inc. established to hold, administer and invest the contributions made under the
Plan, other than contributions invested in or through insurance contracts or
policies (other than life, health or accident, property, casualty, or liability
insurance contracts) issued by an insurance company qualified to do business in
a state (within the meaning of section 7701(a)(10) of the Code).
(sss) "TRUST AGREEMENT" means the agreement between the Company
and the Trustee or any successor Trustee establishing the Trust and specifying
the duties of the Trustee.
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<PAGE>
(ttt) "TRUSTEE" means the persons or entities from time to time
appointed by the Board of Directors to act in the fiduciary capacity of trustee
under the Trust Agreement.
(uuu) "TRUST FUND" means all property of every kind held or
acquired by the Trustee under the Trust Agreement.
(vvv) "VALUATION DATE" means the last day of each Plan Year.
(www) "VESTING" or "VESTED" means the percentage of a Pension
benefit to which a Participant would be entitled at any given time if he, at
that time, were to terminate his Service with the Employer, determined in
accordance with Article V hereof. Any Participant who has completed five (5)
years of Vesting Service (within the meaning of Section 5.4) shall be
one-hundred percent (100%) Vested in his Employer Accrued Benefit.
(xxx) "VESTING SERVICE" means the years of Service included in the
determination of a Participant's Vested Accrued Benefit, determined in
accordance with Sections 5.4 and 5.5.
(yyy) "WESCAR PLAN" means the Retirement Plan for Wescar Freight
System, Inc. as in effect on June 30, 1988.
(zzz) "WESCAR PLAN PARTICIPANT" means a Participant who was a
participant under the Retirement Plan for Wescar Freight System, Inc. as of June
30, 1988, and who performed services for, or was otherwise actively employed by
Wescar Freight System, Inc. or Transway Intermodal System, Inc. on such date.
2.2 SERVICE FOR PREDECESSOR EMPLOYER. If the Employer maintains the
plan of a predecessor employer, the Plan shall treat service of the Employee
with the predecessor employer as Service with the Employer. If the Employer
does not maintain the plan of a predecessor employer, then the Plan shall treat
service of the Employee with the predecessor employer as Service with the
Employer only to the extent prescribed by the Treasury Regulations issued under
section 414(a)(2) of the Code.
2.3 WORD USAGE. Except when otherwise indicated by the context, any
masculine terminology used herein also includes the feminine and neuter, and
vice versa, and the definition of any term herein in the singular shall also
include the plural, and vice versa. The words "hereof", "herein", "hereunder",
and other similar compounds of the word "here" shall mean and refer to the
entire Plan and not to any particular provision or section. All references to
Sections and Articles shall mean and refer to Sections and Articles contained in
this Plan unless otherwise indicated.
2.4 CALCULATION OF TIME. In determining time periods within which an
event or action is to take place for purposes of the Plan, no fraction of a day
shall be considered, and any act, the performance of which would fall on a
Saturday, Sunday, holiday or other non-business day, may be performed on the
next following business day.
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2.5 CONSTRUCTION. It is the intention of the Employers (a) that the
Plan be qualified under the provisions of sections 401(a) and 501(a) of the Code
and Act and all provisions hereof shall be construed to that result, and (b)
that the provisions of the Plan, as amended and restated hereby, shall apply
only to a Participant who effectively terminates Service on or after the
Effective Date.
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End of Article II
22
<PAGE>
ARTICLE III
ELIGIBILITY AND PARTICIPATION
3.1 ELIGIBILITY. Each Eligible Employee who was a Participant in the
Prior Plan on the day immediately preceding the Effective Date shall become a
Participant in this Plan as of the Effective Date. Each other Eligible Employee
who is an Eligible Employee on his Employment Commencement Date shall become a
Participant in the Plan on the Plan Entry Date (if he is employed by an Employer
on that date) that coincides with or immediately follows his completion of one
(1) year of Eligibility Service and the attainment of age twenty-one (21). An
Employee who becomes an Eligible Employee after his Employment Commencement Date
shall become a Participant in the Plan on the LATER of:
(a) The date he performs his first Hour of Service as an Eligible
Employee; or
(b) The date his participation would have commenced if he had been
an Eligible Employee for the entire period commencing on his Employment
Commencement Date and ending on the date he performs his first Hour of Service
as an Eligible Employee.
Notwithstanding the foregoing provisions of this Section 3.1, effective January
1, 1992, an Eligible Employee who is an ICC Plan Participant or a Wescar Plan
Participant shall cease to accrue Benefit Service hereunder for any period of
Service as an Employee of any Employer other than the Company.
3.2 YEARS OF ELIGIBILITY SERVICE. For purposes of determining an
Employee's Employment Commencement Date for purposes of the second to last
sentence of Section 3.1, in the case of an Employee who separates from Service
and who resumes Service, but not as a Re-Employed Employee, such Employee's
Employment Commencement Date shall mean the date on which the Employee first
performs an Hour of Service for the Employer following the close of the period
in which the Employee last incurred a Break in Service. For purposes of
determining when an Employee is a Re-Employed Employee, an Employee whose
Employment Commencement Date is on or after January 1, 1986, shall be credited
with one (1) year of Eligibility Service if he completes not less than one
thousand (1,000) Hours of Service during the twelve (12) consecutive month
period beginning with his Employment Commencement Date and for each Plan Year,
commencing with the Plan Year that includes the first anniversary of his
Employment Commencement Date, during which he completes at least one thousand
(1,000) Hours of Service. Each Employee whose Employment Commencement Date was
prior to the January 1, 1986, shall be credited, with respect to Service prior
to January 1, 1986, with one (1) year of Eligibility Service for each twelve
(12) month Period of Service (within the meaning of Section 1.24 of the Prior
Plan) to which the Employee is or would be entitled to under the terms of the
Prior Plan as in effect immediately prior to the January 1, 1986, with any
fractional part of a twelve (12) month Period of Service to which an Employee is
so entitled being deemed a whole year of Eligibility Service and, with respect
to Service on or after January 1, 1986, with one (1) year of Eligibility Service
for each Plan Year during which he completes not less than
23
<PAGE>
one thousand (1,000) Hours of Service. In the case of an Employee who separates
from Service and who resumes Service, but not as a Re-Employed Employee, years
of Eligibility Service credited for Service performed prior to his resumption of
Service shall be disregarded. In addition, Years of Service prior to the
January 1, 1986, that were disregarded under the Prior Plan shall be disregarded
under this Plan.
3.3 PARTICIPATION - RE-EMPLOYED EMPLOYEES. A Re-Employed Employee,
provided he remains an Eligible Employee, shall re-enter the Plan as a
Participant on the LATER of:
(a) The day he performs his first Hour of Service as a result of
his return to Service; or
(b) The date his Participation would have commenced had there been
no separation from Service, unless he separates from Service subsequent to his
return to Service, but before such date.
Any other Eligible Employee whose employment terminates and who is subsequently
reemployed shall commence participation in accordance with the provisions of
Section 3.1.
3.4 RE-EMPLOYMENT AND SERVICE CREDITING RULES FOR DISABLED
PARTICIPANTS. If a Participant's employment terminates by reason of Disability
and such Disability ceases before the Participant attains his Normal Retirement
Date and the Participant returns to active Service within thirty (30) days
following certification to the Administration Committee by a doctor or clinic
appointed by the Administration Committee that based upon a medical examination
the Participant has sufficiently recovered to be able to engage in regular
employment with the Employer, his Plan participation shall be reinstated as of
the date of such return with full credit for all Service he has been credited
with at the inception date of his Disability. The thirty (30) day period
referred to herein may be extended by the Administration Committee when, in its
sole discretion, reasonable cause exists for so doing. For the purpose of (a)
computing the amount of any Pension to which such Participant may subsequently
be entitled, and (b) determining whether any Service requirements for benefits
have been satisfied, the Participant shall be credited with one hundred and
sixty (160) Hours of Service for each month in the period during which he was
(i) receiving a Disability Pension under this Plan for a Disability incurred
before January 1, 1989, or (ii) for a Disability incurred after such date,
receiving Disability benefits under the long-term disability plan maintained by
the Company.
If a Participant who has received any Disability Pension under the Plan, or
disability benefits under the long-term disability plan maintained by the
Company, does not return to active Service with the Employer within the thirty
(30) day period specified in the preceding paragraph following certification
that his Disability has ceased, he shall be treated as though his Service had
terminated as of the date his Disability commenced, and he shall be entitled to
no further benefits under the Plan by reason of his prior participation,
provided, however, that if such Participant would have had a Vested Accrued
Benefit pursuant to Section 5.4 had he terminated Service as of the date his
Disability ceased, he shall be entitled to a Deferred Vested Pension determined
in accordance with the provision of Section 6.5.
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<PAGE>
If Disability continues until a Participant attains Normal Retirement Age, for
the purpose of (a) computing the amount of any Pension to which such Participant
may subsequently be entitled, and (b) determining whether any Service
requirements have been satisfied, the Participant shall be credited with one
hundred and sixty (160) Hours of Service for each month in the period during
which he was (i) receiving a Disability Pension under this Plan for a Disability
incurred before January 1, 1989, or (ii) for a Disability incurred after such
date, receiving Disability benefits under the long-term disability plan
maintained by the Company.
3.5 ENROLLMENT. Every Eligible Employee shall become a Participant
when he has satisfied the requirements of this Article III and has provided the
Administration Committee with such information as the Administration Committee
deems necessary, in its discretion.
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End of Article III
25
<PAGE>
ARTICLE IV
CONTRIBUTIONS
4.1 EMPLOYER CONTRIBUTIONS. Each Employer intends, but does not
guarantee, to make contributions to the Plan in at least the amount required to
satisfy the minimum funding requirements of section 412 of the Code, as
specified in the Actuary's valuation reports for the applicable period of time.
Notwithstanding the foregoing, each Employer reserves the right to reduce,
suspend, or discontinue making contributions to the Plan at any time.
If the contribution is on account of the Employer's preceding Fiscal Year, the
contribution shall be accompanied by the Employer's signed statement to the
Trustee or insurance company in or through the insurance contracts or policies
of which the Employer's contribution is to be invested (as provided in Section
10.4(q)), such statement to recite that payment is on account of such Fiscal
Year. Contributions shall be paid in cash. Each contribution made after the
end of the Fiscal Year on account of the Employer's prior Fiscal Year shall be
deemed to have been paid as of the last day of the Employer's Fiscal Year to
which it relates, if such contribution is made no later than the time prescribed
by law for filing of the Employer's federal income tax return (including
extensions thereof) for such Fiscal Year. An Employer may make a contribution
to the Plan later than the date prescribed by law for filing its federal income
tax return solely for purposes of complying with the minimum funding
requirements of section 412 of the Code.
4.2 FORFEITURES. Forfeitures arising under this Plan, because of a
termination of Service before a Participant becomes eligible to receive a
Pension, or for any other reason, shall not be used to increase the benefits
otherwise payable to Participants, but shall be applied to reduce the cost of
the Plan to the contributing Employers.
4.3 RETURN OF EMPLOYER CONTRIBUTIONS. Notwithstanding any provision
contained herein to the contrary, upon an Employer's request, the Employer's
contribution which was made upon a mistake of fact or conditioned upon
deductibility of the contribution under section 404 of the Code shall be
returned to the Employer within one (1) year after payment of the contribution
or disallowance of the deduction (to the extent disallowed), as the case may be.
4.4 PARTICIPANT CONTRIBUTIONS. Participants shall not be required or
permitted to make contributions under this Plan.
- ------------------------
End of Article IV
26
<PAGE>
ARTICLE V
REQUIREMENTS FOR RETIREMENT BENEFITS
5.1 NORMAL RETIREMENT. A Participant shall be eligible for a Normal
Retirement Pension determined in accordance with the provisions of Section 6.1
if his Service is terminated on or after his Normal Retirement Date and prior to
the time he becomes eligible for a Late Retirement Pension. A Participant shall
be entitled to receive his Normal Retirement Pension commencing as of the first
day of the month that coincides with or next follows the Participant's
Retirement date, with payment to commence within ninety (90) days following his
Retirement date. A Participant who attains his Normal Retirement Age shall have
a Vested right to his entire Accrued Benefit.
5.2 EARLY RETIREMENT. A Participant who has attained fifty-five (55)
years of age and completed ten (10) or more years of Vesting Service may elect
early retirement, apply for an Early Retirement Pension in accordance with
Section 11.7(b), and retire on the first day of the month coinciding with or
next following the date on which he satisfies such requirements or on the first
day of any month thereafter, provided such date is prior to his Normal
Retirement Date. Termination of Service at or after the later of age fifty-five
(55) or completion of ten (10) or more years of Vesting Service shall be
considered Retirement. The amount of an Early Retirement Pension shall be
determined in accordance with the provisions of Section 6.2. Payment of an
Early Retirement Pension shall commence as of a Participant's Normal Retirement
Date, except that a Participant who elects early retirement may elect to receive
his Early Retirement Pension prior to his Normal Retirement Date, with payments
under such Pension to begin on the first day of a month that is within ninety
(90) days after the effective date of such election. If a Participant's Early
Retirement Pension commences prior to his Normal Retirement Date the amount
thereof shall be reduced as provided in Section 6.2.
Notwithstanding the foregoing, if a Participant who is eligible for an Early
Retirement Pension under this Section 5.2 is receiving a Disability Pension
under this Plan or is receiving a disability benefit under the Company's
long-term disability Plan, he shall not also be entitled to receive an Early
Retirement Pension under this Plan. The Participant may, however, elect to
receive an Early Retirement Pension under this Section 5.2 in lieu of a
Disability Pension or a disability benefit under the Company's long-term
disability plan, as applicable.
5.3 LATE RETIREMENT. After his Normal Retirement Date an Active
Participant (i) who for the immediately preceding two (2) year period has been
employed by the Company or the Related Employer then employing him in a bona
fide executive or high policy making position and (ii) who would be entitled no
later than sixty (60) days after actual retirement to a vested retirement
benefit from a pension, profit sharing, savings or deferred compensation plan,
or a combination of such plans, of such corporation (excluding amounts
attributable to Social Security, employee contributions, contributions of prior
employers and rollover contributions) which in the aggregate is the equivalent
of a straight life annuity (with no ancillary benefits) of at least Forty-Four
Thousand Dollars ($44,000) annually, may elect to remain employed only with the
consent of such corporation. Any other Participant may postpone his Retirement
date.
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<PAGE>
Any Participant who so remains in the Service of the Employer past his Normal
Retirement Date shall become entitled, on the lapse of one (1) month following
his Normal Retirement Date, to a Late Retirement Pension as of the date of his
Retirement. The amount of such Late Retirement Pension shall be determined in
accordance with Section 6.3. Payment of a Late Retirement Pension payable under
this Section 5.3 shall commence at the Participant's election as of the
Participant's Normal Retirement Date or as of the Participant's Late Retirement
Date; provided however, that in no event may such Participant elect to have his
Pension commence later than the earlier of the first day of the month coinciding
with or immediately following his Retirement or the Participant's Required
Commencement Date.
5.4 TERMINATION OF SERVICE PRIOR TO NORMAL RETIREMENT AGE. If a
Participant terminates Service prior to his attainment of Normal Retirement Age
but after becoming creditable with five (5) or more years of Vesting Service,
the Participant shall have a Vested right to one hundred percent (100%) of his
Accrued Benefit. If a Participant terminates Service prior to his attainment of
Normal Retirement Age and prior to becoming creditable with five (5) or more
years of Vesting Service, and such termination of Service is for any reason
other than death, the Participant's Accrued Benefit shall be subject to becoming
a Forfeiture as provided in Section 5.7.
Except as is provided in Section 7.5, a Participant who terminates Service prior
to his Normal Retirement Date for any reason other than early retirement or
death with a Vested right to his Accrued Benefit shall be entitled to receive a
Deferred Vested Pension, the amount thereof to be determined under the
provisions of Section 6.5. Except as is provided in Section 6.5, payment of a
Participant's Deferred Vested Pension shall commence as of his Normal Retirement
Date.
5.5 VESTING SERVICE. For purposes of determining a Participant's
Vested Accrued Benefit under Section 5.4, a Participant whose Employment
Commencement Date was prior to January 1, 1986, shall be credited, with respect
to Service prior to January 1, 1986, with one (1) year of Vesting Service for
each year of Vesting Service (within the meaning of Section 3.2 of the Prior
Plan) to which the Participant is or would be entitled to under the terms of the
Prior Plan as in effect immediately prior to January 1, 1986, with a fractional
part of a Year of Service to which a Participant is so entitled being deemed a
whole year of Vesting Service, and with respect to Service on or after January
1, 1986, with one (1) year of Vesting Service for each Plan Year during which he
completes not less than one thousand (1,000) Hours of Service. A Participant
whose Employment Commencement Date is on or after January 1, 1986, shall be
credited with one (1) Year of Vesting Service for each Plan Year for which he
completes at least one thousand (1,000) Hours of Service. Years of Vesting
Service credited to an ICC Plan Participant under the ICC Plan and years of
Vesting Service credited to a Wescar Plan Participant under the Wescar Plan
shall be credited as years of Vesting Service under this Plan, and Hours of
Service credited to an ICC Plan Participant or to a Wescar Plan Participant for
the Plan Year of either such Plan commencing January 1, 1988, shall be credited
to such a Participant under this Plan. Notwithstanding the foregoing, years of
Vesting Service (within the meaning of Section 1.24 of the Prior Plan) prior to
January 1, 1986, that were disregarded under the Prior Plan shall be disregarded
under this Plan.
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<PAGE>
5.6 INCLUDED YEARS OF VESTING SERVICE - CERTAIN TERMINATED EMPLOYEES.
Notwithstanding any Plan provision to the contrary, if an Employee separates
from Service and resumes Service with the Employer, but not as a Re-Employed
Employee, years of Vesting Service, as defined in Section 5.5, credited for
Service performed prior to his resumption of Service shall be disregarded, and
his Employment Commencement Date shall be redetermined in accordance with the
provisions of Section 3.2.
5.7 FORFEITURE OCCURS. A Participant's Forfeiture, if any, of his
Accrued Benefit shall occur as of the date on which he receives a deemed
distribution pursuant to Section 7.6(b). The Eligibility Service, Vesting
Service and Benefit Service of a Participant whose Accrued Benefit is forfeited
under this Section 5.7 shall be disregarded for all purposes hereunder;
provided, however, that if such a Participant recommences participation herein
as of a Re-Employed Employee pursuant to the provisions of Section 3.3, such
Participant shall be deemed to have repaid his prior distribution and all
forfeited Service shall be restored as of the date such Participant recommences
participation herein. The Administration Committee shall determine a
Participant's Accrued Benefit Forfeiture, if any, solely by reference to the
provisions of Section 5.4. A Participant shall not forfeit any portion of his
Accrued Benefit for any cause other than that specified herein.
5.8 LIMITATION ON TIME OF PAYMENT. Notwithstanding any provision in
this Article V specifying a date for the commencement of benefit payments from
the Plan, in the case of a Participant who has filed a claim for benefits in
accordance with Section 11.7, unless the Participant otherwise directs,
distribution of the Participant's Vested Accrued Benefit shall commence not
later than sixty (60) days after the Plan Year in which the latest of the
following events occurs:
(a) The date the Participant attains Normal Retirement Age; or
(b) The date the Participant terminates Service with the Employer;
or
(c) The tenth (10th) anniversary of the last day of the Plan Year
in which the Participant commenced participation in the Plan.
A Participant may, at the time and in the manner prescribed by the
Administration Committee, elect to defer the commencement of the payment of his
benefits beyond the dates specified above by submitting a written statement to
the Administration Committee describing his benefits and the date on which the
payment of such benefits shall commence. However, a Participant may not elect
to defer the commencement of the payment of his benefit if the exercise of such
election will cause the benefits payable on his behalf in the event of his death
to be more than incidental within the meaning of regulations issued by the
Internal Revenue Service under section 401(a) of the Code. In addition,
distribution of each Participant's Accrued Benefit shall commence not later than
the Participant's Required Commencement Date and the entire Vested Accrued
Benefit of each Participant shall be distributed in full to such Participant not
later than the Required Commencement Date or shall be distributed, commencing
not later than the Required Commencement Date, in accordance with regulations
over the life of such Participant or over the lives of such Participant and his
Beneficiary (or over a period not extending beyond the life
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expectancy of such Participant or the life expectancy of such Participant and
his Beneficiary). For purposes of this Section 5.8, except in the case of a
life annuity, the life expectancy of the Participant and his spouse may be
redetermined but not more frequently than annually.
Further, if a Participant has commenced receiving distributions under the Plan
and the Participant dies before his entire interest has been distributed to him,
the remaining portion, if any, of such interest that is distributable under this
Plan shall be distributed to the Participant's Beneficiary at least as rapidly
as such interest would have been distributed to the Participant, commencing not
later than the Participant's Required Commencement Date, under the method of
distribution in effect at the Participant's death. If the Participant dies
before the distribution of his interest has commenced in accordance with Section
5.1, the entire interest of the Participant shall be distributed within five (5)
years after the death of the Participant; provided, however, if any portion of
the Participant's interest is payable to or for the benefit of a Beneficiary and
such portion of the Participant's undistributed interest will be distributed in
accordance with regulations over the life of such Beneficiary or over a period
not extending beyond the life expectancy of such Beneficiary and such
distributions commence not later than one (1) year after the date of the
Participant's death (or such later date as the Secretary of Treasury may by
regulation prescribe), the deceased Participant's interest shall be distributed
in accordance with the method of payment under which the interest will be
distributed over the life of the Beneficiary or over a period not extending
beyond the life expectancy of the Beneficiary.
Notwithstanding the foregoing, if the Beneficiary is the surviving spouse of the
Participant, the deceased Participant's interest shall be distributed to such
surviving spouse on or before the date on which the Participant would have
attained age seventy and one-half (70-1/2); provided, further, that if the
surviving spouse dies before the distributions to such spouse commence, the
distribution of the interest of the deceased Participant shall begin on or
before a date determined as if the surviving spouse were the Participant. For
purposes of this Section 5.8, and pursuant to regulations prescribed by the
Secretary of the Treasury, any amount paid to a child of the Participant shall
be treated as if it had been paid to the surviving spouse of the Participant if
such amount will become payable to the surviving spouse upon such child's
attainment of majority (or other designated event permitted under regulations
prescribed by the Secretary of the Treasury). For the purposes of this
paragraph, the term "Beneficiary" shall include only individuals.
Nothing in this Section 5.8 shall permit any Participant or Beneficiary to elect
any form of distribution not otherwise expressly permitted under this Plan; but
rather, the Administration Committee may at any time modify any form of
distribution elected by a Participant or Beneficiary to ensure compliance with
this paragraph. In addition, all distributions from the Plan shall be made in
accordance with the requirements of section 401(a)(9) of the Code, including any
grandfather or transitional rules issued thereunder. Any distribution provision
contained herein which conflicts with section 401(a)(9) of the Code will be
disregarded and the provisions of section 401(a)(9) will govern.
- ------------------------
End of Article V
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ARTICLE VI
AMOUNT OF RETIREMENT BENEFIT
6.1 NORMAL RETIREMENT PENSION.
(a) CALCULATION OF NORMAL RETIREMENT PENSION. Subject to the
limitations on annual benefits under Section 6.7, the monthly amount of a Normal
Retirement Pension, expressed in the normal form specified in Section 7.1(a),
payable to a Participant other than an ICC Plan Participant or a Wescar Plan
Participant who retires on or after his Normal Retirement Date and prior to
becoming eligible for a Late Retirement Pension, shall be a monthly amount equal
to two percent (2%) of the Participant's Average Monthly Compensation multiplied
by the Participant's number of years of Benefit Service (but not more than
thirty (30)), minus two and three-sixteenths percent (2-3/16%) of the Primary
Social Security Benefit to which the Participant is entitled, or would be
entitled upon filing an application, multiplied by the Participant's number of
years of Benefit Service (but not more than thirty (30)), as adjusted pursuant
to Section 6.6 hereof.
Subject to the provisions of Section 6.7, the monthly amount of a Normal
Retirement Pension, expressed in the normal form specified in Section 7.1(a),
payable to an ICC Plan Participant who retires on or after his Normal Retirement
Date and prior to becoming eligible for a Late Retirement Pension, shall be the
sum of (A) and (B) where:
(A) Shall be a monthly amount equal to two percent (2%) of the
Participant's Average Monthly Compensation multiplied by the Participant's
number of years of Benefit Service earned after June 30, 1984 (but not
more than thirty (30)), minus two and three-sixteenths percent (2-3/16%)
of the Primary Social Security Benefit to which the Participant is
entitled, or would be entitled upon filing an application, multiplied by
the Participant's number of years of Benefit Service earned after June 30,
1984 (but not more than thirty (30)); and
(B) Is the ICC Plan Participant's accrued benefit payable from the
ICC Plan as of June 30, 1984 (but including Participant Contributions made
during July and August of 1984).
Subject to the provisions of Section 6.7, the monthly amount of a Normal
Retirement Pension, expressed in the normal form specified in Section 7.1(a)
payable to a Wescar Plan Participant who retires on or after his Normal
Retirement Date and prior to becoming eligible for a Late Retirement Pension,
shall be a monthly amount equal to two percent (2%) of the Participant's Average
Monthly Compensation multiplied by the Participant's number of years of Benefit
Service (but not more than thirty (30)), minus two and three-sixteenths percent
(2-3/16%) of the Primary Social Security Benefit to which the Participant is
entitled or would be entitled upon filing an application, multiplied by the
Participant's number of years of Benefit Service (but not more than thirty
(30)), as adjusted pursuant to Section 6.6 hereof.
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In addition, if a Participant was separated from Service and subsequently
returned to Service, such Participant's Normal Retirement Pension shall not as a
result of any increase in the Primary Social Security Benefit effective after
his initial separation be less than the Normal Retirement Pension to which he
would have been entitled if he had not returned to Service after his separation.
The Normal Retirement Pension payable to a Participant shall in no event be less
than Ten Dollars and Fifty Cents ($10.50) per month multiplied by the
Participant's number of years of Benefit Service up to a maximum of thirty (30)
years, as adjusted pursuant to Section 6.6 hereof. Also for this purpose, if a
Participant was separated from Service and subsequently returned to Service,
such Participant's Normal Retirement Pension shall not as a result of any
increase in the Primary Social Security Benefit effective after his initial
separation be less than the Normal Retirement Pension to which he would have
been entitled if he had not returned to Service after his separation.
(b) YEARS OF BENEFIT SERVICE. Subject to the condition that not
more than one (1) year of Benefit Service will be credited for any twelve (12)
month period, a Participant shall be credited with Benefit Service as follows:
(i) One (1) year of Benefit Service for each year included
in the Period of Service as defined by the Prior Plan and credited
thereunder, based on a Severance from Service Date (as defined by the
Prior Plan) of December 31, 1985, plus any remaining fraction of a year
included in such Period of Service (rounded to one-half (1/2) year if such
fraction is less than one-half (1/2) or to one (1) year if such fraction
is at least one-half (1/2));
(ii) In the case of an ICC Plan Participant, one (1) year of
Benefit Service for each year of Benefit Service under the ICC Plan
(including any such year credited for service from July 1, 1984 through
December 31, 1984);
(iii) In the case of a Wescar Plan Participant, one (1) year
of Benefit Service for each full year of Benefit Service under the Wescar
Plan;
(iv) One (1) year of Benefit Service for each Plan Year
beginning with the Plan Year that begins January 1, 1986, during which the
Participant is a Participant and completes at least one thousand (1,000)
Hours of Service;
(v) One (1) year of Benefit Service for any Plan Year in
which a Participant commences employment with an Employer or terminates
Service for reason of death, Disability, or Retirement, provided that the
Participant completes at least five hundred (500) Hours of Service during
such Plan Year. In addition, a Participant shall receive credit for
one-half (1/2) year of Benefit Service in the Plan Year during which he
commences employment with an Employer or in which he terminates Service by
reason of death, Disability or Retirement if he is credited with at least
one (1) but less than five hundred (500) Hours of Service during such Plan
Year;
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(vi) One (1) year of Benefit Service for each year that a
Participant with a Disability is credited with one thousand (1,000) Hours
of Service pursuant to Section 3.4 of the Plan; and
(vii) In the case of a Participant who becomes entitled to a
Normal Retirement Pension but who has less than thirty (30) years of
Benefit Service pursuant to the provisions of (i) through (vi) above, who
was employed by the predecessor employer of the Company's Lancaster,
Memphis, Nashville, Tampa, Richmond or Orlando branches, and who was
employed by the Company immediately following the acquisition by the
Company of Participant's predecessor employer, one (1) year of Benefit
Service for each year of service with such predecessor employer; provided,
however, that the number of years of Benefit Service credited pursuant to
this paragraph (vii) shall not exceed the number of years of Benefit
Service earned on account of actual employment of the Participant by the
Company.
For purposes of (iv) and (v) above, Hours of Service earned by an ICC Plan
Participant under the ICC Plan and Hours of Service earned by a Wescar Plan
Participant under the Wescar Plan shall be counted.
(c) PARTICIPANTS UNDER A UNION PLAN. Notwithstanding anything
in this Plan to the contrary, the Benefit Service of a Participant who also
participated in a qualified retirement program established and maintained by the
Employer pursuant to a collective bargaining agreement or by any collective
bargaining unit having a collective bargaining agreement with the Employer (a
"Collectively Bargained Plan") shall be determined in accordance with the
following paragraphs (i) and (ii) below:
(i) A Participant's years of Benefit Service accrued prior
to January 1, 1993, shall include all employment with Employer for which
the Participant either accrued Benefit Service under this Plan or received
credit under a Collectively Bargained Plan; provided, however, that any
benefit accrued prior to January 1, 1993, to which a Participant or his
Beneficiary may be entitled under this Plan shall be reduced, dollar for
dollar, by the Actuarial Equivalent of any similar form of benefit such
Participant accrued prior to January 1, 1993, under such Collectively
Bargained Plan attributable to such Participant's employment with the
Employer; and
(ii) A Participant's years of Benefit Service accrued on and
after January 1, 1993, shall be deemed to only include each Plan Year
during which the Participant is a Participant and completes one thousand
(1,000) Hours of Service. If a Participant ceases to be an Eligible
Employee because he becomes employed in an employment classification
covered by a collective bargaining agreement which does not provide for
participation in this Plan then, except as provided in the next paragraph
with respect to the year of transfer, such Participant shall not accrue
Benefit Service under the Plan for the period he is employed in such
collective bargaining employment classification. During such employment
period, the Participant will, however, be eligible to participate in any
Collectively Bargained Plan established or maintained pursuant to such
collective bargaining agreement and, except as provided in the next
paragraph with
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respect to the year of transfer, any benefit accrued on or after January
1, 1993, under such Collectively Bargained Plan shall not be used to
reduce any Pension he accrues on or after January 1, 1993, under this
Plan.
If a Participant is transferred to an employment classification covered by
a collective bargaining agreement which does not provide for participation
in the Plan, or is transferred from such a collective bargaining
employment classification to an employment classification that is eligible
for participation in the Plan, a Year of Benefit Service for the year of
transfer shall include all employment with the Employer for which the
Participant either accrued Benefit Service under this Plan or received
credit under a Collectively Bargained Plan; provided, however, that any
benefit to which a Participant or his Beneficiary may be entitled to under
this Plan attributable to the year of transfer shall be reduced, dollar
for dollar, by the Actuarial Equivalent of any similar form of benefit
accrued during the year of transfer under such Collectively Bargained Plan
attributable to such Participant's employment with the Employer during
such year of transfer.
6.2 EARLY RETIREMENT PENSION. Subject to the provisions of Section
6.7, the monthly amount of an Early Retirement Pension, expressed in the normal
form specified in Section 7.1(a), payable to a Participant, commencing on the
date specified in Section 5.2 shall be determined in accordance with Section 6.1
but based on the number of years of Benefit Service, Average Monthly
Compensation, and Primary Social Security Benefit determined as of the Early
Retirement Date. If payment of an Early Retirement Pension commences prior to
the Participant's Normal Retirement Date, the monthly amount determined in
accordance with the immediately preceding sentence shall be reduced for each
month by which the commencement date of his Pension precedes his Normal
Retirement Date as follows:
(a) By one-half (1/2) of one percent (1%) for each month between
age sixty (60) and age sixty-five (65); and
(b) By one-fourth (1/4) of one percent (1%) for each month between
age fifty-five (55) and sixty (60).
A Participant who satisfies the requirements for an Early Retirement Pension and
is retired at the request of the Employer, shall receive a monthly amount,
commencing upon his Early Retirement Date, which shall be equal to the Pension
computed in accordance with the first sentence of this Section 6.2, except that
the offset for Primary Social Security Benefit shall not be applied until the
earliest date a Participant can qualify for an unreduced Primary Social Security
Benefit.
For the purpose of determining the amount of an Early Retirement Pension, the
Social Security offset shall in no event exceed the limitations prescribed by
the Internal Revenue Service Regulations as currently in effect or under
subsequent amendments to such Regulations.
If a Participant commences receiving an Early Retirement Pension pursuant to
Section 5.2 and such Participant at any time thereafter again becomes a
Participant, the Pension of such Participant as finally determined shall be
recomputed on the basis of this Section 6.2, but shall
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<PAGE>
be reduced by a monthly amount Actuarially Equivalent to the total of his Early
Retirement Pension previously distributed.
6.3 LATE RETIREMENT PENSION. Subject to the limitations on annual
benefits under Section 6.7, the annual amount of a Late Retirement Pension,
expressed in the normal form specified in Section 7.1(a), payable to a
Participant commencing on the date specified in Section 5.3, shall be an amount
determined in the same manner as the Normal Retirement Pension described in
Section 6.1, but determined based on his Benefit Service and Compensation as of
his Late Retirement Date; provided, however, that the sum of a Participant's
Pension under the Plan and the monthly benefit payable under the Annuity
Contract shall not be less as a result of delayed Retirement than it would have
been had such Participant retired on his Normal Retirement Date.
6.4 DISABILITY PENSION. A Participant who satisfies the requirements
for a Disability Retirement Pension shall, until reaching age sixty-five (65),
receive a monthly amount determined as follows:
(a) Sixty percent (60%) of the Participant's Average Monthly
Compensation reduced by;
(b) Sixty-four percent (64%) of the Primary Social Security
Disability Benefit to which the Participant is entitled or would be entitled on
filing an application at the time benefit payments begin;
(c) Any public disability benefits to which the disabled
Participant may be entitled; and
(d) When payable any early retirement benefit attributable to the
Prior Plan, whether or not actually paid to the Participant when he becomes or
would have become entitled thereto.
Public disability benefits shall include disability payments under state
disability benefits law, Workmen's Compensation or Occupational Disease Law
(except fixed statutory payments for loss of a bodily member), but shall not
include a pension granted for or on account of military service. Public
disability benefits shall include any payments which a pensioner receives or
would be entitled to receive irrespective of any factor by which he may
disqualify himself or diminish such benefits, such as, for example, failure to
make proper application or engaging in employment for compensation or profit.
The disabled Participant's Pension shall be redetermined as of his Normal
Retirement Date and converted to a Normal Retirement Pension, subject to
Articles VII and VIII by computation in accordance with Section 6.1, and in so
computing such Normal Retirement Pension the Participant's Average Monthly
Compensation prior to receipt of the Disability Retirement Pension and years of
Benefit Service, including the period the Disability Retirement Pension was in
effect, shall be used.
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6.5 DEFERRED VESTED PENSION. Subject to the limitations on annual
benefits under Section 6.7 and unless otherwise provided in Section 7.5, the
monthly amount of a Deferred Vested Pension, expressed in the normal form
specified in Section 7.1(a), payable to a Participant commencing on the date
specified in Section 5.4, shall be based on the Participant's Accrued Benefit,
determined on the basis of the Participant's Accrued Benefit as of the date the
Participant first incurs a Break in Service following his termination of
Service, and in the case of a Participant in the ICC Plan as of June 30, 1988,
adjusted to reflect any receipt of a Cash Withdrawal Benefit as defined in
Section 7.9, taking into account the Participant's Primary Social Security
Benefit determined as of the time of the incurrence of the Break in Service.
Notwithstanding the immediately preceding sentence, a Participant who is
entitled to a Deferred Vested Pension and who has completed at least ten (10)
years of Vesting Service may elect to commence receiving a Deferred Vested
Pension on the first day of any month that is prior to his Normal Retirement
Date and coincident with or following the date such Participant attains age
fifty-five (55), such Deferred Vested Pension to be reduced in accordance with
the provisions of Section 6.2.
6.6 ADJUSTMENT OF PENSION TO REFLECT BENEFITS ACCRUED UNDER THE PRIOR
PLAN. Notwithstanding the foregoing provisions of this Article VI, the Pension
payable to a Participant under this Plan shall be adjusted to reflect benefits
accrued under the Prior Plan as follows:
(a) The Normal Retirement Pension, Late Retirement Pension or
Deferred Vested Pension (if payment commences on or after the Participant's
Normal Retirement Age) payable under this Plan, calculated in the form of a
single life annuity, shall be reduced by the Participant's monthly benefit
payable under the Annuity Contract, calculated in the form of a single life
annuity, commencing on the same date.
(b) The Early Retirement Pension or Deferred Vested Pension (if
payment commences prior to the Participant's Normal Retirement Age) payable
under this Plan, calculated in the form of a single life annuity, shall be
reduced by the Participant's monthly benefit payable under the Annuity Contract,
calculated in the form of a single life annuity commencing as of the earliest
date that benefits are payable under the Annuity Contract;
(c) In the case of a Participant who was receiving a Disability
Retirement Benefit hereunder, or was receiving a disability benefit under the
Company's long-term disability plan, and who did not recover from his Disability
prior to his Normal Retirement Age, the Normal Retirement Pension payable under
this Plan shall be reduced by the monthly amount that would be payable to the
Participant as a single life annuity under the Annuity Contract commencing as of
the earliest date that benefits are payable under the Annuity Contract.
(d) In the event that Vesting Service with a predecessor employer
is treated as Benefit Service under Section 6.1(b)(7)(i) in determining the
Pension payable to a Participant under the Plan pursuant to this Article VI,
such Pension shall be reduced by the pension benefits, if any, to which the
Participant is entitled under any retirement plan of such predecessor employer,
calculated in the form of a single life annuity commencing on the same date that
pension benefits commence hereunder.
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The provisions of this Section 6.6 shall be effective January 1, 1986.
6.7 MAXIMUM ANNUAL BENEFIT. Notwithstanding any provision contained
herein to the contrary, and consistent with Section 2.1(r) of the Plan, the
amount of annual Pension, determined in accordance with Sections 6.1, 6.2, 6.3,
6.4, and 6.5, attributable to a Participant's Accrued Benefit that is payable to
a Participant under this and any Related Plan (whether or not such plan is
terminated) shall be limited in accordance with the provisions of section 415 of
the Code and shall not exceed the LESSER of:
(a) Ninety Thousand Dollars ($90,000), adjusted for increases in
the cost of living pursuant to section 415(b)(1)(A) of the Code; or
(b) One hundred percent (100%) of the Participant's average
Compensation for the three (3) consecutive Plan Years of participation in which
his Compensation was the highest.
Notwithstanding the provisions of subparagraph (a) of this Section 6.7, if the
amount of annual Pension accrued by a Participant hereunder as of the last day
of the Plan Year commencing prior to January 1, 1983, exceeded Ninety Thousand
Dollars ($90,000), but was no greater than the dollar amount specified in
Article IV, Section 6, of the Prior Plan as of such date, then with respect to
such Participant, such amount shall be substituted for Ninety Thousand Dollars
($90,000) each place it appears herein; provided, however, that the prior
provisions of this sentence shall not apply to the last two paragraphs of this
Section 6.7.
If any Participant begins to receive a Pension under this Plan before such
Participant attains Social Security Retirement Age, the maximum annual Pension
that such Participant may receive hereunder shall be adjusted so that it is the
Actuarial Equivalent of Ninety Thousand Dollars ($90,000) per year beginning at
Social Security Retirement Age. If a Participant begins to receive a Pension
hereunder after he attains Social Security Retirement Age, the maximum annual
Pension permitted hereunder shall be the Actuarial Equivalent of Ninety Thousand
Dollars ($90,000) per year beginning at Social Security Retirement Age. Any
adjustment made pursuant to the foregoing shall be made in accordance with
applicable rules prescribed by the Secretary of the Treasury. In making an
actuarial adjustment to any benefit pursuant to the terms of this paragraph, no
cost of living adjustment to the Ninety Thousand Dollar ($90,000) limitation
under section 415(d)(1) of the Code shall be taken into account before the year
in which such cost of living adjustment is made.
Except as provided in the following, which imposes additional limitations on the
amounts payable to Participants with less than ten (10) years of participation
or years of Service with the Employer, the foregoing limitations shall not be
applicable with respect to any Participant whose annual Pension under this Plan
and any Related Plan is less than Ten Thousand Dollars ($10,000) if such
Participant has not at any time participated in any defined contribution plan
(as defined in section 415(k) of the Code) maintained by the Employer or any
Related Employer. In the event that a Participant has been credited with less
than ten (10) years of participation, the Ninety Thousand Dollars ($90,000)
limit under Section 6.7(a) shall be reduced by multiplying such limit by a
fraction, the numerator of which is the number of such Participant's years of
participation (or part thereof) and the denominator of which is ten (10). In
the event that a Participant has
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<PAGE>
been credited with less than ten (10) years of Service with the Employer (or
part thereof), the Compensation limitation under Section 6.7(b) shall be reduced
by multiplying such limit by a fraction, the numerator of which is the number of
years of Service credited to the Participant, and the denominator of which is
ten (10).
The determination of whether a Participant's Pension payable under the Plan
exceeds the limitations of this Section 6.7 shall be made adjusting such Pension
so that it is the Actuarial Equivalent of a straight life annuity with no
ancillary benefits (such adjustment being made in accordance with Regulations
promulgated by the Secretary of the Treasury or his delegate pursuant to section
415(b)(2)(B) of the Code); provided, however, that any portion of an annuity
that constitutes a Qualified Joint and Survivor Annuity (as described in Section
7.1(b)) shall not be taken into account.
If, in any Limitation Year a Participant also participates in one or more
qualified defined contribution plans (within the meaning of section 414(i) of
the Code) maintained by the Employer or a Related Employer (whether or not
terminated), then for any Limitation Year, the sum of the Defined Benefit Plan
Fraction (herein so-called) for such Limitation Year and the Defined
Contribution Plan Fraction (herein so-called) for such Limitation Year shall not
exceed one (1.0).
For purposes of this Section 6.7, the Defined Benefit Plan Fraction for any
Limitation Year shall be a fraction:
(a) The numerator of which is the projected annual benefit of the
Participant under the Plan (determined as of the close of the Limitation Year);
and
(b) The denominator of which is the LESSER of:
(i) The product of one and one-fourth (1.25) multiplied by
the Ninety Thousand Dollar ($90,000) limitation in effect for the
Limitation Year under section 415(b)(1)(A) of the Code; or
(ii) One and four-tenths (1.4) multiplied by one hundred
percent (100%) of the Participant's average Compensation for his three (3)
high years.
The Defined Contribution Plan Fraction for any Limitation Year shall be a
fraction:
(a) The numerator of which is the sum of the annual additions (as
defined in section 415(c)(2) of the Code) to the Participant's accounts under
all defined contribution plans maintained by the Employer or Related Employer as
of the close of the Limitation Year; and
(b) The denominator of which is the LESSER of:
(i) The product of one and one-fourth (1.25) multiplied by
the Ninety Thousand Dollar ($90,000) limitation in effect for such year
under subsection 415(c)(1)(A) of the Code (determined without regard to
subsection 415(c)(6) of the Code); or
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(ii) Thirty-five percent (35%) of the Participant's
Compensation for the Limitation Year and all prior years of Service with
the Employer.
If, in any Limitation Year, the sum of the Defined Benefit Plan Fraction and
Defined Contribution Plan Fraction for a Participant would exceed one (1.0)
without adjustment of the amount of the maximum annual Pension that can be paid
to such Participant under the first paragraph of this Section 6.7, then the
amount of the maximum annual Pension that can be paid to such Participant under
the first paragraph of this Section 6.7 shall be reduced to the extent necessary
to reduce the sum of the Defined Benefit Plan Fraction and Defined Contribution
Plan Fraction for such Participant to one (1.0), or the Administration Committee
may take such other action as will cause the sum to equal one (1.0) or less.
6.8 SUSPENSION OF BENEFITS UPON RE-EMPLOYMENT OF RETIRED PARTICIPANTS.
If a retired Participant returns to the Service of an Employer subsequent to the
time that payment of benefits commences or would have commenced if the
Participant had not returned to Service, and following such return to Service
the Participant completes forty (40) or more Hours of Service for an Employer
during a calendar month, the Participant's benefits shall be permanently
suspended for each such month as follows. 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 Qualified Joint and Survivor Annuity, the amount
suspended shall not be greater than the portion of the monthly benefit payment
derived from Employer contributions. In the case of benefits payable on any
other basis, the amount of benefits suspended shall not exceed the LESSER of:
(a) The amount of benefits that would have been payable to the
Participant if he had been receiving monthly benefits under the Plan since
actual Retirement based on a single life annuity commencing at actual Retirement
Age; or
(b) The actual amount paid or scheduled to be paid to the
Participant for such month.
Payments that are scheduled to be paid less frequently than monthly may be
converted to monthly payments for purposes of determining the amount that may be
suspended hereunder. Payments of benefits suspended shall resume no later than
the first day of the third calendar month after the calendar month in which the
Employee again terminates Service. The initial payment upon such resumption
shall include the payment scheduled to occur in the calendar month when payments
resume.
No benefit payments that commence on or after a Participant has attained Normal
Retirement Age shall be withheld unless the Administration Committee notifies
the Participant by personal delivery or first class mail during the first
calendar month or payroll period in which the Plan withholds payments that his
benefits are suspended. Such notification shall contain a description of the
specific reasons why benefit payments are being suspended, a general description
of the Plan provisions relating to the suspension of the 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 suspension notification shall inform the
Participant of the Plan's procedure for affording a review of the suspension of
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benefits. If the summary plan description with respect to the Plan contains
information substantially similar to the information required in the two
immediately preceding sentences, the notice may refer the Participant to the
relevant portions of the summary plan description; provided the Participant is
informed how to obtain a copy of the summary plan description or the relevant
pages thereof. Requests for such reviews shall be considered in accordance with
the claims procedure set forth in Section 11.7 of this Plan.
- ------------------------
End of Article VI
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ARTICLE VII
METHOD OF PAYMENT OF PENSION
7.1 NORMAL FORM OF PENSION.
(a) GENERAL. The normal form of Pension for the calculation of
all Pensions under this Article VII shall be a Single Life Annuity. The Single
Life Annuity shall be a monthly life annuity commencing on the Participant's
Annuity Starting Date, terminating with the last monthly payment due immediately
preceding the date of the Participant's death, and providing that upon the death
of a retired Participant other than an ICC Plan Participant, his Beneficiary
shall be entitled to receive a single lump sum cash payment in an amount equal
to the sum of the monthly Pension benefit payments that have become payable
prior to the Participant's death and have not been paid, and providing that upon
the death of a retired ICC Plan Participant, his Beneficiary shall be entitled
to receive a single sum cash payment in an amount equal to:
(i) The ICC Plan Participant's Contributions (as defined in
the ICC Plan), if any, (that have not been withdrawn) with Credited
Interest to the date his Pension payments actually commence; minus
(ii) The sum of the monthly Pension benefit payments that
have been paid prior to the Participant's death; provided, however, that
any portion of such Participant's monthly retirement benefit payments that
represents his Supplemental Retirement Benefit (as specified in the
International Controls Corp. Pension Plan as in effect on June 30, 1984)
shall be excluded.
If a Participant retires and is not married on his Annuity Starting Date then,
unless the Participant is an ICC Plan Participant and elects otherwise in
accordance with Section 7.2(a), such Participant's Pension shall be paid in the
form of a Single Life Annuity.
(b) MARRIED PARTICIPANT WITH ELIGIBLE SPOUSE. If a Participant
retires for reasons other than Disability, and on his Annuity Starting Date the
Participant has an Eligible Spouse then, unless the Participant elects (and his
Eligible Spouse, if any, also elects) in accordance with Section 7.3(a) not to
receive his Pension in the form specified in this Section 7.1(b), such
Participant's Pension shall be paid in the form of a Qualified Joint and
Survivor Annuity. With respect to Plan Years commencing on or after January 1,
1985, and to the extent provided in a Qualified Domestic Relations Order, a
former spouse of a Participant shall be deemed to be an Eligible Spouse.
Under the Qualified Joint and Survivor Annuity, a reduced amount shall be paid
to the Participant for his lifetime, upon his death, his surviving Eligible
Spouse shall be entitled to receive for her lifetime a survivorship Pension in a
monthly amount equal to fifty percent (50%) of the reduced monthly amount that
had been paid to the Participant. The last monthly payment under the
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Qualified Joint and Survivor Annuity shall be made as of the first day of the
month in which the death of the last survivor between the Participant and his
Eligible Spouse has occurred.
The reduced amount payable to the Participant shall be determined so that the
discounted present value of the aggregate of the Pension payments expected to be
made to the Participant and his Eligible Spouse shall be the Actuarial
Equivalent of the Pension determined under Section 7.1(a). The Actuarial
Equivalent of the Pension determined under Section 7.1(a) shall be determined as
of the Participant's Annuity Starting Date and by using the interest rate
specified in Section 2.1(c) or, if it would produce a greater benefit, the
interest rate that would be used (determined as of January 1 of the Plan Year in
which such Pension payments commence) by the PBGC for purposes of determining
the present value of a lump sum distribution on plan termination.
(c) MARRIED PARTICIPANT WITHOUT ELIGIBLE SPOUSE. If (i) on the
date a Participant retires for reasons other than Disability the Participant is
married but the Participant's spouse is not an Eligible Spouse, (ii) the
Participant and such spouse were married within one (1) year of the
Participant's Annuity Starting Date and the Participant and such spouse remain
married for one (1) year, such spouse becoming an Eligible Spouse, and (iii) the
Participant and his spouse do not elect in accordance with Section 7.3(a) not to
receive his Pension in the form specified in Section 7.1(b), then the
Participant's Pension shall, upon the date the spouse becomes an Eligible
Spouse, become payable in the form of a Qualified Joint and Survivor Annuity.
The first payment under such Qualified Joint and Survivor Annuity shall be the
payment for the month immediately following the month during which the
Participant's spouse became an Eligible Spouse. The amount of such Pension
shall be calculated pursuant to the provisions of Section 7.1(b) except that the
amount payable to the Participant shall be determined so that the discounted
present value of the aggregate of the Pension payments expected to be received
by the Participant and his Eligible Spouse will be the Actuarial Equivalent of
the Pension provided for in Section 7.1(a) (except to the extent such Pension is
or has been modified by a Qualified Domestic Relations Order) on the basis of
the Participant's life expectancy on the date his spouse becomes an Eligible
Spouse. The Participant's death on or after the date his spouse becomes an
Eligible Spouse and prior to the beginning of the month following such date
shall not deprive the spouse of the survivor annuity that becomes contingently
payable on the date such spouse becomes an Eligible Spouse.
7.2 OPTIONAL PENSION FORMS. By making the election described in
Section 7.3(a) and by giving written notice to the Administration Committee
during the election period specified in Section 7.3(a), a Participant who
retires for reasons other than Disability may elect to receive a Pension payable
in one of the following forms in lieu of the normal form provided for in Section
7.1(a) or the form of Pension provided for in Section 7.1(b) but in an amount
that is Actuarially Equivalent to the normal form of Pension provided for in
Section 7.1(a):
(a) LIFE ANNUITY WITH FIVE (5) YEARS CERTAIN. With respect to
an ICC Plan Participant, a life annuity with sixty (60) monthly Pension benefit
payments guaranteed so that upon the death of the retired Participant on or
after his Annuity Starting Date but before the guaranteed number of monthly
Pension benefit payments has been made, the remainder of such guaranteed number
of monthly Pension benefit payments shall be paid as they become due to the
Beneficiary designated by the retired Participant. In the event of the death of
the Beneficiary
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after the Retired Participant's death but before such guaranteed number of
monthly Pension benefit payments have been made, the remainder of such
guaranteed number of monthly pension benefit payments shall be commuted into one
sum and paid to such Beneficiary's executors or administrators. If there is no
Beneficiary living at the date of such Retired Participant's death, the
remainder of the guaranteed number of monthly Pension benefit payments shall be
commuted into one lump sum and paid to the Retired Participant's executors or
administrators.
(b) CONTINGENT ANNUITY. A reduced Pension for the life of the
Participant and an amount equal to one hundred percent (100%), seventy-five
percent (75%) or fifty percent (50%) at the Participant's election, of his
reduced monthly Pension benefit to be paid to his designated Beneficiary, who
shall be the Participant's contingent annuitant, provided such Beneficiary is
living at the retired Participant's death.
If the Beneficiary is the spouse of the retired Participant, the benefit payable
under this option is payable without restriction. If, however, the Beneficiary
is any person other than the spouse of the retired Participant, the benefit
payable under this option shall be limited to the extent that the present value
of the payments to be made to the Participant during his lifetime shall be more
than fifty percent (50%) of the present value of the total payments to be made
to the Participant and the Beneficiary under this option.
Monthly payments to the annuitant shall commence on the first day of the month
next following the month in which the death of the retired Participant occurs,
provided the Beneficiary is then living, and monthly benefit payments shall
continue with the last monthly payment due immediately preceding the death of
the contingent annuitant.
If the death of the Beneficiary or the Participant occurs before the
Participant's Annuity Starting Date, any election of this option shall be deemed
null and void and the normal form of pension shall again become operative as
though this contingent annuitant had not been elected. If the Beneficiary
predeceases the retired Participant after the Participant's Annuity Starting
Date, retirement benefit payments shall terminate with the monthly payment due
immediately preceding the retired Participant's death.
(c) LIFE ANNUITY WITH TEN (10) YEARS CERTAIN. In the case of an
ICC Plan Participant whose Employment Commencement Date is prior to January 1,
1985, or in the case of a Wescar Plan Participant, a life annuity with one
hundred and twenty (120) monthly Pension benefit payments guaranteed so that
upon the death of the retired Participant on or after his Annuity Starting Date
but before the guaranteed number of monthly Pension benefit payments has been
made, the remainder of such guaranteed number of monthly Pension benefit
payments shall be paid as they become due to the Beneficiary designated by the
retired Participant. In the event of the death of the Beneficiary after the
Retired Participant's death but before such guaranteed number of monthly Pension
benefit payments have been made, the remainder of such guaranteed number of
monthly pension benefit payments shall be commuted into one sum and paid to such
Beneficiary's executors or administrators. If there is no Beneficiary living at
the date of such Retired Participant's death, the remainder of the guaranteed
number of monthly Pension benefit payments shall be commuted into one lump sum
and paid to the Retired Participant's executors or administrators.
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(d) SOCIAL SECURITY INTEGRATED BENEFIT. In the case of an ICC
Plan Participant whose Employment Commencement Date is prior to January 1, 1985,
a monthly Pension benefit payable in such amounts so that the Participant's
monthly benefit under this Plan prior to his Social Security Commencement Date
will generally equal the sum of his monthly benefit under this Plan and his
monthly Social Security Benefit after his Social Security Commencement Date.
For purposes of this option:
(i) Social Security Commencement Date means the earlier of
the first day of the first month in which the Participant's Social
Security Benefit is to commence, or, the first day of the month next
following his sixty-fifth (65th) birthday.
(ii) Social Security Benefit means the yearly Primary
Insurance Amount, or portion thereof, which the Participant is expected to
receive under Title II of the Federal Social Security Act, calculated on a
monthly basis.
A Participant's Social Security Commencement Date and Social Security Benefit
shall be determined by the Administrative Committee based on the Federal Social
Security Act as it exists on the Participant's Annuity Starting Date. A
Participant may elect this option only if his Annuity Starting Date precedes his
Social Security Commencement Date. Upon the death of a retired Participant, his
designated Beneficiary shall be entitled to receive a single sum cash payment in
an amount equal to:
(i) The Participant's Contributions to this Plan (which have
not been withdrawn) with Credited Interest to the date his pension
payments actually commenced, minus
(ii) The sum of the monthly retirement benefit payments which
shall have become payable prior to the Participant's death; provided,
however, that any portion of such Participant's monthly retirement benefit
payments which represents his Supplemental Retirement Benefit shall be
excluded.
7.3 PARTICIPANT PENSION PAYMENT ELECTIONS.
(a) ELECTION NOT TO TAKE QUALIFIED JOINT AND SURVIVOR ANNUITY OR
SINGLE LIFE ANNUITY. A Participant who qualifies for the Qualified Joint and
Survivor Annuity or Single Life Annuity may elect to receive his Pension in one
of the forms described in Sections 7.1(a) or 7.2, or revoke such an election,
provided that the Participant notifies the Administration Committee in writing
of such election or revocation of election on an appropriate form supplied by
the Administration Committee for this purpose. Notwithstanding the foregoing,
in the case of a Participant who has at least one (1) Hour of Service or one (1)
hour of paid leave on or after August 22, 1984, no election made under this
Section 7.3(a) during any Plan Year commencing after December 31, 1984, shall be
effective unless the Eligible Spouse of the Participant consents in writing to
such election, such election designates a specific nonspouse beneficiary or a
form of benefits which may not be changed without spousal consent (or the
consent of the spouse expressly permits designations by the Participant without
any requirements of further spousal consent), and such consent acknowledges both
the designation, if any, of a specific nonspouse
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beneficiary and the effect of such election, and is witnessed by a member of the
Administration Committee or a notary public or it is established to the
satisfaction of the Administration Committee that the consent of an Eligible
Spouse cannot be obtained because the Eligible Spouse cannot be located or such
other circumstances as the Secretary of the Treasury may prescribe by regulation
exist.
The Administration Committee shall furnish to each Participant who is eligible
to make an election under this Section 7.3(a) a written explanation in
nontechnical language of:
(i) The terms and conditions of the Qualified Joint and
Survivor Annuity or Single Life Annuity;
(ii) The Participant's right to make, and the effect of, an
election to waive the Qualified Joint and Survivor Annuity or Single Life
Annuity form of benefit;
(iii) The rights of the Participant's Eligible Spouse under
this Section 7.3(a) with respect to such waiver election; and
(iv) The right to make, and the effect of, a revocation of an
election to waive the Qualified Joint and Survivor Annuity or Single Life
Annuity form of benefit.
If such notification is made by mail or personal delivery, it shall be made by
such time as to reasonably assure that it will be received by the Participant at
least thirty (30) days and not more than ninety (90) days before the Annuity
Starting Date. Notice of the election may be given by alternative means, which
must be reasonably calculated to reach the attention of the Participant on or
about the time period specified in the preceding sentence and continue to reach
the attention of the Participant during the period in which he may make the
election (as, for example, by posting or repeated publication). A Participant
may make an election not to take a Qualified Joint and Survivor Annuity or
Single Life Annuity in favor of a Pension payable in a form prescribed by
Sections 7.1(a) or 7.2 hereof at any time during the ninety (90) day period
preceding the Annuity Starting Date. In addition, a Participant who has
separated from Service and who has a spouse who is not an Eligible Spouse may
make the election provided for in the immediately preceding sentence during the
period beginning on the first day of the ninety (90) day period ending on his
Annuity Starting Date and ending with the date his spouse becomes an Eligible
Spouse. Furthermore, a Participant may request additional information regarding
the Qualified Joint and Survivor Annuity or Single Life Annuity during the sixty
(60) day period following the date the above explanation is mailed or personally
delivered or otherwise communicated to such Participant. If the Participant
requests additional information, the Participant may make an election not to
take a Qualified Joint and Survivor Annuity or Single Life Annuity any time
during the sixty (60) day period following the date the original requested
information is mailed or personally delivered to such Participant.
Notwithstanding the preceding provisions, in no event shall the period during
which a Participant may elect not to take a Qualified Joint and Survivor Annuity
or Single Life Annuity in favor of a Pension payable in a form specified in
Section 7.1 or 7.2 hereof or to revoke such election expire earlier than the
Annuity Starting Date.
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A Participant may revoke an election made pursuant to this Section 7.3(a) during
the ninety (90) day period ending on the Annuity Starting Date (and in the case
of a Participant who separates from Service with a spouse who is not an Eligible
Spouse, ending on the date his spouse becomes an Eligible Spouse), and the
Participant may make a new election thereafter if it otherwise complies with
this Section 7.3(a). A Participant's election not to take a Qualified Joint and
Survivor Annuity or Single Life Annuity, if timely made, is effective on the
date the Participant's payment of benefits is to commence under Article V. A
Participant's revocation of an election not to take a Qualified Joint and
Survivor Annuity or Single Life Annuity is effective on the date the Participant
notifies the Administration Committee thereof in accordance with this Section
7.3(a). Any such new election or revocation of any election previously made
shall be made in accordance with the provisions of this Section 7.3(a).
(b) CONDITIONS OF ELECTION OF OPTIONAL FORM. The Participant
shall not make any election for an optional form of Pension benefit under which
the present value of the Pension payable solely to the Participant will not be
greater than fifty percent (50%) of the present value of the total Pension
payable to the Participant and his Beneficiaries; provided, however, that if the
Participant elects a Qualified Joint and Survivor Annuity described in Section
7.2(b) hereof, and his contingent annuitant is his spouse, the preceding
limitation shall not apply. The Administration Committee shall determine
"present value" as of the date the Trustee is to commence payment of the Pension
to the Participant. If the Administration Committee determines to disallow a
Participant's election, it shall direct the Trustee in writing to commence
payment of the Participant's Pension to him in the normal form specified in
Section 7.1. The Administration Committee shall apply the provisions of this
Section 7.3(b) in a nondiscriminatory and uniform manner.
7.4 QUALIFIED PRE-RETIREMENT SURVIVOR ANNUITY. A Participant who has
at least one (1) Hour of Service or at least one (1) hour of paid leave on or
after August 23, 1984, and has a Vested Accrued Benefit and dies before the
Annuity Starting Date and who has a surviving Eligible Spouse, shall
automatically have provided for such Eligible Spouse a Qualified Pre-Retirement
Survivor Annuity. Except to the extent provided in a Qualified Domestic
Relations Order, the Eligible Spouse of such a Participant shall be the
Participant's sole beneficiary to receive the death benefits which may be
payable on his behalf in the event of his death prior to his Annuity Starting
Date. A Qualified Pre-Retirement Survivor Annuity is a survivor annuity for the
life of the surviving Eligible Spouse of the Participant pursuant to which,
except to the extent modified by a Qualified Domestic Relations Order, payments
to the surviving Eligible Spouse are:
(a) In the case of a Participant who dies on or after the earliest
date on which he could retire under the Plan but before payment of his benefits
has commenced, one-half (1/2) of the annual benefit that would have been payable
to the Participant if he had retired on the first day of the month following his
death and elected that his Pension commence:
(i) At age sixty-five (65); or
(ii) If the Participant had postponed his retirement past his
Normal Retirement Date, at his date of death, as a straight life annuity;
and
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(b) In the case of a Participant who dies before the date he
becomes eligible for an Early Retirement Pension, equal to the amount that would
be payable as a survivor annuity under the Qualified Joint and Survivor Annuity
provided under this Plan if such Participant had:
(i) Separated from Service on the date of death;
(ii) Survived to the date on which he would have become
eligible for an Early Retirement Pension;
(iii) Retired with an immediate Qualified Joint and Survivor
Annuity on the date he became eligible for an Early Retirement Pension;
and
(iv) Died on the day after the day on which such Participant
would have become eligible for an Early Retirement Pension.
A Participant may not elect to waive payment of the Qualified Pre-Retirement
Survivor Annuity. The earliest period for which a surviving Eligible Spouse may
receive a payment under a Qualified Pre-Retirement Survivor Annuity shall be not
later than the month in which the Participant would have become eligible for an
Early Retirement Pension. There shall be no duplication between the benefits
provided under this Section 7.4 and Sections 7.2 (regarding optional pension
forms) and 8.1 (regarding the pre-retirement death benefit) hereof, (I.E., the
benefits provided under each such Section shall be inclusive of the benefits
provided under the other).
7.5 METHODS OF BENEFIT PAYMENT. Pensions shall in general be payable
by the Trustee directly to the Participant entitled thereto. However, the
Administration Committee, in lieu of instructing the Trustee to pay the Pension
to which a Participant is entitled directly from the funds of the Trust, may
instruct the Trustee to purchase from an insurance company selected by the
Administration Committee a non-transferable annuity contract which will provide
pension and other benefits in an amount identical to that to which the
Participant is entitled under this Plan. If an annuity contract is purchased
for the benefit of a Participant from an insurance company, the contract may
either be assigned to the Participant or held by the Trustee for the benefit of
such Participant pursuant to instructions from the Administration Committee.
7.6 DISTRIBUTIONS ON TERMINATION OF EMPLOYMENT FOR REASONS OTHER THAN
RETIREMENT. If a Participant terminates Service for any reason and he has a
Vested Accrued Benefit not in excess of Three Thousand Five Hundred Dollars
($3,500) or such Participant is not vested, distributions shall be made in
accordance with the following provisions:
(a) LUMP-SUM CASHOUT DISTRIBUTION WHEN VESTED ACCRUED BENEFIT NOT
IN EXCESS OF $3,500. If a Participant terminates Service for any reason with a
Vested right to all or part of his Accrued Benefit and the present value of the
Participant's Vested Accrued Benefit is not in excess of Three Thousand Five
Hundred Dollars ($3,500), unless the Participant elects a direct transfer under
this Section 7.6(a), the Administration Committee shall direct the Trustee to
distribute the present value of the Participant's Vested Accrued Benefit in a
single sum as soon as practicable following the Participant's termination of
employment. Alternatively, the
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Participant may elect to transfer all or a portion of his Vested Accrued Benefit
to either (i) a plan qualified under section 401(a) of the Code which accepts
direct transfer contributions, (ii) an individual retirement account described
in section 408(a) of the Code, (iii) an individual retirement annuity described
in section 408(b) of the Code (other than an endowment contract), or (iv) an
annuity plan described in section 403(a) of the Code; provided that such payment
exceeds Two Hundred Dollars ($200) and otherwise qualifies for transfer pursuant
to section 401(a)(31) of the Code. If a Participant elects a direct transfer
under this Section 7.6(a) the Administrative Committee will direct the Trustee
to transfer all or a portion of the Participant's Vested Accrued Benefit to the
eligible retirement arrangement specified by the Participant. If a Participant
elects to transfer only a portion of his Pension under this Section 7.6(a), the
remainder of his Pension shall be distributed in a single sum. The
Administration Committee shall prescribe the procedures a Participant must
follow to request a direct transfer of his Pension pursuant to this Section
7.6(a).
Notwithstanding the foregoing, however, no such distribution or transfer may be
made after the Annuity Starting Date unless the Participant and, if the
Participant is married to an Eligible Spouse, such Eligible Spouse (or if the
Participant has died with an Eligible Spouse, such surviving Eligible Spouse)
consents in writing to such distribution.
For purposes of determining the present value of the Participant's Vested
Accrued Benefit, the present value shall be determined as of the date of the
proposed distribution on the basis of the LESSER of (i) an eight and one
quarter percent (8.25%) per annum interest assumption or (ii) the interest rate
which would be used as of January 1 of the Plan Year in which the distribution
occurs by the PBGC for purposes of determining the present value of a lump sum
distribution on plan termination.
A Participant's Vesting Service and Benefit Service under the Plan shall not be
disregarded following the single sum payment of the Participant's Vested Accrued
Benefit under this Section 7.6(a). However, if the Participant subsequently
returns to employment with the Employer any additional Pension payable to the
Participant under the Plan shall be reduced by the Pension that would have been
payable under the Plan if the Participant had not received a distribution and
had not recommenced participation in the Plan, calculated as of the date the
Participant's Pension distributions commence under the Plan.
(b) DEEMED DISTRIBUTION TO NONVESTED PARTICIPANT. If a
Participant terminates Service at a time when such Participant's vested Accrued
Benefit equals Zero Dollars ($0), the Participant shall be deemed to receive a
distribution of his entire vested Accrued Benefit as of the day he terminates
Service.
7.7 QUALIFIED DOMESTIC RELATIONS ORDERS. During any period in which
the issue of whether a Domestic Relations Order is a Qualified Domestic
Relations Order is being determined (by the Administration Committee, by a court
of competent jurisdiction, or otherwise), the Administration Committee shall
direct the Trustee or any insurance company in or through the insurance
contracts or policies of which assets of the Plan have been invested (as
provided in Section 10.4(q)) to segregate in a separate account or in an escrow
account the amount that would
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have been payable to the Alternate Payee during such period if the Domestic
Relations Order is determined to be a Qualified Domestic Relations Order.
If within eighteen (18) months the Domestic Relations Order (or modification
thereof) is determined to be a Qualified Domestic Relations Order, the
Administration Committee shall direct the Trustee or insurance company to pay
the segregated account (and any earnings or interest thereon) or the balance
held in the escrow account, as applicable, to the person or persons entitled
thereto. If within eighteen (18) months it is determined that the order is not
a Qualified Domestic Relations Order or the issue as to whether such Domestic
Relations Order is a Qualified Domestic Relations Order is not resolved, the
Administration Committee shall direct the Trustee or insurance company to pay
the segregated account (and any earnings or interest thereon) or the balance of
the escrow account, as applicable, to the person or persons who would have been
entitled to such amounts if there had been no Domestic Relations Order. Any
determination that a Domestic Relations Order is a Qualified Domestic Relations
Order which is made after the close of the eighteen (18) month period shall be
applied prospectively only.
The Administration Committee shall establish reasonable procedures for
determining whether a Domestic Relations Order is a Qualified Domestic Relations
Order and to administer distributions under Qualified Domestic Relations Orders.
When the Plan receives a Domestic Relations Order, the Administration Committee
shall promptly notify the appropriate Participant and any other Alternate Payee
of the receipt of such order and the Administration Committee's procedures for
determining whether such order is a Qualified Domestic Relations Order. The
Administration Committee shall determine whether a Domestic Relations Order is a
Qualified Domestic Relations Order within a reasonable period after receipt of
such order, and shall within a reasonable time after such determination notify
the Participant and each Alternate Payee of such determination.
7.8 DETERMINATION OF BENEFIT OF TRANSFERRED EMPLOYEES. If a
Participant's Vesting Service after January 1, 1976, includes Vesting Service
with Transway International Corporation or an entity that is or was a wholly
owned subsidiary of Transway International Corporation which has a Requisite
Plan (as hereinafter defined), the following rules shall apply:
(a) Average Monthly Compensation for purposes of this Section 7.8
shall be computed by taking the Compensation of the Participant from any
Employer, Transway International Corporation or any wholly owned subsidiary of
Transway International Corporation which has a Requisite Plan and is not an
Employer hereunder, during the five (5) consecutive calendar years within his
last ten (10) years of Benefit Service which yield the highest average divided
by sixty (60); provided, however, that no year of Benefit Service shall be
counted in which such Participant received compensation which is not taken into
account in determining the amount of benefits under this Plan or the Requisite
Plan.
(b) For purposes of Article VI there shall be included Benefit
Service with Transway International Corporation or any wholly owned subsidiary
of Transway International Corporation which has a Requisite Plan and is not an
Employer hereunder; limited, however, to the period of such Benefit Service for
which the Participant received credit toward his benefit under such Requisite
Plan.
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(c) The annual benefit to be paid such Participant under this Plan
shall be the amount of the appropriate benefit determined under Article VI using
the foregoing Average Monthly Compensation and Benefit Service determined by
taking into account Section 7.8(b), multiplied by a fraction, the numerator of
which shall be the Participant's years of Benefit Service with the Employer; and
the denominator of which is the years of Benefit Service of such Participant
(taking into account Section 7.8(b)).
(d) If the sum of the number of years (including fractions of
years) used in the numerator of the fraction set forth in Section 7.8(c) and in
the numerators of all the fractions under all the Requisite Plans used in making
the determination of the benefit to be paid such Participant under each of said
Plans exceeds thirty (30), the numerators of this Plan and all the Requisite
Plans shall be reduced so that they aggregate thirty (30). The numerator or
numerators of the said plans that is or are to be reduced to comply will result
in such Participant receiving the maximum aggregate benefit from all such plans.
(e) A corporation shall be considered a wholly owned subsidiary of
Transway International Corporation for purposes of this Section if one hundred
percent (100%) of its outstanding stock is owned by Transway International
Corporation and/or any one or more of the wholly owned subsidiaries of Transway
International Corporation as herein defined.
(f) A "Requisite Plan" shall mean a defined benefit plan (within
the meaning of section 414(j) of the Code) which provides (i) that Benefit
Service under such plan will be granted for Service credited under this Plan and
(ii) that its benefit is to be prorated in the manner substantially the same as
provided in this Section 7.8.
7.9 CASH WITHDRAWAL BENEFIT. An ICC Plan Participant may, at any time
after termination of Service and prior to his attaining age fifty-five (55), if
he has completed ten (10) years of Vesting Service (within the meaning of
Section 5.5), elect to receive a Cash Withdrawal Benefit (herein so called) in
an amount equal to the greater of the present value of his Employee Accrued
Benefit or the aggregate of his Participant Contributions under the
International Controls Corp. Pension Plan as in effect on June 30, 1984, plus
Credited Interest, which benefit shall be paid within ninety (90) days following
the receipt of such election by the Administration Committee. If the present
value of any Qualified Joint and Survivor Annuity or Qualified Pre-Retirement
Survivor Annuity payable with respect to such an ICC Plan Participant
(determined in accordance with Section 7.6) exceeds Three Thousand Five Hundred
Dollars ($3,500), the foregoing election by an ICC Plan Participant shall not be
effective unless the Eligible Spouse, if any, of the ICC Plan Participant
consents in writing to such election and such consent acknowledges the effect of
such election and is witnessed by a member of the Administration Committee or a
notary public. Such spousal consent shall not be necessary if it is established
to the satisfaction of the Administration Committee that the consent of the
Eligible Spouse cannot be obtained because the Eligible Spouse cannot be located
or such other circumstances as the Secretary of the Treasury may prescribe by
regulation exist. The Administration Committee will not be deemed to have
received the ICC Plan Participant's election to receive a Cash Withdrawal
Benefit until it has received, when appropriate, the Eligible Spouse's consent
described in the immediately preceding sentence. A Cash Withdrawal Benefit
shall, in the case of an ICC Plan Participant who does not have a vested right
to his entire Accrued Benefit, be in lieu of all other
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benefits under the Plan unless the Participant resumes Service with the Employer
as a Re-Employed Employee, in which case such Participant shall have an Accrued
Benefit equal to his Employer Accrued Benefit. A Participant who has a vested
right to his entire Accrued Benefit and who elects to receive a Cash Withdrawal
Benefit shall have an Accrued Benefit equal to his Employer Accrued Benefit. The
amount by which the Participant's Accrued Benefit is reduced under the fourth
sentence of this Section 7.9 shall be restored upon repayment by the Participant
of the full amount of the Cash Withdrawal Benefit paid plus interest compounded
annually at the rate of Credited Interest is being computed on the date of
repayment, provided that such repayment must be made within two (2) years of the
Employee's resumption of employment covered by the Plan.
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End of Article VII
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ARTICLE VIII
DEATH BENEFITS
8.1 BENEFIT FOR PRE-RETIREMENT DEATH. If a Participant other than an
ICC Plan Participant dies after earning a vested right to a retirement benefit
but before his Annuity Starting Date and a Qualified Pre-Retirement Survivor
Annuity is not payable with respect to such Participant, no death benefit shall
be payable under this Plan with respect to such Participant. If an ICC Plan
Participant dies prior to the first day of the calendar month on which
retirement benefits shall commence (whether or not payment is actually made on
such date), a Qualified Pre-Retirement Survivor Annuity is not payable with
respect to such Participant, and the Participant has not elected to receive a
Cash Withdrawal Benefit in accordance with Section 7.9, his designated
Beneficiary shall be entitled to receive a Contributory Death Benefit (herein so
called) in an amount equal to the aggregate of the Participant's Contributions
to the ICC Plan plus Credited Interest to the first day of the month preceding
his date of death. If a Participant with respect to whom a Qualified
Pre-Retirement Survivor Annuity is payable dies prior to the Annuity Starting
Date, the only death benefit payable under this Plan with respect to such
Participant shall be such Qualified Pre-Retirement Survivor Annuity.
8.2 BENEFIT FOR POST-RETIREMENT DEATH. Upon the death after
Retirement of a single Participant, or a married Participant who has made an
election under Section 7.3(a) not to receive his Pension in the form of a
Qualified Joint and Survivor Annuity and who is eligible for or receiving a
Normal Retirement Pension, Early Retirement Pension or Deferred Vested Pension
in either the form specified in Section 7.1(a) or an elected optional form, no
Death Benefit Pension shall be provided by the Plan, other than as a part of the
benefit payment form elected and which remains effective under Section 7.2. In
the case of the death after Retirement of a Participant who is receiving a
Qualified Joint and Survivor Annuity, the only death benefit payable under this
Plan with respect to such Participant shall be the survivor annuity that is part
of the Qualified Joint and Survivor Annuity.
8.3 PRE-1992 LUMP SUM DEATH BENEFIT. If a Participant or Former
Participant dies before January 1, 1992, and after his Normal Retirement Date
while receiving a Pension (other than a Deferred Vested Pension) hereunder, his
designated Beneficiary shall receive a lump sum death benefit equal to Two
Thousand Five Hundred Dollars ($2,500).
This benefit is in addition to any optional retirement benefit which may be in
effect in accordance with Article VII at the time of the retired Participant's
death. In addition, any individual who was entitled to the above benefit under
the Prior Plan and on whose behalf the above benefit was not paid under the
Prior Plan shall be entitled to receive such benefit under this Plan.
8.4 DESIGNATION OF BENEFICIARIES. Except to the extent Sections
7.1(b), 7.1(c), and 7.4 limit a Participant's right to designate a Beneficiary,
each Participant may from time to time designate, in writing, a Beneficiary to
whom the Trustee shall pay any benefits to which such Beneficiary may be
entitled hereunder in the event of the Participant's death. The Administration
Committee shall prescribe the form for the written designation of Beneficiaries.
A Participant's
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filing such form with the Administration Committee shall effectively revoke all
Beneficiary designations filed prior to that date by such Participant. Each
such designation may be revoked by the Participant by signing and filing a new
Beneficiary designation form with the Administration Committee.
If a Qualified Joint and Survivor Annuity or Qualified Pre-Retirement Survivor
Annuity is not payable with respect to a deceased Participant and such
Participant has failed to name a Beneficiary in the manner above prescribed, or
if the Beneficiary named by a deceased Participant predeceases the Participant,
the death benefit, if any, which may be payable under this Plan with respect to
such deceased Participant shall be paid, to the first of the following persons
who survive the Participant by at least thirty (30) days:
(i) A person otherwise designated by such Participant as the
beneficiary of such benefits;
(ii) The Participant's spouse;
(iii) Equally among the Participant's descendants;
(iv) The Participant's parents;
(v) Equally among the Participant's heirs at law; or
(vi) The legal representative or representatives of the
Participant's estate.
Any payment made to any person pursuant to the power and discretion conferred
upon the Administration Committee by the preceding sentence shall operate as a
complete discharge of all obligations under this Plan with respect to such
deceased Participant and shall not be subject to review by anyone, but shall be
final, binding, and conclusive on all persons ever interested hereunder.
8.5 CONTINGENT BENEFICIARIES. In the event of the death of a
Beneficiary who survives the Participant and who, at the Beneficiary's death, is
receiving benefits under Article VII under an annuity form providing for a
refund settlement, a survivorship annuity, or a period certain with respect to
which death benefits are payable under this Plan after the Participant's death,
the amount of such refund or the amount of monthly retirement income that the
Beneficiary was receiving, as applicable, shall be payable to a person
designated by the Participant to receive the remaining death benefits, if any,
payable in the event of such contingency, or, if no person was so named, then to
a person designated by the Beneficiary of the deceased Participant to receive
the remaining death benefits, if any, payable in the event of such contingency.
If no person so designated is living upon the occurrence of such contingency,
then the remaining death benefits, if any, shall be payable for the balance of
such applicable period, to the first of the following persons who survive the
Beneficiary by at least thirty (30) days:
(i) The Participant's spouse;
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(ii) The Beneficiary's spouse;
(iii) Equally to the Participant's descendants;
(iv) Equally to Beneficiary's descendants;
(v) The Participant's parents;
(vi) The Beneficiary's parents;
(vii) The Participant's heirs at law;
(viii)The Beneficiary's heirs at law; or
(ix) The legal representative or representatives of the
estate of the deceased Beneficiary.
Any payment made to any person pursuant to the power and discretion conferred
upon the Administration Committee by the preceding sentence shall operate as a
complete discharge of all obligations under this Plan with respect to such
deceased Beneficiary, and shall not be subject to any review by anyone, but
shall be final, binding, and conclusive on all persons ever interested
hereunder.
- ---------------------------
End of Article VIII
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ARTICLE IX
EMPLOYER ADMINISTRATIVE PROVISIONS
9.1 INFORMATION. Each Employer shall, upon request or as may be
specifically required hereunder, furnish or cause to be furnished, all of the
information or documentation which is necessary or required by the
Administration Committee, the Trustee, or any insurance company in or through
the insurance contracts or policies of which assets of the Plan have been
invested (as provided in Section 10.4(q)) to perform their respective duties and
functions under the Plan. For this purpose, the Employer's records shall be
conclusive as to all persons.
9.2 NO LIABILITY. Subject to Article XII, no Employer assumes any
obligation or responsibility to any of the Employees, Participants, or
Beneficiaries for any act of, or failure to act, on the part of the
Administration Committee, the Trustee, or any insurance company in or through
the insurance contracts or policies of which assets of the Plan have been
invested (as provided in Section 10.4(q)).
9.3 EMPLOYER ACTION. Any action required of an Employer shall be
evidenced by resolution of its board of directors or other governing body or by
a person authorized to act by board resolution.
9.4 INDEMNITY. Each Employer by adoption of this Plan agrees to
indemnify and save harmless the Board of Directors, individual Trustee(s), and
the members of the Administration Committee, and each of them, from and against
any and all loss resulting from liability to which the Board of Directors,
individual Trustee(s), and the Administration Committee, or the members of the
Board of Directors and Administration Committee, may be subjected by reason of
any act or conduct (except willful or reckless misconduct) in their official
capacities in the administration of this Plan or Trust, including all expenses
reasonably incurred in their defense. In the event that the Employer fails to
provide such defense, such liability shall be paid from the Trust Fund; provided
that, the indemnification provisions of this Section 9.4 shall not relieve the
Board of Directors, individual Trustee(s), or any members of the Administration
Committee from any liability they may have under the Act for breach of a
fiduciary duty.
9.5 AMENDMENT TO VESTING SCHEDULE. Although the Company reserves the
right to amend the vesting schedule at any time, the Company shall not amend the
vesting schedule (and no amendment shall be effective) if the amendment would
reduce the vested percentage of any Participant's Accrued Benefit (determined as
of the later of the date the Company adopts the amendment, or the date the
amendment becomes effective) to a percentage less than the vested percentage
computed under the Plan without regard to the amendment.
In the event the vesting schedule of the Plan is amended or any other amendment
to the Plan is adopted which directly or indirectly affects the computation of
the vested percentage of a Participant's Employer Accrued Benefit under Section
5.4, the Vested Accrued Benefit of any Participant who has completed at least
five (5) years of Vesting Service, as defined in
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Section 5.5, shall be computed under the vesting schedule, original or amended,
which will result in the greatest vested percentage being credited to the
affected Participant.
- ---------------------------
End of Article IX
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ARTICLE X
ADMINISTRATION AND INVESTMENT PROVISIONS
10.1 APPOINTMENT OF ADMINISTRATION COMMITTEE MEMBERS. The Board of
Directors shall appoint an Administration Committee to administer the Plan and
to direct Plan investments, the members of which may or may not be Participants
in the Plan.
10.2 TERM. Each member of the Administration Committee shall serve
until his successor is appointed. Any member of the Administration Committee
may be removed by the Board of Directors, with or without cause, and such Board
shall have the power to fill any Administration Committee vacancy which may
occur. An Administration Committee member may resign upon written notice to the
Board of Directors.
10.3 COMPENSATION. The members of the Administration Committee shall
serve without compensation for services as such, but the Employers shall pay all
expenses of the Administration Committee, including the expenses for any bond
required under section 412 of the Act. To the extent such expenses are not paid
by the Employers, they shall be paid by the Trustee from the Trust Fund.
10.4 POWERS OF THE ADMINISTRATION COMMITTEE. Subject to Article XII,
the Administration Committee shall have the following powers and duties:
(a) To direct the administration of the Plan in accordance with
the provisions herein set forth;
(b) To adopt rules of procedure and regulations necessary for the
administration of the Plan, provided the rules are not inconsistent with the
terms of the Plan;
(c) To determine all questions with regard to rights of Employees,
Participants, and Beneficiaries under the Plan, including but not limited to
rights of eligibility of an Employee to participate in the Plan, the value of a
Participant's Accrued Benefit, and the Vested Accrued Benefit of each
Participant.
(d) To enforce the terms of the Plan and the rules and regulations
adopted by it;
(e) To direct the Trustee with respect to the crediting and
distribution of the Trust, as well as in all other matters within its
discretion, as provided in the Trust Agreement;
(f) To direct the Trustee to transfer assets to another trust
which constitutes a qualified trust under section 401(a) of the Code and to
accept transfers of assets from other trusts which constitute qualified trusts
under sections 401(a) and 501(a) of the Code;
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(g) To review and render decisions respecting a claim for (or
denial of a claim for) a benefit under the Plan;
(h) To furnish the Employers with information which the Employers
may require for tax or other purposes;
(i) To prescribe procedures to be followed by distributees in
obtaining benefits;
(j) To receive from the Employers and from Employees such
information as shall be necessary for the proper administration of the Plan;
(k) To receive and review reports from the Trustee concerning the
financial condition and receipts and disbursements of the Trust Fund;
(l) To require any reports it deems necessary from any insurance
company in or through the insurance contracts or policies of which assets of the
Plan have been invested pursuant to Section 10.4(q), and to receive and review
such reports;
(m) To maintain, or cause to be maintained, separate accounts in
the name of each Participant to reflect the Participant's Accrued Benefit under
the Plan;
(n) To interpret and construe the Plan; and
(o) To establish and maintain a funding standard account and to
make credits and charges to such account to the extent required by and in
accordance with the provisions of section 412 of the Code;
(p) To direct the Trustee in the investment, reinvestment, and
disposition of the Trust Fund, as provided in the Trust Agreement;
(q) To determine which assets of the Plan are not to be held in
and invested through the Trust Fund and to cause all the assets of the Plan that
are not to be held in and invested through the Trust Fund to be invested in or
through insurance contracts or policies (other than life, health or accident,
property, casualty, or liability insurance contracts) issued by an insurance
company qualified to do business in a state (within the meaning of section
7701(a)(10) of the Code);
(r) To require any insurance company in or through the insurance
contracts or policies of which assets of the Plan have been invested pursuant to
Section 10.4(q) to provide a valuation of such contracts or policies (or, if
appropriate, the assets held thereunder) as of the Valuation Date each Plan
Year;
(s) To engage the services of an investment manager or managers
(as defined in section 3(38) of the Act), each of whom shall have full power and
authority to manage, acquire or dispose (or direct the Trustee with respect to
acquisition or disposition) of any Plan asset under its control;
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(t) To interpret and construe the Plan with respect to the
investment, reinvestment and disposition of Plan assets;
(u) To engage the service of legal counsel (who may, if
appropriate, be legal counsel for an Employer) and agents whom it may deem
advisable to assist it with the performance of its duties; and
(v) To select a secretary, who need not be a member of the
Administration Committee.
The Administration Committee shall have no power to add to, subtract from, or
modify any of the terms of the Plan, or to change or add to any benefits
provided by the Plan, or to waive or fail to apply any requirements of
eligibility for a Pension under the Plan.
10.5 MANNER OF ACTION. The decision of a majority of the appointed and
qualified members of the Administration Committee shall control. In case of a
vacancy in the membership of the Administration Committee, the remaining members
of the Administration Committee may exercise any and all of the powers,
authorities, duties, and discretions conferred upon such Administration
Committee pending the filling of such vacancy. The Administration Committee
may, but need not, call or hold formal meetings. Any decisions made or action
taken pursuant to written approval of a majority of the then members shall be
sufficient for all purposes. The Administration Committee shall maintain
adequate records of its decisions.
10.6 AUTHORIZED REPRESENTATIVE. The Administration Committee may
authorize any one of its members, or its secretary, to sign on its behalf any
notices, directions, applications, certificates, consents, approvals, waivers,
letters, or other documents. The Administration Committee must evidence this
authority by an instrument signed by all its respective members and filed with
the Trustee.
10.7 NONDISCRIMINATION. The Administration Committee shall administer
the Plan in a uniform, nondiscriminatory manner for the exclusive benefit of the
Participants and their Beneficiaries.
10.8 INTERESTED MEMBER. No member of the Administration Committee may
decide or determine any matter concerning the distribution, nature, or method of
settlement of his own benefits under the Plan unless he is the sole member of
the Administration Committee.
10.9 FUNDING POLICY. The Administration Committee shall review, not
less often than annually, all pertinent Employee information and Plan data in
order to establish the funding policy of the Plan and determine the appropriate
methods for carrying out the Plan's objectives. The Administration Committee
shall communicate annually to the Employers, the Trustee, the Investment
Manager, if any, and any insurance company in or through the insurance contracts
or policies of which assets of the Plan have been invested (as provided in
Section 10.4(q)) the Plan's short-term and long-term financial needs so
investment policy can be coordinated with Plan financial requirements.
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10.10 BOOKS AND RECORDS. The Administration Committee shall maintain,
or cause to be maintained, records which will adequately disclose at all times
the state of the Trust Fund and of each separate interest therein. The books,
forms, and methods of accounting shall be the responsibility of the
Administration Committee.
- -----------------------
End of Article X
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ARTICLE XI
PARTICIPANT ADMINISTRATIVE PROVISIONS
11.1 PERSONAL DATA TO ADMINISTRATION COMMITTEE. Each Participant and
Beneficiary shall furnish to the Administration Committee evidence, data, or
information as the Administration Committee considers necessary or desirable for
the purpose of administering the Plan. The provisions of this Plan are
effective for the benefit of each Participant upon the condition precedent that
each Participant will promptly furnish full, true, and complete evidence, data,
and information when requested to do so by the Administration Committee,
provided the Administration Committee shall advise each Participant of the
effect of his failure to comply with its request.
11.2 ADDRESS FOR NOTIFICATION. Each Participant and each Beneficiary
of a deceased Participant shall file with the Administration Committee, in
writing, his post office address, and each subsequent change of such post office
address. Any payment or distribution made hereunder, and any communication
addressed to a Participant or his Beneficiary, at the last address filed with
the Administration Committee, or if no such address has been filed, then at the
last address shown by the records of the Employer, shall be deemed to have been
delivered to the Participant or his Beneficiary on the date that such
distribution or communication is deposited in the United States Mail, postage
prepaid, to be forwarded to such address.
11.3 ASSIGNMENT OR ALIENATION. No benefit payable under the Plan shall
be subject in any manner to alienation, sale, transfer, assignment, pledge,
encumbrance, charge, garnishment, execution, or levy of any kind, either
voluntary or involuntary, except to the extent provided under a Qualified
Domestic Relations Order, prior to actually being received by the person
entitled to the benefit under the terms of the Plan. Neither the Trust Fund nor
the proceeds of any insurance contract or policy in or through which assets of
the Plan have been invested (as provided in Section 10.4(q)) shall in any manner
be liable for, or subject to, the debts, contracts, liabilities, engagements, or
torts of any person entitled to benefits hereunder, except to the extent that
under a Qualified Domestic Relations Order the Trustee or an insurance company
in or through the insurance contracts or policies of which the assets of the
Plan have been invested (as provided in Section 10.4(q)) is required to pay over
a Participant's Accrued Benefit hereunder to an Alternate Payee. In the event
an Employer, the Trustee, or an insurance company in or through the insurance
contracts or policies of which the assets of the Plan have been invested (as
provided in Section 10.4(q)) receives written notice of an adverse claim to a
benefit distributable or being paid to a Participant, Former Participant or
Beneficiary, the Trustee or such insurance company may suspend payment(s) of
such benefit until such matter is resolved to the satisfaction of such party.
11.4 LITIGATION AGAINST THE TRUST. If any legal action filed against
the Trustee, Board of Directors, or the Administration Committee, or against any
member or members of the Administration Committee or Board of Directors, by or
on behalf of any Participant or Beneficiary, results adversely to the
Participant or to the Beneficiary, the Trustee shall reimburse itself, the Board
of Directors, the Administration Committee, and any member or members of the
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Administration Committee or Board of Directors, for all costs and fees expended
by it or them by surcharging all costs and fees against the sums payable under
the Plan to the Participant or to the Beneficiary, but only to the extent a
court of competent jurisdiction specifically authorizes and directs any such
surcharges and then only to the extent permitted under section 401(a)(13) of the
Code.
11.5 INFORMATION AVAILABLE. Any Participant in the Plan or any
Beneficiary may examine copies of the Plan's latest annual report, this Plan and
Trust, and any contract, or other instrument under which the Plan was
established or is operated. The Administration Committee will maintain all of
the items listed in this Section 11.5 for examination during reasonable business
hours in its office, or in such other place or places as it may designate from
time to time in order to comply with the regulations issued under the Act. Upon
the written request of a Participant or Beneficiary, the Administration
Committee shall furnish him with a copy of any item listed in this Section 11.5.
The Administration Committee may make a reasonable charge to the person
requesting the copy so furnished.
11.6 BENEFICIARY'S RIGHT TO INFORMATION. A Beneficiary's right to (and
the Administration Committees', or a Trustee's duty to provide to the
Beneficiary) information or data concerning the Plan shall not arise until he
first becomes entitled to receive a benefit under the Plan.
11.7 CLAIMS PROCEDURE.
(a) GENERAL. Upon termination of Service (except in the case of
early retirement), prior to or upon becoming entitled to receive a benefit
hereunder, a Participant or Beneficiary shall file a claim for such benefit with
the Administration Committee at the time and in the manner prescribed by such
Administration Committee. Notwithstanding the immediately preceding sentence,
the Administration Committee may direct the Trustee to commence payment of a
Participant's or Beneficiary's benefits hereunder without requiring the filing
of a claim therefore if the Administration Committee has knowledge of such
Participant's or Beneficiary's whereabouts and sufficient facts to substantiate
his entitlement to a benefit.
(b) EARLY RETIREMENT BENEFITS. A Participant who is eligible to
apply for an Early Retirement Pension under Section 6.2 and elects to do so
shall file an application therefore with the Administration Committee at the
time and in the manner prescribed by the Administration Committee.
11.8 APPEAL PROCEDURE FOR DENIAL OF BENEFITS. The Administration
Committee shall provide adequate notice in writing to any Participant or to any
Beneficiary ("Claimant") whose claim for benefits under the Plan has been denied
by the Administration Committee. Such notice must be sent within ninety (90)
days of the date the claim is received by the Administration Committee unless
special circumstances require an extension of time for processing the claim.
Such extension shall not exceed ninety (90) days and no extension shall be
allowed unless, within the initial ninety (90) day period, an extension notice
is forwarded to the Claimant indicating the special circumstances requiring the
extension and specifying a date by which the Administration
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Committee expects to render its final decision. The Administration Committee's
notice of denial to the Claimant shall set forth:
(a) The specific reason or reasons for the denial;
(b) Specific references to pertinent Plan provisions on which the
Administration Committee based its denial;
(c) A description of any additional material and information
needed for the Claimant to perfect his claim, along with an explanation of why
the material or information is needed;
(d) A statement that the Claimant may:
(i) Request a review upon written application to the
Administration Committee;
(ii) Review pertinent Plan documents; and
(iii) Submit issues and comments in writing; and
(e) A statement that if the Claimant wishes to appeal the adverse
determination by the Administration Committee, such appeal must be made in
writing to the Administration Committee within sixty (60) days after receipt of
the Administration Committee's notice of denial of benefits. The Administration
Committee's notice must further advise the Claimant that his failure to appeal
the action to the Administration Committee in writing within the sixty (60) day
period will render the Administration Committee's determination final, binding,
and conclusive.
If the Claimant appeals an adverse determination to the Administration
Committee, he, or his duly authorized representative, may submit, in writing,
whatever issues and comments he, or his duly authorized representative, feels
are pertinent. The Administration Committee shall re-examine all facts related
to the appeal and make a final determination as to whether the denial of
benefits is justified under the circumstances. The Administration Committee
shall advise the Claimant in writing of its decision on his appeal, the specific
reasons for the decision, and the specific Plan provisions on which the decision
is based. Notice of a decision on appeal shall be given within sixty (60) days
of the Claimant's written request for review, unless special circumstances (such
as a hearing) would make the rendering of a decision within the sixty (60) day
period impracticable, but in no event shall the Administration Committee render
a decision regarding the denial of a claim for benefits later than one hundred
and twenty (120) days after its receipt of a request for review. If an
extension of time for review is required because of special circumstances,
written notice of the extension shall be furnished to the Claimant prior to the
date the extension period commences.
The Administration Committee's notice of a denial of benefits shall identify the
name of each member of the Administration Committee and the name and address of
the Administration Committee member to whom the Claimant may forward his appeal.
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11.9 PLACE OF PAYMENT AND PROOF OF CONTINUED ELIGIBILITY. As required
by Section 11.2, each Employee and Beneficiary shall file with the
Administration Committee from time to time in writing his post office address
and each change of post office address. Any check representing payment
hereunder and any communication addressed to an Employee, a former Employee, a
retired Employee, or Beneficiary at his last address filed with the
Administration Committee, or if no such address has been filed, then at his last
address as shown by the records of the Employer, shall be deemed to have been
delivered to such person on the date on which such check or communication is
deposited in the United States mail.
If the Administration Committee, for any reason, is in doubt as to whether
Pension payments are being received by the person entitled thereto, it shall, by
registered mail addressed to the person concerned, at his address last known to
the Administration Committee, notify such person that all unmailed and future
retirement income payments shall be henceforth withheld until he provides the
Administration Committee with evidence of his entitlement to such benefit and
his proper mailing address.
11.10 NO RIGHTS IMPLIED. Nothing contained in this Plan, or with
respect to the establishment of the Trust, or any modification or amendment to
the Plan or Trust, or in the creation of any account, or the payment of any
benefit, shall give any Employee, Participant, or Beneficiary any right to
continue employment with an Employer or any legal or equitable right against an
Employer or any officer, director, or Employee of an Employer, or against the
Trustee, or its agents or employees, except as expressly provided by the Plan,
the Trust or the Act.
- -------------------------
End of Article XI
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ARTICLE XII
FIDUCIARIES DUTIES
12.1 FIDUCIARIES. The "Fiduciaries" (herein so called) of the Plan
shall be the following:
(a) The Board of Directors;
(b) The Employers;
(c) The Administration Committee;
(d) The Trustee; and
(e) Such other person or persons that are designated to carry out
fiduciary responsibilities under the Plan in accordance with Section 12.3(c)
hereof.
Any person or group of persons may serve in more than one fiduciary capacity
with respect to the Plan. A Fiduciary may employ one or more persons to render
advice with regard to any responsibility such Fiduciary has under the Plan.
12.2 ALLOCATION OF RESPONSIBILITIES. The powers and responsibilities
of the Fiduciaries are hereby allocated as indicated below:
(a) BOARD OF DIRECTORS. The Board of Directors shall be
responsible for all functions assigned or reserved to it under the Plan and
Trust Agreement. Any authority assigned or reserved to the Board of Directors
under the Plan and Trust Agreement shall be exercised by resolution of the
members of the Board of Directors.
(b) EMPLOYER. The Employer shall be responsible for all
functions assigned or reserved to it under the Plan and Trust Agreement. Any
authority assigned or reserved to the Employer under the Plan and Trust
Agreement shall be exercised by resolution of the Employer's board of directors.
(c) ADMINISTRATION COMMITTEE. The Administration Committee
shall have the responsibility and authority to control the operation and
administration of the Plan in accordance with the terms of the Plan and Trust
Agreement, except with respect to duties and responsibilities specifically
allocated to other fiduciaries. The Administration Committee shall have the
authority to issue written directions to the Trustee to the extent provided in
the Trust Agreement. The Trustee shall follow the Administration Committee's
directions unless it is clear that the actions to be taken under those
directions would be violations of applicable fiduciary standards or would be
contrary to the terms of the Plan or Trust Agreement. The Administration
Committee shall also have the responsibility and authority to control the
investment of the Trust Fund in accordance with the terms of the Plan and Trust
Agreement, except with respect to duties and responsibilities specifically
allocated to other fiduciaries. The Administration Committee shall
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have the authority to issue written directions to the Trustee to the extent
provided in the Trust Agreement. The Trustee shall follow the Administration
Committee's directions, unless it is clear that the actions to be taken under
those directions would be violations of applicable fiduciary standards or would
be contrary to the terms of the Plan or Trust Agreement.
(d) TRUSTEE. The Trustee shall have the duties and
responsibilities set out in the Trust Agreement, subject, however, to direction
by the Administration Committee as set out in the Trust Agreement.
(e) ALLOCATIONS. Powers and responsibilities may be allocated
to other Fiduciaries in accordance with Section 12.3 hereof, or as otherwise
provided herein or in the Trust Agreement.
This Article XII is intended to allocate to each Fiduciary the individual
responsibility for the prudent execution of the functions assigned to it, and
none of such responsibilities or any other responsibility shall be shared by two
or more of such Fiduciaries unless such sharing shall be provided for by a
specified provision of the Plan or Trust Agreement.
12.3 PROCEDURES FOR DELEGATION AND ALLOCATION OF RESPONSIBILITIES.
Fiduciary responsibilities may be allocated as follows:
(a) The Administration Committee may specifically allocate
responsibilities to a specified member or members of the Administration
Committee.
(b) The Administration Committee may designate a person or persons
other than a Fiduciary to carry out fiduciary responsibilities under the Plan,
provided that the authority granted the Administration Committees under this
subparagraph (b) shall not cause any person or persons employed to perform
ministerial acts and services for the Plan to be deemed Fiduciaries of the Plan.
(c) The Administration Committee may appoint an Investment Manager
or managers to manage (including the power to acquire and dispose of) the assets
of the Plan (or a portion thereof).
(d) If at any time there be more than one Trustee serving under
the Trust Agreement, such Trustees may allocate specific responsibilities,
obligations, or duties among themselves in such manner as they shall agree.
Any allocation of responsibilities pursuant to this Section 12.3 shall be made
by filing a written notice thereof with the Administration Committee
specifically designating the person or persons to whom such responsibilities or
duties are allocated and specifically setting out the particular duties and
responsibilities with respect to which the allocation or designation is made.
12.4 GENERAL FIDUCIARY STANDARDS. A Fiduciary shall discharge his
duties with respect to the Plan solely in the interest of the Participants and
their Beneficiaries and
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(a) For the exclusive purpose of providing benefits to
Participants and their Beneficiaries and defraying reasonable expenses of
administering the Plan;
(b) With the care, skill, prudence, and diligence under the
circumstances then prevailing that a prudent man acting in a like capacity and
familiar with such matters would use in the conduct of an enterprise of a like
character and with like aims;
(c) By diversifying the investments of the Plan so as to minimize
the risk of large losses, unless under the circumstances it is clearly prudent
not to do so; and
(d) In accordance with the documents and instruments governing the
Plan, insofar as such documents and instruments are consistent with the
provisions of Title I of the Act.
12.5 LIABILITY AMONG CO-FIDUCIARIES.
(a) GENERAL. Except for any liability which a Fiduciary may
have under the Act, a Fiduciary shall not be liable for the breach of a
fiduciary duty or responsibility by another Fiduciary of the Plan except in the
following circumstances:
(i) He participates knowingly in, or knowingly undertakes to
conceal, an act or omission of such other Fiduciary, knowing such act or
omission is a breach;
(ii) His failure to comply with the general fiduciary
standards set out in Section 12.4 in the administration of his specific
responsibilities which give rise to his status as a Fiduciary has enabled
such other Fiduciary to commit a breach; or
(iii) He has knowledge of a breach by such other Fiduciary and
he does not undertake reasonable efforts under the circumstances to remedy
the breach.
(b) CO-TRUSTEES. In the event that there are two or more
Trustees serving under the Trust Agreement, each should use reasonable care to
prevent a co-Trustee from committing a breach of fiduciary responsibility and
they shall jointly manage and control assets of the Plan, except that in the
event of an allocation of responsibilities, obligations, or duties among
Trustees, a Trustee to whom such responsibilities, obligations, or duties have
not been allocated shall not be liable to any person by reason of this Section
12.5, either individually or as a Trustee, for any loss resulting to the Plan
arising from the acts or omissions on the part of the Trustee to whom such
responsibilities, obligations, or duties have been allocated.
(c) LIABILITY WHERE ALLOCATION IS IN EFFECT. To the extent that
fiduciary responsibilities are specifically allocated either by a Fiduciary or
pursuant to the express terms hereof to any person or persons, then such
Fiduciary shall not be liable for any act or omission of such person in carrying
out such responsibility except to the extent that the Fiduciary violated Section
12.4: (i) with respect to such allocation or designation, (ii) with respect to
the establishment or implementation of the procedure for making such an
allocation or designation, (iii) in continuing the allocation or designation, or
if the Fiduciary would otherwise be liable in accordance with this Section 12.5.
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(d) LIABILITY OF TRUSTEE FOLLOWING ADMINISTRATION COMMITTEE
DIRECTIONS. No Trustee shall be liable for following instructions of the
Administration Committee given pursuant to Section 12.2(c) and (d).
(e) NO RESPONSIBILITY FOR EMPLOYER ACTION. Neither the Trustee,
nor the Administration Committee, shall have any obligation nor responsibility
with respect to any action required by the Plan to be taken by an Employer, any
Participant or eligible Employee, nor for the failure of any of the above
persons to act or make any payment or contribution, or to otherwise provide any
benefit contemplated under this Plan, nor shall the Trustee or the
Administration Committee be required to collect any contribution required under
the Plan, or determine the correctness of the amount of any Employer
contribution.
(f) NO DUTY TO INQUIRE. Neither the Trustee nor the
Administration Committee shall have any obligation to inquire into or be
responsible for any action or failure to act on the part of the others.
(g) LIABILITY OF TRUSTEE WHERE INVESTMENT MANAGER APPOINTED. If
an Investment Manager has been appointed pursuant to Section 12.3(c), then
neither the Trustee nor the Administration Committee shall be liable for the
acts or omissions of such Investment Manager, or be under any obligation to
invest or otherwise manage any assets of the Plan which are subject to the
management of such Investment Manager.
(h) SUCCESSOR FIDUCIARY. No Fiduciary shall be liable with
respect to any breach of fiduciary duty if such breach was committed before he
became a Fiduciary or after he ceased to be a Fiduciary.
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End of Article XII
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ARTICLE XIII
DISCONTINUANCE, AMENDMENT, AND TERMINATION
13.1 DISCONTINUANCE. Each Employer shall have the right, at any time,
to suspend or discontinue its participation in the Plan, subject to its
obligation to make any contribution called for under the Plan with respect to
its past participation, as determined by the Actuary.
13.2 AMENDMENT. The Board of Directors shall have the right at any
time and from time to time to amend the Plan in any manner it deems necessary
or advisable in order to qualify (or maintain qualification of) the Plan, the
Trust, or any insurance contract or policy in or through which assets of the
Plan have been invested (as provided in Section 10.4(q)) under the provisions of
section 401(a) of the Code and to amend the Plan in any other manner, provided
no amendment shall:
(a) Except as provided for in Sections 4.4 and 13.11, authorize or
permit any of the Trust Fund or assets attributable to any insurance contract or
policy in or through which Plan assets have been invested (as provided in
Section 10.4(q)), other than such amounts that are required to pay taxes and
administration expenses, to be used for or diverted to purposes other than
exclusively benefitting the Participants or their Beneficiaries;
(b) Except as provided for in Sections 4.4 and 13.11, cause or
permit any portion of the Trust Fund or assets attributable to any insurance
contract or policy in or through which Plan assets have been invested (as
provided in Section 10.4(q)) to revert to or become the property of an Employer;
(c) Increase the duties or responsibilities of the Trustee or the
Administration Committees without the written consent of the affected Trustee or
the affected members of the Administration Committees; or
(d) Decrease a Participant's Accrued Benefit.
The Board of Directors shall make all amendments in writing. Each amendment
shall state the date to which it is either retroactively or prospectively
effective. The Board of Directors shall transmit any such amendment to the
Administration Committee which shall in turn distribute it to any parties
entitled to review the same.
13.3 MERGER, CONSOLIDATION, OR TRANSFER OF ASSETS. In the event of any
merger or consolidation of this Plan with, or transfer in whole or in part of
the assets and liabilities of the Trust Fund or assets attributable to any
insurance contract or policy in or through which Plan assets have been invested
(as provided in Section 10.4(q)) to another trust fund held under any other plan
of deferred compensation maintained or to be established for the benefit of all
or some of the Participants, the assets of the Trust Fund or assets attributable
to any insurance contract or policy in or through which Plan assets have been
invested (as provided in Section 10.4(q)) and applicable to such Participants
shall be transferred to the other trust fund only if:
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(a) Each Participant would, if either this Plan or the other then
terminated, receive a benefit immediately after the merger, consolidation or
transfer which is equal to or greater than the benefit he would have been
entitled to receive immediately before the merger, consolidation, or transfer
(if this Plan had then terminated), and a certification from the Actuary to this
effect is obtained and filed with the Secretary of the Treasury or his delegate
at least thirty (30) days prior to the consummation of such merger,
consolidation or transfer;
(b) Resolutions of the Board of Directors and of any new or
successor employer of the affected Participants shall authorize such transfer of
assets, and, in the case of the new or successor employer of the affected
Participants, its resolution shall include an assumption of liabilities with
respect to such Participants' inclusion in the new or successor employer's plan,
and
(c) Such other plan and trust are qualified and exempt within the
meaning of sections 401(a) and 501(a) of the Code.
13.4 TERMINATION. Subject to the provisions of Section 13.1, each
Employer shall have the right to terminate its participation in the Plan at any
time with respect to its Eligible Employees who are Participants. The Plan
shall terminate upon the first to occur of the following:
(a) The date terminated by action of the Board of Directors or
other governing body; or
(b) The date terminated by action of the Pension Benefit Guaranty
Corporation.
An Employer's participation in the Plan shall terminate on:
(a) The date the Employer shall be judicially declared bankrupt or
insolvent; or
(b) The dissolution, merger, consolidation, or reorganization of
the Employer, unless the successor to the Employer, if any, makes provision to
continue to participate in the Plan in accordance with Section 13.9, in which
event the successor or purchaser shall be substituted as an Employer under this
Plan.
13.5 VESTING ON TERMINATION. Notwithstanding any other provision of
the Plan to the contrary, upon the date of full or partial termination of the
Plan an affected Participant's right to his Accrued Benefit shall become one
hundred percent (100%) vested. The value of such Accrued Benefit shall be
determined on the date the Accrued Benefit becomes fully vested. The
Administration Committee shall interpret and administer this Section 13.5 in
accord with the intent and scope of the regulations issued under section
411(d)(3) of the Code.
13.6 PROCEDURE ON TERMINATION. In the event of termination of the Plan
or permanent discontinuance of Employer contributions, the Company shall, in its
sole discretion, authorize any one of the following procedures:
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(a) CONTINUE PLAN. To continue the Plan in operation in all
respects until the Trustee and all insurance companies in or through the
insurance contracts or policies of which Plan assets have been invested (as
provided in Section 10.4(q)) have distributed all benefits under the Plan,
except that no further persons shall become Participants, no further Employer
contributions shall be made, all Accrued Benefits shall be fully vested and
nonforfeitable, and no further payments shall be made except in distribution of
the Trust Fund or the assets under such insurance contracts or policies to
Participants and Beneficiaries and in payment of administration expenses; or
(b) LIQUIDATE PLAN. To wind up and liquidate the Plan, Trust,
and all insurance contracts or policies in or through which assets of the Plan
have been invested (as provided in Section 10.4(q)) and distribute the assets
thereof (after deduction of all expenses) to the Participants, Former
Participants, and Beneficiaries in accordance with their respective Accrued
Benefits as then determined.
If the Company makes no election before or concurrent with termination, then
subsection (b) will govern distribution of the Trust Fund and the proceeds of
any insurance contracts or policies in or through which assets of the Plan have
been invested (as provided in Section 10.4(q)).
13.7 PARTIAL TERMINATION. Upon termination of this Plan with respect
to a group of Participants which constitutes a partial termination of the Plan,
the Administration Committee shall instruct the Trustee and any insurance
company in or through the insurance contracts or policies of which Plan assets
have been invested (pursuant to Section 10.4(q)) to allocate and segregate for
the benefit of the Participants with respect to which the Plan is being
terminated the proportionate interest of such Participants in the Trust Fund or
such insurance contracts or policies. Such proportionate interest shall be
determined by the Actuary. The Actuary shall make this determination upon the
basis of the contributions made by the affected Employer, the provisions of this
Article XIII, and such other considerations as the Actuary deems appropriate.
The Fiduciaries shall have no responsibility with respect to the determination
of any such proportionate interest.
The funds so allocated and segregated shall be used by the Trustee or
Administration Committee to pay benefits to or on behalf of the affected
Participants in accordance with Section 13.8.
13.8 LIQUIDATION OF TRUST FUND AND INSURANCE CONTRACTS. Upon
termination or partial termination of the Plan, the assets of the Trust Fund and
the proceeds of any insurance contracts or policies in or through which assets
of the Plan have been invested (as provided in Section 10.4(q)), or the portion
thereof segregated in accordance with Section 13.7, which are allocable to the
terminating Participants shall be liquidated (after provision is made for the
expenses of liquidation) by the payment or provision for payment of benefits in
the following order of priority:
(a) FIRST, in the case of benefits payable as an annuity, (i) in
the case of the benefit of a Participant or Beneficiary which was in pay status
as of the beginning of the three (3) year period ending on the effective date of
the Plan's termination, to each such benefit, based on the provisions of the
Plan (as in effect during the five (5) year period ending on such date)
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under which such benefit would be the least, and (ii) in the case of a
Participant's or Beneficiary's benefit (other than a benefit described in (i)
above) which would have been in pay status as of the beginning of such three (3)
year period if the Participant had retired prior to the beginning of the three
(3) year period and if his benefits had commenced (in the normal form of Pension
under Section 7.1(a) or (b)), as of the beginning of such period, to each such
benefit based on the provisions of the Plan (as in effect during the five (5)
year period ending on such date) under which the benefit would be the least.
For purposes of (i) above, the lowest benefit in pay status during a three (3)
year period shall be considered the benefit in pay status for such period.
SECOND, to all other benefits (if any) due individuals under
the Plan to the extent guaranteed under the termination insurance provisions of
the Act.
THIRD, to all other nonforfeitable benefits under the Plan.
FOURTH, to all other benefits under the Plan.
(b) If the assets available for allocation under any priority
category (other than the third or fourth priority category) are insufficient to
satisfy in full the benefits of all individuals described in such category, the
assets shall be allocated pro rata among such individuals on the basis of the
present value (as of the termination date) of their respective Accrued Benefits.
(c) The Actuary shall calculate the allocation of the assets of
the Trust Fund or the proceeds of any insurance contracts or policies in or
through which assets of the Plan have been invested (as provided in Section
10.4(qq) in accordance with the above priority categories, and certify his
calculations to the Trustee and the Administration Committee. Notwithstanding
the provisions of subsection (a) above, in the event at the date of termination
of the Plan such provisions conflict with the then applicable provisions of the
Act or regulations issued thereunder, the provisions of the Act or its
regulations shall control.
(d) No liquidation of assets and payment of benefits (or provision
therefor) shall actually be made by the Trustee until after it is advised by the
Company in writing that applicable requirements, if any, of the Act governing
termination of "employee pension benefit plans" have been, or are being,
complied with or that appropriate authorizations, waivers, exemptions, or
variances have been, or are being obtained.
13.9 SUCCESSOR EMPLOYER. In the event of the dissolution, merger,
consolidation, or reorganization of an Employer, provision may be made by which
the successor employer can continue to participate in the Plan and Trust, and,
in that event, such successor shall be substituted for the Employer under this
Plan. The substitution of the successor employer shall constitute an assumption
of Plan liabilities by the successor, and the successor employer shall have all
of the powers, duties and responsibilities of the Employer under the Plan.
13.10 MANNER OF DISTRIBUTION. Subject to the provisions of this Article
XIII, any distribution due on or after termination of the Plan may be made, in
whole or in part, to the
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extent that no discrimination in value results, in cash, in securities, or other
assets in kind, or in nontransferable annuity contracts, as the Administration
Committee, in its discretion, shall determine.
13.11 RESIDUAL AMOUNTS. In no event shall an Employer receive any
amounts from the Trust Fund or proceeds from any insurance contracts or policies
in or through which assets of the Plan have been invested (as provided in
Section 10.4(q)) upon termination of the Plan, except that, notwithstanding any
other provision of the Plan to the contrary, an Employer shall receive such
amounts, if any, as determined by the Administration Committee, as may remain
after the satisfaction of all liabilities of the Plan, such amounts arising out
of any variance between actual requirements and expected actuarial requirements.
13.12 TRANSFER OF ASSETS AND LIABILITIES FROM ICC PLAN AND WESCAR PLAN.
Subject to such rules as the Administration Committee shall prescribe, the
assets and liabilities attributable to active and former employees (other than
those individuals actively employed by International Controls Corp. on January
1, 1988 and who were subject to the provisions of the Stock Purchase Agreement
between International Controls Corp. and Datron Inc. dated May 6, 1988) under
the ICC Plan may be transferred to this Plan and the assets and liabilities
attributable to active and former employees under the Wescar Plan may be
transferred to this Plan.
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End of Article XIII
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ARTICLE XIV
PLAN TERMINATION
Upon the termination of the Plan, the annual pension benefit payments to a
Participant who is among the twenty-five (25) highest Highly Compensated
Employees and the twenty-five (25) highest Highly Compensated Former Employees
shall be restricted to an amount equal to the payments that would be made on
behalf of the Participant under a single life annuity that is the Actuarial
Equivalent of the Participant's Accrued Benefit under the Plan. The foregoing
restrictions will not apply, however, if one of the following conditions are
satisfied:
(a) After payment to an Employee described in the preceding
paragraph of all of his benefits under the Plan, the value of the Plan assets
equals or exceeds one hundred and ten percent (110%) of the value of current
liabilities, as defined in section 412(l)(7) of the Code, or
(b) The value of "benefits" for an Employee described in the
preceding paragraph is less than one percent (1%) of the value of current
liabilities, or
(c) The value of benefits payable to the Employee under the Plan
does not exceed the amount described in section 411(a)(11)(A) of the Code
regarding the restrictions on mandatory lump sum distributions of less than
Three Thousand Five Hundred Dollars ($3,500).
The term "benefits" for purposes of this Article XIV includes any periodic
income, any withdrawal values payable to a living Participant, and any death
benefits not provided for by insurance on the Participant's life.
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End of Article XIV
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ARTICLE XV
ADOPTION OF PLAN BY AFFILIATE
15.1 ADOPTION BY AFFILIATES. Any corporation (within the meaning of
section 7701(a)(3) of the Code) that is a Related Employer, may, with the
consent and approval of the Company, by formal resolution of its own board of
directors or other governing body, adopt the Plan and the Trust for its Eligible
Employees and thereby, from and after the specified effective date of the
adoption, become an Employer under this Plan. Such adoption shall be
effectuated by and evidenced by a formal resolution of the Board of Directors
consenting to and containing or incorporating by reference such formal
resolution of the adopting corporation.
The adoption resolution shall become, as to such adopting corporation and its
Employees, a part of the Plan as then amended. It shall not be necessary for
the adopting corporation to sign or execute the original or then amended Plan
and Trust documents. The effective date of the Plan for any such adopting
corporation shall be that stated in the resolution of the adopting corporation,
and from and after such effective date the adopting corporation shall assume all
the rights, obligations and liabilities of an Employer hereunder and under the
Trust. The administrative powers and control of the Board of Directors, as now
or hereafter provided in the Plan and Trust, including the sole right of
amendment of this Plan as provided in Section 13.2, and of appointment and
removal of the members of the Administration Committees and the Trustee and its
successors, shall not be diminished by reason of the participation of any such
adopting corporation in the Plan and Trust.
15.2 WITHDRAWAL BY EMPLOYER. Any participating Employer by action of
its board of directors or other governing body and notice to the Board of
Directors and the Trustee, may withdraw from the Plan and Trust at anytime
without affecting other Employers not withdrawing, by complying with the
provisions of the Plan and Trust. Termination of the Plan as it relates to an
Employer upon its withdrawal shall be governed by the provisions of Article
XIII. A withdrawing Employer may arrange for the continuation by itself or its
successors of this Plan and Trust in separate form for its own Employees, with
such amendments, if any, as it may deem proper, or may arrange for continuation
of the Plan and Trust by merger with an existing plan and trust qualified under
sections 401(a) and 501(a) of the Code and transfer of Trust assets, subject to
the limitations of Section 13.3. The Board of Directors may, in its absolute
discretion, by resolution, terminate an adopting Employer's participation at any
time when in the judgment of the Board of Directors such adopting Employer fails
or refuses to discharge its obligations under the Plan following such prior
notice and opportunity to cure as may be appropriate under the circumstances.
Upon withdrawal of an Employer from the Plan the Administration Committee, upon
the advice of the Actuary, shall calculate the share of the assets of the Plan
allocable to the Employer and set such assets apart for transfer to a successor
plan or distribution under Article XIII, as applicable.
15.3 ADOPTION CONTINGENT UPON INITIAL AND CONTINUED QUALIFICATION. The
adoption of the Plan and Trust by a corporation as provided in Section 15.1 is
made subject to the condition precedent that the adopting corporation and the
Plan as adopted meet all the statutory
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requirements for qualified plans under the Code for its Employees. The adopting
corporation may, or at the request of the Company shall, request an initial
letter of determination from the appropriate District Director of Internal
Revenue to the effect that the Plan and Trust, as herein set forth or as amended
with respect to the adopting corporation, meet the requirements of the
applicable federal statutes for tax qualification purposes for such adopting
corporation and its Employees. In the event the Plan or the Trust in its
operation, becomes disqualified for any reason as to an Employer and its
Employees, the portion of the Trust Fund allocable to them shall be segregated
as soon as is administratively feasible, pending (1) the prompt requalification
of the Plan and Trust as to such Employer and its Employees to the satisfaction
of the Internal Revenue Service, so as not to adversely affect the continued
qualified status of the Plan and Trust as to all other Employers and Employees,
or (2) as provided in Section 15.2 above, the prompt withdrawal of such Employer
from this Plan and Trust and a continuation by itself or its successor of a plan
and a trust separate and apart from this Plan and Trust, or by merger with
another existing qualified plan and trust by a transfer of its said segregated
portion of Trust assets, or (3) the prompt termination of its participation in
the Plan and Trust as to itself and its Employees.
15.4 NO JOINT VENTURE IMPLIED. The adoption of the Plan by any
Employer shall not create a joint venture or partnership relationship between it
and any other Employer. Any rights, duties, liabilities and obligations assumed
or incurred hereunder by any Employer, or imposed upon any Employer by the
provisions of the Plan, shall relate to and affect such Employer alone.
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End of Article XV
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ARTICLE XVI
THE TRUST AND INSURANCE CONTRACTS
16.1 PURPOSE OF THE TRUST FUND AND INSURANCE CONTRACTS. A Trust Fund
has been created and will be maintained for the purposes of the Plan, and the
assets of the Trust Fund shall be invested in accordance with the terms of the
Trust Agreement. All contributions, other than contributions invested pursuant
to Section 10.4(q) in or through the contracts or policies of an insurance
company shall be paid into the Trust Fund, and all benefits under the Plan,
other than benefits paid pursuant to insurance contracts or policies, shall be
paid from the Trust Fund. Assets of the Plan that are not invested through the
Trust Fund shall be invested in or through insurance contracts or policies as
provided in Section 10.4(q).
16.2 APPOINTMENT OF TRUSTEE. One or more Trustees shall be appointed
by the Board of Directors to administer the Trust Fund. The Trustee's
obligations, duties, and responsibilities shall be governed solely by the terms
of the Trust Agreement.
16.3 EXCLUSIVE BENEFIT OF PARTICIPANTS. Subject to Sections 4.4 and
13.11, the Trust Fund and assets of the Plan invested in or through insurance
contracts or policies (as provided in Section 10.4(q)) shall be used and applied
only in accordance with the provisions of the Plan to provide the benefits
thereof, and no part of the corpus or income of the Trust Fund or such insurance
contracts or policies shall be used for or diverted to purposes other than
exclusively benefitting the Participants and their Beneficiaries and with
respect to expenses of administration. Notwithstanding the preceding sentence,
as provided in Section 13.11, the Employer reserves the right to recover any
residual amounts as may remain in the Trust Fund or remain under such insurance
contracts or policies after their termination and the satisfaction of all
liabilities of the Plan arising out of any variations between actual
requirements and expected actuarial requirements.
16.4 BENEFITS SUPPORTED ONLY BY THE TRUST FUND AND INSURANCE CONTRACTS.
Any person having any claim under the Plan shall look solely to the assets of
the Trust Fund and insurance contracts or policies in or through which assets of
the Plan have been invested (pursuant to Section 10.4(q)) for satisfaction, and
no Employer shall have any liability to any Participant, Former Participant or
Beneficiary beyond the amount of its contributions to the Plan.
16.5 RIGHTS TO ASSETS OF TRUST AND PROCEEDS OF INSURANCE CONTRACTS.
No Employee shall have any right to, or interest in, any assets of the Trust
Fund or the proceeds of any insurance contract or policy in or through which
assets of the Plan have been invested (pursuant to Section 10.4(q)) upon
termination of his employment or otherwise, except as provided from time to time
under this Plan, and then only to the extent of the benefits payable under the
Plan to such Employee out of the assets of the Trust Fund or such insurance
contract or policy. Except as otherwise may be provided under Title IV of the
Act, all payments of benefits as provided for in this Plan shall be made solely
out of the assets of the Trust Fund or the proceeds of an insurance contract or
policy in or through which assets of the Plan have been invested (pursuant to
Section 10.4(q)) and none of the Fiduciaries shall be liable therefor in any
manner.
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End of Article XVI
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ARTICLE XVII
TOP HEAVY PLAN PROVISIONS
17.1 TOP HEAVY RULES APPLIED. Notwithstanding any provisions of this
Plan to the contrary, if during any Plan Year beginning after December 31, 1983,
the Plan is a Top Heavy Plan, the provisions of this Article XVII shall apply.
17.2 ADDITIONAL DEFINITIONS.
(a) "AGGREGATION EMPLOYEE" shall mean any employee of the
Aggregation Employer, including any leased employees (within the meaning of
section 414(n) of the Code). For this purpose, an individual formerly employed
by an Aggregation Single Employer shall be deemed an Aggregation Employee.
(b) "AGGREGATION EMPLOYER" shall mean the deemed single employer
that includes the Employer and results from the aggregation of employers that
sections 414(b), 414(c), and 414(m) of the Code require be aggregated and
treated as a single employer.
(c) "AGGREGATION SINGLE EMPLOYER" shall mean an employer that
sections 414(b), 414(c), and 414(m) of the Code require be aggregated with the
Employer and other employers and treated as a single employer.
(d) "COMPENSATION". The term "compensation," as used in this
Article XVII, shall mean an Employee's or Participant's Compensation for the
calendar year that ends with or within the plan year. For purposes of
determining whether an individual has compensation of One Hundred Fifty Thousand
Dollars ($150,000), or whether an individual is a Key Employee by reason of
being an officer or one of the ten (10) employees of the Single Aggregation
Employer described in Section 17.2(f)(ii), compensation from each entity that
sections 414(b), 414(c), and 414(m) require be aggregated is to be taken into
account.
(e) "DETERMINATION DATE" shall mean, with respect to any plan
year, the last day of the preceding plan year, except in the case of the first
plan year of a plan, in which event the Determination Date shall be the last day
of such plan year. Whenever it is necessary to determine the value of accrued
benefits as of a given Determination Date, such value shall be determined as of
the Valuation Date that coincides with the Determination Date or, if there is no
such Valuation Date, the most recent Valuation Date that is within a
twelve-month period ending on the Determination Date.
(f) "KEY EMPLOYEE". Subject to the rules set forth in the last
paragraph of this Section 17.2(f), "Key Employee" shall mean any Aggregation
Employee or former Aggregation Employee (including any deceased employee) who at
any time during the current plan year or any of the four (4) preceding plan
years, is or was:
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(i) An officer of the Aggregation Employer having an annual
compensation greater than 150 percent of the dollar limitation in effect
under section 415(c)(1)(A) of the Code for the calendar year in which the
plan year ends;
(ii) One of the ten (10) employees of an Aggregation Single
Employer having annual compensation for the plan year from such
Aggregation Single Employer of more than the dollar limitation in effect
under section 415(c)(1)(A) of the Code and owning (or considered as owning
within the meaning of section 318 of the Code) or having owned during the
plan year containing the Determination Date or any of the four (4)
immediately preceding plan years both more than a one-half percent (1/2%)
interest and the largest interests in such Aggregation Single Employer,
and if two (2) such employees have the same interest in the employer, the
employee having the greater annual compensation from the employer shall be
treated as having a larger interest;
(iii) A five percent (5%) owner of an Aggregation Single
Employer; or
(iv) A one percent (1%) owner of an Aggregation Single
Employer having compensation of more than One Hundred Fifty Thousand
Dollars ($150,000).
In addition, the term "Key Employee" shall mean the beneficiary of any
Aggregation Employee or former Aggregation Employee defined above in this
Section 17.2(f) as being a Key Employee.
For the purposes of determining which Aggregation Employees or former
Aggregation Employees, if any, are or were officers of the Aggregation Employer,
whether an individual is an officer shall initially be determined based on his
responsibilities with respect to the Aggregation Single Employer or Aggregation
Single Employers by whom he is directly employed, and of such individuals
initially deemed officers, no more than fifty (50) Aggregation Employees, or, if
lesser, the greater of three (3) Aggregation Employees or ten percent (10%) of
the Aggregation Employees of the Aggregation Employer, shall be treated as
officers. In addition, for plan years beginning after February 28, 1985, sole
proprietorships, partnerships, associations, corporations, trusts, and labor
organizations may have officers; and any person who is an administrative
executive in regular and continued service shall be deemed an officer, subject
to the above limitations. The number of employees that the Aggregation Employer
has for the plan year containing the Determination Date with respect to a plan
shall be the greatest number of employees the Aggregation Employer had during
that plan year or any of the preceding four (4) plan years. A "five percent
(5%) owner" shall mean, if the Aggregation Single Employer is a corporation, any
person who owns (or is considered as owning within the meaning of section 318 of
the Code) more than five percent (5%) of the outstanding stock of the
Aggregation Single Employer or stock possessing more than five percent (5%) of
the total combined voting power of all stock of the Aggregation Single Employer
and, if the Aggregation Single Employer is not a corporation, any employee who
owns more than five percent (5%) of the capital or profits interest in the
Aggregation Single Employer. A "one percent (1%) owner" shall mean, if the
Aggregation Single Employer is a corporation, any person who owns (or is
considered as owning within the meaning of section 318 of the Code) more than
one percent (1%) of the outstanding stock of the Aggregation Single Employer or
stock possessing more than one percent (1%) of the
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total combined voting power of all stock of the Aggregation Single Employer and,
if the Aggregation Single Employer is not a corporation, any employee who owns
more than one percent (1%) of the capital or profits interest in the Aggregation
Single Employer. For purposes of applying the attribution rules of section 318
of the Code, section 318(a)(2)(C) of the Code shall be applied by substituting
"five percent (5%)" for "fifty percent (50%)" each time that term appears in
said section. In the case of an entity other than a corporation, ownership
shall be attributed as under section 318 of the Code, except that capital or
profits interests shall be substituted for stock interests. If an employee's
ownership interest in an employer changes during a plan year, his ownership
interest for such plan year is the largest interest he owned at any time during
the year.
(g) "PERMISSIVE AGGREGATION GROUP" shall mean a plan or a group
of plans that must be aggregated in the Required Aggregation Group and any other
plan or plans of an Aggregation Employer if the group would continue to satisfy
the requirements of sections 401(a)(4) and 410 of the Code with such additional
plan being taken into account. Benefits under such plans shall be aggregated by
adding together the present values of the accrued benefits (determined
separately for each plan as of each plan's Determination Date) and adding
together the results for each plan as of the Determination Dates for such plans
that fall within the same calendar year.
(h) "PLAN". The term "plan" as used in this Section 17.2 shall
mean a plan that satisfies the requirements of section 401(a) of the Code.
(i) "PLAN YEAR". The term "plan year" shall mean the plan year
of a plan of an Aggregation Single Employer.
(j) "REQUIRED AGGREGATION GROUP" shall mean a group of plans
consisting of (i) each plan of the Aggregation Employer in which a Key Employee
participates during the plan year containing the Determination Date for such
plan or has participated during any of the immediately preceding four (4) plan
years and (ii) any other plan of the Aggregation Employer that enables any of
such plans to satisfy the requirements of section 401(a)(4) or 410 of the Code.
Benefits under such plans shall be aggregated by adding together the present
values of the accrued benefits (determined separately for each plan as of each
plan's Determination Date) and adding together the results for each plan as of
the Determination Dates for such plans that fall within the same calendar year.
(k) "TOP HEAVY PLAN". If for a given Plan Year the Plan is not
a member of a Required Aggregation Group (because there are no other plans that
must be aggregated with the Plan), the Plan shall be a Top Heavy Plan (herein so
called) if the sum (determined as of the Determination Date for the Plan) of the
present value of the cumulative Accrued Benefits (determined in accordance with
section 1.416-1 of the Treasury Regulations) for Key Employees of the Employer
exceeds sixty percent (60%) of a similar sum determined for all Employees. If
for a given Plan Year the Plan is a member of a Required Aggregation Group, the
Plan shall be a Top Heavy Plan for such Plan Year if, as of the Plan's
Determination Date for such Plan Year, both the Required Aggregation Group and
the Permissive Aggregation Group that include the Plan are Top Heavy Groups
(herein so called). A "Top Heavy Group" is any Required
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Aggregation Group or Permissive Aggregation Group if the sum (determined as of
the Determination Dates for the plans in such group that fall within the same
calendar year) of (i) the present value of the accrued benefits (determined in
accordance with section 1.416-1 of the Treasury Regulations) for Key Employees
under all defined benefit plans (within the meaning of section 414(j) of the
Code) included in such group and (ii) the accrued benefits (determined in
accordance with section 1.416-1 of the Treasury Regulations) of Key Employees
under all defined contribution plans (within the meaning of section 414(i) of
the Code) included in such group exceeds sixty percent (60%) of a similar sum
determined for all Aggregation Employees. For the purpose of determining the
present value of the accrued benefit of any employee, the present value shall be
increased, as required by section 1.416-1 of the Treasury Regulations, by the
aggregate distributions made with respect to such Employee under the plan during
the five (5) year period ending on the Determination Date for such plan, and
under any terminated plan that, if it had not been terminated, would have been
included in the Required Aggregation Group. Notwithstanding the foregoing
provisions of this Section 17.2(k), if any individual has not performed any
service for any employer maintaining the plan at any time during the 5-year
period ending on the Determination Date for such plan, any accrued benefit for
such individual (and the account of such individual) shall not be taken into
account.
Except to the extent provided in Regulations of the Secretary of the Treasury,
any Rollover Contribution (or similar transfer) initiated by an Employee and
made after December 31, 1983, to a plan shall not be taken into account with
respect to the transferee plan for purposes of determining whether such plan is
a Top Heavy Plan (or whether any aggregation group which includes such plan is a
Top Heavy Group). If any individual is not a Key Employee with respect to a
plan in the aggregation group for any plan year, but such individual was a Key
Employee with respect to a plan in the aggregation group for any prior plan
year, any accrued benefit for such Employee and the account of such employee
shall not be taken into consideration in making a determination of the top heavy
status of the plan. Each plan in a Top Heavy Group shall be deemed a Top Heavy
Plan.
(l) "SUPER TOP HEAVY PLAN" shall mean a Top Heavy Plan if the
plan would be a Top Heavy Plan if "ninety percent (90%)" were substituted for
"sixty percent (60%)" each place it appears in Section 17.2(k) above.
17.3 ADDITIONAL LIMITATION - DEFINED BENEFIT PLAN.
(a) SUPER TOP HEAVY PLAN YEARS. If during a Plan Year this Plan
is a Super Top Heavy Plan and a Participant also participates in one or more
qualified defined contribution plans (as defined in section 414(i) of the Code)
maintained by the Employer or a Related Employer, Section 6.7 shall be applied
by substituting "one" (1.0) for "one and one-fourth" (1.25) each place "one and
one-fourth" (1.25) appears.
(b) TOP HEAVY PLAN YEARS. In addition, the above limitation
shall apply to this Plan in any Limitation Year that this Plan is a Top Heavy
Plan but is not a Super Top Heavy Plan and the Accrued Benefit of each
Participant who is a non-Key Employee, when expressed as an annual retirement
benefit, is less than three percent (3%) multiplied by the number of years of
Vesting Service with the Employer or twenty percent (20%) plus one percentage
point for each
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year for which this Plan was taken into account under section 416(h) of the Code
(but not by more than ten (10) percentage points) multiplied by the
Participant's average compensation during the period of five (5) consecutive
years during which the Participant had the greatest aggregate compensation from
the Employer. Years of Vesting Service for purposes of the immediately
preceding sentence shall not include any year of Vesting Service ending in a
Plan Year beginning before January 1, 1984, and shall not include any year of
Eligibility Service that begins after the close of the last year in which the
Plan was a Top Heavy Plan. For the purposes of this Section, an annual
retirement benefit is a benefit payable annually in the form of a single life
annuity (with no ancillary benefits) beginning at Normal Retirement Age.
(c) SPECIAL RULE. Notwithstanding the foregoing provisions of
this Section 17.3, if for any Plan Year the Plan is a Top Heavy Plan or Super
Top Heavy Plan, the sum of the Defined Benefit Fraction (within the meaning of
Section 6.5) and the Defined Contribution Fraction (within the meaning of
Section 6.5) for a Limitation Year may in the case of a Participant exceed one
(1.0) (but not one and one-fourth (1.25)) if, but only if, there are no further
benefit accruals for that individual under any defined benefit plan (within the
meaning of section 414(j) of the Code) maintained by the Employer or a Related
Employer and no further annual additions (within the meaning of section
415(c)(2) of the Code) for that individual under any defined contribution plan
(within the meaning of section 414(i) of the Code) maintained by the Employer or
any Related Employer until the sum of such fractions satisfies the rules of
section 415(e) of the Code using the one (1.0) factor for that individual.
17.4 TERMINATION OF SERVICE PRIOR TO NORMAL RETIREMENT AGE. If during
any Plan Year a Participant has performed at least one Hour of Service for the
Employer and the Plan is a Top Heavy Plan, such Participant shall have a
non-forfeitable interest in his Accrued Benefit attributable to his Employer
Profit Sharing Contribution Account, should his Service with the Employer
terminate prior to Normal Retirement Age for any reason other than early
retirement, death or Disability, in accordance with the following schedule:
<TABLE>
<CAPTION>
<S> <C>
YEARS OF CREDITED PERCENT
SERVICE FOR VESTING PURPOSES VESTED
---------------------------- --------
Less than 2 years 0%
2 years but less than 3 years 0%
3 years but less than 4 years 40%
4 years but less than 5 years 60%
5 years but less than 6 years 80%
6 years or more 100%
</TABLE>
Notwithstanding any of the foregoing, if during any prior Plan Year the Plan was
a Top Heavy Plan and in any subsequent Plan Year the Plan ceases to be a Top
Heavy Plan, the rights of a Participant who had performed at least one Hour of
Service during the period the Plan was a Top Heavy Plan in and to his Accrued
Benefit attributable to his Employer Profit Sharing Contribution Account shall
not be less than his vested rights during the period that the Plan was a Top
Heavy Plan. Provided, further, any Participant who has five (5) or more Years
of Service at the beginning of a Plan Year in which the Plan ceases to be a Top
Heavy Plan shall have the
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<PAGE>
right to elect, within a reasonable time of the beginning of the Plan Year in
which the Plan ceases to be a Top Heavy Plan, to have his non-forfeitable
percentage under this Plan computed in accordance with the schedule applicable
to Plan Years in which the Plan is a Top Heavy Plan. Any election made under
this Section 17.4 shall be made in the manner specified by Section 9.5 as if
such change in vesting schedule had been made by way of an Amendment.
17.5 MINIMUM BENEFITS. During any Plan Year in which this Plan is a
Top Heavy Plan the Accrued Benefit derived from Employer contributions of each
Participant who is a non-Key Employee, when expressed as an annual retirement
benefit, shall not be less than the LESSER of:
(a) Two percent (2%) multiplied by the number of the Participant's
years of Vesting Service; or
(b) Twenty percent (20%) of the Participant's average compensation
during the period of five (5) consecutive years during which the
Participant had the greatest aggregate compensation from the Employer.
Years of Vesting Service for purposes of the immediately preceding sentence
shall not include any year of service ending in a Plan Year beginning before
January 1, 1984, and shall not include any year of service that begins after the
close of the last year in which the Plan was a Top Heavy Plan. For the purposes
of this Section 17.5, an annual retirement benefit is a benefit payable annually
in the form of a single life annuity (with no ancillary benefits) beginning at
Normal Retirement Age. An Employee who is not a Key Employee may not fail to
accrue a minimum benefit under this Section 17.5 because either (1) such
Employee is otherwise excluded from participation (or accrues no benefit) merely
because the Employee's Compensation is less than a stated amount or (2) the
Employee is otherwise excluded from participation (or accrued no benefit) merely
because of a failure to make mandatory Employee contributions.
In addition, notwithstanding the preceding provisions of this Section 17.5, the
following rules shall apply for purposes of determining whether the minimum
benefit requirements of this Section 17.5 have been satisfied in the event that
during a Plan Year the Employer maintains two or more qualified plans (within
the meaning of section 1.401-0(b) of the Treasury Regulations) that are Top
Heavy Plans or Super Top Heavy Plans for a Plan Year. If the Employer maintains
during a Plan Year two or more defined benefit plans (within the meaning of
section 414(j) of the Code), the minimum benefits required by this Section 17.5
on behalf of a Participant who is not a Key Employee and who participates in
both this Plan and such other plans shall, unless provided otherwise in such
other plans, be provided under this Plan to the extent this Plan provides for a
benefit accrual sufficient to satisfy such minimum, and only to the extent that
such minimum is not provided under this Plan shall any portion of such minimum
benefits be provided under such other plans.
If during a Plan Year, the Employer maintains this Plan and a defined
contribution plan (within the meaning of section 414(i) of the Code) and a
Participant who is not a Key Employee participates in both of such plans, then
if such Participant is entitled to accrue a benefit under this plan with respect
to such Plan Year, and such Participant has accrued a benefit equal to or in
excess of two percent (2%) multiplied by his number of years of Vesting Service
(excluding years
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of service accrued during Plan Years, if any, commencing prior to January 1,
1984, and Plan Years during which the Plan was not a Top Heavy Plan) multiplied
by the Participant's average compensation during the five (5) consecutive year
period during which the Participant had the greatest aggregate Compensation from
the Employer, the Employer shall not be required to provide for such Participant
under such other plan the minimum benefit otherwise required under section 416
of the Code, and for purposes of determining whether the minimum benefit
provisions of this Section 17.5 have been satisfied, the minimum benefit accrual
under this Plan shall be offset by the benefits provided under such other plan
for such Plan Year as provided in section 1.416-1, M-12, of the Treasury
Regulations.
If for a Plan Year this Plan is a Top Heavy Plan, but not a Super Top Heavy
Plan, and the Employer makes contributions on behalf of a Participant under both
this Plan and a defined contribution plan (within the meaning of section 414(i)
of the Code) and the Employer wishes to use a factor of one and one-fourth
(1.25) rather than one (1.0) as a limitation on the sum of the Defined
Contribution Fraction (within the meaning of Section 6.5) and the Defined
Benefit Fraction (within the meaning of Section 6.5) for the Limitation Year,
then the defined benefit plan minimum benefit accrual specified above shall be
increased by one (1) percentage point (up to a maximum of ten (10) percentage
points) for each year of Vesting Service within which a Plan Year during which
this Plan was a Top Heavy Plan or Super Top Heavy Plan ended; provided that no
such year of Vesting Service completed during a Plan Year beginning prior to
January 1, 1984, shall be counted for such purpose. The defined contribution
minimum for such Limitation Year shall be increased to seven and one-half
percent (7-1/2%) of compensation. Nothing in this Section 17.5 shall prohibit
the Employer from making contributions in excess of the minimums stated herein
provided such contributions are otherwise in accordance with the provisions of
the Plan or other plan pursuant to which they are made.
- ----------------------------
End of Article XVII
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ARTICLE XVIII
MISCELLANEOUS
18.1 PAYMENT IN THE EVENT OF LEGAL DISABILITY. Payments to any
Participant, Former Participant, or Beneficiary shall be made to the recipient
entitled thereto in person or upon his personal receipt, in form satisfactory to
the Administration Committee, except when the recipient entitled thereto shall
be under a legal incapacity (e.g., minority or adjudicated incompetency), or, in
the sole judgment of the Administration Committee, shall otherwise be unable to
apply such payment in furtherance of his own interest and advantage. The
Administration Committee may, in such event, in its sole discretion, direct all
or any portion of such payments to be made in any one or more of the following
ways:
(a) To such person directly;
(b) To the guardian of his person or his estate;
(c) To a relative or friend of such person, to be expended for his
benefit; or
(d) To a custodian for such person under any Uniform Gifts to
Minors Act.
The decision of the Administration Committee, in each case, shall be final,
binding, and conclusive upon all persons ever interested hereunder. The
Administration Committee shall not be obliged to see to the proper application
or expenditure of any payment so made. Any payment made pursuant to the power
herein conferred upon the Administration Committee shall operate as a complete
discharge of all obligations of the Trustee and the Administration Committee, to
the extent of the distributions so made.
18.2 PAYMENTS ONLY FROM TRUST FUND OR INSURANCE CONTRACTS. All
benefits of the Plan shall be payable solely from the Trust Fund or the proceeds
of insurance contracts in or through which assets of the Plan have been invested
(as provided in Section 10.4(q)) and neither the Employer, Administration
Committee, Trustee nor insurance company issuing such contracts or policies
shall have any liability or responsibility therefor except as expressly provided
herein.
18.3 UNCLAIMED ACCOUNT PROCEDURE. Neither the Trustee nor the
Administration Committee shall be obliged to search for, or ascertain the
whereabouts of, any Participant or Beneficiary. The Administration Committee,
by certified or registered mail addressed to his last known address of record
with the Administration Committee or the Employer, shall notify any Participant
or Beneficiary that he is entitled to a distribution under this Plan, and the
notice shall quote the relevant provisions of this Section 18.3. If the
Participant or Beneficiary fails to claim his benefits or make his whereabouts
known in writing to the Administration Committee within seven (7) calendar years
after the date of notification, the benefits under the Plan of the Participant
or Beneficiary will be disposed of as follows:
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<PAGE>
(a) If the whereabouts of the Participant is unknown but the
whereabouts of the Participant's Beneficiary is then known to the Administration
Committee, distribution will be made to the Beneficiary.
(b) If the whereabouts of the Participant and his Beneficiary is
then unknown to the Administration Committee, but the whereabouts of one or more
relatives by adoption, blood, or marriage of the Participant is known to the
Administration Committee, the Administration Committee shall direct the Trustee
to distribute the Participant's benefits to any one or more of such relatives
and in such proportions as the Administration Committee determines.
(c) If the Administration Committee does not know the whereabouts
of any of the above persons, the Administration Committee shall notify the
Social Security Administration of the Participant's (or Beneficiary's) failure
to claim the distribution to which he is entitled. The Administration Committee
shall request the Social Security Administration to notify the Participant (or
Beneficiary) in accord with the procedures it has established for such purpose.
While payment is pending the Administration Committee shall direct the Trustee
to hold the Participant's benefits in a segregated account invested in U.S.
Government obligations, certificates of deposit, or other obligations providing
a stated rate of return. The segregated account shall be entitled to all income
it earns and shall bear all expense or loss it incurs. Any payment made
pursuant to the power herein conferred upon the Administration Committee shall
operate as a complete discharge of all obligations of the Trustee and the
Administration Committee, to the extent of the distributions so made.
18.4 EXECUTION OF RECEIPTS AND RELEASES. Any payment to any
Participant, or to his legal representative 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 Plan and Trust. The Administration
Committee may require such Participant, legal representative, or Beneficiary, as
a condition precedent to such payment, to execute a receipt and release therefor
in such form as it shall determine.
18.5 NO GUARANTEE OF INTERESTS. Neither the Trustee, the
Administration Committee, nor any Employer guarantees the Trust Fund or any
insurance contract in or through which Plan assets have been invested (pursuant
to Section 10.4(q)) from loss or depreciation. The Employer does not guarantee
the payment of any money which may be or become due to any person from the Trust
Fund or any insurance contract in or through which Plan assets have been
invested (pursuant to Section 10.4(q)). The liability of the Administration
Committee and the Trustee to make any payment from the Trust Fund and any
insurance contracts or policies in or through which Plan assets have been
invested (pursuant to Section 10.4(q)) is limited to the then available assets
of the Trust and such contracts or policies.
18.6 PAYMENT OF EXPENSES. All expenses incident to the administration,
termination, and protection of the Plan and Trust, including but not limited to
legal, accounting, and Trustee fees, shall be paid by the Employers in such
proportions as determined by the Administration Committee, except that in case
of failure of any Employer to pay such expenses, they will be paid
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<PAGE>
from the Trust Fund, and until paid, shall constitute a first and prior claim
and lien against the Trust Fund.
18.7 EMPLOYER RECORDS. Records of an Employer as to an Employee's or
Participant's period of employment, termination of employment and the reason
therefor, leaves of absence, re-employment, and Compensation will be conclusive
on all persons, unless determined to be incorrect.
18.8 INTERPRETATIONS AND ADJUSTMENTS. To the extent permitted by law,
an interpretation of the Plan and a decision on any matter within a Fiduciary's
discretion made in good faith is binding on all persons. A misstatement or
other mistake of fact shall be corrected when it becomes known and the person
responsible shall make such adjustment on account thereof as he considers
equitable and practicable.
18.9 UNIFORM RULES. Uniform rules shall be applied in administering
the Plan to all Participants similarly situated.
18.10 EVIDENCE. Evidence required of anyone under the Plan may be given
by certificate, affidavit, document, or other information which the person
acting on it considers pertinent and reliable, and signed, made or presented by
the proper party or parties.
18.11 SEVERABILITY. In the event any provision of the Plan shall be
held to be illegal or invalid for any reason, the illegality or invalidity shall
not affect the remaining provisions of the Plan, but shall be fully severable
and the Plan shall be construed and enforced as if the illegal or invalid
provision had never been included herein.
18.12 NOTICE. Any notice required to be given herein by the Trustee, an
Employer, or the Administration Committee, shall be deemed delivered, when (a)
personally delivered, or (b) placed in the United States mails, postage prepaid,
in an envelope addressed to the last known address of the person to whom the
notice is given.
18.13 WAIVER OF NOTICE. Any person entitled to notice under the Plan
may waive the notice.
18.14 SUCCESSORS. The Plan shall be binding upon all persons entitled
to benefits under the Plan, their respective heirs and legal representatives,
upon the Employer, its successors and assigns, and upon the Trustee, the
Administration Committee, and their successors.
18.15 HEADINGS. The titles and headings of Articles and Sections are
included for convenience of reference only and are not to be considered in
construing the provisions hereof.
18.16 GOVERNING LAW. All questions arising with respect to the
provisions of this Agreement shall be determined by application of the laws of
the State of Georgia except to the extent Georgia law is preempted by Federal
statute.
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IN WITNESS WHEREOF, this Plan has been executed in multiple original
documents on this ----- day of -------------, 1994, effective as of the 1st day
of January, 1989.
GREAT DANE TRAILERS, INC.
By -----------------------------------
Its Vice President
<PAGE>
CHECKER MOTORS PENSION PLAN
As amended and restated
effective January 1, 1987
<PAGE>
TABLE OF CONTENTS
PAGE
----
ARTICLE I - General........................................................ 1
1.1 Restatement and Effective Dates................................. 1
1.2 Applicability................................................... 1
ARTICLE II - Definitions................................................... 1
2.1 Accrued Benefit................................................. 1
2.2 Actuarial Equivalent............................................ 2
2.3 Actuary......................................................... 3
2.4 Affiliated Company.............................................. 3
2.5 Annuity Starting Date........................................... 4
2.6 Average Monthly Compensation.................................... 4
2.7 Beneficiary..................................................... 4
2.8 Benefit Service................................................. 4
2.9 Board of Administration or Board................................ 5
2.10 Board of Directors.............................................. 5
2.11 Commonly Controlled Entity...................................... 5
2.12 Company......................................................... 6
2.13 Compensation.................................................... 6
2.14 Covered Compensation............................................ 7
2.15 Death Benefit................................................... 7
2.16 Effective Date.................................................. 7
2.17 Eligible Employee............................................... 7
2.18 Eligibility Computation Period.................................. 8
2.19 Employee........................................................ 8
2.20 Employee Funded Accrued Benefit................................. 8
2.21 Employer........................................................ 8
2.22 Employer Funded Accrued Benefit................................. 9
2.23 Entry Date...................................................... 9
2.24 ERISA........................................................... 9
2.25 Hour of Service................................................. 9
2.26 Internal Revenue Code or Code................................... 11
2.27 Leased Employee................................................. 11
2.28 Normal Retirement Date.......................................... 11
2.29 One Year Break in Service....................................... 12
2.30 Parental Leave.................................................. 12
2.31 Participant..................................................... 12
2.32 Pensioner....................................................... 12
2.33 Permanent and Total Disability.................................. 12
2.34 Plan............................................................ 13
2.35 Plan Year....................................................... 13
2.36 Primary Social Security Benefit................................. 13
2.37 Prior Plan...................................................... 13
2.38 Qualified Joint and Survivor Pension............................ 14
2.39 Qualified Survivor Pension...................................... 14
2.40 Recipient....................................................... 14
2.41 Required Beginning Date......................................... 14
2.42 Retirement Benefits............................................. 14
2.43 Section 401(a)(17) Participant.................................. 15
- i -
<PAGE>
TABLE OF CONTENTS
(Continued)
PAGE
----
2.44 Single Life Annuity............................................. 15
2.45 Social Security Retirement Age.................................. 15
2.46 Ten Year Certain and Life Annuity............................... 15
2.47 Termination of Employment....................................... 15
2.48 Trust........................................................... 15
2.49 Trust Agreement................................................. 16
2.50 Trustee......................................................... 16
2.51 Trust Fund...................................................... 16
2.52 Vesting Service................................................. 16
2.53 Year of Benefit Service......................................... 17
2.54 Year of Eligibility Service..................................... 19
2.55 Year of Vesting Service......................................... 19
2.56 Years of Service Under an Elapsed Time Plan..................... 20
ARTICLE III - Participation................................................ 20
3.1 Participation Date.............................................. 20
3.2 Ceasing to be a Participant..................................... 20
3.3 Reinstatement as a Participant.................................. 21
ARTICLE IV - Amount and Payment of Retirement Benefits..................... 21
4.1 Normal Retirement............................................... 21
4.2 62/30 Retirement................................................ 21
4.3 Early Retirement and Disability Retirement...................... 22
4.4 Termination With Right to a Deferred Pension.................... 23
4.5 Reduction for Distribution of Employee Funded
Accrued Benefit................................................ 24
4.6 Reduction for Monthly Plan Payments............................. 24
4.7 Reduction for Other Pensions.................................... 24
4.8 Commencement of Benefits........................................ 25
ARTICLE V - Form and Payment of Retirement Benefits - Spousal Rights....... 25
5.1 Form of Payment of Benefits..................................... 25
5.2 Change of Automatic Form of Payment and Spousal
Consent........................................................ 26
5.3 Elections by Certain Participants Who Had a
Termination of Employment before August 23, 1984............... 28
5.4 Facility of Payment............................................. 29
5.5 Effect of Return of Benefit Checks.............................. 29
5.6 Effect of Pensioner Continuing in or Resuming
Employment..................................................... 29
5.7 Cash-Out of Accrued Benefits.................................... 30
5.8 Withdrawal of Participant Contributions......................... 30
5.9 Repayment of Distributions and Reestablishment of
Benefit Service................................................ 30
5.10 Direct Rollover................................................. 31
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<PAGE>
TABLE OF CONTENTS
(Continued)
PAGE
----
ARTICLE VI - Death Benefits................................................ 31
6.1 Employee Funded Death Benefits.................................. 31
6.2 Employer Funded Death Benefit................................... 32
6.3 Death After Retirement Benefits Commence........................ 33
6.4 Designation of Beneficiary...................................... 34
ARTICLE VII - Plan Financing............................................... 34
7.1 Funding Policy.................................................. 34
7.2 Employer Contributions.......................................... 34
7.3 Forfeitures..................................................... 35
7.4 Exclusive Benefit of Participants............................... 35
7.5 Benefits Payable Only From Trust Fund........................... 35
ARTICLE VIII - Participant Contributions................................... 36
8.1 Participant Contributions....................................... 36
8.2 Manner of Making Participant Contributions...................... 36
8.3 Employee Funded Accrued Benefit................................. 36
8.4 In Service Withdrawal of Participant Contributions.............. 37
ARTICLE IX - Administration................................................ 38
9.1 Board of Directors Duties....................................... 38
9.2 Board Membership................................................ 39
9.3 Board Structure................................................. 39
9.4 Board Actions................................................... 39
9.5 Board of Administration Duties.................................. 39
9.6 Board Liability................................................. 40
9.7 Board Bonding and Expenses...................................... 40
9.8 Allocations and Delegations of Responsibility................... 40
9.9 Information To Be Supplied by Employers......................... 41
9.10 Company Records................................................. 41
9.11 Fiduciary Capacity.............................................. 41
9.12 Company As Agent................................................ 42
9.13 Claims Procedure................................................ 42
9.14 Fiduciary Responsibility........................................ 43
9.15 Construction of Plan and Decisions Final........................ 44
ARTICLE X - Trustee and Trust Fund......................................... 44
10.1 Trust Agreement................................................. 44
10.2 Selection of Trustee............................................ 44
10.3 Trustee's Duties................................................ 44
10.4 Trust Income.................................................... 45
10.5 Trust Expenses.................................................. 45
10.6 Trust Entity.................................................... 45
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<PAGE>
TABLE OF CONTENTS
(Continued)
PAGE
----
ARTICLE XI - Amendment and Termination..................................... 45
11.1 Amendments...................................................... 45
11.2 Right to Terminate.............................................. 45
11.3 Effects of Termination.......................................... 46
11.4 Disposition of Trust Fund on Termination........................ 46
11.5 Disposition Medium.............................................. 47
ARTICLE XII - Adoption and Withdrawal From Plan............................ 47
12.1 Procedure for Adoption.......................................... 47
12.2 Procedure for Withdrawal........................................ 47
ARTICLE XIII - Top Heavy Provisions........................................ 47
13.1 Application..................................................... 47
13.2 Special Top Heavy Definitions................................... 48
13.3 Special Top Heavy Provisions.................................... 57
ARTICLE XIV - Miscellaneous Provisions..................................... 62
14.1 Non-Alienation of Benefits...................................... 62
14.2 No Contract of Employment....................................... 64
14.3 Termination of Employment on Retirement......................... 64
14.4 Limitation on Vesting........................................... 64
14.5 Temporary Limitations on Retirement Benefits
Payable to 25 Highest Paid Employees........................... 65
14.6 Limitations on Retirement Benefits Payable to
Highly Compensated Participants................................ 67
14.7 Maximum Pensions................................................ 71
14.8 Limitation on Liability......................................... 74
14.9 Company Merger.................................................. 75
14.10 Plan Merger..................................................... 75
14.11 Headings and Gender............................................. 75
14.12 Uniform and Non-Discriminatory Treatment........................ 75
14.13 Law Governing................................................... 75
APPENDIX I................................................................. 76
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<PAGE>
CHECKER MOTORS PENSION PLAN
ARTICLE I
GENERAL
1.1 RESTATEMENT AND EFFECTIVE DATES. The CHECKER MOTORS PENSION PLAN
(formerly the CHECKER MOTORS CO., L.P. SALARIED PENSION PLAN and the PENSION
PLAN FOR SALARIED EMPLOYEES OF CHECKER MOTORS CORPORATION AND CERTAIN SUBSIDIARY
AND AFFILIATED CORPORATIONS), restated effective January 1, 1976, January 1,
1981, January 1, 1984 and January 1, 1987 and as from time to time amended (the
"Plan"), is hereby amended and restated effective January 1, 1987, except as
otherwise specifically provided. In order to comply with the consistency
requirements of Treasury Regulation Section 1.401(a)(4)-13, this Plan shall have
a fresh-start date of January 1, 1989, consistent with the Retirement Plan for
Great Dane Trailers, Inc.
1.2 APPLICABILITY. The provisions of the Plan as herein amended and
restated shall apply to persons employed by Checker Motors Co., L.P. or an
Affiliated Company who have a Termination of Employment on or after January 1,
1987, except as otherwise specifically provided. An Employee's eligibility for
benefits, and the amount of benefits, if any, payable to an Employee who has had
a Termination of Employment prior to January 1, 1987 and who was not rehired on
or after January 1, 1987 ("Pre-1987 Employee") shall be determined in accordance
with the provisions of the Plan in effect on the date the Termination of
Employment occurred; provided, however, that Section 5.7(a) shall apply to a
Pre-1987 Employee if, prior to the commencement of a distribution of any
benefits, the Actuarial Equivalent lump sum value of such Pre-1987 Employee's
Accrued Benefit (calculated in accordance with Section 2.2(b)) does not exceed
$3,500, and Section 5.10 shall apply to eligible rollover distributions (as
defined in Section 402(c)(4) of the Internal Revenue Code) made on or after
January 1, 1993 (including eligible rollover distributions paid to Participants
who had a Termination of Employment before January 1, 1993).
ARTICLE II
DEFINITIONS
The following terms shall have the meanings set forth below, unless the
context clearly indicates otherwise:
2.1 "ACCRUED BENEFIT" means the monthly amount of Retirement Benefits
payable to a Participant commencing on or after his Normal Retirement Date in
the form of a Single Life Annuity equal
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to the greater of (i) the Participant's Employee Funded Accrued Benefit, or (ii)
the sum of (a) and (b) where
(a) is the Participant's Accrued Benefit computed as if the
Participant had a Termination of Employment on the earlier of his actual
Termination of Employment or December 31, 1988 under the formula contained
in Appendix I taking into account any withdrawal by the Participant of his
Employee Funded Accrued Benefit regardless of when such withdrawal occurs,
and
(b) is an amount equal to the sum of (1) plus (2) where
(1) is an amount equal to 1% multiplied by the
Participant's Average Monthly Compensation and then multiplied by his
Benefit Service earned on or after January 1, 1989 (up to a maximum
of 45 years reduced by the amount of his Benefit Service earned
before January 1, 1989); and
(2) is an amount equal to .5% multiplied by an amount
equal to (i) minus (ii) where:
(i) is his Average Monthly Compensation, and
(ii) is his Covered Compensation;
and then multiplied by his Benefit Service earned on or after January
1, 1989 (up to a maximum of 35 years reduced by the amount of his
Benefit Service earned before January 1, 1989).
Notwithstanding the foregoing, the Accrued Benefit of a Section 401(a)(17)
Participant shall be equal to the sum of (i) the Section 401(a)(17)
Participant's Accrued Benefit as determined above as if the Section 401(a)(17)
Participant had a Termination of Employment on the earlier of his actual
Termination of Employment or December 31, 1993 and (ii) the Section 401(a)(17)
Participant's Accrued Benefit under the formula set forth in (b) above taking
into account his Benefit Service earned on or after January 1, 1994 (up to a
maximum of 45 years reduced by the amount of Benefit Service earned before
January 1, 1994 for purposes of applying Section 2.1(b)(1) to the post-1993
accruals under this paragraph, and up to a maximum of 35 years reduced by the
amount of Benefit Service earned before January 1, 1994 for purposes of applying
Section 2.1(b)(2) to the post-1993 accruals under this paragraph).
2.2 "ACTUARIAL EQUIVALENT" means, subject to the provisions of Section
8.3, a benefit having the same value as the benefit which it replaces, as
determined by the Actuary, based on the
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<PAGE>
UP-1984 Mortality Table and a seven percent (7%) interest rate, provided,
however
(a) For purposes of Section 14.7(a)(ii), the assumed interest rate
shall be five percent (5%).
(b) Notwithstanding anything in this Section 2.2 to the contrary,
the annual interest rate used to calculate the Actuarial Equivalent of
Retirement Benefits under Section 5.7(a) shall be:
(1) the interest rate which would be used, as of the
January 1 of the Plan Year which contains the date payment of
benefits is to commence, by the Pension Benefit Guaranty Corporation
for purposes of determining the present value of a lump sum
distribution on plan termination (the "Applicable Interest Rate"), if
the Retirement Benefits (calculated using such rate) are not in
excess of $25,000, or
(2) 120 percent (120%) of the Applicable Interest Rate,
if the Retirement Benefits (as determined under subparagraph (1)
above) exceed $25,000, but in no event shall the Retirement Benefits
determined pursuant to this paragraph (2) be less than $25,000.
(c) For purposes of Section 8.3, the interest rate shall be the
Applicable Interest Rate.
2.3 "ACTUARY" means the individual actuary or firm of actuaries selected
by the Board of Administration to provide actuarial services in connection with
the administration of the Plan.
2.4 "AFFILIATED COMPANY" means a Commonly Controlled Entity and the
following corporations and subsidiaries and former subsidiaries thereof:
Chicago Yellow Cab Company, Inc., through May 1, 1969;
City Mutual Insurance Company, through December 31, 1979, and
thereafter through December 31, 1980 Calumet Insurance Company with
respect to those employees of Calumet Insurance Company who were
Participants in the Plan on December 31, 1979;
General Fire & Casualty Company, through May 21, 1964;
Parmelee Transportation Company, through May 1, 1969; and
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<PAGE>
Transportation Maintenance Corporation.
2.5 "ANNUITY STARTING DATE" means the first day of the first period for
which an amount is paid as an annuity or in any other form.
2.6 "AVERAGE MONTHLY COMPENSATION" means one-sixtieth (1/60th) of a
person's Compensation for the five-consecutive-calendar-year period within the
ten-consecutive-calendar-year period ending with (in the case of a person who
does not have at least one Hour of Service on or after January 1, 1988, the
earlier of his Normal Retirement Date or) the date he ceases to be an Eligible
Employee in which he earned the highest Compensation. For purposes of
calculating Average Monthly Compensation, a calendar year ending on or next
preceding the date a person ceases to be an Eligible Employee and the calendar
year beginning or next following the date such person becomes an Eligible
Employee shall be treated as consecutive. If a person has less than five (5)
consecutive calendar years of Compensation, Average Monthly Compensation shall
mean the sum of the person's Compensation divided by the number of months such
person has earned Compensation.
Notwithstanding any other provision in this Plan, effective for Plan Years
commencing on or after January 1, 1994, Compensation for calendar years
commencing prior to January 1, 1994 shall not exceed $150,000 for purposes of
determining a Participant's Average Monthly Compensation on or after January 1,
1994.
2.7 "BENEFICIARY" means a person designated by the Participant or by the
Plan to receive any Death Benefit payable under the Plan.
2.8 "BENEFIT SERVICE" means the sum of a Participant's Years of Benefit
Service provided that:
(a) If, prior to earning a vested interest in his Employer Funded
Accrued Benefit, the Participant has incurred five (5) or more consecutive
One Year Breaks in Service (or, for periods prior to January 1, 1985 if he
had a number of consecutive One Year Breaks in Service as of December 31,
1984 equal to or in excess of his number of years of Vesting Service),
Years of Benefit Service accrued prior to such consecutive One Year Breaks
in Service shall be excluded.
(b) Benefit Service used to calculate the Participant's Accrued
Benefit where the Participant receives his entire vested Accrued Benefit in
the form of a lump sum Actuarial Equivalent payment under Section 5.7 shall
be excluded, provided, however, the Participant will not have such Benefit
- 4 -
<PAGE>
Service excluded if he makes repayment to the Plan in accordance with
Section 5.9.
(c) Benefit Service used to calculate the Participant's Accrued
Benefit determined as of the date the Participant withdraws the lump sum
Actuarial Equivalent of his Employee Funded Accrued Benefit under Section
5.8 when he has earned less than a 50% vested interest in his Employer
Funded Accrued Benefit shall be excluded, provided however, the Participant
shall not have such Benefit Service excluded if he makes repayment to the
Plan in accordance with Section 5.9.
(d) In the case of a person who does not have an Hour of Service on
or after January 1, 1988, Years of Benefit Service accrued after the
Participant's Normal Retirement Date shall be excluded.
(e) No Benefit Service will be credited for periods of time in which
a Participant is not an Eligible Employee, except as provided in Section
2.53(c), (d) and (e).
(f) Benefit Service accrued while an individual is suspended from
participation in the Plan under Section 8.4 shall be excluded.
(g) Years of Benefit Service in excess of 45 shall be excluded;
provided that for persons who have a Termination of Employment prior to
January 1, 1985, Years of Benefit Service in excess of 41 shall be
excluded.
(h) Benefit Service accrued on or before December 31, 1991 by
individuals employed by International Controls Corp. shall be excluded.
(i) Benefit Service accrued on or before December 31, 1989 by
individuals employed by Chicago Autowerks or City Wide Towing, Inc. shall
be excluded.
2.9 "BOARD OF ADMINISTRATION" or "BOARD" means the Board of
Administration appointed pursuant to Section 9.1 to administer the Plan.
2.10 "BOARD OF DIRECTORS" means the board of directors of Checker Motors
Corporation acting as general partner of the Company.
2.11 "COMMONLY CONTROLLED ENTITY" means a corporation, trade or business
if it and an Employer are members of a controlled group of corporations as
defined in Section 414(b) of the Internal Revenue Code, under common control as
defined in
- 5 -
<PAGE>
Section 414(c) of the Internal Revenue Code, members of an affiliated service
group as defined in Section 414(m) of the Internal Revenue Code, or any other
entity required to be aggregated with an Employer pursuant to regulations under
Section 414(o) of the Internal Revenue Code; provided, however, that solely for
the purposes of the provisions pertaining to Maximum Pensions set forth in
Section 14.7, the standard of control under Section 414(b) and 414(c) of the
Internal Revenue Code shall be deemed to be "more than 50%" rather than "at
least 80%."
2.12 "COMPANY" means Checker Motors Co., L.P. or any successor entity by
merger, consolidation, purchase or otherwise, which elects to adopt the Plan and
the Trust.
2.13 "COMPENSATION" means the total amount of compensation paid to an
Eligible Employee by an Employer or Affiliated Company each Plan Year, as
reported on federal income tax withholding Form W-2, including (except for
purposes of the provisions pertaining to Maximum Pensions set forth in Section
14.7 and the provisions of Article XIII (other than Section 13.2(d))) any
amounts by which the Eligible Employee's compensation is reduced by salary
reduction or any similar arrangement under any Related Plan or any cafeteria
plan (as described in Code Section 125) maintained by an Employer or Affiliated
Company, but excluding reimbursements or other expense allowances, fringe
benefits (cash and noncash), moving expenses, and welfare benefits and any other
benefits paid under the Plan or under any other qualified plan described in
Section 401(a) of the Code, or other deferred compensation, stock options, or
any other distributions which receive special tax benefits; provided, that, for
Plan Years beginning before January 1, 1989, "COMPENSATION" means the total
amount of compensation paid to an Eligible Employee by an Employer or Affiliated
Company each Plan Year, determined on the cash basis, for service rendered to
the Employer for the period of time he is an Eligible Employee, as reported on
federal income tax withholding Form W-2, including commissions and overtime, but
excluding bonuses; and provided further that, for any person who does not have
at least one Hour of Service on or after January 1, 1988, Compensation shall be
determined only for the period of time he is an Eligible Employee prior to his
Normal Retirement Date. If an Eligible Employee completes less than 2000 Hours
of Service in a Plan Year, then for purposes of determining his Accrued Benefit,
his Compensation for such Plan Year shall be his actual compensation for such
Plan Year multiplied by a fraction, the numerator of which is 2000 and the
denominator of which is his actual number of Hours of Service in that Plan Year.
Notwithstanding any other provision of the Plan to the contrary, except for
purposes of determining Highly Compensated Employees under Section 14.6(a)(3)
and except for purposes of
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<PAGE>
Section 14.7, the amount of an Eligible Employee's annual Compensation taken
into account under the Plan shall not exceed the following limitations:
(i) for Plan Years ending on or before December 31, 1993,
$200,000, adjusted from time to time by the Secretary of the Treasury
at the same time and in the same manner as under Section 415(d) of
the Code; and
(ii) for Plan Years beginning on or after January 1, 1994,
$150,000 as adjusted by the Commissioner of the Internal Revenue
Service for increases in the cost of living in accordance with
Section 401(a)(17)(B) of the Code, and prorated for any period that
consists of fewer than 12 months.
For purposes of the preceding sentence, in determining the Compensation of any
Eligible Employee who is a Highly Compensated Employee in the group consisting
of the top ten persons employed by the Company and all Commonly Controlled
Entities who are paid the greatest compensation (without regard to this
sentence), or any 5% owner of an Employer or Commonly Controlled Entity, there
shall be included the Compensation paid to such Eligible Employee's spouse and
any lineal descendant of the Highly Compensated Employee who has not attained
age 19 before the end of the applicable Plan Year.
2.14 "COVERED COMPENSATION" means, with respect to an Eligible Employee,
the average of the contribution and benefit bases in effect under Section 230 of
the Social Security Act for each calendar year during the 35-year period ending
with the year in which the Eligible Employee attains (or will attain) the Social
Security Retirement Age.
2.15 "DEATH BENEFIT" means the benefit payable to a Participant's
surviving spouse, and if applicable, the Participant's Beneficiary under the
terms of the Plan.
2.16 "EFFECTIVE DATE" for purposes of this amendment and restatement,
means January 1, 1987.
2.17 "ELIGIBLE EMPLOYEE" means any person who is employed by an
Employer, including a person on an authorized leave of absence, and excluding
(a) any member of a collective bargaining unit represented by a collective
bargaining representative (with respect to which bargaining unit there is or has
been a collective bargaining agreement and, if there has been but no longer is a
collective bargaining agreement, any person who is working in a job category
that was covered by such collective bargaining agreement, regardless of when
such person became an Employee, shall also be excluded), (b) any Employee of the
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Employer who is a participant under any other defined benefit plan under which
contributions are made on his behalf by the Employer; provided that no Employee
shall be excluded from participation hereunder by reason of his previous
participation under any of the defined benefit plans consolidated hereunder, and
(c) any Leased Employee.
2.18 "ELIGIBILITY COMPUTATION PERIOD" means (a) initially, the
twelve-consecutive-month period commencing with the date an Employee first earns
an Hour of Service upon employment (or reemployment following a One Year Break
in Service), and (b) thereafter, the Plan Year commencing with the Plan Year
that includes the first anniversary of the date the Employee first earned an
Hour of Service upon employment (or reemployment following a One Year Break in
Service).
2.19 "EMPLOYEE" means any person employed by an Employer or an
Affiliated Company, excluding a Leased Employee.
2.20 "EMPLOYEE FUNDED ACCRUED BENEFIT" means that portion of a
Participant's Accrued Benefit derived from his Participant contributions as
determined under Section 8.3.
2.21 "EMPLOYER" means the Company and any Affiliated Company which,
pursuant to the provisions of Section 12.1, has adopted the Plan. As of date on
which this amendment and restatement of the Plan was signed, as set forth on the
last page hereof, the following corporations have adopted the Plan for the
period (or periods) of time indicated below:
Airlines Transportation Company through March 4, 1986
Chicago Autowerks (formerly, Cab Service & Parts Corporation),
beginning January 1, 1990
Checker Motors Sales Corporation through March 4, 1986
City Wide Towing, Inc., beginning January 1, 1990
Continental Air Transport Co., Inc. through March 24, 1983
International Controls Corp., beginning January 1, 1992
The Yellow Cab Company of Pittsburgh through November 30, 1982
Yellow Taxi Company of Minneapolis through March 4, 1986
Checker Motors Corporation through March 4, 1986
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<PAGE>
Checker Taxi Company
Yellow Cab Company
American Country Insurance Company
2.22 "EMPLOYER FUNDED ACCRUED BENEFIT" means that portion of a
Participant's Accrued Benefit derived from Employer contributions. A
Participant's Employer Funded Accrued Benefit is equal to his Accrued Benefit
minus his Employee Funded Accrued Benefit.
2.23 "ENTRY DATE" means the Effective Date and each July 1 and January 1
thereafter.
2.24 "ERISA" means the Employee Retirement Income Security Act of 1974,
as from time to time amended.
2.25 "HOUR OF SERVICE" means:
(a) Except as provided in Section 2.25(d), for an Employee who is
paid on an hourly basis, each hour for which such Employee is paid, or
entitled to payment, by an Employer or an Affiliated Company:
(1) for the performance of duties;
(2) on account of a period of time during which no duties were
performed, provided that no more than 501 Hours of Service shall be
credited for any single continuous period during which an Employee
performs no duty, and provided that payments made or due under a plan
maintained solely for the purpose of complying with applicable
workmen's compensation, unemployment compensation or disability
insurance laws, or for reimbursement of medical expenses shall be
excluded; these hours shall be credited to the computation period
during which such duties would have been performed; and
(3) for which back pay, irrespective of mitigation of damages,
is awarded or agreed to by the Employer, provided that no more than
501 Hours of Service shall be credited for any single continuous
period of time during which the Employee did not or would not have
performed duties; these hours shall be credited to the computation
period to which such back pay pertains.
(b) Except as provided in Section 2.25(d), for an Employee who is
paid on other than an hourly basis, Hours of Service shall be credited
according to the following schedule, based on the payroll period of the
Employee, for
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each payroll period in which he would have earned at least one Hour of
Service under Section 2.25(a) if it were applicable to him:
<TABLE>
<CAPTION>
PAYROLL PERIOD HOURS OF SERVICE
-------------- ----------------
<S> <C>
Daily 10
Weekly 45
Semi-monthly 95
Monthly 190
</TABLE>
(c) The determination of Hours of Service for reasons other than
the performance of duties shall be determined in accordance with the
provisions of Labor Department Regulations Section 2530.200b-2(b), and
Hours of Service shall be credited to computation periods in accordance
with the provisions of Labor Department Regulations Section 2530.200b-2(c).
In no event shall the number of Hours of Service credited to an Employee
for a period during which he performed no duties exceed the number of hours
for which he would have been regularly scheduled had he performed duties
during such period of nonperformance, or in the absence of a regularly
scheduled number of hours, forty (40) hours per week (or eight (8) hours
per day).
(d) In the case of an Employee who transfers from a plan ("Elapsed
Time Plan") of a Commonly Controlled Entity under which service is
determined on the basis of elapsed time, with respect to the computation
period that includes the date of transfer, the Employee shall be credited
with the number of Hours of Service for employment to the date of transfer
which corresponds to the Payroll Period of the Employer for each payroll
period of employment under the Elapsed Time Plan for which the Employee
receives or is entitled to receive any compensation in accordance with the
chart set forth above in Section 2.25(b). Commencing with the date of
transfer, the Employee shall be credited with Hours of Service in
accordance with the other provisions of this Plan.
(e) To the extent not credited above, and solely for purposes of
avoiding a One Year Break in Service for periods of absence from work on
account of Parental Leave an Employee shall be credited with:
(1) the Hours of Service which normally would have been
credited to such individual but for the Parental Leave, or
(2) eight (8) Hours of Service per day of such absence if the
Plan is unable to determine the number of
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<PAGE>
Hours of Service which would have been credited to such individual
but for the Parental Leave.
An Employee's Hours of Service for absence on account of Parental
Leave shall not exceed a maximum of 501 Hours of Service and shall be
credited to the Eligibility Computation Period in which absence because of
a Parental Leave commenced; except that if such Hours of Service are not
needed to prevent a One Year Break In Service in the Eligibility
Computation Period in which absence because of a Parental Leave commenced,
and the Parental Leave continues into the next following Eligibility
Computation Period, then such Hours of Service shall be credited in the
Eligibility Computation Period next following the Plan Year in which such
absence commenced.
2.26 "INTERNAL REVENUE CODE" or "CODE" means the Internal Revenue Code
of 1986, as amended, and any subsequent Internal Revenue Code; if there is a
subsequent Internal Revenue Code, any references herein to any section of the
Internal Revenue Code shall be deemed to refer to comparable sections of any
subsequent Internal Revenue Code.
2.27 "LEASED EMPLOYEE" means any person who is not an employee of the
Recipient and who provides services to the Recipient if:
(a) such services are provided pursuant to an agreement between the
Recipient and the leasing organization (which may be any person other than
the Recipient or the Leased Employee);
(b) such person has performed such services for the Recipient or
for the Recipient and related persons (determined in accordance with
Internal Revenue Code Section 414(n)(6)) on a substantially full time basis
for a period of at least one year; and
(c) such services are of a type historically performed, in the
business field of the Recipient, by employees.
2.28 "NORMAL RETIREMENT DATE" means
(a) for a person who does not have at least one Hour of Service on
or after January 1, 1988, the day on which a person attains age 65, and
(b) for a person who has at least one Hour of Service on or after
January 1, 1988, the later of the day the person attains age 65 or the
fifth anniversary of the date on which the person commences participation
in the Plan.
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<PAGE>
2.29 "ONE YEAR BREAK IN SERVICE" means a Plan Year during which an
Employee or former Employee, who is not on a leave of absence authorized by the
Employer or an Affiliated Company is credited with not more than five hundred
(500) Hours of Service.
2.30 "PARENTAL LEAVE" means a period during which an individual is
absent from work for any period:
(1) by reason of the pregnancy of the individual,
(2) by reason of the birth of a child of the individual,
(3) by reason of the placement of a child with the individual
in connection with the adoption of such child by such individual, or
(4) for purposes of caring for such child for a period
beginning immediately following such birth or placement.
An absence from work shall not be a Parental Leave unless the
individual furnishes the Board of Administration such timely information as may
reasonably be required to establish that the absence from work was for one of
the reasons specified above and the number of days for which there was such an
absence. Nothing contained herein shall be construed to establish or alter
Employer policies concerning authorized leaves of absence.
2.31 "PARTICIPANT" means each person who is participating in the Plan
pursuant to the provisions of Section 3.1.
2.32 "PENSIONER" means a Participant who is receiving Retirement
Benefits.
2.33 "PERMANENT AND TOTAL DISABILITY" means (a) for the period ending on
the day this amendment and restatement is adopted, a physical or mental injury
or disease through some unavoidable cause which causes a Participant to be
permanently incapable of rendering satisfactory service to an Employer as
determined by the Board of Administration, excluding a permanent and total
disability if it is the result of (1) wilfully self-inflicted injury or wilfully
self-induced sickness or (2) injury or disease contracted, suffered or incurred
while participating in a criminal enterprise, and (b) for the period beginning
on the day after the day this amendment and restatement is adopted, a physical
or mental injury that results in the person's eligibility to receive disability
benefits under the Social Security Act.
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<PAGE>
2.34 "PLAN" means the Checker Motors Pension Plan, as herein amended and
restated, and as hereafter from time to time amended.
2.35 "PLAN YEAR" means the calendar year.
2.36 "PRIMARY SOCIAL SECURITY BENEFIT" means with respect to the portion
of a Participant's Accrued Benefit accrued prior to January 1, 1989 the monthly
amount available to the Participant at his Normal Retirement Date (assuming the
Participant actually retired on his Normal Retirement Date) under the provisions
of Title II of the Social Security Act in effect at the earlier of (1) his
Normal Retirement Date, or (2) the time of his Termination of Employment,
without regard to any increases in the wage base or benefit levels that take
effect after the date of his Termination of Employment, or if earlier, his
Normal Retirement Date, subject to the following:
(a) If an Employee has a Termination of Employment prior to his
Normal Retirement Date, his Primary Social Security Benefit shall be
estimated by assuming that he will continue to receive, until reaching his
Normal Retirement Date, compensation that would be treated as wages for
purposes of the Social Security Act at the same rate as he received
compensation at the time of Termination of Employment, and by multiplying
the amount of Primary Social Security Benefit so estimated by a fraction,
the numerator of which is the Participant's Years of Benefit Service, and
the denominator of which is the Years of Benefit Service the Participant
would have had if he had continued to be an Eligible Employee until
reaching his Normal Retirement Date.
(b) An Employee's Primary Social Security Benefit shall be
estimated by assuming he received, prior to his employment by an Employer
or Affiliated Company, compensation that would be treated as wages for
purposes of the Social Security Act at a rate of increase in the Average
Per Worker Total Wages reported by the Social Security Administration;
provided that a Participant may provide his Employer with his actual wage
history (obtained from the Social Security Administration) for such period,
and if he does so, such actual wage history shall be used with respect to
such period. The Board of Administration may adopt rules governing the
computation of a Participant's Primary Social Security Benefit, and the
fact that an Employee does not actually receive such amount because of
failure to apply or continuance of work, or for any other reason, shall be
disregarded.
2.37 "PRIOR PLAN" means the Plan as it existed immediately prior to
January 1, 1981.
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<PAGE>
2.38 "QUALIFIED JOINT AND SURVIVOR PENSION" means a reduced monthly
pension payable to the Participant for life and, upon the Participant's death,
if the Participant's spouse survives the Participant, a monthly pension payable
to the Participant's spouse for life equal to 50% of the pension previously
payable to the Participant. The amount of such Qualified Joint and Survivor
Pension shall be determined in accordance with the provisions of Article V, or
Section 6.1, as applicable.
2.39 "QUALIFIED SURVIVOR PENSION" means a monthly pension payable to the
surviving spouse of a Participant for life, beginning at the time and payable in
the amount determined under the applicable provisions of Article VI.
2.40 "RECIPIENT" means any Employer or Commonly Controlled Entity for
whom a Leased Employee performs services.
2.41 "REQUIRED BEGINNING DATE" means April 1 of the calendar year
following:
(a) for a Participant who attains age 70-1/2 on or after January 1,
1988, the calendar year in which the Participant attains age 70-1/2, and
(b) for a Participant who attains age 70-1/2 prior to January 1,
1988, the later of
(1) the calendar year in which the Participant attains
age 70-1/2, or
(2) if the Participant is not a 5% owner of the Employer
(as determined under Internal Revenue Code Section 416(i)) at any
time during the Plan Year ending with or within the calendar year in
which he attains age 70-1/2 or any of the four (4) prior Plan Years,
the calendar year in which he has a Termination of Employment,
provided that if any such Participant becomes a 5% owner during any
Plan Year after he attains age 70-1/2, the "REQUIRED BEGINNING
DATE" for such Participant shall be the April 1 of the calendar year
following the calendar year in which such Plan Year ends;
provided, however, in no event shall a Participant's "REQUIRED BEGINNING DATE"
occur prior to any date to which the Required Beginning Date can be delayed in
accordance with applicable law, regulations or rulings.
2.42 "RETIREMENT BENEFITS" means the monthly benefits payable to a
Participant under the provisions of the Plan.
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<PAGE>
2.43 "SECTION 401(a)(17) PARTICIPANT" means a Participant whose Accrued
Benefit as of any date on or after January 1, 1994, is based on Compensation for
any calendar year beginning before January 1, 1994 that exceeded $150,000.
2.44 "SINGLE LIFE ANNUITY" means a monthly pension payable to an
individual during his lifetime, the last payment of which is made in the month
of the individual's death.
2.45 "SOCIAL SECURITY RETIREMENT AGE" means the age used as the
retirement age under Section 216(l) of the Social Security Act, except that such
section shall be applied:
(a) without regard to the age increase factor, and
(b) as if the early retirement age under Section 216(l)(2) of such
Act were 62.
2.46 "TEN YEAR CERTAIN AND LIFE ANNUITY" means a monthly pension payable
to the Participant during his lifetime, the last payment of which is made in the
month of the Participant's death; provided that, if the Participant's death
occurs before 120 such monthly payments have been made, monthly payments shall
be made to the Participant's Beneficiary designated under Section 6.4 until a
total of 120 such monthly payments have been made in aggregate to the
Participant and Beneficiary. The amount of the monthly payments shall be the
Actuarial Equivalent of the Participant's Accrued Benefit.
2.47 "TERMINATION OF EMPLOYMENT" means the occurrence of the earliest of
the following events:
(a) an Employee voluntarily quits (or retires), or
(b) an Employee is discharged, or
(c) an Employee accepts full time employment from another employer,
except during layoff,
provided, however, transfers of employment by an Employee from the Company to an
Affiliated Company, or from one Affiliated Company to another Affiliated Company
or to the Company, shall not constitute a Termination of Employment of such
Employee for purposes of the Plan.
2.48 "TRUST" means the legal entity resulting from the agreement between
the Company and the Trustee and any amendments thereto, by which Employer and
Participant contributions shall be received, held, invested and distributed to
or for the benefit of the Participants, their surviving spouses and their
Beneficiaries.
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<PAGE>
2.49 "TRUST AGREEMENT" means the agreement between the Company and the
Trustee establishing the Checker Motors Co., L.P. Retirement Plans Master Trust,
as amended from time to time.
2.50 "TRUSTEE" means the individual, individuals, bank or trust company
which shall accept the appointment to execute the duties of a Trustee as set
forth in the Trust Agreement.
2.51 "TRUST FUND" means any property, real or personal, received by the
Trustee with respect to the Plan, plus all income and gains and less losses,
expenses and distributions chargeable thereto.
2.52 "VESTING SERVICE" means the sum of a Participant's Years of Vesting
Service provided that:
(a) If, prior to earning a vested interest in his Employer Funded
Accrued Benefit, the Participant has incurred five (5) or more consecutive
One Year Breaks in Service (or, for periods prior to January 1, 1985, if he
had a number of consecutive One Year Breaks in Service prior to December
31, 1984 equal to or in excess of his number of years of Vesting Service),
Vesting Service accrued prior to such consecutive One Year Breaks in
Service shall be excluded;
(b) If a Participant has a One Year Break in Service, the
Participant's Vesting Service prior to the One Year Break in Service shall
be excluded until the Participant has completed one Year of Vesting Service
after the One Year Break in Service;
(c) Vesting Service accrued before January 1, 1976 by an Employee
who was covered under the provisions of the Plan then in effect shall be
equal to such Employee's "Service" as defined by, and computed in
accordance with, the provisions of the Plan then in effect;
(d) Vesting Service accrued on or before December 31, 1991 by a
person employed by International Controls Corp. shall be equal to vesting
service as of December 31, 1991 as defined by and computed in accordance
with the provisions of the Retirement Plan for Great Dane Trailers, Inc.;
(e) For persons who became Participants on or after January 1, 1976,
and who had a Termination of Employment prior to January 1, 1985, Vesting
Service accrued before attainment of age twenty-two (22) shall be excluded;
(f) For persons who became Participants on or after January 1, 1976,
and who did not have a Termination of
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<PAGE>
Employment prior to January 1, 1985, Vesting Service accrued before
attainment of age eighteen (18) shall be excluded; and
(g) Vesting Service accrued before January 1, 1990 by a person
employed by Chicago Autowerks shall be equal to vesting service as of
December 31, 1989 as defined by and computed in accordance with the
provisions of the Checker Motors Pension Plan for Cab and Taxi Companies
(formerly, Checker Motors Pension Plan for Non-Salaried Employees of Cab
Service and Parts (Group 016)).
2.53 "YEAR OF BENEFIT SERVICE" means each year credited under (a), (b),
(c), (d) and (e) below.
(a) Except as provided in the following sentence, for purposes of
determining Benefit Service earned before January 1, 1976, a Participant
shall be credited with Years of Benefit Service equal to the Participant's
years of Credited Service as determined under the provisions of the Plan in
effect at the time such Credited Service was earned. Effective January 1,
1986, a Participant who was a participant in the Checker Taxi Company, Inc.
Pension Plan For Salaried Employees or the Calumet Insurance Company
Salaried Pension Plan (collectively, the "Merged Plans") on December 31,
1985 shall be credited with Years of Benefit Service equal to such
Participant's years of benefit service under the Merged Plans. Such
Participant shall not be credited with Years of Benefit Service under any
other provision of this Section 2.53 for benefit service credited under the
Merged Plans.
(b) For purposes of determining Benefit Service earned on and after
January 1, 1976 and prior to January 1, 1985, a Participant shall be
credited with one Year of Benefit Service for each Plan Year in which he
has earned not less than two thousand (2000) Hours of Service while an
Eligible Employee and after attaining age 24. For purposes of determining
Benefit Service earned on and after January 1, 1985, a Participant shall be
credited with one Year of Benefit Service for each Plan Year in which he
earned not less than two thousand (2000) Hours of Service while an Eligible
Employee and after attaining age 20. For purposes of determining Benefit
Service of a Participant who has earned less than two thousand (2000) Hours
of Service in a Plan Year while an Eligible Employee and after attaining
age 24 (with respect to the period January 1, 1976 through December 31,
1984) or age 20 (with respect to the period beginning January 1, 1985), the
Participant will be credited with a portion of a Year of Benefit Service
for Hours of Service earned during the Plan Year after attaining age 20 (or
24, as the case may be) as follows: If the Participant
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<PAGE>
has earned less than 1000 Hours of Service as an Eligible Employee, he
shall be credited with no part of a Year of Benefit Service. If the
Participant has earned at least 1000 Hours of Service but less than 2000
Hours of Service while an Eligible Employee, he shall be credited with a
fraction of a Year of Benefit Service, the numerator of which is his Hours
of Service in the Plan Year while an Eligible Employee and the denominator
of which is 2000. For purposes of determining Benefit Service in the year
in which a person becomes a Participant (or resumes participation after a
One Year Break in Service), all Hours of Service earned during the Plan
Year after attaining age 20 (or 24, as the case may be) shall be taken into
account, whether or not the Participant was a Participant throughout the
Plan Year.
(c) A Participant who has transferred from employment as an Employee
of an Employer while not an Eligible Employee to employment as an Eligible
Employee shall be credited with Years of Benefit Service for Years of
Vesting Service earned while not an Eligible Employee equal to the product
of (i) such Years of Vesting Service earned while not an Eligible Employee
multiplied by (ii) a fraction (not more than 1.0), the numerator of which
is such Participant's Years of Benefit Service earned under Section 2.53(b)
after becoming an Eligible Employee, and the denominator of which is the
number of such Years of Benefit Service he would have earned had he worked
as an Eligible Employee on a full-time continuous basis from the date such
Participant became an Eligible Employee until such Participant's Normal
Retirement Date. Notwithstanding anything in this Section 2.53(c) to the
contrary, effective January 1, 1992, the maximum number of Years of Benefit
Service which a Participant may be credited under this Section 2.53(c) is
the greater of (A) the number of Years of Benefit Service, if any, which
such Participant was credited under this Section 2.53(c) prior to January
1, 1992, or (B) five (5) Years of Benefits Service.
(d) A Participant shall be credited with Years of Benefit Service
for years and fractions of years of service in the Armed Forces of the
United States, if he retains reemployment rights with the Employer under
the laws of the United States and if he resumes employment with the
Employer following the expiration of such military service but only to the
extent required by law to be recognized by this Plan.
(e) For purposes of determining Benefit Service of a Participant who
has incurred a Permanent and Total Disability such a Participant shall be
credited with a Year of Benefit Service for each Plan Year in which he is
not otherwise credited with Benefit Service, commencing with the Plan Year
in which he incurs the Permanent and Total Disability and
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<PAGE>
ending with the Plan Year in which occurs the earliest of his death, his
recovery from a Permanent and Total Disability, his Normal Retirement Date,
or the date his Disability Pension actually commences.
2.54 "YEAR OF ELIGIBILITY SERVICE" means (a) each of an Employee's Years
of Service Under an Elapsed Time Plan and (b) except as provided in (a), an
Eligibility Computation Period within which an Employee has earned at least one
thousand (1000) Hours of Service.
If, prior to earning a vested interest in his Employer Funded Accrued
Benefit, a person has five (5) or more consecutive One Year Breaks in Service,
Years of Eligibility Service accrued prior to such consecutive One Year Breaks
in Service shall be excluded.
Years of Eligibility Service accrued before January 1, 1992 by a
person employed by International Controls Corp. shall be equal to years of
eligibility service as of December 31, 1991 as defined by and computed in
accordance with the provisions of the Retirement Plan for Great Dane Trailers,
Inc.
Years of Eligibility Service accrued before January 1, 1990 by a
person employed by Chicago Autowerks shall be equal to years of eligibility
service as of December 31, 1989 as defined by and computed in accordance with
the provisions of the Checker Motors Pension Plan for Cab and Taxi Companies
(formerly, the Checker Motors Pension Plan for Non-Salaried Employees of Cab
Service and Parts (Group 016)).
2.55 "YEAR OF VESTING SERVICE" means:
(a) except as provided in Section 2.55(d), for purposes of
determining Vesting Service earned prior to January 1, 1976, an Employee's
years of Service, as determined under the provisions of the Prior Plan,
(b) except as provided in Section 2.55(d), for purposes of
determining Vesting Service on and after January 1, 1976, each Plan Year
during which an Employee earns at least 1000 Hours of Service,
(c) an Employee's years and fractions of years of service in the
Armed Forces of the United States, if he retains employment rights with the
Employer or a Commonly Controlled Entity under the laws of the United
States and if he resumes employment with the Employer or a Commonly
Controlled Entity following the expiration of such military service but
only to the extent required by law to be recognized by this Plan, and
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<PAGE>
(d) an Employee's Years of Service Under an Elapsed Time Plan;
provided that for periods prior to January 1, 1986, a Participant who was a
Participant in the Checker Taxi Company, Inc. Pension Plan for Salaried
Employees or in the Calumet Insurance Company Salaried Pension Plan
(collectively, the "Merged Plans") on December 31, 1985 shall not be credited
with Years of Vesting Service as provided above, but shall be credited with his
years of vesting service credited under the Merged Plans as of December 31,
1985.
2.56 "YEARS OF SERVICE UNDER AN ELAPSED TIME PLAN" means, with respect
to an Employee who transfers from a plan ("Elapsed Time Plan") of a Commonly
Controlled Entity under which service is determined on the basis of elapsed
time, the number of full years of service credited to the Employee under the
Elapsed Time Plan as of the date of transfer.
ARTICLE III
PARTICIPATION
3.1 PARTICIPATION DATE.
(a) Each Eligible Employee who was a Participant in the Plan on
December 31, 1986 shall be a Participant on January 1, 1987.
(b) Any Eligible Employee who is first hired by an Employer after
attaining age sixty (60) shall become a Participant in the Plan on the
later of January 1, 1988 or the Entry Date coincident with or next
following the date he has completed one Year of Eligibility Service.
(c) Each other Eligible Employee shall become a Participant in the
Plan on the Entry Date coincident with or next following the date he has
both completed one Year of Eligibility Service and attained age 21.
3.2 CEASING TO BE A PARTICIPANT. A Participant who incurs a Termination
of Employment for any reason and (i) who has not earned at least a 50% vested
interest in his Employer Funded Accrued Benefit and who receives a lump sum
distribution of the Actuarial Equivalent of his Employee Funded Accrued Benefit
under Section 5.8, or (ii) who receives a lump sum distribution (including a
deemed distribution, in the case of a Participant who has no vested interest in
Accrued Benefit) of his vested Retirement Benefits under Section 5.7, shall
cease to be a Participant.
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<PAGE>
3.3 REINSTATEMENT AS A PARTICIPANT. A Participant who ceases to be a
Participant shall become a Participant as of the date he again becomes an
Eligible Employee; provided, however, that a former Participant who is
reemployed following five (5) or more consecutive One Year Breaks in Service and
whose prior Years of Eligibility Service are disregarded under Section 2.54
shall become a Participant on the Entry Date coincident with or next following
the date he has completed one Year of Eligibility Service following such
reemployment.
ARTICLE IV
AMOUNT AND PAYMENT OF RETIREMENT BENEFITS
4.1 NORMAL RETIREMENT. A Participant who has reached his Normal
Retirement Date and who is an Employee shall be entitled to a Normal Retirement
Pension upon Termination of Employment equal to the Participant's Accrued
Benefit reduced by monthly amounts, if any, under the terms of Sections 4.5, 4.6
and 4.7. A Participant's Normal Retirement Pension shall commence on the first
day of the month next following the later of his Termination of Employment or
his Normal Retirement Date if he makes application for benefits in accordance
with Section 9.13.
4.2 62/30 RETIREMENT. Upon his Termination of Employment on or after
his 62nd birthday, a Participant who has at least thirty (30) years of Benefit
Service but who has not satisfied the requirements of Section 4.1(a) shall be
entitled to a 62/30 Pension with respect to the portion of his Accrued Benefit
accrued prior to January 1, 1992. Such Participant's 62/30 Pension shall be a
monthly benefit equal to the portion of his Accrued Benefit accrued prior to
January 1, 1992, reduced by 5/18ths of 1% for each full month between the date
his 62/30 Pension commences and the first day of the month next following his
Normal Retirement Date. Such pension shall be further reduced by monthly
amounts determined under Sections 4.5, 4.6 and 4.7, if applicable. A
Participant's 62/30 Pension shall commence on the first day of the month next
following his Normal Retirement Date if application for benefits is made in
accordance with Section 9.13; provided, however, such Participant may elect, at
any time prior to his Normal Retirement Date, by making application in
accordance with Section 9.13, to begin receiving his 62/30 Pension the first day
of any month up to the month next following his Normal Retirement Date. A 62/30
Pension shall not be payable with respect to the portion of a Participant's
Accrued Benefit accrued on or after January 1, 1992.
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<PAGE>
4.3 EARLY RETIREMENT AND DISABILITY RETIREMENT.
(a) EARLY RETIREMENT - ELIGIBILITY. Upon Termination of
Employment after attainment of age 55, a Participant with at least ten (10)
years of Benefit Service who cannot satisfy the requirements of Section 4.1
or 4.2 shall be entitled to an Early Retirement Pension. Such
Participant's Early Retirement Pension shall be a monthly benefit equal to
his Accrued Benefit reduced by 5/9ths of 1% for each of the first 60 full
months and by 5/18ths of 1% for each full month in excess of 60 between the
date benefits commence and the first day of the month next following his
Normal Retirement Date. Such pension shall be further reduced by monthly
amounts determined under Sections 4.5, 4.6 and 4.7, if applicable. A
Participant's Early Retirement Pension shall commence on the first day of
the month the Participant elects by making application in accordance with
Section 9.13; provided, however, if the Participant does not elect to begin
receiving his Early Retirement Pension the first day of any month up to the
month next following his Normal Retirement Date, the Participant's Early
Retirement Pension shall commence on the first day of the month next
following his Normal Retirement Date if application for benefits is made in
accordance with Section 9.13.
(b) DISABILITY RETIREMENT - ELIGIBILITY. A Participant who has at
least ten (10) years of Benefit Service, who incurs a Permanent and Total
Disability before he has satisfied the requirements of Section 4.1, 4.2 or
4.3(a), and who has a Termination of Employment on account of Permanent and
Total Disability shall be entitled to a Disability Pension. Upon his
Termination of Employment on account of Permanent and Total Disability, the
Participant's Disability Pension shall be a monthly benefit equal to his
Accrued Benefit determined based on his Average Monthly Compensation as of
the date he incurred the Permanent and Total Disability reduced by 5/9ths
of 1% for each of the first 60 full months and by 5/18ths of 1% for each
full month in excess of 60 between the date benefits commence and the first
day of the month next following his Normal Retirement Date. Such pensions
shall be further reduced by monthly amounts determined under Sections 4.5,
4.6 and 4.7, if applicable. A Participant's Disability Pension shall
commence on the first day of the month the Participant elects by making
application in accordance with Section 9.13; provided, however, if the
Participant does not elect to begin receiving his Disability Pension the
first day of any month on or after he attains age 55 up to the month next
following his Normal Retirement Date, the Participant's Disability Pension
shall commence on the first day of the month next following his Normal
Retirement
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<PAGE>
Date if application for benefits is made in accordance with Section 9.13.
4.4 TERMINATION WITH RIGHT TO A DEFERRED PENSION. Upon his Termination
of Employment, a Participant who has not satisfied the requirements of Section
4.1, 4.2, 4.3(a) or 4.3(b) shall be entitled to a Deferred Pension with respect
to his Accrued Benefit. A Participant's Deferred Pension shall be a monthly
amount equal to his Employee Funded Accrued Benefit plus the product of his
Employer Funded Accrued Benefit and his Vested Percentage determined under the
following Table I or Table II, whichever is applicable; provided, however, that
such Deferred Pension shall not be in an amount less than the amount to which
the Participant would have been entitled under the provisions of Article VI,
Section 7(e) of the Prior Plan had his Termination of Employment occurred on
December 31, 1980:
TABLE I
With respect to any Participant who does not have at least one Hour of
Service on or after January 1, 1989:
<TABLE>
<CAPTION>
VESTING SERVICE VESTED PERCENTAGE
--------------- -----------------
<S> <C>
Less than 5 years 0%
5 years but less than 6 years 50%
6 years but less than 7 years 60%
7 years but less than 8 years 70%
8 years but less than 9 years 80%
9 years but less than 10 years 90%
10 years or more 100%
</TABLE>
TABLE II
With respect to any Participant who has at least one Hour of Service on or
after January 1, 1989:
<TABLE>
<CAPTION>
VESTING SERVICE VESTED PERCENTAGE
--------------- -----------------
<S> <C>
Less than 5 years 0%
5 years or more 100%
</TABLE>
A Participant's Deferred Pension shall be reduced by monthly amounts determined
under Sections 4.5, 4.6 and 4.7, if applicable.
A Participant's Deferred Pension shall commence on the first day of the
month next following the later of his Normal Retirement Date or the date
application for benefits is made in
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accordance with Section 9.13; provided that a Participant who has 10 or more
years of Benefit Service may elect to have his Deferred Pension commence any
month after he attains age 55, up to the month next following his Normal
Retirement Date. In the event a Participant elects to have his Deferred Pension
commence prior to his Normal Retirement Date, his Deferred Pension shall be
reduced 5/9ths of 1% for each of the first 60 full months and by 5/18ths of 1%
for each full month in excess of 60 between the date his benefits commence and
the first day of the month next following his Normal Retirement Date.
4.5 REDUCTION FOR DISTRIBUTION OF EMPLOYEE FUNDED ACCRUED BENEFIT. A
Participant who received an Actuarial Equivalent lump sum distribution of his
Employee Funded Accrued Benefit under Section 5.8 when he had earned at least a
50% vested interest in his Employer Funded Accrued Benefit shall have his
Retirement Benefits reduced by the Actuarial Equivalent of such lump sum
distribution.
4.6 REDUCTION FOR MONTHLY PLAN PAYMENTS. The Retirement Benefits of a
Participant shall be reduced by the Actuarial Equivalent of any Retirement
Benefits paid, other than lump sum payments, to the extent necessary to prevent
such Participant from receiving double credit under the Plan for any Benefit
Service which was a base for computing such Retirement Benefits.
4.7 REDUCTION FOR OTHER PENSIONS.
(a) Effective for Plan Years beginning before January 1, 1989, if a
Participant receives benefits from any other defined benefit pension plan
(or such other retirement plan as the Board of Directors or the Board of
Administration shall designate), and if the computation of the
Participant's Retirement Benefits includes any Benefit Service for any
years, which years (the "Common Years") are also included in determining
the Participant's benefits under such other defined benefit pension plan
(or years during which the Participant was accruing benefits under another
retirement plan designated by the Board of Directors or the Board of
Administration), except as otherwise provided by the Employer and attached
as an exhibit to the Plan, the Participant's Retirement Benefits shall be
deemed to be the Participant's Retirement Benefits reduced by the lesser of
(i) the Actuarial Equivalent of such portions of the Participant's benefits
from such other plan as are attributable to the Common Years or (ii) such
portions of the Participant's Retirement Benefits under the Plan as are
attributable to such Common Years.
(b) Effective for Plan Years beginning on or after January 1, 1989
with respect to Participants who have an Hour
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<PAGE>
of Service on or after such date, if a Participant receives benefits from
any other qualified defined benefit pension plan ("Other Plan") for any
years of service for periods before the person commenced or recommenced
participation in the Plan ("Pre-participation Service") and if such
Pre-participation Service is, pursuant to an action taken hereunder which
is applicable to all similarly situated employees, included in determining
the person's Accrued Benefit under the Plan, the Participant's vested
Accrued Benefit shall be reduced by the person's vested accrued benefit
under the Other Plan (other than vested accrued benefits attributable to
the person's own contributions) with respect to the period of
Pre-participation Service and the unvested Accrued Benefit shall be reduced
by the unvested accrued benefit under the Other Plan with respect to the
period of Pre-participation Service.
4.8 COMMENCEMENT OF BENEFITS. Unless a Participant (or Beneficiary)
otherwise elects (which election shall specify a commencement date no later than
the Required Beginning Date), upon application for Retirement Benefits in
accordance with Section 9.13, payment of Retirement Benefits shall commence not
later than the sixtieth (60th) day after the latest of the close of the Plan
Year in which (a) the Participant reaches age 65, (b) occurs the tenth (10th)
anniversary of the Participant's commencement of participation in the Plan, or
(c) the Participant has a Termination of Employment, provided that benefits
shall not be paid until an application is made in accordance with Section 9.13.
ARTICLE V
FORM AND PAYMENT OF RETIREMENT BENEFITS - SPOUSAL RIGHTS
5.1 FORM OF PAYMENT OF BENEFITS. A Participant's Retirement Benefits
under the Plan shall commence as of the first day of the month specified in the
applicable provision of Article IV and shall be payable as follows:
(a) AUTOMATIC FORM FOR MARRIED PARTICIPANTS. A Participant who is
married on the date his Normal Retirement Pension, 62/30 Pension, Early
Retirement Pension, Disability Pension or Deferred Pension commences shall
receive his Retirement Benefits in the form of a Qualified Joint and
Survivor Pension unless the Participant waives a Qualified Joint and
Survivor Pension (and his spouse consents) in accordance with the
procedures set forth in Section 5.2. The amount of such Qualified Joint
and Survivor Pension shall be the Actuarial Equivalent of the Participant's
Accrued Benefit.
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(b) AUTOMATIC FORM FOR UNMARRIED PARTICIPANTS. A Participant who,
as of the date his Retirement Benefits commence, is not married shall
receive Retirement Benefits in the form of a Single Life Annuity, unless
the Participant waives the Single Life Annuity in accordance with the
procedures set forth in Section 5.2.
(c) A Participant who wishes to receive his Retirement Benefits in a
form other than the automatic form applicable to him may elect, at any time
prior to the date his Retirement Benefits commence, by written notice to
the Board of Administration, an optional form of benefit in which his
Retirement Benefits will be paid, provided that he shall have waived the
automatic form of payment applicable to him in accordance with the
procedures set forth in Section 5.2 (including obtaining his spouse's
consent where applicable). A married Participant may elect a Single Life
Annuity or a Ten Year Certain and Life Annuity as optional forms of
benefit. An unmarried Participant may elect a Ten Year Certain and Life
Annuity as an optional form of benefit. A Participant may not name a
Beneficiary other than his spouse under a Ten Year Certain and Life Annuity
unless (1) if the Participant is married, he has validly waived the
Qualified Joint and Survivor Pension in accordance with the procedures set
forth in Section 5.2 (including obtaining spousal consent), (2) the annuity
complies with the minimum distribution incidental benefit requirements of
Treasury Regulation Section 1.401(a)(9)-2, and (3) the monthly amount
payable to a Beneficiary under an optional form of payment does not exceed
the monthly amount payable to the Participant.
An election made pursuant to this Section 5.1(c) may be revoked and a
new election may be made by the Participant at any time prior to the
commencement of the Participant's Retirement Benefits, provided that, if
the Participant is married and elects a Single Life Annuity or Ten Year
Certain and Life Annuity (or if he changes the Beneficiary under an
optional form of payment), he shall first have obtained spousal consent in
accordance with the procedures set forth in Section 5.2.
5.2 CHANGE OF AUTOMATIC FORM OF PAYMENT AND SPOUSAL CONSENT.
(a) During the Applicable Election Period and at such other times
determined in accordance with applicable law, regulations or rulings as the
Board of Administration shall permit, each Participant may elect in writing
in such manner as the Board of Administration shall require (subject to his
spouse's consent in accordance with the procedures set forth
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in Section 5.2(c)) (i) to waive the automatic form of payment applicable to
him, (ii) to change the Beneficiary designated under an optional form of
payment, (iii) to change the optional form of payment elected, and (iv) to
revoke his waiver of the automatic form of payment applicable to him.
(b) Within ninety (90) but not less than thirty (30) days before the
Annuity Starting Date (in accordance with such regulations as the Secretary
of the Treasury may prescribe), the Board of Administration shall provide
each Participant with a written explanation of:
(1) the terms and conditions of the automatic form of payment
applicable to the Participant,
(2) the Participant's right to make, and the effect of, an
election to waive the automatic form of payment applicable to him,
(3) the rights of the Participant's spouse to consent to the
Participant's election (i) to waive the Qualified Joint and Survivor
Pension, (ii) to change the Beneficiary designated under an optional
form of payment, and (iii) to change the optional form of payment
elected, and the effect of such consent,
(4) the Participant's right to revoke, and the effect of a
revocation of, an election to waive the automatic form of payment
applicable to him,
(5) the Participant's (and, if he is married, his spouse's)
right to defer any distribution until the Participant's Normal
Retirement Date or later Termination of Employment (subject to the
requirements of Section 4.8), and
(6) the optional forms of benefit distributions provided by
the Plan, including a general description of the material features
and an explanation of the relevant values of the optional forms of
benefit distributions provided by the plan.
(c) SPOUSAL CONSENT TO A WAIVER. A spousal consent to (i) a
waiver of a Qualified Joint and Survivor Pension, (ii) a change of
Beneficiary designated under an optional form of payment, and (iii) a
change in the optional form of payment elected by the Participant shall be:
(1) in writing acknowledging the effect of the consent;
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(2) signed by the Participant's spouse and witnessed by a Plan
representative or a notary public; and
(3) effective only for the spouse who gives the consent, and
the beneficiary (or form of benefits) shall not be changed without
spousal consent (unless the consent of the spouse provides that such
change may be made without further consent of the spouse);
provided that the consent of a Participant's spouse shall not be required
if it is established to the satisfaction of the Board of Administration
that such consent may not be obtained because there is no spouse, because
the spouse cannot be located or because of such other circumstances as the
Secretary of the Treasury may by regulations prescribe.
(d) To the extent provided in any Qualified Domestic Relations Order
(as defined in Section 414(p) of the Internal Revenue Code) if married to
the Participant for at least one year, the former spouse of a Participant
shall be treated as the surviving spouse of such Participant for purposes
of receiving a Qualified Joint and Survivor Pension or death benefits in
the form of an annuity and providing consent in accordance with the
procedures set forth in Section 5.2(c).
(e) "APPLICABLE ELECTION PERIOD" means the ninety (90) day period
ending on the Annuity Starting Date.
5.3 ELECTIONS BY CERTAIN PARTICIPANTS WHO HAD A TERMINATION OF EMPLOYMENT
BEFORE AUGUST 23, 1984.
(a) During the period described in Section 5.3(b), a Participant who
has had a Termination of Employment and who will receive benefits in the
form of a life annuity may elect a Qualified Joint and Survivor Pension if:
(1) the Participant was credited with any period of service
under the Plan on or after September 2, 1974;
(2) Internal Revenue Code Section 401(a)(11) before the
enactment of the Retirement Equity Act of 1984 did not apply to such
Participant;
(3) the Participant is not credited with any period of service
under the Plan on or after January 1, 1985; and
(4) as of August 23, 1984, the Participant's Annuity Starting
Date had not occurred and the Participant was alive.
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(b) An election under Section 5.3(a) may be made by a Participant
during the period beginning on August 23, 1984 and ending on the earlier of
the Participant's Annuity Starting Date or the date of the Participant's
death.
5.4 FACILITY OF PAYMENT. All Retirement Benefits shall be paid to the
payee either by a check which shall be endorsed personally by the payee or, if
the payee makes a written request on a form approved by the Board of
Administration, by a deposit in the personal savings or checking account of the
payee; provided that if any such payment shall be made in error or in excess of
the amount due, the payee shall be liable to return any excessive portion of any
payment. If, in the opinion of the Board of Administration, any person to whom
benefits are payable is unable to care for his affairs because of illness,
accident or other incapacity, any payment due (unless prior claim therefor shall
have been made by a duly qualified legal representative) may be paid for his
benefit to his spouse, parent, child, brother or sister, or to any other person
as the Board of Administration may from time to time determine. If any payment
due any person under this Plan is unpaid at the time of the payee's death, the
Board of Administration may determine the person equitably entitled thereto to
whom the payment shall be made (unless prior claim therefor shall have been made
by a duly qualified legal representative). Any such payment under this Section
5.4 shall, to the extent thereof, be a complete discharge of any liability
therefor.
5.5 EFFECT OF RETURN OF BENEFIT CHECKS. Each person entitled to
benefits under this Plan shall furnish the Board of Administration with the
address to which his benefit checks shall be mailed. If any benefit check
mailed by regular United States mail to the last address appearing on the Board
of Administration's records is returned because the addressee is not found at
that address, the mailing of benefit checks shall stop. Thereafter, if the
Board of Administration receives written notice of the proper address of the
person entitled to receive such benefit checks and is furnished with evidence
satisfactory to the Board of Administration that such person is living, all
amounts then due but unpaid shall be forwarded to such person.
5.6 EFFECT OF PENSIONER CONTINUING IN OR RESUMING EMPLOYMENT. If a
Pensioner (a) continues in employment with an Employer after his Normal
Retirement Date, or (b) resumes employment with an Employer or a Commonly
Controlled Entity after beginning to receive Retirement Benefits under the Plan,
payment of Retirement Benefits shall be discontinued for each month that such
Participant is so employed. A Pensioner shall be treated as being reemployed in
each month in which he has at least 40 Hours of Service for the performance of
duties. In the event a Participant's Retirement Benefits are suspended, the
Board of
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Administration shall give such Participant any notification of his rights and
shall offset such Participant's Retirement Benefits in a manner determined
subject to any requirements imposed by law.
5.7 CASH-OUT OF ACCRUED BENEFITS.
(a) BENEFITS NOT IN EXCESS OF $3,500. Notwithstanding any other
provision of this Plan, if a Participant has a Termination of Employment or
dies and the Actuarial Equivalent lump sum value of a Participant's vested
Accrued Benefit (or, if the Participant dies before his Annuity Starting
Date, the Actuarial Equivalent of the Death Benefit payable to the
Participant's Beneficiary pursuant to Article VI) (calculated in accordance
with Section 2.2(b)) does not exceed $3500, the Board of Administration
shall make payment of such Participant's Retirement Benefits (or the Death
Benefit, as applicable) prior to his Annuity Starting Date in a lump sum,
notwithstanding any election made by the Participant, the Participant's
spouse or Beneficiary to the contrary. A Participant who has a Termination
of Employment and who is 0% vested in his Accrued Benefit shall be deemed
to have received his Accrued Benefit upon his Termination of Employment.
(b) BENEFITS NOT IN EXCESS OF $5,000. Notwithstanding any other
provision of this Plan, if upon a Participant's Termination of Employment,
the Actuarial Equivalent lump sum value of his vested Accrued Benefit does
not exceed $5,000, then, unless payment of such Accrued Benefit is required
under Section 5.7(a) or the Participant is otherwise entitled to a
distribution under Article IV, the Participant may elect to receive his
Accrued Benefit immediately in a lump sum or the Actuarial Equivalent of
such lump sum payable in any form provided by Section 5.1.
5.8 WITHDRAWAL OF PARTICIPANT CONTRIBUTIONS. A Participant who has a
Termination of Employment shall be paid the lump sum Actuarial Equivalent of his
Employee Funded Accrued Benefit within 30 days after making application therefor
if he submits an application for such benefits in accordance with Section 9.13
prior to the date his Retirement Benefits begin, accompanied by a waiver of the
automatic form of payment applicable to the Participant under Section 5.1(a) or
(b) with respect to such amount (including a spousal consent thereto) in
accordance with the procedures set forth in Section 5.2. Otherwise his Employee
Funded Accrued Benefit shall be paid as Retirement Benefits at such time as is
provided under Article IV hereof.
5.9 REPAYMENT OF DISTRIBUTIONS AND REESTABLISHMENT OF BENEFIT SERVICE.
Any Participant who had a Termination of
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Employment, who again becomes a Participant and who formerly received less than
the entire Actuarial Equivalent of his Accrued Benefit in the form of a lump sum
payment under Section 5.7 will be entitled to restore such Accrued Benefit as
provided in Section 2.8(b), and a Participant who had a Termination of
Employment, who again becomes a Participant and who formerly withdrew the lump
sum Actuarial Equivalent of his Employee Funded Accrued Benefit under Section
5.8 when he was less than 50% vested in his Employer Funded Accrued Benefit will
be entitled to restore his Accrued Benefit as provided in Section 2.8(c), if he
shall repay to the Plan the amount so received plus interest thereon, compounded
annually, at the applicable rate specified in Section 8.3 from the date of such
distribution to the date of repayment, on or before the earlier of:
(a) the date the individual incurs 5 consecutive One Year Breaks in
Service commencing after the withdrawal or lump sum distribution, or
(b) 5 years after the first date on which the Participant is reemployed
by his Employer.
5.10 DIRECT ROLLOVER. Notwithstanding any provision of this Plan to the
contrary, effective for distributions made on or after January 1, 1993, a
Participant (including a Participant who ceased to be an Employee prior to
January 1, 1993), his surviving spouse or a former spouse who is an alternate
payee under a Qualified Domestic Relations Order (as defined in Section 414(p)
of the Internal Revenue Code) (a "Distributee") may elect, at such time and in
such manner as prescribed by the Board of Administration, to have all or any
portion of the benefits payable to such Distributee which constitutes an
eligible rollover distribution as defined in Section 402(c)(4) of the Internal
Revenue Code paid by the Trustee directly to the eligible retirement plan (as
described in Section 401(a)(31)(D) of the Internal Revenue Code) specified by
such Distributee.
ARTICLE VI
DEATH BENEFITS
6.1 EMPLOYEE FUNDED DEATH BENEFITS. If a Participant dies before his
Retirement Benefits have commenced, a Death Benefit shall be paid under the Plan
equal to the Actuarial Equivalent of such deceased Participant's Employee Funded
Accrued Benefit, reduced by unrepaid withdrawals made under Section 5.8 or
8.4(a); provided, however, that such amount shall not be less than the amount to
which the Beneficiary would have been entitled under Article V, Section 5 of the
Prior Plan had the Participant died prior to April 1, 1981. If such Participant
was married at least
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one year as of the date of his death, his surviving spouse shall receive a
Qualified Survivor Pension beginning the same time as the Qualified Survivor
Pension is (or would be) paid under Section 6.2(c), in an amount equal to the
amount such spouse would have received if the Participant had a Termination of
Employment on the earlier of the day before he died or the date of his actual
Termination of Employment, survived to the later of the two dates described in
Section 6.2(c)(1) and (2) and commenced to receive a Qualified Joint and
Survivor Pension on the day before his death, the Actuarial Equivalent of which
Qualified Joint and Survivor Pension is equal to the amount of his Employee
Funded Accrued Benefit. The remainder of the Death Benefit payable under this
Section 6.1 (or, if the Participant has not been married at least one year as of
the date of his death, the entire Death Benefit payable under this Section 6.1)
shall be paid in a lump sum to the Beneficiary designated by the Participant
under Section 6.4 as soon as reasonably practicable after the Board of
Administration receives and approves an application for benefits in accordance
with Section 9.13 from the deceased Participant's Beneficiary.
6.2 EMPLOYER FUNDED DEATH BENEFIT.
(a) TERMINATION OF EMPLOYMENT ON OR AFTER AUGUST 23, 1984. The
surviving spouse of a Participant shall be entitled to the Death Benefit
described in Section 6.2(c) if all the following conditions are satisfied:
(1) The Participant had a vested interest in his
Employer Funded Accrued Benefit.
(2) The Participant had at least one Hour of Service on
or after August 23, 1984.
(3) The Participant died before his Retirement Benefits
had begun.
(4) The surviving spouse had been married to the
Participant at least one year as of the date of his death.
(5) The surviving spouse has applied for benefits in
accordance with Section 9.13.
(b) TERMINATION OF EMPLOYMENT BEFORE AUGUST 23, 1984. The
surviving spouse of a Participant who had a Termination of Employment prior
to August 23, 1984 shall be entitled to the Death Benefit described in
Section 6.2(c) if all of the following conditions are satisfied:
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(1) The Participant was credited with any period of
service in the first Plan Year beginning on or after January 1, 1976.
(2) The Participant had at least ten years of service
under the Plan.
(3) As of August 23, 1984, the Participant's annuity
starting date had not occurred and the Participant was alive.
(c) PAYMENT OF BENEFIT. The employer funded Death Benefits shall
be a Qualified Survivor Pension commencing the first day of the month
coinciding with or next following the latest of
(1) the Participant's death,
(2) the date application is made for such benefits under
Section 9.13,
(3) the date the Participant would have attained age 55,
in the case of a Participant who has at least ten (10) years of
Benefit Service, or
(4) the date the Participant would have attained age 65,
in the case of a Participant who has less than ten (10) years of
Benefit Service,
in an amount equal to the amount such surviving spouse would have received
if the Participant had had a Termination of Employment on the earlier of
the day before he died or the date of his actual Termination of Employment,
survived to the latest of the four dates described in (1), (2), (3), and
(4) above, and commenced to receive his vested Accrued Benefit (reduced by
the Actuarial Equivalent of any Employee Funded Death Benefits paid to the
surviving spouse under Section 6.1) in the form of a Qualified Joint and
Survivor Pension on the day before his death.
6.3 DEATH AFTER RETIREMENT BENEFITS COMMENCE. The surviving spouse of a
Participant who commenced receiving his Retirement Benefits in the form of a
Qualified Joint and Survivor Pension shall receive a Death Benefit payable under
that form of payment. The Beneficiary of a Participant who commenced receiving
his Retirement Benefits in the form of a Ten Year Certain and Life Annuity and
who died before 120 monthly payments had been made shall receive a Death Benefit
payable under that form of payment. Except as herein provided, in the case of a
Participant who dies after the commencement of Retirement Benefits, no death
benefit shall be payable hereunder.
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6.4 DESIGNATION OF BENEFICIARY. Each Participant with an Employee
Funded Accrued Benefit and each Participant who elects payment of his Retirement
Benefits in the form of a Ten Year Certain and Life Annuity may designate a
Beneficiary to whom the Employee Funded Death Benefit, or remaining payments
under the Ten Year Certain and Life Annuity, if any, payable under the Plan
shall be paid. The designation of a Beneficiary, and any change or revocation
thereof, shall be made on forms provided by the Board of Administration and
shall not be effective until filed with the Board of Administration. A
designation of a Beneficiary other than a Participant's spouse shall not be
effective unless either the Participant is not married or has been married less
than a year as of the date of his death or the Participant has waived the
Qualified Joint and Survivor Pension and his surviving spouse has consented to
the waiver (including the Beneficiary named) in accordance with the procedures
set forth in Section 5.2. In the absence of a valid Beneficiary designation by
a Participant or in the event that no designated Beneficiary survives a
Participant, such Death Benefit shall be paid:
(a) to his surviving spouse; or if there be none;
(b) to his descendants per stirpes; or if there be none surviving;
(c) to his father and mother, in equal shares; or if there be none
surviving;
(d) to his estate.
ARTICLE VII
PLAN FINANCING
7.1 FUNDING POLICY. The Company shall establish and direct the
implementation of a funding policy and method for the Plan which shall be
consistent with the objectives of the Plan and with the minimum funding
standards established under Section 412 of the Internal Revenue Code. The
Company may rely upon the advice of the Actuary in establishing and carrying out
a funding policy and method.
7.2 EMPLOYER CONTRIBUTIONS. Each Employer shall make contributions to
the Trust Fund to fund benefits of the Plan for its Participants in such amounts
and at such times as determined under the funding policy and method of the Plan;
provided that any such contribution shall be made not later than the due date
for the Employer's United States income tax return (including extensions) for
the year for which such contribution is made. Employer contributions are
expressly conditioned upon the
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deductibility of such contributions by the Employer under Section 404 of the
Internal Revenue Code.
7.3 FORFEITURES. Forfeitures of benefits under the Plan arising for any
reason shall be applied to reduce the cost of the Plan under the funding policy
and method of the Plan and shall not increase the benefits under the Plan
otherwise payable to Participants.
7.4 EXCLUSIVE BENEFIT OF PARTICIPANTS. All Participant contributions
through December 31, 1988 and Employer contributions under the Plan shall be
paid to the Trustee and deposited in the Trust Fund and shall be held, managed
and distributed solely in the interest of the Participants, their surviving
spouses and their Beneficiaries for the exclusive purpose of (i) providing
benefits to Participants, their surviving spouses and their Beneficiaries and
(ii) defraying reasonable administrative expenses of the Plan and the Trust, to
the extent such expenses are not paid by the Employer, provided that:
(a) If, and to the extent, deduction for an Employer contribution
under Section 404 of the Internal Revenue Code is disallowed, Employer
contributions conditioned upon deductibility shall be returned to the
Employer making such contributions within one year after the disallowance
of the deduction;
(b) If, and to the extent that, an Employer or Participant
contribution is made through mistake of fact, such Employer or Participant
contribution shall be returned to the Employer or Participant making such
contribution within one year of the payment of the contribution;
(c) If any amounts arising out of variation between expected
actuarial requirements and actual requirements remain in the Trust Fund
after termination of the Plan and if all liabilities of the Plan to
Participants, surviving spouses and Beneficiaries have been satisfied,
including those satisfied under Section 11.4, such amounts shall be
distributed to the Employers in such amounts as the Board of Administration
in its sole discretion shall determine consistent with applicable law.
All Employer contributions are conditioned on their being deductible under
Section 404 of the Internal Revenue Code.
7.5 BENEFITS PAYABLE ONLY FROM TRUST FUND. All benefits provided by
this Plan shall be paid solely out of the Trust Fund, and neither Employer nor
any agent or representative of the Employer shall be liable in any manner for
any such benefits.
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ARTICLE VIII
PARTICIPANT CONTRIBUTIONS
8.1 PARTICIPANT CONTRIBUTIONS. Prior to January 1, 1989, a Participant
may elect to make Participant contributions to the Plan in the amount of three
and one-half percent (3-1/2%) of the Participant's Compensation for the year,
provided that, in the Plan Year in which the Participant becomes (or again
becomes) a Participant, and in the Plan Year in which the Participant has a
suspension of participation pursuant to Section 8.4, the contributions shall be
based upon the Participant's Compensation during that part of the Plan Year in
which he is a Participant prior to any such suspension of participation.
Notwithstanding the preceding sentence, for Plan Years beginning on or after
January 1, 1986, a Participant's contribution for any Plan Year shall not exceed
$10,500, and no Participant contributions shall be made to the Plan after
December 31, 1988. Any Participant contributions made after December 31, 1988
shall be returned to the Participant who made them.
8.2 MANNER OF MAKING PARTICIPANT CONTRIBUTIONS. Subject to Section 8.1,
to make Participant contributions, a Participant shall complete and deliver to
the Board of Administration a form prepared for that purpose by the Board of
Administration which will authorize the Employer to deduct the Participant
contributions on a regular basis from the Participant's payroll check. A
Participant who does not have at least one Hour of Service on or after January
1, 1988 may commence (or recommence) making contributions to the Plan at any
time prior to his sixty-fifth (65th) birthday, and shall cease making
contributions to the Plan on his sixty-fifth (65th) birthday. A Participant who
has at least one Hour of Service on or after January 1, 1988 may make
Participant Contributions at any time, subject to Section 8.1. An election to
make Participant contributions will remain in effect until revoked. Once
revoked, an election to make Participant Contributions may again be made no
earlier than one year after the prior election was revoked. Revocation and
reelection shall be made by completing and delivering to the Board of
Administration a form prepared by the Board of Administration for that purpose.
No retroactive contributions will be permitted.
8.3 EMPLOYEE FUNDED ACCRUED BENEFIT. A Participant's Employee Funded
Accrued Benefit shall be equal to the Actuarial Equivalent of his Accumulated
Contributions (defined below) expressed as a monthly benefit commencing on the
Participant's Normal Retirement Date (determined under Section 2.28(a)) and
payable in the form of a Single Life Annuity. "ACCUMULATED CONTRIBUTIONS"
means the sum of
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(a) the total amount of contributions made by the Participant to
the Plan on or before December 31, 1988 reduced by withdrawals made
pursuant to Section 5.8 or 8.4(a), or pursuant to the provisions of the
Prior Plan, and
(b) the interest on (a), compounded annually, (i) at the average
rate earned by the Trust Fund prior to January 1, 1976, (ii) at the higher
of the average rate earned by the Trust Fund or five percent (5%) per annum
from January 1, 1976 through December 31, 1980, (iii) at the rate of five
percent (5%) per annum from January 1, 1981 to December 31, 1987, (iv) at
the rate of 120 percent (120%) of the Federal mid-term rate (as in effect
under Section 1274 of the Internal Revenue Code for the first month of the
Plan Year) for the period beginning on or after January 1, 1988 and ending
on the date the determination is being made, and (v) at the interest rate
specified in Section 2.2(b) for the period beginning with the determination
date and ending on the Participant's Normal Retirement Date (determined
under Section 2.28(a)).
A Participant's Employee Funded Accrued Benefit shall be nonforfeitable at all
times prior to the date his Retirement Benefits commence.
8.4 IN SERVICE WITHDRAWAL OF PARTICIPANT CONTRIBUTIONS.
(a) A Participant who has not had a Termination of Employment may,
upon written request to the Board of Administration, accompanied by a
waiver of the automatic form of benefit payment applicable to him under
Section 5.1 (including a spousal consent thereto in accordance with the
procedures set forth in Section 5.2) withdraw the Actuarial Equivalent lump
sum value of his Employee Funded Accrued Benefit. If a Participant makes
such a withdrawal, then unless the Participant repays the withdrawal in
accordance with Section 8.4(b), his Accrued Benefit shall be reduced by the
Actuarial Equivalent of the amount withdrawn, provided that the reduced
amount of such Accrued Benefit shall not be less than the amount which
would be determined under Section 2.1(a) if all such Participant's Benefit
Service were noncontributory. Upon making such a withdrawal, the
Participant shall be suspended from participation in the Plan for a period
of one year from the date of such withdrawal. During the period of
suspension the suspended individual shall not accrue Benefit Service and
shall not be entitled to make Participant contributions to the Plan.
(b) A Participant who has made a withdrawal pursuant to Section
8.4(a) may, at any time prior to incurring a One Year Break in Service,
repay to the Plan the amount so withdrawn,
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together with interest on such amount at the applicable rate specified in
Section 8.3 compounded annually from the date of the withdrawal.
ARTICLE IX
ADMINISTRATION
9.1 BOARD OF DIRECTORS DUTIES. The Board of Directors shall have
overall responsibility for the establishment, amendment, termination,
administration and operation of the Plan and the investment of its assets, which
responsibility it shall discharge:
(a) by the appointment and removal (with or without cause) of
(i) the members of the Board of Administration, to which is
delegated the overall responsibility for the administration and
operation of the Plan;
(ii) the Trustee, to which is delegated the responsibility for
the investment and safekeeping of the assets of the Plan, except to
the extent such responsibility is delegated to one or more Investment
Managers; and
(iii) if and to the extent it deems appropriate, one or more
Investment Managers to whom it may delegate responsibility for the
investment of all or any part of the assets of Plan; and
(b) by establishing and communicating to the Trustee and any
Investment Managers investment objectives and guidelines and periodically
reviewing and monitoring the performance of the Board of Administration,
Trustee and any Investment Managers.
(c) by directing, in its discretion, that Plan assets be invested in
such contract (including but not limited to a group annuity contract, a
guaranteed investment contract, an immediate participation guarantee
contract or a deposit administration contract) issued by an insurance
company authorized to do business in any State of the United States,
selected from time to time by the Board of Directors. The Trustee shall be
the policyholder of such contract unless the Board of Directors directs
that the Board of Administration shall be the policyholder of such
contract, provided that regardless of who is the policyholder, the Board of
Administration shall have the right to exercise, or to direct
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the Trustee to exercise, all rights, powers, and elections provided under
any such contract.
9.2 BOARD MEMBERSHIP. The Board of Administration shall consist of not
less than three members, who shall be appointed by the Board of Directors. In
the absence of such appointment, if the Trustee is one or more individuals, the
Trustee shall be the Board of Administration. They shall remain in office at
the will of the Board of Directors, and the Board of Directors may from time to
time remove any of said members with or without cause and shall appoint their
successors. The Board of Administration shall have the general responsibility
for the administration of the Plan and for carrying out its provisions, and
shall be the Plan Administrator.
9.3 BOARD STRUCTURE. Each member of the Board of Administration shall
be an officer or Eligible Employee of an Employer hereunder. Each person upon
becoming a member of the Board, shall file an acceptance thereof in writing with
the secretary of the Company and the secretary of the Board. Any member of the
Board may resign by delivering his written resignation to the secretary of the
Company and the secretary of the Board, and such resignation shall become
effective upon the date specified therein. In the event of a vacancy in
membership, the remaining members shall constitute the Board with full power to
act until said vacancy is filled.
9.4 BOARD ACTIONS. The action of the Board of Administration shall be
determined by the vote or other affirmative expression of a majority of its
members. The Board shall choose a chairman who shall be a member of the Board
and a secretary who may (but need not) be a member of the Board. The secretary
shall keep a record of all meetings and acts of the Board and shall have custody
of all records and documents pertaining to its operations. Either the chairman
or the secretary may execute any certificate or other written direction on
behalf of the Board.
9.5 BOARD OF ADMINISTRATION DUTIES. The Board of Administration on
behalf of the Participants, Pensioners and all other Beneficiaries of the Plan
and Trust shall enforce the Plan in accordance with the terms of the Plan and
the Trust Agreement and shall have all powers necessary to accomplish that
purpose, including but not by way of limitation, the following:
(a) To issue rules and regulations necessary for the proper conduct
and administration of the Plan and to change, alter, or amend such rules
and regulations;
(b) To construe the Plan and Trust Agreement;
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(c) To determine all questions arising in its administration,
including those relating to the eligibility of persons to become
Participants; the rights of Participants, Pensioners and their
Beneficiaries, and Employer Contributions; and its decision thereon shall
be final and binding upon all persons hereunder;
(d) To compute and certify to the Trustee the amount and kind of
benefits payable to Participants, Pensioners or their Beneficiaries;
(e) To authorize all disbursements of the Trustee from the Trust
Fund;
(f) To employ and suitably compensate such accountants and attorneys
(who may but need not be the accountants or attorneys of the Company),
other persons to render advice and clerical employees as it may deem
necessary to the performance of its duties;
(g) To communicate the Plan and its eligibility requirements to the
Employees and to notify Employees when they become eligible to participate;
and
(h) To make available to Participants upon request, for examination
during business hours, such records as pertain exclusively to the examining
Participant.
9.6 BOARD LIABILITY. The Board of Administration and the members
thereof shall be free from all liability, joint or several, for their acts as
members of such Board, except to the extent that they may have been guilty of
willful misconduct, except as otherwise required by federal law.
9.7 BOARD BONDING AND EXPENSES. The members of the Board of
Administration shall serve without bond (except as otherwise required by federal
law) and without compensation for their service as such; but all expenses of the
Board (including but not limited to premiums for termination insurance) shall be
paid by the Trust except to the extent paid by the Employers.
9.8 ALLOCATIONS AND DELEGATIONS OF RESPONSIBILITY.
(a) The Board of Directors and the Board of Administration shall
each have the authority to delegate from time to time, by instrument in
writing filed in its minute books all or any part of its responsibilities
under the Plan to such person or persons as it may deem advisable (and may
authorize such person, upon receiving the written consent of the Board of
Directors or the Board of Administration, to delegate such responsibilities
to such other person or
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persons as the Board of Directors or the Board of Administration shall
authorize), and in the same manner to revoke any such delegation of
responsibility. Any action of the delegate in the exercise of such
delegated responsibilities shall have the same force and effect for all
purposes hereunder as if such action had been taken by the Board of
Directors or the Board of Administration. An Employer, the Board of
Directors and the Board of Administration shall not be liable for any acts
or omissions of any such delegate. The delegate shall periodically report
to the Board of Directors or the Board of Administration concerning the
discharge of the delegated responsibilities.
(b) The Board of Directors and Board of Administration shall each
have the authority to allocate from time to time, by instrument in writing
filed in its minute books, all or any part of its responsibilities under
the Plan to one or more of its members as it may deem advisable, and in the
same manner to revoke such allocation of responsibilities. Any action of
the member to whom responsibilities are allocated in the exercise of such
allocated responsibilities shall have the same force and effect for all
purposes hereunder as if such action had been taken by the Board of
Directors or the Board of Administration. An Employer, the Board of
Directors and the Board of Administration shall not be liable for any acts
or omissions of such member. The member to whom responsibilities have been
allocated shall periodically report to the Board of Directors or the Board
of Administration concerning the discharge of the allocated
responsibilities.
9.9 INFORMATION TO BE SUPPLIED BY EMPLOYERS. Employers shall provide
the Board of Administration or its delegate with such information as it shall
from time to time need in the discharge of its duties.
9.10 COMPANY RECORDS. The regularly kept records of the Board, Company
and any Employer shall be conclusive evidence of the Vesting Service, Benefit
Service, and Years of Eligibility Service of an Employee, his Compensation, his
age, his status as an Eligible Employee, and all other matters contained in such
records applicable to this Plan, provided that an Employee may request a
correction in the record of his age at any time prior to retirement, and such
correction shall be made if within 90 days after such request he furnishes in
support thereof a birth certificate, baptismal certificate, or other documentary
proof of age satisfactory to the Board.
9.11 FIDUCIARY CAPACITY. Any person or group of persons may serve in
more than one fiduciary capacity with respect to the Plan.
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9.12 COMPANY AS AGENT. The Company and/or the Board shall act as agent
for each Employer in the administration of the Plan.
9.13 CLAIMS PROCEDURE.
(a) INITIAL CLAIM FOR BENEFITS. Before Retirement Benefits will
commence or a Death Benefit will be paid, each Participant or Beneficiary
("Claimant") shall submit his application for benefits ("Claim") to the
Board of Administration (or to such other person as shall be designated in
writing by the Board of Administration) in writing in such form as is
permitted by the Board of Administration. A Claimant shall have no right
to seek review of a denial of benefits, or to bring any action in any court
to enforce a Claim for benefits, prior to his filing a Claim for benefits
and exhausting his rights to review under this Section.
When a Claim has been filed properly, such Claim shall be
evaluated, and the Claimant shall be notified of the approval or the denial
within 90 days after the receipt of such Claim unless special circumstances
require an extension of time for processing of the Claim. If such an
extension of time is required, written notice of the extension shall be
furnished to the Claimant prior to the termination of the initial 90-day
period, which notice shall specify the special circumstances requiring an
extension and the date by which a final decision will be reached (which
date shall not be later than 180 days after the date on which the Claim was
filed). A Claimant shall be given a written notice in which the Claimant
shall be advised as to whether the Claim is granted or denied, in whole or
in part. If a Claim is denied, in whole or in part, the notice shall
contain (i) the specific reasons for the denial, (ii) references to
pertinent Plan provisions on which the denial is based, (iii) a description
of any additional material or information necessary to perfect the Claim
and an explanation of why such material or information is necessary, and
(iv) the Claimant's rights to seek review of the denial.
(b) REVIEW OF DENIAL OF CLAIM. If a Claim is denied, in whole or
in part, the Claimant shall have the right to (i) request that the Board of
Administration (or such other person as shall be designated in writing by
the Board of Administration) review the denial, (ii) review pertinent
documents, and (iii) submit issues and comments in writing, provided that
the Claimant files a written request for review with the Board of
Administration within 60 days after the date on which the Claimant received
written notification of the denial. Within sixty (60) days after a request
for review is received, the review shall be made, and the
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Claimant shall be advised in writing of the decision on review. However,
if special circumstances require an extension of time for processing the
review, the Claimant shall be given a written notification within such
initial 60 day period specifying the reasons for the extension and when
such review shall be completed (provided that such review shall be
completed within 120 days after the date on which the request for review
was filed). The decision on review shall be forwarded to the Claimant in
writing and shall include specific reasons for the decision and references
to Plan provisions upon which the decision is based. A decision on review
shall be final and binding on all persons for all purposes.
If a Claimant shall fail to file a request for review in
accordance with the procedures herein outlined, such Claimant shall have no
rights to review and shall have no right to bring action in any court, and
the denial of the Claim shall become final and binding on all persons for
all purposes.
9.14 FIDUCIARY RESPONSIBILITY. If a Plan fiduciary acts in accordance
with ERISA, Title I, Subtitle B, Part 4,
(a) in relying on a Participant's election to waive a Qualified
Joint and Survivor Pension or a revocation of such an election or in
determining that the Participant's spouse has consented to a waiver or that
the consent of the Participant's spouse may not be obtained because there
is no spouse, the spouse cannot be located or other circumstances
prescribed by the Secretary of the Treasury by regulations, then to the
extent of payments made pursuant to such consent, revocation or
determination, the Plan and its fiduciaries shall have no further
liability; or
(b) in treating a domestic relations order as being (or not being) a
Qualified Domestic Relations Order, or, during any period in which the
issue of whether a domestic relations order is a Qualified Domestic
Relations Order is being determined (by the Board of Administration, by a
court of competent jurisdiction, or otherwise), in separately accounting
for the amounts ("Segregated Amounts") which would have been payable to the
alternate payee during such period if the order has been determined to be a
Qualified Domestic Relations Order, in paying the Segregated Amounts
(including any interest thereon) to the person entitled thereto if within
the 18-month period beginning with the date on which the first payment
would be required to be made under the domestic relations order (the
"18-Month Period") the domestic relations order (or a modification thereof)
is determined to be a Qualified Domestic Relations Order, in paying the
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Segregated Amounts (including any interest thereon) to the person entitled
thereto if there had been no order if within the 18-Month Period the
domestic relations order is determined not to be qualified or if the issue
is not resolved within the 18-Month Period, and in prospectively applying a
domestic relations order which is determined to be qualified after the
close of the 18-Month Period, then the obligation of the Plan and its
fiduciaries to the Participant and each alternate payee shall be discharged
to the extent of any payment made pursuant to such acts.
9.15 CONSTRUCTION OF PLAN AND DECISIONS FINAL. The Company, the Board
of Administration, the Board of Directors, and the Trustee have full discretion
to construe and interpret the Plan and to decide all matters within their
respective jurisdictions, including factual matters, all questions concerning
eligibility for participation and all questions relating to the amount and
manner of providing benefits, and including the full discretion to resolve
benefit appeals, and their decisions shall be final, binding and conclusive upon
the Employers, each Employee, Beneficiary, Participant, former employee, former
Participant and every other person or party interested or concerned for all
purposes.
ARTICLE X
TRUSTEE AND TRUST FUND
10.1 TRUST AGREEMENT. The Company has entered into a Trust Agreement
providing for the administration of the Plan. Said Trust Agreement, as from
time to time amended, shall continue in force and shall be deemed to form a part
of this Plan, and any and all rights or benefits which may accrue to any person
under this Plan shall be subject to all the terms and provisions of the said
Trust Agreement.
10.2 SELECTION OF TRUSTEE. As provided in the Trust Agreement, the
Board of Directors shall have the power to remove the Trustee and to appoint a
successor Trustee.
10.3 TRUSTEE'S DUTIES. The powers, duties and responsibilities of the
Trustee shall be as stated in the Trust Agreement, and nothing contained in this
Plan either expressly or by implication shall be deemed to impose any additional
powers, duties or responsibilities upon the Trustee. All Employer and
Participant contributions shall be paid into the Trust and all benefits payable
under the Plan shall be paid from the Trust. Employers shall have no rights or
claims of any nature in or to the assets of the Trust Fund except the right to
require the Trustee to hold, use, apply and pay such assets in its hands, in
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accordance with the directions of the Board of Administration for the exclusive
benefit of the Participants, their surviving spouses and their Beneficiaries,
except as otherwise provided in Section 7.4 and Section 11.4.
10.4 TRUST INCOME. The net income derived from the Trust shall be
accumulated and shall from time to time be invested as a part of the Trust Fund.
10.5 TRUST EXPENSES. All clerical, legal or other expenses of the Trust
and Trustee's fees (of any Trustee that is not an individual) shall be paid by
the Trust except to the extent paid by the Employer. Individual Trustees shall
not receive compensation for their services as such.
10.6 TRUST ENTITY. The Trust under this Plan from its inception shall
be a separate entity aside and apart from the Employer and its assets. The
Trust and the corpus and income thereof shall in no event and in no manner
whatsoever be subject to the rights or claims of any creditor of the Employer.
ARTICLE XI
AMENDMENT AND TERMINATION
11.1 AMENDMENTS. The Company, by resolution of the Board of Directors,
may amend, modify, change, revise or discontinue this Plan at any time;
provided, however, that (i) no amendment shall increase the duties or
liabilities of the Trustee or the Board of Administration without their written
consent; (ii) no amendment shall have the effect of vesting in the Employer any
interest in any funds, securities or other property subject to the terms of this
Plan and the Trust Agreement; (iii) except as provided in Section 7.4, no
amendment shall authorize or permit at any time any part of the corpus or income
of the Trust Fund to be used or diverted to purposes other than for the
exclusive benefit of Participants, their surviving spouses and their
Beneficiaries; (iv) no amendment shall have any retroactive effect as to deprive
any Participant, surviving spouse or Beneficiary of any benefit already accrued;
provided that no amendment made in conformance to provisions of the Internal
Revenue Code, or any other statute relating to the Internal Revenue Code, or any
other statute relating to employees' trusts, or any official regulations or
ruling issued pursuant thereto, shall be considered prejudicial to the rights of
any Participant, his surviving spouse or Beneficiary.
11.2 RIGHT TO TERMINATE. The Company may at any time terminate the Plan
by action of its Board of Directors.
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11.3 EFFECTS OF TERMINATION. Upon termination of the Plan, further
payment of Employer contributions to the Trust shall cease. The Board of
Administration shall notify each Participant of the termination of the Plan.
Upon termination or partial termination of the Plan, the Accrued Benefit of each
affected Participant which is not vested and nonforfeitable as of the date of
such termination or partial termination shall be nonforfeitable, to the extent
funded; provided, however, notwithstanding any other provision of this Plan, the
rights of all persons entitled to vested and nonforfeitable benefits under the
Plan shall be limited to the assets of the Plan and no Employer shall have any
obligation to make any contributions to pay any benefit under the Plan
subsequent to a termination or partial termination of the Plan.
11.4 DISPOSITION OF TRUST FUND ON TERMINATION. Subject to the
provisions of Section 14.7, upon termination of the Plan, the Trust Fund, after
providing for the expenses of the Plan and Trust Fund, shall be allocated among
and distributed to Participants, surviving spouses and Beneficiaries to the
extent the assets in the Trust Fund are sufficient therefor, in accordance with
ERISA Section 4044, provided that with respect to persons described in ERISA
Section 4044(a)(5), allocation and distribution shall be made in the following
order of precedence:
(i) To provide benefits commencing at age 65 for remaining
Employees age 62 or over on the date of termination of the Plan,
without reference to the order in which they reach age 65.
(ii) To provide benefits commencing at age 65 for remaining
Employees below the age of 62 on the date of termination of the Plan,
in the order in which they are expected to reach age 65.
In the event assets of the Trust Fund remain after the foregoing
allocations have been made ("Remaining Assets") the amount of Remaining Assets
attributable to mandatory Employee contributions ("Employee Remaining Assets")
and the amount of Remaining Assets attributable to Employer contributions
("Employer Remaining Assets") shall be determined and allocated as follows:
(i) The amount of Employee Remaining Assets shall be the
amount determined by multiplying the total amount of Remaining Assets
by a fraction, the numerator of which is the amount of Trust Fund
assets allocated pursuant to Section 11.4 to persons described in
ERISA Section 4044(a)(2) and the denominator of which is the total
amount of Trust Fund assets allocated to persons described in ERISA
Sections 4044(a)(2) through (a)(6).
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(ii) The Employee Remaining Assets shall be allocated among
Participants, surviving spouses, and Beneficiaries entitled to an
allocation under ERISA Section 4044(a)(2) in an amount determined by
multiplying the amount of Employee Remaining Assets by a fraction,
the numerator of which is the amount allocated to each such person
pursuant to ERISA Section 4044(a)(2) and the denominator of which is
the total amount of Trust Assets allocated pursuant to Section
4044(a)(2).
(iii) The amount of Employer Remaining Assets, which is equal to
the amount of Remaining Assets reduced by the amount of Employee
Remaining Assets, shall revert to the Employers in such respective
portions as the Board of Administration shall determine.
11.5 DISPOSITION MEDIUM. The distributions referred to in Section 11.4
may be implemented by the Trustee upon discretion from the Board through the
continuance of the Trust Fund, through a new Trust Fund, or through the purchase
of annuity contracts issued by an insurance company, or by a combination of
these media.
ARTICLE XII
ADOPTION AND WITHDRAWAL FROM PLAN
12.1 PROCEDURE FOR ADOPTION. Any Affiliated Company may, by resolution
of such Affiliated Company's board of directors, adopt the Plan for the benefit
of its employees upon authorization of such action by the Board of Directors
subject to such terms and conditions (including but not limited to terms and
conditions concerning Vesting Service, Benefit Service, Years of Eligibility
Service, and amount of Retirement Benefits) as may be imposed by the Board of
Directors.
12.2 PROCEDURE FOR WITHDRAWAL. Any Employer (other than the Company)
may, by resolution of the board of directors of such Employer, with the consent
of the Board of Directors and subject to such conditions as may be imposed by
the Board of Directors, withdraw its participation in the Plan.
ARTICLE XIII
TOP HEAVY PROVISIONS
13.1 APPLICATION. The definitions in Section 13.2 shall apply under
this Article XIII and the special rules in Section 13.3 shall apply,
notwithstanding any other provisions of
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the Plan, for any Plan Year in which the Plan is a Top Heavy Plan and for such
other Plan Years as may be specified herein. Anything in this Article XIII to
the contrary notwithstanding, if the Plan is a multiemployer plan described in
Internal Revenue Code Section 414(f) or a multiple employer plan as described in
Internal Revenue Code Section 413(c), the provisions of this Article XIV shall
be applied separately to each Employer and its Commonly Controlled Entities
taking account of benefits under the plan provided to employees of the Employer
or Commonly Controlled Entity because of service with that Employer or Commonly
Controlled Entity.
13.2 SPECIAL TOP HEAVY DEFINITIONS. The following special definitions
shall apply under this Article XIII:
(a) "AGGREGATION GROUP" means the group of plans in a Mandatory
Aggregation Group, if any, that includes the Plan, unless the inclusion of
Related Plans in the Permissive Aggregation Group would prevent the Plan
from being a Top Heavy Plan, in which case "Aggregation Group" means the
group of plans consisting of the Plan and each other Related Plan in a
Permissive Aggregation Group with the Plan.
(i) "MANDATORY AGGREGATION GROUP" means each plan
(considering the Plan and Related Plans) that, during the Plan Year
that contains the Determination Date or any of the four preceding
Plan Years,
(A) had a Participant who was a Key Employee, or
(B) was necessary to be considered with a plan in which
a Key Employee participated in order to enable the plan in
which the Key Employee participated to meet the requirements of
Section 401(a)(4) or Section 410 of the Internal Revenue Code.
If the Plan is not described in (A) or (B) above, it shall not be
part of a Mandatory Aggregation Group.
(ii) "PERMISSIVE AGGREGATION GROUP" means the group of plans
consisting of (A) the plans, if any, in a Mandatory Aggregation Group
with the Plan and (b) any other Related Plan that, when considered as
a part of the Aggregation Group, does not cause the Aggregation Group
to fail to satisfy the requirements of Section 401(a)(4) and Section
410 of the Internal Revenue Code. A Related Plan in (B) of the
preceding sentence may include a simplified employee pension plan, as
defined in Internal Revenue Code Section 408(k), and
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a collectively bargained plan, if when considered as a part of the
Aggregation Group such plan does not cause the Aggregation Group to
fail to satisfy the requirements of Section 401(a)(4) and Section 410
of the Internal Revenue Code considering, if the plan is a
multiemployer plan as described in Code Section 414(f) or a multiple
employer plan as described in Section 413(c), benefits under the plan
only to the extent provided to employees of the employer because of
service with the employer and, if the plan is a simplified employee
pension plan, only the employer's contribution to the plan.
(b) "DETERMINATION DATE" means, with respect to a plan year, the
last day of the preceding plan year or, in the case of the first plan year,
the last day of such plan year. If the Plan is aggregated with other plans
in the Aggregation Group, the Determination Date for each other plan shall
be, with respect to any plan year, the Determination Date for each such
other plan which falls in the same calendar year as the Determination Date
for the Plan.
(c) "HIGHEST AVERAGE MONTHLY COMPENSATION" means one sixtieth of a
person's Compensation for a period consisting of his sixty (60) consecutive
calendar months in which his Compensation was the highest preceding the
date he ceases to be an Employee. For purposes of this Section, a calendar
month ending on or next preceding the date a person ceases to be an
Employee and a calendar month beginning on or next following the date such
person becomes an Employee shall be treated as consecutive. If a person
has less than sixty (60) consecutive calendar months of Compensation,
Highest Average Monthly Compensation shall mean the sum of the person's
Compensation divided by the number of months of employment for which the
person was compensated.
(d) "KEY EMPLOYEE" means, for the Plan Year containing the
Determination Date, any person or the beneficiary of any person who is an
Employee or former Employee of an Employer or a Commonly Controlled Entity
as determined under Internal Revenue Code Section 416(i) and who, at any
time during the Plan Year containing the Determination Date or any of the
four (4) preceding Plan Years (the "Measurement Period"), is a person
described in paragraph (i), (ii), (iii) or (iv), subject to paragraph (v).
(i) An officer of the Employer or Commonly Controlled Entity
who:
(a) in any Measurement Period, in the case of a Plan
Year beginning after December 31, 1983, is
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an officer during the Plan Year and has annual Compensation for
the Plan Year in an amount greater than fifty percent (50%) of
the amount in effect under Section 415(b)(1)(a) of Internal
Revenue Code for the calendar year in which such Plan Year ends
($98,064 in 1989, $102,582 in 1990, $108,963 in 1991 and as
adjusted in subsequent years in accordance with regulations
prescribed by the Secretary of the Treasury or his delegate
pursuant to the provisions of Section 415(d) of the Internal
Revenue Code); and
(B) in any Measurement Period, in the case of a Plan
Year beginning on or before December 31, 1983, is an officer
during the Plan Year, regardless of his Compensation (except to
the extent that applicable law, regulations and rulings
indicate that the fifty percent (50%) of Section 415(b)(1)(a)
of the Internal Revenue Code requirement is applicable).
No more than a total of fifty (50) persons (or, if lesser, the
greater of three (3) persons or ten percent (10%) of all persons or
beneficiaries of persons who are employees or former employees) shall
be treated as Key Employees under this paragraph (i) for any
Measurement Period. In the case of an Employer or Commonly
Controlled Entity which is not a corporation:
(A) in any Measurement Period, in the case of a Plan
Year beginning on or before February 28, 1985 no persons shall
be treated as Key Employees under this paragraph (i); and
(B) in any Measurement Period, in the case of a Plan
Year beginning after February 28, 1985, the term "officer" as
used in this subsection (d) shall include administrative
executives as described in Section 1.416-1(T-13) of the
Treasury Regulations.
(ii) One (1) of the ten (10) persons who, during a Plan Year in
the Measurement Period:
(A) have annual Compensation from the Employer or a
Commonly Controlled Entity for such Plan Year greater than the
amount in effect under Section 415(c)(1)(a) of the Internal
Revenue Code for the calendar year in which such Plan Year ends
(the greater of $30,000 or one-fourth (1/4) of the dollar
limitation in effect under Section 415(b)(1)(a) of the Internal
Revenue Code for the
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Plan Year as adjusted in accordance with regulations prescribed
by the Secretary of the Treasury or his delegate pursuant to
the provisions of Section 415(d) of the Internal Revenue Code);
and
(b) own (or are considered as owning within the meaning
of Internal Revenue Code Section 318) in such Plan Year, the
largest percentage interests in the Employer or a Commonly
Controlled Entity, in such Plan Year, provided that no person
shall be treated as a Key Employee under this paragraph unless
he owns more than one-half percent (1/2%) interest in the
Employer or a Commonly Controlled Entity.
No more than a total of ten (10) persons or beneficiaries of persons
who are employees or former employees shall be treated as Key
Employees under this paragraph (ii) for any Measurement Period.
(iii) A person who, for a Plan Year in the Measurement Period, is
a more than five percent (5%) owner (or is considered as owning more
than five percent (5%) within the meaning of Internal Revenue Code
Section 318) of the Employer or a Commonly Controlled Entity.
(iv) A person, who, for a Plan Year in the Measurement Period,
is a more than one percent (1%) owner (or is considered as owning
more than one percent (1%) within the meaning of Internal Revenue
Code Section 318) of the Employer or a Commonly Controlled Entity and
has an annual Compensation for such Plan Year from the Employer and
Commonly Controlled Entities of more than $150,000.
(v) If the number of persons who meet the requirements to be
treated as Key Employees under paragraph (i) or (ii) exceed the
limitation on the number of Key Employees to be counted under
paragraph (i) or (ii), those persons with the highest annual
Compensation in a Plan Year in the Measurement Period for which the
requirements are met and who are within the limitation on the number
of Key Employees will be treated as Key Employees.
If the requirements of paragraph (i) or (ii) are met by a person in
more than one (1) Plan Year in the Measurement Period, each person
will be counted only once under paragraph (i) or (ii):
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(A) under paragraph (i), the Plan Year in the
Measurement Period in which a person who was an officer and had
the highest annual Compensation shall be used to determine
whether the person will be treated as a Key Employee under the
preceding sentence;
(B) under paragraph (ii), the Plan Year in the
Measurement Period in which the ownership percentage interest
is the greatest shall be used to determine whether the person
will be treated as a Key Employee under the preceding sentence.
Notwithstanding the above provisions of paragraph (v), a person may
be counted in determining the limitation under both paragraphs (i)
and (ii). In determining the sum of the Present Value of Accrued
Benefits for Key Employees under subsection (i) of this Section, the
Present Value of Accrued Benefits for any person shall be counted
only once.
(e) "NON-KEY EMPLOYEE" means a person with an accrued benefit or
account balance in the Plan or any Related Plan in the Aggregation Group
who is not a Key Employee, and any beneficiary of such a person.
(f) "PRESENT VALUE OF ACCRUED BENEFITS" means for any Plan Year an
amount equal to the sum of (i), (ii), and (iii), subject to (iv), for each
person who, in the Plan Year containing the Determination Date was a Key
Employee or a Non-Key Employee:
(i) The sum of the actuarial present values of a person's
accrued benefits under this Plan and each Related Defined Benefit
Plan in the Aggregation Group, expressed as a benefit commencing at
Normal Retirement Date (or the person's attained age, if later)
determined based on the following actuarial assumptions:
(a) Interest rate 5%; and
(b) Mortality: UP-1984 Table;
and determined in accordance with Internal Revenue Code Section
416(g); provided, however, that the accrued benefit of any Non-Key
Employee shall be determined under the method which is used for
accrual purposes for all Related Defined Benefit Plans or, if no
single accrual method is used in all such plans, such accrued benefit
shall be determined as if such accrued benefit
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accrued not more rapidly than the slowest accrual rate under Section
411(b)(1)(c) of the Internal Revenue Code.
The present value of an accrued benefit for any person who is
employed by an employer maintaining a plan on the Determination Date
is determined as of the most recent valuation date which is within a
12-month period ending on the Determination Date, provided however
that:
(A) for the first plan year of the plan, the present
value for an employee is determined as if the employee had a
Termination of Employment (1) on the Determination Date or (2)
on such valuation date but taking into account the estimated
accrued benefit as of the Determination Date; and
(B) for the second and subsequent plan years of the
plan, the accrued benefit taken into account for an employee is
not 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 as
of the Determination Date for the second plan year.
For purposes of this paragraph (i), the valuation date is the
valuation date used by the plan for computing plan costs for minimum
funding, regardless of whether a valuation is performed that year.
If the plan provides for a nonproportional subsidy as described
in Treasury Regulations Section 1.416-1 (T-26), the present value of
accrued benefits shall be determined taking into account the value of
nonproportional subsidized early retirement benefits and
nonproportional subsidized benefit options.
(ii) The value of a person's accrued benefit under each Related
Defined Contribution Plan in the Aggregation Group, determined as of
the valuation date coincident with or immediately preceding the
Determination Date, adjusted for contributions due as of the
Determination Date, as follows:
(A) in the case of a plan not subject to the minimum
funding requirements of Internal Revenue Code Section 412, by
including the amount of any contributions actually made after
the valuation date but on or before the Determination Date,
and, in the first plan year of a plan, by including
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contributions made after the Determination Date that are
allocated as of a date in that first plan year; and
(b) in the case of a plan that is subject to the
minimum funding requirements, by including the amount of any
contributions that would be allocated as of a date not later
than the Determination Date, plus adjustments to those amounts
as required under applicable rulings, even though those amounts
are not yet required to be contributed or allocated (e.g.,
because they have been waived) and by including the amount of
any contribution actually made (or due to be made) after the
valuation date but before the expiration of the extended
payment period in Internal Revenue Code Section 412(c)(10).
(iii) The aggregate value of amounts distributed during the plan
year that includes the Determination Date or any of the four
preceding plan years, including amounts distributed under a
terminated plan which, if it had not been terminated, would have been
in the Aggregation Group.
(iv) The following rules shall apply in determining the Present
Value of Accrued Benefits:
(A) Amounts attributable to qualified voluntary
employee contributions, as defined in Section 219(e) of the
Internal Revenue Code, shall be excluded.
(B) In computing the Present Value of Accrued Benefits
with respect to rollovers or plan-to-plan transfers, the
following rules shall be applied to determine whether amounts
which have been distributed during the 5-year period ending on
the Determination Date from or accepted into this Plan or any
plan in the Aggregation Group shall be included in determining
the Present Value of Accrued Benefits:
(1) Unrelated Transfers accepted into the Plan or
any plan in the Aggregation Group after December 31,
1983, shall not be included.
(2) Unrelated Transfers accepted on or before
December 31, 1983, and all Related Transfers accepted at
any time into the Plan
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or any plan in the Aggregation Group shall be included.
(3) Unrelated Transfers made from the Plan or any
plan in the Aggregation Group shall be included.
(4) Related Transfers made from the Plan or any
plan in the Aggregation Group shall not be included (but
shall be counted by the accepting plan).
(C) The Accrued Benefit of any individual who has not
performed services for an Employer maintaining the Plan at any
time during the five (5) year period ending on the
Determination Date shall be excluded.
(g) "RELATED PLAN" means any other defined benefit plan or a
defined contribution plan (as defined in Section 415(k) of the Code)
maintained by an Employer or a Commonly Controlled Entity, respectively
called a "Related Defined Benefit Plan" and a "Related Defined Contribution
Plan".
(h) "RELATED TRANSFER" means a rollover or a plan-to-plan transfer
which is either not initiated by the Employee or is made between plans each
of which is maintained by a Commonly Controlled Entity.
(i) A "TOP HEAVY AGGREGATION GROUP" exists in any Plan Year for
which, as of the Determination Date, the sum of the Present Value of
Accrued Benefits for Key Employees under all plans in the Aggregation Group
exceeds sixty percent (60%) of the sum of the Present Value of Accrued
Benefits for all employees under all plans in the Aggregation Group;
provided that, for purposes of determining the sum of Present Value of
Accrued Benefits for all employees, there shall be excluded the Present
Value of Accrued Benefits of any Non-Key Employee who was a Key Employee
for any Plan Year preceding the Plan Year that contains the Determination
Date. For purposes of applying the special rules herein with respect to a
Super Top Heavy Plan, a Top Heavy Aggregation Group will also constitute a
"SUPER TOP HEAVY AGGREGATION GROUP" if in any Plan Year as of the
Determination Date, the sum of the Present Value of Accrued Benefits for
Key Employees under all plans in the Aggregation Group exceeds ninety
percent (90%) of the sum of the Present Value of Accrued Benefits for all
employees under all plans in the Aggregation Group.
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(j) "TOP HEAVY BENEFIT SERVICE" means the number of Plan Years in
which an Employee is a Participant and in which he completes 1,000 Hours of
Service excluding:
(1) Plan Years commencing before January 1, 1984;
(2) Plan Years in which the Plan is not a Top Heavy Plan;
(3) If the Employee does not have any nonforfeitable interest
in his Accrued Benefit, years of Top Heavy Benefit Service before any
period of consecutive One Year Breaks in Service if the number of
consecutive One Year Breaks in Service equals or exceeds the greater
of
(A) five (5) consecutive One Year Breaks in Service, or
(B) the aggregate number of Plan Years during which the
Participant had 1,000 Hours of Service before the consecutive
One Year Breaks in Service;
(4) any years of Top Heavy Benefit Service earned before a
One Year Break in Service until the Employee has completed one Year
of Eligibility Service following the One Year Break in Service;
(5) for purposes of determining a Participant's years of Top
Heavy Benefit Service before a period of five consecutive One Year
Breaks in Service and a Termination of Employment, Years of Top Heavy
Benefit Service after the period of five consecutive One Year Breaks
in Service.
(k) "TOP HEAVY PLAN" means the Plan in any Plan Year in which the
Plan is a member of a Top Heavy Aggregation Group. For purposes of
applying the rules herein with respect to a Super Top Heavy Plan, a Top
Heavy Plan will also constitute a "SUPER TOP HEAVY PLAN" if the Plan in
any Plan Year is a member of a Super Top Heavy Aggregation Group, including
a Super Top Heavy Aggregation Group consisting solely of the Plan.
(l) "UNRELATED TRANSFER" means a rollover or a plan-to-plan
transfer which is both initiated by the Employee and (a) made from a plan
maintained by a Commonly Controlled Entity to a plan maintained by an
employer which is not a Commonly Controlled Entity or (b) made to a plan
maintained by a Commonly Controlled Entity from a plan maintained by an
employer which is not a Commonly Controlled Entity.
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<PAGE>
13.3 SPECIAL TOP HEAVY PROVISIONS. For each Plan Year in which the Plan
is a Top Heavy Plan, the following rules shall apply, except that the special
provisions of this Section 13.3 shall not apply with respect to any employee
included in a unit of employees covered by an agreement which the Secretary of
Labor finds to be a collective bargaining agreement between employee
representatives and one or more employees if there is evidence that retirement
benefits were the subject of good faith bargaining between such employee
representative and the Employer or Employers:
(a) MINIMUM BENEFITS. For the first Plan Year in which the Plan
is a Top Heavy Plan and for every Plan Year thereafter, regardless of
whether the Plan is a Top Heavy Plan, the Employer Funded Accrued Benefit
of each Participant who is a Non-Key Employee shall be a monthly amount
payable for life beginning at the Participant's Normal Retirement Date in
an amount equal to the greater of
(i) the Actuarial Equivalent of such Participant's Employer
Funded Accrued Benefit determined under Section 2.1, or
(ii) the lesser of:
(A) 20% of the Participant's Highest Average Monthly
Compensation, or
(B) the sum of:
(1) the Actuarial Equivalent of such
Participant's Employer Funded Accrued Benefit determined
under Section 2.1 as though he had a Termination of
Service on the last day of the Plan Year ("Last Pre-Top
Heavy Year") immediately preceding the Plan Year in which
the Plan first became a Top Heavy Plan, plus
(2) the product of the positive difference, if
any, between
(I) 20% of such Participant's Highest
Average Monthly Compensation, and
(II) the Actuarial Equivalent of such
Participant's Employer Funded Accrued Benefit
monthly benefit determined under Section 2.1 as
though he had a Termination of Service on the last
day of the Last Pre-Top Heavy Year;
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multiplied by a fraction, the numerator of which is such
Participant's years of Top Heavy Benefit Service (not in
excess of 10), and the denominator of which is 10.
For purposes of determining whether a Non-Key Employee is a
Participant entitled to the minimum benefit described in this paragraph
(a), a Non-Key Employee will be treated as a Participant even if he is not
otherwise a Participant or entitled to an accrual under the Plan because:
(i) he is not employed on a specified date,
(ii) he is excluded from participation in the Plan (or accrues
no benefit) merely because his compensation is less than a stated
amount, or
(iii) he is excluded from participation in the Plan (or accrues
no benefit) merely because of a failure to make mandatory employee
contributions or because of a withdrawal of mandatory employee
contributions.
(b) VESTING. For each Plan Year in which the Plan is a Top Heavy
Plan and for each Plan Year thereafter, the vested right of a Participant
who has at least one hour of service after the Plan becomes a Top Heavy
Plan to a percentage of his Employer Funded Accrued Benefit (to the extent
the Accrued Benefit had not been forfeited prior to the Plan's becoming a
Top Heavy Plan) shall be determined under the following tables:
TABLE I
For a Participant who does not have at least one Hour of Service on
or after January 1, 1989:
<TABLE>
<CAPTION>
Years of Vesting Vested
Service Percentage
----------------- ----------
<S> <C>
Less than 2 0%
2 but less than 3 20%
3 but less than 4 40%
4 but less than 5 60%
5 but less than 6 80%
6 or more 100%
</TABLE>
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<PAGE>
TABLE II
For a Participant who has at least one Hour of Service on or after
January 1, 1989:
<TABLE>
<CAPTION>
Years of Vesting Vested
Service Percentage
---------------- ----------
<S> <C>
Less than 2 0%
2 but less than 3 20%
3 but less than 4 40%
4 but less than 5 60%
5 or more 100%
</TABLE>
(c) COMPENSATION. For Plan Years beginning before January 1,
1989, Compensation taken into account for purposes of benefit accruals
under the Plan in years in which the Plan is a Top Heavy Plan shall not
exceed $200,000 (in 1984, adjusted in subsequent years for the cost of
living adjustments determined in accordance with regulations prescribed by
the Secretary of Treasury or his delegate pursuant to the provisions of
Section 416(d)(2) of the Internal Revenue Code); except that this
limitation on Compensation shall not apply in the case of Section 14.7 of
the Plan. Notwithstanding the preceding sentence, Compensation in excess
of $200,000 (adjusted as provided in the preceding sentence) for years
before the Plan became a Top Heavy Plan, for purposes of Section 2.1, shall
be taken into account (to the extent otherwise provided in the Plan) in
determining a person's Accrued Benefit accrued in such years, and
Compensation in excess of $200,000 (adjusted as provided in the preceding
sentence) for years after the Plan ceases to be a Top Heavy Plan shall be
taken into account (to the extent otherwise provided in the Plan) in
determining a person's Accrued Benefit for all years, including years in
which the Plan was a Top Heavy Plan.
(d) LIMITATIONS. In computing the limitations under Section 14.7
hereof for years in which the Plan is a Top Heavy Plan, the special rules
of Section 416(h) of the Internal Revenue Code shall be applied in
accordance with applicable regulations and rulings so that, in determining
the denominator of the Defined Contribution Plan Fraction and the Defined
Benefit Plan Fraction, at each place at which "1.25" would have been used,
"1.00" shall be substituted and by substituting $41,500 for $57,875 in the
numerator of the transition fraction described in Section 415(e)(1)(B) of
the Internal Revenue Code, unless the Plan is not a Super Top Heavy Plan
and the special requirements of Section 416(h)(2) of the Internal Revenue
Code have been satisfied. The conditions of Section 416(h)(2) of the
Internal Revenue Code
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<PAGE>
will have been satisfied by providing the minimum benefit under Section
13.3(a) that would be required if "30%" were substituted for "20%" in
Section 13.3(a)(ii)(A) and Section 13.3(a)(ii)(B)(2)(i).
(e) TRANSITION RULE FOR A TOP HEAVY PLAN. Notwithstanding the
provisions of Section 13.3(d), for each Plan Year in which the Plan is a
Top Heavy Plan and in which the Plan does not meet the special requirements
of Section 416(h)(2) of the Internal Revenue Code in the manner described
in Section 13.3(d) in order to use 1.25 in the denominator of the Defined
Contribution Plan Fraction and the Defined Benefit Plan Fraction, if an
Employee was a participant in one or more defined benefit plans and in one
or more defined contribution plans maintained by the employer before the
plans became Top Heavy Plans and if such Participant's Combined Fraction
exceeds 1.00 because of accruals and additions that were made before the
plans became Top Heavy Plans, a factor equal to the lesser of 1.25 or such
lesser amount (but not less than 1.00) as shall be needed to make the
Employee's Combined Fraction equal to 1.00 shall be used in the denominator
of the Defined Benefit Plan Fraction and the Defined Contribution Plan
Fraction if there are no further accruals or annual additions under any Top
Heavy Plans until the Participant's Combined Fraction is not greater than
1.00 when a factor of 1.00 is used in the denominators of the Defined
Benefit Plan Fraction and the Defined Contribution Plan Fraction. Any
provisions herein to the contrary notwithstanding, if the Plan is a Top
Heavy Plan and the Plan does not meet the special requirements of Section
416(h)(2) of the Internal Revenue Code in the manner described in Section
13.3(d) in order to use 1.25 in the denominators of the Defined Benefit
Plan Fraction and the Defined Contribution Plan Fraction, there shall be no
further accruals under the Plan for a Participant whose Combined Fraction
is greater than 1.00 when a factor of 1.00 is used in the denominator of
the Defined Benefit Plan Fraction and the Defined Contribution Plan
Fraction, until such time as the Participant's Combined Fraction is not
greater than 1.00.
(f) TRANSITION RULE FOR A SUPER TOP HEAVY PLAN. Notwithstanding
the provisions of Sections 13.3(d), and 13.3(e), for each Plan Year in
which the Plan is a Super Top Heavy Plan, (1) if an Employee was a
participant in one or more defined benefit plans and in one or more defined
contribution plans maintained by the employer before the plans became Super
Top Heavy Plans, and (2) if such Participant's Combined Fraction exceeds
1.00 because of accruals and additions that were made before the plans
became Super Top Heavy Plans and if immediately before the plans became
Super Top Heavy Plans the Combined Fraction as then
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<PAGE>
computed did not exceed 1.00, then a factor equal to the lesser of 1.25 or
such lesser amount (but not less than 1.00) as shall be needed to make the
Employee's Combined Fraction equal to 1.00 shall be used in the denominator
of the Defined Benefit Plan Fraction and the Defined Contribution Plan
Fraction if there are no further accruals or annual additions under any
Super Top Heavy Plans until the Participant's Combined Fraction is not
greater than 1.00 when a factor of 1.00 is used in the denominators of the
Defined Benefit Plan Fraction and the Defined Contribution Plan Fraction.
Any provisions herein to the contrary notwithstanding, if the Plan is a
Super Top Heavy Plan, there shall be no further accruals under the Plan for
a Participant whose Combined Fraction is greater than 1.00 when a factor of
1.00 is used in the denominator of the Defined Benefit Plan Fraction and
the Defined Contribution Plan Fraction until the Participant's Combined
Fraction is not greater than 1.00.
(g) TERMINATED PLAN. If the Plan becomes a Top Heavy Plan after
it has formally been terminated, has ceased crediting service for benefit
accruals and vesting and has been or is distributing all plan assets to
participants and their beneficiaries as soon as administratively feasible,
or if the Plan has distributed all benefits of participants and their
beneficiaries, the provisions of Section 13.3 shall not apply to the Plan.
(h) FROZEN PLANS. If the Plan becomes a Top Heavy Plan after
benefit accruals have ceased but all assets have not been distributed to
participants or their beneficiaries, the provisions of Section 13.3 shall
apply to the Plan.
(i) ACTUARIAL INCREASE OF SUSPENDED TOP HEAVY BENEFITS. If
benefit payments are suspended hereunder pursuant to Section 5.6 on account
of continuation in or resumption of employment after a person's Normal
Retirement Date or after his benefit payments have begun, then upon
resumption of benefit payments, the amount of such person's Top Heavy
Benefits shall be increased to the Actuarial Equivalent of such Top Heavy
Benefits determined as of the date benefit payments resume. For purposes
of the preceding sentence, "TOP HEAVY BENEFITS" means the amount
described in Section 13.3(a)(ii).
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ARTICLE XIV
MISCELLANEOUS PROVISIONS
14.1 NON-ALIENATION OF BENEFITS.
(a) No benefit payable at any time under this Plan shall be subject
in any manner to alienation, sale, transfer, assignment, pledge,
attachment, or other legal process, or encumbrance of any kind. Any
attempt to alienate, sell, transfer, assign, pledge or otherwise encumber
any such benefits, whether currently or thereafter payable, shall be void.
No benefit, nor any fund which may be established for the payment of such
benefits, shall, in any manner, be liable for or subject to the debts or
liabilities of any person.
(b) Notwithstanding Section 14.1(a), the Board of Administration
(1) shall comply with an order entered on or after January 1,
1985 determined by the Board of Administration to be a Qualified
Domestic Relations Order as provided in Section 14.1(c).
(2) shall comply with a domestic relations order entered
before January 1, 1985 if benefits are already being paid under such
order, and
(3) may treat an order entered before January 1, 1985 as a
Qualified Domestic Relations Order even if it does not meet the
requirements of Section 14.1(c).
(c) QUALIFIED DOMESTIC RELATIONS ORDER.
(1) "Qualified Domestic Relations Order" means any judgment,
decree, or order (including approval of a property settlement
agreement):
(A) which is made pursuant to a state domestic relations
law (including a community property law),
(B) which relates to the provision of child support,
alimony payments, or marital property rights to a spouse,
former spouse, child, or other dependent of a Participant,
(C) which creates or recognizes the existence of an
alternate payee's right to receive all or a portion of the
Participant's Accrued Benefit under the Plan, and
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(D) with respect to which the requirements of paragraphs
(2) and (3) are met.
(2) A domestic relations order can be a Qualified Domestic
Relations Order only if such order clearly specifies:
(A) the name and the last known mailing address, if any,
of the Participant and the name and mailing address of each
alternate payee covered by the order,
(B) the amount or percentage of the Participant's
Accrued Benefit to be paid by the Plan to each such alternate
payee, or the manner in which such amount or percentage is to
be determined,
(C) the number of payments or period to which such order
applies, and
(D) each Plan to which such order applies.
(3) A domestic relations order can be a Qualified Domestic
Relations Order only if such order does not:
(A) require the Plan to provide any type or form of
benefit, or any option not otherwise provided under the Plan,
(B) require the Plan to provide increased benefits
(determined on the basis of actuarial value), or
(C) require the payment of benefits to an alternate
payee which are required to be paid to another alternate payee
under another order previously determined to be a Qualified
Domestic Relations Order.
(4) A domestic relations order shall not be treated as failing
to meet the requirements of Section 14.1(c)(3)(A) solely because such
order requires that payment of benefits be made to an alternate
payee:
(A) in the case of any payment before a Participant has
had a Termination of Employment, on or after the earlier of:
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(i) the date on which the Participant is entitled
to receive benefits under the Plan, or
(ii) the later of:
(A) the date the Participant attains age
50, or
(B) the earliest date on which the
Participant could begin receiving
benefits under the Plan if the
Participant terminated employment,
(B) as if the Participant had retired on the date on
which such payment is to begin under such order (but taking
into account only the present value of the benefits actually
accrued and not taking into account the present value of any
employer subsidy for early retirement), and
(C) in any form in which such benefits may be paid under
the Plan to the Participant (other than in the form of a
Qualified Joint and Survivor Annuity with respect to the
alternate payee and his or her subsequent spouse).
(5) To the extent provided in any Qualified Domestic Relations
Order, the former spouse of a Participant, if married to the
Participant for at least one (1) year, shall be treated as the
surviving spouse of such Participant for purposes of receiving
Qualified Joint and Survivor Pension, a surviving spouse's death
benefit under Article VI, and giving a spousal consent to the extent
provided in Section 5.2.
14.2 NO CONTRACT OF EMPLOYMENT. Nothing contained in this Plan shall be
construed as a contract of employment between any Employer and any Participant
or as creating a right of any Participant to be continued in the employment of
any Employer.
14.3 TERMINATION OF EMPLOYMENT ON RETIREMENT. When a Participant has a
Termination of Employment, his employment relationship shall be terminated, and
his right to benefits shall be determined by the terms of this Plan.
14.4 LIMITATION ON VESTING. No person shall have any vested right to
Employer Funded Accrued Benefits under this Plan until all of the applicable
requirements for such benefits set forth in Articles IV and V (or Article XIII)
have been fulfilled, and then
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<PAGE>
any such rights shall be subject to the limitation of Section 7.5.
14.5 TEMPORARY LIMITATIONS ON RETIREMENT BENEFITS PAYABLE TO 25 HIGHEST
PAID EMPLOYEES. This Section 14.5 is effective for Plan Years commencing
before January 1, 1992.
(a) The following special definitions shall apply under this
Section 14.5:
(1) "HIGHLY PAID EMPLOYEE" means a Participant (i) who was
among the 25 highest paid employees of a Controlled Group on the
determination date and (ii) whose anticipated annual Retirement
Benefits from Employer contributions exceed $1,500.
(2) "CONTROLLED GROUP" means an Employer and its Commonly
Controlled Entities.
(3) "LIMITATION DATE" means, with respect to any
Participant, the latest of the following on which the Participant was
a Highly Paid Employee:
(i) the date the Plan was established;
(ii) the effective date of the participation in the Plan
by the Participant's Employer; or
(iii) the date of an amendment to the Plan which
substantially increased the Participant's Retirement Benefits.
(4) "LIMITATION PERIOD" means, with respect to any
Participant, the later of (i) ten years from the Limitation Date
applicable to the Participant or (ii) the date on which the full
current costs of the Plan have been met.
(b) If the Limitation Period with respect to any Participant has
not expired then, except as provided in subparagraphs "(c)", "(d)" and
"(e)" below, the Participant's Retirement Benefits shall be limited as
provided in this subparagraph (b). If a Participant is subject to the
provisions of this Section 14.5, the Retirement Benefits payable to him
shall not exceed the Retirement Benefits which can be provided from the
greatest of (1), (2) or (3) subject to (4):
(1) The Employer contributions (or funds attributable
thereto) which would have been applied to provide Retirement Benefits
for the Participant if the
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<PAGE>
Plan had not been amended on the Participant's Limitation Date and
had continued without change;
(2) $20,000; or
(3) The sum of (i) the Employer contributions (or funds
attributable thereto) which would have been applied to provide
benefits for the Participant if the Plan had been terminated on the
date before the Participant's Limitation Date (if applicable) and
(ii) an amount computed by multiplying the number of years for which
the current costs of the Plan have been met, after the Participant's
Limitation Date by 20% of the first $50,000 of the Participant's
average annual compensation during his last 5 years of employment;
(4) provided, however, notwithstanding any provision hereof
to the contrary, that the amount in Sections 14.5(b)(2) and
14.5(b)(3) shall not be less than the present value of whichever of
the following amounts is applicable:
(i) in the case of a Participant who is a substantial
owner described in ERISA Section 4022(b)(5), the present value
of the benefit guaranteed for such Participant under ERISA
Section 4022, if the Plan has terminated, or the present value
of the benefit that would be guaranteed, if the Plan terminated
on the date the benefit commences, determined in accordance
with regulations of the PBGC; or
(ii) in the case of a Participant other than a substantial
owner described in ERISA Section 4022(b)(5), the present value
of the maximum benefit described in ERISA Section 4022(b)(3)(B)
(determined on the date the Plan terminates or on the date
benefits commence whichever is earlier, and determined in
accordance with regulations of the PBGC without regard to any
other limitations in ERISA Section 4022).
(c) The limitations described above may be exceeded for the purpose
of making current payments of Retirement Benefits to retired Participants
who would otherwise be subject to such restrictions, provided that:
(1) The contributions which may be used for any such retired
Participant in accordance with the restrictions heretofore indicated
are applied to provide either a level amount of pension in the basic
form of
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<PAGE>
benefit provided for under the Plan for such Participant, or a level
amount of pension in an optional form of benefit not greater in
amount than the level amount of pension under the basic form of
benefit;
(2) The pension thus provided is supplemented by monthly
payments to the extent necessary to provide the full pension in the
basic form called for by the Plan; and
(3) Such supplemental payments are made only if (i) the full
current costs of the Plan have been met or (ii) the aggregate of such
supplemental payments for all such retired Participants does not
exceed the aggregate Employer Contributions already made under the
Plan in the year then current.
(d) The limitations in this Section 14.5 shall automatically become
inoperative and of no effect upon a ruling by the Internal Revenue Service
that such limitations are not required.
(e) If regulations are issued modifying the limitations described in
this Section, the Plan shall be amended in a timely fashion to incorporate
such modified regulations; and prior to such amendment, the Plan shall be
administered in accordance with the modified regulations.
14.6 LIMITATIONS ON RETIREMENT BENEFITS PAYABLE TO HIGHLY
COMPENSATED PARTICIPANTS. Effective for Plan Years commencing on or after
January 1, 1992, any provision of the Plan to the contrary notwithstanding,
benefits and distributions under the Plan shall be subject to the limitations
imposed under this Section 14.6.
(a) DEFINITIONS. The following special definitions apply under
this Section 14.6:
(1) "BENEFIT PAYMENTS," for purposes of Section 14.6(b),
include loans in excess of the amounts 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 death benefits
not provided for by insurance on the Employees's life.
(2) "CURRENT LIABILITIES," for purposes of this Section
14.6, means current liabilities as defined in Section 412(l)(7);
provided, however, the Company may use either (A) the value of
current liabilities as reported on Schedule B of the Plan's most
recent, timely
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filed Form 5500 or Form 5500 C/R or (B) the value of current
liabilities as of a later date.
(3) "HIGHLY COMPENSATED EMPLOYEE" means, for any Plan Year,
any individual who performs services as an employee for an Employer
or a Commonly Controlled Entity during the Plan Year and who at any
time during the Plan Year or the preceding Plan Year:
(A) is a more than five percent (5%) owner (or is
considered as owning more than five percent (5%) within the
meaning of Section 318 of the Internal Revenue Code) ("5%
Owner") of the Employer or a Commonly Controlled Entity.
(B) receives Compensation in excess of $75,000 (in
1987, adjusted in subsequent years from time to time in
accordance with regulations or rulings under Section 414(q) of
the Internal Revenue Code).
(C) (1) receives Compensation in excess of $50,000 (in
1987, adjusted in subsequent years from time to time in
accordance with regulations or rulings under Section 414(q) of
the Internal Revenue Code) and (2) is in the group consisting
of the top twenty percent (20%) of the total number of persons
employed by the Employer and Commonly Controlled Entities when
ranked on the basis of Compensation paid during such year
provided that, for purposes of determining the total number of
persons employed by the Employer and Commonly Controlled
Entities, the following employees shall be excluded:
(i) employees who have not completed an aggregate
of six (6) months of service during the year and the
preceding year,
(ii) employees who work less than seventeen and
one-half (17-1/2) hours per week for 50% or more of the
total weeks worked by such employees during the year,
(iii) employees who normally work during not more
than six (6) months during any year,
(iv) employees who have not attained age 21 by the
end of the year, and
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(v) except to the extent provided in regulations
to be prescribed by the Secretary of the Treasury,
employees who are members of a collective bargaining unit
represented by a collective bargaining agent with which
the Employer or a Commonly Controlled Entity has or has
had a bargaining agreement.
(D) (1) is an officer of the Employer or a Commonly
Controlled Entity, provided that no more than a total of fifty
(50) persons (or, if lesser, the greater of three (3) persons
or ten percent (10%) of persons employed (excluding the
employees described in Section 14.6(a)(3)(C)(i) through (v)) by
the Employer and Commonly Controlled Entities shall be treated
as Highly Compensated Employees under this subparagraph (D) for
any Plan Year, and (2) receives Compensation in excess of fifty
percent (50%) of the amount in effect under Section
415(b)(1)(A) of the Internal Revenue Code $90,000 (in 1987,
adjusted in subsequent years as determined in accordance with
regulations prescribed by the Secretary of the Treasury or his
delegate pursuant to the provisions of Section 415(d) of the
Internal Revenue Code), provided that, if, for any Plan Year,
no officer of the Employer and all Commonly Controlled Entities
receives Compensation in excess of the applicable amount under
this subparagraph (D), then the highest paid officer of the
Employer and Commonly Controlled Entities shall be treated as a
Highly Compensated Employee for such Plan Year.
(E) In the case of the Plan Year for which the relevant
determination is being made, any Participant not described in
subparagraph (B), (C), or (D) for the preceding Plan Year
(without regard to this sentence) shall not be treated as
described in subparagraph (B), (C), or (D) unless such
Participant is a member of the group consisting of the one
hundred (100) employees of the Employer and Commonly Controlled
Entities paid the greatest Compensation during the Plan Year
for which such determination is being made.
(F) For purposes of this Section 14.6(a)(3), the
Compensation (1) of any Highly Compensated Employee in the
group consisting of the ten (10) employees of the Employer and
Commonly Controlled Entities paid the greatest Compensation
(without regard to this sentence) or (2) of any 5% Owner of
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the Employer or a Commonly Controlled Entity shall include any
Compensation paid to a spouse, lineal ascendants or
descendants, or any spouse of such lineal ascendants or
descendants ("Family Member") of such Highly Compensated
Employee or 5% Owner, and such Family Member shall not be
treated as an employee for purposes of this Section 14.6(a)(3).
(G) A former employee shall also be treated as a Highly
Compensated Employee for a Plan Year if such former employee
had a Termination of Employment prior to such Plan Year and was
a Highly Compensated Employee (within the meaning of
subparagraphs (A) through (F) above) for either the Plan Year
in which he had a Termination of Employment or any Plan Year
ending on or after his 55th birthday.
(H) For purposes of this Section 14.6(a)(3), an employee
who performs no services for the Employer or Commonly
Controlled Entities during a Plan Year (for example, an
employee who is on an Authorized Leave of Absence throughout
the Plan Year) shall be treated as having had a Termination of
Employment in the Plan Year in which he last performed services
for the Employer or a Commonly Controlled Entity.
(I) For purposes of subparagraph (G) above, an employee
who performs services for the Employer or a Commonly Controlled
Entity during a Plan Year shall nevertheless be deemed to have
had a Termination of Employment (solely for purposes of
determining whether such employee is a Highly Compensated
Employee under subparagraph (G) for any period after he has an
actual Termination of Employment) if (1) in a Plan Year prior
to his attainment of age 55, the employee receives Compensation
in an amount less than 50% of his average annual Compensation
for the three consecutive calendar years preceding such Plan
Year during which his Compensation was the greatest (or the
total period of the employee's service with the Employer and
Commonly Controlled Entities, if less) and (2) after such Plan
Year in which the employee is deemed to have had a Termination
of Employment and before the Plan Year in which the employee
has an actual Termination of Employment, the employee's
services for and Compensation from the Employer and Commonly
Controlled Entities do not increase significantly.
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<PAGE>
(J) For purposes of this Section 14.6(a)(3), employees
who are nonresident aliens and who receive no earned income
(within the meaning of Section 911(d)(2) of the Internal
Revenue Code) from the Employer or a Commonly Controlled Entity
which constitutes income from sources within the United States
(within the meaning of Section 861(a)(3) of the Internal
Revenue Code) shall not be treated as employees.
(4) "HIGHLY COMPENSATED PARTICIPANT" means an Employee or a
former Employee who is one of the 25 Highly Compensated Employees
with the greatest Compensation (as defined in Section 2.13 for
purposes of determining Highly Compensated Employees).
(b) RESTRICTION ON RETIREMENT BENEFITS OF HIGHLY COMPENSATED
EMPLOYEES UPON PLAN TERMINATION. In the event that the Plan is
terminated, the Retirement Benefit of any Participant who is a Highly
Compensated Employee shall be limited to a benefit that is
nondiscriminatory under Section 401(a)(4) of the Internal Revenue Code.
(c) RESTRICTIONS ON DISTRIBUTIONS TO HIGHLY COMPENSATED
PARTICIPANTS. The annual payments to a Highly Compensated Participant
shall not exceed an amount equal to the payments that would be made on
behalf of the Highly Compensated Participant under a Single Life Annuity
that is the Actuarial Equivalent of the sum of the Highly Compensated
Participant's Accrued Benefit and the Highly Compensated Participant's
other benefits under the Plan. The limitation imposed under this Section
14.6(c) shall not apply, however, if
(1) after payment to a Highly Compensated Participant of all
Benefit Payments, the value of Plan assets equals or exceeds 110
percent of the value of Current Liabilities (as determined on the
same date as the Plan assets);
(2) the value of the Benefit Payments for a Highly Compensated
Participant is less than 1 percent of the value of Current
Liabilities before distribution; or
(3) the payment is made pursuant to Section 5.7(a).
14.7 MAXIMUM PENSIONS.
(a) Any provisions of the Plan to the contrary notwithstanding,
except as provided below in this Section 14.7, a Participant's Retirement
Benefits
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attributable to Employer contributions, when expressed as a yearly pension,
shall not exceed the Participant's Maximum Annual Benefit. For purposes of
this Section 14.7, Maximum Annual Benefit shall mean the lesser of $90,000
(in 1987) (the "Dollar Limit") or 100% of the Participant's average annual
Compensation ("Highest Average Compensation") for the Participant's highest
three consecutive calendar years, reduced by the annual pension, if any,
payable to the Participant under any other defined benefit plan maintained
by the Employer (or any Commonly Controlled Entity) to the extent
attributable to contributions by the Employer (or any Commonly Controlled
Entity), subject to the following:
(i) If the form of Retirement Benefits payable to a
Participant is other than a Single Life Annuity, or a qualified joint
and survivor annuity as defined in Section 401(a)(11) of the Internal
Revenue Code, the Participant's annual Retirement Benefits shall not
exceed the Actuarial Equivalent of the Maximum Annual Benefit payable
in the form of a Single Life Annuity.
(ii) No adjustment shall be made to the Maximum Annual Benefit
on account of the age of the Participant at the time Retirement
Benefits commence unless Retirement Benefits commence prior to the
Participant's having attained the Social Security Retirement Age in
which case the Dollar Limit shall be reduced to the Actuarial
Equivalent of a benefit commencing at the Social Security Retirement
Age.
If the Participant is past the Social Security Retirement Age
when his Retirement Benefits commence, the Dollar Limit shall be
increased to the Actuarial Equivalent of a Single Life Annuity
beginning at the Social Security Retirement Age. Any reduction or
increase of the Dollar Limit made pursuant to this Section
14.7(a)(ii) shall be made in accordance with such rules or
regulations as prescribed by the Secretary of the Treasury.
(iii) If the Participant has fewer than ten years of
participation in the Plan at retirement, the Dollar Limit component
of the Maximum Annual Benefit shall be multiplied by a fraction, of
which the numerator is his years and fractions of years of
participation in the Plan and the denominator is 10. If the
Participant has fewer than ten years of Vesting Service with an
Employer (including service as an employee or partner of any other
Commonly Controlled Entity) at retirement, the Highest Average
Compensation component of the Maximum Annual Benefit shall be
multiplied by a fraction, of
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<PAGE>
which the numerator is such years and fractions of years of Vesting
Service and the denominator is 10; provided, however, that the
Maximum Annual Benefit shall not be reduced, pursuant to this Section
14.7(a), to an amount less than 1/10 of the Maximum Annual Benefit
determined without regard to this Section 14.7(a)(iii).
(iv) The Dollar Limit component of the Maximum Annual Benefit
shall be increased as permitted by applicable governmental
regulations and rulings to reflect cost-of-living adjustments.
(v) If a Participant is also a participant in any defined
contribution plan of the Employer (or any Commonly Controlled Entity)
including the defined contribution plan portion of the Plan with
respect to any Participant contributions made to the Plan, and if the
sum of the Participant's defined benefit plan fraction (as defined in
Section 415(e)(2) as modified by Section 416(h)(1) of the Internal
Revenue Code) and the Participant's defined contribution plan
fraction (as defined in Section 415(e)(3) as modified by Section
416(h)(1) of the Internal Revenue Code) exceeds 1.0 (such sum called
the "Combination Factor"), the Participant's Maximum Annual Benefit
shall be reduced to the extent necessary to reduce such sum to 1.0.
For purposes of the last Plan Year beginning before January 1, 1987,
an amount, determined as prescribed by regulations, shall be
subtracted from the numerator (not exceeding such numerator) of the
defined contribution plan factor so that the Combination Factor does
not exceed 1.0 for such Plan Year. The annual additions for any plan
year of such defined contribution plan beginning before January 1,
1987 shall not be recomputed to treat any Participant contributions
or employee contributions under such plan as an annual addition.
(vi) In no event shall the Maximum Annual Benefit of a
Participant be less than an amount, if any, equal to the Accrued
Benefit he would have been entitled to receive under the terms of the
Plan as in effect on December 31, 1986 as if the Participant had a
Termination of Employment on December 31, 1986.
(b) If a Participant in the Plan was a participant under the
provisions of the Prior Plan in effect on December 31, 1975 ("Pre-ERISA
Plan"), Retirement Benefits payable hereunder to such Participant shall not
be less than the pension benefits that would have been payable to him had
the Pre-ERISA Plan remained in effect until such Participant's Termination
of Employment, considering such
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<PAGE>
Participant's compensation as determined under the Pre-ERISA Plan as of
December 31, 1975 and such Participant's service accumulated until his
Termination of Employment.
(c) If a Participant in the Plan is a participant in another defined
benefit plan or is or was a participant in another defined contribution
plan and such other plan was previously not a plan of the Employer or a
Commonly Controlled Entity but becomes a plan of the Employer or a Commonly
Controlled Entity in any year, the Participant's Maximum Annual Benefit may
exceed the limitations set forth in this Section 14.7 in such year and in
any other year on account of the aggregation of such other plan with this
Plan, provided that the following conditions are met with respect to such
other plan:
(1) if the other plan is a defined benefit plan, the
Participant's accrued benefit derived from employer contributions
under such plan is not increased and no voluntary contributions to
the plan are made by the Participant in any year in which the
limitations set forth in Section 14.7(a) would be exceeded.
(2) if the other plan is a defined contribution plan, no
employer contributions or forfeitures are allocated to the
Participant's account and no voluntary or mandatory contributions to
the plan are made by the Participant in any year in which the
limitations set forth in Section 14.7(a) would be exceeded.
If the limitations of Section 14.7(a) may be exceeded by reason of the
preceding provisions of this Section 14.7(c), the Participant shall not
accrue any additional employer funded benefits under the Plan for such year
or for any subsequent year until the limitations set forth in Section
14.7(a) (without regard to the provisions of this Section 14.7(c) would not
be exceeded on account of such accruals. In the event the foregoing
conditions with respect to such other plans are not met, this Section
14.7(c) shall not apply.
14.8 LIMITATION ON LIABILITY. The Employer, or any agent or
representative of the Employer who is an Employee, officer, or director of an
Employer and the Board of Administration do not in any manner guarantee the
Trust Fund against loss or depreciation, and to the extent not prohibited by
federal law, none of them shall be liable (except for his own gross negligence
or willful misconduct), for any act or failure to act done or omitted in good
faith with respect to the Plan. The Employer shall not be responsible for any
act or failure to act of any Trustee appointed to administer the Trust Fund.
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<PAGE>
14.9 COMPANY MERGER. In the event that any successor corporation to the
Company, by merger, consolidation, purchase or otherwise, shall elect to adopt
the Plan, such successor corporation shall be substituted hereunder for the
Company upon filing in writing with the Trustee its election to do so.
14.10 PLAN MERGER. The Plan shall not merge or consolidate with, or
transfer any assets or liabilities to any other plan, unless each Participant
would receive a benefit immediately after the merger, consolidation or transfer
(if the Plan were then terminated) which is equal to or greater than the benefit
he would have been entitled to immediately before the merger, consolidation, or
transfer (if the Plan were then terminated).
14.11 HEADINGS AND GENDER. The headings of articles are included solely
for convenience of reference, and if there is any conflict between such heading
and the text of this Plan, the text shall control. Whenever any words are used
herein in the masculine gender, they shall be construed as though they were also
in the feminine gender in all cases where they would so apply.
14.12 UNIFORM AND NON-DISCRIMINATORY TREATMENT. Any discretion
exercisable hereunder by an Employer or the Board of Administration shall be
exercised in a uniform and non-discriminatory manner.
14.13 LAW GOVERNING. This Plan shall be construed according to the laws
of the State of Michigan, other than its laws respecting choice of law, to the
extent not preempted by federal law.
Executed this day of , 1994.
CHECKER MOTORS CORPORATION
By________________________
ATTEST:
__________________________
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<PAGE>
APPENDIX I
TO THE
CHECKER MOTORS CORPORATION
SALARIED PENSION PLAN
BENEFIT ACCRUED PRIOR TO JANUARY 1, 1989
The portion of a Participant's Accrued Benefit accrued prior to January 1,
1989 is equal to the sum of (a) and (b), determined on the basis of such
Participant's Benefit Service and Average Monthly Compensation as of the earlier
of the Participant's actual Termination of Employment or December 31, 1988, and
subject to a maximum of $20,500 per month; provided, however, (i) a Participant
who, on April 1, 1981, was participating under the Plan as it existed prior to
January 1, 1981 shall be entitled to an Accrued Benefit which shall not be less
than the Actuarial Equivalent of the sum of his Accrued Contributory Pension and
his Accrued Normal Retirement Pension determined as of April 1, 1981, under the
terms of the Prior Plan in effect as of December 31, 1980; (ii) a Participant
who, on December 31, 1984 was participating under the Plan as it existed prior
to January 1, 1985 shall be entitled to an Accrued Benefit which shall not be
less than the Actuarial Equivalent of the sum of his Accrued Contributory
Pension and his Accrued Normal Retirement Pension determined as of December 31,
1984, under the terms of the Plan in effect as of December 31, 1984; (iii) a
Participant who, on December 31, 1985 was participating under the Plan as it
existed prior to January 1, 1986 shall be entitled to an Accrued Benefit which
shall not be less than the Actuarial Equivalent of the sum of his Accrued
Contributory Pension and his Accrued Normal Retirement Pension determined as of
December 31, 1985, under the terms of the Plan in effect as of December 31,
1985; and (iv) a Participant who, on December 31, 1988 was participating in the
Plan as it existed prior to January 1, 1989 shall be entitled to an Accrued
Benefit which shall not be less than the Actuarial Equivalent of the greater of
his Employee Funded Accrued Benefit and his Accrued Benefit based on Average
Monthly Compensation determined on December 31, 1988 under the terms of the Plan
in effect as of December 31, 1988; where:
(a) is
(1) for Participants who have a Termination of Employment
prior to June 1, 1985, $11.00 multiplied by the Participant's Benefit
Service for years in which he did not make Participant contributions
to the Plan throughout the Plan Year, or
(2) for Participants who have a Termination of Employment on
or after June 1, 1985, $16.00 multiplied by the Participant's Benefit
Service for years in which
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he did not make Participant contributions to the Plan throughout the
Plan Year; and
(b) is the greater of (1) or (2) where
(1) is 2% of the Participant's Average Monthly Compensation,
multiplied by the Participant's Benefit Service for years in which
the Participant made Participant contributions to the Plan throughout
the Plan Year, reduced by 75% of the Participant's Primary Social
Security Benefit, and
(2) is
(A) for Participants who had a Termination of Employment
prior to June 1, 1985, $16.50 multiplied by the Participant's
Benefit Service for years in which the Participant made
Participant contributions to the Plan throughout the Plan Year,
or
(B) for Participant's who have a Termination of
Employment on or after June 1, 1985, $21.50 multiplied by the
Participant's Benefit Service for years in which the
Participant made Participant contributions to the Plan
throughout the Plan Year.
Not more than a total of 45 years of Benefit Service may be credited under
Subsections (a) and (b) above: provided that for persons who have a Termination
of Employment prior to January 1, 1985, not more than a total of 41 years of
Benefit Service may be credited under Subsections (a) and (b) above.
A Participant shall be deemed to have been making contributions for
years of Benefit Service earned prior to the Company's offering a contributory
pension hereunder to the same extent as the Participant's service was treated as
Credited Service under the contributory part of the Prior Plan.
A Participant shall be deemed to have been making contributions for
years of Benefit Service earned while an Eligible Employee, excluding any period
of time during which he was not eligible to make contributions to the Prior
Plan, prior to the date he initially becomes eligible to make Participant
contributions, provided he elects to make Participant contributions as of the
date he initially becomes eligible to do so.
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<PAGE>
To the extent a Participant is credited with Years of Benefit Service
pursuant to Section 2.53(c), 2.53(d) or 2.53(e), such Years of Benefit Service
shall be treated as years for which the Participant did not make Participant
contributions to the Plan.
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COMPOSITE
CHECKER EMPLOYEES' 401(k)
RETIREMENT BENEFIT PLAN
REFLECTING ALL AMENDMENTS TO DATE
<PAGE>
TABLE OF CONTENTS
PAGE
----
ARTICLE I - General........................................................ 1
1.1 Establishment and Effective Date................................ 1
1.2 Applicability................................................... 1
ARTICLE II - Definitions................................................... 1
2.1 Account or Accounts............................................. 1
2.2 Accrued Benefit................................................. 2
2.3 Active Participant.............................................. 2
2.4 Authorized Leave of Absence..................................... 2
2.5 Beneficiary..................................................... 2
2.6 Beneficiary Designation Form.................................... 3
2.7 Board of Directors.............................................. 3
2.8 Code............................................................ 3
2.9 Committee....................................................... 3
2.10 Commonly Controlled Entity...................................... 3
2.11 Company......................................................... 3
2.12 Compensation.................................................... 3
2.13 Disability or Disabled.......................................... 5
2.14 Effective Date.................................................. 5
2.15 Eligibility Computation Period.................................. 5
2.16 Eligible Employee............................................... 5
2.17 Employee........................................................ 6
2.18 Employer........................................................ 6
2.19 Employer Contributions.......................................... 6
2.20 Entry Date...................................................... 6
2.21 ERISA........................................................... 6
2.22 Family Member................................................... 6
2.23 401(k) Election................................................. 6
2.24 401(k) Election Form............................................ 6
2.25 Forfeiture...................................................... 7
2.26 Highly Compensated Employee..................................... 7
2.27 Hour of Service................................................. 9
2.28 Investment Fund................................................. 10
2.29 Non-highly Compensated Employee................................. 10
2.30 Normal Retirement Date.......................................... 10
2.31 One Year Break in Service....................................... 10
2.32 Parental Leave.................................................. 10
2.33 Participant..................................................... 11
2.34 Plan............................................................ 11
2.35 Plan Administrator.............................................. 11
2.36 Plan Year....................................................... 11
2.37 Related Plan.................................................... 11
2.38 Required Beginning Date......................................... 11
2.39 Rollover Contribution........................................... 11
2.40 Termination of Employment....................................... 12
2.41 Trust........................................................... 12
2.42 Trust Agreement................................................. 12
2.43 Trust Fund...................................................... 12
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TABLE OF CONTENTS
(Continued)
PAGE
----
2.44 Trustee......................................................... 12
2.45 Valuation Date.................................................. 12
2.46 Year of Eligibility Service..................................... 12
2.47 Year of Vesting Service......................................... 12
ARTICLE III - Participation................................................ 14
3.1 Participation................................................... 14
3.2 Certification of Participation and Compensation to
Committee...................................................... 14
3.3 Participation Upon Change of Job Status......................... 14
3.4 Participation Upon Reemployment................................. 14
ARTICLE IV - Contributions................................................. 15
4.1 401(k) Contributions............................................ 15
4.2 Matching Contributions.......................................... 16
4.3 Special Employer Contributions.................................. 16
4.4 Profit Sharing Contributions.................................... 17
4.5 401(k) Elections................................................ 17
4.6 Prevented Contributions......................................... 18
4.7 Rollover Contributions.......................................... 18
ARTICLE V - Restrictions and Limitations on Contributions.................. 19
5.1 Order of Application of the Restrictions and
Limitations on Contributions................................... 19
5.2 Restrictions on 401(k) Contributions............................ 19
5.3 401(k) Discrimination Limits.................................... 22
5.4 Restrictions on Matching Contributions.......................... 25
5.5 Multiple Use of Section 5.3 and Section 5.4..................... 28
ARTICLE VI - Allocations of Contributions.................................. 29
6.1 401(k) Contributions............................................ 29
6.2 Matching Contributions and Forfeitures.......................... 29
6.3 Special Employer Contributions.................................. 30
6.4 Profit Sharing Contributions.................................... 30
6.5 Limitations on Contributions.................................... 30
ARTICLE VII - Trustee and Trust Fund....................................... 33
7.1 Trust Agreement................................................. 33
7.2 Selection of Trustee............................................ 33
7.3 Trustee's Duties................................................ 33
7.4 Trust Expenses.................................................. 34
7.5 Trust Entity.................................................... 34
7.6 Separate Accounts............................................... 34
7.7 Investment Funds................................................ 34
7.8 Trust Income.................................................... 36
7.9 Correction of Error............................................. 37
7.10 Right of the Employers to Trust Assets.......................... 37
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<PAGE>
TABLE OF CONTENTS
(Continued)
PAGE
----
ARTICLE VIII - Benefits.................................................... 38
8.1 Payment of Benefits in General.................................. 38
8.2 Payment of Vested Accrued Benefit on Termination of
Employment..................................................... 39
8.3 Payment of Vested Accrued Benefit on Death...................... 39
8.4 Lump Sum Payment Without Election............................... 41
8.5 Vested Interests................................................ 41
8.6 Deduction of Taxes from Amounts Payable......................... 43
8.7 Deadline for Payment of Benefits................................ 44
8.8 Facility of Payment............................................. 44
8.9 Spousal Consent to a Waiver..................................... 44
8.10 Form of Payment................................................. 45
8.11 Improper Payment of Benefits.................................... 45
ARTICLE IX - Administration................................................ 45
9.1 Board of Directors Duties....................................... 45
9.2 Committee Membership............................................ 45
9.3 Committee Structure............................................. 45
9.4 Committee Actions............................................... 46
9.5 Committee Duties................................................ 46
9.6 Allocations and Delegations of Responsibility................... 47
9.7 Committee Bonding and Expenses.................................. 48
9.8 Information to be Supplied by Employer.......................... 48
9.9 Records......................................................... 48
9.10 Fiduciary Capacity.............................................. 48
9.11 Plan Administrator.............................................. 48
9.12 Committee/Plan Administrator Decisions Final.................... 49
9.13 Company, Committee and Trustee as Agent......................... 49
9.14 Fiduciary Responsibility........................................ 49
ARTICLE X - Claims Procedure............................................... 50
10.1 Initial Claim for Benefits...................................... 50
10.2 Review of Claim Denial.......................................... 50
ARTICLE XI - Amendment and Termination of the Plan......................... 51
11.1 Discontinuance of Contributions................................. 51
11.2 Amendments...................................................... 51
11.3 Plan Termination................................................ 52
11.4 Payment Upon Termination........................................ 52
11.5 Withdrawal from the Plan by an Employer......................... 52
ARTICLE XII - Top Heavy Provisions......................................... 52
12.1 Application..................................................... 52
12.2 Special Top Heavy Definitions................................... 53
12.3 Special Top Heavy Provisions.................................... 60
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TABLE OF CONTENTS
(Continued)
PAGE
----
ARTICLE XIII - Miscellaneous Provisions.................................... 63
13.1 Employer Joinder................................................ 63
13.2 Company Merger.................................................. 63
13.3 Plan Merger..................................................... 64
13.4 Indemnification................................................. 64
13.5 Unclaimed Amounts............................................... 64
13.6 Plan Governs.................................................... 64
13.7 Nonalienation of Benefits....................................... 65
13.8 Qualified Domestic Relations Order.............................. 65
13.9 Contract of Employment.......................................... 66
13.10 Source of Benefits.............................................. 66
13.11 Employees' Trust................................................ 67
13.12 Gender and Number............................................... 67
13.13 Headings........................................................ 67
13.14 Uniform and Non-Discriminatory Application of
Provisions..................................................... 67
13.15 Invalidity of Certain Provisions................................ 67
13.16 Law Governing................................................... 67
ARTICLE XIV - Direct Rollovers............................................. 67
14.1 Direct Rollovers............................................... 67
14.2 Definitions.................................................... 68
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<PAGE>
ARTICLE I
GENERAL
1.1 ESTABLISHMENT AND EFFECTIVE DATE. The Checker Employees' 401(k)
Retirement Benefit Plan (the "Plan") is established effective January 1, 1990,
as set forth herein. [THE FOLLOWING SENTENCE IS EFFECTIVE PRIOR TO JULY 1,
1994] It is intended that this Plan shall qualify under Sections 401(a) and
401(k) of the Code. [THE FOLLOWING SENTENCE IS EFFECTIVE AFTER JUNE 30, 1994]
The Plan is intended to be a profit sharing plan qualified under Sections 401(a)
and 401(k) of the Internal Revenue Code, and is intended to meet the
requirements relating to participant directed accounts contained in the
Department of Labor regulations promulgated under Section 404(c) of the Employee
Retirement Income Security Act of 1974 (ERISA), as amended.
1.2 APPLICABILITY. The Plan shall apply to persons who are Employees of
an Employer on or after January 1, 1990, except as otherwise specifically
provided herein.
ARTICLE II
DEFINITIONS
When used herein the following words shall have the following meanings
unless the context clearly indicates otherwise.
2.1 "ACCOUNT" or "ACCOUNTS" means a Participant's share in the Trust.
Each Participant shall have the following Accounts:
(a) A "401(k) ACCOUNT" to which shall be credited the
Participant's 401(k) Contributions made to the Trust in accordance with
Section 4.1, and Special Employer Contributions made to the Trust in
accordance with Sections 4.3 and 5.3(b), plus income and gains and less
expenses and losses attributable thereto. A Participant's 401(k) Account
shall be reduced by any distributions therefrom and shall be fully vested
and nonforfeitable.
(b) A "MATCHING CONTRIBUTION ACCOUNT" to which shall be credited
the Participant's Matching Contributions and Forfeitures made to the Trust
in accordance with Sections 4.2 and 8.5(e), and Special Employer
Contributions made to the Trust in accordance with Sections 4.3 and 5.4(b),
plus income and gains and less expenses and losses attributable thereto. A
Participant's Matching Contribution Account shall be reduced by any
distributions therefrom and shall vest in accordance with Sections 8.5 and
11.4.
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(c) A "PROFIT SHARING CONTRIBUTION ACCOUNT" to which shall be
credited the Participant's Profit Sharing Contributions made to the Trust
in accordance with Section 4.4 and Minimum Employer Contributions, if any,
made to the Plan pursuant to Section 12.3(a), plus income and gains and
less expenses and losses attributable thereto. A Participant's Profit
Sharing Contribution Account shall be reduced by any distributions
therefrom and shall be vested in accordance with Sections 8.5 and 11.4.
(d) A "ROLLOVER CONTRIBUTION ACCOUNT" to which shall be credited
the Participant's Rollover Contributions made to the Trust in accordance
with Section 4.7 plus income and gains and less expenses and losses
attributable thereto. A Participant's Rollover Contribution Account shall
be reduced by any distributions therefrom and shall be fully vested and
nonforfeitable.
2.2 "ACCRUED BENEFIT" means a Participant's interest in the Trust
composed of such Participant's Accounts. The value of an Accrued Benefit at any
time during any Plan Year shall be its value as adjusted on the coinciding or
immediately preceding Valuation Date.
2.3 "ACTIVE PARTICIPANT" means
(a) with respect to Profit Sharing Contributions, Matching
Contributions, and Special Employer Contributions made pursuant to Sections
4.3 and 5.4(b), a Participant
(1) who is an Eligible Employee as of the last day of the
Plan Year or
(2) who was an Eligible Employee as of any day of the Plan
Year and had a Termination of Employment during the Plan Year on
account of death, Disability or on or after Normal Retirement Date;
or
(b) for all other purposes, a Participant who is an Eligible
Employee on any day of the Plan Year.
2.4 "AUTHORIZED LEAVE OF ABSENCE" means any absence authorized by an
Employer under the Employer's standard personnel practices. An absence due to
service in the Armed Forces of the United States shall be considered an
Authorized Leave of Absence provided that the Employee returns to employment
with the Employer with reemployment rights provided by law.
2.5 "BENEFICIARY" means any person designated by the Plan or by a
Participant in accordance with Section 8.3 to receive any benefits which shall
be payable under the Plan on the Participant's death.
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2.6 "BENEFICIARY DESIGNATION FORM" means the form provided or permitted
by the Committee on which the Participant, in accordance with Section 8.3, may
(a) designate his Beneficiary, (b) select the form of his Beneficiary's benefit
and (c) elect to permit his Beneficiary to change the form of the Beneficiary's
benefit.
2.7 "BOARD OF DIRECTORS" means the board of directors of Checker Motors
Corporation, as general partner of the Company.
2.8 "CODE" means the Internal Revenue Code of 1986, as amended from time
to time and any subsequent Internal Revenue Code. References to any section of
the Code shall be deemed to include similar sections of the Code as renumbered
or amended.
2.9 "COMMITTEE" means the committee appointed pursuant to Article IX to
administer the Plan.
2.10 "COMMONLY CONTROLLED ENTITY" means a corporation, trade, or
business if it and an Employer are members of a controlled group of corporations
as defined in Section 414(b) of the Code or under common control as defined in
Section 414(c) of the Code or members of an affiliated service group as defined
in Section 414(m) of the Code or members of a group the members of which are
required to be aggregated pursuant to regulations under Section 414(o) of the
Code.
2.11 "COMPANY" means Checker Motors Co., L.P., or any successor entity
by merger, consolidation, purchase, or otherwise which elects to adopt the Plan
and Trust.
2.12 "COMPENSATION" means the amounts described below.
(a) Except as provided in (b) and (c), Compensation means the total
amount of cash compensation paid during the Plan Year to a Participant,
while a Participant in the Plan, by the Employer including regular salary,
wages, commissions, bonus, and overtime and any amounts by which the
Employee's compensation is reduced by salary reduction or any similar
arrangement under the Plan, any Related Plan or any cafeteria plan (as
described in Code Section 125) maintained by an Employer, but excluding any
other benefits paid under the Plan or under any other qualified plan
described in Section 401(a) of the Code, or other deferred compensation,
stock options, or any other distributions which receive special tax
benefit.
(b) For purposes of determining the limitations under Section 6.5
and Article XII (except for determining a Key Employee under Section
12.2(d)), Compensation means total compensation paid to the Employee by an
Employer or a Commonly Controlled Entity in the Plan Year, not increased by
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any amount by which the Employee's compensation is reduced by salary
reduction or any similar arrangement under the Plan, any Related Plan or
any cafeteria plan (as described in Code Section 125) maintained by an
Employer or Commonly Controlled Entity, and excluding any benefits under
the Plan or any other qualified plan described in Section 401(a) of the
Code, or other deferred compensation, stock options, or any other
distributions which receive special tax benefit;
(c) For purposes of determining Highly Compensated Employees under
Section 2.26, Key Employees under Section 12.2(d), the Actual Deferral
Percentage under Section 5.3 and the Average Contribution Percentage under
Section 5.4, Compensation means total compensation paid to an Employee by
an Employer or Commonly Controlled Entity during the Plan Year, increased
by any amounts by which the Employee's compensation is reduced by salary
reduction or similar arrangement under the Plan, any Related Plan or any
cafeteria plan (as described in Code Section 125) maintained by an Employer
or a Commonly Controlled Entity, and excluding any benefits paid under the
Plan or under any other qualified plan described in Section 401(a) of the
Code, and excluding other deferred compensation, stock options and any
other distributions which receive special tax benefit. [EFFECTIVE FOR
PLAN YEARS COMMENCING ON OR AFTER JANUARY 1, 1992] Notwithstanding the
foregoing provisions of this Section 2.12(c), for the purpose of
determining the Actual Deferral Percentage under Section 5.3 and the
Average Contribution Percentage under Section 5.4, the Plan Administrator
may, for any Plan Year, limit the period used to determine an Employee's
compensation to that portion of the Plan Year in which the Employee was an
Eligible Employee, provided that such limit is applied uniformly to all
Eligible Employees under the Plan for the Plan Year. The Plan
Administrator may change such determination from Plan Year to Plan Year.
(d) Notwithstanding any other provision of the Plan to the
contrary, except for purposes of determining Highly Compensated Employees
under Section 2.26 and except for purposes of Section 6.5, the amount of an
Employee's annual Compensation taken into account under the Plan shall not
exceed the following limitations:
(i) for Plan Years ending on or before December 31, 1993,
$200,000, adjusted from time to time by the Secretary of the Treasury
at the same time and in the same manner as under Section 415(d) of
the Code; and
(ii) for Plan Years beginning on or after January 1, 1994,
$150,000 as adjusted by the Commissioner of the Internal Revenue
Service for increases in the cost of living in accordance with
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Section 401(a)(17)(B) of the Code, and prorated for any period that
consists of fewer than 12 months.
For purposes of the preceding sentence, in determining the Compensation of
any Employee who is a Highly Compensated Employee in the group consisting
of the top ten persons employed by the Company and all Commonly Controlled
Entities who are paid the greatest compensation (without regard to this
sentence), or any Five Percent Owner, there shall be included the
Compensation paid to such Employee's spouse and any lineal descendant of
the Highly Compensated Employee who has not attained age 19 before the end
of the applicable Plan Year.
2.13 "DISABILITY" or "DISABLED" means an injury or illness which
qualifies the Participant for permanent disability insurance payments in
accordance with the Federal Social Security Act, provided that if the
Participant is not entitled to receive permanent disability insurance payments
under the Federal Social Security Act for reasons not associated with the
seriousness and permanency of his incapacity, the Committee may, in its
discretion, make a determination of whether the Participant has incurred a
Disability by applying those standards applied to determine whether a
Participant is entitled to receive permanent disability payments under the
Federal Social Security Act, other than those not associated with the
seriousness or permanency of the Participant's incapacity.
2.14 "EFFECTIVE DATE" means January 1, 1990.
2.15 "ELIGIBILITY COMPUTATION PERIOD" means the 12 consecutive month
period commencing with the date that an Employee is employed (or reemployed
after a One Year Break in Service) by an Employer or other Commonly Controlled
Entity, and, thereafter, each Plan Year commencing with the Plan Year which
includes the first anniversary of the employment (or reemployment after a
One-Year Break in Service) by the Employer or Commonly Controlled Entity.
2.16 "ELIGIBLE EMPLOYEE" means any Employee who is employed by an
Employer, including a person on an Authorized Leave of Absence, but excluding
(a) any Employee who is a member of a collective bargaining unit represented by
a collective bargaining agent with which the Employer has or has had a
bargaining agreement, unless an agreement between the Employer and the
collective bargaining agent requires that members of the collective bargaining
unit participate in the Plan, and (b) those Employees who were eligible to
participate in the Yellow Cab Company - Local 777 DUOC Pension Plan and those
Employees who are in the same job category as those Employees who were so
eligible.
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2.17 "EMPLOYEE" means any person who is employed by the Company or
Commonly Controlled Entity excluding an independent contractor and any leased
employee (as defined in Section 414(n) of the Code).
2.18 "EMPLOYER" means the Company and any other Commonly Controlled
Entity which, pursuant to Section 13.1 of the Plan, elects to adopt the Plan and
the Trust Agreement.
2.19 "EMPLOYER CONTRIBUTIONS" means the following payments made from
time to time by an Employer to the Trustee:
(a) "401(k) CONTRIBUTIONS" made pursuant to Section 4.1;
(b) "MATCHING CONTRIBUTIONS" made pursuant to Section 4.2;
(c) "PROFIT SHARING CONTRIBUTIONS" made pursuant to Section 4.4;
(d) "SPECIAL EMPLOYER CONTRIBUTIONS" made pursuant to Section
4.3; and
(e) "MINIMUM EMPLOYER CONTRIBUTIONS", if any, made pursuant to
Section 12.3(a).
2.20 "ENTRY DATE" means April 1, 1990 and July 1, 1990, and thereafter,
January 1 and July 1 of each Plan Year.
2.21 "ERISA" means the Employee Retirement Income Security Act of 1974,
as amended from time to time.
2.22 "FAMILY MEMBER" shall mean an Employee who is a spouse, a lineal
ascendant or descendant, or the spouse of a lineal ascendant or descendant of
any Highly Compensated Employee who is in the group consisting of the ten
persons employed by the Company or Commonly Controlled Entity paid the greatest
Compensation (without regard to this sentence) or any Five Percent Owner and
such spouse, lineal ascendants or descendants, or their spouses. A Family
Member shall not be treated as an individual for purposes of determining
Compensation under the Plan.
2.23 "401(k) ELECTION" means the election to have Compensation reduced
which has been made on a properly completed and executed form which has been
filed by the Participant with the Committee in accordance with Sections 4.1 and
4.5.
2.24 "401(k) ELECTION FORM" means the form provided by the Committee to
the Participant for the purpose of making 401(k) Elections, as provided in
Sections 4.1 and 4.5.
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2.25 "FORFEITURE" means the portion of a Participant's Accrued Benefit
which is forfeited as provided in Section 8.5 or Section 13.5.
2.26 "HIGHLY COMPENSATED EMPLOYEE" means the individuals described
below.
(a) For any Plan Year (subject to subsections (b) and (c)), a
Highly Compensated Employee is any Participant who at any time during the
Plan Year or the preceding Plan Year:
(1) was an Employee and at any time a more than five percent
(5%) owner, as defined in Code Section 416(i)(1) (or was considered
as owning more than five percent (5%) within the meaning of Section
318 of the Code) ("Five Percent Owner"), of the Company or Commonly
Controlled Entity who was employed by the Company or a Commonly
Controlled Entity;
(2) received Compensation in excess of $85,485 (in 1990,
adjusted from time to time by the Secretary of Treasury at the same
time and in the same manner as under Section 415(d) of the Code);
(3) (A) received Compensation in excess of $56,990 (in 1990,
adjusted from time to time by the Secretary of Treasury at the same
time and in the same manner as under Section 415(d) of the Code) and
(B) was in the group consisting of the top 20% of the total number of
Employees of the Company and Commonly Controlled Entities when ranked
on the basis of Compensation paid during such year; provided that,
for purposes of determining the total number of Employees of the
Company and Commonly Controlled Entities, the following individuals
shall be excluded:
individuals who have not completed six months of
service,
individuals who normally work less than 17-1/2 hours
per week,
individuals who normally work during not more than six
months during any year,
individuals who have not attained age 21,
except to the extent provided in regulations,
individuals who are members of a collective bargaining unit
represented by a collective bargaining agent with which the
Company
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or Commonly Controlled Entity has or has had a bargaining
agreement, and
individuals who are non-resident aliens and who receive
no earned income (within the meaning of Code Section 911(d)(2))
from the Company or a Commonly Controlled Entity which
constitutes income from sources within the United States
(within the meaning of Code Section 861(a)(3)); or
(4) was at any time an officer of the Company or a Commonly
Controlled Entity and received Compensation greater than 50% of the
amount (the "Dollar Limit") in effect under Section 415(b)(1)(a) of
the Code ($102,582 in 1990, adjusted in subsequent years as
determined in accordance with regulations prescribed by the Secretary
of the Treasury or his delegate pursuant to the provisions of Section
415(d) of the Code); provided that no more than a total of 50
individuals (or, if less, the greater of 3 individuals or 10% of the
Employees of the Company and Commonly Controlled Entities) shall be
treated as officers; and further provided that the individuals
excluded under Section 2.26(a)(3) shall also be excluded under this
Section 2.26(a)(4). If, for the Plan Year for which the
determination is being made and the preceding Plan Year, no officer
of the Company or Commonly Controlled Entity receives Compensation
greater than 50% of the applicable Dollar Limit, then the highest
paid officer of the Company or Commonly Controlled Entity shall be
treated as a Highly Compensated Employee for the Plan Year for which
the determination is being made.
(b) Any individual not described in subsection (2), (3) or (4) for
the preceding Plan Year shall not be treated as described in subsection
(2), (3), or (4) for the Plan Year unless such individual is a member of
the group consisting of the 100 Employees of the Company and Commonly
Controlled Entities who were paid the greatest Compensation during the Plan
Year for which such determination is being made.
(c) A former Employee shall be treated as a Highly Compensated
Employee if such individual was a Highly Compensated Employee at the time
of his Termination of Employment or at any time after attaining age 55.
The Committee may elect to apply Section 2.26(a)(3)(i), (ii), (iii) or (iv)
by substituting a shorter period of service, smaller number of hours or months,
or lower age for period of service, number of hours or months, or age (as
applicable) than that specified in such Sections.
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Solely for purposes of this Section, the Compensation of (1) any Highly
Compensated Employee in the group consisting of the ten (10) persons employed by
the Company or Commonly Controlled Entity paid the greatest Compensation
(without regard to this sentence), or (2) any Five Percent Owner of the Company
or Commonly Controlled Entity, shall include any Compensation paid to a Family
Member.
2.27 "HOUR OF SERVICE" means each hour for which an Employee is paid, or
entitled to payment, by an Employer or a Commonly Controlled Entity:
(a) for the performance of duties;
(b) on account of a period of time during which no duties were
performed; provided that, no more than 1,000 Hours of Service shall be
credited for any single continuous period during which an Employee performs
no duty, and provided that Hours of Service shall not be credited for
payments made or due under a plan maintained solely for the purpose of
complying with applicable worker's compensation, unemployment compensation
or disability insurance laws, or for reimbursement of medical expenses; and
(c) for which back pay, irrespective of mitigation of damages, is
awarded or agreed to by the Employer; provided that the same Hours of
Service have not already been credited under (a) or (b) above.
For Employees who are paid on other than an hourly basis, Hours of Service
shall be credited for each payroll period of the Employee for which the Employee
receives or is entitled to receive compensation according to the following
chart:
<TABLE>
<CAPTION>
Payroll Period Hours of Service Credited
-------------- -------------------------
<S> <C>
(1) Daily 10
(2) Weekly 45
(3) Bi-Monthly 95
(4) Monthly 190
</TABLE>
To the extent not credited above, for periods of Authorized Leave of
Absence, an Employee shall be credited with the number of hours for which he
would have been regularly scheduled for such periods if he had not been on such
Authorized Leave of Absence.
To the extent not credited above, solely for purposes of avoiding a One
Year Break in Service, for periods of absence from work on account of Parental
Leave, an Employee shall be credited, but not in excess of the number of Hours
of Service required to
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bring the total of Hours of Service for the Eligibility Computation Period or
Plan Year, as applicable, to 501, with
(1) the Hours of Service which normally would have been credited to
such individual but for the Parental Leave or
(2) 8 Hours of Service per day of such absence if the Plan is unable
to determine the Hours of Service which would have been credited to such
individual but for the Parental Leave.
An Employee's Hours of Service for absence on account of Parental Leave
shall be credited to the Eligibility Computation Period or Plan Year, as
applicable, in which absence because of a Parental Leave commenced, except that
if such Hours of Service are not needed to prevent a One Year Break in Service
in the Eligibility Computation Period or Plan Year, as applicable, in which the
absence because of Parental Leave commenced and if such Parental Leave continues
into a subsequent Eligibility Computation Period or Plan Year, as applicable,
the Hours of Service shall be credited to the subsequent Eligibility Computation
Period or Plan Year, as applicable.
The determination of Hours of Service for reasons other than the
performance of duties shall be determined in accordance with the provisions of
Labor Department Regulations Section 2530.200b-2(b), and Hours of Service shall
be credited to computation periods in accordance with the provisions of Labor
Department Regulations Section 2530.200b-2(c).
2.28 "INVESTMENT FUND" means any of the funds designated from time to
time by the Committee pursuant to Section 7.7 for the investment of Trust Fund
assets.
2.29 "NON-HIGHLY COMPENSATED EMPLOYEE" means an Employee who is neither
a Highly Compensated Employee nor a Family Member.
2.30 "NORMAL RETIREMENT DATE" means the date on which a Participant
attains age 65.
2.31 "ONE YEAR BREAK IN SERVICE" means (a) for purposes of determining
Years of Eligibility Service, an Eligibility Computation Period during which the
Employee is not credited with at least 501 Hours of Service; and (b) for
purposes of determining Years of Vesting Service, a Plan Year during which a
Participant is credited with less than 501 Hours of Service.
2.32 "PARENTAL LEAVE" means a period of time during which an Employee is
absent from work: (a) by reason of the pregnancy of the Employee, (b) by reason
of the birth of a child of the Employee, (c) by reason of the placement of a
child with the Employee in connection with the adoption of such child by such
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Employee, or (d) for purposes of caring for such child for a period beginning
immediately following such birth or placement. An absence from work shall not
be a Parental Leave unless the Employee furnishes the Committee such timely
information as may reasonably be required to establish that the absence from
work was for one of the reasons specified in this Section 2.33 and the number of
days for which there was such an absence. Nothing contained herein shall be
construed to establish an Employer policy of treating a Parental Leave as an
Authorized Leave of Absence.
2.33 "PARTICIPANT" means an Eligible Employee participating in the Plan
as provided in Article III.
2.34 "PLAN" means the Checker Employees' 401(k) Retirement Benefit Plan,
as set forth herein and as from time to time amended.
2.35 "PLAN ADMINISTRATOR" means the person, persons or group appointed
to act as Plan Administrator under Section 9.11, and in the absence of such
appointment, the Committee.
2.36 "PLAN YEAR" means the calendar year.
2.37 "RELATED PLAN" means any other defined contribution plan or a
defined benefit plan (as defined in Section 415(k) of the Code) maintained by an
Employer or a Commonly Controlled Entity, respectively called a "Related Defined
Contribution Plan" and a "Related Defined Benefit Plan."
2.38 "REQUIRED BEGINNING DATE" means April 1 of the calendar year
following:
(a) for a Participant to whom Section 2.38(b) does not apply, the
calendar year in which the Participant reaches age 70-1/2, and
(b) for a Participant who reached age 70-1/2 prior to January 1,
1988 and who is not a Five Percent Owner of the Employer (as defined in
Section 2.26(e)) at any time during the calendar year in which he reached
age 70-1/2 or any of the four (4) prior Plan Years, the calendar year in
which he has a Termination of Employment, provided that if any such
Participant becomes a Five Percent Owner during any Plan Year after he
reaches age 70-1/2, the "REQUIRED BEGINNING DATE" for such Participant
shall be the April 1 of the calendar year following the calendar year in
which such Plan Year ends.
2.39 "ROLLOVER CONTRIBUTION" shall mean a rollover contribution as
described in Code Section 402(a)(5) [CODE SECTION
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402(c), EFFECTIVE JANUARY 1, 1993], Code Section 403(a)(4), or Code Section
408(d)(3).
2.40 "TERMINATION OF EMPLOYMENT" means (a) a resignation by an Employee
for any reason, (b) a dismissal or layoff of an Employee for any reason, (c)
death or retirement, (d) a failure to return to work without reasonable cause,
as determined by the Employer, after the conclusion of an Authorized Leave of
Absence or (e) any other termination of employment. The transfer of an Employee
from employment by an Employer or a Commonly Controlled Entity to employment by
another Employer or a Commonly Controlled Entity shall not be a Termination of
Employment.
2.41 "TRUST" means the trust established and maintained for the purposes
of the Plan, which is administered by the Trustee in accordance with the
provisions of the Trust Agreement.
2.42 "TRUST AGREEMENT" means the agreement between the Company and the
Trustee establishing the Checker Employees' 401(k) Retirement Benefit Trust, and
any amendments thereto.
2.43 "TRUST FUND" means all property, real or personal, received or held
by the Trustee plus all income and gains and minus all losses, expenses, and
distributions chargeable thereto.
2.44 "TRUSTEE" means any corporation, individual or individuals who
shall accept the appointment as trustee to execute the duties of the Trustee, as
specifically set forth in the Trust Agreement.
2.45 "VALUATION DATE" means the last business day of the Plan Year and
such additional dates as the Committee shall deem appropriate.
2.46 "YEAR OF ELIGIBILITY SERVICE" means an Eligibility Computation
Period during which an Employee is credited with at least 1,000 Hours of
Service.
2.47 "YEAR OF VESTING SERVICE" means
(a) Except as otherwise provided below, each calendar year during
which an Employee is credited with at least 1,000 Hours of Service.
(b) Except as otherwise provided below, an Employee's years and
fractions of years of service in the armed forces of the United States, if
he retains employment rights with the Employer or a Commonly Controlled
Entity under the laws of the United State and if he resumes employment with
the Employer or a Commonly Controlled Entity following the expiration of
such military service but only to the extent required by law to be
recognized by this Plan.
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(c) With respect to an Employee who, immediately prior to December
31, 1989, was employed by International Controls Corp. and who became an
Employee on January 11, 1989, for periods prior to January 11, 1989, a
number of Years of Vesting Service equal to his full years of service
credited for vesting purposes under the Retirement Plan for Great Dane
Trailers, Inc. as of January 11, 1989.
(d) With respect to any other Employee whose service prior to 1990
was determined on the basis of elapsed time, the number of full years of
service credited to the employee prior to 1990; provided that for periods
prior to January 1, 1986, a Participant who was a participant in the
Checker Taxi Company, Inc. Pension Plan for Salaried Employees or the
Calumet Insurance Company Salaried Pension Plan (collectively, the "Merged
Plans") on December 31, 1985 shall not be credited with Years of Vesting
Service as provided above, but shall be credited with his years of vesting
service credited under the Merged Plans as of December 31, 1985.
Notwithstanding the foregoing, in determining a Participant's Years of
Vesting Service, the following shall be excluded:
(e) If a Participant who has no vested interest in any Employer
Contributions incurs five (5) or more consecutive One Year Breaks in
Service, Years of Vesting Service accrued prior to such consecutive One
Year Breaks in Service shall be excluded;
(f) If a Participant has a One Year Break in Service, the
Participant's Vesting Service prior to the One Year Break in Service shall
be excluded until the Participant has completed one year of Vesting Service
after the One Year Break in Service;
(g) If a Participant has a Termination of Employment and receives a
distribution of less than 100% of his Accrued Benefit, then, upon his
reemployment, the Vesting Service with which he was credited for the period
prior to such Termination of Employment shall be excluded unless the
Participant repays such distribution in accordance with Section 8.5(d);
(h) Years of Vesting Service accrued prior to attainment of age 18
shall be excluded.
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ARTICLE III
PARTICIPATION
3.1 PARTICIPATION. Each Eligible Employee shall become a Participant on
the first Entry Date coinciding with or next following the date on which he
completes one (1) Year of Eligibility Service and attains age twenty-one (21).
Each Participant shall continue to be a Participant until the later of his
Termination of Employment or the date his entire vested Accrued Benefit is
distributed from the Plan.
Admission to participation in the Plan shall only be made when an Eligible
Employee is not on an Authorized Leave of Absence or serving with the Armed
Forces of the United States.
3.2 CERTIFICATION OF PARTICIPATION AND COMPENSATION TO COMMITTEE. Each
Employer shall certify to the Committee, within a reasonable time after each
Entry Date, the names of all new Participants. Each Employer, within a
reasonable time after the last day of each Plan Year, shall certify to the
Committee each Participant's Compensation during such Plan Year and such other
information as the Committee may request.
3.3 PARTICIPATION UPON CHANGE OF JOB STATUS. An Employee who has
satisfied the age and service requirements of Section 3.1, but who is not a
Participant because he is not an Eligible Employee, shall become a Participant
on the Entry Date coincident with or next following his becoming an Eligible
Employee, but not earlier than the date he would have become a Participant had
he been an Eligible Employee at all times, provided that such Eligible
Employee's 401(k) Election shall not become effective prior to the first day of
the payroll period coinciding with or next following the date on which he
becomes a Participant.
3.4 PARTICIPATION UPON REEMPLOYMENT. An Employee who has a Termination
of Employment and thereafter becomes an Eligible Employee shall become a
Participant immediately upon becoming an Eligible Employee; provided, however,
that in the case of an Employee who was not a Participant immediately before
such Termination of Employment the Employee shall not become a Participant
earlier than the date he would have become a Participant had he been an Eligible
Employee at all times, and further provided that such Eligible Employee's 401(k)
Election shall not become effective prior to the first day of the payroll period
coinciding with or next following the date on which he becomes a Participant.
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ARTICLE IV
CONTRIBUTIONS
4.1 401(k) CONTRIBUTIONS.
(a) 401(k) CONTRIBUTIONS. Each Active Participant shall,
commencing as of the first day of the payroll period coinciding with or
next following the date on which he becomes a Participant, have his
Compensation reduced for each Plan Year by the amount (if any) specified in
his 401(k) Election made in accordance with this Section 4.1(a) and Section
4.5. Each Employer shall contribute to the Trust, as a 401(k) Contribution
on behalf of each Active Participant employed by the Employer, the amount
by which such Participant's Compensation has been reduced under such
Participant's 401(k) Election. For each Plan Year [COMMENCINIG PRIOR TO
JANUARY 1, 1991], the 401(k) Election, if any, of a Participant shall
equal a minimum of one percent (1%) up to a maximum of six percent (6%) of
his Compensation, except that, for the Plan Year commencing January 1,
1990, a Participant making a 401(k) Election on or before March 30, 1990
shall have his Compensation reduced commencing with Compensation paid on or
after April 1, 1990, and the 401(k) Election, if any, of the Participant
shall equal a minimum of one and one third percent (1-1/3%) up to a maximum
of eight percent (8%) of his Compensation paid on or after April 1, 1990.
For each Plan Year [COMMENCING ON OR AFTER JANUARY 1, 1991], the 401(k)
Election, if any, of a Participant shall equal a minimum of one percent
(1%) up to a maximum of ten percent (10%) (or such greater or lesser
percentage as teh Committee may from time to time determine) of his
Compensation. A Participant's 401(k) Election, if any, shall be made by
written authorization in increments of 1% (for Plan Years beginning on or
after January 1, 1991), in accordance with such rules as the Committee, in
its discretion, shall from time to time specify; provided that 401(k)
Contributions for any calendar year or Plan Year shall be subject to
Section 5.2 and shall not exceed an amount which may from time to time be
established by the Committee or a pro rata portion of said amount for any
partial Plan Year or calendar year of contributions.
(b) DEADLINE FOR 401(k) CONTRIBUTIONS. Each Employer shall
contribute the 401(k) Contributions for each Plan Year to the Trustee as
soon as reasonably possible after the Participant's Compensation has been
reduced for each pay period at such time as the Committee shall from time
to time determine, but not later than twelve (12) months after the last day
of the Plan Year to which such 401(k) Contribution relates or, with the
approval of the Committee, by such later
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date as may be permitted under applicable law, Treasury Regulations and
Rulings of the Internal Revenue Service.
4.2 MATCHING CONTRIBUTIONS.
(a) MATCHING CONTRIBUTIONS. For each Plan Year, each Employer
shall contribute on behalf of each Active Participant employed by the
Employer a Matching Contribution in an amount equal to twenty-five percent
(25%) (or such lesser or greater percentage as the Board may determine) of
that portion of such Active Participant's 401(k) Contribution made pursuant
to Section 4.1 which does not exceed four percent (4%) of such Active
Participant's Compensation. Notwithstanding the foregoing, for the Plan
Year beginning January 1, 1990 the amount of the Matching Contribution
shall be equal to twenty-five percent (25%) (or such lesser or greater
percentage as the Board may determine) of that portion of such Active
Participant's 401(k) Contribution made pursuant to Section 4.1 which does
not exceed five and one-third percent (5-1/3%) of such Active Participant's
Compensation paid on or after April 1, 1990.
(b) DEADLINE FOR CONTRIBUTIONS. Matching Contributions for each
Plan Year shall be delivered to the Trustee as soon as reasonably possible
after the end of the Plan Year on or before such date as the Committee
shall specify, but not later than the due date for the filing of the
federal income tax return (including any extensions) of the Employer for
the tax year during which the last day of such Plan Year occurs.
4.3 SPECIAL EMPLOYER CONTRIBUTIONS.
(a) SPECIAL EMPLOYER CONTRIBUTIONS. For each Plan Year, the
Company may, on or before the due date (including extensions) for filing
the Company's federal income tax return for the tax year during which the
last day of such Plan Year occurs, elect to have the Company and the other
Employers make Special Employer Contributions to the Trust in such amounts
(if any) as the Company may determine. In any Plan Year in which the
Company elects to have such Special Employer Contributions made, each
Employer shall contribute a fractional portion of the Special Employer
Contribution in an amount equal to the total Special Employer Contribution
multiplied by a fraction, (a) in the case of a Special Employer
Contribution made for purposes of Section 5.3(b), the numerator of which is
the 401(k) Contributions made for all Active Participants of the Employer
who are Non-highly Compensated Employees for the Plan Year, and the
denominator of which is the total of all 401(k) Contributions for the Plan
Year made for Active Participants who are Non-highly Compensated Employees,
and (b) in the case of a Special Employer Contribution made for purposes of
Section 5.4(b),
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the numerator of which is the Matching Contribution made for all Active
Participants of the Employer who are Non-highly Compensated Employees for
the Plan Year, and the denominator of which is the total of all Matching
Contributions for the Plan Year made for Active Participants who are
Non-highly Compensated Employees.
(b) DEADLINE FOR SPECIAL EMPLOYER CONTRIBUTIONS. Special
Employer Contributions for each Plan Year shall be delivered to the Trustee
on or before such date as the Committee shall specify, but not later than
the due date for the filing of the federal income tax return (including
extensions) of the Employer for the tax year during which the last day of
such Plan Year occurs.
4.4 PROFIT SHARING CONTRIBUTIONS.
(a) PROFIT SHARING CONTRIBUTIONS. For each Plan Year the Company shall
contribute to the Trust for Active Participants who are Employees of the Company
as Profit Sharing Contributions such amount, if any, as may be determined by the
Board of Directors, but in no event shall the Company contribute an amount for
any Plan Year greater than the maximum amount deductible from income by the
Company under the provisions of the Code.
(b) OTHER PROFIT SHARING CONTRIBUTIONS. Each other Employer shall
contribute to the Trust for each Plan Year for each Active Participant who is an
Employee of that Employer as Profit Sharing Contributions an amount which is
equal to the product of (1) the total Compensation for the Plan Year paid to
Active Participants by such Employer, multiplied by (2) a fraction, the
numerator of which is the Company's Profit Sharing Contribution for the Plan
Year and the denominator of which is the total Compensation for the Plan Year
paid to Active Participants by the Company.
(c) DEADLINE FOR PROFIT SHARING CONTRIBUTIONS. The Profit Sharing
Contributions for each Plan Year shall be delivered to the Trustee on or before
the due date (including extensions thereof) for the filing of the federal income
tax return of the Employer for the tax year within which or during which the
last day of such Plan Year occurs. If the Employer makes Profit Sharing
Contributions to the Plan for a Plan Year prior to the end of a Plan Year, the
contributions shall be held in a separate suspense account until allocated
pursuant to Section 5.1.
4.5 401(k) ELECTIONS. [EFFECTIVE PRIOR TO JULY 1, 1994] A
Participant may make, change or revoke a 401(k) Election by filing with the
Committee written notice of such election, change or revocation on such form and
in such manner as the Committee may prescribe, provided that a 401(k) Election
or a change or revocation shall apply solely to Compensation not yet payable as
of the date of such election, change or revocation. A 401(k)
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Election or change in a Participant's 401(k) Election shall be made as of
January 1 or July 1 of any Plan Year ("Election Date"), and shall be effective
on the first day of the payroll period which commences following such Election
Date, except that the initial 401(k) Election of persons becoming eligible to
participate in the Plan on April 1, 1990 shall be effective as provided in
Section 4.1(a). A revocation of a Participant's 401(k) Election may be made at
any time and shall be effective on the first day of the payroll period which
commences after such revocation is filed or at such later date as the
Participant shall specify. Thereafter a new 401(k) Election may not be made
until the next Election Date. The 401(k) Election by the Participant shall
continue in effect, notwithstanding any change in Compensation, until such
Participant shall change or revoke such 401(k) Election or until he shall cease
to be an Active Participant.
[EFFECTIVE AFTER JUNE 30, 1994] A Participant may make, change or revoke
a 401(k) Election by filing with the Committee written notice of such election,
change or revocation on such form and in such manner as the Committee may
prescribe, provided that a 401(k) Election or a change or revocation shall apply
solely to Compensation not yet payable as of the date of such election, change
or revocation. A 401(k) Election or change in a Participant's 401(k) Election
may be made as of the first day of any calendar quarter ("Election Date"), and
shall be effective on the first day of the payroll period which commences
following such Election Date. A revocation of a Participant's 401(k) Election
may be made at any time and shall be effective on the first day of the payroll
period which commences after such revocation is filed or at such later date as
the Participant shall specify. Thereafter a new 401(k) Election may not be made
until the next Election Date. Except as provided in Section 4.1, the 401(k)
Election by the Participant shall continue in effect, notwithstanding any change
in Compensation, until such Participant shall change or revoke such 401(k)
Election or until he shall cease to be an Active Participant.
4.6 PREVENTED CONTRIBUTIONS. Notwithstanding the provisions of Sections
4.1, 4.2, 4.3, and 4.4 no Employer shall make any contribution for any Plan Year
in excess of the maximum amount deductible from income by the Employer for the
Plan Year under the provisions of the Code.
4.7 ROLLOVER CONTRIBUTIONS. [THE FOLLOWING SENTENCE IS EFFECTIVE PRIOR
TO DECEMBER 15, 1994] Notwithstanding the provisions of Section 3.1, the
Committee may, at the request of an Eligible Employee, direct the Trustee to
accept a Rollover Contribution to the Plan for such Eligible Employee provided
the Committee reasonably anticipates he will meet the requirements of Section
3.1, to be held in the Rollover Contribution Account for such person, regardless
of whether he has fulfilled the
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requirements for participation under Section 3.1; provided, however, that if any
such Rollover Contribution includes property other than money, the Committee may
in its sole discretion refuse to accept such Rollover Contribution or may
condition its acceptance of such Rollover Contribution upon such terms and
conditions as the Committee in its sole discretion may deem reasonable. [THE
FOLLOWING SENTENCE IS EFFECTIVE AFTER DECEMBER 14, 1994] Notwithstanding the
provisions of Section 3.1, the Committee may, at the request of an Eligible
Employee, direct the Trustee to accept a cash Rollover Contribution (including a
direct rollover from another qualified plan) to the Plan for such Eligible
Employee provided the Committee reasonably anticipates he will meet the
requirements of Section 3.1, to be held in the Rollover Contribution Account for
such person, regardless of whether he has fulfilled the requirements for
participation under Section 3.1. Prior to the acceptance of a Rollover
Contribution, the Committee may require the submission of evidence so that it
may be reasonably satisfied that such Rollover Contribution qualifies as a
Rollover Contribution. If the Committee shall determine subsequent to any
Rollover Contribution that such contribution did not in fact constitute a
qualified Rollover Contribution, the amount of his Rollover Contribution Account
shall be returned to the Eligible Employee or Participant. An Eligible Employee
making a Rollover Contribution who is otherwise ineligible to be a Participant
shall be a Participant solely for the purpose of making and withdrawing such
contributions until he meets the other requirements for participation in the
Plan.
All Rollover Contributions are fully vested and nonforfeitable.
ARTICLE V
RESTRICTIONS AND LIMITATIONS ON CONTRIBUTIONS
5.1 ORDER OF APPLICATION OF THE RESTRICTIONS AND LIMITATIONS ON
CONTRIBUTIONS. Sections 5.2, 5.3, 5.4, 5.5, and 6.5 shall be applied in
sequential order to contributions under the Plan.
5.2 RESTRICTIONS ON 401(k) CONTRIBUTIONS. Notwithstanding the
provisions of Section 4.1, 401(k) Contributions for any Participant or group of
Participants shall not exceed either the maximum dollar amount permitted under
Section 402(g) of the Code as set forth in Sections 5.2(a) or 5.2(b) or the
amounts permitted under the non-discrimination rules of Section 401(k) of the
Code as set forth in Section 5.3 and in Section 5.5:
(a) DEFERRAL LIMITS. Notwithstanding anything in Sections 4.1,
4.2 or 4.5 to the contrary, (1) an Active Participant's 401(k)
Contributions under the Plan and his elective deferrals (as defined in
Section 402(g) of the Code)
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under any Related Plan for any taxable year shall not exceed $7,979 (in
1990, adjusted in subsequent years as determined in accordance with
regulations prescribed by the Secretary of Treasury or his delegate and
increased in accordance with the provisions of Sections 402(g)(4) and
402(g)(8) of the Code) with respect to any Participant who participates in
a plan described in Section 403(b) of the Code or who is a qualified
employee in a plan of a qualified organization (as defined in Code Section
402(g)(8)); and (2) the Committee may, in its discretion, limit the
periodic amount of 401(k) Contributions for Active Participants to a pro
rata portion of such annual limit with such rounding and other
administratively desirable provisions as it from time to time deems
appropriate.
(b) AGGREGATE DEFERRAL. [EFFECTIVE FOR PLAN YEARS COMMENCING
BEFORE JANUARY 1, 1994] If for any taxable year, the Participant notifies
the Committee in writing prior to March 1 (or such later date as the
Committee permits, but no later than April 15) of the succeeding taxable
year that the sum of (1) the Participant's 401(k) Contributions, (2) any
elective deferrals (as defined in Section 402(g) of the Code) under a
Related Plan, and (3) other elective deferrals (as defined in Section
402(g) of the Code) exceeds $7,979 (in 1990, adjusted in subsequent years
as determined in accordance with regulations prescribed by the Secretary of
Treasury or his delegate, and increased in accordance with the provisions
of Sections 402(g)(4) and 402(g)(8) of the Code as applicable), then the
Committee shall, not later than the April 15 following the receipt of such
notice, distribute to the Participant all or such portion of the
Participant's 401(k) Contributions for such taxable year as requested in
writing, but no more than the amount necessary to eliminate the excess.
Any income allocable to such excess amount, determined under Section
5.2(c), shall also be distributed.
[EFFECTIVE FOR PLAN YEARS COMMENCING ON OR AFTER JANUARY 1, 1994]
If for any taxable year, the Participant notifies the Committee in writing
prior to March 1 (or such later date as the Committee permits, but no later
than April 15) of the succeeding taxable year that the sum of (1) the
Participant's 401(k) Contributions, (2) any elective deferrals (as defined
in Section 402(g) of the Code) under a Related Plan, and (3) other elective
deferrals (as defined in Section 402(g) of the Code) exceeds $7,979 (in
1990, adjusted in subsequent years as determined in accordance with
regulations prescribed by the Secretary of Treasury or his delegate, and
increased in accordance with the provisions of Sections 402(g)(4) and
402(g)(8) of the Code as applicable), then the Committee shall, not later
than the April 15 following the receipt of such notice, distribute to the
Participant all or such portion of the Participant's 401(k) Contributions
(by first distributing unmatched Participant 401(k) Contributions and
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then matched Participant 401(k) Contributions) for such taxable year as
requested in writing, but no more than the amount necessary to eliminate
the excess. Any income allocable to such excess amount, determined under
Section 5.2(c), shall also be distributed. Any Matching Contributions
(including any net income allocable to such forfeited Matching
Contributions determined in accordance with Section 5.2(c)) made with
respect to such distributed Participant 401(k) Contributions shall be
forfeited and allocated in accordance with Section 6.2.
(c) ALLOCATION OF INCOME. [EFFECTIVE FOR PLAN YEARS COMMENCING
BEFORE JANUARY 1, 1994] Income equal to the sum of the amounts determined
under (1) and (2) below shall be allocated to and distributed with any
amounts distributed to a Participant as follows:
(1) INCOME FOR PLAN YEAR. Income for a completed Plan Year
shall equal the net income for the Plan Year allocable to a
Participant's 401(k) Account multiplied by a fraction, the numerator
of which is the amount of 401(k) Contributions so distributed and the
denominator of which is the balance of such Account as of the last
day of the Plan Year (prior to distribution of any 401(k)
Contribution for such taxable year and prior to allocation of income,
gains, losses and expenses thereto).
(2) INCOME FOR PERIOD BETWEEN END OF PLAN YEAR AND
Distribution. Income for the period between the end of a Plan Year
and the date of a distribution shall equal the product of the number
of months which has elapsed since the end of the preceding Plan Year
and the date of the distribution, multiplied by ten percent (10%),
multiplied by the income allocated to such distributed amounts under
subsection (1) above. For this purpose, a distribution made on or
before the 15th day of a month shall be deemed to be made on the last
day of the prior month, and a distribution made after the 15th day of
a month shall be deemed to be made on the first day of the next
month.
[EFFECTIVE FOR PLAN YEARS COMMENCING ON OR AFTER JANUARY 1, 1994]
Income equal to the sum of the amounts determined under (1) and (2) below
shall be allocated to and distributed (or forfeited, as applicable) with
any amounts distributed to a Participant or forfeited as follows:
(1) INCOME FOR TAXABLE YEAR. Income for a completed
taxable year shall equal the net income for the taxable year
allocable to a Participant's 401(k) Account (or Matching Contribution
Account, as
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applicable) multiplied by a fraction, the numerator of which is the
amount of 401(k) Contributions so distributed (or Matching
Contributions so forfeited) and the denominator of which is the
balance of such Account as of the last day of the taxable year (prior
to distribution of any 401(k) Contribution or forfeiture of any
Matching Contribution for such taxable year and prior to allocation
of income, gains, losses and expenses thereto).
(2) INCOME FOR PERIOD BETWEEN END OF TAXABLE YEAR AND
DISTRIBUTION. Income for the period between the end of a taxable
year and the date of a distribution or forfeiture shall equal the
product of the number of months which has elapsed since the end of
the preceding taxable year and the date of the distribution or
forfeiture, multiplied by ten percent (10%), multiplied by the income
allocated to such distributed or forfeited amounts under subsection
(1) above. For this purpose, a distribution or forfeiture occurring
on or before the 15th day of a month shall be deemed to occur on the
last day of the prior month, and a distribution or forfeiture
occurring after the 15th day of a month shall be deemed to occur on
the first day of the next month.
5.3 401(k) DISCRIMINATION LIMITS.
(a) LIMITS ON DEFERRAL PERCENTAGES. For any Plan Year, Section
401(k)(3) Contributions, as defined below, shall in all events be caused to
comply with the requirements of Section 401(k)(3) of the Code. The
requirements of Section 401(k)(3) of the Code are as follows:
(1) either the excess of the actual deferral percentage (as
defined below) for such Plan Year for Active Participants who are
Highly Compensated Employees over that of Active Participants who are
Non-highly Compensated Employees is not more than two (2) percentage
points, and the actual deferral percentage for such Plan Year for
Active Participants who are Highly Compensated Employees is not more
than the actual deferral percentage for such Plan Year of Active
Participants who are Non-highly Compensated Employees multiplied by
two (2), or
(2) the actual deferral percentage for such Plan Year for the
Active Participants who are Highly Compensated Employees is not more
than the actual deferral percentage for such Plan Year of Active
Participants who are Non-highly Compensated Employees multiplied by
1.25.
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(b) SECTION 401(k)(3) CONTRIBUTIONS. "Section 401(k)(3)
Contributions" include 401(k) Contributions and, at the Committee's
election, all or any portion of the Special Employer Contributions, or the
matching contributions (as defined in Section 401(m)(4)(a)) and/or
qualified nonelective contributions (as defined in Section 401(m)(4)(c) of
the Code) made under any Related Plan to the extent permitted in applicable
regulations and to the extent the Committee separately accounts therefor
(including separate accounting for income, gains, losses, withdrawals, and
other credits or charges).
(c) ACTUAL DEFERRAL PERCENTAGE. The actual deferral percentage
for a specified group of Participants for a Plan Year shall be the average
of the ratios (calculated separately for each Active Participant in such
group) of the amount of Section 401(k)(3) Contributions actually made on
behalf of each such Active Participant for such Plan Year (excluding excess
deferrals of Non-highly Compensated Employees to the Plan or any Related
Plan) divided by the Active Participant's Compensation. Such ratios and
the actual deferral percentage for each group shall be calculated to the
nearest one-hundredth of one percent.
(d) LIMITS ON SECTION 401(k)(3) CONTRIBUTIONS. The Committee may
establish, from time to time, such rules, restrictions, and limitations as
it may deem appropriate to insure that Section 401(k)(3) Contributions made
to the Plan satisfy the requirements of Section 401(k)(3) of the Code as
set forth herein. If the Committee determines that it is necessary or
desirable, the Committee may reduce or completely disallow 401(k)
Contributions for Highly Compensated Employees, including 401(k)
Contributions already made to the Plan for that Plan Year.
Upon reduction or disallowance by the Committee, the amount by which
the 401(k) Contributions of Highly Compensated Employees exceed the
Committee's determination of allowable 401(k) Contributions for Highly
Compensated Employees for the Plan Year shall be reduced under the
following leveling method: the unmatched 401(k) Contributions and, if
necessary, the matched 401(k) Contributions with respect thereto of the
Highly Compensated Employee with the highest actual deferral percentage
shall be reduced to the extent necessary to enable the Plan to satisfy the
requirement of Section 401(k)(3) of the Code or to reduce such Highly
Compensated Employee's actual deferral percentage to equal that of the
Highly Compensated Employee with the next highest actual deferral
percentage. This process shall be repeated until the Plan satisfies the
requirements of Section 401(k)(3) of the Code. The Committee shall, after
the close of the Plan Year, and no later than 12 months
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following the close of the Plan Year in which the reduced 401(k)
Contributions were deferred, distribute the amount of such contributions,
including any income earned on such amounts (determined under Section
5.3(f)), to the Highly Compensated Employees on whose behalf such
contributions were made. [EFFECTIVE FOR PLAN YEARS COMMENCING ON OR AFTER
JANUARY 1, 1994] Any Matching Contributions (including any net income
allocable thereto determined in accordance with Section 5.3(f)) made with
respect to such distributed matched 401(k) Contributions shall be forfeited
and allocated in accordance with Section 6.2.
(e) AGGREGATION RULES. Notwithstanding the foregoing provisions
in this Section 5.3, if a Related Plan which contains a cash or deferred
arrangement and the Plan are treated as one plan for purposes of Section
401(a)(4) or 410(b) of the Code, such plans shall be treated as one
arrangement under this Section 5.3, and if a Highly Compensated Employee is
a participant under a cash or deferred arrangement under the Plan and a
Related Plan, such plans shall be treated as one arrangement for purposes
of determining the actual deferral percentage for such Participant.
For purposes of determining the actual deferral percentage of an
Active Participant who is a Five Percent Owner or an Employee who is a
Highly Compensated Employee in the group consisting of the top ten (10)
persons employed by the Company and all Commonly Controlled Entities who
are paid the greatest compensation, the Section 401(k)(3) Contributions and
Compensation of such Active Participant shall include the Section 401(k)(3)
Contributions and Compensation of Family Members, and Family Members shall
be disregarded as Active Participants in determining the actual deferral
percentage both for Active Participants who are Highly Compensated
Employees and Active Participants who are Non-highly Compensated Employees.
(f) ALLOCATION OF INCOME. Income equal to the sum of the amounts
determined under (1) and (2) below shall be allocated to and distributed
with any amounts distributed to a Participant as follows:
(1) INCOME FOR PLAN YEAR. Income for a completed Plan Year
shall equal the net income for the Plan Year allocable to each of a
Participant's respective Accounts to which his Section 401(k)(3)
Contributions for the Plan Year are allocated prior to distribution
of any excess contributions, multiplied by a fraction, the numerator
of which is the amount of 401(k) Contributions so distributed and the
denominator of which is the total of such Account balances as of the
last day of the Plan
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Year (prior to distribution of any excess contribution for such Plan
Year and prior to allocation of income, gains, losses and expenses
thereto).
(2) INCOME FOR PERIOD BETWEEN END OF PLAN YEAR AND
DISTRIBUTION. Income for the period between the end of the Plan
Year and the date of a distribution shall equal the product of the
number of months which has elapsed since the end of the preceding
Plan Year and the date of the distribution, multiplied by ten percent
(10%), multiplied by the income allocated to such distributed amounts
under subsection (1) above. For this purpose, a distribution made on
or before the 15th day of a month shall be deemed to be made on the
last day of the prior month, and a distribution made after the 15th
day of a month shall be deemed to be made on the first day of the
next month.
5.4 RESTRICTIONS ON MATCHING CONTRIBUTIONS.
(a) LIMITS ON CONTRIBUTION PERCENTAGES. For any Plan Year,
Section 401(m) Contributions, as defined below, shall in all events be
caused to comply with the requirements of Section 401(m) of the Code. The
requirements of Section 401(m) of the Code are as follows:
(1) either the excess of the average contribution percentage
(as defined below) for the Plan Year for the group of Active
Participants who are Highly Compensated Employees over that of all
Active Participants who are Non-highly Compensated Employees is not
more than two (2) percentage points, and the average contribution
percentage for the Plan Year for the group of Active Participants who
are Highly Compensated Employees is not more than the average
contribution percentage for the Plan Year of all Active Participants
who are Non-highly Compensated Employees multiplied by two (2), or
(2) the average contribution percentage for the Plan Year for
Active Participants who are Highly Compensated Employees is not more
than the average contribution percentage for the Plan Year of all
Active Participants who are Non-highly Compensated Employees
multiplied by 1.25.
(b) SECTION 401(m) CONTRIBUTIONS. "Section 401(m) Contributions"
include Matching Contributions and, at the Committee's election (to the
extent they are not treated as Section 401(k)(3) Contributions under
Section 5.3), (1) all or any portion of the Special Employer Contributions,
or the qualified nonelective contributions (as defined in Section
401(m)(4)(c) of the Code) made under the Plan or any
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Related Plan and (2) all or any portion of the elective deferrals (as
defined in Section 402(g) of the Code) made under any Related Plan to the
extent permitted in applicable regulations and to the extent the Committee
separately accounts therefor (including separate accounting for income,
gains, losses, withdrawals, and other credits or charges).
(c) AVERAGE CONTRIBUTION PERCENTAGE. The average contribution
percentage for a specified group of Participants for a Plan Year shall be
the average of the ratios (calculated separately for each Active
Participant in such group) of the amount of Section 401(m) Contributions
actually paid over to the Plan on behalf of each Active Participant divided
by the Active Participant's Compensation. Such ratios and the average
contribution percentage for each group shall be calculated to the nearest
one-hundredth of one percent.
(d) LIMITS ON SECTION 401(m) CONTRIBUTIONS. The Committee may
establish, from time to time, such rules, restrictions and limitations as
it may deem appropriate to insure that Section 401(m) Contributions made to
the Plan satisfy the requirements of Section 401(m) of the Code set forth
herein. If the Committee determines that it is necessary or desirable, the
Committee may reduce or disallow Matching Contributions or 401(k)
Contributions for Highly Compensated Employees, including Matching
Contributions or 401(k) Contributions already made for that Plan Year.
Upon reduction or disallowance by the Committee, the amount by which
the 401(k) Contributions or Matching Contributions of Highly Compensated
Employees exceed the Committee's determination of allowable 401(k)
Contributions or Matching Contributions for Highly Compensated Employees
for the Plan Year shall be reduced under the following leveling method:
the Matching Contributions and, if necessary, the matched 401(k)
Contributions with respect thereto and the unmatched 401(k) Contributions
of the Highly Compensated Employee with the highest average contribution
percentage shall be reduced to the extent necessary to enable the Plan to
satisfy the requirement of Section 401(m) of the Code or to reduce such
Highly Compensated Employee's average contribution percentage to equal that
of the Highly Compensated Employee with the next highest average
contribution percentage. This process shall be repeated until the Plan
satisfies the requirements of Section 401(m) of the Code. The Committee
shall, after the close of the Plan Year, and no later than 12 months
following the close of the Plan Year in which the reduced 401(k)
Contributions were deferred or the reduced Matching Contributions arose,
distribute the amount of such contributions to the extent such
contributions are vested, including any income earned on
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such amounts (determined under Section 5.4(f)), to the Highly Compensated
Employees on whose behalf such contributions were made. Any unvested
Matching Contributions which are reduced under this Section 5.4(d) shall be
forfeited as of the last day of the Plan Year in which such unvested
reduced Matching Contributions arose.
(e) AGGREGATION. Notwithstanding any provision in this Section
5.4 to the contrary, if a Related Plan to which matching contributions and
employee contributions are made and the Plan are treated as one plan for
purposes of Code Section 401(a)(4) or Code Section 410(b), such plans shall
be treated as one arrangement under this Section, and if a Highly
Compensated Employee is a participant under any Related Plan to which
matching contributions and employee contributions are made, such plan and
the Plan shall be treated as one arrangement for purposes of determining
the average contribution percentage of such Highly Compensated Employee.
For purposes of determining the average contribution percentage of an
Active Participant who is a Five Percent Owner or an Employee who is a
Highly Compensated Employee in the group consisting of the top ten (10)
persons employed by the Company and all Commonly Controlled Entities who
are paid the greatest compensation, the Section 401(m) Contributions and
Compensation of such Active Participant shall include the Section 401(m)
Contributions and Compensation of Family Members, and Family Members shall
be disregarded as Active Participants in determining the average
contribution percentage both for Active Participants who are Highly
Compensated Employees and Active Participants who are Non-highly
Compensated Employees.
(f) ALLOCATION OF INCOME. Income equal to the sum of the amounts
determined under (1) and (2) below shall be allocated to and distributed
with any amounts distributed to a Participant as follows:
(1) INCOME FOR PLAN YEAR. Income for a completed Plan Year
shall equal the net income for the Plan Year allocable to each of a
Participant's respective Accounts to which his Section 401(m)
Contributions for the Plan Year are allocated prior to distribution
of any excess contributions, multiplied by a fraction, the numerator
of which is the amount of 401(k) Contributions and Matching
Contributions so distributed and the denominator of which is the
total of such Account balances as of the last day of the Plan Year
(prior to distribution of any excess contribution for such Plan Year
and prior to allocation of income, gains, losses and expenses
thereto).
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(2) INCOME FOR PERIOD BETWEEN END OF PLAN YEAR AND
DISTRIBUTION. Income for the period between the end of a Plan Year
and the date of a distribution shall equal the product of the number
of months which has elapsed since the end of the preceding Plan Year
and the date of the distribution, multiplied by ten percent (10%),
multiplied by the income allocated to such distributed amounts under
subsection (1) above. For this purpose, a distribution made on or
before the 15th day of a month shall be deemed to be made on the last
day of the prior month, and a distribution made after the 15th day of
a month shall be deemed to be made on the first day of the next
month.
5.5 MULTIPLE USE OF SECTION 5.3 AND SECTION 5.4. Notwithstanding
Section 5.3 and Section 5.4, the sum of the actual deferral percentages and the
average contribution percentages, for a Plan Year, of the Highly Compensated
Employees who are Active Participants shall not exceed the greater of (i) the
sum of (a) plus (b) or (ii) the sum of (c) plus (d) where:
(a) is one hundred and twenty-five percent (125%) of the greater of
(1) the actual deferral percentages for such Plan Year of the Non-highly
Compensated Employees who are Active Participants, or (2) the average
contribution percentage for such Plan Year of such Non-highly Compensated
Employees;
(b) is two (2) plus the lesser of the amount determined under Section
5.5(a)(1) or the amount determined under Section 5.5(a)(2), but in no event
shall this amount exceed two hundred percent (200%) of the lesser of the
amount determined under Section 5.5(a)(1) or the amount determined under
Section 5.5(a)(2);
(c) is one hundred and twenty-five percent (125%) of the lesser of
the amount determined under Section 5.5(a)(1) or the amount determined
under Section 5.5(a)(2); and
(d) is two (2) plus the greater of the amount determined under
Section 5.5(a)(1) or the amount determined under Section 5.5(a)(2), but in
no event shall this amount exceed two hundred percent (200%) of the greater
of the amount determined under Section 5.5(a)(1) or the amount determined
under Section 5.5(a)(2).
The Committee may establish, from time to time, such rules, restrictions and
limitations as it may deem appropriate to insure that the above limitations are
met. If the Committee determines that the reduction or disallowance of 401(k)
Contributions or Matching Contributions is necessary or desirable with respect
to Highly Compensated Employees, the Committee may reduce or disallow 401(k)
Contributions or Matching Contributions for such
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Highly Compensated Employees, including 401(k) Contributions or Matching
Contributions already made for that Plan Year, as provided in Section 5.3(d) and
(f) or Section 5.4(d) and (f).
ARTICLE VI
ALLOCATIONS OF CONTRIBUTIONS
6.1 401(k) CONTRIBUTIONS. All 401(k) Contributions shall be allocated
as soon as practicable to the 401(k) Account of the Active Participant on whose
behalf they were made.
6.2 MATCHING CONTRIBUTIONS AND FORFEITURES. [EFFECTIVE FOR PLAN YEARS
COMMENCING BEFORE JANUARY 1, 1994] As of the last day of the Plan Year, (a)
Matching Contributions shall be allocated to the Matching Contribution Account
of each Active Participant on whose behalf they were made, and (b) Forfeitures
allocable under this Section 6.2 shall be allocated to the Matching Contribution
Account of each Active Participant in an amount determined by multiplying the
amount of such Forfeitures by a fraction, the numerator of which is the amount
of Matching Contributions allocated to such Active Participant's Account for the
Plan Year, and the denominator of which is the amount of Matching Contributions
allocated to all Active Participants' Accounts for the Plan Year.
[EFFECTIVE FOR PLAN YEARS COMMENCING ON AFTER JANUARY 1, 1994] As of the
last day of the Plan Year, (a) Matching Contributions shall be allocated to the
Matching Contribution Account of each Active Participant on whose behalf they
were made, and (b) Forfeitures allocable under this Section 6.2 shall be
allocated to the Matching Contribution Account of each Active Participant in an
amount determined by multiplying the amount of such Forfeitures by a fraction,
the numerator of which is the amount of Matching Contributions allocated to such
Active Participant's Account for the Plan Year, and the denominator of which is
the amount of Matching Contributions allocated to all Active Participants'
Accounts for the Plan Year; provided, however, that Forfeitures arising under
the provisions of Section 5.3 shall be allocated to the Matching Contribution
Account of each Active Participant who is a Non-highly Compensated Employee in
an amount determined by multiplying the amount of the Forfeitures arising under
Section 5.3 by a fraction, the numerator of which is the amount of Matching
Contributions allocated to such Active Participant's Account for the Plan Year,
and the denominator of which is the amount of Matching Contributions allocated
to the Accounts of all Active Participants who are Non-highly Compensated
Employees for the Plan Year.
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6.3 SPECIAL EMPLOYER CONTRIBUTIONS. As of the last day of the Plan
Year, (a) all Special Employer Contributions for the Plan Year made in
accordance with Sections 4.3 and 5.3(b) shall be allocated to the 401(k) Account
of each Active Participant who is a Non-highly Compensated Employee in an amount
equal to the Special Employer Contributions multiplied by a fraction, the
numerator of which is such Active Participant's 401(k) Contributions for the
Plan Year, and the denominator of which is the total of all 401(k) Contributions
for the Plan Year made for Active Participants who are Non-highly Compensated
Employees, and (b) all Special Employer Contributions for the Plan Year made in
accordance with Sections 4.3 and 5.4(b) shall be allocated to the Matching
Contribution Account of each Active Participant who is a Non-highly Compensated
Employee in an amount equal to the Special Employer Contributions multiplied by
a fraction, the numerator of which is such Active Participant's Matching
Contribution for the Plan Year, and the denominator of which is the total of all
Matching Contributions for the Plan Year made by Active Participants who are
Non-highly Compensated Employees.
6.4 PROFIT SHARING CONTRIBUTIONS. As of the last day of the Plan Year,
Profit Sharing Contributions shall be allocated to the Profit Sharing
Contribution Account of each Active Participant in an amount equal to the
product of the aggregate amount of the Profit Sharing Contributions multiplied
by a fraction, the numerator of which is the Active Participant's Compensation
and the denominator of which is the Compensation of all Active Participants.
6.5 LIMITATIONS ON CONTRIBUTIONS.
(a) LIMITATIONS ON CONTRIBUTIONS. Any of the provisions herein
to the contrary notwithstanding, a Participant's Annual Additions (as
defined in Section 6.5(b)(1) below) for any Plan Year shall not exceed his
Maximum Annual Additions (as defined in Section 6.5(b)(2) below) for the
Plan Year. If a Participant's Annual Additions exceed his Maximum Annual
Additions, the Participant's Annual Additions for the Plan Year shall be
reduced according to Section 6.5(c) by the amount necessary to eliminate
such excess (the "Annual Excess").
(b) DEFINITIONS.
(1) "ANNUAL ADDITIONS" of a Participant for a Plan Year
means the sum of the following:
(A) Profit Sharing Contributions for the Plan Year
allocated to his Profit Sharing Contribution Account,
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(B) Matching Contributions and Forfeitures for the Plan
Year allocated to his Matching Contribution Account,
(C) Minimum Employer Contributions for the Plan Year
allocated to his Profit Sharing Contribution Account,
(D) 401(k) Contributions for the Plan Year allocated to
his 401(k) Account,
(E) Special Employer Contributions for the Plan Year
allocated to his 401(k) Account and to his Matching
Contribution Account,
(F) all employer contributions, non-deductible employee
contributions and forfeitures allocated to such Participant's
accounts under any Related Defined Contribution Plan for the
Plan Year of the Related Defined Contribution Plan ending with
or within the Plan Year, and
(G) solely for purposes of the limit described in
Section 6.5(b)(2)(B), contributions allocated to any individual
medical account established for the Participant, which is part
of a Related Defined Benefit Plan, as provided in Code Section
415(1) and any amount attributable to post-retirement medical
benefits allocated to an account, established under Code
Section 419A(d)(1) for the Participant.
Rollover Contributions to the Plan shall not be included as a part of
a Participant's Annual Additions. Employer Contributions distributed
pursuant to Sections 5.2(b), 5.3(d), and 5.4(d) in any Plan Year shall be
included as a part of a Participant's Annual Additions. Any income on
Profit Sharing Contributions held in a suspense account pursuant to Section
6.5 shall not be included as part of the Participant's Annual Additions.
(2) "MAXIMUM ANNUAL ADDITIONS" of a Participant for a Plan
Year means the lesser of (A) and (B) below:
(A) 25% of the Participant's Compensation or
(B) the greater of (i) $30,000 or (ii) one-fourth (1/4)
of the amount in effect under Section 415(b)(1)(A) of the Code
($102,582 in 1990, adjusted in subsequent years as determined
in accordance with regulations prescribed by the
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Secretary of Treasury or his delegate pursuant to the
provisions of Section 415(d) of the Code).
(c) ELIMINATION OF ANNUAL EXCESS. If a Participant has an Annual
Excess for a Plan Year, such excess shall not be allocated to the
Participant's Accounts but shall be eliminated as follows:
(1) The Participant's 401(k) Contributions which are credited
to his 401(k) Account and which are not matched by the Employer
pursuant to Section 4.1 and his Special Employer Contributions
allocated to his 401(k) Account shall be reduced by first reducing
his Special Employer Contributions and thereafter his unmatched
401(k) Contributions to the extent necessary to eliminate the
remaining Annual Excess.
(2) If any Annual Excess remains, the Participant's 401(k)
Contributions which are matched by the Employer pursuant to Section
4.1, his Matching Contributions, and Special Employer Contributions
allocated to his Matching Contribution Account shall be reduced in
proportionate amounts to the extent necessary to eliminate the
remaining Annual Excess.
(3) If any Annual Excess remains, the Participant's Profit
Sharing Contributions and his Forfeitures made pursuant to Section
4.4 shall be reduced by first reducing his Forfeitures and thereafter
his Profit Sharing Contributions to the extent necessary to eliminate
the remaining Annual Excess.
Any 401(k) Contributions reduced or eliminated under this Section 6.5
shall be distributed to the Participant. Any allocations of Profit Sharing
Contributions, Matching Contributions, Special Employer Contributions or
Forfeitures reduced or eliminated under this Section 6.5 shall, subject to
the limits of this Section 6.5, be reallocated to the Accounts of the other
Participants as of the last day of that Plan Year in the same manner as
such Profit Sharing Contributions, Matching Contributions, Special Employer
Contributions and Forfeitures were initially allocated. Profit Sharing
Contributions, Matching Contributions, Special Employer Contributions and
Forfeitures which cannot, under the limits of this Section 6.5, be
reallocated to the Accounts of other Participants in the Plan Year shall be
held, subject to the limits of this Section 6.5, in a suspense account and
reallocated in the subsequent Plan Year prior to making any Employer
Contributions in any subsequent Plan Year. On Plan termination any amounts
held in a suspense account which, under the limits of this Section 6.5,
cannot be reallocated to Participants in the Plan Year of the
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termination shall be returned to the Employers in such proportions as shall
be determined by the Committee.
(d) If a Participant participates or has participated in any
Related Defined Benefit Plan, the sum of the Defined Benefit Plan Fraction
(as defined in Section 415(e)(2) of the Code) and the Defined Contribution
Plan Fraction (as defined in Section 415(e)(3) of the Code) for such
Participant shall not exceed 1.0 (called the "Combined Fraction"). If the
Combined Fraction of such Participant exceeds 1.0, the Participant's
Defined Benefit Plan Fraction shall be reduced (a) first, by limiting the
Participant's annual benefits payable from the Related Defined Benefit Plan
in which he participates to the extent provided therein and (b) second, by
reducing the Participant's Annual Additions to the extent necessary to
reduce the Combined Fraction of such Participant to 1.0.
(e) For purposes of this Section 6.5, the standard of control for
determining a Commonly Controlled Entity under Sections 414(b) and 414(c)
of the Code (and thus also Related Plans) shall be deemed to be "more than
50%" rather than "at least 80%".
ARTICLE VII
TRUSTEE AND TRUST FUND
7.1 TRUST AGREEMENT. The Company and the Trustee have entered into a
Trust Agreement which provides for the investment of the assets of the Plan and
administration of the Trust Fund. The Trust Agreement, as from time to time
amended, shall continue in force and shall be deemed to form a part of the Plan,
and any and all rights or benefits which may accrue to any person under the Plan
shall be subject to all the terms and provisions of the Trust Agreement.
7.2 SELECTION OF TRUSTEE. The Board of Directors shall adopt the Trust
Agreement and thereby appoint the Trustee. Thereafter, the resignation or
removal of a Trustee, the appointment of a Trustee, and the approval of a
Trustee's accounts shall be accomplished in the manner provided in the Trust
Agreement.
7.3 TRUSTEE'S DUTIES. The powers, duties and responsibilities of the
Trustee shall be as stated in the Trust Agreement, and nothing contained in this
Plan either expressly or by implication shall be deemed to impose any additional
powers, duties or responsibilities upon the Trustee. All Employer Contributions
and Rollover Contributions shall be paid into the Trust, and all benefits
payable under the Plan shall be paid from
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the Trust. An Employer shall have no rights or claims of any nature in or to
the assets of the Trust Fund except the right to require the Trustee to hold,
use, apply and pay such assets held by the Trustee, in accordance with the
directions of the Committee, for the exclusive benefit of the Participants and
their Beneficiaries, except as otherwise provided in Sections 6.5 and 7.10.
7.4 TRUST EXPENSES. All clerical, legal and other expenses of the Plan
and the Trust and Trustee's fees, if any, shall be paid by the Trust except to
the extent paid by an Employer.
7.5 TRUST ENTITY. The Trust under this Plan from its inception shall be
a separate entity aside and apart from Employers or their assets. The Trust,
and the corpus and income thereof, shall in no event and in no manner whatsoever
be subject to the rights or claims of any creditor of any Employer.
7.6 SEPARATE ACCOUNTS. The Committee, or the Trustee on the Committee's
behalf, shall create and maintain separate Accounts for each Participant as
described in Section 2.1 hereof. Every adjustment to a Participant's Accounts
shall be considered as having been made on the relevant Valuation Date
regardless of the date of actual entry or receipt by the Trustee of Employer
Contributions or Rollover Contributions for a Plan Year.
7.7 INVESTMENT FUNDS.
[PRIOR TO JULY 1, 1994, SECTION 7.7 READS AS FOLLOWS]
(a) The Committee may permit each Participant (or Beneficiary) to
elect, at such times, on such forms and in accordance with such rules and
procedures as the Committee may establish, to have his Accounts invested in
such Investment Funds (including but not limited to mutual funds or annuity
contracts) providing for investment in accordance with the direction of
individual Participants for whose account such Investment Funds are
maintained as the Committee shall from time to time establish, subject to
such conditions and limitations as it shall impose.
(b) PARTICIPANT ELECTIONS. If the Committee, in its discretion,
permits Participants to direct the investment of their Accounts, a
Participant's (or Beneficiary's) investment election (if any) or change of
election shall be made not less than 30 days prior to any December 31 or
such other times as Committee may permit and shall be effective as of the
following January 1 or as soon thereafter as reasonably practicable,
provided that the Committee, in its discretion, may permit elections to be
made or to become effective at any additional times as it may designate. A
Participant's (or Beneficiary's) investment election shall remain effective
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until such time as the Participant (or Beneficiary) files a new investment
election and it becomes effective. The investment election of a deceased
Participant shall remain effective until such time as his Beneficiary files
a new investment election and it becomes effective. If a Participant (or
Beneficiary) fails to make an investment election at such times as the
Committee may provide, his Accounts shall be invested in the Investment
Fund deemed by Committee to provide greatest safety of principal.
(c) If the Committee, in its discretion, does not permit
Participants to direct the investment of their Accounts, the assets of the
Plan shall be invested in a commingled Investment Fund.
[AFTER JUNE 30, 1994, SECTION 7.7 READS AS FOLLOWS]
(a) The Committee shall designate the Investment Funds in which a
Participant's Account may be invested provided, however, that if the
Committee permits Participants to direct the investment of their Accounts
in accordance with paragraph (b) hereof, there shall be at least three
Investment Funds which shall be designated "core funds" within the meaning
of the regulations promulgated under Section 404(c) of ERISA.
(b) PARTICIPANT ELECTIONS. The Committee may permit each
Participant (or Beneficiary) to elect, at such times, on such forms and in
accordance with such rules and procedures as the Committee may establish,
to have his Accounts invested in such Investment Funds providing for
investment in accordance with the direction of individual Participants for
whose account such Investment Funds are maintained. If the Committee, in
its discretion, permits Participants to direct the investment of their
Accounts,
(i) each Participant (or Beneficiary) shall be provided, as
soon as reasonably practicable, a description of each Investment Fund
(including any withdrawal or other limitations associated with such
Fund and the fees and expenses, if any, which are charged directly to
a Participant's or Beneficiary's Account), the identity of any
designated investment manager and an explanation of the procedures
for giving investment instructions;
(ii) each Participant or Beneficiary shall be advised that he
or she is entitled to receive, within a reasonable time following a
request therefor, a description of annual operating expenses of each
Investment Fund which reduce the rate of return, copies of
prospectuses, financial statements and other materials provided to
the Plan regarding the Investment
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Funds, a list of the assets comprising each Investment Fund and the
value of each, and the value of shares or units of each Investment
Fund held under the Plan and in his or her own Accounts; and
(iii) a Participant's (or Beneficiary's) investment election
(if any) or change of election shall be permitted to be made not less
frequently than quarterly or at such other times as the Committee may
permit, and shall be effective as of the first day of the payroll
period following the date of such election or as soon thereafter as
reasonably practicable, provided that the Committee, in its
discretion, may permit elections to be made or to become effective at
any additional times as it may designate.
A Participant's (or Beneficiary's) investment election shall remain
effective until such time as the Participant (or Beneficiary) files a new
investment election and it becomes effective. If a Participant (or
Beneficiary) fails to make an investment election at such times as the
Committee may provide, his Accounts shall be invested in the Investment
Fund deemed by Committee to provide greatest safety of principal.
(c) If the Committee, in its discretion, does not permit
Participants to direct the investment of their Accounts, the assets of the
Plan shall be invested by the Trustees, as directed by the Committee, in
accordance with the terms of the Trust Agreement.
7.8 TRUST INCOME. As of each Valuation Date the fair market value of
the Trust shall be determined, recorded and communicated in writing to the
Committee by the Trustee. The Trustee shall also determine the fair market
value of each Investment Fund (if any). The Trustee's determination of fair
market value shall be final and conclusive on all persons. As of each Valuation
Date the Committee shall determine the net income, gains or losses of the Trust
Fund and of each Investment Fund (if any) since the preceding Valuation Date.
The net income, gains or losses thus derived from the Trust shall be accumulated
and shall from time to time be invested as a part of the Trust Fund. The net
income, gains or losses of each separate Investment Fund (if any) shall be
credited (or charged) to such separate Investment Fund. The Committee shall
proportionately allocate the net income, gains or losses of each Investment Fund
among (a) the sum of all Participants' Accounts invested in such Investment
Fund, and (b) the suspense account maintained under Section 6.5(c), all as
valued as of the preceding Valuation Date (reduced by any distributions
therefrom since the preceding Valuation Date) by crediting (or charging) each
such account by an amount equal to the net income, gains or losses of each
Investment Fund
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multiplied by a fraction, the numerator of which is the balance of such Account
invested in such Investment Fund as of the preceding Valuation Date (reduced by
any distributions therefrom since the preceding Valuation Date) and the
denominator of which is the total value of all Accounts invested in such
Investment Fund, as of the preceding Valuation Date (reduced by any
distributions therefrom since the preceding Valuation Date); provided however
that for the purpose of allocating such income as of the first Valuation Date,
the numerator and denominator of the preceding fraction shall be determined by
using Account balances as of the first Valuation Date after all contributions
are credited thereto and before income is allocated as provided in this Section.
For purposes of the preceding sentence, if valuations are less
frequent than every business day, an amount equal to one-half (1/2) of 401(k)
Contributions made between the preceding Valuation Date and the current
Valuation Date and which has not been distributed since the preceding Valuation
Date shall be treated as if it had been allocated to the 401(k) Account on the
preceding Valuation Date. Funds withdrawn from the Plan as of a Valuation Date
shall not share in income of the Trust for such Valuation Date.
7.9 CORRECTION OF ERROR. In the event of an error in the adjustment of
a Participant's Account, the Employer may in its sole discretion elect to
contribute such amount as it shall determine to correct the error, or the
Committee, in its sole discretion, may correct such error by either crediting or
charging the adjustment required to make such correction to or against income or
as an expense of the Trust for the Plan Year in which the correction is made.
Except as provided in this Section, the accounts of other Participants shall not
be readjusted on account of such error.
7.10 RIGHT OF THE EMPLOYERS TO TRUST ASSETS. Except as provided in
Section 6.5, the Employers shall have no right or claims of any nature in or to
the Trust Fund except the right to require the Trustee to hold, use, apply, and
pay such assets in its possession in accordance with the Plan for the exclusive
benefit of the Participants or their Beneficiaries and for defraying the
reasonable expenses of administering the Plan and Trust; provided that:
(a) if an Employer Contribution is conditioned upon initial
qualification of the Plan under Sections 401(a) or 401(k) of the Code and
if the Plan does not initially so qualify, 401(k) Contributions conditioned
on such qualification shall be distributed to the appropriate Participant
and other Employer Contributions shall be returned to the appropriate
Employer within one year of the denial of qualification of the Plan;
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(b) if, and to the extent that, a deduction for Employer
Contributions under Section 404 of the Code is disallowed, 401(k)
Contributions conditioned on deductibility shall be distributed to the
appropriate Participant and other Employer Contributions conditioned upon
deductibility shall be returned to the appropriate Employer within one year
after the disallowance of the deduction; and
(c) if, and to the extent that, an Employer Contribution is made
through mistake of fact, 401(k) Contributions shall be distributed to the
appropriate Participant and other Employer Contributions shall be returned
to the appropriate Employer within one year of the payment of the
contribution.
All Employer Contributions are conditioned on the Plan's being
initially qualified under Section 401(a) of the Code, all 401(k) Contributions
are conditioned on the Plan's being initially qualified under Section 401(k) of
the Code and all Employer Contributions are conditioned upon their being
deductible under Section 404 of the Code.
ARTICLE VIII
BENEFITS
8.1 PAYMENT OF BENEFITS IN GENERAL. A Participant's benefits under this
Plan shall be payable in accordance with the provisions of this Article.
(a) If a Participant has a Termination of Employment for any reason
other than death, the vested portion of the Participant's Accrued Benefit
shall be payable in a lump sum, in accordance with and subject to the
limitations of Section 8.2.
(b) If a Participant dies, the vested portion of his Accrued
Benefit shall be payable to his surviving spouse if he was married on his
date of death, or to his other Beneficiary or Beneficiaries if he was not
married on his date of death or to the extent he designates a Beneficiary
other than his surviving spouse with his spouse's consent, in a lump sum,
in accordance with and subject to the limitations of Section 8.3.
(c) If a Participant is otherwise entitled to a distribution due to
retirement on or after Normal Retirement Date, Disability, death or other
Termination of Employment, the Committee shall require the immediate
distribution of small vested Accrued Benefits in accordance with and
subject
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to the limitations of Section 8.4, notwithstanding the provisions of
Sections 8.2, 8.3, and 8.9.
(d) [EFFECTIVE DECEMBER 15, 1994] A distribution to which a
Participant is entitled pursuant to this Article VIII may commence less
than 30 days after the notice required under Treasury Regulations Section
1.411(a)-11(c) is given if (1) the Committee clearly informs the
Participant that the Participant has a right to a period of at least 30
days after receiving the notice to consider the decision of whether or not
to elect a distribution and (2) the Participant after receiving the notice
affirmatively elects a distribution; provided, however, that nothing in
this Section 8.1(d) shall be construed to provide for the distribution of
benefits prior to the distribution date otherwise provided in this Article
VIII.
8.2 PAYMENT OF VESTED ACCRUED BENEFIT ON TERMINATION OF EMPLOYMENT.
(a) METHOD AND FORM OF PAYMENT.
[FOR PLAN YEARS COMMENCING PRIOR TO JANUARY 1, 1993]
If a Participant has a Termination of Employment for any reason other
than the unpaid portion of the Participant's death, the Participant may,
upon written notice to the Committee at least thirty (30) days (or such
lesser period as the Committee may from time to time permit) prior to a
Valuation Date, elect a distribution of his vested Accrued Benefit valued
as of such Valuation Date in one (1) lump sum. Such distribution shall be
made or shall commence as soon as reasonably practicable after such
Valuation Date.
[FOR PLAN YEARS COMMENCING ON OR AFTER JANUARY 1, 1993]
If a Participant has a Termination of Employment for any reason other
than the Participant's death, the Participant may, upon written notice to
the Committee at least thirty (30) days (or such lesser period as the
Committee may from time to time permit) prior to a Valuation Date, elect a
lump sum distribution (within the meaning of Section 402(d)(4) of the Code)
of his vested Accrued Benefit, valued as of such Valuation Date. Such
distribution shall be made as soon as practicable after such Valuation
Date.
(b) Payment of benefits shall be made not later than the Required
Beginning Date, regardless of whether the Participant has elected to defer
such payment under this Section 8.2.
8.3 PAYMENT OF VESTED ACCRUED BENEFIT ON DEATH.
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(a) PAYMENT TO SPOUSE OR OTHER BENEFICIARY. On the death of a
Participant before his entire vested Accrued Benefit has been paid from the
Plan, the Trustees shall pay the unpaid portion of the Participant's vested
Accrued Benefit to the Participant's surviving spouse (who shall be deemed
to be the Participant's designated Beneficiary) if the Participant is
married, subject to the following sentence. If the Participant is not
married, or to the extent the Participant named a Beneficiary other than
his surviving spouse to receive some or all of his vested Accrued Benefit
under the Plan (and in accordance with Section 8.9 his surviving spouse
consented to the naming of the other Beneficiary), the Trustees shall pay
the Participant's vested Accrued Benefit to his Beneficiary.
(b) METHOD AND FORM OF PAYMENT. The Participant's vested Accrued
Benefit shall be paid in one lump sum as soon as reasonably practicable
after the Valuation Date coinciding with or next following the death of the
Participant and shall be valued as of such Valuation Date. The surviving
spouse, or other Beneficiary or Beneficiaries, may elect (if they are not
prohibited by an election of the Participant from so electing) to defer the
receipt of the vested Accrued Benefit, but in no event shall such receipt
be deferred beyond December 31 of the year in which the fifth anniversary
of the date of the Participant's death occurs.
(c) BENEFICIARY DESIGNATION. The Participant may designate a
Beneficiary or Beneficiaries to receive the Participant's vested Accrued
Benefit, if any, on the Participant's death. Such Beneficiary or
Beneficiaries shall be designated by the Participant on a Beneficiary
Designation Form provided or permitted by the Committee, and may be changed
from time to time by filing a new Beneficiary Designation Form with the
Committee. No designation of Beneficiary or change of Beneficiary shall be
effective until filed with the Committee. If (i) a Participant fails to
file a valid Beneficiary Designation Form, or (ii) all persons designated
on the Beneficiary Designation Form predecease the Participant (or, in the
case of a Beneficiary other than an individual, ceases to exist prior to
the Participant's death, or (iii) any Beneficiary other than the surviving
spouse survives the Participant but dies (or ceases to exist) prior to the
receipt of the total amount to which such Beneficiary was entitled, and if
there are no remaining contingent Beneficiaries, then the Trustees shall
distribute the portion of such Participant's vested Accrued Benefit which
is subject to the Beneficiary Designation Form in one lump sum to his
surviving spouse, or if there is no surviving spouse, then to his estate.
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(d) Any amount paid to a child, in accordance with regulations
prescribed by the Secretary of the Treasury, shall be treated as if it had
been paid to the Participant's surviving spouse if such amount will become
payable to the surviving spouse upon such child reaching majority (or such
other events as the Secretary of the Treasury may by regulations
prescribe).
8.4 LUMP SUM PAYMENT WITHOUT ELECTION. Notwithstanding the provisions
of this Article to the contrary, if the Participant or Beneficiary is entitled
to a distribution due to the Participant's retirement on or after his Normal
Retirement Date, death, Disability or other Termination of Employment, and if
the value of the Participant's Accrued Benefit before such distribution does not
exceed $3,500, the Committee shall direct the immediate distribution of such
benefit, if any, as soon as practicable following the next Valuation Date,
regardless of any election or consent of the Participant, his spouse, or other
Beneficiary.
8.5 VESTED INTERESTS.
(a) A Participant shall be one-hundred percent (100%) vested in his
Accrued Benefit if on or before the date he has a Termination of Employment
he attains his Normal Retirement Date, is Disabled or dies.
(b) Except as otherwise provided in Section 8.5(a), the vested
portion of the Participant's Accrued Benefit is the sum of the following:
(1) 100% of his 401(k) Account;
(2) 100% of his Rollover Contribution Account;
(3) with respect to his Profit Sharing Contribution Account
and his Matching Contribution Account, respectively, a percentage
determined in accordance with the following schedule:
<TABLE>
<CAPTION>
Years of Vesting Vested
Service Interest
----------------- --------
<S> <C>
Less than 5 years 0%
5 years or more 100%
</TABLE>
(c) TIME OF FORFEITURE. If a Participant has a Termination of
Employment, then except as otherwise provided in Section 8.5(a) and (d),
that portion of the Participant's Accrued Benefit which is not vested as of
the date of such Participant's Termination of Employment shall become a
Forfeiture as of the earlier of the date on which the vested
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portion of the Participant's Accrued Benefit is fully distributed or as of
the end of the Plan Year in which the Participant's Termination of
Employment occurs. If a Participant has no vested Accrued Benefit, the
Participant shall be deemed to have received a distribution of his vested
Accrued Benefit on the date of his Termination of Employment, and
accordingly, the unvested portion of the Accrued Benefit shall become a
Forfeiture on such date.
(d) REINSTATEMENT OF UNVESTED AMOUNTS. The provisions of this
Section 8.5(d) apply with respect to a Participant who has a Termination of
Employment and who resumes service with the Employer or a Commonly
Controlled Entity before having five consecutive One Year Breaks in
Service.
(1) If such Participant resumes service without having
received a distribution of any portion of his Accrued Benefit, the
amount of Matching Contributions, if any, forfeited under Section
8.5(c) shall be reinstated to the Participant's Matching Contribution
Account, and the amount of Profit Sharing Contributions, if any,
forfeited under Section 8.5(c) shall be reinstated to the
Participant's Profit Sharing Contribution Account.
(2) If such Participant has received a distribution of a
portion (but less than all) of his Accrued Benefit no later than the
close of the second Plan Year following the Plan Year in which such
Termination of Employment occurred, the amount of Matching
Contributions, if any, forfeited under Section 8.5(c) shall not be
reinstated to the Participant's Matching Contribution Account, and
the amount of Profit Sharing Contributions, if any, forfeited under
Section 8.5(c) shall not be reinstated to the Participant's Profit
Sharing Contribution Account, and the Participant's Years of Vesting
Service credited prior to his Termination of Employment shall be
excluded, unless the Participant repays the amount of any such
distribution to the Plan before the earlier of
(A) the end of the five-year period beginning with
the date the Participant, following such distribution,
again becomes an Employee, or
(B) the date the Participant has incurred five (5)
consecutive One Year Breaks in Service following such
distribution.
(3) If such Participant received a distribution of his vested
Accrued Benefit after the close of the second
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Plan Year following the Plan Year in which his Termination of
Employment occurred, the amount of Matching Contributions, if any,
forfeited under Section 8.5(c) shall not be reinstated to the
Participant's Matching Contribution Account, and the amount of Profit
Sharing Contributions, if any, forfeited under Section 8.5(c) shall
not be reinstated to the Participant's Profit Sharing Contribution
Account, and the Participant's Years of Vesting Service credited
prior to the date of such distribution shall be excluded, unless the
Participant repays the amount of any such distribution to the Plan
before the end of the five-year period beginning on the date of such
distribution.
(4) Amounts which must be reinstated pursuant to Section
8.5(d)(1) or (2) (other than amounts repaid by the Participant),
unless contributed by the Employers, shall be reinstated from
Forfeitures in the Plan Year in which service with an Employer or
Commonly Controlled Entity is resumed (or if later, in which such
amounts are repaid), and, to the extent such Forfeitures are less
than the amounts to be reinstated, as an expense of the Trust in the
Plan Year in which service is resumed.
(e) NO REINSTATEMENT AFTER FIVE ONE YEAR BREAKS IN SERVICE. If a
Participant who had a Termination of Employment resumes service with an
Employer or Commonly Controlled Entity after having five consecutive One
Year Breaks in Service, the amount, if any, forfeited under Section 8.5(c)
shall not be reinstated.
(f) ALLOCATION OF FORFEITURES. [EFFECTIVE FOR PLAN YEARS
COMMENCING PRIOR TO JANUARY 1, 1994] Forfeitures arising under the
provisions of Section 8.5 and 13.5 shall be allocated as Matching
Contributions under Section 6.5, in addition to Matching Contributions made
to the Plan under Section 4.2, for the Plan Year in which such Forfeitures
occurred.
[EFFECTIVE FOR PLAN YEARS COMMENCING ON OR AFTER JANUARY 1, 1994]
Forfeitures arising under the provisions of Sections 5.2, 5.3, 8.5 and 13.5
shall be allocated as Matching Contributions under Section 6.2, in addition
to Matching Contributions made to the Plan under Section 4.2, for the Plan
Year in which such Forfeitures occurred.
8.6 DEDUCTION OF TAXES FROM AMOUNTS PAYABLE. The Trustee may deduct
from the amount to be distributed such amount as the Trustee, in his or its sole
discretion, deems proper to protect the Trustee and the Trust against liability
for the payment of death, succession, inheritance, income, or other taxes, and
out
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of the money so deducted, the Trustee may discharge any such liability and pay
the amount remaining to the Participant or his Beneficiary, as the case may be.
8.7 DEADLINE FOR PAYMENT OF BENEFITS. Notwithstanding any other
provision herein, payment of a Participant's benefits shall be made (unless the
Participant elects otherwise) not later than sixty (60) days after the latest of
the close of the Plan Year in which (a) the Participant attains age sixty-five
(65), (b) occurs the tenth (10th) anniversary of the date on which the
Participant commenced participation in the Plan, and (c) the Participant had a
Termination of Employment, provided, however, payment of benefits shall commence
or be made not later than a Participant's Required Beginning Date.
8.8 FACILITY OF PAYMENT. If a Participant or Beneficiary is declared an
incompetent or is a minor, and a conservator, guardian, or other person legally
charged with his care has been appointed, any benefits to which such Participant
or Beneficiary is entitled shall be payable to such conservator, guardian, or
other person legally charged with his care.
If a Participant or Beneficiary is incompetent, is a minor, or, in
the opinion of the Committee would fail to derive benefit from distribution of
funds, and if a conservator, guardian, or other person charged with his care has
not been appointed, the Committee, in its sole and exclusive discretion, may (a)
require the appointment of a conservator or guardian; (b) distribute the
Participant's Accrued Benefit to relatives of the Participant or Beneficiary for
the benefit of the Participant or Beneficiary, or (c) distribute such Accrued
Benefit directly to or for the benefit of the Participant or Beneficiary.
The decision of the Committee in such matters shall be final,
binding, and conclusive upon the Employer and the Trustee and upon each
Employee, Participant, Beneficiary, and every other person or party interested
or concerned. An Employer, the Trustee and the Committee shall not be under any
duty to see to the proper application of such payments made to a Participant,
conservator, guardian, or relatives of a Participant.
8.9 SPOUSAL CONSENT TO A WAIVER. A spousal consent to the Participant's
naming of a Beneficiary other than his spouse shall:
(a) be in a writing acknowledging the effect of the consent;
(b) be witnessed by the Committee or a notary public;
(c) be effective only for the spouse who executes the consent; and
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(d) designate a Beneficiary which may be further changed without
spousal consent only if the consent of the spouse expressly so permits;
provided that the consent of a Participant's spouse shall not be required if it
is established to the satisfaction of the Committee that such consent may not be
obtained because there is no spouse, because the spouse cannot be located or
because of such other circumstances as the Secretary of the Treasury may by
regulations prescribe; and further provided that the Committee may provide a
spousal consent form which provides that such consent once given is irrevocable.
8.10 FORM OF PAYMENT. A Participant's Accrued Benefit payable under
this Article shall be distributed in cash.
8.11 IMPROPER PAYMENT OF BENEFITS. The Committee shall require
reimbursement of any amount of payment subsequently determined not to have been
properly payable to a Participant or Beneficiary.
ARTICLE IX
ADMINISTRATION
9.1 BOARD OF DIRECTORS DUTIES. The Board of Directors shall have
overall responsibility for the establishment, amendment, termination,
administration and operation of the Plan, which responsibility it shall
discharge by the appointment and removal (with or without cause) of the members
of the Committee, to which is delegated the overall responsibility for the
administration and operation of the Plan, and for appointing, supervising and
terminating the Trustee and any Investment Manager in accordance with the Trust
Agreement.
9.2 COMMITTEE MEMBERSHIP. The Committee shall consist of three (3) or
more members, who shall be appointed by the Board of Directors. In the absence
of such appointment, if the Trustee is one or more individuals, the Trustee
shall serve as the Committee and if the Trustee is not one or more individuals,
the Company shall serve as the Committee. The members of the Committee shall
remain in office at the will of the Board of Directors, and the Board of
Directors may from time to time remove any of said members with or without cause
and shall appoint their successors. The Committee shall have the general
responsibility for the administration of the Plan and for carrying out its
provisions.
9.3 COMMITTEE STRUCTURE. Each member of the Committee may (but need
not) be an officer, director or Employee of an Employer hereunder, a Participant
or Beneficiary. Each person, upon becoming a member of the Committee, shall
file an acceptance
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thereof in writing with the secretary of Checker Motors Corporation, acting as
general partner of the Company, and the secretary of the Committee. Any member
of the Committee may resign by delivering his written resignation to the
secretary of Checker Motors Corporation, acting as general partner of the
Company, and the secretary of the Committee, and such resignation shall become
effective upon the date specified therein. In the event of a vacancy in
membership, the remaining members shall constitute the Committee with full power
to act until said vacancy is filled.
9.4 COMMITTEE ACTIONS. The action of the Committee shall be determined
by the vote or other affirmative expression of a majority of its members.
Action may be taken by the Committee at a meeting or in writing without a
meeting. The Board of Directors of the Company shall choose a chairman who shall
be a member of the Committee and a secretary who may (but need not) be a member
of the Committee. The secretary shall keep a record of all meetings and acts of
the Committee and shall have custody of all records and documents pertaining to
its operations. Either the chairman or secretary may execute any certificate or
other written direction on behalf of the Committee.
9.5 COMMITTEE DUTIES. The Committee on behalf of the Participants and
all other Beneficiaries of the Plan and the Trust shall enforce the Plan and the
Trust Agreement in accordance with the terms of the Plan and the Trust Agreement
and shall have all powers necessary to accomplish that purpose, including, but
not by way of limitation, the following:
(a) To appoint and remove, as it deems advisable, a Plan
Administrator;
(b) To issue rules and regulations necessary for the proper conduct
and administration of the Plan and to change, alter, or amend such rules
and regulations;
(c) To construe the Plan and Trust Agreement;
(d) To determine all questions arising in the administration of the
Plan, including those relating to the eligibility of persons to become
Participants, the rights of Participants and their Beneficiaries, and
Employer Contributions, and its decision thereon shall be final and binding
upon all persons hereunder;
(e) To compute and certify to the Trustee the amount and kind of
benefits payable to Participants or their Beneficiaries;
(f) To authorize all disbursements of the Trustee from the Trust
Fund in accordance with the provisions of the Plan;
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(g) To employ and suitably compensate such accountants, attorneys
(who may but need not be the accountants or attorneys of the Company), and
other persons to render advice and clerical employees as it may deem
necessary to the performance of its duties;
(h) To hear, review and determine claims for benefits;
(i) To exercise any rights, powers or privileges granted to it by
the terms of the Trust Agreement;
(j) To communicate the Plan and its eligibility requirements to the
Employees and notify Employees when they become eligible to participate;
(k) To make available to Participants upon request, for examination
during business hours, such records as pertain exclusively to the examining
Participant; and
(l) To establish and communicate to the Trustee and any Investment
Managers the investment objectives and guidelines and to periodically
review and monitor the performance of the Trustee and any Investment
Manager.
9.6 ALLOCATIONS AND DELEGATIONS OF RESPONSIBILITY.
(a) The Board of Directors, the Committee and, if the Trustee is
one or more individuals, the Trustee, respectively, shall have the
authority to delegate, from time to time, by instrument in writing filed in
their respective minute books, all or any part of their respective
responsibilities under the Plan to such person or persons as it may deem
advisable (and may authorize such person, upon receiving written consent of
the delegating entity, to delegate such responsibilities to such other
person or persons as the delegating entity shall authorize) and in the same
manner to revoke any such delegation of responsibility. Any action of the
delegate in the exercise of such delegated responsibilities shall have the
same force and effect for all purposes hereunder as if such action had been
taken by the delegating entity. Any Employer, the Board of Directors, the
Committee and, if the Trustee is one or more individuals, the Trustee shall
not be liable for any acts or omissions of any such delegate. The delegate
shall periodically report to the delegating authority concerning the
discharge of the delegated responsibilities.
(b) The Board of Directors, the Committee and, if the Trustee is
one or more individuals, the Trustee shall have the authority to allocate,
from time to time, by instrument in writing filed in their respective
minute books, all or any part of their respective responsibilities under
the Plan to
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one or more of their respective members as they may deem advisable, and in
the same manner to revoke such allocation of responsibilities. Any action
of the member to whom responsibilities are allocated in the exercise of
such allocated responsibilities shall have the same force and effect for
all purposes hereunder as if such action had been taken by the allocating
entity. An Employer, the Board of Directors, the Committee and, if the
Trustee is one or more individuals, the Trustee shall not be liable for any
acts or omissions of such member. The member to whom responsibilities have
been allocated shall periodically report to the allocating authority
concerning the discharge of the allocated responsibilities.
9.7 COMMITTEE BONDING AND EXPENSES. The members of the Committee shall
serve without bond (except as otherwise required by federal law). A member of
the Committee who is receiving full-time pay from an Employer or Commonly
Controlled Entity as an Employee shall serve without compensation for services
as a member of the Committee. Any other member of the Committee may receive
compensation for services as a member of the Committee from the Employer, but
may not receive such compensation for services from the Plan. All expenses of
the Committee shall be paid by the Trust except to the extent paid by an
Employer.
9.8 INFORMATION TO BE SUPPLIED BY EMPLOYER. Each Employer shall provide
the Committee and the Trustee or their delegate with such information as it
shall from time to time need in the discharge of its duties. The Committee and
the Trustee may rely conclusively on the information certified to it by an
Employer.
9.9 RECORDS. The regularly kept records of the Committee, any Employer
and, if the Trustee is one or more individuals, the Trustee shall be conclusive
evidence of the service of a Participant, his Compensation, his age, his marital
status, his status as an Employee, and all other matters contained therein
applicable to this Plan; provided that a Participant may request a correction in
the record of his age at any time prior to retirement, and such correction shall
be made if within 90 days after such request he furnishes in support thereof a
birth certificate, baptismal certificate, or other documentary proof of age
satisfactory to the Committee.
9.10 FIDUCIARY CAPACITY. Any person or group of persons may serve in
more than one fiduciary capacity with respect to the Plan.
9.11 PLAN ADMINISTRATOR. The Committee may appoint a Plan Administrator
who may (but need not) be a member of the Committee; and in absence of such
appointment, the Committee shall be the Plan Administrator.
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9.12 COMMITTEE/PLAN ADMINISTRATOR DECISIONS FINAL. The Committee and
Plan Administrator shall have full discretion to construe and interpret the Plan
and to decide all matters within their respective jurisdictions, including
factual matters, all questions concerning eligibility for participation, and all
questions relating to the amount and manner of providing benefits, and including
full discretion to resolve benefit appeals, and their decisions shall be final,
binding and conclusive upon the Employers, each Employee, Participant, former
Participant, Beneficiary and every other person or party interested or concerned
for all purposes.
9.13 COMPANY, COMMITTEE AND TRUSTEE AS AGENT. The Company, the
Committee and, if the Trustee is one or more individuals, the Trustee, shall act
as agent for each Employer in the administration of the Plan.
9.14 FIDUCIARY RESPONSIBILITY. If a Plan fiduciary acts in accordance
with ERISA, Title I, Subtitle B, Part 4,
(a) in determining that the Participant's spouse has consented to
the Participant's naming of a Beneficiary other than his spouse or that the
consent of the Participant's spouse may not be obtained because there is no
spouse, the spouse cannot be located or other circumstances prescribed by
the Secretary of the Treasury by regulations, then to the extent of
payments made pursuant to such consent or determination, the Plan and its
fiduciaries shall have no further liability; or
(b) in treating a domestic relations order as being (or not being)
a Qualified Domestic Relations Order (defined in Section 13.7), or, during
any period in which the issue of whether a domestic relations order is a
Qualified Domestic Relations Order is being determined (by the Committee,
by a court of competent jurisdiction, or otherwise), in separately
accounting for the amounts ("Segregated Amounts") which would have been
payable to the alternate payee during such period if the order had been
determined to be a Qualified Domestic Relations Order, in paying the
Segregated Amounts (including any interest thereon) to the person entitled
thereto if within the 18-month period beginning with the date on which the
first payment would be required to be made under the domestic relations
order (the "18-Month Period") the domestic relations order (or a
modification thereof) is determined to be a Qualified Domestic Relations
Order, in paying the Segregated Amounts (including any interest thereon) to
the person entitled thereto if there had been no order if within the
18-Month Period the domestic relations order is determined not to be
qualified or if the issue is not resolved within the 18-Month Period and in
prospectively applying a domestic relations order which is determined to be
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qualified after the close of the 18-Month Period, then the obligation of
the Plan and its fiduciaries to the Participant and each alternate payee
shall be discharged to the extent of any payment made pursuant to such
acts.
ARTICLE X
CLAIMS PROCEDURE
10.1 INITIAL CLAIM FOR BENEFITS. Each Participant or Beneficiary
("Claimant") may submit his application for +benefits ("Claim") to the Committee
(or to such other person as may be designated by the Committee) in writing in
such form as is provided or approved by the Committee. A Claimant shall have no
right to seek review of a denial of benefits, or to bring any action in any
court to enforce a Claim prior to his filing a Claim and exhausting his rights
to review under Sections 10.1 and 10.2.
When a Claim has been filed properly, such Claim shall be evaluated
and the Claimant shall be notified of the approval or the denial of the Claim
within ninety (90) days after the receipt of such Claim unless special
circumstances require an extension of time for processing the Claim. If such an
extension of time for processing is required, written notice of the extension
shall be furnished to the Claimant prior to the termination of the initial
ninety (90) day period, which notice shall specify the special circumstances
requiring an extension and the date by which a final decision will be reached
(which date shall not be later than one hundred and eighty (180) days after the
date on which the Claim was filed). A Claimant shall be given a written notice
in which the Claimant shall be advised as to whether the Claim is granted or
denied, in whole or in part. If a Claim is denied, in whole or in part, the
notice shall contain (1) the specific reasons for the denial, (2) references to
pertinent Plan provisions upon which the denial is based, (3) a description of
any additional material or information necessary to perfect the Claim and an
explanation of why such material or information is necessary, and (4) the
Claimant's rights to seek review of the denial.
10.2 REVIEW OF CLAIM DENIAL. If a Claim is denied, in whole or in part,
the Claimant shall have the right to (i) request that the Committee (or such
other person as shall be designated in writing by the Committee) review the
denial, (ii) review pertinent documents, and (iii) submit issues and comments in
writing, provided that the Claimant files a written request for review with the
Committee within sixty (60) days after the date on which the Claimant received
written notification of the denial. Within sixty (60) days after a request for
review is received, the review shall be made and the Claimant shall be
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advised in writing of the decision on review, unless special circumstances
require an extension of time for processing the review, in which case the
Claimant shall be given a written notification within such initial sixty (60)
day period specifying the reasons for the extension and when such review shall
be completed (provided that such review shall be completed within one hundred
and twenty (120) days after the date on which the request for review was filed).
The decision on review shall be forwarded to the Claimant in writing and shall
include specific reasons for the decision and references to Plan provisions upon
which the decision is based. A decision on review shall be final and binding on
all persons for all purposes.
If a Claimant shall fail to file a request for review in accordance
with the procedures herein outlined, such Claimant shall have no rights to
review and shall have no right to bring action in any court and the denial of
the Claim shall become final and binding on all persons for all purposes.
ARTICLE XI
AMENDMENT AND TERMINATION OF THE PLAN
11.1 DISCONTINUANCE OF CONTRIBUTIONS. It is the expectation of the
Company that it will continue the Plan and the payment of contributions
hereunder indefinitely, but the continuation of the Plan and the payment of
Employer Contributions hereunder is not assumed as a contractual obligation of
the Company or any other Employer; and the right is reserved by the Company or
any other Employer at any time to reduce, suspend or discontinue its
contributions hereunder, provided, however, that the Employer Contributions
accrued or determined for any Plan Year shall not be retroactively reduced,
suspended or discontinued.
11.2 AMENDMENTS.
(a) The Company by resolution of the Board of Directors or any
entity appointed for such purpose by the Board of Directors, may amend,
modify, change, revise or discontinue the Plan or the Trust Agreement, at
any time; provided, that, except as provided in Sections 6.5 and 7.10, no
amendment shall (i) increase the duties or liabilities of the Trustee, the
Committee or the Plan Administrator without written consent of the entity
affected; (ii) have the effect of vesting in any Employer any interest in
any funds, securities or other property subject to the terms of this Plan
and the Trust Agreement; (iii) authorize or permit at any time any part of
the corpus or income of the Trust Fund to be used or diverted to purposes
other than for the exclusive benefit of Participants and their
Beneficiaries; or (iv) have any
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retroactive effect as to deprive any Participant or Beneficiary of any
benefit already accrued; provided that no amendment made in conformance to
provisions of the Code, or any other statute relating to employee's trusts,
or any official regulations or rulings issued pursuant thereto, shall be
considered prejudicial to the rights of any Participant or Beneficiary, or
to have violated the provisions hereof.
(b) If a person is not an Employee on or after the effective date
of any amendment to the Plan, the amendment shall be deemed as having no
effect on the amount of such person's benefits or other rights under the
Plan unless the amendment specifically provides otherwise.
11.3 PLAN TERMINATION. Although it is the intention of the Company that
this Plan be permanent, the Company shall have the right to terminate the Plan
and the Trust at any time, by resolution of the Board of Directors.
11.4 PAYMENT UPON TERMINATION. Upon termination of the Plan or complete
discontinuance of Employer Contributions hereunder, each Participant's Accrued
Benefit shall become fully vested. Upon a partial termination of the Plan, the
Accrued Benefit of each former Participant who lost status as a Participant
because of such partial termination shall become fully vested. In the event of
termination of the Plan and after payment of all expenses and proportional
adjustment of accounts to reflect such expenses, fund losses or profits and
reallocation to the date of termination, except to the extent that the Board of
Directors shall otherwise direct, each Participant and each Beneficiary of a
deceased Participant shall be entitled to receive his entire Accrued Benefit as
soon as reasonably possible. If such amounts are not immediately distributed,
then continued allocations of the net earnings, losses and expenses of the
Trust.
11.5 WITHDRAWAL FROM THE PLAN BY AN EMPLOYER. While it is not the
present intention of any Employer to withdraw from the Plan and Trust Agreement,
any Employer other than the Company may withdraw from the Plan and Trust
Agreement, under such terms and conditions as the Board of Directors may
prescribe, by delivery to the Trustee and the Company of a resolution of its
board of directors electing to so withdraw.
ARTICLE XII
TOP HEAVY PROVISIONS
12.1 APPLICATION. The definitions in Section 12.2 shall apply under
this Article XII and the special rules in Section 12.3 shall apply,
notwithstanding any other provisions of
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the Plan, for any Plan Year in which the Plan is a Top Heavy Plan and for such
other Plan Years as may be specified herein.
12.2 SPECIAL TOP HEAVY DEFINITIONS. The following special definitions
shall apply under this Article XII.
(a) "AGGREGATE EMPLOYER CONTRIBUTIONS" means the sum of all
Employer Contributions under this Plan allocated for a Participant to the
Plan and employer contributions and forfeitures allocated for the
Participant to all Related Defined Contribution Plans in the Aggregation
Group.
(b) "AGGREGATION GROUP" means the group of plans in a Mandatory
Aggregation Group, if any, that includes the Plan, unless inclusion of
Related Plans in the Permissive Aggregation Group in the Aggregation Group
would prevent the Plan from being a Top Heavy Plan, in which case
"Aggregation Group" means the group of plans consisting of the Plan and
each other Related Plan in a Permissive Aggregation Group with the Plan.
(i) "MANDATORY AGGREGATION GROUP" means each plan
(considering the Plan and Related Plans) that, during the Plan Year
that contains the Determination Date or any of the four preceding
Plan Years,
(A) had a participant who was a Key Employee, or
(B) was necessary to be considered with a plan in which
a Key Employee participated in order to enable the plan in
which the Key Employee participated to meet the requirements of
Section 401(a)(4) or Section 410 of the Code.
If the Plan is not described in (A) or (B) above, it shall not
be part of a Mandatory Aggregation Group.
(ii) "PERMISSIVE AGGREGATION GROUP" means the group of plans
consisting of (A) the plans, if any, in a Mandatory Aggregation Group
with the Plan, and (B) any other Related Plan, that, when considered
as a part of the Aggregation Group, does not cause the Aggregation
Group to fail to satisfy the requirements of Section 401(a)(4) and
Section 410 of the Code. A Related Plan in (B) of the preceding
sentence may include a simplified employee pension plan, as defined
in Code Section 408(k), and a collectively bargained plan, if when
considered as a part of the Aggregation Group such plan does not
cause the Aggregation Group to fail to satisfy the requirements of
Section 401(a)(4)
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and Section 410 of the Code considering, if the plan is a
multiemployer plan as described in Code Section 414(f) or a multiple
employer plan as described in Code Section 413(c), benefits under the
plan only to the extent provided to employees of the employer because
of service with the employer and, if the plan is a simplified
employee pension plan, only the employer's contribution to the plan.
(c) "DETERMINATION DATE" means, with respect to a plan year, the
last day of the preceding plan year or, in the case of the first plan year,
the last day of such plan year. If the Plan is aggregated with other plans
in the Aggregation Group, the Determination Date for each other plan shall
be, with respect to any plan year, the Determination Date for each such
other plan which falls in the same calendar year as the Determination Date
for the Plan.
(d) "KEY EMPLOYEE" means, for the Plan Year containing the
Determination Date, any person or the beneficiary of any person who is an
employee or former employee of an Employer or a Commonly Controlled Entity
as determined under Code Section 416(i) and who, at any time during the
Plan Year containing the Determination Date or any of the four (4)
preceding Plan Years (the "Measurement Period"), is a person described in
paragraph (i), (ii), (iii) or (iv), subject to paragraph (v).
(i) An officer of the Employer or Commonly Controlled Entity
who:
(A) in any Measurement Period, in the case of a Plan
Year beginning after December 31, 1983, is an officer during
the Plan Year and has annual Compensation for the Plan Year in
an amount greater than fifty percent (50%) of the amount in
effect under Section 415(c)(1)(A) of Internal Revenue Code for
the calendar year in which such Plan Year ends ($30,000 in
1989, adjusted in subsequent years as determined in accordance
with regulations prescribed by the Secretary of the Treasury or
his delegate pursuant to the provisions of Section 415(d) of
the Internal Revenue Code); and
(b) in any Measurement Period, in the case of a Plan
Year beginning on or before December 31, 1983, is an officer
during the Plan Year, regardless of Compensation (except to the
extent that applicable law, regulations and rulings indicate
that the fifty percent (50%) requirement set forth in
subparagraph (A) is applicable).
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No more than a total of fifty (50) persons (or, if lesser, the
greater of three (3) persons or ten percent (10%) of all persons or
beneficiaries of persons who are employees or former employees) shall
be treated as Key Employees under this paragraph (i) for any
Measurement Period. In the case of an Employer or Commonly
Controlled Entity which is not a corporation:
(A) in any Measurement Period, in the case of a Plan
Year beginning on or before February 28, 1985, no persons shall
be treated as Key Employees under this paragraph (i); and
(B) in any Measurement Period, in the case of a Plan
Year beginning after February 28, 1985, the term "officer" as
used in this subsection (d) shall include administrative
executives as described in Section 1.416-1(T-13) of the
Treasury Regulations.
(ii) One (1) of the ten (10) persons who, during a Plan Year
in the Measurement Period:
(a) have annual Compensation from the Employer or a
Commonly Controlled Entity for such Plan Year greater than the
amount in effect under Section 415(c)(1)(A) of the Code for the
calendar year in which such Plan Year ends (the greater of
$30,000 or one-fourth (1/4) of the dollar limitation in effect
under Section 415(b)(1)(A) of the Code, adjusted as determined
in accordance with regulations prescribed by the Secretary of
the Treasury or his delegate pursuant to the provisions of
Section 415(d) of the Code); and
(b) own (or are considered as owning within the meaning
of Code Section 318) in such Plan Year, the largest percentage
interests in the Employer or a Commonly Controlled Entity, in
such Plan Year, provided that no person shall be treated as a
Key Employee under this paragraph unless he owns more than
one-half percent (1/2%) interest in the Employer or a Commonly
Controlled Entity.
No more than a total of ten (10) persons or beneficiaries of persons
who are employees or former employees shall be treated as Key
Employees under this paragraph (ii) for any Measurement Period.
A person who, for a Plan Year in the Measurement Period, is a
more than five percent (5%) owner (or is considered as owning more
than five percent (5%) within
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the meaning of Code Section 318) of the Employer or a Commonly
Controlled Entity.
A person who, for a Plan Year in the Measurement Period, is a
more than one percent (1%) owner (or is considered as owning more
than one percent (1%) within the meaning of Code Section 318) of the
Employer or a Commonly Controlled Entity and has an annual
Compensation for such Plan Year from the Employer and Commonly
Controlled Entities of more than $150,000.
If the number of persons who meet the requirements to be
treated as Key Employees under paragraph (i) or (ii) exceed the
limitation on the number of Key Employees to be counted under
paragraph (i) or (ii), those persons with the highest annual
Compensation in a Plan Year in the Measurement Period for which the
requirements are met and who are within the limitation on the number
of Key Employees will be treated as Key Employees.
If the requirements of paragraph (i) or (ii) are met by a person in
more than one (1) Plan Year in the Measurement Period, each person
will be counted only once under paragraph (i) or (ii):
(A) under paragraph (i), the Plan Year in the
Measurement Period in which a person who was an officer and had
the highest annual Compensation shall be used to determine
whether the person will be treated as a Key Employee under the
preceding sentence;
(B) under paragraph (ii), the Plan Year in the
Measurement Period in which the ownership percentage interest
is the greatest shall be used to determine whether the person
will be treated as a Key Employee under the preceding sentence.
Notwithstanding the above provisions of paragraph (v), a person may
be counted in determining the limitation under both paragraphs (i)
and (ii). In determining the sum of the Present Value of Accrued
Benefits for Key Employees under subsection (h) of this Section, the
Present Value of Accrued Benefits for any person shall be counted
only once.
(e) "NON-KEY EMPLOYEE" means a person or the beneficiary of a
person who, at any time during the Measurement Period, has an account
balance in the Plan or an account balance or accrued benefit in any Related
Plan in the Aggregation Group and who is not a Key Employee.
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(f) "PRESENT VALUE OF ACCRUED BENEFITS" means, for any Plan Year,
an amount equal to the sum of (i), (ii) and (iii) for each person who, in
the Plan Year containing the Determination Date, was a Key Employee or a
Non-Key Employee.
Subject to (iv) below, the value of a person's Accrued Benefit
under the Plan and each Related Defined Contribution Plan in the
Aggregation Group, determined as of the valuation date coincident
with or immediately preceding the Determination Date, adjusted for
contributions due as of the Determination Date, as follows:
(A) in the case of a plan not subject to the minimum
funding requirements of Section 412 of the Code, by including
the amount of any contributions actually made after the
valuation date but on or before the Determination Date, and, in
the first plan year of a plan, by including contributions made
after the Determination Date that are allocated as of a date in
that first plan year; and
(B) in the case of a plan that is subject to the
minimum funding requirements, by including the amount of any
contributions that would be allocated as of a date not later
than the Determination Date, plus adjustments to those amounts
as required under applicable rulings, even though those amounts
are not yet required to be contributed or allocated (e.g.,
because they have been waived) and by including the amount of
any contributions actually made (or due to be made) after the
valuation date but before the expiration of the extended
payment period in Section 412(c)(10) of the Code.
Subject to (iv) below, the sum of the actuarial present values
of a person's accrued benefits under each Related Defined Benefit
Plan in the Aggregation Group, determined, for any person who is
employed by an Employer maintaining the Plan on the Determination
Date, expressed as a benefit commencing at Normal Retirement Date (or
the person's attained age, if later), and further determined using
the same method which is used for accrual purposes under all Related
Defined Benefit Plans in the Aggregation Group, and if the same
method is not used for all Related Defined Benefit Plans then as if
such benefit accrued no more rapidly than at the slowest permitted
accrual rate under Code Section 411(b)(1)(C) determined based on the
following actuarial assumptions:
(A) Interest rate 5%; and
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(B) Mortality: 1984 Unisex Pension Table;
and determined in accordance with Code Section 416(g), provided,
however, that if a Related Defined Benefit Plan in the Aggregation
Group provides for different or additional actuarial assumptions to
be used in determining the present value of accrued benefits
thereunder for the purpose of determining the top heavy status
thereof, then such different or additional actuarial assumptions
shall apply with respect to each Related Defined Benefit Plan in the
Aggregation Group.
The present value of an accrued benefit for any person who is
employed by an employer maintaining a plan on the Determination Date
is determined as of the most recent valuation date which is within a
12-month period ending on the Determination Date, provided however
that:
(A) for the first plan year of the plan, the present
value for an employee is determined as if the employee had a
Termination of Employment (1) on the Determination Date or (2)
on such valuation date but taking into account the estimated
accrued benefit as of the Determination Date; and
(B) for the second and subsequent plan years of the
plan, the accrued benefit taken into account for an employee is
not 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 as
of the Determination Date for the second plan year.
For purposes of this paragraph (ii), the valuation date is the
valuation date used by the plan for computing plan costs for minimum
funding, regardless of whether a valuation is performed that year.
If the plan provides for a nonproportional subsidy as described
in Treasury Regulations Section 1.416-1(T-27), the present value of
accrued benefits shall be determined taking into account the value of
nonproportional subsidized early retirement benefits and
nonproportional subsidized benefit options.
Subject to (iv) below, the aggregate value of amounts
distributed from the Plan and each Related Plan in the Aggregation
Group during the Plan Year that includes the Determination Date or
any of the four preceding Plan Years including amounts distributed
under
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a terminated plan which, if it had not been terminated, would have
been in the Aggregation Group.
The following rules shall apply in determining the Present
Value of Accrued Benefits:
(A) Amounts attributable to qualified voluntary
employee contributions, as defined in Section 219(e) of the
Code, shall be excluded.
(B) In computing the Present Value of Accrued Benefits
with respect to rollovers or plan-to-plan transfers, the
following rules shall be applied to determine whether amounts
which have been distributed during the five (5) year period
ending on the Determination Date from or accepted into this
Plan or any plan in the Aggregation Group shall be included in
determining the Present Value of Accrued Benefits:
(1) Unrelated Transfers accepted into the Plan or
any plan in the Aggregation Group after December 31, 1983
shall not be included.
(2) Unrelated Transfers accepted on or before
December 31, 1983 and all Related Transfers accepted at
any time into the Plan or any plan in the Aggregation
Group shall be included.
(3) Unrelated Transfers made from the Plan or any
plan in the Aggregation Group shall be included.
(4) Related Transfers made from the Plan or any
plan in the Aggregation Group shall not be included by
the transferor plan (but shall be counted by the
accepting plan).
The Accrued Benefit of any individual who has not performed services
for an Employer maintaining the Plan or from a Commonly Controlled Entity
maintaining a Related Plan in the Aggregation Group at any time during the
five (5) year period ending on the Determination Date shall be excluded in
computing the Present Value of Accrued Benefits.
(g) "RELATED TRANSFER" means a rollover or a plan-to-plan
transfer which is either not initiated by the Employee or is made between
plans each of which is maintained by a Commonly Controlled Entity.
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(h) A "TOP HEAVY AGGREGATION GROUP" exists in any Plan Year for
which, as of the Determination Date, the sum of the Present Value of
Accrued Benefits for Key Employees under all plans in the Aggregation Group
exceeds sixty percent (60%) of the sum of the Present Value of Accrued
Benefits for all employees under all plans in the Aggregation Group;
provided that, for purposes of determining the sum of the Present Value of
Accrued Benefits for all employees under all plans in the Aggregation
Group, there shall be excluded the Present Value of Accrued Benefits of any
Non-Key Employee who was a Key Employee for any Plan Year preceding the
Plan Year that contains the Determination Date. For purposes of applying
the special rules herein with respect to a Super Top Heavy Plan, a Top
Heavy Aggregation Group will also constitute a "Super Top Heavy Aggregation
Group" if in any Plan Year as of the Determination Date, the sum of the
Present Value of Accrued Benefits for Key Employees under all plans in the
Aggregation Group exceeds ninety percent (90%) of the sum of the Present
Value of Accrued Benefits for all employees under all plans in the
Aggregation Group.
(i) "TOP HEAVY PLAN" means the Plan in any Plan Year in which it
is a member of a Top Heavy Aggregation Group, including a Top Heavy
Aggregation Group consisting solely of the Plan. For purposes of applying
the rules herein with respect to a Super Top Heavy Plan, a Top Heavy Plan
will also constitute a "SUPER TOP HEAVY PLAN" if the Plan in any Plan
Year is a member of a Super Top Heavy Aggregation Group, including a Super
Top Heavy Aggregation Group consisting solely of the Plan.
(j) "UNRELATED TRANSFER" means a rollover or a plan-to-plan
transfer which is both initiated by the Employee and (a) made from a plan
maintained by a Commonly Controlled Entity to a plan maintained by an
employer which is not a Commonly Controlled Entity or (b) made to a plan
maintained by a Commonly Controlled Entity from a plan maintained by an
employer which is not a Commonly Controlled Entity.
12.3 SPECIAL TOP HEAVY PROVISIONS. For each Plan Year in which the Plan
is a Top Heavy Plan, the following rules shall apply, except that the special
provisions of this Section 12.3 shall not apply with respect to any employee
included in a unit of employees covered by an agreement which the Secretary of
Labor finds to be a collective-bargaining agreement between employee
representatives and one or more Employers if there is evidence that retirement
benefits were the subject of good faith bargaining between such employee
representative and the Employer or Employers:
(a) MINIMUM EMPLOYER CONTRIBUTIONS. In any Plan Year in which
the Plan is a Top Heavy Plan, the Employers shall
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make additional Employer Contributions to the Plan as necessary for each
Participant who is employed on the last day of the Plan Year and who is a
Non-Key Employee to bring the amount of his Aggregate Employer
Contributions (excluding such Participant's 401(k) Contributions and
Matching Contributions used for purposes of determining the actual
contribution percentage under Section 5.4(c)) for the Plan Year up to at
least three percent (3%) of his Compensation, or if the Plan is not
required to be included in an aggregation group in order to permit a
defined benefit plan in the aggregation group to satisfy the requirements
of Section 401(a)(4) or Section 410 of the Code, such lesser amount as is
equal to the largest percentage of a Key Employee's Compensation allocated
to the Key Employee as Aggregate Employer Contributions, unless such
Participant is a Participant in a Related Defined Benefit Plan and receives
a minimum benefit thereunder in accordance with Section 416(c) of the Code
in which case such Participant shall not receive a minimum contribution
under this Section 12.3(a).
For purposes of determining whether a Non-Key Employee is a Participant
entitled to have minimum Employer Contributions made on his behalf, a
Non-Key Employee will be treated as a Participant even if he is not
otherwise a Participant (or accrues no benefit) under the Plan because:
he has failed to complete the requisite number of hours of
service (if any) after becoming a Participant in the Plan,
he is excluded from participation in the Plan (or accrues no
benefit) merely because his compensation is less than a stated
amount, or
he is excluded from participation in the Plan (or accrues no
benefit) merely because of a failure to make mandatory employee
contributions or, if the Plan is a 401(k) plan, because of a failure
to make elective 401(k) contributions.
(b) VESTING. For each Plan Year in which the Plan is a Top Heavy
Plan and for each Plan Year thereafter, the Participant's vested Accrued
Benefit shall be determined in accordance with the following schedule:
<TABLE>
<CAPTION>
Years of Vesting Service Vested Percentage
------------------------ -----------------
<S> <C>
Less than 3 years 0%
3 years or more 100%
</TABLE>
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(c) LIMITATIONS. In computing the limitations under Section 6.5
hereof for years in which the Plan is a Top Heavy Plan, the special rules
of Section 416(h) of the Code shall be applied in accordance with
applicable regulations and rulings so that, in determining the denominator
of the Defined Contribution Plan Fraction and the Defined Benefit Plan
Fraction, at each place at which "1.25" would have been used, "1.00" shall
be substituted, unless the Plan is not a Super Top Heavy Plan and the
special requirements of Section 416(h)(2) of the Code have been satisfied.
(d) TRANSITION RULE FOR A TOP HEAVY PLAN. Notwithstanding the
provisions of Section 12.3(c), for each Plan Year in which the Plan is a
Top Heavy Plan and in which the Plan does not meet the special requirements
of Section 416(h)(2) of the Code in order to use 1.25 in the denominator of
the Defined Contribution Plan Fraction and the Defined Benefit Plan
Fraction, if an Employee was a participant in one or more defined benefit
plans and in one or more defined contribution plans maintained by the
employer before the plans became Top Heavy Plans and if such Participant's
Combined Fraction exceeds 1.00 because of accruals and additions that were
made before the plans became Top Heavy Plans, a factor equal to the lesser
of 1.25 or such lesser amount (but not less than 1.00) as shall be needed
to make the Employee's Combined Fraction equal to 1.00 shall be used in the
denominator of the Defined Benefit Plan Fraction and the Defined
Contribution Plan Fraction if there are no further accruals or annual
additions under any Top Heavy Plans until the Participant's Combined
Fraction is not greater than 1.00 when a factor of 1.00 is used in the
denominators of the Defined Benefit Plan Fraction and the Defined
Contribution Plan Fraction. Any provisions herein to the contrary
notwithstanding, if the Plan is a Top Heavy Plan and the Plan does not meet
the special requirements of Section 416(h)(2) of the Code in order to use
1.25 in the denominator of the Defined Benefit Plan Fraction and the
Defined Contribution Plan Fraction, there shall be no further Annual
Additions for a Participant whose Combined Fraction is greater than 1.00
when a factor of 1.00 is used in the denominator of the Defined Benefit
Plan Fraction and the Defined Contribution Plan Fraction, until such time
as the Participant's Combined Fraction is not greater than 1.00.
(e) TRANSITION RULE FOR A SUPER TOP HEAVY PLAN. Notwithstanding
the provisions of Sections 12.3(c) and 12.3(d), for each Plan Year in which
the Plan is a Super Top Heavy Plan, (1) if an Employee was a participant in
one or more defined benefit plans and in one or more defined contribution
plans maintained by the employer before the plans became Super Top Heavy
Plans, and (2) if such Participant's Combined Fraction exceeds 1.00 because
of
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accruals and additions that were made before the plans became Super Top
Heavy Plans and if immediately before the plans became Super Top Heavy
Plans the Combined Fraction as then computed did not exceed 1.00, then a
factor equal to the lesser of 1.25 or such lesser amount (but not less than
1.00) as shall be needed to make the Employee's Combined Fraction equal to
1.00 shall be used in the denominator of the Defined Benefit Plan Fraction
and the Defined Contribution Plan Fraction if there are no further accruals
or annual additions under any Super Top Heavy Plans until the Participant's
Combined Fraction is not greater than 1.00 when a factor of 1.00 is used in
the denominators of the Defined Benefit Plan Fraction and the Defined
Contribution Plan Fraction. Any provisions herein to the contrary
notwithstanding, if the Plan is a Super Top Heavy Plan, there shall be no
further Annual Additions for a Participant whose Combined Fraction is
greater than 1.00 when a factor of 1.00 is used in the denominator of the
Defined Benefit Plan Fraction and the Defined Contribution Plan Fraction
until the Participant's Combined Fraction is not greater than 1.00.
(f) TERMINATED PLAN. If the Plan becomes a Top Heavy Plan after
it has formally been terminated, has ceased crediting for benefit accruals
and vesting and has been or is distributing all plan assets to participants
and their beneficiaries as soon as administratively feasible or if the Plan
has distributed all benefits of participants and their beneficiaries, the
provisions of Section 12.3 shall not apply to the Plan.
(g) FROZEN PLANS. If the Plan becomes a Top Heavy Plan after
contributions have ceased under the Plan but all assets have not been
distributed to participants or their beneficiaries, the provisions of
Section 12.3 shall apply to the Plan.
ARTICLE XIII
MISCELLANEOUS PROVISIONS
13.1 EMPLOYER JOINDER. Any Commonly Controlled Entity may, with the
approval of the Board of Directors and subject to such terms and conditions as
the Board of Directors may prescribe, adopt the Plan and Trust Agreement.
13.2 COMPANY MERGER. In the event that a corporation or other entity
becomes a successor corporation to the Company or an Employer, by merger,
consolidation, purchase or otherwise, such successor corporation shall be
substituted hereunder for the Company or the Employer.
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13.3 PLAN MERGER. The Plan shall not merge or consolidate with, or
transfer any assets or liabilities to any other plan, unless each Participant
would receive a benefit immediately after the merger, consolidation or transfer
(if the Plan were then terminated) which is equal to or greater than the benefit
he would have been entitled to immediately before the merger, consolidation, or
transfer (if the Plan were then terminated).
13.4 INDEMNIFICATION. Each Employer shall indemnify and hold harmless
each member of the Board of Directors, each member of the Committee, the Plan
Administrator and, if the Trustees are one or more individuals, the Trustees,
and each officer and employee of an Employer to whom are delegated duties,
responsibilities, and authority with respect to the Plan, from and against all
claims, liabilities, fines and penalties, and all expenses reasonably incurred
by or imposed upon him (including, but not limited to, reasonable attorney fees)
which arise as a result of his actions or failure to act in connection with the
operation and administration of the Plan to the extent lawfully allowable and to
the extent that such claim, liability, fine, penalty, or expense is not paid for
by liability insurance purchased or paid for by an Employer. Notwithstanding
the foregoing, an Employer shall not indemnify any person for any such amount
incurred through any settlement or compromise of any action unless the Employer
consents in writing to such settlement or compromise.
13.5 UNCLAIMED AMOUNTS. Unclaimed amounts shall consist of the amounts
of the Accounts of a Participant which cannot be distributed because of the
Committee's inability, after a reasonable search, to locate a Participant or his
Beneficiary within a period of two (2) years after the payment of benefits
becomes due. Unclaimed amounts for a Plan Year shall become a Forfeiture and
shall be allocated in accordance with Section 8.5(e) hereof, within a reasonable
time after the close of the Plan Year in which such two-year period shall end.
If an unclaimed amount is subsequently properly claimed by the Participant or
the Participant's Beneficiary, said amount shall be paid to such Participant or
Beneficiary, and shall, unless contributed by the Employers, be accounted for by
charging Forfeitures in the Plan Year such amount is paid and, to the extent
such Forfeitures are less than the amounts paid, as an expense of the Trust in
the Plan Year in which paid.
13.6 PLAN GOVERNS. In the event of a conflict between the provisions of
the Plan and of the provisions of any group annuity arrangement or other
contract entered into for purposes of this Plan, the provisions of the Plan
shall govern.
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13.7 NONALIENATION OF BENEFITS.
(a) Benefits payable under this Plan shall not be subject in any
manner to anticipation, alienation, sale, transfer, assignment, pledge,
encumbrance, charge, garnishment, execution or levy of any kind, either
voluntary or involuntary, prior to actually being received by the person
entitled to the benefit under the terms of the Plan; and any attempt to
anticipate, alienate, sell, transfer, assign, pledge, encumber, charge,
garnish, execute on, levy or otherwise dispose of any right to benefits
payable hereunder, shall be void. The Trust Fund shall not in any manner
be liable for, or subject to, the debts, contracts, liabilities,
engagements or torts of any person entitled to benefits hereunder.
(b) Notwithstanding Section 13.7(a), the Trustee shall comply with
an order determined by the Committee to be a Qualified Domestic Relations
Order as provided in Section 13.8.
13.8 QUALIFIED DOMESTIC RELATIONS ORDER.
(a) "QUALIFIED DOMESTIC RELATIONS ORDER" means any judgment,
decree, or order (including approval of a property settlement agreement):
(1) which is made pursuant to a state domestic relations law
(including a community property law),
(2) which relates to the provision of child support, alimony
payments, or marital property rights to a spouse, former spouse,
child, or other dependent of a Participant,
(3) which creates or recognizes the existence of an alternate
payee's right to receive all or a portion of the Participant's
Accrued Benefit under the Plan, and
(4) with respect to which the requirements of paragraphs (b)
and (c) are met.
(b) A domestic relations order can be a Qualified Domestic
Relations Order only if such order clearly specifies:
(1) the name and the last known mailing address, if any, of
the Participant and the name and mailing address of each alternate
payee covered by the order,
(2) the amount or percentage of the Participant's Accrued
Benefit to be paid by the Plan to each such
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alternate payee, or the manner in which such amount or percentage is
to be determined,
(3) the number of payments or period to which such order
applies, and
(4) each Plan to which such order applies.
(c) A domestic relations order can be a Qualified Domestic
Relations Order only if such order does not:
(1) require the Plan to provide any type or form of benefit,
or any option not otherwise provided under the Plan,
(2) require the Plan to provide increased benefits (determined
on the basis of actuarial value), or
(3) require the payment of benefits to an alternate payee
which are required to be paid to another alternate payee under
another order previously determined to be a Qualified Domestic
Relations Order.
(d) A domestic relations order shall not be treated as failing to
meet the requirements of Section 13.8(c)(1) solely because such order
requires that payment of benefits be made to an alternate payee:
(1) before a Participant has had a Termination of Employment,
(2) as if the Participant had retired on the date on which
such payment is to begin under such order (but taking into account
only the present value of the benefits actually accrued and not
taking into account the present value of any employer subsidy for
early retirement), and
(3) in any form in which such benefits may be paid under the
Plan to the Participant (other than in the form of a qualified joint
and survivor annuity with respect to the alternate payee and his or
her subsequent spouse).
13.9 CONTRACT OF EMPLOYMENT. Nothing contained herein shall be
construed to constitute a contract of employment between an Employer and any
Employee.
13.10 SOURCE OF BENEFITS. All benefits payable under the Plan shall be
paid or provided for solely from the Trust and the Employers assume no liability
or responsibility therefore.
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13.11 EMPLOYEES' TRUST. The Plan and Trust are created for the
exclusive purpose of providing benefits to the Participants in the Plan and
their Beneficiaries and defraying reasonable expenses of administering the Plan
and Trust. The Plan and Trust shall be interpreted in a manner consistent with
their being a Plan described in Section 401(a) of the Code and a Trust exempt
under Section 501(a) of the Code. At no time shall the Trust Fund be diverted
from the above purpose.
13.12 GENDER AND NUMBER. Except when the context indicates to the
contrary, when used herein, masculine terms shall be deemed to include the
feminine, and singular the plural.
13.13 HEADINGS. The headings of Articles and Sections are included
solely for convenience of reference, and if there is any conflict between such
headings and the text of this Plan, the text shall control.
13.14 UNIFORM AND NON-DISCRIMINATORY APPLICATION OF PROVISIONS. The
provisions of this Plan shall be interpreted and applied in a uniform and
non-discriminatory manner with respect to all Participants, former Participants,
and Beneficiaries.
13.15 INVALIDITY OF CERTAIN PROVISIONS. If any provision of this Plan
shall be held invalid or unenforceable, such invalidity or unenforceability
shall not affect any other provisions hereof and the Plan shall be construed and
enforced as if such provisions, to the extent invalid or unenforceable, had not
been included.
13.16 LAW GOVERNING. The Plan shall be construed and enforced according
to the laws of Illinois, other than its laws with respect to choice of law, to
the extent not preempted by ERISA.
ARTICLE XIV
DIRECT ROLLOVERS
14.1 DIRECT ROLLOVERS. This Article 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 Article,
a Distributee may elect, at the time and in the manner prescribed by the Plan
Administrator, to have any portion of an Eligible Rollover Distribution paid
directly to an Eligible Retirement Plan specified by the Distributee in a Direct
Rollover.
-67-
<PAGE>
14.2 DEFINITIONS.
(a) ELIGIBLE ROLLOVER DISTRIBUTION: An "Eligible Rollover
Distribution" is any distribution of all or any portion of the balance to
the credit of the Distributee, except that an Eligible Rollover
Distribution does not include: any distribution that is one of a series of
substantially equal periodic payments (not less frequently than annually)
made for the life (or life expectancy) of the Distributee or the joint
lives (or joint life expectancies) of the Distributee and the Distributee's
designated beneficiary, or for a specified period of ten years or more; any
distribution to the extent such distribution is required under Section
401(a)(9) of the Code; and the portion of any distribution that is not
includible in gross income) determined without regard to the exclusion for
net unrealized appreciation with respect to employer securities).
(b) ELIGIBLE RETIREMENT PLAN: An "Eligible Retirement Plan" is
an individual retirement account described in Section 408(a) of the Code,
an individual retirement annuity described in Section 408(b) of the Code,
an annuity plan described in Section 403(a) of the Code, or a qualified
trust described in Section 401(a) of the Code, that accepts the
Distributee's Eligible Rollover Distribution. However, in the case of an
Eligible Rollover Distribution to the surviving spouse, an Eligible
Retirement Plan is an individual retirement account or individual
retirement annuity.
(c) DISTRIBUTEE: A "Distributee" includes an Employee or former
Employee. In addition, the Employee's or former Employee's surviving
spouse and the Employee's or former Employee's spouse or former spouse who
is the alternate payee under a qualified domestic relations order, as
defined in Section 414(p) of the Code, are Distributees with regard to the
interest of the spouse or former spouse.
(d) DIRECT ROLLOVER: A "Direct Rollover" is a payment by the
Plan to the Eligible Retirement Plan specified by the Distributee.
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<PAGE>
Executed this ____ day of _______________, 1990.
CHECKER MOTORS CORPORATION, as general
partner of Checker Motors Co., L.P.
BY:___________________________________
ATTEST:
__________________________
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<PAGE>
EXHIBIT 11.1
COMPUTATION OF INCOME (LOSS) PER SHARE
<TABLE>
<CAPTION>
1990 1991 1992 1993 1994
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
AVERAGE NUMBER OF SHARES OUTSTANDING 16,800,000 16,800,000 16,800,000 16,800,000 16,800,000
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
INCOME (LOSS) BEFORE EXTRAORDINARY ITEMS
AND ACCOUNTING CHANGES (20,274,000) (27,006,000) (7,555,000) 3,364,000 24,348,000
EXTRAORDINARY ITEMS 27,749,000 31,188,000 0 0 0
ACCOUNTING CHANGES 0 0 0 (46,626,000) 0
----------- ----------- ----------- ----------- -----------
NET INCOME (LOSS) 7,475,000 4,182,000 (7,555,000) (43,262,000) 24,348,000
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
INCOME (LOSS) PER SHARE:
BEFORE EXTRAORDINARY ITEMS
AND ACCOUNTING CHANGES (1.21) (1.61) (0.45) 0.20 1.45
EXTRAORDINARY ITEMS 1.66 1.86 0.00 0.00 0.00
ACCOUNTING CHANGES 0.00 0.00 0.00 (2.78) 0.00
----------- ----------- ----------- ----------- -----------
NET INCOME (LOSS) PER SHARE 0.45 0.25 (0.45) (2.58) 1.45
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
PRIMARY:
- ---------------------------
AVERAGE NUMBER OF SHARES OUTSTANDING 16,800,000 16,800,000 16,800,000 16,800,000 16,800,000
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
FULLY DILUTED:
- ---------------------------
AVERAGE NUMBER OF SHARES OUTSTANDING 16,800,000 16,800,000 16,800,000 16,800,000 16,800,000
NET EFFECT OF DILUTIVE STOCK OPTIONS, USING
AN ASSUMED ISSUE PRICE OF $11 PER SHARE 134,977 134,977 134,977 134,977 134,977
----------- ----------- ----------- ----------- -----------
TOTAL FULLY DILUTED SHARES 16,934,977 16,934,977 16,934,977 16,934,977 16,934,977
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
</TABLE>
NOTE: SHARES SUBJECT TO STOCK OPTIONS ARE NOT INCLUDED IN THE EARNINGS PER
SHARE COMPUTATION BECAUSE THE PRESENT EFFECT THEREOF IS NOT MATERIALLY DILUTIVE
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the captions "Summary
Consolidated Financial Information," "Selected Consolidated Financial Data" and
"Experts" and to the use of our reports on Great Dane Holdings Inc. and
subsidiaries dated February 14, 1995, except for Note A, as to which the date is
March 27, 1995, in the Registration Statement (Amendment No. 2 to Form S-1 No.
33-56595) and related Prospectus of Great Dane Holdings Inc. dated April 5,
1995.
ERNST & YOUNG LLP
Kalamazoo, Michigan
March 29, 1995
