<PAGE> 1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Mark One)
(x) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the year ended December 31, 1997
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ............ to ............
COMMISSION FILE NUMBER 1-6780
RAYONIER INC.
Incorporated in the State of North Carolina
I.R.S. Employer Identification No. 13-2607329
1177 SUMMER STREET, STAMFORD, CT 06905-5529
(Principal Executive Office)
Telephone Number: (203) 348-7000
Securities registered pursuant to Section 12(b) of the Act,
all of which are registered on the New York Stock Exchange:
Common Shares
7.5% Notes, due October 15, 2002
Medium-Term Notes, due 1998-1999
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months and (2) has been subject to such filing requirements for
the past 90 days.
YES (x) NO ( )
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of the Form 10-K or any amendment to this
Form 10-K. ( )
The aggregate market value of the Common Shares of the registrant held by
non-affiliates of the Registrant on March 10, 1998, was approximately
$1,293,000,000.
As of March 10, 1998, there were outstanding 28,303,555 Common Shares of the
Registrant.
The registrant's definitive proxy statement filed or to be filed with the
Securities and Exchange Commission pursuant to Regulation 14A involving the
election of directors at the annual meeting of the shareholders of the
registrant scheduled to be held on May 15, 1998, is incorporated by reference in
Part III of the Form 10-K.
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
ITEM PAGE
<S> <C>
PART 1
1. Business 1
2. Properties 6
3. Legal Proceedings 6
4. Submission of Matters to a Vote of Security Holders 6
* Executive Officers of Rayonier 7
PART II
5. Market for the Registrant's Common Equity and
Related Stockholder Matters 8
6. Selected Financial Data 9
7. Management's Discussion and Analysis of
Financial Condition and Results of Operations 11
8. Financial Statements and Supplementary Data 17
9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure 17
PART III
10. Directors and Executive Officers of the Registrant 17
11. Executive Compensation 17
12. Security Ownership of Certain Beneficial Owners and Management 17
13. Certain Relationships and Related Transactions 17
PART IV
14. Exhibits, Financial Statement Schedules and Reports on Form 8-K 17
</TABLE>
* Included pursuant to Instruction 3 to Item 401 (b) of Regulation S-K.
i
<PAGE> 3
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<S> <C>
Report of Management F-1
Report of Independent Public Accountants F-1
Statements of Consolidated Income for the
Three Years Ended December 31, 1997 F-2
Consolidated Balance Sheets as of
December 31, 1997 and 1996 F-3 to F-4
Statements of Consolidated Cash Flows for the
Three Years Ended December 31, 1997 F-5
Notes to Consolidated Financial Statements F-6 to F-18
</TABLE>
INDEX TO FINANCIAL STATEMENT SCHEDULES
Financial statement schedules have been omitted because they are
not applicable, the required matter is not present, the amounts
are insignificant or immaterial, or the information has been
otherwise supplied in the financial statements or the notes
thereto.
Signatures A
Exhibit Index B to E
ii
<PAGE> 4
PART I
ITEM 1. BUSINESS
GENERAL
Rayonier Inc. (Rayonier or the Company), including its subsidiaries, is a
leading international forest products company primarily engaged in the trading,
merchandising and manufacturing of logs, timber and wood products, and in the
production and sale of high-value-added specialty pulps. Rayonier owns, leases,
manages or controls approximately 1.5 million acres of timberland in the United
States and New Zealand. In addition, the Company operates two pulp mills and
three lumber manufacturing facilities in the United States and, as of October 1,
1997, a medium density fiberboard plant in New Zealand.
Rayonier was founded as Rainier Pulp and Paper Company in Shelton, WA in 1926.
In 1937, the Company became "Rayonier Incorporated", a corporation whose stock
was publicly traded on the New York Stock Exchange (NYSE) until Rayonier became
a wholly owned subsidiary of ITT Industries, Inc. (ITT), then known as ITT
Corporation, in 1968. On February 28, 1994, Rayonier again became an independent
company when ITT distributed all of the Common Shares of Rayonier to ITT
stockholders. Rayonier shares are publicly traded on the NYSE under the symbol
RYN.
Rayonier is a North Carolina corporation with its executive offices at 1177
Summer Street, Stamford, CT 06905-5529. Its telephone number is (203) 348-7000.
Rayonier operates in two major business segments, Timber and Wood Products and
Specialty Pulp Products. In 1997, Timber and Wood Products accounted for 50
percent of sales and Specialty Pulp Products accounted for 47 percent of sales.
The remaining 3 percent of sales (classified in Dispositions) were made from
inventory of the Company's Port Angeles, WA, pulp mill, which was closed on
February 28, 1997. With customers in 70 countries, 49 percent of Rayonier's 1997
sales of $1.104 billion were made to customers outside of the United States. For
further data on sales, operating income and identifiable assets by segment, see
Item 7 - Management's Discussion and Analysis of Financial Condition and Results
of Operations and Note 15 - Segment Information of the Notes to Consolidated
Financial Statements.
TIMBER AND WOOD PRODUCTS
Rayonier's Timber and Wood Products business segment is composed of three
principal lines of business: (1) Trading and merchandising, (2) Timberlands
management and (3) Wood products. Sales for the last three years by principal
line of business were as follows (in millions of dollars):
<TABLE>
<CAPTION>
Sales Revenue
----------------------------------------------------------
1997 % 1996 % 1995 %
---- - ---- - ---- -
<S> <C> <C> <C> <C> <C> <C>
Trading and merchandising $ 259 47 $ 322 55 $ 393 64
Timberlands management 184 33 196 34 168 27
Wood products 133 24 104 18 75 12
Intrasegment eliminations (23) (4) (40) (7) (18) (3)
---- ---- ---- ---- ---- ----
Total $ 553 100 $ 582 100 $ 618 100
==== === ==== === ==== ===
</TABLE>
TRADING AND MERCHANDISING
Rayonier is a leading exporter and trader of softwood logs, lumber and wood
panel products. Rayonier purchases and harvests timber and purchases lumber and
wood panel products for sale in domestic and export markets. In 1997, 53 percent
of New Zealand log sales volume was sourced from Company timberlands. In North
America, 6 percent of log sales volume was sourced from Rayonier's timberlands;
however, logs also were purchased from local dealers who had, in some cases,
purchased their cutting rights from Company-managed timberlands.
- 1 -
<PAGE> 5
TIMBERLANDS MANAGEMENT
Rayonier manages approximately 1.5 million acres of timberlands as of December
31, 1997 as follows in (000's):
<TABLE>
<CAPTION>
Fee Long-Term
Region Total Acres % Owned Acres Leased Acres
------ ----------- - ----------- ------------
<S> <C> <C> <C> <C>
Southeast U.S. 854 59 744 110
Northwest U.S. 379 26 379 -
New Zealand 219 15 6 213
----- ------ ----- ---
Total 1,452 100 1,129 323
===== === ===== ===
</TABLE>
Rayonier manages timberlands, scientifically developing forests until their
economic peak for specific markets. The average rotation age for timber from the
Southeastern U.S. (primarily Southern pine) is 25 years for timber sold to
sawmills and 20 years for pulpwood destined for pulp and paper mills. The
average rotation age for timber destined for domestic and export markets from
the Northwestern U.S. (primarily hemlock and Douglas fir species) is 45-50
years. The average rotation age for timber grown in New Zealand (primarily
radiata pine) is 25-28 years.
Timberlands Management is organized to regularly sell timber through auction
processes predominately to third parties. By requiring the Company's other
business sectors (e.g., Specialty Pulp Products, Wood Products and Trading and
Merchandising) to competitively bid on the timber, the Company believes it can
maximize the true economic return on its investments.
The Company manages its timberlands on a sustainable yield basis in conformity
with best forest industry practices. A key to success is the extensive
application of Rayonier's silvicultural expertise to species selection for
plantations, soil preparation, thinning of timber stands, pruning of selected
species, fertilization and careful timing of the harvest, all designed to
maximize value, while responding to environmental needs.
The following table sets forth Timberlands Management acres by region and by
timber classification in (000's):
<TABLE>
<CAPTION>
Softwood Hardwood
Region Plantation Lands Non-Forest Total
------ ---------- ----- ---------- -----
<S> <C> <C> <C> <C>
Southeast U.S. 558 293 3 854
Northwest U.S. 323 18 38 379
New Zealand (1) 214 5 - 219
----- ------ ---- ------
Total 1,095 316 41 1,452
===== ====== ==== ======
</TABLE>
(1) Excludes 30 thousand acres managed by Rayonier under joint ventures and
approximately 67 thousand acres of native bush estate that is not
harvestable.
The following table sets forth the estimated volumes of merchantable timber by
location and type, as of December 31, 1997.
<TABLE>
<CAPTION>
Equivalent total,
in thousands
Region Softwood Hardwood Total of cubic meters %
- ------ -------- -------- ----- --------------- -
<S> <C> <C> <C> <C> <C>
Southeast U.S., in thousands of short green tons 9,683 6,856 16,539 11,316 27
Northwest U.S., in millions of board feet 2,096 213 2,309 13,961 34
New Zealand, in thousands of cubic meters 15,634 220 15,854 15,854 39
------ --
41,131 100
====== ===
</TABLE>
- 2 -
<PAGE> 6
Merchantable timber inventory is an estimate of the amount of standing timber at
the earliest age that, under varying economic conditions, could be harvested.
Estimates are based on a continuing inventory system, which involves periodic
statistical sampling of the timberlands, with adjustments made on the basis of
growth estimates, harvest information and market conditions.
Southeastern U.S. timberlands are located primarily in Georgia and Florida.
Their proximity to pulp, paper and lumber mills results in significant
competition for the purchase of Rayonier's timber. Approximately 55 percent of
the timber harvest is pulpwood, which is destined for pulp and paper mills, with
the remaining 45 percent representing higher value timber sold primarily to
plywood and lumber mills. Over the last five years the Company, through advanced
silvicultural practices, has been able to increase the amount of timber volume
per acre available for harvest from its Southeastern timberlands by
approximately 2-3 percent per year and expects this trend to continue.
Northwestern U.S. timberlands are located primarily on the Olympic Peninsula in
Washington state, are all owned in fee and consist almost entirely of
second-growth trees. These timberlands include softwood stands, of which
approximately 71 percent is hemlock and 29 percent is Douglas fir, Western red
cedar and spruce, and hardwood timber stands, consisting principally of alder
and maple.
New Zealand forest assets consist primarily of Crown Forest licenses providing
the right to utilize approximately 219,000 acres of New Zealand plantation
forests for a minimum period of 35 years. Approximately 91 percent of these
timberlands consist of radiata pine trees, well suited for high quality lumber
and panel products. The trees typically produce up to twice as much fiber per
acre, per year as the most productive commercial tree species in the United
States. The remaining 9 percent is Douglas fir and other species. Rayonier grows
New Zealand timber for both domestic New Zealand uses and for export primarily
to the Pacific Rim markets. In addition, Rayonier New Zealand manages
timberlands for others, principally joint ventures in which Rayonier holds a
minority interest.
WOOD PRODUCTS
Rayonier's lumber mills located at Baxley and Swainsboro, GA, convert Southern
pine timber into dimension and specialty lumber products for residential
construction and industrial uses. The two mills have a combined annual capacity
of approximately 250 million board feet of lumber and approximately 528,000 tons
of wood chips for pulping. The mills sell their lumber output primarily in
Southeastern United States and Caribbean markets. Substantially all of the wood
chip production is sold (at market price) to Rayonier's Jesup, GA pulp facility
accounting for approximately 28 percent of Jesup's 1997 pine chip consumption. A
third lumber manufacturing facility, located in Plummer, ID, has annual capacity
of 85 million board feet. Lumber is sold primarily by Rayonier sales personnel,
although sales to certain export locations are made through independent sales
agents.
In the third quarter of 1997, the Company completed construction of a $115
million medium-density-fiberboard (MDF) facility in New Zealand with an annual
capacity of 140,000 cubic meters and utilities infrastructure capacity for an
additional 140,000 cubic meters. The Company markets its MDF in New Zealand
through an exclusive marketing arrangement with a third party. Internationally,
the Company's premium grade Patinna(TM) brand MDF is marketed by Rayonier
personnel and independent sales agents.
SPECIALTY PULP PRODUCTS
Rayonier is a leading specialty pulp manufacturer. The Company owns and operates
pulp mills at Jesup, GA, and Fernandina Beach, FL, with an annual capacity of
700,000 metric tons. Rayonier's facilities are able to manufacture more than 25
different grades of pulp to meet customers' needs. The Jesup facility produces
approximately 550,000 metric tons of wood pulp, or 79 percent of Rayonier's
total capacity. The Fernandina Beach facility produces approximately 150,000
metric tons of wood pulp, or 21 percent of Rayonier's total capacity.
Sales for the last three years for the Jesup and Fernandina Beach mills by
principal line of business were as follows (millions of dollars):
<TABLE>
<CAPTION>
Sales Revenue
---------------------------------------------------
1997 % 1996 % 1995 %
---- - ----- - ---- -
<S> <C> <C> <C> <C> <C> <C>
Chemical cellulose $ 338 65 $ 328 64 $ 288 53
Fluff and specialty paper pulps 182 35 186 36 252 47
--- -- --- -- --- --
Total $ 520 100 $ 514 100 $ 540 100
===== === ==== === ==== ===
</TABLE>
- 3 -
<PAGE> 7
Rayonier concentrates on the production of specialty pulps to customers'
specifications, sold to industrial companies producing a wide variety of
products. Over half of Rayonier's pulp sales are to export customers, primarily
in Europe, Asia and Latin America. Over 90 percent of specialty pulp sales are
made directly by Rayonier sales personnel. In certain of the Company's export
locations, sales are made through independent sales agents.
CHEMICAL CELLULOSE
Rayonier is one of the world's leading producers of chemical cellulose, also
called dissolving pulp, which is a highly purified form of pulp. Chemical
cellulose is used in a wide variety of products such as textile fibers, rigid
packaging, photographic film, impact-resistant plastics, high tenacity rayon
yarn for tires and industrial hoses, pharmaceuticals, cosmetics, detergents,
sausage casings, food products, thickeners for oil well drilling muds, cigarette
filters, lacquers, paints, printing inks and explosives. Within the chemical
cellulose industry, Rayonier concentrates on the most highly valued,
technologically demanding end uses, such as cellulose acetate and high-purity
cellulose ethers where it is a leading supplier.
FLUFF AND SPECIALTY PAPER PULPS
Rayonier is a leading supplier of fluff pulp, used as an absorbent medium in
products such as disposable baby diapers, personal sanitary napkins,
incontinence pads, convalescent bed pads, industrial towels and wipes and
non-woven fabrics.
Rayonier also is a major producer of specialty paper pulps and produces only a
small volume of regular paper pulp. Customers use Rayonier's specialty paper
pulps to manufacture paper for decorative laminates for counter tops, air and
oil filters, shoe innersoles, battery separators, circuit boards and filter
media for the food industry. Paper pulp, representing approximately 2 percent of
total Company pulp sales, is used in the manufacture of bond, book and printing
paper.
PULP PRICING
Pulp prices are cyclical. Since Rayonier is a non-integrated specialty pulp
producer for non-paper making end uses, pricing of its high-value product mix
tends to lag (on both the upturn and downturn) commodity paper pulp prices.
FOREIGN SALES AND OPERATIONS
Rayonier's sales for the last three years by point of destination are as follows
(millions of dollars):
<TABLE>
<CAPTION>
Sales by Destination
---------------------------------------------------------
1997 % 1996 % 1995 %
---- - ---- - ---- -
<S> <C> <C> <C> <C> <C> <C>
United States $ 568 51 $ 527 45 $ 518 41
Europe 127 12 135 12 141 12
Japan 173 16 234 20 269 21
Korea 52 5 49 4 77 6
China 36 3 54 4 60 5
Other Asia 66 6 89 7 76 6
Latin America 59 5 57 5 64 5
Canada 16 1 20 2 42 3
All other 7 1 13 1 13 1
------------- ------------ ------ ------
Total $ 1,104 100 $ 1,178 100 $1,260 100
====== === ====== === ===== ===
</TABLE>
Overseas assets, primarily in New Zealand, were 22 percent of total assets at
the end of 1997 and Rayonier's sales from non-U.S. sources were 10 percent of
total sales.
See Note 15 - Segment Information of the Notes to Consolidated Financial
Statements.
- 4 -
<PAGE> 8
DISPOSITIONS AND DISCONTINUED OPERATIONS
Dispositions and discontinued operations include Rayonier's Port Angeles, WA,
pulp mill, which was closed on February 28, 1997, its interest in the Grays
Harbor, WA, pulp and paper complex, which was closed in 1992, its wholly owned
subsidiary, Southern Wood Piedmont Company (SWP), which ceased operations in
1986, and other miscellaneous assets held for disposition.
See Note 6 - Reserves for Dispositions and Discontinued Operations of the Notes
to Consolidated Financial Statements.
RAYONIER TIMBERLANDS, L.P.
In the United States, Rayonier manages almost all of its timberlands and sells
timber directly through Rayonier Timberlands, L.P. (RTLP), a limited
partnership. Rayonier and its wholly owned subsidiary, Rayonier Forest Resources
Company (RFR), are the general partners of RTLP. Until January 1998, Rayonier
owned 74.7 percent of the Class A Limited Partnership Units, with the remaining
25.3 percent being publicly held. Revenues, expenses and cash flow associated
with RTLP's normal timber harvesting through December 31, 2000, are allocated 95
percent to all Class A Units. In January 1998, the publicly held units were
acquired by Rayonier under the terms of the RTLP Partnership Agreement. See Note
3 Subsequent Event (Rayonier Timberlands, L.P.) of the Notes to Consolidated
Financial Statements.
PATENTS
Rayonier has a large number of patents, which relate primarily to its products
and processes. It also has pending a number of patent applications. Although
Rayonier's patents are of significant importance to the operation of each of its
individual businesses, Rayonier does not consider any of its patents or group of
patents relating to a particular product or process to be of material importance
from the standpoint of Rayonier overall.
COMPETITION AND CUSTOMERS
The Company's U.S. timberlands are located in two major timber growing regions
(the Southeast and the Northwest), where timber markets are fragmented and very
competitive. In the Northwest U.S., John Hancock Mutual Life Insurance Co. and
Washington state (DNR) are significant competitors. In both the Northwest U.S.
and Southeast U.S., smaller forest products companies and private land owners
compete with the Company. Price is the principal method of competition.
Rayonier's lumber and MDF wood products compete with the products of numerous
companies, some of which are larger and have greater resources than Rayonier.
Both lumber and MDF compete with alternative construction materials. In most of
Rayonier's markets, competition is primarily through price, quality, customer
relationships and technical service.
Export log markets are highly competitive, with logs available from several
countries and numerous suppliers. In New Zealand, major competitors include
Carter Holt Harvey and Fletcher Challenge. In North America, Weyerhaeuser,
International Paper and Willamette are principal competitors. Price and customer
relationships are important methods of competition.
Specialty pulp products are marketed worldwide against strong competition from
domestic and foreign producers. Rayonier's major competitors include
International Paper, Weyerhaeuser, Georgia-Pacific, Buckeye Technologies and
Stora Kopparberg. Product performance, pricing and technical service are the
principal methods of competition.
ENVIRONMENTAL MATTERS
See "Environmental Regulation" in Item 7 - Management's Discussion and Analysis
of Financial Condition and Results of Operations and Note 14 - Contingencies of
the Notes to Consolidated Financial Statements.
RAW MATERIALS
Regional timber availability continues to be restricted by legislation,
litigation and pressure from various preservationist groups and is also subject
to cyclical swings in lumber and paper and pulp markets. While the Timberlands
Management business has benefited from a significant increase in timber prices
over the last decade, this increase also adversely impacted fiber costs at
Rayonier's pulp and lumber manufacturing facilities.
- 5 -
<PAGE> 9
Rayonier has pursued, and is continuing to pursue, reductions in usage and costs
of key raw materials, supplies and contract services at the Company's pulp and
lumber mills. Management foresees no significant constraints from pricing or
availability of its key raw materials.
RESEARCH AND DEVELOPMENT
Rayonier believes it maintains one of the preeminent specialty pulp research
facilities and staff in the forest products industry. Research and development
efforts are directed primarily at the development of new and improved pulp
grades, improved manufacturing efficiency, reduction of energy needs, product
quality and development of improved environmental controls. The research center
is adjacent to the pulp mill in Jesup, GA.
Research activities related to Timberlands Management operations include genetic
tree improvement programs as well as applied silviculture programs to identify
management practices that improve returns from timberland assets.
Research and development expenditures were $10 million, $11 million, and $8
million in 1997, 1996 and 1995, respectively.
EMPLOYEE RELATIONS
Rayonier currently employs approximately 2,500 people. Of this number,
approximately 2,250 are employees in the United States, of whom 44 percent are
covered by labor contracts. Most hourly employees are represented by one of
several labor unions. Labor relations are maintained in a normal and
satisfactory manner.
The Jesup labor agreements, covering approximately 700 employees, expire in June
2002. Fernandina labor contracts, covering approximately 300 employees, expire
in May 2001.
Rayonier has in effect various plans for its employees and retirees, providing
certain group medical, dental and life insurance coverage, pension and other
benefits. The cost is borne primarily by Rayonier.
ITEM 2. PROPERTIES
RTLP owns, leases or controls approximately 1.1 million acres of timberlands in
the United States previously owned or leased by Rayonier. See Note 3 -
Subsequent Event (Rayonier Timberlands, L.P.) of the Notes to Consolidated
Financial Statements. Rayonier, through its wholly owned subsidiary, RFR, as
managing general partner of RTLP, continues on behalf of RTLP to manage these
properties and sell timber to Rayonier as well as unaffiliated parties.
Rayonier's New Zealand subsidiary owns or manages the forest assets on
approximately 219,000 acres of plantation forests in New Zealand. Rayonier and
its wholly owned subsidiaries own or lease various other properties used in
their operations, which include two pulp mills, three lumber manufacturing
facilities, an MDF plant, a research facility, various other timberlands and
Rayonier's corporate headquarters. These facilities (except for the corporate
headquarters in Stamford, CT) are located in the Northwestern and Southeastern
portions of the United States and in New Zealand.
ITEM 3. LEGAL PROCEEDINGS
Rayonier is one of two defendants in an action by Powel-Duffryn Terminals
instituted in the U.S. District Court for the Southern District of Georgia on
April 10, 1997, seeking indemnity for $57 million in damages incurred as the
result of a fire and explosion at a marine terminal and storage facility where
crude sulfate turpentine produced by Rayonier and others was stored. Plaintiff
has sued to recover sums paid to third party claimants, expenses incurred to
remediate the property and adjoining lands and other damages. Rayonier is
vigorously defending the action, believes that its defenses are meritorious and
based on advice of counsel, believes that its liability, if any, will not be
material and will be covered by its product liability insurance. See also Note
14 - Contingencies (Legal Proceedings) of the Notes to Consolidated Financial
Statements.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matter was submitted to a vote of security holders of Rayonier during the
fourth quarter of 1997.
- 6 -
<PAGE> 10
EXECUTIVE OFFICERS OF RAYONIER
RONALD M. GROSS, 64, Chairman of the Board and Chief Executive Officer - He
joined Rayonier in March 1978 as President and Chief Operating Officer and a
director, was elected Chief Executive Officer in 1981 and Chairman in 1984; he
assumed his present position in July 1996. He also serves as a director of
Lukens Inc. and The Pittston Company. Mr. Gross is a graduate of Ohio State
University and the Harvard Graduate School of Business Administration.
W. LEE NUTTER, 54, President and Chief Operating Officer - He was elected to his
current position on July 19, 1996, and was elected a director of Rayonier on the
same date. He joined Rayonier in 1967 in the Northwest Forest Operations and was
named Vice President, Timber and Wood in 1984, Vice President, Forest Products
in 1985, Senior Vice President, Operations, in 1986 and Executive Vice President
in 1987. Mr. Nutter is a member of the Board of Governors of the National
Council for Air and Stream Improvement. He graduated from the University of
Washington and the Harvard Graduate School of Business Administration Advanced
Management Program.
WILLIAM S. BERRY, 56, Executive Vice President, Forest Resources and Corporate
Development - He was elected to his present position in October 1996 after being
elected Senior Vice President, Forest Resources and Corporate Development, of
Rayonier in January 1994. He was Senior Vice President, Land and Forest
Resources, of Rayonier from January 1986 to January 1994. From October 1981 to
January 1986 he was Vice President and Director of Forest Products Management.
Mr. Berry joined Rayonier in 1980 as Director of Wood Products Management. He
holds a B.S. in Forestry from the University of California at Berkeley and an
M.S. in Forestry from the University of Michigan.
WILLIAM A. KINDLER, 55, Senior Vice President, Specialty Pulp - He was elected
to his present position effective March 1, 1998. He joined Rayonier in August
1996 and was elected Vice President Specialty Pulp, in October 1996. Prior to
coming to Rayonier, Mr. Kindler was with James River Corporation for 26 years
where he held a number of senior management positions, most recently as Vice
President, General Manager, Printing Papers (November 1988 until March 1994) and
as Vice President, Product Supply, Consumer Products (March 1994 until August
1996). He holds a B.A. in Chemistry from Western Washington University and an
M.S. and Ph.D. in Pulp and Paper Technology from the Institute of Paper
Chemistry.
JOHN P. O'GRADY, 52, Senior Vice President, Administration - He was elected
Senior Vice President, Human Resources, of Rayonier in January 1994 and Senior
Vice President, Administration, effective January 1996. He was Vice President,
Administration, of Rayonier from July 1991 to January 1994. From December 1975
to July 1991, he held a number of human resources positions at ITT Corporation
and its subsidiaries. Mr. O'Grady serves on the employee and labor relations
committee of the American Forest & Paper Association (AFPA). He is on the
Business Advisory Board of the University of Oklahoma School of Business and is
a Management Trustee for United Paperworkers' Health and Welfare Trust. Mr.
O'Grady holds a B.S. degree in Labor Economics from the University of Akron, an
M.S. degree in Industrial Relations from Rutgers University and a Ph.D. in
Management from California Western University.
GERALD J. POLLACK, 56, Senior Vice President and Chief Financial Officer - He
was elected Senior Vice President and Chief Financial Officer of Rayonier in May
1992. From July 1986 to May 1992, he was Vice President and Chief Financial
Officer. Mr. Pollack joined Rayonier in June 1982 as Vice President and
Controller. He is a member of the New York Advisory Board of the Allendale
Insurance Co., the financial management committee of AFPA, and the Financial
Executives Institute. Mr. Pollack has a B.S. degree in Physics from Rensselaer
Polytechnic Institute and an MBA in Accounting and Finance from the Amos Tuck
School at Dartmouth College.
CHARLES MARGIOTTA, 45, Vice President, Forest and Wood Products - He was elected
to his present position effective January 1, 1997. He joined Rayonier in 1976
and following assignments at its corporate headquarters and its Southeast Forest
Resources division, went to Rayonier's New Zealand operations in 1989 where he
served as General Manager, Rayonier New Zealand, until 1992 when he was promoted
to Managing Director, Rayonier New Zealand. He holds a B.B.A. in Accounting and
Finance from Pace University, has attended the Duke University Senior
Professional Forestry Program and has recently completed the International
Advanced Management Program at the Harvard Graduate School of Business
Administration.
KENNETH P. JANETTE, 52, Vice President and Corporate Controller - He joined
Rayonier in August 1994 and was elected Vice President and Corporate Controller
in October 1994. From 1992 to 1994 he was Vice President and Corporate
Controller of Sunkyong America, Inc., a Korean international trading
organization, which he joined in 1990 as Corporate Controller. He was with AMAX
Inc. from 1977 to 1990, most recently as Assistant Corporate Controller and
Director of Auditing, and was with Arthur Andersen and Co. from 1968 to 1977. He
is a member of the Financial Executives Institute, the AICPA and the Institute
of Management Accountants. He received a B.S. in Accounting in 1967 and an
M.B.A. in Finance in 1968 from the University of Rochester.
- 7 -
<PAGE> 11
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
The table below reflects the range of market prices of Rayonier Common Shares as
reported in the consolidated transaction reporting system of the New York Stock
Exchange, the only exchange on which this security is listed, under the trading
symbol RYN.
RAYONIER COMMON SHARES - MARKET PRICES AND DIVIDENDS (UNAUDITED)
<TABLE>
<CAPTION>
Composite
High Low Volume Dividend
---- --- ------ --------
1997
----
<S> <C> <C> <C> <C>
First Quarter $ 39.13 $ 35.25 3,611,800 $.30
Second Quarter 44.38 36.88 3,391,800 .30
Third Quarter 53.00 42.00 3,657,700 .30
Fourth Quarter 51.13 40.25 3,655,100 .30
1996
----
First Quarter $37.25 $ 33.13 5,692,000 $.29
Second Quarter 38.63 35.00 5,965,700 .29
Third Quarter 41.25 37.75 4,006,600 .29
Fourth Quarter 40.00 37.38 5,163,000 .29
</TABLE>
On February 20, 1998, Rayonier announced a one cent increase in its quarterly
dividend. The first quarter dividend of 31 cents per share is payable on March
31, 1998 to shareholders of record on March 10, 1998.
There were approximately 25,099 holders of record of Rayonier Common Shares on
February 27, 1998.
- 8 -
<PAGE> 12
ITEM 6. SELECTED FINANCIAL DATA
The following summary of historical financial data for each of the five years
ended December 31, 1997 is derived from the consolidated financial statements of
the Company. The data should be read in conjunction with the consolidated
financial statements (dollar amounts in millions, except per share data).
<TABLE>
<CAPTION>
Year Ended December 31
---------------------------------------------------------
1997 1996 1995 1994 1993
----- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
OPERATIONS:
Sales $ 1,104 $ 1,178 $ 1,260 $1,069 $ 936
Operating income before provision for
dispositions 166 159 234 169 130
Provision for dispositions - (125)(1) - - (3)
Operating income 166 34 234 169 127
Income (loss) from continuing operations 87 ( - ) 142 70 52
Provision for discontinued operations - (98)(2) - - -
Net income (loss) 87 (98) 142 70 52
PER COMMON SHARE:
Income (loss) from continuing operations $ 2.97 $ ( - ) $ 4.75 $ 2.36 $ 1.77
Provision for discontinued operations - (3.28) - - -
Net income (loss) - Diluted 2.97 (3.28) 4.75 2.36 1.77
- Basic 3.03 (3.28) 4.81 2.37 1.77
Dividends paid 1.20 1.16 1.00 .72 4.12(3)
Book value 22.37 21.29 25.95 22.15 20.51
FINANCIAL CONDITION:
Total assets $ 1,596 $ 1,598 $ 1,648 $1,524 $1,488
Total debt 426 433 450 483 498
Book value 633 623 769 655 606
CASH FLOW:
Cash flow from operating activities $ 253 $ 236 $ 213 $ 190 $ 118
Capital expenditures 137 187 143 101 72
Custodial capital spending 72 83 72 67 65
Depreciation, depletion and amortization 99 97 96 90 78
EBITDA (4) 237 236 303 229 187
EBIT (5) 138 139 207 139 109
Free cash flow (6) 122 119 107 90 36
Dividends 35 34 30 21 122(3)
PERFORMANCE RATIOS (%):
Operating income to sales (7) 15 13 19 16 14
Return on equity (8) 14 - 20 11 8
Return on assets (8) 5 - 9 5 4
Debt to capital 40 41 37 43 45
OTHER:
Number of employees 2,500 2,700 2,900 2,700 2,600
Timberlands, thousands of acres 1,452 1,462 1,473 1,501 1,495
</TABLE>
- 9 -
<PAGE> 13
<TABLE>
<CAPTION>
Year Ended December 31
------------------------------------------------------
1997 1996 1995 1994 1993
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
SELECTED OPERATING DATA (UNAUDITED)
Timber and Wood Products
Trading volume
North America logs - in millions of board feet 224 284 351 306 266
New Zealand logs- in thousands of cubic meters 1,113 1,414 1,682 1,623 1,375
Other logs - in thousands of cubic meters 277 97 103 54 67
Timber sales volume
Northwest U.S. - in millions of board feet 190 193 175 194 143
Southeast U.S. - in thousands of short green tons 2,421 2,281 2,218 2,184 2,001
New Zealand - in thousands of cubic meters (9) 1,111 1,097 - - -
Lumber sales volume - in millions of board feet 325 280 213 197 125
Intercompany sales volume
Logs - in millions of board feet 1 12 22 13 15
NW U.S. timber - in millions of board feet 14 23 32 36 28
SE U.S. timber - in thousands of short green tons 92 158 292 199 299
New Zealand timber - in thousands of cubic meters (9) 589 840 - - -
Specialty Pulp Products
Pulp sales volume
Chemical cellulose - in thousands of metric tons (10) 381 349 342 311 275
Fluff and specialty paper pulp - in thousands of metric
tons (11) 344 332 308 350 330
Production as a percent of capacity 100% 101% 99% 96% 88%
</TABLE>
(1) Includes a charge of $125 million ($79 million after-tax) related to the
closure of the Port Angeles pulp mill and write-off of other
non-strategic assets.
(2) Includes an after-tax charge to implement AICPA Statement of Position
96-1 related to future environmental monitoring costs.
(3) Includes a $90 million ($3.04 per Common Share) special dividend paid to
ITT.
(4) EBITDA is defined as earnings from continuing operations before
significant non-recurring items, provision for dispositions, interest
expense, income taxes and depreciation, depletion and amortization.
(5) EBIT is defined as earnings from continuing operations before significant
non-recurring items, provision for dispositions, interest expense and
income taxes.
(6) Free cash flow is defined as income from continuing operations plus
depreciation, depletion and amortization, deferred income taxes and
changes in working capital, less custodial capital spending and
prior-year dividend levels.
(7) Based on operating income before provision for dispositions.
(8) Based on income (loss) from continuing operations, including charges for
pulp mill disposition.
(9) Intercompany activity began in 1996 when Rayonier divided its New Zealand
operations into separate trading and timberlands management
organizations. Timber harvested and sold as logs was 1,133, 1,155 and 918
for the years 1995-1993, respectively.
(10) Excludes sales by the Port Angeles pulp mill, which ceased operations on
February 28, 1997, of 35, 94, 98, 117, and 94 for the years 1997-1993,
respectively.
(11) Excludes sales by the Port Angeles pulp mill of 7, 18, 36, 12, and 22 for
the years 1997-1993, respectively.
- 10 -
<PAGE> 14
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
SEGMENT INFORMATION
The amounts and relative contributions to sales and operating income
attributable to each of Rayonier's business segments for each of the three years
ended December 31, 1997 were as follows (in millions of dollars):
<TABLE>
<CAPTION>
Year Ended December 31
---------------------------------------
SALES 1997 1996 1995
- ----- ---- ---- ----
<S> <C> <C> <C>
TIMBER AND WOOD PRODUCTS
Trading and merchandising $ 259 $ 322 $ 393
Timberlands management 184 196 168
Wood products 133 104 75
Intrasegment eliminations (23) (40) (18)
------ ----- ------
Total Timber and Wood Products 553 582 618
------ ----- ------
SPECIALTY PULP PRODUCTS
Chemical cellulose 338 328 288
Fluff and specialty paper pulps 182 186 252
------ --- ------
Total Specialty Pulp Products 520 514 540
------ --- ------
Intersegment eliminations (3) (6) (20)
------ ----- ------
Total before dispositions 1,070 1,090 1,138
Dispositions 34 88 122
------ ----- ------
Total sales $ 1,104 $1,178 $ 1,260
====== ===== ======
OPERATING INCOME
Timber and Wood Products $ 124 $ 127 $ 141
Specialty Pulp Products 56 57 103
Corporate and other (17) (16) (12)
------ ------ ------
Total before dispositions 163 168 232
Dispositions 3 (134) 2
------ ----- ------
Total operating income $ 166 $ 34 $ 234
====== ===== ======
</TABLE>
BUSINESS CONDITIONS
Rayonier's 1997 net income was $87 million, or $2.97 per share, compared to 1996
net income, excluding significant non-recurring items, of $79 million, or $2.63
per share. The 1997 results include a non-operating gain of $8 million ($6
million after-tax, or 19 cents per share) related to the sale of an interest in
New Zealand timber assets. The improved 1997 results also reflect the absence of
losses from the now-closed Port Angeles pulp mill, stronger lumber markets,
lower minority interest, lower interest expense and a lower effective tax rate.
Rayonier's overall operating results are somewhat cyclical and driven by
international economic factors. In 1997, approximately 49 percent of Rayonier
sales were made to customers outside the U.S., down from 55 percent in 1996.
Lower export sales following closure of the Port Angeles pulp mill on February
28, 1997, contributed to the reduction. In addition, weak Asian economies,
together with a strengthening U.S. dollar, further reduced sales prices and
volume on timber and log sales from the Northwest U.S. and New Zealand.
Relatively high worldwide market pulp inventories during most of 1997 resulted
in lower average pulp prices than in 1996.
In January 1998, the Company acquired the outstanding publicly traded minority
interest in Rayonier Timberlands, L.P. (RTLP or the Partnership), a master
limited partnership that owned and operated most of its U.S. timberlands
business. As a
- 11 -
<PAGE> 15
result of the acquisition, Rayonier expects to recognize approximately 25 cents
to 30 cents per share of incremental net income in 1998 based on its current
perception of markets for timber harvested from the Partnership's timberlands.
A strategic assessment of the Company's specialty pulp business was completed
early in 1997. Actions are underway to implement several significant profit
improvement opportunities that were identified. Pulp production costs declined
in 1997 as operating efficiency improved and certain key raw material and
service costs fell. These general trends are expected to continue during 1998.
Rayonier's capital spending in 1997 and 1996 was focused on expansion of its New
Zealand operations, quality and productivity improvements in Specialty Pulp
Products and acquisitions and growth in the Timber and Wood Products businesses.
These investments are expected to help moderate the cyclical effects of the pulp
market cycle, improve bottom-of-the-cycle earnings and add value to existing
assets. See Liquidity and Capital Resources.
During the fourth quarter of 1997 and early 1998, weakness in Asian markets
placed additional price pressure on worldwide pulp markets, as well as timber
and log markets in New Zealand and the Northwest U.S. Partially offsetting these
effects are lower costs for many of the Company's raw materials, benefits from a
lower New Zealand currency and a strong domestic U.S. market. The Company also
is redirecting its marketing efforts toward stronger economies in North America,
Europe and Latin America.
Unusually wet weather in the Southeast U.S. during the fourth quarter of 1997
and early 1998 is expected to raise Southeast U.S. fiber costs for both pulp and
lumber facilities, which will affect results in 1998. The adverse impact of
higher wood costs will be partially offset by increased prices for the Company's
Southeast U.S. timber.
RESULTS OF OPERATIONS, 1997 VS. 1996
Sales and Operating Income
Sales declined 6 percent to $1.1 billion in 1997, reflecting the closure of the
Port Angeles pulp mill on February 28, 1997, lower North American log trading
volume and export prices, lower New Zealand log volume and lower Northwest U.S.
timber selling prices, partially offset by higher lumber selling prices and
volume. Operating income for the year was $166 million, rising from $34 million
in 1996, due to the absence of the disposition charge of $125 million and
operating losses associated with the Port Angeles pulp mill, and higher lumber
selling prices and volume.
Timber and Wood Products
Sales of Timber and Wood Products declined 5 percent to $553 million,
while operating income declined 2 percent to $124 million. Lower
Northwest U.S. timber prices and New Zealand timber volume were
partially offset by strong U.S. lumber selling prices and volume and
favorable New Zealand exchange rates.
Trading and merchandising sales were $259 million compared to $322
million in 1996. The 20 percent decline was primarily due to weakness
in Asian wood markets, resulting in lower log prices and volume.
Although sales declined, operating income improved slightly,
principally due to favorable New Zealand exchange rates and margins.
Timberlands management sales of $184 million decreased 6 percent from
1996, and operating income declined primarily due to weaker Northwest
U.S. timber prices. Southeast U.S. timber volume improved due to a
strong pulpwood market.
Wood products sales increased 28 percent to $133 million in 1997 due to
stronger U.S. lumber sales volume and prices and start-up of the
medium-density fiberboard (MDF) business in New Zealand. Wood products
operating income improved from 1996 due to higher lumber prices and
volumes and lower conversion costs. The significant improvements
experienced in lumber were partially offset by operating losses
incurred in connection with the start-up of the New Zealand MDF
business, as the Company increased production to commercial levels and
developed markets in the Pacific Rim and Europe for its premium-quality
Patinna(TM) brand. Operating losses from the MDF business are expected
to continue in 1998.
Specialty Pulp Products
Sales of $520 million for the Company's Jesup and Fernandina pulp mills
were slightly above the prior year level with lower selling prices more
than offset by higher volume. Operating income of $56 million was $1
million below last year as lower average selling prices for both
chemical cellulose and fluff pulp were mostly offset by higher pulp
shipments and lower manufacturing costs. Pulp production costs declined
to $612 per ton in 1997 from $639 in 1996.
- 12 -
<PAGE> 16
Intersegment
Intersegment sales of $3 million in 1997 were less than the $6 million
recorded in 1996 due to lower log sales from the Timber and Wood
Products segment to the Specialty Pulp Products segment.
Dispositions
Dispositions results include the Company's Port Angeles pulp mill,
permanently closed in February 1997, with product sales arising from
inventory. Improved results over 1996 primarily reflect the absence of
operating losses following the mill's closure. Sales were $34 million
in 1997 compared to $88 million in 1996, and operating income in 1997
was $3 million compared to an operating loss in 1996 of $10 million,
excluding closure charges.
Other Income/Expense
Interest expense for 1997 decreased $2 million to $26 million reflecting lower
average debt levels primarily due to reduced investment in working capital.
Capitalized interest relating to the Company's New Zealand MDF facility was $4.6
million in 1997 compared to $2.3 million in 1996.
Rayonier purchases forward exchange contracts to mitigate the impact of New
Zealand/U.S. dollar exchange fluctuations on operating results. The
mark-to-market loss on these contracts included in "Interest and miscellaneous
(expense) income, net," was $3 million in 1997, as compared to a mark-to-market
gain of $6 million in 1996. In 1997 the movement of the New Zealand/U.S. dollar
exchange rate from 0.71 on January 1, 1997, to 0.58 on December 31, 1997, had a
favorable effect of $5 million on the Company's New Zealand operating income, as
compared to a negative impact of $2 million in 1996 when the New Zealand
currency strengthened.
From time to time the Company opportunistically sells non-strategic assets to
maximize value from its asset mix. During the fourth quarter of 1997, the
Company sold a 75 percent interest in two New Zealand forests (12,100 acres) to
a timber investment fund and purchased a 25 percent stake in two other New
Zealand forests (3,700 acres) from the same fund in a transaction that resulted
in net cash proceeds to the Company of $11.7 million. As a result, a pretax gain
of $8.4 million, $5.6 million after-tax, or 19 cents per share, was realized.
Rayonier has management and marketing responsibilities for the joint venture,
which involves 15,800 acres of timber on New Zealand's North Island.
Minority interest in the earnings of Rayonier Timberlands, L.P. decreased $2
million to $26 million in 1997 due to lower Partnership earnings, primarily
reflecting lower Northwest U.S. timber prices.
Income Taxes
The effective tax rate for 1997 was 27.6 percent compared to 29.1 percent in
1996, excluding the tax benefits for two significant non-cash charges (see
Dispositions and Discontinued Operations), which were recorded at statutory
rates. These effective tax rates are below the U.S. statutory rates, primarily
resulting from the lower rates in effect for foreign subsidiaries. Additionally,
1997 reflects both research and investment tax credits and foreign exchange
translation gains while the prior year includes certain tax benefits recognized
in 1996 that pertained to prior years.
Acquisition of Minority Interest in RTLP
In January 1998, Rayonier exercised its right to acquire all of the 5,060,000
publicly traded Class A Units of RTLP for a cash purchase price of $13.00 per
unit in accordance with the terms of the RTLP Partnership Agreement. Rayonier's
income statement in the future will reflect the elimination of a minority
interest deduction and a reduction in selling and general expenses offset
somewhat by added timber cost depletion and interest expense associated with the
$66 million cost of acquiring the Class A Units. The acquisition will be
accounted for under the purchase method and was financed by the utilization of
existing credit facilities.
RESULTS OF OPERATIONS, 1996 VS. 1995
Sales and Operating Income
Sales declined 7 percent to $1.18 billion in 1996, reflecting lower fluff and
specialty paper pulp prices as well as reduced North American log trading volume
and lower New Zealand log pricing. Operating income for the year was $34
million, down from $234 million in 1995, due to the disposition charge of $125
million associated with the closure of the Port Angeles pulp mill and lower
fluff pulp pricing.
Timber and Wood Products
Sales of Timber and Wood Products declined 6 percent to $582 million,
and operating income declined 10 percent to $127 million. The declines
were due to lower export log volumes and margins, and lower timber
prices, partially
- 13 -
<PAGE> 17
offset by significantly improved wood products results. In 1996, the
New Zealand operations were divided into separate trading and
timberlands management organizations that are now reported as distinct
lines of business.
Trading and merchandising sales declined 18 percent to $322 million due
to lower North American log trading volume and operating income
declined due to weakness in Asian wood markets.
Timberlands management sales of $196 million, including additional
timber sales of $37 million from New Zealand activity, increased 17
percent from 1995 while operating income declined as lower timber
prices in both the Northwest and Southeast regions, resulting from weak
export and domestic log markets, offset increased harvest activity in
the Northwest.
Wood products sales increased 39 percent in 1996, and operating results
improved significantly due to higher lumber prices and volumes, lower
raw material costs and improved conversion costs.
Specialty Pulp Products
Sales of $514 million for the Company's Jesup and Fernandina pulp mills
were $26 million lower than 1995 and operating income of $57 million
declined $46 million from the prior year due to significantly lower
fluff and specialty paper pulp selling prices and unfavorable sales
mix. These impacts were partially offset by higher average chemical
cellulose prices and improved production costs.
Intersegment
Intersegment sales of $6 million in 1996 were less than the $20 million
recorded in 1995 due to lower log sales from the Timber and Wood
Products segment to the Specialty Pulp Products and Dispositions
segments.
Dispositions
Full year sales from the Port Angeles pulp mill of $88 million were $34
million below the prior year due to curtailed production as a result of
lower market prices. An operating loss, prior to closure charges, of
$10 million was $12 million worse than the prior year.
During the fourth quarter of 1996, Rayonier recorded a disposition
charge of $79 million after-tax, or $2.63 per share, primarily related
to the planned closure of the Port Angeles pulp mill on February 28,
1997. The pretax charge of $125 million included a $77 million loss on
disposal of mill assets with a net book value of $84 million, accruals
of $40 million for severance, relocation, demolition, environmental
cleanup and other items associated with the disposition, and $8 million
for loss on disposal of other non-strategic assets. The liquidation of
working capital and tax benefits associated with the closure offset
cash closure costs. Dismantling began in 1997 and is expected to be
substantially completed in 1998.
Other Income/Expense
Interest expense for 1996 decreased $6 million to $28 million as a result of
lower average debt, lower interest rates and higher capitalized interest.
Rayonier purchases forward exchange contracts to offset the impact of New
Zealand/U.S. dollar exchange fluctuations on operating results. The net gain on
these contracts, which is included in "Interest and miscellaneous (expense)
income, net," was $6 million in 1996 compared to $1 million for 1995. In 1996,
movement of the New Zealand/U.S. dollar exchange rate had an adverse effect on
the Company's New Zealand operating income of $2 million. The exchange rate
increased from 0.65 on January 1, 1996, to 0.71 on December 31, 1996.
A 1995 non-operating gain related to the sale of a 75 percent interest in
approximately 9 percent of the Company's New Zealand timber holdings to a timber
investment fund. The transaction resulted in a pretax gain of $35 million, $24
million after-tax, or 80 cents per share.
Minority interest in the earnings of RTLP decreased $2 million to $27 million
due to lower Partnership earnings resulting from lower timber prices in both the
Southeast and Northwest regions of the U.S., partially offset by volume
increases.
Income Taxes
Excluding the tax benefits for the two significant non-cash charges which were
booked at statutory rates, the effective tax rate for 1996 was 29.1 percent and
reflected the 1996 recognition of a tax asset related to a prior year
transaction following resolution of various uncertainties. The 1995 effective
tax rate of 31.6 percent reflected the benefits of foreign source income and tax
credits on exported pulp sales.
- 14 -
<PAGE> 18
Discontinued Operations
In the fourth quarter of 1996, the Company adopted Statement of Position 96-1
"Environmental Remediation Liabilities" issued by the American Institute of
Certified Public Accountants. Adoption of the pronouncement resulted in a cash
neutral pretax charge of $155 million ($98 million after-tax, or $3.28 per
share). The Company's annual cash flow was not impacted by the adoption of the
accounting pronouncement.
LIQUIDITY AND CAPITAL RESOURCES
Cash flow from operating activities in 1997 was $253 million, or approximately
$9 per share, up $17 million from 1996. The favorable change was primarily due
to higher net income and reduced working capital requirements. This cash flow
financed capital expenditures of $137 million, dividends of $35 million and the
repurchase of Common Shares of $48 million.
Cash from operating activities in 1996 increased $23 million over 1995 levels to
$236 million. Cash from operating activities helped finance capital expenditures
of $187 million, dividends of $34 million, the repurchase of Common Shares of
$17 million and repayment of borrowings of $17 million.
The Company's cash tax payments were reduced in 1996 and 1997 as a result of
transactions undertaken by the Company to control environmental remediation and
monitoring costs, and certain benefits relating to the Port Angeles pulp mill
closure.
In 1996, the Company began a Common Share repurchase program to minimize the
dilutive effect on earnings per share of its employee incentive stock plans.
This program limits the number of shares that may be repurchased each year to
the greater of 1.5 percent of the Company's outstanding shares or the number of
incentive shares actually issued to employees during the year. In February 1997,
the Company announced a one-year increase in the share repurchase program. The
Company repurchased 1,123,500 shares at an average cost of $43.08 for $48
million as compared to 437,800 shares repurchased in 1996 at an average cost of
$37.74 for $17 million.
In 1997, EBITDA (defined as earnings from continuing operations before
significant non-recurring items, provision for dispositions, interest expense,
income taxes and depreciation, depletion and amortization) was $237 million, or
$8.07 per share, up $1 million from 1996. In 1996, EBITDA was $236 million, or
$7.86 per share, compared to $303 million, or $10.10 per share, in 1995. Free
cash flow (defined as income from continuing operations plus depreciation,
depletion and amortization, deferred income taxes and changes in working
capital, less custodial capital spending and prior-year dividend levels)
increased $3 million to $122 million in 1997.
Debt declined $7 million in 1997 to $426 million. The year-end debt-to-capital
ratio of 40 percent is slightly lower than prior year-end. At December 31, 1995,
debt was $450 million, or 37 percent of capital. The percentage of debt with
fixed interest rates was 50 percent as of December 31, 1997 and 1996, and 48
percent in 1995. In addition, at December 31, 1997, the Company had outstanding
interest rate swap agreements that effectively converted $125 million of
floating rate obligations to fixed rates ranging from 5.35 to 5.39 percent. The
agreements commenced in January 1996 and matured in January 1998. In January
1998, the acquisition of the minority interest in RTLP for approximately $66
million increased the debt-to-capital ratio to approximately 44 percent.
The most restrictive long-term debt covenant in effect at December 31, 1997,
provided that the ratio of total debt to EBITDA not exceed 4 to 1. As of
December 31, 1997, the ratio was 1.9 to 1. In addition, $361 million of retained
earnings was unrestricted as to the payment of dividends.
Capital spending of $137 million in 1997 included $34 million for the Company's
New Zealand MDF facility (total cost of $115 million), which was completed in
the third quarter, and $12 million for advanced automation and control systems
in the pulp mills. Rayonier expects to invest $250-$300 million in capital
projects during the two-year period 1998-1999. Capital projects include profit
improvement, custodial capital, sawmill modernization, timberlands reforestation
and various projects to comply with new environmental laws and requirements. As
new environmental regulations are promulgated, additional capital spending may
be required to ensure continued compliance with environmental standards.
See Environmental Regulation.
The Company has unsecured credit facilities totaling $300 million, which are
used for direct borrowings of $25 million and as support for $56 million of
outstanding commercial paper. As of December 31, 1997, Rayonier had $219 million
available under its revolving credit facilities. (In January 1998, approximately
$66 million of these facilities was utilized to acquire the minority interest in
RTLP.) In addition, the Company has on file with the Securities and Exchange
Commission shelf
- 15 -
<PAGE> 19
registration statements to offer $100 million of new public debt securities,
after the issuance of an additional $41 million of medium-term notes in February
1998.
The Company believes that internally generated funds, combined with available
external financing, will enable Rayonier to fund capital expenditures, share
repurchases, working capital and other liquidity needs for the foreseeable
future.
ENVIRONMENTAL REGULATION
Rayonier is subject to stringent environmental laws and regulations concerning
air emissions, water discharges and waste disposal that, in the opinion of
management, will require substantial expenditures over the next 10 years. During
1997, 1996 and 1995 Rayonier spent approximately $4 million, $6 million and $1
million, respectively, for capital projects related to environmental compliance
for ongoing operations. During the two-year period 1998-1999, Rayonier expects
to spend approximately $35 million on such capital projects.
During 1997, the Environmental Protection Agency (EPA) finalized its Cluster
Rules governing air emissions but, due to the specialty nature of Rayonier's
products and operations, postponed finalizing water discharge rules governing
the Company's pulp mills. The Company continues to work with the EPA to
establish appropriate water discharge rules for the pulp mills, but the timing
and costs associated with such rulemaking are uncertain. In the opinion of
management, capital costs to be incurred over the next three to five years
associated with environmental regulations will not exceed $30 million at the
Fernandina pulp mill and $50 million at the Jesup pulp mill.
Over the past several years, the harvest of timber from private lands in the
state of Washington has been restricted as a result of the listing of the
northern spotted owl and the marbled murrelet as threatened species under the
Endangered Species Act. These restrictions have caused Rayonier to restructure
and reschedule some of its harvest plans. In addition, several runs of salmon
are expected to be listed as threatened or endangered within the next year, and
rules implemented to protect them. Rayonier and other members of the forest
products industry in Washington state are currently engaged in negotiations with
regulatory agencies to obtain a predictable plan to protect fish and water. Such
efforts are ongoing and, in the opinion of management, will not have a material
impact on the Company's consolidated financial position or results of
operations.
Dispositions and discontinued operations include Rayonier's Port Angeles, WA,
pulp mill which was closed on February 28, 1997; its interest in the Grays
Harbor, WA, pulp and paper complex which was closed in 1992; its wholly owned
subsidiary, Southern Wood Piedmont Company, which ceased operations in 1986; and
other miscellaneous assets held for disposition. Rayonier currently estimates
that expenditures for environmental remediation and monitoring costs for all
dispositions and discontinued operations during 1998-1999 will total
approximately $29 million. Such costs will be charged against Rayonier's
reserves for estimated environmental obligations (including monitoring and
remediation costs) to be incurred over the next 25-30 years with respect to
dispositions and discontinued operations. At December 31, 1997, these reserves
totaled approximately $199 million. The amount of actual future environmental
costs is dependent on the outcome of negotiations with federal and state
agencies and may also be affected by new laws, regulations and administrative
interpretations, and changes in environmental remediation technology. The
Company believes that any future changes in estimates, if necessary, will not
materially affect its consolidated financial condition or results of operations.
YEAR 2000 COMPLIANCE
Rayonier believes its information systems will be compliant with year 2000
requirements as a result of normal, planned upgrades, without incurring a
material incremental cost.
SAFE HARBOR
Except for the information about past operations and results, the comments in
this report are forward-looking and are made pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995. Changes in
the following important factors, among others, could cause actual results to
differ materially from those expressed in the forward-looking statements:
competitive products and pricing, as well as fluctuations in demand,
particularly for specialty fluff pulps and for export and domestic logs and wood
products, including MDF; the impact of such market factors on the Company's
timber sales in the U.S. and New Zealand; the impact of Asia market conditions
on prices and volumes; production costs for specialty pulps, particularly for
raw materials and chemicals; governmental policies and regulations affecting the
environment, import and export controls and taxes; and interest rate and
currency movements.
- 16 -
<PAGE> 20
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
See Index to Financial Statements on Page ii.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information called for by Item 10 with respect to directors is incorporated
herein by reference to the definitive proxy statement involving the election of
directors filed or to be filed by Rayonier with the Securities and Exchange
Commission pursuant to Regulation 14A within 120 days after the end of the
fiscal year covered by this Form 10-K.
The information called for by Item 10 with respect to executive officers is set
forth above in Part I under the caption Executive Officers of Rayonier.
ITEM 11. EXECUTIVE COMPENSATION
The information called for by Item 11 is incorporated herein by reference to the
definitive proxy statement referred to above in Item 10.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information called for by Item 12 is incorporated herein by reference to the
definitive proxy statement referred to above in Item 10.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
None
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS OF FORM 8-K
(a) Documents filed as a part of this report:
1. See Index to Financial Statements on page ii for a list of the
financial statements filed as part of this report.
2. See Index to Financial Statement Schedules on page ii for a list of the
financial statement schedules filed as a part of this report.
3. See Exhibit Index on pages B, C, D and E for a list of the exhibits
filed or incorporated herein as part of this report.
(b) Reports on Form 8-K:
1. Rayonier Inc. filed a Current Report on Form 8-K on January 16, 1998
announcing its election to purchase all of the 5,060,000 outstanding
Class A Depositary Units of Rayonier Timberlands, L.P. in January 1998
for a cash purchase price of $13.00 per unit.
- 17 -
<PAGE> 21
REPORT OF MANAGEMENT
To Our Shareholders
Rayonier management is responsible for the preparation and integrity of the
information contained in the accompanying financial statements. The statements
were prepared in accordance with generally accepted accounting principles and,
where necessary, include amounts that are based on management's best judgments.
Rayonier's system of internal controls includes accounting controls and an
internal audit program. This system is designed to provide reasonable assurance
that Rayonier's assets are safeguarded, transactions are properly recorded and
executed in accordance with management's authorization, and fraudulent financial
reporting is prevented or detected.
Rayonier's internal controls provide for the careful selection and training of
personnel and for appropriate divisions of responsibility. The controls are
documented in policies, procedures and a written code of conduct that are
communicated to Rayonier's employees. Management continually monitors the system
of internal controls for compliance. Rayonier's independent public accountants,
Arthur Andersen LLP, evaluate and test internal controls as part of their annual
audit and make recommendations for improving internal controls. Management takes
appropriate action in response to each recommendation. The Board of Directors
and the officers of Rayonier monitor the administration of Rayonier's policies
and procedures and the preparation of financial reports.
RONALD M. GROSS
Chairman and Chief Executive Officer
GERALD J. POLLACK
Senior Vice President and
Chief Financial Officer
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholders of Rayonier Inc.
We have audited the accompanying consolidated financial statements of Rayonier
Inc. (a North Carolina corporation) and subsidiaries as of December 31, 1997 and
1996, and for each of the three years in the period ended December 31, 1997, as
described in the Index to Financial Statements. These financial statements are
the responsibility of Rayonier's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Rayonier Inc. and subsidiaries
as of December 31, 1997 and 1996, and the results of their operations and their
cash flows for each of the three years in the period ended December 31, 1997 in
conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Stamford, Connecticut
January 21, 1998
F-1
<PAGE> 22
<TABLE>
<CAPTION>
RAYONIER INC. AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED INCOME
For the Year Ended December 31,
(Thousands of dollars, except per share data)
1997 1996 1995
----------- ----------- -----------
<S> <C> <C> <C>
SALES $ 1,104,228 $ 1,178,040 $ 1,260,492
----------- ----------- -----------
Costs and expenses
Cost of sales 902,734 981,337 994,982
Selling and general expenses 42,410 39,409 37,043
Other operating (income) expense, net (7,046) (1,210) (5,210)
Provision for dispositions -- 124,587 --
----------- ----------- -----------
938,098 1,144,123 1,026,815
----------- ----------- -----------
OPERATING INCOME 166,130 33,917 233,677
Interest expense (25,868) (27,662) (33,615)
Interest and miscellaneous (expense) income, net (2,490) 7,762 3,131
Gains from sale of assets 8,395 -- 34,763
Minority interest (25,520) (27,474) (29,897)
----------- ----------- -----------
INCOME (LOSS) FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES 120,647 (13,457) 208,059
Income tax (expense) benefit (33,328) 13,297 (65,711)
----------- ----------- -----------
INCOME (LOSS) FROM CONTINUING OPERATIONS 87,319 (160) 142,348
Provision for discontinued operations, net -- (98,239) --
----------- ----------- -----------
NET INCOME (LOSS) $ 87,319 $ (98,399) $ 142,348
=========== =========== ===========
BASIC EPS
Continuing operations $ 3.03 $ (--) $ 4.81
Discontinued operations -- (3.28) --
----------- ----------- -----------
Net income (loss) $ 3.03 $ (3.28) $ 4.81
=========== =========== ===========
DILUTED EPS
Continuing operations $ 2.97 $ (--) $ 4.75
Discontinued operations -- (3.28) --
----------- ----------- -----------
Net income (loss) $ 2.97 $ (3.28) $ 4.75
=========== =========== ===========
The accompanying Notes to Consolidated Financial Statements are an
integral part of these consolidated statements.
</TABLE>
F-2
<PAGE> 23
<TABLE>
<CAPTION>
RAYONIER INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
As of December 31,
(Thousands of dollars)
ASSETS
1997 1996
------------- ---------
<S> <C> <C>
CURRENT ASSETS
Cash and short-term investments $ 10,661 $ 3,432
Accounts receivable, less allowance for doubtful
accounts of $4,481 and $4,674 115,704 123,435
Inventories 114,148 154,914
Timber purchase agreements 31,758 31,416
Other current assets 13,955 13,223
Deferred income taxes 24,288 23,168
------------- -------------
Total current assets 310,514 349,588
OTHER ASSETS 55,791 50,026
TIMBER PURCHASE AGREEMENTS 28,248 23,341
TIMBER, TIMBERLANDS AND LOGGING ROADS,
NET OF DEPLETION AND AMORTIZATION 497,110 490,298
PROPERTY, PLANT AND EQUIPMENT
Land, buildings, machinery and equipment 1,266,431 1,190,786
Less - accumulated depreciation 562,536 506,308
------------- -------------
703,895 684,478
------------- -------------
$ 1,595,558 $ 1,597,731
============= =============
The accompanying Notes to Consolidated Financial Statements are an
integral part of these consolidated statements.
</TABLE>
F-3
<PAGE> 24
<TABLE>
<CAPTION>
RAYONIER INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
As of December 31,
(Thousands of dollars)
LIABILITIES AND SHAREHOLDERS' EQUITY
1997 1996
------------- ---------
<S> <C> <C>
CURRENT LIABILITIES
Accounts payable $ 74,269 $ 87,609
Bank loans and current maturities 4,194 2,243
Accrued taxes 10,973 11,497
Accrued payroll and benefits 18,694 18,340
Accrued interest 6,076 5,154
Other current liabilities 66,085 55,976
Current reserves for dispositions and discontinued operations 26,247 40,003
------------- -------------
Total current liabilities 206,538 220,822
DEFERRED INCOME TAXES 113,442 89,484
LONG-TERM DEBT 421,325 430,667
NON-CURRENT RESERVES FOR DISPOSITIONS AND
DISCONTINUED OPERATIONS 172,615 183,975
OTHER NON-CURRENT LIABILITIES 31,997 30,529
MINORITY INTEREST 16,959 18,864
SHAREHOLDERS' EQUITY
Common Shares, 60,000,000 shares authorized,
28,283,634 and 29,282,455 shares issued
and outstanding 102,175 145,679
Retained earnings 530,507 477,711
------------- -------------
632,682 623,390
------------- -------------
$ 1,595,558 $ 1,597,731
============= =============
The accompanying Notes to Consolidated Financial Statements are an
integral part of these consolidated statements.
</TABLE>
F-4
<PAGE> 25
<TABLE>
<CAPTION>
RAYONIER INC. AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED CASH FLOWS
For the Year Ended December 31,
(Thousands of dollars)
1997 1996 1995
--------- --------- ---------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income (loss) $ 87,319 $ (98,399) $ 142,348
Non-cash items included in income
Depreciation, depletion and amortization 99,309 96,910 95,988
Deferred income taxes 14,045 (80,235) 16,617
Write-off of property, plant and equipment 2,100 94,164 --
Reserve for dispositions and discontinued operations -- 192,623 --
Disposition of New Zealand timber assets 4,634 -- 9,440
Increase in other non-current liabilities 1,468 5,325 1,509
Change in accounts receivable, inventories and accounts payable 35,157 2,678 (55,645)
(Increase) decrease in current timber purchase agreements (342) 16,025 (2,126)
(Increase) decrease in other current assets (732) 2,189 (2,720)
Increase in accrued liabilities 10,861 9,261 12,156
Reduction in reserves for dispositions (900) (5,000) (4,933)
--------- --------- ---------
CASH FROM OPERATING ACTIVITIES 252,919 235,541 212,634
--------- --------- ---------
INVESTING ACTIVITIES
Capital expenditures, net of sales and retirements
of $4,691 , $11,544 and $3,931 (132,272) (175,200) (139,395)
Expenditures for dispositions and discontinued operations,
net of tax benefits of $8,793, $1,185 and $5,493 (15,423) (2,049) (9,352)
Change in timber purchase agreements and other assets (10,672) (1,433) 3,232
--------- --------- ---------
CASH USED FOR INVESTING ACTIVITIES (158,367) (178,682) (145,515)
--------- --------- ---------
FINANCING ACTIVITIES
Issuance of debt 342,226 40,472 35,437
Repayments of debt (349,617) (57,298) (68,923)
Dividends paid (34,523) (34,229) (29,629)
Repurchase of Common Shares (48,396) (16,522) --
Issuance of Common Shares 4,892 3,169 1,451
(Decrease) increase in minority interest (1,905) 49 (3,701)
--------- --------- ---------
CASH USED FOR FINANCING ACTIVITIES (87,323) (64,359) (65,365)
--------- --------- ---------
CASH AND SHORT-TERM INVESTMENTS
Increase (decrease) in cash and short-term investments 7,229 (7,500) 1,754
Balance, beginning of year 3,432 10,932 9,178
--------- --------- ---------
Balance, end of year $ 10,661 $ 3,432 $ 10,932
========= ========= =========
Supplemental disclosures of cash flow information Cash paid during
the year for:
Interest $ 29,951 $ 30,440 $ 34,208
========= ========= =========
Income taxes $ 8,671 $ 7,462 $ 41,760
========= ========= =========
The accompanying Notes to Consolidated Financial Statements are an
integral part of these consolidated statements.
</TABLE>
F-5
<PAGE> 26
RAYONIER INC. AND SUBSIDIARIES NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollar amounts in thousands unless otherwise stated)
1. NATURE OF BUSINESS OPERATIONS
Rayonier operates in two major industry segments, Timber and Wood Products and
Specialty Pulp Products.
TIMBER AND WOOD PRODUCTS
Rayonier owns, leases or controls approximately 1.5 million acres of timberlands
in the U.S. and New Zealand. The Company also purchases and harvests timber and
purchases logs, lumber and wood panel products, primarily in North America and
New Zealand, for subsequent sale into export markets (primarily Japan, Korea and
China), as well as to domestic customers. Rayonier operates three lumber
manufacturing facilities in the U.S. that produce dimension and custom lumber
products for residential construction and industrial uses, and a
medium-density-fiberboard (MDF) facility in New Zealand that produces premium
grade MDF sold into Pacific Rim and European markets. The MDF facility began
commercial operation on October 1, 1997.
SPECIALTY PULP PRODUCTS
Rayonier is a leading specialty manufacturer of high-grade chemical cellulose,
often called dissolving pulp, from which customers produce a wide variety of
products, including textiles, industrial and filtration fibers, plastics and
other chemical intermediate products. Rayonier also manufactures fluff pulps
that customers use to produce diapers and other sanitary products, and specialty
paper pulps used in the manufacture of products such as filters and decorative
laminates. With the closure of the Port Angeles, WA, pulp mill on February 28,
1997, the Company now operates two pulp mills in the U.S. at Jesup, GA, and
Fernandina Beach, FL, with an aggregate annual capacity of 700,000 metric tons.
Over half of Rayonier's pulp production is sold to export customers, primarily
in Europe and Asia.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of Rayonier and its
subsidiaries. Minority interest represents public unitholders' proportionate
share of the partners' capital of Rayonier's consolidated subsidiary, Rayonier
Timberlands, L.P. (RTLP). All significant intercompany balances and transactions
are eliminated.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires the use of certain estimates by management (e.g.,
useful economic lives of assets) in determining the reported amount of assets
and liabilities at the date of the financial statements and the reported amounts
of revenues and expenses during the reported period. Actual results could differ
from those estimates.
CASH AND SHORT-TERM INVESTMENTS
Cash and short-term investments include cash, time deposits and readily
marketable debt securities with maturities at date of acquisition of three
months or less.
INVENTORIES
Inventories are valued at the lower of cost or market. The cost of manufactured
pulp and MDF products is determined on the first-in, first-out (FIFO) basis.
Other products are generally valued on an average cost basis. Inventory costs
include material, labor and manufacturing overhead. Physical counts of
inventories are made at least annually. Potential losses from obsolete, excess
or slow-moving inventories are provided currently.
F-6
<PAGE> 27
TIMBER PURCHASE AGREEMENTS AND TIMBER-CUTTING CONTRACTS
Rayonier purchases timber for use in its log trading, pulp and wood products
businesses. The purchases are classified as current for timber expected to be
harvested within one year of the balance sheet date. The remainder is classified
as a non-current asset.
Rayonier evaluates the realizability of timber purchases and timber-cutting
contracts based on the estimated aggregate cost of such harvests and the sales
values to be realized. Losses are recorded in the period that a determination is
made that the aggregate harvest costs in a major operating area will not be
fully recoverable.
TIMBER AND TIMBERLANDS
The acquisition cost of land, timber, real estate taxes, lease payments, site
preparation and other costs relating to the planting and growing of timber are
capitalized. Such accumulated costs attributed to merchantable timber are
charged against revenue at the time the timber is harvested based on the
relationship of harvested timber to the estimated volume of currently
merchantable timber. Timber and timberlands are stated at the lower of original
cost, net of timber cost depletion, or market value.
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment additions are recorded at cost, which includes
applicable freight, taxes, interest, construction and installation costs.
Interest capitalized in connection with major construction projects, primarily
the New Zealand MDF facility, amounted to $5,005, $2,664, and $1,346 during
1997, 1996 and 1995, respectively. Upon ordinary retirement or sale of property,
accumulated depreciation is charged with the cost of the property removed and
credited with the proceeds of salvage value, with no gain or loss recognized.
Gains and losses with respect to any significant and unusual retirements of
assets are included in operating income.
DEPRECIATION
Pulp and MDF manufacturing facilities are generally depreciated using the units
of production method. Depreciation on buildings and other equipment is provided
on a straight-line basis over the useful economic lives of the assets involved.
Rayonier normally claims the maximum depreciation deduction allowable for tax
purposes.
RESEARCH AND DEVELOPMENT
Significant costs are incurred for research and development programs expected to
contribute to the profitability of future operations. Such costs are expensed as
incurred. Research and development expenditures amounted to $9,656, $11,000, and
$8,442 in 1997, 1996 and 1995, respectively.
INCOME TAXES
Income taxes on foreign operations are provided based upon the statutory tax
rates of the applicable foreign country. Additional U.S. income taxes have not
been provided on approximately $82 million of undistributed foreign earnings as
the Company intends to permanently reinvest such earnings in expanding foreign
operations.
FOREIGN CURRENCY TRANSLATION
For significant foreign operations, including Rayonier's New Zealand-based
operations, the U.S. dollar is the functional currency. Monetary assets and
liabilities of foreign subsidiaries are translated into U.S. dollars at current
exchange rates. Non-monetary assets such as inventories, timber and property,
plant and equipment are translated at historical exchange rates. Income and
expense items are translated at average exchange rates prevailing during the
year, except that inventories, depletion and depreciation charged to operations
are translated at historical rates. Exchange gains and losses arising from
translation are recognized currently in "Other operating (income) expense, net."
EARNINGS (LOSS) PER COMMON SHARE
In 1997, the Company adopted Statement of Financial Accounting Standards (SFAS)
No. 128, "Earnings Per Share" and restated earnings per share reported in all
prior periods to conform with current requirements.
F-7
<PAGE> 28
The following table provides details of the calculation of basic and diluted EPS
for 1997, 1996 and 1995.
<TABLE>
<CAPTION>
1997 1996 1995
----------- --------------- -----------
<S> <C> <C> <C>
Income (loss) from continuing operations $ 87,319 $ (160) $ 142,348
=========== =============== ===========
Shares used for determining basic EPS 28,820,115 29,978,012 29,624,049
Dilutive effect of:
Stock options 389,131 * 175,834
Contingent shares 221,250 * 183,000
----------- --------------- -----------
Shares used for determining diluted EPS 29,430,496 29,978,012 29,982,883
=========== =============== ===========
Basic EPS-continuing operations $ 3.03 $ (--) $ 4.81
=========== =============== ===========
Diluted EPS-continuing operations $ 2.97 $ (--) $ 4.75
=========== =============== ===========
</TABLE>
* Outstanding stock options and contingent shares would be antidilutive in
1996 and therefore were excluded.
3. SUBSEQUENT EVENT (RAYONIER TIMBERLANDS, L.P.)
In 1985, Rayonier transferred substantially all of its U.S. timberlands business
to Rayonier Timberlands, L.P., a master limited partnership, in exchange for 20
million Class A and 20 million Class B Depository Units. Thereafter, Rayonier
offered and sold 5.06 million Class A Units (25.3 percent) to the public. Class
A Units participate principally in the revenues and costs associated with RTLP's
sales of timber through the Initial Term, that will end on December 31, 2000,
and to a significantly lesser extent in subsequent periods.
In January 1998, Rayonier exercised its right to acquire all of the publicly
traded Class A Units for a cash purchase price of $13.00 per unit. The
acquisition will be accounted for under the purchase method and was financed by
the utilization of existing credit facilities.
RTLP is included in the consolidated financial statements. The following table
summarizes the sales and operating income of RTLP, for the three years ended
December 31, 1997, by region.
<TABLE>
<CAPTION>
1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
SALES
Northwest U.S. $ 80,570 $ 91,691 $ 95,168
Southeast U.S. 58,555 56,215 65,100
------------- ------------- -------------
$ 139,125 $ 147,906 $ 160,268
============ ============ ============
OPERATING INCOME
Northwest U.S. $ 58,970 $ 68,083 $ 73,393
Southeast U.S. 46,440 44,849 51,693
Corporate and other (1,711) (1,715) (1,778)
------------- ------------- -------------
$ 103,699 $ 111,217 $ 123,308
============ ============ ============
</TABLE>
F-8
<PAGE> 29
4. INCOME TAXES
The provision for income taxes consists of the following:
<TABLE>
<CAPTION>
1997 1996 1995
----------- ------------ --------
<S> <C> <C> <C>
CURRENT
U.S. federal $ 6,531 $ 5,446 $ 36,564
State and local 1,292 2,290 2,779
Foreign 1,709 1,596 4,258
----------- ------------ ------------
9,532 9,332 43,601
----------- ------------ ------------
DEFERRED
U.S. federal 24,652 (70,108) 12,386
State and local 540 (6,469) 1,081
Foreign (1,396) (2,813) 8,643
----------- ------------ ------------
23,796 (79,390) 22,110
------------ ------------ ------------
$ 33,328 $ (70,058) $ 65,711
============ ============ ============
</TABLE>
Deferred income taxes represent the tax effects related to recording revenues
and expenses in different periods for financial reporting and tax return
purposes. Deferred tax assets (liabilities) at December 31, 1997 and 1996 were
related to the following principal timing differences:
<TABLE>
<CAPTION>
1997 1996
-------------- --------------
<S> <C> <C>
Accelerated depreciation and depletion $ (133,521) $ (130,586)
Reserves for dispositions and discontinued operations 39,907 69,601
All other, net 4,460 (5,331)
-------------- -------------
$ (89,154) $ (66,316)
============== =============
</TABLE>
A reconciliation of the income tax provision at the U.S. statutory rate to the
reported income tax provision follows:
<TABLE>
<CAPTION>
1997 1996 1996* 1995
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Income tax provision at U.S. statutory rate $ 42,226 $(58,960) $ 38,896 $ 72,821
State and local taxes, net of federal tax benefit 1,191 (2,716) 1,806 2,509
Foreign operations (5,647) (4,988) (4,988) (4,697)
Foreign sales corporations (2,200) (2,391) (2,391) (3,816)
Research and development tax credits (1,675) -- -- --
All other, net (567) (1,003) (1,003) (1,106)
-------- -------- -------- --------
Provision for income taxes - reported $ 33,328 $(70,058) $ 32,320 $ 65,711
======== ======== ======== ========
Effective tax rate - % 27.6 (41.6) 29.1 31.6
</TABLE>
* Excludes the tax benefits of $102 million for the two significant non-cash
charges in 1996.
5. INVENTORIES
Rayonier's inventories included the following at December 31, 1997 and 1996:
<TABLE>
<CAPTION>
1997 1996
------------ ------------
<S> <C> <C>
Finished goods $ 51,398 $ 68,441
Work in process 17,491 20,128
Raw materials 19,740 39,650
Manufacturing and maintenance supplies 25,519 26,695
------------ ------------
$ 114,148 $ 154,914
============ ============
</TABLE>
F-9
<PAGE> 30
6. RESERVES FOR DISPOSITIONS AND DISCONTINUED OPERATIONS
Dispositions and discontinued operations include Rayonier's Port Angeles, WA,
pulp mill, which was closed on February 28, 1997; its interest in the Grays
Harbor, WA, pulp and paper complex which was closed in 1992; its wholly owned
subsidiary, Southern Wood Piedmont Company, which ceased operations in 1986; and
other miscellaneous assets held for disposition.
In the fourth quarter of 1996, Rayonier recorded a disposition charge of $79
million after-tax, or $2.63 per share, primarily related to the closure of the
Port Angeles pulp mill. The Company concluded that the mill was not competitive
in world markets because of long-term high wood costs due to federal
environmental restrictions on Northwest timber harvests, viscose pulp capacity
additions in lower cost regions of the world and anticipated large expenditures
for new environmental regulations. The $125 million pretax charge included a $77
million loss on disposal of mill assets with a net book value of $84 million,
accruals of $40 million for severance, relocation, demolition, environmental
cleanup and other items associated with the disposition, and $8 million for loss
on disposal of other non-strategic assets. Dismantling and demolition of the
mill began in 1997 and is expected to be substantially completed in 1998. During
1997, Port Angeles pulp product sales contributed $3 million to operating
income.
In the fourth quarter of 1996, the Company also adopted Statement of Position
96-1 "Environmental Remediation Liabilities" issued by the American Institute of
Certified Public Accountants. The statement specifically identified future,
long-term monitoring and administration expenditures as remediation liabilities
that need to be accrued on the balance sheet as an existing obligation. Adoption
of the pronouncement resulted in a cash neutral pretax charge of $155 million,
$98 million after-tax, or $3.28 per share. Although the Company had already
accrued for cleanup and closure remediation liabilities associated with its
Southern Wood Piedmont Company (SWP) wood treating business (discontinued in
1986), the cash expenditures for monitoring and administration activities of
approximately $4 million pretax, or 8 cents per share, had been expensed as
incurred in 1995 and 1996. These monitoring costs are expected to continue on an
annual basis, plus inflation, for approximately 25-30 years as mandated by state
and federal regulations. The Company's annual cash flow was not impacted by
adoption of the accounting pronouncement.
As of December 31, 1997 and 1996, Rayonier had $11.5 million of receivables from
insurance claims included in "Other assets." Such receivables represent the
Company's claim for reimbursements in connection with property damage
settlements relating to SWP's discontinued wood preserving operations.
Rayonier currently estimates that expenditures during 1998-1999 for
environmental remediation and monitoring costs for all dispositions and
discontinued operations will total approximately $29 million. Such costs will be
charged against Rayonier's reserves for estimated environmental obligations
(including monitoring and remediation costs) to be incurred over the next 25-30
years with respect to dispositions and discontinued operations. At December 31,
1997, these reserves totaled approximately $199 million. The amount of actual
future environmental costs is dependent on the outcome of negotiations with
federal and state agencies and may also be affected by new laws, regulations and
administrative interpretations, and changes in environmental remediation
technology. The Company believes that any future changes in estimates, if
necessary, will not materially affect its consolidated financial condition or
results of operations.
7. GAINS FROM SALE OF ASSETS
From time to time Rayonier opportunistically sells non-strategic assets to
maximize value from its asset mix. In December 1997, the Company sold a 75
percent interest in approximately 6 percent of its timber holdings in New
Zealand to a timber investment fund advised by UBS Resource Investments Int'l.
Rayonier acquired a 25 percent interest in two forests owned by the investment
fund. Rayonier received net cash proceeds of $11.7 million and recorded a pretax
gain of $8.4 million, $5.6 million after-tax, or 19 cents per share. In
September 1995, the Company sold a 75 percent interest in approximately 9
percent of its New Zealand timber holdings to the timber investment fund as part
of a similar joint venture with the Company. The transaction resulted in a
pretax gain of $34.8 million, $23.9 million after-tax, or 80 cents per share.
Rayonier has marketing and management responsibilities for both joint ventures.
F-10
<PAGE> 31
8. DEBT
Rayonier's debt included the following at December 31, 1997 and 1996:
<TABLE>
<CAPTION>
1997 1996
------------ ------------
<S> <C> <C>
Short-term bank loans at a weighted average rate of 6.37% $ 123,352 $ 15,514
Commercial paper at discount rates of 6.00% to 6.13% 56,000 135,000
Medium-term note due 1998 at a variable interest rate of 6.2% 33,000 67,000
Medium-term notes due 1998-1999 at fixed interest rates
of 5.84% to 6.16% 16,000 16,000
7.5% notes due 2002 110,000 110,000
Pollution control and industrial revenue bonds due
1998-2015 at fixed interest rates of 5.2% to 8.0% 86,830 88,910
All other 337 486
------------ ------------
Total debt 425,519 432,910
Less:
Short-term bank loans 1,852 14
Current maturities 2,342 2,229
------------ ------------
Long-term debt $ 421,325 $ 430,667
============ ============
</TABLE>
Rayonier has revolving credit agreements with a group of banks that provide the
Company with unsecured credit facilities totaling $300 million and expiring in
2002. The revolving credit facilities are used for direct borrowings and as
credit support for a commercial paper program. As of December 31, 1997, the
Company had $56 million of outstanding commercial paper, $25 million of direct
borrowings and $219 million of available borrowings under its revolving credit
facilities.
On March 29, 1994, the Company filed a shelf registration statement with the
Securities and Exchange Commission on Form S-3 covering $150 million of new debt
securities. The registration statement also served as a post-effective amendment
to a 1992 registration statement, which, as amended, permitted Rayonier to offer
up to $174 million of medium-term notes. On August 18, 1994, Rayonier issued
$100 million of variable rate medium-term notes. An additional $33 million of
medium-term notes were issued in 1995 to replace maturing notes. The note
outstanding as of December 31, 1997, matures in 1998 and bears interest at a
variable rate of three-month LIBOR plus 0.29 percent. In addition, through
currently effective shelf registration statements filed with the Securities and
Exchange Commission, Rayonier may offer up to $141 million of new public debt
securities.
Required repayments of debt are as follows:
<TABLE>
<S> <C>
1998 $ 4,194
1999 17,475
2000 2,420
2001 2,185
2002 323,810
2003-2015 75,435
-----------
$ 425,519
=============
</TABLE>
Medium-term notes, commercial paper and short-term bank loans totaling $211.5
million are classified as long-term debt because the Company has the ability and
intends to refinance such maturities through continued short-term borrowings,
available committed credit facilities or long-term borrowings. The most
restrictive long-term debt covenant in effect at December 31, 1997, provided
that the ratio of total debt to EBITDA not exceed 4 to 1. As of December 31,
1997, the ratio was 1.9 to 1. In addition, $361 million of retained earnings was
unrestricted as to the payment of dividends.
F-11
<PAGE> 32
9. FINANCIAL INSTRUMENTS
INTEREST RATE SWAPS
Rayonier uses interest rate swap agreements to manage exposure to interest rate
fluctuations. Outstanding agreements involve the exchange of floating rate
interest payments for fixed rate interest payments over the life of the
agreement without the exchange of any underlying principal amounts. Rayonier's
credit exposure is limited to the fair value of the agreements, and the Company
only enters into agreements with highly rated counterparties. The Company does
not enter into interest rate swap agreements for trading or speculative purposes
and matches the terms and contract notional amounts to existing debt or debt
expected to be refinanced. The net amounts paid or received under interest rate
swap agreements are recognized as an adjustment to interest expense.
At December 31, 1997, the Company had interest rate swap agreements with a total
notional value of $125 million, expiring January 2, 1998. The agreements
effectively convert floating rate obligations to fixed rates ranging from 5.35
to 5.39 percent. The Company has another interest rate swap agreement with a
total notional value of $50 million effective for the period January 2, 1998,
through December 31, 1998, and fixing rates at 6.45 percent. If the Company were
to terminate its existing interest rate swap agreements, any resulting gain or
loss would be deferred and recognized over the remaining life of the related
debt.
FOREIGN CURRENCY CONTRACTS
Rayonier enters into forward exchange contracts to help mitigate the adverse
impact of foreign currency fluctuations on the Company's New Zealand net
currency exposure. Rayonier's forward contracts are intended to cover
anticipated operating needs and therefore do not "hedge" firm contracts or
commitments in accordance with SFAS No. 52, "Foreign Currency Translation." As a
result, the gains and losses on these contracts are included in "Interest and
miscellaneous (expense) income, net" based on mark-to-market values at reporting
dates. In 1997, the maximum foreign currency contracts outstanding at any point
in time totaled $32,561. At December 31, 1997, the Company held foreign currency
contracts maturing through November 1998 totaling $23,605.
COMMODITY FORWARDS
The Company periodically enters into commodity forwards to fix certain raw
material and energy costs. This practice effectively eliminates the risk of a
change in product margins resulting from an increase or decrease in fuel oil
costs. The Company does not enter into commodity forwards for trading or
speculative purposes. The net amounts paid or received under the agreements are
recognized as an adjustment to fuel oil expense. There were no contracts
outstanding at December 31, 1997.
FAIR VALUE OF FINANCIAL INSTRUMENTS
At December 31, 1997 and 1996, the estimated fair values of Rayonier's financial
instruments were as follows:
<TABLE>
<CAPTION>
1997 1996
------------------------------- -------------------------------
Carrying Fair Carrying Fair
Amount Value Amount Value
------ ----- ------ -----
<S> <C> <C> <C> <C>
Cash and short-term investments $ 10,661 $ 10,661 $ 3,432 $ 3,432
Debt 425,519 438,310 432,910 440,195
Foreign currency contracts (2,365) (2,365) 1,504 1,504
Interest rate swap agreements - (287) - 428
</TABLE>
Rayonier uses the following methods and assumptions in estimating the fair value
of its financial instruments:
Cash and Short-Term Investments - The carrying amount is equal to fair market
value.
Debt - The Company's short-term bank loans and floating rate debt approximate
fair value. The fair value of fixed rate long-term debt is based upon quoted
market prices for these or similar issues, or rates currently available to the
Company for debt with similar terms and maturities.
F-12
<PAGE> 33
Foreign Currency Contracts - The fair value of foreign currency contracts is
based on dealer-quoted market prices of comparable instruments. The contracts
are reported at mark-to-market values if not considered a hedge for accounting
purposes.
Interest Rate Swap Agreements - The fair value of interest rate swap agreements
is based upon the estimated cost to terminate the agreements, taking into
account current interest rates and creditworthiness of the counterparties.
10. SHAREHOLDERS' EQUITY
An analysis of activity in shareholders' equity for the three years ended
December 31, 1997 follows:
<TABLE>
<CAPTION>
Total
Common Shares Retained Shareholders'
Shares Amount Earnings Equity
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
BALANCE, JANUARY 1, 1995 29,574,807 $ 157,581 $ 497,620 $ 655,201
Net income - - 142,348 142,348
Dividends paid - - (29,629) (29,629)
Incentive stock plans 78,471 1,451 - 1,451
--------------- --------------- --------------- ---------------
BALANCE, DECEMBER 31, 1995 29,653,278 159,032 610,339 769,371
Net loss - - (98,399) (98,399)
Dividends paid - - (34,229) (34,229)
Incentive stock plans 66,977 3,169 - 3,169
Repurchase of Common Shares (437,800) (16,522) - (16,522)
--------------- --------------- --------------- ---------------
BALANCE, DECEMBER 31, 1996 29,282,455 145,679 477,711 623,390
Net Income - - 87,319 87,319
Dividends paid - - (34,523) (34,523)
Incentive stock plans 124,679 4,892 - 4,892
Repurchase of Common Shares (1,123,500) (48,396) - (48,396)
--------------- --------------- --------------- ---------------
BALANCE, DECEMBER 31, 1997 28,283,634 $ 102,175 $ 530,507 $ 632,682
=============== =============== =============== ===============
</TABLE>
11. INCENTIVE STOCK PLANS
The 1994 Rayonier Incentive Stock Plan (the 1994 Plan) provides for the grant of
incentive stock options, non-qualified stock options, stock appreciation rights,
performance shares and restricted stock, subject to certain limitations. Under
the 1994 Plan, the Company may grant options to its employees for up to 4.5
million Common Shares. The exercise price of each option equals the market price
of the Company's stock on the date of grant, and an option's maximum term is 10
years. Options vest in one-third increments over a three-year period starting
from the date of grant.
Restricted stock granted under the 1994 Plan vests after three years. During
1997, 1996 and 1995, 2,000, 27,500 and 6,000 restricted shares were granted with
grant-date fair values of $38.13, $33.38 and $30.00 for 1997, 1996 and 1995,
respectively.
In 1997, 1996 and 1995, 93,000, 48,000 and 82,500 Common Shares, respectively,
were reserved for contingent performance shares. The actual number of
performance shares to be issued is contingent upon the Company's total
shareholder return, as defined, compared with a competitive peer group of 12
companies within the forest products industry over a three-year period. The
grant-date fair values of the 1997, 1996 and 1995 performance shares were
$38.13, $33.38 and $30.00 respectively.
The Company applies APB Opinion No. 25, "Accounting for Stock Issued to
Employees" to account for its stock plans. The compensation cost recognized was
$3,904, $3,737 and $2,338 in 1997, 1996 and 1995, respectively. Under SFAS No.
123 "Accounting for Stock Based Compensation," net income (loss) and earnings
(loss) per share would have been reduced (increased) by $1,431 or 5 cents per
share, $1,008 or 3 cents per share and $522 or 2 cents per share for 1997, 1996
and 1995, respectively. The fair value of each option grant is estimated on the
date of grant using the Black-Scholes option-pricing model with the following
weighted-average assumptions used for grants in 1997, 1996, and 1995,
respectively: dividend yield of 3.0 percent for 1997 and 3.1 percent for 1996
and 1995; expected volatility of 22.5 percent for all years; risk-free interest
rates of 6.3 percent, 5.6 percent and 7.9 percent; and an expected life of 7.5
years for all years. The weighted average fair value of options granted during
the year was $10.46, $8.39 and $9.20 for 1997, 1996 and 1995, respectively.
F-13
<PAGE> 34
A summary of the status of the Company's stock option plans as of December 31,
1997, 1996 and 1995, and changes during the years then ended is presented below:
<TABLE>
<CAPTION>
1997 1996 1995
-------------------------- --------------------------- --------------------------
Weighted Weighted Weighted
Number Average Number Average Number Average
of Exercisable of Exercisable of Exercisable
Shares Price Shares Price Shares Price
<S> <C> <C> <C> <C> <C> <C>
Options outstanding at
beginning of year 1,268,288 $29.99 974,614 $28.64 721,019 $27.14
Granted - 1994 Incentive
Stock Plan 370,500 $38.34 355,000 $33.53 346,000 $30.03
Exercised (80,345) $28.24 (39,477) $27.79 (72,471) $20.02
Canceled (6,832) $36.01 (21,849) $31.38 (19,934) $29.72
--------- --------- ---------
Outstanding at end of year 1,551,611 $32.05 1,268,288 $29.99 974,614 $28.64
========= ========= =========
Options exercisable at
year-end 857,833 $29.23 596,001 $28.13 264,140 $25.14
</TABLE>
The following table summarizes information about stock options outstanding at
December 31, 1997:
<TABLE>
<CAPTION>
Options Outstanding
-------------------------------------
Range Number Weighted Average Options
of Outstanding Remaining Exercisable Weighted Average
Exercise Prices at 12/31/97 Contractual Life at 12/31/97 Exercise Price
--------------- ----------- ---------------- ----------- --------------
<S> <C> <C> <C> <C>
$16.57 - $19.72 90,322 2.9 years 90,322 $18.47
$28.88 - $31.35 752,589 6.5 years 647,783 $29.93
$33.38 - $48.56 708,700 8.5 years 119,728 $33.35
</TABLE>
12. EMPLOYEE BENEFIT PLANS
Employee benefit plan liabilities are estimated using actuarial estimates and
management assumptions. These estimates are based on historical information,
along with certain assumptions about future events. Changes in assumptions, as
well as changes in actual experience, could cause these estimates to change.
Pension Plans
Rayonier has pension plans covering substantially all of its employees. The cost
is borne by Rayonier. Certain plans are subject to union negotiation. The
following table sets forth net periodic pension cost of Rayonier plans and total
pension expense for the three years ended December 31:
<TABLE>
<CAPTION>
1997 1996 1995
---------- ---------- -------
<S> <C> <C> <C>
Defined Benefit Plans
Service cost $ 4,871 $ 5,136 $ 4,022
Interest cost 7,461 7,311 6,348
Return on assets (21,788) (14,254) (23,105)
Net amortization and deferral 13,580 6,672 15,463
---------- ---------- ------
Net periodic pension cost of Rayonier plans 4,124 4,865 2,728
Other Pension Cost
Defined contribution plans 2,437 2,326 1,872
---------- ---------- ---------
Total pension expense $ 6,561 $ 7,191 $ 4,600
========== ========== =========
</TABLE>
F-14
<PAGE> 35
The following table sets forth the funded status of the Rayonier pension plans,
the amounts recognized in the balance sheets of the Company at December 31, 1997
and 1996 and the principal weighted-average assumptions inherent in their
determination:
<TABLE>
<CAPTION>
1997 1996
---------- --------
<S> <C> <C>
Actuarial Present Value of Benefit Obligations
Vested benefits $ 101,488 $ 94,878
========== ==========
Accumulated benefits $ 107,851 $ 101,064
========== ==========
Projected benefits $ 113,407 $ 105,899
Plan assets at fair value 119,862 110,397
---------- -------
Plan assets in excess of projected benefits 6,455 4,498
Unrecognized net gain (5,167) (6,532)
Unrecognized past service cost 11,618 12,851
Curtailment effects and termination benefits (2,952) -
Unrecognized net assets (3,505) (4,369)
----------- ----------
Prepaid pension asset $ 6,449 $ 6,448
========== ==========
Actuarial Assumptions (%)
Discount rate 7.00 7.50
Rate of return on invested assets 9.75 9.75
Salary increase assumption 5.00 5.00
</TABLE>
The table for 1997 reflects the costs of curtailment and special termination
benefits of an hourly Rayonier pension plan as a result of the closure of the
Port Angeles pulp mill. See Note 6. The costs of $2,952 were recorded as part of
the 1996 charge of $125 million primarily related to the Port Angeles pulp mill
closure and were accounted for in accordance with SFAS No. 88, "Employers'
Accounting for Settlements and Curtailments of Defined Benefit Pension Plans and
for Termination Benefits."
Postretirement Health and Life
Rayonier provides health care and life insurance benefits for certain employees
upon retirement. The following table sets forth postretirement health care and
life insurance benefits expense for the three years ended December 31:
<TABLE>
<CAPTION>
1997 1996 1995
---------- ---------- ---------
<S> <C> <C> <C>
Service cost $ 407 $ 429 $ 598
Interest cost 1,305 1,254 1,847
Net amortization and deferral 138 (289) 319
---------- ---------- ---------
Net periodic expense of Rayonier plans 1,850 1,394 2,764
Multi-employer plans 592 393 -
---------- ---------- ---------
Total postretirement benefits expense $ 2,442 $ 1,787 $ 2,764
========== ========== =========
</TABLE>
The following table sets forth the status of the Rayonier postretirement benefit
plans other than pensions, the amounts recognized in the balance sheets of the
Company at December 31, 1997 and 1996 and the principal weighted-average
assumptions inherent in their determination:
<TABLE>
<CAPTION>
1997 1996
---------- -----------
<S> <C> <C>
Accumulated postretirement benefit obligation $ 20,405 $ 17,915
Unrecognized net loss (10,424) (9,328)
Unrecognized prior service cost 3,951 8,482
---------- ----------
Liability recognized in the balance sheet $ 13,932 $ 17,069
========== ==========
Actuarial Assumptions (%)
Discount rate 7.00 7.50
Ultimate health care trend rate 5.00 5.00
</TABLE>
The assumed rate of future increases in the per capita cost of health care (the
health care trend rate) was 8 percent for 1997, decreasing ratably to 5 percent
in the year 2001. Increasing the table of health care trend rates by one
percentage point per year would have the effect of increasing the accumulated
postretirement benefit obligation by $567 and the annual expense by $45.
F-15
<PAGE> 36
13. COMMITMENTS
The Company leases certain buildings, machinery and equipment under various
operating leases. As of December 31, 1997, minimum rental commitments under
operating leases are $5,704, $5,085, $4,619, $9,959 and $1,746 for 1998, 1999,
2000, 2001 and 2002, respectively. For the remaining years, such commitments
amount to $3,848, aggregating total minimum lease payments of $30,961. Total
rental expense for operating leases amounted to $7,545, $5,609, and $7,373 in
1997, 1996 and 1995, respectively. Additionally, the Company has indirectly
guaranteed approximately $23.6 million of debt that is secured by equipment used
by its vendors to provide products to the Company.
14. CONTINGENCIES
From time to time, Rayonier may become liable with respect to pending and
threatened litigation and environmental and other matters.
Legal Proceedings
Rayonier has been designated a potentially responsible party, or has had other
claims made against it, under the U.S. Comprehensive Environmental Response,
Compensation and Liability Act and/or comparable state statutes at eight sites,
all of which relate to operations classified under "Dispositions and
Discontinued Operations." Rayonier is a de minimis participant in proceedings
involving two of these sites. In addition, the Company is negotiating consent
orders with state environmental agencies for environmental remediation at two
additional sites. Rayonier believes that an appropriate provision for
remediation costs at these sites is included in its reserves for estimated
environmental obligations with respect to dispositions and discontinued
operations. See Note 6.
In addition, there are various lawsuits pending against or affecting Rayonier
and its subsidiaries, some of which involve claims for substantial sums, but
whose outcomes are not expected to materially impact the Company's consolidated
financial position or results of operations. In particular, Rayonier is one of
two defendants in an action seeking indemnity for $57 million in damages
incurred as the result of a fire and explosion at a storage facility where a
Rayonier pulp manufacturing by-product was stored. Rayonier is vigorously
defending the action, believes that its defenses are meritorious and based on
advice of counsel, believes that its liability, if any, will not be material and
will be covered by its product liability insurance.
Environmental Matters
Rayonier is subject to stringent environmental laws and regulations concerning
air emissions, water discharges and waste disposal that, in the opinion of
management, will require substantial expenditures over the next ten years.
During 1997, the EPA finalized its Cluster Rules governing air emissions but,
due to the specialty nature of Rayonier's products and operations, postponed
finalizing water discharge rules governing the Company's pulp mills. The Company
continues to work with the EPA to establish appropriate water discharge rules
for the pulp mills, but the timing and costs associated with such rulemaking is
uncertain. In the opinion of management, future capital costs associated with
existing environmental rules will not have a material impact on the Company's
consolidated financial position or results of operations.
Over the past several years, the Company has worked with the state of Washington
to implement protective measures with respect to several endangered species. The
effect has been to restrict harvesting in various habitats on Company land. Such
efforts are ongoing and, in the opinion of management, will not have a material
impact on the Company's consolidated financial position or results of
operations.
F-16
<PAGE> 37
15. SEGMENT INFORMATION
Please refer to "Item 7 - Segment Information" where information regarding
business segment sales and operating income is provided. Additional segment
information for the three years ended December 31 follows (millions of dollars):
<TABLE>
<CAPTION>
DEPRECIATION,
GROSS PLANT ADDITIONS DEPLETION AND AMORTIZATION IDENTIFIABLE ASSETS
1997 1996 1995 1997 1996 1995 1997 1996 1995
------ ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Timber and Wood Products $ 75 $ 109 $ 72 $ 31 $ 28 $ 26 $ 828 $ 797 $ 737
Specialty Pulp Products 61 71 65 66 60 59 691 703 708
Corporate and other 1 1 3 1 -- 1 46 49 49
Dispositions -- 6 3 1 9 10 31 49 154
------ ------ ------ ------ ------ ------ ------ ------ ------
Total $ 137 $ 187 $ 143 $ 99 $ 97 $ 96 $1,596 $1,598 $1,648
====== ====== ====== ====== ====== ====== ====== ====== ======
</TABLE>
Custodial capital spending was $72 million, $83 million and $72 million in 1997,
1996 and 1995, respectively. Custodial capital spending is defined as capital
expenditures to maintain current earnings level over the cycle and to keep
facilities and equipment in safe and reliable condition, and in compliance with
regulatory requirements.
GEOGRAPHICAL OPERATING INFORMATION
Information by geographical operating area for the three years ended December 31
follows (millions of dollars):
<TABLE>
<CAPTION>
OPERATING
LOCATION SALES OPERATING INCOME IDENTIFIABLE ASSETS
1997 1996 1995 1997 1996 1995 1997 1996 1995
------ ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
United States $ 992 $1,059 $1,126 $ 163 $ 32 $ 222 $1,222 $1,275 $1,393
New Zealand 90 96 106 8 5 13 357 301 237
All other 22 23 28 (5) (3) (1) 17 22 18
------ ------ ------ ------ ------ ------ ------ ------ ------
Total $1,104 $1,178 $1,260 $ 166 $ 34 $ 234 $1,596 $1,598 $1,648
====== ====== ====== ====== ====== ====== ====== ====== ======
</TABLE>
EXPORT SALES
Sales of products produced in various countries for export to other countries
consisted of the following (millions of dollars):
<TABLE>
<CAPTION>
OPERATING SALES
LOCATION DESTINATION 1997 % 1996 % 1995 %
---- - ---- - ---- -
<S> <C> <C> <C> <C> <C> <C> <C>
United States Asia Pacific $ 227 46 $327 54 $ 368 53
Western Europe 127 26 138 23 146 21
All other 77 15 78 12 102 15
------ ---- ------ ---- ------ ----
431 87 543 89 616 89
------ ---- ------ ---- --- ----
New Zealand Asia Pacific 46 9 47 8 61 9
United States 5 1 4 - 3 -
------ ---- ------ ---- ------ ----
51 10 51 8 64 9
All other Primarily Asia Pacific 17 3 13 3 14 2
------ ---- ------ ---- ------ ----
Total $ 499 100 $607 100 $ 694 100
====== === === === ====== ===
</TABLE>
16. NEW ZEALAND - FOREIGN CURRENCY EXPOSURE AND RISK MANAGEMENT
Rayonier's New Zealand operations generate approximately 8 percent of the
Company's sales. A significant portion of the revenue from Rayonier's New
Zealand operations is in U.S. dollars or significantly affected by the New
Zealand dollar/U.S. dollar exchange rate. However, most of its cash operating
costs are incurred in New Zealand dollars with New Zealand dollar expenses
exceeding New Zealand dollar revenues. The Company believes that it has been
able to mitigate most of the effect of exchange rate fluctuations of the New
Zealand dollar through risk management activities thereby normalizing the
contribution of its New Zealand operations toward what it would have been
without exchange rate movements. The Company
F-17
<PAGE> 38
plans to continue this program but will continue to limit its mark-to-market
exposure so as not to have a material effect on EPS if exchange rates move
rapidly.
The following summarizes the contribution to Rayonier's earnings from New
Zealand operations after consideration of foreign exchange effects (millions of
dollars):
<TABLE>
<CAPTION>
1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
Operating income on a 1995 exchange rate basis $ 5 $ 7 $ 13
Effect of exchange rate changes 3 (2) --
---- ---- ----
Operating income as reported 8 5 13
Gain (loss) from foreign exchange contracts (3) 6 1
---- ---- ----
Contribution from New Zealand operations $ 5 $ 11 $ 14
==== ==== ====
</TABLE>
17. QUARTERLY RESULTS FOR 1997 AND 1996 (UNAUDITED)
(thousands of dollars, except per share amounts)
<TABLE>
<CAPTION>
Quarter Ended
------------------------------------------------------------- Total
March 31 June 30 Sept. 30 Dec. 31 Year
----------- ----------- ----------- ---------- -----------
1997
<S> <C> <C> <C> <C> <C>
Sales $ 260,138 $ 290,073 $ 266,853 $ 287,164 $ 1,104,228
Operating income 40,473 41,075 41,894 42,688 166,130
Net income 18,396 19,761 23,241 25,921 87,319
Basic EPS .63 .68 .81 .91 3.03
Diluted EPS .62 .67 .79 .89 2.97
1996
Sales $ 293,980 $ 296,667 $ 285,104 $ 302,289 $ 1,178,040
Operating income (loss) 59,892 32,949 31,049 (89,973)a 33,917
Net income (loss) 31,477 15,404 15,568 (160,848)b (98,399)
Basic EPS 1.06 .52 .53 (5.39)b (3.28)
Diluted EPS 1.05 .51 .52 (5.39)b (3.28)
</TABLE>
a Includes a pretax charge of $125 million for dispositions, primarily for
the closure of the Port Angeles pulp mill. See Note 6.
b Includes a charge of $79 million after-tax, or $2.63 per share, primarily
for the closure of the Port Angeles pulp mill and a charge of $98 million
after-tax, or $3.28 per share, to implement AICPA Statement of Position
96-1 related to future environmental monitoring costs. See Note 6.
F-18
<PAGE> 39
SIGNATURES
Pursuant to the requirements of Section 13 of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
RAYONIER INC.
By KENNETH P. JANETTE
----------------------------------
Kenneth P. Janette
March 20, 1998 Vice President and Corporate Controller
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
* Chairman of the Board, Chief
------------------------------- Executive Officer and Director
Ronald M. Gross
(Principal Executive Officer)
GERALD J. POLLACK Senior Vice President and March 20, 1998
------------------------------- Chief Financial Officer
Gerald J. Pollack
(Principal Financial Officer)
KENNETH P. JANETTE Vice President and Corporate March 20, 1998
------------------------------- Controller
Kenneth P. Janette
(Principal Accounting Officer)
* President, Chief Operating
------------------------------- Officer and Director
W. Lee Nutter
* Director
-------------------------------
Rand V. Araskog
* Director
-------------------------------
Donald W. Griffin
* Director
-------------------------------
Paul G. Kirk, Jr.
* Director
-------------------------------
Katherine D. Ortega
* Director
-------------------------------
Burnell R. Roberts
* Director
-------------------------------
Carl S. Sloane
* Director
-------------------------------
Nicholas L. Trivisonno
* Director
-------------------------------
Gordon I. Ulmer
*By GERALD J. POLLACK March 20, 1998
---------------------------
Attorney-In-Fact
</TABLE>
A
<PAGE> 40
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description Location
----------- ----------- --------
<S> <C> <C>
2.1 Distribution agreement between ITT Incorporated by reference to Exhibit
Corporation and Rayonier Inc. 2.1 to the Registrant's December 31,
1993 Form 10-K
3.1 Amended and Restated Articles of Incorporation Incorporated by reference to Exhibit
4(a) to the Registrant's Registration
Statement on Form S-8 (Registration No.
33-52437)
3.2 By-Laws Incorporated by reference to Exhibit
3.2 to the Registrant's December 31,
1995 Form 10-K
4.1 Indenture dated as of September 1, 1992 Incorporated by reference to Exhibit
between the Company and Bankers Trust 4.1 to the Registrant's December 31,
Company, as Trustee, with respect to certain 1993 Form 10-K
debt securities of the Company
4.2 First Supplemental Indenture dated as of Incorporated by reference to Exhibit
December 13, 1993 4.2 to the Registrant's December 31,
1993 Form 10-K
4.3 $100 million 364-day Revolving Credit Incorporated by reference to Exhibit
Agreement dated as of April 14, 1995 among 4.1 to the Registrant's March 31, 1995
Rayonier Inc. as Borrower and the banks named Form 10-Q
therein as Banks, Citibank, N.A. as
Administrative Agent and Citicorp Securities,
Inc. and the Toronto-Dominion Bank as
Arrangers
4.4 $200 million Revolving Credit Agreement dated Incorporated by reference to Exhibit
as of April 14, 1995 among Rayonier Inc. as 4.2 to the Registrant's March 31, 1995
Borrower and the banks named therein as Form 10-Q
Banks, Citibank, N.A. as Administrative Agent
and Citicorp Securities, Inc. and the
Toronto-Dominion Bank as Arrangers
4.5 Amendment No.1, dated as of June 16, 1995 to Incorporated by reference to Exhibit
the $100 million 364-day Revolving Credit 4.1 to the Registrant's June 30, 1996
Agreement dated as of April 14, 1995 among Form 10-Q
Rayonier Inc. as Borrower and the banks named
therein as Banks, Citibank, N.A. as
Administrative Agent and Citicorp Securities,
Inc. and the Toronto-Dominion Bank as
Arrangers
4.6 Amendment No. 2, dated as of April 12, 1996 Incorporated by reference to Exhibit
to the $100 million 364-day Revolving Credit 4.2 to the Registrant's June 30, 1996
Agreement dated as of April 14, 1995 among Form 10-Q
Rayonier Inc. as Borrower and the banks named
therein as Banks, Citibank, N.A. as
Administrative Agent and Citicorp Securities,
Inc. and the Toronto-Dominion Bank as
Arrangers
B
</TABLE>
<PAGE> 41
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description Location
----------- ----------- --------
<S> <C> <C>
4.7 Amendment No. 1, dated as of June 16, 1995 to Incorporated by reference to Exhibit
the $200 million Revolving Credit Agreement 4.3 to the Registrant's June 30, 1996
dated as of April 14, 1995 among Rayonier Form 10-Q
Inc. as Borrower and the banks named therein
as Banks, Citibank, N.A. as Administrative
Agent and Citicorp Securities, Inc. and the
Toronto-Dominion Bank as Arrangers
4.8 Amendment No. 2, dated as of April 12, 1996 Incorporated by reference to Exhibit
to the $200 million Revolving Credit 4.4 to the Registrant's June 30, 1996
Agreement dated as of April 14, 1995 among Form 10-Q
Rayonier Inc. as Borrower and the banks named
therein as Banks, Citibank, N.A. as
Administrative Agent and Citicorp Securities,
Inc. and the Toronto-Dominion Bank as
Arrangers
4.9 Amended and Restated Revolving Credit Incorporated by reference to Exhibit
Agreement dated as of April 11, 1997, for the 4.1 to the Registrant's March 31, 1997
$200 million Revolving Credit Agreement dated Form 10-Q
as of April 14, 1995 as amended as of June
16, 1995 and as of April 12, 1996 among
Rayonier Inc. as Borrower and the banks named
therein as Banks, Citibank, N.A. as
Administrative Agent and Citicorp Securities,
Inc. and the Toronto-Dominion Bank as
Arrangers
4.10 Other instruments defining the rights of Not required to be filed. The
security holders, including indentures Registrant hereby agrees to file with
the Commission a copy of any other
instrument defining the rights of
holders of the Registrant's long-term
debt upon request of the Commission
9 Voting trust agreement None
10.1 Rayonier 1994 Incentive Stock Plan Filed herewith
10.2 Rayonier Supplemental Senior Executive Filed herewith
Severance Pay Plan
10.3 Rayonier Investment and Savings Plan for Filed herewith
Salaried Employees
10.4 Rayonier Salaried Employees Retirement Plan Filed herewith
</TABLE>
C
<PAGE> 42
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description Location
----------- ----------- --------
<S> <C> <C>
10.5 Form of Indemnification Agreement between Incorporated by reference to Exhibit
Rayonier Inc. and its Directors and Officers 10.9 to the Registrant's December 31,
1993 Form 10-K
10.6 Rayonier Inc. Excess Benefit Plan Incorporated by reference to Exhibit
10.10 to the Registrant's December 31,
1993 Form 10-K
10.7 Amendment to Rayonier Inc. Excess Benefit Filed herewith
Plan dated August 18, 1997
10.8 Rayonier Inc. Excess Savings and Deferred Filed herewith
Compensation Plan
10.9 Form of Rayonier Inc. Excess Savings and Incorporated by reference to Exhibit
Deferred Compensation Plan Agreements 10.13 to the Registrant's December 31,
1995 Form 10-K
10.10 Form of Indemnification Agreement between Incorporated by reference to Exhibit
Registrant and directors of Rayonier Forest 10.1 to the Registrant's March 31, 1994
Resources Company, its wholly owned Form 10-Q
subsidiary which is Managing General Partner
of Rayonier Timberlands, L.P., who are not
also directors of Registrant
10.11 Description of Rayonier 1994 Incentive Stock Incorporated by reference to Exhibit
Plan Contingent Performance Share Awards 10.1 to the Registrant's June 30, 1994
Form 10-Q
10.12 Form of Rayonier 1994 Incentive Stock Plan Incorporated by reference to Exhibit
Contingent Performance Share Award Agreement 10.1 to the Registrant's June 30, 1994
Form 10-Q
10.13 Form of Rayonier 1994 Incentive Stock Plan Incorporated by reference to Exhibit
Restricted Share Award Agreement 10.17 to the Registrant's December 31,
1995 Form 10-K
10.14 Form of Rayonier 1994 Incentive Stock Incorporated by reference to Exhibit
Non-qualified Stock Option Award Agreement 10.18 to the Registrant's December 31,
1995 Form 10-K
10.15 Rayonier Substitute Stock Option Plan Incorporated by reference to Exhibit
4(c) to the Registrant's Registration
Statement on Form S-8 (File No.
33-52891)
10.16 Form of Rayonier Substitute Stock Option Incorporated by reference to Exhibit
Award Agreements 10.20 to the Registrant's December 31,
1995 Form 10-K
10.17 Split-Dollar Life Insurance Agreement dated Incorporated by reference to Exhibit
June 22, 1994 between Rayonier Inc. and 10.2 to the Registrant's June 30, 1994
Ronald M. Gross Form 10-Q
10.18 Amendment to Split-Dollar Life Insurance Filed herewith
Agreement, dated July 22, 1997
</TABLE>
D
<PAGE> 43
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description Location
----------- ----------- --------
<S> <C> <C>
10.19 Deferred Compensation / Supplemental Incorporated by reference to Exhibit
Retirement Agreement dated June 28, 1994 10.3 to the Registrant's June 30, 1994
between Rayonier Inc. and Ronald M. Gross Form 10-Q
10.20 Amendment to Deferred Compensation / Filed herewith
Supplemental Retirement Agreement, dated July
22, 1997
10.21 Other material contracts None
11 Statement re computation of per share earnings Not required to be filed
12 Statements re computation of ratios Filed herewith
13 Annual report to security holders, Form 10-Q Not applicable
or quarterly report to security holders
16 Letter re change in certifying accountant Not applicable
18 Letter re change in accounting principles Not applicable
21 Subsidiaries of the Registrant Incorporated by reference to Exhibit 21
to the Registrant's December 31, 1993
Form 10-K
22 Published report regarding matters submitted None
to vote of security holders
23 Consents of experts and counsel Filed herewith
24 Powers of attorney Filed herewith
27 Financial data schedule Filed herewith
28 Information from reports furnished to state Not applicable
insurance regulatory authorities
99 Additional exhibits None
</TABLE>
E
<PAGE> 1
1994 RAYONIER INCENTIVE STOCK PLAN
The following is the text of the 1994 Rayonier Incentive Stock Plan as amended
effective July 18, 1997:
1. PURPOSE
The purpose of the 1994 Rayonier Incentive Stock Plan is to motivate
and reward superior performance on the part of employees of Rayonier and its
subsidiaries and to thereby attract and retain employees of superior ability. In
addition, the Plan is intended to further opportunities for stock ownership by
such employees in order to increase their proprietary interest in Rayonier and,
as a result, their interest in the success of the Company. Awards will be made,
in the discretion of the Committee, to Key Employees (including officers and
directors who are also employees) whose responsibilities and decisions directly
affect the performance of any Participating Company and its subsidiaries. Such
incentive awards may consist of stock options, stock appreciation rights payable
in stock or cash, performance shares, restricted stock or any combination of the
foregoing, as the Committee may determine.
2. DEFINITIONS
When used herein, the following terms shall have the following
meanings:
"Act" means the Securities Exchange Act of 1934.
"Award" means an award granted to any Key Employee in accordance with
the provisions of the Plan in the form of Options, Rights, Performance Shares or
Restricted Stock, or any combination of the foregoing.
"Award Agreement" means the written agreement evidencing each Award
granted to a Key Employee under the Plan.
"Beneficiary" means the beneficiary or beneficiaries designated
pursuant to Section 10 to receive the amount, if any, payable under the Plan
upon the death of a Key Employee.
"Board" means the Board of Directors of the Company.
"CHANGE IN CONTROL" HAS THE MEANING SPECIFIED IN THE RETIREMENT PLAN.
"Code" means the Internal Revenue Code of 1986, as now in effect or as
hereafter amended. (All citations to sections of the Code are to such sections
as they may from time to time be amended or renumbered.)
"Committee" means the Compensation and Management Development Committee
of the Board or such other committee as may be designated by the Board to
administer the Plan.
"Company" means Rayonier Inc. and its successors and assigns.
"Fair Market Value", unless otherwise indicated in the provisions of
this Plan, means, as of any date, the composite closing price for one share of
Stock on the New York Stock Exchange or, if no sales of Stock have taken place
on such date, the composite closing price on the most recent date on which
selling prices were quoted, the determination to be made in the discretion of
the Committee.
1
<PAGE> 2
"Incentive Stock Option" means a stock option qualified under Section
422 of the Code.
"Key Employee" means an employee (including any officer or director who
is also an employee) of any Participating Company whose responsibilities and
decisions, in the judgment of the Committee, directly affect the performance of
the Company and its subsidiaries.
"Limited Stock Appreciation Right" means a stock appreciation right
which shall become exercisable automatically upon the occurrence of an
Acceleration Event as described in Section 9 of the Plan.
"Option" means an option awarded under Section 5 of the Plan to
purchase Stock of the Company, which option may be an Incentive Stock Option or
a non-qualified stock option.
"Participating Company" means the Company or any subsidiary or other
affiliate of the Company; provided, however, for Incentive Stock Options only,
"Participating Company" means the Company or any corporation which at the time
such Option is granted qualifies as a "subsidiary" of the Company under Section
425(f) of the Code.
"Performance Share" means a performance share awarded under Section 6
of the Plan.
"Plan" means the 1994 Rayonier Incentive Stock Plan, as the same may be
amended, administered or interpreted from time to time.
"Plan Year" means the calendar year.
"Retirement" means eligibility to receive immediate retirement benefits
under a Participating Company pension plan.
"Restricted Stock" means Stock awarded under Section 7 of the Plan
subject to such restrictions as the Committee deems appropriate or desirable.
"Retirement Plan" means the Retirement Plan for Salaried Employees of
Rayonier Inc., as amended effective July 18, 1997, and as the same may be
thereafter amended from time to time prior to the occurrence of a Change in
Control.
"Right" means a stock appreciation right awarded in connection with an
option under Section 5 of the Plan.
"Stock" means the common shares of the Company.
"Total Disability" means the complete and permanent inability of a Key
Employee to perform all of his or her duties under the terms of his or her
employment with any Participating Company, as determined by the Committee upon
the basis of such evidence, including independent medical reports and data, as
the Committee deems appropriate or necessary.
"Voting Securities" means any securities of the Company that vote
generally in the election of directors.
2
<PAGE> 3
3. SHARES SUBJECT TO THE PLAN
The aggregate number of shares of Stock which may be awarded under the
Plan in any Plan Year shall be subject to an annual limit. The maximum number of
shares of Stock for which Awards may be granted under the Plan in each Plan Year
shall be 1.5 percent (l.5%) of the total of the issued and outstanding shares of
Stock reported in the Annual Report on Form 10-K of the Company for the fiscal
year ending immediately prior to any Plan Year. Any unused portion of the annual
limit for any Plan Year shall be carried forward and be made available for
awards in succeeding Plan Years.
No more than twenty percent (20%) of such total number of shares on a
cumulative basis shall be available for restricted stock and performance shares
Awards. In addition to the foregoing, in no event shall more than one million
(1,000,000) shares of Stock be cumulatively available for Awards of incentive
stock options under the Plan. For any Plan Year, no individual employee may
receive an Award of stock options for more than ten percent (10%) of the annual
limit on available shares applicable to that Plan Year.
Subject to the above limitations, shares of Stock to be issued under the Plan
may be made available from the authorized but unissued shares, or from shares
purchased in the open market. For the purpose of computing the total number of
shares of Stock available for Awards under the Plan, there shall be counted
against the foregoing limitations the number of shares of Stock which equal the
value of performance share Awards, in each case determined as at the dates on
which such Awards are granted. If any Awards under the Plan are forfeited,
terminated, expire unexercised, are settled in cash in lieu of Stock or are
exchanged for other Awards, the shares of Stock which were theretofore subject
to such Awards shall again be available for Awards under the Plan to the extent
of such forfeiture or expiration of such Awards. Further, any shares that are
exchanged (either actually or constructively) by optionees as full or partial
payment to the Company of the purchase price of shares being acquired through
the exercise of a stock option granted under the Plan may be available for
subsequent Awards, provided however, that such shares may be awarded only to
those participants who are not directors or executive officers (as that term is
defined in the rules and regulations under Section 16 of the Exchange Act).
4. GRANT OF AWARDS AND AWARD AGREEMENTS
(a) Subject to the provisions of the Plan, the Committee shall (i)
determine and designate from time to time those Key Employees or groups of Key
Employees to whom Awards are to be granted; (ii) determine the form or forms of
Award to be granted to any Key Employee; (iii) determine the amount or number of
shares of Stock subject to each Award; and (iv) determine the terms and
conditions of each Award.
(b) Each Award granted under the Plan shall be evidenced by a written
Award Agreement. Such agreement shall be subject to and incorporate the express
terms and conditions, if any, required under the Plan or required by the
Committee.
3
<PAGE> 4
5. STOCK OPTIONS AND RIGHTS
(a) With respect to Options and Rights, the Committee shall (i)
authorize the granting of Incentive Stock Options, non-qualified stock options,
or a combination of Incentive Stock Options and non-qualified stock options;
(ii) authorize the granting of Rights which may be granted in connection with
all or part of any Option granted under this Plan, either concurrently with the
grant of the option or at any time thereafter during the term of the Option;
(iii) determine the number of shares of Stock subject to each Option or the
number of shares of Stock that shall be used to determine the value of a Right;
and (iv) determine the time or times when and the manner in which each Option or
Right shall be exercisable and the duration of the exercise period.
(b) Any option issued hereunder which is intended to qualify as an
Incentive Stock Option shall be subject to such limitations or requirements as
may be necessary for the purposes of Section 422 of the Code or any regulations
and rulings thereunder to the extent and in such form as determined by the
Committee in its discretion.
(c) Rights may be granted only to Key Employees who may be considered
directors or officers of the Company for purposes of Section 16 of the Act.
(d) The exercise period for a non-qualified stock option and any
related Right shall not exceed ten years and two days from the date of grant,
and the exercise period for an Incentive Stock Option and any related Right
shall not exceed ten years from the date of grant.
(e) The Option price per share shall be determined by the Committee at
the time any Option is granted and shall be not less than the Fair Market Value
of one share of Stock on the date the Option is granted.
(f) No part of any Option or Right may be exercised until the Key
Employee who has been granted the Award shall have remained in the employ of a
Participating Company for such period after the date of grant as the Committee
may specify, if any, and the Committee may further require exercisability in
installments; provided, however, the period during which a Right is exercisable
shall commence no earlier than six months following the date the Option or Right
is granted.
(g) The purchase price of the shares as to which an Option shall be
exercised shall be paid to the Company at the time of exercise either in cash or
Stock already owned by the optionee having a total Fair Market Value equal to
the purchase price, or a combination of cash and Stock having a total fair
market value, as so determined, equal to the purchase price. The Committee shall
determine acceptable methods for tendering Stock as payment upon exercise of an
Option and may impose such limitations and prohibitions on the use of Stock to
exercise an Option as it deems appropriate.
(h) Unless Section 9 shall provide otherwise, Rights granted to a
director or officer shall terminate when such person ceases to be considered a
director or officer of the Company subject to Section 16 of the Act.
(i) In case of termination of employment, the following provisions
shall apply:
(A) If a Key Employee who has been granted an Option shall die
before such Option has expired, his or her Option may be exercised in
full by the person or persons to whom the Key Employee's rights under
the Option pass by will, or if no such person has such right, by his or
her
4
<PAGE> 5
executors or administrators, at any time, or from time to time, within
five years after the date of the Key Employee's death or within such
other period, and subject to such terms and conditions as the Committee
may specify, but not later than the expiration date specified in
Section 5(d) above.
(B) If the Key Employee's employment by any Participating
Company terminates because of his or her Retirement or Total
Disability, he or she may exercise his or her Options in full at any
time, or from time to time, within five years after the date of the
termination of his or her employment or within such other period, and
subject to such terms and conditions as the Committee may specify, but
not later than the expiration date specified in Section 5(d) above. Any
such Options not fully exercisable immediately prior to such optionee's
retirement shall become fully exercisable upon such retirement unless
the Committee, in its sole discretion, shall otherwise determine.
(C) Except as provided in Section 9, if the Key Employee shall
voluntarily resign before eligibility for Retirement or he or she is
terminated for cause as determined by the Committee, the Options or
Rights shall be cancelled coincident with the effective date of the
termination of employment.
(D) If the Key Employee's employment terminates for any other
reason, he or she may exercise his or her Options, to the extent that
he or she shall have been entitled to do so at the date of the
termination of his or her employment, at any time, or from time to
time, within three months after the date of the termination of his or
her employment or within such other period, and subject to such terms
and conditions as the Committee may specify, but not later than the
expiration date specified in Section 5(d) above.
(j) No Option or Right granted under the Plan shall be transferable
other than by will or by the laws of descent and distribution. During the
lifetime of the optionee, an Option or Right shall be exercisable only by the
Key Employee to whom the Option or Right is granted.
(k) With respect to an Incentive Stock Option, the Committee shall
specify such terms and provisions as the Committee may determine to be necessary
or desirable in order to qualify such Option as an "incentive stock option"
within the meaning of Section 422 of the Code.
(1) With respect to the exercisability and settlement of Rights:
(i) Upon exercise of a Right, the Key Employee shall
be entitled, subject to such terms and conditions the
Committee may specify, to receive upon exercise thereof all or
a portion of the excess of (A) the Fair Market Value of a
specified number of shares of Stock at the time of exercise,
as determined by the Committee, over (B) a specified amount
which shall not, subject to Section 5(e), be less than the
Fair Market Value of such specified number of shares of Stock
at the time the Right is granted. Upon exercise of a Right,
payment of such excess shall be made as the Committee shall
specify in cash, the issuance or transfer to the Key Employee
of whole shares of Stock with a Fair Market Value at such time
equal to any excess, or a combination of cash and shares of
Stock with a combined Fair Market Value at such time equal to
any such excess, all as determined by the Committee. The
Company will not issue a fractional share of Stock and, if a
fractional share would otherwise be issuable, the Company
shall pay cash equal to the Fair Market Value of the
fractional share of Stock at such time.
5
<PAGE> 6
(ii) For the purposes of Subsection (i) of this
Section 5(l), in the case of any such Right or portion
thereof, other than a Right related to an Incentive Stock
Option, exercised for cash during a "window period" specified
by Rule 16b-3 under the Act, the Fair Market Value of the
Stock at the time of such exercise shall be the highest
composite daily closing price of the Stock during such window
period.
(iii) In the event of the exercise of such Right, the
Company's obligation in respect of any related Option or such
portion thereof will be discharged by payment of the Right so
exercised.
6. PERFORMANCE SHARES
(a) Subject to the provisions of the Plan, the Committee shall (i)
determine and designate from time to time those Key Employees or groups of Key
Employees to whom Awards of Performance Shares are to be made, (ii) determine
the Performance Period (the "Performance Period") and Performance Objectives
(the "Performance Objectives") applicable to such Awards, (iii) determine the
form of settlement of a Performance Share and (iv) generally determine the terms
and conditions of each such Award. At any date, each Performance Share shall
have a value equal to the Fair Market Value of a share of Stock at such date;
provided that the Committee may limit the aggregate amount payable upon the
settlement of any Award.
(b) The Committee shall determine a Performance Period of not less than
two nor more than five years. Performance Periods may overlap and Key Employees
may participate simultaneously with respect to Performance Shares for which
different Performance Periods are prescribed.
(c) The Committee shall determine the Performance Objectives of Awards
of Performance Shares. Performance Objectives may vary from Key Employee to Key
Employee and between groups of Key Employees and shall be based upon such
performance criteria or combination of factor as the Committee may deem
appropriate, including, but not limited to, minimum earnings per share or return
on equity. If during the course of a Performance Period there shall occur
significant events which the Committee expects to have a substantial effect on
the applicable Performance Objectives during such period, the Committee may
revise such Performance Objectives.
(d) At the beginning of a Performance Period, the Committee shall
determine for each Key Employee or group of Key Employees the number of
Performance Shares or the percentage of Performance Shares which shall be paid
to the Key Employee or member of the group of Key Employees if Performance
Objectives are met in whole or in part.
(e) If a Key Employee terminates service with all Participating
Companies during a Performance Period because of death, Total Disability,
Retirement, or under other circumstances where the Committee in its sole
discretion finds that a waiver would be in the best interests of the Company,
that Key Employee may, as determined by the Committee, be entitled to an Award
of Performance Shares at the end of the Performance Period based upon the extent
to which the Performance Objectives were satisfied at the end of such period and
prorated for the portion of the Performance Period during which the Key Employee
was employed by any Participating Company; provided, however, the Committee may
provide for an earlier payment in settlement of such Performance Shares in such
amount and under such terms and conditions as the Committee deems appropriate or
desirable. If a Key Employee terminates service with all Participating Companies
during a Performance Period for any other reason, then such Key Employee shall
not be entitled to any Award with respect to that Performance Period unless the
Committee shall otherwise determine.
6
<PAGE> 7
(f) Each Award of a Performance Share shall be paid in whole shares of
Stock, or cash, or a combination of Stock and cash either as a lump sum payment
or in annual installments, all as the Committee shall determine, with payment to
commence as soon as practicable after the end of the relevant Performance
Period.
7. RESTRICTED STOCK
(a) Restricted Stock shall be subject to a restriction period (after
which restrictions will lapse) which shall mean a period commencing on the date
the Award is granted and ending on such date as the Committee shall determine
(the "Restriction Period"). The Committee may provide for the lapse of
restrictions in installments where deemed appropriate.
(b) Except when the Committee determines otherwise pursuant to Section
7(d), if a Key Employee terminates employment with all Participating Companies
for any reason before the expiration of the Restriction Period, all shares of
Restricted Stock still subject to restriction shall be forfeited by the Key
Employee and shall be reacquired by the Company.
(c) Except as otherwise provided in this Section 7, no shares of
Restricted Stock received by a Key Employee shall be sold, exchanged,
transferred, pledged, hypothecated or otherwise disposed of during the
Restriction Period.
(d) In cases of death, Total Disability or Retirement or in cases of
special circumstances, the Committee may, in its sole discretion when it finds
that a waiver would be in the best interests of the Company, elect to waive any
or all remaining restrictions with respect to such Key Employee's Restricted
Stock.
(e) The Committee may require, under such terms and conditions as it
deems appropriate or desirable, that the certificates for Stock delivered under
the Plan may be held in custody by a bank or other institution, or that the
Company may itself hold such shares in custody until the Restriction Period
expires or until restrictions thereon otherwise lapse, and may require, as a
condition of any Award of Restricted Stock that the Key Employee shall have
delivered a stock power endorsed in blank relating to the Restricted Stock.
(f) Nothing in this Section 7 shall preclude a Key Employee from
exchanging any shares of Restricted Stock subject to the restrictions contained
herein for any other shares of Stock that are similarly restricted.
(g) Subject to Section 7(e) and Section 8, each Key Employee entitled
to receive Restricted Stock under the Plan shall be issued a certificate for the
shares of Stock. Such certificate shall be registered in the name of the Key
Employee, and shall bear an appropriate legend reciting the terms, conditions
and restrictions, if any, applicable to such Award and shall be subject to
appropriate stop-transfer orders.
8. CERTIFICATES FOR AWARDS OF STOCK
(a) The Company shall not be required to issue or deliver any
certificates for shares of Stock prior to (i) the listing of such shares on any
stock exchange on which the Stock may then be listed and (ii) the completion of
any registration or qualification of such shares under any federal or state law,
or any ruling or regulation of any government body which the Company shall, in
its sole discretion, determine to be necessary or advisable.
7
<PAGE> 8
(b) All certificates for shares of Stock delivered under the Plan shall
also be subject to such stop-transfer orders and other restrictions as the
Committee may deem advisable under the rules, regulations, and other
requirements of the Securities and Exchange Commission, any stock exchange upon
which the Stock is then listed and any applicable federal or state securities
laws, and the Committee may cause a legend or legends to be placed on any such
certificates to make appropriate reference to such restrictions. The foregoing
provisions of this Section 8(b) shall not be effective if and to the extent that
the shares of Stock delivered under the Plan are covered by an effective and
current registration statement under the Securities Act of 1933, or if and so
long as the Committee determines that application of such provisions is no
longer required or desirable. In making such determination, the Committee may
rely upon an opinion of counsel for the Company.
(c) Except for the restrictions on Restricted Stock under Section 7,
each Key Employee who receives Stock in settlement of an Award of Stock, shall
have all of the rights of a shareholder with respect to such shares, including
the right to vote the shares and receive dividends and other distributions. No
Key Employee awarded an Option, a Right or Performance Share shall have any
right as a shareholder with respect to any shares covered by his or her Option,
Right or Performance Share prior to the date of issuance to him or her of a
certificate or certificates for such shares.
9. CHANGE IN CONTROL
Notwithstanding any provisions in this Plan to the contrary:
(a) Each outstanding Option granted under the Plan shall
become immediately exercisable in full for the aggregate number of
shares covered thereby and all related Rights shall also become
exercisable upon the occurrence of a Change in Control and shall
continue to be exercisable in full for cash for a period of 60 calendar
days beginning on the date that such Change in Control occurs and
ending on the 60th calendar day following that date; provided, however,
that (A) no Right shall become exercisable earlier than six months
following the date the Right is granted, and (B) no Option or Right
shall be exercisable beyond the expiration date of its original term.
(b) Options and Rights shall not terminate and shall continue
to be fully exercisable for a period of seven months following the
occurrence of a Change in Control in the case of an employee who is
terminated other than for just cause or who voluntarily terminates his
or her employment because he or she in good faith believes that as a
result of such Change in Control he or she is unable effectively to
discharge his or her present duties or the duties of the position he or
she occupied just prior to the occurrence of such Change in Control.
For purposes of Section 9 only, termination shall be for "just cause"
only if such termination is based on fraud, misappropriation or
embezzlement on the part of the employee which results in a final
conviction of a felony. Under no circumstances, however, shall any
Option or Right be exercised beyond the expiration date of its original
term.
(c) Any Right or portion thereof may be exercised for cash
within the 60-calendar-day period following the occurrence of a Change
in Control with settlement, except in the case of a Right related to an
Incentive Stock Option, based on the "Formula Price" which shall be the
highest of (A) the highest composite daily closing price of the Stock
during the period beginning on the 60th calendar day prior to the date
on which the Right is exercised and ending on the date such Right is
exercised, (B) the highest gross price paid for the Stock during the
same period of time, as reported in a report on Schedule 13D filed with
the Securities and Exchange Commission or (C) the highest gross price
paid or to be paid for a share of Stock (whether by way of exchange,
conversion,
8
<PAGE> 9
distribution upon merger, liquidation or otherwise) in any of the
transactions set forth in the definition of "Change in Control" in the
Retirement Plan.
(d) Upon the occurrence of a Change in Control, Limited Stock
Appreciation Rights shall automatically be granted as to any Option
with respect to which Rights are not then outstanding; provided,
however, that Limited Stock Appreciation Rights shall be provided at
the time of grant of any Incentive Stock Option subject to
exercisability upon the occurrence of a Change in Control. Limited
Stock Appreciation Rights shall entitle the holder thereof, upon
exercise of such rights and surrender of the related Option or any
portion thereof, to receive, without payment to the Company (except for
applicable withholding taxes), an amount in cash equal to the excess,
if any, of the Formula Price as that term is defined in Section 9 over
the option price of the Stock as provided in such Option; provided that
in the case of the exercise of any such Limited Stock Appreciation
Right or portion thereof related to an Incentive Stock Option, the Fair
Market Value of the Stock at the time of such exercise shall be
substituted for the Formula Price. Each such Limited Stock Appreciation
Right shall be exercisable only during the period beginning on the
first business day following the occurrence of such Change in Control
and ending on the 60th calendar day following such date and only to the
same extent the related Option is exercisable. In the case of persons
who are considered directors or officers of the Company for purposes of
Section 16 of the Act, Limited Stock Appreciation Rights shall not be
so exercisable until they have been outstanding for at least six
months. Upon exercise of a Limited Stock Appreciation Right and
surrender of the related Option, or portion thereof, such Option, to
the extent surrendered, shall not thereafter be exercisable.
(e) The restrictions applicable to Awards of Restricted Stock
issued pursuant to Section 7 shall lapse upon the occurrence of a
Change in Control and the Company shall issue stock certificates
without a restrictive legend. Key Employees holding Restricted Stock on
the date of a Change in Control may tender such Restricted Stock to the
Company which shall pay the Formula Price as that term is defined in
Section 9; provided, such Restricted Stock must be tendered to the
Company within 60 calendar days of the Change in Control.
(f) If a Change in Control occurs during the course of a
Performance Period applicable to an Award of Performance Shares
pursuant to Section 6, then the Key Employee shall be deemed to have
satisfied the Performance Objectives and settlement of such Performance
Shares shall be based on the Formula Price, as defined in this Section
9.
10. BENEFICIARY
(a) Each Key Employee shall file with the Company a written designation
of one or more persons as the Beneficiary who shall be entitled to receive the
Award, if any, payable under the Plan upon his or her death. A Key Employee may
from time-to-time revoke or change his or her Beneficiary designation without
the consent of any prior Beneficiary by filing a new designation with the
Company. The last such designation received by the Company shall be controlling;
provided, however, that no designation, or change or revocation thereof, shall
be effective unless received by the Company prior to the Key Employee's death,
and in no event shall it be effective as of a date prior to such receipt.
(b) If no such Beneficiary designation is in effect at the time of a
Key Employee's death, or if no designated Beneficiary survives the Key Employee
or if such designation conflicts with law, the Key Employee's estate shall be
entitled to receive the Award, if any, payable under the Plan upon his or her
death. If the Committee is in doubt as to the right of any person to receive
such Award, the Company may retain such Award, without liability for any
interest thereon, until the Committee determines the rights thereto, or the
9
<PAGE> 10
Company may pay such Award into any court of appropriate jurisdiction and such
payment shall be a complete discharge of the liability of the Company therefor.
11. ADMINISTRATION OF THE PLAN
(a) Each member of the Committee shall be both a member of the Board
and a "non-employee director" within the meaning of Rule 16b-3(b)(3)(i) under
the Act or successor rule or regulation. No member of the Committee shall be, or
shall have been, eligible to receive an Award under the Plan or any other plan
maintained by any Participating Company to acquire stock, stock options, stock
appreciation rights, performance shares or restricted stock of a Participating
Company at any time within the one year immediately preceding the member's
appointment to the Committee.
(b) All decisions, determinations or actions of the Committee made or
taken pursuant to grants of authority under the Plan shall be made or taken in
the sole discretion of the Committee and shall be final, conclusive and binding
on all persons for all purposes.
(c) The Committee shall have full power, discretion and authority to
interpret, construe and administer the Plan and any part thereof, and its
interpretations and constructions thereof and actions taken thereunder shall be,
except as otherwise determined by the Board, final, conclusive and binding on
all persons for all purposes.
(d) The Committee's decisions and determinations under the Plan need
not be uniform and may be made selectively among Key Employees, whether or not
such Key Employees are similarly situated.
(e) The Committee may, in its sole discretion, delegate such of its
powers as it deems appropriate.
(f) If a Change in Control has not occurred and if the Committee
determines that a Key Employee has taken action inimical to the best interests
of any Participating Company, the Committee may, in its sole discretion,
terminate in whole or in part such portion of any Option (including any related
Right) as has not yet become exercisable at the time of termination, terminate
any Performance Share Award for which the Performance Period has not been
completed or terminate any Award of Restricted Stock for which the Restriction
Period has not lapsed.
12. AMENDMENT, EXTENSION OR TERMINATION
The Board may, at any time, amend or terminate the Plan and,
specifically, may make such modifications to the Plan as it deems necessary to
avoid the application of Section 162(m) of the Code and the Treasury regulations
issued thereunder. However, no amendment shall, without approval by a majority
of the Company's stockholders, (a) alter the group of persons eligible to
participate in the Plan, (b) except as provided in Section 13 increase the
maximum number of shares of Stock which are available for Awards under the Plan
or (c) extend the period during which awards may be granted beyond December 31,
2003. If a Change in Control has occurred, no amendment or termination shall
impair the rights of any person with respect to a prior Award.
13. ADJUSTMENTS IN EVENT OF CHANGE IN COMMON STOCK
In the event of any recapitalization, reclassification, split-up or
consolidation of shares of Stock or, stock dividend, merger or consolidation of
the Company or sale by the Company of all or a portion of its
10
<PAGE> 11
assets, the Committee may make such adjustments in the Stock subject to Awards,
including Stock subject to purchase by an Option, or the terms, conditions or
restrictions on Stock or Awards, including the price payable upon the exercise
of such Option, as the Committee deems equitable.
14. MISCELLANEOUS
(a) Except as provided in Section 9, nothing in this Plan or any Award
granted hereunder shall confer upon any employee any right to continue in the
employ of any Participating Company or interfere in any way with the right of
any Participating Company to terminate his or her employment at any time. No
Award payable under the Plan shall be deemed salary or compensation for the
purpose of computing benefits under any employee benefit plan or other
arrangement of any Participating Company for the benefit of its employees unless
the Company shall determine otherwise. No Key Employee shall have any claim to
an Award until it is actually granted under the Plan. To the extent that any
person acquires a right to receive payments from the Company under this Plan,
such right shall be no greater than the right of an unsecured general creditor
of the Company. All payments to be made hereunder shall be paid from the general
funds of the Company and no special or separate fund shall be established and no
segregation of assets shall be made to assure payment of such amounts except as
provided in Section 7(e) with respect to Restricted Stock.
(b) The Committee may cause to be made, as a condition precedent to the
payment of any Award, or otherwise, appropriate arrangements with the Key
Employee or his or her Beneficiary, for the withholding of any federal, state,
local or foreign taxes.
(c) The Plan and the grant of Awards shall be subject to all applicable
federal and state laws, rules, and regulations and to such approvals by any
government or regulatory agency as may be required.
(d) The terms of the Plan shall be binding upon the Company and its
successors and assigns.
(e) Captions preceding the sections hereof are inserted solely as a
matter of convenience and in no way define or limit the scope or intent of any
provision hereof.
15. EFFECTIVE DATE, TERM OF PLAN AND SHAREHOLDER APPROVAL
The effective date of the Plan was March 1, 1994 and was approved by
the Company's shareholders within twelve months before such date. The Plan was
amended and restated effective July 18, 1997. No Award shall be granted under
this Plan after the Plan's termination date. The Plan's termination date shall
be December 31, 2003. The Plan will continue in effect for existing Awards as
long as any such Award is outstanding.
11
<PAGE> 1
EXHIBIT 10.2
RAYONIER, INC.
SUPPLEMENTAL SENIOR EXECUTIVE
SEVERANCE PAY PLAN
Human Resources
July 1997
<PAGE> 2
RAYONIER INC.
SUPPLEMENTAL SENIOR EXECUTIVE SEVERANCE PAY PLAN
1. PURPOSE
The Compensation and Management Development Committee (the "Committee") of the
Board of Directors of Rayonier Inc. (the "Company") recognizes that, as with
many publicly held corporations, there exists the possibility of a Change in
Control of the Company. This possibility and the uncertainty it creates may
result in the loss or distraction of senior executives of the Company, to the
detriment of the Company and its shareholders.
Accordingly, the Committee has determined that appropriate steps should be taken
to assure the Company of the continued employment, attention and dedication to
duty of its senior executives -- including maintaining professionalism,
indifference and objectivity in negotiating with a potential acquirer and to
seek to ensure the availability of their continued service, notwithstanding the
possibility, threat, or occurrence of a Change in Control.
Therefore, in order to fulfill the above purposes, the Senior Executive
Severance Pay Plan adopted by the Rayonier Board of Directors on March 1, 1994
is hereby amended and restated as the Supplemental Senior Executive Severance
Pay Plan (the "Plan") as set forth as follows:
2. COVERED EMPLOYEES
Covered Employees under this Plan (each an "Executive") are those full-time,
regular Senior Executive salaried employees of the Company, who are identified
in Appendix "A" attached hereto and designated as Tier I or Tier II, as may be
amended from time to time prior to a Change in Control by the Committee.
An Executive shall only cease to be a participant in the Plan as a result of
termination or amendment of the Plan complying with Section 15 of the Plan, or
when he or she ceases to be an employee of the Company, unless, at the time he
or she ceases to be an employee, such Executive is entitled to payment of
Separation Benefits as provided in the Plan or there has been an event or
occurrence that constitutes Good Reason after a Change in Control that would
enable Executive to terminate his or her employment and receive Separation
Benefits. An Executive entitled to payment of Separation Benefits under the Plan
shall remain a participant in the Plan until the full amount of the Separation
Benefits have been paid to Executive.
3. SEPARATION BENEFITS UPON QUALIFYING TERMINATION OF EMPLOYMENT
If, within two years following a Change in Control, (a) an Executive terminates
his or her employment for Good Reason, or (b) the Company terminates an
Executive's employment, the Executive shall be provided Separation Benefits in
accordance with the terms of this Plan, except Separation Benefits shall not be
payable where Executive:
- is terminated for Cause;
2
<PAGE> 3
- terminates employment with the Company prior to the effective
date of this Plan;
- voluntarily resigns, other than for Good Reason;
- voluntarily fails to return from an approved leave of absence
(including a medical leave of absence); or
- terminates employment as a result of Executive's death or
Disability.
Any non-excepted termination is a "Qualifying Termination."
4. SEPARATION BENEFITS
For purposes of this Plan, Separation Benefits consist of both Scheduled
Severance Pay and Additional Severance.
Scheduled Severance Pay shall be determined in accordance with the
following schedule, which sets forth the months of Base Pay to be provided to an
Executive, based upon Executive's Years of Service as of the Effective Date, and
payable as provided in Section 5 below.
<TABLE>
<CAPTION>
YEARS OF SERVICE MONTHS OF BASE PAY
---------------- ------------------
TIER I TIER II
EXECUTIVES EXECUTIVES
---------- ----------
<S> <C> <C> <C>
Less than 4 24 12
4 25 13
5 26 14
6 27 15
7 28 16
8 29 17
9 30 18
10 31 19
11 32 20
12 33 21
13 34 22
14 35 23
15 or more 36 24
</TABLE>
Additional Severance. In addition to Scheduled Severance Pay, upon a
Qualifying Termination Executive will be eligible to receive as Additional
Severance, the Benefits Continuation Amounts, as provided in Section 7 below,
and a Target Bonus Severance, as follows. The Target Bonus Severance shall be
based upon the Target Bonus Award established under the Rayonier Incentive Bonus
Plan during the year most recently ended prior to the Effective Date of the
Qualifying Termination. Tier I Executives are entitled to a Target Bonus
Severance which is three times Target Bonus Award, together with an additional
amount representing the prorated current year's bonus. Tier II Executives are
entitled to a Target Bonus Severance which is two times
3
<PAGE> 4
Target Bonus Award, together with an additional amount representing the prorated
current year's bonus. The prorated current year's bonus shall be determined by
multiplying one times the Target Bonus Award by a fraction of the numerator of
which the number of months or portion thereof lapsed in the then current year
prior to the qualifying termination and the denominator of which is twelve. The
Target Bonus Severance shall be paid to Executive by the Company as a lump sum
cash payment within 10-days after the Effective Date of the Qualifying
Termination.
5. LUMP SUM PAYMENT OF SCHEDULED SEVERANCE PAY
The Company shall pay the Scheduled Severance Pay to Executive in a lump sum not
later than 10 days after the Effective Date, except where Executive is entitled
to periodic payments of Salary Continuation under Section 6.
6. PERIODIC PAYMENT OF SCHEDULED SEVERANCE PAY
At Executive's option, subject to the conditions set forth in this Section 6,
the Scheduled Severance Pay shall be payable to Executive in the form of equal
periodic payments ("Salary Continuation") according to the Company's regular
payroll schedule or at any other intervals elected by Executive for a period
commencing on the first regular payroll pay date beginning after the Effective
Date of Executive's Qualifying Termination (the "Salary Continuation Period").
In order to receive Salary Continuation during a Salary Continuation Period, an
Executive must elect such Salary Continuation in writing prior to a Change in
Control and specify the Salary Continuation Period, which may not exceed the
number of months of Base Pay payable to Executive as Scheduled Severance Pay in
accordance with Section 4 above. During the Salary Continuation Period,
Executive agrees to perform advisory, consultative and such other services as
the Company may, from time to time, reasonably request in order to effect the
transition of Executive's duties as a result of Executive's Qualifying
Termination. The manner and time devoted to such service shall be determined in
the sole reasonable discretion of the Executive.
During such Salary Continuation Period, Executive will remain an active employee
of the Company, but Executive's benefits shall be limited as provided in Section
7 below. Notwithstanding Executive's status as an active employee of the Company
during the Salary Continuation Period, solely for the purposes of this Plan and
the Separation Benefits payable hereunder, Executive's Qualifying Termination
shall be deemed to occur as of the commencement of the Salary Continuation
Period.
In the event of Executive's death during the Salary Continuation Period, any
unpaid Salary Continuation shall be paid in a lump sum to such beneficiary or
beneficiaries designated by Executive in writing or, failing such designation,
to Executive's spouse if Executive is married or to Executive's estate if
Executive is unmarried.
7. BENEFITS CONTINUATION
Additional Severance shall include the Benefits Continuation Amounts, which are
comprised of the following:
A. If Executive is receiving Salary Continuation during a Salary
Continuation Period pursuant to Section 6 above, Executive will
continue to be eligible to participate
4
<PAGE> 5
in and shall receive credit for service during the Salary Continuation
Period under the following Company employee benefit plans:
(i) such employee welfare benefit plans, within the meaning of
Section 3(1) of ERISA, as the Company may maintain for the
benefit of the Company's employees during the Salary
Continuation Period, subject to the terms and conditions of
such plans; provided, however, that Executive shall not be
eligible to participate in any short or long-term disability
benefits plans or any business travel accident plans
maintained by the Company during the Salary Continuation
Period;
(ii) the Retirement Plan for Salaried Employees of Rayonier and the
Rayonier Investment and Savings Plan for Salaried Employees;
(iii) any excess benefit plan, within the meaning of Section 3(36)
of ERISA, or any supplemental executive retirement plan or
other employee pension benefit plan, within the meaning of
Section 3(2) of ERISA, not intended to be qualified under
Section 401(a) of the Code, maintained by the Company during
the Salary Continuation Period, subject to the terms and
conditions of such plans (collectively, the "Supplemental
Plans"); and
(iv) the Senior Executive Tax Plan, as applicable to Executive
immediately prior to the Qualifying Termination, and any
successor thereto.
During the period an Executive is receiving Salary Continuation,
Executive will not be eligible to accrue any vacation or participate in
any (i) bonus program, (ii) special termination programs, (iii) new
awards under any stock option or stock related plan for executives
(provided that Executive will be eligible to exercise any outstanding
stock options in accordance with the terms of any applicable stock
option plan), (iv) new or revised executive compensation programs that
may be introduced after the Effective Date and (v) any other executive
compensation program, plan, arrangement, practice, policy or
perquisites unless specifically authorized by the Company in writing.
The period during which an Executive is receiving Salary Continuation
does not count as service for the purpose of any Company long-term
incentive award program including, but not limited to, Rayonier's
Incentive Stock Plan and any similar plan.
If, for any reason at any time the Company is unable to treat Executive
as being eligible for ongoing participation in any Company employee
benefit plan as provided in this Section 7A, and if as a result thereof
Executive does not receive a benefit or receives a reduced benefit, the
Company shall provide such benefits outside such plan at no additional
cost (including without limitation tax cost) to Executive, or at the
Company's option, make available equal benefits from other sources.
If the length of Executive's Salary Continuation Period is less than 36 months,
by reason of:
5
<PAGE> 6
(i) the payment intervals elected by Executive pursuant to Section
6 above; or
(ii) fewer than 36 months of Base Pay being payable to Executive
pursuant to Section 4 above according to the Company's regular
payroll schedule; or
(iii) the acceleration of Executive's Salary Continuation as
provided in Section 10 below;
the Company shall pay to Executive in a lump sum not more than 10 days after the
end of Executive's Salary Continuation Period, as the same may be shortened by
reason of the acceleration of Executive's Salary Continuation as provided in
Section 10 below, an amount equal to the excess of (X) over (Y), where (X) is
the Equivalent Actuarial Value of the benefit to which Executive would have been
entitled under the Retirement Plan for Salaried Employees of Rayonier Inc., the
Retirement Plan for Salaried Employees of ITT Corporation, the Rayonier
Investment and Savings Plan for Salaried Employees, any excess benefit plan,
within the meaning of Section 3(36) of ERISA, or any supplemental executive
retirement plan within the meaning of Section 3(2) of ERISA, maintained by ITT
Corporation (the "ITT Supplemental Plans"), and the Supplemental Plans
(collectively, the "Plans") had Executive accumulated additional eligibility
service as a fully vested participant in the Plans and additional benefit
service in all the Plans other than the Retirement Plan for Salaried Employees
of ITT Corporation and the ITT Supplemental Plans equal to the difference
between 36 months and the number of months of eligibility and benefit service
credited to Executive under the Plans during the Salary Continuation Period and
as if Executive were three years older than his attained age at the beginning of
the Salary Continuation Period, solely for purposes of benefit eligibility and
determining the amount of reduction in benefit on account of payment commencing
prior to the Executive's normal retirement date, and by defining Executive's
Final Average Compensation as equal to the greater of Executive's Base Pay on
the Effective Date of Executive's Qualifying Termination or Executive's Final
Average Compensation as determined under the terms of the Retirement Plan for
Salaried Employees of Rayonier Inc. and (Y) is the Equivalent Actuarial Value of
the amounts otherwise actually payable to Executive under the Plans. The
Equivalent Actuarial Value shall be determined using the same assumptions
utilized under the Rayonier Inc. Excess Benefit Plan upon the date of payment of
the lump sum and based on Executive's age on such date.
Notwithstanding the foregoing, for purposes of calculating the above lump sum,
Executive shall not be required to contribute to the Rayonier Investment and
Savings Plan for Salaried Employees or the Rayonier Inc. Excess Savings and
Deferred Compensation Plan as a condition to receiving such lump sum nor shall
the Company be required to include in such lump sum amounts attributable to
contributions Executive would have made under the Rayonier Investment and
Savings Plan for Salaried Employees or the Rayonier Inc. Excess Savings and
Deferred Compensation Plan had Executive continued to participate in those
plans. The Company shall only be obligated to include in such lump sum the
Company contributions that would have been made under the Rayonier Investment
and Savings Plan for Salaried Employees and the Rayonier Inc. Excess Savings and
Deferred Compensation Plan had Executive continued to participate in those plans
at the level of compensation and rate of contribution in effect as of the pay
date immediately preceding the termination of the
6
<PAGE> 7
Salary Continuation Period, without allocating any deemed earnings to said
Company contributions.
B. If the Executive has not elected Salary Continuation under Section 6,
the Company shall pay the Executive in a lump sum in cash on the
Effective Date, in addition to amounts to which Executive is entitled
under the Retirement Plan for Salaried Employees of Rayonier Inc., the
Retirement Plan for Salaried Employees of ITT Corporation, the Rayonier
Investment and Savings Plan for Salaried Employees and the Supplemental
Plans (collectively, the "Plans"), in effect on the Effective Date, an
amount equal to the excess of (X) over (Y), where (X) is the Equivalent
Actuarial Value of the benefit to which Executive would have been
entitled under the terms of such Plans, without regard to "vesting"
thereunder, had Executive accumulated an additional 3 years of
eligibility service as a fully vested participant in the Plans and an
additional 3 years of benefit service in all the Plans other than the
Retirement Plan for Salaried Employees of ITT Corporation and the ITT
Supplemental Plans and as if Executive were 3 years older, solely for
purposes of benefit eligibility and determining the amount of reduction
in benefit on account of payment commencing prior to the Executive's
normal retirement date, and by defining Executive's Final Average
Compensation as equal to the greater of Executive's Base Pay on the
Effective Date of Executive's Qualifying Termination or Executive's
Final Average Compensation as determined under the terms of the
Retirement Plan for Salaried Employees of Rayonier Inc. and (Y) is the
Equivalent Actuarial Value of the amounts otherwise actually payable to
Executive under the Plans. The Equivalent Actuarial Value shall be
determined using the same assumptions utilized under the Rayonier Inc.
Excess Benefit Plan upon the date of payment of the lump sum and based
on Executive's age on such date.
Notwithstanding the foregoing, for purposes of calculating the above
lump sum, Executive shall not be required to contribute to the Rayonier
Investment and Savings Plan for Salaried Employees or the Rayonier Inc.
Excess Savings and Deferred Compensation Plan as a condition to
receiving such lump sum nor shall the Company be required to include in
such lump sum amounts attributable to contributions Executive would
have made under the Rayonier Investment and Savings Plan for Salaried
Employees or the Rayonier Inc. Excess Savings and Deferred Compensation
Plan had Executive continued to participate in those plans. The Company
shall only be obligated to include in such lump sum the Company
contributions that would have been made under the Rayonier Investment
and Savings Plan for Salaried Employees and the Rayonier Inc. Excess
Savings and Deferred Compensation Plan had Executive continued to
participate in those plans at the level of compensation and rate of
contribution in effect as of the pay date immediately preceding the
Effective Date, without allocating any deemed earnings to said Company
contributions.
C. Regardless of whether Executive has elected Salary Continuation
pursuant to Section 6 or is receiving a lump sum payment of Scheduled
Severance Pay pursuant to Section 5, the Company shall provide to
Executive the following additional benefits:
7
<PAGE> 8
(i) Ensure that options to purchase the Common Shares of the
Company ("Stock Options") granted to Executive prior to the
Effective Date by the Company will become immediately
exercisable in full in accordance with the respective Plan,
provided that no option shall be exercisable after the
termination date of such option.
(ii) Immediately vest in and grant to Executive all outstanding
Performance Shares and Restricted Stock ("Common Shares")
awarded to Executive prior to the Effective Date by the
Company without remaining restrictions as if all performance
objectives had been achieved in accordance with the respective
Plan documents.
(iii) Outplacement services, the scope and provider of which shall
be selected by Executive in his or her sole discretion, until
Executive is employed on a full time, comparable work basis,
for a period not to extend beyond the second anniversary of
the Effective Date of Executive's Qualifying Termination.
D. If there has been a Change in Control and any dispute arises between
Executive and the Company as to the validity, enforceability and/or
interpretation of any right or benefit afforded by this Plan, at
Executive's option such dispute shall be resolved by binding
arbitration proceedings in accordance with the rules of the American
Arbitration Association. The arbitrators shall presume that the rights
and/or benefits afforded by this Plan which are in dispute are valid
and enforceable and that Executive is entitled to such rights and/or
benefits. The Company shall be precluded from asserting that such
rights and/or benefits are not valid, binding and enforceable and shall
stipulate before such arbitrators that the Company is bound by all the
provisions of this Plan. The burden of overcoming by clear and
convincing evidence the presumption that Executive is entitled to such
rights and/or benefits shall be on the Company. The results of any
arbitration be conclusive on both parties and shall not be subject to
judicial interference or review on any ground whatsoever, including
without limitation any claim that the Company was wrongfully induced to
enter into this agreement to arbitrate such a dispute.
The Company shall pay the cost of any arbitration proceedings under
this Plan. Executive shall be entitled (within two (2) business days of
requesting such advance) to an advance of the actual legal fees and
expenses incurred by such Executive in connection with such proceedings
and Executive shall be obligated to reimburse the Company for such fees
and expenses in connection with such arbitration proceedings only if it
is finally and specifically determined by the arbitrators that
Executive's position in initiating the arbitration was frivolous and
completely without merit. The arbitrators shall have discretion to
award punitive damages to the Executive if it is found that the
Company's actions or failures to act which led to the Executive
submitting a dispute to arbitration and/or the Company's actions or
failures to act during the pendency of the arbitration proceeding make
such an award appropriate in the circumstances.
8
<PAGE> 9
In the event Executive is required to defend in any legal action or
other proceeding the validity or enforceability of any right or benefit
afforded by this Plan, the Company will pay any and all actual legal
fees and expenses incurred by such Executive regardless of the outcome
of such action and, if requested by Executive, shall (within two
business days of such request) advance such expenses to Executive. The
Company shall be precluded from asserting in any judicial or other
proceeding commenced with respect to any right or benefit afforded by
this Plan that such rights and benefits are not valid, binding and
enforceable and shall stipulate in any such proceeding that the Company
is bound by all the provisions of this Plan.
8. DEFINITIONS
The following terms not otherwise defined in this Plan have the indicated
meaning:
"Base Pay" shall mean the annual base salary rate payable to Executive
at the Effective Date, including compensation converted to other
benefits under a flexible pay arrangement maintained by the Company or
deferred pursuant to a written plan or agreement with the Company. Such
annual base salary rate shall in no event be less than the highest
annual base salary rate paid to Executive at any time during the
twenty-four (24) month period immediately preceding the Effective Date.
"Target Bonus Award" shall mean the Standard Bonus Target Percentages
of base salaries as defined under the Rayonier Incentive Bonus Plan for
the respective executive salary grades as determined pursuant to
Company base salary compensation schedules in effect for eligible
executives at a 100 percent performance factor as of December 31 for
the year most recently ended prior to the Effective Date.
"Cause" shall mean with respect to any Executive: (i) the willful and
continued failure of Executive for a period of ninety (90) days to
perform substantially Executive's duties with the Company (other than
any such failure resulting from incapacity due to physical or mental
illness), after a written demand for substantial performance is
delivered to Executive by the Board of Directors of the Company that
specifically identifies the manner in which the Board believes that
Executive has not substantially performed Executive's duties, or (ii)
the engaging by Executive in illegal conduct or gross misconduct that
is demonstrably injurious to the Company. For purposes of this
definition, no act or failure to act on the part of Executive shall be
considered "willful" unless it is done, or omitted to be done, by
Executive without reasonable belief that Executive's action or omission
was in the best interests of the Company. Any act or failure to act
based upon authority given pursuant to a resolution duly adopted by the
Board of Directors or upon the instructions of the Chief Executive
Officer or a senior officer of the Company or based upon the advice of
counsel for the Company shall be conclusively presumed to be done, or
omitted to be done, by Executive in good faith and in the best
interests of the Company. An Executive shall be deemed to have engaged
in illegal conduct and shall be subject to termination for Cause if
9
<PAGE> 10
Executive has been indicted or charged by any prosecuting agency with
the commission of a felony.
"Change in Control" shall have the definition set forth in the
Retirement Plan for Salaried Employees of Rayonier Inc. as amended
effective July 18, 1997, and as the same may be thereafter amended from
time to time prior to the occurrence of a Change in Control.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time.
"Disability" shall mean an illness or injury that has prevented
Executive from performing his or her duties (as they existed
immediately prior to the illness or injury) on a full-time basis for
180 consecutive business days.
"Effective Date" is the date the Company selects as the Executive's
last day of active full-time employment.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended, and the regulations thereunder.
"Good Reason" shall mean, with respect to any Executive, (i) the
assignment to Executive of any duties inconsistent in any respect with
Executive's position (including status, offices, titles, and reporting
requirements), authority, duties or responsibilities immediately before
the Change in Control, or any other action by the Company that results
in a significant diminution in such position, authority, duties or
responsibilities, excluding for this purpose an isolated, insubstantial
and inadvertent action not taken in bad faith and which is remedied by
the Company promptly after receipt of notice thereof given by
Executive; (ii) any material reduction in Executive's Base Pay,
opportunity to earn annual bonuses or other compensation or employee
benefits, other than as a result of an isolated and inadvertent action
not taken in bad faith and that is remedied by the Company promptly
after receipt of notice thereof given by Executive; (iii) the Company's
requiring Executive to relocate his or her principal place of business
to a place which is more than thirty-five miles from his or her
previous principal place of business; or (iv) any purported termination
of the Plan otherwise than as expressly permitted by this Plan. For
purposes of this Plan, any good faith determination of "Good Reason"
made by Executive shall be conclusive.
"Normal Retirement Date" shall mean the first of the month that
coincides with or follows Executive's 65th birthday.
"Separation Benefits" shall mean the benefits described in Sections 4
and 6 that are provided to Executive upon a Qualifying Termination
under this Plan.
"Years of Service" shall mean the total number of completed years of
employment, inclusive of credited ITT system service, from Executive's
date of hire to the Effective Date, rounded up or down to the nearest
whole year. The ITT system service date of hire is the date from which
employment in the ITT system is recognized in conjunction with Rayonier
service for purposes of determining eligibility and vesting under the
applicable ITT and Rayonier retirement plans covering Executive on the
Effective Date.
10
<PAGE> 11
9. Certain Additional Payments by the Company
(a) Anything in this Plan to the contrary notwithstanding and
except as set forth below, in the event it shall be determined
that any payment or distribution by the Company to or for the
benefit of any Executive (whether paid or payable or
distributed or distributable pursuant to the terms of this
Plan or otherwise, but determined without regard to any
additional payments required under this Section 9) (a
"Payment") would be subject to the excise tax imposed by
Section 4999 of the Code or any interest or penalties are
incurred by Executive with respect to such excise tax (such
excise tax, together with any such interest and penalties, are
hereinafter collectively referred to as the "Excise Tax"),
then Executive shall be entitled to receive an additional
payment (a "Gross-Up Payment") in an amount such that after
payment by the Executive of all taxes (including any interest
or penalties imposed with respect to such taxes), including,
without limitation, any income taxes (and any interest and
penalties imposed with respect thereto) and Excise Tax imposed
upon the Gross-Up Payment, Executive retains an amount of the
Gross-Up Payment equal to the Excise Tax imposed upon the
Payments.
(b) Subject to the provisions of Section 9(c), all determinations
required to be made under this Section 9, including whether
and when a Gross-Up Payment is required and the amount of such
Gross-Up Payment and the assumptions to be utilized in
arriving at such determination, shall be made by such
nationally recognized certified public accounting firm as may
be designated by Executive (the "Accounting Firm"), which
shall provide detailed supporting calculations both to the
Company and Executive within fifteen business days of the
receipt of notice from Executive that there has been a
Payment, or such earlier time as is requested by the Company.
In the event that the Accounting Firm is serving as accountant
or auditor for the individual, entity, or group effecting the
Change of Control, Executive shall appoint another nationally
recognized accounting firm to make the determinations required
hereunder (which accounting firm shall then be referred to as
the Accounting Firm hereunder). All fees and expenses of the
Accounting Firm shall be borne solely by the Company. Any
Gross-Up Payment, as determined pursuant to this Section 9,
shall be paid by the Company to Executive within five days of
the receipt of the Accounting Firm's determination. Any
determination by the Accounting Firm shall be binding upon the
Company and Executive. As a result of the uncertainty in the
application of Section 4999 of the Code at the time of the
initial determination by the Accounting Firm hereunder, it is
possible that Gross-Up Payments which will not have been made
by the Company should have been made (an "Underpayment"),
consistent with the calculations required to be made
hereunder. In the event that the Company exhausts its remedies
pursuant to Section 9(c) and Executive thereafter is required
to make a payment of any Excise Tax, the Accounting Firm shall
determine the amount of the Underpayment that has occurred and
any such Underpayment shall be promptly paid by the Company to
or for the benefit of Executive.
11
<PAGE> 12
(c) Executive shall notify the Company in writing of any claim by
the Internal Revenue Service that, if successful, would
require the payment by the Company of the Gross-Up Payment.
Such notification shall be given as soon as practicable but no
later than ten business days after Executive is informed in
writing of such claim and shall apprise the Company of the
nature of such claim and the date on which such claim is
requested to be paid. Executive shall not pay such claim prior
to the expiration of the thirty-day period following the date
on which it gives such notice to the Company (or such shorter
period ending on the date that any payment of taxes with
respect to such claim is due). If the Company notifies
Executive in writing prior to the expiration of such period
that it desires to contest such claim, Executive shall:
(i) give the Company any information reasonably requested
by the Company relating to such claim;
(ii) take such action in connection with contesting such
claim as the Company shall reasonably request in
writing from time to time, including, without
limitation, accepting legal representation with
respect to such claim by an attorney reasonably
selected by the Company;
(iii) cooperate with the Company in good faith in order
effectively to contest such claim; and
(iv) permit the Company to participate in any proceedings
relating to such claim; provided, however, that the
Company shall bear and pay directly all costs and
expenses (including additional interest and
penalties) incurred in connection with such contest
and shall indemnify and hold Executive harmless, on
an after-tax basis, for any Excise Tax or income tax
(including interest and penalties with respect
thereto) imposed as a result of such representation
and payment of costs and expenses. Without limitation
on the foregoing provisions of this Section 9(c), the
Company shall control all proceedings taken in
connection with such contest and, at its sole option,
may pursue or forgo any and all administrative
appeals, proceedings, hearings and conferences with
the taxing authority in respect of such claim and
may, at its sole option either direct Executive to
pay the tax claimed and sue for a refund or contest
the claim in a permissible manner, and the Executive
agrees to prosecute such contest to a determination
before any administrative tribunal, in a court of
initial jurisdiction and in one or more appellate
courts as the Company shall determine; provided,
however, that if the Company directs Executive to pay
such claim and sue for a refund, the Company shall
advance the amount of such payment to Executive on an
interest-free basis and shall indemnify and hold
Executive harmless, on an after-tax basis, from any
Excise Tax or income tax (including interest or
penalties with respect thereto) imposed with respect
to such advance or with respect to any imputed income
with respect to such advance and
12
<PAGE> 13
further provided that an extension of the statute of
limitations relating to payment of taxes for the
taxable year of Executive with respect to which such
contested amount is claimed to be due is limited
solely to such contested amount. Furthermore, the
Company's control of the contest shall be limited to
issues with respect to which a Gross-Up Payment would
be payable hereunder and Executive shall be entitled
to settle or contest, as the case may be, any other
issue raised by the Internal Revenue Service or any
other taxing authority.
(d) If, after the receipt by Executive of an amount advanced by
the Company pursuant to Section 9(c), Executive becomes
entitled to receive any refund with respect to such claim,
Executive shall (subject to the Company's complying with the
requirements of Section 9(c)) promptly pay to the Company the
amount of such refund (together with any interest paid or
credited thereon after taxes applicable thereto). If, after
the receipt by Executive of an amount advanced by the Company
pursuant to Section 9(c), a determination is made that
Executive shall not be entitled to any refund with respect to
such claim and the Company does not notify Executive in
writing of its intent to contest such denial of refund prior
to the expiration of thirty days after such determination,
then such advance shall be forgiven and shall not be required
to be repaid and the amount of such advance shall offset, to
the extent thereof, the amount of Gross-Up Payment required to
be paid."
10. PAYMENT ACCELERATION
If during the period an Executive is receiving Salary Continuation, the Company,
in its reasonable judgment exercised by the Board of Directors determines that
the Executive (i) engages in any activity that is inimical to the best interests
of the Company, (ii) publicly disparages the Company; (iii) fails to comply with
any Company Covenant Against Disclosure and Assignment of Rights to Intellectual
Property; (iv) without Rayonier Inc.'s prior consent, engages in, becomes
affiliated with, or becomes employed by any business competitive with the
Company; or (v) fails to comply with applicable provisions of the Rayonier Code
of Corporate Conduct or applicable Rayonier Inc. corporate policies, then the
Company may, upon written notice to Executive, pay the entire unpaid balance of
the scheduled Severance Pay to Executive as a nondiscounted lump sum together
with the amounts payable as a result of the termination of the Salary
Continuation Period under Section 7A.
11. RELEASE
No Separation Benefits will be provided under this Plan unless Executive
executes and delivers to the Company a mutual release, satisfactory to the
Company, in which Executive discharges and releases the Company and the
Company's directors, officers, employees and employee benefit plans from all
claims (other than for benefits to which Executive is entitled under this Plan
or any Company employee benefit plan) arising out of Executive's employment or
termination of employment and the Company discharges and releases Executive from
any and all claims arising out of Executive's employment or termination of
employment with the Company.
13
<PAGE> 14
12. SUCCESSOR TO COMPANY
This Plan shall bind any successor of the Company, its assets, or its businesses
(whether direct or indirect, by purchase, merger, consolidation, or otherwise),
in the same manner and to the same extent that the Company would be obligated
under this Plan if no succession had taken place.
In the case of any transaction in which a successor would not by the foregoing
provision or by operation of law be bound by this Plan, the Company shall
require such successor expressly and unconditionally to assume and agree to
perform the Company's obligations under this Plan, in the same manner and to the
same extent that the Company would be required to perform if no such succession
had taken place. The term "Company," as used in this Plan, shall mean the
Company as hereinbefore defined and any successor or assignee to the business or
assets which by reason hereof becomes bound by this Plan.
13. ADMINISTRATION OF PLAN
The Company is the Named Fiduciary for the Plan under ERISA. The Rayonier Board
of Directors Compensation and Management Development Committee (the "Committee")
is the Plan Administrator, which shall have the exclusive right to interpret
this Plan, adopt any rules and regulations for carrying out this Plan as may be
appropriate and, except as otherwise provided in this Plan, decide any and all
matters arising under this Plan. All interpretations and decisions by the
Committee shall be final, conclusive and binding on all parties affected
thereby.
14. CLAIMS PROCEDURE
If an employee or former employee makes a written request alleging a right to
receive benefits under this Plan or alleging a right to receive an adjustment in
benefits being paid under the Plan, the Company shall treat it as a claim for
benefit. All claims for benefit under the Plan shall be sent to the Rayonier
Board of Directors Compensation and Management Development Committee and must be
received within thirty days after termination of employment. If the Company
determines that any individual who has claimed a right to receive benefits, or
different benefits, under the Plan is not entitled to receive all or any part of
the benefits claimed, it will inform the claimant in writing of its
determination and the reasons therefor in terms calculated to be understood by
the claimant. The notice will be sent within ninety days of the claim unless the
Company determines additional time, not exceeding ninety days, is needed. The
notice shall make specific reference to the pertinent Plan provisions on which
the denial is based, and describe any additional material or information as
necessary. Such notice shall, in addition, inform the claimant what procedure
the claimant should follow to take advantage of the review procedures set forth
below in the event the claimant desires to contest the denial of the claim. The
claimant may within ninety days thereafter submit in writing to the Company a
notice that the claimant contests the denial of his or her claim by the Company
and desires a further review. The Company shall within sixty days thereafter
review the claim and authorize the claimant to appear personally and review
pertinent documents and submit issues and comments relating to the claim to the
persons responsible for making the determination on behalf of the
14
<PAGE> 15
Company. The Company will render its final decision with specific reasons
therefor in writing and will transmit it to the claimant within sixty days of
the written request for review, unless the Company determines additional time,
not exceeding sixty days, is needed, and so notifies the employee. If the
Company fails to respond to a claim filed in accordance with the foregoing
within sixty days or any such extended period, the Company shall be deemed to
have denied the claim.
15. TERMINATION OR AMENDMENT
The Company's Board of Directors may terminate or amend this Plan ("Plan
Change") at any time, except that no such Plan Change may reduce or adversely
affect Separation Benefits for any Executive who has a Qualifying Termination
within two years of the effective date of such Plan Change provided that
Executive was a Covered Employee under this Plan on the date of the Plan Change.
Notwithstanding the foregoing, for two years after the occurrence of a Change in
Control event, this Plan may not be terminated or amended until after all
Executives who become entitled to any payments hereunder shall have received
such payments in full. Any extension, amendment, or termination of this Plan by
the Board in accordance with the foregoing shall be made by action of the Board
in accordance with the Company's charter and bylaws and applicable law, and
shall be evidenced by a written instrument signed by a duly authorized officer
of the Company, certifying that the Board has taken such action.
16. PLAN SUPERSEDES PRIOR PLANS
This Plan supersedes and replaces all prior severance policies, plans, or
practices maintained by the Company with respect to all Covered Employees other
than individualized written agreements executed by the Company and Executive.
17. UNFUNDED PLAN STATUS.
This Plan is intended to be an unfunded plan maintained primarily for the
purpose of providing deferred compensation for a select group of management or
highly compensated employees, within the meaning of Section 401 of ERISA. All
payments pursuant to the Plan shall be made from the general funds of the
Company and no special or separate fund shall be established or other
segregation of assets made to assure payment. No Participant or other person
shall have under any circumstances any interest in any particular property or
assets of the Company as a result of participating in the Plan. Notwithstanding
the foregoing, the Company may but shall not be obligated to create one or more
grantor trusts, the assets of which are subject to the claims of the Company's
creditors, to assist it in accumulating funds to pay its obligations under the
Plan.
18. MISCELLANEOUS
Except as provided in this Plan, Executive shall not be entitled to any notice
of termination or pay in lieu thereof.
In cases where Severance Pay is provided under this Plan, pay in lieu of any
unused current year vacation entitlement will be paid to Executive in a lump
sum.
15
<PAGE> 16
This Plan is not a contract of employment, does not guarantee Executive
employment for any specified period and does not limit the right of the Company
to terminate the employment of Executive at any time.
The section headings contained in this Plan are included solely from convenience
of reference and shall not in any way affect the meaning of any provision of
this Plan.
If, for any reason, any one or more of the provisions or part of a provision
contained in this Plan shall be held to be invalid, illegal or unenforceable in
any respect, such invalidity, illegality or unenforceability shall not affect
any other provision or part of a provision of this Plan not held so invalid,
illegal or unenforceable, and each other provision or part of a provision shall
to the full extent consistent with law remain in full force and effect.
19. ADOPTION DATE AND AMENDMENT
This Plan was first adopted by Rayonier Inc.'s Board of Directors, effective
March 1, 1994 ("Adoption Date") and does not apply to any termination of
employment that occurred or which was communicated to Executive prior to the
Adoption Date.
On May 16, 1997, the Committee approved changes to the Plan, effective as of
June 1,1997. Subsequently on July 18, 1997, the Committee approved additional
changes to the Plan as contained herein, effective retroactive to June 1, 1997.
16
<PAGE> 17
APPENDIX A
SENIOR EXECUTIVE OFFICERS
TIER I TIER II
17
<PAGE> 18
SCHEDULE 1
RAYONIER BENEFIT PLANS
1. The Retirement Plan for Salaried Employees of Rayonier Inc.
2. The Rayonier Excess Benefit (Retirement) Plan
3. The Rayonier Investment and Savings Plan for Salaried Employees
4. The Rayonier Excess Savings and Deferred Compensation Plan
5. The Rayonier 1994 Incentive Stock Plan
6. Rayonier Supplemental Senior Executive Severance Pay Plan
7. Vacation Benefits for Salaried Employees (Human Resources Practice 29.0)
18
<PAGE> 1
Exhibit 10.3
RAYONIER INVESTMENT AND SAVINGS PLAN
FOR SALARIED EMPLOYEES
AS AMENDED AND RESTATED
EFFECTIVE JULY 18, 1997
(EXCEPT AS OTHERWISE INDICATED)
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C>
ARTICLE ONE Introduction and Purpose............................................................................ 1
ARTICLE TWO Definitions......................................................................................... 1
autonum "Accounts\........................................................................................ 1
autonum "Actual Contribution Percentage\.................................................................. 1
autonum "Actual Deferral Percentage\...................................................................... 2
autonum "Affiliate\....................................................................................... 2
autonum "After-Tax Savings\............................................................................... 2
autonum "Basic After-Tax Investment Account\.............................................................. 2
autonum "Basic After-Tax Savings\......................................................................... 3
autonum "Basic Before-Tax Investment Account\............................................................. 3
autonum "Basic Before-Tax Savings\........................................................................ 3
autonum "Basic Investment Account\........................................................................ 3
autonum "Basic Savings\................................................................................... 3
autonum "Before-Tax Savings\.............................................................................. 3
autonum "Beneficiary\..................................................................................... 4
autonum "Board of Directors\.............................................................................. 4
autonum "Break in Service\................................................................................ 4
autonum "Change in Control\............................................................................... 4
autonum "Code\............................................................................................ 4
autonum "Company\......................................................................................... 5
autonum "Company Contribution Account\.................................................................... 5
autonum "Compensation\.................................................................................... 5
autonum "Deferred Member\................................................................................. 5
autonum "Disability\...................................................................................... 5
autonum "Effective Date\.................................................................................. 6
autonum "Employee\........................................................................................ 6
autonum "Enrollment Date\................................................................................. 6
autonum "Funds\........................................................................................... 6
autonum "Hardship Committee\.............................................................................. 7
autonum "Highly Compensated Employee\..................................................................... 7
autonum "Hours Worked\.................................................................................... 9
autonum "ITT Plan\........................................................................................ 9
autonum "Loan Valuation Date\............................................................................. 9
autonum "Matching Company Contribution\................................................................... 9
autonum "Member\.......................................................................................... 10
autonum "Non-U.S. Citizen Employee\....................................................................... 10
autonum "Participating Corporation\....................................................................... 10
autonum "Participating Location\.......................................................................... 10
autonum "Plan\............................................................................................ 11
autonum "Plan Committee\.................................................................................. 11
autonum "Plan Year\....................................................................................... 11
autonum "Prior Plan Transfer\............................................................................. 11
autonum "Rayonier Shares\................................................................................. 11
autonum "Retirement\...................................................................................... 11
autonum "Retirement Contribution\......................................................................... 12
autonum "Retirement Account\.............................................................................. 12
autonum "Salary\.......................................................................................... 12
autonum "Savings Plan Administrator\...................................................................... 12
autonum "Service\......................................................................................... 12
autonum "Supplemental After-Tax Investment Account\....................................................... 14
autonum "Supplemental After-Tax Savings\.................................................................. 14
autonum "Supplemental Before-Tax Investment Account\...................................................... 14
autonum "Supplemental Before-Tax Savings\................................................................. 14
autonum "Supplemental Investment Account\................................................................. 14
</TABLE>
<PAGE> 3
<TABLE>
<S> <C>
autonum "Supplemental Savings\............................................................................ 14
autonum "Termination of Employment\....................................................................... 15
autonum "Trust Fund\...................................................................................... 15
autonum "Trustee\......................................................................................... 15
autonum "Valuation Date\.................................................................................. 15
autonum "Vested Company Contribution Account\............................................................. 15
autonum "Vested Share\.................................................................................... 16
autonum "Withdrawal Valuation Date\....................................................................... 16
ARTICLE THREE Membership........................................................................................ 16
3.1. Membership............................................................................................. 16
3.2. Enrollment Form........................................................................................ 16
ARTICLE FOUR Member Savings..................................................................................... 17
4.1. Member Before-Tax Savings.............................................................................. 17
4.2. Member After-Tax Savings............................................................................... 18
4.3. Suspension and Resumption of Member Savings............................................................ 20
4.4. Vesting of Member's and Deferred Member's Contributions................................................ 20
4.5. Rollovers and Transfers................................................................................ 20
ARTICLE FIVE Company Contributions.............................................................................. 21
5.1. Company Contributions.................................................................................. 21
5.2. Vesting................................................................................................ 21
5.3. Forfeitures............................................................................................ 22
5.4. Maximum Annual Additions............................................................................... 23
ARTICLE SIX Investment of Contributions......................................................................... 24
6.1. Investment Funds....................................................................................... 24
6.2. Investment of Contributions............................................................................ 24
6.3. Change in Investment Election.......................................................................... 25
6.4. Redistribution of Member Savings....................................................................... 25
6.5. Investment Option at Age 55............................................................................ 25
6.6. Voting of Rayonier Shares.............................................................................. 26
6.7. Return of Contributions................................................................................ 26
ARTICLE SEVEN Credits to Members' Accounts, Valuation and Allocation of Assets................................. 27
7.1. Crediting Savings and Contributions.................................................................... 27
7.2. Credits to Members' Accounts........................................................................... 27
7.3. Valuation of Assets.................................................................................... 27
7.4. Allocation of Assets................................................................................... 27
ARTICLE EIGHT Withdrawals Prior to Termination of Employment.................................................... 28
8.1. General Conditions for Withdrawals..................................................................... 28
8.2. Withdrawals from Supplemental After-Tax Investment Account and Basic After-Tax Investment Account...... 28
8.3. Withdrawal of Vested Company Contribution Account...................................................... 29
8.4. Withdrawal from Supplemental Before-Tax Investment Account and Basic Before-Tax Investment Account..... 29
8.5. Ordering of Withdrawals................................................................................ 30
8.6. Repayment of Withdrawal From Plan...................................................................... 31
8.7. Withdrawal Limitation after Loan Application........................................................... 31
8.8. Direct Rollover........................................................................................ 31
8.9 Withdrawals by Officers and Directors.................................................................. 31
ARTICLE NINE Loans.............................................................................................. 32
9.1. General Conditions for Loans........................................................................... 32
9.2. Amounts Available for Loans............................................................................ 32
9.3. Account Ordering for Loans............................................................................. 32
9.4. Interest Rate for Loans................................................................................ 33
9.5. Term and Repayment of Loan............................................................................. 33
9.6. Frequency of Loan Requests............................................................................. 33
9.7. Loan Limitation after Withdrawal Application........................................................... 33
9.8. Prepayment of Loans.................................................................................... 33
</TABLE>
<PAGE> 4
<TABLE>
<S> <C>
9.9. Outstanding Loan Balance at Termination of Employment.................................................. 33
9.10. Loan Default during Employment...................................................................... 34
9.11. Incorporation by Reference.......................................................................... 34
9.12 Loans to Officers and Directors........................................................................ 34
ARTICLE TEN Distributions....................................................................................... 34
10.1. General............................................................................................. 34
10.2. Valuation Date and Conditions of Distribution....................................................... 36
10.3. Methods of Distribution............................................................................. 36
10.4. Death of Spouse Who is a Beneficiary................................................................ 39
10.5. Proof of Death and Right of Beneficiary or Other Person............................................. 39
10.6. Completion of Appropriate Forms..................................................................... 39
10.7. Restoration of Prior Forfeiture..................................................................... 39
10.8. Direct Rollover of Certain Distributions............................................................ 40
ARTICLE ELEVEN Management of Funds.............................................................................. 41
11.1. Rayonier Pension Fund Trust and Investment Committee................................................ 41
11.2. Trust Fund.......................................................................................... 41
11.3. Reports to Members and Deferred Members............................................................. 42
11.4. Fiscal Year......................................................................................... 42
ARTICLE TWELVE Administration of Plan........................................................................... 42
12.1. Appointment of Plan Committee....................................................................... 42
12.2. Powers of Plan Committee............................................................................ 42
12.3. Plan Committee Action............................................................................... 43
12.4. Compensation........................................................................................ 43
12.5. Committee Liability................................................................................. 43
12.6. Claims Procedure.................................................................................... 44
12.7. Indemnity for Liability............................................................................. 45
ARTICLE THIRTEEN Hardship Committee............................................................................. 45
13.1. Appointment of Hardship Committee................................................................... 45
13.2. Powers of Hardship Committee........................................................................ 46
13.3. Hardship Committee Action........................................................................... 46
13.4. Compensation........................................................................................ 46
ARTICLE FOURTEEN Amendment and Termination...................................................................... 47
14.1. Amendment........................................................................................... 47
14.2. Termination of Plan................................................................................. 47
14.3. Merger or Consolidation of Plan..................................................................... 47
ARTICLE FIFTEEN Tender Offer.................................................................................... 48
15.1. Applicability....................................................................................... 48
15.2. Instructions to Trustee............................................................................. 48
15.3. Trustee Action on Member Instructions............................................................... 48
15.4. Action With Respect to Members Not Instructing the Trustee or Not Issuing Valid Instructions........ 49
15.5. Investment of Plan Assets after Tender Offer........................................................ 49
ARTICLE SIXTEEN General and Administrative Provisions........................................................... 49
16.1. Payment of Expenses................................................................................. 49
16.2. Source of Payment................................................................................... 49
16.3. Inalienability of Benefits.......................................................................... 50
16.4. No Right to Employment.............................................................................. 50
16.5. Uniform Action...................................................................................... 50
16.6. Headings............................................................................................ 50
16.7. Use of Pronouns..................................................................................... 50
16.8. Construction........................................................................................ 50
ARTICLE SEVENTEEN Top-Heavy Provisions.......................................................................... 51
17.1. Determination of Top-Heavy Status................................................................... 51
17.2. Minimum Requirements................................................................................ 52
</TABLE>
<PAGE> 5
RAYONIER INVESTMENT AND SAVINGS PLAN FOR SALARIED EMPLOYEES
AS AMENDED AND RESTATED EFFECTIVE JULY 18, 1997
ARTICLE ONE
Introduction and Purpose
Rayonier Inc. ("Rayonier") established the Rayonier Investment and
Savings Plan for Salaried Employees (the "Plan") as of March 1, 1994. The Plan
is hereby amended and restated effective as of July 18, 1997 (except as
otherwise indicated). The Plan contains assets received from the ITT Investment
and Savings Plan for Salaried Employees. The purpose of the Plan is to increase
the level of ownership of Rayonier Shares by salaried employees of Rayonier, to
provide a convenient way for such salaried employees to increase their financial
security for emergencies and financial hardships and to supplement retirement
income by saving on a regular and long-term basis, thereby offering these
employees an additional incentive to continue their careers with Rayonier. The
Plan is intended to meet the requirements of sections 401(a), 401(k), 401(m) and
501(a) of the Internal Revenue Code of 1986, as amended.
ARTICLE TWO
Definitions
1. "ACCOUNTS" SHALL MEAN, WITH RESPECT TO ANY MEMBER OR DEFERRED
MEMBER, THE BASIC INVESTMENT ACCOUNT, SUPPLEMENTAL INVESTMENT ACCOUNT, COMPANY
CONTRIBUTION ACCOUNT AND RETIREMENT ACCOUNT.
2. "ACTUAL CONTRIBUTION PERCENTAGE" SHALL MEAN, WITH RESPECT TO A
SPECIFIED GROUP OF EMPLOYEES REFERRED TO IN SECTIONS 4.2(b) AND 4.2(c), THE
AVERAGE OF THE RATIOS, CALCULATED SEPARATELY FOR EACH EMPLOYEE IN THAT GROUP, OF
(a) THE AFTER-TAX SAVINGS AND MATCHING COMPANY CONTRIBUTION MADE BY THE EMPLOYEE
FOR A PLAN YEAR AND, AT THE OPTION OF THE COMPANY, THE RETIREMENT CONTRIBUTION
MADE FOR THE EMPLOYEE FOR THE PLAN YEAR UNDER SECTION 5.1(a) TO (b) THE
EMPLOYEE'S SALARY FOR THAT PLAN YEAR. SUCH ACTUAL CONTRIBUTION PERCENTAGE SHALL
BE COMPUTED TO THE NEAREST ONE-HUNDREDTH OF ONE PERCENT OF THE EMPLOYEE'S
SALARY. FOR PURPOSES OF THIS SECTION 2.2, SALARY SHALL
<PAGE> 6
EXCLUDE COMPENSATION PAID TO THE EMPLOYEE WHILE THE EMPLOYEE IS NOT A PLAN
MEMBER.
3. "ACTUAL DEFERRAL PERCENTAGE" SHALL MEAN, WITH RESPECT TO A SPECIFIED
GROUP OF EMPLOYEES REFERRED TO IN SECTIONS 4.1(c) AND 4.2(c), THE AVERAGE OF THE
RATIOS, CALCULATED SEPARATELY FOR EACH EMPLOYEE IN THAT GROUP, OF (a) THE AMOUNT
OF BEFORE-TAX SAVINGS MADE ON THE EMPLOYEE'S BEHALF FOR A PLAN YEAR AND, AT THE
OPTION OF THE COMPANY, THE RETIREMENT CONTRIBUTION MADE FOR THE EMPLOYEE FOR THE
PLAN YEAR UNDER SECTION 5.1(a) TO (b) THE EMPLOYEE'S SALARY FOR THAT PLAN YEAR.
SUCH ACTUAL DEFERRAL PERCENTAGE SHALL BE COMPUTED TO THE NEAREST ONE-HUNDREDTH
OF ONE PERCENT OF THE EMPLOYEE'S SALARY. FOR PURPOSES OF THIS SECTION 2.3,
SALARY SHALL EXCLUDE COMPENSATION PAID TO THE EMPLOYEE WHILE THE EMPLOYEE IS NOT
A PLAN MEMBER.
4. "AFFILIATE" SHALL MEAN--
(a) any corporation which is a member of the same controlled
group of corporations (within the meaning of Code section 414(b)) as
the Employer,
(b) any trade or business (whether or not incorporated) which
is under common control with the Employer within the meaning of Code
section 414(c),
(c) any organization which, together with the Employer, is a
member of an affiliated service group within the meaning of Code
section 414(m),
(d) any other entity required to be aggregated with the
Employer pursuant to regulations under Code section 414(o).
5. "AFTER-TAX SAVINGS" SHALL MEAN THE CONTRIBUTIONS MADE BY A MEMBER
PURSUANT TO SECTION 4.2.
6. "BASIC AFTER-TAX INVESTMENT ACCOUNT" SHALL MEAN THAT PORTION OF THE
TRUST FUND WHICH, WITH RESPECT TO ANY MEMBER OR DEFERRED MEMBER, IS ATTRIBUTABLE
TO BASIC AFTER-TAX SAVINGS AND ANY INVESTMENT EARNINGS AND GAINS OR LOSSES
THEREON.
<PAGE> 7
7. "BASIC AFTER-TAX SAVINGS" SHALL MEAN THE CONTRIBUTIONS MADE BY A
MEMBER WHICH ARE CREDITED TO THE BASIC AFTER-TAX INVESTMENT ACCOUNT IN
ACCORDANCE WITH SECTION 4.2(a)(i).
8. "BASIC BEFORE-TAX INVESTMENT ACCOUNT" SHALL MEAN THAT PORTION OF THE
TRUST FUND WHICH, WITH RESPECT TO ANY MEMBER OR DEFERRED MEMBER, IS ATTRIBUTABLE
TO BASIC BEFORE-TAX SAVINGS AND ANY INVESTMENT EARNINGS AND GAINS OR LOSSES
THEREON.
9. "BASIC BEFORE-TAX SAVINGS" SHALL MEAN THE CONTRIBUTIONS MADE ON A
MEMBER'S BEHALF WHICH ARE CREDITED TO THE BASIC BEFORE-TAX INVESTMENT ACCOUNT IN
ACCORDANCE WITH SECTION 4.1(a)(i).
10. "BASIC INVESTMENT ACCOUNT" SHALL MEAN THAT PORTION OF THE TRUST
FUND WHICH, WITH RESPECT TO ANY MEMBER OR DEFERRED MEMBER, INCLUDES THE BASIC
BEFORE-TAX INVESTMENT ACCOUNT AND THE BASIC AFTER-TAX INVESTMENT ACCOUNT.
11. "BASIC SAVINGS" SHALL MEAN THE BASIC AFTER-TAX SAVINGS CONTRIBUTED
BY A MEMBER AND THE BASIC BEFORE-TAX SAVINGS CONTRIBUTED ON A MEMBER'S BEHALF.
12. "BEFORE-TAX SAVINGS" SHALL MEAN THOSE CONTRIBUTIONS MADE ON A
MEMBER'S BEHALF PURSUANT TO SECTION 4.1.
13. "BENEFICIARY" SHALL MEAN SUCH PERSON OR PERSONS, OR ENTITY OR
ENTITIES, AS DESIGNATED FROM TIME TO TIME BY THE MEMBER OR DEFERRED MEMBER, ON A
FORM MADE AVAILABLE BY THE PLAN COMMITTEE FOR SUCH PURPOSE, TO RECEIVE, IN THE
EVENT OF THE MEMBER'S OR DEFERRED MEMBER'S DEATH, THE VALUE OF THE MEMBER'S OR
DEFERRED MEMBER'S ACCOUNTS AT THE TIME OF DEATH. IN THE CASE OF A MEMBER OR
DEFERRED MEMBER WHO IS MARRIED, THE BENEFICIARY SHALL BE THE MEMBER'S OR
DEFERRED MEMBER'S SPOUSE UNLESS SUCH SPOUSE CONSENTS IN WRITING ON A FORM
WITNESSED BY A NOTARY PUBLIC TO THE DESIGNATION OF ANOTHER PERSON, TRUST, OR
OTHER ENTITY AS BENEFICIARY. FOR PURPOSES OF THIS
<PAGE> 8
SECTION 2.13, A DEFERRED MEMBER SHALL NOT INCLUDE A DEFERRED MEMBER WHO IS AN
ALTERNATE PAYEE DESIGNATED AS SUCH PURSUANT TO A QUALIFIED DOMESTIC RELATIONS
ORDER.
14. "BOARD OF DIRECTORS" SHALL MEAN THE BOARD OF DIRECTORS OF RAYONIER
OR OF ANY SUCCESSOR BY MERGER, PURCHASE OR OTHERWISE.
15. "BREAK IN SERVICE" SHALL MEAN A FIVE CONSECUTIVE YEAR PERIOD IN
WHICH AN EMPLOYEE DOES NOT HAVE ANY HOURS WORKED, WHICH SHALL BE TREATED AS
COMMENCING ON THE DATE OF SEVERANCE FROM SERVICE.
16. "CHANGE IN CONTROL" SHALL HAVE THE MEANING SPECIFIED IN THE
RETIREMENT PLAN FOR SALARIED EMPLOYEES OF RAYONIER INC. AS AMENDED EFFECTIVE
JULY 18, 1997, AND AS THE SAME MAY BE THEREAFTER AMENDED FROM TIME TO TIME PRIOR
TO THE OCCURRENCE OF A CHANGE IN CONTROL.
17. "CODE" MEANS THE INTERNAL REVENUE CODE OF 1986, AS AMENDED FROM
TIME TO TIME. REFERENCES TO ANY SECTION OF THE CODE SHALL INCLUDE ANY SUCCESSOR
PROVISION THERETO.
18. "COMPANY" SHALL MEAN RAYONIER OR ANY SUCCESSOR BY MERGER, PURCHASE
OR OTHERWISE WITH RESPECT TO ITS EMPLOYEES, ANY PARTICIPATING LOCATION WITH
RESPECT TO ITS EMPLOYEES, AND ANY PARTICIPATING CORPORATION WITH RESPECT TO ITS
EMPLOYEES.
<PAGE> 9
19. "COMPANY CONTRIBUTION ACCOUNT" SHALL MEAN THAT PORTION OF THE TRUST
FUND WHICH, WITH RESPECT TO ANY MEMBER OR DEFERRED MEMBER, IS ATTRIBUTABLE TO
ANY CONTRIBUTIONS MADE ON THE MEMBER'S OR DEFERRED MEMBER'S BEHALF BY THE
COMPANY PURSUANT TO SECTION 5.1 WITH RESPECT TO BASIC SAVINGS AND ANY INVESTMENT
EARNINGS AND GAINS OR LOSSES THEREON, AND/OR ANY CONTRIBUTIONS AND INVESTMENT
EARNINGS THEREON MADE ON THE MEMBER'S OR DEFERRED MEMBER'S BEHALF AND
TRANSFERRED TO THE TRUST FUND PURSUANT TO A PRIOR PLAN TRANSFER.
20. "COMPENSATION" SHALL MEAN, FOR PURPOSES OF SECTIONS 2.28 AND 5.4,
TOTAL WAGES AND OTHER COMPENSATION PAID TO OR FOR THE MEMBER AS REPORTED ON THE
MEMBER'S FORM W-2, WAGE AND TAX STATEMENT, PLUS ELECTIVE CONTRIBUTIONS UNDER
SECTIONS 401(K) AND 125 OF THE CODE. IN NO EVENT SHALL COMPENSATION EXCEED THE
INDEXED DOLLAR LIMIT PRESCRIBED UNDER SECTION 401(a)(17) OF THE CODE.
21. "DEFERRED MEMBER" SHALL MEAN A MEMBER WHO HAS TERMINATED EMPLOYMENT
WITH THE COMPANY AND WHOSE VESTED SHARE WILL BE DEFERRED IN ACCORDANCE WITH
SECTION 10.1(a). "DEFERRED MEMBER" SHALL ALSO INCLUDE AN ALTERNATE PAYEE
DESIGNATED AS SUCH PURSUANT TO A QUALIFIED DOMESTIC RELATIONS ORDER.
22. "DISABILITY" SHALL MEAN, WITH RESPECT TO A MEMBER, THE TOTAL
DISABILITY OF SUCH MEMBER THAT RESULTS IN THE MEMBER QUALIFYING FOR BENEFITS
UNDER THE RAYONIER LONG TERM DISABILITY PLAN FOR SALARIED EMPLOYEES.
23. "EFFECTIVE DATE" SHALL MEAN MARCH 1, 1994, WITH RESPECT TO THE
ORIGINAL EFFECTIVE DATE OF THE PLAN, AND JULY 18, 1997 (EXCEPT AS OTHERWISE
INDICATED) WITH RESPECT TO THIS AMENDMENT AND RESTATEMENT, BOTH SUCH DATES WITH
RESPECT TO THOSE PARTICIPATING CORPORATIONS AND PARTICIPATING LOCATIONS THAT
WERE PARTICIPATING IN THE PLAN ON SUCH DATE AND WITH RESPECT TO ANY OTHER
PARTICIPATING CORPORATION OR PARTICIPATING LOCATION SHALL MEAN THE DATE AS OF
WHICH SUCH PARTICIPATING CORPORATION OR PARTICIPATING LOCATION BEGINS ITS
<PAGE> 10
PARTICIPATION IN THE PLAN AS AUTHORIZED BY THE BOARD OF DIRECTORS OF RAYONIER.
24. "EMPLOYEE" SHALL MEAN ANY PERSON REGULARLY EMPLOYED BY THE COMPANY
WHO THE COMPANY CONSIDERS TO BE A SALARIED EMPLOYEE FOR PURPOSES OF THE
COMPANY'S OTHER EMPLOYEE BENEFIT PLANS, WHO IS PAID FROM A PAYROLL MAINTAINED IN
THE CONTINENTAL UNITED STATES AND WHO RECEIVES REGULAR AND STATED COMPENSATION
OTHER THAN A PENSION OR RETAINER, REGARDLESS OF HOW ANY PERSON MAY BE CLASSIFIED
BY THE INTERNAL REVENUE SERVICE, ANY STATE OR OTHER GOVERNMENTAL AUTHORITY, OR
JUDICIAL DECISION. HOWEVER, EXCEPT AS THE BOARD OF DIRECTORS OR THE PLAN
COMMITTEE, PURSUANT TO AUTHORITY DELEGATED TO IT BY THE BOARD OF DIRECTORS, MAY
OTHERWISE PROVIDE ON A BASIS UNIFORMLY APPLICABLE TO ALL PERSONS SIMILARLY
SITUATED, AND, EXCEPT AS SPECIFIED BELOW, NO PERSON SHALL BE AN "EMPLOYEE" FOR
PURPOSES OF THE PLAN WHOSE TERMS AND CONDITIONS OF EMPLOYMENT ARE DETERMINED BY
A COLLECTIVE BARGAINING AGREEMENT WITH THE COMPANY WHICH DOES NOT MAKE THIS PLAN
APPLICABLE TO SUCH PERSON, OR WHO IS A LEASED EMPLOYEE AS DEFINED IN CODE
SECTION 414(n).
25. "ENROLLMENT DATE" SHALL MEAN THE FIRST DAY OF ANY MONTH.
26. "FUNDS" SHALL MEAN THE INVESTMENT FUNDS SPECIFIED IN EXHIBIT A TO
THIS PLAN AND MADE A PART HEREOF, AS THE SAME MAY FROM TIME TO TIME BE CHANGED
BY ACTION OF THE RAYONIER PENSION FUND TRUST AND INVESTMENT COMMITTEE.
27. "HARDSHIP COMMITTEE" SHALL MEAN THE INVESTMENT AND SAVINGS PLAN
HARDSHIP COMMITTEE OR COMMITTEES ESTABLISHED HEREUNDER FOR THE PURPOSES PROVIDED
IN ARTICLE THIRTEEN.
28. "HIGHLY COMPENSATED EMPLOYEE" SHALL MEAN, FOR PLAN YEARS BEGINNING
BEFORE JANUARY 1, 1997, AN EMPLOYEE WHO PERFORMS SERVICE FOR THE COMPANY OR AN
AFFILIATE DURING THE DETERMINATION YEAR AND WHO, DURING THE LOOK-BACK YEAR:
<PAGE> 11
(a) received compensation from the Company or an Affiliate in
excess of $75,000 (as adjusted pursuant to section 415(d) of the Code);
(b) received compensation from the Company or an Affiliate in
excess of $50,000 (as adjusted pursuant to section 415(d) of the Code)
and was a member of the top-paid group for such year; or
(c) was an officer (within the meaning of Code section 416(i))
of the Company or an Affiliate and received compensation during such
year that is greater than 50 percent of the dollar limitation in effect
under section 415(b)(1)(A) of the Code.
The term Highly Compensated Employee also includes:
(d) An Employee who is both described above if the term
"determination year" is substituted for the term "look-back-year" and
is one of the 100 Employees who received the most compensation from the
Company or an Affiliate during the determination year; and
(e) An Employee who is a 5 percent owner (as defined in Code
section 416(i)(1)(A)(iii)) at any time during the look-back year or
determination year.
For this purpose, the determination year shall be the Plan Year. The
look-back year shall be the twelve-month period immediately preceding the
determination year.
If an Employee is, during a determination year or look-back year, a
family member of either (i) a 5 percent owner who is an active or former
Employee or (ii) a Highly Compensated Employee who is one of the 10 most Highly
Compensated Employees ranked on the basis of compensation paid by the Company
and Affiliates during such year, then the family member and the 5 percent owner
or top-ten Highly Compensated Employee shall be aggregated. In such case, the
family member and 5 percent owner or top-ten Highly Compensated Employee shall
be treated as a single Employee receiving compensation and Plan contributions
equal to the sum of such compensation and contributions of the family member and
5 percent owner or top-ten Highly Compensated Employee. For purposes of this
section, family member includes the spouse, lineal ascendants and descendants of
the Employee or former Employee and the spouses of such lineal ascendants and
descendants.
The top-paid group consists of the top 20 percent of Employees ranked
on the basis of compensation received during the year. For purposes of
determining the number of Employees in the top-paid group, Employees described
in Code section 414(q)(8) and Q & A 9(b) of Treasury regulations section
1.414(q)-t are excluded.
The number of officers is limited to 50 (or, if lesser, the greater of
3 Employees or 10 percent of Employees) excluding those Employees who may be
excluded in determining the top-paid group. When no officer has compensation in
excess of 50 percent of the Code section 415(b)(1)(A) limit, the highest paid
officer is treated as highly compensated.
<PAGE> 12
For purposes of this section, compensation is compensation within the
meaning of Code section 415(c)(3) including elective contributions to a
cafeteria plan under Code section 125 or a cash or deferred arrangement under
Code section 401(k).
For purposes of determining the Actual Contribution Percentage and the
Actual Deferral Percentage, "Highly Compensated Employee" shall mean an
individual determined by the Company during a given Plan Year to be likely to
meet the foregoing criteria for a given Plan Year.
Notwithstanding the foregoing, the Plan Committee may elect to
determine the definition of "Highly Compensated Employee" under the simplified
identification method provided in Revenue Procedure 93-42, including the use of
a snapshot date as provided therein.
For Plan Years beginning after December 31, 1996, "Highly Compensated
Employee" means an Employee described in Code section 414(q) and the regulations
thereunder, and generally means an Employee who performed services for the
Company or an Affiliate during the determination year and is in one or more of
the following groups:
(a) Employees who at any time during the determination year or
look-back year were 5 percent owners of the Company.
(b) Employees who received compensation during the look-back
year from the Company or an Affiliate in excess of $80,000 (as adjusted
pursuant to section 415(d) of the Code) and were in the Top Paid Group
of Employees during the look-back year.
The determination year shall be the Plan Year for which testing is
being performed, and the look-back year shall be the immediately preceding
twelve-month period.
The top-paid group consists of the top 20 percent of Employees ranked
on the basis of compensation received during the year. For purposes of
determining the number of Employees in the top-paid group, Employees described
in Code section 414(q)(8) and Q & A 9(b) of Treasury regulations section
1.414(q)-t are excluded.
In determining who is a Highly Compensated Employee, Employees who are
non-resident aliens and who received no earned income (within the meaning of
Code section 911(d)(2)) from the Company or an Affiliate constituting United
States source income within the meaning of Code section 861(a)(3) shall not be
treated as Employees. Additionally, Leased Employees within the meaning of Code
section 414(n)(2) and 414(o)(2) shall be considered Employees unless such Leased
Employees are covered by a plan described in Code section 414(n)(5) and are not
covered in any qualified plan maintained by the Company or an Affiliate. The
exclusion of Leased Employees for this purpose shall be applied on a uniform and
consistent basis for all of the Company's retirement plans. Highly Compensated
Former Employees shall be treated as Highly Compensated Employees without regard
to whether they performed services during the determination year.
<PAGE> 13
29. "HOURS WORKED" SHALL MEAN HOURS FOR WHICH AN EMPLOYEE IS
COMPENSATED WHETHER OR NOT THE EMPLOYEE HAS WORKED, SUCH AS PAID HOLIDAYS, PAID
VACATION, PAID SICK LEAVE AND PAID TIME OFF, AND BACK PAY FOR THE PERIOD FOR
WHICH IT WAS AWARDED, AND EACH SUCH HOUR SHALL BE COMPUTED AS ONLY ONE HOUR,
EVEN THOUGH THE EMPLOYEE IS COMPENSATED AT MORE THAN THE STRAIGHT TIME RATE.
WITH RESPECT TO ANY PERIOD FOR WHICH AN EMPLOYEE IS COMPENSATED BUT HAS NOT
WORKED, HOURS COUNTED SHALL BE INCLUDED ON THE BASIS OF THE EMPLOYEE'S NORMAL
WORK-DAY OR WORK-WEEK. THIS DEFINITION OF HOURS WORKED SHALL BE APPLIED IN
COMPLIANCE WITH 29 CODE OF FEDERAL REGULATIONS SECTION 2530.200B-2(b) AND (c),
AS PROMULGATED BY THE UNITED STATES DEPARTMENT OF LABOR, IN A CONSISTENT AND
NONDISCRIMINATORY MANNER.
30. "ITT PLAN" SHALL MEAN THE ITT INVESTMENT AND SAVINGS PLAN FOR
SALARIED EMPLOYEES AS IN EFFECT ON FEBRUARY 28, 1994.
31. "LOAN VALUATION DATE" SHALL MEAN THE LAST DAY OF THE CALENDAR MONTH
IN WHICH A MEMBER'S PROPERLY COMPLETED APPLICATION FOR A LOAN UNDER THE PLAN AS
TRANSMITTED BY THE COMPANY IS RECEIVED BY THE SAVINGS PLAN ADMINISTRATOR.
32. "MATCHING COMPANY CONTRIBUTION" MEANS THE CONTRIBUTION ALLOCATED TO
A MEMBER'S COMPANY CONTRIBUTION ACCOUNT PURSUANT TO SECTION 5.1(b).
33. "MEMBER" SHALL MEAN ANY PERSON WHO HAS BECOME A MEMBER AS PROVIDED
IN ARTICLE THREE OR ON WHOSE BEHALF A PRIOR PLAN TRANSFER HAS BEEN MADE.
34. "NON-U.S. CITIZEN EMPLOYEE" SHALL MEAN ANY PERSON WHO IS CONSIDERED
A SALARIED EMPLOYEE FOR PURPOSES OF THE COMPANY'S EMPLOYEE BENEFIT PLANS, WHO IS
(a) not a citizen of the United States,
(b) paid from a payroll maintained in the continental United
States, and
<PAGE> 14
(c) employed by the Company in a regular position (as
distinguished from a temporary assignment) in the continental United
States.
35. "PARTICIPATING CORPORATION" SHALL MEAN ANY SUBSIDIARY OR AFFILIATED
COMPANY OF RAYONIER OR DESIGNATED DIVISION(S) OR UNIT(S) ONLY OF SUCH SUBSIDIARY
OR AFFILIATE WHICH, BY APPROPRIATE ACTION OF THE BOARD OF DIRECTORS OR BY A
DESIGNATED OFFICER OF RAYONIER PURSUANT TO AUTHORIZATION DELEGATED TO SUCH
OFFICER BY THE BOARD OF DIRECTORS HAS BEEN DESIGNATED AS A PARTICIPATING
CORPORATION IN THE PLAN AS TO ALL OF ITS EMPLOYEES OR AS TO THE EMPLOYEES OF ONE
OR MORE OF ITS OPERATING OR OTHER UNITS AND THE BOARD OF DIRECTORS OF WHICH
SHALL HAVE TAKEN APPROPRIATE ACTION TO ADOPT THIS PLAN.
36. "PARTICIPATING LOCATION" SHALL MEAN ANY LOCATION OF RAYONIER OR
DESIGNATED UNIT(S) ONLY OF SUCH LOCATION WHICH BY APPROPRIATE ACTION OF THE
BOARD OF DIRECTORS OR BY A DESIGNATED OFFICER OF RAYONIER PURSUANT TO
AUTHORIZATION DELEGATED TO SUCH OFFICER BY THE BOARD OF DIRECTORS HAS BEEN
DESIGNATED AS A PARTICIPATING LOCATION IN THIS PLAN.
37. "PLAN" SHALL MEAN THE RAYONIER INVESTMENT AND SAVINGS PLAN FOR
SALARIED EMPLOYEES AS SET FORTH HEREIN OR AS AMENDED FROM TIME TO TIME.
38. "PLAN COMMITTEE" SHALL MEAN THE INVESTMENT AND SAVINGS PLAN
COMMITTEE ESTABLISHED HEREUNDER FOR THE PURPOSES OF ADMINISTERING THE PLAN AS
PROVIDED IN ARTICLE TWELVE.
39. "PLAN YEAR" SHALL MEAN THE CALENDAR YEAR.
40. "PRIOR PLAN TRANSFER" SHALL MEAN THAT PORTION OF THE ACCOUNT OF ANY
MEMBER OR DEFERRED MEMBER THAT IS ATTRIBUTABLE TO AMOUNTS TRANSFERRED ON THE
MEMBER'S OR DEFERRED MEMBER'S BEHALF FROM THE ITT PLAN.
<PAGE> 15
41. "RAYONIER SHARES" SHALL MEAN COMMON SHARES OF RAYONIER INC.
42. "RETIREMENT" SHALL MEAN EARLY OR NORMAL RETIREMENT UNDER THE
RETIREMENT PLAN FOR SALARIED EMPLOYEES OF RAYONIER. NORMAL RETIREMENT MAY BE
ELECTED UNDER THE ABOVE-STATED RETIREMENT PLAN ON OR AFTER THE FIRST DAY OF THE
CALENDAR MONTH COINCIDENT WITH OR NEXT FOLLOWING THE 65TH ANNIVERSARY OF AN
EMPLOYEE'S BIRTH. EARLY RETIREMENT MAY BE ELECTED AT ANY TIME AFTER THE 50TH
ANNIVERSARY OF AN EMPLOYEE'S BIRTH, PROVIDED SERVICE REQUIREMENTS SPECIFIED IN
THE STATED RETIREMENT PLANS ARE MET. "RETIREMENT" FOR MEMBERS NOT COVERED BY THE
ABOVE STATED RETIREMENT PLAN SHALL MEAN SEPARATION FROM SERVICE ON OR AFTER
ATTAINING AGE 65.
43. "RETIREMENT CONTRIBUTION" MEANS THE COMPANY CONTRIBUTION ALLOCATED
TO A MEMBER'S RETIREMENT ACCOUNT PURSUANT TO SECTION 5.1(a).
44. "RETIREMENT ACCOUNT" SHALL MEAN THAT PORTION OF THE TRUST FUND
WHICH, WITH RESPECT TO ANY MEMBER OR DEFERRED MEMBER, IS ATTRIBUTABLE TO
RETIREMENT CONTRIBUTIONS.
45. "SALARY" SHALL MEAN AN EMPLOYEE'S COMPENSATION FROM THE COMPANY AT
THE EMPLOYEE'S BASE RATE, DETERMINED PRIOR TO ANY ELECTION BY THE MEMBER
PURSUANT TO SECTION 4.1(a) HEREOF AND PRIOR TO ANY ELECTION BY THE MEMBER
PURSUANT TO SECTION 125 OF THE CODE, EXCLUDING ANY OVERTIME, BONUS, FOREIGN
SERVICE ALLOWANCE OR ANY OTHER FORM OF COMPENSATION, EXCEPT TO THE EXTENT
OTHERWISE DEEMED "SALARY" FOR PURPOSES OF THE PLAN UNDER SUCH NONDISCRIMINATORY
RULES AS ARE ADOPTED BY THE PLAN COMMITTEE WITH RESPECT TO ALL MEMBERS OR ANY
PARTICULAR PARTICIPATING COMPANY OR PARTICIPATING LOCATION, AND LIMITED TO A
DOLLAR AMOUNT WHICH IS INDEXED ANNUALLY AND DETERMINED IN ACCORDANCE WITH
SECTION 401(a)(17) OF THE CODE.
<PAGE> 16
46. "SAVINGS PLAN ADMINISTRATOR" SHALL MEAN THE SAVINGS PLAN
ADMINISTRATOR DESIGNATED BY THE COMPANY.
47. "SERVICE" SHALL MEAN THE PERIOD OF ELAPSED TIME BEGINNING ON THE
EARLIER OF (i) THE DATE AN EMPLOYEE COMMENCES EMPLOYMENT WITH THE COMPANY AND
(ii) THE DATE AN EMPLOYEE COMMENCES ANY SERVICE CREDITED UNDER THE ITT PLAN, AND
ENDING ON THE MOST RECENT SEVERANCE DATE, WHICH SHALL BE THE EARLIER OF (i) THE
DATE THE EMPLOYEE QUITS, IS DISCHARGED, RETIRES OR DIES OR (ii) THE FIRST
ANNIVERSARY OF THE DATE ON WHICH THE EMPLOYEE IS FIRST ABSENT FROM SERVICE, WITH
OR WITHOUT PAY, FOR ANY REASON SUCH AS VACATION, SICKNESS, DISABILITY, LAYOFF OR
LEAVE OF ABSENCE. IF SERVICE IS INTERRUPTED FOR MATERNITY OR PATERNITY REASONS,
MEANING AN INTERRUPTION OF SERVICE BY REASON OF (a) THE PREGNANCY OF THE
EMPLOYEE, (b) THE BIRTH OF A CHILD OF THE EMPLOYEE OR (c) THE PLACEMENT OF A
CHILD WITH THE EMPLOYEE BY REASON OF ADOPTION, OR FOR PURPOSES OF CARING FOR A
NEWBORN CHILD OF THE EMPLOYEE IMMEDIATELY FOLLOWING THE BIRTH OR ADOPTION OF THE
NEWBORN, THEN THE DATE OF SEVERANCE FROM SERVICE SHALL BE THE EARLIER OF (i) THE
DATE THE EMPLOYEE QUITS, IS DISCHARGED, RETIRES OR DIES, OR (ii) THE SECOND
ANNIVERSARY OF THE DATE ON WHICH THE EMPLOYEE IS FIRST ABSENT FROM SERVICE. IF
AN EMPLOYEE TERMINATES AND IS LATER REEMPLOYED WITHIN 12 MONTHS OF (i) THE
EMPLOYEE'S DATE OF TERMINATION OR (ii) THE FIRST DAY OF AN ABSENCE FROM SERVICE
IMMEDIATELY PRECEDING THE EMPLOYEE'S DATE OF TERMINATION, IF EARLIER, THE PERIOD
BETWEEN THE EMPLOYEE'S SEVERANCE DATE AND THE EMPLOYEE'S DATE OF REEMPLOYMENT
SHALL BE INCLUDED IN THE EMPLOYEE'S SERVICE. WITH RESPECT TO SERVICE FOR
PURPOSES OF THE VESTING SCHEDULE IN SECTION 5.2, IF AN EMPLOYEE TERMINATES AND
IS LATER REEMPLOYED AFTER 12 OR MORE MONTHS HAVE ELAPSED SINCE THE EMPLOYEE'S
SEVERANCE DATE, THE PERIOD OF SERVICE PRIOR TO THE EMPLOYEE'S SEVERANCE DATE
SHALL BE INCLUDED IN SERVICE.
For purposes of eligibility for membership in the Plan provided in
Article Three, an Employee whose employment with the Company is on a less than
full-time basis shall be eligible if the Employee is regularly scheduled to
complete or has completed at least 1,000 Hours Worked in a twelve consecutive
month period of employment measured from the date on which such Employee's
Service commences or from any subsequent anniversary thereof.
After such an Employee has become a Member of the Plan as provided in
Article Three, Service for purposes of meeting the requirements for vesting
shall be determined in accordance with the first paragraph of this section 2.47.
<PAGE> 17
Under the circumstances hereinafter stated and upon such conditions as
the Plan Committee shall determine on a basis uniformly applicable to all
employees similarly situated, the period of Service of an employee shall be
deemed not to be interrupted by an absence of the type hereinafter stated and
the period of such absence shall be included in determining the length of an
employee's Service:
(a) if a leave of absence has been authorized by the Company
or any subsidiary or affiliate of the Company, for the period of such
authorized leave of absence only; or
(b) if an Employee enters service in the armed forces of the
United States and if the Employee's right to re-employment is protected
by the Selective Service Act or any similar law then in effect and if
the employee returns to regular employment within the period during
which the right to re-employment is protected by any such law.
48. "SUPPLEMENTAL AFTER-TAX INVESTMENT ACCOUNT" SHALL MEAN THAT PORTION
OF THE TRUST FUND WHICH, WITH RESPECT TO ANY MEMBER OR DEFERRED MEMBER, IS
ATTRIBUTABLE TO SUPPLEMENTAL AFTER-TAX SAVINGS AND ANY INVESTMENT EARNINGS AND
GAINS OR LOSSES THEREON.
49. "SUPPLEMENTAL AFTER-TAX SAVINGS" SHALL MEAN THE CONTRIBUTIONS MADE
BY A MEMBER WHICH ARE CREDITED TO THE SUPPLEMENTAL AFTER-TAX INVESTMENT ACCOUNT
IN ACCORDANCE WITH SECTION 4.2(a)(ii) AND/OR WHICH ARE CREDITED ON THE MEMBER'S
BEHALF PURSUANT TO A PRIOR PLAN TRANSFER AND/OR A ROLLOVER CONTRIBUTION TO THE
PLAN PURSUANT TO SECTION 4.5.
50. "SUPPLEMENTAL BEFORE-TAX INVESTMENT ACCOUNT" SHALL MEAN THAT
PORTION OF THE TRUST FUND WHICH, WITH RESPECT TO ANY MEMBER OR DEFERRED MEMBER,
IS ATTRIBUTABLE TO SUPPLEMENTAL BEFORE-TAX SAVINGS AND ANY INVESTMENT EARNINGS
AND GAINS OR LOSSES THEREON.
51. "SUPPLEMENTAL BEFORE-TAX SAVINGS" SHALL MEAN THE CONTRIBUTIONS MADE
ON A MEMBER'S BEHALF WHICH ARE CREDITED TO THE SUPPLEMENTAL BEFORE-TAX
INVESTMENT ACCOUNT IN ACCORDANCE WITH SECTION 4.1(a)(ii) AND/OR WHICH ARE
CREDITED ON THE MEMBER'S BEHALF PURSUANT TO A PRIOR PLAN TRANSFER.
<PAGE> 18
52. "SUPPLEMENTAL INVESTMENT ACCOUNT" SHALL MEAN THAT PORTION OF THE
TRUST FUND WHICH, WITH RESPECT TO ANY MEMBER OR DEFERRED MEMBER, INCLUDES THE
SUPPLEMENTAL BEFORE-TAX INVESTMENT ACCOUNT AND THE SUPPLEMENTAL AFTER-TAX
INVESTMENT ACCOUNT.
53. "SUPPLEMENTAL SAVINGS" SHALL MEAN THE SUPPLEMENTAL AFTER-TAX
SAVINGS CONTRIBUTED BY A MEMBER, SUPPLEMENTAL BEFORE-TAX SAVINGS CONTRIBUTED ON
A MEMBER'S BEHALF, AND THE SUPPLEMENTAL AFTER-TAX SAVINGS AND SUPPLEMENTAL
BEFORE-TAX SAVINGS CREDITED ON A MEMBER'S BEHALF PURSUANT TO A PRIOR PLAN
TRANSFER.
54. "TERMINATION OF EMPLOYMENT" SHALL MEAN SEPARATION FROM THE
EMPLOYMENT OF THE COMPANY FOR ANY REASON, INCLUDING, BUT NOT LIMITED TO,
RETIREMENT, DEATH, DISABILITY, RESIGNATION OR DISMISSAL BY THE COMPANY;
PROVIDED, HOWEVER, THAT TRANSFER IN EMPLOYMENT BETWEEN THE COMPANY AND ANY OTHER
SUBSIDIARY OR AFFILIATE OF RAYONIER SHALL NOT BE DEEMED TO BE "TERMINATION OF
EMPLOYMENT." WITH RESPECT TO ANY LEAVE OF ABSENCE AND ANY PERIOD OF SERVICE IN
THE ARMED FORCES OF THE UNITED STATES, SECTION 2.47 SHALL GOVERN.
55. "TRUST FUND" SHALL MEAN THE AGGREGATE FUNDS HELD BY THE TRUSTEE
UNDER THE TRUST AGREEMENT OR AGREEMENTS ESTABLISHED FOR THE PURPOSES OF THIS
PLAN, CONSISTING OF THE FUNDS DESCRIBED IN ARTICLE SIX.
56. "TRUSTEE" SHALL MEAN THE TRUSTEE OR TRUSTEES AT ANY TIME ACTING AS
SUCH UNDER THE TRUST AGREEMENT OR AGREEMENTS ESTABLISHED FOR THE PURPOSES OF
THIS PLAN.
57. "VALUATION DATE" SHALL MEAN THE DATE OR DATES, AS APPLICABLE, ON
WHICH THE TRUST FUND IS VALUED IN ACCORDANCE WITH ARTICLE SEVEN.
58. "VESTED COMPANY CONTRIBUTION ACCOUNT" SHALL MEAN, WITH RESPECT TO A
MEMBER OR DEFERRED MEMBER, THAT PORTION OF THE
<PAGE> 19
COMPANY CONTRIBUTION ACCOUNT WHICH IS VESTED IN ACCORDANCE WITH THE TERMS OF
SECTION 5.2.
59. "VESTED SHARE" SHALL MEAN, WITH RESPECT TO A MEMBER OR DEFERRED
MEMBER, THAT PORTION OF THE ACCOUNTS VESTED IN ACCORDANCE WITH THE TERMS OF
SECTIONS 4.4 AND 5.2.
60. "WITHDRAWAL VALUATION DATE" SHALL MEAN, WITH RESPECT TO WITHDRAWALS
MADE PURSUANT TO SECTIONS 8.2 AND 8.3 AND WITH RESPECT TO WITHDRAWALS MADE AFTER
AGE 59-1/2 PURSUANT TO SECTION 8.4, THE LAST DAY OF THE CALENDAR MONTH IN WHICH
A MEMBER'S PROPERLY COMPLETED REQUEST FOR A WITHDRAWAL UNDER THE PLAN AS
TRANSMITTED BY THE COMPANY IS RECEIVED BY THE SAVINGS PLAN ADMINISTRATOR. WITH
RESPECT TO WITHDRAWALS MADE PRIOR TO AGE 59-1/2 PURSUANT TO SECTION 8.4,
"WITHDRAWAL VALUATION DATE" SHALL MEAN THE LAST DAY OF THE CALENDAR MONTH IN
WHICH A MEMBER'S PROPERLY COMPLETED REQUEST FOR A WITHDRAWAL UNDER THE PLAN AS
TRANSMITTED BY THE COMPANY IS APPROVED BY THE RELEVANT HARDSHIP COMMITTEE.
ARTICLE THREE
Membership
3.1. Membership. All Employees of the Company who were members of the
ITT Plan on or before the original Effective Date of this Plan shall remain
Members of the Plan. All Employees of the Company who were Members of this Plan
on or before the Effective Date of the amendment and restatement of this Plan
shall remain Members of the Plan. Any other Employee shall become a Member on
any Enrollment Date following the Employee's date of hire, provided that the
Employee has filed an enrollment form in accordance with section 3.2; however,
an Employee whose employment with the Company is on a less than full-time basis
shall become a Member on any Enrollment Date coinciding with or next following
fulfillment of the conditions of section 2.47.
3.2. Enrollment Form. A Member must file an enrollment form approved by
the Plan Committee with the Company at least 15 days prior to an Enrollment
Date. By filing the enrollment form, the Employee shall designate a Beneficiary
and may:
(a) designate the rate of After-Tax Savings,
(b) authorize the Company to make regular payroll deductions
of the amount of After-Tax Savings, if any,
<PAGE> 20
(c) designate the rate of Before-Tax Savings,
(d) authorize the Company to reduce Salary by the amount of
Before-Tax Savings, if any,
(e) make an investment election as described in section 6.2.
(f) make a rollover contribution to the Plan, as described in
section 4.5.
ARTICLE FOUR
Member Savings
4.1. Member Before-Tax Savings.
(a) Each Member may elect, subject to the provisions of
section 4.1(b), to have the Member's subsequent Salary reduced by 2%,
3%, 4%, 5%, 6%, 7%, 8%, 9%, 10%, 11%, 12%, 13%, 14%, 15% or 16%, and
have that amount contributed to the Trust Fund by the Company that
employs said Member. Such election shall be effective with the first
payroll paid on or after the date as of which the election is to apply.
From time to time and in order to comply with section 401(k)(3) of the
Code, the Plan Committee may impose a limitation on the extent to which
a Member who is a Highly Compensated Employee may reduce the Member's
Salary in accordance herewith, based on the Plan Committee's reasonable
projection of savings rates of Members who are not Highly Compensated
Employees.
(i) Basic Before-Tax Savings--Contributions under
this section which are not in excess of 6% of such Member's
Salary for the month for which such contributions are made
shall be known as "Basic Before-Tax Savings" and shall be
credited to the Member's Basic Before-Tax Investment Account;
and
(ii) Supplemental Before-Tax Savings--Contributions
under this section which are in excess of the maximum allowed
under the preceding paragraph (i) shall be known as
"Supplemental Before-Tax Savings" and shall be credited to the
Member's Supplemental Before-Tax Investment Account.
Before-Tax Savings shall also include amounts credited on a Member's
behalf pursuant to a Prior Plan Transfer. As of any January 1, April 1,
July 1, or October 1, a Member may elect to change the rate of the
Member's Salary reduction by giving the Company at least 15 days' prior
written notice on a form approved by the Plan Committee for such
purpose.
(b) The maximum dollar amount of Before-Tax Savings that may
be made on behalf of any Member for a calendar year shall be the
maximum amount determined by the Secretary of the Treasury, pursuant to
section 402(g) of the Code. In the event the foregoing limitation is
exceeded for any calendar year, the excess Before-Tax Savings as
adjusted for investment
<PAGE> 21
experience will be deemed to have been distributed to the Member and
recontributed to the Plan as After-Tax Savings or returned to the
Member on behalf of whom such Before-Tax Savings were contributed, in
accordance with the Member's election. Any amounts so returned to the
Member will be returned no later than the April 15 following the end of
the calendar year for which the contributions were made. However, in
the event the Member participated in more than one qualified defined
contribution plan under which the Member contributed pursuant to a
salary deferral arrangement, the Member shall notify the Committee by
March 1 of the following calendar year of the amount of the excess
deferrals to be allocated to this Plan and such portion of the excess
deferrals so allocated shall be recontributed to the Plan as After-Tax
Savings or returned to the Member as provided in the preceding
sentence.
(c) With respect to each Plan Year, the Actual Deferral
Percentage for Highly Compensated Employees who are Members shall not
exceed the greater of: (a) 125 percent of the Actual Deferral
Percentage for all other Employees who are Members or (b) the lesser of
(i) 200 percent of the Actual Deferral Percentage of all other
Employees who are Members or (ii) the Actual Deferral Percentage of all
other Employees who are Members plus 2 percentage points. In the event
the Actual Deferral Percentage for Highly Compensated Employees for any
Plan Year exceeds the limits described in the preceding sentence, then
the amount of excess deferrals, determined by reducing contributions
made on behalf of Highly Compensated Employees in order of the Actual
Deferral Percentages beginning with the highest of such percentages, as
adjusted for investment experience, will be distributed to the Members
on whose behalf such deferrals were made or, under rules to be adopted
by the Committee, such Members may elect to recharacterize such
adjusted deferrals as After-Tax Savings. Any distribution of the
adjusted excess deferrals will be made to the Highly Compensated
Employees on the basis of the respective portion of the adjusted excess
deferrals attributable to each of such employees and will be returned
to the employees on whose behalf such contributions were made within
2-1/2 months following the end of the Plan Year for which the deferrals
were made. In the event that any portion of a Member's Before-Tax
Savings, as adjusted for investment experience, is returned or
recharacterized pursuant to section 4.1(b) as a result of the annual
limit applicable to Before-Tax Savings, such Member's Average Deferral
Percentage shall be determined before such excess deferral is returned.
Any such adjusted excess deferrals that are recharacterized shall be
treated as (a) annual additions pursuant to section 5.4 and (b)
Before-Tax Savings for purposes of their withdrawability prior to
Termination of Employment and shall be subject to the financial
hardship requirement provisions of section 8.4.
4.2. Member After-Tax Savings.
(a) By authorizing payroll deductions, each Member may elect
to contribute to the Trust Fund 1%, 2%, 3%, 4%, 5%, 6%, 7%, 8%, 9%,
10%, 11%, 12%, 13%, 14%, 15% or 16% of the Member's Salary in such
payroll period, effective with the first payroll paid on or after the
date as of which the election is to apply. A Member may not contribute
more than the difference between 16% of the Member's Salary and the
amount of savings the Member elected pursuant to section 4.1. A Member
who contributes only After-Tax Savings in accordance with this section
4.2 shall be subject to a minimum contribution of 2% of the Member's
Salary. From time to time and
<PAGE> 22
in order to comply with section 401(m) of the Code, the Plan Committee
may impose an additional limit on the extent to which a Member who is a
Highly Compensated Employee may contribute to the Trust Fund as
After-Tax Savings, based on the Plan Committee's reasonable projection
of savings rates of Members who are not Highly Compensated Employees.
Each Member's contributions shall be paid monthly into the Trust Fund
and shall be credited as follows:
(i) Basic After-Tax Savings--Contributions by a
Member that are not in excess of the difference between 6% of
such Member's Salary for the month for which such
contributions are made and the amount credited as Basic
Before-Tax Savings for that month shall be known as "Basic
After-Tax Savings" and shall be credited to the Basic
After-Tax Investment Account; and
(ii) Supplemental After-Tax Savings--Any
contributions by a Member that are in excess of the maximum
allowed under the preceding paragraph (i) shall be known as
"Supplemental After-Tax Savings" and shall be credited to the
Supplemental After-Tax Investment Account.
After-Tax Savings may also include amounts credited
on a Member's behalf pursuant to a Prior Plan Transfer.
As of January 1, April 1, July 1 or October 1, a
Member may elect to change the Member's after-tax contribution
rate by giving the Company at least 15 days' prior written
notice on a form approved by the Plan Committee for such
purpose.
(b) With respect to each Plan Year, the Actual Contribution
Percentage for Highly Compensated Employees who are Members shall not
exceed the greater of (a) 125 percent of the Actual Contribution
Percentage for all other Employees who are Members or (b) the lesser of
(i) 200 percent of the Actual Contribution Percentage of all other
Employees who are Members or (ii) the Actual Contribution Percentage of
all other Employees who are Members plus 2 percentage points. In the
event the Actual Contribution Percentage for Highly Compensated
Employees for any Plan Year exceeds the limits described in the
preceding sentence, such excess contributions determined by reducing
contributions made on behalf of Highly Compensated Employees in order
of the Actual Contribution Percentages beginning with the highest such
percentages, as adjusted for investment experience, will be returned
to, or paid to, the employees for whom such contributions were made
within 2-1/2 months following the end of the Plan Year for which the
contributions were made.
A Member's Actual Contribution Percentage shall be determined
after a Member's excess Before-Tax Savings are either recontributed to
the Plan as After-Tax Savings or paid to the Member.
(c) Notwithstanding the provisions of section 4.1(c) and
section 4.2(b) above, in no event shall the sum of the Actual Deferral
Percentage of the group of eligible Highly Compensated
<PAGE> 23
Employees and the Actual Contribution Percentage of such group, after
applying the provisions of section 4.1(c) and section 4.2(b) above,
exceed the "aggregate limit" as such term is defined under regulations
prescribed by the Secretary of the Treasury under section 401(m) of the
Code. In the event the aggregate limit is exceeded for any Plan Year,
the Actual Contribution Percentages of the Highly Compensated Employees
shall be reduced to the extent necessary to satisfy the aggregate limit
in accordance with the procedure set forth in section 4.2(b) above.
4.3. Suspension and Resumption of Member Savings. A Member may suspend
the Member's savings under section 4.1 and section 4.2 by giving to the Company
written notice on a form approved by the Plan Committee for such purpose. Such
suspension will become effective with the first payroll paid in the month
following the date written notice is received by the Company. If a Member takes
a withdrawal from the Supplemental Before-Tax Investment Account and Basic
Before-Tax Investment Account under section 8.4 the Member may elect to suspend
savings for a period of not less than 12 months in lieu of disclosing the
Member's financial resources. Such suspension will become effective in the third
month following the month in which the Valuation Date of the Member's
distribution occurs. No Matching Company Contributions shall be made during the
period of a Member's suspension although the Member will continue to be
considered a Member for purposes of sections 4.1(c), 4.2(b) and 4.2(c).
A Member who suspends savings in accordance with the first sentence of
the preceding paragraph may resume savings under section 4.1 and/or under
section 4.2 as of any January 1, April 1, July 1 or October 1 after the date the
suspension commenced by giving to the Company at least 15 days' prior written
notice on a form approved by the Plan Committee for such purpose. A Member who
elects to suspend savings in accordance with the third sentence of the preceding
paragraph may resume savings under section 4.1 and/or under section 4.2 as of
any January 1, April 1, July 1, or October 1 following a period of suspension of
not less than 12 months, by giving to the Company at least 15 days' prior
written notice on a form approved by the Plan Committee for such purpose.
4.4. Vesting of Member's and Deferred Member's Contributions. Each
Member's and Deferred Member's Basic Investment Account and Supplemental
Investment Account shall at all times be fully vested.
4.5. Rollovers and Transfers. Each Employee shall be entitled to
transfer amounts to the Trust Fund from an employees' trust described in section
401(a) of the Code, from an employee annuity described in section 403(a) of the
Code, from an individual retirement account described in section 408(a) of the
Code, or from an individual retirement annuity described in section 408(b)of the
Code, but only if such amounts constitute rollover contributions within the
meaning of sections 402(a)(5), 403(a)(4), or 408(d)(3) of the Code or such
amounts are transferred directly from the trustee or custodian holding such
amounts to the Trustee. The Plan Committee may require such information or
documentation with respect to any such proposed transfer as it deems necessary
or desirable to confirm that it will qualify as a rollover contribution within
the meaning of the aforesaid sections of the Code or that the source of the
amounts proposed to be transferred is tax-qualified.
<PAGE> 24
ARTICLE FIVE
Company Contributions
5.1. Company Contributions.
(a) Retirement Contributions. The Company shall contribute
each Plan Year to the Retirement Account of a Member an amount equal to
one-half of one percent of the Member's Salary for the Plan Year.
(b) Matching Company Contributions. The Company, with respect
to each Member employed by it, shall contribute to the Trust Fund an
amount equal to 60% of such Member's Basic Savings for the
corresponding month. The Matching Company Contributions with respect to
a Member shall be paid into the Trust Fund and credited to such
Member's Company Contribution Account. No Matching Company
Contributions shall be made with respect to a Member's Supplemental
Savings. Notwithstanding the foregoing, no Matching Company
Contributions shall be made with respect to a Member's Basic Savings
which were made during a suspension period following a withdrawal prior
to Termination of Employment as provided in sections 8.2, 8.3 and 8.4
herein.
(c) Contributions in Cash or Shares. Company contributions
shall be made in either cash or Rayonier Shares, as the Company shall
determine (including authorized but unissued Rayonier Shares).
(d) Contributions From Profits. Contributions under this
Article V shall be made from the Company's profits, which shall mean
the net income of the Company for the Company's fiscal year as
determined by the Company according to generally accepted accounting
principles and practices, but without regard to any federal, state, or
local income and/or franchise taxes which may be payable with respect
to such income.
5.2. Vesting. A Member shall be vested in, and have a nonforfeitable
right to, the Member's Company Contribution Account and in accordance with the
following schedule:
<TABLE>
<CAPTION>
Nonforfeitable
Years of Service Percentage
---------------- --------------
<S> <C>
less than 1 year................ 0%
1 but less than 2 years ........ 20%
2 but less than 3 years ........ 40%
3 but less than 4 years ........ 60%
4 but less than 5 years ........ 80%
5 or more years ................ 100%
</TABLE>
Notwithstanding the foregoing schedule, a Member shall immediately be
fully vested in the Member's Company Contribution Account in the event of any
one of the following:
<PAGE> 25
(a) attainment of age 65,
(b) the Member's Retirement,
(c) the Member's Disability,
(d) the Member's death,
(e) termination of the Plan,
(f) complete discontinuance of Company contributions, or
(g) a Change in Control.
A Member shall at all times be fully vested in, and shall have a nonforfeitable
right to 100 percent of, the portion of the Member Retirement Account.
5.3. Forfeitures.
(a) In the event of Termination of Employment of a Member for
any reason other than the foregoing listed in (a) through (d) of
section 5.2, then the portion of the Member's Company Contribution
Account in which the Member is not vested in accordance with section
5.2 shall be forfeited. However, if the Member is reemployed by the
Company prior to the expiration of a Break in Service, the provisions
of section 10.7 shall apply.
(b) If a Member shall have withdrawn all or a portion of the
value of the Member's Vested Company Contribution Account at any time
before Termination of Employment, then all or a portion of the excess
of the value of the Member's Company Contribution Account over the
value of the Member's Vested Company Contribution Account shall be
forfeited as provided in section 8.3. However, the Member may restore
such forfeited amounts in accordance with the provisions of section
8.6.
(c) As soon as practicable after an event giving rise to a
forfeiture shall have occurred, the amount of any forfeiture under the
foregoing subdivisions of this section 5.3, reduced by any forfeited
amounts restored to a Member's Accounts, shall be applied to reduce
future Company contributions under section 5.1.
(d) In the event of the termination of the Plan or complete
discontinuance of Company contributions hereunder, any forfeitures not
previously applied in accordance with the foregoing provisions of this
section shall be credited proportionately to the Accounts of all
Members as provided in section 14.2(b).
5.4. Maximum Annual Additions.
<PAGE> 26
(a) Notwithstanding any other provision of the Plan, except as
otherwise provided in this section 5.4(a), the annual addition to a
Member's Accounts for any Plan Year, when added to the Member's annual
addition for that Plan Year under any other qualified defined
contribution plan of the Company or any subsidiary or affiliate of the
Company, shall not exceed an amount which is equal to the lesser of (i)
25% of the Member's aggregate Compensation for that Plan Year
determined after (A) any reduction of Salary pursuant to section 4.1(a)
and (B) after any reduction of Salary as a result of elective
contributions pursuant to section 125 of the Code, or (ii) $30,000. As
of January 1 of each Plan Year, one-quarter of the dollar limitation in
effect under section 415(b)(1)(A) of the Code, if greater, shall become
effective as the alternative maximum permissible annual addition during
that Plan Year in lieu of $30,000.
(b) For purposes of this section 5.4, the "annual addition"
for a Plan Year to a Member's Accounts under this Plan shall be the sum
of (i) the amount of such Member's Before-Tax Savings for such Plan
Year, (ii) the amount of such Member's After-Tax Savings for such Plan
Year, and (iii) all contributions by the Company or any subsidiary or
affiliate of the Company to such Member's Company Contribution Account
or Retirement Account for such Plan Year.
(c) For purposes of this section 5.4, the term subsidiary or
affiliate shall mean any such company within the controlled group of
companies within the meaning of Code section 414, except the phrase
"more than 50 percent" shall be substituted for the phrase "at least 80
percent" each place it appears in section 1563(a)(1) of such Code.
(d) In the event that it is determined that the annual
additions to a Member's Accounts for any Plan Year would be in excess
of the limitations contained herein, such annual additions shall be
reduced to the extent necessary to bring such annual additions within
the limitations contained in this section 5.4. The Member's allocable
share of Company contributions for such Plan Year shall be reduced and
reallocated to the other Members in the Plan, in the proportion that
the Salary of each other Member bears to the total Salaries for all
such other Members for such Plan Year; subject, however, to the
limitations contained in section 5.4(a).
(e) In the event that any Member of this Plan is a participant
in any other defined contribution plan (whether or not terminated),
maintained by the Company or any subsidiary or affiliate of the Company
the total amount of annual additions to such Member's accounts under
all such defined contribution plans shall not exceed the limitations
set forth in this section 5.4.
If it is determined that as a result of the limitations set
forth in this Subparagraph (e), the annual additions to such Member's
accounts must be reduced:
(i) first, the annual additions to such Member's
accounts under other defined contribution plans shall be
reduced to the extent necessary and to the extent permitted by
law so that the limitations described in section 5.4(a) are
not exceeded; and
<PAGE> 27
(ii) second, if after application of clause (i), the
annual additions to such Member's accounts are still in excess
of the permissible amount, the annual additions to such
Member's Account under this Plan shall be reduced.
In the event that any Member of the Plan is also a participant
in any defined benefit plan maintained by the Company or any subsidiary
or affiliate of the Company, it is intended that the benefits under
such defined benefit plan shall be reduced prior to the application of
the limitations contained in section 5.4(a) to the annual additions to
such Member's Accounts under this Plan to the extent necessary to
satisfy the requirements of section 415(e) of the Code.
ARTICLE SIX
Investment of Contributions
6.1. Investment Funds. Pursuant to the provisions of this Article Six,
contributions to the Plan shall be invested by the Trustee in Fund A, described
below, and such additional Funds as may be specified in Exhibit A attached to
this Plan and made a part hereof.
FUND A--a fund, together with the earnings thereon, invested
primarily in Rayonier Shares (the "Rayonier Common Share Fund").
Rayonier Shares shall be purchased by the Trustee regularly on the open
market, in accordance with a nondiscretionary purchase program, by the
exercise of stock rights or by private purchase; provided, however,
that at the option and direction of Rayonier, authorized and unissued
Rayonier Shares may be contributed to the Trustee as provided in
section 5.1.
In any Fund, regardless of its primary investment objective, the Trustee
temporarily may hold cash or make short-term investments in obligations of the
United States Government, commercial paper, an interim investment fund for tax
qualified employee benefit plans established by the Trustee or other investments
of a short-term nature, unless otherwise provided by applicable law.
6.2. Investment of Contributions. Contributions under the Plan shall be
invested by the Trustee as follows:
(a) Matching Company Contributions and Retirement
Contributions shall be invested entirely in Fund A, except when a
Member who has attained age 55 elects to have all or part of the
Member's Matching Company Contributions or Retirement Contributions
transferred to or invested in a Fund investing in fixed income
investments pursuant to section 6.5.
(b) Contributions for Member savings made pursuant to section
4.1 or section 4.2 shall be invested, in multiples of 5%, in any one or
more of the Funds as elected by the Member.
A Company Contribution Account shall be established for each Member in each Fund
to which Matching Company Contributions made pursuant to section 5.1 with
respect to the Member have been made or transferred. A Retirement Account shall
be established for each Member in each Fund in which
<PAGE> 28
Retirement Contributions with respect to the Member have been made. A Basic
After-Tax Investment Account, a Basic Before-Tax Investment Account, a
Supplemental After-Tax Investment Account, and a Supplemental Before-Tax
Investment Account, as applicable, shall be established for each Member in each
Fund to which such Member's savings have been directed.
6.3. Change in Investment Election. Not more than once in any calendar
month, by giving to the Company prior written notice on a form approved by the
Plan Committee for such purpose, a Member may change the Member's investment
election within the limitation set forth in section 6.2 with respect to savings
to be made for any payroll paid on or after the effective date of such notice.
The effective date of notice shall be the first day of the calendar month
immediately following the date on which properly completed written notice is
received by the Company.
6.4. Redistribution of Member Savings. Not more than once in any
calendar month, by giving written notice to the Company on a form approved by
the Plan Committee for such purpose, a Member, Deferred Member or Beneficiary
who was the spouse of a Member and who elects to defer receipt of the Member's
or Deferred Member's Vested Share in accordance with section 10.1(a) or (b) may
elect to redistribute on any Valuation Date all or part, in multiples of 5%, of
the Member's Basic Investment Account and/or Supplemental Investment Account
among the Funds. The Valuation Date applicable to the redistribution
reallocation shall be the last day of the calendar month in which properly
completed written notice is received by the Savings Plan Administrator.
6.5. Investment Option at Age 55. By giving to the Company written
notice on a form approved by the Plan Committee for such purpose, any Member who
has attained age 55 shall have an option to elect the following:
(a) to have transferred to a Fund investing in fixed income
investments all or part, in multiples of 5%, of such Member's
previously credited Company Contribution Account and/or Retirement
Account,
(b) to have invested in a Fund investing in fixed income
investments all or part, in multiples of 25%, of such Member's future
Matching Company Contributions and Retirement Contributions, and
(c) if a Member is age 55 or older when the Member joins the
Plan or becomes a Member, the Member can have all or part of the
Matching Company Contributions and Retirement Contributions made on
such Member's behalf invested in a Fund investing in fixed income
investments in multiples of 25% thereof.
A Member may make the elections described above only once, and if a Member
desires to make more than one type of election, such elections must be made
simultaneously.
The Valuation Date applicable with respect to transfers and investments
made in accordance with subparagraph (a) above shall be the last day of the
calendar month in which the Member's request is filed with the Company. The
effective date applicable with respect to investments made in accordance with
<PAGE> 29
subparagraph (b) above shall be the first day of the calendar month following
the calendar month in which the Member's request is filed with the Company.
6.6. Voting of Rayonier Shares. Each Member, Deferred Member, and
Beneficiary (in the event of the death of the Member or Deferred Member) is, for
the purposes of this section 6.6, hereby designated a named fiduciary within the
meaning of section 402(a)(2) of the Employee Retirement Income Security Act of
1974, as amended, with respect to the Rayonier Shares allocated to the Member's,
Deferred Member's, or Beneficiary's Account. Each Member, Deferred Member, and
Beneficiary may direct the Trustee as to the manner in which the Rayonier Shares
allocated to the applicable Accounts are to be voted. Before the applicable
annual or special meeting of shareholders of Rayonier there shall be sent to
each Member, Deferred Member and such Beneficiary a copy of the proxy
solicitation material for such meeting, together with a form requesting
instructions to the Trustee on how to vote the Rayonier Shares allocated to such
Member's, Deferred Member's and Beneficiary's Accounts. Upon receipt of such
instructions, the Trustee shall vote such shares as instructed. In lieu of
voting fractional shares as instructed by Members, Deferred Members or
Beneficiaries, the Trustee may vote the combined fractional Rayonier Shares to
the extent possible to reflect the directions of Members, Deferred Members or
Beneficiaries with allocated fractional shares of stock. The Trustee shall vote
Rayonier Shares allocated to Accounts under the Plan but for which the Trustee
received no valid voting instructions in the same manner and in the same
proportion as the Rayonier Shares in the Accounts in the respective funds with
respect to which the Trustee received valid voting instructions are voted.
Instructions to the Trustee shall be in such form and pursuant to such
regulations as the Plan Committee may prescribe.
Any instructions received by the Trustee from Members, Deferred Members
and Beneficiaries regarding the voting of Rayonier Shares shall be confidential
and shall not be divulged by the Trustee to the Company, or to any director,
officer, employee or agent of the Company, it being the intent of this provision
of section 6.6 to ensure that the Company (and its directors, officers,
employees and agents) cannot determine the voting instructions given by any
Member, Deferred Member or Beneficiary.
6.7. Return of Contributions. Notwithstanding anything herein to the
contrary, upon the Company's request, a deposit which was made by a mistake of
fact, or conditioned upon qualification of the Plan or any amendment thereof or
upon the deductibility of the contribution under section 404 of the Code, shall
be returned to the Company within one year after the payment of the deposit, the
denial of the qualification, or the disallowance of the deduction (to the extent
disallowed), whichever is applicable. All Matching Company Contributions and
Retirement Contributions are hereby conditioned upon their deductibility under
section 404 of the Code.
ARTICLE SEVEN
Credits to Members' Accounts, Valuation and
Allocation of Assets
7.1. Crediting Savings and Contributions. Before-Tax Savings and
After-Tax Savings made on behalf of or by a Member shall be allocated to the
Basic Investment Account or Supplemental Investment Account of such Member, as
appropriate, as soon as practicable after such contributions are
<PAGE> 30
transferred to the Trust Fund. Matching Company Contributions and Retirement
Contributions made on behalf of a Member shall be allocated to the appropriate
account as soon as practicable after contribution to the Trust Fund.
7.2. Credits to Members' Accounts. At the end of each month in which
the Plan is in effect and operation, the amount of each Member's credit in each
of the Funds A, B, C and D shall be expressed and credited in dollars of
contributions by the Member and Company contributions and Rayonier Shares
allocated to a Member's Accounts for such month. For the purposes of section 6.6
and Article Fifteen, a Member's interest in Fund A shall be converted into
Rayonier Shares at any time of determination by dividing the value of all
Rayonier Shares in Fund A by the value of such Member's interest in Fund A at
the time. The resulting number of Rayonier Shares shall be deemed allocated to
such Member.
7.3. Valuation of Assets. As of the last business day of each month
after the first month in which the Plan is in operation, the Trustee shall
determine the total fair market value of all assets then held by it in each
fund.
7.4. Allocation of Assets. At the end of each month when the value of
all assets in each Fund has been determined pursuant to section 7.3, the Trustee
shall determine the gain or loss in the value of such assets in each of the
Funds. Such gain or loss shall be allocated pro rata by fund to the balances
credited to the Accounts of all Members and Deferred Members immediately prior
to the end of such month, not including new contributions to that fund at the
end of that month for that month.
ARTICLE EIGHT
Withdrawals Prior to Termination of Employment
8.1. General Conditions for Withdrawals. Subject to the restrictions in
sections 8.7 and 8.9, at any time before Termination of Employment, a Member may
file with the Company a written notice on a form approved by the Plan Committee
requesting a withdrawal from the Member's Accounts. Any such withdrawal shall be
payable only in cash and shall be in accordance with the conditions of sections
8.2, 8.3, or 8.4. For purposes of this Article Eight, a Member's Accounts shall
be valued as of the applicable Withdrawal Valuation Date. Amounts to be
distributed to Members will not participate in the investment experience of the
Plan after the Withdrawal Valuation Date. Such amounts generally will be paid
within approximately six weeks following the Withdrawal Valuation Date.
8.2. Withdrawals from Supplemental After-Tax Investment Account and
Basic After-Tax Investment Account. Subject to the provisions of sections 8.1,
8.7 and 8.9, one and only one withdrawal from a Member's Supplemental After-Tax
Investment Account and Basic After-Tax Investment Account may be made by a
Member in any six-month period before Termination of Employment. Such withdrawal
may be:
(a) any specified whole dollar amount which is less than the
full value of the Member's Supplemental After-Tax Investment Account
and Basic After-Tax Investment Account, or
<PAGE> 31
(b) the full value of the Member's Supplemental After-Tax
Investment Account, or
(c) the full value of the Member's Basic After-Tax Investment
Account.
For a withdrawal in accordance with subparagraph (a) above, certain
conditions will apply: (i) the amount withdrawn must be at least $300; (ii) if
the amount withdrawn exceeds the value of the Member's Supplemental After-Tax
Savings and investment earnings and gains thereon (such value for this purpose
will be determined as of the Valuation Date immediately preceding the applicable
Withdrawal Valuation Date), Matching Company Contributions will be suspended and
will not be resumed for a period of at least three months following the
applicable Withdrawal Valuation Date; (iii) if a Member has accounts in more
than one Fund, the amount withdrawn shall be prorated among such accounts based
on their respective values; and (iv) further Basic and Supplemental Savings by
the Member under the Plan may be continued without interruption.
For a withdrawal in accordance with subparagraph (b) above, further
Basic and Supplemental Savings by the Member under the Plan may be continued
without interruption.
For a withdrawal in accordance with subparagraph (c) above, certain
conditions will apply: (i) the Member must simultaneously withdraw the Member's
Supplemental After-Tax Investment Account, if any; (ii) Matching Company
Contributions will be suspended and will not be resumed for a period of three
months following the applicable Withdrawal Valuation Date; and (iii) further
Basic and Supplemental Savings by the Member under the Plan may be continued
without interruption.
8.3. Withdrawal of Vested Company Contribution Account. Subject to the
provisions of sections 8.1, 8.7 and 8.9, not more frequently than once in any
six-month period, a Member who has withdrawn the maximum amount available from
the Member's Supplemental After-Tax Investment Account and Basic After-Tax
Investment Account pursuant to section 8.2 may withdraw, in 25 percent
increments, all or a portion of the value of the Member's Vested Company
Contribution Account attributable to Company Contributions, other than those
Company Contributions made within the last twenty-four months; provided,
however, that a Member who has participated in the Plan for at least sixty
months shall also be able to withdraw Company Contributions made within the last
twenty-four months. Such Member may continue the Member's Basic and Supplemental
Savings under the Plan without interruption; however, Matching Company
Contributions will be suspended for a period of three months following the
applicable Withdrawal Valuation Date. Such three-month suspension period shall
run concurrently with any three-month suspension period resulting from a
withdrawal pursuant to section 8.2.
8.4. Withdrawal from Supplemental Before-Tax Investment Account and
Basic Before-Tax Investment Account.
(a) Subject to the provisions of sections 8.1, 8.7 and 8.9, a
Member who has not attained age 59-1/2 may withdraw all or a portion of
the Member's Supplemental Before-Tax Investment Account and the
Member's Basic Before-Tax Investment Account, except for that portion
of each such Account which represents investment earnings credited to
the Account subsequent to December 31, 1988, in the ITT Plan and this
Plan, only if the Member is able to
<PAGE> 32
establish to the satisfaction of the Hardship Committee that a bona
fide financial hardship exists and only if the Member has obtained (i)
all distributions (other than hardship distributions) available under
all other retirement plans maintained by the Company, including this
Plan and (ii) all non-taxable loans available under all retirement
plans maintained by the Company, including this Plan, provided that the
loan repayments do not result in a financial hardship for the Member.
For this purpose, a bona fide financial hardship shall mean an
immediate and heavy need to draw on financial resources not reasonably
available from other sources of the Member. Bona fide financial
hardships shall include cash down payments and/or closing costs
associated with the purchase of a Member's principal residence; medical
expenses for a Member, the Member's spouse or dependents, or expenses
necessary for those persons to obtain medical care, which were not paid
or reimbursed by insurance; tuition expenses and related educational
fees for post-secondary education for a Member, the Member's spouse or
dependents for the next academic year; payments to prevent a Member's
eviction from the Member's principal residence or foreclosure of a
mortgage on such residence; and any other reasons which the Hardship
Committee may deem appropriate. A Member's withdrawal from Before-Tax
Investment Accounts, together with the Member's concomitant withdrawal
from After-Tax Investment and Vested Company Contribution Accounts and
Plan loan, if any, shall be limited to the amount of the financial need
plus taxes on such withdrawals for which the Member is liable. A Member
may demonstrate lack of other reasonably available financial resources
by disclosing on a form approved by the Hardship Committee for such
purpose relevant details of the Member's personal and family finances
or, alternatively, the Hardship Committee may deem that the Member has
no other financial resources reasonably available if (i) the Member
agrees to cease all Before-Tax Savings and After-Tax Savings for a
period of not less than 12 months and (ii) in the calendar year in
which the Member is eligible to resume saving under the Plan, to have
the Member's maximum permissible Before-Tax Savings to the Plan, as
defined in section 4.1(b), reduced by any Before-Tax Savings made on
the Member's behalf in the previous calendar year. The Hardship
Committee shall make determinations of financial hardship in a uniform
and nondiscriminatory manner, with reference to all the relevant facts
and circumstances and in accordance with applicable tax law under
section 401(k) of the Code. Subsequent to the attainment of age 59-1/2,
a Member may at any time before Termination of Employment, and without
regard to financial hardship, withdraw all or a portion of the Member's
Supplemental Before-Tax Investment Account and the Member's Basic
Before-Tax Investment Account.
Notwithstanding the foregoing, for a withdrawal in accordance with (a)
above, Matching Company Contributions will be suspended for a period of at least
three months following the applicable Withdrawal Valuation Date.
8.5. Ordering of Withdrawals. For purposes of processing a withdrawal,
Basic After-Tax Savings made by a Member attributable to the ITT Plan on or
after January 1, 1987 and to this Plan, and investment earnings and gains
thereon and Supplemental After-Tax Savings made by a Member to the ITT Plan on
or after January 1, 1987 and to this Plan, and investment earnings and gains
thereon shall constitute a separate contract (Contract II) and all remaining
amounts in the Plan with respect to a Member shall constitute another contract
(Contract I) for purposes of section 72(e) of the Code. The Plan Committee shall
maintain records of withdrawals, contributions, earnings and other additions and
<PAGE> 33
subtractions attributable to each separate contract and shall credit or charge
the appropriate contract, and adjust the non-taxable basis of each contract, for
transactions properly allocable to such contract. For purposes of processing a
withdrawal under section 8.2 or 8.3, such withdrawals will be deducted from the
Member's Accounts in Contract I and Contract II in the following order: (i) the
value of the Member's Supplemental After-Tax Investment Account in Contract I,
(ii) the value of the Member's Supplemental After-Tax Investment Account in
Contract II, (iii) the value of the Member's Basic After-Tax Investment Account
in Contract I, (iv) the value of the Member's Basic After-Tax Investment Account
in Contract II and (v) the value of the Member's Vested Company Contribution
Account.
For purposes of processing a withdrawal from Before-Tax Investment
Accounts under section 8.4 by a Member who has attained age 59-1/2, such
withdrawal will be deducted from the Member's Accounts in Contract I. Any
nontaxable savings in such Member's Accounts in Contract I are first applied
toward such withdrawal.
8.6. Repayment of Withdrawal From Plan. If a Member makes a withdrawal
pursuant to section 8.3 and the Member forfeits all or a portion of the value of
the Member's Company Contribution Account, the Member shall be permitted to
repay in full the amounts previously withdrawn from the Member's Basic After-Tax
Investment Account and the Member's Vested Company Contribution Account to the
Plan by giving to the Company prior written notice on a form approved by the
Plan Committee for such purpose. At the Member's option, the Member may repay
the amount of the Member's Supplemental After-Tax Investment Account.
Such payment may be made at any time after the three month suspension
of Matching Company Allocations described in section 8.3 above, provided the
Member is then eligible for the Plan and further provided the Member has not
incurred a Break in Service. Such repayment amounts shall be invested in the
same or equivalent Funds in the same amounts as were withdrawn from each Fund.
In the event that an equivalent Fund shall be unavailable at the time of such
repayment, the amount of such repayment or the portion thereof otherwise
allocable to such unavailable Fund shall be invested as directed by the Member
on such form as the Plan Committee shall provide. Upon such repayment the Plan
Committee shall instruct the Trustee to restore the balance of the Member's
Accounts in each Fund to its value at the time of the withdrawal payment.
However, repayments of amounts previously withdrawn from the short-term U.S.
Government Obligations Fund of the ITT Plan (which was eliminated from the ITT
Plan effective July 1, 1993) will be invested in the Fund that invests in fixed
income investments. With respect to a Member who has exercised the investment
option at age 55 pursuant to section 6.5, repayment and restoration of the
Member's Company Contribution Account shall be made in accordance with the
Member's election pursuant to such section 6.5 in effect at the time of
repayment.
8.7. Withdrawal Limitation after Loan Application. A Member who has
applied for a loan in accordance with Article Nine may not apply for a
withdrawal of any type from the Member's Accounts before the third calendar
month following the Loan Valuation Date which is applicable to the Member's
loan. A Member may, however, file application for a withdrawal, subject to the
conditions of sections 8.2, 8.3, or 8.4, at the same time the Member files
application with the Company for a loan provided such withdrawal and loan
applications are appended together upon transmittal to and receipt by the
Savings Plan Administrator. (See section 9.7 for similar loan limitation after
withdrawal application.)
<PAGE> 34
8.8. Direct Rollover. Certain withdrawals or portions thereof paid on
or after January 1, 1993 pursuant to this Article Eight may be "eligible
rollover distributions" as defined and discussed in section 10.8, and shall be
treated as such to the extent required under section 402 of the Code.
8.9. Withdrawals by Officers and Directors. Notwithstanding any
provision of Article Eight to the contrary, in no event may a withdrawal by a
Member who is an officer or director of the Company and who is subject to
Section 16 of the Securities and Exchange Act of 1934, as amended, include any
amounts deducted from those portions, if any, of a Member's Accounts that are
invested in Fund A, nor may any repayment of such withdrawal pursuant to section
8.6 be invested in Fund A. Any provision of this Article Eight regarding the
proportionate withdrawal from or repayment to the Fund by such Members shall be
applied excluding Fund A.
ARTICLE NINE
Loans
9.1. General Conditions for Loans. Subject to the restrictions in
sections 9.6 and 9.7, at any time before Termination of Employment, a Member may
file with the Company a written notice on forms approved by the Plan Committee
requesting a loan from the Member's Accounts. By filing the loan forms, the
Member:
(a) specifies the amount and the term of the loan,
(b) agrees to the annual percentage rate of interest,
(c) agrees to the finance charge,
(d) promises to repay the loan, and
(e) authorizes the Company to make regular payroll deductions
to repay the loan.
9.2. Amounts Available for Loans. Subject to the following sentence, a
Member may request a loan in any specified whole dollar amount which must be at
least $1,000 but which may not exceed the lesser of 50% of the Vested Share, or
$50,000 reduced by the difference (if any) between the Member's highest
outstanding loan balance, if any, during the prior one-year period and the
outstanding loan balance on the date on which the loan is made. In no event may
a Member borrow any amount from the Member's Retirement Account, however, the
Member's Retirement Account balance may be taken into consideration in
determining the amount available for a loan. For purposes of determining amounts
available for loans, a Member's Vested Share shall be determined based on the
latest information available to the Company at the time the Member files a loan
request with the Company. Notwithstanding the foregoing, such amounts may
automatically be borrowed from a Member's Retirement Account as may be necessary
to fulfill the loan request of such Member if, as a result of a decrease in
market value, the amount available for loan on the Loan Valuation Date is less
than the amount calculated as being available for loan at the time the Member
filed the loan request with the Company.
<PAGE> 35
9.3. Account Ordering for Loans. For purposes of processing a loan, the
amount of such loan will be deducted from the Member's Accounts in the following
order: (i) the value of the Member's Before-Tax Savings (including investment
earnings and gains or losses thereon), (ii) the value of the Member's After-Tax
Savings (including investment earnings and gains or losses thereon), and (iii)
the Member's Vested Company Contribution Account. A loan is deducted from a
Member's Accounts as of the Loan Valuation Date. Amounts so deducted and
distributed to a Member as a Plan loan will not participate in the investment
experience of the Plan except as such amounts are repaid to the Member's
Accounts.
9.4. Interest Rate for Loans. The Plan Committee shall establish and
communicate to Members a reasonable market rate of interest for loans.
9.5. Term and Repayment of Loan. A Member may elect to repay a loan no
less frequently than on a monthly basis over a period of 12, 24, 36, 48, or 60
months. A Member who is using a loan to acquire the Member's own principal
residence may elect to repay a loan over a period of 120 or 180 months. No
extension of the loan term shall be permitted after the loan is made. Repayment
of the loan is made to the Member's Accounts from which the loan amount was
deducted in inverse order to the Account Ordering for Loans described in section
9.3. Repayments are invested in the Member's Accounts in accordance with the
Member's current investment election. Repayments of amounts deducted from the
Member's Vested Company Contribution Account are invested in accordance with the
investment direction applicable to the Member's Company contributions at the
time of repayment under the terms of the Plan. Loan repayments are not credited
with investment experience under the Plan until the first of the month following
the month in which such repayments are made.
9.6. Frequency of Loan Requests. A Member may have only one loan
outstanding at any time. A Member who fully repays a loan may not apply for
another loan before the third calendar month following the last day of the month
in which the loan is repaid.
9.7. Loan Limitation after Withdrawal Application. A Member who
requests a withdrawal of any type in accordance with Article Nine may not apply
for a loan before the third calendar month following the applicable Withdrawal
Valuation Date. A Member may, however, file application for a loan, subject to
the conditions of sections 9.1 and 9.2, at the same time the Member files
application with the Company for a withdrawal provided such loan and withdrawal
applications are appended together upon transmittal to and receipt by the
Savings Plan Administrator. (See section 8.7 for similar withdrawal limitation
after loan application.)
9.8. Prepayment of Loans. A Member may prepay the entire outstanding
balance of a loan, with interest to date of prepayment, at any time. The date of
prepayment will be the last day of the month in which the prepayment is made.
9.9. Outstanding Loan Balance at Termination of Employment. Upon the
Member's Termination of Employment, the outstanding balance of any loan shall
become due and payable and shall either be canceled or, if the Member so elects,
prepaid in full to the Member's Accounts with interest to the
<PAGE> 36
date of prepayment; such prepayment date may not be later than the Valuation
Date of the Member's distribution at Termination of Employment or the date the
Member becomes a Deferred Member.
9.10. Loan Default during Employment. Under certain circumstances,
including, but not limited to, the Member's failure to make repayment or the
bankruptcy of the Member, the Plan Committee may declare a Member's loan to be
in default. In the event default is declared, the outstanding loan balance and
any accrued interest may be treated as a withdrawal prior to Termination of
Employment subject to the provisions of Article Eight.
9.11. Incorporation by Reference. Any additional rules or restrictions
as may be necessary to implement and administer Plan loans shall be in writing
and communicated to Members. Such further documentation is hereby incorporated
into the Plan by reference, and pursuant to subparagraph (b) of section 12.2,
the Plan Committee is hereby authorized to make such revisions to these rules as
it deems necessary or appropriate on the advice of counsel.
9.12. Loans to Officers and Directors. Notwithstanding any provision of
Article Nine to the contrary, in no event may a loan to a Member who is an
officer or director of the Company and who is subject to Section 16 of the
Securities Exchange Act of 1934, as amended, include any amounts deducted from
those portions, if any, of a Member's Accounts that are invested in Fund A, nor
may any repayments of such a loan be invested in Fund A.
ARTICLE TEN
Distributions
10.1. General.
(a) Upon Termination of Employment, a Member may apply for
distribution of the value of the Member's Vested Share. Alternatively,
upon Termination of Employment, a Member whose Vested Share as of the
Valuation Date of the month in which the Member files appropriate
application with the Savings Plan Administrator exceeds $3,500 or,
effective January 1, 1998, $5,000, may elect to defer distribution of
such Vested Share until the January 31 Valuation Date immediately
following the Member's attainment of age 70-1/2. A Member who
terminates employment and elects to defer distribution of the Member's
Vested Share shall become a Deferred Member. A Deferred Member may,
however, file application for distribution of the Deferred Member's
Vested Share at any time prior to the January 31 following the Member's
attainment of age 70-1/2. If a Member terminates employment and does
not apply for a distribution of the Member's Vested Share, or does not
elect to defer distribution of the Member's Vested Share, within 60
days of the Member's Termination of Employment, and the value of the
Member's Vested Share as of the Valuation Date coincident with or next
following the 60th day after the Member's Termination of Employment
exceeds $3,500, or, effective January 1, 1998, $5,000, such Member will
be deemed to be a Deferred Member; provided, however, that distribution
of the Vested Share of a Member so deemed to be a Deferred Member shall
commence not later than the 60th day after the close of the Plan Year
in which the later of the following events occurs: (i) the Member's
attainment of age 65, or (ii) the date of the Member's Termination of
Employment. A Deferred Member may elect to redistribute the Member's
Basic
<PAGE> 37
Investment Account and/or Supplemental Investment Account in accordance
with section 6.4 among the Funds and to make the investment election
described in section 6.5.
(b) Upon the death of a Member or Deferred Member, the value
of such Member's or Deferred Member's Vested Share shall be distributed
to the Member's or Deferred Member's Beneficiary. If the distribution
of a Member's Vested Share has begun and the Member or Deferred Member
dies before the Member's or Deferred Member's interest has been
distributed, the remaining portion of such Vested Share shall be
distributed at least as rapidly as under the method of distribution
selected as of the Member's or Deferred Member's date of death. If a
Member or Deferred Member dies before the Member or Deferred Member has
begun to receive any distribution of the Member's or Deferred Member's
Vested Share (and distributions are not to be made in the form of an
annuity to the Member's or Deferred Member's spouse) then the Member's
or Deferred Member's Vested Share shall be distributed by December 31
of the calendar year in which the fifth anniversary of the Member's or
Deferred Member's date of death occurs. This distribution requirement,
however, shall not apply to any portion of the deceased Member's or
Deferred Member's Vested Share that is payable to or for the benefit of
a designated Beneficiary. In such event, such portion may, at the
election of the Member or Deferred Member (or the Member's or Deferred
Member's Beneficiary), be distributed over the life of such Beneficiary
(or over a period not extending beyond the life expectancy of such
Beneficiary) provided such distribution begins not later than December
31 of the calendar year immediately following the calendar year in
which the Member or Deferred Member died. In the event the Member's or
Deferred Member's spouse (determined as of the date of the Member's or
Deferred Member's death) is the Member's or Deferred Member's
Beneficiary, the requirement that distributions commence within one
year of a Member's or Deferred Member's death shall not apply if the
value of the Vested Share to be distributed to the spouse Beneficiary
exceeds $3,500, or effective January 1, 1998, $5,000. Such spouse
Beneficiary may elect to defer receipt of the Member's or Deferred
Member's Vested Share until the date as of which the Member or Deferred
Member would have reached age 70-1/2. If the value of the Vested Share
to be distributed to a spouse Beneficiary exceeds $3,500 or, effective
January 1, 1998, $5,000 and such spouse Beneficiary neither files
application for distribution of such Vested Share nor elects to defer
receipt of such Vested Share, then such spouse Beneficiary shall be
deemed to have deferred receipt of such Vested Share until the January
31 Valuation Date immediately following the date as of which the Member
or Deferred Member would have attained age 70-1/2. A spouse Beneficiary
may, however, file application for distribution of such Vested Share at
any time prior to the January 31 Valuation Date immediately following
the year in which the Member or Deferred Member would have attained age
70-1/2.
For purposes of this section 10.1(b), the spouse of a Member
or a Deferred Member shall be treated as a Beneficiary if a trust of
which such spouse is a primary beneficiary is designated as the
Beneficiary of the Member or Deferred Member, provided that such trust
meets the requirements of Prop. Treasury Regulations section
1.401(a)(9)-1, D-5 (or any successor regulation).
<PAGE> 38
(c) A Member who attains age 70-1/2 on or after January 1,
1988 must commence distribution of the Member's Vested Share by no
later than (i) the April 1 following the year in which the Member
attains age 70-1/2 or (ii) effective January 1, 1997, the calendar year
in which the Member retires; provided, however, that clause (ii) shall
not apply to a Member who attains age 70-1/2 before January 1, 1998 and
elects not to have it apply and in the case of a Member who is a 5
percent owner at any time during the 5 Plan Year period ending in the
calendar year in which the Member attains age 70-1/2, or, in the case
of an Employee who becomes a 5 percent owner during any subsequent Plan
Year, clause (ii) shall no longer apply, and distribution of the
Member's Vested Share must commence by April 1st of the calendar year
following the calendar year in which such subsequent Plan Year ends.
The Vested Share of such Member shall be paid under the payment method
described in section 10.3(c)(i) below, if permissible under the terms
of that payment method. If payment under the terms of that payment
method is not permissible, the Vested Share of the Member shall be paid
in an immediate lump sum. Alternatively, the Member may elect that the
Member's Vested Share be paid under the payment method described in
section 10.3(c)(ii) below, if permissible under the terms of that
payment method, or in an immediate lump sum. Payment of the Vested
Share of a Member who has been required to commence payments pursuant
to this section shall be made no less frequently than annually, and
once such payment has commenced, the Member may not elect an alternate
method for payment of such Vested Share while the Member is still an
Employee.
10.2. Valuation Date and Conditions of Distribution.
(a) The value of any distribution will be determined as of the
Valuation Date of the calendar month in which a properly completed
application for the distribution by the Member, Deferred Member or
Beneficiary, as transmitted by the Company, is received by the Savings
Plan Administrator. In no event, however, may the Valuation Date of a
Member's Accounts precede the Valuation Date of the month in which
Termination of Employment occurs.
(b) Application by the Member, Deferred Member or Beneficiary
must be in writing on a form approved by the Plan Committee.
(c) Generally, all funds distributed will be paid within
approximately six weeks following the applicable Valuation Date. If
part of the distribution is to be paid in stock, the stock certificate
will be distributed after the check representing the cash distribution.
10.3. Methods of Distribution. After Termination of Employment occurs,
and as soon as practicable following application by the Member, Deferred Member
or Beneficiary, distributions under the Plan shall be made in the following
manner:
(a) all distributions from the Funds other than Fund A shall
be made in cash;
(b) unless the Member, Deferred Member or Beneficiary elects
to take cash for distributions from Fund A, distributions from Fund A
shall be in Rayonier Shares, except that any fractional interest in a
share shall be paid in cash;
<PAGE> 39
(c) all distributions of cash and Rayonier Shares shall be
made as soon as practicable after receipt of the application by the
Member, Deferred Member or Beneficiary in accordance with section
10.2(b).
However, with prior written notice on a form approved by the
Plan Committee for such purpose, a Member who is terminating employment
after attaining age 55 or a Member or Beneficiary of a Member or
Deferred Member who is terminating employment by reason of Retirement,
death or Disability may elect a distribution in the method of payment
described in (i) or (ii) below. With prior written notice on a form
approved by the Plan Committee for such purpose, a Deferred Member who
elects to receive a distribution after attaining age 55 may elect to
receive distribution in the method of payment described in (i) or (ii)
below.
(i) Provided the value of the Member's or Deferred
Member's vested Accounts is at least $3,500, or, effective
January 1, 1998, $5,000, and the first payment is at least
$1,000, by payment in not more than twenty annual
installments, with all such installments to be paid in cash,
as follows: the amount of the annual installments to be paid
to each Member or Deferred Member or, in the event of death,
to the Member's or Deferred Member's Beneficiary shall be
based upon the value of The Member's or Deferred Member's
Accounts as of the Valuation Date coinciding with or next
following the date of receipt by the Savings Plan
Administrator of a properly completed application as
transmitted by the Company and each anniversary thereof, and
shall be determined by multiplying such value by a fraction,
the numerator of which shall be one and the denominator of
which shall be the number of unpaid annual installments.
Notwithstanding the foregoing, the number of annual
installments elected may not exceed the life expectancy of the
Member or Deferred Member, or if the Member or Deferred Member
is married, the joint life expectancy of the Member or
Deferred Member and the spouse or in the event of the Member's
or Deferred Member's death, the life expectancy of the
Beneficiary. Any Member or Deferred Member or Beneficiary who
elects annual installment payments may, at any time thereafter
(but with the consent of the spouse of the Member or Deferred
Member, if applicable), elect by filing a request with the
Plan Committee to receive in a lump sum the remaining value of
any unpaid annual installments. The Valuation Date applicable
to such election shall be the last day of the calendar month
in which a request to receive the remaining value of any
unpaid annual installments is received by the Savings Plan
Administrator.
For purposes of this section 10.3(c)(i), the spouse
of a Member or a Deferred Member shall be treated as a
Beneficiary if a trust of which such spouse is a primary
beneficiary is designated as the Beneficiary of the Member or
Deferred Member, provided that such trust meets the
requirements of Prop. Treasury Regulations section
1.401(a)(9)-1, D-5 (or any successor regulation).
(ii) Provided the value of the Member's or Deferred
Member's vested Accounts is at least $3,500 or, effective
January 1, 1998, $5,000, and the first payment is
<PAGE> 40
at least $1,000, by payment in annual cash installments over
the Member's or Deferred Member's life expectancy or the joint
life expectancies of the Member or Deferred Member and the
Member's or Deferred Member's spouse or in the event of the
death of the Member of the Deferred Member, over the life
expectancy of the Member's or Deferred Member's Beneficiary,
as actuarially determined at the time of commencement of the
initial installment and which may, in the case of payments to
a Member or Deferred Member and/or to the Member's or Deferred
Member's spouse, be redetermined annually thereafter. The
amount of such installments will be based on the value of the
Member's or Deferred Member's Accounts as of the Valuation
Date coinciding with or next following the date of receipt by
the Savings Plan Administrator of a properly completed
application as transmitted by the Company and each anniversary
thereof, and shall be determined by multiplying such value by
a fraction, the numerator of which shall be one and the
denominator of which shall be the number of years and fraction
thereof of the Member's or Deferred Member's or Beneficiary's
life expectancy as the case may be (or the joint life
expectancies of the Member or Deferred Member and the Member's
or Deferred Member's spouse) based on age at the time of the
initial installment (if life expectancy is not to be
recalculated) or at the time the installment is payable (if
life expectancy is to be recalculated). Any Member or Deferred
Member or Beneficiary who elects annual cash installment
payments over the Member's or Deferred Member's or
Beneficiary's life expectancy or over the joint life
expectancies of the Member or Deferred Member and the Member's
or Deferred Member's spouse may not thereafter elect to
receive in a lump sum the remaining value of the Accounts.
If a Member or Deferred Member elects a distribution as
provided in the paragraph (i) or (ii) of this section 10.3(c) and the
Member or Deferred Member dies prior to receipt of the cash and/or
Rayonier Shares comprising such distribution, then the Member or
Deferred Member shall be considered to have terminated employment by
reason of death and the Beneficiary of such Member or Deferred Member
may elect a distribution as provided in paragraph (i) or (ii) of this
section 10.3(c).
The Vested Share of a Member who, following Termination of
Employment, fails to apply for distribution of such Vested Share, shall
be paid entirely in cash, provided that the value of such Vested Share
is less than $3,500 or, effective January 1, 1998, $5,000, on a
Valuation Date no earlier than the second Valuation Date following the
Member's or Deferred Member's Termination of Employment. Alternative
methods of distribution may apply to that portion of a Member's or a
Deferred Member's Accounts attributable to a Prior Plan Transfer.
In no event shall the foregoing provisions permit the
distribution of a Member's Accounts to commence later than the date
specified in section 10.1(c).
10.4. Death of Spouse Who is a Beneficiary. Upon the death of a spouse
who individually is a Beneficiary with Accounts remaining in the Plan, the
remaining value of all such Accounts shall be paid to the estate of the spouse
Beneficiary.
<PAGE> 41
10.5. Proof of Death and Right of Beneficiary or Other Person. The Plan
Committee may require and rely upon such proof of death and such evidence of the
right of any Beneficiary or other person to receive the undistributed value of
the Accounts of a deceased Member, Deferred Member or Beneficiary as the Plan
Committee may deem proper, and its determination of death and of the right of
such Beneficiary or other person to receive payment shall be conclusive.
10.6. Completion of Appropriate Forms. The Plan Committee has
prescribed forms providing written notice to the Company in order for a
distribution to be made under the Plan. No distribution shall be made under the
Plan unless such forms are properly filed by the Member, Deferred Member or
Beneficiary; however, if a distribution is due to a Member, Deferred Member or
Beneficiary under the terms of the Plan, the Savings Plan Administrator will
take necessary action to cause the distribution to be made.
10.7. Restoration of Prior Forfeiture.
(a) On Repayment of Accounts Following Rehire
If a Member's employment is terminated otherwise than by
Retirement or Disability and as a result of such termination an amount
to the Member's credit is forfeited, such amount shall be subsequently
restored to the Member's Accounts provided the Member is reemployed by
the Company prior to the expiration of a Break in Service, and, after
giving prior written notice on a form approved by the Plan Committee
for such purpose, the Member repays to the Trust Fund an amount in cash
equal to the full amounts of the Member's Basic Investment Account, the
Member's Vested Company Contribution Account and the Member's
Retirement Account distributed to the Member from the Trust Fund on
account of the Member's Termination of Employment. (At the Member's
option, the Member may repay the amount of the Member's Supplemental
Investment Account.) Such repayment must be made within five years of
the date the Member again becomes eligible to become a Member of the
Plan. Such repayment shall be invested in the same or equivalent Funds
in the same amounts as were withdrawn from each Fund. In the event that
an equivalent Fund shall be unavailable at the time of such repayment,
the amount of such repayment or the portion thereof otherwise allocable
to such unavailable Fund shall be invested as directed by the Member on
such form as the Plan Committee shall provide. Repayment of amounts
previously distributed from the short-term U.S. Government Obligations
Fund under the ITT Plan (which was eliminated effective July 1, 1993
from the ITT Plan) will be reinvested in a Fund investing in fixed
income investments. With respect to a Member who had exercised the
investment option at age 55 pursuant to section 6.5, repayment and
restoration of the Member's Company Contribution Account and Retirement
Account shall be made in accordance with the Member's election pursuant
to such section 6.5.
Upon such repayment, the Trustee shall restore the balance of
the Member's Accounts in each Fund to its value at the time the
distribution was made. Any amounts restored under this paragraph shall
be repaid as amounts included in the Member's Basic After-Tax
Investment Account and Supplemental After-Tax Investment Account.
<PAGE> 42
(b) On Rehire of Deferred Member
If a Deferred Member whose employment terminated otherwise
than by Retirement or Disability and as a result of such termination an
amount to the Deferred Member's credit was forfeited, such amount shall
be subsequently restored to the Deferred Member's Accounts at its
current value assuming such amount, from the time of termination to the
date of restoration, was subject to the same overall investment
experience as the Member's Matching Company Contributions while such
Member was a Deferred Member, provided the Deferred Member is
reemployed by the Company prior to the expiration of a Break in
Service. Such restoration shall be made as of the Valuation Date next
following the date the Savings Plan Administrator is informed of the
Deferred Member's reemployment provided such Deferred Member is again
eligible to become a Member of the Plan. Such restoration of the
Company Contribution Account shall be invested in Fund A. However, with
respect to a Deferred Member who had exercised the investment option at
age 55 pursuant to section 6.5, the restoration and transfer of the
Company Contribution Account and the remainder of the Retirement
Account shall be made in accordance with the Member's election pursuant
to such section 6.5.
10.8. Direct Rollover of Certain Distributions. Notwithstanding any
other provision of this Plan, with respect to any withdrawal or distribution
from the Plan pursuant to Article Eight or this Article Ten which is (a) payable
on and after January 1, 1993 to a "distributee" and (b) determined by the Plan
Administrator to be an "eligible rollover distribution," such distributee may
elect, at the time and in a manner prescribed by the Plan Committee for such
purpose, to have the Plan make a "direct rollover" of all or part of such
withdrawal or distribution to an "eligible retirement plan" which accepts such
rollover. The following definitions apply to the terms used in this section
10.8:
(a) "Distributee" means a Member or Deferred Member. In
addition, the Member's or Deferred Member's spouse Beneficiary and the
Member's or Deferred Member'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.
(b) "Eligible rollover distribution" is any withdrawal or
distribution of all or any portion of a Member or Deferred Member's
Vested Share owing to the credit of a distributee, except that the
following distributions shall not be eligible rollover distributions:
(i) any distribution that is one of a series of substantially equal
periodic payments 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, (ii) any distribution required
under section 401(a)(9) of the Code, and (iii) the portion of a
distribution not includable in gross income.
(c) "Eligible retirement plan" means an individual retirement
account described in section 408(a) 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 eligible rollover
distribution. However, in the case of an eligible rollover distribution
to the spouse Beneficiary of the Member or
<PAGE> 43
Deferred Member, an eligible retirement plan is an individual
retirement account or individual retirement annuity only.
(d) "Direct rollover" means a payment by the Plan directly to
the eligible retirement plan specified by the distributee.
In the event that the provisions of this section 10.8 or any part thereof cease
to be required by law as a result of subsequent legislation or otherwise, this
section 10.8 or applicable part thereof shall be ineffective without necessity
of further amendment of the Plan.
ARTICLE ELEVEN
Management of Funds
11.1. Rayonier Pension Fund Trust and Investment Committee. The
Rayonier Pension Fund Trust and Investment Committee shall be responsible,
except as otherwise herein expressly provided, for the management of the assets
of the Plan. Said Committee is designated a named fiduciary of the Plan within
the meaning of section 402(a) of the Employee Retirement Income Security Act of
1974 and shall have the authority, powers and responsibilities delegated and
allocated to it from time to time by resolutions of the Board of Directors,
including, but not by way of limitation, the authority to establish one or more
trusts for the Plan pursuant to trust instrument(s) approved or authorized by
the Committee and subject to the provisions of such trust instrument(s) to:
(i) provide, consistent with the provisions of the
Plan, direction to the Trustee thereunder, which may involve
but need not be limited to direction of investment of Plan
assets and the establishment of investment criteria, and
(ii) appoint and provide for use of investment
advisors and investment managers.
In discharging its responsibility, the Committee shall evaluate and monitor the
investment performances of the Trustee and investment managers, if any.
11.2. Trust Fund. All the funds of the Plan shall be held by a Trustee
appointed from time to time by the Rayonier Pension Fund Trust and Investment
Committee in one or more trusts under a trust instrument or instruments approved
or authorized by said Committee for use in providing the benefits of the Plan;
provided that no part of the corpus or income of the Trust Fund shall be used
for, or diverted to, purposes other than for the exclusive benefit of Members,
Deferred Members, and Beneficiaries and to defray reasonable administrative
expenses as described herein.
11.3. Reports to Members and Deferred Members. At least annually at a
time to be determined by the Plan Committee, each Member and Deferred Member
shall be furnished a written statement setting forth the value of each of the
Accounts, together with a statement of the amounts contributed to each such
Account by the Member and Deferred Member and by the Company on the Member's or
Deferred
<PAGE> 44
Member's behalf and the vested amount of the Company Contribution Account and
Retirement Account, or the earliest time a portion of the Company Contribution
Account and Retirement Account will become vested.
11.4. Fiscal Year. The fiscal year of the Plan and the Trust shall end
on the 31st day of December of each year or at such other date as may be
designated by the Rayonier Pension Fund Trust and Investment Committee.
ARTICLE TWELVE
Administration of Plan
12.1. Appointment of Plan Committee. From time to time, the Board of
Directors or an officer of Rayonier to whom authority has been delegated by the
Board shall appoint a Plan Committee of not less than five persons to serve
during the pleasure of the appointing Board or officer and shall designate a
Chairman of the Plan Committee from among the members and a Secretary who may
be, but need not be, one of the members of the Plan Committee. Any person so
appointed may resign at any time by delivering a written resignation to the
Secretary of Rayonier and the Chairman or Secretary of the Plan Committee.
Notwithstanding any vacancies, the Plan Committee may act so long as there are
at least three members of the Plan Committee.
12.2. Powers of Plan Committee.
(a) The Plan Committee is designated a named fiduciary within
the meaning of section 402(a)(2) of the Employee Retirement Income
Security Act of 1974, and shall have authority and responsibility for
general supervision of the administration of the Plan.
(b) The Plan Committee shall establish such policies, rules
and regulations as it may deem necessary to carry out the provisions of
the Plan and transactions of its business, including, without
limitation, such rules and regulations which may become necessary with
respect to loans and any defaults thereof.
(c) Except as to matters which are required by law to be
determined or performed by the Board of Directors, or which from time
to time the Board may reserve to itself or allocate or delegate to
officers of Rayonier or to another committee, the Plan Committee shall
determine any question arising in the administration, interpretation
and application of the Plan, including the right to remedy possible
ambiguities, inconsistencies or commissions. Such determinations shall
be final, conclusive and binding on all parties affected thereby.
(d) The Plan Committee shall have the right to exercise powers
reserved to the Board of Directors hereunder to the extent that the
right to exercise such powers may from time to time be allocated or
delegated to the Plan Committee by the Board of Directors and to such
further extent that, in the judgment of the Plan Committee, the
exercise of such powers does not involve any material cost to the
Company.
<PAGE> 45
(e) The Plan Committee may retain counsel, employ agents and
provide for such clerical, accounting and other services as it may
require in carrying out the provisions of the Plan.
(f) The Plan Committee may appoint from its number such
committees with such powers as it shall determine and may authorize one
or more of its number or any agent to execute or deliver any instrument
or make any payment on its behalf.
(g) The Plan Committee may delegate to an administrator the
responsibility of administering and operating the details of the Plan
in accordance with the provisions of the Plan and any policies which,
from time to time, may be established by the Plan Committee.
12.3. Plan Committee Action. Action by the Plan Committee may be taken
by majority vote at a meeting upon such notice, or upon waiver of notice, at
such time and place as it may determine from time to time; or action may be
taken by unanimous written consent of the members without a meeting with the
same effect for all purposes as if assented to at a meeting.
12.4. Compensation. Members of the Plan Committee shall not receive any
compensation for their services as such, and, except as required by law, no
bonds or other security shall be required of them in such capacity in any
jurisdiction.
12.5. Committee Liability. Each member of the Plan Committee as well as
the Rayonier Pension Fund Trust and Investment Committee and the Hardship
Committee shall use that degree of care, skill, prudence and diligence in
carrying out the member's duties that a prudent person, acting in a like
capacity and familiar with such matters, would use in conduct of a similar
situation. A member of any Committee shall not be liable for the breach of
fiduciary responsibility of another fiduciary unless:
(a) the person participates knowingly in, or knowingly
undertakes to conceal, an act or omission of such other fiduciary,
knowing such act or omission is a breach; or
(b) by the person's failure to discharge the person's duties
solely in the interest of the Members and other persons entitled to
benefits under the Plan, for the exclusive purpose of providing
benefits and defraying reasonable expenses of administering the Plan
not met by the Company, such person has enabled such other fiduciary to
commit a breach; or
(c) the person has knowledge of a breach by such other
fiduciary and does not make reasonable efforts to remedy the breach; or
(d) if the Committee of which the person is a member
improperly allocates responsibilities among its members or to others
and the person fails to review prudently such allocation.
<PAGE> 46
12.6. Claims Procedure.
(a) Denial of Claim. If the Plan Committee denies, in whole or
in part, a claim for benefits made by any Member, Deferred Member, or
Beneficiary, the Plan Committee shall give the Member, Deferred Member,
or Beneficiary written notice within 90 days following the date on
which the claim is filed, which notice shall set forth--
(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 such material or
information is necessary; and
(4) an explanation of the Plan's claim review
procedure.
If special circumstances require an extension of time for
processing the claim, written notice of an extension shall be furnished
to the claimant prior to the end of the initial period of 90 days
following the date on which the claim is filed. Such an extension may
not exceed a period of 90 days beyond the end of said initial period of
90 days.
If the claim has not been granted, and if written notice of
the denial of the claim is not furnished within 90 days following the
date on which the claim is filed, the claim shall be deemed denied for
the purpose of proceeding to the claim review procedure.
(b) Claim Review Procedure. A Member, Deferred Member,
Beneficiary, or the authorized representative of either shall have 60
days after receipt of written notification of denial of a claim to
request a review of the denial by making written request to the Plan
Committee at the following address:
Rayonier Inc.
1177 Summer Street
Stamford, CT 06905
ATTN: Corporate Secretary
Within 30 days following receipt of such requests for review,
the Plan Committee shall meet to review its prior decision denying the
claim. The Plan Committee shall inform the Member, Deferred Member, or
Beneficiary of the time and place of its review in order that the
Member, Deferred Member, Beneficiary, or the authorized representative
or either may have an opportunity to appear to review pertinent
documents, to submit issues and comments in writing, and to present
evidence supporting the claim.
<PAGE> 47
Not later than 60 days after receipt of the request for
review, the Plan Committee shall render and furnish to the claimant a
written decision which shall include specific reasons for the decision,
and shall make specific references to pertinent Plan provisions on
which it is based. If special circumstances require an extension of
time for processing, the decision shall be rendered as soon as
possible, but not later than 120 days after receipt of the request for
review, provided that written notice and explanation of the delay are
given to the claimant prior to commencement of the extension. Such
decision by the Plan Committee shall not be subject to further review.
If a decision on review is not furnished to a claimant within the
specified time period, the claim shall be deemed to have been denied on
review.
(c) Exhaustion of Remedy. No claimant shall institute any
action or proceeding in any state or federal court of law or equity, or
before any administrative tribunal or arbitrator, for a claim for
benefits under the Plan, until the claimant has first exhausted the
procedures set forth in this section.
12.7. Indemnity for Liability. To the maximum extent allowed by law and
to the extent not otherwise indemnified, the Company shall indemnify the members
(and former members) of the Plan Committee, and any other current or former
officer, director, or employee of the Company, against any and all claims,
losses, damages, and expenses, including counsel fees, incurred by such persons
and any liability, including any amounts paid in settlement with the Company's
approval, arising from such person's action or failure to act.
ARTICLE THIRTEEN
Hardship Committee
13.1. Appointment of Hardship Committee. From time to time, the
Chairman of the Plan Committee shall appoint a Hardship Committee of not less
than three persons who may be, but need not be, members of the Plan Committee
and shall designate a Chairman of the Hardship Committee from among the members
and a Secretary who may be, but need not be, one of the members of the Hardship
Committee. Any person so appointed may resign at any time by delivering a
written resignation to the Chairman of the Plan Committee. Notwithstanding any
vacancies, the Hardship Committee may act so long as there are two members of
the Hardship Committee.
<PAGE> 48
13.2. Powers of Hardship Committee.
(a) The Hardship Committee is designated a named fiduciary
within the meaning of section 402(a) of the Employee Retirement Income
Security Act of 1974, and shall have authority to determine whether a
bona fide financial hardship exists as a condition for a Member's
withdrawal from the Member's Supplemental Before-Tax Investment Account
and the Member's Basic Before-Tax Investment Account under section 8.4
herein. The Hardship Committee shall take into account all pertinent
facts and circumstances and shall base its determination on the meaning
of hardship as construed by the applicable tax law, including cases and
Internal Revenue Service guidelines thereunder. A determination by the
Hardship Committee as to the existence or absence of a hardship shall
be final, conclusive and binding.
(b) The Hardship Committee shall establish such policies,
rules and regulations as they may deem necessary to carry out the
provisions of the Plan and transactions of their business.
(c) The Hardship Committee may retain counsel, employ agents
and provide for such clerical, accounting and other services as they
may require in carrying out the provisions of the Plan.
(d) The Hardship Committee may appoint from its number such
committees with such powers as it shall determine and may authorize one
or more of its number or any agent to execute or deliver any instrument
or make any payment on its behalf.
13.3. Hardship Committee Action. Action by the Hardship Committee shall
be taken by majority vote at a meeting upon such notice, or upon waiver of
notice, at such time and place as it may determine from time to time; or action
may be taken by written consent of a majority of the members without a meeting
with the same effect for all purposes as if assented to at a meeting.
13.4. Compensation. No member of the Hardship Committee shall receive
any compensation for services as such.
<PAGE> 49
ARTICLE FOURTEEN
Amendment and Termination
14.1. Amendment. The Board of Directors reserves the right at any time
and from time to time, and retroactively if deemed necessary or appropriate to
conform with governmental regulations or other policies, to modify or amend in
whole or in part any or all of the provisions of the Plan; provided that no such
modification or amendment shall make it possible for any part of the funds of
the Plan to be used for, or diverted to, purposes other than for the exclusive
benefit of Members, Deferred Members, and Beneficiaries and for the purpose of
defraying reasonable administrative expenses as described herein, or shall
increase the duties of the Trustee without its consent thereto in writing.
Except as may be required to conform with governmental regulations, no such
amendment shall adversely affect the rights of any Member or Deferred Member
with respect to contributions made on the Member's or Deferred Member's behalf
prior to the date of such amendment.
14.2. Termination of Plan.
(a) The Plan is entirely voluntary on the part of the Company.
The Board of Directors reserves the right at any time to terminate the
Plan, the trust agreement and the trust hereunder or to suspend, reduce
or partially or completely discontinue contributions thereto. In the
event of such termination or partial termination of the Plan or
complete discontinuance of contributions, the interests of Members and
Deferred Members shall automatically become nonforfeitable.
(b) In the event of such termination or partial termination or
complete discontinuance, any forfeitures not previously applied in
accordance with section 5.3 shall be credited ratably to the Accounts
of all Members and Deferred Members in proportion to the amounts of
Matching Company Allocations made pursuant to section 5.1 credited to
that portion of their respective Retirement Accounts that is
attributable to Matching Company Allocations during the current
calendar year, or, if no Matching Company Allocations have been made
during the current calendar year, then in proportion to such Matching
Company Allocations during the last previous calendar year during which
such Matching Company Allocations were made.
14.3. Merger or Consolidation of Plan. The Plan may not be merged or
consolidated with, nor may its assets or liabilities be transferred to, any
other plan unless each Member, Deferred Member, or Beneficiary under the Plan
would, if the resulting plan were then terminated, receive a benefit immediately
after the merger, consolidation, or transfer which is equal to or greater than
the benefit such person would have been entitled to receive immediately before
the merger, consolidation, or transfer if the Plan had then terminated.
<PAGE> 50
ARTICLE FIFTEEN
Tender Offer
15.1. Applicability. The provisions of this Article Fifteen shall apply
in the event any person, either alone or in conjunction with others, makes a
tender or exchange offer, or otherwise offers to purchase or solicits an offer
to sell to such person one percent or more of the outstanding Rayonier Shares.
Such event shall herein be referred to as a "tender offer". As to any
tender offer, each Member and Deferred Member (or Beneficiary in the event of
the death of the Member or Deferred Member) shall have the right to determine
confidentially whether shares held subject to the Plan will be tendered.
15.2. Instructions to Trustee. In the event a tender offer for Rayonier
Shares is commenced, the Plan Committee, promptly after receiving notice of the
commencement of such tender offer, shall transfer certain of its recordkeeping
functions to an independent recordkeeper. The functions so transferred shall be
those necessary to preserve the confidentiality of any directions given by the
Members and Deferred Members (or Beneficiary in the event of the death of the
Member or Deferred Member) in connection with the tender offer. A Trustee may
not take any action in response to a tender offer except as otherwise provided
in this Article Fifteen. Each Member, Deferred Member, and Beneficiary is, for
all purposes of this Article Fifteen, hereby designated a named fiduciary within
the meaning of section 402(a)(2) of the Employee Retirement Income Security Act
of 1974, as amended, with respect to the Rayonier Shares allocated to the
Member's, Deferred Member's, or Beneficiary's Accounts. Each Member and Deferred
Member (or Beneficiary in the event of the death of the Member or Deferred
Member) may direct the Trustee to sell, offer to sell, exchange or otherwise
dispose of the Rayonier Shares allocated to any such individual's Accounts in
accordance with the provisions, conditions and terms of such tender offer and
the provisions of this Article Fifteen; provided, however, that such directions
shall be confidential and shall not be divulged by the Trustee or independent
recordkeeper to the Company or to any director, officer, employee or agent of
the Company, it being the intent of this provision of section 15.2 to ensure
that the Company (and its directors, officers, employees and agents) cannot
determine the direction given by any Member, Deferred Member or Beneficiary.
Such instructions shall be in such form and shall be filed in such manner and at
such time as the Trustee may prescribe. The confidentiality provision of this
section shall likewise apply to the directions given to, and actions taken by,
the Trustee pursuant to section 15.5.
15.3. Trustee Action on Member Instructions. The Trustee shall sell,
offer to sell, exchange or otherwise dispose of the Rayonier Shares allocated to
the Member's, Deferred Member's or Beneficiary's Accounts with respect to which
it has received directions to do so under this Article Fifteen. The proceeds of
a disposition directed by a Member, Deferred Member or Beneficiary from the
Accounts under this Article Fifteen shall be allocated to such individual's
Accounts and be governed by the provisions of section 15.5 or other applicable
provisions of the Plan and the trust agreements established under the Plan.
15.4. Action With Respect to Members Not Instructing the Trustee or Not
Issuing Valid Instructions. To the extent to which Members, Deferred Members and
Beneficiaries do not issue valid
<PAGE> 51
directions to the Trustee to sell, offer to sell, exchange or otherwise dispose
of the Rayonier Shares allocated to their Accounts, such individuals shall be
deemed to have directed the Trustee that such Accounts remain invested in
Rayonier Shares subject to all provisions of the Plan, including section 15.5.
15.5. Investment of Plan Assets after Tender Offer. To the extent
possible, the proceeds of a disposition of Rayonier Shares in an individual's
Accounts shall be reinvested in Rayonier Shares by the Trustee as expeditiously
as possible in the exercise of the Trustee's fiduciary responsibility and shall
otherwise be held by the Trustee subject to the provisions of the Trust
Agreement and the Plan. In the event that Rayonier Shares are no longer
available to be acquired following a tender offer, the Company may direct the
substitution of new employer securities for the Rayonier Shares or for the
proceeds of any disposition of Rayonier Shares. Pending the substitution of new
employer securities or the termination of the Plan and trust, the Trust Fund
shall be invested in such securities as the Trustee shall determine; provided,
however, that, pending such investment, the Trustee shall invest the cash
proceeds in short-term securities issued by the United States of America or any
agency or instrumentality thereof or any other investments of a short-term
nature, including corporate obligations or participations therein and interim
collective or common investment funds.
ARTICLE SIXTEEN
General and Administrative Provisions
16.1. Payment of Expenses. An annual charge to the Plan trust of up to
.25% of the market value of the assets held by such trust, is charged and
applied to satisfy expenses incurred in conjunction with Plan administration,
including, but not limited to, investment management, trustee, record-keeping,
and audit fees; the Company will pay the balance of all such expenses.
The annual charge will be deducted equally from each of the Plan's
investment funds (the Rayonier Common Share Fund, Index Fund, Fixed Income Fund
and Balanced Fund).
16.2. Source of Payment. Benefits under the Plan shall be payable only
out of the Trust Fund, and the Company shall not have any legal obligation,
responsibility or liability to make any direct payment of benefits under the
Plan. Neither the Company nor the Trustee guarantees the Trust Fund against any
loss or depreciation or guarantees the payment of any benefit hereunder. No
person shall have any rights under the Plan with respect to the Trust Fund, or
against the Company, except as specifically provided for herein.
16.3. Inalienability of Benefits. Except as specifically provided in
the Plan or as applicable law may otherwise require or as may be required under
the terms of a qualified domestic relations order, no benefit under the Plan
shall be subject in any manner to anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance or charge, and any attempts so to do shall be
void, nor shall any such benefit be in any manner liable for or subject to
debts, contracts, liabilities, engagements or torts of the person entitled to
such benefit; and in the event that the Plan Committee shall find that any
Member, Deferred Member or Beneficiary who is or may become entitled to benefits
hereunder has become bankrupt or that any attempt has been made to anticipate,
alienate, sell, transfer, assign, pledge,
<PAGE> 52
encumber or charge any of the benefits under the Plan, except as specifically
provided in the Plan or as applicable law may otherwise require, then such
benefit shall cease and terminate, and in that event the Plan Committee shall
hold or apply the same to or for the benefit of such Member, Deferred Member or
Beneficiary who is or may become entitled to benefits hereunder, such person's
spouse, children, parents or other blood relatives, or any of them.
16.4. No Right to Employment. Nothing herein contained nor any action
taken under the provisions hereof shall be construed as giving any Employee the
right to be retained in the employ of the Company.
16.5. Uniform Action. Action by the Plan Committee and the Hardship
Committees shall be uniform in nature as applied to all persons similarly
situated, and no such action shall be taken which will discriminate in favor of
Members who are Highly Compensated Employees.
16.6. Headings. The headings of the sections in this Plan are placed
herein for convenience of reference and in the case of any conflict, the text of
the Plan, rather than such headings, shall control.
16.7. Use of Pronouns. Any masculine pronoun used herein shall be
equally applicable to both men and women, and words used in the singular are
intended to include the plural, whenever appropriate.
16.8. Construction. The Plan shall be construed, regulated and
administered in accordance with the laws of the State of Connecticut, subject to
the provisions of applicable Federal laws.
ARTICLE SEVENTEEN
Top-Heavy Provisions
17.1. Determination of Top-Heavy Status. For purposes of this Article
Seventeen, the Plan shall be "top-heavy" with respect to any Plan Year, if, as
of the last day of the preceding Plan Year, the value of the aggregate of the
Accounts under the Plan for "key employees" exceeds 60 percent of the value of
the aggregate of the Accounts under the Plan for all Employees. The value of
such Accounts shall be determined as of the Valuation Date coincident with or
immediately preceding the last day of such preceding Plan Year, in accordance
with sections 416(g)(3) and (4) of the Code and Article Seven of this Plan. The
determination as to whether an Employee will be considered a "key employee"
shall be made in accordance with the provisions of sections 416(i)(1) and (5) of
the Code and any regulations thereunder, and, where applicable, on the basis of
the Employee's remuneration from the Company, or a subsidiary or affiliate of
the Company, as reported on Form W-2 for the applicable Plan Year. For purposes
of determining whether the Plan is top-heavy, the account balances under the
Plan will be combined with the account balances or the present value of accrued
benefits under any other qualified plan of the Company or its subsidiaries or
affiliates in which there are members who are "key employees" or which enables
the Plan to meet the requirements of section 401(a)(4) or 410 of the Code; and,
in the Company's discretion, may be combined with the account balances or the
present value of accrued benefits under any other qualified plan of the Company
or its subsidiaries or affiliates in which all members are non-key employees, if
the contributions or benefits under the other plan are at least
<PAGE> 53
comparable to the benefits provided under this Plan.
17.2. Minimum Requirements. For any Plan Year with respect to which the
Plan is top-heavy, an additional Company contribution shall be allocated on
behalf of each Member (or each Employee eligible to become a Member) who is not
a "key employee," and who has not separated from service as of the last day of
the Plan Year, to the extent that the amounts allocated to the Accounts as a
result of contributions made on the Member's behalf under sections 5.1 and 5.2
for the Plan Year would otherwise be less than 3% of the Member's remuneration
(as reported on Form W-2 for that Plan Year). However, if the greatest
percentage of remuneration (as reported on Form W-2 for that Plan Year and
limited to a dollar amount that is indexed annually in accordance with section
401(a)(1) of the Code) contributed on behalf of a "key employee" under section
4.1 or allocated to the Accounts as a result of contributions made pursuant to
section 5.1 for the Plan Year would be less than 3%, such lesser percentage
shall be substituted for "3%" in the preceding sentence. Notwithstanding the
foregoing provisions of this section 17.2, no minimum contribution shall be made
with respect to a Member (or an Employee eligible to become a Member) if the
required minimum benefit under section 416(c)(1) of the Code is provided by the
Retirement Plan for Salaried Employees of Rayonier Inc.
* * * * * * * * * *
IN WITNESS WHEREOF, RAYONIER INC. has caused this instrument to be
executed effective as of July 18, 1997.
RAYONIER INC.
By: John P. O'Grady
-----------------------------------
Senior Vice President, Administration
Date: July 18, 1997
<PAGE> 1
Exhibit 10.4
RETIREMENT PLAN
FOR SALARIED EMPLOYEES
OF RAYONIER INC.
Effective as of March 1, 1994
And Further Amended Through January 1, 1998
<PAGE> 2
RETIREMENT PLAN FOR SALARIED EMPLOYEES
OF RAYONIER INC.
TABLE OF CONTENTS
Page
----
Foreword
--------
ARTICLE 1 DEFINITIONS......................................................1
ARTICLE 2 SERVICE
2.01 Eligibility Service.......................................15
2.02 Benefit Service...........................................22
2.03 Questions relating to Service under the Plan..............27
ARTICLE 3 MEMBERSHIP
3.01 Persons employed on the Effective Date....................28
3.02 Persons first employed as Employees on or
after the Effective Date ...............................28
3.03 Reemployment After March 1, 1994 of
ITT Incorporated Salaried Employees.....................29
3.04 Persons employed as a Leased Employee with the
Company or an Associated Company........................29
3.05 Persons employed as other than Employees
by the Company..........................................29
3.06 Reemployment of former Employees, former
Members and retired Members.............................30
3.07 Termination of membership.................................30
3.08 Questions relating to membership in the Plan..............31
ARTICLE 4 BENEFITS
4.01 Normal Retirement Allowance...............................32
4.02 Postponed Retirement Allowance............................34
4.03 Standard Early Retirement Allowance.......................36
4.04 Special Early Retirement Allowance........................37
4.05 Vested Benefit............................................39
4.06 Forms of Benefit Payment after Retirement.................41
(a) Automatic Forms of Payment...........................41
(b) Optional Forms of Payment............................43
(c) Required Notice......................................45
(d) Election of Options..................................45
4.07 Survivor's Benefit Applicable Before Retirement...........47
4.08 Maximum benefits..........................................64
4.09 No duplication............................................68
4.10 Payment of benefits.......................................69
4.11 Reemployment of former Member or retired Member...........72
4.12 Top-heavy provisions......................................76
4.13 Payment of Medical Benefits for Benefits for Certain
Members who retire under the Plan.......................80
4.14 Transfers from Hourly Plans maintained by the
Company or an Associated Company........................82
4.15 Direct Rollover of Certain Distributions..................82
<PAGE> 3
RETIREMENT PLAN FOR SALARIED EMPLOYEES
OF RAYONIER INC.
TABLE OF CONTENTS
(Cont'd)
Page
----
ARTICLE 5 ADMINISTRATION OF PLAN..........................................84
ARTICLE 6 CONTRIBUTIONS...................................................88
ARTICLE 7 MANAGEMENT OF FUNDS.............................................90
ARTICLE 8 CERTAIN RIGHTS AND LIMITATIONS..................................92
ARTICLE 9 NONALIENATION OF BENEFITS......................................101
ARTICLE 10 AMENDMENTS.....................................................103
APPENDIX A
APPENDIX B
APPENDIX C
APPENDIX D
APPENDIX E
<PAGE> 4
FOREWORD
The Plan as set forth in this document is known as the Retirement Plan for
Salaried Employees of Rayonier Inc. (hereinafter called the Plan).
Unless otherwise expressly provided in this Plan and consistent with applicable
law, (i) the rights and benefits of any Member who retires or whose employment
is terminated, whichever first occurs, are determined in accordance with the
provisions of the Plan in effect at the time of such retirement or termination,
and (ii) no revision to the Plan shall deprive any Member who retires or whose
employment is terminated prior to such revisions, of any rights and benefits
which theretofore had accrued under the Plan.
This Plan is intended to qualify under the Internal Revenue Code of 1986.
Subject to the preceding sentence, the Plan shall be construed, regulated and
administered under the laws of the State of Connecticut, to the extent such laws
are not superseded by applicable federal law.
<PAGE> 5
RETIREMENT PLAN FOR SALARIED EMPLOYEES
OF RAYONIER INC.
ARTICLE 1 - DEFINITIONS
1.01 Accrued Benefit shall mean, as of any date of determination, the
retirement allowance computed under Section 4.01(b) on the basis of the
Member's Benefit Service and applicable components of the Plan formula as
of the determination date and with respect to the amount determined under
Section 4.01(b)(i)(4), the applicable components of the Prior Salaried
Plan as of the determination date.
1.02 Annual Dollar Limit shall mean the amount in effect under Section
401(a)(17) of the Code which is for Plan Years beginning in 1994,
$150,000, except that if for any calendar year after 1994 the
cost-of-living adjustment, as hereafter defined, is equal to or greater
than $10,000, then the Annual Dollar Limit (as previously adjusted under
this Section) for any Plan Year beginning in any subsequent calendar year
shall be increased by the amount of such cost-of-living adjustment,
rounded to the next lowest multiple of $10,000. The cost-of-living
adjustment shall equal the excess of (i) $150,000 increased by the
adjustment made under Section 415(d) of the Code for the calendar year
except that the base period for purposes of Section 415(d)(1)(A) of the
Code shall be the calendar quarter beginning October 1, 1993 over (ii) the
Annual Dollar Limit in effect for the Plan Year beginning in the calendar
year.
1.03 Annuity Starting Date shall mean the first day of the first period for
which an amount is due on behalf of a Member or former Member as an
annuity or any other form of payment under the Plan.
<PAGE> 6
Page 2
1.04 Appendix shall mean the tables of factors which are used in determining
the amount of the various forms of benefits payable under the Plan.
1.05 Associated Company shall mean any subsidiary or affiliated company of
Rayonier Inc. not participating in the Plan which is (i) a component
member of a controlled group of corporations (as defined in Section 414(b)
of the Code), which controlled group of corporations includes as a
component member Rayonier Inc., (ii) any trade or business under common
control (as defined in Section 414(c) of the Code) with Rayonier Inc.,
(iii) any organization (whether or not incorporated) which is a member of
an affiliated service group (as defined in Section 414(m) of the Code)
which includes Rayonier Inc. or (iv) any other entity required to be
aggregated with Rayonier Inc. pursuant to regulations under Section 414(o)
of the Code, during the period such entity is described in clause (i),
(ii), (iii), or (iv). Notwithstanding the foregoing, for purposes of the
preceding sentence and Section 4.08 of the Plan, the definitions of
Section 414(b) and (c) of the Code shall be modified as provided in
Section 415(h) of the Code.
1.06 Beneficiary shall mean any person or entity named by a Member by written
designation to receive certain benefits payable in the event of his or her
death as provided under Section 4.07.
1.07 Benefit Service shall mean employment recognized as such for the purposes
of computing a benefit under the Plan as provided under Article 2.
1.08 Board of Directors shall mean the Board of Directors of Rayonier Inc. or
of any successor to Rayonier Inc. by merger, purchase or otherwise.
<PAGE> 7
Page 3
1.09 Change in Control shall mean the occurrence of any one or more of the
following events: (i) subject to the conditions contained in the final
paragraph of this definition, the filing of a report on Schedule 13D with
the Securities and Exchange Commission pursuant to Section 13(d) of the
Securities Exchange Act of 1934 (the "Act") disclosing that any person,
other than the Corporation or any employee benefit plan sponsored by the
Corporation, is the beneficial owner (as the term is defined in Rule 13d-3
under the Act) directly or indirectly, of securities representing 20
percent or more of the total voting power represented by the Corporation's
then outstanding Voting Securities (calculated as provided in paragraph
(d) of Rule 13d-3 under the Act in the case of rights to acquire Voting
Securities); or (ii) the purchase by any person, other than the
Corporation or any employee benefit plan sponsored by the Corporation, of
shares pursuant to a tender offer or exchange offer to acquire any Voting
Securities of the Corporation (or securities convertible into such Voting
Securities) for cash, securities, or any other consideration, provided
that after consummation of the offer, the person in question is the
beneficial owner, directly or indirectly, of securities representing 20
percent or more of the total voting power represented by the Corporation's
then outstanding Voting Securities (all as calculated under clause (i));
or (iii) the approval by the shareholders of the Corporation of (A) any
consolidation or merger of the Corporation in which the Corporation is not
the continuing or surviving corporation (other than a merger of the
Corporation in which holders of Common Shares of the Corporation
immediately prior to the merger have the same proportionate ownership of
Common Shares of the surviving corporation immediately after the merger as
immediately before), or pursuant to which Common Shares of the Corporation
would be converted into cash, securities, or other property, or (B) any
sale, lease, exchange, or other transfer (in one transaction or a series
of related transactions) of all
<PAGE> 8
Page 4
or substantially all the assets of the Corporation; or (iv) a change in
the composition of the Board of Directors of the Corporation at any time
during any consecutive 24-month period such that "continuing directors"
cease for any reason to constitute at least a 70 percent majority of the
Board. For purposes of this definition of "Change in Control," the term
"Voting Securities" means any securities of the Corporation which vote
generally in the election of members of the Board of Directors and the
term "continuing directors" means those members of the Board who either
were directors at the beginning of a consecutive 24-month period or were
elected during such period by or on the nomination or recommendation of at
least a 70 percent majority of the then-existing Board.
So long as there has not been a Change in Control within the meaning of
clause (iv) above, the Board of Directors may adopt by a 70 percent
majority vote of the "continuing directors" a resolution to the effect
that the occurrence of an event described in clause (i) (a "Clause (i)
Event") does not constitute a "Change in Control" (an "Excluding
Resolution") or a resolution to the effect that the occurrence of a Clause
(i) Event does constitute a "Change in Control" (an "Including
Resolution"). The adoption of an Excluding Resolution with respect to any
Clause (i) Event shall not deprive the Board of Directors of the right to
adopt an Including Resolution with respect to such Clause (i) Event at a
later date. A Clause (i) Event shall not in and of itself constitute a
"Change in Control" until the earlier of (x) the effective date of an
Including Resolution with respect thereto or (y) the passage of a period
of 30 calendar days after the occurrence thereof without an Excluding
Resolution having been adopted with respect thereto; notwithstanding the
adoption of an Excluding Resolution within the 30-day period referred to
in (y), an Including Resolution may subsequently be adopted with respect
to the relevant Clause (i) Event while it
<PAGE> 9
Page 5
continues to exist, in which event a "Change in Control" shall be deemed
to have occurred for purposes of this definition upon the effective date
of such Including Resolution. The provisions of this second paragraph of
the definition of "Change in Control" relate only to situations where a
Clause (i) Event has occurred and no Change in Control within the meaning
of clause (ii), (iii), or (iv) of the preceding paragraph has occurred,
and nothing in this paragraph shall derogate from the principle that the
occurrence of an event described in clause (ii), (iii), or (iv) of the
preceding paragraph shall be deemed an immediate Change in Control
regardless of whether or not a Clause (i) Event has occurred and an
Excluding Resolution or Including Resolution become effective.
1.10 Code shall mean the Internal Revenue Code of 1986, as amended from time to
time.
1.11 Company shall mean Rayonier Inc. (formerly known as ITT Rayonier
Corporation) with respect to its Employees; and any Participating Unit
with respect to its Employees. When used herein, the term Company shall
collectively include Rayonier Inc. and any Participating Unit.
1.12 Compensation shall mean the total remuneration paid to a Member (whether
before or after membership in the Plan) for services rendered on and after
the Effective Date, including annual base salary, overtime, leadman's pay,
shift differential, and bonuses paid under the Rayonier Inc. local bonus
and gain share plans as in effect on March 1, 1994 (determined prior to
any pre-tax contributions under a "qualified cash or deferred
arrangement," as defined under Section 401(k) of the Code and its
applicable regulations, or under a "cafeteria plan," as defined under
Section 125 of the Code and its applicable regulations), and for Members
who receive no other source of remuneration from the Company, commissions,
but excluding, except to the extent specifically
<PAGE> 10
Page 6
included above, foreign service pay, automobile allowance, separation pay,
incentive pay or other special pay or allowances of similar nature,
commissions for any Member who receives any other form of remuneration
from the Company, bonuses, and the cost of any public or private employee
benefit plan, including the Plan; provided however, Compensation taken
into account for any purpose under the Plan shall not exceed the Annual
Dollar Limit.
1.13 Early Retirement Date shall mean the date as determined in the manner set
forth in Section 4.03.
1.14 Effective Date of the Plan shall mean March 1, 1994.
1.15 Eligibility Service shall mean any employment recognized as such for the
purposes of meeting the eligibility requirements for membership in the
Plan and for eligibility for benefits under the Plan as provided under
Article 2.
1.16 Employee shall mean any person regularly employed by the Company who is
paid from a payroll maintained in the continental United States, Hawaii,
Puerto Rico or the U.S. Virgin Islands and who receives regular and stated
compensation other than a pension or retainer; provided, however, that
except as the Board of Directors or the Retirement Committee, pursuant to
the authority delegated to it by the Board of Directors, may otherwise
provide on a basis uniformly applicable to all persons similarly situated,
no person shall be an Employee for purposes of the Plan who is (i) engaged
as a consultant, (ii) a non-resident alien, (iii) paid on an hourly basis
and who, under the Company's employment classification practices, is
considered as an hourly-rated employee for purposes of the Company's
employee benefit plans, (iv) accruing benefits in respect of current
<PAGE> 11
Page 7
service under any other pension, retirement, qualified profit-sharing or
other similar plan of the Company (other than the Rayonier Inc. Investment
and Savings Plan for Salaried Employees,) or of any Associated Company (v)
a Leased Employee; and provided further, that no person shall be an
Employee for purposes of the Plan whose terms and conditions of employment
are determined by a collective bargaining agreement with the Company which
does not make this Plan applicable to such person. In addition, effective
January 1, 1998, any person considered to be an independent contractor by
the Company shall not be considered an Employee even if he is reclassified
as an employee by any taxing authority such as the Internal Revenue
Service or any other authority or agency.
1.17 Equivalent Actuarial Value shall mean equivalent value of a benefit under
the Plan determined on the basis of the applicable factors set forth in
Appendix A, except as otherwise specified in the Plan. In any other event,
Equivalent Actuarial Value shall be determined on the same actuarial basis
utilized to compute the factors set forth in Appendix A.
1.18 ERISA shall mean the Employee Retirement Income Security Act of 1974, as
amended from time to time.
1.19 Final Average Compensation shall mean the sum of
(a) The average of a Member's annual base salary recognized as
Compensation received in any five calendar years of Eligibility
Service in which such annual base salary was highest, plus
<PAGE> 12
Page 8
(b) The average of a Member's annual Compensation in excess of annual
base salary received in any five calendar years of Eligibility
Service in which such Compensation was highest; provided, however,
that the calendar years on which such averages are based shall be
any five calendar years during the last 120 calendar months of a
Member's Eligibility Service or, if the Member has less than five
calendar years of Eligibility Service, all of his or her calendar
years of Eligibility Service; provided, further, however, that (i)
the annual base salary earned in any calendar year and taken into
account for purposes of "Final Average Compensation", and (ii) the
amount in excess of base annual salary earned in any calendar year
and taken into account for purposes of "Final Average Compensation",
and (iii) the sum of (i) and (ii) taken into account for any
calendar year, each shall not exceed the Annual Dollar Limit. If the
Member terminates employment before the last day of the calendar
year or otherwise experiences an interruption in Eligibility
Service, the Retirement Committee shall, in accordance with rules
uniformly applicable to all persons similarly situated, determine
the amount of the Member's Final Average Compensation. The term
Eligibility Service as used in this Section shall include all
service recognized as Eligibility Service for purposes of
eligibility requirements under Article 2.
1.20 Hour of Service shall mean hours of employment as defined pursuant to the
provisions of Section 2.01(b).
1.21 IRS Interest Rate shall mean the annual rate of interest on 30-year
Treasury Securities, as specified by the Commissioner of Internal Revenue
for the first full calendar month preceding the applicable Stability
Period.
<PAGE> 13
Page 9
1.22 IRS Mortality Table shall mean the mortality table prescribed by the
Secretary of the Treasury under Code Section 417(e)(3)(A)(ii)(I) as in
effect on the first day of the applicable Stability Period.
1.23 Leased Employee shall mean any person as so defined in Section 414(n) of
the Code by virtue of his or her performance of services for the Company
or an Associated Company.
1.24 Member shall mean any person included in the membership of the Plan as
provided in Article 3.
1.25 Non-Benefits Worker shall mean any individual designated by the Company as
ineligible to participate in any Company-sponsored employee benefit
program and any individual who the Company considers to be an independent
contractor.
1.26 Normal Retirement Date shall mean the first day of the calendar month
coincident with or next following the date the Employee attains age 65,
which is his or her Normal Retirement Age.
1.27 Parental Leave shall mean a period in which a person is absent from work
because of the person's pregnancy, the birth of a person's child, the
adoption by a person of a child, or, for purposes of caring for that
child, for a period beginning immediately following such birth or
adoption.
1.28 Participating Unit shall mean, in addition to Rayonier Inc., any
subsidiary or affiliated company of Rayonier Inc., any designated
location(s) only of such subsidiary or affiliated company or any
designated unit(s) only of such subsidiary, or affiliated company which
has by appropriate action
<PAGE> 14
Page 10
of the Board of Directors been designated as a Participating Unit and the
board of directors of any such subsidiary or affiliated company shall have
taken appropriate action to adopt the Plan. The Board of Directors shall
take action (i) to designate such entity as a Participating Unit, (ii) to
determine that such persons are Employees, and (iii) to establish, by
written amendment of the Plan, the terms and conditions under which such
Employees are to be included in the Plan.
If a group of persons is transferred to or assigned to a Participating
Unit or is hired by a Participating Unit as the result of the opening or
purchase of a plant or the merger of one unit into another, such persons
shall not be deemed to be Employees for purposes of the Plan until further
action by the Board of Directors, by written amendment of the Plan,
including the determination that such persons are Employees for purposes
of the Plan, and the establishment of the terms and conditions under which
such Employees are to be included in the Plan.
To the extent that the Board of Directors shall have authorized and
established the basis for recognition under the Plan of service with a
predecessor corporation(s), if any, reference in this Plan to service with
a Participating Unit shall include service with the predecessor
corporation(s) of such Participating Unit, provided that all or part of
the business and assets of any such corporation shall have been acquired
by Rayonier Inc. or by a Participating Unit.
1.29 Pension Fund Trust and Investment Committee shall mean the committee
established by Rayonier Inc. for the purposes of managing the assets of
the Plan as provided in Article 5.
<PAGE> 15
Page 11
1.30 Plan shall mean the Retirement Plan for Salaried Employees of Rayonier
Inc. as set forth herein or as hereafter amended.
1.31 Plan Year shall mean the calendar year.
1.32 Postponed Retirement Date shall mean, with respect to an Employee who does
not retire at Normal Retirement Date but who works after such date, the
first day of the calendar month coincident with or next following the date
on which such Employee retires from active service. No retirement
allowance shall be paid to the Employee until his or her Postponed
Retirement Date, except as otherwise provided in Article 4.
1.33 Prior Salaried Plan shall mean the Retirement Plan for Salaried Employees
of ITT Corporation (now known as the "ITT Industries Salaried Retirement
Plan"), as in effect on February 28, 1994 and as thereafter amended from
time to time.
1.34 Qualified Joint and Survivor Annuity shall mean an annuity described in
Section 4.06(a)(i).
1.35 Retirement Committee shall mean the committee established for the purposes
of administering the Plan as provided in Article 5.
1.36 Severance Date shall mean the date an Employee is considered to have
severed his or her employment as defined pursuant to the provisions of
Section 2.01(a).
<PAGE> 16
Page 12
1.37 Social Security Benefit shall mean the amount of annual old age or
disability insurance benefit under Title II of the Federal Social Security
Act as determined by the Retirement Committee under reasonable rules
uniformly applied, on the basis of such Act as in effect at the time of
retirement or termination to which a Member or former Member is or would
upon application be entitled, even though the Member does not receive such
benefit because of his or her failure to apply therefor or he or she is
ineligible therefor by reason of earnings he or she may be receiving in
excess of any limit on earnings for full entitlement to such benefit. In
computing the Member's Social Security Benefit, no wage index adjustment
or cost of living adjustment shall be assumed with respect to any period
after the end of the calendar year in which the Member retires or
terminates service. For all years prior to retirement or other termination
of employment with the Company where actual earnings are not available,
the Member's Social Security Benefit shall be determined on the basis of
the Member's actual earnings in conjunction with a salary increase
assumption based on the actual yearly change in national average wages as
determined by the Social Security Administration. If, within a reasonable
time after the later of (i) the date of retirement or other termination of
employment or (ii) the date on which a Member is notified of the
retirement allowance or vested benefit to which he or she is entitled, the
Member provides documentation from the Social Security Administration as
to his or her actual earnings history with respect to those prior years,
his or her Social Security Benefit shall be redetermined using the actual
earnings history. If this recalculation results in a different Social
Security Benefit, his or her retirement allowance or vested benefit shall
be adjusted to reflect this change. Any adjustment to his or her
retirement allowance or vested benefit shall be made retroactive to the
date his or her payments commenced. The Retirement Committee shall resolve
any questions arising under this Section on a basis uniformly applicable
to all Employees similarly situated.
<PAGE> 17
Page 13
1.38 Social Security Retirement Age shall mean age 65 with respect to a Member
who was born before January 1, 1938; age 66 with respect to a Member who
was born after December 31, 1937 and before January 1, 1955; and age 67
with respect to a Member who was born after December 31, 1954.
1.39 Special Early Retirement Date shall mean the date as determined in the
manner set forth in Section 4.04.
1.40 Spousal Consent shall mean written consent given by a Member's or former
Member's spouse to an election made by the Member or former Member which
specifies the form of retirement allowance, vested benefit, Beneficiary,
or contingent annuitant designated by the Member or former Member. The
specified form or specified Beneficiary or contingent annuitant shall not
be changed unless further Spousal Consent is given. Spousal Consent shall
be duly witnessed by a notary public or, in accordance with uniform rules
of the Retirement Committee, by a Plan representative and shall
acknowledge the effect on the spouse of the Member's or former Member's
election. The requirement for Spousal Consent may be waived by the
Retirement Committee in accordance with applicable law. Spousal Consent
shall be applicable only to the particular spouse who provides such
consent.
1.41 Stability Period shall mean the Plan Year in which occurs the Annuity
Starting Date for the distribution.
<PAGE> 18
Page 14
1.42 Transferred Employee shall mean an employee of the Company on the
Effective Date who is paid on an hourly basis, classified as an
hourly-rated employee for purposes of the Company's employee benefit
plans, and who is entitled to a benefit under the Prior Salaried Plan.
1.43 Trustee shall mean the trustee or trustees by which the funds of the Plan
are held as provided in Article 7.
<PAGE> 19
Page 15
ARTICLE 2 - SERVICE
2.01 Eligibility Service
(a) Eligibility Service on and after the Effective Date. Except as otherwise
provided in this Article 2, all uninterrupted employment with the Company
or with an Associated Company rendered on and after (i) the Effective Date
or (ii) date of employment, if later, and prior to such Member's Severance
Date shall be recognized as Eligibility Service for all Plan purposes.
"Severance Date" shall mean the earlier of (i) the date a Member resigns,
is discharged, retires or dies or (ii) one year from the date the Member
is continuously absent from service for any other reason as provided in
this Article 2. Eligibility Service for any period of employment rendered
prior to the Effective Date shall be determined as set forth in Section
2.01(g).
(b) Eligibility Service for Plan membership by Employees hired on other than a
full-time basis -With respect to any Employee whose employment with the
Company or with an Associated Company is on a temporary or less than
full-time basis, "one year of Eligibility Service" for purposes of meeting
the requirements for membership in the Plan as provided in Article 3 shall
mean a period of twelve consecutive months of employment and measured from
the date on which he or she first completes an Hour of Service or from any
subsequent anniversary thereof and during which he or she has completed at
least 1,000 Hours of Service with the Company or with an Associated
Company. After such an Employee has met the requirements for membership in
the Plan as provided in Article 3, Eligibility Service for purposes of
meeting the eligibility requirements for benefits and for vesting shall be
determined in accordance with Sections 2.01(a) and 2.01(g).
<PAGE> 20
Page 16
"Hours of Service" shall include hours worked and hours for which a person
is compensated by the Company or by an Associated Company for the
performance of duties for the Company or an Associated Company, although
he or she has not worked (such as: paid holidays, paid vacation, paid sick
leave, paid time off and back pay for the period for which it was
awarded), and each such hour shall be computed as only one hour, even
though he or she is compensated at more than the straight time rate. This
definition of "Hours of Service" shall be applied in a consistent and
non-discriminatory manner in compliance with 29 Code of Federal
Regulations, Section 2530.200b-2(b) and (c) as promulgated by the United
States Department of Labor and as may hereafter be amended.
Solely for purposes of this paragraph (b), if a temporary or less than
full-time Employee does not complete more than 500 Hours of Service in the
twelve month period beginning on the date on which he or she first
completes an Hour of Service or beginning on any subsequent anniversary
thereof (which for purposes of this paragraph (b) shall be known as the
"computation period"), he or she shall incur a one-year break in service.
Solely for purposes of determining whether such an Employee has incurred a
break in service, hours shall include each Hour of Service for which such
Employee would otherwise have been credited under this paragraph (b) were
it not for the Employee's absence due to Parental Leave. Hours of Service
credited under the preceding sentence shall not exceed the number of hours
needed to avoid a break in service in the computation period in which the
Parental Leave first began, and in any event shall not exceed 501 hours;
if no hours are needed to avoid a break in service in such computation
period, then the provisions of the preceding sentence shall apply as
though the Parental Leave began in the immediately following computation
period. If such an Employee has had a break in service before becoming
eligible for
<PAGE> 21
Page 17
membership, Eligibility Service shall begin from the date of his or her
return to the employ of the Company or an Associated Company. Except as
otherwise provided in this Article 2, his or her Eligibility Service
before the break in service shall be restored only upon completion of one
year of Eligibility Service within the twelve-month period following his
or her break in service. If, however, the periods of consecutive one-year
breaks in service equals or exceeds the greater of (i) five years or (ii)
the total number of years of Eligibility Service before the break in
service, his or her Eligibility Service prior to the break shall never be
restored.
(c) Employment with the Company or an Associated Company but not as an
Employee Eligibility Service with respect to prior employment rendered by
any person who, on or after the Effective Date and prior to the date on
which he or she becomes an Employee, is or was in the employ of the
Company or an Associated Company but not as an Employee shall, subject to
the provisions of Section 2.01(e) and Section 2.01(f), be equal to:
(i) the number of years credited to him, if any, on the basis of the
"1,000 hour rule" under a pension plan maintained by the Company or
an Associated Company applicable to him or her for the period of
such prior employment ending on the last day of the calendar year
preceding the date on which he or she becomes an Employee or the
date on which such prior employment terminated, plus
(ii) the greater of (1) the service credited to him, if any, on the basis
of the "1,000 hour rule" for the portion of the calendar year ending
on the date immediately preceding the date he or she becomes an
Employee or the date on which such prior employment terminated, or
(2) the Eligibility Service he or she would be credited with under
this Plan for the entire calendar year in which the transfer or
termination of employment took place.
<PAGE> 22
Page 18
Notwithstanding the foregoing provisions of this paragraph (c), in the
event a person's prior employment was not covered by or credited under a
pension plan which recognized employment on the basis of the "1,000 hour
rule", any such prior employment with the Company or an Associated Company
whether rendered before or after the Effective Date shall be recognized in
accordance with the terms of this Article 2.
(d) Certain absences to be recognized as Eligibility Service - Except as
otherwise indicated in this Article 2, the following periods of approved
absence rendered on and after the Effective Date shall be recognized as
Eligibility Service under the Plan and shall not be considered as breaks
in Eligibility Service:
(i) The period of any leave of absence granted in respect of service
with the armed forces of the United States on or after the
Effective Date provided the Employee shall have returned to the
service of the Company or an Associated Company in accordance with
reemployment rights under applicable law and shall have complied
with all of the requirements of such law as to reemployment.
(ii) Except as provided by law, the period on or after the Effective
Date of any leave of absence granted in respect of service, not
exceeding two years, with any other agency or department of the
United States Government.
(iii) The period on and after the Effective Date of any total and
permanent disability during which an Employee becomes entitled to
a disability benefit under Title II of the Federal Social Security
Act as amended from time to time or the period on and after the
Effective Date of total and permanent disability as determined by
the Retirement Committee on the basis of such medical information
as it shall require.
<PAGE> 23
Page 19
(iv) The period of any leave of absence on and after the Effective Date
during which Company sickness or accident benefits are payable.
(v) The period on and after the Effective Date of any leave of absence
approved by the Company during which an Employee is paid
Compensation at a rate which is at least one-half of the
Employee's basic rate of Compensation in effect immediately prior
to such leave.
(vi) In any event, Eligibility Service shall include the period, with
or without Compensation, immediately preceding the Employee's
Severance Date but not in excess of 12 consecutive months
inclusive of those periods of approved absences already included
in sub-paragraphs (i) through (v) above, during which an Employee
is continuously absent from service.
(vii) The period between an Employee's Severance Date and his or her
reemployment if he or she returns to the employ of the Company or
an Associated Company before the first anniversary date of his or
her Severance Date; provided, however, that the combined periods
recognized under sub-paragraph (vi) above and under this
sub-paragraph (vii) shall not exceed 12 consecutive months.
(viii) The period of any periodic salary continuation payments an Employee
receives under any severance pay plan of the Company.
Except to the extent provided under sub-paragraph (vi) and, if applicable,
under sub-paragraph (vii) above, if an Employee fails to return to active
employment upon expiration of the approved absences specified in
sub-paragraphs (i), (ii), (iv) and (v) above, such periods of approved
absence shall not be considered as Eligibility Service under the Plan.
<PAGE> 24
Page 20
(e) Breaks in Service - All absences from the Company or from an Associated
Company, other than the absences specified in paragraph (d) above, shall
be considered as breaks in Eligibility Service; provided, however, that in
no event shall there be a break in Eligibility Service if an Employee (i)
is continuously absent from service with the Company or with an Associated
Company and returns to the employ of the Company or an Associated Company
before the first anniversary of his or her Severance Date or (ii) is
absent from work because of a Parental Leave and returns to the employ of
the Company or an Associated Company within two years of his or her
Severance Date. If the provisions of clause (ii) above are applicable, the
first year of such absence for Parental Leave, measured from an Employee's
Severance Date, shall not be considered in determining the Employee's
period of break in service for purposes of Section 2.01(f) below.
(f) Bridging breaks in service
(i) If an Employee has a break in service and such Employee was eligible
for a vested benefit under Section 4.05 at the time of his or her
break in service, except as otherwise provided in Section 4.11,
employment both before and after the Employee's absence shall be
immediately recognized as Eligibility Service, subject to this
provisions of this Section 2.01, upon his or her return to the
employ of the Company or an Associated Company.
(ii) If an Employee has a break in service and such Employee was not
eligible for a vested benefit under Section 4.05 at the time of his
or her break in service, Eligibility Service shall begin from the
date of his or her return to the employ of the Company or an
Associated Company. If such Employee returns to the employ of the
Company or an Associated Company and the period of the Employee's
break is less than the greater of (1) five years or (2) the service
rendered prior to such
<PAGE> 25
Page 21
break, the service prior to such break shall be included as
Eligibility Service, subject to the provisions of this Section 2.01,
only upon completion of at least twelve months of Eligibility
Service following his or her break in service. However, if the
period of the Employee's break in service equals or exceeds the
greater of (1) five years or (2) the service rendered prior to such
break, the service rendered prior to such break shall be included as
Eligibility Service, subject to the provisions of this Section 2.01,
only upon completion of a period of Eligibility Service equal to the
lesser of the period of his or her break in service or ten years.
(g) Eligibility Service prior to the Effective Date
Notwithstanding any foregoing provisions to the contrary, Eligibility
Service shall include (i) with respect to any person who becomes a Member
of the Plan on the Effective Date pursuant to the provisions of Section
3.01(a) or (b) or Section 3.05, any employment rendered by such Member
prior to the Effective Date to the extent such employment is recognized as
Eligibility Service under the provisions of the Prior Salaried Plan, (ii)
with respect to any person who was employed by ITT Rayonier Corporation on
a salaried basis as of February 28, 1994 but was not a member of the Prior
Salaried Plan as of such date and who becomes a Member of the Plan on or
after the Effective Date pursuant to the provisions of Section 3.01(c),
any uninterrupted employment with the Company or with an Associated
Company rendered by such Member prior to the Effective Date and prior to
his or her Severance Date, and (iii) with respect to any person who was
employed by ITT Rayonier Corporation on a salaried basis on December 1,
1993 but was not employed by the Company on the Effective Date, any
employment rendered by the Member prior to the Effective Date to the
extent such employment is recognized as Eligibility Service under the
provisions of the Prior Salaried Plan. With respect to a person not
described in clause (i), (ii), or (iii) of the
<PAGE> 26
Page 22
preceding sentence who becomes a Member after the Effective Date,
Eligibility Service for the purpose of determining eligibility for
benefits but not for the purpose of determining eligibility for Plan
membership or Final Average Compensation shall include, subject to the
provisions of Section 2.01(f)(ii) with respect to bridging breaks in
service, any employment with ITT Rayonier Corporation rendered by such
Member prior to the Effective Date to the extent such employment is
recognized or would have been recognized as Eligibility Service under the
provisions of the Prior Salaried Plan.
2.02 Benefit Service
(a) Benefit Service on and after the Effective Date . Except as hereinafter
otherwise provided, all uninterrupted employment with the Company rendered
by a Member as an Employee on and after the Effective Date and prior to
his or her Severance Date shall be recognized as Benefit Service under the
Plan. Benefit Service for any period of employment rendered prior to the
Effective Date shall be determined as set forth in Section 2.02(f).
(b) Employment with an Associated Company - Except as otherwise provided in an
Appendix to the Plan, no employment with an Associated Company rendered by
a Member shall be recognized as Benefit Service under the Plan; except,
however, if a Member completes 36 months of Eligibility Service as an
Employee, any employment rendered on and after the Member's date of hire
with an Associated Company before classification as an Employee shall be
recognized as Benefit Service subject to any limitations for the
Associated Company at which the Member was employed set forth in writing
by the Retirement Committee. If a Member ceases to be an Employee and is
again employed at an Associated Company, such further employment will not
be recognized as Benefit
<PAGE> 27
Page 23
Service unless and until the Member again (i) becomes an Employee and (ii)
completes 36 months of Eligibility Service as an Employee.
(c) Employment with the Company but not as an Employee
Except as otherwise provided in Section 3.04, with respect to (i) any
person who on or after the Effective Date and immediately prior to the
date on which he or she becomes an Employee, is in the employ of the
Company but not as an Employee and (ii) any Member who completes an Hour
of Service on and after the Effective Date, and who thereafter ceases to
be an Employee but remains in the employ of the Company and, on or after
the Effective Date again becomes an Employee, uninterrupted employment
with the Company otherwise than as an Employee rendered on and after the
Effective Date shall be recognized as Benefit Service in accordance with
the terms of this Section 2.02, provided such person is a Member of the
Plan, upon completion of thirty-six months of Eligibility Service as an
Employee, subject to the limitations set forth in writing by the Board of
Directors or the Retirement Committee for the Participating Unit at which
such person was first employed.
(d) Certain absences to be recognized as Benefit Service - Except as otherwise
indicated below, the following periods of approved absence rendered on and
after the Effective Date shall be recognized as Benefit Service and shall
not be considered as breaks in Benefit Service:
(i) The period of any leave of absence granted in respect of service
with the armed forces of the United States on and after the
Effective Date provided the Employee shall have returned to the
service of the Company or an Associated Company in accordance with
<PAGE> 28
Page 24
reemployment rights under applicable law and shall have complied
with all of the requirements of such law as to reemployment.
(ii) Except as provided by law, the period on and after the Effective
Date of any leave of absence granted in respect of service, not
exceeding two years, with any other agency or department of the
United States Government.
(iii) The period on and after the Effective Date of any total and
permanent disability during which an Employee becomes entitled to a
disability benefit under Title II of the Federal Social Security Act
as amended from time to time; provided, however, that, if such
disability benefit ceases to be paid solely due to the Employee's
age, Benefit Service shall include the period of total and permanent
disability during which the Employee is entitled or would have been
entitled if he or she had participated in the Company's applicable
long term disability plan to receive disability benefit under such
long term disability plan.
(iv) The period on and after the Effective Date of any leave of absence
during which Company sickness or accident benefits are payable.
(v) The period on and after the Effective Date of any leave of absence
approved by the Company during which an Employee is paid
Compensation at a rate which is at least one-half of the Employee's
basic rate of Compensation in effect immediately prior to such
leave.
(vi) In any event, Benefit Service shall include the period, with or
without Compensation, immediately preceding the Employee's Severance
Date not in excess of 12 consecutive months inclusive of those
periods of approved absences already included in sub-paragraphs (i)
through (v) above, during which an Employee is continuously absent
from service.
<PAGE> 29
Page 25
(vii) The period of any periodic salary continuation payments an Employee
receives under any severance pay plan of the Company.
Except to the extent provided under sub-paragraph (vi) above, if an
Employee fails to return to active employment upon expiration of the
approved absences specified in sub-paragraphs (i), (ii), (iv) and (v)
above, such periods of approved absence shall not be considered as Benefit
Service under the Plan.
The Compensation of a Member during the periods of absence covered by
clause (i), (ii), (iv) or (vi) above shall be the Compensation the Member
actually receives during such period. The Compensation of a Member during
the period of absence covered by clause (iii) above shall be deemed to be
the Member's Final Average Compensation based on his or her Eligibility
Service up to such absence. Unless the Retirement Committee determines
otherwise on a basis uniformly applicable to all persons similarly
situated, the Social Security Benefit of a Member covered by clause (iii)
above shall be based on the benefit awarded by the Social Security
Administration at the date of his or her total and permanent disability.
(e) All Other Absences for Employees
(i) No period of absence approved by the Company other than those
specified in Section 2.02(d) above shall be recognized as Benefit
Service.
(ii) No other absence, other than the absence covered by the exception in
clause (i) above, shall be recognized as Benefit Service and any
such absence shall be considered as a break in Benefit Service;
provided, however, that in no event shall there be a break in
Benefit Service if an Employee is continuously absent from service
with the Company or with an
<PAGE> 30
Page 26
Associated Company for a period not in excess of 12 months and
returns as an Employee to the employ of the Company before the first
anniversary date of his or her Severance Date. However, any period
between a Severance Date and a reemployment date which is counted as
Eligibility Service under Section 2.01(d)(vii) shall not be counted
as Benefit Service.
If the Employee was eligible for a vested benefit under Section 4.05
at the time of a break in service, Benefit Service both before and
after the Employee's absence shall be immediately recognized as
Benefit Service under the Plan upon his or her return to service.
If the Employee was not eligible for a vested benefit under Section
4.05 at the time of a break in service, Benefit Service shall begin
from the date of the Employee's return to the employ of the Company.
However, any Benefit Service rendered prior to such break in service
shall be included, subject to the provisions of this Section 2.02,
as Benefit Service only at the time that he or she bridges his or
her Eligibility Service in accordance with the provisions of Section
2.01(f).
(f) Benefit Service prior to the Effective Date
Notwithstanding any foregoing provisions to the contrary, Benefit Service
shall include (i) with respect to any person who becomes a Member of the
Plan on the Effective Date pursuant to the provisions of Section 3.01(a)
or (b) or Section 3.05, any employment rendered by such Member prior to
the Effective Date to the extent such employment is recognized as Benefit
Service under the provisions of the Prior Salaried Plan, (ii) with respect
to any person who was employed by ITT
<PAGE> 31
Page 27
Rayonier Corporation on a salaried basis as of February 28, 1994 but who
was not a Member of the Prior Salaried Plan as of such date and who
becomes a Member of the Plan on or after the Effective Date pursuant to
the provisions of Section 3.01(c), any uninterrupted employment with the
Company rendered by such Member as an Employee prior to the Effective Date
and prior to his or her Severance Date, and (iii) with respect to any
person who was employed by ITT Rayonier Corporation on a salaried basis on
or after December 1, 1993 but was not employed by the Company on the
Effective Date, any employment rendered by the Member prior to the
Effective Date to the extent such employment is recognized as Benefit
Service under the provisions of the Prior Salaried Plan.
2.03 Questions relating to Service under the Plan - If any question shall arise
hereunder as to an Employee's Eligibility Service or Benefit Service, such
question shall be resolved in writing by the Retirement Committee on a
basis uniformly applicable to all Employee(s) similarly situated. The
Retirement Committee may, with respect to any person or any group of
persons which it considers to be not substantial in number, determine
whether the employment of such person(s), the Company or any Associated
Company shall be recognized under the Plan as Eligibility Service or
Benefit Service. If, in the judgment of the Retirement Committee, a group
of persons is considered to be substantial in number, the employment of
such persons with the Company or any Associated Company shall not be
recognized under the Plan as Eligibility Service or Benefit Service until
further action by the Board of Directors. Such further documentation is
hereby incorporated into the Plan by reference.
<PAGE> 32
Page 28
ARTICLE 3 - MEMBERSHIP
3.01 Persons employed on the Effective Date
(a) Any person who is an Employee as defined in Section 1.16 on the
Effective Date and who was a member of the Prior Salaried Plan on
February 28, 1994 shall become a Member of the Plan on the Effective
Date.
(b) Any person who would be classified as an Employee as defined in
Section 1.16 on the Effective Date but is absent from work at the
Company by reason of layoff, leave of absence, short term disability
or long term disability and who is a Member of the Prior Salaried
Plan on February 28, 1994 shall become a Member of the Plan on the
Effective Date.
(c) Any person who is an Employee as defined in Section 1.16 on the
Effective Date and who as of February 28, 1994 was not a member of
the Prior Salaried Plan but was in the process of satisfying the age
and service eligibility requirements for membership in the Prior
Salaried Plan, shall become a Member of the Plan as of the first day
of the calendar month coincident with or next following the date he
or she completes the age and service requirements set forth in
Section 3.02(a) and (b).
3.02 Persons first employed as Employees on or after the Effective Date - Every
person who is first employed as an Employee on or after the Effective Date
shall become a Member of the Plan as of the first day of the calendar
month coincident with or next following the later of:
(a) the date on which he or she attains the 21st anniversary of his or
her birth, or
(b) the date on which he or she completes one year of Eligibility
Service.
<PAGE> 33
Page 29
3.03 Reemployment After March 1, 1994 of ITT Rayonier Incorporated Salaried
Employees Any person who was employed by ITT Rayonier Incorporated on a
salaried basis on December 1, 1993 and who was a member of the Prior
Salaried Plan but who terminated employment prior to the Effective Date
shall become a Member of the Plan on the first day he is employed as an
Employee.
3.04 Persons employed as a Leased Employee with the Company or an Associated
Company Any person who is a Leased Employee shall not be eligible to
participate in the Plan. However notwithstanding any other Plan provision
to the contrary, if a Leased Employee subsequently becomes an Employee as
defined in Section 1.16 or an Employee as defined in Section 1.16
subsequently becomes employed as a Leased Employee, uninterrupted
employment with the Company or an Associated Company as a Leased Employee,
shall be counted for the sole purpose of determining Eligibility Service
but not for the purpose of determining Benefit Service; provided, however,
that Eligibility Service shall not be counted for any Leased Employee for
any period of his or her employment during which the requirements of
Section 414(n)(5) of the Code are met.
3.05 Persons employed as other than Employees by the Company - Every person
employed as other than an Employee by a Participating Unit shall become a
Member of the Plan as of the first day of the calendar month coincident
with or next following the date on which he or she first becomes an
Employee, but not unless and until he or she satisfies the same terms and
conditions which would have been applicable had he or she always been an
Employee at such Participating Unit. Notwithstanding the foregoing, a
Transferred Employee shall become a Member on the Effective Date.
<PAGE> 34
Page 30
3.06 Reemployment of former Employees, former Members and retired Members
Except as provided in Section 3.03, any person reemployed by the Company
as an Employee shall be considered a new Employee for membership purposes
under the Plan if such Employee was not previously a Member of the Plan.
The membership of any person reemployed by the Company as an Employee
shall be immediately resumed if such Employee was previously a Member of
the Plan.
If a retired Member or a former Member is reemployed by the Company or by
an Associated Company in a capacity other than as a Non-Benefits Worker,
his or her membership in the Plan shall be immediately resumed and any
payment of a retirement allowance with respect to his or her original
retirement or any payment of a vested benefit with respect to his or her
original employment shall cease in accordance with the provisions of
Section 4.11.
3.07 Termination of membership - Unless otherwise determined by the Retirement
Committee in writing under rules uniformly applicable to all person(s) or
Employee(s) similarly situated, an Employee's membership in the Plan shall
terminate if he or she ceases to be an Employee and he or she is not
entitled to either a retirement allowance or vested benefit under Sections
4.01, 4.02, 4.03, 4.04 or 4.05, except that an Employee's membership shall
continue (a) during any period while on leave of absence approved by the
Company, (b) while absent by reason of temporary disability, (c) during
the period of any total and permanent disability which continues to be
recognized as Eligibility Service and Benefit Service as provided in
Article 2, (d) while he or she is not an Employee as
<PAGE> 35
Page 31
herein defined but is in the employ of the Company or an Associated
Company, or (e) during the period of any periodic salary continuation
payments an Employee receives under any severance pay plan of the Company.
Employees covered by the Plan may not waive such coverage.
3.08 Questions relating to membership in the Plan - If any question shall arise
hereunder as to the commencement, duration or termination of the
membership of any person(s) or Employee(s) employed by the Company or by
an Associated Company, such question shall be resolved by the Retirement
Committee in writing under rules uniformly applicable to all person(s) or
Employee(s) similarly situated. Such further documentation is hereby
incorporated into the Plan by reference.
<PAGE> 36
Page 32
ARTICLE 4 - BENEFITS
4.01 Normal Retirement Allowance
(a) The right of a Member to his or her normal retirement allowance shall be
nonforfeitable as of his or her Normal Retirement Age. A Member may retire
from active service on a normal retirement allowance upon reaching his or
her Normal Retirement Date. If a Member postpones his or her retirement
and continues in active service after his or her Normal Retirement Date or
returns to service after his or her Normal Retirement Date, the provisions
of Section 4.02 shall be applicable.
(b) Benefit - Prior to adjustment in accordance with Sections 4.06(a) and
4.07(c), the annual normal retirement allowance payable on a lifetime
basis upon retirement at a Member's Normal Retirement Date shall be equal
to the sum of (i) and (ii) where:
(i) equals
(1) 2 percent of the Member's Final Average Compensation multiplied by
the portion of the first 25 years of his or her Benefit Service
rendered prior to the Effective Date;
(2) plus 1-1/2 percent of the Member's Final Average Compensation
multiplied by the next 15 years of his or her Benefit Service
rendered prior to the Effective Date, to a combined maximum of 40
years of Benefit Service;
(3) reduced by 1-1/4 percent of the Social Security Benefit multiplied
by the portion of his or her years of Benefit Service rendered prior
to the Effective Date, and not in excess of 40 years;
(4) reduced, but not below zero, by the annual normal retirement
allowance determined under the provisions of Section 4.01(b) of the
Prior Salaried Plan prior to the imposition of any
<PAGE> 37
Page 33
limitations under Section 415 of the Code and the application of any
offset provisions of the Prior Salaried Plan, with respect to the
Member's period of employment rendered prior to the Effective Date
which has been credited as Benefit Service hereunder pursuant to the
provisions of Section 2.02(f); and
(ii) equals:
(1) 2 percent of the Member's Final Average Compensation multiplied by
the portion of the first 25 years of his or her Benefit Service
rendered on and after the Effective Date;
(2) plus 1-1/2 percent of the Member's Final Average Compensation
multiplied by the portion of the next 15 years of his or her Benefit
Service rendered on or after the Effective Date, to a combined
maximum of 40 years of Benefit Service minus the total number of
years of Benefit Service rendered prior to the Effective Date;
(3) reduced by 1-1/4 percent of the Social Security Benefit multiplied
by the portion of the number of years of his or her Benefit Service
rendered on or after the Effective Date not in excess of 40 years
minus the total number of years of Benefit Service rendered prior to
the Effective Date.
The combined maximum years of Benefit Service used to compute the amounts
under clauses (i) and (ii) above shall not exceed 40 years.
The annual normal retirement allowance determined prior to reduction to be
made on account of the Social Security Benefit shall be an amount not less
than the greatest annual early retirement allowance which would have been
payable to a Member had he or she retired under Section 4.03 or Section
4.04 at any time before his or her Normal Retirement Date and as such
early retirement allowance would have been reduced to commence at such
earlier date but without reduction on
<PAGE> 38
Page 34
account of the Social Security Benefit. The reduction to be made on
account of the Social Security Benefit shall in any event be based on the
Federal Social Security Act in effect at the time of the Member's actual
retirement.
4.02 Postponed Retirement Allowance
(a) A Member who continues in active service after his or her Normal
Retirement Date or returns to active service on or after his or her Normal
Retirement Date shall be retired from active service on a postponed
retirement allowance on the first day of the month following his or her
termination of employment, which date shall be the Member's Postponed
Retirement Date.
(b) Benefit - Except as hereinafter provided and prior to adjustment in
accordance with Sections 4.06(a) and 4.07(c), the annual postponed
retirement allowance payable on a lifetime basis upon retirement at a
Member's Postponed Retirement Date shall be equal to the greater of:
(i) an amount determined in accordance with Section 4.01(b) but based on
the Member's Benefit Service, Social Security Benefit and Final
Average Compensation and, with respect to the amount determined
under Section 4.01(b)(i)(4), any applicable components under the
Prior Salaried Plan as of his or her Postponed Retirement Date or
(ii) the annual normal retirement allowance to which the Member would
have been entitled under Section 4.01(b) had he or she retired on
his or her Normal Retirement Date, increased by an amount which is
the Equivalent Actuarial Value of the monthly payments which would
have been payable with respect to each month in which he or she
worked fewer than eight days. Any monthly payment determined under
this sub-paragraph (ii) with respect to any such month in which he
or she worked fewer than eight days shall be
<PAGE> 39
Page 35
computed as if the Member had retired on his or her Normal
Retirement Date and shall reflect additional benefit accruals, if
any, recomputed as of the first day of each subsequent Plan Year
during which payment would have been made on the basis of his or her
Final Average Compensation and Benefit Service accrued to such
recomputation date.
(c) Benefit for Member in Active Service after he or she attains Age 70-1/2 -
In the event a Member's retirement allowance is required to begin under
Section 4.10 while the Member is in active service, the January 1
immediately following the calendar year in which the Member attained age
70-1/2 shall be the Member's Annuity Starting Date for purposes of this
Article 4 and the Member shall receive a postponed retirement allowance
commencing on that January 1 in an amount determined as if he or she had
retired on such date. As of each succeeding January 1 prior to the
Member's actual Postponed Retirement Date and as of his or her actual
Postponed Retirement Date, the Member's retirement allowance shall be:
(i) recomputed to reflect any additional retirement allowance
attributable to his or her Compensation and Benefit Service earned
during the immediately preceding calendar year and based on his or
her age at each succeeding January 1 or actual Postponed Retirement
Date, and
(ii) reduced by the Equivalent Actuarial Value of the total payments of
his or her postponed retirement allowance made with respect to each
month of continued employment in which he or she was credited with
at least eight days of service and which were paid prior to each
such recomputation;
<PAGE> 40
Page 36
provided that no such reduction shall reduce the Member's postponed
retirement allowance below the amount of postponed retirement allowance
payable to the Member immediately prior to the recomputation of such
retirement allowance.
4.03 Standard Early Retirement Allowance
(a) Eligibility - A Member, who has not reached his or her Normal Retirement
Date but has, prior to his or her termination of employment reached the
55th anniversary of his or her birth and completed ten years of
Eligibility Service, is eligible to retire on a standard early retirement
allowance on the first day of the calendar month coincident with or next
following termination of employment, which date shall be the Member's
Early Retirement Date.
(b) Benefit - Except as hereinafter provided and prior to adjustment in
accordance with Sections 4.06(a) and 4.07(c) the standard early retirement
allowance shall be an allowance deferred to commence on the Member's
Normal Retirement Date and shall be equal to the Member's Accrued Benefit
earned up to his or her Early Retirement Date, computed on the basis of
his or her Benefit Service, Final Average Compensation, Social Security
Benefit and any applicable components of the Prior Salaried Plan as of his
or her Early Retirement Date, with the Social Security Benefit determined
on the assumption that the Member had no earnings after his or her Early
Retirement Date.
The Member may, however, elect to receive an early retirement allowance
commencing on his or her Early Retirement Date or the first day of any
calendar month before his or her Normal Retirement Date specified in his
or her later request therefor in a reduced amount which, prior to
<PAGE> 41
Page 37
adjustment in accordance with Sections 4.06(a) and 4.07(c) shall be equal
to his or her Accrued Benefit earned up to his or her Early Retirement
Date prior to the reduction for the Social Security Benefit, reduced by
1/4 of 1 percent per month for each month by which the commencement date
of his or her retirement allowance precedes his or her Normal Retirement
Date.
The reduction to be made on account of the Social Security Benefit, with
respect to the retirement allowance payable to a Member retiring prior to
his or her 62nd birthday, shall not be made until such time as the Member
is or would upon proper application first be entitled to receive said
Social Security Benefit. With respect to a Member who retires on and after
said date and prior to attaining age 62, the reduction to be made to the
retirement allowance payable to such Member or any benefit payable after
his or her death to his or her spouse or to a contingent annuitant
pursuant to the provisions of Section 4.06 on account of the Social
Security Benefit shall not be made until such time as the Member is or
would have, had he or she survived, upon proper application first been
entitled to receive said Social Security Benefit.
4.04 Special Early Retirement Allowance
(a) Eligibility - A Member who has not reached his or her Normal Retirement
Date but who prior to his or her termination of employment (i) has reached
the 55th anniversary of his or her birth and completed fifteen years of
Eligibility Service or (ii) has reached the 50th anniversary of his or her
birth but not the 55th anniversary of his or her birth and whose age plus
years of Eligibility Service equals eighty or more, is eligible, in either
case, to retire on a special early retirement allowance on the first day
of the calendar month coincident with or next following termination of
employment, which date shall be the Member's Special Early Retirement
Date.
<PAGE> 42
Page 38
(b) Benefit - Except as hereinafter otherwise provided and prior to adjustment
in accordance with Sections 4.06(a) and 4.07(c) the special early
retirement allowance shall be an allowance deferred to commence on the
Member's Normal Retirement Date and shall be equal to his or her Accrued
Benefit earned up to the Member's Special Early Retirement Date, computed
on the basis of his or her Benefit Service, Final Average Compensation,
Social Security Benefit and any applicable components of the Prior
Salaried Plan as of his or her Special Early Retirement Date, with the
Social Security Benefit determined on the assumption that the Member had
no earnings after his or her Special Early Retirement Date.
At or after his or her Special Early Retirement Date, however, the Member
may elect to receive early payment of his or her Accrued Benefit
commencing on the later of his or her Special Early Retirement Date or the
first day of any later calendar month prior to his or her Normal
Retirement Date as specified in his or her request therefor.
In the event of early payment commencing on the first day of the month
coincident with or following the 60th anniversary of a Member's birth, the
special early retirement allowance, prior to any adjustment in accordance
with Sections 4.06(a) and 4.07(c), payable prior to age 62 shall be equal
to his or her Accrued Benefit earned up to the Member's Special Early
Retirement Date prior to the reduction for the Social Security Benefit;
such retirement allowance shall not be increased to reflect a commencement
date later than the 60th anniversary of the Member's birth.
<PAGE> 43
Page 39
In the event of early payment commencing prior to the 60th anniversary of
a Member's birth, the special early retirement allowance, prior to any
adjustment in accordance with Sections 4.06(a) and 4.07(c), payable prior
to age 62 shall be equal to his or her Accrued Benefit earned up to the
Member's Special Early Retirement Date prior to the reduction for the
Social Security Benefit but reduced by 5/12 of 1 percent per month for
each month up to 60 months by which the commencement date of his or her
special early retirement allowance precedes the first day of the calendar
month coinciding with or next following the 60th anniversary of his or her
birth.
The reduction to be made on account of the Social Security Benefit, with
respect to the retirement allowance payable to a Member retiring prior to
his or her 62nd birthday, shall be made at such time as the Member is or
would upon proper application first be entitled to receive said Social
Security Benefit. With respect to a Member who retires prior to attaining
age 62, the reduction to be made to the retirement allowance payable to
such Member or any benefit payable after his or her death to his or her
spouse or to a contingent annuitant pursuant to the provisions of Section
4.06 on account of the Social Security Benefit shall not be made until
such time as the Member is or would have, if he or she had survived, upon
proper application first been entitled to receive said Social Security
Benefit.
4.05 Vested Benefit
(a) Eligibility - A Member shall be vested in, and have a nonforfeitable right
to, his or her Accrued Benefit upon completion of five years of
Eligibility Service. If such Member's services are subsequently terminated
for reasons other than death or early retirement prior to his or her
Normal
<PAGE> 44
Page 40
Retirement Date, he or she shall be entitled to a vested benefit under the
provisions of this Section 4.05.
(b) Benefit - Prior to adjustment in accordance with Sections 4.06(a) and
4.07(a), the vested benefit payable to a Member shall be a benefit
deferred to commence on the former Member's Normal Retirement Date and
shall be equal to his or her Accrued Benefit earned up to the date the
Member's employment is terminated, computed on the basis of his or her
Benefit Service, Final Average Compensation, Social Security Benefit and
any applicable component of the Prior Salaried Plan as of his or her date
of termination, with the Social Security Benefit determined on the
assumption that the Member continued in service to his or her Normal
Retirement Date at his or her rate of Compensation in effect as of his or
her date of termination. On or after the date on which the former Member
shall have reached the 55th anniversary of his or her birth he or she may
elect to receive a benefit commencing on the first day of any calendar
month coincident with or next following the 55th anniversary of his or her
birth and prior to his or her Normal Retirement Date as specified in his
or her request therefor, after receipt by the Retirement Committee of
written application therefor made by the former Member and filed with the
Retirement Committee. Upon such earlier payment, the vested benefit
otherwise payable at the former Member's Normal Retirement Date will be
reduced by 1/180th for each month up to 60 months by which the
commencement date of such payments precedes his or her Normal Retirement
Date and further reduced by 1/360th for each such month in excess of 60
months.
<PAGE> 45
Page 41
4.06 Forms of Benefit Payment after Retirement
(a) Automatic Forms of Payment
(i) Automatic Joint and Survivor Annuity - If a Member or former Member
who is married on his or her Annuity Starting Date has not made an
election of an optional form of payment as provided in Section
4.06(b), the retirement allowance or vested benefit payable to such
Member or former Member shall automatically be adjusted as follows
in order to provide that, after his or her death, a lifetime benefit
as described below shall be payable to the spouse to whom he or she
is married on his or her Annuity Starting Date:
(1) 90/50 Spouse's Annuity - If such Member retires from active
service under Section 4.01, Section 4.02, Section 4.03 or
Section 4.04, the automatic joint and survivor annuity payable
to the Member shall provide (A) a reduced retirement allowance
payable to the Member during his or her life equal to 90% of
the retirement allowance otherwise payable without optional
modification to the Member under Section 4.01, 4.02, 4.03 or
4.04, as the case may be, further adjusted, if necessary, as
provided in the following sentence and (B) a benefit payable
after his or her death to his or her surviving spouse equal to
50% of the retirement allowance otherwise payable without
optional modification to the Member under Section 4.01, 4.02,
4.03 or 4.04, as the case may be, and without further
adjustment as provided in the following sentence. If such
spouse is more than 5 years older than the Member, the reduced
retirement allowance payable to the Member shall be increased
for each such additional full year in excess of 5 years, but
for not more than 20 years, by one-half of 1% of the
retirement allowance payable to the Member prior to optional
modification. If such spouse is more than 5 years younger than
the Member, the reduced retirement
<PAGE> 46
Page 42
allowance payable to the Member shall be further reduced for
each such additional full year in excess of 5 years by
one-half of 1% of the retirement allowance payable to the
Member prior to optional modification.
Notwithstanding the foregoing, the retirement allowance
payable to the Member shall not be less than the retirement
allowance otherwise payable without optional modification to
the Member at retirement under Section 4.01, 4.02, 4.03 or
4.04, as the case may be, multiplied by the appropriate factor
contained in Table 3 of Appendix A.
(2) Vested Spouse's Annuity - If such Member terminates service
and is entitled to a vested benefit under Section 4.05, the
joint and survivor annuity payable to the former Member shall
provide (A) a reduced vested benefit payable to the former
Member during his or her life equal to his or her vested
benefit computed in accordance with Section 4.05 multiplied by
the appropriate factor contained in Table 1 of Appendix A and
(B) a benefit payable after his or her death to his or her
surviving spouse equal to 50% of the reduced vested benefit
payable to the former Member.
(ii) Automatic Life Annuity - If a Member or former Member is not married
on his or her Annuity Starting Date, the retirement allowance or
vested benefit computed in accordance with Section 4.01, 4.02, 4.03,
4.04 or 4.05, as the case may be, shall be paid to the Member or
former Member in the form of a lifetime benefit payable during his
or her own lifetime with no further benefit payable to anyone after
his or her death, unless the Member or former Member is eligible for
and makes an election of an optional form of payment under Section
4.06(b).
<PAGE> 47
Page 43
(b) Optional Forms of Payment
(i) Life Annuity Option - Any Member or former Member who retires or
terminates employment with the right to a retirement allowance or
vested benefit may elect, in accordance with the provisions of
Section 4.06(d), to provide that the retirement allowance payable to
him or her under Section 4.01, 4.02, 4.03 or 4.04 or the vested
benefit payable to him or her under Section 4.05 shall be in the
form of a lifetime benefit payable during his or her own lifetime
with no further benefit payable to anyone after his or her death.
(ii) 80/80 Spouse's Annuity Option - Any Member who retires from active
service under Section 4.01, 4.02, 4.03 or 4.04, who is married on
his or her Annuity Starting Date, may elect, in accordance with the
provisions of Section 4.06(d), to convert the retirement allowance
otherwise payable to him or her without optional modification under
Section 4.01, 4.02, 4.03 or 4.04, as the case may be, into the
following alternative benefit in order to provide that, after his or
her death, a lifetime benefit shall be payable to the spouse to whom
the Member is married on his or her Annuity Starting Date.
The Member shall receive a reduced retirement allowance payable
during his or her life equal to 80% of the retirement allowance
otherwise payable without optional modification to the Member at
retirement under Section 4.01, 4.02, 4.03 or 4.04, as the case may
be, further adjusted, if necessary, as provided below. The Member's
surviving spouse shall receive a benefit payable after the Member's
death equal to the Member's retirement allowance as reduced in this
Section 4.06(b)(ii).
<PAGE> 48
Page 44
If such spouse is more than 5 years older than the Member, the
reduced retirement allowance payable to the Member shall be
increased for each such additional full year in excess of 5 years,
but for not more than 20 years, by 1% of the retirement allowance
payable to the Member prior to optional modification. If such spouse
is more than 5 years younger than the Member, the reduced retirement
allowance payable to the Member shall be further reduced for each
such additional full year in excess of 5 years by 1% of the
retirement allowance payable to the Member prior to optional
modification.
Notwithstanding the foregoing, the retirement allowance payable to
the Member and his or her surviving spouse shall not be less than
the retirement allowance that would have been payable if the Member
had elected Option 1 under Section 4.06(b)(iii).
(iii) Contingent Annuity Option - Any Member who retires from active
service under Section 4.01, 4.02, 4.03 or 4.04 may elect, in
accordance with the provisions of Section 4.06(d), to convert the
retirement allowance otherwise payable to him or her without
optional modification under Section 4.01, 4.02, 4.03 or 4.04, as the
case may be, into one of the following alternative options in order
to provide that after his or her death, a lifetime benefit shall be
payable to the person who, when the option became effective, was
designated by him or her to be his or her contingent annuitant. The
optional benefit elected shall be the Equivalent Actuarial Value of
the retirement allowance otherwise payable without optional
modification under Section 4.01, 4.02, 4.03 or 4.04.
Option 1 - A reduced retirement allowance payable during the
Member's life with the provisions that after his or her death a
benefit equal to 100% of his or her reduced
<PAGE> 49
Page 45
retirement allowance shall be paid during the life of, and to, his
or her surviving contingent annuitant.
Option 2 - A reduced retirement allowance payable during the
Member's life with the provision that after his or her death a
benefit equal to 50% of his or her reduced retirement allowance
shall be paid during the life of, and to, his or her surviving
contingent annuitant.
(c) Required Notice - No less than 30 days and no more than 90 days before his
or her Annuity Starting Date, the Retirement Committee shall furnish to
each Member or former Member a written explanation in non-technical
language of the terms and conditions of the Automatic Joint and Survivor
Annuity and the Automatic Life Annuity as described in Section 4.06(a) and
the optional forms of benefits described in Section 4.06(b). Such
explanation shall include (i) a general description of the eligibility
conditions for, the material features of and the relative values of the
optional forms of payment under the Plan, (ii) any rights the Member or
former Member may have to defer commencement of his or her retirement
allowance or vested benefit, (iii) the requirement for Spousal Consent as
provided in Section 4.06(d) and (iv) the right of the Member or former
Member, prior to his or her Annuity Starting Date to make and to revoke
elections under Section 4.06.
(d) Election of Options - A Member may, subject to the provisions of this
Section 4.06(d), elect to receive his or her retirement allowance or
vested benefit in the optional form of payment described in Section
4.06(b)(i) or, in the case of a Member who retires under the provisions of
Section 4.01, 4.02, 4.03 or 4.04, one of the optional forms of payment
described in Section 4.06(b)(ii) or
<PAGE> 50
Page 46
4.06(b)(iii), in lieu of the automatic forms of payment described in
Section 4.06(a). A married Member's or a married former Member's election
of a Life Annuity form of payment under Section 4.06(b)(i) or any optional
form of payment under Section 4.06(b)(ii) and Section 4.06(b)(iii), which
does not provide for monthly payments to his or her spouse for life after
the Member's or former Member's death, in an amount equal to at least 50%
but not more than 100% of the monthly amount payable under that form of
payment to the Member or former Member and which is not of Equivalent
Actuarial Value to the Automatic Joint and Survivor Annuity described in
Section 4.06(a)(i), shall be effective only with Spousal Consent; provided
such Spousal Consent to the election has been received by the Retirement
Committee.
Any election made under Section 4.06(a) or Section 4.06(b) shall be made
on a form approved by the Retirement Committee and may be made during the
90-day period ending on the Member's Annuity Starting Date, but not prior
to the date the Member or former Member receives the written explanation
described in Section 4.06(c). Any such election shall become effective on
the Member's or former Member's Annuity Starting Date, provided the
appropriate form is filed with and received by the Retirement Committee
and may not be modified or revoked after his or her Annuity Starting Date.
Any election made under Section 4.06(a) or Section 4.06(b) after having
been filed, may be revoked or changed by the Member or former Member only
by written notice received by the Retirement Committee before his or her
election becomes effective on his or her Annuity Starting Date. Any
subsequent elections and revocations may be made at any time and from time
to time during the 90-day period ending on the Member's or former Member's
Annuity Starting Date. A revocation shall be effective when the completed
notice is received by the Retirement Committee. A re-election shall be
effective on the Member's or former Member's
<PAGE> 51
Page 47
Annuity Starting Date. If, however, the Member or the spouse or the
contingent annuitant designated in the election dies before the election
has become effective, the election shall thereby be revoked.
With respect to a Member who retires under the provisions of Section 4.03
or Section 4.04, the reduction on account of the Social Security Benefit
to made to the benefit, if any, payable in accordance with Section 4.06(a)
or Section 4.06(b) to his or her designated spouse or to his or her
contingent annuitant shall not be made until such time as the Member would
have, had he or she survived, upon proper application first been entitled
to receive said Social Security Benefit.
If a Member dies after his or her Annuity Starting Date, any payment
continuing on to his or her spouse or contingent annuitant shall be
distributed at least as rapidly as under the method of distribution being
used as of the Member's date of death.
4.07 Survivor's Benefit Applicable Before Retirement
The term "Beneficiary" for purposes of this Section 4.07 shall mean any
person or any trust established by the Member or the Member's estate,
named by the Member by written designation to receive benefits payable
under the automatic Pre-Retirement Survivor's Benefit and under the
optional Supplemental Pre-Retirement Survivor's Benefit; provided,
however, that, for any married Member the term "Beneficiary" shall
automatically mean the Member's spouse and any prior designation to the
contrary will be canceled, unless the Member, with Spousal Consent,
designates otherwise. An election of a non-spouse Beneficiary by a married
Member shall be effective only if accompanied by Spousal Consent and such
Spousal Consent has been received by the Retirement
<PAGE> 52
Page 48
Committee. If the Member dies without an effective designation of
Beneficiary, the Member's Beneficiary for purposes of this Section 4.07
shall automatically be the Member's spouse, if any, or his or her estate.
If the Member elects the additional optional protection of the
Supplemental Pre-Retirement Survivor's Benefit, the Member's Beneficiary
thereunder shall be the same as the Beneficiary under the Automatic
Pre-Retirement Survivor's Benefit. The Retirement Committee shall resolve
any questions arising hereunder as to the meaning of "Beneficiary" on a
basis uniformly applicable to all Members similarly situated.
(a) Automatic Vested Spouse's Benefit
(i) Automatic Vested Spouse's Benefit applicable before termination of
employment - The surviving spouse of a Member who has completed 5
years of Eligibility Service but who has not yet completed 10 years
of Eligibility Service and attained age 55 shall automatically
receive a benefit payable under the Automatic Vested Spouse's
Benefit of this Section 4.07(a)(i) in the event said Member should
die after the effective date of coverage hereunder and before
termination of employment. The benefit payable to the Member's
spouse shall be equal to 50% of the benefit the Member would have
received if he or she had terminated his or her employment on his or
her date of death, survived to Normal Retirement Date, and on the
day before he or she would have reached Normal Retirement Date had
elected to begin receiving his or her vested benefit in the form of
the Automatic Joint and Survivor Annuity under Section
4.06(a)(i)(2), or with respect to a Member who had met the
eligibility requirements set forth in Section 4.04(a)(ii) and who
died in active employment prior to the 55th anniversary of his or
her birth, his or her early retirement allowance accrued to his or
her date of death in the form of the Automatic Joint
<PAGE> 53
Page 49
and Survivor Annuity under Section 4.06(a)(i)(1). Such benefit shall
be payable for the life of the spouse commencing on what would have
been the Member's Normal Retirement Date. However, the Member's
spouse may elect, by written application filed with the Retirement
Committee, to have payments begin as of the first day of any
calendar month on or after the date the former Member would have
reached the 55th anniversary of his or her birth provided, however,
if the Member dies after having met the requirements set forth in
Section 4.04(a)(ii) for a special early retirement allowance, the
Member's spouse may elect to have payments begin under this
Automatic Vested Spouse's Benefit as of the first day of any month
following the Member's death.
If the Member's spouse elects to commence payment of the Automatic
Vested Spouse's Benefit prior to what would have been the Member's
Normal Retirement Date, the amount of such benefit payable to the
spouse shall be based on (i) the reduced vested benefit to which the
Member would have been entitled, had the Member elected to have
payments commence to himself on such earlier date in accordance with
the provisions of Section 4.05(b) or (ii) in the case of a Member
who dies after having met the requirements for a special early
retirement allowance as set forth Section 4.04(a)(ii), the reduced
early retirement allowance to which the Member would have been
entitled had he or she elected to have payments commence to himself
on such earlier date in accordance with the provisions of Section
4.04(b).
Coverage hereunder shall be applicable to a married Member in active
service who has satisfied the eligibility requirements for a vested
benefit under Section 4.05 and shall
<PAGE> 54
Page 50
become effective on the date the Member marries and shall cease on
the earlier of (i) the date such active Member reaches the 55th
anniversary of his or her birth and completes 10 years of
Eligibility Service, (ii) the date such active Member reaches the
65th anniversary of his or her birth, (iii) the date such active
Member's marriage is legally dissolved by a divorce decree, or (iv)
the date such active Member's spouse dies. Coverage under Section
4.07(b)(i) shall commence on the date a Member in active service
reaches the earlier of (i) the 55th anniversary of his or her birth
or, if later, the date he or she completes 10 years of Eligibility
Service or (ii) the 65th anniversary of his or her birth.
(ii) Automatic Vested Spouse's Benefit applicable upon termination of
employment - In the case of a former Member who is married and
entitled to a vested benefit under Section 4.05, the provisions of
this Section 4.07(a)(ii) shall apply to the period between the date
his or her services are terminated or the date, if later, the former
Member is married and his or her Annuity Starting Date, or other
cessation of coverage as later specified in this Section
4.07(a)(ii).
In the event of a married former Member's death during any period in
which these provisions have not been waived or revoked by the former
Member and his or her spouse, the benefit payable to the former
Member's spouse shall be equal to 50% of the vested benefit the
former Member would have received on his or her Normal Retirement
Date if he or she had elected to receive such benefit in the form of
the Automatic Joint and Survivor Annuity under Section 4.06(a)(i).
<PAGE> 55
Page 51
The spouse's benefit shall be payable for the life of the spouse
commencing on what would have been the former Member's Normal
Retirement Date. However, the former Member's spouse may elect, by
written application filed with the Retirement Committee, to have
payments begin as of the first day of any calendar month on or after
the date the former Member would have reached the 55th anniversary
of his or her birth. If the former Member's spouse elects to
commence payment of this Automatic Vested Spouse's Benefit prior to
what would have been the former Member's Normal Retirement Date, the
amount of such benefit payable to the spouse shall be based on the
reduced vested benefit to which the former Member would have been
entitled, had the former Member elected to have payments commence to
himself on such earlier date in accordance with the provisions of
Section 4.05(b).
The vested benefit payable to a former Member whose spouse is
covered under this Section 4.07(a)(ii) or, if applicable, the
benefit payable to his or her spouse upon his or her death shall be
reduced by the applicable percentages shown below. Such reduction
shall commence on and after the first of the month coincident with
or following the effective date of coverage hereunder and cease when
coverage ceases; provided, however, no reduction shall be made with
respect to any period before the later of (1) the date the
Retirement Committee furnishes the Member the notice of his or her
right to waive the Automatic Vested Spouse's Benefit or (2) the
commencement of the election period specified below.
<PAGE> 56
Page 52
ANNUAL REDUCTION FOR SPOUSE'S COVERAGE
AFTER TERMINATION OF EMPLOYMENT
<TABLE>
<CAPTION>
Age Reduction
--- ---------
<S> <C>
Less than 40 1/10 of 1% per year
40 but prior to 50 2/10 of 1% per year
50 but prior to 55 3/10 of 1% per year
55 but prior to 60 5/10 of 1% per year
60 but less than 65 1% per year
</TABLE>
The Retirement Committee shall furnish to each former Member a
written explanation which describes (1) the terms and conditions of
the Automatic Vested Spouse's Benefit, (2) the former Member's right
to make, and the effect of, an election to waive the Automatic
Vested Spouse's Benefit, (3) the rights of the former Member's
spouse, and (4) the right to make, and the effect of, a revocation
of such a waiver. Such written explanation shall be furnished to
each former Member before the first anniversary of the date he or
she terminated service and shall be furnished to such former Member
even though he or she is not married.
The period during which the former Member may make an election to
waive the Automatic Vested Spouse's Benefit provided under this
Section 4.07(a)(ii) shall begin not later than the date his or her
employment terminates and end on his or her Annuity Starting Date
or, if earlier, his or her date of death. Any waiver, revocation or
re-election of the Automatic Vested Spouse's Benefit shall be made
on a form provided by the Retirement Committee and any waiver or
revocation shall require Spousal Consent. If, upon termination of
employment, the former Member waives coverage hereunder in
accordance with administrative procedures established by the
Retirement Committee for all Members
<PAGE> 57
Page 53
similarly situated, such waiver shall be effective as of the
Member's Severance Date. Any later re-election or revocation shall
be effective on the first day of the month coincident with or next
following the date the completed form is received by the Retirement
Committee. If a former Member dies during the period after a waiver
or revocation is in effect there shall be no benefits payable under
the provisions of this Section 4.07.
Except as described above in the event of a waiver or revocation,
coverage under this Section 4.07(a)(ii) shall cease to be effective
upon a former Member's Annuity Starting Date, or upon the date a
former Member's marriage is legally dissolved by a divorce decree,
or upon the death of the spouse, whichever event shall first occur.
(b) Automatic Pre-Retirement Survivor's Benefit
(i) Automatic Pre-Retirement Survivor's Benefit applicable before a
Member retires under the provisions of Section 4.01, Section 4.02,
Section 4.03 or Section 4.04 - The Beneficiary of a Member who has
reached the 65th anniversary of his or her birth or who has reached
the 55th anniversary of his or her birth and completed 10 years of
Eligibility Service, shall automatically receive a Pre-Retirement
Survivor's Benefit payable under the provisions of this Section
4.07(b)(i) in the event said Member should die before he or she
retires under the provisions of Section 4.01, 4.02, 4.03 or 4.04 or
reaches his or her Annuity Starting Date pursuant to the provisions
of Section 4.02(d), if earlier. The benefit payable during the life
of, and to, the Beneficiary shall be equal to one-half of the
Member's Accrued Benefit, without optional modification in
accordance with the provisions of Section 4.06, accrued to the date
of his or her death, adjusted to take into account the Member's
Social
<PAGE> 58
Page 54
Security Benefit. The Social Security Benefit shall be determined on
the assumption that the Member had no earnings after his or her date
of death and, if his or her death occurs prior to the time the
Member is or would upon proper application first be entitled to
receive such Social Security Benefit, such adjustment shall
nevertheless be made at the Member's date of death. If the
Beneficiary is more than 5 years younger than the Member, the
benefit payable to the Beneficiary shall be reduced by one-half of
1% for each full year the Beneficiary is more than 5 years younger.
Coverage hereunder shall be effective on the first day of the
calendar month coincident with or next following the date the Member
reaches his or her 55th birthday and completes 10 years of
Eligibility Service or, if earlier, his or her Normal Retirement
Date. In the case of a married Member coverage under Section
4.07(a)(i) shall cease on the date coverage under this Section
4.07(b)(i) is effective as set forth in the preceding sentence.
(ii) Automatic Pre-Retirement Survivor's Benefit applicable between Early
Retirement Date or Special Early Retirement Date and the Member's
Annuity Starting Date - In the case of a Member retired early under
Section 4.03 or Section 4.04 of the Plan with the payment of the
early retirement allowance deferred to commence at a date later than
his or her Early Retirement Date or Special Early Retirement Date,
whichever is applicable, the provisions of this Section 4.07(b)(ii)
shall apply to the period between his or her Early Retirement Date
or Special Early Retirement Date and his or her Annuity Starting
Date. The Member shall, at his or her Early Retirement Date or
Special Early Retirement Date, complete such forms as are required
under this Section 4.07(b)(ii) and coverage hereunder shall be
effective as of his or her Early Retirement Date or Special Early
Retirement Date.
<PAGE> 59
Page 55
In the event of the Member's death during the period in which these
provisions are in effect, the benefit payable during the life of,
and to, the Beneficiary shall be equal to one-half of the Member's
Accrued Benefit, without optional modification in accordance with
the provisions of Section 4.06, accrued to the date of his or her
Early Retirement Date or Special Early Retirement Date, whichever is
applicable, adjusted to take into account the Member's Social
Security Benefit. If the Member's death occurs prior to the time the
Member is or would upon proper application first be entitled to
receive such Social Security Benefit, such adjustment shall
nevertheless be made at the Member's date of death. If the
Beneficiary is more than 5 years younger than the Member, the
benefit payable to the Beneficiary shall be reduced by one-half of
1% for each full year the Beneficiary is more than 5 years younger.
The Automatic Pre-Retirement Survivor's Benefit shall be payable for the
life of the Beneficiary commencing on what would have been the Member's
Normal Retirement Date or date of death, if later. However, if a Member
dies prior to his or her Normal Retirement Date, the Beneficiary of the
Member may elect, by written application filed with the Retirement
Committee, to have such payments begin as of the first day of any calendar
month following the Member's date of death and prior to what would have
been the Member's Normal Retirement Date. If the Beneficiary elects to
commence payment of the Automatic Pre-Retirement Survivor's Benefit prior
to what would have been the Member's Normal Retirement Date the amount of
such benefit shall be determined in accordance with Sections 4.07(b)(i)
and (ii) above, as applicable, and without reduction for such early
commencement.
<PAGE> 60
Page 56
Notwithstanding the foregoing, in the event the Member's Beneficiary is
someone other than his or her spouse, payment of the automatic
Pre-Retirement Survivor's Benefit shall commence within one year of the
Member's date of death and in the event such commencement date is prior to
the 55th anniversary of the Member's birth, the benefit payable to the
Beneficiary shall be of Equivalent Actuarial Value to the benefit
otherwise payable hereunder to the Beneficiary on the date the Member
would have attained age 55.
(c) Optional Supplemental Pre-Retirement Survivor's Benefit
(i) Optional Supplemental Pre-Retirement Survivor's Benefit applicable
before a Member retires under the provisions of Section 4.01,
Section 4.02, Section 4.03 or Section 4.04 - A Member, who has
reached the 65th anniversary of his or her birth or who has reached
the 55th anniversary of his or her birth and completed 10 years of
Eligibility Service, may elect to receive a reduced retirement
allowance upon his or her retirement in order to provide that, if he
or she should die after his or her election becomes effective but
before he or she retires under the provisions of Section 4.01,
Section 4.02, 4.03 or 4.04 or reaches his or her Annuity Starting
Date pursuant to the provisions of Section 4.02(d), a benefit shall
be paid to the Beneficiary designated by him or her in accordance
with the following terms and conditions.
The Member may elect to reduce the retirement allowance to which he
or she would otherwise be entitled at retirement under Section 4.01,
4.02, 4.03 or 4.04 by one-half of 1% per year for each year between
the date on which the election becomes effective and
<PAGE> 61
Page 57
the earliest of the Member's Early Retirement Date, Special Early
Retirement Date, Annuity Starting Date, or the date the election is
revoked as provided in Section 4.07(i).
If the Member makes such an election and dies before he or she
retires under the provisions of Section 4.01, 4.02, 4.03 or 4.04,
the benefit payable during the life of, and to, the Beneficiary
shall be equal to 25% of the Member's Accrued Benefit without
optional modification in accordance with the provisions of Section
4.06, accrued to the date of his or her death adjusted (1) to take
into account the Member's Social Security Benefit and (2) as
provided below. The Social Security Benefit shall be determined on
the assumption that the Member had no earnings after his or her date
of death and, if his or her death occurs prior to the time the
Member is or would upon proper application first be entitled to
receive such Social Security Benefit, such adjustment shall
nevertheless be made at the Member's date of death. The benefit
payable to the Beneficiary shall be reduced by one-half of 1% per
year for each year between the date on which the election became
effective and the date of the Member's death. If the Beneficiary is
more than 5 years younger than the Member, the benefit payable to
the Beneficiary shall be further reduced by one-half of 1% for each
full year the Beneficiary is more than 5 years younger.
If the Member makes an election under this Section 4.07(c)(i) at or
prior to the time he or she is first eligible to do so, it shall
become effective on the first day of the calendar month coincident
with or next following the date the Member reaches his or her 55th
birthday and completes 10 years of Eligibility Service or, if
earlier, his or her Normal Retirement Date. A Member will be deemed
to have waived coverage under this Section 4.07(c)(i) if he or
<PAGE> 62
Page 58
she does not file the appropriate forms with the Retirement
Committee when first eligible to do so. If the Member does not make
such election until after he or she is first eligible to do so, it
shall become effective one year after the first day of the calendar
month coincident with or next following (1) the date the notice is
received by the Retirement Committee or (2) the date specified in
such notice, if later.
(ii) Optional Supplemental Pre-Retirement Survivor's Benefit applicable
between Early Retirement Date or Special Early Retirement Date and
the Member's Annuity Starting Date - In the case of a Member retired
early under the provisions of Section 4.03 or Section 4.04 of the
Plan with the payment of the early retirement allowance deferred to
commence at a date later than his or her Early Retirement Date or
Special Early Retirement Date, the provisions of this Section
4.07(c)(ii) shall apply to the period between his or her Early
Retirement Date or Special Early Retirement Date and his or her
Annuity Starting Date.
The Member may elect to reduce the early retirement allowance to
which he or she would otherwise be entitled under Section 4.03 or
Section 4.04 by one-half of 1% per year for each year between his or
her Early Retirement Date or Special Early Retirement Date and the
earlier of the date the election is revoked pursuant to Section
4.07(i) or his or her Annuity Starting Date.
If the Member makes such an election and dies during the period the
election is in effect, the benefit payable during the life of, and
to, his or her Beneficiary shall be equal to 25% of the Member's
Accrued Benefit, without optional modification in accordance with
the
<PAGE> 63
Page 59
provisions of Section 4.06, accrued to his or her Early Retirement
Date or Special Early Retirement Date, adjusted (1) to take into
account the Member's Social Security Benefit and (2) as provided
below. If the Member's death occurs prior to the time the Member is
or would upon proper application first be entitled to receive such
Social Security Benefit, such adjustment shall nevertheless be made
at the Member's date of death. The benefit payable to the
Beneficiary shall be reduced by one-half of 1% per year for each
year between the date on which the election became effective and the
date of the Member's death. If the Beneficiary is more than 5 years
younger than the Member, the benefit payable to the Beneficiary
shall be further reduced by one-half of 1% for each full year the
Beneficiary is more than 5 years younger.
The Member shall, at his or her Early Retirement Date or Special
Early Retirement Date, complete such forms as are required under
this Section 4.07(c)(ii) and, if he or she so elects, coverage
hereunder shall be effective as of his or her Early Retirement Date
or Special Early Retirement Date. A Member will be deemed to have
waived coverage under this Section 4.07(c)(ii) if he or she does not
file the appropriate forms with the Retirement Committee at his or
her Early Retirement Date or Special Early Retirement Date. If the
Member subsequently makes an election hereunder, it shall become
effective one year after the first day of the calendar month
coincident with or next following (1) the date the notice is
received by the Retirement Committee or (2) the date specified in
such notice, if later.
The optional Supplemental Pre-Retirement Survivor's Benefit shall be
payable for the life of the Beneficiary commencing on what would have been
the Member's Normal Retirement Date or date
<PAGE> 64
Page 60
of death, if later. However, if a Member dies prior to his or her Normal
Retirement Date, the Beneficiary may elect, by written application filed
with the Retirement Committee, to have such payments begin as of the first
day of any calendar month coincident with or next following the Member's
date of death and prior to what would have been the Member's Normal
Retirement Date. If the Beneficiary elects to commence payment of the
optional Supplemental Pre-Retirement Survivor's Benefit prior to what
would have been the Member's Normal Retirement Date and after what would
have been the 55th anniversary of the Member's birth, the amount of such
benefit shall be determined in accordance with Section 4.07(c)(i) and (ii)
above, as applicable and without reduction for such early commencement. If
the Beneficiary elects to commence payment of the optional Supplemental
Pre-Retirement Survivor's Benefit prior to what would have been the 55th
anniversary of the Member's birth, the benefit payable to the Beneficiary
shall be of Equivalent Actuarial Value to the benefit otherwise payable to
Beneficiary on the date the Member would have attained age 55.
Notwithstanding any foregoing provision to the contrary, payment of the
optional Supplemental Pre-Retirement Survivor Benefit must commence as of
the same date payment of the Automatic Pre-Retirement Survivor Benefit
commences.
Notwithstanding the foregoing, in the event the Member's Beneficiary is
someone other than his or her spouse, payment of the optional Supplemental
Pre-Retirement Survivor's Benefit shall commence within one year of the
Member's date of death and in the event such commencement date is prior to
the 55th anniversary of the Member's birth, the benefit payment to the
Beneficiary shall be of Equivalent Actuarial Value to the benefit
otherwise payable hereunder to the Beneficiary on the date the Member
would have attained age 55.
<PAGE> 65
Page 61
(d) Notwithstanding any provision of Section 4.07(b) or Section 4.07(c) to the
contrary, in no event shall the sum of the Automatic Pre-Retirement
Survivor's Benefit payable under the provisions of Section 4.07(b) and the
optional Supplemental Pre-Retirement Survivor's Benefit payable under the
provisions of Section 4.07(c) to a Beneficiary be less than the amount of
benefit the spouse would have received if the retirement allowance to
which the Member was entitled at his or her date of death (i) had
commenced on the date the spouse elects to have such Pre-Retirement
Survivor's Benefit payments commence, (ii) in the form of an Automatic
Joint and Survivor Annuity under Section 4.06(a)(i), and (iii) the Member
had died immediately thereafter. However, in lieu of the Automatic Joint
and Survivor Annuity referred to in the preceding sentence, the 80/80
Spouse's Annuity Option described in Section 4.06(b)(ii) shall be used to
compute the amount payable to the spouse if, within the 90 day period
prior to his or her Annuity Starting Date, the Member had elected such
optional form of payment.
(e) Benefits payable to an estate or trust - If a Member's Beneficiary under
this Section 4.07 is his or her estate or a trust, the benefits otherwise
payable under Section 4.07(b), and, if elected, under Section 4.07(c)
shall be commuted into a single lump sum amount, which amount shall be
determined by multiplying the benefits otherwise payable by the
appropriate factor in Tables 4 or 5 of Appendix A and calculated by
assuming the Beneficiary had been a person of the same age as the Member
at the Member's date of death. In no event shall the amount of the lump
sum be less than the amount required by applicable law. The payment of
such single lump sum amount shall represent the full and total payment of
all benefits due under the Plan. The Retirement Committee shall resolve
any questions arising hereunder on a basis uniformly applicable to all
Members similarly situated.
<PAGE> 66
Page 62
(f) If the Member's Beneficiary dies during the period coverage is effective
under Sections 4.07(b) and Section 4.07(c), the Beneficiary designation
shall thereby be canceled. However, coverage under Section 4.07(b) and, if
elected, under Section 4.07(c) shall nevertheless continue in full effect.
The Member's Beneficiary thereafter shall be in accordance with his or her
subsequent designation of a new Beneficiary or in accordance with the term
"Beneficiary" as defined herein.
If the Member's Beneficiary is his or her spouse and if the Member's
marriage to said spouse is legally dissolved by a divorce decree, the
Beneficiary designation under Sections 4.07(b) and 4.07(c) shall remain in
effect until a subsequent Beneficiary designation is submitted by the
Member to the Retirement Committee or until the Member remarries. Coverage
under Section 4.07(b) and, if elected, under Section 4.07(c) shall
continue in full effect.
A Member may change his or her Beneficiary designation at any time after
receiving the written explanation described in Section 4.07(g), subject to
Spousal Consent. Any such change shall become effective on the first day
of the calendar month coincident with or next following the (i) date the
notice of change is received by the Retirement Committee or (ii) the date
specified in such notice, if later, and the original designation shall
remain in effect until such date.
(g) The Retirement Committee shall furnish to each Member a written
explanation in non-technical language which describes (i) the terms and
conditions of the Automatic Pre-Retirement Survivor's Benefit and the
Optional Supplemental Pre-Retirement Survivor's Benefit, (ii) the Member's
right to make an election to designate a Beneficiary other than his or her
spouse and the effect of such
<PAGE> 67
Page 63
election, (iii) the right to revoke, prior to the Annuity Starting Date,
such designation and the effect of such revocation, and (iv) the rights of
the Member's spouse, if any. The Retirement Committee shall furnish this
written explanation to each Member during the period beginning one year
prior to the earlier of (i) the date the Member retires pursuant to the
provision of Section 4.04(a)(ii), (ii) the date the Member reaches the
55th anniversary of his or her birth and completes 10 years of Eligibility
Service, or (iii) in the Member's Normal Retirement Date, and ending
within one year after such date.
(h) A Member may revoke an election made under Section 4.07(c) at any time
prior to his or her Annuity Starting Date. There shall be no further
reduction to the Member's retirement allowance for any period during which
an election under Section 4.07(c) is not in effect. The Member may make a
new election at any time thereafter and any subsequent election shall
become effective one year after the first day of the calendar month
coincident with or next following the (i) date the notice is received by
the Retirement Committee or (ii) the date specified in such notice, if
later.
If the Member dies prior to the time an election under Section 4.07(c)
becomes effective, the election shall thereby be canceled.
Any designation of a Beneficiary and any election made under Section 4.07
(including any waiver or revocation of either of them) shall be made on a
form approved by and filed with the Retirement Committee and in accordance
with the term "Beneficiary" as defined in this Section 4.07.
<PAGE> 68
Page 64
4.08 Maximum benefits
(a) The maximum annual postponed, normal, standard early or special early
retirement allowance, death in service benefit, or vested benefit payable
under the Plan in the form of a life annuity when added to any pension
attributable to contributions of the Company or an Associated Company
provided to the Member under any other qualified defined benefit Plan
payable in the form of a life annuity (collectively referred to in this
Section as "retirement allowance"), shall be equal to the lesser of:
(i) $90,000 adjusted in accordance with regulations issued under Section
415 of the Internal Revenue Code by the Secretary of the Treasury or
his or her delegate; provided, however, that each year in which such
an adjustment is made, it shall not become effective prior to
January 1 of such year, or
(ii) the Member's average annual remuneration during the three
consecutive years of service with Company or Associated Company
affording the highest such average or during all of the years of
such service if less than three years;
provided that, if a Member's total years of membership in the Plan and the
Prior Salaried Plan are less than 10 years, the maximum annual retirement
allowance in subparagraph (i) above shall be multiplied by the ratio which
the Member's total years of membership bears to 10. If the Member has less
than 10 years of service with the Company or any Associated Company, the
maximum annual retirement allowance provided in subparagraph (ii) shall be
multiplied by the ratio which the Member's total years of service with the
Company or any Associated Company bears to 10.
If the Member's retirement allowance is payable in the form of joint and
survivor annuity which constitutes a qualified joint and survivor annuity
as defined in Section 417 of the Code, the
<PAGE> 69
Page 65
modification of the retirement allowance for that form of payment shall be
made before the application of the maximum limitation, and, as so
modified, shall be subject to such limitation. Effective as of September
1, 1995, if the Member's retirement allowance is payable in a form that is
neither a life annuity for the life of the Member nor in the form of a
qualified joint and survivor annuity as defined in Section 417 of the
Code, the maximum retirement allowance payable in clause (i) or clause
(ii) above shall be of Equivalent Actuarial Value to the maximum benefit
payable as a life annuity, such Equivalent Actuarial Value to be
calculated using the Plan's factors for computing optional benefits, or if
less, using factors calculated from the IRS Mortality Table, if
applicable, and either the IRS Interest Rate if the benefit is subject to
the provisions of Section 417(e)(3) of the Code or 5 percent otherwise.
(b) If the retirement allowance begins before the Member's Social Security
Retirement Age but on or after his or her 62nd birthday, the maximum
retirement allowance in subparagraph (i) of paragraph (a) shall be reduced
by 5/9 of one percent for each of the first 36 months plus 5/12 of one
percent for each additional month by which the Member is younger than the
Social Security Retirement Age at the date his or her retirement allowance
begins. If the retirement allowance begins before the Member's 62nd
birthday, the maximum retirement allowance in subparagraph (i) of
paragraph (a) shall be of Equivalent Actuarial Value to the maximum
benefit payable to age 62 as determined in accordance with the preceding
sentence.
If the retirement allowance begins after the Member's Social Security
Retirement Age, the maximum retirement allowance in subparagraph (i) of
paragraph (a) shall be of Equivalent Actuarial Value to that maximum
benefit payable at the Social Security Retirement Age. Effective
<PAGE> 70
Page 66
September 1, 1995, for purposes of this paragraph (b), Equivalent
Actuarial Value shall be determined on the basis of the factors in Table 7
as in effect on that date.
As of January 1 of each calendar year commencing on or after January 1,
1988, the dollar limitation as determined by the Commissioner of Internal
Revenue for that calendar year shall become effective as the maximum
permissible dollar amount of retirement allowance payable under the Plan
during the calendar year, including any retirement allowance payable to
Members who retired prior to that calendar year, in lieu of the dollar
amount in sub-paragraph (i) of paragraph (a).
(c) In the case of a Member who is participating in the Rayonier Inc.
Investment and Savings Plan for Salaried Employees or any other defined
contribution plan or plans of the Company or Associated Company, the
maximum benefit limitation shall not exceed the adjusted limitation
computed as follows:
(i) Determine the "defined contribution fraction" as set forth in
sub-paragraph (i) of the following paragraph (d).
(ii) Subtract the result of (i) from one (1.0) with the result not to be
less than zero.
(iii) Multiply the dollar amount in Section 4.08(a)(i) by 1.25.
(iv) Multiply the amount described in Section 4.08(a)(ii) by 1.4.
(v) Multiply the lesser of the result of (iii) or the result of (iv) by
the result of (ii) to determine the adjusted maximum benefit
limitation applicable to the Member.
<PAGE> 71
Page 67
(d) For purposes of this Section 4.08(d)
(i) The "defined contribution fraction" for a Member who is
participating in the Rayonier Inc. Investment and Savings Plan for
Salaried Employees or any other defined contribution plan or plans
of the Company or an Associated Company shall be a fraction, the
numerator of which is the sum of the following:
(1) the Company's and Associated Company's contributions credited
to the Member's accounts under all defined contribution plans
(whether or not terminated) ever maintained by the Company or
an Associated Company, including the amount of any
contribution made on a Member's behalf on a salary reduction
basis under any such plan qualified under Section 401(k) of
the Internal Revenue Code,
(2) any forfeitures allocated to his or her accounts under such
plan or plans, but reduced by any amount permitted by
regulations promulgated by the Commissioner of Internal
Revenue; and the denominator of which is the lesser of the
following amounts determined for each year of the Member's
Eligibility Service:
(3) 1.25 multiplied by the maximum dollar amount allowed by law
for that year; or
(4) 1.4 multiplied by 25% of the Member's remuneration for that
year.
(ii) a "defined contribution plan" means a qualified pension plan which
provides for an individual account for each participant and for
benefits based solely upon the amount contributed to the
participant's account, and any income, expenses, gains and losses,
and any forfeitures of accounts of other participants which may be
allocated to that participant's accounts, subject to (iii) below;
<PAGE> 72
Page 68
(iii) a "defined benefit plan" means any qualified pension plan which is
not a defined contribution plan; however in the case of a defined
benefit plan which provides a benefit which is based partly on the
balance of the separate account of a participant, that plan shall be
treated as a defined contribution plan to the extent benefits are
based on the separate account of a participant and as a defined
benefit plan with respect to the remaining portion of the benefits
under the plan; and
(iv) the term "remuneration" for purposes of this Section 4.08 with
respect to any Member shall mean the wages, salaries and other
amounts paid to such Member by the Company for personal services
actually rendered, determined after any pre-tax contributions under
a "qualified cash" or deferred arrangement (as defined under Section
401(k) of the Code and applicable regulations) or under a "cafeteria
plan (as defined under Section 125 of the Code and its applicable
regulations), and shall include, without being limited to, bonuses,
overtime payments and commissions; and shall exclude deferred
compensation, stock options and other distributions which receive
special tax benefits under the Code.
4.09 No duplication
Except as hereinafter provided, there shall be deducted from any
retirement allowance or vested benefit payable under this Plan the part of
any pension or comparable benefit, including any lump sum payment,
provided by employer contributions which Rayonier Inc., any Participating
Unit, (including any former Participating Unit divested by Rayonier Inc.),
any Associated Company or any affiliate of the Company is obligated to pay
or has paid to or under any defined benefit plan or other agreement which
provides for benefits comparable to those benefits paid under a defined
benefit plan (except for any pension plan or other agreement which
provides for the payment of
<PAGE> 73
Page 69
that portion of any benefits accrued under the Plan but not payable from
the Plan on account of Section 1.02 or Section 4.08) with respect to any
service rendered on or after March 1, 1994 which is Benefit Service for
purposes of computation of benefits under this Plan.
4.10 Payment of benefits
(a) Unless otherwise provided under an optional benefit elected pursuant to
Section 4.06, the survivor's benefits available under Section 4.07, or the
provisions of Section 4.10(e)(ii), all retirement allowances, vested
benefits or other benefits payable under the Plan will be paid in monthly
installments as of the end of each month beginning with (i) the month in
which a Member has reached his or her Normal Retirement Date and has
retired from active service, (ii) the month in which a Member has reached
his or her Postponed Retirement Date and has retired from active service,
(iii) the month in which a Member, upon proper application, has requested
commencement of his or her vested benefit or early retirement allowance,
or (iv) the month in which benefits under an optional benefit under
Section 4.06 or the survivor's benefits under Section 4.07 become payable,
whichever is applicable. Such monthly installments shall cease with the
payment for the month in which the recipient dies. In no event shall a
retirement allowance or vested benefit be payable to a Member who
continues in or resumes active service with the Company or an Associated
Company for any period between his or her Normal Retirement Date and
Postponed Retirement Date, except as provided in Sections 4.02(d), and
4.10(e).
(b) In any case, a lump sum payment equal to the vested benefit payable under
Section 4.05 or the vested spouse's benefit payable under Section 4.07(a)
multiplied by the appropriate factor contained in Table 4, 5 or 6 of
Appendix A shall be made in lieu of any vested benefit payable to a
<PAGE> 74
Page 70
former Member or any vested spouse's benefit payable to a spouse of a
Member or a former Member, if the lump sum present value of such benefit
amounts to $3,500 ($5,000 effective January 1, 1998) or less. In no event,
however, with respect to any Member who terminates employment prior to
September 1, 1995, shall that adjustment factor produce a lump sum that is
less than the amount determined by using the interest rate assumption used
by the Pension Benefit Guaranty Corporation for valuing benefits for
determining lump sum payments under single employer plans that terminate
on January 1 of the Plan Year in which the Annuity Starting Date occurs.
With respect to any Member who terminates employment on or after September
1, 1995, the lump sum present value shall be based on the IRS Mortality
Table and the IRS Interest Rate. The lump sum payment may be made at any
time on or after the date the Member has terminated employment or died,
but in any event prior to the date his or her benefit payment would have
otherwise commenced.
In the event a Member is not entitled to any retirement allowance or
vested benefit upon his or her termination of employment, he or she shall
be deemed "cashed-out" under the provisions of this paragraph (b) as of
the date he or she terminated service.
(c) In the event that the Retirement Committee shall find that a person to
whom benefits are payable is unable to care for his or her affairs because
of illness or accident or is a minor or has died, then, unless claim shall
have been made therefor by a legal representative, duly appointed by a
court of competent jurisdiction, the Retirement Committee may direct that
any benefit payment due him or her be paid to his or her spouse, a child,
a parent or other blood relative, or to a person with whom
<PAGE> 75
Page 71
he or she resides, and any such payment made shall be a complete discharge
of the liabilities of the Plan therefor.
(d) Before any benefit shall be payable to a Member, a former Member, or other
person who is or may become entitled to a benefit hereunder, such Member,
former Member, or other person shall file with the Retirement Committee
such information as it shall require to establish his or her rights and
benefits under the Plan.
(e) (i) Except as otherwise provided in this Article 4, payment of a
Member's retirement allowance or a former Member's vested benefit
shall begin as soon as administratively practicable following the
latest of (1) the Member's Normal Retirement Age or (2) the date he
or she terminates service with the Company and all Associated
Companies (but not more than 60 days after the close of the Plan
Year in which the latest of (1) or (2) occurs).
(ii) Notwithstanding anything contained in the Plan to the contrary, in
the case of a Member who owns either (1) more than five percent of
the outstanding stock of the Company or (2) stock possessing more
than five percent of the total combined voting power of all stock of
the Company, the Member's retirement allowance shall begin not later
than the April 1 following the calendar year in which he or she
attains age 70-1/2.
Payment of any other Member's retirement allowance or vested benefit
shall begin not later than April 1 of the calendar year following
the calendar year in which the Member attains age 70-1/2, provided
that such commencement of benefit payments while in active service
<PAGE> 76
Page 72
shall not be required with respect to a Member who attains age
70-1/2 prior to January 1, 1988 and who is not a five percent owner
as described above.
(f) Notwithstanding any other provision of this Article 4, all distributions
from this Plan shall conform to the regulations issued under Section
401(a)(9) of the Code, including the incidental death benefit provisions
of Section 401(a)(9)(G) of the Code. Further, such regulations shall
override any plan provision that is inconsistent with Section 401(a)(9) of
the Code.
4.11 Reemployment of former Member or retired Member
(a) Cessation of benefit payments. If a former Member or a retired Member
entitled to or in receipt of a vested benefit or retirement allowance is
reemployed by the Company or by an Associated Company as an Employee or as
other than an Employee, but not as a Non-Benefits Worker, any benefit
payments he or she is receiving shall cease, except as otherwise provided
in Section 4.02(c) and Section 4.10(e). If a former Member or a retired
Member returns to the Company or an Associated Company as a Non-Benefits
Worker, benefit payments shall continue and paragraphs (b) and (c) shall
not apply.
(b) Optional forms of pension benefits
(i) If the Member is reemployed in a capacity other than as a
Non-Benefits Worker any previous election of an optional benefit
under Section 4.06 or a survivor's benefit under Section 4.07 shall
be revoked and the terms and conditions of subparagraph (ii) of this
paragraph (b) shall apply.
<PAGE> 77
Page 73
(ii) Any Member who is at least age 55 with 10 or more years of
Eligibility Service when he or she is reemployed in a capacity other
than as a Non-Benefits Worker shall, with respect to the vested
benefit or retirement allowance earned prior to his or her
reemployment and with respect to any additional benefits earned
during reemployment, be covered by the provisions of Section 4.07(b)
-- Pre-Retirement Survivor's Benefit and be eligible to elect
coverage under Section 4.07(c) Supplemental Pre-Retirement
Survivor's Benefit. Coverage under Section 4.07(b) shall be
effective on the first day of the calendar month coincident with or
next following the date of his or her reemployment and any previous
election shall remain in effect until such date. If, within 30 days
after reemployment, the Member elects coverage under Section
4.07(c), such coverage shall be effective as of the first day of the
calendar month coincident with or next following the date of his or
her reemployment. If the Member does not make an election under
Section 4.07(c) within 30 days after his or her reemployment or he
or she waives such coverage, any later election shall become
effective one year after the first day of the calendar month
coincident with or next following the date notice is received by the
Retirement Committee or on the date specified in such notice, if
later.
Any Member or former Member with 5 or more years of Eligibility
Service who is less than age 55 when he or she is reemployed shall
be covered by the provisions of Sections 4.07(a)(i) -- Automatic
Vested Spouse's Benefit until he or she attains age 55 and such
coverage shall be effective on the first day of the calendar month
coincident with or next following the date of his or her
reemployment and any previous election shall remain in effect until
such date. Such former Member and any other Member or former Member
<PAGE> 78
Page 74
shall be covered by the provisions of Section 4.07(b) --
Pre-Retirement Survivor's Benefit and shall be eligible to elect
coverage under Section 4.07(c) Supplemental Pre-Retirement
Survivor's Benefit upon the later of the date he or she attains age
55, the date he or she completes 10 years of Eligibility Service, or
his or her Normal Retirement Date, and such coverage shall be in
accordance with the provisions of such Sections and shall apply with
respect to his or her retirement allowance or vested benefit earned
prior to his or her reemployment, as well as any additional benefits
earned during reemployment.
(c) Benefit payments at subsequent termination or retirement
(i) In accordance with the procedure established by the Retirement
Committee on a basis uniformly applicable to all Members similarly
situated, upon the subsequent retirement of a Member in service
after his or her Normal Retirement Date, payment of such Member's
retirement allowance shall resume no later than the third month
after the final month during the reemployment period in which he or
she is credited with at least eight days of service.
(ii) Upon the subsequent retirement or termination of employment of a
retired or former Member, the Retirement Committee shall, in
accordance with rules uniformly applicable to all Members similarly
situated, determine the amount of vested benefit or retirement
allowance which shall be payable to such Member at such subsequent
retirement or termination. Such vested benefit or retirement
allowance shall not be less than the sum of (1) the original amount
of vested benefit or retirement allowance previously earned by such
Member in accordance with the terms of the Plan in effect during
such previous employment adjusted to reflect the election of any
survivor's benefits pursuant to
<PAGE> 79
Page 75
Section 4.07(a)(ii) or 4.07(c) and reduced by an amount of
Equivalent Actuarial Value to the benefits, if any, he or she
received before the earlier of the date of his or her restoration to
service or his or her Normal Retirement Date and (2) any additional
vested benefit or retirement allowance earned during his or her
period of reemployment, such amounts to be adjusted to reflect the
election during reemployment of any survivor's benefits pursuant to
Section 4.07(a)(ii) or 4.07(c). Notwithstanding anything to the
contrary contained in this Plan, with respect to an Employee who has
incurred a break in service, the vested benefit or retirement
allowance for Benefit Service credited prior to the date of
reemployment shall not be re-calculated or increased unless the
period of the Member's break in service is less than the greater of
(1) five years or (2) the service rendered prior to such break and
until the Member, regardless of his or her vested status, has
completed at least twelve months of Eligibility Service following
his or her reemployment and, in such event, the re-calculated vested
benefit or retirement allowance, prior to any optional modification
in accordance with the provisions of Section 4.06, shall be reduced
by an amount determined by dividing the sum of any payments
previously received by the former Member or retired Member before
the earlier of his or her restoration to service or his or her
Normal Retirement Date by the appropriate factor contained in Table
5 of Appendix A; provided that no such reduction shall reduce such
retirement allowance or vested benefit below the amount determined
pursuant to clause (1) of the preceding sentence.
(d) Questions relating to reemployment of former Members or retired Members.
If, at subsequent termination of employment or retirement, any question
shall arise under this Section 4.11 as to the calculation or
re-calculation of a reemployed former Member's or retired Member's vested
benefit
<PAGE> 80
Page 76
or retirement allowance or election of an optional form of benefit under
the Plan, such question shall be resolved by the Retirement Committee on a
basis uniformly applicable to all Members similarly situated.
4.12 Top-heavy provisions
(a) The following definitions apply to the terms used in this Section:
(i) "applicable determination date" means the last day of the preceding
Plan Year;
(ii) "top-heavy ratio" means the ratio of (A) the present value of the
cumulative Accrued Benefits under the Plan for key employees to (B)
the present value of the cumulative Accrued Benefits under the Plan
for all key employees and non-key employees; provided, however, that
if a key employee has not performed services for the Company at any
time during the 5-year period ending on the applicable determination
date, any Accrued Benefit for such individual (and any account
balances of such individual) shall not be taken into account;
(iii) "applicable valuation date" means the date within the preceding Plan
Year as of which annual Plan costs are or would be computed for
minimum funding purposes;
(iv) "key employee" means an Employee determined to be a "key employee"
in accordance with the provisions of Section 416(i)(1) and (5) of
the Code and any regulations thereunder, and, where applicable, on
the basis of the Employee's remuneration (defined as set forth in
Section 4.08(d)(iv) of the Plan except that any pre-tax
contributions under a "qualified cash or deferred arrangement as
defined in Section 401(k) of the Code and its applicable
regulations, or under a "cafeteria plan" as defined in Section 125
of the Code
<PAGE> 81
Page 77
and its applicable regulations shall be included) from the Company
or an Associated Company;
(v) "non-key employee" means any employee who is not a key employee;
(vi) "average remuneration" means the average annual remuneration of a
Member for the five consecutive years of his or her Eligibility
Service during which he or she received the greatest aggregate
remuneration from the Company or Associated Company, excluding any
remuneration for service after the last Plan Year with respect to
which the Plan is top-heavy;
(vii) "required aggregation group" means each other qualified plan of the
Company or an Associated Company (including plans that terminated
within the five-year period ending on the determination date) in
which there are members who are key employees or which enables the
Plan to meet the requirements of Section 401(a)(4) or 410 of the
Code; and
(viii)"permissive aggregation group" means each plan in the required
aggregation group and any other qualified plan(s) of the Company or
an Associated Company in which all members are non-key employees, if
the resulting aggregation group continues to meet the requirements
of Sections 401(a)(4) and 410 of the Code.
(b) For purposes of this Section 4.12, the Plan shall be "top-heavy" with
respect to any Plan Year if, as of the applicable determination date, the
top-heavy ratio exceeds 60 percent. The top-heavy ratio shall be
determined as of the applicable valuation date in accordance with Section
416(g)(3) and (4)(B) of the Code on the basis of the same mortality and
interest rate assumptions used to value the Plan. For purposes of
determining whether the Plan is top-heavy, the present value of Accrued
Benefits under the Plan will be combined with the present value of accrued
benefits or
<PAGE> 82
Page 78
account balances under each other plan in the required aggregation group,
and, in the Company's discretion, may be combined with the present value
of accrued benefits or account balances under any other qualified plan(s)
in the permissive aggregation group. The Accrued Benefit of a non-key
employee under the Plan or any other defined benefit plan in the
aggregation group shall be (i) determined under the method, if any, that
uniformly applies for accrual purposes under all plans maintained by the
Company or an Associated Company or (ii) if there is no such method, as if
such benefit accrued not more rapidly than the slowest accrual rate
permitted under the fractional rule described in Section 411(b)(i)(C) of
the Code.
(c) The following provisions shall be applicable to Members for any Plan Year
with respect to which the Plan is top-heavy:
(i) In lieu of the vesting requirements specified in Section 4.05, the
following vesting schedule shall apply:
<TABLE>
<CAPTION>
Years of Eligibility Service Percentage Vested
---------------------------- -----------------
<S> <C>
Less than 2 years 0%
2 years 20
3 years 40
4 years 60
5 or more years 100
</TABLE>
(ii) The Accrued Benefit of a Member who is a non-key employee shall not
be less than two percent of his or her "average remuneration"
multiplied by the number of years of his or her Eligibility Service,
not in excess of 10, during the Plan Years for which the Plan is
top-heavy. Such minimum benefit shall be payable at a Member's
Normal Retirement Date. If
<PAGE> 83
Page 79
payments commence at a time other than the Member's Normal
Retirement Date, the minimum Accrued Benefit shall be of Equivalent
Actuarial Value to such minimum benefit, as determined on the basis
of the actuarial assumptions stated in Section 4.14(b) above.
(iii) The multiplier "1.25" in subsections (c)(iii) and (d)(i)(3) of
Section 4.08 shall be reduced to "1.0".
(d) If the Plan is top-heavy with respect to a Plan Year and ceases to be
top-heavy for a subsequent Plan Year, the following provisions shall be
applicable:
(i) The Accrued Benefit in any such subsequent Plan Year shall not be
less than the minimum Accrued Benefit provided in Section 4.12(c)
(ii) above, computed as of the end of the most recent Plan Year for
which the Plan was top-heavy.
(ii) If a Member has completed three years of Eligibility Service on or
before the last day of the most recent Plan Year for which the Plan
was top-heavy, the vesting schedule set forth in Section 4.12(c)(i)
above shall continue to be applicable.
(iii) If a Member has completed at least two, but less than three years of
Eligibility Service on or before the last day of the most recent
Plan Year for which the Plan is top-heavy, the vesting provisions of
Section 4.05 shall again be applicable; provided, however, that in
no event shall the vested percentage of a Member's accrued benefit
be less than the percentage determined under Section 4.12(c)(i)
above as of the last day of the most recent Plan Year for which the
Plan was top-heavy.
<PAGE> 84
Page 80
4.13 Payment of Medical Benefits for Benefits for Certain Members who retire
under the Plan This Section 4.13 defines the basis of providing medical
benefits to eligible Members or their eligible dependents as defined below
for those expenses incurred by such Members or their eligible dependents
on or after the date specified by the Board of Directors.
(a) In order to be eligible for the benefits provided hereunder, a person must
be a Plan Member who retired under the Plan provisions during the period
designated by the Retirement Committee and be currently eligible for
post-retirement medical benefits under a plan maintained by the Company
and hereinafter referred to as the "Medical Plan" or be an eligible
dependent of such a Member. To the extent they are not otherwise
reimbursed from Company assets, covered medical expenses incurred during
the applicable period shown below by such a Member or his or her eligible
dependents shall be reimbursed hereunder.
(b) The level of medical benefits covered under the provisions of this Section
4.13 shall be the medical coverage in effect under the terms of the
Medical Plan. Except as provided in Article 10, such medical coverage or
benefit plan may be withdrawn or amended from time to time as the Company
shall determine.
(c) Except as provided in Section 4.13(e), all contributions made to the trust
to provide medical benefits under this Section 4.13 shall be maintained in
a separate account and such assets may not be used for or diverted to any
purpose other than to provide said medical benefits; provided, however,
none of the assets so set aside may be used to provide medical benefits
for a Member, former Member or their dependents if the Member or former
Member is a "key employee" as
<PAGE> 85
Page 81
determined in accordance with the provisions of Section 416(i)(1) and (5)
of the Internal Revenue Code. Similarly, none of the assets accumulated to
provide the retirement allowances or vested benefits set forth in the
foregoing provisions of this Article 4 may, prior to the termination of
the Plan and satisfaction of all the liabilities for such retirement
allowances or vested benefits, be used or diverted to provide medical
benefits under this Section 4.13. The assets, if any, accumulated to
provide medical benefits under this Section 4.13 may be invested pursuant
to the provisions of Article 7.
(d) It is the intention of the Company to continue providing medical benefits
under this Section 4.13 and to make contributions to the Trustee to fund
such medical benefits in such amounts as the Company shall deem necessary
or appropriate. The aggregate contributions made to fund the medical
benefits provided under this Section, when added to the actual
contributions for any life insurance protection provided under the Plan,
shall not exceed 25 percent of the total actual contributions made to the
Plan (other than contributions to fund past service credits) after the
later of the adoption or effective date of this Section. Any forfeitures
of a Member's interest in the medical benefit accounts as provided
hereunder prior to any discontinuance of medical benefits by the Board of
Directors shall be applied to reduce any subsequent Company contributions
made pursuant to this Section 4.13.
(e) Except as provided in Article 10, the Board of Directors may discontinue
providing medical benefits under this Section 4.13 for any reason at any
time, in which event the assets allocated to provide medical benefits
hereunder, if any remain, shall, to the extent they are not otherwise
reimbursed from Company assets, be used to continue medical benefits to
Members who are
<PAGE> 86
Page 82
eligible for them prior to the discontinuance date as long as any assets
remain. However, if, after the satisfaction of all medical benefits
provided hereunder, there remain any assets, the program shall be deemed
to be terminated and such remainder shall be returned to the Company, in
accordance with Section 401(h)(5) of the Code.
4.14 Transfers from Hourly Plans maintained by the Company or an Associated
Company At the discretion and direction of the Retirement Committee, the
Plan may accept from a hourly pension plan maintained by the Company or an
Associated Company which is qualified under Section 401(a) of the Code a
transfer of (i) liabilities with respect to the accrued benefit under such
hourly plan of a Member who has employment with the Company rendered
otherwise than as an Employee recognized as Benefit Service pursuant to
the provisions of Section 2.02(c) of the Plan and (ii) with respect to
such liabilities, any assets determined by the Company to be applicable.
All such transfers shall be made in accordance with the provisions of the
Code and ERISA.
4.15 Direct Rollover of Certain Distributions
Notwithstanding any other provision of this Plan, with respect to any
distribution from this Plan which is (a) payable to a "distributee" and
(b) determined by the Retirement Committee to be an "eligible rollover
distribution", such distributee may elect, at the time and in the manner
prescribed by the Retirement Committee, to have the Plan make a "direct
rollover" of all or part of such distribution to an "eligible retirement
plan" which accepts such rollover. The following definitions apply to the
terms used in this Section:
(a) a "distributee" means a Member or former Member. In addition, the
Member's or former Member's surviving spouse and the Member's or
former Member's spouse or former
<PAGE> 87
Page 83
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;
(b) an "eligible rollover distribution" is any distribution of all or
any portion of the retirement allowance or vested benefit owing to
the credit of a distributee, except that the following distributions
shall not be eligible rollover distributions: (i) any distribution
that is one of a series of substantially equal periodic payments
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, (ii) any distribution required under Section
401(a)(9) of the Code and (iii) the portion of a distribution not
includible in gross income;
(c) 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 eligible
rollover distribution; however, in the case of an eligible rollover
distribution to the Member's surviving spouse, an eligible
retirement plan is an individual retirement account or individual
retirement annuity only; and
(d) "direct rollover" means a payment by the Plan directly to the
eligible retirement plan specified by the distributee.
In the event that the provisions of this Section 4.15 or any part thereof
cease to be required by law as a result of subsequent legislation or
otherwise, this Section 4.15 or applicable part thereof shall be
ineffective without necessity of further amendment of the Plan.
<PAGE> 88
Page 84
ARTICLE 5 - ADMINISTRATION OF PLAN
5.01 The responsibility for carrying out all phases of the administration of
the Plan except those phases connected with the management of assets,
shall be placed in a Retirement Committee of not less than three persons
appointed from time to time by the Board of Directors to serve at the
pleasure of the Board of Directors. The Board of Directors may also
designate alternate members to act in the absence of the regular members.
The Board of Directors shall designate a Chairman of the Retirement
Committee from among the regular members and a Secretary who may be, but
need not be, one of its members. Any member of the Retirement Committee
may resign by delivering his or her written resignation to the Board of
Directors and the Secretary of the Retirement Committee.
5.02 The responsibility for the management of the assets of the Plan shall be
placed in a Pension Fund Trust and Investment Committee of not less than
three persons appointed from time to time by the Board of Directors to
serve at the pleasure of the Board of Directors. The Board of Directors
may also designate alternate members to act in the absence of the regular
members. The Board of Directors shall designate a Chairman of the Pension
Fund Trust and Investment Committee from among the regular members and a
Secretary who may be, but need not be, one of the members of the Pension
Fund Trust and Investment Committee. Any member of the Pension Fund Trust
and Investment Committee may resign by delivering his or her written
resignation to the Board of Directors and the Secretary of the Pension
Fund Trust and Investment Committee.
<PAGE> 89
Page 85
5.03 The Retirement Committee and the Pension Fund Trust and Investment
Committee (hereinafter collectively referred to as the ("Committees") are
designated as named fiduciaries within the meaning of Section 402(a) of
the Employee Retirement Income Security Act of 1974.
5.04 The Committees shall hold meetings upon such notice, at such place or
places, and at such time or times as each may respectively determine. The
action of at least a majority of the members, or alternate members, of a
Committee expressed from time to time by a vote at a meeting or in writing
without a meeting shall constitute the action of that Committee and shall
have the same effect for all purposes as if assented to by all members of
such Committee at the time in office. No member of either Committee shall
receive any compensation for his or her service as such.
5.05 Each Committee may authorize one or more of its number or any agent to
execute or deliver any instrument or make any payment on its behalf; may
retain counsel, employ agents and such clerical, accounting and actuarial
services as it may require in carrying out the provisions of the Plan for
which it has responsibility; may allocate among its members or to other
persons all or such portion of its duties hereunder as it, in its sole
discretion, shall decide.
5.06 The Pension Fund Trust and Investment Committee shall be responsible for
managing the assets under the Plan. If it deems such action to be
advisable, the Committee, subject to the provisions of the trust
instrument(s) adopted for use in implementing the Plan pursuant to Section
7.01 hereof, may:
<PAGE> 90
Page 86
(a) provide direction to the trustee(s) thereunder, including, but not
by way of limitation, the direction of investment of all or part of
the Plan assets and the establishment of investment criteria, and
(b) appoint and provide for use of investment advisors and investment
managers.
In discharging its responsibility, the Committee shall evaluate and
monitor the investment performance of the trustee(s) and investment
manager, if any.
5.07 Subject to the limitations of the Plan, the Retirement Committee from time
to time shall establish rules or regulations for the administration of the
Plan and the transaction of its business. The Retirement Committee shall
have full discretionary authority, except as to matters which the Board of
Directors from time to time may reserve to itself, to interpret the Plan
and to make factual determinations regarding any and all matters arising
hereunder, including but not limited to, the right to determine
eligibility for benefits and to construe the terms of the Plan including
the right to remedy possible ambiguities, inequities, inconsistencies or
omissions. The Retirement Committee shall also have the right to exercise
powers otherwise exercisable by the Board of Directors hereunder to the
extent that the exercise of such powers does not involve the management of
Plan assets. In addition, the Retirement Committee shall have the further
right to exercise such powers as may be delegated to the Retirement
Committee by the Board of Directors.
Subject to applicable Federal and State Law, all interpretations,
determinations and decisions of the Retirement Committee or the Board of
Directors in respect of any matter hereunder shall be final, conclusive
and binding on all parties affected thereby.
<PAGE> 91
Page 87
5.08 The members of the Committees shall use that degree of care, skill,
prudence and diligence in carrying out their duties 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. A member
of either Committee shall not be liable for the breach of fiduciary
responsibility of another fiduciary unless:
(a) the person participates knowingly in, or knowingly undertakes to
conceal, an act or omission of such other fiduciary, knowing such
act or omission is a breach; or
(b) by the person's failure to discharge such person's duties solely in
the interest of the Members and other persons entitled to benefits
under the Plan, for the exclusive purpose of providing benefits and
defraying reasonable expenses of administering the Plan not met by
the Company, the person has enabled such other fiduciary to commit a
breach; or
(c) the person has knowledge of a breach by such other fiduciary and
does not make reasonable efforts to remedy the breach; or
(d) if the Committee of which the person is a member improperly
allocates responsibilities among its members or to others and the
person fails to review prudently such allocation.
5.09 The Retirement Committee, the Pension Fund Trust and Investment Committee,
and the Company shall be "named fiduciaries" within the meaning of Section
402(a) of ERISA.
<PAGE> 92
Page 88
ARTICLE 6 - CONTRIBUTIONS
6.01 It is the intention of the Company to continue the Plan and make regular
contributions to the Trustee each year in such amounts as are necessary to
maintain the Plan on a sound actuarial basis and to meet minimum funding
standards as prescribed by any applicable law. However, subject to the
provisions of Article 8, the Company may reduce or suspend its
contributions for any reason at any time. Any forfeitures shall be used to
reduce the Company contributions otherwise payable, and will not be
applied to increase the benefits any Member or other person would
otherwise receive under the Plan.
6.02
(a) If a contribution is conditioned on initial qualification of the Plan
under Section 401(a) of the Code, and if the Commissioner of Internal
Revenue, on timely application made after the establishment of the Plan,
determines that the Plan is not initially so qualified, or refuses, in
writing, to issue a determination as to whether the Plan is so qualified,
said contribution shall be returned to the Company without interest. The
return shall be made within one year after the date of the final
determination of the denial of qualification. The provisions of this
paragraph (a) shall apply only if the application for the determination is
made by the time prescribed by law for filing the Company's return for the
taxable year in which the Plan was adopted, or such later date as the
Secretary of the Treasury may prescribe.
<PAGE> 93
Page 89
(b) The Company's contributions to the Plan are conditioned upon their
deductibility under Section 404 of the Code. In the event that all or part
of the Company's deductions under Section 404 of the Code for
contributions to the Plan are disallowed by the Internal Revenue Service,
the portion of the contributions to which such disallowance applies shall
be returned to the Company without interest but reduced by any investment
loss attributable to those contributions. Such return shall be made within
one year after the disallowance of deduction.
<PAGE> 94
Page 90
ARTICLE 7 - MANAGEMENT OF FUNDS
7.01 All the funds of the Plan shall be held by a Trustee or Trustees including
any member(s) of the Rayonier Inc. Pension Fund Trust and Investment
Committee, appointed from time to time by said Committee or Rayonier, in
one or more trusts under a trust instrument or instruments approved or
authorized by said Committee or Rayonier Inc. for use in providing the
benefits of the Plan and paying any expenses of the Plan not paid directly
by the Company; provided, however, that the Pension Fund Trust and
Investment Committee may, in its discretion, also enter into any type of
contract with any insurance company or companies selected by it for
providing benefits under the Plan.
7.02 Prior to the satisfaction of all liabilities with respect to persons
entitled to benefits, except for the payment of expenses, no part of the
corpus or income of the funds shall be used for, or diverted to, purposes
other than for the exclusive benefit of Members and other persons who are
or may become entitled to benefits hereunder, under the Prior Salaried
Plan, or under any trust instrument or under any insurance contract made
pursuant to this Plan.
7.03 Subject to applicable Federal and State law, no person shall have any
interest in or right to any part of the corpus or income of the funds,
except as and to the extent expressly provided in the Plan and in any
trust instrument or under any insurance contract made pursuant to this
Plan.
<PAGE> 95
Page 91
7.04 Subject to applicable Federal and State law, the Company shall have no
liability for the payment of benefits under the Plan nor for the
administration of the funds paid over to the Trustee(s) or insurer(s)
except as expressly provided under this Plan.
7.05 Except as permitted by applicable Federal law, no part of the corpus or
income of the trust shall be invested in securities of the Company or of
any Associated Company or in real property and related personal property
which is leased to the Company or any Associated Company or in the
securities of the Trust or Trustees or their subsidiary companies, if any.
7.06 Notwithstanding any other provision of this Plan to the contrary, the
Company may recover without interest the amount of its contributions to
the Plan made on account of a mistake in fact, provided that such recovery
is made within one year after the date of such contribution.
7.07 The Pension Fund Trust and Investment Committee may, in its discretion,
appoint one or more investment managers (within the meaning of Section
3(38) of ERISA) to manage (including the power to acquire and dispose of)
all or part of the assets of the Plan, as the Investment Committee shall
designate. In that event, authority over and responsibility for the
management of the assets so designated shall be the sole responsibility of
that investment manager.
<PAGE> 96
Page 92
ARTICLE 8 - CERTAIN RIGHTS AND LIMITATIONS
The following provisions shall apply in all cases whenever a Member or any other
person is affected thereby.
8.01 Termination of the Plan
(a) The Board of Directors may terminate the Plan for any reason at any time.
In case of termination of the Plan, the rights of Members to the benefits
accrued under the Plan to the date of the termination, to the extent then
funded or protected by law, if greater, shall be nonforfeitable. The funds
of the Plan shall be used for the exclusive benefit of persons entitled to
benefits under the Plan as of the date of termination, except as provided
in Section 6.02. However, any funds not required to satisfy all
liabilities of the Plan for benefits because of erroneous actuarial
computation shall be returned to the Company except as otherwise provided
in Section 8.06. The Retirement Committee shall determine on the basis of
an actuarial valuation the share of the funds of the Plan allocable to
each person entitled to benefits under the Plan in accordance with Section
4044 of ERISA or corresponding provision of any applicable law in effect
at the time. In the event of a partial termination of the Plan, the
provisions of this Section shall be applicable only to the Members
affected by that partial termination.
(b) Plan Merger or Consolidation
The Plan may not be merged or consolidated with, nor may its assets or
liabilities be transferred to, any other plan unless each Member or other
person entitled to a benefit under the Plan would, if the resulting plan
were then terminated, receive a benefit immediately after the merger,
consolidation,
<PAGE> 97
Page 93
or transfer which is equal to or greater than the benefit he or she would
have been entitled to receive immediately before the merger,
consolidation, or transfer, if the Plan had then terminated; provided
that, subject to the provisions of Article 10 on or after the date of the
first occurrence of a Change in Control (i) no transfer of assets or
liabilities, except as specifically permitted under Section 8.01(a),
between the Plan and any Employee Benefit Plan, as hereinafter defined,
(ii) no spin-off of Plan assets or Plan liabilities to any Employee
Benefit Plan, (iii) no withdrawal of Plan assets, in the event such
withdrawal is permitted under applicable law or (iv) no merger or
consolidation of the Plan with any Employee Benefit Plan shall be
permitted.
For purposes of this Section 8.01(b), Employee Benefit Plan has the same
meaning as the term "employee benefit plan" has under Section 3(3) of
ERISA.
8.02 Limitation Concerning Highly Compensated Employees
or Highly Compensated Former Employees
(a) The provisions of this Section shall apply (i) in the event the Plan is
terminated, to any Member who is a highly compensated employee or highly
compensated former employee (as those terms are defined in Section 414(q)
of the Code) of the Company or an Associated Company and (ii) in any other
event, to any Member or former Member who is one of the 25 highly
compensated employees or highly compensated former employees of the
Company or Associated Company with the greatest compensation in any Plan
Year. The amount of the annual payments to any one of the Members or
former Member to whom this Section applies shall not be greater than an
amount equal to the payments that would be made on behalf of the Member or
former Member under a single life annuity that is of Equivalent Actuarial
Value to the sum of the Member's or former Member's Accrued Benefit and
any other benefits payable to the Member and former Member under the Plan.
<PAGE> 98
Page 94
(b) If, (i) after payment of an Accrued Benefit or other benefits to any one
of the Members or to whom this Section applies, the value of Plan assets
equals or exceeds 110 per cent of the value of current liabilities (as
that term is defined in Section 412(1)(7) of the Code) of the Plan or (ii)
the value of the Accrued Benefit and other benefits of any one of the
Members or former Members to whom this Section applies is less than one
percent of the value of current liabilities of the Plan or (iii) the value
of the Accrued Benefit and other benefits of any one of the Members or
former Members to whom this Section applies does not exceed $3,500 ($5,000
effective January 1, 1998), the provisions of paragraph (a) above will not
be applicable to the payment of benefits to the Member or former Member.
(c) Notwithstanding paragraph (a) of this Section , in the event the Plan is
terminated, the restriction of this Section shall not be applicable if the
benefits payable to any highly compensated employee and any highly
compensated former employee is limited to a benefit that is
nondiscriminatory under Section 401(a)(4) of the Code.
(d) If it should subsequently be determined by statute, court decision
acquiesced in by the Commissioner of Internal Revenue, or ruling by the
Commissioner of Internal Revenue, that the provisions of this Section are
no longer necessary to qualify the Plan under the Code, this Section shall
be ineffective without the necessity of further amendment to the Plan.
8.03 Conditions of Employment Not Affected by Plan
The establishment of the Plan shall not be construed as conferring any
legal rights upon any Employee or other person for a continuation of
employment, nor shall it interfere with the rights of
<PAGE> 99
Page 95
the Company to discharge any Employee or other person and to treat him or
her without regard to the effect which such treatment might have upon him
or her under the Plan.
8.04 Offsets - Unless the Board of Directors otherwise provides under written
rules uniformly applicable to all Employees similarly situated, the
Retirement Committee shall deduct from the amount of any retirement
allowance or vested benefit under the Plan, any amount paid or payable to
or on account of any Member under the provisions of any present or future
law, pension or benefit scheme of any sovereign government, or any
political subdivision thereof or any fund or organization or government
agency or department on account of which contributions have been made or
premiums or taxes paid by the Company, any Participating Unit, or any
Associated Company with respect to any service which is Benefit Service
for purposes of computation of benefits under the Plan; provided, however,
that pensions payable for government service or benefits under Title II of
the Social Security Act are not to be used to reduce the benefits
otherwise provided under this Plan except as specifically provided herein.
8.05 Denial of Benefits - The Retirement Committee may prescribe rules on a
basis uniformly applicable to all Employees similarly situated under which
an Employee whose employment is terminated because of dishonesty,
conviction of a felony or other conduct prejudicial to the Company may be
denied any benefit or benefits for which he or she would otherwise be
eligible under the Plan, except his or her retirement allowance pursuant
to Section 4.01 or his or her vested benefit pursuant to Section 4.05;
provided, however, that such denial is not contrary to applicable law.
<PAGE> 100
Page 96
8.06 Change in Control - In the event of a Change in Control the following
restrictions shall apply:
(a) Notwithstanding any other provision of the plan, in the event of a
Change in Control, neither the Board of Directors, its designee, the
Retirement Committee nor the Trustee may merge or consolidate the
Plan with any other plan, transfer any Plan assets to any other
retirement or welfare benefit plan, transfer any other welfare or
retirement benefit plan's liabilities to the Plan, spin-off or
split-off any part of the Plan or group of Members in the Plan, or
reduce future Plan benefits, or cause or permit the Plan to acquire
any security or real or personal property of the Company or any
Associated Company, during the five-year period commencing on the
date on which the Change in Control occurs.
(b) Notwithstanding any other provision of the Plan, in the event of a
Change in Control, neither the Board of Directors nor its designee
may, during the five-year period commencing on the date on which the
Change in Control occurs, designate any new Participating Units or
designate any new groups of Employees as eligible to participate in
the Plan.
(c) Notwithstanding any other provision of the Plan, if at any time
during the five-year period commencing on the date on which a Change
in Control occurs, the Plan is terminated, any Member who was an
Employee on the date of the Change in Control shall, if not
previously vested, become fully vested in all Plan benefits. If the
Plan has surplus assets, all of the surplus assets shall be
allocated to Plan Members who were Members as of the date on which a
Change in Control occurs (including Members who terminated
employment with entitlement to a retirement allowance and Members
who are, on the date
<PAGE> 101
Page 97
on which a Change in Control occurs, receiving a retirement
allowance) on pro rata basis, in relation to the benefits accrued
prior to the date of Change in Control and none of this surplus may
be recovered by the Company, any successor or any Associated
Company. For purposes of this Section 8.06(c) the amount of surplus
assets will be determined as part of the process of purchasing
non-participating group annuity contracts in connection with the
termination of the Plan. In purchasing such annuities, the Plan
shall seek competitive bids from at least three unrelated insurance
companies. In no event shall the increase in the Retirement
Allowance payable pursuant to this paragraph cause the retirement
allowance to exceed the limitations in Section 4.08 of the Plan.
(d) Notwithstanding any other provision of the Plan, if at any time
during the five-year period commencing on the date on which a Change
in Control occurs (i) a Substantial Reduction in Force (as
hereinafter defined) occurs or (ii) any action prohibited by
paragraph (a) or (b) of this Section 8.06 is taken, then any Member
who was an Employee on the date of the Change in Control shall, if
not previously vested, become fully vested in all Plan benefits.
Furthermore, if, as of the date either of the events described in
(i) or (ii) above occurs, the fair market value of the Plan's assets
exceeds the Plan's current liability pursuant to Section 412(l)(7)
of the Code (based on the Plan's actuarial assumptions on the date
the Change in Control occurs except that the interest rate shall be
the maximum rate permitted under Section 412 of the Code) the amount
of such excess assets shall be applied to increase, as described
below, the Accrued Benefit of all Plan Members who were Members as
of the date on which a Change in Control occurs. For purposes of
determining the increase in Accrued Benefit under this Section
8.06(d), Plan Member
<PAGE> 102
Page 98
includes both Members who are Employees as well as former Employees,
or Beneficiaries of former Employees either entitled to future
benefits or currently in receipt of Plan benefits. The Equivalent
Actuarial Value of each Plan Member's Accrued Benefit shall be
increased by the amount determined by multiplying (a) the Plan's
excess assets as defined in this Section 8.06(d) by (b) the ratio
that the Current Liability of each Plan Member bears to the sum of
the Current Liability of all Plan Members. Such increased present
value will be converted into an enhanced Accrued Benefit for each
Plan Member. In no event, however, shall such increase cause a Plan
Member's Accrued Benefit to exceed the limitation of Section 4.08 of
the Plan.
For purposes of this Section 8.06,
(i) a "Substantial Reduction in Force" shall mean the Involuntary
Separation from employment, following a Change in Control, of
the percentage of Members set forth below who were Employees
when the Change in Control occurred:
(1) 10% or more within any consecutive 12-month period.
(2) 15% or more within any consecutive 24-month period.
(3) 20% or more within any consecutive 36-month period.
(4) 25% or more within any consecutive 48-month period.
(5) 30% or more within a 60-month period; and
(ii) "Involuntary Separation" shall mean the termination of a
Member's employment with the Company as a result of Company
action such as a discharge, a resignation after a reduction in
pay, position or responsibilities, a retirement after the
Company has requested such Member to resign or retire, a
layoff, or any
<PAGE> 103
Page 99
relocation of the work location of a Member to a place more
than 35 miles from such Member's principal residence;
provided, however, that an Involuntary Separation shall not be
deemed to have occurred if a Member resigns or retires other
than in response to a Company request, or is terminated for
serious misconduct in connection with such Member's work.
(e) In the event the Internal Revenue Service makes a final
determination that the utilization of surplus assets of the Plan (or
any portion thereof) in accordance with paragraph (c) or (d) of this
Section 8.06 cannot be accomplished in any manner without
disqualifying the Plan, the Company shall utilize such assets which
cannot be so utilized to provide benefits to those Members who were
Employees on the date of the Change in Control in any manner that
the Company deems to be in the best interests of such Members and
which would not disqualify the Plan. Such utilization may include
the transfer of such assets to another employee benefit plan of the
Company, including a voluntary employees' beneficiary association as
described in Section 501(c)(9) of the Code; provided, however, that
in no event shall any such assets be transferred to any entity other
than a trust devoted exclusively to providing benefits to employees
and retirees who were Plan Members as of the date of the Change in
Control.
8.07 Prevention of Escheat - If the Retirement Committee cannot ascertain the
whereabouts of any person to whom a payment is due under the Plan, the
Retirement Committee may, no later than two years from the date such
payment is due, mail a notice of such due and owing payment to the last
known address of such person as shown on the records of the Retirement
Committee or the
<PAGE> 104
Page 100
Company. If such person has not made written claim therefor within three
months of the date of the mailing, the Retirement Committee may, if it so
elects and upon receiving advice from counsel to the Plan, direct that
such payment and all remaining payments otherwise due such person be
canceled on the records of the Plan and the amount thereof applied to
reduce the contributions of the Company. Upon such cancellation, the Plan
shall have no further liability therefor except that, in the event such
person or his or her beneficiary later notifies the Retirement Committee
of his or her whereabouts and requests the payment or payments due to him
or her under the Plan, the amount so applied shall be paid to him or her
in accordance with the provisions of the Plan.
<PAGE> 105
Page 101
ARTICLE 9 - NONALIENATION OF BENEFITS
9.01
(a) Subject to any applicable Federal and State law, no benefit under the Plan
shall be subject in any manner to anticipation, alienation, sale,
transfer, assignment, pledge, encumbrance or charge except any election to
make a contribution necessary to provide post-retirement medical benefits
under any Plan maintained by the Company and, any attempt so to do shall
be void, except as specifically provided in the Plan, nor shall any such
benefit be in any manner liable for or subject to garnishment, attachment,
execution or levy or liable for or subject to the debts, contracts,
liabilities, engagements or torts of the person entitled to such benefit.
(b) Subject to applicable Federal and State law, in the event that the
Retirement Committee shall find that any Member or other person who is or
may become entitled to benefits hereunder has become bankrupt or that any
attempt has been made to anticipate, alienate, sell, transfer, assign,
pledge, encumber or charge any of his or her benefits under the Plan,
except as specifically provided in the Plan, or if any garnishment,
attachment, execution, levy or court order for payment of money has been
issued against any of his or her benefits under the Plan, then such
benefit shall cease and terminate. In such event the Retirement Committee
shall hold or apply the payments to or for the benefit of such Member or
other person who is or may become entitled to benefits hereunder, his or
her spouse, children, parents or other blood relatives, or any of them.
(c) Notwithstanding the foregoing provisions of the Plan, payment shall be
made in accordance with the provisions of any judgment, decree, or,
domestic relations order which:
<PAGE> 106
Page 102
(i) creates for, or assigns to, a spouse, former spouse, child or other
dependent of a Member the right to receive all or a portion of the
Member's benefits under the Plan for the purpose of providing child
support, alimony payments or marital property rights to that spouse,
child or dependent,
(ii) is made pursuant to the domestic relations law of any State (as such
term is defined in Section 3(10) of ERISA,
(iii) does not require the Plan to provide any type of benefit, or any
option, not otherwise provided under the Plan, and
(iv) otherwise meets the requirements of Section 206(d) of ERISA to be a
"qualified domestic relations order" as determined by the Retirement
Committee.
If the lump sum present value of any series of payments made under the
criteria set forth in paragraphs (i) through (iv) above amounts to $3,500
($5,000 effective January 1, 1998) or less, then a lump sum payment of
Equivalent Actuarial Value (determined in the manner described in Section
4.10) shall be made in lieu of the series of payments.
(d) The Retirement Committee shall resolve any questions arising under this
Article 9 on a basis uniformly applicable to all persons similarly
situated.
<PAGE> 107
Page 103
ARTICLE 10 - AMENDMENTS
10.01 Subject to Section 10.02, the Board of Directors or its delegate reserves
the right at any time and from time to time, and retroactively if deemed
necessary or appropriate to conform with governmental regulations or other
policies, to modify or amend in whole or in part any or all of the
provisions of the Plan; provided that no such modification or amendment
shall make it possible for any part of the funds of the Plan to be used
for, or diverted to, purposes other than for the exclusive benefit of
Members, spouses, or contingent annuitants or other persons who are or may
become entitled to benefits hereunder prior to the satisfaction of all
liabilities with respect to them; and that no modification or amendment
shall be made which has the effect of decreasing the Accrued Benefit of
any Member or of reducing the nonforfeitable percentage of the Accrued
Benefit of a Member attributable to Company contributions below that
nonforfeitable percentage thereof computed under the Plan as in effect on
the later of the date on which the amendment is adopted or becomes
effective. Any action to amend the Plan by the Board of Directors shall be
taken in such manner as may be permitted under the by-laws of the Company
and any action to amend the Plan by a delegate of the Board of Director
shall be in writing.
10.02 Notwithstanding the above, on or after the date a Change in Control first
occurs, Section 8.01, Section 8.06 and this Article 10, as they pertain to
events occurring on or after the date such Change in Control occurs, may
not be further amended by the Board of Directors without written consent
of not less than three- quarters (3/4) of the Members and other persons
then receiving to benefits under the Plan.
<PAGE> 108
APPENDIX A
TABLE 4
Factors to Determine Lump Sum Payments
----------------------------------------------
: : :
AGE : FACTOR : AGE : FACTOR
: : :
----------------------------------------------
25 : 0.989 : 41 : 3.439
26 : 1.069 : 42 : 3.720
27 : 1.155 : 43 : 4.024
28 : 1.249 : 44 : 4.353
29 : 1.350 : 45 : 4.710
30 : 1.459 : 46 : 5.097
31 : 1.577 : 47 : 5.516
32 : 1.705 : 48 : 5.972
33 : 1.843 : 49 : 6.466
34 : 1.992 : 50 : 7.002
35 : 2.153 : 51 : 7.585
36 : 2.327 : 52 : 8.218
37 : 2.516 : 53 : 8.907
38 : 2.720 : 54 : 9.657
39 : 2.941 : 55 : 10.474
40 : 3.180 : :
----------------------------------------------
Note: Above factors represent present value of
annuity of $1.00 per annum with payments
deferred to commence at age 55.
<PAGE> 109
APPENDIX A
TABLE 5
Factors to Determine Lump Sum Payments
----------------------
:
AGE : FACTOR
:
----------------------
55 : 10.474
56 : 10.323
57 : 10.165
58 : 10.001
59 : 9.829
60 : 9.651
61 : 9.467
62 : 9.278
63 : 9.084
64 : 8.885
65 : 8.682
66 : 8.476
67 : 8.268
68 : 8.057
69 : 7.845
70 : 7.631
71 : 7.417
72 : 7.201
73 : 6.985
74 : 6.768
75 : 6.552
----------------------
Note: Above factors represent
present value of annuity
of $1.00 per annum.
<PAGE> 110
APPENDIX A
TABLE 6
Factors to Determine Lump Sum Payments
-----------------------------------------
: FACTOR TO BE APPLIED TO
: --------------------------------
: Benefit : Benefit
AGE : Payable : Payable
: To Age 62 : After Age 62
-----------------------------------------
55 : 5.314 : 5.160
56 : 4.724 : 5.599
57 : 4.086 : 6.079
58 : 3.397 : 6.604
59 : 2.649 : 7.180
60 : 1.839 : 7.812
61 : 0.958 : 8.509
62 : : 9.278
63 : : 9.084
64 : : 8.885
65 : : 8.682
66 : : 8.476
67 : : 8.268
68 : : 8.057
69 : : 7.845
70 : : 7.631
71 : : 7.417
72 : : 7.201
73 : : 6.985
74 : : 6.768
75 : : 6.552
-----------------------------------------
Note: Above factors represent present
value of annuity of $1.00 per
annum.
<PAGE> 111
APPENDIX A
TABLE 7
Factors to Determine Maximum Benefits Prior to September 1, 1995
- --------------------------------------------------------------------------------
FACTOR
---------------------------------------------------------
AGE AT Born After
COMMENCEMENT Born Before December 31, 1937 Born After
OF BENEFIT January 1,1938 and Before December 31, 1954
January 1, 1955
- --------------------------------------------------------------------------------
50 0.326 0.306 0.286
51 0.349 0.327 0.305
52 0.374 0.350 0.327
53 0.401 0.376 0.351
54 0.430 0.403 0.376
55 0.462 0.433 0.404
56 0.497 0.466 0.435
57 0.536 0.503 0.469
58 0.578 0.542 0.506
59 0.626 0.587 0.547
60 0.678 0.635 0.593
61 0.735 0.689 0.643
62 0.800 0.750 0.700
63 0.867 0.800 0.750
64 0.933 0.867 0.800
65 1.000 0.933 0.867
66 1.099 1.000 0.933
67 1.210 1.102 1.000
68 1.337 1.217 1.105
69 1.483 1.350 1.225
70 1.649 1.501 1.363
71 1.841 1.676 1.521
72 2.063 1.878 1.705
73 2.321 2.113 1.918
74 2.622 2.388 2.168
75 2.977 2.710 2.461
- --------------------------------------------------------------------------------
<PAGE> 112
APPENDIX A
TABLE 7
Factors to Determine Maximum Benefits Effective September 1, 1995
- --------------------------------------------------------------------------------
FACTOR
---------------------------------------------------------
AGE AT Born After
COMMENCEMENT Born Before December 31, 1937 Born After
OF BENEFIT January 1,1938 and Before December 31, 1954
January 1, 1955
- --------------------------------------------------------------------------------
50 0.338 0.317 0.296
51 0.362 0.339 0.316
52 0.386 0.362 0.338
53 0.413 0.387 0.361
54 0.442 0.415 0.387
55 0.474 0.444 0.414
56 0.509 0.477 0.445
57 0.546 0.512 0.478
58 0.588 0.551 0.515
59 0.634 0.594 0.554
60 0.683 0.641 0.598
61 0.738 0.692 0.646
62 0.800 0.750 0.700
63 0.867 0.800 0.750
64 0.933 0.867 0.800
65 1.000 0.933 0.867
66 1.092 1.000 0.933
67 1.196 1.095 1.000
68 1.313 1.202 1.098
69 1.447 1.324 1.209
70 1.598 1.463 1.336
71 1.772 1.622 1.481
72 1.971 1.805 1.648
73 2.202 2.016 1.841
74 2.470 2.261 2.065
75 2.783 2.548 2.327
- --------------------------------------------------------------------------------
<PAGE> 113
APPENDIX B
<PAGE> 114
RETIREMENT PLAN FOR SALARIED EMPLOYEES OF RAYONIER INC.
APPENDIX B
This Appendix B, effective as of September 1, 1995, is applicable with respect
to former employees of Rayonier Inc. (or its predecessor Rayonier Incorporated)
who are in receipt of a retirement allowance under the Salaried Employees
Retirement Income Plan of Rayonier Incorporated as of August 31, 1995 and their
spouses and beneficiaries. This Appendix B constitutes an integral part of the
Plan and sets forth the particulars concerning the eligibility requirements for
membership as referred to in Article 3 of the Plan.
<PAGE> 115
Page 2
ARTICLE 3 - MEMBERSHIP
Any former employee of Rayonier Inc. (or its predecessor ITT Rayonier
Incorporated) who is in receipt of a retirement allowance under the Salaried
Employees Retirement Income Plan of Rayonier Incorporated as of August 31, 1995
shall become a Member of the Plan on September 1, 1995, but he or she shall not
accrue any Benefit Service under the Plan after such date. Such Member, or his
or her spouse or beneficiary, shall be eligible for and shall receive from this
Plan benefits in the same amount and payable in accordance with the same terms
as the retirement allowance to which he or she was entitled under the Salaried
Employees Retirement Income Plan of Rayonier Incorporated as of August 31, 1995.
<PAGE> 116
APPENDIX B
SCHEDULE I
(FORMER MEMBERS OF THE SALARIED EMPLOYEES
RETIREMENT INCOME PLAN OF RAYONIER INCORPORATED)
Effective as of October 1, 1988, the retirement allowances payable to the
following retired Members or, if applicable, beneficiaries shall be supplemented
in the amounts listed below (and shall be payable after the death of a retired
Member in accordance with the provisions of the Plan, as applicable).
<TABLE>
<CAPTION>
SOCIAL FIRST SECOND TOTAL
SECURITY MONTHLY MONTHLY MONTHLY
NAME NUMBER SUPPLEMENT SUPPLEMENT SUPPLEMENT
---- -------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Vialas A. Aggergaard ###-##-#### $ 83.73 $ 50.27 $ 134.00
Louis H. Bock ###-##-#### 175.66 99.19 274.85
G. M. Atkinson ###-##-#### 93.06 32.84 125.90
Leonard E. Attwood ###-##-#### 175.99 80.92 256.91
Morton J. Barger ###-##-#### 35.00 10.00 45.00
Fred C. Barnhart ###-##-#### 191.15 73.74 264.89
George Bartlett ###-##-#### 58.55 30.20 88.75
John W. Bennett ###-##-#### 110.44 75.56 186.00
Paul W. Blatter ###-##-#### 178.31 74.21 252.52
William E. Breitenbach ###-##-#### 629.15 334.89 964.04
Oral S. Burnett ###-##-#### 48.28 16.49 64.77
Frances M. Cannon ###-##-#### 60.25 22.19 82.44
Evert A. Carlson ###-##-#### 89.88 37.40 127.28
Henry V. Charnell ###-##-#### 240.30 164.40 404.70
Miriam C. Christian ###-##-#### 57.41 26.40 83.81
M. A. Corbin ###-##-#### 81.33 33.85 115.18
Fred B. Doherty ###-##-#### 223.19 152.70 375.89
Frank W. Dolby ###-##-#### 53.50 27.60 81.10
Elgin W. Edmisten ###-##-#### 146.38 56.47 202.85
Harold C. Ellingson ###-##-#### 95.21 32.53 127.74
Claribel S. Forrest ###-##-#### 293.85 176.41 470.26
G. A. Franklin ###-##-#### 58.78 35.29 94.07
Betty M. Graham ###-##-#### 30.00 10.00 40.00
Rolla W. Halbert ###-##-#### 133.78 80.31 214.09
H. J. Hamilton ###-##-#### 85.42 58.44 143.86
Betty M. Hansen ###-##-#### 21.86 19.49 41.35
Kenneth E. Harris ###-##-#### 120.28 72.21 192.49
Katherine E. Hirt ###-##-#### 68.38 38.61 106.99
Milton L. Holt ###-##-#### 35.00 10.00 45.00
</TABLE>
<PAGE> 117
Page 2
<TABLE>
<CAPTION>
SOCIAL FIRST SECOND TOTAL
SECURITY MONTHLY MONTHLY MONTHLY
NAME NUMBER SUPPLEMENT SUPPLEMENT SUPPLEMENT
---- -------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Harry L. Hooker ###-##-#### $ 131.60 $ 54.77 $ 186.37
Jack H. Jensen ###-##-#### 75.40 45.27 120.67
Martha B. Kitchen ###-##-#### 111.08 35.61 146.69
Fletcher T. Lake ###-##-#### 98.02 58.85 156.87
Carrie P. Larsen ###-##-#### 124.47 40.71 165.18
Arthur L. Leathers ###-##-#### 150.31 69.11 219.42
Lecil Leslie ###-##-#### 78.40 47.07 125.47
Parker Lindhart ###-##-#### 120.76 72.50 193.26
Olaf O. Lodeen ###-##-#### 110.03 66.06 176.09
C. V. McKinstry ###-##-#### 122.62 63.25 185.87
Anna Marie Smith ###-##-#### 42.82 14.63 57.45
Lenhard E. Miller ###-##-#### 80.37 28.36 108.73
Don F. Murchison ###-##-#### 98.87 45.46 144.33
Harvey O. Nelson ###-##-#### 116.09 69.69 185.78
Riley Nelson ###-##-#### 101.35 46.60 147.95
Anna K. Spilseth ###-##-#### 41.33 15.22 56.55
Robert N. Pollock ###-##-#### 87.80 27.79 115.59
Leslie E. Pooler ###-##-#### 105.63 63.42 169.05
Bryan L. Rauschert ###-##-#### 219.27 123.82 343.09
D. D. Rhebeck ###-##-#### 148.07 83.61 231.68
Steve Rupert ###-##-#### 460.30 133.70 594.00
Jeanne Sanders ###-##-#### 20.00 10.00 30.00
Wanda E. Schirmer ###-##-#### 20.00 10.00 30.00
Winston Scott ###-##-#### 248.43 84.87 333.30
James T. Sheehy ###-##-#### 673.32 418.87 1,092.19
Oren B. Sorensen ###-##-#### 97.63 66.80 164.43
Elmer Sytsma ###-##-#### 53.18 18.17 71.35
J. B. Talbird ###-##-#### 422.08 175.65 597.73
Alonzo R. Teeters ###-##-#### 95.64 39.81 135.45
Maxine F. Tinkham ###-##-#### 30.00 16.50 46.50
Adolph Tratnick ###-##-#### 93.83 64.19 158.02
E. H. Wagner ###-##-#### 264.11 59.40 323.51
G. Weighton ###-##-#### 106.80 36.49 143.29
Clarke M. Williams ###-##-#### 96.22 44.24 140.46
Bernard T. Winiecki ###-##-#### 118.50 40.48 158.98
Lewis Woods ###-##-#### 30.00 13.64 43.64
Elliott H. Woodruff ###-##-#### 370.94 144.91 515.85
Rena Young ###-##-#### 108.82 34.44 143.26
</TABLE>
<PAGE> 118
Page 3
SCHEDULE I
(FORMER MEMBERS OF THE SALARIED EMPLOYEES
RETIREMENT INCOME PLAN OF RAYONIER INCORPORATED)
Effective as of January 1, 1996, the Retirement Allowance payable to the
following retired Members, contingent annuitants or surviving spouses shall be
supplemented in the amounts listed below, and shall be payable after the death
of a Member in accordance with the provisions of Section 4.06 of the Plan.
<TABLE>
<CAPTION>
SOCIAL
SECURITY MONTHLY
NAME NUMBER SUPPLEMENT
---- -------- ----------
<S> <C> <C>
Leonard E. Attwood ###-##-#### $ 84.97
Paul W. Blatter ###-##-#### 80.56
Louis H. Bock ###-##-#### 98.34
William Breitenbach ###-##-#### 337.07
Henry V. Charnell ###-##-#### 155.53
M. A. Corbin ###-##-#### 36.60
Fred Doherty ###-##-#### 144.42
Frank W. Dolby ###-##-#### 28.08
Claribel Forrest ###-##-#### 171.99
Betty M. Graham ###-##-#### 10.00
Betty M. Hansen ###-##-#### 17.49
Katherine Hirt ###-##-#### 38.22
Margaret Holt ###-##-#### 10.29
Martha B. Kitchen ###-##-#### 42.34
Arthur L. Leathers ###-##-#### 72.47
Riley Nelson ###-##-#### 48.95
Robert N. Pollock ###-##-#### 33.22
Marjorie Rauchert ###-##-#### 61.30
Vivian Rhebeck ###-##-#### 41.45
Steve Rupert ###-##-#### 165.38
Jeanne Sanders ###-##-#### 10.00
Wanda E. Schirmer ###-##-#### 10.00
Winston Scott ###-##-#### 98.49
Anna K. Spilseth ###-##-#### 17.20
Elmer Sytsma ###-##-#### 21.02
J. B. Talbird ###-##-#### 190.37
Adolph Tratnick ###-##-#### 60.71
Clarke M. Williams ###-##-#### 46.45
Bernhard Winiecki ###-##-#### 47.04
Isobel Woodruff ###-##-#### 80.26
</TABLE>
<PAGE> 119
APPENDIX C
<PAGE> 120
RETIREMENT PLAN FOR SALARIED EMPLOYEES OF RAYONIER INC.
APPENDIX C
This Appendix C, effective as of September 1, 1995, is applicable with respect
to employees or former employees of Rayonier Inc. (or its predecessor ITT
Rayonier Incorporated) who are entitled to a pension benefit under The Vanillin
Operation of the Northwest Chemical Products Division of Rayonier Inc. Pension
Plan for Hourly Employees as of August 31, 1995 and their spouses and
beneficiaries. This Appendix C constitutes an integral part of the Plan and sets
forth the particulars concerning:
(i) The definition of "Accrued Benefit", "Annuity Starting Date",
"Equivalent Actuarial Value", "Final Average Compensation",
"Normal Retirement Date", "Public Disability Benefit", "Total
and Permanent Disability" and "Vanillin Plan."
(ii) The determination of Eligibility Service as referred to in
Section 2.01 of the Plan.
(iii) The determination of Benefit Service as referred to in Section
2.02 of the Plan.
(iv) The eligibility requirements for membership as referred to in
Article 3 of the Plan.
(v) The determination of the amount of normal retirement allowance
as referred to in Section 4.01(b) of the Plan.
(vi) The determination of the amount of postponed retirement
allowance as referred to in Section 4.02(b) and (c) of the Plan.
(vii) The eligibility requirements for the standard early retirement
allowance referred to in Section 4.03(a) of the Plan.
(viii) The determination of the amount of the standard early retirement
allowance referred to in Section 4.03(b) of the Plan.
(ix) The eligibility requirements for a disability retirement
allowance.
(x) The determination of the amount of a disability retirement
allowance.
<PAGE> 121
Page 2
(xi) The eligibility requirements for a vested benefit as referred to
in Section 4.05(a) of the Plan.
(xii) The determination of the amount of vested benefit as referred to
in Section 4.05(b) of the Plan.
(xiii) The forms of benefit payment after retirement as referred to in
Section 4.06 of the Plan.
(xiv) The survivor's benefit applicable before retirement as referred
to in Section 4.07 of the Plan.
(xv) The provisions for payment of benefits as referred to in Section
4.10(a) of the Plan.
(xvi) The determination of the amount of an automatic lump sum payment
as referred to in Section 4.10(b) of the Plan.
(xvii) The effect of reemployment on the election of an optional form
of benefit as referred to in Section 4.11(b) of the Plan.
(xviii) The determination of the amount of benefit payable to a
reemployed Member upon his or her subsequent retirement as
referred to in Section 4.11(c) of the Plan.
(xix) The minimum adjusted benefit payable under the Plan.
<PAGE> 122
Page 3
ARTICLE 1 - DEFINITIONS
1.01 Accrued Benefit shall mean, as of any date of determination, the
retirement allowance computed under Section 4.01(b) on the basis of the
Member's Benefit Service and applicable components of the Plan formula as
of the determination date.
1.03 Annuity Starting Date shall mean the first day of the first period for
which an amount is due on behalf of a Member or former Member as an
annuity or any other form of payment under the Plan; provided, however,
that in the case of a Member who retires under Section 4.04, Annuity
Starting Date shall mean his or her Normal Retirement Date.
1.17 Equivalent Actuarial Value shall mean equivalent value of a benefit under
the Plan determined on the basis of the applicable factors set forth in
Schedule I, except as otherwise specified in the Plan. In any other event,
Equivalent Actuarial Value shall be determined on the same actuarial basis
utilized to compute the factors set forth in Schedule I.
1.19 Final Average Compensation shall mean the Member's "Pensionable
Compensation" under the Vanillin Plan as of August 31, 1995.
1.26 Normal Retirement Date shall mean the last day of the calendar month in
which the former employee attains age 65, which is his Normal Retirement
Age.
<PAGE> 123
Page 4
1.44 Public Disability Benefit shall mean disability payments or lump sum
payments under any workers' compensation or occupational diseases law,
except fixed statutory payments for the loss of any bodily member and
except lump-sum payments for disfigurement. The amount of the deduction to
be made from monthly disability retirement allowances in respect to any
lump-sum payments under any workers' compensation or occupational diseases
law shall be determined by dividing the lump-sum payment by the maximum
number of months or fractions thereof in the period provided by statute or
regulation, provided the amount of such deduction shall be limited to the
amount of monthly disability retirement allowance and shall be applicable
for the number of months and fractions thereof in such maximum period.
1.45 Total and Permanent Disability shall mean the total and permanent
disablement of a Member if (a) through some unintentional cause, he or she
has been totally disabled by bodily injury or disease or by mental
derangement so as to be prevented thereby from engaging in any regular
occupation or employment for remuneration or profit, and (b) such total
disability is expected to be permanent and continuous during the remainder
of his or her life, provided such disability is not incurred in service in
the armed forces of any country, each as determined by the Company on the
basis of qualified medical evidence.
1.46 Vanillin Plan shall mean The Vanillin Operation of the Northwest Chemical
Products Division of Rayonier Inc. Pension Plan for Hourly Employees as in
effect on the date specified in the Plan.
<PAGE> 124
Page 5
ARTICLE 2 - SERVICE
2.01 Eligibility Service
(a) Eligibility Service on and after September 1, 1995: Except as otherwise
provided in this Article 2, all uninterrupted employment with the Company
or with an Associated Company rendered on and after September 1, 1995 and
prior to the date such Member's employment terminates shall be recognized
as Eligibility Service for all Plan purposes. Notwithstanding the
foregoing, with respect to any calendar year in which the employee
completes at least 1,000 Hours of Service there shall be included in his
or her Eligibility Service a full year of Eligibility Service.
(b) Hours of Service - "Hours of Service" shall include hours worked and hours
for which a person is compensated by the Company or by an Associated
Company for the performance of duties for the Company or an Associated
Company, although he or she has not worked (such as: paid holidays, paid
vacation, paid sick leave, paid time off and back pay for the period for
which it was awarded), and each hour shall be computed as only one hour,
even though he or she is compensated at more than the straight time rate.
This definition of "Hours of Service" shall be applied in a consistent and
non-discriminatory manner in compliance with 29 Code of Federal
Regulations, Section 2530.200b-2(b) and (c) as promulgated by the United
States Department of Labor and as may hereafter be amended.
(c) Certain absences to be recognized as Eligibility Service - Except as
otherwise indicated in this Article 2, the period of any leave of absence
granted in respect of service with the armed forces of the United States
shall be recognized as Eligibility Service under the Plan and shall not be
<PAGE> 125
Page 6
considered as a break in service, provided the employee shall have
returned to the service of the Company or an Associated Company in
accordance with reemployment rights under applicable law and shall have
complied with all of the requirements of such law as to reemployment. If
an employee fails to return to active employment upon expiration of the
approved absence set forth in the prior sentence, such period of approved
absence shall not be considered as Eligibility Service under the Plan.
(d) Breaks in Service - If an employee does not complete more than 500 Hours
of Service in any calendar year, other than the calendar year in which the
employee was hired, he or she shall incur a one-year break in service;
provided that no break in service shall occur unless the employee's
employment with the Company or an Associated Company is terminated. For
purposes of this Section 2.01, the length of an employee's break in
service shall be determined on the following basis:
(i) If the employee completes at least 500 Hours of Service in the
calendar year in which his or her employment terminates, the date
his or her break in service begins shall be the January 1st of the
next following calendar year; otherwise, the date his or her break
in service begins shall be the date on which his or her employment
terminates.
(ii) If the employee completes at least 500 Hours of Service in the
calendar year in which he or she is reemployed, the date his or her
break in service ceases is the January 1st of the calendar year in
which he or she is reemployed; otherwise, the date his or her break
in service ceases is the date on which he or she is reemployed.
<PAGE> 126
Page 7
Solely for purposes of determining whether such an employee has incurred a
break in service, hours shall include each Hour of Service for which such
employee would otherwise have been credited under paragraph (a) above were
it not for the employee's absence due to Parental Leave. Hours of Service
credited under the preceding sentence shall not exceed the number of hours
needed to avoid a break in service in the computation period in which the
Parental Leave began, and in any event shall not exceed 501 hours; if no
hours are needed to avoid a break in service in such computation period,
then the provisions of the preceding sentence shall apply as though the
Parental Leave began in the immediately following computation period.
(e) Bridging breaks in service
If an employee has a break in service, except as otherwise provided in
Section 4.11, employment both before and after the employee's absence
shall be immediately recognized as Eligibility Service, subject to the
provisions of this Section 2.01, upon his or her return to the employ of
the Company or an Associated Company.
(f) Eligibility Service prior to September 1, 1995
Notwithstanding any foregoing provisions to the contrary, a Member's
Eligibility Service shall include the "Continuous Service" credited to
such Member under the Vanillin Plan as of August 31, 1995.
<PAGE> 127
Page 8
2.02 Benefit Service
For purposes of determining the amount of a Member's retirement allowance
or vested benefit under this Appendix C, there shall be recognized as
Benefit Service the "Credited Service" credited to such Member under the
Vanillin Plan as of August 31, 1995.
<PAGE> 128
Page 9
ARTICLE 3 - MEMBERSHIP
Any former employee of Rayonier Inc. (or its predecessor ITT Rayonier
Incorporated) who is entitled to a pension benefit under the Vanillin Plan as of
August 31, 1995 shall become a Member of the Plan on September 1, 1995, but he
or she shall not accrue any Benefit Service for purposes of this Appendix C
after such date and, unless he or she is reemployed by the Company or an
Associated Company, he or she shall not accrue any Eligibility Service under the
Plan after such date. Such Member, or his or her spouse or beneficiary, shall be
eligible for and shall receive from this Plan benefits in the same amount and
payable in accordance with the same terms as the pension benefit to which he or
she was entitled under the Vanillin Plan as of August 31, 1995.
<PAGE> 129
Page 10
ARTICLE 4 - BENEFITS
4.01 Normal Retirement Allowance
(b) Benefit - Prior to adjustment in accordance with Sections 4.06(a) and
4.07(b), the annual normal retirement allowance payable on a lifetime
basis upon retirement at a Member's Normal Retirement Date shall be equal
to 70% of the Member's Average Final Compensation, minus 50% of his or her
Social Security Benefit; provided, however, that if the Member has
completed less than 40 years of Benefit Service, the resulting monthly
retirement allowance shall be reduced in proportion that the number of
years of his or her Benefit Service bears to 40. The annual normal
retirement allowance shall not be less than the greatest annual early
retirement allowance which would have been payable to a Member had he or
she retired under Section 4.03 at any time before his or her Normal
Retirement Date, but based on the Federal Social Security Act in effect at
the time of the Member's actual retirement, or Normal Retirement Date, if
earlier.
4.02 Postponed Retirement Allowance
(b) Benefit - Except as hereinafter provided and prior to adjustment in
accordance with Section 4.06(a) and 4.07(b), the annual postponed
retirement allowance payable on a lifetime basis upon retirement at a
Member's Postponed Retirement Date shall be equal to the greater of:
(i) an amount determined in accordance with Section 4.01(b) but based on
the Member's Benefit Service, Social Security Benefit and Average
Final Compensation as of his or her Postponed Retirement Date; or
<PAGE> 130
Page 11
(ii) the annual normal retirement allowance to which the Member would
have been entitled under Section 4.01(b) had he or she retired on
his or her Normal Retirement Date, increased by an amount which is
the Equivalent Actuarial Value of the monthly payments which would
have been payable with respect to each month in which he or she
completed less than 40 Hours of Service. Any monthly payment
determined under this paragraph (b)(ii) with respect to any such
month in which the Member completed less than 40 Hours of Service
shall be computed as if the Member had retired on his or her Normal
Retirement Date.
(c) Benefit for Member in Active Service after he or she attains Age 70-1/2 -
In the event a Member's retirement allowance is required to begin under
Section 4.10 while the Member is in active service, the January 1
immediately following the calendar year in which the Member attained age
70-1/2 shall be the Member's Annuity Starting Date for purposes of this
Article 4 and the Member shall receive a postponed retirement allowance
commencing on that January 1 in an amount determined as if he or she had
retired on such date. As of each succeeding January 1 prior to the
Member's actual Postponed Retirement Date and as of his or her actual
Postponed Retirement Date, the Member's retirement allowance shall be
reduced by the Equivalent Actuarial Value of the total payments of his or
her postponed retirement allowance made with respect to each month of
continued employment in which he or she completed at least 40 Hours of
Service which were paid prior to each such recomputation, provided that no
such reduction shall reduce the Member's postponed retirement allowance
below the amount of postponed retirement allowance payable to the Member
immediately prior to the recomputation of such retirement allowance.
<PAGE> 131
Page 12
4.03 Standard Early Retirement Allowance
(a) Eligibility - A Member who has not reached his or her Normal Retirement
Date but has, prior to his or her termination of employment reached the
55th anniversary of his or her birth and completed 10 years of Eligibility
Service, is eligible to retire on a standard early retirement allowance on
the last day of the calendar month in which the Member terminates
employment, which date shall be the Member's Early Retirement Date.
(b) Benefit - Except as hereinafter provided and prior to adjustment in
accordance with Sections 4.06(a) and 4.07(b) the standard early retirement
allowance shall be an allowance deferred to commence on the first day of
the calendar month next following the Member's Normal Retirement Date and
shall be equal to the Member's Accrued Benefit earned up to his or her
Early Retirement Date, computed on the basis of his or her Benefit
Service, Final Average Compensation and Social Security Benefit as of his
or her Early Retirement Date, with the Social Security Benefit determined
on the assumption that the Member had no earnings after his or her Early
Retirement Date. The Member may, however, elect to receive an early
retirement allowance commencing on the first day of the calendar month
next following his or her Early Retirement Date or on the first day of any
calendar month before his or her Normal Retirement Date specified in his
or her later request therefor in a reduced amount which, prior to
adjustment in accordance with Sections 4.06(a) and 4.07(b), shall be equal
to his or her Accrued Benefit, reduced by 1/3 of 1 percent per month for
each month by which the commencement date of his or her retirement
allowance precedes his or her Normal Retirement Date.
<PAGE> 132
Page 13
4.04 Disability Retirement Allowance
(a) Eligibility - A Member who has reached the 50th anniversary of his or her
birth and completed fifteen years of Eligibility Service, who incurs a
Total and Permanent Disability, is eligible to retire on a disability
retirement allowance on the last day of the calendar month as of which the
Member is determined to be so disabled by the Company based on a qualified
medical evidence.
(b) Benefit - The disability retirement allowance shall commence on the first
day of the calendar month next following the date the Member meets the
eligibility requirements in paragraph (a) above and, prior to the Member's
Normal Retirement Date, shall be equal to his or her Accrued Benefit
earned up to his or her date of disability, computed on the basis of his
or her Benefit Service, Final Average Compensation and Social Security
Benefit as of his or her date of disability, with the Social Security
Benefit determined on the basis of the Federal Social Security Act as in
effect on the Member's date of disability. Notwithstanding the preceding
sentence, if a Member is awarded a Public Disability Benefit, the
disability retirement allowance payable prior to his or her Normal
Retirement Date shall be reduced by the amount of the Company-provided
Public Disability Benefit. On and after the first day of the calendar
month next following the Member's Normal Retirement Date, the disability
retirement allowance shall be adjusted, if applicable, in accordance with
Sections 4.06(a) and 4.06(b).
4.05 Vested Benefit
(a) Eligibility - A Member shall be vested in, and have a nonforfeitable right
to, his or her Accrued Benefit upon completion of five years of
Eligibility Service or, if the Member terminated employment on or after
January 1, 1993, on his or her date of termination, if earlier.
<PAGE> 133
Page 14
If such Member's services are subsequently terminated for reasons other
than death or early retirement prior to his or her Normal Retirement Date,
he or she shall be entitled to a vested benefit under the provisions of
this Section 4.05.
(b) Benefit - Prior to adjustment in accordance with Sections 4.06(a) and
4.07(a), the vested benefit payable to a Member shall be a benefit
deferred to commence on the first day of the calendar month next following
the former Member's Normal Retirement Date and shall be equal to 1.75% of
his or her Final Average Compensation multiplied by his or her years of
Benefit Service, not in excess of 40 years, minus the lesser of:
(i) 1.25% of the Member's Social Security Benefit multiplied by his or
her years of Benefit Service, not in excess of 40 years; or
(ii) 50% of the Member's Social Security Benefit multiplied by a
fraction, the numerator of which is the number of years of Benefit
Service to date of termination and the denominator of which is the
number of years of Benefit Service the Member would have had, had he
or she continued in service to his or her Normal Retirement Date.
The Social Security Benefit shall be determined on the assumption that the
Member continued in service to his or her Normal Retirement Date at the
Member's rate of compensation in effect as of his or her date of
termination.
On or after the date on which the former Member shall have reached the
55th anniversary of his or her birth, he or she may elect to receive a
benefit commencing on the first day of any calendar
<PAGE> 134
Page 15
month next following the 55th anniversary of his or her birth and prior to
his or her Normal Retirement Date as specified in his or her request
therefor, after receipt by the Retirement Committee of written application
therefor made by the former Member and filed with the Retirement
Committee. Upon such earlier payment, the vested benefit otherwise payable
shall be reduced by 1/180th for each month up to 60 months by which the
commencement date of such payments precedes his or her Normal Retirement
Date and further reduced by 1/360th for each such month in excess of 60
months.
4.06 Forms of Benefit Payment after Retirement
(a) Automatic Forms of Payment
(i) Automatic Joint and Survivor Annuity - If a Member or former Member
who is married on his or her Annuity Starting Date has not made an
election of an optional form of payment as provided in Section
4.06(b), the retirement allowance or vested benefit payable to such
Member or former Member commencing on his or her Annuity Starting
Date shall automatically be adjusted to provide (A) a reduced
benefit payable to the Member or former Member during his or her
life equal to his or her benefit otherwise payable without optional
modification computed in accordance with Section 4.01, 4.02, 4.03,
4.04 or 4.05, as the case may be, multiplied by the appropriate
factor contained in Table 1 of Schedule I and (B) a benefit payable
after his or her death to his or her surviving spouse equal to 50%
of the reduced benefit payable to the former Member.
(ii) Automatic Life Annuity - If a Member or former Member is not married
on his or her Annuity Starting Date, the retirement allowance or
vested benefit computed in accordance
<PAGE> 135
Page 16
with Section 4.01, 4.02, 4.03, 4.04 or 4.05, as the case may be,
shall be paid to the Member or former Member in the form of a
lifetime benefit payable during his or her own lifetime with no
further benefit payable to anyone after his or her death, unless the
Member or former Member is eligible for and makes an election of an
optional form of payment under Section 4.06(b).
(b) Optional Forms of Payment
(i) Life Annuity Option - Any Member or former Member who retires or
terminates employment with the right to a retirement allowance or
vested benefit, may elect, in accordance with the provisions of
Section 4.06(d), to provide that the retirement allowance payable to
him or her under Section 4.01, 4.02, 4.03, or 4.04 or the vested
benefit payable to him or her under Section 4.05 shall be in the
form of a lifetime benefit payable during his or her own lifetime
with no further benefit payable to anyone after his or her death.
(ii) Contingent Annuity Option - Any Member or former Member who retires
or terminates employment with the right to a retirement allowance in
accordance with the provisions of Section 4.01, 4.02 or 4.03 may
elect, in accordance with provisions of Section 4.06(d), to convert
the benefit otherwise payable to him or her without optional
modification under Section 4.01, 4.02 or 4.03, as the case may be,
into one of the following alternative options in order to provide
that after his or her death, a lifetime benefit shall be payable to
the person who, when the option became effective, was designated by
him or her to be his or her contingent annuitant. The optional
benefit elected shall be the Equivalent Actuarial
<PAGE> 136
Page 17
Value of the retirement allowance otherwise payable without optional
modification under Section 4.01, 4.02 or 4.03.
Option 1 - A reduced retirement allowance payable during the
Member's or former Member's life with the provision that after his
or death a benefit equal to 100% of his or her reduced retirement
allowance shall be paid during the life of, and to, his or her
surviving contingent annuitant.
Option 2 - A reduced retirement allowance payable during the
Member's or former Member's life with the provision that after his
or her death a benefit equal to 50% of his or her reduced retirement
allowance shall be paid during the life of, and to, his or her
surviving contingent annuitant.
(d) Election of Options - A Member or former Member may, subject to the
provisions of this Section 4.06(d), elect to receive his or her retirement
allowance or vested benefit in the optional form of payment described in
Section 4.06(b)(i) or, in the case of a Member who retires under the
provisions of Section 4.01, 4.02 or 4.03, in one of the optional forms of
payment described in Section 4.06(b)(ii), in lieu of the automatic forms
of payment described in Section 4.06(a). Notwithstanding the preceding
sentence, a Member who retired on a disability retirement allowance may
only elect an optional form of payment to take effect on the first day of
the calendar month next following his or her Normal Retirement Date. A
married Member's or a married former Member's election of a Life Annuity
form of payment under Section 4.06(b)(i) or any optional form of payment
under Section 4.06(b)(ii), which does not provide for monthly payments to
his or
<PAGE> 137
Page 18
her spouse for life after the Member's or former Member's death, in an
amount equal to at least 50% but not more than 100% of the monthly amount
payable under that form of payment to the Member or former Member and
which is not of Equivalent Actuarial Value to the Automatic Joint and
Survivor Annuity described in Section 4.06(a)(i), shall be effective only
with Spousal Consent; provided that such Spousal Consent to the election
has been received by the Retirement Committee.
4.07 Survivor's Benefit Applicable Before the Annuity Starting Date
(a) Automatic Pre-Retirement Spouse's Benefit
(i) Automatic Pre-Retirement Spouse's Benefit applicable before
termination of employment - The surviving spouse of a Member who has
completed 5 years of Eligibility Service or who is receiving a
disability retirement allowance under Section 4.04 shall
automatically receive a benefit payable under the automatic
Pre-Retirement Spouse's Benefit of this Section 4.07(a)(i) in the
event said Member should die after the effective date of coverage
hereunder and before termination of employment (or Normal Retirement
Date, in the case of a Member receiving a disability retirement
allowance). The benefit payable to the Member's spouse shall be
equal to the benefit the Member's spouse would have received if the
retirement allowance or vested benefit the Member was entitled to at
his or her date of death had commenced as of the month next
following the month in which his or her Normal Retirement Date would
have occurred (or the month next following the month in which the
Member's date of death occurred, if later) in the form of the
Automatic Joint and Survivor Annuity under Section 4.06(a)(i). Such
benefit shall be payable for the life of the spouse commencing on
the first day of the calendar month next following what would have
been the Member's Normal Retirement Date (or next following the
month in
<PAGE> 138
Page 19
which the Member's date of death occurred, if later). However, the
Member's spouse may elect, by written application filed with the
Retirement Committee, to have payments begin as of the first day of
any calendar month after the date the former Member would have
reached the 55th anniversary of his or her birth; provided, however,
if the Member dies while receiving a disability retirement allowance
under Section 4.04, payments begin under this automatic
Pre-Retirement Spouse's Benefit as of the first day of the month
following the Member's death.
If payment of the automatic Pre-Retirement Spouse's Benefit
commences prior to what would have been the Member's Normal
Retirement Date, the amount of such benefit payable to the spouse
shall be based on (i) the standard early retirement allowance or
vested benefit to which the Member would have been entitled, had the
Member elected to have payments commence to himself or herself on
such earlier date in accordance with the provisions of Section
4.03(b) or Section 4.05(b), or in the case of a Member who dies
while receiving a disability retirement allowance under Section
4.04, the disability retirement allowance the Member was receiving
on his date of death.
Coverage hereunder shall be applicable to a married Member in active
service who has satisfied the eligibility requirements for a
retirement allowance under Section 4.01(a), 4.02(a), 4.03(a) or
4.04(a) or a vested benefit under Section 4.05(a) and shall become
effective on the date the Member marries and shall cease on the
earlier of (i) the date such active Member's marriage is legally
dissolved by a divorce decree or (ii) the date such active Member's
spouse dies.
<PAGE> 139
Page 20
(ii) Automatic Pre-Retirement Spouse's Benefit applicable upon
termination of employment - In the case of a Member or former Member
who is married and entitled to a standard early retirement allowance
under Section 4.03 or a vested benefit under Section 4.05, the
provisions of this Section 4.07(a)(ii) shall apply to the period
between the date his or her services are terminated or the date, if
later, the Member or former Member is married and his or her Annuity
Starting Date, or other cessation of coverage as later specified in
this Section 4.07(a)(ii).
In the event of a married Member's or former Member's death during
any period in which these provisions have not been waived or revoked
by the Member or former Member and his or her spouse, the benefit
payable to the Member's or former Member's spouse shall be equal to
50% of the standard early retirement allowance or vested benefit the
Member or former Member would have received as of the month next
following the month in which his or her Normal Retirement Date would
have occurred if he or she had elected to receive such benefit in
the form of the Automatic Joint and Survivor Annuity under Section
4.06(a).
The spouse's benefit shall be payable for the life of the spouse
commencing on the first day of the calendar month next following
what would have been the Member's or former Member's Normal
Retirement Date. However, the Member's or former Member's spouse may
elect, by written application filed with the Retirement Committee,
to have payments begin as of the first day of any calendar month
after the date the Member or former
<PAGE> 140
Page 21
Member would have reached the 55th anniversary of his or her birth
(or his or her date of death, if later). If the Member's or former
Member's spouse elects to commence payment of this automatic
Pre-Retirement Spouse's Benefit prior to what would have been the
Member's or former Member's Normal Retirement Date, the amount of
such benefit payable to the spouse shall be based on the standard
early retirement allowance or vested benefit to which the Member or
former Member would have been entitled, had the Member or former
Member elected to have payments commence to himself or herself on
such earlier date in accordance with the provisions of Section
4.03(b) or Section 4.05(b).
However, if a Member or former Member had elected Option 1 under
Section 4.06(b)(ii) within the 90-day period preceding his or her
Annuity Starting Date, with his or her spouse as contingent
annuitant, the amount of benefit payable to the spouse shall be
based on the provisions of Option 1, in lieu of the provisions of
this Section 4.07(a)(ii).
The vested benefit payable to a former Member whose spouse is
covered under this Section 4.07(a)(ii) or, if applicable, the
benefit payable to his or her spouse upon his or her death shall be
reduced by the applicable percentages shown below. Such reduction
shall apply to each month during which coverage is in effect for at
least one day; provided, however, no reduction shall be made with
respect to any period before the later of (1) the date the
Retirement Committee furnishes the former Member the notice of his
or her right to waive the automatic Pre-Retirement Spouse's Benefit
or (2) the commencement of the election period specified in Section
4.07(b) below.
<PAGE> 141
Page 22
ANNUAL REDUCTION FOR SPOUSE'S COVERAGE
AFTER TERMINATION OF EMPLOYMENT
OTHER THAN RETIREMENT
<TABLE>
<CAPTION>
Age Reduction
--- ---------
<S> <C>
Less than 40 1/10 of 1% per year
40 but prior to 50 2/10 of 1% per year
50 but prior to 55 3/10 of 1% per year
55 but prior to 60 5/10 of 1% per year
60 but less than 65 1% per year
</TABLE>
(b) The Retirement Committee shall furnish to each former Member a written
explanation which describes (i) the terms and conditions of the automatic
Pre-Retirement Spouse's Benefit, (ii) the former Member's right to make,
and the effect of, an election to waive the automatic Pre-Retirement
Spouse's Benefit, (iii) the rights of the or former Member's spouse, and
(iv) the right to make, and the effect of, a revocation of such a waiver.
Such written explanation shall be furnished to each former Member before
the first anniversary of the date he or she terminated service, and shall
be furnished to such Member even though he or she is not married.
(c) The period during which the former Member may make an election to waive
the automatic Pre-Retirement Spouse's Benefit provided under Section
4.07(a)(ii) shall begin not later than the date his or her employment
terminates and end on his or her Annuity Starting Date or, if earlier, his
or her date of death. Any waiver, revocation or re-election of the
automatic Pre-Retirement Spouse's Benefit shall be made on a form provided
by the Retirement Committee and any waiver or revocation shall require
Spousal Consent. If, upon termination of employment, the former Member
waives coverage hereunder in accordance with administrative procedures
established by the
<PAGE> 142
Page 23
Retirement Committee for all Members similarly situated, such waiver shall
be effective as of the former Member's Severance Date. Any later
re-election or revocation shall be effective when the completed form is
received by the Retirement Committee. If a former Member dies during the
period when a waiver is in effect, there shall be no benefits payable to
his or her spouse under the provisions of this Section 4.07.
Except as described above in the event of a waiver or revocation, coverage
under Section 4.07(a)(ii) shall cease to be effective upon a Member's or
former Member's Annuity Starting Date, or upon the date a Member's or
former Member's marriage is legally dissolved by a divorce decree, or upon
the death of the spouse, whichever event shall first occur.
(d) Any election made under Section 4.07 (including any waiver or revocation
thereof) shall be made on a form approved by and filed with the Retirement
Committee.
4.10 Payment of Benefits
(a) Unless otherwise provided under an optional benefit elected pursuant to
Section 4.06, the survivor's benefits available under Section 4.07 or the
provisions of Section 4.10(e)(ii), all retirement allowances, vested
benefits or other benefits payable will be paid in monthly installments
for each month beginning with (i) the month next following the month in
which the Member has reached his or her Normal Retirement Date and has
retired from active service, (ii) the month next following the month in
which a Member has reached his or her Postponed Retirement Date and
retired from active service, (iii) the month next following the month in
which a Member or former Member files a proper application requesting
commencement of his or her vested benefit, standard early
<PAGE> 143
Page 24
retirement allowance or disability retirement allowance, or (iv) the month
in which benefits under an optional benefit under Section 4.06 or the
survivor's benefits under Section 4.07 become payable, whichever is
applicable. Such monthly installments shall cease with the payment for the
month in which the recipient dies. In no event shall a retirement
allowance or vested benefit be payable to a Member who continues in or
resumes active service with the Company or an Associated Company for any
period between his or her Normal Retirement Date and Postponed Retirement
Date, except as provided in Sections 4.02(d) and 4.10(e).
(b) In any case, a lump sum payment equal to the retirement allowance or
vested benefit payable under Section 4.01, 4.02, 4.03, 4.04 or 4.05 or the
pre-retirement spouse's benefit payable under Section 4.07(a) multiplied
by the appropriate factor contained in Table 3 of Schedule I shall be made
in lieu of any retirement allowance or vested benefit payable to a Member
or former Member or any pre-retirement spouse's benefit payable to a
spouse of a Member or a former Member, if the lump sum present value of
such benefit amounts to $3,500 ($5,000 effective January 1, 1998) or less.
For distributions prior to September 1, 1995, however, in no event shall
that adjustment factor produce a lump sum that is less than the amount
determined by using the interest rate assumption used by the Pension
Benefit Guaranty Corporation for valuing benefits for determining lump sum
payments under single employer plans that terminate on January 1 of the
Plan Year in which the Annuity Starting Date occurs. For distributions on
and after September 1, 1995, in no event shall that adjustment factor
produce a lump sum that is less than the amount determined by using the
"Applicable Mortality Table" (as defined in Code Section
417(e)(A)(ii)(II)) and the interest rate on 30-year Treasury Securities
for December of the year preceding the Plan Year in which the Annuity
Starting Date occurs. The lump sum payment shall be made as soon as
administratively
<PAGE> 144
Page 25
practicable following the date the Member has terminated employment or
died, but in any event prior to the date his or her benefit payment would
have otherwise commenced.
4.11 Reemployment of former Member or retired Member
(b) Optional forms of pension benefits
If the Member is reemployed, any previous election of an optional benefit
under Section 4.06 or a survivor's benefit under Section 4.07 shall be
revoked.
(c) Benefit payments at subsequent termination or retirement
(i) In accordance with the procedure established by the Retirement
Committee on a basis uniformly applicable to all Members similarly
situated, upon the subsequent retirement of a Member in service
after his or her Normal Retirement Date, payment of such Member's
retirement allowance shall resume no later than the third month
after the final month during the reemployment period in which he or
she is credited with at least 40 Hours of Service.
(ii) Upon the subsequent retirement or termination of employment of a
retired or former Member, the Retirement Committee shall, in
accordance with rules uniformly applicable to all Members similarly
situated, determine the amount of vested benefit or retirement
allowance which shall be payable to such Member at such subsequent
retirement or termination. Such vested benefit or retirement
allowance shall be reduced by an amount of Equivalent Actuarial
Value to the benefits, if any, other than disability retirement
allowance payments, he or she received before the earlier of the
date of his or her
<PAGE> 145
Page 26
restoration to service or his or her Normal Retirement Date,
provided that no such reduction shall reduce such retirement
allowance or vested benefit below the original amount of retirement
allowance or vested benefit earned but not received or retirement
allowance or vested benefit previously received by such Member in
accordance with the terms of the Plan in effect during such previous
employment, adjusted to reflect the election of any survivor's
benefits pursuant to Section 4.07(a)(ii).
4.16 Minimum Adjusted Benefit
(a) The adjustment factor applied to a retirement allowance or vested benefit
payable to any Member or former Member who terminates employment on or
after October 1, 1985, or to the Beneficiary of such Member or former
Member, shall not result in a retirement allowance or vested benefit which
is less than the adjusted retirement allowance or vested benefit which
would have been payable to such Member, former Member or Beneficiary under
the provisions of the Vanillin Plan as in effect on September 30, 1985
based on Benefit Service rendered up to and including September 30, 1985.
(b) The adjustment factor applied to a retirement allowance or vested benefit
payable to any Member or former Member who terminates employment on or
after January 1, 1989, or to the Beneficiary of such Member or former
Member, shall not result in a retirement allowance or vested benefit which
is less than the adjusted retirement allowance or vested benefit which
would have been payable to such Member, former Member or Beneficiary under
the provisions of the Vanillin Plan as in effect on December 31, 1988
based on Benefit Service rendered up to and including December 31, 1988.
<PAGE> 146
APPENDIX D
<PAGE> 147
RETIREMENT PLAN FOR SALARIED EMPLOYEES OF RAYONIER INC.
APPENDIX D
This Appendix D, effective as of September 1, 1995, is applicable with respect
to employees or former employees of Southern Wood Piedmont Company who are
entitled to a pension benefit under the Southern Wood Piedmont Company Pension
Plan for Non-Union Hourly Employees as of August 31, 1995 and their spouses and
beneficiaries. This Appendix D constitutes an integral part of the Plan and sets
forth the particulars concerning:
(i) The definition of "Accrued Benefit", "Annuity Starting Date",
"Equivalent Actuarial Value", "Normal Retirement Date", "Public
Disability Benefit", "Southern Wood Plan", and "Total and
Permanent Disability."
(ii) The determination of Eligibility Service as referred to in
Section 2.01 of the Plan.
(iii) The determination of Benefit Service as referred to in Section
2.02 of the Plan.
(iv) The eligibility requirements for membership as referred to in
Article 3 of the Plan.
(v) The determination of the amount of normal retirement allowance
as referred to in Section 4.01(b) of the Plan.
(vi) The determination of the amount of postponed retirement
allowance as referred to in Section 4.02(b) and (c) of the Plan.
(vii) The eligibility requirements for the standard early retirement
allowance referred to in Section 4.03(a) of the Plan.
(viii) The determination of the amount of the standard early retirement
allowance referred to in Section 4.03(b) of the Plan.
(ix) The eligibility requirements for a disability retirement
allowance.
(x) The determination of the amount of a disability retirement
allowance.
<PAGE> 148
Page 2
(xi) The eligibility requirements for a vested benefit as referred to
in Section 4.05(a) of the Plan.
(xii) The determination of the amount of vested benefit as referred to
in Section 4.05(b) of the Plan.
(xiii) The forms of benefit payment after retirement as referred to in
Section 4.06 of the Plan.
(xiv) The survivor's benefit applicable before retirement as referred
to in Section 4.07 of the Plan.
(xv) The provisions for payment of benefits as referred to in Section
4.10(a) of the Plan.
(xvi) The determination of the amount of an automatic lump sum payment
as referred to in Section 4.10(b) of the Plan.
(xvii) The effect of reemployment on the election of an optional form
of benefit as referred to in Section 4.11(b) of the Plan.
(xviii) The determination of the amount of benefit payable to a
reemployed Member upon his or her subsequent retirement as
referred to in Section 4.11(c) of the Plan.
(xix) The minimum adjusted benefit payable under the Plan.
<PAGE> 149
Page 3
ARTICLE 1 - DEFINITIONS
1.01 Accrued Benefit shall mean the accrued benefit under the Southern Wood
Plan as of August 31, 1995.
1.03 Annuity Starting Date shall mean the first day of the first period for
which an amount is due on behalf of a Member or former Member as an
annuity or any other form of payment under the Plan; provided, however,
that in the case of a Member who retires under Section 4.04, Annuity
Starting Date shall mean his or her Normal Retirement Date.
1.17 Equivalent Actuarial Value shall mean equivalent value of a benefit under
the Plan determined on the basis of the applicable factors set forth in
Schedule I, except as otherwise specified in the Plan. In any other event,
Equivalent Actuarial Value shall be determined on the same actuarial basis
utilized to compute the factors set forth in Schedule I.
1.26 Normal Retirement Date shall mean the last day of the calendar month in
which the employee or former employee attains age 65, which is his Normal
Retirement Age.
1.44 Public Disability Benefit shall mean disability payments or lump sum
payments under any workers' compensation or occupational diseases law,
except fixed statutory payments for the loss of any bodily member and
except lump-sum payments for disfigurement. The amount of the deduction to
be made from monthly disability retirement allowances in respect to any
lump-sum payments under any workers' compensation or occupational diseases
law shall be determined by
<PAGE> 150
Page 4
dividing the lump-sum payment by the maximum number of months or fractions
thereof in the period provided by statute or regulation, provided the
amount of such deduction shall be limited to the amount of monthly
disability retirement allowance and shall be applicable for the number of
months and fractions thereof in such maximum period.
1.45 Southern Wood Plan shall mean the Southern Wood Piedmont Company Pension
Plan for Non-Union Hourly Employees as in effect on the date specified in
the Plan.
1.46 Total and Permanent Disability shall mean the total and permanent
disablement of a Member if (a) through some unintentional cause, he or she
has been totally disabled by bodily injury or disease or by mental
derangement so as to be prevented thereby from engaging in any regular
occupation or employment for remuneration or profit, and (b) such total
disability is expected to be permanent and continuous during the remainder
of his or her life, provided such disability is not incurred in service in
the armed forces of any country, each as determined by the Company on the
basis of qualified medical evidence.
<PAGE> 151
Page 5
ARTICLE 2 - SERVICE
2.01 Eligibility Service
(a) Eligibility Service on and after September 1, 1995: Except as otherwise
provided in this Article 2, all uninterrupted employment with the Company
or with an Associated Company rendered on and after September 1, 1995 and
prior to the date such Member's employment terminates, or his Normal
Retirement Date, if earlier, shall be recognized as Eligibility Service
for all Plan purposes. Notwithstanding the foregoing, with respect to any
calendar year in which the employee completes at least 1,000 Hours of
Service there shall be included in his or her Eligibility Service a full
year of Eligibility Service.
(b) Hours of Service - "Hours of Service" shall include hours worked and hours
for which a person is compensated by the Company or by an Associated
Company for the performance of duties for the Company or an Associated
Company, although he or she has not worked (such as: paid holidays, paid
vacation, paid sick leave, paid time off and back pay for the period for
which it was awarded), and each hour shall be computed as only one hour,
even though he or she is compensated at more than the straight time rate.
This definition of "Hours of Service" shall be applied in a consistent and
non-discriminatory manner in compliance with 29 Code of Federal
Regulations, Section 2530.200b-2(b) and (c) as promulgated by the United
States Department of Labor and as may hereafter be amended.
(c) Certain absences to be recognized as Eligibility Service - Except as
otherwise indicated in this Article 2, the period of any leave of absence
granted in respect of service with the armed forces of
<PAGE> 152
Page 6
the United States shall be recognized as Eligibility Service under the
Plan and shall not be considered as a break in service, provided the
employee shall have returned to the service of the Company or an
Associated Company in accordance with reemployment rights under applicable
law and shall have complied with all of the requirements of such law as to
reemployment. If an employee fails to return to active employment upon
expiration of the approved absence set forth in the prior sentence, such
period of approved absence shall not be considered as Eligibility Service
under the Plan.
(d) Breaks in Service - If an employee does not complete more than 500 Hours
of Service in any calendar year, other than the calendar year in which the
employee was hired, he or she shall incur a one-year break in service;
provided that no break in service shall occur unless the employee's
employment with the Company or an Associated Company is terminated. For
purposes of this Section 2.01, the length of an employee's break in
service shall be determined on the following basis:
(i) If the employee completes at least 500 Hours of Service in the
calendar year in which his or her employment terminates, the date
his or her break in service begins shall be the January 1st of the
next following calendar year; otherwise, the date his or her break
in service begins shall be the date on which his or her employment
terminates.
(ii) If the employee completes at least 500 Hours of Service in the
calendar year in which he or she is reemployed, the date his or her
break in service ceases is the January 1st of the calendar year in
which he or she is reemployed; otherwise, the date his or her break
in service ceases is the date on which he or she is reemployed.
<PAGE> 153
Page 7
Solely for purposes of determining whether such an employee has incurred a
break in service, hours shall include each Hour of Service for which such
employee would otherwise have been credited under paragraph (a) above were
it not for the employee's absence due to Parental Leave. Hours of Service
credited under the preceding sentence shall not exceed the number of hours
needed to avoid a break in service in the computation period in which the
Parental Leave began, and in any event shall not exceed 501 hours; if no
hours are needed to avoid a break in service in such computation period,
then the provisions of the preceding sentence shall apply as though the
Parental Leave began in the immediately following computation period.
(e) Bridging breaks in service
If an employee has a break in service, except as otherwise provided in
Section 4.11, employment both before and after the employee's absence
shall be immediately recognized as Eligibility Service, subject to the
provisions of this Section 2.01, upon his or her return to the employ of
the Company or an Associated Company.
(f) Eligibility Service prior to September 1, 1995
Notwithstanding any foregoing provisions to the contrary, a Member's
Eligibility Service shall include the "Continuous Service" credited to
such Member under the Southern Wood Plan as of August 31, 1995.
<PAGE> 154
Page 8
2.02 Benefit Service
For purposes of determining the amount of a Member's retirement allowance
or vested benefit under this Appendix D, there shall be recognized as
Benefit Service the "Credited Service" credited to such Member under the
Southern Wood Plan as of August 31, 1995.
<PAGE> 155
Page 9
ARTICLE 3 - MEMBERSHIP
Any former employee of Southern Wood Piedmont Company who is entitled to a
pension benefit under the Southern Wood Plan as of August 31, 1995 shall become
a Member of the Plan on September 1, 1995, but he or she shall not accrue any
Benefit Service for purposes of this Appendix D after such date, and unless he
or she is employed or reemployed by the Company or an Associated Company, he or
she shall not accrue any Eligibility Service under the Plan after such date.
Such Member, or his or her spouse or beneficiary, shall be eligible for and
shall receive from this Plan benefits in the same amount and payable in
accordance with the same terms as the pension benefit to which he or she was
entitled under the Southern Wood Plan as of August 31, 1995.
<PAGE> 156
Page 10
ARTICLE 4 - BENEFITS
4.01 Normal Retirement Allowance
(b) Benefit - Prior to adjustment in accordance with Sections 4.06(a) and
4.07(b), the annual normal retirement allowance payable on a lifetime
basis upon retirement at a Member's Normal Retirement Date shall be equal
to his Accrued Benefit.
4.02 Postponed Retirement Allowance
(b) Benefit - Except as hereinafter provided and prior to adjustment in
accordance with Section 4.06(a) and 4.07(b), the annual postponed
retirement allowance payable on a lifetime basis upon retirement at a
Member's Postponed Retirement Date shall be equal to the annual normal
retirement allowance to which the Member would have been entitled under
Section 4.01(b) had he or she retired on his or her Normal Retirement
Date, increased by an amount which is the Equivalent Actuarial Value of
the monthly payments which would have been payable with respect to each
month in which he or she completed less than 40 Hours of Service. Any
monthly payment determined under this paragraph (b) with respect to any
such month in which he or she completed less than 40 Hours of Service
shall be computed as if the Member had retired on his or her Normal
Retirement Date.
(c) Benefit for Member in Active Service after he or she attains Age 70-1/2 -
In the event a Member's retirement allowance is required to begin under
Section 4.10 while the Member is in active service, the January 1
immediately following the calendar year in which the Member attained age
70-1/2 shall be the Member's Annuity Starting Date for purposes of this
Article 4 and the
<PAGE> 157
Page 11
Member shall receive a postponed retirement allowance commencing on that
January 1 in an amount determined as if he or she had retired on such
date. As of each succeeding January 1 prior to the Member's actual
Postponed Retirement Date and as of his or her actual Postponed Retirement
Date, the Member's retirement allowance shall be reduced by the Equivalent
Actuarial Value of the total payments of his or her postponed retirement
allowance made with respect to each month of continued employment in which
he or she completed at least 40 Hours of Service which were paid prior to
each such recomputation, provided that no such reduction shall reduce the
Member's postponed retirement allowance below the amount of postponed
retirement allowance payable to the Member immediately prior to the
recomputation of such retirement allowance.
4.03 Standard Early Retirement Allowance
(a) Eligibility - A Member who has not reached his or her Normal Retirement
Date but has, prior to his or her termination of employment reached the
62nd anniversary of his or her birth and completed 20 years of Eligibility
Service, is eligible to retire on a standard early retirement allowance on
the last day of the calendar month in which the Member terminates
employment, which date shall be the Member's Early Retirement Date.
(b) Benefit - Except as hereinafter provided and prior to adjustment in
accordance with Sections 4.06(a) and 4.07(b) the standard early retirement
allowance shall be an allowance deferred to commence on the first day of
the calendar month next following the Member's Normal Retirement Date and
shall be equal to the Member's Accrued Benefit. The Member may, however,
elect to receive an early retirement allowance commencing on the first day
of the calendar month next following his or her Early Retirement Date or
on the first day of any calendar month before his or
<PAGE> 158
Page 12
her Normal Retirement Date specified in his or her later request therefor
in a reduced amount which, prior to adjustment in accordance with Sections
4.06(a) and 4.07(b), shall be equal to his or her Accrued Benefit, reduced
by 1/180th for each month by which the commencement date of his or her
retirement allowance precedes his or her Normal Retirement Date.
4.04 Disability Retirement Allowance
(a) Eligibility - A Member who has reached the 50th anniversary of his or her
birth and completed fifteen years of Eligibility Service, who incurs a
Total and Permanent Disability, is eligible to retire on a disability
retirement allowance on the last day of the calendar month as of which the
Member is determined to be so disabled by the Company based on a qualified
medical evidence; provided, however, that any Member who on December 31,
1970 was a member of (i) the Pension Agreement entered into as of April 7,
1965 between Southern Wood Piedmont Company and the Oil, Chemical and
Atomic Workers International Union, AFL-CIO, Local 3-116 or (ii) the
Southern Wood Piedmont Company Pension Plan and Trust for Hourly-Paid
Employees at Wilburn, Florida; Jacksonburg, Alabama and Homerville,
Georgia may retire in accordance with the eligibility requirements for a
disability benefit under such plan.
(b) Benefit - The disability retirement allowance shall commence on the first
day of the calendar month next following the date the Member meets the
eligibility requirements in paragraph (a) above and, prior to the Member's
Normal Retirement Date, shall be equal to his or her Accrued Benefit,
without any adjustment. Notwithstanding the preceding sentence, if a
Member is awarded a Public Disability Benefit, the disability retirement
allowance payable prior to his or her Normal Retirement Date shall be
reduced by the amount of the Company-provided Public Disability
<PAGE> 159
Page 13
Benefit. On and after the first day of the calendar month next following
the Member's Normal Retirement Date, the disability retirement allowance
shall be adjusted, if applicable, in accordance with Sections 4.06(a) and
4.06(b).
4.05 Vested Benefit
(a) Eligibility - A Member shall be vested in, and have a nonforfeitable right
to, his or her Accrued Benefit upon completion of five years of
Eligibility Service or, if the Member terminated employment on or after
January 1, 1988 but prior to January 1, 1990 for any reason other than
death or retirement, on his or her date of termination, if earlier.
(b) Benefit - Prior to adjustment in accordance with Sections 4.06(a) and
4.07(a), the vested benefit payable to a Member shall be a benefit
deferred to commence on the first day of the calendar month next following
the former Member's Normal Retirement Date and shall be equal to his or
her Accrued Benefit. On or after the date on which the former Member shall
have reached the 62nd anniversary of his or her birth, he or she may elect
to receive a benefit commencing on the first day of any calendar month
following the 62nd anniversary of his or her birth and prior to his or her
Normal Retirement Date as specified in his or her request therefor, after
receipt by the Retirement Committee of written application therefor made
by the former Member and filed with the Retirement Committee. Upon such
earlier payment, the vested benefit otherwise payable shall be reduced by
1/180th for each month by which the commencement date of such payments
precedes his or her Normal Retirement Date.
<PAGE> 160
Page 14
4.06 Forms of Benefit Payment after Retirement
(a) Automatic Forms of Payment
(i) Automatic Joint and Survivor Annuity - If a Member or former Member
who is married on his or her Annuity Starting Date has not made an
election of an optional form of payment as provided in Section
4.06(b), the retirement allowance or vested benefit payable to such
Member or former Member commencing on his or her Annuity Starting
Date shall automatically be adjusted to provide (A) a reduced
benefit payable to the Member or former Member during his or her
life equal to his or her benefit otherwise payable without optional
modification computed in accordance with Section 4.01, 4.02, 4.03,
4.04 or 4.05, as the case may be, multiplied by the appropriate
factor contained in Table 1 of Schedule I and (B) a benefit payable
after his or her death to his or her surviving spouse equal to 50%
of the reduced benefit payable to the Member or former Member.
(ii) Automatic Life Annuity - If a Member or former Member is not married
on his or her Annuity Starting Date, the retirement allowance or
vested benefit computed in accordance with Section 4.01, 4.02, 4.03,
4.04 or 4.05, as the case may be, shall be paid to the Member or
former Member in the form of a lifetime benefit payable during his
or her own lifetime with no further benefit payable to anyone after
his or her death, unless the Member or former Member is eligible for
and makes an election of an optional form of payment under Section
4.06(b).
(iii) A married former Member entitled to, but not in receipt of, a
retirement allowance or vested benefit as of August 23, 1984 who
terminated service on or after September 2,
<PAGE> 161
Page 15
1974 but before January 1, 1976 may elect, during the period
beginning on August 23, 1984 and ending on his or her Annuity
Starting Date, to have his or her retirement allowance or vested
benefit payable in accordance with the provisions of this Section
4.06(a).
(b) Optional Forms of Payment
(i) Life Annuity Option - Any Member or former Member who retires or
terminates employment with the right to a retirement allowance or
vested benefit may elect, in accordance with the provisions of
Section 4.06(d), to provide that the retirement allowance payable to
him or her under Section 4.01, 4.02, 4.03, or 4.04 or the vested
benefit payable to him or her under Section 4.05 shall be in the
form of a lifetime benefit payable during his or her own lifetime
with no further benefit payable to anyone after his or her death.
(ii) Contingent Annuity Option - Any Member or former Member who retires
or terminates employment with the right to a retirement allowance in
accordance with the provisions of Section 4.01, 4.02 or 4.03 may
elect, in accordance with provisions of Section 4.06(d), to convert
the benefit otherwise payable to him or her without optional
modification under Section 4.01, 4.02 or 4.03, as the case may be,
into one of the following alternative options in order to provide
that after his or her death, a lifetime benefit shall be payable to
the person who, when the option became effective, was designated by
him or her to be his or her contingent annuitant. The optional
benefit elected shall be the Equivalent Actuarial Value of the
retirement allowance otherwise payable without optional modification
under Section 4.01, 4.02 or 4.03.
<PAGE> 162
Page 16
Option 1 - A reduced retirement allowance payable during the
Member's or former Member's life with the provision that after his
or death a benefit equal to 100% of his or her reduced retirement
allowance shall be paid during the life of, and to, his or her
surviving contingent annuitant.
Option 2 - A reduced retirement allowance payable during the
Member's or former Member's life with the provision that after his
or her death a benefit equal to 50% of his or her reduced retirement
allowance shall be paid during the life of, and to, his or her
surviving contingent annuitant.
(d) Election of Options - A Member or former Member may, subject to the
provisions of this Section 4.06(d), elect to receive his or her retirement
allowance or vested benefit in the optional form of payment described in
Section 4.06(b)(i) or, in the case of a Member who retires under the
provisions of Section 4.01, 4.02, 4.03 or 4.04, one of the optional forms
of payment described in Section 4.06(b)(ii), in lieu of the automatic
forms of payment described in Section 4.06(a). Notwithstanding the
preceding sentence, a Member who retired on a disability retirement
allowance may only elect an optional form of benefit to take effect on the
first day of the calendar month next following his or her Normal
Retirement Date. A married Member's or a married former Member's election
of a Life Annuity form of payment under Section 4.06(b)(i) or any optional
form of payment under Section 4.06(b)(ii), which does not provide for
monthly payments to his or her spouse for life after the Member's or
former Member's death, in an amount equal to at least 50% but not more
than 100% of the monthly amount payable under that form of payment to the
Member
<PAGE> 163
Page 17
or former Member and which is not of Equivalent Actuarial Value to the
Automatic Joint and Survivor Annuity described in Section 4.06(a)(i),
shall be effective only with Spousal Consent; provided that such Spousal
Consent to the election has been received by the Retirement Committee.
4.07 Survivor's Benefit Applicable Before the Annuity Starting Date
(a) Automatic Pre-Retirement Spouse's Benefit
(i) Automatic Pre-Retirement Spouse's Benefit applicable before
termination of employment - The surviving spouse of a Member who has
completed 5 years of Eligibility Service or who is receiving a
disability retirement allowance under Section 4.04 shall
automatically receive a benefit payable under the automatic
Pre-Retirement Spouse's Benefit of this Section 4.07(a)(i) in the
event said Member should die after the effective date of coverage
hereunder and before termination of employment (or Normal Retirement
Date, in the case of a Member receiving a disability retirement
allowance). The benefit payable to the Member's spouse shall be
equal to the benefit the Member's spouse would have received if the
retirement allowance or vested benefit the Member was entitled to at
his or her date of death had commenced as of the month next
following the month in which his or her Normal Retirement Date would
have occurred (or the month next following the month in which the
Member's date of death occurred, if later) in the form of the
Automatic Joint and Survivor Annuity under Section 4.06(a)(i). Such
benefit shall be payable for the life of the spouse commencing on
the first day of the calendar month next following what would have
been the Member's Normal Retirement Date (or next following the
month in which the Member's date of death occurred, if later).
However, the Member's spouse may elect, by written application filed
with the Retirement Committee, to have payments begin
<PAGE> 164
Page 18
as of the first day of any calendar month after the date the former
Member would have reached the 62nd anniversary of his or her birth;
provided, however, if the Member dies while receiving a disability
retirement allowance under Section 4.04, payments begin under this
automatic Pre-Retirement Spouse's Benefit as of the first day of the
month following the Member's death.
If payment of the automatic Pre-Retirement Spouse's Benefit
commences prior to what would have been the Member's Normal
Retirement Date, the amount of such benefit payable to the spouse
shall be based on (i) the standard early retirement allowance or
vested benefit to which the Member would have been entitled, had the
Member elected to have payments commence to himself or herself on
such earlier date in accordance with the provisions of Section
4.03(b) or Section 4.05(b), or in the case of a Member who dies
while receiving a disability retirement allowance under Section
4.04, the disability retirement allowance the Member was receiving
on his date of death.
Coverage hereunder shall be applicable to a married Member in active
service who has satisfied the eligibility requirements for a
retirement allowance under Section 4.01(a), 4.02(a), 4.03(a) or
4.04(a) or vested benefit under Section 4.05(a) and shall become
effective on the date the Member marries and shall cease on the
earlier of (i) the date such active Member's marriage is legally
dissolved by a divorce decree or (ii) the date such active Member's
spouse dies.
<PAGE> 165
Page 19
(ii) Automatic Pre-Retirement Spouse's Benefit applicable upon
termination of employment - In the case of a Member or former Member
who is married and entitled to a standard early retirement allowance
under Section 4.03 or a vested benefit under Section 4.05, the
provisions of this Section 4.07(a)(ii) shall apply to the period
between the date his or her services are terminated or the date, if
later, the Member or former Member is married and his or her Annuity
Starting Date, or other cessation of coverage as later specified in
this Section 4.07(a)(ii).
In the event of a married Member's or former Member's death during
any period in which these provisions have not been waived or revoked
by the Member or former Member and his or her spouse, the benefit
payable to the Member's or former Member's spouse shall be equal to
50% of the standard early retirement allowance or vested benefit the
Member or former Member would have received as of the month next
following the month in which his or her Normal Retirement Date would
have occurred if he or she had elected to receive such benefit in
the form of the Automatic Joint and Survivor Annuity under Section
4.06(a).
The spouse's benefit shall be payable for the life of the spouse
commencing on the first day of the calendar month next following
what would have been the Member's or former Member's Normal
Retirement Date. However, the Member's or former Member's spouse may
elect, by written application filed with the Retirement Committee,
to have payments begin as of the first day of any calendar month
after the date the Member or former Member would have reached the
62nd anniversary of his or her birth (or his or her date of
<PAGE> 166
Page 20
death, if later). If the Member's or former Member's spouse elects
to commence payment of this automatic Pre-Retirement Spouse's
Benefit prior to what would have been the Member's or former
Member's Normal Retirement Date, the amount of such benefit payable
to the spouse shall be based on the standard early retirement
allowance or vested benefit to which the Member or former Member
would have been entitled, had the Member or former Member elected to
have payments commence to himself or herself on such earlier date in
accordance with the provisions of Section 4.03(b) or Section
4.05(b).
However, if a Member or former Member has elected Option 1 under
Section 4.06(b)(ii) within the 90-day period preceding his or her
Annuity Starting Date, with his or her spouse as contingent
annuitant, the amount of benefit payable to the spouse shall be
based on the provisions of Option 1, in lieu of the provisions of
this Section 4.07(a)(ii).
The vested benefit payable to a former Member whose spouse is
covered under this Section 4.07(a)(ii) or, if applicable, the
benefit payable to his or her spouse upon his or her death shall be
reduced by the applicable percentages shown below. Such reduction
shall apply to each month during which coverage is in effect for at
least one day; provided, however, no reduction shall be made with
respect to any period before the later of (1) the date the
Retirement Committee furnishes the former Member the notice of his
or her right to waive the automatic Pre-Retirement Spouse's Benefit
or (2) the commencement of the election period specified in Section
4.07(b) below.
<PAGE> 167
Page 21
ANNUAL REDUCTION FOR SPOUSE'S COVERAGE
AFTER TERMINATION OF EMPLOYMENT
OTHER THAN RETIREMENT
<TABLE>
<CAPTION>
Age Reduction
--- ---------
<S> <C>
Less than 40 1/10 of 1% per year
40 but prior to 50 2/10 of 1% per year
50 but prior to 55 3/10 of 1% per year
55 but prior to 60 5/10 of 1% per year
60 but less than 65 1% per year
</TABLE>
(b) The Retirement Committee shall furnish to each former Member a written
explanation which describes (i) the terms and conditions of the automatic
Pre-Retirement Spouse's Benefit, (ii) the former Member's right to make,
and the effect of, an election to waive the automatic Pre-Retirement
Spouse's Benefit, (iii) the rights of the former Member's spouse, and (iv)
the right to make, and the effect of, a revocation of such a waiver. Such
written explanation shall be furnished to each former Member before the
first anniversary of the date he or she terminated service, and shall be
furnished to such former Member even though he or she is not married.
The period during which the former Member may make an election to waive
the automatic Pre-Retirement Spouse's Benefit provided under Section
4.07(a)(ii) shall begin not later than the date his or her employment
terminates and end on his or her Annuity Starting Date or, if earlier, his
or her date of death. Any waiver, revocation or re-election of the
automatic Pre-Retirement Spouse's Benefit shall be made on a form provided
by the Retirement Committee and any waiver or revocation shall require
Spousal Consent. If, upon termination of employment, the former Member
waives coverage hereunder in accordance with administrative procedures
established by the Retirement Committee for all Members similarly
situated, such waiver shall be effective as of the
<PAGE> 168
Page 22
former Member's Severance Date. Any later re-election or revocation shall
be effective on the first day of the month coincident with or next
following the date the completed form is received by the Retirement
Committee. If a former Member dies during the period after a waiver is in
effect, there shall be no benefits payable to his or her spouse under the
provisions of this Section 4.07 unless an effective election under Section
4.07(b) is in effect.
Except as described above in the event of a waiver or revocation, coverage
under Section 4.07(a)(ii) shall cease to be effective upon a Member's or
former Member's Annuity Starting Date, or upon the date a Member's or
former Member's marriage is legally dissolved by a divorce decree, or upon
the death of the spouse, whichever event shall first occur.
(c) Any election made under Section 4.07 (including any waiver or revocation
thereof) shall be made on a form approved by and filed with the Retirement
Committee.
(d) Notwithstanding the provisions of Section 4.07(a), a Member or former
Member whose employment terminated on of after January 1, 1976 and prior
to August 23, 1984 and who is entitled to a retirement allowance or vested
benefit pursuant to the provisions of Section 4.03 or 4.05, but who is not
yet in receipt thereof, may elect, on or after August 23, 1984 and prior
to the commencement of such retirement allowance or vested benefit, to
have the provisions or Section 4.07(a)(ii) apply to him or her.
<PAGE> 169
Page 23
4.10 Payment of Benefits
(a) Unless otherwise provided under an optional benefit elected pursuant to
Section 4.06, the survivor's benefits available under Section 4.07 or the
provisions of Section 4.10(e)(ii), all retirement allowances, vested
benefits or other benefits payable will be paid in monthly installments
for each month beginning with (i) the month next following the month in
which the Member has reached his or her Normal Retirement Date and has
retired from active service, (ii) the month next following the month in
which a Member has reached his or her Postponed Retirement Date and has
retired from service, (iii) the month next following the month in which a
Member or former Member, files a proper application requesting
commencement of his or her vested benefit, standard early retirement
allowance or disability retirement allowance, or (iv) the month in which
benefits under an optional benefit under Section 4.06 or the survivor's
benefits under Section 4.07 become payable, whichever is applicable. Such
monthly installments shall cease with the payment for the month in which
the recipient dies. In no event shall a retirement allowance or vested
benefit be payable to a Member who continues in or resumes active service
with the Company or an Associated Company for any period between his or
her Normal Retirement Date and Postponed Retirement Date, except as
provided in Sections 4.02(d) and 4.10(e).
(b) In any case, a lump sum payment equal to the retirement allowance or
vested benefit payable under Section 4.01, 4.02, 4.03, 4.04 or 4.05 or the
pre-retirement spouse's benefit payable under Section 4.07(a) multiplied
by the appropriate factor contained in Table 3 of Schedule I shall be made
in lieu of any retirement allowance or vested benefit payable to a Member
or former Member or any pre-retirement spouse's benefit payable to a
spouse of a Member or a former Member, if the lump sum present value of
such benefit amounts to $3,500 ($5,000 effective January 1, 1998) or less.
<PAGE> 170
Page 24
For distributions prior to September 1, 1995, however, in no event shall
that adjustment factor produce a lump sum that is less than the amount
determined by using the interest rate assumption used by the Pension
Benefit Guaranty Corporation for valuing benefits for determining lump sum
payments under single employer plans that terminate on January 1 of the
Plan Year in which the Annuity Starting Date occurs. For distributions on
and after September 1, 1995, in no event shall that adjustment factor
produce a lump sum that is less than the amount determined by using the
"Applicable Mortality Table" (as defined in Code Section
417(e)(A)(ii)(II)) and the interest rate on 30-year Treasury Securities
for December of the year preceding the Plan Year in which the Annuity
Starting Date occurs. The lump sum payment shall be made as soon as
administratively practicable following the date the Member has terminated
employment or died, but in any event prior to the date his or her benefit
payment would have otherwise commenced.
4.11 Reemployment of former Member or retired Member
(b) Optional forms of pension benefits
If the Member is reemployed, any previous election of an optional benefit
under Section 4.06 or a survivor's benefit under Section 4.07 shall be
revoked.
(c) Benefit payments at subsequent termination or retirement
(i) In accordance with the procedure established by the Retirement
Committee on a basis uniformly applicable to all Members similarly
situated, upon the subsequent retirement of a Member in service
after his or her Normal Retirement Date, payment of such Member's
retirement allowance shall resume no later than the third month
after the final month
<PAGE> 171
Page 25
during the reemployment period in which he or she is credited with
at least 40 Hours of Service.
(ii) Upon the subsequent retirement or termination of employment of a
retired or former Member, the Retirement Committee shall, in
accordance with rules uniformly applicable to all Members similarly
situated, determine the amount of vested benefit or retirement
allowance which shall be payable to such Member at such subsequent
retirement or termination. Such vested benefit or retirement
allowance shall be reduced by an amount of Equivalent Actuarial
Value to the benefits, if any, other than disability retirement
allowance payments, he or she received before the earlier of the
date of his or her restoration to service or his or her Normal
Retirement Date, provided that no such reduction shall reduce such
retirement allowance or vested benefit below the original amount of
retirement allowance or vested benefit earned but not received or
retirement allowance or vested benefit previously received by such
Member in accordance with the terms of the Plan in effect during
such previous employment, adjusted to reflect the election of any
survivor's benefits pursuant to Section 4.07(a)(ii).
4.16 Minimum Adjusted Benefit
(a) The adjustment factor applied to a retirement allowance or vested benefit
payable to any Member or former Member who terminates employment on or
after October 1, 1985, or to the Beneficiary of such Member or former
Member, shall not result in a retirement allowance or vested benefit which
is less than the adjusted retirement allowance or vested benefit which
would have been payable to such Member, former Member or Beneficiary under
the provisions of the Southern
<PAGE> 172
Page 26
Wood Plan as in effect on September 30, 1985 based on Benefit Service
rendered up to and including September 30, 1985.
(b) The adjustment factor applied to a retirement allowance or vested benefit
payable to any Member or former Member who terminates employment on or
after January 1, 1989, or to the Beneficiary of such Member or former
Member, shall not result in a retirement allowance or vested benefit which
is less than the adjusted retirement allowance or vested benefit which
would have been payable to such Member, former Member or Beneficiary under
the provisions of the Southern Wood Plan as in effect on December 31, 1988
based on Benefit Service rendered up to and including December 31, 1988.
<PAGE> 173
Page 27
SCHEDULE I
[TABLE OMITTED]
<PAGE> 174
APPENDIX D
SCHEDULE II
(SOUTHERN WOOD PIEDMONT NON-UNION LOCATIONS)
Effective as of September 1, 1986, the Retirement Allowances payable to the
following retired Members, contingent annuitants or surviving spouses shall be
supplemented in the amounts listed below, and shall be payable after the death
of a Member in accordance with the provisions of Section 4.06 of the Plan, if
applicable.
SOCIAL MONTHLY
NAME SECURITY NO. SUPPLEMENT
---- ------------ ----------
Lillie V. Barnhill ###-##-#### $ 10.00
Charles J. Calloway ###-##-#### 10.00
Julius Davis ###-##-#### 10.00
David Russell Fowler ###-##-#### 10.00
Willie Gilchrist ###-##-#### 10.00
Foster Gore ###-##-#### 10.00
Manson Griffin ###-##-#### 10.00
Robert J. Hardy ###-##-#### 10.00
Calvin B. Hyde ###-##-#### 10.00
Savannah A. Jeter ###-##-#### 10.00
Codozar Jeter ###-##-#### 10.00
Charles E. Lambert ###-##-#### 10.00
Franklin C. Lyile ###-##-#### 10.00
<PAGE> 175
APPENDIX D
SCHEDULE II
(SOUTHERN WOOD PIEDMONT NON-UNION LOCATIONS)
Effective as of October 1, 1988, the Retirement Allowances payable to the
following retired Members, contingent annuitants or surviving spouses shall be
supplemented in the amounts listed below, and shall be payable after the death
of a Member in accordance with the provisions of Section 4.06 of the Plan, if
applicable.
SOCIAL MONTHLY
NAME SECURITY NO. SUPPLEMENT
---- ------------ ----------
John W. Anderson ###-##-#### $ 10.00
Otis J. Atkinson ###-##-#### 10.00
James Baker, Jr. ###-##-#### 10.00
Lillie V. Barnhill ###-##-#### 10.00
Asberry Bell ###-##-#### 10.00
Daniel Bell ###-##-#### 10.00
Lawson Bethune ###-##-#### 10.00
Homer A. Blanton ###-##-#### 10.00
Charles J. Calloway ###-##-#### 10.00
Marvin Chandler ###-##-#### 10.00
James Davenport ###-##-#### 10.00
Terry Davenport ###-##-#### 10.00
Julius Davis ###-##-#### 10.00
David Russell Fowler ###-##-#### 10.00
Andrew Foster ###-##-#### 10.00
Clyde Fullenwider ###-##-#### 10.00
Willie Gilchrist ###-##-#### 10.00
Joseph Goodman ###-##-#### 10.00
Foster Gore ###-##-#### 13.85
Manson Griffin ###-##-#### 12.60
Robert L. Hardy ###-##-#### 10.00
Charles Holmes, Sr. ###-##-#### 10.00
Calvin B. Hyde ###-##-#### 10.00
Savanah A. Jeter ###-##-#### 10.00
Codozar Jeter ###-##-#### 10.00
Laddie Joe Johnson ###-##-#### 10.00
James Jones ###-##-#### 10.00
Murry L. Jones ###-##-#### 10.00
Robert H. Knuckles ###-##-#### 10.00
<PAGE> 176
Page 2
SOCIAL MONTHLY
NAME SECURITY NO. SUPPLEMENT
---- ------------ ----------
Charles E. Lambert ###-##-#### $ 10.00
Harold J. Lawter ###-##-#### 10.00
Gilbert F. Lemay ###-##-#### 10.00
Ruby Inez Lytle ###-##-#### 10.00
Herman J. Mason ###-##-#### 10.00
Walter K. Mayo ###-##-#### 10.00
Walter E. Paden ###-##-#### 10.08
John Lee Palmer ###-##-#### 10.00
Charles F. Parnell ###-##-#### 10.00
J. Landrum Prince ###-##-#### 12.42
Oliver L. Rhodes ###-##-#### 10.00
John Rogers ###-##-#### 10.00
William Rollins ###-##-#### 10.00
Clarence Ruffin ###-##-#### 10.00
Charles O. Scott ###-##-#### 13.85
Beezie Sheppard ###-##-#### 10.00
John C. Stripling ###-##-#### 10.00
James E. Tennant ###-##-#### 10.00
John H. Terley ###-##-#### 10.00
Leroy Thompson ###-##-#### 10.00
Thomas Thompson ###-##-#### 10.00
Oscar Travis ###-##-#### 10.00
Woodrow Wilson Tyson ###-##-#### 10.00
Isaac Valentine ###-##-#### 10.00
Walter Webster ###-##-#### 10.00
John H. West ###-##-#### 10.00
Louise H. Williamson ###-##-#### 10.00
<PAGE> 177
Page 3
SCHEDULE II
(SOUTHERN WOOD PIEDMONT NON-UNION LOCATIONS)
Effective as of January 1, 1996, the Retirement Allowance payable to the
following retired Members, contingent annuitants or surviving spouses shall be
supplemented in the amounts listed below, and shall be payable after the death
of a Member in accordance with the provisions of Section 4.06 of the Plan.
SOCIAL MONTHLY
NAME SECURITY NO. SUPPLEMENT
---- ------------ ----------
John Anderson ###-##-#### $ 10.38
Otis J. Atkinson ###-##-#### 10.00
H. Baker ###-##-#### 10.00
Asberry Bell ###-##-#### 10.00
Lawson Bethune ###-##-#### 10.00
Roman Bing ###-##-#### 10.00
Homer A. Blanton ###-##-#### 10.00
Calvin Boykin ###-##-#### 10.00
Arthur L. Brown ###-##-#### 12.73
Elizabeth Clark ###-##-#### 10.00
James Davenport ###-##-#### 11.98
Terry Davenport ###-##-#### 10.00
Julius Davis ###-##-#### 10.00
Mary Dunn ###-##-#### 10.00
James P. Edgins ###-##-#### 11.78
G. F. Ellis ###-##-#### 10.00
Steve Finch ###-##-#### 12.87
Andrew Foster ###-##-#### 10.00
David Russell Fowler ###-##-#### 10.00
Delois Fullenwider ###-##-#### 10.00
Joseph Goodman ###-##-#### 10.05
Foster Gore ###-##-#### 10.12
Corrine Griffin ###-##-#### 10.00
Robert L. Hardy ###-##-#### 10.00
Charles Holmes, Sr. ###-##-#### 10.00
Sam Horton ###-##-#### 10.07
Fannie M. Hughes ###-##-#### 10.00
Woodrow Hunter ###-##-#### 15.35
Savanah Jeter ###-##-#### 10.00
Laddie Joe Johnson ###-##-#### 11.90
James Jones ###-##-#### 10.00
Annie Knuckles ###-##-#### 10.00
<PAGE> 178
Page 4
SOCIAL MONTHLY
NAME SECURITY NO. SUPPLEMENT
---- ------------ ----------
Charles E. Lambert ###-##-#### 10.00
Louise Lawter ###-##-#### 10.88
Gilbert F. Lemay ###-##-#### 10.00
Ruby Inez Lytle ###-##-#### 10.00
Herman J. Mason ###-##-#### 10.00
Estella Mayo ###-##-#### 10.00
M. Curtis Mcintyre ###-##-#### 11.41
Willie Mcintyre ###-##-#### 11.16
Clarence E. Neal ###-##-#### 10.00
Will Norton ###-##-#### 12.77
Walter E. Paden ###-##-#### 10.00
John Lee Palmer ###-##-#### 10.00
Walter G. Palmer ###-##-#### 10.00
Charles F. Parnell ###-##-#### 10.00
Edgar Lee Pope ###-##-#### 10.00
J. Landrum Prince ###-##-#### 10.00
Oliver L. Rhodes ###-##-#### 10.00
William Rollins ###-##-#### 10.00
Frank Ross ###-##-#### 10.00
Joe Ross, Jr. ###-##-#### 10.00
Clarence Ruffin ###-##-#### 10.00
Charles O. Scott ###-##-#### 10.00
Earl Sexton ###-##-#### 11.09
George Smith, Sr. ###-##-#### 11.07
George Stallings ###-##-#### 13.37
Ruth Stripling ###-##-#### 10.00
Wallace Tate ###-##-#### 10.00
James E. Tennant ###-##-#### 13.13
W. Thomason ###-##-#### 12.89
Leroy Thompson ###-##-#### 10.00
Oscar Travis ###-##-#### 10.00
Woodrow Wilson Tyson ###-##-#### 10.00
Isaac Valentine ###-##-#### 12.13
Walter Webster ###-##-#### 10.00
John H. West ###-##-#### 10.00
Willie A. Willis ###-##-#### 10.00
W. G. Worrell ###-##-#### 10.51
Nina Wright ###-##-#### 10.00
<PAGE> 179
APPENDIX E
<PAGE> 180
RETIREMENT PLAN FOR SALARIED EMPLOYEES OF RAYONIER INC.
APPENDIX E
This Appendix E, effective as of January 1, 1996, is applicable with respect to
(a) employees of Rayonier Inc. at the Southeast Forest Resources who were
participants in the Employees Retirement Income Plan for Rayonier Incorporated
Hourly Employees at the Southeast Forest Resources as of December 31, 1995 and
(b) former employees of Rayonier Inc. at the Southeast Forest Resources who are
entitled to a pension benefit under the Employees Retirement Income Plan for
Rayonier Incorporated Hourly Employees at the Southeast Forest Resources as of
December 31, 1995 and their spouses and beneficiaries. This Appendix E
constitutes an integral part of the Plan and sets forth the particulars
concerning:
(i) The definition of "Annuity Starting Date", "Benefit Service",
"Eligibility Service", "Equivalent Actuarial Value", "Normal
Retirement Date", "Postponed Retirement Date", "Public Disability
Benefit", "Southeast Forest Accrued Benefit", "Southeast Forest
Plan", and "Total and Permanent Disability."
(ii) The determination of Eligibility Service as referred to in Section
2.01 of the Plan.
(iii) The determination of Benefit Service as referred to in Section 2.02
of the Plan.
(iv) The eligibility requirements for membership as referred to in
Article 3 of the Plan.
(v) The determination of the amount of normal retirement allowance as
referred to in Section 4.01(b) of the Plan.
(vi) The determination of the amount of postponed retirement allowance
as referred to in Sections 4.02(b) and (c) of the Plan
(vii) The eligibility requirements for a standard early retirement
allowance as referred to in Section 4.03(a) of the Plan.
(viii) The determination of the amount of a standard early retirement
allowance as referred to in Section 4.03(b) of the Plan.
<PAGE> 181
Page 2
(ix) The eligibility requirements for a disability retirement allowance.
(x) The determination of the amount of a disability retirement
allowance.
(xi) The determination of the amount of vested benefit as referred to in
Section 4.05(b) of the Plan.
(xii) The forms of benefit payment after retirement as referred to in
Section 4.06 of the Plan.
(xiii) The survivor's benefit applicable before retirement as referred to
in Section 4.07 of the Plan.
(xiv) The determination of the amount of an automatic lump sum payment as
referred to in Section 4.10(b) of the Plan.
(xv) The effect of re-employment on the election of an optional form of
benefit as referred to in Section 4.11(b) of the Plan.
(xvi) The determination of the amount of benefit payable to a re-employed
Member upon his or her subsequent retirement as referred to in
Section 4.11(c) of the Plan.
(xvii) The minimum adjusted benefit payable under the Plan.
Notwithstanding the foregoing, the provisions set forth in this Appendix E,
other than the provisions of Sections 2.01(a)(i), 2.02(a) and Article 3 of this
Appendix E, shall only be applicable with respect to retirement allowances,
vested benefits, or other benefits attributable to a Member's Benefit Service
prior to January 1, 1996; provided, however, that a Member's Benefit Service on
and after January 1, 1996 shall be taken into account for purposes of the
determination under Section 4.03 of this Appendix E of whether a reduction for
the commencement of benefits prior to Normal Retirement Date applies and for
purposes of calculating the percentage of disability retirement allowance
payable pursuant to Section 4.04 of this Appendix E.
<PAGE> 182
Page 3
ARTICLE 1 - DEFINITIONS
1.03 Annuity Starting Date shall mean the first day of the first period for
which an amount is due on behalf of a Member or former Member as an
annuity or any other form of payment under the Plan; provided, however,
that in the case of a Member who retires under Section 4.04, Annuity
Starting Date shall mean his or her Normal Retirement Date.
1.07 Benefit Service shall mean employment recognized as such for the purposes
of determining eligibility for certain benefits and computing a benefit
under the Plan as provided under Article 2.
1.15 Eligibility Service shall mean any employment recognized as such for the
purposes of meeting the eligibility requirements for membership in the
Plan and for eligibility for certain benefits under the Plan as provided
under Article 2.
1.17 Equivalent Actuarial Value shall mean equivalent value of a benefit under
the Plan determined on the basis of the applicable factors set forth in
Schedule I, except as otherwise specified in the Plan. In any other event,
Equivalent Actuarial Value shall be determined on the same actuarial basis
utilized to compute the factors set forth in Schedule I.
1.26 Normal Retirement Date shall mean the first day of the calendar month next
following the date the employee or former employee attains age 65, which
is his or her Normal Retirement Age.
1.32 Postponed Retirement Date shall mean, with respect to an Employee who does
not retire at Normal Retirement Date but who works after such date, the
first day of the calendar month next
<PAGE> 183
Page 4
following the date on which such Employee retires from active service. No
retirement allowance shall be paid to the Employee until his or her
Postponed Retirement Date, except as otherwise provided in Article 4.
1.44 Public Disability Benefit shall mean disability payments or lump sum
payments under any workers' compensation or occupational diseases law,
except fixed statutory payments for the loss of any bodily member and
except lump-sum payments for disfigurement. The amount of the deduction to
be made from monthly disability retirement allowances in respect to any
lump-sum payments under any workers' compensation or occupational diseases
law shall be determined by dividing the lump-sum payment by the maximum
number of months or fractions thereof in the period provided by statute or
regulation, provided the amount of such deduction shall be limited to the
amount of monthly disability retirement allowance and shall be applicable
for the number of months and fractions thereof in such maximum period.
1.45 Southeast Forest Accrued Benefit shall mean the accrued benefit under the
Southeast Forest Plan as of December 31, 1995.
1.46 Southeast Forest Plan shall mean the Employees Retirement Income Plan for
Rayonier Incorporated Hourly Employees at the Southeast Forest Resources
as in effect on the date specified in the Plan.
1.47 Total and Permanent Disability shall mean the total and permanent
disablement of a Member if (a) through some unintentional cause, he or she
has been totally disabled by bodily injury or disease or by mental
derangement so as to be prevented thereby from engaging in any regular
<PAGE> 184
Page 5
occupation or employment for remuneration or profit, and (b) such total
disability is expected to be permanent and continuous during the remainder
of his or her life, provided such disability is not incurred in service in
the armed forces of any country, each as determined by the Company on the
basis of qualified medical evidence.
<PAGE> 185
Page 6
ARTICLE 2 - SERVICE
2.01 Eligibility Service
(a) (i) Eligibility Service Prior to January 1, 1996 - Subject to the
bridging breaks in service provisions of Section 2.01(e), a Member's
Eligibility Service shall include the "Vesting Service" credited to
such Member under the Southeast Forest Plan as of December 31, 1995.
(ii) Eligibility Service on and after January 1, 1996 - Except as
otherwise provided in this Article 2, all uninterrupted employment
with the Company or with an Associated Company rendered on and after
January 1, 1996 and prior to the date such Member's employment
terminates, shall be recognized as Eligibility Service for all Plan
purposes. Notwithstanding the foregoing, with respect to any
calendar year in which the employee completes at least 1,000 Hours
of Service there shall be included in his or her Eligibility Service
a full year of Eligibility Service. For any calendar year in which
the employee completes less than 1,000 Hours of Service there shall
be included in his or her Eligibility Service one month of
Eligibility Service for each calendar month in which he or she works
at least one day.
(b) Hours of Service - "Hours of Service" shall include hours worked and hours
for which a person is compensated by the Company or by an Associated
Company for the performance of duties for the Company or an Associated
Company, although he or she has not worked (such as: paid holidays, paid
vacation, paid sick leave, paid time off and back pay for the period for
which it was awarded), and each such hour shall be computed as only one
hour, even though he or she is compensated at
<PAGE> 186
Page 7
more than the straight time rate. This definition of "Hours of Service"
shall be applied in a consistent and non-discriminatory manner in
compliance with 29 Code of Federal Regulations, Section 2530.200b-2(b) and
(c) as promulgated by the United States Department of Labor and as may
hereafter be amended.
(c) Certain absences to be recognized as Eligibility Service - Except as
otherwise indicated in this Article 2, the following periods of approved
absence shall be recognized as Eligibility Service under the Plan and
shall not be considered as breaks in Eligibility Service:
(i) The period of any leave of absence granted in respect of service
with the armed forces of the United States on or after January 1,
1996, provided the Employee shall have returned to the service of
the Company or an Associated Company in accordance with
re-employment rights under applicable law and shall have complied
with all of the requirements of such law as to re-employment.
(ii) The period on or after January 1, 1996 of any leave of absence
approved by the Company, provided the employee shall have returned
to the service of the Company or an Associated Company upon the
expiration of such approved leave.
If an Employee fails to return to active employment upon expiration of the
approved absences specified in sub-paragraphs (i) and (ii) above, such
periods of approved absence shall not be considered as Eligibility Service
under the Plan.
(d) Breaks in Service - All calendar years other than the calendar year in
which the employee is hired or calendar years in which an absence
specified in paragraph (c) above occurs and such absence is considered as
Eligibility Service, in which an employee does not work at least one day
shall be considered as breaks in Eligibility Service; provided, however,
that in no event shall there be a
<PAGE> 187
Page 8
break in Eligibility Service unless the employee's employment with the
Company or an Associated Company is terminated.
(e) Bridging breaks in service
(i) If an Employee has a break in service and such Employee was eligible
for a vested benefit under Section 4.05 at the time of his or her
break in service, except as otherwise provided in Section 4.11,
employment both before and after the Employee's absence shall be
immediately recognized as Eligibility Service, subject to the
provisions of this Section 2.01, upon his or her return to the
employ of the Company or an Associated Company.
(ii) If an Employee has a break in service and such Employee was not
eligible for a vested benefit under Section 4.05 at the time of his
or her break in service, Eligibility Service shall begin from the
date of his or her return to the employ of the Company or an
Associated Company. If such Employee returns to the employ of the
Company or an Associated Company and the period of the Employee's
break is less than the greater of (1) five years or (2) the
Eligibility Service rendered prior to such break, the service prior
to such break shall be included as Eligibility Service, subject to
the provisions of this Section 2.01, only upon completion of at
least twelve months of Eligibility Service following his or her
break in service. However, if the period of the Employee's break in
service equals or exceeds the greater of (1) five years or (2) the
Eligibility Service rendered prior to such break, the service
rendered prior to such break shall not be included as Eligibility
Service.
<PAGE> 188
Page 9
2.02 Benefit Service
(a) Benefit Service prior to January 1, 1996 - Subject to the restoration of
Benefit Service provisions of Section 2.02(e)(ii), Benefit Service shall
include the "Benefit Service" credited to such Member under the Southeast
Forest Plan as of December 31, 1995.
(b) Employment on or after January 1, 1996 with the Company or an Associated
Company - All uninterrupted employment with the Company or with an
Associated Company rendered or after January 1 1996 and prior to the date
such Member's employment terminates shall be recognized as Benefit Service
for the purpose of meeting the eligibility requirements of the Plan for a
standard early retirement allowance under Section 4.03 or a disability
retirement allowance under Section 4.04, but not for the purpose of
computing the amount of any retirement allowance or vested benefit under
the Plan. However, such uninterrupted employment shall be included for the
purposes of calculating the Benefit Service with respect to which the
determination is made pursuant to Section 4.03(b) of whether a reduction
for the commencement of benefits prior to Normal Retirement Date applies
and for purposes of calculating the percentage of disability retirement
allowance payable pursuant to Section 4.04(b).
(c) Certain absences to be recognized as Benefit Service - Except as otherwise
indicated below, the following periods of approved absence shall be
recognized as Benefit Service and shall not be considered as breaks in
Benefit Service:
(i) The period of any leave of absence granted in respect of service
with the armed forces of the United States on and after January 1,
1996, provided the Employee shall have returned to the service of
the Company or an Associated Company in
<PAGE> 189
Page 10
accordance with reemployment rights under applicable law and shall
have complied with all of the requirements of such law as to
reemployment, shall be recognized as Benefit Service for the purpose
of meeting the eligibility requirements of the Plan for a standard
early retirement allowance under Section 4.03 or a disability
retirement allowance under Section 4.04 and shall not be considered
as a break in Benefit Service nor be considered as Benefit Service
for the purpose of computing the amount of any retirement allowance
or vested benefit under the Plan. However, such leave of absence
shall be included for the purposes of calculating the Benefit
Service with respect to which the determination is made pursuant to
Section 4.03(b) of whether a reduction for the commencement of
benefit prior to Normal Retirement Date applies and for purposes of
calculating the percentage of disability retirement allowance
payable pursuant to Section 4.04 (b).
(ii) With respect to an Employee who was in receipt of Worker's
Compensation benefits on December 31, 1995 as a result of such
Employee's employment with the Company, the continuous period on and
after January 1, 1996 for which such benefits are paid to the
Employee shall be recognized as Benefit Service for all purposes of
the Plan and shall not be considered as a break in Benefit Service.
<PAGE> 190
Page 11
(d) All Other Absences for Employees
(i) No period of absence approved by the Company other than that
specified in Section 2.02(c) above shall be recognized as Benefit
Service for purposes of this Section 2.02.
(ii) No other absence, other than the absence covered by the exception in
clause (i) above, shall be recognized as Benefit Service for
purposes of this Section 2.02 and any such absence shall be
considered as a break in Benefit Service for purposes of this
Section 2.02.
If the Employee was eligible for a vested benefit under Section 4.05
at the time of a break in service, Benefit Service under Section
2.02(a) above before the Employee's absence shall be immediately
recognized as Benefit Service for purposes of Section 2.02(a) above
upon his or her return to service and Benefit Service under Sections
2.02(b) and (c) above both before and after the Employee's absence
shall be immediately recognized as Benefit Service for purposes of
Sections 2.02(b) and (c) above upon his or her return to service.
If the Employee was not eligible for a vested benefit under Section
4.05 at the time of a break in service, Benefit Service under
Section 2.02(b) above shall begin from the date of the Employee's
return to the employ of the Company. However, any Benefit Service
prior to January 1, 1996 rendered prior to such break in service
shall be included as Benefit Service for purposes of Section 2.02(a)
above and any Benefit Service on or after January 1, 1996 shall be
included as Benefit Service for purposes of Sections 2.02 (b) and
(c) above only at the time that the Member bridges his or her
Eligibility Service in accordance with the provisions of Section
2.01(e).
<PAGE> 191
Page 12
ARTICLE 3 - MEMBERSHIP
3.01 Any employee or former employee of Rayonier Inc. at the Southeast Forest
Resources (or its predecessor ITT Rayonier Incorporated at its Southeast
Forest Operations) who is a participant in the Southeast Forest Plan as of
December 31, 1995 shall become a Member of the Plan on January 1, 1996,
but he or she shall not accrue any Eligibility Service or Benefit Service
for purposes of this Appendix E of the Plan unless he or she is employed
by the Company or an Associated Company. Any former employee of Rayonier
Inc. at the Southeast Forest Resources (or its predecessor ITT Rayonier
Incorporated at its Southeast Forest Operations) who is entitled to
receive a pension benefit or disability benefit under the Southeast Forest
Plan as of December 31, 1995, or his or her spouse or beneficiary, shall
be eligible for and shall receive from this Plan benefits in the same
amount and payable in accordance with the same terms as the pension
benefit or disability benefit to which he or she was entitled under the
Southeast Forest Plan as of December 31, 1995.
<PAGE> 192
Page 13
ARTICLE 4 - BENEFITS
4.01 Normal Retirement Allowance
(b) Benefit
Prior to adjustment in accordance with Sections 4.06(a) and 4.07(b), the
annual normal retirement allowance with respect to Benefit Service
credited prior to January 1, 1996 and Benefit Service credited under
Section 2.02(c)(ii) on and after January 1, 1996 payable on a lifetime
basis upon retirement at such Member's Normal Retirement Date, shall be
equal to the sum of (i) and (ii) where:
(i) equals his or her Southeast Forest Accrued Benefit; and
(ii) equals $180.00 multiplied by his or her Benefit Service credited
pursuant to Section 2.02(c)(ii).
4.02 Postponed Retirement Allowance
(b) Benefit - Except as hereinafter provided and prior to adjustment in
accordance with Sections 4.06(a) and 4.07(b), the annual postponed
retirement allowance with respect to Benefit Service credited prior to
January 1, 1996 and Benefit Service credited under Section 2.02(c)(ii) on
and after January 1, 1996 payable on a lifetime basis upon retirement at a
Member's Postponed Retirement Date shall be equal to the annual normal
retirement allowance to which the Member would have been entitled under
Section 4.01(b) based on such Benefit Service had he or she retired on his
or her Normal Retirement Date, increased by an amount which is the
Actuarial Equivalent Value of the monthly payments which would have been
payable with respect to such Benefit Service with respect to each month in
which he or she completed less than 40 Hours of Service. Any monthly
payment determined under this paragraph (b) with respect to any such month
in
<PAGE> 193
Page 14
which he or she completed less than 40 Hours of Service shall be computed
as if the Member had retired on his or her Normal Retirement Date.
(c) Benefit for Member in Active Service after he or she attains Age 70-1/2 -
In the event a Member's retirement allowance is required to begin under
Section 4.10 while the Member is in active service, the January 1
immediately following the calendar year in which the Member attained age
70-1/2 shall be the Member's Annuity Starting Date for purposes of this
Article 4 and the Member shall receive a postponed retirement allowance
commencing on that January 1 in an amount determined as if he or she had
retired on such date. As of each succeeding January 1 prior to the
Member's actual Postponed Retirement Date and as of his or her actual
Postponed Retirement Date, the Member's retirement allowance shall be
reduced by the Equivalent Actuarial Value of the total payments of his or
her postponed retirement allowance made with respect to each month of
continued employment in which he or she completed at least 40 Hours of
Service and which were paid prior to each such recomputation, provided
that no such reduction shall reduce the Member's postponed retirement
allowance below the amount of postponed retirement allowance payable to
the Member immediately prior to the recomputation of such retirement
allowance.
4.03 Standard Early Retirement Allowance
(a) Eligibility - A Member who has not reached his or her Normal Retirement
Date but has, prior to his or her termination of employment reached the
55th anniversary of his or her birth and completed 15 years of Benefit
Service (as determined in accordance with Sections 2.02 (a), (b) and (c)),
is eligible to retire on a standard early retirement allowance on the
first day of the calendar month next following termination of employment,
which date shall be the Member's Early Retirement Date.
<PAGE> 194
Page 15
(b) Benefit - Except as hereinafter provided and prior to adjustment in
accordance with Sections 4.06(a) and 4.07(b), the standard early
retirement allowance with respect to Benefit Service credited prior to
January 1, 1996 and Benefit Service credited under Section 2.02(c)(ii) on
and after January 1, 1996 shall be an allowance deferred to commence on
the Member's Normal Retirement Date and shall be equal to the sum of (i)
and (ii) where:
(i) equals his or her Southeast Forest Accrued Benefit; and
(ii) equals $180.00 multiplied by his or her Benefit Service credited
pursuant to Section 2.02(c)(ii).
The Member may, however, elect to receive an early retirement allowance
commencing on the last day of the month in which his or her Early
Retirement Date occurs or on the last day of any calendar month before his
or her Normal Retirement Date specified in his or her later request
therefor; provided, however, that in the event the Member had not attained
age 62 and completed at least 20 years of Benefit Service (as determined
in accordance with Sections 2.02(a), (b) and (c)) as of the date he or she
terminated employment, such retirement allowance shall be a reduced amount
which, prior to adjustment in accordance with Sections 4.06(a) and 4.07(a)
shall be equal to his or her Southeast Forest Accrued Benefit reduced by
1/180th for each month up to 60 months by which the commencement date of
his or her retirement allowance precedes his or her Normal Retirement Date
and further reduced by 1/360th for each such month in excess of 60 months.
<PAGE> 195
Page 16
4.04 Disability Retirement Allowance
(a) Eligibility - A Member who has completed ten years of Benefit Service
(determined in accordance with Sections 2.02(a), (b) and (c)) who incurs a
Total and Permanent Disability is eligible to retire on a disability
retirement allowance on the first day of the calendar month next following
the date the Member is determined to be so disabled by the Company based
on a qualified medical evidence, which date shall be the Member's
Disability Retirement Date.
(b) Benefit -Except as herein provided and prior to any adjustment in
accordance with Section 4.07(b)(ii), the disability retirement allowance
shall commence on the last day of the calendar month in which the Member's
Disability Retirement Date occurs and shall be equal to the sum of (i) and
(ii) where:
(i) equals his or her Southeast Forest Accrued Benefit; and
(ii) equals $180.00 multiplied by his or her Benefit Service credited
pursuant to Section 2.02(c)(ii);
multiplied by the percentage set forth below based on his or her years of
Benefit Service (as determined in accordance with Sections 2.02(a), (b)
and (c)):
<TABLE>
<CAPTION>
Years of Benefit Service Percentage
------------------------ ----------
<S> <C>
10 50%
11 60
12 70
13 80
14 90
15 or more 100
(The above percentages are to be
interpolated to reflect fractional
years of Benefit Service.)
</TABLE>
<PAGE> 196
Page 17
Notwithstanding the preceding sentence, if a Member is awarded a Public
Disability Benefit, the disability retirement allowance payable prior to
his or her Normal Retirement Date shall be reduced by the amount of the
Company-provided Public Disability Benefit. On and after the Member's
Normal Retirement Date, the disability retirement allowance, which shall
be calculated without regard to any adjustment prior to the Member's
Normal Retirement Date made pursuant to Section 4.07(b)(ii), will be
adjusted, if applicable, in accordance with Sections 4.06(a) and 4.06(b).
(c) Benefit Discontinuance - In the event such Member's disability retirement
allowance is discontinued as herein provided and he or she is not restored
to service as an Employee, he or she shall be entitled to retire on a
standard early retirement allowance as of the first day of the calendar
month next following such discontinuance or to receive a vested benefit
commencing on the last day of the month in which his or her Normal
Retirement Date occurs, provided that, in the case of early retirement, at
his or her Disability Retirement Date he or she had completed the
eligibility requirements for the standard early retirement allowance. In
either case, the standard early retirement allowance or vested benefit
shall be computed on the basis of the Member's Benefit Service as of the
earlier of his or her Disability Retirement Date or January 1, 1996.
(d) Medical Examination - Any Member who has not reached his or her Normal
Retirement Date and who is claiming to be totally and permanently disabled
may be required by the Company to submit to examination in a clinic or by
a physician or physicians selected by the Company, and any question as to
the existence of such disability shall be settled on the basis of such
examination. Should any Member in receipt of a disability retirement
allowance refuse to submit to such medical examination, his or her
disability retirement allowance shall be discontinued until his or her
withdrawal of such refusal, and should his or her refusal continue for a
year, all rights in and to the
<PAGE> 197
Page 18
disability retirement allowance shall cease; provided, however, that he or
she shall be entitled to have his or her disability retirement allowance
restored, prior to his or her Normal Retirement Date, if, on the basis of
a medical examination by a physician or physicians designated by the
Company, the Company finds that he or she has again lost earning capacity
because of the same disability.
4.05 Vested Benefit
(b) Benefit - Prior to adjustment in accordance with Sections 4.06(a) and
4.07(a), the vested benefit payable to a Member shall be a benefit
deferred to commence on the last day of the month in which the former
Member's Normal Retirement Date occurs and shall be equal to the sum of
(i) and (ii) where:
(i) equals his or her Southeast Forest Accrued Benefit; and
(ii) equals $180.00 multiplied by his or her Benefit Service credited
pursuant to Section 2.02(c)(ii).
On or after the date on which the former Member shall have reached the
55th anniversary of his or her birth, he or she may elect to receive a
benefit commencing on the last day of any calendar month next following
the 55th anniversary of his or her birth and prior to his or her Normal
Retirement Date as specified in his or her request therefor, after receipt
by the Retirement Committee of written application therefor made by the
former Member and filed with the Retirement Committee. Upon such earlier
payment, the vested benefit otherwise payable at the former Member's
Normal Retirement Date will be reduced by 1/180th for each month up to 60
months by which the commencement date of such payments precedes his or her
Normal Retirement Date and further reduced by 1/360th for each such month
in excess of 60 months.
<PAGE> 198
Page 19
4.06 Forms of Benefit Payment after Retirement
(a) Automatic Forms of Payment
(i) Automatic Joint and Survivor Annuity - If a Member or former Member
who is married on his or her Annuity Starting Date has not made an
election of an optional form of payment as provided in Section
4.06(b), the retirement allowance or vested benefit payable to such
Member or former Member commencing on his or her Annuity Starting
Date shall automatically be adjusted to provide (A) a reduced
benefit payable to the Member or former Member during his or her
life equal to his or her benefit otherwise payable without optional
modification computed in accordance with Section 4.01, 4.02, 4.03,
4.04 or 4.05, as the case may be, multiplied by the appropriate
factor contained in Table 1 of Schedule I and (B) a benefit payable
after his or her death to his or her surviving spouse equal to 50%
of the reduced benefit payable to the Member or former Member.
(ii) Automatic Life Annuity - If a Member or former Member is not married
on his or her Annuity Starting Date, the retirement allowance or
vested benefit computed in accordance with Section 4.01, 4.02, 4.03,
4.04 or 4.05, as the case may be, shall be paid to the Member or
former Member in the form of a lifetime benefit payable during his
or her own lifetime with no further benefit payable to anyone after
his or her death, unless the Member or former Member is eligible for
and makes an election of an optional form of payment under Section
4.06(b).
(iii) A married former Member entitled to, but not in receipt of, a
retirement allowance or vested benefit as of August 23, 1984 who
terminated service on or after September 2,
<PAGE> 199
Page 20
1974 but before January 1, 1976 may elect, during the period
beginning on August 23, 1984 and ending on his or her Annuity
Starting Date, to have his or her retirement allowance or vested
benefit payable in accordance with the provisions of this Section
4.06(a).
(b) Optional Forms of Payment
(i) Life Annuity Option - Any Member or former Member who retires or
terminates employment with the right to a retirement allowance or
vested benefit may elect, in accordance with the provisions of
Section 4.06(d), to provide that the retirement allowance payable to
him or her under Section 4.01, 4.02, 4.03 or 4.04 or the vested
benefit payable to him or her under Section 4.05 shall be in the
form of a lifetime benefit payable during his or her own lifetime
with no further benefit payable to anyone after his or her death.
(ii) Contingent Annuity Option - Any Member who retires or terminates
employment with the right to a retirement allowance may elect, in
accordance with provisions of Section 4.06(d), to convert the
benefit otherwise payable to him or her without optional
modification under Section 4.01, 4.02, 4.03 or 4.04, as the case may
be, into one of the following alternative options in order to
provide that after his or her death, a lifetime benefit shall be
payable to the person who, when the option became effective, was
designated by him or her to be his or her contingent annuitant. The
optional benefit elected shall be the Equivalent Actuarial Value of
the benefit otherwise payable without optional modification under
Section 4.01, 4.02, 4.03 or 4.04.
<PAGE> 200
Page 21
Option 1 - A reduced retirement allowance payable during the
Member's or former Member's life with the provision that after his
or her death a benefit equal to 100% of his or her reduced
retirement allowance shall be paid during the life of, and to, his
or her surviving contingent annuitant.
Option 2 - A reduced benefit payable during the Member's or former
Member's life with the provision that after his or her death a
benefit equal to 50% of his or her reduced retirement allowance
shall be paid during the life of, and to, his or her surviving
contingent annuitant.
(d) Election of Options - A Member or former Member may, subject to the
provisions of this Section 4.06(d), elect to receive his or her retirement
allowance or vested benefit in the optional form of payment described in
Section 4.06(b)(i) or, in the case of a Member who retires under the
provisions of Section 4.01, 4.02, 4.03 or 4.04, in one of the optional
forms of payment described in Section 4.06(b)(ii), in lieu of the
automatic forms of payment described in Section 4.06(a). Notwithstanding
the preceding sentence, a Member who retired on a disability retirement
allowance may only elect an optional form of payment under this Section
4.06 to take effect on his or her Normal Retirement Date. A married
Member's or a married former Member's election of a Life Annuity form of
payment under Section 4.06(b)(i) or any optional form of payment under
Section 4.06(b)(ii), which does not provide for monthly payments to his or
her spouse for life after the Member's or former Member's death, in an
amount equal to at least 50% but not more than 100% of the monthly amount
payable under that form of payment to the Member or former Member and
which is not of Equivalent Actuarial Value to the Automatic Joint and
Survivor Annuity described
<PAGE> 201
Page 22
in Section 4.06(a)(i), shall be effective only with Spousal Consent;
provided that such Spousal Consent to the election has been received by
the Retirement Committee.
Any election made under Section 4.06(a) or Section 4.06(b) shall be made
on a form approved by the Retirement Committee and may be made during the
90-day period ending on the Member's Annuity Starting Date, but not prior
to the date the Member or former Member receives the written explanation
described in Section 4.06(c). Any such election shall become effective on
the Member's or former Member's Annuity Starting Date, provided the
appropriate form is filed with and received by the Retirement Committee
and may not be modified or revoked after his or her Annuity Starting Date.
Any election made under Section 4.06(a) or Section 4.06(b) after having
been filed, may be revoked or changed by the Member or former Member only
by written notice received by the Retirement Committee before his or her
election becomes effective on his or her Annuity Starting Date. Any
subsequent elections and revocations may be made at any time and from time
to time during the 90-day period ending on the Member's or former Member's
Annuity Starting Date. A revocation shall be effective when the completed
notice is received by the Retirement Committee. A re-election shall be
effective on the Member's or former Member's Annuity Starting Date. If,
however, the Member or the spouse or the contingent annuitant designated
in the election dies before the election has become effective, the
election shall thereby be revoked.
If a Member dies after his or her Annuity Starting Date, any payment
continuing on to his or her spouse or contingent annuitant shall be
distributed at least as rapidly as under the method of distribution being
used as of the Member's date of death.
<PAGE> 202
Page 23
4.07 Survivor's Benefit Applicable Before the Annuity Starting Date
(a) Automatic Pre-Retirement Spouse's Benefit
(i) Automatic Pre-Retirement Spouse's Benefit applicable before
termination of employment - The surviving spouse of a Member who has
completed 5 years of Eligibility Service and who does not have an
effective election of the optional Pre-Retirement Survivor's Benefit
under Section 4.07(b)(i) shall automatically receive a benefit
payable under the automatic Pre-Retirement Spouse's Benefit of this
Section 4.07(a)(i) in the event said Member should die after the
effective date of coverage hereunder and before termination of
employment. The benefit payable to the Member's spouse shall be
equal to 50% of the benefit the Member would have received if the
retirement allowance or vested benefit the Member was entitled to at
his or her date of death had commenced as of the month in which his
or her Normal Retirement Date would have occurred (or as of the
month following the month in which his or her date of death
occurred, if later) in the form of the Automatic Joint and Survivor
Annuity under Section 4.06(a)(i). Such benefit shall be payable for
the life of the spouse commencing as of the month in which the
Member's Normal Retirement Date would have occurred (or the month
next following the month in which the Member's date of death
occurred, if later). However, the Member's spouse may elect, by
written application filed with the Retirement Committee, to have
payments begin as of the last day of any calendar month on or after
the date the former Member would have reached the 55th anniversary
of his or her birth.
If the Member's spouse elects to commence payment of the automatic
Pre-Retirement Spouse's Benefit prior to what would have been the
Member's Normal Retirement Date, the amount of such benefit payable
to the spouse shall be based on the standard early
<PAGE> 203
Page 24
retirement allowance or vested benefit to which the Member would
have been entitled, had the Member elected to have payments commence
to himself or herself on such earlier date in accordance with the
provisions of Section 4.03(b) or Section 4.05(b).
However, if a Member had elected Option 1 under Section 4.06(b)(ii)
within the 90-day period proceeding his or her Annuity Starting
Date, with his or her spouse as contingent annuitant, the amount of
benefit payable to the spouse shall be based on the provisions of
Option 1, in lieu of the provisions of this Section 4.07(a)(i).
Coverage hereunder shall be applicable to a married Member in active
service who has satisfied the eligibility requirements for a
retirement allowance under Section 4.01(a), 4.02(a) or 4.03(a) or a
vested benefit under Section 4.05(a) and shall become effective on
the date the Member marries and shall cease on the earlier of (i)
the date such active Member's marriage is legally dissolved by a
divorce decree or (ii) the date such active Member's spouse dies.
(ii) Automatic Pre-Retirement Spouse's Benefit applicable during
disability retirement - The surviving spouse of a Member who is
receiving a disability retirement allowance under Section 4.04 and
who does not have an effective election of the optional
Pre-Retirement Survivor's Benefit under Section 4.07(b)(ii) shall
automatically receive a benefit payable under the automatic
Pre-Retirement Spouse's Benefit of this Section 4.07(a)(ii) in the
event said Member should die after the effective date of coverage
thereunder and before Normal Retirement Date. The benefit payable to
the Member's
<PAGE> 204
Page 25
spouse shall be equal to 50% of the benefit the Member was receiving
prior to his date of death multiplied by the applicable factor in
Table 1 of Schedule I based on the ages of the Member and his or her
spouse on the Member's date of death. Such benefit shall be payable
for the life of the spouse commencing as of the last day of the
month of the Member's death.
However, if a Member had elected Option 1 under Section 4.06(b)(ii)
within the 90-day period proceeding his or her Annuity Starting
Date, with his or her spouse as contingent annuitant, the amount of
benefit payable to the spouse shall be based on the provisions of
Option 1, in lieu of the provisions of this Section 4.07(a)(ii).
Coverage hereunder shall be applicable to a married Member who has
satisfied the eligibility requirements for a disability retirement
allowance under Section 4.04(a) and shall become effective on the
date the Member marries and shall cease on the earliest of (i) the
date such Member's marriage is legally dissolved by a divorce decree
or (ii) the date such Member's spouse dies.
(iii) Automatic Pre-Retirement Spouse's Benefit applicable upon
termination of employment - In the case of a Member or former Member
who is married and entitled to a standard early retirement allowance
under Section 4.03 or a vested benefit under Section 4.05, the
provisions of this Section 4.07(a)(iii) shall apply to the period
between the date his or her services are terminated or the date, if
later, the Member or former Member is married and his or her Annuity
Starting Date, or other cessation of coverage as later specified in
this Section 4.07(a)(iii).
<PAGE> 205
Page 26
In the event of a married Member's or former Member's death during
any period in which these provisions have not been waived or revoked
by the Member or former Member and his or her spouse, the benefit
payable to the Member's or former Member's spouse shall be equal to
50% of the standard early retirement allowance or vested benefit the
Member or former Member would have received as of the month in which
his or her Normal Retirement Date would have occurred if he or she
had elected to receive such benefit in the form of the Automatic
Joint and Survivor Annuity under Section 4.06(a).
The spouse's benefit shall be payable for the life of the spouse
commencing as of the month in which the Member's or former Member's
Normal Retirement Date would have occurred. However, the Member's or
former Member's spouse may elect, by written application filed with
the Retirement Committee, to have payments begin as of any month
following the month in which the Member or former Member would have
reached the 55th anniversary of his or her birth (or following the
month in which his or her date of death occurred, if later). If the
Member's or former Member's spouse elects to commence payment of
this automatic Pre-Retirement Spouse's Benefit prior to what would
have been the Member's or former Member's Normal Retirement Date,
the amount of such benefit payable to the spouse shall be based on
the standard early retirement allowance or vested benefit to which
the Member or former Member would have been entitled, had the Member
or former Member elected to have payments commence to himself or
herself on such earlier date in accordance with the provisions of
Section 4.03(b) or Section 4.05(b).
<PAGE> 206
Page 27
However, if a Member or former Member had elected Option 1 under
Section 4.06(b)(ii) within the 90-day period preceding his or her
Annuity Starting Date, with his or her spouse as contingent
annuitant, the amount of benefit payable to the spouse shall be
based on the provisions of Option 1, in lieu of the provisions of
this Section 4.07(a)(iii).
The vested benefit payable to a former Member whose spouse is
covered under this Section 4.07(a)(iii) or, if applicable, the
benefit payable to his or her spouse upon his or her death shall be
reduced by the applicable percentages shown below. Such reduction
shall apply to each month during which coverage is in effect for at
least one day; provided, however, no reduction shall be made with
respect to any period before the later of (1) the date the
Retirement Committee furnishes the former Member the notice of his
or her right to waive the automatic Pre-Retirement Spouse's Benefit
or (2) the commencement of the election period specified in Section
4.07(c) below.
ANNUAL REDUCTION FOR SPOUSE'S COVERAGE
AFTER TERMINATION OF EMPLOYMENT
OTHER THAN RETIREMENT
<TABLE>
<CAPTION>
Age Reduction
--- ---------
<S> <C>
Less than 40 1/10 of 1% per year
40 but prior to 50 2/10 of 1% per year
50 but prior to 55 3/10 of 1% per year
55 but prior to 60 5/10 of 1% per year
60 but less than 65 1% per year
</TABLE>
(b) Optional Pre-Retirement Survivor's Benefit
The term "Beneficiary" for purposes of this Section 4.07(b) shall mean any
person named by the Member by written designation to receive benefits
payable under the optional Pre-Retirement Survivor's Benefit; provided,
however, that for any married Member the term "Beneficiary" shall
<PAGE> 207
Page 28
automatically mean the Member's spouse and any prior designation to the
contrary will be canceled, unless the Member, with Spousal Consent,
designates otherwise. An election of a non-spouse Beneficiary by a married
Member shall be effective only if accompanied by Spousal Consent and such
Spousal Consent has been received by the Retirement Committee. The
Retirement Committee shall resolve any questions arising hereunder as to
the meaning of "Beneficiary" on a basis uniformly applicable to all
Members similarly situated.
(i) Optional Pre-Retirement Survivor's Benefit in Active Service After
Normal Retirement Date - A Member in active service after his or her
Normal Retirement Date may elect a Pre-Retirement Survivor's Benefit
with a non-spouse Beneficiary pursuant to this Section 4.07(b)(i);
provided, however, that if such Member is married, he or she must
first make an effective waiver of the automatic Pre-Retirement
Spouse's Benefit under Section 4.07(a)(i) pursuant to Section
4.07(c).
In the event of a Member's death during any period in which the
Pre-Retirement Survivor's Benefit provided in this Section
4.07(b)(i) is in effect, the benefit payable to the Member's
Beneficiary shall be equal to 50% of the retirement allowance the
Member would have received on his or her date of death if he or she
had elected to receive such benefit in the form of Option 2 under
Section 4.06(b)(ii). The Pre-Retirement Survivor's Benefit shall be
payable for the life of the Beneficiary commencing on the last day
of the month following the Member's death.
(ii) Optional Pre-Retirement Survivor's Benefit During Disability - In
the case of a Member retired due to disability under the provisions
of
<PAGE> 208
Page 29
Section 4.04, the provisions of this Section 4.07(b)(ii) shall apply
to the period between his or her Disability Retirement Date and his
or her Normal Retirement Date.
The Member may elect the optional Pre-Retirement Survivor's Benefit
under Option A or B below; provided, however, that a married Member
may not elect Option A below with his spouse as Beneficiary.
Option A - The disability retirement allowance payable to the Member
prior to his or her Normal Retirement Date shall be equal to the
retirement allowance the Member would have received on his or her
Disability Retirement Date if he or she had elected to receive such
retirement allowance in the form of Option 2 under Section
4.06(b)(ii). In the event of the Member's death during any period in
which this Option A is in effect, the benefit payable during the
life of, and to, his or her Beneficiary shall be equal to 50% of the
Member's disability retirement allowance calculated in accordance
with the prior sentence, and shall commence on the last day of the
month following the Member's death.
Option B - The disability retirement allowance payable to the Member
prior to his or her Normal Retirement Date shall be equal to the
retirement allowance the Member would have received on his or her
Disability Retirement Date if he or she had elected to receive such
retirement allowance in the form of Option 1 under Section
4.06(b)(ii). In the event of the Member's death during any period
when this Option B is in effect, the benefit payable during the life
of, and to, his or her Beneficiary shall be equal to 100% of the
Member's disability retirement allowance calculated in accordance
with the prior sentence, and shall commence on the last day of the
month following the Member's death.
<PAGE> 209
Page 30
A Member who is eligible for a disability retirement allowance under
Section 4.04 may elect the optional Pre-Retirement Survivor's
Benefit pursuant to this Section 4.07(b)(ii); provided, however,
that if such Member is married and elects a Beneficiary other than
his or her spouse, he or she must first make an effective waiver of
the automatic Pre-Retirement Spouse's Benefit under Section
4.07(a)(ii) pursuant to Section 4.07(c). In order to elect the
optional Pre-Retirement Survivor's Benefit under this Section
4.07(b)(ii), the Member shall, at his or her Disability Retirement
Date, complete such forms as are required under this Section
4.07(b)(ii) and, if he or she elects this optional Pre-Retirement
Survivor's Benefit, coverage hereunder shall be effective as of his
or her Disability Retirement Date. A Member will be deemed to have
waived coverage under this Section 4.07(b)(ii) if he or she does not
file the appropriate forms with the Retirement Committee at his or
her Disability Retirement Date.
(c) The Retirement Committee shall furnish to each Member and former Member a
written explanation which describes (i) the terms and conditions of the
automatic Pre-Retirement Spouse's Benefit and the optional Pre-Retirement
Survivor Benefit, (ii) the Member's or former Member's right to make, and
the effect of, an election to waive the automatic Pre-Retirement Spouse's
Benefit and to elect the optional Pre-Retirement Survivor's Benefit, (iii)
the rights of the Member's or former Member's spouse, and (iv) the right
to make, and the effect of, a revocation of such a waiver. Such written
explanation shall be furnished (A) to each Member in active service within
the period beginning one year prior to his or her attainment of his or her
Normal Retirement Date and ending one year after his or her attainment
thereof, (B) to each Member or former Member who has terminated service
before the first anniversary of the date he or she terminated service, and
(C) to each
<PAGE> 210
Page 31
Member eligible for a disability retirement allowance before his or her
Disability Retirement Date, and shall be furnished to such Member or
former Member even though he or she is not married.
The period during which the Member may make an election to waive the
automatic Pre-Retirement Spouse's Benefit provided under Section
4.07(a)(i) and to elect in lieu thereof the optional Pre-Retirement
Survivor's Benefit under Section 4.07(b)(i) shall begin not later than his
or her Normal Retirement Date and end on his or her Annuity Starting Date
or, if earlier, his or her date of death. The period during which the
Member may make an election to waive the automatic Pre-Retirement Spouse's
Benefit provided under Section 4.07(a)(ii) and to elect in lieu thereof
the optional Pre-Retirement Survivor's Benefit under Section 4.07(b)(ii)
shall begin not later than on the date he or she becomes disabled and end
on his or her Disability Retirement Date. The period during which the
former Member may make an election to waive the automatic Pre-Retirement
Spouse's Benefit provided under Section 4.07(a)(iii) shall begin not later
than the date his or her employment terminates and end on his or her
Annuity Starting Date or, if earlier, his or her date of death. Any
waiver, revocation or re-election of the automatic Pre-Retirement Spouse's
Benefit shall be made on a form provided by the Retirement Committee and
any waiver or revocation shall require Spousal Consent. If, upon
termination of employment, the former Member waives coverage hereunder in
accordance with administrative procedures established by the Retirement
Committee for all Members similarly situated, such waiver shall be
effective as of the Member's or former Member's Severance Date. Any later
re-election or revocation under Section 4.07(a)(iii) shall be effective
when the completed form is received by the Retirement Committee. If a
Member or former Member dies during the period when a waiver is in effect,
there shall be no benefits payable to his or her spouse under the
provisions of this Section 4.07, unless an effective election under
Section 4.07(b)(i) or (ii) is in effect and the spouse is the Beneficiary.
<PAGE> 211
Page 32
Except as described above in the event of a waiver or revocation, coverage
under Section 4.07(a)(i), (ii) or (iii) shall cease to be effective upon a
Member's or former Member's Annuity Starting Date, or upon the date a
Member's or former Member's marriage is legally dissolved by a divorce
decree, or upon the death of the spouse, whichever event shall first
occur.
Coverage under Section 4.07(b)(i) shall cease to be effective upon a
Member's Annuity Starting Date, upon the death of the Beneficiary, or upon
the marriage of an unmarried Member, whichever event shall first occur.
Coverage under Section 4.07(b)(ii) shall cease to be effective upon a
Member's Annuity Starting Date, upon the death of the Beneficiary, upon
the marriage of an unmarried Member, or upon the cessation of a Member's
Total and Permanent Disability, whichever event shall first occur.
(d) Any election made under Section 4.07 (including any waiver or revocation
thereof) shall be made on a form approved by and filed with the Retirement
Committee and in accordance with the term "Beneficiary" as defined in this
Section 4.07.
(e) Notwithstanding the provisions of Section 4.07(a), a Member or former
Member whose employment terminated on or after January 1, 1976 and prior
to August 23, 1984 and who is entitled to a retirement allowance or vested
benefit pursuant to the provisions of Section 4.03 or 4.05, but who is not
yet in receipt thereof, may elect, on or after August 23, 1984 and prior
to the commencement of such retirement allowance or vested benefit, to
have the provisions of Section 4.07(a)(iii) apply to him or her.
<PAGE> 212
Page 33
4.10 Payment of Benefits
(a) Unless otherwise provided under an optional benefit elected pursuant to
Section 4.06, the survivor's benefit available under Section 4.07 or the
provisions of Section 4.10(e)(ii), all retirement allowances, vested
benefits or other benefits payable will be paid in monthly installments
for each month beginning with (i) the month in which the Member has
reached his or her Normal Retirement Date and has retired from active
service, (ii) the month in which a Member has reached his or her Postponed
Retirement Date and retired from active service, (iii) the month next
following the month in which a Member or former Member files a proper
application requesting commencement of his or her vested benefit, standard
early retirement allowance or disability retirement allowance, or (iv) the
month in which benefits under an optional benefit under Section 4.06 or
the survivor's benefits under Section 4.07 become payable, whichever is
applicable. Such monthly installments shall cease with the payment for the
month preceding the month in which the recipient dies. In no event shall a
retirement allowance or vested benefit be payable to a Member who
continues in or resumes active service with the Company or an Associated
Company for any period between his or her Normal Retirement Date and
Postponed Retirement Date, except as provided in Sections 4.02(d) and
4.10(e).
(b) In any case, a lump sum payment equal to the retirement allowance or
vested benefit payable under Section 4.01, 4.02, 4.03, 4.04 or 4.05 or any
pre-retirement spouse's benefit payable under Section 4.07(a) multiplied
by the appropriate factor contained in Table 3 of Schedule I shall be made
in lieu of any retirement allowance or vested benefit payable to a Member
or former Member or any pre-retirement spouse's benefit payable to a
spouse of a Member or a former Member, if the lump sum present value of
such benefit amounts to $3,500 ($5,000 effective January 1, 1998) or less.
For distributions prior to September 1, 1995, however, in no event shall
that adjustment factor
<PAGE> 213
Page 34
produce a lump sum that is less than the amount determined by using the
interest rate assumption used by the Pension Benefit Guaranty Corporation
for valuing benefits for determining lump sum payments under single
employer plans that terminate on January 1 of the Plan Year in which the
Annuity Starting Date occurs. For distributions on or after September 1,
1995, in no event shall that adjustment factor produce a lump sum that is
less than the amount determined by using the "Applicable Mortality Table"
(as such term is defined in Code Section 417(e)(3)(A)(ii)(II)) and the
interest rate on 30-year Treasury Securities for December of the year
preceding the Plan Year in which the Annuity Starting Date occurs. The
lump sum payment shall be made as soon as administratively practicable
following the date the Member has terminated employment or died, but in
any event prior to the date his or her benefit payment would have
otherwise commenced.
In the event a Member is not entitled to any retirement allowance or
vested benefit upon his or her termination of employment, he or she shall
be deemed "cashed-out" under the provisions of this paragraph (b) as of
the date he or she terminated service.
4.11 Re-employment of former Member or retired Member
(b) Optional forms of pension benefits
If the Member is reemployed, any previous election of an optional benefit
under Section 4.06 or a survivor's benefit under Section 4.07 shall be
revoked.
(c) Benefit payments at subsequent termination or retirement
(i) In accordance with the procedure established by the Retirement
Committee on a basis uniformly applicable to all Members similarly
situated, upon the subsequent retirement of a Member in service
after his or her Normal Retirement Date, payment of such Member's
<PAGE> 214
Page 35
retirement allowance shall resume no later than the third month
after the final month during the reemployment period in which he or
she completes at least 40 Hours of Service.
(ii) Upon the subsequent retirement or termination of employment of a
retired or former Member, the Retirement Committee shall, in
accordance with rules uniformly applicable to all Members similarly
situated, determine the amount of vested benefit or retirement
allowance which shall be payable to such Member at such subsequent
retirement or termination. Such vested benefit or retirement
allowance shall be reduced by an amount of Equivalent Actuarial
Value to the benefits, if any, other than disability retirement
allowance payments, he or she received before the earlier of the
date of his or her restoration to service or his or her Normal
Retirement Date, provided that no such reduction shall reduce such
retirement allowance or vested benefit below the original amount of
retirement allowance or vested benefit earned but not received or
retirement allowance or vested benefit previously received by such
Member in accordance with the terms of the Plan in effect during
such previous employment, adjusted to reflect the election of any
survivor's benefits pursuant to Section 4.07(a)(iii).
4.16 Minimum Adjusted Benefit
(a) The adjustment factor applied to a retirement allowance or vested benefit
payable to any Member or former Member who terminates employment on or
after October 1, 1985, or to the Beneficiary of such Member or former
Member, shall not result in a retirement allowance or vested benefit which
is less than the adjusted retirement allowance or vested benefit which
would have been payable to such Member, former Member or Beneficiary under
the provisions of the Southeast
<PAGE> 215
Page 36
Forest Plan as in effect on September 30, 1985 based on Benefit Service
rendered up to and including September 30, 1985.
(b) The adjustment factor applied to a retirement allowance or vested benefit
payable to any Member or former Member who terminates employment on or
after January 1, 1989, or to the Beneficiary of such Member or former
Member, shall not result in a retirement allowance or vested benefit which
is less than the adjusted retirement allowance or vested benefit which
would have been payable to such Member, former Member or Beneficiary under
the provisions of the Southeast Forest Plan as in effect on December 31,
1988 based on Benefit Service rendered up to and including December 31,
1988.
<PAGE> 216
Page 1
SCHEDULE II
(SOUTHEAST FOREST RESOURCES)
Effective as of September 1, 1986, the Retirement Allowances payable to the
following retired Members, contingent annuitants or surviving spouses shall be
supplemented in the amounts listed below, and shall be payable after the death
of a Member in accordance with the provisions of Section 4.06 of the Plan, if
applicable.
<TABLE>
<CAPTION>
SOCIAL MONTHLY
NAME SECURITY NO. SUPPLEMENT
---- ------------ ----------
<S> <C> <C>
Homer Betts ###-##-#### $ 21.50
Carl M. Harrell ###-##-#### 11.00
Bessie Mae Hill ###-##-#### 16.00
Ernest Johnson ###-##-#### 20.50
W. J. Kemp ###-##-#### 21.00
John L. Kirkland, Sr. ###-##-#### 15.00
R. L. Lauramore ###-##-#### 14.50
Robert D. McIntosh ###-##-#### 20.00
Henry Mikulka ###-##-#### 18.50
Carlton B. Persall ###-##-#### 17.50
Mark M. Roberts ###-##-#### 19.50
Elizabeth J. Robson ###-##-#### 19.50
Dean Rossin ###-##-#### 11.00
McKinley Taylor ###-##-#### 14.00
Harold D. Thomas ###-##-#### 14.00
Leonard Thrift ###-##-#### 16.50
Winnie B. William ###-##-#### 17.50
</TABLE>
<PAGE> 217
Page 2
SCHEDULE II
(SOUTHEAST FOREST RESOURCES)
Effective as of October 1, 1988, the Retirement Allowances payable to the
following retired Members, contingent annuitants or surviving spouses shall be
supplemented in the amounts listed below, and shall be payable after the death
of a Member in accordance with the provisions of Section 4.06 of the Plan, if
applicable.
<TABLE>
<CAPTION>
SOCIAL MONTHLY
NAME SECURITY NO. SUPPLEMENT
---- ------------ ----------
<S> <C> <C>
Homer Betts ###-##-#### $ 32.45
David Burdette ###-##-#### 40.64
Joyce M. Fitzgerald ###-##-#### 10.00
Edward M. Hickox ###-##-#### 15.16
Bessie Mae Hill ###-##-#### 29.13
Ernest Johnson ###-##-#### 11.91
Winnie B. Jones ###-##-#### 10.61
W. J. Kemp ###-##-#### 22.31
John L. Kirkland, Sr. ###-##-#### 55.03
R. L. Lauramore ###-##-#### 62.86
Robert D. McIntosh ###-##-#### 68.89
Ruth C. Mikulka ###-##-#### 28.05
Carlton B. Persall ###-##-#### 13.68
Jessie Mae Reed ###-##-#### 10.00
Mark M. Roberts ###-##-#### 79.01
Elizabeth Robson ###-##-#### 31.80
Dean Rossin ###-##-#### 70.66
Allen Rossin, Jr. ###-##-#### 33.19
Joe G. Rozier ###-##-#### 16.70
Tot. W. Sowell ###-##-#### 29.57
Clyde L. Sullivan ###-##-#### 39.46
McKinley Taylor ###-##-#### 18.07
Lonnie A. Thomas ###-##-#### 10.00
Leonard Thrift ###-##-#### 31.87
Ollie Lee Trail ###-##-#### 22.03
Hugh L. Turner ###-##-#### 10.00
</TABLE>
<PAGE> 218
Page 3
SCHEDULE II
(SOUTHEAST FOREST RESOURCES)
Effective as of January 1, 1996, the Retirement Allowance payable to the
following retired Members, contingent annuitants or surviving spouses shall be
supplemented in the amounts listed below, and shall be payable after the death
of a Member in accordance with the provisions of Section 4.06 of the Plan.
<TABLE>
<CAPTION>
SOCIAL MONTHLY
NAME SECURITY NO. SUPPLEMENT
---- ------------ ----------
<S> <C> <C>
David Burdette ###-##-#### $ 29.69
Joyce M. Fitzgerald ###-##-#### 13.38
James W. Godwin ###-##-#### 10.00
Edward M. Hickox ###-##-#### 63.65
Bessie Mae Hill ###-##-#### 21.32
Winnie B. Jones ###-##-#### 10.00
John L. Kirkland ###-##-#### 40.13
Robert D. Mcintosh ###-##-#### 50.27
Ruth C. Mikulka ###-##-#### 21.82
Jessie Mae Reed ###-##-#### 17.49
Allen Rossin, Jr. ###-##-#### 40.43
Dean Rossin ###-##-#### 51.60
Joe G. Rozier ###-##-#### 70.12
Dewey Sapp ###-##-#### 25.55
Myrtle Sowell ###-##-#### 10.00
Ruby Aleene Sullivan ###-##-#### 24.11
Mc Kinley Taylor ###-##-#### 13.23
Lonnie A. Thomas ###-##-#### 30.72
Jack Thrift ###-##-#### 11.03
Ollie Lee Trail ###-##-#### 60.71
Hugh L. Turner ###-##-#### 28.81
</TABLE>
<PAGE> 1
EXHIBIT 10.7
RAYONIER INC.
I, John P. O'Grady, do hereby certify that I am the Senior Vice President,
Administration of Rayonier Inc., and that pursuant to the authority granted me
in resolutions adopted by the Compensation and Management Development Committee
of the Board of Directors on July 18, 1997, I adopted the following preambles
and resolutions:
WHEREAS, Rayonier Inc. (the "Company") maintains the Rayonier Inc. Excess
Benefit Plan ("Excess Plan") for the benefit of employees of the Company who are
eligible to participate thereunder; and
WHEREAS, pursuant to Section 4.01 of the Plan, the Compensation and Management
Development Committee of the Board of Directors (the "Committee") reserves the
right to amend the Excess Plan, subject to certain conditions not now relevant;
and
WHEREAS, the Committee deems it advisable to amend the Excess Plan to (1)
clarify that benefits will be paid from the Excess Plan that would have been
payable from the Retirement Plan for Salaried Employees of Rayonier Inc.
("Retirement Plan") upon a change of ownership or management of the company but
for the limitations on benefits and pensionable compensation in the Retirement
Plan and (2) make other technical changes that the actuary for the Excess Plan
deems appropriate;
NOW, THEREFORE, it is
RESOLVED, that the Excess Plan shall be, and hereby is, amended as follows:
1. The first sentence of Section 2.02 is amended by deleting the phrase
"or 4.05" and substituting the phrase "4.05, 8.06(c), or 8.06(d)" in
its stead.
<PAGE> 2
2. Section 2.04(c) is amended by deleting the phrase "determined in
accordance with Section 4.10(b) of the Retirement Plan" and
substituting the following in its stead:
"determined by using the interest rate assumption used by the
Pension Benefit Guaranty Corporation for valuing benefits for
single employer plans that terminate in the month in which his
applicable retirement date under the Retirement Plan is
effective, and the 1984 George B. Buck Unisex Mortality Table,
75% male, 25% female."
3. The last sentence of Section 4.03 is amended by deleting the phrase
"4.10(b) of the Retirement Plan" and substituting the phrase "2.04(c)"
in its stead.
and be it further
RESOLVED, that a proper officer or officers of the Company are hereby authorized
and empowered to do or cause to be done all such further acts and things as
shall be necessary and proper to implement the foregoing resolution.
Dated: August 18, 1997 /s/ John P. O'Grady
--------------------------------------
John P. O'Grady
Senior Vice President, Human Resources
<PAGE> 1
EXHIBIT 10.8
RAYONIER INC. EXCESS SAVINGS
AND DEFERRED COMPENSATION PLAN
(Amended and Restated
Effective July 18, 1997)
<PAGE> 2
RAYONIER INC. EXCESS SAVINGS AND DEFERRED COMPENSATION PLAN
(Amended and Restated Effective January 1, 1997)
CONTENTS
SECTION PAGE
ARTICLE I. THE PLAN
1.1 ESTABLISHMENT OF THE PLAN 1
1.2 PURPOSE 1
ARTICLE II. DEFINITIONS
2.1 DEFINITIONS 2
2.2 GENDER AND NUMBER 5
ARTICLE III. PARTICIPATION
3.1 ELIGIBILITY 6
3.2 COMMENCEMENT 6
3.3 TERMINATION OF ELIGIBILITY 6
ARTICLE IV. EXCESS SAVINGS AND CONTRIBUTIONS
4.1 ACCOUNTS 7
4.2 BASE SALARY 7
4.3 BONUS DEFERRAL 8
4.4 EXCESS MATCHING COMPANY CONTRIBUTION ACCOUNT 8
4.5 EXCESS RETIREMENT CONTRIBUTIONS 8
4.6 ADJUSTMENT TO ACCOUNTS 9
4.7 VESTING 9
4.8 DATE OF PAYMENT 9
4.9 FORM OF PAYMENT 9
4.10 DEATH BENEFITS 11
4.11 HARDSHIP WITHDRAWALS 12
4.12 CHANGE OF CONTROL 12
ARTICLE V. RIGHTS OF PARTICIPANTS
5.1 CONTRACTUAL OBLIGATION 13
5.2 UNSECURED INTEREST 13
<PAGE> 3
ARTICLE VI. ADMINISTRATION
6.1 ADMINISTRATION 14
6.2 INDEMNIFICATION 14
6.3 EXPENSES 14
6.4 TAX WITHHOLDING 14
6.5 CLAIMS PROCEDURE 15
ARTICLE VII. MISCELLANEOUS
7.1 NONTRANSFERABILITY 17
7.2 RIGHTS AGAINST THE COMPANY 17
7.3 AMENDMENT OR TERMINATION 17
7.4 APPLICABLE LAW 17
7.5 ILLEGALITY OF PARTICULAR PROVISION 18
<PAGE> 4
RAYONIER INC. EXCESS SAVINGS AND DEFERRED COMPENSATION PLAN
(Amended and Restated Effective January 1, 1997)
CONTENTS
SECTION PAGE
ARTICLE VI. ADMINISTRATION
6.1 Administration 13
6.2 Indemnification 13
6.3 Expenses 13
6.4 Tax Withholding 13
6.5 Claims Procedure 14
ARTICLE VII. MISCELLANEOUS
7.1 Nontransferability 16
7.2 Rights Against the Company 16
7.3 Amendment or Termination 16
7.4 Applicable Law 16
7.5 Illegality of Particular Provision 17
<PAGE> 5
ARTICLE I. THE PLAN
1.1 ESTABLISHMENT OF THE PLAN
Rayonier Inc. heretofore established and presently maintains an unfunded
supplemental retirement plan for eligible salaried Employees, effective as of
March 1, 1994, known as the "Rayonier Inc. Excess Savings Plan" (hereinafter
referred to as the "Plan"). Effective September 1, 1995, the Plan is amended and
restated and shall be known as the "Rayonier Inc. Excess Savings and Deferred
Compensation Plan".
1.2 PURPOSE
The Plan is intended to provide Employees with contributions lost due to
restrictions on defined contribution plans under sections 401(a)(17), 401(k),
401(m), 402(g), and 415 of the Internal Revenue Code of 1986, as amended, which
primarily affect higher-paid Employees. The intent is to provide these Employees
with allocations under this Plan that, when added to such Employees'
contributions under the Rayonier Investment and Savings Plan for Salaried
Employees, will be similar to contributions other Employees can receive under
such plan. Effective September 1, 1995, the Plan is amended to provide Employees
with an opportunity to defer that portion of the Employee's Base Salary in
excess of the qualified plan limitation under section 401(a)(17) of the Internal
Revenue Code of 1986, as amended, which primarily impacts higher-paid Employees.
The Plan is also intended to provide these Employees with the opportunity to
defer all or any portion of bonus otherwise payable for a Plan Year. The Plan is
intended to be an unfunded plan under the Employee Retirement Income Security
Act of 1974, as amended, that is maintained for the purpose of providing
deferred compensation for a select group of management or highly compensated
Employees.
<PAGE> 6
ARTICLE II. DEFINITIONS
2.1 DEFINITIONS
Capitalized terms used in the Plan shall have the respective meanings set forth
below:
(a) "ACCOUNTS" shall mean a Participant's Excess Savings Account (comprised
of an Excess Basic Savings Account, an Excess Matching Company
Contribution Account, and an Excess Retirement Contribution Account),
an Excess Base Salary Deferral Account, and a Bonus Deferral Account.
(b) "BASE SALARY" shall mean an Employee's compensation from the Company at
the Employee's base rate, determined prior to any election by the
Participant pursuant to section 401(k) or 125 of the Code, excluding
any overtime, bonus, foreign service allowance, or any other form of
compensation.
(c) "BASIC SAVINGS" shall have the meaning set forth in the Qualified Plan.
(d) "BENEFICIARY" shall mean the person designated under section 4.10.
(e) "BONUS DEFERRAL" shall mean the amount of annual bonus that the
Participant elects to defer under section 4.3.
(f) "BONUS DEFERRAL ACCOUNT" shall mean the account established for the
Participant on the books of the Company under section 4.1.
(g) "BONUS DEFERRAL AGREEMENT" shall mean a written agreement between the
Company and the Participant to defer all or a portion of the
Participant's annual bonus, as described in section 4.3.
(h) "CHANGE OF CONTROL" hereto meaning specified in the Retirement Plan for
Salaried Employees of Rayonier Inc. as amended effective July 18, 1997,
and as the same may be hereafter amended from time to time prior to the
occurrence of a Change in Control.
(i) "CODE" means the Internal Revenue Code of 1986, as amended.
(j) "COMPANY" shall have the meaning set forth in the Qualified Plan.
(k) "EMPLOYEE" shall have the meaning set forth in the Qualified Plan.
(l) "EXCESS BASE SALARY" shall mean that portion of the Employee's Base
Salary that exceeds the annual indexed dollar amount under section
401(a)(17) of the Code.
<PAGE> 7
(m) "EXCESS BASE SALARY DEFERRAL ACCOUNT" shall mean the account
established for the Participant on the books of the Company under
section 4.1.
(n) "EXCESS BASE SALARY DEFERRAL AGREEMENT" means a written agreement
between the Company and the Participant to defer all or a portion of
the Participant's Excess Base Salary, as described in section 4.2(b).
(o) "EXCESS BASE SALARY DEFERRALS" means the amount of Excess Base Salary
that the Participant elects to defer, as described in section 4.2(b).
(p) "EXCESS BASIC SAVINGS" means those amounts deferred by the Participant
under section 4.2(a).
(q) "EXCESS BASIC SAVINGS ACCOUNT" means an account established for the
Participant on the books of the Company under section 4.1 to which the
Participant's Excess Basic Savings are credited.
(r) "EXCESS BASIC SAVINGS AGREEMENT" means a written agreement between the
Company and the Participant to defer a portion of the Participant's
Excess Base Salary, as described in section 4.2(a).
(s) "EXCESS MATCHING COMPANY CONTRIBUTION" means the amount credited to the
Participant under section 4.4.
(t) "EXCESS MATCHING COMPANY CONTRIBUTION ACCOUNT" shall mean the account
established for the Participant on the books of the Company under
section 4.1.
(u) "EXCESS RETIREMENT CONTRIBUTION" means the amount credited to the
Participant under section 4.5.
(v) "EXCESS RETIREMENT CONTRIBUTION ACCOUNT" shall mean the account
established for the Participant on the books of the Company under
section 4.1.
(w) "EXCESS SAVINGS ACCOUNT" shall mean an account comprised of an Excess
Basic Savings Account, an Excess Matching Company Contribution Account,
and an Excess Retirement Contribution Account.
(x) "MATCHING COMPANY CONTRIBUTION" shall have the meaning set forth in the
Qualified Plan.
(y) "PARTICIPANT" means an Employee who participates in the Plan pursuant
to Article III.
(z) "PLAN ADMINISTRATOR" means the entity described in Article VI.
<PAGE> 8
(aa) "PLAN YEAR" means the plan year of the Qualified Plan.
(bb) "QUALIFIED PLAN" means the Rayonier Investment and Savings Plan for
Salaried Employees, which is intended to be qualified under section
401(a) of the Code.
(cc) "RETIREMENT CONTRIBUTION" shall have the meaning set forth in the
Qualified Plan.
(dd) "TERMINATION OF EMPLOYMENT" shall have the meaning set forth in the
Qualified Plan.
(ee) "VALUATION DATE" shall have the meaning set forth in the Qualified
Plan.
<PAGE> 9
2.2 GENDER AND NUMBER
Unless the context clearly requires otherwise, the masculine pronoun whenever
used shall include the feminine and neuter pronoun, and the singular shall
include the plural.
<PAGE> 10
ARTICLE III. PARTICIPATION
3.1 ELIGIBILITY
Each management Employee or highly compensated Employee who participates in the
Qualified Plan and whose Base Salary exceeds the annual indexed dollar amount
under section 401(a)(17) of the Code shall be eligible to participate in the
Plan; provided, however, that an Employee shall be eligible to participate with
respect to a Plan Year only if the Employee has made the maximum Basic Savings
permitted under the terms of the Qualified Plan for such Plan Year.
3.2 COMMENCEMENT
Each Employee who is a Participant prior to the date of this amended and
restated Plan shall continue to be a Participant on September 1, 1995. Each
other Employee shall become a Participant on the first day of the month
coincident with or next following the date he satisfies the eligibility
requirements. Notwithstanding the foregoing, an Employee participating in the
Plan in 1995 may execute an Excess Base Salary Deferral Agreement and/or a Bonus
Deferral Agreement no later than September 1, 1995, with respect to Excess Base
Salary payable for the remainder of 1995 and/or any bonus payable for 1995.
3.3 TERMINATION OF ELIGIBILITY
An individual shall cease to be a Participant as of the date such individual
ceases to meet all of the requirements of section 3.1 above; provided however,
that benefits accrued as of such date shall not be reduced and shall be paid as
provided herein.
<PAGE> 11
ARTICLE IV. EXCESS SAVINGS AND CONTRIBUTIONS
4.1 ACCOUNTS
The Company shall establish and maintain as a bookkeeping entry an Excess
Savings Account (with separate bookkeeping entries for the Excess Basic Savings
Account, the Excess Matching Company Contribution Account, and the Excess
Retirement Contribution Account), an Excess Base Salary Deferral Account, and a
Bonus Deferral Account for each Participant. During each Plan Year, the Company
shall credit to the appropriate Account the amounts described in this Article
IV.
4.2 BASE SALARY
(a) EXCESS BASIC SAVINGS. Each Employee described in section 3.1 may enter
into an Excess Basic Savings Agreement with the Company under which the
Participant elects to defer up to 6 percent of the Excess Base Salary
that would otherwise be payable to him each payroll period during each
subsequent Plan Year. Such election shall be irrevocable and shall
remain in effect for such Plan Year and all subsequent Plan Years
unless the Participant, prior to the beginning of a Plan Year, elects
to revoke or amend the Excess Basic Savings Agreement. An Excess Basic
Savings Agreement may be reinstated or amended prior to the beginning
of any Plan Year for Excess Base Salary payable in that Plan Year.
Notwithstanding the foregoing, an Employee who becomes eligible during
a Plan Year to participate in the Plan may execute an Excess Basic
Savings Agreement with respect to unearned Excess Base Salary within 30
days of becoming eligible. The Company shall credit the Excess Basic
Savings to the Participant's Excess Basic Savings Account as of the
payroll period to which the Excess Basic Savings relates.
(b) EXCESS BASE SALARY DEFERRAL. Each Employee described in section 3.1 may
enter into an Excess Base Salary Deferral Agreement with respect to any
Plan Year in which Excess Base Salary is otherwise payable to the
Employee. Prior to the beginning of such Plan Year, the Employee may
elect to defer all or any portion (but not less than $10,000) of such
Excess Base Salary otherwise payable to him during such Plan Year;
provided, however, that such deferral shall first be reduced by the
amount of Excess Basic Savings contributed under section 4.2(a). Such
Excess Base Salary Deferral Agreement shall remain in effect for such
Plan Year and shall be irrevocable. Notwithstanding the foregoing, an
<PAGE> 12
Employee who becomes eligible during a Plan Year to participate may
execute an Excess Base Salary Deferral Agreement with respect to
unearned Excess Base Salary within 30 days of becoming eligible. The
Company shall credit the Excess Base Salary Deferral to the
Participant's Excess Base Salary Deferral Account as of the payroll
period to which the Excess Base Salary Deferral relates.
4.3 BONUS DEFERRAL
An Employee described in section 3.1 may enter into a Bonus Deferral Agreement
with the Company under which the Participant elects to defer all or any portion
of any bonus (but not less than $10,000) that would otherwise be payable to him
during a Plan Year. Such Bonus Deferral Agreement shall be entered into by the
Participant and the Company on or prior to the December 1 preceding the
beginning of the Plan Year for which services are rendered with respect to the
bonus, shall remain in effect for the Plan Year, and shall be irrevocable;
provided, however, that an election with respect to any bonus payable in 1996
attributable to services rendered in 1995 shall be made no later than September
1, 1995. The Company shall credit the above amounts to the Participant's Bonus
Deferral Account as of the payroll period to which the deferral relates.
4.4 EXCESS MATCHING COMPANY CONTRIBUTION ACCOUNT
During each Plan Year, the Company shall credit to a Participant's Excess
Matching Company Contribution Account an amount that is equal to 60 percent of
Excess Basic Savings for that Plan Year, but in no event more than an amount
equal to 3.6 percent of Excess Base Salary; provided, however that Excess Basic
Savings prior to July 1, 1995 shall be credited with an amount that is equal to
50 percent of Excess Basic Savings (but in no event more than an amount equal to
3 percent of Excess Base Salary). The Excess Matching Company Contribution shall
be credited to the Participant's Excess Matching Company Contribution Account as
of the same date or dates that the Excess Basic Savings are allocated to the
Participant's Excess Basic Savings Account.
4.5 EXCESS RETIREMENT CONTRIBUTIONS
During each Plan Year, the Company shall credit to a Participant's Excess
Retirement Contribution Account an amount that is equal to the difference
between the amount in (a) and the amount in (b) where --
(a) is an amount equal to one-half of one percent of the Participant's Base
<PAGE> 13
Salary for the Plan Year, and
(b) is an amount equal to the amount of the Retirement Contribution
allocated to the Participant's Account for such Plan Year pursuant to
the Qualified Plan.
The Excess Retirement Contribution shall be credited to the Participant's Excess
Retirement Contribution Account as of the same date or dates that the Retirement
Contribution under the Qualified Plan is actually allocated to the Participant's
Account under the Qualified Plan.
4.6 ADJUSTMENT TO ACCOUNTS
As of each Valuation Date, the Excess Base Salary Deferral Account and the Bonus
Deferral Account of each Participant shall be credited or debited on the books
of the Company with a gain or loss equal to the adjustment that would be made if
assets equal to each such Account had been invested with a rate of return equal
to the rate of return of 10-Year Treasury Notes (adjusted monthly) plus 1.5
percent. As of each Valuation Date, the Excess Savings Account of each
Participant shall be credited or debited on the books of the Company with a gain
or loss equal to the adjustment that would be made if assets equal to such
Account had been invested in Fund C, as described in section 6.1 of the
Qualified Plan, or in any successor to Fund C.
4.7 VESTING
Except as provided in section 4.9, a Participant shall have a nonforfeitable
right to amounts credited to the Participant's Accounts.
4.8 DATE OF PAYMENT
A Participant's Excess Savings Account shall be payable upon the Participant's
Termination of Employment. At the time the Participant executes the Excess Base
Salary Deferral Agreement and the Bonus Deferral Agreement, the Participant
shall designate the date upon which the amounts deferred under such agreements
shall become payable. Such amounts may be made payable either before, after, or
upon the Participant's Termination of Employment; provided, however, that,
subject to the provisions of section 4.9, such election shall be irrevocable.
4.9 FORM OF PAYMENT
(a) EXCESS BASE SALARY AND BONUS DEFERRAL. At the time the Participant
executes the Excess Base Salary Deferral Agreement and the Bonus
Deferral Agreement, the Participant shall elect one of the following
<PAGE> 14
forms of payment for amounts credited to the Excess Base Salary
Deferral Account and one of the following forms of payment for amounts
credited to the Bonus Deferral Account:
(1) LUMP SUM. The Participant shall receive a single sum cash
payment equal to the amount credited to such Account.
<PAGE> 15
(2) INSTALLMENTS. The Participant shall receive the amount
credited to such Account in equal annual installments payable
over a period not exceeding 15 years. Earnings shall continue
to be credited on the unpaid amounts.
In the event the Participant changes any of the foregoing elections
prior to the date of payment or changes the time of payment elected
under section 4.8, then, notwithstanding the provisions of section 4.7
and except as provided in section 4.11, the Participant shall forfeit 6
percent of the amount otherwise payable to the Participant under such
election, and such forfeited amount shall cease to be an obligation of
the Company and the Plan.
(b) EXCESS SAVINGS ACCOUNT. Within 30 days after becoming a Participant,
the Participant shall execute an Excess Basic Savings Agreement and
elect one of the following forms of payment for amounts credited to the
Excess Savings Account:
(1) LUMP SUM. The Participant shall receive a single sum cash
payment equal to the amount credited to the Excess Savings
Account.
(2) INSTALLMENTS. The Participant shall receive the amount
credited to the Excess Savings Account in equal annual
installments payable over a period not exceeding 15 years.
Earnings shall continue to be credited on the unpaid amounts.
In the event the Participant changes the foregoing election prior to
the date of payment, then, notwithstanding the provisions of section
4.7 and except as provided in section 4.11, the Participant shall
forfeit 6 percent of the amount otherwise payable to the Participant
under such election, such forfeited amount shall cease to be an
obligation of the Company and the Plan, and no subsequent changes may
be made by the Participant.
(c) PARTICIPANTS PRIOR TO SEPTEMBER 1, 1995. A Participant in the Plan
prior to September 1, 1995 shall make an election as to form of payment
with respect to deferrals credited to his Accounts as of that date no
later than September 1, 1995.
4.10 DEATH BENEFITS
At the time the Participant executes the Excess Basic Savings Agreement, the
Excess Savings Account election, the Excess Base Salary Deferral Agreement, and
the Bonus Deferral Agreement, the Participant shall designate a Beneficiary to
receive death benefits payable under this section 4.10. In the event of the
death of the Participant prior to full payment of amounts credited to the
Participant's Accounts, the unpaid amounts shall be paid as soon as practicable
in a single sum cash payment to the Beneficiary. If no
<PAGE> 16
Beneficiary is designated or if no Beneficiary survives the Participant, the
Participant's surviving spouse or, in the case of an unmarried Participant, the
designated Beneficiary under the Rayonier Salaried Life Insurance Plan shall be
the Beneficiary. In the event that no spouse survives the Participant or, in the
case of an unmarried Participant, that the life insurance benefits have been
assigned or that no Beneficiary has been designated under the Rayonier Salaried
Life Insurance Plan, the Beneficiary shall be the Participant's estate.
4.11 HARDSHIP WITHDRAWALS
Notwithstanding the provisions of section 4.9, a Participant may, prior to the
date payment of his Accounts is otherwise to be made, request a financial
hardship withdrawal from any of his Accounts. A hardship withdrawal shall be
available only upon a determination by the Company's Senior Vice President,
Human Resources, that the Participant has suffered a severe and unanticipated
emergency caused by an event that is beyond the control of the Participant. The
amount of the withdrawal shall be limited to the amount necessary to satisfy the
hardship. The Company's Senior Vice President, Human Resources, shall examine
all relevant facts and circumstances to determine whether the Participant has a
financial hardship and may require a Participant to submit any and all
documentation that he deems necessary to substantiate the existence of a
financial hardship.
4.12 CHANGE OF CONTROL
Notwithstanding the provisions of sections 4.8 and 4.9, upon the occurrence of a
Change of Control, a Participant shall receive a single sum cash payment equal
to the amount credited to the Participant's Accounts.
<PAGE> 17
ARTICLE V. RIGHTS OF PARTICIPANTS
5.1 CONTRACTUAL OBLIGATION
It is intended that the Company is under a contractual obligation to make
payments under this Plan when due. The benefits under this Plan shall be paid
out of the general assets of the Company.
5.2 UNSECURED INTEREST
No special or separate fund shall be established and no segregation of assets
shall be made to assure the payment of benefits hereunder. No Participant
hereunder shall have any right, title, or interest whatsoever in any specific
asset of the Company. Nothing contained in this Plan and no action taken
pursuant to its provisions shall create or be construed to create a trust of any
kind, or a fiduciary relationship, between the Company and a Participant or any
other person. To the extent that any person acquires a right to receive payments
under this Plan, such right shall be no greater than the right of any unsecured
general creditor of the Company.
<PAGE> 18
ARTICLE VI. ADMINISTRATION
6.1 ADMINISTRATION
The Plan shall be administered by the Company as Plan Administrator. The Plan
Administrator may appoint one or more individuals and delegate such of its
powers and duties described herein as it deems desirable to any such individual,
in which case every reference herein made to the Plan Administrator shall be
deemed to mean or include the individuals as to matters within their
jurisdiction; provided, however, that in the absence of any contrary appointment
or delegation, the authority, powers, and duties herein shall be assigned to the
Company's Senior Vice President, Human Resources. The Plan Administrator shall,
in its sole discretion, be authorized to construe and interpret all provisions
of the Plan, to adopt rules and practices concerning the administration of the
same, and to make any determinations and calculations necessary or appropriate
hereunder. The determination of the Plan Administrator as to any disputed
question arising under this Plan, including questions of construction and
interpretation, shall be final, binding, and conclusive on all persons.
6.2 INDEMNIFICATION
To the extent permitted by law, all agents and representatives of the Plan
Administrator shall be indemnified by the Company and saved harmless against any
claims, and the expenses of defending against such claims, resulting from any
action or conduct relating to the administration of the Plan, except claims
arising from gross negligence, willful neglect, or willful misconduct.
6.3 EXPENSES
The cost of benefit payments from this Plan and the expenses of administering
the Plan shall be borne by the Company.
6.4 TAX WITHHOLDING
The Company may withhold from a payment any federal, state, or local taxes
required by law to be withheld with respect to such payment and such sums as the
Company may reasonably estimate are necessary to cover any taxes for which the
Company may be liable and which may be assessed with regard to such payment.
<PAGE> 19
6.5 CLAIMS PROCEDURE
(a) SUBMISSION OF CLAIMS. Claims for benefits under the Plan shall be
submitted in writing to the Plan Administrator or to an individual
designated by the Plan Administrator for this purpose.
(b) DENIAL OF CLAIM. If any claim for benefits is wholly or partially
denied, the claimant shall be given written notice within 90 days
following the date on which the claim is filed, which notice shall set
forth --
(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 such material or information is necessary;
and
(4) an explanation of the Plan's claim review procedure.
If special circumstances require an extension of time for processing
the claim, written notice of an extension shall be furnished to the
claimant prior to the end of the initial period of 90 days following
the date on which the claim is filed. Such an extension may not exceed
a period of 90 days beyond the end of said initial period.
If the claim has not been granted, and if written notice of the denial
of the claim is not furnished within 90 days following the date on
which the claim is filed, the claim shall be deemed denied for the
purpose of proceeding to the claim review procedure.
(c) CLAIM REVIEW PROCEDURE. The claimant or his authorized representative
shall have 60 days after receipt of written notification of denial of a
claim to request a review of the denial by making written request to
the Plan Administrator, and may review pertinent documents and submit
issues and comments in writing within such 60-day period.
Not later than 60 days after receipt of the request for review, the
Plan Administrator shall render and furnish to the claimant a written
decision, which shall include specific reasons for the decision and
shall make specific references to pertinent Plan provisions on which it
is based. If special circumstances require an extension of time for
processing, the decision shall be rendered as soon as possible, but not
later than 120 days after receipt of the request for review, provided
that written notice and explanation of the delay are given to the
claimant prior to commencement of the extension. Such decision by the
Plan Administrator shall not be subject to further review. If a
decision on review is not furnished to a claimant within the specified
<PAGE> 20
time period, the claim shall be deemed to have been denied on review.
(d) EXHAUSTION OF REMEDY. No claimant shall institute any action or
proceeding in any state or federal court of law or equity, or before
any administrative tribunal or arbitrator, for a claim for benefits
under the Plan, until the claimant has first exhausted the procedures
set forth in this section.
<PAGE> 21
ARTICLE VII. MISCELLANEOUS
7.1 NONTRANSFERABILITY
In no event shall the Company make any payment under this Plan to any assignee
or creditor of a Participant or of a Beneficiary, except as otherwise required
by law. Prior to the time of a payment hereunder, a Participant or a Beneficiary
shall have no rights by way of anticipation or otherwise to assign or otherwise
dispose of any interest under this Plan, nor shall rights be assigned or
transferred by operation of law.
7.2 RIGHTS AGAINST THE COMPANY
Neither the establishment of the Plan, nor any modification thereof, nor any
payments hereunder, shall be construed to give any Participant the right to be
retained in the employ of the Company or to interfere with the right of the
Company to discharge the Participant at any time.
7.3 AMENDMENT OR TERMINATION
The Plan may be amended, modified, or terminated at any time by the Company
except that, without the consent of any Participant or Beneficiary, if
applicable, no such amendment, modification, or termination shall reduce or
diminish such person's right to receive any benefit accrued hereunder prior to
the date of such amendment, modification, or termination. Notice of such
amendment, modification, or termination shall be given in writing to each
Participant and Beneficiary of a deceased Participant having an interest in the
Plan.
7.4 APPLICABLE LAW
This instrument shall be binding on all successors and assignees of the Company
and shall be construed in accordance with and governed by the laws of the State
of Connecticut, subject to the provisions of all applicable Federal laws.
<PAGE> 22
7.5 ILLEGALITY OF PARTICULAR PROVISION
The illegality of any particular provision of this document shall not affect the
other provisions, and the document shall be construed in all respects as if such
invalid provision were omitted.
* * * * * * * * * *
IN WITNESS WHEREOF, Rayonier Inc. has caused this instrument to be executed,
effective July 18, 1997, on this 29 day of September, 1997.
RAYONIER, INC.
ATTEST: /s/ John B. Canning
Corporate Secretary By /s/ John P. O'Grady
--------------------
Senior Vice President,
Administration
By
<PAGE> 1
EXHIBIT 10.18
THIS AMENDMENT is made this 22nd day of July, 1997, by and between RAYONIER INC.
(the "Employer") and RONALD M. GROSS (the "Employee") with respect to the
SPLIT-DOLLAR LIFE INSURANCE AGREEMENT effective June 22, 1994 (the "Agreement").
WHEREAS, the Employer and the Employee desire to amend the Agreement effective
as of the day and year first above written to authorize the continuation of the
Agreement as hereinafter provided following a Change in Control of the Employer.
(Terms not otherwise defined herein shall have the same meaning as in the
Agreement.)
NOW, THEREFORE, in consideration of the agreements hereinafter contained, the
parties hereto hereby agree to amend the Agreement effective as of the day and
year first above written by adding thereto the following new Article 14:
"14. Change in Control.
Notwithstanding any provision in this Agreement to the contrary, if, following a
Change in Control and before January 3, 1999, the Employee retires or otherwise
terminates his employment for any reason whatsoever or the Employer terminates
the Employee's employment for any reason whatsoever, this Agreement shall remain
in full force and effect unless and until payments shall have commenced to the
Employee under that certain Deferred Compensation/Supplemental Retirement
Agreement, effective June 28, 1994 (as amended), between the Employer and the
Employee (the "Deferral Agreement").
The Employer shall have no right of offset with respect to payments due
under the Deferral Agreement for payments, if any, made to the Employee
or his designated beneficiary, on or pursuant to the Policy. Nothing in
this Agreement shall be construed to give the Employee a right in the
Policy or in the proceeds therefrom from and after the commencement of
payments under the Deferral Agreement nor shall such Policy secure in
any fashion the obligations of the Employer thereunder.
In the event that the Employee is required to defend in any legal action or
other proceeding the validity or enforceability of any right or benefit afforded
by this Agreement, including this Article 14, the Employer shall pay any and all
actual legal fees and expenses incurred by the Employee regardless of the
outcome of such action and, if requested by the Employee, shall (within two
business days of such request) advance such expenses to the Employee. The
Employer shall be precluded from asserting in any judicial or other proceeding
commenced with respect to any right or benefit afforded by this Agreement,
including this Article 14, that such rights and benefits are not valid, binding
and enforceable and shall stipulate in any such proceeding that the Employer is
bound by all the provisions of the Agreement.
<PAGE> 2
For purposes of this Article 14, "Change in Control" has the meaning specified
in the Retirement Plan for Salaried Employees of Rayonier Inc. as amended
effective July 18, 1997, and as the same may be thereafter amended from time to
time prior to the occurrence of a Change in Control."
IN WITNESS WHEREOF, the Employer has caused this Amendment to be executed by its
duly authorized officer and the Employee has hereunto set his hand as of the
date and year first above written.
ATTEST: RAYONIER INC.
By: /s/ John B. Canning By: /s/John P. O'Grady
Title: Corporate Secretary Name: John P. O'Grady
Title: Senior Vice President,
Administration
/S/ RONALD M. GROSS
<PAGE> 1
EXHIBIT 10.20
THIS AMENDMENT is made the 22nd of July, 1997, by and between RAYONIER INC. (the
"Corporation") and RONALD M. GROSS (the "Employee") with respect to the DEFERRED
COMPENSATION/SUPPLEMENTAL RETIREMENT AGREEMENT effective June 28, 1994 (the
"Agreement").
WHEREAS, the Corporation and the Employee desire to amend the Agreement
effective as of the day and year first above written to authorize the payment of
the Retirement Benefit thereunder upon termination of the Employee's employment
for any reason following a Change in Control of the Corporation.
NOW, THEREFORE, in consideration of the agreements hereinafter contained, the
parties hereto hereby agree to amend the Agreement effective as of the day and
year first above written by adding thereto the following new Article 9:
"9. Change in Control.
Notwithstanding any provision in this Agreement to the contrary, if, following a
Change in Control, the Employee terminates his employment for any reason other
than death or the Corporation terminates the Employee's employment for any
reason other than death, the Employee shall be entitled to payment of the
Retirement Benefit set forth in Article 1 of this Agreement. Payment of the
Retirement Benefit shall commence as soon as is practicable after the Employee's
termination of employment following a Change in Control. If the Employee dies
during the Payout Period, the amounts due under Article 1 of this Agreement
shall be paid to the Employee's Designated Beneficiary as provided therein.
In the event that the Employee is required to defend in any legal action or
other proceeding the validity or enforceability of any right or benefit afforded
by this Agreement, including this Article 9, the Corporation shall pay any and
all actual legal fees and expenses incurred by the Employee regardless of the
outcome of such action and, if requested by the Employee, shall (within two
business days of such request) advance such expenses to the Employee. The
Corporation shall be precluded from asserting in any judicial or other
proceeding commenced with respect to any right or benefit afforded by this
Agreement, including this Article 9, that such rights and benefits are not
valid, binding and enforceable and shall stipulate in any such proceeding that
the Corporation is bound by all the provisions of the Agreement.
For purposes of this Article 9, "Change in Control" has the meaning specified in
the Retirement Plan for Salaried Employees of Rayonier Inc. as amended effective
July 18, 1997, and as the same may be thereafter amended from time to time prior
to the occurrence of a Change in Control."
<PAGE> 2
IN WITNESS WHEREOF, the Corporation has caused this Amendment to be executed by
its duly authorized officer and the Employee has hereunto set his hand as of the
date and year first above written.
ATTEST: RAYONIER INC.
By: /s/ John B. Canning By: /s/John P. O'Grady
Title: Corporate Secretary Name: John P. O'Grady
Title: Senior Vice President, Administration
/S/ RONALD M. GROSS
<PAGE> 1
EXHIBIT 12
RAYONIER INC. AND SUBSIDIARIES
RATIO OF EARNINGS TO FIXED CHARGES
(Unaudited, thousands of dollars)
<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------------------------------------------
1997 1996 1995 1994 1993
-------- --------- --------- --------- -------
<S> <C> <C> <C> <C> <C>
Earnings:
Income (loss) from continuing operations $ 87,319 $ (160) $ 142,348 $ 70,032 $ 52,466
Add (deduct):
Income tax 33,328 (13,297) 65,711 38,038 30,432
Minority interest 25,520 27,474 29,897 32,419 22,508
Amortization of capitalized interest 2,067 4,505 1,963 1,644 1,411
-------- --------- --------- --------- ---------
148,234 18,522 239,919 142,133 106,817
-------- --------- --------- --------- ---------
Adjustments to earnings for fixed charges:
Interest and other financial charges 25,868 27,662 33,615 31,065 23,368
Interest factor attributable to rentals 1,974 2,187 1,444 1,474 1,760
-------- --------- --------- --------- ---------
27,842 29,849 35,059 32,539 25,128
-------- --------- --------- --------- ---------
Earnings as adjusted $ 176,076 $ 48,371 $ 274,978 $ 174,672 $ 131,945
======== ========= ========= ========= =========
Fixed charges:
Fixed charges above $ 27,842 $ 29,849 $ 35,059 $ 32,539 $ 25,128
Capitalized interest 5,005 2,664 1,346 194 -
-------- --------- --------- --------- ---------
Total fixed charges 32,847 32,513 36,405 32,733 25,128
-------- --------- --------- --------- ---------
Total fixed charges $ 32,847 $ 32,513 $ 36,405 $ 32,733 $ 25,128
======== ========= ========= ========= =========
Ratio of earnings as adjusted to
total fixed charges 5.36 1.49 7.55 5.34 5.25
======== ========= ========= ========= =========
Effective tax rate 28% (42)% 32% 35% 37%
======== ========= ========= ========= =========
</TABLE>
<PAGE> 1
EXHIBIT 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Rayonier Inc.:
As independent public accountants, we hereby consent to the incorporation of our
report included in this Form 10-K, into the Company's previously filed
Registration Statements on Forms S-3 (File Nos. 33-51972 and 33-52855).
ARTHUR ANDERSEN LLP
Stamford, Connecticut
March 25, 1998
<PAGE> 1
EXHIBIT 24
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the person whose signature appears below
constitutes and appoints GERALD J. POLLACK, LISA M. PALUMBO and JOHN B. CANNING
his or her true and lawful attorneys-in-fact, with full power in each to act
without the other and with full power of substitution and resubstitution to sign
in the name of such person and in each of his or her offices and capacities in
Rayonier Inc. (the "Company") the Annual Report on Form 10-K for the fiscal year
ended December 31, 1997 of the Company, and to file the same, and any amendments
thereto, with all exhibits thereto and other documents in connection therewith,
with the Securities and Exchange Commission.
Dated: March 20, 1998
/s/ RONALD M. GROSS
- -------------------
Ronald M. Gross
Chairman of the Board, Chief
Executive Officer and Director
/s/ W.LEE NUTTER
- ----------------
W. Lee Nutter
President, Chief Operating
Officer and Director
/s/ RAND V. ARASKOG
- -------------------
Rand V. Araskog
Director
/s/ DONALD W. GRIFFIN
- ---------------------
Donald W. Griffin
Director
/s/ PAUL G. KIRK, JR
- --------------------
Paul G. Kirk, Jr.
Director
/s/ KATHERINE D. ORTEGA
- -----------------------
Katherine D. Ortega
Director
/s/ BURNELL R. ROBERTS
- ----------------------
Burnell R. Roberts
Director
/s/ CARL S. SLOANE
- ------------------
Carl S. Sloane
Director
/s/ NICHOLAS L. TRIVISONNO
- --------------------------
Nicholas L. Trivisonno
Director
/s/ GORDON I. ULMER
- -------------------
Gordon I. Ulmer
Director
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 10,661
<SECURITIES> 0
<RECEIVABLES> 120,185
<ALLOWANCES> 4,481
<INVENTORY> 114,148
<CURRENT-ASSETS> 310,514
<PP&E> 1,266,431
<DEPRECIATION> 562,536
<TOTAL-ASSETS> 1,595,558
<CURRENT-LIABILITIES> 206,538
<BONDS> 421,325
0
0
<COMMON> 102,175
<OTHER-SE> 530,507
<TOTAL-LIABILITY-AND-EQUITY> 1,595,558
<SALES> 1,104,228
<TOTAL-REVENUES> 1,104,228
<CGS> 902,734
<TOTAL-COSTS> 902,734
<OTHER-EXPENSES> 54,979
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 25,868
<INCOME-PRETAX> 120,647
<INCOME-TAX> 33,328
<INCOME-CONTINUING> 87,319
<DISCONTINUED> 87,319
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 87,319
<EPS-PRIMARY> 3.03
<EPS-DILUTED> 2.97
</TABLE>
