<PAGE>
FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark one)
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended November 30, 1994
-----------------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from to
--------------- ---------------
Commission File Number: 0-15838
NEW JERSEY STEEL CORPORATION
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(Exact name of registrant as specified in its charter)
Delaware 22-2137967
- - - - - -------------------------------- -----------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
North Crossman Road, Sayreville, New Jersey 08872
- - - - - --------------------------------------------- -----------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (908) 721-6600
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $ .01 par value
------------------------------------------------
(Title of Class)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes [ X ] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ X ]
Aggregate market value of voting stock held by nonaffiliates: $30,416,794
based on the last sales price of such common stock on February 17, 1995 as
reported on the NASDAQ National Market System.
Number of shares of Common Stock, par value $.01 per share, outstanding at
February 17, 1995: 5,893,370.
DOCUMENTS INCORPORATED BY REFERENCE: None
PART I
Item 1. Business.
General.
New Jersey Steel Corporation (the "Company") was organized under the
<PAGE>
laws of the State of Delaware in 1976 to consolidate the operations of New
Jersey Steel and Structural Corporation, founded in 1967, Capitol Steel
Corporation and Fireproof Products Co., Inc. The Company produces steel and
steel products, principally rebar, which is used in the construction
industry. The Company believes it is a low cost producer and the largest
producer of rebar in the northeastern United States. The Company owns and
operates a mini-mill in Sayreville, New Jersey (the "Sayreville Mill"),
which produces rebar and related steel products, and a rebar fabrication
facility located in Bowie, Maryland (the "Bowie Fabrication Facility"),
which cuts and bends rebar.
The Sayreville Mill consists of an electric arc furnace, a five strand
continuous caster and a rolling mill. In its production process, the
Company's electric arc furnace melts scrap steel and casts the resulting
molten steel into long strands called billets, which are then reheated and
rolled into rebar and, to a substantially lesser extent, other merchant bar
products.
Rebar is a bar of steel used to increase the strength of poured
concrete. Reinforced concrete is produced when poured concrete is formed
with rebar embedded in it. Rebar is manufactured with a ribbed surface
which allows concrete to adhere to the rebar, giving reinforced concrete the
tensile strength of the rebar and the compression and shear resistance of
concrete. Reinforced concrete is used in the construction of highways,
bridges, sewage and water treatment plants, buildings, subways, tunnels,
dams and other public works. Rebar is manufactured by the Company to
standard specification and ranges in diameter from 3/8" to 1-3/8". The
Company also produces merchant bar which consists of round and square steel
bars used for mine roof supports, hand rails and other industrial purposes.
Merchant bar consists of round, flat, angled and square steel bars used by
fabricators to produce a wide variety of products, including gratings, steel
floor and roof joists, safety walkways, ornamental furniture, stair railings
and farm equipment. In the Company's fiscal year ended November 30, 1994
("Fiscal 1994"), the Company was engaged in only one industry segment, the
ownership and operation of a mini-mill, rebar fabrication facility and epoxy
coating facility.
Modernization Program.
In 1993, the Company began implementation of a Modernization Program to
upgrade melt shop equipment, improve operating efficiency and expand melt
shop capacity (the "Modernization Program"). In connection with the
Modernization Program, the Company shut down its melt shop operations for
the month of April 1994 to rebuild its melt shop and install a new
production technology known as the Consteel process. The Consteel process
continuously feeds steel scrap preheated by flue gases into the furnace
through a side opening. The advantages of the Consteel process are reduced
electricity usage in the melt process and decreased volumes of dust. Other
major capital elements of the Modernization Program include a ladle furnace,
a pollution control system, upgraded infrastructure, including water and
electrical distribution systems, and a new higher capacity continuous
casting machine (to be installed in the third quarter of 1995). The Company
believes that the Modernization Program will result in cost savings from
reduced electric power consumption and decreased electrode, labor, plant
maintenance and dust disposal costs.
As of November 30, 1994, the Company had spent $41.5 million on the
Modernization Program and expects to spend an additional $7.9 million in
fiscal 1995, principally to install a continuous casting machine.
<PAGE>
Manufacturing Operations.
The Sayreville Mill utilizes iron and steel scrap to produce rebar and a
limited range of other steel products. The Sayreville Mill was built in
1971, expanded in 1975 and has been reconditioned and upgraded continually
since 1982. The Sayreville Mill consists of an electric arc furnace, a five
strand continuous caster and a rolling mill.
The Company's steel production commences with the melting of scrap in
the electric arc furnace. The molten metal is then funneled into the
continuous caster from which it emerges as continuous strands of steel
approximately 4-1/2 inches square that are cut into approximately 24 foot
long billets. The billets are then reheated to approximately 2300 degrees
fahrenheit, and fed through a series of rollers which reduce their size and
shapes them into finished rebar or merchant bar. These products emerge from
the rolling mill, are allowed to cool uniformly on the cooling bed and are
then cut to standard lengths. The Company on occasion has purchased small
amounts of billets from outside suppliers to fully utilize the capacity of
the rolling mill. However, as a result of the Modernization Program, the
Company's melt shop capacity will exceed the capacity of the rolling mill.
The Company has no current plans to utilize such increased capacity.
The Bowie Fabrication Facility cuts, bends and shapes the rebar and
other steel products to meet customer specifications. From time to time,
the Company may purchase rebar for its fabrication operations from outside
sources.
The Company spent approximately $32,891,000 in fiscal 1994 on
improvements to the Sayreville Mill. These expenditures were incurred
primarily in connection with the Modernization Program.
Customers and Marketing.
The Company's customers are primarily fabricators and steel service
centers. During fiscal 1994, sales to the Company's top three customers
accounted, respectively, for 21%, 11%, and 10% of the Company's net sales.
Due to the commodity nature of rebar, the Company does not believe that the
loss of any significant customer of the Company would have a material
adverse effect on the Company.
The Company primarily markets rebar in the northeastern United States,
which includes New York, New Jersey, Pennsylvania, Maryland, Delaware,
Washington D.C. and New England. The Company is the only significant
producer of rebar with a manufacturing facility in the northeastern United
States. The Company's facilities are strategically located near its
important market areas of Boston, Philadelphia, New York and Washington,
D.C. enabling the Company to benefit from lower transportation costs in
these markets as compared with competitors who must ship rebar longer
distances to serve such markets.
Substantially all of the Company's sales are made through its own sales
force. The Company maintains finished products in inventory based on
historical patterns of usage in order to offer immediate shipment to
customers whenever possible. The Company transports its products by common
carrier, including truck, rail and water transportation. The Sayreville
Mill is served by an on site railroad siding.
Competition and Other Market Factors.
CONSTRUCTION INDUSTRY. The level of construction activity in the
<PAGE>
Company's market depends on a variety of economic and political factors,
including the general level of economic activity, interest rates, the
availability of financing, population trends and government policy. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations".
COMPETITION. The Company experiences substantial competition in the
sale of its products from a number of domestic companies in its geographic
markets, including Birmingham Steel Corporation (Kankakee, Illinois),
Florida Steel Corporation (Charlotte, North Carolina) and Auburn Steel
Corporation (Syracuse, New York). With the exception of Auburn Steel
Corporation, which, although a rebar producer, primarily produces merchant
bar, there are no significant rebar manufacturers in the northeastern United
States other than the Company. The mini-mill steel industry currently has
excess production capacity, which has resulted in competitive product
pricing and pressures on industry profit margins. The high fixed costs of
operating a mini-mill encourage mill operators to maintain high levels of
output even during periods of reduced demand, which exacerbates the
pressures on profit margins. In this environment, efficient production and
cost controls are important to mini-mill steel producers. Competing
companies in the industry may have more capital and substantially greater
manufacturing, marketing and human resources capabilities and may constitute
significant long-term competition.
REBAR. The Company is a major seller of rebar in the northeastern
United States market. Rebar and merchant bar are commodity steel products,
making price the primary competitive factor. Additional important
competitive factors governing the sale of rebar are price, quality, facility
location and product availability. Due to the high cost of freight relative
to the value of the Company's steel products, competition from non-regional
producers is limited; and rebar deliveries are generally concentrated within
a 300 mile radius of a mini-mill, while merchant bar deliveries are
generally concentrated within a 500 mile radius. Except in unusual
circumstances, the customer's delivery expense is limited to freight charges
from the nearest competitive mini-mill and any incremental freight charges
must be absorbed by the supplier. The rebar market is highly competitive.
FOREIGN COMPETITION. The worldwide steel industry is characterized by
excess mill capacity. A number of foreign governments subsidize their
countries' steel production enabling that country's steel to be sold at
prices lower than the cost of production. However, domestic transportation
and port costs and the lack of local distribution centers have limited
foreign producers' inroads into the Company's rebar market. Various Federal
and state laws and the "Buy America" programs, prohibit the use of foreign
steel in publicly funded construction. The Company could be adversely
affected if the Buy America programs were discontinued or substantially cut
back. While the Company believes that foreign competition currently does
not have a material adverse effect upon the Company's operations, there can
be no assurance that this will continue to be so.
PUBLICALLY FUNDED PROJECTS. The Company believes it is well positioned
to benefit from recently initiated public works projects in the northeastern
United States, including the Boston Harbor Project and the widening of the
New Jersey Turnpike. The Company believes that the additional public works
projects that may result from the $151 billion Surface Transportation Act of
1991 should increase demand for the Company's products. As construction
activity increases in the northeastern United States, the Company believes
that more of its output will be delivered within its northeastern United
States market, rather than to more remote markets.
<PAGE>
DOMESTIC OVERCAPACITY. The domestic steel industry is characterized by
overcapacity. The Company believes, however, that its geographic location,
lower production costs, and the low selling price of rebar relative to other
steel products insulate it, to a certain extent, from the competitive
effects of this overcapacity.
<PAGE>
SEASONALITY. The Company's normal operations are subject to a seasonal
period of reduced sales during November through February, when
winter weather impacts the construction market for rebar. To partially
offset such seasonal effects, the Company markets rebar to Caribbean markets
and to the mine roof bolt industry. During the winter, the Company
generally operates the Sayreville Mill at full capacity to build inventory,
which is sold during the balance of the year.
BACKLOG. The commodity nature of the mill rebar market is generally not
characteristic of a long lead time order cycle. Orders are generally filled
within 45 days and are cancellable. The Company does not believe backlog is
a significant factor in its business based on prior experience.
Raw Materials.
The principal raw material used in the Company's mini-mill is scrap
steel derived from, among other sources, junked automobiles, machines,
railroad cars and track materials, and demolition scrap from bridges and
other obsolete structures. The purchase of scrap steel is highly
competitive and its price is subject to market conditions largely beyond the
control of the Company. Fluctuations in the supply and demand for scrap may
result in increased prices and production costs. The Company has
historically maintained up to 40 days of scrap inventory in order to
insulate itself against possible short-term fluctuations. The Company
purchases scrap through outside brokers, principally Tube City Iron and
Metal Company, through which the Company purchased approximately $41.6
million (87% of its total scrap purchases) in Fiscal 1994. The Company
believes that adequate sources of scrap and other raw materials it uses are
readily available.
The Company uses various other materials in producing its steel. All of
the Company's raw materials are available from a number of sources.
The Company's manufacturing processes consume large amounts of
electricity provided by Jersey Central Power & Light Company, a subsidiary
of General Public Utilities, under a contract which allows the Company to
purchase its electricity at a reduced cost in return for the utility's right
to periodically interrupt service. The number and duration of the service
interruptions are contractually limited. The Company believes that the
savings in the cost of electricity more than offsets any production which
might be lost as a result of such interruptions.
Employees.
As of November 30, 1994, the Company employed 374 people.
Environmental and Regulatory Matters.
The Company is subject to Federal, state and local environmental laws
and regulations concerning, among other matters, waste water, effluent air
emissions, hazardous waste management and noise. The Sayreville mill is
classified as generating hazardous waste because it produces certain types
of dust containing lead and cadmium. The Company currently collects and
disposes of such wastes through contracts with approved waste disposal
<PAGE>
firms.
The Company is party to an administrative consent order dated August 14,
1991 (the "ACO") with the New Jersey Department of Environmental Protection
(the "NJDEP") in settlement of certain emission control matters. In April
1993, the Company and the NJDEP agreed that the Modernization Program would
be covered by an extension and modification of the existing ACO and the
Company commenced the Modernization Program on that basis. The Company and
the NJDEP negotiated an amendment to extend and modify the ACO (the "Amended
ACO"). The Amended ACO called for the NJDEP to issue a new permit covering
the modernized facility and provided that the Company pay a penalty of
$150,000, which was charged to operations in Fiscal 1994.
On September 7, 1994, NJDEP issued to the Company a "Permit to
Construct, Install or Alter Control Apparatus or Equipment" and "Temporary
Certificate to Operate Control Apparatus or Equipment" and "Prevention of
Significant Deterioration Permit" (the "NJDEP Permit"). The NJDEP Permit
authorizes the Company to proceed with the mill modernization project,
contains a temporary operating permit and directs that the testing required
for issuance of a five-year certificate to operate be performed by April 4,
1995. By letter dated February 8, 1995, the NJDEP advised the Company that
all obligations imposed by the Amended ACO have been satisfied and that it
had terminated the Amended ACO effective February 3, 1995. Notwithstanding
termination of the Amended ACO, the Company must perform and meet the tests
contained in the NJDEP Permit to obtain a five-year operating permit.
Management believes the improvements necessary to bring the Sayreville Mill
up to the operating standards contained in the NJDEP Permit have been
included in the Modernization Program, that its testing will demonstrate
compliance with the provisions of the NJDEP Permit and that a new five-year
operating permit will be issued by the NJDEP. As a consequence, management
does not believe that the foregoing regulatory matters will have a material
adverse effect on the Company's financial condition or results of
operations.
On June 7, 1994, the United States Environmental Protection Agency (the
"USEPA") issued a Notice of Violation ("NOV") to the Company (IN THE MATTER
OF NEW JERSEY STEEL CORPORATION, Index No. A-94-131, United States
Environmental Protection Agency, Region II) stating that the Company had
violated the New Jersey State Implementation Plan because a "major
modification" was commenced without a Prevention of Significant
Deterioration Permit from NJDEP. That permit was issued by the NJDEP on
September 7, 1994. The USEPA defines a "major modification" as any physical
change that would result in a significant net increase in emissions. Since
the Company's mill modernization project resulted in a net decrease in
emissions and because the Company acted in accordance with an understanding
with the NJDEP, the Company believes that no violation of the New Jersey
State Implementation Plan occurred. There have been no further proceedings
under the NOV. The Company believes that the issuance of the Prevention of
Significant Deterioration Permit on September 7, 1994 addressed the concerns
raised by USEPA in the NOV. However, there can be no assurances that USEPA
will not assess additional penalties resulting from the NOV, and the amount
of such penalties, if any, cannot be determined at this time.
Total expenditures exclusive of the modernization project incurred by
the Company in Fiscal 1994 in relation to environmental matters were
approximately $.6 million. The majority of the expenditures were related to
a continuous emissions monitoring system.
Power Contract.
<PAGE>
On September 22, 1992, the State of New Jersey Board of Regulatory
Commissioners approved a revised tariff for electrical service provided by
the Company's electric utility, Jersey Central Power & Light, which
decreased the rate charged for service to the Sayreville Mill. A portion of
the power savings became effective September 25, 1992. The balance of the
`revised tariff was implemented, retroactive to April 1, 1994, upon the
Company's having met a $25 million minimum capital spending threshold
required by the tariff.
Item 2. Properties.
The Company owns approximately 116.5 acres of real estate in Sayreville,
New Jersey, upon which are located its steel mill, its executive offices,
epoxy coating plant, training, storage and repair facilities. The Company
owns approximately 8.5 acres in Bowie, Maryland, on which its fabrication
facility is located. The Company also owns 27 acres in Keasbey, New Jersey,
which has buildings and dock facilities. The Sayreville and Bowie
properties are generally fully utilized and are suitable for their use in
the Company's business. The Keasbey property is not currently fully leased,
in part as a result of its being held off the market in connection with the
proposed merger transaction described below. Except for the dock facility,
the Keasbey property is not utilized in the Company's business.
The following table lists the Company's real property and production
facilities all of which are owned by the Company:
<TABLE>
<CAPTION>
<S> <C> <C>
Square
Facility Utilization Footage
- - - - - -------- ----------- -------
Sayreville, NJ Administrative
and Sales Offices 8,000
Steel Mill 235,000
Epoxy Coating Line
and Training Center 30,000
Bowie, MD Fabrication Shop 18,000
Office 3,000
Keasbey, NJ Buildings and Dock
Facilities 94,000
</TABLE>
With the exception of the Keasbey Property, all of the Company's real
property is owned free of any material encumbrances. The Keasbey Property
is subject to a mortgage in the principal amount of $5,081,576 held by
N.J.S.C. Investment Co., Inc., a wholly owned subsidiary of the Company.
Item 3. Legal Proceedings; Other Matters.
MERGER AGREEMENT. In October 1994, the Company entered into an
Agreement and Plan of Merger (the "Merger") with International Metals
Acquisition Corporation ("IMAC"). Pursuant to the Merger Agreement, each
share of common stock of the Company was to be converted into either $18.00
in cash, or an IMAC unit consisting of three shares of IMAC common stock
<PAGE>
(subject to adjustment) and a five-year warrant to purchase one share of
IMAC common stock at $8.00 per share, at the election of the holder of the
Company's stock. Concurrent with the execution of the Merger Agreement, the
Company's majority stockholder, Von Roll Ltd. ("Von Roll"), entered into a
stock purchase agreement with IMAC pursuant to which Von Roll, among other
things, agreed to sell all its holdings of the Company's stock to IMAC and
to vote all of such shares in favor of the Merger. The consummation of the
Merger and the related stock purchase agreement were contingent on a number
of conditions being met, including the buyer's obtaining financing for the
transaction, and the required approvals by stockholders of the Company and
IMAC.
On February 1, 1995, the Merger Agreement and related stock purchase
agreement were terminated. IMAC has advised the Company that it intends to
seek reimbursement of its expenses incurred in connection with the
transaction up to a maximum of $3,500,000. Based on the advice of legal
counsel, management believes that IMAC is not entitled to such
reimbursement. The Company has advised IMAC that it intends to seek
recovery of its expenses, which it estimates to be approximately $800,000.
STOCKHOLDERS ACTION. On September 22, 1994, the Company received a
summons and complaint in an action in the Court of Chancery for New Castle
County, Delaware entitled LESLIE SUSSER v. NEW JERSEY STEEL CORPORATION,
WALTER H. BEEBE, DR. PAUL J. CHOFFAT, H. GEORG HAHNLOSER, HARVEY L. KARP and
ROBERT J. PASQUARELLI (Civil Action No. 13747). The action purports to be a
class action on behalf of minority stockholders of the Company and seeks
unspecified damages and injunctive relief in connection with the Merger.
The complaint alleges, among other things, that $18.00 per share is
"unconscionable, unfair and grossly inadequate;" the terms of the
Merger constitute unfair dealing with respect to the minority shareholders
of the Company because, among other things, the intrinsic value of the
Company's securities is materially in excess of the $18.00 per share, and
was not the result of arm's length negotiations; and the directors of the
Company breached their fiduciary obligations to the minority stockholders of
the Company in approving the Merger. With the termination of the Agreement
and Plan of Merger between the Company and IMAC, the Company believes this
action is now moot.
MOUNTAINEER BOLT, INC LITIGATION. The Company and Von Roll AG ("Von Roll")
are defendants in an action entitled MOUNTAINEER BOLT, INC. AND ADVANCED
MINING SYSTEMS, INC. v. BRUCE A. CASSIDY, FREDERICK B. MUNSON, EXCEL MINING
SYSTEMS, INC., NEW JERSEY STEEL CORPORATION, VON ROLL LTD., a/k/a VON ROLL
A.G. (United States District Court, Southern District of New York; Case No.
93 Civ. 6612). In June 1992, Mountaineer Bolt, Inc. and Advanced Mining,
Inc. filed Chapter 11 bankruptcy petitions in the Bankruptcy Court for the
Southern District of New York. The original complaint alleged causes of
action against defendants other than the Company and Von Roll, and sought
damages in excess of $12 million. In 1992, an amended complaint added the
Company and Von Roll as additional parties and claimed that they conspired
with the original defendants to destroy the business of Mountaineer Bolt.
The amended complaint alleges causes of action for tortious conspiracy,
tortious interference with contract and prospective business relations and
fraud and unfair competition. The amended complaint seeks damages in excess
of $12 million. The action has been transferred from the U.S. District
Court for the Northern District of West Virginia to the U.S. District Court
for the Southern District of New York. As defendants, the Company and Von
<PAGE>
Roll have made a motion to dismiss the amended complaint on jurisdictional
and substantive grounds. In 1993, in connection with the settlement of an
unrelated action, the original defendants were dropped as defendants in this
action. The Company believes the plaintiffs' claims are without merit and
intends to vigorously defend itself in this action.
NEW JERSEY STEEL ACQUISITION CORP LITIGATION. The Company was a
defendant in an action entitled NEW JERSEY STEEL ACQUISITION CORP. v. VON
ROLL AG., MONTEFORNO, S.A. and NEW JERSEY STEEL CORPORATION, which had been
brought in the Supreme Court of New York, New York County in 1984. The case
arose from an unsuccessful effort to sell the Company in 1983 pursuant to a
stock purchase agreement. The complaint sought in excess of $26,600,000 in
compensatory damages, an unspecified amount of punitive damages and specific
performance of the stock purchase agreement, together with injunctive and
declaratory relief. The trial was completed on May 6, 1993 and the court
subsequently rendered a decision dismissing the complaint based on its
merits. By order dated November 30, 1994, an appeal by the plaintiff was
dismissed.
SECURITIES AND EXCHANGE COMMISSION INQUIRY. In a letter dated July 7,
1994, the staff of the Securities and Exchange Commission informed the
Company that it is conducting a private inquiry into whether there have
been violations of the federal securities laws. The staff requested that the
Company provide it with all documents concerning its investments in AJ Ross
Logistics, Inc. ("AJ Ross") and the Modernization Program. The staff letter
states that its request for documents should not be construed as an
indication by the Commission or its staff that any violations of law have
occurred, nor should it be considered a reflection upon any person, entity
or security. The Company is cooperating with the staff and has provided the
requested documents.
NOVO-PLEZ AND NASCO ARBITRATION. Novo-Plez SA and NASCO Brokers, Inc.
(the "Claimants"), steel brokers, filed a Petition and Request for
Arbitration in the International Court of Arbitration of the International
Chamber of Commerce on March 21, 1994 (the "Petition") based on two purchase
agreements between the Company and the Claimants. The Claimants demand
$720,653 plus interest at 9.5% since November 29, 1991 and have reserved the
right to assert a claim for an additional $8,700,000 in incidental and
consequential damages. The Claimants have also petitioned the Company to
indemnify them against all expenses and costs incurred relating to the
transaction and arbitration. The Company filed an answer to the Petition on
May 2, 1994, in which it stated that the steel billets fully conformed to
the specifications provided for in the contracts it had with the Claimants.
Management believes that the Company has breached no legal obligation owing
to Claimants under the contracts. While final arbitration always involve
risk at the hands of the decision maker, based on the advice of legal
counsel, management believes that based on the contractual obligations and
all of the facts and circumstances, the Company will prevail in a successful
defense against these claims.
Egyptian Metals Company ("EMC"), the customer of the Claimants in the
above arbitration, and its broker have attempted to pursue a related claim
before the "Tribunal de Commerce" in Paris, France alleging that the Company
was liable to it for the sale of the defective billets. EMC claimed damages
of $2,120,666 and an additional claim for payment of FF 100,000 under the
French Code of Civil Procedure. Management believes that the Company is not
liable to EMC for any damages. The Company has not entered an appearance in
this French litigation as, based on the advice of legal counsel, management
believes that the French court is without jurisdiction over the Company and
that the litigation will ultimately be dismissed or, if judgment is in fact
entered, that it will be unenforceable against the Company.
From time to time the Company is involved in litigation relating to
claims arising out of its operations in the normal course of business. Such
<PAGE>
claims against the Company are generally covered by insurance. There can be
no assurance that insurance, including product liability insurance, will be
available in the future at reasonable rates.
Item 4. Submission of Matter to a
Vote of Security Holders.
Not applicable.
PART II
Item 5. Market for Registrant's Common Equity
and Related Stockholder Matters.
The Company's Common Stock is traded on the NASDAQ National Market
System under the symbol NJST. On February 3, 1995, there were approximately
2,049 holders of record of the Company's Common Stock. On September 20,
1991 the Company announced the omission of its quarterly dividend and is
currently not paying dividends. The range of high and low closing sale
prices of the Common Stock for the last two fiscal years by quarter is
presented below:
<TABLE>
<CAPTION>
First Second Third Fourth
----- ------ ----- ------
High Low High Low High Low High Low
---- --- ---- --- ---- --- ---- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Fiscal
1994 19-1/4 14-1/2 19-1/4 16-3/4 17-3/4 15-1/2 17-1/2 15-1/2
Fiscal
1993 18-1/4 16-1/2 18-1/2 14-1/4 17-3/4 14 19 14-1/4
</TABLE>
Item 6. Selected Financial Data.
The selected financial data shown below for the five year period
ended November 30, 1994 should be read in conjunction with the Financial
Statements and related Notes thereto which are included elsewhere in this
Report.
<TABLE>
<CAPTION>
Year Ended November 30
1994 1993 1992 1991 1990
(In thousands, except per share data)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA
Net Sales $137,755 $119,462 $111,746 $120,059 $128,790
Gross profit 9,022 7,129 7,159 1,191 14,332
Earnings (loss) before
extraordinary credit and
cumulative effect of
<PAGE>
change in accounting
for income taxes 2,599 (3,702) 697 (3,868) 5,435
Net earnings (loss)(1) 2,599 1,198 2,064 (3,868) 8,160
PER SHARE DATA (2)
Earnings (loss) before
extraordinary credit and
cumulative effect of
change in accounting
for income taxes $.44 $(.63) $.12 $(.66) $ .93
Net earnings (loss) .44 .20 .35 (.66) 1.40
Cash dividends declared - - - .45 .60
BALANCE SHEET DATA
Working capital $ 3,656 $ 18,126 $ 34,249 $ 32,430 $ 35,269
Total assets 136,236 113,306 105,515 100,092 109,791
Long-term debt (including
current portion) 10,536 - - - -
Total stockholders'
equity 89,450 86,623 85,425 83,310 89,732
- - - - - ------------------
<FN>
(1)The Company adopted the provisions of Statement of Financial
Accounting Standards No. 109 "Accounting for Income Taxes"
effective December 1, 1992. The cumulative effect of this change
in accounting for income taxes was a credit of $4,900,000 in fiscal
1993.
(2)The weighted average number of shares of common stock and common
stock equivalents where applicable is approximately 5,883,000,
5,874,000, 5,868,000, 5,858,000, and 5,821,000 shares for the years
ended November 30, 1994, 1993, 1992, 1991, and 1990, respectively.
</TABLE>
Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations.
General.
The steel industry is cyclical in nature. The Company's sales are
primarily derived from products sold to the construction industry,
which also has been cyclical and directly affected by, among other
things, the level of consumer confidence and prevailing economic
conditions. However, the Company believes its results of operations
are less sensitive to economic trends due to the majority of its sales
going to public construction projects, which are usually less
vulnerable to economic cycles.
Substantially all of the Company's revenues are comprised of
rebar sales. Rebar is a commodity the price of which is determined by
supply and demand. Supply, i.e., rebar production capacity, is fairly
constant. Demand is determined, in large part, by levels of activity
in the construction industry. The principal variable in production
costs is the cost of scrap steel. Scrap is also a commodity the price
of which is determined by supply and demand. Scrap supply is fairly
constant and demand for scrap is influenced by the level of activity in
the worldwide steel industry. The Company has realized reduced power
<PAGE>
costs in the 1993-1994 period as a result of implementation of its new
electrical tariff, power costs are expected to remain fairly stable in
the foreseeable future.
Scrap steel is the principal raw material used in the Company's
products and accounted for approximately 39% of the Company's total
cost of product sold in fiscal 1994. Scrap demand, and therefore scrap
prices are affected by cyclical, seasonal and other market factors.
These fluctuations in scrap prices affect the Company's revenues, costs
and earnings. Increases in the sales price of rebar during 1994
resulted in a more favorable spread between rebar prices and scrap
prices.
The Company began the Modernization Program in 1993 designed
significantly to increase its melt shop productivity and reduce
operating costs. The major elements of the Modernization Program
include upgrading equipment, the installation of a new production
technology known as the Consteel process and a new higher capacity
continuous casting machine. Each of the elements of the Modernization
Program have been completed with the exception of the installation of a
new continuous casting machine, which is scheduled to be installed in the
third quarter of fiscal 1995. In conjunction with the Modernization Program,
the Company also negotiated a reduced long-term electricity tariff with its
electricity supplier, which was fully implemented as of April 1994.
Management believes that the combination of the electrical rate
reductions and the installation of the Consteel process will result in
reduced electrical costs per ton of steel. The manufacturer's
specifications for the Consteel process indicate a reduction in
electric consumption of 120 KWH per ton(at production levels of 90 tons
per hour, the anticipated normal production level). In addition, the
manufacturer's specifications for the Consteel process indicate reduced
electrode usage. With the increased capacity of the new furnace the
Company should be able to achieve production levels of 90 tons per hour
with three shifts, rather than the present four shifts. In addition,
the Company expects its maintenance costs, dust disposal costs, other
materials costs and scrap handling costs to be reduced. Management
believes that the aggregate of these savings, assuming the Consteel
process performs up to expectations, should be approximately $25.00 per
ton of steel produced. However, the Company has not yet achieved
consistent production levels of 90 tons per hour using the Consteel
process.
The Company is not aware of any material remediation contingencies
associated with the real estate or industrial facilities owned and
operated by it. The Sayreville Mill operates pursuant to permits
issued by various regulatory agencies, including the NJDEP. Should the
respective regulatory agencies impose substantially more restrictive
operating conditions on renewal of the permits, the Company's
operations could be substantially and adversely affected.
Results of Operations.
The following table sets forth for the periods indicated the
relative percentages selected items in the Consolidated Statements of
Operations bear to net sales:
<PAGE>
<TABLE>
<CAPTION>
Year Ended November 30,
1994 1993 1992
<S> <C> <C> <C>
Net Sales 100% 100% 100%
Gross Profit 6.5 6.0 6.4
Selling, General &
Administrative Expenses 5.0 9.8 5.1
Other Income .4 0.7 2.2
Earnings (Loss) Before Provision
for Income Taxes, Equity in
Operations of Investee,
Extraordinary Credit, and Cumulative
Effect of Change in Accounting for
Income Taxes 1.9 (3.1) 3.5
Provision for Income Taxes -- -- 1.3
Earnings (Loss) Before Equity
in Operations of Investee,
Extraordinary Credit, and
Cumulative Effect of Change in
Accounting for Income Taxes 1.9 (3.1) 2.2
Equity in Operations of Investee -- -- (1.6)
Earnings (Loss) Before
Extraordinary Credit and
Cumulative Effect of Change in
Accounting for Income Taxes 1.9 (3.1) 0.6
Extraordinary Credit -- -- 1.2
Earnings (Loss) Before Cumulative
Effect of Change in Accounting
for Income Taxes 1.9 (3.1) 1.8
Cumulative Effect of Change in
Accounting for Income Taxes -- 4.1 --
Net Earnings 1.9 1.0 1.8
</TABLE>
Year ended November 30, 1994 compared
to the year ended November 30, 1993.
Net Sales for the fiscal year ended November 30, 1994 increased 15% to
$137,755,000 as compared to $119,462,000 for the fiscal year ended November
30, 1993 primarily as a result of higher rebar selling prices. Annual
shipment levels for fiscal 1994 were 446,000 tons, consistent with fiscal
1993 shipment levels of 451,000 tons. An increase in shipments to local
domestic rebar markets, along with several rebar price increases in 1994
enabled the Company to show a strong improvement in its average selling
prices, which increased to $309 per ton in fiscal 1994 from $265 in fiscal
1993.
Gross profit margin increased to 6.5% in the 1994 fiscal year from 6.0%
<PAGE>
in 1993. This was primarily a result of a 16.6% increase in average selling
prices partially offset by average scrap costs increasing 14.3% from $91 per
ton in fiscal 1993 to $104 per ton in fiscal 1994. Additionally, although
the Company showed continued improvement in its melt shop operations during
the third and fourth quarters of 1994, operating performance and costs in
1994 were negatively impacted while the melt shop continued to work through
problems associated with the integration of new equipment and the
implementation of the new Consteel melting process. As a result, 1994
operating costs were higher than 1993.
Selling, general and administrative expense decreased $4,730,000 in 1994
to $6,997,000 from $11,727,000 in 1993. This was primarily a result of a
$5,159,000 charge to earnings in fiscal 1993 to reflect the write-off of
trade receivables relating to the bankruptcy of one of its customers, offset
by increased professional fees related to the terminated merger agreement,
increased bank fees related to the Company's borrowings and increases in
various sales department expenses.
Total other income (expense) for the 1994 fiscal year, decreased
$322,000 to $574,000 in fiscal 1994 from $896,000 in fiscal 1993. This was
primarily a result of a decrease in interest and rental income of $168,000
and $331,000, respectively from fiscal 1993. This decrease was partially
offset by the lack of any other non-operating income or expenses in fiscal
1994. Also in fiscal 1993, other income (expense) included a gain on an
insurance settlement and expenses incurred in connection with the Company's
option to purchase property in Pennsylvania which expired in 1993.
The Company adopted the Financial Accounting Standards Board's Statement
No. 109 effective December 1, 1992. The cumulative effect of this change in
accounting for income taxes had a favorable impact of $4,900,000 on 1993
earnings and was reported separately in the consolidated statement of
operations for the year ended November 30, 1993. Management believes that it
is more likely than not that certain of its net operating loss carryforwards
will be utilized prior to their expiration. This belief is based on the
Company's new reduced electrical tariff, the reduced costs expected from the
plant Modernization Program, improvement during 1994 in the sales price of
rebar, and as a result of the Company's history of generating and then
utilizing net operating loss carryforwards.
Year ended November 30, 1993 compared
to the year ended November 30, 1992.
Net sales for 1993 increased approximately 7% to $119,462,000 as
compared to $111,746,000 in fiscal year 1992 reflecting a 4% increase in
shipment levels and a 3% increase in average selling prices. Shipments
increased to 451,000 tons from 435,000 tons in fiscal 1992. Average selling
prices in fiscal 1993 increased to $265 per ton from $257 per ton in fiscal
1992.
Gross profit margin decreased to 6.0% in the 1993 fiscal year from 6.4%
in 1992. This was a result of a rapid rise in the cost of scrap during
1993, which was not fully recovered through higher selling prices, reduced
electrical rates and lower conversion costs in 1993. Scrap prices in fiscal
1993 increased to an average of $91 per ton from $75 per ton in fiscal 1992.
In addition, gross margin was negatively impacted by start-up costs related
to the installation of the new epoxy-coating line totalling approximately
$1.3 million. Billet conversion costs for fiscal year 1993 were lower
primarily as a result of higher billet production levels over the
corresponding 1992 fiscal year and the realization of the full benefit of
the reduced electric rate.
<PAGE>
Selling, general and administrative expenses increased $6,050,000 in
1993 to $11,727,000 from $5,677,000 in 1992. This was primarily due to a
charge of $5,159,000 to reflect the write-off of trade receivables from AJ
Ross, higher employment and training related expenses and increases in
various finance department and fabrication division expenses.
Total other income (expense) for the 1993 fiscal year decreased
$1,610,000 to $896,000 from $2,506,000 in fiscal 1992, due to a combination
of factors including a gain on an insurance settlement of $627,000 in 1993
as compared to a gain of $1,125,000 realized in 1992, lower interest and
rental income in 1993, and expenses incurred in connection with the
Company's option to purchase property in Pennsylvania which expired in May
1993.
During 1993, the Company revised the estimated remaining useful lives of
certain machinery and equipment from 10 to 15 years to more closely reflect
expected remaining lives. The effect of this change in accounting estimate
resulted in an increase in earnings before extraordinary item, cumulative
effect of change in accounting for income taxes, and net earnings of
$1,486,000, or $.25 per common share.
Liquidity and Capital Resources.
As of November 30, 1994, the Company had cash and cash equivalents of
$337,000 and total outstanding indebtedness of $10,536,000 under a revolving
credit facility with a current maximum availability of $20 million. The
credit facility is secured by accounts receivable and inventory and expires
in December 1995. The Company expects such credit facility to be renewed
and extended in the normal course of business. The Company's debt policy
from its initial public offering in 1987 through 1993 had been to minimize
borrowings. Consequently, during this period, the Company carried no debt
and additionally, did not require any equity offerings. The Company's need
to borrow in fiscal 1994 was to finance the Modernization Program. Until it
began conserving cash in 1991 in anticipation of the Modernization Program,
the Company's liquidity needs were met from cash flows generated by
operations. A portion of the Company's excess cash flow was distributed to
stockholders as dividends through 1991.
The year ended November 30, 1994 reflects reduced liquidity as compared
to earlier periods. This is primarily a result of utilizing cash on hand,
cash generated by operations and borrowings for the funding requirements for
capital expenditures primarily related to the Modernization Program.
Capital expenditures during fiscal 1994, 1993 and 1992 were $32,891,000,
$17,759,000 and $4,738,000, respectively. The Company expects to incur
capital expenditures of approximately $7,900,000 in fiscal 1995, primarily
to install a new continuous casting machine. The Company believes that its
borrowing capacity and cash generated by operations will be adequate to fund
planned capital expenditures and to meet the anticipated liquidity needs of
its business.
Working capital decreased by $14,470,000 at November 30, 1994 as
compared to November 30, 1993 primarily as a result of an increase in
capital expenditures to $32,891,000 in fiscal 1994 as compared to
$17,759,000 in fiscal 1993. The Company's total trade receivables increased
by approximately $3.9 million at November 30, 1994, as compared to November
30, 1993. This was primarily a result of higher selling prices during
fiscal 1994 and significantly higher shipment levels in the fourth quarter
of fiscal 1994 as compared to the comparable quarter in 1993. Inventories
decreased by approximately $7.2 million at November 30, 1994, as compared to
<PAGE>
November 30, 1993, primarily as a result of a planned build up of billets in
1993 to meet rolling mill requirements during the installation of the
Consteel process in April 1994, during which time the melt shop was shut
down. Accounts payable at November 30, 1994 increased by approximately $6.3
million as compared to November 30, 1993 primarily as a result of the timing
associated with cash disbursements for the Modernization Program.
Net cash provided by operating activities increased $15,278,000 to
$19,928,000 in fiscal 1994, as compared to $4,650,000 in 1993 primarily due
to higher earnings, a reduction of inventory levels in 1994 of $7,216,000
and an increase in accounts payable in 1994 of $6,349,000. Net cash
provided by operating activities was $7,438,000 in fiscal 1992.
Net cash used in investing activities increased $15,132,000 to
$32,891,000 in fiscal 1994 as compared to $17,759,000 in fiscal 1993,
reflecting an increase in capital expenditures. Capital expenditures in
fiscal 1992 were $4,738,000. Capital expenditures for 1995 are expected to
be approximately $7,900,000 primarily for a new casting machine which is
part of the Modernization Program. There were no significant cash flows from
investing activities other than capital expenditures in fiscal 1994, 1993
and 1992.
There were no significant cash flows from financing activities in fiscal
1993 or 1992. In fiscal 1994, cash flows from financing activities
increased to $10,764,000 primarily due to the Company's bank borrowings to
fund the Modernization Program.
Despite a business restructuring by AJ Ross, changing market conditions
and related increases in the price of rebar in 1993 had an adverse effect on
AJ Ross' operations, and on November 2, 1993, AJ Ross filed a petition for
relief under Chapter 11 of the U.S. Bankruptcy Code. As a result, the
Company took a one-time charge of approximately $5.2 million in fiscal 1993.
AJ Ross was a significant customer of the Company which received in excess
of $5.6 million in payments on trade receivables from AJ Ross in the year
immediately preceding the filing date. Although AJ Ross has not asserted
any claim against the Company in the bankruptcy proceeding as a result of
these payments and based upon the advice of the Company's bankruptcy
counsel, management does not believe that the $5.6 million constitute
voidable preferences. However, there can be no assurance that AJ Ross, a
trustee in AJ Ross' case (should one be appointed) or other entities will
not assert that some or all of the payments are voidable preferences which
must be returned to AJ Ross' bankruptcy estate for distribution to AJ Ross
creditors.
Environmental.
The Company is subject to Federal, state and local environmental laws
and regulations concerning, among other matters, waste water, effluent air
emissions, hazardous waste management and noise. The Sayreville Mill is
classified as generating hazardous waste because it produces certain types
of dust containing lead and cadmium. The Company currently collects and
disposes of such wastes through contracts with approved waste disposal
firms.
The Company is party to an administrative consent order dated August 14,
1991 (the "ACO") with the New Jersey Department of Environmental Protection
(the "NJDEP") in settlement of certain emission control matters. In April
1993, the Company and the NJDEP agreed that the Modernization Program would
be covered by an extension and modification of the existing ACO and the
Company commenced the Modernization Program on that basis. The Company and
<PAGE>
the NJDEP negotiated an amendment to extend and modify the ACO (the "Amended
ACO"). The Amended ACO called for the NJDEP to issue a new permit covering
the modernized facility and provided that the Company pay a penalty of
$150,000, which was charged to operations in Fiscal 1994.
On September 7, 1994, NJDEP issued to the Company a "Permit to
Construct, Install or Alter Control Apparatus or Equipment" and "Temporary
Certificate to Operate Control Apparatus or Equipment" and "Prevention of
Significant Deterioration Permit" (the "NJDEP Permit"). The NJDEP Permit
authorizes the Company to proceed with the mill modernization project,
contains a temporary operating permit and directs that the testing required
for issuance of a five-year certificate to operate be performed by April 4,
1995. By letter dated February 8, 1995, the NJDEP advised the Company that
all obligations imposed by the Amended ACO have been satisfied and that it
had terminated the Amended ACO effective February 3, 1995. Notwithstanding
termination of the Amended ACO, the Company must perform and meet the tests
contained in the NJDEP Permit to obtain a five-year operating permit.
Management believes the improvements necessary to bring the Sayreville Mill
up to the operating standards contained in the NJDEP Permit have been
included in the Modernization Program, that its testing will demonstrate
compliance with the provisions of the NJDEP Permit and that a new five-year
operating permit will be issued by the NJDEP. As a consequence, management
does not believe that the foregoing regulatory matters will have a material
adverse effect on the Company's financial condition or results of
operations.
On June 7, 1994, the United States Environmental Protection Agency (the
"USEPA") issued a Notice of Violation ("NOV") to the Company (IN THE MATTER
OF NEW JERSEY STEEL CORPORATION, Index No. A-94-131, United States
Environmental protection Agency, Region II) stating that the Company had
violated the New Jersey State Implementation Plan because a "major
modification" was commenced without a Prevention of Significant
Deterioration Permit from NJDEP. That permit was issued by the NJDEP on
September 7, 1994. The USEPA defines a "major modification" as any physical
change that would result in a significant net increase in emissions. Since
the Company's melt shop modernization project resulted in a net decrease in
emissions and because the Company acted in accordance with an understanding
with the NJDEP, the Company believes that no violation of the New Jersey
State Implementation Plan occurred. There have been no further proceedings
under the NOV. The Company believes that the issuance of the Prevention of
Significant Deterioration Permit on September 7, 1994 addressed the concerns
raised by USEPA in the NOV. However, there can be no assurances that USEPA
will not assess additional penalties resulting from the NOV, and the amount
of such penalties, if any, cannot be determined at this time.
Future Trends Commentary.
In 1992, the Company signed a reduced long-term electricity tariff with
its electricity supplier. In connection therewith, the Board of Directors
approved a $42 million plant modernization plan. The rate provided by this
tariff, which was fully implemented in April 1994, will result in
significant power savings to the Company as compared to its previous tariff
and will increase its competitiveness with other mini-mills which have had
access to lower cost power. These savings are anticipated to be in excess
of $6 million annually. The modernization entails a new caster (expected to
be installed in fiscal 1995), melt shop pollution control system, Consteel
system and a melt shop infrastructure renovation. As a result of this
modernization, the Company expects to realize further direct cost savings in
addition to its power rate reduction. These additional direct cost savings
are anticipated to be approximately $6 million annually. When fully
<PAGE>
implemented, the combined direct cost savings from reduced power rates and
the modernization are anticipated to be in excess of $12 million annually as
compared to 1992 levels. As of November 30, 1994, the Company had spent
$41.5 million on the Modernization Program and expects to expend an
additional $7.9 million in fiscal 1995 to install a continuous casting
machine.
Much of the Company's future profitability improvement will depend
largely on the Company's ability to pass through scrap cost increases in its
selling prices and its ability to realize potential cost savings from the
Consteel process.
Net Operating Loss Carryforwards.
At November 30, 1994 the Company had net operating loss carryforwards
for Federal income tax purposes of $25,047,000, which expire in the years
1997-2009.
The Tax Reform Act of 1986 contains provisions materially limiting the
use, INTER ALIA, of net operating loss carryforwards after an "ownership
change" (as defined). In general, an ownership change will occur only if
there has been a change in the stock ownership of a corporation of more than
50 percentage points during a three-year "testing period", generally the
three-year period preceding the date of the change in stock ownership in
question. Transactions involving stockholders individually holding less
than 5% of the voting stock generally are not taken into account, however,
in determining whether there has been such a change. Transactions which may
result in an ownership change can arise in any number of ways including
sales or other transfers by existing stockholders, new issuances of shares,
issuance of options, and redemptions. See Item 12 "Security Ownership of
Certain Beneficial Owners and Management."
There can be no assurance that future transactions involving shares of
stock in the Company including, without limitation, issuances of certain
types of preferred stock, will not result in a more than 50 percentage point
ownership change within the meaning of the Internal Revenue Code which might
therefore result in a material curtailment of the ability of the Company to
avail itself of its net operating loss carryforwards.
Item 8. Financial Statements and Supplementary Data.
See index on Page F-1.
<PAGE>
NEW JERSEY STEEL CORPORATION AND SUBSIDIARY
Index to Consolidated Financial Statements and Schedule
Page
Number
------
Independent Auditors' Report F-2
Consolidated Financial Statements:
Consolidated Balance Sheets - November 30, 1994 and 1993 F-3
Consolidated Statements of Operations - Years ended
November 30, 1994, 1993 and 1992 F-5
Consolidated Statements of Stockholders' Equity - Years
ended November 30, 1994, 1993 and 1992 F-7
Consoldiated Statements of Cash Flows - Years ended
November 30, 1994, 1993 and 1992 F-8
Notes to Consoldated Financial Statements F-10
Schedule - Years ended November 30, 1994, 1993 and 1992:
VIII - Valuation and Qualifying Accounts
Schedules other than that listed above are omitted as the required
information is either not applicable or is included in the consolidated
financial statements or notes thereto.
F-1
- - - - - --------------------------------------------------------------------------------
<PAGE>
Independent Auditors' Report
The Board of Directors and Stockholders
New Jersey Steel Corporation:
We have audited the consolidated financial statements of New Jersey
Steel Corporation and subsidiary as listed in the accompanying index. In
connection with our audits of the consolidated financial statements, we also
have audited the financial statement schedule as listed in the accompanying
index. These consolidated financial statements and financial statement
schedule are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements and financial statement schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial
position of New Jersey Steel Corporation and subsidiary as of November 30,
1994 and 1993, and the results of their operations and their cash flows for
each of the years in the three-year period ended November 30, 1994 in
conformity with generally accepted accounting principles. Also in our
opinion, the related financial statement schedule, when considered in
relation to the basic consolidated financial statements taken as a whole,
presents fairly, in all material respects, the information set forth
therein.
As discussed in notes 1 and 6 to the consolidated financial statements,
the Company adopted the provisions of Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes," in 1993.
KPMG Peat Marwick LLP
Short Hills, New Jersey
January 11, 1995, except as to the second
paragraph of note 12, which is as of
February 1, 1995, the fourth paragraph
of note 10, which is as of February 8,
1995, and the twelfth paragraph of note 10,
which is as of February 23, 1995
F-2
- - - - - --------------------------------------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
NEW JERSEY STEEL CORPORATION AND SUBSIDIARY
Consolidated Balance Sheets
November 30, 1994 and 1993
(Dollars In Thousands, Except Per Share Data)
Assets 1994 1993
------ -------- --------
<S> <C> <C>
Current Assets:
Cash and cash equivalents $ 337 2,536
Receivables:
Trade, less allowance for
doubtful receivables of $1,846
and $1,828 in 1994 and 1993,
respectively 19,874 15,375
Trade - affiliates 2,858 3,460
Other 364 390
-------- --------
Net receivables 23,096 19,225
Inventories 14,853 22,069
Prepaid expenses and other current assets 1,238 539
Deferred income taxes 382 440
-------- --------
Total current assets 39,906 44,809
Property, plant and equipment, net 73,928 46,087
Other assets 3,931 3,491
Deferred income taxes 4,518 4,460
Real estate held for investment, net 13,953 14,459
-------- --------
136,236 113,306
======== ========
Liabilities and Stockholders' Equity
-----------------------------------
Current liabilites:
Accounts payable - trade 27,824 21,475
Due to parent 339 113
Accrued expenses 5,015 5,095
Customer deposit 3,072 --
-------- --------
Total current liabilities 36,250 26,683
-------- --------
Note payable - bank 10,536 --
F-3 (Continued)
- - - - - --------------------------------------------------------------------------------
<PAGE>
NEW JERSEY STEEL CORPORATION AND SUBSIDIARY
Consolidated Balance Sheets (Continued)
November 30, 1994 and 1993
(Dollars In Thousands, Except Per Share Data)
Stockholders' equity:
Preferred stock, $.01 par value.
Authorized 5,000,000 shares;
none issued -- --
Common stock, $.01 par value.
Authorized 15,000,000 shares;
issued and outstanding 5,893,370
shares in 1994 and 5,873,870
shares in 1993 59 59
Additional paid-in capital 133,904 133,676
Accumulated deficit (44,513) (47,112)
-------- --------
Total stockholders' equity 89,450 86,623
Commitments and contingencies -------- --------
$136,236 113,306
======== ========
See accompanying notes to consolidated financial statements.
</TABLE>
F-4
- - - - - --------------------------------------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
NEW JERSEY STEEL CORPORATION AND SUBSIDIARY
Consolidated Statements of Operations
Years ended November 30, 1994, 1993 and 1992
(In Thousands, Except Per Share Data)
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Net sales $128,605 106,366 99,585
Net sales - affiliates 9,150 13,096 12,161
Cost of sales 128,733 112,333 104,587
------- ------- -------
Gross profit 9,022 7,129 7,159
Selling, general and administrative
expenses, including management and
technical consulting fees to Von
Roll Ltd. of $450 in 1994, 1993
and 1992 6,997 11,727 5,677
-------- ------- -------
Operating income (loss) 2,025 (4,598) 1,482
-------- ------- -------
Other income (expense):
Interest income 43 211 381
Rental 531 862 1,000
Gain on insurance settlement -- 627 1,125
Other expense -- (804) --
-------- ------- -------
574 896 2,506
-------- ------- -------
Earnings (loss) before provision
for income taxes, equity in
operations of investee, extra-
ordinary credit and cumulative
effect of change in accounting
for income taxes 2,599 (3,702) 3,988
Provision for income taxes -- -- 1,458
-------- ------- -------
Earnings (loss) before equity in
operations of investee,
extraordinary credit and
cumulative effect of change
in accounting for income taxes 2,599 (3,702) 2,530
Equity of operations of investee -- -- (1,833)
-------- ------- -------
Earnings (loss) before extra-
ordinary credit and cumulative
effect of change in accounting
for income taxes 2,599 (3,702) 697
F-5 (continued)
- - - - - --------------------------------------------------------------------------------
<PAGE>
NEW JERSEY STEEL CORPORATION AND SUBSIDIARY
Consolidated Statements of Operations (Continued)
Years ended November 30, 1994, 1993 and 1992
(In Thousands, Except Per Share Data)
Extraordinary credit resulting from
utilization of net operating loss
carryforwards -- -- 1,367
-------- ------- -------
Earnings (loss) before cumulative
effect of change in accounting for
income taxes 2,599 (3,702) 2,064
Cumulative effect of change in accounting
for income taxes -- 4,900 --
-------- ------- ------
Net earnings $ 2,599 1,198 2,064
======== ======= ======
Per common share amounts:
Earnings (loss) before extraordinary
credit and cumulative effect of
change in accounting for income
taxes $ .44 (.63) .12
Extraordinary credit -- -- .23
Cumulative effect of change in
accounting for income taxes -- .83 --
------- ------ ------
Net earnings per common share $ .44 .20 .35
======= ====== ======
Weighted average number of common
shares outstanding 5,883 5,874 5,868
======= ====== ======
See accompanying notes to consolidated financial statements.
</TABLE>
F-6
- - - - - --------------------------------------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
NEW JERSEY STEEL CORPORATION AND SUBSIDIARY
Consolidated Statements of Stockholders' Equity
Years Ended November 30, 1994,1993 and 1992
(Dollars In Thousands, Except Per Share Data)
Capital Stock
-----------------------------------------
Preferred Stock Common Stock
--------------- -----------------------
$.01 $.01
par par
value value
shares Amount shares Amount
-----------------------------------------
<S> <C> <C> <C> <C>
Balances at November 30, 1991 -- $ -- 5,866,870 $ 59
Common stock options exercised -- -- 7,000 --
Net earnings -- -- -- --
-----------------------------------------
Balances at November 30, 1992 -- -- 5,873,870 59
Net earnings -- -- -- --
-----------------------------------------
Balances at November 30, 1993 -- -- 5,873,870 59
Common stock options exercised -- -- 19,500 --
Net earnings -- -- -- --
-----------------------------------------
Balances at November 30, 1994 -- $ -- 5,893,370 $ 59
=========================================
Total
Additional stock-
paid-in Accumulated holders'
capital deficit equity
----------------------------------------
Balances at November 30, 1991 $133,625 (50,374) 83,310
Common stock options exercised 51 -- 51
Net earnings -- 2,064 2,064
----------------------------------------
Balances at November 30, 1992 133,676 (48,310) 85,425
Net earnings -- 1,198 1,198
----------------------------------------
Balances at November 30, 1993 133,676 (47,112) 86,623
Common stock options exercised 228 -- 228
Net earnings -- 2,599 2,599
----------------------------------------
Balances at November 30, 1994 $133,904 (44,513) 89,450
========================================
See accompanying notes to consolidated financial statements.
</TABLE>
F-7
- - - - - --------------------------------------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
NEW JERSEY STEEL CORPORATION AND SUBSIDIARY
Consolidated Statements of Cash Flows
Years ended November 30, 1994, 1993 and 1992
(Dollars In Thousands)
1994 1993 1992
---------------------------
<S> <C> <C> <C>
Cash flows from operating activities: $ 2,599 1,198 2,064
Net earnings
Adjustments to reconcile net earnings
to net cash provided by operating
activities:
Depreciation 5,556 4,843 5,848
Provision for losses on trade
receivables 742 5,774 540
Deferred income taxes -- (4,900) --
Loss from equity investment -- -- 1,833
Changes in assets and liabilities:
Increase in net receivables (4,613) (2,783) (3,729)
Decrease (increase) in
inventories 7,216 (5,896) (290)
(Increase) decrease in prepaid
expenses and other current
assets (699) (234) 103
(Increase) decrease in other
assets (440) 55 (363)
Increase in accounts payable -
trade 6,349 6,782 435
Increase (decrease) in due to
parent, accrued expenses
and customer deposit 3,218 (189) 997
---------------------------
Net cash provided by oper-
ating activities 19,928 4,650 7,438
---------------------------
Cash flows from investing activities:
Payments of notes receivable- affiliate -- -- 292
Capital expenditures (32,891) (17,759) (4,738)
---------------------------
Net cash used in investing
activities (32,891) (17,759) (4,446)
---------------------------
Cash flows from financing activities:
Bank borrowings 22,095 -- --
Repayment of bank borrowings (11,559) -- --
Proceeds from exercise of stock options 228 -- 51
---------------------------
Net cash provided by
financing activities 10,764 -- 51
---------------------------
F-8 (Continued)
- - - - - --------------------------------------------------------------------------------
<PAGE>
NEW JERSEY STEEL CORPORATION AND SUBSIDIARY
Consolidated Statements of Cash Flows (Continued)
Years ended November 30, 1994, 1993 and 1992
(Dollars In Thousands)
Net (decrease) increase in
cash and cash equivalents (2,199) (13,109) 3,043
Cash and cash equivalents at beginning of
year 2,536 15,645 12,602
---------------------------
Cash and cash equivalents at end of year $ 337 2,536 15,645
===========================
See accompanying notes to consolidated financial statements.
</TABLE>
F-9
- - - - - --------------------------------------------------------------------------------
<PAGE>
NEW JERSEY STEEL CORPORATION AND SUBSIDIARY
Notes to Consolidated Financial Statements
November 30, 1994, 1993 and 1992
(1)OWNERSHIP AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
OWNERSHIP AND NATURE OF OPERATIONS
----------------------------------
New Jersey Steel Corporation and subsidiary (the Company) is majority
owned by Von Roll Ltd., a company based in Switzerland. During 1990, New
Jersey Steel Corporation formed a subsidiary, New Jersey Steel Investment
Co., to hold various investments. The Company operates in one industry
segment, the manufacture and sale of steel products. The Company is a steel
mini-mill which is designed to convert scrap metal into steel, operating at
a high capacity utilization and employing modern technology to produce steel
at a low cost. The Company manufactures and fabricates steel reinforcing
bars which are used in the building and roadway construction industries.
For the year ended November 30, 1993, export sales accounted for 6% of the
Company's total net sales. Export sales were not significant during 1994
and 1992.
Concentration of Credit Risk
----------------------------
The Company grants trade credit to customers, substantially all of which
are located in the Northeastern section of the United States. During the
year ended November 30, 1994, the Company generated sales to three customers
representing 21%, 11% and 10% of net sales. During the year ended November
30, 1993, the Company generated sales to three customers representing 16%,
15% and 13% of net sales. During the year ended November 30, 1992, the
Company generated sales to three customers representing 13%, 12% and 12% of
net sales. At November 30, 1994 and 1993, the Company's ten largest
customer trade receivable accounts aggregated approximately 77% and 80%,
respectively, of trade receivables.
Principles of Consolidation
---------------------------
The consolidated financial statements include the accounts of the Company
and its wholly-owned subsidiary. All significant intercompany balances and
transactions have been eliminated in consolidation.
Cash Equivalents
----------------
Cash equivalents of $2,523,000 at November 30, 1993 consist primarily of
corporate money market accounts. The Company considers all highly liquid
instruments with maturities of three months or less at date of purchase to
be cash equivalents.
F-10 (Continued)
- - - - - --------------------------------------------------------------------------------
<PAGE>
NEW JERSEY STEEL CORPORATION AND SUBSIDIARY
Notes to Consolidated Financial Statements
(1)OWNERSHIP AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES , cont.
Supplemental Cash Flow Information
----------------------------------
Cash paid for income taxes during the years ended November 30, 1993 and
1992 amounted to approximately $169,000 and $190,000, respectively. Total
interest paid and capitalized totaled approximately $1,002,000 for the year
ended November 30, 1994 (none in 1993 and 1992).
Inventories
-----------
Inventories are stated at the lower of cost or market value. Cost is
determined using the first-in, first-out method.
Property, Plant and Equipment
-----------------------------
Property, plant and equipment is stated at cost.
Depreciation of plant and equipment is calculated using the straight-line
method over the estimated useful lives of the assets ranging from five to 18
years. Repairs and maintenance are expensed as incurred.
Real Estate Held for Investment
-------------------------------
Real estate held for investment, consisting of land, bulkhead and
buildings, is stated at net depreciated cost unless, in the opinion of
management, there has been a permanent impairment in value. Depreciation is
calculated using the straight-line method over the estimated useful lives of
the bulkhead and buildings ranging from 18-25 years.
Equity Investment
-----------------
The Company accounted for its one-third ownership interest in an investee
using the equity method through 1993 when the investee declared bankruptcy.
Accounting Standards
--------------------
Effective December 1, 1992, the Company adopted Statement of Financial
Accounting Standards No. 109 (Statement 109), "Accounting for Income Taxes,"
which utilizes the asset and liability method of accounting for income
taxes. Under the asset and liability method, deferred tax assets and
liabilities are recognized for the future tax consequences attributable to
F-11 (Continued)
- - - - - --------------------------------------------------------------------------------
<PAGE>
NEW JERSEY STEEL CORPORATION AND SUBSIDIARY
Notes to Consolidated Financial Statements
(1)OWNERSHIP AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, cont.
Accounting Standards, cont.
---------------------------
differences between the financial statement carrying amounts of existing
assets and liabilities and their respective tax bases. Deferred tax assets
and liabilities are measured using enacted tax rates expected to apply to
taxable income in the years in which those temporary differences are
expected to be recovered or settled. The effect on deferred tax assets and
liabilities of a change in tax rates is recognized in income in the period
that includes the enactment date.
The Company has reported the cumulative effect of that change in the
method of accounting for income taxes in the 1993 consolidated statement of
operations. Pursuant to the deferred method under APB Opinion 11, which was
applied in 1992 and prior years, deferred income taxes are recognized for
income and expense items that are reported in different years for financial
reporting purposes and income tax purposes using the tax rate applicable for
the year of the calculation. Under the deferred method, deferred taxes are
not adjusted for subsequent changes in tax rates.
Revenue Recognition
-------------------
The Company recognizes revenue upon product shipment.
Per Common Share Amounts
------------------------
Net earnings per common share is computed by dividing net earnings by the
weighted average number of common shares outstanding during the year. The
effect on earnings per common share resulting from the assumed exercise of
outstanding stock options is immaterial in 1994, 1993 and 1992.
Reclassifications
-----------------
Certain amounts in the 1993 and 1992 consolidated financial statements
have been reclassified to conform to the 1994 financial statement
presentation.
(2) TRANSACTIONS WITH VON ROLL LTD.
In accordance with a technical services and management consulting
F-12 (Continued)
- - - - - --------------------------------------------------------------------------------
<PAGE>
NEW JERSEY STEEL CORPORATION AND SUBSIDIARY
Notes to Consolidated Financial Statements
(2) TRANSACTIONS WITH VON ROLL LTD., cont.
agreement with Von Roll Ltd., during each of the years 1994, 1993 and 1992,
the Company charged $450,000 to selling, general and administrative expenses
for management and technical consulting services provided by Von Roll Ltd.
The agreement is on a year-to-year basis. The fee payable under the
agreement is renegotiated annually. The Company has agreed to pay Von Roll
Ltd. a fee of $450,000 under this agreement for the year ending November 30,
1995.
(3) INVENTORIES
Inventories at November 30, 1994 and 1993 consist of the following:
<TABLE>
<CAPTION>
1994 1993
---- ----
<S> <C> <C>
Finished goods $ 4,707,000 6,419,000
Work in Process 305,000 7,390,000
Raw materials, spare parts
and supplies 9,841,000 8,260,000
---------- ----------
$14,853,000 22,069,000
========== ==========
</TABLE>
(4) PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment at November 30, 1994 and 1993 consist of the
following:
<TABLE>
<CAPTION>
1994 1993
---- ----
<S> <C> <C>
Land and land improvements $1,944,000 1,944,000
Steel mill and other
related facilities 62,646,000 61,271,000
Machinery and equipment 82,228,000 44,220,000
Construction in progress 11,613,000 18,105,000
----------- -----------
158,431,000 125,540,000
Less accumulated
depreciation 84,503,000 79,453,000
----------- -----------
$ 73,928,000 46,087,000
=========== ===========
</TABLE>
F-13 (Continued)
- - - - - --------------------------------------------------------------------------------
<PAGE>
NEW JERSEY STEEL CORPORATION AND SUBSIDIARY
Notes to Consolidated Financial Statements
(4) PROPERTY, PLANT AND EQUIPMENT, cont.
During 1993, the Company revised the estimated remaining useful lives of
certain machinery and equipment from ten to 15 years to more closely reflect
expected remaining lives. The effect of this change in accounting estimate
resulted in an increase in the Company's earnings before extraordinary item
and net earnings in 1993 of $1,486,000, or $.25 per common share.
(5) INVESTMENTS AND TRANSACTIONS WITH RELATED PARTIES
The Company acquired a one-third interest in the common stock of A.J. Ross
Logistics, Inc. and subsidiaries (AJ Ross) for $2,000,000 in fiscal 1988.
As further described in the succeeding paragraphs, at November 30, 1994 and
1993, the Company had written off its entire investment in AJ Ross and all
of its trade receivables due from AJ Ross except as described in the third
paragraph below.
On November 5, 1990, the Company completed the purchase and leaseback of
AJ Ross' land and buildings located in Keasbey, New Jersey. The property
was purchased for approximately $16,054,000 (based upon an independent
appraisal and including related acquisition costs) comprised of $5,141,000
of an assumption of a bank mortgage (which the Company immediately repaid to
the bank), and the reduction of the Company's trade receivables due from AJ
Ross of approximately $10,913,000. The land and buildings are classified as
real estate held for investment in the accompanying consolidated balance
sheets and the depreciable portion of such assets is being depreciated over
their estimated useful lives. Under the terms of the lease agreement, the
Company agreed to lease back the property to AJ Ross under a two-year
operating lease. During November 1992, the lease expired at which point AJ
Ross leased the property on a month-to-month basis. During fiscal 1994, AJ
Ross stopped leasing the property; however, an affiliate of an AJ Ross
stockholder leased a portion of the property on a month-to-month basis.
Rental income from AJ Ross and an affiliate of AJ Ross for the years ended
November 30, 1994, 1993 and 1992 was approximately $480,000, $862,000 and
$1,000,000, respectively.
AJ Ross undertook a significant restructuring during 1992. The
restructuring included asset sales, management changes, and a focus solely
on being a rebar fabricator. AJ Ross also had financial support provided by
its bank through a revolving credit arrangement, which, during 1992, was
increased by the bank and subsequently converted into a term loan with
minimal principal payments until August 1994. In conjunction with the AJ
F-14 (Continued)
- - - - - --------------------------------------------------------------------------------
<PAGE>
NEW JERSEY STEEL CORPORATION AND SUBSIDIARY
Notes to Consolidated Financial Statements
(5) INVESTMENTS AND TRANSACTIONS WITH RELATED PARTIES, cont.
Ross bank agreement, the Company agreed to allow its trade receivables with
AJ Ross to remain at the $5.3 million level through August 31, 1994 (except
for certain defined payments allowable based on defined earnings) as long as
such bank debt was outstanding, and to extend an additional line of trade
support of $1 million. The Company viewed the $5.3 million as the
equivalent of a continuation of historical trade support with a major
customer. The additional $1 million was secured by the accounts receivable
and inventories of AJ Ross up to $750,000 and, during 1992, the Company
provided for an additional $1 million equity loss after reducing the
carrying value of its investment to zero. Despite the aforementioned
restructuring of AJ Ross, changing market conditions and related increases
in the price of rebar in 1993 had an adverse effect on AJ Ross' operations,
and AJ Ross filed a petition for relief under Chapter 11 of the Bankruptcy
Code in November 1993 and subsequently ceased doing business. As a result,
in November 1993, the Company charged approximately $5,159,000 to selling,
general and administrative expenses to write off trade receivables due from
AJ Ross. During fiscal 1992, AJ Ross provided certain freight services for
the Company amounting to approximately $511,000.
Included in trade receivables - affiliates at November 30, 1994 and 1993
is approximately $601,000, which represents the remaining carrying value of
the Company's aforementioned $750,000 receivable previously due from AJ
Ross, now due from the aforementioned bank which realized proceeds from the
sale of the AJ Ross collateral. Based upon the terms of the distribution of
proceeds in the Company's agreement with the bank, the Company has a
priority position in such proceeds in an amount up to $750,000. While the
bank to date has declined to pay the $750,000 to the Company, discussions
with the bank are continuing. Management believes, based on advice of its
bankruptcy counsel, that it has a valid and subsisting contract claim and
that the Company should prevail if it were forced to litigate.
Summary financial information for AJ Ross as of and for the year ended
August 31, 1992 (AJ Ross' fiscal year end and the most recent available
audited statements) follows:
<TABLE>
<CAPTION>
<S> <C>
Current assets $ 4,973,000
Current liabilities 8,601,000
----------
Working capital deficit (3,628,000)
F-15 (Continued)
- - - - - --------------------------------------------------------------------------------
<PAGE>
NEW JERSEY STEEL CORPORATION AND SUBSIDIARY
Notes to Consolidated Financial Statements
(5) INVESTMENTS AND TRANSACTIONS WITH RELATED PARTIES, cont.
Property, plant and equipment, net 2,042,000
Other assets 428,000
Long-term debt (4,842,000)
Other liabilities (162,000)
----------
Stockholders' deficit $(6,162,000)
==========
Net sales $20,484,000
==========
Net loss $10,607,000
==========
</TABLE>
The Company has an investment in Excel Mining Systems, Inc. (Excel), a
Company which operates in the mine roof bolt industry. The investment has
had no significant effect on the Company's financial position or results of
operations. Receivables due from Excel are included in trade - affiliates
in the accompanying consolidated balance sheets and amount to $2,257,000 and
$2,859,000 at November 30, 1994 and 1993, respectively. Receivables from
Excel carry the Company's normal trade terms consistent with its other
customers.
(6) INCOME TAXES
The Company adopted Statement 109 effective December 1, 1992. The cumula-
tive effect of this change in accounting for income taxes is a $4,900,000
benefit, which is determined as of December 1, 1992 and is reported
separately in the consolidated statement of operations for the year ended
November 30, 1993.
The components of the deferred income tax assets and liabilities arising
under Statement 109 at November 30, 1994 and 1993 are as follows:
<TABLE>
<CAPTION>
1994 1993
---- ----
<S>
Deferred tax assets:
Federal and state net operating <C> <C>
loss carryforwards $ 8,593,000 8,098,000
Other tax credit carryforwards 4,585,000 4,609,000
Equity investment 764,000 764,000
Deferred compensation 947,000 815,000
Other deductible temporary differences 1,187,000 1,240,000
Valuation allowances (7,582,000) (9,028,000)
--------- ---------
$ 8,494,000 6,498,000
========= =========
F-16 (Continued)
- - - - - --------------------------------------------------------------------------------
<PAGE>
NEW JERSEY STEEL CORPORATION AND SUBSIDIARY
Notes to Consolidated Financial Statements
(6) INCOME TAXES, cont.
Deferred tax liabilities:
Fixed asset basis differences 2,789,000 798,000
Other taxable temporary differences 805,000 800,000
--------- ---------
$ 3,594,000 1,598,000
========= =========
</TABLE>
For tax purposes, the Company has available at November 30, 1994 net
operating loss (NOL) carryforwards for regular Federal income tax purposes,
which expire as follows:
<TABLE>
<CAPTION>
<S> <C>
1997 $ 627,000
1998 11,524,000
1999 4,601,000
2006 2,392,000
2008 4,072,000
2009 1,831,000
----------
$25,047,000
==========
</TABLE>
The Company also has investment tax credit carryforwards totalling
approximately $904,000, which expire as follows; $1,000 in 1995; $47,000 in
1996; $52,000 in 1997; $347,000 in 1998; $217,000 in 1999; and $240,000
thereafter. Additionally, in conjunction with the Alternative Minimum Tax
(AMT) rules, the Company has available alternative minimum tax credit
carryforwards of approximately $1,051,000, which may be used indefinitely to
reduce regular Federal income taxes. The Company has also received approval
for $3,986,000 of recycling credits which are available to offset certain
state income taxes ($2,631,000 net of Federal benefit). These credits are
subject to certain limitations, with an unlimited carryforward. A valuation
allowance has been recorded at November 30, 1994 and 1993, respectively, for
those tax credits and deductible temporary differences which are not
presently considered more likely than not to be realized. During fiscal
1994, the valuation allowance decreased by approximately $1,446,000. During
fiscal 1993, the valuation allowance increased by approximately $1,943,000.
Management believes that it is more likely than not that certain of its
NOL carryforwards will be utilized prior to their expiration. This belief
is based upon the factors discussed below:
F-17 (Continued)
- - - - - --------------------------------------------------------------------------------
<PAGE>
NEW JERSEY STEEL CORPORATION AND SUBSIDIARY
Notes to Consolidated Financial Statements
(6) INCOME TAXES, cont.
(i) In April 1994, the second phase of the Company's new reduced
electrical rate tariff became effective. The new tariff will remain in
effect for a period of ten years. Management believes that direct cost
savings from the new tariff are significant as compared to such costs when
the tariff was agreed upon.
(ii) In 1994, the Company continued and completed a major portion
of its plant Modernization Program which included a new, more efficient
process for making steel. The Company is in the process of working with the
new system in order to maximize efficiencies and cost savings. The
improvements are expected to result in lower unit consumption of power and
yield higher productivity, which management believes will result in signif-
icant additional cost savings.
(iii) The sales price for the Company's product, rebar, improved
dramatically during fiscal 1994.
(iv) The Company operates in a highly cyclical industry and conse-
quently has a history of generating and subsequently utilizing significant
amounts of NOL carryforwards.
The components of the provision for income taxes for the year ended
November 30, 1992 consist of current Federal and state income taxes of
$1,201,000 and $155,000, respectively, and deferred Federal income taxes of
$102,000.
The provision for income taxes for the years ended November 30, 1994,
1993 and 1992 differs from the expected (benefit) provision for Federal
income taxes as follows:
<TABLE>
<CAPTION>
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Computed expected (benefit) provision
for Federal income taxes $ 884,000 (1,259,000) 1,356,000
Change in the beginning of the year
balance of the valuation allowance
for deferred tax assets allocated
to the provision for income taxes (1,446,000) -- --
Expenses with no tax benefit 222,000 -- --
State income taxes before change in
valuation allowance (net of
Federal income tax benefit) 117,000 -- 102,000
F-18 (Continued)
- - - - - --------------------------------------------------------------------------------
<PAGE>
NEW JERSEY STEEL CORPORATION AND SUBSIDIARY
Notes to Consolidated Financial Statements
(6) INCOME TAXES, cont.
Loss for which no benefit was recorded -- 1,259,000 --
Other 223,000 -- --
---------- --------- ---------
$ -- -- 1,458,000
========== ========= =========
</TABLE>
(7) STOCKHOLDERS' EQUITY
Under the terms of the New Jersey Steel Corporation Incentive Stock
Option Plan, certain key employees may be granted options to purchase up to
503,000 shares of common stock. Options are issued at prices equal to the
fair market value of the Company's common stock at the date of grant.
Options become exercisable ratably over a five-year period. Options which
expire or are cancelled become available for future grants.
Information on common stock options is as follows:
<TABLE>
<CAPTION>
Incentive
stock options
------------------------------
Price
Shares per share
------------------------------
<S> <C> <C>
Outstanding at November 30, 1991 128,630 $ 3.00-14.00
Granted 7,500 14.00
Exercised (7,000) 3.88-11.75
-----------
Outstanding at November 30, 1992 129,130 3.00-14.00
Granted -- --
Exercised -- --
-----------
Outstanding at November 30, 1993 129,130 3.00-14.00
Granted -- --
Exercised (19,500) 11.50-11.75
-----------
Outstanding at November 30, 1994 109,630 3.00-14.00
===========
Exercisable at November 30, 1994 107,130 3.00-14.00
=========== ============
</TABLE>
F-19 (Continued)
- - - - - --------------------------------------------------------------------------------
<PAGE>
NEW JERSEY STEEL CORPORATION AND SUBSIDIARY
Notes to Consolidated Financial Statements
(8) NOTE PAYABLE - BANK
At November 30, 1993, the Company had a $10,000,000 line of
credit with a bank which was to expire on December 31, 1994.
Borrowings under the line of credit were unsecured. The line of
credit was also subject to certain covenants. Such covenants require
the Company to maintain certain financial ratios such as minimum
working capital, current ratio, and certain profitability (as
defined) and net worth requirements. No amounts were borrowed under
this arrangement through November 30, 1993; however, when utilized,
borrowings would bear interest at 3/4% per annum below the prime
lending rate.
During 1994, the Company and the bank amended the line of
credit, which, as amended currently, provides for $20,000,000 of
available credit (subject to limits on collateral availability),
bearing interest at the bank's prime rate (8.5% at November 30,
1994), and modified certain financial covenants. Advances under the
amended line of credit are secured by the Company's accounts
receivable and inventory. The amended line of credit matures on
December 31, 1995.
(9) BENEFIT PLANS
The Company has a 401(k) plan which allows employees, upon
meeting eligibility requirements, to make contributions to the plan,
and under various conditions allows the Company to contribute to the
plan at percentages specified in the plan agreement. Company
contributions to the plan amounted to $175,000, $139,000 and $121,000
in 1994, 1993 and 1992, respectively.
The Company has a voluntary, nonqualified plan of deferred
compensation covering a select group of key employees. Under the
terms of the plan, key employees are eligible to defer specific
percentages of their compensation until their retirement or other
termination of employment. The Company supplements these amounts at
percentages specified under the plan. Company contributions to the
plan amounted to $261,000, $189,000 and $133,000 in 1994, 1993 and
1992, respectively.
During the years ended November 30, 1994, 1993 and 1992, the
Company charged $189,000, $146,000 and $260,000, respectively, to
operations for amounts paid under a profit-sharing plan for hourly
F-20 (Continued)
- - - - - --------------------------------------------------------------------------------
<PAGE>
NEW JERSEY STEEL CORPORATION AND SUBSIDIARY
Notes to Consolidated Financial Statements
(9) BENEFIT PLANS, cont.
and salaried employees authorized by the Board of Directors.
(10) COMMITMENTS AND CONTINGENCIES
The Company was a defendant in an action in the Supreme Court of
New York. The case arose from an unsuccessful effort to sell the
Company in 1983 pursuant to a stock purchase agreement. The
complaint sought in excess of $26,600,000 in compensatory damages, an
unspecified amount of punitive damages, and specific performance of
the stock purchase agreement, together with injunctive and
declaratory relief. The trial was completed on May 6, 1993 and the
court subsequently rendered a decision dismissing the complaint based
on its merits. By order dated November 30, 1994, the plaintiff's
appeal was dismissed.
The Company and Von Roll Ltd. are defendants in an action
brought by Mountaineer Bolt, Inc. and Advanced Mining Systems, Inc.
against several individuals, Excel Mining Systems, Inc., the Company
and Von Roll Ltd. In June 1992, Mountaineer Bolt, Inc. and Advanced
Mining Systems, Inc. filed Chapter 11 bankruptcy petitions in the
Bankruptcy Court for the Southern District of New York. The original
complaint alleged causes of action against defendants other than the
Company and Von Roll Ltd., and sought damages in excess of
$12,000,000. In 1992, an amended complaint added the Company and Von
Roll Ltd. as additional parties and claimed that they conspired with
the original defendants to destroy the business of Mountaineer Bolt,
Inc. The amended complaint alleges causes of action for tortious
conspiracy, tortious interference with contract and prospective busi-
ness relations and fraud and unfair competition. The amended
complaint seeks damages in excess of $12,000,000. The action has
been transferred from the United States District Court for the
Northern District of West Virginia to the U. S. District Court for
the Southern District of New York. As defendants, the Company and
Von Roll have made a motion to dismiss the Amended Complaint on
jurisdictional and substantive grounds. In 1993, in connection with
the settlement of an unrelated action, the original defendants were
dropped as defendants in this action. Management believes the
plaintiffs' claims are without merit and intends to vigorously defend
the Company in this action.
The Company is a party to an Administrative Consent Order (ACO)
F-21 (Continued)
- - - - - --------------------------------------------------------------------------------
<PAGE>
NEW JERSEY STEEL CORPORATION AND SUBSIDIARY
Notes to Consolidated Financial Statements
(10) COMMITMENTS AND CONTINGENCIES, cont.
with the New Jersey Department of Environmental Protection (NJDEP) in
settlement of certain emission control matters. In April 1993, the
Company and the NJDEP agreed that the mill modernization project
would be covered by an extension and modification of the existing ACO
and the Company commenced its mill modernization project on that
basis. The Company and the NJDEP negotiated an amendment to extend
and modify the ACO (the Amended ACO). The Amended ACO called for the
NJDEP to issue a new permit covering the modernized facility and
provided that the Company pay a penalty of $150,000, which was
charged to operations in fiscal 1994. On September 7, 1994, the
NJDEP issued to the Company a "Permit to Construct, Install or Alter
Control Apparatus or Equipment" and "Temporary Certificate to Operate
Control Apparatus or Equipment" and "Prevention of Significant
Deterioration Permit" (the NJDEP Permit). The NJDEP Permit
authorizes the Company to proceed with the mill modernization
project, contains a temporary operating permit and directs that the
testing required for issuance of a five-year certificate to operate
be performed by April 4, 1995.
By letter dated February 8, 1995, the NJDEP advised the Company
that all obligations imposed by the Amended ACO have been satisfied
and that it had terminated the Amended ACO effective February 3,
1995. Notwithstanding termination of the Amended ACO, the Company
must perform and meet the tests contained in the NJDEP Permit to
obtain a five-year operating permit. Management believes the
improvements necessary to bring the Sayreville mill up to the
operating standards contained in the NJDEP Permit have been included
in the Modernization Program, that its testing will demonstrate
compliance with the provisions of the NJDEP Permit and that a new
five-year operating permit will be issued by the NJDEP. As a
consequence, management does not believe that the foregoing
regulatory matters will have a material adverse effect on the
Company's financial condition or results of operations.
On June 7, 1994, the United States Environmental Protection
Agency (USEPA) issued a Notice of Violation (NOV) to the Company
stating that the Company had violated the New Jersey State
Implementation Plan because a "major modification" was commenced
without a Prevention of Significant Deterioration Permit from the
NJDEP. That permit was issued by the NJDEP on September 7,
F-22 (Continued)
- - - - - --------------------------------------------------------------------------------
<PAGE>
NEW JERSEY STEEL CORPORATION AND SUBSIDIARY
Notes to Consolidated Financial Statements
(10) COMMITMENTS AND CONTINGENCIES, cont.
1994. The USEPA defines a "major modification" as any physical change that
would result in a significant net increase in emissions. Since the
Company's mill modernization project resulted in a net decrease in
emissions and because the Company acted in accordance with an
understanding with the NJDEP, management believes that no violation
of the New Jersey State Implementation Plan occurred. There have
been no further proceedings under the NOV. The Company believes that
the issuance of the Prevention of Significant Deterioration Permit on
September 7, 1994 addressed the concerns raised by USEPA in the NOV.
However, there can be no assurances that USEPA will not assess
additional penalties resulting from the NOV, and the amount of such
penalties, if any, cannot be determined at this time.
By letter dated July 7, 1994, the staff of the Securities and
Exchange Commission (SEC) informed the Company that it is conducting
a private inquiry into whether there have been violations of the
Federal securities laws. The staff requested that the Company
provide it with all documents concerning its investments in AJ Ross
and the Modernization Program. The staff letter states that its
request for documents should not be construed as an indication by the
SEC or its staff that any violations of law have occurred, nor should
it be considered a reflection upon any person, entity or security.
The Company is cooperating with the staff and has provided the
requested documents.
In September 1994, the Company received a summons and complaint
in an action which purports to be a class action on behalf of
minority stockholders of the Company and seeks unspecified damages
and injunctive relief in connection with the proposed merger of the
Company into a subsidiary of International Metals Acquisition
Corporation (IMAC) (the Merger) (see note 12). The complaint
alleges, among other things, that $18.00 per share is
"unconscionable, unfair and grossly inadequate"; the terms of the
Merger constitute unfair dealing with respect to the minority
shareholders of the Company because, among other things, the
intrinsic value of the Company's securities is materially in excess
of the $18.00 per share, and was not the result of arm's-length
negotiations; and the directors of the Company breached their
fiduciary obligations to the minority stockholders of the Company in
approving the Merger. With the termination of the Agreement and Plan
of Merger between the Company and IMAC (see note 12), the Company
believes this action is now moot.
F-23 (Continued)
- - - - - --------------------------------------------------------------------------------
<PAGE>
NEW JERSEY STEEL CORPORATION AND SUBSIDIARY
Notes to Consolidated Financial Statements
(10) COMMITMENTS AND CONTINGENCIES, cont.
Novo-Plez SA and NASCO Brokers, Inc. (the Claimants), steel
brokers, filed a Petition and Request for Arbitration in the
International Court of Arbitration of the International Chamber of
Commerce on March 21, 1994 based on two 1991 purchase agreements
between the Company and the Claimants. The Claimants demand $720,653
plus interest at 9.5% since November 29, 1991 and have reserved the
right to assert a claim for an additional $8,700,000 in incidental
and consequential damages. The Claimants have also petitioned the
Company to indemnify them against all expenses and costs incurred
relating to the transaction and arbitration. The Company filed an
answer to the Petition on May 2, 1994, in which it stated that the
steel billets fully conformed to the specifications provided for in
the contracts it had with the Claimants. Management believes that
the Company has breached no legal obligation owing to Claimants under
the contracts. While final arbitration always involves risk at the
hands of the decision maker, based on the advice of legal counsel,
management believes that based on the contractual obligations and all
of the facts and circumstances, the Company will prevail in a
successful defense against these claims.
Egyptian Metals Company (EMC), the customer of the Claimants in
the above arbitration, and its broker have attempted to pursue a
related claim before the "Tribunal de Commerce" in Paris, France
alleging that the Company was liable to it for the sale of the
defective billets. EMC claimed damages of $2,120,666 and an
additional claim for payment of FF 100,000 under the French Code of
Civil Procedure. Management believes that the Company is not liable
to EMC for any damages. The Company has not entered an appearance in
this French litigation as, based on the advice of legal counsel,
management believes that the French court is without jurisdiction
over the Company, and that the litigation will ultimately be
dismissed or, if judgment is in fact entered, that it will be
unenforceable against the Company.
As further described in note 5, in November 1993, AJ Ross filed
a petition for relief under Chapter 11 of the U.S. Bankruptcy Code.
As AJ Ross was a significant customer, the Company received in excess
of $5.6 million in payments on trade receivables from AJ Ross in the
year immediately preceding the filing date. AJ Ross has not asserted
any claim against the Company as a result of these payments. In
F-24 (Continued)
- - - - - --------------------------------------------------------------------------------
<PAGE>
NEW JERSEY STEEL CORPORATION AND SUBSIDIARY
Notes to Consolidated Financial Statements
(10) COMMITMENTS AND CONTINGENCIES, cont.
addition, based upon the advice of its bankruptcy counsel, management
does not believe that the $5.6 million constituted voidable prefer-
ences. However, there can be no assurance that AJ Ross, a trustee in
AJ Ross' case (should one be appointed) or other entities will not
assert that some or all of such payments are voidable preferences
which must be returned to AJ Ross' bankruptcy estate for distribution
to AJ Ross creditors.
The Company is also involved in litigation relating to claims
arising out of its operations in the normal course of business. Such
claims against the Company are generally covered by insurance. In
the opinion of management, any uninsured or unindemnified liability
resulting from existing litigation would not have a material adverse
effect on the Company's business or consolidated financial position.
The Company is not aware of any probable liabilities or related
recoveries which would have a material adverse effect on the
Company's consolidated financial position. There can be no assurance
that insurance, including product liability insurance, will be
available in the future at reasonable rates.
On December 15, 1994, Excel signed a letter of intent with
Birmingham Steel Corporation to acquire Birmingham's mine roof bolt
business for approximately $23,000,000. On February 23, 1995, the
board of directors of the Company agreed in principle, subject to
certain conditions, to guarantee up to $7,000,000 of Excel's
revolving credit facility. The guaranteed amount will decline
ratably over the nine-months following the transaction and will
expire on November 30, 1995. The transaction is scheduled to close
in March 1995.
The Company has an employment agreement with an executive
officer which expires in September 1996. The agreement provides for
a base annual salary, presently at $235,000, plus an incentive bonus.
In the event there is a change in control of the Company, as defined,
the officer will have the option to terminate his employment and
receive for a period of two years following such termination, the
salary and incentive bonus he would have received had he not
terminated his employment.
The Company is a party to several month-to-month operating
F-25 (Continued)
- - - - - --------------------------------------------------------------------------------
<PAGE>
NEW JERSEY STEEL CORPORATION AND SUBSIDIARY
Notes to Consolidated Financial Statements
(10) COMMITMENTS AND CONTINGENCIES, cont.
leases, primarily for equipment. Total rent expense in 1994, 1993
and 1992 was approximately $574,000, $476,000 and $491,000,
respectively.
(11) OTHER INCOME (EXPENSE)
During fiscal 1992, the Company settled a claim with its
insurance company related to an electrical fire resulting in a gain
of $1,125,000, which is included in the accompanying 1992
consolidated statement of operations. During fiscal 1993, the
Company settled a claim with its insurance company related to roof
damage in its melt shop resulting in a gain of $627,000, which is
included in the accompanying 1993 consolidated statement of
operations.
Other expense during fiscal 1993 is primarily a result of
expenses incurred in connection with the Company's option to purchase
property in Pennsylvania, which expired in May 1993.
(12) MERGER AGREEMENT
In October 1994, the Company entered into an Agreement and Plan
of Merger (the Merger Agreement) with IMAC. Pursuant to the Merger
Agreement, each of the outstanding shares of common stock of the
Company was to be converted into either $18.00 in cash, or an IMAC
unit consisting of three shares of IMAC common stock (subject to
adjustment) and a five-year warrant to purchase one share of IMAC
common stock at $8.00 per share, at the election of the holder of the
Company's stock. Concurrent with the execution of the Merger
Agreement, the Company's majority stockholder, Von Roll Ltd., entered
into a stock purchase agreement with IMAC pursuant to which Von Roll
Ltd., among other things, agreed to sell all its holdings of the
Company's stock to IMAC and to vote all of such shares in favor of
the Merger. The consummation of the Merger and the related stock
purchase agreement was contingent on a number of conditions being
met, including the buyer's obtaining financing for the transaction,
and the required approvals by stockholders of the Company and IMAC.
On February 1, 1995, the Merger Agreement and related stock
purchase agreement were terminated. IMAC has advised the Company
F-26 (Continued)
- - - - - --------------------------------------------------------------------------------
<PAGE>
NEW JERSEY STEEL CORPORATION AND SUBSIDIARY
Notes to Consolidated Financial Statements
(12) MERGER AGREEMENT, cont.
that it intends to seek reimbursement of its expenses incurred in
connection with the transaction up to a maximum of $3,500,000.
Based on the advice of legal counsel, management believes that IMAC
is not entitled to such reimbursement. The Company has advised IMAC
that it intends to seek recovery of its expenses, which it estimates
to be approximately $800,000.
During fiscal 1994, the Company entered into executive severance
agreements with certain executive officers. Pursuant to the
agreements, if a sale of the Company is consummated prior to December
31, 1994 (subsequently extended to the later of April 30, 1995, or
the consummation or termination of the IMAC transaction), and within
one year of consummation either the executive is terminated without
good cause or elects to terminate his employment under the
circumstances specified therein, the executive will receive from 12
to 18 months of base salary plus certain benefits. Any employee
stock options held by such officers which are not exercisable as of
the termination date will be accelerated, become immediately
exercisable and expire 30 days following termination. In addition,
pursuant to a letter agreement between the Company and its President
and Chief Executive Officer dated March 14, 1994, the Company agreed
to pay a bonus upon consummation of a sale or merger involving the
Company. The letter agreement provides that if a merger is
consummated, the President and Chief Executive Officer will receive a
bonus payable by the Company of $300,000. In addition, if the
transaction involves a payment of consideration exceeding $18.00 per
share of the Company, an additional bonus by the Company of $100,000
for each $1.00 per share over $18.00 per share will be payable. The
letter agreement originally was to expire on September 30, 1994 and
was extended to the later of the consummation of the IMAC transaction
or December 31, 1994. The aforementioned termination of the
Agreement and Plan of Merger and related Stock Purchase Agreement has
resulted, in substance, in the expiration of this letter agreement.
(13) QUARTERLY FINANCIAL INFORMATION (Unaudited)
The following tables set forth selected quarterly financial
information (in thousands, except per share amounts):
F-27 (Continued)
- - - - - --------------------------------------------------------------------------------
<PAGE>
NEW JERSEY STEEL CORPORATION AND SUBSIDIARY
Notes to Consolidated Financial Statements
(13) QUARTERLY FINANCIAL INFORMATION (UNAUDITED), cont.
<TABLE>
<CAPTION>
1994
-------------------------------------
First Second Third Fourth
quarter quarter quarter quarter
--------------------------------------
<S> <C> <C> <C> <C>
Net sales $22,349 35,841 40,067 39,498
Gross profit 562 129 3,187 5,144
Net (loss) earnings (903) (1,355) 1,578 3,279
Per common share amounts
- net (loss) earnings $ (.15) (.23) .27 .55
</TABLE>
<TABLE>
1993
-------------------------------------
First Second Third Fourth
quarter quarter quarter quarter
-------------------------------------
<S> <C> <C> <C> <C>
Net sales $ 27,869 29,958 35,521 26,114
Gross profit 102 1,734 3,255 2,038
(Loss) earnings before
extraordinary credit
and cumulative effect
of change in accounting
for income taxes (1,150) 443 1,819 (4,814)
Cumulative effect of change
in accounting for income
taxes 4,900 -- -- --
Net earnings (loss) 3,750 443 1,819 (4,814)
Per common share amounts:
(Loss) earnings before
extraordinary credit and
cumulative effect of change
in accounting for income
taxes $ (.20) .08 .31 (.82)
Cumulative effect of change
in accounting for income
taxes .83 -- -- --
Net earnings (loss) .63 .08 .31 (.82)
</TABLE>
F-28 (Continued)
- - - - - --------------------------------------------------------------------------------
<PAGE>
NEW JERSEY STEEL CORPORATION AND SUBSIDIARY
Notes to Consolidated Financial Statements
(13) QUARTERLY FINANCIAL INFORMATION (UNAUDITED), cont.
During the fourth quarter of 1993, the Company charged
approximately $5.2 million to selling, general and administrative
expenses to write off trade receivables due from AJ Ross.
Effective December 1, 1992, the Company revised the estimated
remaining lives of certain machinery and equipment to more closely
reflect expected remaining lives resulting in an increase in the
Company's net earnings of approximately $372,000 for each respective
quarter in 1993.
F-29
- - - - - --------------------------------------------------------------------------------
<PAGE>
Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosures.
Not Applicable.
PART III
Item 10. Directors and Executive Officers of the Registrant.
The following table sets forth information regarding the
directors of the Company.
Year First Elected Principal
Name of Directors Age as a Director Occupation
Walter H. Beebe 54 1978 Partner in law firm
firm of Jacobs
Jacobs, Persinger &
Parker since prior
to 1990.
H. Georg Hahnloser 51 1978 Chief Operating
Officer of Von Roll since
February 1995,
previously
Executive Vice
President -
Finance and
Controlling of
Von Roll since
prior to 1990.
Harvey L. Karp 67 1987 Chairman of the
Board of Mueller
Industries, Inc.
a leading
fabricator
of brass, bronze,
copper, plastic and
aluminum products
and private
<PAGE>
investor since
prior to 1990.
Robert J. Pasquarelli 48 1982 President and
Chief Executive
Officer of the
Company since
prior to 1990.
Each of the directors has served continuously since the year
in which he was first elected. Each director holds office until
the next annual meeting of stockholders and until his successor
is elected and qualified.
Except as set forth below, none of the directors is a
director of any company (other than the Company) which is
subject to the reporting requirements of the Securities Exchange
Act of 1934 or which is a registered investment company under
the Investment Company Act of 1940.
Name Director of
Harvey J. Karp Mueller Industries, Inc.
Robert J. Pasquarelli Mueller Industries, Inc.
Set forth below is certain information concerning persons
who are executive officers of the Company
Name Office Held Age
Robert J. Pasquarelli Director, President and Chief 48
Executive Officer of the
Company since prior to 1990.
Paul Roik Vice President-Finance and 43
Treasurer of the Company
since prior to 1990.
John R. Sullivan Vice President-Industrial 49
Relations of the Company
since prior to 1990.
Joseph Lahita Vice President-Operations 49
of the Company since June
1990; prior thereto Plant
Manager of the Company since
prior to 1990.
Gary Giovannetti Vice President - Sales and 44
Marketing of the Company
since June 1991; prior
thereto employee of the
Company since February 1991
to June 1991; prior thereto
Vice President-Sales
and Marketing Northern
Precision Casting Company
since prior to 1990.
Each executive officer is appointed by the Board of
<PAGE>
Directors and holds office until the first meeting of directors
following the annual meeting of stockholders and until his
successor is duly chosen and qualified.
Item 11. Executive Compensation.
The Summary Compensation Table below sets forth individual
compensation information for each of the Company's last three
fiscal years on the Chief Executive Officer ("CEO") and the four
other most highly paid executive officers who were serving as
such at the end of the Company's fiscal year ended November 30,
1994 and whose total annual salary and bonus for such fiscal
year exceeded $100,000.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Long Term
Compensation
Awards
Name and Annual Compensation
Principal Stock All Other
Position Year Salary Bonus Options
Compensation(1)
(in Shares)
<S> <C> <C> <C> <C> <C>
Robert J. Pasquarelli 1994 $235,000 $ - - $62,598
CEO, President 1993 225,000 25,000 - 61,236
1992 212,000 50,000 - 55,587
Paul Roik 1994 136,000 - - 28,109
Vice President- 1993 131,000 - - 28,820
Finance and Treasurer 1992 123,000 20,000 - 24,365
Gary Giovannetti 1994 127,000 - - 26,849
Vice President- 1993 122,000 - - 24,760
Sales and Marketing 1992 115,000 - 7,500 23,490
Joseph Lahita 1994 116,000 - - 25,309
Vice President- 1993 111,000 - - 23,220
Operations 1992 105,000 - - 22,396
John R. Sullivan 1994 112,000 - - 5,130
Vice President- 1993 108,000 - - 3,845
Industrial Relations 1992 102,000 - - 12,026
- - - - - ------------------------
<FN>
1)Includes amounts allocated under the Company's Executive
Thrift Savings Plan and the Company's Profit Sharing Plan. For
1994, the amounts allocated under the Company's Executive
Thrift Savings Plan and the Company's Profit Sharing Plan were,
respectively, as follows: Robert J. Pasquarelli - $38,948,
$23,650; Paul Roik - $19,901, $8,208; Gary Giovannetti -
$18,641, $8,208; Joseph Lahita - $17,101, $8,208; and John R.
Sullivan - $0, $5,130.
</TABLE>
The above table does not include any amounts for personal
<PAGE>
benefits because, in any individual case, such amounts do not
exceed the lesser of $50,000 or 10% of such individual's cash
compensation.
The Company has an employment agreement with Robert J.
Pasquarelli which expires in September 1996. The agreement
provides for an annual base salary, presently at $235,000 per
year plus an incentive bonus. In the event there is a "Change
of Control of the Company" as defined generally in the
employment agreement to occur if Von Roll no longer controls 50%
of the voting stock of the Company, Mr. Pasquarelli will have
the option to terminate his employment and receive for a period
of two years following such termination the salary and incentive
bonus he would have received had he not terminated his
employment.
During fiscal 1994, the Company entered into severance
agreements with certain executive officers. Pursuant to the
agreements, if a sale of the Company is consummated prior to
December 31, 1994 (subsequently extended to the later of April
30, 1995, or the consummation or termination of the IMAC
transaction), and within one year of consummation either the
executive is terminated without good cause or elects to
terminate his employment under the circumstances specified
therein, the executive will receive from 12 to 18 months of base
salary plus certain benefits. Any employee stock options held
by such officers which are not exercisable as of the termination
date will be accelerated, become immediately exercisable and
expire 30 days following termination. In addition, pursuant to
a letter agreement between the Company and Mr. Robert
Pasquarelli, the President and Chief Executive Officer of the
Company, dated March 14, 1994, the Company agreed to pay a bonus
upon consummation of a sale or merger involving the Company.
The letter agreement provides that if a merger is consummated,
Mr. Pasquarelli will receive a bonus payable by the Company of
$300,000. In addition, if the transaction involves a payment of
consideration exceeding $18.00 per share of the Company, an
additional bonus by the Company of $100,000 for each $1.00 per
share over $18.00 per share will be payable. The letter
agreement originally was to expire on September 30, 1994 and was
extended to the later of the consummation of the IMAC
transaction or December 31, 1994. The aforementioned
termination of the Merger Agreement and related stock purchase
agreement has resulted, in substance, in the expiration of the
letter agreement.
Compensation of Directors
Mr. Karp receives an annual director's fee of $30,000. In
addition, Mr. Karp is paid $1,000 per meeting attended plus
reasonable travel expenses. Mr. Pasquarelli, who is an employee
of the Company, receives no director's fee. Mr. Beebe, a member
of Jacobs Persinger & Parker, general counsel to the Company,
receives no director's fee as such for serving as a director of
the Company.
Option Tables.
The following table sets forth option exercise activity in
the last fiscal year and the fiscal year-end option values with
<PAGE>
respect to the CEO and each of the executive officers named in
the Summary Compensation Table. There were no grants of stock
options made during fiscal 1994.
<TABLE>
<CAPTION>
Aggregated Option Exercises in the Fiscal
Year Ended November 30, 1994 and the
November 30, 1994 Option Values
Values of
Number of Unexercised
Unexercised In-the-money
Options at Options at
11/30/94 11/30/94
Shares
Acquired Value Exercisable/ Exercisable/
Name On Exercise Realized Unexercisable Unexercisable
<S> <C> <C> <C> <C>
Robert J. Pasquarelli -- -- 27,130/-- $275,370/--
Gary Giovannetti -- -- 12,500/2,500 $54,375/18,750
Paul Roik -- -- --/-- --/--
John R. Sullivan -- -- --/-- --/--
Joseph Lahita -- -- 25,000/-- $112,500/--
</TABLE>
Item 12. Security Ownership of Certain
Beneficial Owners and Management.
The following table sets forth certain information regarding the
beneficial ownership as of February 10, 1995 of Common Stock of the
Company by the only persons who, to the knowledge of the Board of
Directors, own more than five percent of the outstanding shares:
Name and Address Amount Owned Percentage
of Beneficial Owner Beneficially of Class
Von Roll Ltd. 3,561,500 60.4%
CH-4563, Gerlafingen
Switzerland
Von Roll has sole voting and investment power over the shares it
owns. In December 1993, Von Roll indicated to the Board of Directors
its desire to sell its interest in the Company. In 1994, Von Roll
entered into a Stock Purchase Agreement dated October 4, 1994 (the
"Stock Purchase Agreement") with IMAC for the sale of its interest in
the Company to IMAC in connection with the merger of the Company into
an IMAC subsidiary pursuant to the Agreement and Plan of Merger dated
October 4, 1994 between IMAC, IMAC Merger Subsidiary, Inc. and the
Company (the "Merger Agreement"). The Merger Agreement has been
terminated with both the Company and IMAC claiming a breach of the
agreement by the other. As a result of the termination of the Merger
Agreement, the Stock Purchase Agreement has also been terminated.
As of February 10, 1995, Mr. Pasquarelli owned beneficially
27,255 shares of Common Stock of the Company. As of February 10,
1995, all directors and officers, including Mr. Pasquarelli, as a
group, owned beneficially a total of 79,155 shares (1.34%) of the
<PAGE>
Common Stock of the Company. The beneficial owners have sole voting
and investing power over the shares owned. No other directors owned
any shares of the Company. Mr. Hahnloser owns shares of common stock
of Von Roll representing less than .5% of the Von Roll common stock
outstanding.
Item 13. Certain Relationships and
Related Transactions.
In August 1988, the Company acquired for $2 million
approximately one-third of the common stock of A.J. Ross Logistics,
Inc. ("AJ Ross"), a publicly-held steel fabricator and significant
customer of the Company located in Keasbey, New Jersey. At the time,
AJ Ross had an account receivable balance of approximately $8.7
million to the Company. The purpose of this investment was to
strengthen the financial position of AJ Ross to permit it to obtain
additional financing from its bank. The purchase agreement provided
that the sale proceeds would be used by AJ Ross to repay
approximately $2 million of accounts receivable then due to the
Company, and AJ Ross thereafter paid the Company an aggregate of
approximately $4 million in past due receivables.
Following such acquisition, the Company granted Thomas Petrizzo,
the then President of AJ Ross, a proxy to vote its shares on all
matters requiring a vote of AJ Ross stockholders. This proxy was
revoked in June, 1992 when Messrs. Pasquarelli and Roik, President
and CEO and Vice President, Finance, of the Company, respectively,
joined the board of directors of AJ Ross. Messrs. Pasquarelli and
Roik served on the board of directors of AJ Ross from June 1992 to
October 28, 1993. In addition, the Company subsequently purchased a
$2 million term insurance policy on Mr. Petrizzo's life, of which $1
million remains in effect.
On November 5, 1990, the Company and AJ Ross entered into a $16
million sale/leaseback transaction pursuant to which the Company
purchased AJ Ross' land and buildings located in Keasbey, New Jersey
(the "Keasbey Property"). An independent appraisal with respect to
this property at that time concluded that the property had a value of
approximately $15.5 million. This property consists of 27 acres
including a deep water dock and 700 foot frontage on the north shore
of Raritan Bay. The purchase price consisted of a $5.1 million
mortgage assumption which was immediately repaid and the reduction of
$10.9 million in trade receivables due to the Company from AJ Ross.
Under the terms of the lease agreement, the Company agreed to lease
back the property to AJ Ross under a two-year operating lease.
During November 1992, the lease expired at which point AJ Ross leased
the property on a month-to-month basis. During fiscal 1994, AJ Ross
stopped leasing the property; however, an affiliate of an AJ Ross
stockholder leased a portion of the property on a month-to-month
basis. Rental income from AJ Ross and the affiliate of AJ Ross for
the years ended November 30, 1994, 1993 and 1992 was approximately
$480,000, $862,000 and $1,000,000, respectively.
AJ Ross undertook a significant restructuring during 1992. The
restructuring included asset sales, management changes, and a
focus solely on being a rebar fabricator. AJ Ross also had financial
support provided by its bank, the Bank of New York ("BONY"), through
a revolving credit arrangement, which, during 1992, was increased by
BONY and subsequently converted into a term loan with minimal
principal payments until August 1994. In conjunction with the AJ
<PAGE>
Ross bank agreement, the Company agreed to allow its trade
receivables with AJ Ross to remain at the $5.3 million level through
August 31, 1994 (except for certain defined payments allowable based
on defined earnings) as long as such bank debt was outstanding, and
to extend an additional line of trade support of $1 million. The
Company viewed the $5.3 million as the equivalent of a continuation
of historical trade support with a major customer. The additional $1
million was secured by the accounts receivable and inventories of AJ
Ross up to $750,000 and, during 1992, the Company provided for an
additional $1 million equity loss after reducing the carrying value
of its investment to zero. Despite the aforementioned restructuring
of AJ Ross, changing market conditions and related increases in the
price of rebar in 1993 had an adverse effect on AJ Ross' operations,
and AJ Ross filed a petition for relief under Chapter 11 of the
Bankruptcy Code in November 1993 and subsequently ceased doing
business. As a result, in November 1993, the Company charged
approximately $5,159,000 to selling, general and administrative
expenses to write off trade receivables due from AJ Ross. During
fiscal 1992, AJ Ross provided certain freight services for the
Company amounting to approximately $511,000.
Included in trade receivables - affiliates at November 30, 1994
and 1993 is approximately $601,000, which represents the remaining
carrying value of the Company's aforementioned $750,000 receivable
previously due from AJ Ross, now due from BONY which realized
proceeds from the sale of the AJ Ross collateral. Based upon the
terms of the distribution of proceeds in the Company's agreement with
BONY, the Company has a priority position in such proceeds in an
amount up to $750,000. While BONY to date has declined to pay the
$750,000 to the Company, discussions with the bank are continuing.
Management believes, based on advice of its bankruptcy counsel, that
it has a valid and subsisting contract claim.
Mr. Petrizzo is currently incarcerated under an indictment issued
by a Grand Jury in the United States District Court for the Eastern
District of New York. The indictment alleges, among other things,
that Mr. Petrizzo is a member of an organized crime family and was
involved in a criminal conspiracy. To the knowledge of the Company,
prior to such indictment Mr. Petrizzo had no prior criminal record.
In a letter dated July 7, 1994, the staff of the Securities and
Exchange Commission (SEC) informed the Company that it is conducting
a private inquiry into whether there have been violations of the
federal securities laws. The staff requested that the Company
provide it with all documents concerning its investments in AJ Ross
and the Modernization Program. The staff letter states that its
request for documents should not be construed as an indication by the
Commission or its staff that any violations of law have occurred, nor
should it be considered a reflection upon any person, entity or
security. The Company is cooperating with the staff and has provided
the requested documents.
The Company has an investment in Excel Mining Systems, Inc., a
company which operates in the mine roof bolt industry. Historically,
the investment has had no significant effect of the Company's
financial postiion or results of operations. On December 15, 1994,
Excel signed a Letter of Intent with Birmingham Steel Corporation to
acquire Birmingham's mine roof bolt business for approximately
$23,000,000. The Board of Directors of the Company has agreed in
principle, subject to certain conditions, to guarantee up to
<PAGE>
$7,000,000 of Excel's revolving credit facility. The guaranteed
amount will decline ratably over the nine-months following the
transaction and will expire on November 30, 1995. The transaction is
scheduled to close in March, 1995.
The Company has a Technical Services and Management Consulting
Agreement with Von Roll dated as of April 1, 1987 pursuant to which
Von Roll provides certain management and operational services to the
Company. The fee payable under the Agreement is to be renegotiated
annually. The Company incurred fees of $450,000 in fiscal 1994 and
has agreed to pay to Von Roll fees of $450,000, based upon the
anticipated services, for fiscal year 1995. The terms of any
extension, amendment or modification of the Agreement will be no less
favorable to the Company than those that could be obtained from
unaffiliated third parties. The amount of the annual fee and the
terms of any extension, amendment or modification will be approved by
the Board of Directors and a majority of the directors who are not
employees of the Company and Von Roll.
The Company has an Indemnity Agreement with Von Roll dated as of
April 1, 1987 pursuant to which Von Roll has agreed to indemnify the
Company from any claims or expenses in connection with the action
entitled NEW JERSEY STEEL ACQUISITION CORP. v. VON ROLL AG,
MONTEFORNO, S.A. AND NEW JERSEY STEEL CORPORATION.
The Company on occasion makes loans to employees primarily in
connection with their purchases of housing. At November 30, 1994
there was outstanding a loan of $189,000 to Mr. Roik. Mr. Roik's
loan bears interest at the rate of 7.5% per annum and matures in
November of 1996. There also was an outstanding loan of $150,000 to
Mr. Giovannetti. Mr. Giovannetti's loan bears interest at the rate
of 7.5% per annum and matures in April of 1997. There was also an
outstanding loan of $75,000 to Mr. Pasquarelli. Mr. Pasquarelli's
loan bears interest at the rate of 7.5% per annum and matures in
February 1997.
H. Georg Hahnloser, a director of the Company, is an executive
officer of Von Roll, the majority stockholder of the Company.
Walter H. Beebe, a director and Thomas W. Jackson, Secretary of
the Company, are partners in the law firm of Jacobs Persinger &
Parker, general counsel to the Company. Jacobs Persinger & Parker
also provides legal services to Von Roll. During the fiscal year
ended November 30, 1994, the Company made payments to that firm for
services rendered and disbursements incurred aggregating $161,397.
PART IV
Item 14. Exhibits, Financial Statements,
Schedules, and Reports on Form 8-K.
1. The following financial statements are filed as part of this
report:
See Index to Financial Statements and Schedules on page F-1
of this Report.
2. The following financial statement schedules are filed as
part of this report:
<PAGE>
See Index to Financial Statements and Schedules on page F-1
of this Report.
Schedules other than those listed on the Index to Financial
Statements and Schedules are omitted as the required information is
either not applicable or is included in the financial statements or
notes thereto.
3. Exhibits:
3(a)-- Restated Certificate of Incorporation, as amended--
Incorporated by reference to Exhibit 3(a) of the Company's
Registration Statement on Form S-1 (No. 33-13298).
3(b)-- By-laws, as amended--Incorporated by reference to Exhibit
(b) to the Company's Annual Report on Form 10-K for the
year ended November 30, 1983 (File No. 0-15838).
4(a)-- Form of Certificate for shares of Common Stock of the
Company-- Incorporated by reference to Exhibit 4(a) of the
Company's Registration Statement on Form S-1 (No. 33-
13298).
10(a)-- Electricity Supply Contract between Company and Central
Jersey Power & Light Company effective May 1985--
Incorporated by reference to Exhibit 10(d) of the Company's
Registration Statement on Form S-1 (No. 33-13298).
10(b)-- Technical Services and Management Consulting Agreement
between the Company and Von Roll Ltd. dated as of April 1,
1987--Incorporated by reference to Exhibit 10(e) of the
Company's Registration Statement on Form S-1 (No. 33-
13298).
10(c)-- Incentive Stock Option Plan of Company adopted October 2,
1987 with amendments--Incorporated by reference to Exhibit
10(f) of the Company's Registration Statement on Form S-1
(No. 33-13298).
10(d)-- Form of Stock Option Agreement--Incorporated by reference
to Exhibit 4(b) of the Company's Registration Statement on
Form S-8 (No. 33-17435).
10(e)-- Indemnity Agreement between the Company and Von Roll Ltd.
dated as of April 1, 1987--Incorporated by reference to
Exhibit 10(g) of the Company's Registration Statement on
Form S-1 (No. 33-13298).
10(f)-- New Jersey Steel Corporation Executive Thrift Savings
Plan--Incorporated by reference to Exhibit 10(i) of the
Company's Registration Statement on Form S-1 (No. 33-
13298).
10(g)-- New Jersey Steel Corporation Thrift Savings Plan (as
amended 1994)--Filed herewith.
10(h)-- New Jersey Steel Corporation Thrift Savings Agreement (as
amended 1994) -- Filed herewith.
10(i)-- Registration Agreement between the Company and Von Roll
<PAGE>
Ltd. dated as of April 1, 1987--Incorporated by reference
to Exhibit 10(h) of the Company's Registration Statement
on Form S-1 (No. 33-13298).
10(j)-- Real Estate Purchase and Sale Agreement between the Company
and A.J. Ross Logistics, Inc. dated as of November 5, 1990--
Incorporated by reference to Exhibit 10(m) of the Company's
Annual Report on Form 10-K for the year ended November 30,
1990 (File No. 0-15838).
10(k)-- Employment Agreement dated September 23, 1993 between
the Company and Robert J. Pasquarelli--Incorporated by
reference to Exhibit 10(k) to the Company's Annual Report on
Form 10-K for the year ended November 30, 1993 (File No.0-
15838).
23 -- Consent of KPMG Peat Marwick LLP.
27 -- Financial Data Schedule.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(b) 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.
February 28, 1995
NEW JERSEY STEEL CORPORATION
By:/s/ Robert J. Pasquarelli
--------------------------------
Robert J. Pasquarelli, President
and Chief Executive Officer
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:
Signature Title Date
/s/ Robert J. Pasquarelli Director, President February 28, 1995
- - - - - ------------------------- Chief Executive
Robert J. Pasquarelli Officer (Principal
Executive Officer)
/s/ Paul Roik Vice President-Finance February 28, 1995
- - - - - ------------------------- and Treasurer (Principal
Paul Roik Financial and Accounting
Officer)
/s/ H. Georg Hahnloser Director February 28, 1995
- - - - - -------------------------
H. Georg Hahnloser
/s/ Walter H. Beebe Director February 28, 1995
- - - - - -------------------------
Walter H. Beebe
/s/ Harvey L. Karp Director February 28, 1995
- - - - - -------------------------
Harvey L. Karp
- - - - - --------------------------------------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
NEW JERSEY STEEL CORPORATION AND SUBSIDIARY Schedule VIII
Valuation and Qualifying Accounts
Years ended November 30, 1994, 1993 and 1992
Write
Balance Charged offs,
at to costs net of Balance
beginning and recov- at end
Description of year expenses eries of year
- - - - - ----------- --------- -------- ------ -------
<S> <C> <C> <C> <C>
Allowance for doubtful
accounts:
Year ended November 30,
1994 $1,828,000 742,000 (724,000) 1,846,000
Year ended November 30,
1993 1,836,000 5,774,000 (5,782,000) 1,828,000
Year ended November 30,
1992 1,914,000 540,000 (618,000) 1,836,000
========= ========= =========== =========
</TABLE>
- - - - - --------------------------------------------------------------------------------
<PAGE>
401K SAVINGS AND INVESTMENT PLAN SPECIFICATIONS
The following plan specifications are provided merely to
assist in the preparation of the legal document necessary for the
establishment of the savings and investment plan. While counsel
should feel free to make any changes he considers appropriate,
certain provisions have been included in these plan
specifications to comply with applicable law and regulations of
the U.S. Treasury and Labor Departments, including the Tax Reform
Act of 1986.
<PAGE>
NEW JERSEY STEEL CORPORATION
THRIFT SAVINGS PLAN
(AS AMENDED 1994)
<PAGE>
TABLE OF CONTENTS
Page No.
ARTICLE 1 - DEFINITIONS
1.01 Account
1.02 Anniversary Date
1.03 Annuity Starting Date
1.04 Applicable Computation Period
1.05 Beneficiary
1.06 Board of Directors
1.07 Committee
1.08 Company
1.09 Compensation
1.10 Controlled or Affiliated Service Group
1.11 Disability
1.12 Effective Date/Supplemental Effective Date
1.13 Election Period
1.14 Employee/Eligible Employee/Leased Employee
1.15 Employer
1.16 Highly Compensated Employee
1.17 Internal Revenue Code or Code
1.18 Nonhighly Compensated Employee
1.19 Participant
1.20 Plan
1.21 Plan Year
1.22 Protected Spouse
1.23 Qualified Domestic Relations Order
1.24 Retirement
1.25 Retirement Dates
1.26 Service (Break-in-Service - Month of Service -
Year of Service - Hour of Employment)
1.27 Trust Agreement
1.28 Trustee
1.29 Trust Fund
1.30 Valuation Date
ARTICLE 2 - ELIGIBILITY AND PARTICIPATION
2.01 Eligibility for Participation
2.02 Change in Employment Status
<PAGE>
TABLE OF CONTENTS
Page No.
ARTICLE 3 - CONTRIBUTIONS
3.01 Elective Deferral Contributions
3.02 Reduction of Excess Elective
Deferral Contributions
3.03 Matching Contributions
3.04 Voluntary Contributions
3.05 Contribution Changes
3.06 Discontinuance of Contributions
3.07 Rollover Contributions from Other
Qualified Plans
3.08 Transfer of Assets from Other
Qualified Plans
3.09 Deposit of Contributions
3.10 Payment of Expenses
ARTICLE 4 - CONTRIBUTIONS LIMITATIONS
4.01 $7,000 Limitation on Elective
Deferral Contributions
4.02 Limitation on Elective Deferral, Matching
and/or Voluntary Contributions
4.03 Limitation on Allocations
ARTICLE 5 - MAINTENANCE OF ACCOUNTS, INVESTMENT FUNDS AND
VALUATION OF THE TRUST FUND
5.01 Maintenance of Accounts
5.02 Investment Election
5.03 Investment Funds
5.04 Valuation of Trust Fund
5.05 Allocation of Investment Earnings and
Expenses
ARTICLE 6 - BENEFITS PAYABLE UPON TERMINATION OF EMPLOYMENT
6.01 Upon Retirement
6.02 Upon Disability
6.03 Upon Death
6.04 Upon Other Termination of Employment
6.05 Reemployment and Repayment of Benefits
<PAGE>
TABLE OF CONTENTS
Page No.
ARTICLE 7 - DISTRIBUTION OF BENEFITS
7.01 Claim Procedure For Benefits
7.02 Commencement of Benefits
7.03 Method and Form of Payment of Benefits
7.04 Disposition of Unclaimed Benefits
7.05 Non-Assignability
7.06 Substitute Payee
7.07 Satisfaction of Liability
7.08 Direct Rollover to Eligible Retirement Plans
7.09 Waiver of 30 Day Notice Requirement
ARTICLE 8 - ADMINISTRATION OF THE PLAN
8.01 Assignment of Administrative Authority
8.02 Organization and Operation of the Committee
8.03 Authority and Responsibility
8.04 Records and Reports
8.05 Required Information
8.06 Fiduciary Liability
8.07 Payment of Expenses
8.08 Indemnification
8.09 Qualified Domestic Relations Orders
ARTICLE 9 - AMENDMENT AND TERMINATION
9.01 Amendment
9.02 Termination
9.03 Vesting Upon Termination
9.04 Distribution of Benefits After Termination
ARTICLE 10 - PARTICIPATING COMPANIES
10.01 Adoption by Other Entities
10.02 Alternative Provisions
10.03 Right to Withdraw (Plan Spinoff)
10.04 Procedure Upon Withdrawal
<PAGE>
TABLE OF CONTENTS
Page No.
ARTICLE 11 - TOP-HEAVY PROVISIONS
11.01 Definition of Top-Heavy and Super Top-Heavy
11.02 Definition of Key Employee
11.03 Minimum Employer Contribution
[11.03 Allocation of Contributions
[ and Forfeitures]]
[11.04 Minimum Vesting]
11.04/11.05 Limitation of Allocations
ARTICLE 12 - WITHDRAWAL OF FUNDS DURING EMPLOYMENT
12.01 Withdrawals from Elective Deferral
Contribution Account
12.02 Withdrawals from Matching and Regular
Contribution Accounts
[12.02 Withdrawals from Matching
Contribution Account
[12.03 Withdrawals from Regular Contribution
Account
12.0[ ] Withdrawals from Rollover Account
12.0[ ] Withdrawals from Transfer Account
12.0[ ] Withdrawals from Voluntary
Contribution Account
12.0[ ] Withdrawals from Participating
Contribution Account
12.0[ ] Withdrawals from Qualified Matching
Contribution and Qualified Nonelective
Contribution Accounts
12.0[ ] Financial Hardship Rules
12.0[ ] General Withdrawal Rules
<PAGE>
[ARTICLE 13 - LOANS
[13.01 Activation of Loan Provisions]
13.01/13.02 Amount of Loans and Terms of Repayment]]
USE APPLICABLE GENERAL PROVISIONS LISTING
[ARTICLE 13 - GENERAL PROVISIONS
13.01 Exclusiveness of Benefits
13.02 Limitation of Rights
13.03 Limitation of Liability and Legal Actions
13.04 Construction of Agreement
13.05 Title to Assets
13.06 Severability
13.07 Titles and Headings
13.08 Counterparts as Original
13.09 Merger of Plans
[ 13.10 Special Rules with Respect to
Owner-Employees
[ 13.1[ ] Internal Revenue Service Approval]
]
[ARTICLE 14 - GENERAL PROVISIONS
14.01 Exclusiveness of Benefits
14.02 Limitation of Rights
14.03 Limitation of Liability and Legal Actions
14.04 Construction of Agreement
14.05 Title to Assets
14.06 Severability
14.07 Titles and Headings
14.08 Counterparts as Original
14.09 Merger of Plans
[ 14.10 Special Rules with Respect to
Owner-Employees ]
[ 14.1[ ] Internal Revenue Service Approval]
]
<PAGE>
NEW JERSEY STEEL CORPORATION
THRIFT SAVINGS PLAN
(AS AMENDED 1994)
STATEMENT OF PURPOSE
New Jersey Steel Corporation has had in effect since January 1,
1981 the New Jersey Steel Corporation Thrift Savings Plan, to
which it made contributions for the purpose of sharing its
profits with its employees in order to provide for the
accumulation of funds for the benefit of eligible employees and
their beneficiaries in the manner and to the extent set forth in
such plan, which plan was fully restated in 1983, 1984, 1985 and
1989.
The New Jersey Steel Corporation Thrift Savings Plan (As Amended
1994), hereinafter set forth, and its related trust agreement,
constitutes an amendment in its entirety to said plan which is
continued effective as of January 1, 1994 with respect to
employees and participants who had not yet retired, terminated
employment or died as of such date. The rights of anyone covered
under the plan prior to January 1, 1994, who retired, terminated
employment or died before that date, shall be determined in
accordance with the terms and provisions of the plan in effect on
the date of such retirement, termination of employment or death,
except as otherwise specifically provided herein.
Unless otherwise provided herein, those provisions added or
amended to comply with the Tax Reform Act of 1986 required to be
effective as of January 1, 1987 or January 1, 1989 shall be
effective as of such date.
ARTICLE 1
DEFINITIONS
For purposes of the Plan, the following words and phrases shall
have the following meanings unless a different meaning is plainly
required by the context. Wherever used, the masculine pronoun
shall include the feminine pronoun and the feminine pronoun shall
include the masculine and the singular shall include the plural
and the plural shall include the singular.
<PAGE>
1.01 "Account"
The interest of a Participant in the Trust Fund as
represented by his accounts as designated below.
(a) "Basic Elective Deferral Contribution Account" (Account
A) - Portion of Trust Fund attributable to a Participant's
Basic Elective Deferral Contributions in accordance with the
provisions of Section 3.01 and the provisions of the Plan in
effect prior to the Supplemental Effective Date.
(b) "Matching Contribution Account" (Account B) - Portion
of Trust Fund attributable to the Company's
(i) Matching Contributions in accordance with the
provisions of Subsection 3.03(a) and with the provisions of the
Plan in effect prior to the Supplemental Effective Date; and
(ii) Additional Matching Contributions in accordance
with the provisions of Subsection 3.03(b) and with the provisions
of the Plan in effect prior to the Supplemental Effective Date.
(c) "Supplemental Elective Deferral Contribution Account"
(Account C) - Portion of Trust Fund attributable to a
Participant's Basic Elective Deferral Contributions in accordance
with the provisions of Section 3.01 and the provisions of the
Plan in effect prior to the Supplemental Effective Date.
(d) "Participating Contribution Account" (Account D) -
Portion of Trust Fund attributable to a Participant's
Participating Contributions in accordance with the provisions of
the Plan in effect prior to the Supplemental Effective Date.
(e) "Voluntary Contribution Account" (Account E) -
Portion of Trust Fund attributable to a Participant's Voluntary
Contributions in accordance with the provisions of Section 3.04
and the provisions of the Plan in effect prior to the
Supplemental Effective Date.
(f) "Qualified Matching Contribution Account" (Account F)
- - - - - - Portion of Trust Fund attributable to the Company's Qualified
Matching Contributions in accordance with the provisions of
Subsection 3.03(b).
(g) "Qualified Nonelective Contribution Account" (Account
G) - Portion of Trust Fund attributable to the Company's
Qualified Nonelective Contributions in accordance with the
provisions of Subsection 3.03(c).
(h) "Rollover Account" - Portion of Trust Fund
attributable to funds rolled over from another qualified plan in
accordance with Section 3.07.
(i) "Transfer Account" - Portion of Trust Fund
attributable to the Company's contributions during a
Participant's participation under another qualified plan and
transferred in accordance with the provisions of Section 3.08.
<PAGE>
1.02 "Anniversary Date"
Each January 1 after the Effective Date.
1.03 "Annuity Starting Date"
The first day of the first period for which an amount is
payable as an annuity. If a benefit is not payable in the form
of an annuity, the first day on which all events have occurred
which entitle the Participant to such benefit.
1.04 "Applicable Computation Period"
(a) For purposes of Hours of Employment for eligibility in
accordance with Section 2.01, an Eligible Employee's first
Applicable Computation Period shall be the period beginning as of
the first day of the month during which a person first completed
an Hour of Employment with an Employer and ending on the
anniversary of the last day of such month. Thereafter, such
Eligible Employee's Applicable Computation Period shall be each
Plan Year, commencing with the Plan Year which begins after the
date he first completed an Hour of Employment.
(b) For purposes of contributions in accordance with
Articles 3 and 11, Applicable Computation Period shall be a Plan
Year.
(c) For all other purposes, Applicable Computation Period
shall be the 12-month period beginning as of the first day of the
month during which a person first completed an Hour of Employment
with the Employer and each anniversary thereof.
1.05 "Beneficiary"
The person designated to receive benefits payable under the
Plan in the event of death. In the event a Beneficiary is not
designated, the Participant's surviving spouse shall be deemed
his Beneficiary or in the absence of a surviving spouse, the
benefits shall be paid to the Participant's estate.
1.06 "Board of Directors"
The Board of Directors of New Jersey Steel Corporation or,
if the Company is a non-incorporated entity, such governing body
as the Company shall direct.
1.07 "Committee"
The persons appointed in accordance with Section 8.01 to
administer the Plan. In the absence of such designation, the
Company shall serve as the Committee and in such case all
references herein to the Committee shall be deemed a reference to
the Company.
<PAGE>
1.08 "Company"
(a) New Jersey Steel Corporation and any successor which
shall maintain this Plan; and
(b) any other business entity which duly adopts the Plan
with the approval of the Board of Directors.
1.09 "Compensation"
(a) Unless otherwise indicated, for purposes of Sections
3.01, 3.03 and 3.04, the amount described in Subsection (c),
exclusive of any (i) amount which is paid by the Employer but not
by the Company; (ii) amount paid by the Company for any period
during which the Participant's employment status did not meet the
requirements of Section 1.14 and (iii) amount paid before an
Eligible Employee was eligible to become a Participant in
accordance with Section 2.01. For purposes of Section 3.01,
third party insurance payments shall be excluded.
(b) For purposes of Section 4.03, the Participant's wages
for the Plan Year paid by the Employer of the type reported in
box 10 of Form W-2 (1991). Such wages shall include amounts
within the meaning of Section 3401(a) of the Code plus any other
amounts paid to the Participant by the Employer for which the
Employer is required to furnish a written statement under Section
6041(d) and 6051(a)(3) of the Code, determined without regard to
any rules that limit the amount required to be reported based on
the nature or location of the employment or services performed,
exclusive of
(i) severance pay on a non payroll basis;
(ii) non-qualified deferred compensation payments;
(iii) any amounts paid or reimbursed by the
Employer for moving expenses which the Employer reasonably
believes at the time of such payment to be deductible by the
Employee under Section 217 of the Code; and
(iv) welfare benefits, fringe benefits (cash and non-
cash), reimbursements of other expense allowances, moving
expenses and deferred compensation.
(c) For purposes of Sections 1.16 and 4.02 and Article 11,
the amount described in Subsection (b) increased by the amount of
any contributions made by the Employer under any salary reduction
or similar arrangement to a qualified deferred compensation,
pension or cafeteria plan, contributions to a simplified employee
pension plan described in Section 408(k) of the Code,
contributions towards the purchase of an annuity contract
described in Section 403(b) of the Code, compensation deferred
under a deferred compensation plan within the meaning of Section
457(b) of the Code and Employee contribution (under governmental
plans described in Section 414(h)(2) of the Code which are picked
up and treated as Employer contributions. For purposes of
Section 1.16, the amount described above shall be for the
applicable period for making the determination of Highly
Compensated Employees.
<PAGE>
In addition to other applicable limitations set forth in the
Plan, and notwithstanding any other provision of the Plan to the
contrary, for Plan Years beginning on or after January 1, 1994,
the annual Compensation of each Employee taken into account under
the Plan shall not exceed the OBRA '93 annual compensation limit.
The OBRA '93 annual compensation limit is $150,000, as adjusted
by the Commissioner for increases in the cost of living in
accordance with section 401(a)(17)(B) of the Internal Revenue
Code. The cost-of-living adjustment in effect for a calendar
year applies to any period, not exceeding 12 months, over which
Compensation is determined (determination period) beginning in
such calendar year. If a determination period consists of fewer
than 12 months, the OBRA '93 annual compensation limit will be
multiplied by a fraction, the numerator of which is the number of
months in the determination period, and the denominator of which
is 12.
For Plan Years beginning on or after January 1, 1994, any
reference in this Plan to the limitation under section 401(a)(17)
of the Code shall mean the OBRA '93 annual compensation limit set
forth in this provision.
If compensation for any prior determination period is taken
into account in determining an Employee's benefits accruing in
the current Plan Year, the Compensation for that prior
determination period is subject to the OBRA '93 annual
compensation limit in effect for that prior determination period.
For this purpose, for the determination periods beginning before
the first day of the first Plan Year beginning on or after
January 1, 1994, the OBRA '93 annual compensation limit is
$150,000.
For Plan Years beginning before January 1, 1994, the
Compensation limitation shall be determined in accordance with
the provisions of the Plan in effect prior to this restatement.
1.10 "Controlled or Affiliated Service Group"
(a) "Controlled Group" - Any group of business entities
under common control, including but not limited to
proprietorships and partnerships, or a controlled group of
corporations within the meaning of Sections 414(b), (c) and (o)
of the Code. For purposes of Section 4.03, the phrase "more than
50%" is substituted for the phrase "at least 80%" each place it
appears in Section 1563(a)(1) of the Code.
(b) "Affiliated Service Group" - Any group of business
entities within the meaning of Section 414(m) of the Code.
<PAGE>
1.11 "Disability"
Any physical or mental condition which may reasonably be
expected to be permanent and which renders the Participant
incapable of continuing as an Eligible Employee for his customary
Hours of Employment.
1.12 "Effective Date"
January 1, 1981, the date as of which the Plan was
established.
"Supplemental Effective Date"
January 1, 1994, the last date as of which the Plan was
amended in its entirety.
Unless otherwise provided herein, those provisions added or
amended to comply with the Tax Reform Act of 1986 required to be
effective as of January 1, 1987 or January 1, 1989 shall be
effective as of such date.
1.13 "Election Period"
The period commencing 90 days before the Annuity Starting
Date and ending on such Annuity Starting Date.
1.14 "Employee"
Any person in the employ of the Company.
Leased Employees shall be included as Employees unless (i)
such individual is covered by a money purchase pension plan
providing (A) a nonintegrated employer contribution rate of at
least 10 percent of compensation, as defined in Section 415(c)(3)
of the Code, but including amounts contributed by the employer
pursuant to a salary reduction agreement which are excludable
from the Leased Employee's gross income under Section 125,
402(a)(8), 403(h) or 403(b) of the Code; (B) immediate
participation; and (C) full and immediate vesting; and (ii)
Leased Employees do not constitute more than 20% of the
Employer's Nonhighly Compensated Employee workforce.
"Eligible Employee"
An Employee for whom the Company is required to contribute
Federal Insurance Contributions Act taxes excluding persons (a)
who are Leased Employees or (b) under the jurisdiction of a
collective bargaining unit (i) having a pension or profit-sharing
plan to which the Company is required to contribute under the
terms of the collective bargaining agreement or (ii) for whom
retirement benefits were the subject of good faith bargaining.
Notwithstanding the above, Leased Employees shall be
included in the definition of Eligible Employee if the
requirements of Section 414(n)(2) of the Code require such
inclusion in order to meet the plan qualification requirements
enumerated in Section 414(n) and then only if the coverage
requirements of Section 410(b) of the Code would otherwise not be
met.
<PAGE>
"Leased Employee"
Any person (other than an Employee of the recipient) who
pursuant to an agreement between the recipient and any other
person ("leasing organization") has performed services for the
recipient (or for the recipient and related persons determined in
accordance with Section 414(n)(6) of the Code) on a substantially
full time basis for a period of at least one year, and such
services are of a type historically performed by employees in the
business field of the recipient employer. Contributions or
benefits provided a Leased Employee by the leasing organization
which are attributable to services performed for the recipient
employer shall be treated as provided by the recipient employer.
1.15 "Employer"
The Company and any other business entity in a Controlled or
Affiliated Service Group which includes the Company.
1.16 "Highly Compensated Employee"
(a) An Employee who is a Highly Compensated Active Employee
or a Highly Compensated Former Employee.
(b) A Highly Compensated Active Employee is any Employee
who performs Service with the Employer during the Determination
Year and is described in either the Look-back Year Group or the
Determination Year Group or both such groups.
(i) The Look-back Year Group includes any Employee who
(A) was at any time during the Look-back Year a 5% owner, as
defined in Section 416(i)(1) of the Code; (B) received
Compensation from the Employer in excess of $75,000; (C) received
Compensation from the Employer in excess of $50,000 and was in
the Top-Paid Group, as defined in Section 414(q) of the Code, of
Employees for such Look-back Year; or (D) was at any time an
officer and received Compensation greater than 50% of the maximum
dollar limitation under Section 415(b)(1)(A) of the Code.
The 415(b)(1)(A) limitation and the $75,000 and
$50,000 thresholds set forth above shall be adjusted annually for
increases in the cost-of-living in accordance with Section 415(d)
of the Code, effective as of January 1 of the calendar year such
increase is promulgated and applicable to the Plan Year which
begins with or within such calendar year.
(ii) The Determination Year Group includes any Employee
who (A) was at any time during the Determination Year a 5% owner,
as defined in Section 416(i)(1) of the Code; or (B) is both (1)
described in Subparagraphs (i)(B), (i)(C) or (i)(D) above
substituting the Determination Year for the Look-back Year; and
(2) a member of the group consisting of the 100 Employees paid
the greatest Compensation during the Determination Year of
reference.
<PAGE>
(c) A Highly Compensated Former Employee for a
Determination Year is any former Employee who separated from
Service prior to such Determination Year and was a Highly
Compensated Active Employee for either the year in which such
Employee separated from Service or any Determination Year ending
on or after such Employee's 55th birthday.
(d) For purposes of this definition, the following shall be
applicable:
(i) The Determination Year is the applicable Plan Year
for which a determination is being made and the Look-back Year is
the 12-month period immediately preceding such Plan Year.
(ii) If there are no officers as described above in
either the Determination Year or the Look-back Year, then the
highest paid officer of the Employer in each such year shall be
deemed a Highly Compensated Employee with respect to such year.
(iii) The determination of Highly Compensated
Employees, including the determinations of the number and
identity of Employees in the Top-Paid Group, the top 100
Employees and the number of Employees treated as officers shall
be governed by Section 414(q) of the Code and Treasury Regulation
1.414(q)-1T.
(iv) The Compensation and contributions under the
Plan of a Highly Compensated Employee who is a 5% owner or in the
group consisting of the 10 Highly Compensated Employees paid the
greatest Compensation during any Determination Year or Look-back
Year shall be determined by aggregating such amounts with the
Compensation and contributions of each other Employee who is the
spouse, lineal ascendant or descendant or spouse of a lineal
ascendant or descendant of such Highly Compensated Employee.
(e) The Company may make the following elections as
provided for in Treasury Regulation 1.414(q)-1T:
(i) the special rule for determining Highly
Compensated Former Employees who separated from Service before
January 1, 1987 in accordance with Treasury Regulation
1.414(q)-1T, Q&A 4(d). However, once such an election is made it
may not be changed without the consent of the Commissioner;
(ii) the calendar year election for the Look-back Year
in accordance with Treasury Regulation 1.414(q)-1T, Q&A 14(b);
(iii) the modification on a consistent and uniform
basis of the permissible age and service exclusions in accordance
with Treasury Regulation 1.414(q)-1T, Q&A 9(b)(2);
(iv) the inclusion of employees covered under a
collective bargaining agreement in accordance with Treasury
Regulation 1.414(q)-1T, Q&A 9(b)(2);
(v) the inclusion of leased employees in determining
the highly compensated group in accordance with Treasury
Regulation 1.414(q)-1T, Q&A 7(b)(4); and
(vi) the transitional rule in accordance with Treasury
Regulation 1.414(q)-1T, Q&A 15.
<PAGE>
1.17 "Nonhighly Compensated Employee"
An Employee who is not deemed to be a Highly Compensated
Employee.
1.18 "Internal Revenue Code" or "Code"
The Internal Revenue Code of 1986, and any amendments
thereto.
1.19 "Participant"
(a) An Eligible Employee who participates under the Plan in
accordance with Section 2.01.
(b) Each other Eligible Employee or former Eligible
Employee for whom an Account is maintained.
1.20 "Plan"
The plan of the Company, as herein set forth and as from
time to time supplemented and amended, which Plan is intended to
be a profit-sharing plan for purposes of Sections 401(a), 402,
412 and 417 of the Code.
1.21 "Plan Year"
A period of 12 consecutive months commencing on the
Effective Date and each Anniversary Date thereof.
1.22 "Protected Spouse"
The spouse to whom the Participant had been legally married
on the date of the Participant's death.
1.23 "Qualified Domestic Relations Order"
A domestic relations order as defined in Section 8.09 in
accordance with Section 414(p) of the Code.
1.24 "Retirement"
The termination of employment of a Participant on his Normal
or Deferred Retirement Date.
1.25 "Retirement Dates"
(a) "Normal Retirement Date" - The date on which the
Participant attains age 65.
(b) "Deferred Retirement Date" - The first day of any month
subsequent to the Participant's Normal Retirement Date.
<PAGE>
1.26 "Service"
(a) All periods of employment with an Employer.
A period of employment begins as of the date the
Employee first completes an Hour of Employment for the Employer
and ends on the earlier of the date the Employee resigns, is
discharged, retires or dies or, if the Employee is absent for any
other reason, on the first anniversary of the first day of such
absence (with or without pay) from the Employer. If an Employee
is absent for any reason and returns to the employ of the
Employer before incurring a Break-in-Service, as provided in
Subsection (b), he shall receive credit for his period of absence
up to a maximum of 12 months. Service subsequent to a
Break-in-Service will be credited as a separate period of
employment.
(b) "Break-in-Service" - A period of 12-consecutive months
during which an Employee fails to accrue an Hour of Employment
with the Employer. Such period begins on the earlier of the date
the Employee resigns, is discharged, retires or dies or, if the
Employee is absent for any other reason, on the first anniversary
of the first day of such absence (with or without pay) from the
Employer. If an Employee is absent by reason of (i) the
pregnancy of the Employee, (ii) the birth of a child of the
Employee, (iii) the placement of a child with the Employee in
connection with an adoption of such child by such Employee, or
(iv) caring for such child immediately following such birth or
placement, such Employee will not be treated as having retired,
resigned or been discharged and the period between the first and
second anniversary of the first day of such absence shall not be
deemed a Break-in-Service.
(c) "Month of Service" - A calendar month any part of which
is in a period of employment or credited absence.
(d) "Year of Service" - Unless otherwise indicated, 12
Months of Service.
(e) "Hour of Employment"
(i) For an Employee paid on an hourly basis or for
whom hourly records of employment are required to be maintained,
each hour for which the person is directly or indirectly paid or
entitled to payment for the performance of duties or for the
period of time when no duties are performed, irrespective of
whether the employment relationship has terminated, such as
vacation, holiday or illness.
(ii) For an Employee paid on a non-hourly basis or for
whom hourly records of employment are not required to be
maintained, each week for which the person is directly or
indirectly paid or entitled to payment shall be equal to 45 Hours
of Employment.
(iii) A person shall receive an Hour of Employment
for each hour for which back pay has been awarded or agreed to
irrespective of mitigation of damages, provided that each such
hour shall be credited to the Applicable Computation Period to
which it pertains, rather than the Applicable Computation Period
in which the award or agreement is made, and further provided
that no such award or agreement shall have the effect of
crediting an Hour of Employment for any hour for which the person
previously received credit under (i) or (ii) above.
<PAGE>
(iv) Notwithstanding the foregoing, Hours of Employment
shall be computed and credited in accordance with Department of
Labor Regulation 2530.200b-2, Subparagraphs (b) and (c).
(f) An Employee shall receive credit for the period of his
employment with another business entity to which he had been
transferred by the Company solely for purposes of determining his
vested interest in accordance with Section 6.04.
1.27 "Trust Agreement"
The instrument executed by the Company and the Trustee
fixing the rights and liabilities of each with respect to holding
and administering the Trust Fund, which instrument shall be
incorporated by reference into this Plan.
1.28 "Trustee"
The Trustee or any successor Trustee, appointed by the Board
of Directors, acting in accordance with the terms of the Trust
Agreement.
1.29 "Trust Fund"
All assets held by the Trustee for the purposes of the Plan
in accordance with the terms of the Trust Agreement.
1.30 "Valuation Date"
The last day of each calendar month or such other dates as
the Committee may determine from time to time.
<PAGE>
ARTICLE 2
ELIGIBILITY AND PARTICIPATION
2.01 Eligibility for Participation
An Eligible Employee may become a Participant upon
satisfaction of the following requirements, provided he elects to
contribute in accordance with Section 3.01 or 3.04.
(a) Each Eligible Employee on the Supplemental Effective
Date who was a Participant of the Plan shall continue as a
Participant as of the Supplemental Effective Date.
(b) Each other Eligible Employee shall become a Participant
as of the Supplemental Effective Date or the January or July 1
coincident with or next following the first day of the month
during which he completes one Year of Service. For purposes of
this Section, Year of Service shall mean an Applicable
Computation Period in which the Employee completes 1,000 Hours of
Employment with the Employer.
(c) If a former Participant is reemployed, he shall be
eligible to resume his participation as of the date of his
reemployment or any subsequent January or July 1.
2.02 Change in Employment Status
(a) In the event a Participant ceases to be an Eligible
Employee as the result of becoming part of an excluded class,
only Compensation up to the date he ceased to be an Eligible
Employee shall be considered for purposes of contributions in
accordance with Article 3. Such Employee shall remain a
Participant but shall not be permitted to contribute in
accordance with Article 3 or share in any Company contributions
or forfeitures allocated in accordance with Article 3 for the
period beyond the date he ceased to be an Eligible Employee.
In the event such Participant returns to an eligible
class and again becomes an Eligible Employee, he shall be
permitted to share in Company contributions [or forfeitures]
allocated in accordance with Article 3 as of the date he again
became an Eligible Employee and may elect to comply with the
provisions of Section 3.01 as of such date or any subsequent
January or July 1. Only Compensation from the date he again
became an Eligible Employee shall be considered for purposes of
such contributions.
(b) If a person otherwise satisfied the eligibility
requirements of Section 2.01 and subsequently becomes an Eligible
Employee, he shall be eligible to become a Participant as of the
date he became an Eligible Employee.
(c) In the event a collective bargaining agreement is
entered into between the Company and a representative for any
class of Employees in the employ of the Company subsequent to the
[Supplemental ]Effective Date, eligibility for participation in
the Plan by such Employees who are not Participants shall not be
extended beyond the effective date of the collective bargaining
agreement unless the agreement extends participation in the Plan
to such Employees. The provisions of Subsection (a) shall apply
to those Employees who are currently Participants.
<PAGE>
ARTICLE 3
CONTRIBUTIONS
3.01 Elective Deferral Contributions
(a) Basic Elective Deferral Contributions - A Participant
may, when first eligible or as of any subsequent January or July
1 elect to save, through pay reduction each payroll period, no
less than 1% nor more than 4%, in whole percentages, of that
portion of his Compensation attributable to such payroll period.
(b) Supplemental Pay Conversion Contributions - Each
Participant contributing the maximum under Subsection (a), may,
as of any January or July 1 elect to save, through pay reduction
each payroll period, an additional amount of no less than 1% nor
more than 11%, in whole percentages, of that portion of his
Compensation attributable to such payroll period.
(c) Lump Sum Pay Conversion Contribution - Each Participant
who has not contributed the maximum under Subsection (b) may also
elect to save, through payroll reduction taken from such
Participant's final paycheck for the Plan Year of reference, a
lump sum amount that when combined with the total amount of pay
conversion contributions he made in accordance with Subsections
(a) and (b) during such Plan Year does not exceed 15% of his
Compensation for such Plan Year.
(i) The portion of the Participant's lump sum
contribution that when combined with the total amount contributed
in accordance with Subsection (a) during the Plan Year of
reference does not exceed 4% of his Compensation for such Plan
Year shall be deemed as a Basic Elective Deferral Contribution
and credited to the Participant's Basic Elective Deferral
Contribution Account.
(ii) The portion of the Participant's lump sum
contribution that when combined with the total amount contributed
in accordance with Subsection (a) during the Plan Year of
reference exceeds 4% of his Compensation for such Plan Year shall
be deemed as a Supplemental Elective Deferral Contribution and
credited to the Participant's Basic Elective Deferral
Contribution Account.
(d) Such contributions shall take the form of before tax
contributions (hereinafter known as "Elective Deferral
Contributions"), shall be deemed to be Company contributions for
purposes of Section 414(h) of the Code and shall be subject to
the limitations on Elective Deferral Contributions under Sections
4.01 and 4.02 and the limitations on annual additions under
Section 4.03.
<PAGE>
(e) Rules Governing Elections
(i) An initial written election must be made by an
Eligible Employee and submitted to the Committee at least 30 days
(or such other period as the Committee may fix from time to time)
prior to the first date the Eligible Employee would be eligible
to become a Participant of the Plan in accordance with Section
2.01.
(ii) An election, once made, shall remain in effect
until subsequently changed by the Eligible Employee in accordance
with the provisions of Section 3.05 or 3.06.
3.02 Reduction of Excess Elective Deferral Contributions
If Elective Deferral Contributions under Section 3.01 are
projected to exceed the limitations of Sections 4.01 or 4.02 at
any time during a Plan Year, the Committee, in a good faith
effort to comply with such limitations, retains the right to
reduce the rate of elective deferrals made by Highly Compensated
Employees. Such reduction shall be made in the sole discretion
of the Committee and for purposes of Section 4.02 shall be
accomplished by progressively reducing the Elective Deferral
Contributions of those Highly Compensated Employees with the
highest deferral percentage until the limitations are met.
USE IF PARTIAL MATCH
Contributions made prior to the date of such reduction shall
be deemed to be made pro rata throughout the Plan Year of
reference for purposes of entitlement to a Matching Contribution
under Section 3.03.
3.03 Matching Contributions
Subject to the limitations on annual additions under Section
4.03, the Company shall contribute the following amounts:
FULLY MATCHED ELECTIVE DEFERRAL CONTRIBUTIONS
FIXED PERCENTAGE RATE MATCH
(a) Matching Contributions - [25%][33%][50%][100%][ %] of
each Participant's Elective Deferral Contributions with respect
to Elective Deferral Contributions which are not required to be
restricted under Sections 3.02, 4.01 or 4.02. No Matching
Contribution will be provided in excess of the limitations under
Subsections 4.02(b) and (c).
<PAGE>
DISCRETIONARY PERCENTAGE RATE MATCH - DELETE BRACKETED
PHRASE IF ALLOCATED TO ALL CONTRIBUTING MEMBERS
(a) Matching Contributions - An amount equal to a
designated percentage rate of each Participant's Elective
Deferral Contributions with respect to Elective Deferral
Contributions which are not required to be restricted under
Sections 3.02, 4.01 or 4.02. [Such Matching Contributions shall
be allocated to Participants in the employ of [the][such] Company
on the last business day of such Plan Year. ]No Matching
Contribution will be provided in excess of the limitations under
Subsections 4.02(b) and (c).
Such percentage rate shall be determined by the Company
and announced to the Eligible Employees [prior to the
beginning][after the end] of the Plan Year of reference.
RANGE OF PERCENTAGE RATE MATCH - DELETE BRACKETED
PHRASE IF ALLOCATED TO ALL CONTRIBUTING MEMBERS
(a) Matching Contributions - An amount equal to a
designated percentage rate, within the range of [ %][25%] to [
%][100%] of each Participant's Elective Deferral Contributions
with respect to Elective Deferral Contributions which are not
required to be restricted under Sections 3.02, 4.01 or 4.02.
[Such Matching Contributions shall be allocated to Participants
in the employ of [the][such] Company on the last business day of
such Plan Year. ]No Matching Contribution will be provided in
excess of the limitations under Subsections 4.02(b) and (c).
Such percentage rate shall be determined by the Company
and announced to the Eligible Employees [prior to the
beginning][after the end] of the Plan Year of reference.
MINIMUM PERCENTAGE RATE MATCH
(a) Matching Contributions - A minimum of [ %][10%] of
each Participant's Elective Deferral Contributions with respect
to Elective Deferral Contributions which are not required to be
restricted under Sections 3.02, 4.01 or 4.02. No Matching
Contribution will be provided in excess of the limitations under
Subsections 4.02(b) and (c).
Notwithstanding the foregoing, the Company may, in its
sole discretion, increase the percentage rate of its Matching
Contributions for any Plan Year. If applicable, such increased
percentage rate shall be determined and announced to the Eligible
Employees prior to the beginning of the Plan Year of reference.
USE IF MUST BE EMPLOYED ON LAST DAY OF PLAN YEAR
IF DISABILITY (SECTION 6.02), USE BRACKETED WORD IN
FIRST PARAGRAPH OF THE FOLLOWING MATERIAL AND OMIT BRACKETED WORD
IN SECOND PARAGRAPH - IF NO DISABILITY (SECTION 6.02), OMIT
BRACKETED WORD IN FIRST PARAGRAPH AND INCLUDE BRACKETED WORD IN
SECOND PARAGRAPH
<PAGE>
Notwithstanding the foregoing provision, a Participant
otherwise eligible shall share in such Matching Contributions for
the Plan Year of (i) his Retirement[, Disability] or death, (ii)
the commencement of a Leave of Absence authorized by the Company
or (iii) his transfer to another business entity to which such
Participant had been transferred by the Company, even if the
Participant is not in the employ of a Company on the last
business day of such Plan Year.
As used herein, Leave of Absence shall mean a leave
granted for pregnancy, [Disability,] sickness, death or any other
family obligation or status; personal or family hardship or
special business circumstances; educational purposes; and/or
civic, charitable or governmental services, provided that all
Eligible Employees under similar circumstances shall be treated
in a similar manner.
ADDITIONAL AND QUALIFIED MATCH - ALWAYS USE
DELETE BRACKETED PHRASE IF ALLOCATED TO ALL
CONTRIBUTING MEMBERS
(b) Additional Matching Contributions - For any Plan Year,
[the][any] Company may contribute such additional amounts as it
shall determine. Such additional Matching Contributions shall be
allocated to Participants [in the employ of [the][such] Company
on the last business day of such Plan Year ]in the same
proportion that the Elective Deferral Contributions of each such
Participant for such Plan Year bears to the aggregate Elective
Deferral Contributions of all Participants for such Plan Year.
Qualified Matching Contributions - For any Plan Year,
[the][any] Company may contribute such additional amounts as it
shall determine. Such Qualified Matching Contributions shall be
allocated to those Participants who are Nonhighly Compensated
Employees[ in the employ of [the][such] Company on the last
business day of such Plan Year,] in the same proportion that the
Elective Deferral Contributions of each such Participant for such
Plan Year bears to the aggregate Elective Deferral Contributions
of all such Participants for such Plan Year.
Such contributions shall be subject to Treasury
Regulation 1.401(k)-1(g)(7).
IF DISABILITY (SECTION 6.02), USE BRACKETED WORD IN
FIRST PARAGRAPH OF THE FOLLOWING MATERIAL AND OMIT BRACKETED WORD
IN SECOND PARAGRAPH - IF NO DISABILITY (SECTION 6.02), OMIT
BRACKETED WORD IN FIRST PARAGRAPH AND INCLUDE BRACKETED WORD IN
SECOND PARAGRAPH
Notwithstanding the foregoing provision, a Participant
otherwise eligible shall share in such Additional or Qualified
Matching Contributions for the Plan Year of (i) his Retirement[,
Disability] or death, (ii) the commencement of a Leave of Absence
authorized by the Company or (iii) his transfer to another
business entity to which such Participant had been transferred by
the Company, even if the Participant is not in the employ of
[a][the] Company on the last business day of such Plan Year.
<PAGE>
As used herein, Leave of Absence shall mean a leave
granted for pregnancy, [Disability,] sickness, death or any other
family obligation or status; personal or family hardship or
special business circumstances; educational purposes; and/or
civic, charitable or governmental services, provided that all
Eligible Employees under similar circumstances shall be treated
in a similar manner.
PARTIALLY MATCHED ELECTIVE DEFERRAL CONTRIBUTIONS
FIXED PERCENTAGE RATE MATCH
(a) Matching Contributions - [25%][33%][50%][100%][ %] of
that portion of the Participant's Elective Deferral Contributions
each payroll period which does not exceed [6%][ %] of the
Participant's Compensation for such payroll period. Only
Elective Deferral Contributions which are not required to be
restricted under Sections 3.02, 4.01 or 4.02 shall be matched.
No Matching Contribution will be provided in excess of the
limitations under Subsections 4.02(b) and (c).
DISCRETIONARY PERCENTAGE RATE MATCH
(a) Matching Contributions - An amount equal to a
designated percentage rate of that portion of the Participant's
Elective Deferral Contributions each payroll period which does
not exceed [6%][ %] of the Participant's Compensation for such
payroll period. Only Elective Deferral Contributions which are
not required to be restricted under Sections 3.02, 4.01 or 4.02
shall be matched. No Matching Contribution will be provided in
excess of the limitations under Subsections 4.02(b) and (c).
Such percentage rate shall be determined by the Company
and announced to the Eligible Employees prior to the beginning of
the Plan Year of reference.
RANGE OF PERCENTAGE RATE MATCH
(a) Matching Contributions - An amount equal to a
designated percentage rate, within the range of [ %][25%] to [
%][100%] of that portion of the Participant's Elective Deferral
Contributions each payroll period which does not exceed [6%][ %]
of the Participant's Compensation for such payroll period. Only
Elective Deferral Contributions which are not required to be
restricted under Sections 3.02, 4.01 or 4.02 shall be matched.
No Matching Contribution will be provided in excess of the
limitations under Subsections 4.02(b) and (c).
Such percentage rate shall be determined by the Company
and announced to the Eligible Employees prior to the beginning of
the Plan Year of reference.
<PAGE>
MINIMUM PERCENTAGE RATE MATCH
(a) Matching Contributions - A minimum of [ %][10%] of
that portion of the Participant's Elective Deferral Contributions
each payroll period which does not exceed [6%][ %] of the
Participant's Compensation for such payroll period. Only
Elective Deferral Contributions which are not required to be
restricted under Sections 3.02, 4.01 or 4.02 shall be matched.
No Matching Contribution will be provided in excess of the
limitations under Subsections 4.02(b) and (c).
Notwithstanding the foregoing, the Company may, in its
sole discretion, increase the percentage rate of its Matching
Contributions for any Plan Year. If applicable, such increased
percentage rate shall be determined and announced to the Eligible
Employees prior to the beginning of the Plan Year of reference.
ADDITIONAL AND QUALIFIED MATCH - ALWAYS USE
SINGLE PLAN - DELETE BRACKETED PHRASE IF ALLOCATED TO
ALL CONTRIBUTING MEMBERS
(b) Additional Matching Contributions - For any Plan Year,
[the][any] Company may contribute such additional amounts as it
shall determine. Such Additional Matching Contributions shall be
allocated to Participants [in the employ of [the][such] Company
on the last business day of such Plan Year ]in the same
proportion that the Elective Deferral Contributions of each such
Participant for such Plan Year bears to the aggregate Elective
Deferral Contributions of all Participants for such Plan Year,
taking into consideration only that portion of each Participant's
Elective Deferral Contributions which does not exceed [6%][ %] of
such Participant's Compensation for each payroll period during
such Plan Year.
Qualified Matching Contributions - For any Plan Year,
[the][any] Company may contribute such additional amounts as it
shall determine. Such Qualified Matching Contributions shall be
allocated to those Participants who are Nonhighly Compensated
Employees[ in the employ of [the][such] Company on the last
business day of such Plan Year] in the same proportion that the
Elective Deferral Contributions of each such Participant for such
Plan Year bears to the aggregate Elective Deferral Contributions
of all such Participants for such Plan Year, taking into
consideration only that portion of each Participant's Elective
Deferral Contributions which does not exceed [6%][ %] of such
Participant's Compensation for each payroll period during such
Plan Year.
Such contributions shall be subject to Treasury
Regulation 1.401(k)-1(g)(13).
IF DISABILITY (SECTION 6.02), USE BRACKETED WORD IN
FIRST PARAGRAPH OF THE FOLLOWING MATERIAL AND OMIT BRACKETED WORD
IN SECOND PARAGRAPH - IF NO DISABILITY (SECTION 6.02), OMIT
BRACKETED WORD IN FIRST PARAGRAPH AND INCLUDE BRACKETED WORD IN
SECOND PARAGRAPH
<PAGE>
Notwithstanding the foregoing provision, a Participant
otherwise eligible shall share in such Additional or Qualified
Matching Contributions for the Plan Year of (i) his Retirement[,
Disability] or death, (ii) the commencement of a Leave of Absence
authorized by the Company or (iii) his transfer to another
business entity to which such Participant had been transferred by
the Company, even if the Participant is not in the employ of the
Company on the last business day of such Plan Year.
(c) Qualified Nonelective Contributions - Such amount as
the Company shall determine for any Plan Year, which shall be
allocated to those Participants who are Nonhighly Compensated
Employees in the same proportion that his Compensation bears to
the aggregate Compensation of all such Participants for such Plan
Year, provided the Participant is in the employ of the Company on
the last business day of such Plan Year, which amount shall be
credited at the end of the Plan Year.
Such contributions shall be subject to Treasury
Regulation 1.401(k)-1(g)(13).
Notwithstanding the foregoing provision, a Participant
otherwise eligible shall be entitled to a share of the Company's
Qualified Nonelective Contributions for the Plan Year of (i) his
Retirement, Disability or death, (ii), the commencement or end of
a Leave of Absence authorized by the Company or (iii) his
transfer to another business entity to which such Participant had
been transferred by the Company, even if the Participant is not
in the employ of the Company on the last business day of such
Plan Year.
A Participant shall not share in the allocation of the
Company's Qualified Nonelective Contributions for any Plan Year
during which he terminated his employment for reasons other than
specified in (i), (ii) or (iii).
For purposes of this Subsection, Participant shall also
include any Eligible Employee who would otherwise be eligible for
the Plan but who declined to make contributions required under
the Plan in accordance with Sections 3.01 or 3.04 at any time.
As used herein, Leave of Absence shall mean a leave granted
for pregnancy, Disability, sickness, death or any other family
obligation or status; personal or family hardship or special
business circumstances; educational purposes; and/or civic,
charitable or governmental services, provided that all Eligible
Employees under similar circumstances shall be treated in a
similar manner.
<PAGE>
3.04 Voluntary Contributions
(a) The Committee, solely at its discretion, may elect to
provide Participants[ who are Nonhighly Compensated Employees]
with the option of making Voluntary aftertax contributions for
each Plan Year any amount from 2% to 10%, in whole percentages,
of Compensation.
(b) The Committee may also, solely at its discretion,
permit such Participants to contribute the difference between (i)
10% of such Participant's Compensation while a Participant of the
Plan, and (ii) the sum of all previous Voluntary Contributions
actually made by the Participant.
(c) All contributions under this Section shall be subject
to the limitations on Voluntary Contributions under Section 4.02
and the limitations on annual additions under Section 4.03.
(d) The Committee shall promulgate such specific rules and
regulations as may be required with respect to the implementation
and operation of these provisions.
3.05 Contribution Changes
A Participant may, subject to the minimum and maximum
percentages as specified in Section 3.01, increase or reduce the
percentage rate of his Elective Deferral Contributions and/or, if
applicable, his Voluntary Contributions once during a Plan Year,
as of any Anniversary Date (or as of such other dates as the
Committee may fix from time to time), by written notification to
the Committee at least 30 days (or such other period as the
Committee may fix from time to time) prior to the effective date
of such change.
3.06 Discontinuance of Contributions
(a) A Participant may discontinue his Elective Deferral
Contributions and/or, if applicable, his Voluntary Contributions
at any time, but limited to once during a Plan Year, by written
notification to the Committee at least 30 days (or such other
period as the Committee may fix from time to time) prior to the
effective date of such discontinuance.
(b) A Participant may resume his Elective Deferral
Contributions and/or, if applicable, his Voluntary Contributions]
as of any subsequent Anniversary Date (or such other dates as the
Committee may fix from time to time) by written notification to
the Committee at least 30 days (or such other period as the
Committee may fix from time to time) prior to the effective date
of such resumption.
(c) The discontinuance of Elective Deferral Contributions
will automatically include a discontinuance of the Matching
Contributions. A discontinuance only of the Participant's
Voluntary Contributions will not affect contributions to the
Participant's other accounts.
<PAGE>
3.07 Rollover Contributions from Other Qualified Plans
(a) The Committee may elect to provide all Eligible
Employees, upon commencement of employment with the option of
making a rollover contribution to the Trust Fund of all or any
portion of the entire amount (including money or any other
property acceptable to the Committee and Trustee) which is an
eligible rollover distribution, as defined in Section 402(c)(4)
of the Code and temporary Treasury Regulation 1.402(C)-2T, Q&A 3
and 4, provided such rollover contribution is either (i) a direct
transfer from another qualified plan or (ii) received on or
before the 60th day immediately following the date the Employee
received such distribution from a qualified plan or conduit
Individual Retirement Account or Annuity.
(b) The Committee shall credit the fair market value of any
rollover contribution and investment earnings attributable
thereto to the Participant's Rollover Account. A Participant
shall be 100% vested in his Rollover Account at all times.
(c) An Eligible Employee who becomes a Participant by
virtue of the acceptance of such rollover contribution, but who
is not otherwise eligible for participation in accordance with
Section 2.01, shall not be entitled to make contributions or
share in any Company contribution allocated in accordance with
this Article 3 or Article 11.
(d) The Committee may promulgate specific rules and
regulations governing all aspects of this Section.
3.08 Transfer of Assets from Other Qualified Plans
(a) The Committee may accept the direct transfer to the
Trust Fund from another qualified trust fund of those assets
(including money or any other property acceptable to the
Committee and Trustee) attributable to a Participant's
participation in any qualified plan to which such trust relates.
Such transferred amounts shall not be considered annual additions
for purposes of Section 4.03.
Notwithstanding the foregoing provisions, transfers
from a plan subject to Section 412 of the Code without the
required spousal consent shall not be permitted.
(b) The amount transferred shall be credited to the
Participant's Accounts as determined by the Committee, taking
into account the applicable vesting schedules, amounts subject to
special tax treatment and withdrawal rules. Additional Transfer
Accounts will be established, if required, to accommodate these
objectives.
(c) An Eligible Employee who becomes a Participant by
virtue of a transfer of assets, but who is not otherwise eligible
for participation in accordance with Section 2.01, shall not be
entitled to make contributions or share in any Company
contribution allocated in accordance with this Article 3 or
Article 11.
<PAGE>
(d) The Committee may promulgate specific rules and
regulations governing all aspects of this Section but until
promulgated, all other provisions of the Plan shall be applicable
based on the Account to which such assets were transferred.
3.09 Deposit of Contributions
The Company shall deposit the Elective Deferral
Contributions[ and Voluntary Contributions] with the Trustee as
soon as practicable (in no event to exceed 90 days) following the
date on which such amounts would otherwise have been paid to the
Participant. In no event shall Voluntary Contributions be
deposited later than 30 days after the end of the Plan Year. All
other Company contributions must be deposited by the earlier of
the end of the subsequent Plan Year or after the end of the
period described in Code Section 404(a)(6) applicable to the tax
year of the Company with or within which the Plan Year ends.
3.10 Payment of Expenses
In addition to its contributions, the Company may elect to
pay all the administrative expenses of the Plan and all fees and
retainers of the Plan's Trustee, accountant, counsel, consultant,
administrator or other specialist so long as the Plan or Trust
Fund remains in effect. If the Company does not pay all or part
of such expenses, the Trustee shall pay these expenses from the
Trust Fund. All expenses relating directly to the investments of
the Trust Fund, including taxes, brokerage commissions and
registration charges, must be paid from the Trust Fund.
<PAGE>
ARTICLE 4
CONTRIBUTION LIMITATIONS
4.01 $7,000 Limitation on Elective Deferral Contributions
Each Participant's Elective Deferral Contributions under
Section 3.01, when added to any additional elective deferrals, as
defined in Section 402(g) of the Code, under all other plans
maintained by the Employer, shall be limited to $7,000 during any
calendar year, adjusted annually for increases in the
cost-of-living in accordance with Section 415(d) of the Code, or
such other maximum permitted under Section 402(g) of the Code.
To the extent a Participant's Elective Deferral
Contributions exceed the above limitation the Employer will
notify the Plan of such excess and such amount will be designated
as an excess deferral. Such excess deferral will be distributed
to such Participant with investment experience no later than
April 15 following the close of the calendar year to which such
excess relates. Such excess may be distributed prior to the
close of the calendar year of reference provided the correcting
distribution is made after the date on which the plan received
the excess deferral and is specifically designated as an excess
deferral.
Investment experience will be determined in accordance with
the fourth paragraph of Section 4.02(d) below.
4.02 Limitation on Elective Deferral, Matching and/or Voluntary
Contributions
(a) The Actual Deferral Percentage of Highly Compensated
Employees in the Testing Group for any Plan Year shall be limited
to the greater of
(i) the Actual Deferral Percentage for the Nonhighly
Compensated Employees in the Testing Group multiplied by 1.25; or
(ii) the Actual Deferral Percentage for the Nonhighly
Compensated Employees in the Testing Group multiplied by 2.00,
provided, however, that the Actual Deferral Percentage for the
Highly Compensated Employees in the Testing Group may not exceed
the Actual Deferral Percentage for such Nonhighly Compensated
Employees by more than two percentage points.
(b) The Actual Contribution Percentage of Highly
Compensated Employees in the Testing Group for any Plan Year
shall be limited to the greater of
(i) the Actual Contribution Percentage for Nonhighly
Compensated Employees in the Testing Group multiplied by 1.25; or
<PAGE>
(ii) the Actual Contribution Percentage for Nonhighly
Compensated Employees in the Testing Group multiplied by 2.00,
provided, however, that the Actual Contribution Percentage for
the Highly Compensated Employees in the Testing Group may not
exceed the Actual Contribution Percentage for such Nonhighly
Compensated Employees by more than two percentage points.
(c) If one or more Highly Compensated Employees are
eligible for both Elective Deferral Contributions and to receive
Matching Contributions[ or to make Voluntary Contributions], such
contributions shall be limited to the greater of (i) or (ii)
below. Notwithstanding the above, this Subsection (c) shall only
be applicable if both the Actual Deferral Percentage and the
Actual Contribution Percentage of the Highly Compensated
Employees exceeds 1.25 multiplied by the respective Nonhighly
Compensated Employee percentages.
(i) The sum of
(A) 1.25 times the greater of
(1) the Actual Deferral Percentage for the
Nonhighly Compensated Employees, or
(2) the Actual Contribution Percentage for
the Nonhighly Compensated Employees; and
(B) two plus the lesser of Subparagraph (1) or
(2) above, provided that such amount may not exceed 200% of the
lesser of Subparagraph (1) or (2).
(ii) The sum of
(A) 1.25 times the lesser of
(1) the Actual Deferral Percentage for the
Nonhighly Compensated Employees, or
(2) the Actual Contribution Percentage for
the Nonhighly Compensated Employees; and
(B) two plus the greater of Subparagraph (1) or
(2) above, provided that such amount may not exceed 200% of the
greater of Subparagraph (1) or (2).
(d) To the extent the otherwise applicable Elective
Deferral[, Voluntary] and Matching Contributions for any Plan
Year must be limited due to the restrictions described in
Subsections (a), (b) and (c), such limitations shall be applied
to the Highly Compensated Employees' Elective Deferral[,][and/or]
Matching[ and/or][ Voluntary] Contribution percentages, whichever
applicable, beginning with the highest of such percentages until
the limitations are met. [In satisfying the limited percentages
applicable to any individual Highly Compensated Employee,
reductions will first be made to Voluntary Contributions.
Additional r][R]eductions to satisfy Subsection (c) shall be
applied first to unmatched Elective Deferral Contributions, if
any, and then to matched Elective Deferral Contributions and
Matching Contributions proportionately.
<PAGE>
Excess Elective Deferral[, Voluntary] and Matching
Contributions shall be allocated to Participants who are subject
to the family aggregation rules of Section 414(q)(6) of the Code
in proportion to their unadjusted deferrals and contributions.
Any excess Elective Deferral[ or Voluntary]
Contributions that result from the above limitations shall be
refunded to such Highly Compensated Employees with investment
experience, no later than the last day of the Plan Year
subsequent to the Plan Year to which the excess relates. The
limitation on Matching Contributions is effected by limiting the
otherwise applicable Matching Contributions in accordance with
Subsection 3.03(a).
Investment experience shall be the income or loss
allocable to the Participant's Elective Deferral Contribution
Account[ or Voluntary Contribution Account] for the Plan Year
multiplied by a fraction, the numerator of which is such
Participant's excess Elective Deferral [or Voluntary
]Contributions for the year and the denominator is the sum of (i)
the Participant's Elective Deferral Contribution Account[ or
Voluntary Contribution Account] balance as of the beginning of
the Plan Year and (ii) the Participant's Elective Deferral[ or
Voluntary ]Contributions for the Plan Year.
(e) Definitions and Special Rules
(i) The Actual Deferral Percentage for the Highly
Compensated Employees and Nonhighly Compensated Employees for a
Plan Year shall be the average of the ratios (calculated
separately for each such Employee in the Testing Group) of
(A) the amount of contributions credited to the
Elective Deferral Contribution Account on behalf of each such
Employee in the Testing Group during such Plan Year, to
(B) the Compensation of each such Employee in the
Testing Group for such Plan Year.
For purposes of the above, Qualified Matching
Contributions and Qualified Nonelective Contributions may be
taken into account in determining the Actual Deferral Percentage
for each Employee in the Testing Group for such Plan Year
provided such amounts comply with the provisions of Treasury
Regulation 1.401(k)-1(b).
Qualified Matching Contributions, Qualified
Nonelective Contributions and Elective Deferral Contributions
included in the calculation of the Actual Contribution
Percentages will not be included in the calculation of Actual
Deferral Percentages.
<PAGE>
(ii) The Actual Contribution Percentage for the Highly
Compensated and Nonhighly Compensated Employees in the Testing
Group for a Plan Year shall be the average of the ratios
(calculated separately for each such Employee in the Testing
Group) of
(A) the amount of Matching[ and Voluntary]
Contributions credited on behalf of each such Employee in the
Testing Group during such Plan Year[ and any recharacterized
Elective Deferral Contributions as the result of Subsection
4.02(d) for such Plan Year], to
(B) the Compensation of each such Employee in the
Testing Group for such Plan Year.
For purposes of the above, Qualified Matching
Contributions, Qualified Nonelective Contributions and Elective
Deferral Contributions may be taken into account in determining
the Actual Contribution Percentage for each Employee in the
Testing Group for such Plan Year provided such amounts comply
with the provisions of Treasury Regulation 1.401(m)-1(b).
Qualified Matching Contributions, Qualified
Nonelective Contributions and Elective Deferral Contributions
included in the calculation of the Actual Deferral Percentages
will not be included in the calculation of Actual Contribution
Percentages.
(iii) Testing Group shall mean the group of all
Eligible Employees eligible for participation in accordance with
Section 2.01.
(iv) All Eligible Employees in the Testing Group will
be included in determining the Actual Deferral Percentages and/or
the Actual Contribution Percentages, whichever is applicable.
The ratio averaged into the respective percentages will be zero
for any Eligible Employee in the Testing Group if the otherwise
applicable numerator is zero.
(v) All such ratios and the average of such ratios
shall be calculated to the nearest one-hundredth of one percent.
(vi) The deferral percentage and/or contribution
percentage for a Plan Year for any Highly Compensated Employee
who is eligible to participate under two or more plans or
arrangements described in Section 401(a) or 401(k) of the Code
that are maintained by the Employer shall be determined as if all
contributions were made under a single plan.
(vii) In the event that this Plan satisfies the
requirements of Section 401(k), 401(a)(4) or 410(b) of the Code
only if aggregated with one or more other plans, or if one or
more other plans satisfy the requirements of such Sections of the
Code only if aggregated with this Plan, deferral and contribution
percentages shall be determined as if all such plans were a
single plan. Any other plan may be aggregated with this Plan at
the discretion of the Company. Plans may be aggregated in order
to satisfy Section 401(k) of the Code only if they have the same
Plan Year.
<PAGE>
(viii) The ratio for any 5% owner, as defined in
Section 416(i)(1) of the Code, and for any Highly Compensated
Employee in the group consisting of the 10 Highly Compensated
Employees paid the greatest Compensation shall be determined by
aggregating the Elective Deferral Contributions or Matching[ and
Voluntary] Contributions and Compensation of such individual with
the respective amounts of each other Eligible Employee who is a
family member of such Highly Compensated Employee.
Once the ratio for the family group is determined,
the individual ratios of the family members are not taken into
account.
For purposes of this paragraph, family member
shall mean the spouse, lineal ascendant or descendant or spouse
of a lineal ascendant or descendant of the Highly Compensated
Employee.
4.03 Limitation on Allocations
(a) The "annual addition" for any Participant shall not
exceed the amount determined hereunder. Annual addition shall
mean the sum of Employer contributions, Employee contributions
and forfeitures allocated on behalf of a Participant for a Plan
Year, which is defined to be the limitation year.
Annual additions shall also include excess deferrals,
excess contributions and excess aggregate contributions, other
than excess deferrals distributed in accordance with Treasury
Regulation 1.402(g)-1(e)(2) or (3).
The determination of the annual addition will be made
as if all defined contribution plans of the Employer were one
plan and any Participant contributions to defined benefit plans
will be treated as contributions to defined contribution plans.
Annual additions will be applied to the applicable Plan Year in
accordance with Section 1.415-6(b) of the Treasury Regulations.
For purposes of Subsection (b)(i), annual addition
shall also include amounts allocated, after March 31, 1984, to an
individual medical account, as defined in Section 415(l) of the
Code which is part of a defined benefit plan maintained by the
Employer and amounts derived from contributions paid or accrued
after December 31, 1985, in taxable years ending after such date,
which are attributable to post-retirement medical benefits
allocated to the separate account of a Key Employee (as defined
in Section 11.02) under a welfare benefit plan (as defined in
Section 419A(d) of the Code) maintained by the Employer.
(b) The annual addition for any Participant shall not
exceed the lesser of (i) or (ii) below:
(i) $30,000, or if greater, one-fourth of the defined
benefit dollar limitation set forth in Section 415(b)(1)(A) of
the Code as in effect for the limitation year.
In the event of a short Plan Year, the maximum
dollar limitation shall be divided by 12 and multiplied by the
number of months in the short Plan Year.
(ii) 25% of the Participant's Compensation.
<PAGE>
(c) If a Participant also is or has been a participant in
one or more defined benefit plans of the Employer, whether or not
terminated, the projected annual benefit from such defined
benefit plans shall be reduced so that a "combined benefit
factor" in excess of 1.0 shall not result. The combined benefit
factor is the sum of (i) the defined benefit factor and (ii) the
defined contribution factor where
(i) the defined benefit factor is a fraction
(A) the numerator of which is the Participant's
projected annual benefit under all defined benefit plans of the
Employer at the end of the limitation year of the Plan, and
(B) the denominator of which is the lesser of
(l) 1.25 multiplied by the maximum allowable
annual benefit under Sections 415(b)(1)(A) and 415(d) of the Code
at the end of the limitation year of the Plan, or
(2) 1.4 multiplied by the maximum allowable
annual benefit under Section 415(b)(1)(B) of the Code at the end
of the limitation year of the Plan, and
(ii) the defined contribution factor is a fraction
(A) the numerator of which is the sum of the
annual additions for such Participant under all defined
contribution plans of the Employer, whether or not terminated,
for all such years during which he was a participant in such
plans, and
(B) the denominator of which is the sum of the
lesser of the amounts determined in (1) or (2) for the current
year and each prior year during which the Participant was
employed by the Employer, regardless of whether or not a plan was
in existence during those years:
(l) 1.25 multiplied by the maximum dollar
limitation as defined in Subsection (b)(i), or
(2) 1.4 multiplied by the compensation
limitation as defined in Subsection (b)(ii).
<PAGE>
(d) A Participant shall not be permitted to defer
Compensation or contribute amounts, nor shall he be entitled to
an allocation of any Employer contributions or forfeitures under
any qualified defined contribution plan which exceeds the
limitations described herein.
(e) The limitations on allocations to a Participant's
Account will be applied by limiting otherwise allocable amounts
starting with the latest allocations during the limitation year.
To the extent more than one type of addition is allocated as of
any date, the limitation will be applied in the following order:
(i) forfeitures;
(ii) Employer contributions under profit-sharing plans
other than matching contributions;
(iii) Employer contributions under money purchase
plans other than matching contributions;
(iv) Employer matching contributions under money
purchase plans.
(v) Employer matching contributions under
profit-sharing plans;
(vi) Employee contributions; and
(vii) elective deferrals.
Amounts listed above which would have been added to a
Participant's Account based on an allocation method specified in
a Plan will be reallocated among the remaining Participants
eligible to share under the Plan.
Amounts listed above which would have been added to the
Participant's Account based on an individually defined
entitlement will reduce the Employer's contribution commitment.
Employee contributions and elective deferrals will be
limited at the time deposited and will not be permitted to the
extent the limits of this Section would be violated.
In the event annual additions on behalf of a
Participant participating in more than one plan of the same type
during a Plan Year are required to be limited under this Section,
the limitation shall be ratably apportioned among all such plans.
<PAGE>
(f) Notwithstanding the above, if an excess allocation
occurs as a result of
(i) an allocation of forfeitures;
(ii) a reasonable error in determining a Participant's
Compensation;
(iii) a reasonable error in determining the amount
of elective deferrals that may be made under this Section; or
(iv) any other reason acceptable to the Internal
Revenue Service,
the resulting additions to the Participant's Account
will be reduced by first eliminating Employee contributions and
elective deferrals to the extent otherwise required to be
refunded under Sections 402(g), 401(k)(3) or 401(m)(2) of the
Code. Any additional reductions permitted under this Subsection
will be applied in the manner described in Subsection (e).
However, any amounts paid to the Trust for the
limitation year which are not allocated to other Participants
will be held in a suspense account, without investment earnings,
and allocated and reallocated in the following limitation year
and, to the extent necessary, each subsequent limitation year.
Allocations from a suspense account in a money purchase plan will
be viewed as an allocation of accrual requirement for the year in
which the amount is ultimately allocated.
In the event a plan is terminated, suspense accounts
shall revert to the Employer to the extent such accounts may not
then be allocated on behalf of any remaining eligible
Participants.
(g) Notwithstanding any provision of the Plan to the
contrary,
(i) the annual addition for any Plan Years beginning
before January 1, 1987 shall not be recomputed to include all
Employee contributions.
(ii) if the Employee was a Participant as of the first
day of the first limitation year beginning after December 31,
1986, in one or more defined benefit plans maintained by the
Employer which were in existence on May 6, 1986, the denominator
of the defined benefit fraction will not be less than 125 percent
of the sum of the annual benefits under such plans which the
Participant had accrued as of the close of the last limitation
year beginning before January 1, 1987, disregarding any changes
in the terms and conditions of the plan after May 5, 1986. The
preceding sentence applies only if the defined benefit plans
individually and in the aggregate satisfied the requirements of
Section 415 of the Code for all limitation years beginning before
January 1, 1987.
<PAGE>
(iii) if the Employee was a Participant as of the
end of the first day of the first limitation year beginning after
December 31, 1986, in one or more defined contribution plans
maintained by the Employer which were in existence on May 6,
1986, the numerator of the defined contribution fraction will be
adjusted if the sum of this fraction and the defined benefit
fraction would otherwise exceed 1.0 under the terms of this Plan.
Under the adjustment, an amount equal to the product of (A) the
excess of the sum of the fractions over 1.0 times (B) the
denominator of the defined contribution fraction, will be
permanently subtracted from the numerator of the defined
contribution fraction. The adjustment is calculated using the
fractions as they would be computed as of the end of the last
limitation year beginning before January 1, 1987, and
disregarding any changes in the terms and conditions of the Plan
made after May 5, 1986, but using the Code Section 415 limitation
applicable to the first limitation year beginning on or after
January 1, 1987.
(iv) transitional rules provided in conjunction with
legislative changes and changes in the Plan's top- heavy status
will be applied in accordance with Internal Revenue Service
promulgations and legislative history.
<PAGE>
ARTICLE 5
MAINTENANCE OF ACCOUNTS, INVESTMENT FUNDS AND
VALUATION OF THE TRUST FUND
5.01 Maintenance of Accounts
The Committee shall establish and maintain a separate
accounting in the name of each Participant to which it shall
credit all amounts contributed in accordance with Articles 3 and
11.
5.02 Investment Election
(a) Initial Election - Each Participant shall designate one
or more of the investment funds established in accordance with
Section 5.03 for the investment of his Account. The percentage
elected for investment in any one of the investment funds must be
a multiple of 25%, and the same percentage shall be applied
equally to each of the Participant's Accounts.
Such initial election may only be made as of January or
July 1. Contributions or transfers to the Participant's Account
prior to such date shall automatically be invested in the
Short-Term Fixed Income Investment Fund until the next January or
July 1.
(b) Subsequent Election - A Participant may, by written
notice to the Committee at least 30 days prior to the January or
July 1 as of which such election is to be effective, change his
investment fund election with respect to subsequent contributions
but, until changed, an investment fund election, once made, shall
remain in effect for all subsequent Plan Years.
(c) Transfer Election - A Participant may by written notice
to the Committee at least 30 days prior to the January or July as
of which such election is to be effective, elect a change in
investment funds applicable to his then existing Accounts,
provided such change (i) results in multiples of 25% in any one
investment fund; (ii) is applied to the ending balance determined
as of the applicable Valuation Date; and (iii) is applicable
equally to each of the Participant's Accounts. Such change shall
become effective within such period of time as may be
administratively required for the orderly liquidation of
investments following the applicable Valuation Date.
(d) The Committee may promulgate any additional rules and
regulations it deems necessary or appropriate to govern all
aspects of this Section.
<PAGE>
5.03 Investment Funds
The Trust Fund shall be divided into such investment funds
as designated by the Committee and approved by the Trustee for
the investment of all Accounts, which shall be administered as a
unit. Until changed, the investment funds shall include, but not
be limited to, the following:
(a) Equity Investment Fund - This investment fund shall be
primarily invested in common or other forms of equity stocks or
securities convertible into stocks of such corporations as the
Trustee shall in its sole discretion determine or under special
contracts with insurance companies, designated by the Committee,
in their separate accounts which consist of such investments.
(b) Long-Term Fixed Investment Fund - This investment fund
shall be primarily invested in long-term fixed income investments
such as but not limited to corporate, municipal or United States
Government bonds, mortgages, notes, certificates of deposit or
such other instruments of indebtedness as the Trustee shall in
its discretion determine or under special contracts with
insurance companies, designated by the Committee, in their
separate accounts which consist of such investments.
(c) Short-Term Fixed Investment Fund - This investment fund
shall be primarily invested in high quality short-term fixed
income money market instruments such as but not limited to money
market funds, certificates of deposit, U.S. Treasury bills and
commercial paper as the Trustee shall in its discretion determine
or under special contracts with insurance companies, designated
by the Committee, in their separate accounts which consist of
such investments.
5.04 Valuation of Trust Fund
(a) The Trust Fund shall be valued by the Trustee as of
each Valuation Date on the basis of its fair market value.
(b) The Trust Fund may also be valued by the Trustee as of
any other date as the Committee may authorize for any reason the
Committee deems appropriate.
5.05 Allocation of Investment Earnings and Expenses
On the basis of the valuation as of a Valuation Date,
subject to the provisions of Subsection 7.03(b), the Accounts of
all Participants, shall be (a) proportionately adjusted to
reflect expenses in accordance with Section 3.10 and investment
earnings, other than those credited to a specific Account; and
(b) directly adjusted to reflect all other applicable
transactions during the Plan Year attributable to such Accounts
including, but not limited to, any contributions or
distributions.
<PAGE>
ARTICLE 6
BENEFITS PAYABLE UPON TERMINATION OF EMPLOYMENT
6.01 Upon Retirement
A Participant shall be 100% vested in his Account at all
times after first becoming eligible for Retirement.
A Participant shall be eligible to retire on his Normal or
Deferred Retirement Date.
In the event a Participant does not retire on his [Early or
Normal Retirement Date, he shall continue to be credited with
contributions in accordance with Articles 3 and 11 until his
actual retirement.
6.02 Upon Disability
(a) A Participant who incurs a Disability prior to
termination of employment shall be 100% vested in his Account.
(b) In determining the existence of a Participant's
Disability, the Committee may select a physician to examine such
Participant and render a medical opinion. The final
determination shall be made by the Committee on the basis of the
evidence requested and made available.
(c) If such Participant returns to the employ of the
Company, he shall resume his participation as of the date of his
return. The Participant's vested interest in that portion of his
Account attributable to Service from the date of his last
reemployment shall be determined in accordance with the
provisions of Article 6, without regard to his prior Disability.
6.03 Upon Death
(a) A Participant who dies prior to termination of
employment shall be 100% vested in his Account.
(b) Upon the death of a Participant, his Beneficiary shall
be entitled to 100% of such Participant's vested Account.
(c) Each Participant, upon becoming eligible for
participation in the Plan, may designate a primary Beneficiary to
receive the benefits payable in the event of his death and may
designate a secondary Beneficiary to receive any benefits payable
in the event of the death of the primary Beneficiary. If a
Participant designates a primary Beneficiary but not a secondary
Beneficiary or if any such secondary Beneficiary dies, the
Beneficiary last in receipt of or entitled to any benefit shall
have the right to designate a successor Beneficiary to receive
any benefits payable in the event of his death. In the absence
of any such designation, benefits payable upon the death of the
last living Beneficiary shall be paid in a lump sum to such
Beneficiary's estate. A Participant may change his Beneficiary
designation at any time. All Beneficiary designations and
changes shall be made on an appropriate form and filed with the
Committee. If the primary Beneficiary designated by the
Participant is anyone other than the Participant's Protected
Spouse, such designation must include the written acknowledgment
and consent of such spouse and be witnessed by a Plan
representative or a notary public, to the extent required by law
<PAGE>
and the Committee. Such consent will be limited to a specific
alternate Beneficiary and any change in such alternate
Beneficiary will require a new spousal consent.
6.04 Upon Other Termination of Employment
(a) Upon a Participant's termination of employment for
reasons other than Retirement, Disability or death, the following
provisions shall be applicable:
(i) Such Participant shall have a 100% vested interest
in his Basic Elective Deferral Contribution, Supplemental
Elective Deferral Contribution, Voluntary Contribution, Rollover,
Transfer, Qualified Matching Contribution and Qualified
Nonelective Contribution Accounts.
(ii) Such Participant's vested interest in his Matching
Contribution Account shall, subject to Subsection 6.05(a), be
determined in accordance with the following schedule on the basis
of such Participant's full Years of Service.
Number of Years Percentage of Account
Less than 1 full year 0%
1 full year 20%
2 full years 40%
3 full years 60%
4 full years 80%
5 or more full years 100%
(b) Effective as of January 1, 1987, the portion of a
Participant's Account which is not vested shall be forfeited on
the earlier of the date on which the Participant receives a
distribution of his vested benefits or the date on which such
Participant incurs five consecutive Breaks-in-Service, but in no
event shall such forfeiture occur earlier than the Anniversary
Date next following the date on which the Participant terminated
employment. If a Participant does not have a vested interest in
his Account, he shall be deemed to have received an immediate
distribution as of the Anniversary Date next following the date
on which such Participant terminated employment.
That portion of the Participant's Account which is not
vested shall be used to reduce the Company's contributions in
accordance with Section 3.03.
<PAGE>
6.05 Reemployment and Repayment of Benefits
(a) If a Participant is reemployed by the Employer prior to
incurring five consecutive Breaks-in-Service, the dollar amount
which was subject to forfeiture in accordance with Subsection
6.04(b) will be restored to the Participant's Account if the
Participant repays the amount distributed, if any, from Elective
Deferral Contribution, Matching Contribution, Regular
Contribution, Qualified Matching Contribution and Qualified
Nonelective Contribution Accounts. Such amounts must be repaid
to the Trust Fund in a lump sum within five years from the date
such Participant resumes his employment with the Employer. If a
Participant who is deemed to receive a distribution pursuant to
Subsection 6.04(b) is reemployed by the Employer prior to
incurring five consecutive Breaks-in-Service, the dollar amount
which was subject to forfeiture in accordance with such
Subsection will be restored to the Participant's Account. The
funds required for the restoration of such Account will be paid
by the Company.
Such repaid amounts shall be credited to the
Participant's Accounts as determined by the Committee, taking
into account the applicable vesting schedules, amounts subject to
special tax treatment and withdrawal rules. Additional Accounts
will be established, if required, to accommodate these
objectives. Amounts repaid and restored in accordance with this
Subsection will not be treated as annual additions for purposes
of Section 4.03.
(b) Notwithstanding the above, no restoration shall be made
to a Participant's Account and no repayment will be permitted
with respect to funds accumulated prior to reemployment in the
case of
(i) any Participant who was fully vested,
(ii) any Participant who is reemployed after incurring
five consecutive Breaks-in-Service,
(iii) any Participant who incurred a one year
Break-in-Service prior to January 1, 1985 and reemployment, or
(iv) any Participant who did not incur a one year
Break-in-Service prior to reemployment by January 1, 1983 but
failed to repay the amount distributed within two years of
reemployment.
<PAGE>
ARTICLE 7
DISTRIBUTION OF BENEFITS
7.01 Claim Procedure For Benefits
(a) Any request for specific information with respect to
benefits under the Plan must be made to the Committee in writing
by a Participant or his Beneficiary. Oral communications will
not be recognized as a formal request or claim for benefits.
(b) The Committee shall provide adequate notice in writing
to any Participant or Beneficiary whose claim for benefits under
the Plan has been denied, (i) setting forth the specific reasons
for such denial; specific references to pertinent plan
provisions; a description of any material and information which
had been requested but not received by the Committee; and, (ii)
advising such Participant or Beneficiary that any appeal of such
adverse determination must be in writing to the Committee, within
such period of time designated by the Committee but, until
changed, not more than 60 days after receipt of such
notification, and must include a full description of the
pertinent issues and basis of claim.
(c) If the Participant or Beneficiary fails to appeal such
action to the Committee in writing within the prescribed period
of time, the Committee's adverse determination shall be final.
(d) If an appeal is filed with the Committee, the
Participant or Beneficiary shall submit such issues he feels are
pertinent and the Committee shall re-examine all facts, make a
final determination as to whether the denial of benefits is
justified under the circumstances, and advise the Participant or
Beneficiary in writing of its decision and the specific reasons
on which such decision was based, within 60 days of receipt of
such written request, unless special circumstances require a
reasonable extension of such 60-day period.
7.02 Commencement of Benefits
The following provisions shall be applicable for determining
when distribution of benefits shall be made. These provisions
are intended to conform to the requirements of Section 401(a)(9)
of the Code, including the minimum distribution incidental
benefit proposed Treasury Regulation 1.401(a)(9)-2, and shall be
construed accordingly:
(a) Unless otherwise provided in Subsection (c), in the
event of termination of employment, benefits which total $3,500
or less will commence as soon as administratively feasible
following[ the Valuation Date next subsequent to] such
termination.
<PAGE>
(b) Unless otherwise provided in this Section, in the event
of termination of employment, benefits which total more than
$3,500 will commence as soon as administratively feasible
following the Valuation Date next subsequent to such termination,
provided that, if the Participant has not attained his Normal
Retirement Date, the Participant consents to such distribution
within his Election Period.
Notwithstanding the above, no consent to a distribution
prior to the date the Participant attained his Normal Retirement
Date shall be valid until after written notification of the right
to defer is received by the Participant[ or Protected Spouse, if
applicable]. The Committee shall provide such written
notification of the right to defer any benefit payable no less
than 30 days nor more than 90 days before the Annuity Starting
Date.
USE FOR PLANS WITH ELECTION TO NEXT TAXABLE YEAR OR
NORMAL RETIREMENT AGE ONLY - USE AGE 62 IF NRD IS LESS THAN 62
In lieu of commencement as soon as administratively
possible, the Participant or spouse as Beneficiary may elect to
defer such commencement to his or her next fiscal year.
If a Participant does not consent to the distribution
at the time specified above, and fails to elect deferral to his
next fiscal year, benefits will commence as of the 60th day
following the last day of the Plan Year during which the
Participant['s Normal Retirement Date occurs][ attains age 62].
ALL OTHER PLANS - USE AGE 62 IF NRD IS LESS THAN 62
If a Participant does not consent to the distribution
at the time specified above and fails to elect deferral in
accordance with Subsection (d), benefits will commence as of the
60th day following the last day of the Plan Year during which the
Participant['s Normal Retirement Date occurs][ attains age 62].
OMIT IF NO ANNUITIES OR IF PERIOD CERTAIN ANNUITIES
ONLY
USE FOR PLANS WITH ELECTION TO NEXT TAXABLE YEAR OR
NORMAL RETIREMENT AGE ONLY - USE AGE 62 IF NRD IS LESS THAN 62
If the Participant's Protected Spouse as Beneficiary
does not consent to the distribution of a Participant's
transferred funds at the time specified above and fails to elect
deferral to her next fiscal year, and if such funds exceed $3,500
benefits attributable to such transferred funds will commence as
of the 60th day following the last day of the Plan year during
which the Participant['s Normal Retirement Date would have
occurred][would have attained age 62].
ALL OTHER PLANS - USE AGE 62 IF NRD IS LESS THAN 62
<PAGE>
If the Participant's Protected Spouse as Beneficiary
does not consent to the distribution of a Participant's
transferred funds at the time specified above, and if such funds
exceed $3,500, benefits attributable to such transferred funds
will commence as of the 60th day following the last day of the
Plan Year during which the Participant['s Normal Retirement Date
would have occurred][ would have attained age 62].
USE FOR MAAC
If such termination of employment is a result of an
event other than Retirement, Disability or death, and a deferred
annuity is required to be purchased on behalf of the Participant
in accordance with Section 7.03, distribution of benefits will be
deferred for the five-year period commencing on the January 1
following the Participant's termination of employment or, if
earlier, until his [Early or] Normal Retirement Date. The
Participant may elect the distribution of benefits under the
annuity at that time or on any subsequent date.
MANDATORY DEFERRAL IN TRUST FUND TO THIRD PLAN YEAR END
If such termination of employment is a result of an
event other than Retirement, Disability or death and the combined
value of a Participant's vested interest in his Matching
Contribution[ and Regular Contribution] Account[s] is more than
$3,500, payment of such Account[s] will be deferred until the end
of the Plan Year in which occurs the earliest of the second
anniversary of the date the Participant terminated his
employment, his [Early or] Normal Retirement Date or his death.
Such benefit will commence as soon as administratively feasible
following such Plan Year end, at which time the consent
requirement of the preceding paragraph shall apply.
DEFERRED ANNUITY AND COMMENCEMENT RESTRICTED TO ON OR
AFTER EARLY OR NORMAL RETIREMENT DATE OR SPECIFIED AGE
If such termination of employment is as a result of an
event other than Retirement, Disability or death, and a deferred
annuity is required to be purchased on behalf of the Participant
in accordance with Section 7.03, such Participant may elect the
distribution of benefits under such annuity on any date
subsequent to his [Early or ]Normal Retirement Date].
ALL PLANS
(c) The amount of any benefit payable will be determined as
of the Valuation Date preceding the date such benefit is
processed, adjusted to reflect intervening contributions and
withdrawals but not investment experience.
If the amount of any payment under this Section would
adversely affect the Trust Fund by forcing the premature
liquidation of assets, such payment may be delayed until the
timely and orderly liquidation of investments can be
accomplished, but in no event later than the 60th day following
the last day of the Plan Year during which occurs the latest of
<PAGE>
(i) the date a Participant attains the earlier of his
Normal Retirement Date or age 65;
(ii) the tenth anniversary of the year during which the
Participant commenced participation in the Plan; or
(iii) the date the Participant terminates his
employment.
If the amount of any payment under this Section would
adversely affect the Trust Fund by permitting former Participants
to enter into direct competition with the Company, such payment
will be delayed until the 60th day after the end of the Plan Year
during which the Participant's Normal Retirement Date occurs.
If the amount of any payment under this Section cannot
be ascertained by the applicable commencement date, payment shall
be made no later than 60 days after the earliest date on which
the amount of such payment can be ascertained.
OMIT IF ELECTION TO DEFER TO NEXT TAXABLE YEAR IN
SUBSECTION (b)
(d) A Participant who terminates employment may elect that
benefit payments commence at a date later than specified in
Subsection (b) by submitting a signed, written statement
describing the benefit and the date on which the payment of such
benefit shall commence, provided such date is not later than the
April 1 following the calendar year during which the Participant
attains age 70-1/2 or such later date as may be promulgated by
the Internal Revenue Service.
AMENDED OR NEW PLANS WITH ED BEFORE DECEMBER 31, 1988 - DELETE
FIRST BRACKET IN FIRST PARAGRAPH IF ED ON OR AFTER JANUARY 1,
1985
(d)/(e) Effective for Plan Years beginning [after December
31, 1984 but] before January 1, 1989, distribution of benefits to
a 5% owner, within the meaning of Section 416(i)(1)(B)(i) of the
Code, must commence not later than the April 1 following the
calendar year in which the Participant attains age 70-1/2, or
such later date as promulgated by the Internal Revenue Service,
whether or not the Participant terminates employment in that year
and whether or not the Participant applies for benefit payment.
Effective for Plan Years beginning after December 31,
1988, distribution of benefits must commence not later than the
April 1 following the calendar year in which the Participant
attains age 70-1/2, or such later date as promulgated by the
Internal Revenue Service, whether or not the Participant
terminates employment in that year and whether or not the
Participant applies for benefit payment.
<PAGE>
NEW PLANS WITH ED AFTER DECEMBER 31, 1988
(d)/(e) Distribution of benefits must commence not later
than the April 1 following the calendar year in which the
Participant attains age 70-1/2, or such later date as promulgated
by the Internal Revenue Service, whether or not the Participant
terminates employment in that year and whether or not the
Participant applies for benefit payment.
USE WITH EITHER (d)/(e)
[(e)] The foregoing shall not apply to a Participant (i)
who attains age 70-1/2 before January 1, 1988 unless such
Participant was or becomes a 5% owner, within the meaning of
Section 416(i)(1)(B)(i) of the Code, at any time during the Plan
Year ending with or within the calendar year in which he attains
age 66-1/2 or any subsequent Plan Year, or (ii) who had made a
valid election under Section 242(b) of the Tax Equity and Fiscal
Responsibility Act of 1982 (TEFRA) to commence his benefits at a
later date.
(f) If the designated Beneficiary is,
USE FIRST BRACKETED PHRASE IF ELECTION TO DEFER TO
NEXT TAXABLE YEAR IN SUBSECTION (b)
(i) [the Participant's spouse, benefit payments will
commence in accordance with Subsection (b) [the Participant's
spouse, such spouse may elect that benefit payments commence at a
date later than specified in Subsection (b) by submitting a
signed written statement describing the benefit and the date on
which the payment of such benefit shall commence, provided such
date is not later than the latest of (A) December 31 of the
calendar year in which the Participant dies, (B) December 31 of
the calendar year during which the Participant would have
attained age 70-1/2, or (C) such later date as may be promulgated
by the Internal Revenue Service.]
If such spouse dies prior to the commencement of
benefits, and if the distribution of any death benefit payable to
the spouse's Beneficiary is made in a form that may extend beyond
the December 31 of the calendar year during which the fifth
anniversary of such spouse's death occurs, such distribution must
commence no later than the December 31 of the calendar year
immediately following the date of such spouse's death or such
later date as may be promulgated by the Internal Revenue Service.
(ii) other than the Participant's spouse, and the death
benefit payable is made in a form that may extend beyond the
December 31 of the calendar year during which the fifth
anniversary of such Participant's death occurs, such distribution
must commence no later than the December 31 of the calendar year
immediately following the date of such Participant's death or
such later date as may be promulgated by the Internal Revenue
Service.
<PAGE>
(g) If a Participant is in receipt of benefits from the
Company's insured long-term disability program, if applicable,
payment of the Participant's Elective Deferral Contribution,
Matching Contribution,[ Regular Contribution,] Transfer,
Qualified Matching Contribution and Qualified Nonelective
Contribution Accounts shall be deferred to the first day of the
month in which such Participant is no longer eligible to receive
such benefits or, if earlier, the 60th day following the last day
of the Plan Year during which the Participant's Normal Retirement
Date occurs, provided the benefits payable under the long-term
disability program would otherwise be reduced by the benefits
payable under the Plan.
DELETE FOLLOWING SUBSECTION IF NO EARLIER DISTRIBUTION ALLOWED
SHORT-TERM FIXED INCOME - NO INTEREST
(h) If the Trust Fund is fully invested in short-term fixed
income assets on the date of a Participant's retirement[,][ or]
death[ or termination], a Beneficiary[,][ or] retired[ or
terminated ]Participant may, subject to the provisions of
Subsections (c) and (g) and any required deferral under Section
7.03, irrevocably elect to receive earlier payment of his
benefits as of the first day of any month prior to the Valuation
Date next subsequent to the occurrence of the applicable event.
Under such circumstances the Participant's Account shall be
determined as of the Valuation Date prior to the occurrence of
such event, adjusted to reflect intervening contributions and
withdrawals, but not investment experience. Investment
experience will not be credited with respect to such early
distributions. Any subsequent allocation of contributions will
be distributed after the end of the Plan Year.
SHORT-TERM FIXED INCOME - INTEREST
(h) If the Trust Fund is fully invested in short-term fixed
income assets on the date of a Participant's retirement[,][ or]
death[ or termination], a Beneficiary[,][ or] retired[ or
terminated ]Participant may, subject to the provisions of
Subsections (c) and (g) and any required deferral under Section
7.03, irrevocably elect to receive earlier payment of his
benefits as of the first day of any month prior to the Valuation
Date next subsequent to the occurrence of the applicable event.
Under such circumstances the Participant's Account shall be
determined as of the Valuation Date prior to the occurrence of
such event and adjusted to reflect intervening contributions and
withdrawals. Interest at the [lowest annual effective rate
guaranteed under any insurance company investment contract used
for the investment of all or any portion of the Trust
Fund][annual effective rate of [ %]] will be credited from the
last Valuation Date to the first day of the month preceding or
coincident with the date specified for the distribution of the
Participant's benefits. Any subsequent allocation of
contributions will be distributed after the end of the Plan Year.
<PAGE>
USE WITH EITHER (h) ABOVE
If the Trust Fund is not fully invested in short-term
fixed income assets on such date, no early distribution election
will be allowed.
OTHER THAN SHORT-TERM FIXED INCOME - NO INTEREST
(h) A Beneficiary[,][ or] retired[ or terminated
]Participant may, subject to the provisions of Subsections (c)
and (g) and any required deferral under Section 7.03, irrevocably
elect to receive earlier payment of his benefits prior to the
Valuation Date next subsequent to the occurrence of the
applicable event, providing the market value of Trust Fund
assets, adjusted for contributions and payment activity has not
declined and there is no significant adverse economic effect on
the Trust Fund. Under such circumstances the Participant's
Account shall be determined as of the Valuation Date prior to the
occurrence of such event, adjusted to reflect intervening
contributions and withdrawals, but not investment experience.
Investment experience will not be credited with respect to such
early distributions. Any subsequent allocation of contributions
will be distributed after the end of the Plan Year.
TWO INVESTMENT FUNDS - FIXED INCOME - NO INTEREST; GENERAL
INCOME NO EARLY ELECTION
(h) A Beneficiary[,][ or] retired[ or terminated
]Participant may, subject to the provisions of Subsections (c)
and (g) and any required deferral under Section 7.03, irrevocably
elect to receive earlier payment of that portion of his benefits
which is invested in the [NAME OF FIXED INCOME FUND] as of the
first day of any month prior to the Valuation Date next
subsequent to the occurrence of the applicable event. Under such
circumstances that portion of the Participant's Account invested
in the [NAME OF FIXED INCOME FUND] shall be determined as of the
Valuation Date prior to the occurrence of such event, adjusted to
reflect intervening contributions and withdrawals, but not
investment experience. Investment experience will not be
credited with respect to such early distributions. Any
subsequent allocation of contributions and that portion of a
Participant's Account invested in the [GENERAL FUND] will be
distributed after the end of the Plan Year.
TWO INVESTMENT FUNDS - FIXED INCOME - NO INTEREST; GENERAL
INCOME NO INTEREST
(h) A Beneficiary[,][ or] retired[ or terminated
]Participant may, subject to the provisions of Subsections (c)
and (g) and any required deferral under Section 7.03, irrevocably
elect to receive earlier payment of his benefits as of the first
<PAGE>
day of any month prior to the Valuation Date next subsequent to
the occurrence of the applicable event, providing that, if the
Participant's Account includes any investment in the [NAME OF
GENERAL FUND], payment of such portion of the Participant's
benefit will only be permitted if the market value of Trust Fund
assets invested in such fund, adjusted for contributions and
payment activity, has not declined and there is no significant
adverse economic effect on the Trust Fund. Under such
circumstances the Participant's Account shall be determined as of
the Valuation Date prior to the occurrence of such event,
adjusted to reflect intervening contributions and withdrawals,
but not investment experience. Investment experience will not be
credited with respect to such early distributions. Any
subsequent allocation of contributions will be distributed after
the end of the Plan Year.
TWO INVESTMENT FUNDS FIXED INCOME - INTEREST; GENERAL INCOME
NO EARLY ELECTION
(h) A Beneficiary[,][ or] retired[ or terminated
]Participant may, subject to the provisions of Subsections (c)
and (g) and any required deferral under Section 7.03, irrevocably
elect to receive earlier payment of that portion of his benefits
which is invested in the [NAME OF FIXED INCOME FUND] as of the
first day of any month prior to the Valuation Date next
subsequent to the occurrence of the applicable event. Under such
circumstances that portion of the Participant's Account which is
invested in the [NAME OF FIXED INCOME FUND] shall be determined
as of the Valuation Date prior to the occurrence of such event
and adjusted to reflect intervening contributions and
withdrawals. Interest at the [lowest annual effective rate
guaranteed under any insurance company investment contract used
for the investment of all or any portion of the Trust
Fund][annual effective rate of [ %]] will be credited from the
last Valuation Date to the first day of the month preceding or
coincident with the date specified for the distribution of the
Participant's benefits. Any subsequent allocation of
contributions will be distributed after the end of the Plan Year.
Any subsequent allocation of contributions and that portion of a
Participant's Account invested in the [GENERAL FUND] will be
distributed after the end of the Plan Year.
TWO INVESTMENT FUNDS FIXED INCOME - INTEREST; GENERAL INCOME
NO INTEREST
(h) A Beneficiary[,][ or] retired[ or terminated
]Participant may, subject to the provisions of Subsections (c)
and (g) and any required deferral under Section 7.03, irrevocably
elect to receive earlier payment of his benefits as of the first
day of any month prior to the Valuation Date next subsequent to
the occurrence of the applicable event, providing that, if the
Participant's Account includes any investment in the [NAME OF
GENERAL FUND], payment of such portion of the Participant's
benefit will only be permitted if the market value of Trust Fund
assets invested in such fund, adjusted for contributions and
payment activity, has not declined and there is no significant
adverse economic effect on the Trust Fund. Under such
circumstances that portion of the Participant's Account which is
invested in the
(1) [NAME OF FIXED INCOME FUND] shall be determined as
of the Valuation Date prior to the occurrence of such event and
adjusted to reflect intervening contributions and withdrawals.
<PAGE>
Interest at the [lowest annual effective rate guaranteed under
any insurance company investment contract used for the investment
of all or any portion of the Trust Fund][annual effective rate of
[ %]] will be credited from the last Valuation Date to the first
day of the month preceding or coincident with the date specified
for the distribution of the Participant's benefits.
(2) [NAME OF GENERAL FUND] shall be determined as of
the Valuation Date prior to the occurrence of such event,
adjusted to reflect intervening contributions and withdrawals,
but not investment experience. Investment experience will not be
credited with respect to early distributions from this fund.
Any subsequent allocation of contributions will be
distributed after the end of the Plan Year.
USE WITH ANY OF THE ABOVE TWO INVESTMENT FUND CHOICES THAT
DO NOT PERMIT EARLY PAYMENTS FROM GENERAL FUND
If the investment election option in accordance with
Article 5 is discontinued, no early distribution election will be
allowed.
ALL PLANS WITH ANNUITY OPTIONS -(SEE SPEC ITEM J.1. & 2.)
7.03 Method and Form of Payment of Benefits
The following provisions shall be applicable for determining
the method and form of payment of all benefits. These provisions
are intended to conform to the requirements of Section 401(a)(9)
of the Code, including the minimum distribution incidental
benefit proposed Treasury Regulation 1.401(a)(9)-2, and shall be
construed accordingly.
FULL LUMP SUM OPTION UPON TERMINATION FOR ANY REASON
(a) Subject to Section 7.02, any benefit payable to a
Participant who has terminated employment or Beneficiary which in
total is $3,500 or less will be distributed in a lump sum.
(b) Subject to Section 7.02, any benefit payable to a
Participant who has terminated employment which is more than
$3,500 will be distributed at the Participant's election as
follows:
<PAGE>
(i) All or any portion of such amount may be
distributed in a lump sum, subject to the provisions below.
(ii) The balance, if any, may be used to purchase an
immediate or deferred annuity in accordance with the provisions
of Subsections (e), (f) and (g).
OMIT BRACKETED PHRASE IF PERIOD CERTAIN ANNUITIES ONLY
[Unless otherwise provided in Subsection (g), i][I]n
the absence of an election by the Participant, benefits will be
distributed in a lump sum. If such benefits are deferred in
accordance with Section 7.02, the provisions of Subsection (h)
will be applicable.
BENEFITS PAYABLE DIFFERENTLY UPON RETIREMENT VS. RESIGNATION
OR DISCHARGE OR BENEFITS PAYABLE THE SAME BUT NOT LUMP SUM OR
ANNUITY
UPON RETIREMENT:
(a) Subject to Section 7.02, any benefit payable to a
Participant who has terminated employment or Beneficiary which in
total is $3,500 or less will be distributed in a lump sum.
(b) Subject to Section 7.02,
(i) any benefit payable to a Participant as a result
of Retirement or Disability which is more than $3,500 will be
distributed at the Participant's election as follows:
PART AS LUMP SUM, BALANCE IF MORE THAN $3,500 AS ANNUITY
(A) All or any portion of such amount may be
distributed in a lump sum, subject to the provisions below.
(B) The balance, if any, may be used to purchase
an immediate or deferred annuity in accordance with the
provisions of Subsections (e), (f) and (g).
OMIT BRACKETED PHRASE IF PERIOD CERTAIN ANNUITIES
ONLY
[Unless otherwise provided in Subsection (g),
i][I]n the absence of an election by the Participant, benefits
will be distributed in a lump sum. If such benefits are deferred
in accordance with Section 7.02, the provisions of Subsection (h)
will be applicable.
<PAGE>
MANDATORY ANNUITY
(A) If the[ combined] value of a Participant's
Matching Contribution,[ Regular Contribution,] Transfer,
Qualified Matching Contribution and Qualified Nonelective
Contribution Accounts is [$3,500][$ ] or less, all or a
portion of the total value of the Participant's Account may be
distributed in a lump sum, subject to the provisions below.
The balance, if any, or the entire amount in
the absence of a lump sum election, will be used to purchase an
immediate or deferred annuity in accordance with the provisions
of Subsections (e), (f) and (g).
(B) If the[ combined] value of a Participant's
Matching Contribution,[ Regular Contribution,] Transfer,
Qualified Matching Contribution and Qualified Nonelective
Contribution Accounts is more than [$3,500][$ ], such amount
will be used to purchase an immediate or deferred annuity in
accordance with the provisions of Subsections (e), (f) and (g).
Such Participant may elect to have the combined value of his
Elective Deferral Contribution[,] [and] [Rollover] [and Voluntary
Contribution ]Account[s] distributed in a lump sum, subject to
the provisions below, or in the absence of such lump sum
election, such amount will be combined with his previously
described Accounts for the purchase of the annuity.
UPON RESIGNATION OR DISCHARGE
(ii) Subject to Section 7.02, any benefit payable to a
Participant as a result of termination of employment for reasons
other than Retirement or Disability which is more than $3,500
will be distributed as follows:
MANDATORY ANNUITY
(A) If the[ combined] value of a Participant's
vested interest in his Matching Contribution,[ Regular
Contribution,] Transfer, Qualified Matching Contribution and
Qualified Nonelective Contribution Accounts is $3,500][$ ] or
less, all or a portion of the total value of the Participant's
vested interest may be distributed in a lump sum, subject to the
provisions below.
The balance if any, or the entire amount in
the absence of a lump sum election, will be used to purchase an
immediate or deferred annuity in accordance with the provisions
of Subsections (e), (f) and (g).
(B) If the[ combined] value of a Participant's
vested interest in his Matching Contribution,[ Regular
Contribution,] Transfer, Qualified Matching Contribution and
Qualified Nonelective Contribution Accounts is more than
[$3,500][$ ], such amount will be used to purchase a[n]
[immediate or] deferred annuity in accordance with the provisions
of Subsections (e), (f) and (g)[ at the Participant's election].
<PAGE>
Such Participant may elect to have the combined value of the
vested interest in his Elective Deferral
Contribution[,][and][Rollover] [and Voluntary Contribution
]Account[s] distributed in a lump sum, subject to the provisions
below, or in the absence of such lump sum election, such amount
will be combined with his previously described Accounts for the
purchase of the annuity.
ALL PLANS - FOR PERIOD CERTAIN ONLY ANNUITIES, OMIT BRACKETED
PHRASES.
(c) Subject to Section 7.02, if a Participant's benefits
are required to commence in accordance with Subsection 7.02[(d)
or] (e), such Participant shall make an irrevocable election as
to the optional form of payment. Such benefit shall reflect the
Participant's elections regarding Beneficiary and recalculation
of life expectancies in accordance with regulations under Code
Section 401(a)(9).[ A Participant whose Account includes funds
transferred without the required spousal consent[ after December
31, 1984], directly or indirectly, from a plan subject to Code
Section 412, must elect to recalculate life expectancies unless
his spouse consents to waive the Qualified Annuity]. The options
available will include the options available under Subsection
(f)[, with lifetime option benefits determined using the rules
provided by regulations under Code Section 401(a)(9)] and will be
payable through the purchase of an annuity contract. Upon
subsequent termination of employment, the optional form
previously elected will remain in effect. In lieu of the options
available under Subsection (f), the Participant may elect to have
the value of his Account each year payable in a lump sum or to
have the minimum amount required to be distributed each year
under Code Section 401(a)(9) payable directly from the Trust Fund
with the remaining balance payable in a lump sum upon termination
of employment.
In the absence of an election by the Participant, the
form of payment shall irrevocably be the minimum amount required
to be distributed each year under Code Section 401(a)(9) payable
directly from the Trust Fund with the remaining balance payable
in a lump sum upon such Participant's termination of employment
and life expectancies shall not be recalculated.[ If the
Participant's Account includes funds transferred without the
required spousal consent[ after December 31, 1984], directly or
indirectly, from a plan subject to Code Section 412, the form of
payment shall irrevocably be a Qualified Annuity and life
expectancies shall be recalculated.]
(d) Subject to Section 7.02 and before the Participant's
Annuity Starting Date, any benefit payable to a Participant's
Beneficiary other than the Participant's Protected Spouse which
is more than $3,500 may be distributed in a lump sum or used to
purchase an immediate annuity in accordance with the provisions
of Subsections (e) and (f), as elected by the Participant while
in the employ of the Company. In the absence of such an election
by the Participant, or if the Participant's Protected Spouse is
the Beneficiary, such Beneficiary may make the election.
<PAGE>
OMIT BRACKETED PHRASE IF NO ANNUITIES OR PERIOD CERTAIN
ANNUITIES ONLY
In the absence of an election by the Beneficiary,
benefits will be payable in a lump sum[ unless the Protected
Spouse is the Beneficiary and the Participant had funds
transferred without the required spousal consent[ after December
31, 1984], directly or indirectly, to the Plan from a plan
subject to Section 412 of the Code, in which case, benefits will
be payable to the Protected Spouse in the form of a life
annuity].
ALL PLANS
(e) Any benefit payable as an annuity will be distributed
(i) by the purchase of a nontransferable single premium annuity
contract, including an annuity purchased under a group annuity
contract, on behalf of a Participant or Beneficiary from an
insurance company, provided at least [$3,500][$ ] is
available for the purchase of the annuity, or (ii) directly from
the Trust Fund.
Any annuity contract purchased and distributed to a
Participant or Beneficiary shall comply with the requirement of
this Plan.
In the absence of a requirement or an election
indicating the type of annuity preferred, a deferred annuity will
be provided upon the Participant's termination of employment
unless the Participant had attained[ his Normal Retirement
Date][age 62], in which event an immediate annuity shall be
provided. If the payment of benefits to a Participant is
deferred in accordance with Subsection 7.02(g), a deferred
annuity will be provided on behalf of such Participant.
IF PERIOD CERTAIN ANNUITIES ONLY, USE SECOND BRACKETED
MATERIAL AND OMIT FIRST; USE LAST SENTENCE ONLY IF BENEFITS
PAYABLE DIFFERENTLY UPON RETIREMENT VS. RESIGNATION OF DISCHARGE
(f) The annuity options available include [the Life, Joint
and 100% Survivor, 15 Year Certain and Continuous, and] 10, 15 or
20 Year Certain Installments[ but, may not include any lifetime
annuity form].[ If benefits are payable in accordance with
Paragraph (b)(ii), the above options[, including a lump sum
distribution,] will be available [provided that no method of
distribution includes a lump sum payment or installments payable
over a period of less than 10 years]
IF PERIOD CERTAIN ANNUITIES ONLY, OMIT BRACKETED PHRASES
<PAGE>
The election of the annuity option under the above
provisions shall be at the discretion of the Participant or his
Beneficiary provided that no method shall be permitted which
would (i) result in the benefits being payable over a period
extending beyond the[ life of such Participant or the lives of
such Participant and his Beneficiary or] life expectancy of such
Participant or the life expectancy of such Participant and his
Beneficiary; or (ii) distribute any remaining balance, in the
event of a Participant's death after the commencement of his
benefits, less rapidly than the method of distribution in effect
prior to his death.
In no event may the Participant or Beneficiary change
any annuity option subsequent to the Annuity Starting Date.
USE IF PERIOD CERTAIN ANNUITIES ONLY
(g) In the absence of an election of an annuity option by
the Participant, a 15 Year Certain Annuity will be purchased.
OMIT IF PERIOD CERTAIN ANNUITIES ONLY - FOR NEW PLANS WITH EFF.
DATES AFTER DEC. 31, 1984, OMIT BRACKETED MATERIAL IN PARAGRAPH
(ii)
(g) Subject to Section 7.04,
(i) if a Participant elects to receive his benefits in
the form of a life annuity, such benefits shall be distributed
under a Qualified Annuity unless the Participant elects to
receive his retirement income under any other optional form of
distribution as made available to such Participant.
(ii) if a Participant has had funds transferred without
the required spousal consent[ after December 31, 1984], directly
or indirectly, from a plan subject to Code Section 412 and the
portion of the Participant's Account attributable to such
transferred funds is more than $3,500, such funds will be
distributed in the form of a Qualified Annuity unless the
Participant elects to receive his retirement income under any
other optional form of distribution as made available to such
Participant.
(iii) the Participant shall have the right to
elect, revoke or change any election under this Subsection at any
time during his Election Period.
ALL PLANS
IF ONE INVESTMENT FUND, USE 5.03
(h) Notwithstanding the provisions of Section [5.03/5.05],
when distribution of benefits from the Trust Fund is to be
deferred, whether in whole or in part, the Committee may direct
the Trustee to deposit the Participant's Account in an
interest-bearing account or to purchase, on behalf of such
Participant, a single-premium deferred annuity policy.
Thereafter, such Participant's Account shall be credited with the
interest attributable to such account or shall be equal to the
value of such annuity policy and the provisions of Section
[5.03/5.05] shall not be applicable.
<PAGE>
ALL PLANS
(i) Any benefits payable under this Article may be paid in
cash, securities, or such other assets of the Trust Fund as the
Committee may direct.
The distribution of a lump sum payment and/or annuity
contract to the Participant or his Beneficiary will constitute
the complete discharge of all obligations of the Plan.
LUMP SUM ONLY
7.03 Method and Form of Payment of Benefits
The following provisions shall be applicable for determining
when distribution of benefits shall be made. These provisions
are intended to conform to the requirements of Section 401(a)(9)
of the Code, including the minimum distribution incidental
benefit proposed Treasury Regulation 1.401(a)(9)-2, and shall be
construed accordingly:
(a) Subject to Section 7.02, all benefits will be
distributed in a lump sum.
(b) Notwithstanding the provisions of Section [5.03/5.05],
when distribution of benefits from the Trust Fund is to be
deferred in accordance with Section 7.02, whether in whole or in
part, the Committee may direct the Trustee to deposit the
Participant's Account in an interest-bearing account.
Thereafter, such Participant's Account shall be credited with the
interest attributable to such account and the provisions of
Section [5.03/5.05] shall not be applicable.
(c) Subject to Section 7.02, if a Participant's benefits
are required to commence in accordance with Subsection 7.02[(d)
or] (e), in lieu of an immediate lump sum distribution, the
Participant may elect to have the minimum amount required to be
distributed each year under Code Section 401(a)(9) with the
remaining balance payable in a lump sum upon termination of
employment. Such benefit shall be payable directly from the
Trust Fund and shall reflect the Participant's elections
regarding Beneficiary and recalculation of life expectancies in
accordance with regulations under Code Section 401(a)(9).
In the absence of an election by the Participant, the
form of payment shall irrevocably be [in the form of a lump
sum][the minimum amount required to be distributed each year
under Code Section 401(a)(9) payable directly from the Trust Fund
with the remaining balance payable in a lump sum upon such
Participant's termination of employment and life expectancies
shall not be recalculated].
<PAGE>
(d) Any benefits payable under this Article may be paid in
cash, securities, or such other assets of the Trust Fund as the
Committee may direct.
The distribution of a lump sum payment to the
Participant or his Beneficiary will constitute the complete
discharge of all obligations of the Plan.
OMIT IF NO LIFE ANNUITIES
7.04 Spousal Consent Requirements With Respect to Participant
Elections
(a) If a Participant is married and has elected to receive
his benefits in the form of a life annuity, any election by such
Participant to commence a benefit payment in a form other than a
Qualified Annuity at any time will require the written
acknowledgment and irrevocable consent of the Protected Spouse as
witnessed by a Plan representative or a notary public during the
Election Period.
(b) If a Participant is married and has had funds
transferred without the required spousal consent[ after December
31, 1984], directly or indirectly, to the Plan from a plan
subject to Section 412 of the Code, any election by such
Participant to commence a benefit payment in a form other than a
Qualified Annuity at any time, will require the written
acknowledgment and irrevocable consent of the Protected Spouse as
witnessed by a Plan representative or a notary public during the
Election Period.
Notwithstanding the above, if such transferred funds
are accounted for separately, the above consent requirement will
only apply to payments attributable to such funds and then only
if the value of such funds at the Annuity Starting Date exceeds
$3,500.
(c) Any spousal consent will be limited to a specific
alternate Beneficiary and form of payment and any change in such
Beneficiary or form will require a new spousal consent.
(d) If it is established to the satisfaction of the
Committee that there is no spouse because the spouse cannot be
located or such other circumstances as may be promulgated by the
Internal Revenue Service or established by law, such consent will
not be required. Spousal consent[ shall be effective with
respect to Participants who received pay for at least one Hour of
Employment after August 22, 1984, but only with respect to
elections made after December 31, 1984, and, with respect to any
other Participant,] may additionally be required at the
Committee's request.
<PAGE>
(e) Notwithstanding the above, no consent to a distribution
or election of an optional form shall be valid until written
notification of the provisions of this Section and Subsection
7.03(g) is received by the Participant. The Committee shall
provide such written notification no less than 30 days nor more
than 90 days before the Annuity Starting Date.
Such notice shall contain a written explanation of
(i) the terms and conditions of a Qualified Annuity;
(ii) the Participant's right to make and the effect of
an election to waive the Qualified Annuity form of benefit;
(iii) the rights of the Protected Spouse;
(iv) the right to make, and the effect of, a revocation
of a previous election to waive the Qualified Annuity; and
(v) a description of the optional forms available
under Subsection 7.03(f).
ALL PLANS - IF FORFEITURES REDUCE COMPANY CONTRIBUTIONS, USE
FIRST BRACKETED CLAUSE, OTHERWISE USE SECOND BRACKETED CLAUSE
7.04/
7.05 Disposition of Unclaimed Benefits
In the event that any check or notice with respect to the
payment of benefits under the Plan remains outstanding at the
expiration of six months from the date of mailing of such check
to the last known address of the payee, the Committee shall
notify the Trustee to stop payment of all such outstanding checks
and to suspend the issuance of any further checks, if any, to
such payee. If, during the three-year period (or such other
period as specified in the Trust Agreement) from the date of
mailing of the first such check or of notice that a benefit is
due under the Plan, the Committee cannot establish contact with
the payee by taking such action as it deems appropriate and the
payee does not make contact with the Committee, the remaining
benefits shall be forfeited and used to reduce the Company's
contributions in accordance with Section 3.03. In the event the
payee is located subsequent to the date the benefits were
forfeited, the dollar amount of such benefits shall be restored
[from Company contributions] [in accordance with the provisions
of Article 6.
<PAGE>
7.05/
7.06 Non-Assignability
OMIT BRACKETED PHRASE IF PLAN HAS NO LOANS
No benefit under the Plan shall be subject in any manner to
anticipation, alienation, sale, transfer, assignment, pledge,
encumbrance or charge, and any such action shall be void for all
purposes of the Plan. No benefit shall in any manner be subject
to the debts, contracts, liabilities, engagements or torts of any
person, nor shall it be subject to attachments or other legal
process for or against any person, except with respect to a
Qualified Domestic Relations Order and in such other instances
and to such extent as may be required by law [ and except as
provided in Article [13][ ]].
7.06/
7.07 Substitute Payee
If a Participant or Beneficiary entitled to receive any
benefits hereunder is in his minority or is, in the judgment of
the Committee, legally, physically, or mentally incapable of
personally receiving and receipting any distribution, the
Committee may instruct the Trustee to make distributions to his
legally appointed guardian.
7.07/
7.08 Satisfaction of Liability
After all benefits have been distributed in full to a
Participant or to his Beneficiary, all liability to such
Participant or to his Beneficiary shall cease.
7.08/
7.09 Direct Rollover to Eligible Retirement Plans
(a) Notwithstanding any provisions of the Plan to the
contrary that would otherwise limit a Distributee's election
under this Section, a Distributee may elect, at the time and in
the manner prescribed by the Committee, to have any portion of an
Eligible Rollover Distribution paid directly to an Eligible
Retirement Plan specified by the Distributee in a Direct
Rollover.
(b) Definitions
(i) Eligible Rollover Distribution
An Eligible Rollover Distribution is any
distribution of all or any portion of the balance to the credit
of the Distributee, except that an Eligible Rollover Distribution
does not include: (A) any distribution that is one of a series of
substantially equal periodic payments (not less frequently than
annually) made for the life (or life expectancy) of the
Distributee or the joint lives (or joint life expectancies) of
the Distributee and the Distributee's designated Beneficiary, or
for a specified period of ten years of more; (B) any distribution
to the extent such distribution is required under Section
401(a)(9) of the Code; and (C) the portion of any distribution
that is not includable in gross income (determined without regard
to the exclusion for net unrealized appreciation with respect to
Employer securities).
<PAGE>
(ii) Eligible Retirement Plan
An Eligible Retirement Plan is an individual
retirement account described in Section 408(a) of the Code, an
individual retirement annuity described in Section 408(b) of the
Code, an annuity plan described in Section 403(a) of the Code, or
a qualified trust described in Section 401(a) of the Code, that
accepts the Distributee's Eligible Rollover Distribution.
However, in the case of an Eligible Rollover Distribution to the
surviving spouse, an Eligible Retirement Plan is an individual
retirement account or individual retirement annuity.
(iii) Distributee
A Distributee includes an Employee or former
Employee. In addition, the Employee's or former Employee's
surviving spouse and the Employee's or former Employee's spouse
or former spouse who is the alternate payee under a Qualified
Domestic Relations Order, are Distributees with regard to the
interest of the spouse or former spouse.
(iv) Direct Rollover
A Direct Rollover is a payment by the Plan to the
Eligible Retirement Plan specified by the Distributee.
7.10 Waiver of 30 Day Notice Requirement
Notwithstanding any provisions of the Plan to the contrary,
if a distribution is one to which Sections 401(a)(11) and 417 of
the Code do not apply, such distribution may commence less than
30 days after the notice required under Section 1.411(a)-11(c) of
the Treasury Regulations is given, provided that:
(a) the Committee clearly informs the Participant that the
Participant has a right to a period of at least 30 days after
receiving the notice to consider the decision of whether or not
to elect a distribution (and, if applicable, a particular
distribution option), and
(b) the Participant, after receiving the notice,
affirmatively elects a distribution.
<PAGE>
ARTICLE 8
ADMINISTRATION OF THE PLAN
8.01 Assignment of Administrative Authority
The Board of Directors shall appoint a Committee to
administer the Plan. The Committee may consist of directors,
officers, Employees, or any other individuals, who, upon
acceptance of such appointment, shall serve at the pleasure of
the Board of Directors. Any member may resign by delivering his
written resignation to the Board of Directors and to the
Committee. Vacancies in the Committee arising from resignation,
death or removal shall be filled by the Board of Directors. The
Board of Directors shall also appoint the Trustee and may appoint
an investment manager.
8.02 Organization and Operation of the Committee
(a) The Committee shall act, in carrying out its duties and
responsibilities, in the interest of the Participants and
Beneficiaries with the care, skill, prudence,and diligence under
the circumstances then prevailing that a prudent man, acting in a
like capacity and familiar with such matters, would use in the
conduct of an enterprise of like character and aims.
(b) The Committee shall act by a majority of its members
unless unanimous consent is required by the Plan or by unanimous
approval of its members if there are two or less members in
office at the time. In the event of a Committee deadlock, the
Committee shall determine the method for resolving such deadlock.
If there are two or more Committee members, no member shall act
upon any question pertaining solely to himself, and the other
member or members shall make any determination required by the
Plan in respect thereof.
(c) The Committee may authorize any one or more of its
members to execute documents on behalf of the Committee and shall
notify the Trustee in writing of such action and the name or
names of the member or members so designated.
(d) The Committee may, by unanimous consent, delegate
specific authority and responsibilities to one or more of its
members. The member or members so designated shall be solely
liable, jointly and severally, for their acts or omissions with
respect to such delegated authority and responsibilities.
Members not so designated, except as provided under Subsection
8.06(b), shall be relieved from liability for any act or omission
resulting from such delegation.
(e) The Committee shall endeavor not to engage in any
prohibited transactions, as specified in the Employee Retirement
Income Security Act of 1974, or any successor act. However, any
member of the Committee who is a Participant or Beneficiary shall
not be precluded from receiving benefits payable under the Plan.
<PAGE>
8.03 Authority and Responsibility
The Committee and its delegates shall have full
discretionary authority and responsibility for administration of
the Plan. Such authority and responsibility shall include, but
shall not be limited to, the following areas.
(a) Appointment of qualified accountants, consultants,
administrators, counsel or other persons it deems necessary or
advisable, who shall serve the Committee as advisors only and
shall not exercise any discretionary authority, responsibility or
control with respect to the management or administration of the
Plan.
Any action of the Committee on the basis of advice,
opinion, reports, etc. furnished by such qualified accountants,
consultants, administrators and counsel shall be the sole
responsibility of the Committee.
Members of the Committee shall not be precluded from
serving the Committee in any other capacity, provided any
compensation paid for such services is reasonable.
(b) Determination of eligibility to participate and all
benefits, and resolution of all questions arising from the
administration, interpretation and application of the Plan,
including the determination of the validity of any Qualified
Domestic Relations Order in accordance with Section 8.09.
(c) Notification to the Trustee of all benefits payable
under the Plan and the manner in which such benefits are to be
paid.
(d) Adoption of forms and regulations for the
administration of the Plan.
(e) Remedy of any inequity resulting from incorrect
information received or communicated, or of administrative error.
(f) Assurance that its members, the Trustee and other
persons who handle funds or other property of the Trust Fund are
bonded as required by law.
(g) Settlement or compromise of any claims or debts arising
from the operation of the Plan and the commencement of any legal
actions or administrative proceeding.
(h) Direction to the Trustee as to specific investments
which, under the terms of the Trust Agreement, may be made only
upon written direction of the Committee or which are made in
accordance with specific provisions of the Plan, such as annuity
or group investment contracts, loans to Participants, or
earmarked investments selected by Participants.
<PAGE>
(i) Action as agent for the service of legal process.
(j) Communication regarding the liquidity needs of the Plan
so that investment discretion can be exercised to effect specific
objectives.
8.04 Records and Reports
(a) The Committee shall keep a record of its proceedings
and acts and shall keep books of account, records and other data
necessary for the proper administration of the Plan.
(b) The Committee shall make its records available for
examination by the Employer, or any Participant or Beneficiary
during business hours at the principal place of business of the
Company. However, a Participant or Beneficiary may examine only
records pertaining exclusively to himself and such other records
specified by law.
(c) The Committee shall make available to any Participant
or Beneficiary any material required by law without cost. The
Committee may, upon written request by any Participant or
Beneficiary, provide copies of such material as it deems
appropriate and shall furnish copies of such material required by
law. The Participant or Beneficiary may be required to pay the
reasonable cost as determined by the Committee of preparing and
furnishing such material or the cost as prescribed by law.
8.05 Required Information
The Company and Participants or Beneficiaries entitled to
benefits shall furnish forms, including but not limited to
annuity applications, and any information or evidence, as
requested by the Committee for the proper administration of the
Plan. Failure on the part of any Participant or Beneficiary to
comply with such request within a reasonable period of time shall
be sufficient grounds for delay in the payment of benefits until
the information or evidence requested is received.
8.06 Fiduciary Liability
(a) A member of the Committee who breaches the
responsibilities, obligations, or duties imposed by law shall be
liable to the Plan for any losses resulting from such breach.
(b) A member of the Committee shall be liable for a breach
of fiduciary responsibility by another Committee member or
Trustee, with respect to the Plan or Trust Fund, under the
following circumstances.
(i) The member knowingly participates in or undertakes
to conceal an act or omission of another member of the Committee
or Trustee, with knowledge that the act or omission is such a
breach.
<PAGE>
(ii) If the member's failure to comply with Subsection
8.02(a) has enabled another member or Trustee to commit such a
breach.
(iii) The member has knowledge of such a breach by
another member or Trustee and does not make reasonable efforts
under the circumstances to remedy the breach.
8.07 Payment of Expenses
Those members of the Committee who are full-time paid
employees of the Company shall serve without compensation. The
expenses of the Committee, including reasonable compensation as
may be agreed upon in writing between the Company and the
Committee for members of the Committee who are not full-time
employees of the Company, shall be deemed administrative expenses
payable in accordance with Article 3.
8.08 Indemnification
The Company shall indemnify members of the Committee against
personal financial loss resulting from liability incurred in the
administration of the Plan, unless such liability and loss were
caused by such individual's gross negligence or willful
misconduct.
8.09 Qualified Domestic Relations Orders
(a) Qualified Domestic Relations Order
(i) A Qualified Domestic Relations Order (hereinafter
referred to as "QDRO") is a Domestic Relations Order which
creates or recognizes the existence of an Alternate Payee's right
to, or assigns to an Alternate Payee the right to, receive all or
a portion of the benefits payable with respect to a Participant
under the Plan, and which the Committee has determined meets the
requirements of Paragraphs (ii) and (iii).
(ii) A Domestic Relations Order meets the requirements
of a QDRO only if the order clearly specifies
(A) the name and the last known mailing address
(if any) of the Participant and the name and mailing address of
each Alternate Payee covered by the order;
(B) the amount or percentage of the Participant's
benefits to be paid by the Plan to each such Alternate Payee, or
the manner in which such amount or percentage is to be
determined;
<PAGE>
(C) the number of payments or period to which
such order applies; and
(D) that the order applies to this Plan.
(iii) A Domestic Relations Order meets the
requirements of a QDRO only if the order
(A) does not require the Plan to provide any type
or form of benefits, or any option, not otherwise provided under
the Plan;
(B) does not require the Plan to provide
increased benefits (determined on the basis of actuarial value);
and
(C) does not require the payment of benefits to
an Alternate Payee which are required to be paid to another
Alternate Payee under another Domestic Relations Order previously
determined to be a QDRO.
(iv) In the case of any payment before a Participant
has separated from service, a QDRO shall not be treated as
failing to meet the requirements of Paragraph (iii)(A) above
solely because the order requires the payment of benefits to an
Alternate Payee
(A) on or after the date on which the Participant
attains (or would have attained) the Earliest Retirement Age;
(B) as if the Participant had retired on the date
such payment is to begin under such order; and
(C) in any form in which such benefits may be
paid under the Plan to the Participant (other than in the form of
a joint and survivor annuity with respect to the Alternate Payee
and his or her subsequent spouse).
(v) For purposes of Paragraph (iv), Earliest
Retirement Age means the earlier of
(A) the date on which the Participant is entitled
to a distribution under the Plan; or
(B) the later of (1) the date the Participant
attains age 50 or (2) the earliest date on which the Participant
could begin receiving benefits under the Plan if such Participant
separated from service.
Notwithstanding any provisions of the Plan to the
contrary, for purposes of Subparagraph (A) above, a distribution
to an Alternate Payee may be made prior to the date on which the
Participant is entitled to a distribution under Section 7.02 or
Article 12 if requested by the Alternate Payee to the extent such
distribution is permitted under the QDRO. Nothing in this
provision shall permit the Participant to receive a distribution
at a date otherwise not permitted under Section 7.02 or Article
12 nor shall it permit the Alternate Payee to receive a form of
payment not permitted in Section 7.03.
<PAGE>
(b) Procedures
Upon receipt of a Domestic Relations Order, the
Committee shall take, or cause to be taken, the following
actions:
(i) The Committee shall promptly notify the
Participant, each Alternate Payee covered by the order and each
representative for these parties of the receipt of the Domestic
Relations Order. Such notice shall include a copy of the order
and these QDRO Procedures for determining whether such order is a
QDRO.
(ii) Once a Domestic Relations Order has been received
(A) the affected Participant will not be permitted to request a
withdrawal[ or a loan] from the Plan and (B) no distributions
will be made from the Plan to the Participant upon a subsequent
termination until after the payment to the Alternate Payee has
been determined, unless the Committee determines the order not to
be a QDRO.
(iii) Within a reasonable period after receipt of a
Domestic Relations Order, the Committee shall determine whether
it is a QDRO and shall notify the parties indicated in Paragraph
(i) of such determination. Such notice shall indicate whether the
benefits payable to the Alternate Payee in accordance with the
QDRO are subject to a previously existing QDRO.
(iv) Pending the Committee's determination of whether a
Domestic Relations Order is a QDRO, if payments are due to be
paid to the Participant, the Committee shall withhold payment and
separately account for the amounts otherwise payable to the
Alternate Payee during such period if the order is subsequently
determined to be a QDRO (hereinafter referred to as the
"segregated amounts"). If, within the 18-month period beginning
with the date the first payment would have been required to be
made under the Domestic Relations Order, the Committee determines
the order to be a QDRO, the Committee shall pay the segregated
amounts, including any interest thereon, to the person or persons
entitled thereto. If, within such 18-month period, the Committee
determines an order is not a QDRO or the Committee fails to reach
a decision, the Committee shall pay the segregated amounts to the
Participant. If, after the 18-month period, the Committee
subsequently determines that the order is a QDRO, the Committee
shall pay benefits subsequent to such determination in accordance
with the order. If action is taken in accordance with this
Subsection (b), the Plan's obligation to the Participant and each
Alternate Payee shall be discharged to the extent of any payment
made pursuant to the QDRO.
<PAGE>
(v) In determining the segregated amount in accordance
with Paragraph (iv), the Participant's vested interest shall be
prorated between the Participant and Alternate Payee and the
entire amount of any nonvested interest[ or any outstanding Plan
loans] will be credited to the Participant and not taken into
consideration in making such determination. Any future
contributions[ or loan repayment] will be credited to the
Participant and not the Alternate Payee.
(vi) Upon a determination by the Committee that a
Domestic Relations Order is a QDRO, the Committee shall arrange
for benefits to be paid to the Alternate Payee in accordance with
such order and Sections 7.02 and 7.03 as if the Participant had
terminated employment at such time.
(vii) If benefits are not immediately distributable
to the Alternate Payee, such amount shall be separately accounted
for until such time as the distribution is made. Any amount
subject to a QDRO will not be available to the Participant under
the Plan withdrawal provisions[ nor will it be available as
collateral for a Plan loan].
(viii) The Alternate Payee shall be treated as a
Beneficiary for all purposes of the Plan.[ The Alternate Payee
will be eligible for the same investment election option in
accordance with Article 5 as the Participant.]
The foregoing provisions are effective for QDROs entered
into on or after January 1, 1985, except that, in the case of a
Domestic Relations Order entered into before January 1, 1985, the
Committee (i) may treat such order as a QDRO even though such
order fails to meet the requirements of Subsections (a)(ii) and
(iii) above, and (ii) must treat such order as a QDRO if benefits
were being paid pursuant to such order on January 1, 1985.
<PAGE>
ARTICLE 9
AMENDMENT AND TERMINATION
9.01 Amendment
(a) The Plan may be amended or otherwise modified by the
Board of Directors, or the Committee to the extent authorized in
accordance with Subsection (c). Copies of any such amendment or
modification shall be sent to the governing body of each Company
for adoption.
(b) No amendment or modification shall
(i) permit any part of the Trust Fund, other than such
part as is required to pay taxes, administrative expenses and
expenses incurred in effectuating such changes, to be used for or
diverted to purposes other than the exclusive benefit of the
Participants or Beneficiaries and/or persons entitled to benefits
under the Plan or permit any portion of the Trust Fund to revert
to or become the property of the Company;
(ii) have the effect of reducing the Account of any
Participant as of the date of such amendment or deprive any
Participant or Beneficiary of a benefit accrued and payable; or
(iii) eliminate any option which constitutes a
valuable right available to a Participant with respect to
benefits previously accrued to the extent the Participant
satisfied, either before or after the amendment, the conditions
for the form of payment except as otherwise permitted by
applicable law and regulations.
(c) The Committee may amend or modify the Plan in order to
bring the Plan into compliance with applicable law or
regulations, provided said amendment or modification does not
have a material effect on the estimated cost of maintaining the
Plan and does not create a new class of benefits or entitlements.
9.02 Termination
While the Plan and Trust Fund are intended to be permanent,
they may be terminated at the discretion of the Board of
Directors. Written notification of such action shall be given to
each Company, the Trustee and the Committee. Thereafter, no
further contributions shall be made to the Trust Fund.
REFERENCE IN SUBSECTION (c) IS TO FIRST SECTION OF LAST ARTICLE
<PAGE>
9.03 Vesting Upon Termination
Upon the complete discontinuance of Company contributions or
the termination or partial termination of the Plan and Trust
Fund, the Account of each affected Participant shall become fully
vested and shall not be reduced except
(a) for adjustments resulting from a valuation in
accordance with Article 5, which valuation shall also reflect the
expenses incurred for administration of the Plan and/or Trust
Fund after such discontinuance or termination date, and all
expenses incurred in effectuating the complete discontinuance of
Company contributions or termination or partial termination of
the Plan and Trust Fund, such as the fees and retainers of the
Plan's Trustee, accountant, custodian, administrator, consultant,
counsel and other specialists if such expenses are not paid by
the Company;
(b) for distributions of benefits by the Trustee to the
Participant in accordance with the Plan and at the written
direction of the Committee; and
(c) as provided in Section [14.01][13.01][12.01].
OMIT FIRST BRACKETED PHRASE AT CONSULTANT'S REQUEST
9.04 Distribution of Benefits After Termination
As soon as administratively feasible following [receipt of a
favorable letter of determination from the Internal Revenue
Service with regard to ]the termination of the Plan and Trust
Fund, the Trustee, as authorized and directed by the Committee,
shall, provided there is no successor defined contribution plan
within the meaning of Section 401(k)(10)(A)(i) of the Code,
distribute each Account, after adjustment in accordance with
Subsection 9.03(a), in a manner consistent with the provisions of
Article 7.
<PAGE>
FOR SINGLE PLAN (ASSETS FROM ONE COMPANY MAY BE USED FOR
EMPLOYEES OF ANOTHER COMPANY)
ARTICLE 10
PARTICIPATING COMPANIES
10.01 Adoption by Other Entities
Any corporation or other business entity may, by resolution
of its own governing body, and with the approval of the Board of
Directors, adopt the Plan and thereby become a Company.
Notwithstanding the adoption of the Plan by other entities,
[effective as of [DATE OF MERGER],] the Plan will be administered
as a single plan and all Plan assets will be available to pay
benefits to all Participants under the Plan.
10.02 Alternative Provisions
No Company may adopt alternative provisions as to itself or
its Employees.
Upon request of the governing body of a Company, the Board
of Directors may amend the Plan with respect to the Employees of
such Company provided that any change will only apply if any
inequity resulting from such changed Plan provisions is not found
to be discriminatory on behalf of Highly Compensated Employees.
10.03 Right to Withdraw (Plan Spinoff)
Each Company having adopted the Plan shall have the right as
of the last day of any month to withdraw from the Plan and/or
Trust Agreement by delivering to the Board of Directors, the
Committee and the Trustee written notification from its own
governing body of such action and setting forth the date as of
which the withdrawal shall be effective. The date specified in
such written notice shall be deemed a Valuation Date.
10.04 Procedure Upon Withdrawal
(a) If a Company withdraws from the Plan and Trust
Agreement as the result of its adoption of a different plan, the
Trustee shall segregate the portion of the Trust Fund
attributable to the Accounts of Participants employed solely by
such Company.
OMIT BRACKETED PHRASE AT CONSULTANT'S REQUEST
As soon as administratively feasible[ following receipt
of a favorable letter of determination from the Internal Revenue
Service with regard to the adoption of such successor plan], the
Trustee shall transfer the segregated assets to the insurance
carrier or fiduciary designated by the Company as the agency
through which the benefits of such successor plan are to be
disbursed.
(b) If a Company withdraws from the Plan and Trust
Agreement as the result of its adoption of a resolution to
terminate its participation in the Plan and to distribute assets
to its Employees who are Participants, the Trustee shall
segregate the portion of the Trust Fund attributable to the
Accounts of the Participants who are employed solely by such
Company, and the termination provisions of Section 9.03 and 9.04
shall apply with respect to such segregated assets.
<PAGE>
FOR SEPARATE PLANS (EACH COMPANY HAS SEPARATE PLAN AND ASSETS OF
ONE CANNOT BE USED FOR EMPLOYEES OF ANOTHER COMPANY)
ARTICLE 10
PARTICIPATING COMPANIES
10.01 Adoption by Other Entities
Any corporation or other business entity may, by resolution
of its own governing body, and with the approval of the Board of
Directors, adopt the Plan and thereby become a Company. Each
Company hereunder shall be deemed to have a separate plan so that
the assets of each plan will not be available to provide benefits
to the Employees of any other Company's plan hereunder. Any
reference to Company within the Plan shall be applied separately
with respect to each adopting business entity.
10.02 Alternative Provisions
A Company may, at any time, in lieu of the provisions of the
Plan, request that the Board of Directors adopt alternative
provisions with respect to its separate Plan. In no event shall
alternative provisions be permitted if any inequity resulting
from such changed provisions is found to be discriminatory on
behalf of Highly Compensated Employees.
10.03 Right to Discontinue Company Contributions, Withdraw or
Terminate
Each Company having adopted the Plan shall have the right as
of the last day of any month to discontinue further contributions
to the Trust Fund or to withdraw from the Plan and/or Trust
Agreement or to terminate, as to itself, the Plan and the Trust
Agreement by delivering to the Board of Directors, the Committee
and the Trustee written notification from its own governing body
of such action and setting forth the date as of which the
discontinuance, withdrawal or termination shall be effective.
10.04 Procedure Upon Discontinuance of Company Contributions,
Withdrawal or Termination
(a) If a Company discontinues further contributions to the
Trust Fund, the portion of the Trust Fund attributable to such
Company shall continue to be held by the Trustee and the
Committee shall continue to administer the Plan with respect to
the Participants who are Employees of such Company. The
provisions of Section 9.03 shall apply to the Accounts of all
such Participants as of the date of discontinuance.
(b) If a Company withdraws from the Plan and Trust
Agreement as the result of its adoption of a different plan, the
Trustee shall segregate the portion of the Trust Fund
attributable to such Company.
OMIT BRACKETED PHRASE AT CONSULTANT'S REQUEST
As soon as administratively feasible[ following receipt
of a favorable letter of determination from the Internal Revenue
Service with regard to the adoption of such successor plan], the
Trustee shall transfer the portion of the Trust Fund attributable
to such Company to the insurance carrier or fiduciary designated
by the Company as the agency through which the benefits of such
successor plan are to be disbursed.
(c) If a Company shall terminate the Plan and Trust
Agreement as to itself, the Trustee shall segregate the portion
of the Trust Fund attributable to such Company, and the
provisions of Sections 9.03 and 9.04 shall apply with respect to
such Company.
<PAGE>
ALL PLANS
ARTICLE 11
TOP-HEAVY PROVISIONS
11.01 Definition of Top-Heavy and Super Top-Heavy
AMENDED PLANS IF EFFECTIVE DATE BEFORE 12-31-83
(a) The Plan will be Top-Heavy for a Plan Year beginning
after December 31, 1983, if, as of the [final ]Valuation Date of
the preceding Plan Year, hereinafter referred to as the
Determination Date,
NEW PLANS AND AMENDED PLANS IF EFFECTIVE DATE AFTER 12-31-83
(a) The Plan will be Top-Heavy for a Plan Year if, as of
the [final ]Valuation Date of the preceding Plan Year (or the
[final ]Valuation Date of the current Plan Year, if such year is
the first Plan Year), hereinafter referred to as the
Determination Date,
ALL PLANS
(i) the aggregate value of the Accounts of all
Participants who are Key Employees (as defined in Section 11.02)
exceeds 60% of the aggregate value of such Accounts of all
Participants and the Plan cannot be aggregated with any other
plans which would result in the formation of a non-Top-Heavy
aggregation group of plans; or
(ii) the Plan is required to be part of an aggregation
group of plans and the aggregation group is Top-Heavy. The group
will be deemed Top-Heavy if the aggregate value of all defined
contribution plan accounts and the value of all defined benefit
plan accrued benefits attributable to Key Employees exceeds 60%
of such values attributable to all participants of the aggregated
plans. Such benefit values and accounts shall be aggregated
using the Determination Dates of the individual plans which fall
within the same calendar year.
For purposes of this Section, aggregation group means
all plans, including terminated plans, maintained by the Employer
if maintained within the last five years ending on the
Determination Date, in which a Key Employee is a participant or
which enables any plan in which a Key Employee is a participant
to meet the requirements of Section 401(a)(4) or Section 410 of
the Code, as well as all other plans maintained by the Employer,
provided that inclusion of such other plans in the aggregation
group would not prevent the group of plans from continuing to
meet the requirements of such sections of the Code.
<PAGE>
(b) The Plan will be Super Top-Heavy for a Plan Year if the
aggregate value of all defined contribution plan accounts and the
value of all defined benefit plan accrued benefits attributable
to all Participants who are Key Employees exceeds 90% of such
values attributable to all Participants in lieu of 60% as stated
in Subsection (a).
REMOVE BRACKETED PHRASE IF ED AFTER DATES OF REFERENCE
(c) For purposes of determining the aggregate value of the
benefit values and accounts under this Section, distributions,
other than rollovers or direct transfers to another qualified
plan maintained by the Employer or rollovers or direct transfers
not initiated by the Participant, made during the five-year
period ending on the Determination Date of the plan from which
such distributions were made, shall be included to the extent
such distributions are not otherwise reflected in the value of
any accrued benefit under a defined benefit plan as determined
with respect to such plan's Determination Date. Such aggregate
value shall not include any (i) assets rolled over or transferred
at the initiation of the Participant directly from a qualified
plan maintained by a business entity other than an Employer to
the Plan[, after December 31, 1983], (ii) amounts attributable to
former Key Employees, (iii) amounts attributable to Participants
not employed during such five-year period, or (iv) amounts
attributable to deductible employee contributions under former
Section 219(e)(2) of the Code.
A Participant's accounts under any defined contribution
plan as of any Determination Date, other than the Determination
Date which falls within the first Plan Year, shall not include
any Employer contributions due and not yet paid as of the
Determination Date, if the plan under which the account is
maintained is not subject to Section 412 of the Code.
Accrued benefit values under defined benefit plans
aggregated with this Plan shall be determined, subject to the
rules set forth in Section 416(g)(4)(F)(ii) of the Code, as of
the dates of the most recent valuations preceding or coincident
with such defined benefit plans' Determination Dates, in
accordance with the interest and mortality rate assumptions
specified in such defined benefit plans for this purpose or, if
not specified, shall be determined using an interest rate of 5%
and mortality rates in accordance with Group Annuity Mortality
Table for 1951 (Projection "C" to 1970, set back five years for
females). Such accrued benefit values shall be determined under
the method of accrual used for all plans of the Employer or, if
such method is not identical, as if such benefit accrued under
the fractional rule as described in Section 411(b)(1)(C) of the
Code.
<PAGE>
11.02 Definition of Key Employee
An Employee or a former Employee will be considered to be a
Key Employee for a Plan Year if, at any time during the Plan Year
or the preceding four Plan Years, he is an officer of the
Employer earning more than 50% of the maximum dollar limitation
under Section 415(b)(1)(A) of the Code; one of the 10 employees
owning the largest interests (minimum 1/2%) in the Employer
earning more than the maximum dollar limitation under Section
415(c)(1)(A) of the Code; a 5% owner; or a 1% owner whose
compensation exceeds $150,000. This definition of Key Employee
shall be governed by Section 416 of the Code and Regulations
thereunder. For purposes of this definition, but only to the
extent required by law, a Key Employee's Beneficiary shall be
treated as a Key Employee, and ownership percentages shall be
determined without regard to aggregation of entities under common
control within the meaning of Sections 414(b), (c) and (m) of the
Code. In no event shall more than 50 employees (or, if less, the
greater of three employees or 10 percent of the employees) be
deemed officers for purposes of this definition.
IF CLIENT MAINTAINS DEFINED BENEFIT PLAN AND DEFINED CONTRIBUTION
PLAN LIMITED BY 1.0 RULE, IS NOT SUPER-TOP-HEAVY, AND WANTS TO
RECOUP 1.25 RULE, CHANGE 3% TO 4%, AND 5% TO 7.5%
IF AUTOMATIC REVERSION FOR NON TOP-HEAVY YEARS, REMOVE FIRST
BRACKETED CLAUSE IN SUBSECTION (a) - IF FORFEITURES REDUCE
COMPANY CONTRIBUTIONS, REMOVE SECOND AND THIRD BRACKETED WORDS IN
SUBSECTION (a)
ALL NON-INTEGRATED PLANS, ALL INTEGRATED PLANS WHERE MINIMUM
IS PROVIDED FOR IN REGULAR NON-DISCRETIONARY ALLOCATION
(INCLUDING SHARING FOR EMPLOYEES WITH LESS THAN 1,000 HOURS) AND
401(k) AND S & I PLANS WITHOUT REGULAR CONTRIBUTIONS
11.03 Minimum Employer Contribution
(a) Unless otherwise provided in this Section, for any Plan
Year in which the Plan is determined to be Top-Heavy[ and for
each Plan Year thereafter, even if the Plan ceases to be
Top-Heavy],[ the sum of ] the Company contribution [and
forfeitures, if any, ]allocated to any non Key Employee
Participant in the employ of the Company on the last business day
of that Plan Year, shall not be less than an amount which, in
combination with all other such amounts allocated to him under
all other defined contribution plans maintained by the Employer,
is equal to the lesser of
(i) 3% of the Participant's Compensation or
(ii) the highest percentage of Compensation (net of
amounts contributed under a qualified salary reduction or similar
arrangement) at which contributions (including Employer matching
contributions and forfeitures) are allocated for the Plan Year
under the Plan and under any other defined contribution plan
required to be aggregated with the Plan on behalf of any Key
Employee, times the Participant's Compensation.
USE WITH 401(k) PLANS WITH REGULAR CONTRIBUTIONS - REFERENCE IS
TO COMPANY REGULAR CONTRIBUTION ACCOUNT
<PAGE>
(b) Any contributions made solely to comply with the
provisions of this Section shall be credited at the end of the
Plan Year.
USE WITH 401(k) PLANS WITHOUT REGULAR CONTRIBUTIONS
(b) Any contributions made solely to comply with the
provisions of this Section shall be credited at the end of the
Plan Year to the Participant's Minimum Employer Contributions
Account, which shall be established by the Committee for this
purpose.
11.03 Allocation of Contributions[ and Forfeitures]
(a) To the extent that the allocations provided under
Article 3 satisfies the minimum percentage specified in
Subsection (b) below, the allocation procedures under said
Article 3 shall govern in lieu of those provided for in this
Article.
(b) Unless otherwise provided in this Section, for any Plan
Year in which the Plan is determined to be Top-Heavy[ and for
each Plan Year thereafter, even if the Plan ceases to be
Top-Heavy],[ the sum of ] the Company contribution [and
forfeitures, if any, ]shall be allocated to non Key Employee
Participants in the employ of the Company on the last business
day of that Plan Year and to those other Participants eligible to
share in accordance with Article 3 in proportion to their
Compensation up to 3%, provided that the amount allocated to any
such non Key Employee in the employ of the Company on the last
business day of the Plan Year shall not be less than an amount
which, in combination with all other such amounts allocated to
him under all other defined contribution plans maintained by the
Employer, is equal to the lesser of
(i) 3% of the Participant's Compensation or
(ii) the highest percentage of Compensation (net of
amounts contributed under a qualified salary reduction or similar
arrangement) at which contributions (including Employer matching
contributions and forfeitures) are allocated for the Plan Year
under the Plan and under any other defined contribution plan
required to be aggregated with the Plan on behalf of any Key
Employee, times the Participant's Compensation.
USE IF NO YEARS OF SERVICE IN REGULAR ALLOCATION
(c) To the extent the amount to be allocated exceeds the
amount above, the remaining balance shall be allocated to those
Participants eligible to share in accordance with Article 3, in
proportion to Compensation (excluding any amount paid by the
Employer which is not paid by the Company) in excess of [the
Social Security Taxable Wage Base][$ ] up to 3% of such
Compensation.
<PAGE>
USE IF YEARS OF SERVICE IN REGULAR ALLOCATION
(c) To the extent the amount to be allocated exceeds the
amount above, the remaining balance shall be allocated to those
Participants eligible to share in accordance with Article 3 in
the following order:
(i) in proportion to Compensation (excluding any
amount paid by the Employer which is not paid by the Company) in
excess of [the Social Security Taxable Wage Base][$ ] up
to 3% of such Compensation.
(ii) in proportion to each such Participant's full
Years of Service.
USE WITH EITHER (c)
Any contributions made solely to comply with the
provisions of this Section shall be credited at the end of the
Plan Year.
ALL PLANS
[(c)][(d)] If any Participant is also covered by a defined
benefit plan or plans maintained by the Employer, then for each
year the Plan is determined to be Top-Heavy, 5% will be
substituted in lieu of the 3% minimum allocation under [Paragraph
(a)(i)][Paragraph (b)(i) and Subsection (c)] for such Participant
and Paragraph [(a)][(b)](ii) shall not be applicable, unless the
Participant receives the Top-Heavy defined benefit minimum under
the defined benefit plan or plans in accordance with Section
416(c)(1) of the Code, notwithstanding any offset attributable to
defined contribution account balances, in which event no minimum
contribution will be required under the Plan.
[(d)][(e)] For purposes of this Section, only benefits
derived from Employer contributions under the Plan, or any other
defined contribution plan or plans are to be taken into account
to determine whether the minimum Employer contribution or benefit
has been satisfied, excluding matching contributions and any
contributions attributable to a salary reduction or similar
arrangement, but including contributions as defined in Treasury
Regulation 1.401(k)-1(g)(13). Such salary reduction
contributions will be taken into account to determine the
Employer contribution made on behalf of any Key Employee under
Subsection 11.03[(a)][(b)](ii), but not to determine whether the
minimum Employer contribution or benefit has been satisfied.
USE FOR PLANS WITH REGULAR CONTRIBUTIONS
IF 1,000 HOURS REQUIRED TO SHARE
[(e)][(f)] For purposes of this Section only, Participant
shall also include any Participant who did not meet the 1,000
Hours of Employment requirement necessary to share in the
Company's [Regular C][c]contributions.
<PAGE>
USE FOR PLANS WITHOUT REGULAR CONTRIBUTIONS
[(e)][(f)] For purposes of this Section only, Participant
shall also include any Eligible Employee who would otherwise be
eligible for the Plan but who declined to make contributions
required under the Plan in accordance with Subsection 3.01(a)[or
Section 3.04] at any time.
ALL PLANS
OMIT IF 1,000 HOURS NOT REQUIRED FOR ELIGIBILITY
[(f)][(g)] An Eligible Employee who has not met the 1,000
Hours of Employment requirement for eligibility in accordance
with Article 2, shall not be considered a Participant for
purposes of this Section.
ALL PLANS
[( )] An employee of a business entity which has not
adopted the Plan shall not be considered a Participant for
purposes of this Section unless also employed by the Company.
[( )] An Eligible Employee who becomes a Participant by
virtue of the acceptance of a rollover contribution in accordance
with Section 3.07 or a transfer of assets in accordance with
Section 3.08 but who is not otherwise eligible in accordance with
Section 2.01, shall not be entitled to share in any Company
contribution allocated in accordance with this Article.
OMIT FOLLOWING SECTION IF NORMAL VESTING SCHEDULE FOR ALL
ACCOUNTS IS MORE LIBERAL FOR ALL YEARS
IF NO DISABILITY, USE 6.03(a)
11.04 Minimum Vesting
(a) The following vesting schedule shall be substituted for
the vesting schedule under Subsection [6.04(a)/6.03(a)] as of the
first day of the first Plan Year the Plan is determined to be
Top-Heavy for persons not under the jurisdiction of a collective
bargaining unit.
<PAGE>
REGULAR TOP-HEAVY SCHEDULE
Number of Years Percentage of Account
Less than 2 full years 0%
2 full years 20%
3 full years 40%
4 full years 60%
5 full years 80%
6 or more full years 100%
3-YEAR CLIFF SCHEDULE
Less than 3 full years 0%
3 or more full years 100%
FASTER IN SOME YEARS SCHEDULE
Less than 2 full years [ ]
2 full years [ ]
3 full years [ ]
4 full years [ ]
5 full years [ ]
6 or more full years [ ]
SCHEDULE CONTINUATION FOR NON TOP HEAVY YEARS
(b) The vesting schedule under Subsection 11.04(a), unless
subsequently amended, shall remain applicable even if the Plan
later ceases to be Top-Heavy.
SCHEDULE REVERSION FOR NON TOP-HEAVY YEARS
(b) If the Plan ceases to be Top-Heavy, all Participants
with three or more Years of Service as of the beginning of such
Plan Year, shall continue to be covered by the above schedule.
All other Participants shall, for each succeeding Plan Year, be
entitled to the vested percentage determined under the schedule
in Subsection [6.04(a)][6.03(a)], provided that such vested
percentage shall not be less than the vested percentage
determined under the schedule in Subsection (a) as of the last
day of the last Plan Year the Plan was Top-Heavy.
ALL PLANS - IF PLANS HAVE 4% and 7-1/2% IN SECTION 11.03, OMIT
THE WORDS "Top-Heavy or"
11.04/
11.05 Limitation of Allocations
For any Plan Year in which the Plan is determined to be
Top-Heavy or Super Top-Heavy, the reference to "1.25" in Item (1)
of Paragraph (B) of Subsection 4.03(c) will be changed to read
"1.0".
<PAGE>
IF WITHDRAWAL OF ANY ACCOUNT IS SAME AS ANY OTHER ACCOUNT, ADD
REFERENCE TO SUCH ACCOUNT TO APPROPRIATE SECTION - IF WITHDRAWAL
OF ANY ACCOUNT IS DIFFERENT, DRAFT A SEPARATE SECTION AND
RENUMBER ALL SECTIONS ACCORDINGLY - IN EITHER EVENT, INCLUDE
REFERENCE TO THESE ACCOUNTS IN OTHER SECTIONS WHERE APPROPRIATE
AND ADJUST INDEX
ARTICLE 12
WITHDRAWAL OF FUNDS DURING EMPLOYMENT
12.01 Withdrawals from Elective Deferral Contribution Account
Subject to the general withdrawal rules below, a Participant
may withdraw up to 100% of his Elective Deferral Contribution
Account (a) after attaining age 59-1/2 or (b) before attaining
age 59-1/2, provided such withdrawal meets the Financial Hardship
Rules below.
COMPANY MATCHING AND REGULAR CONTRIBUTION ACCOUNTS TREATED THE
SAME
NO WITHDRAWALS FROM COMPANY CONTRIBUTIONS ACCOUNTS
12.02 Withdrawals from Matching and Regular Contribution
Accounts
No withdrawals shall be permitted from a Participant's
Matching and Regular Contribution Accounts.
FINANCIAL HARDSHIP REQUIRED - USE "either", "or" AND "fully
vested" IF TWO ACCOUNTS HAVE DIFFERENT VESTING SCHEDULES
12.02 Withdrawals from Matching and Regular Contribution
Accounts
Subject to the general withdrawal rules below, a Participant
who has a 100% vested interest in [either] his Matching [or][and]
Regular Contribution Account[s] may withdraw up to [100%][[50%][
%] of such [fully vested ]Account[s][, inclusive of all prior
withdrawals,] provided such withdrawal meets the Financial
Hardship Rules below.
FIVE AND TWO YEAR RULE - USE "either", "or" AND "fully
vested" IF TWO ACCOUNTS HAVE DIFFERENT VESTING SCHEDULES
12.02 Withdrawals from Matching and Regular Contribution
Accounts
Subject to the general withdrawal rules below, a Participant
who has a 100% vested interest in [either ]his Matching [or][and]
Regular Contribution Account[s] may
<PAGE>
(a) withdraw up to [100%][[50%][ %], inclusive of all
prior withdrawals,] of such [fully vested ]Account[s], provided
he has completed five or more full years of Plan participation;
or
(b) withdraw up to [100%][[50%][ %], inclusive of all
prior withdrawals,] of that portion of such [fully vested
]Account[s] on deposit for at least two full years as of the date
of such withdrawal, if such Participant has not completed five or
more full years of Plan participation.
TWO YEAR RULE - USE "either", "or" AND "fully vested" IF TWO
ACCOUNTS HAVE DIFFERENT VESTING SCHEDULES
12.02 Withdrawals from Matching and Regular Contribution
Accounts
Subject to the general withdrawal rules below, a member who
has a 100% vested interest in [either ]his Matching [or][and]
Regular Contribution Account[s] may withdraw up to [100%][[50%][
%], inclusive of all prior withdrawals,] of that portion of such
[fully vested ]Account[s] on deposit for at least two full years
as of the date of such withdrawal.
FIVE YEAR RULE - USE "either", "or" AND "fully vested" IF
TWO ACCOUNTS HAVE DIFFERENT VESTING SCHEDULES
12.02 Withdrawals from Matching and Regular Contribution
Accounts
Subject to the general withdrawal rules below, a Participant
who has completed five or more full years of Plan participation
and has a 100% vested interest in [either ]his Matching [or][and]
Regular Contribution Account[s] may elect to withdraw up to
[100%][[50%][ %], including all prior withdrawals,] of such
[fully vested ]Account[s].
COMPANY MATCHING AND REGULAR CONTRIBUTION ACCOUNTS TREATED
DIFFERENTLY
COMPANY MATCHING CONTRIBUTION ACCOUNT
NO WITHDRAWALS
12.02 Withdrawals from Matching Contribution Account
No withdrawals shall be permitted from a Participant's
Matching Contribution Account.
FINANCIAL HARDSHIP REQUIRED
<PAGE>
12.02 Withdrawals from Matching Contribution Account
Subject to the general withdrawal rules below, a Participant
who has a 100% vested interest in his Matching Contribution
Account may withdraw up to [100%][[50%][ %], inclusive of all
prior withdrawals,] of such Account, provided such withdrawal
meets the Financial Hardship Rules below.
TWO AND FIVE YEAR RULE
12.02 Withdrawals from Matching Contribution Account
Subject to the general withdrawal rules below, a Participant
who has a 100% vested interest in his Matching Contribution
Account may
(a) withdraw up to [100%][[50%][ %], including all prior
withdrawals,] of such Account, provided he has completed five or
more full years of Plan participation; or
(b) withdraw up to [100%][[50%][ %], inclusive of all
prior withdrawals,] of that portion of such Account on deposit
for at least two full years as of the date of such withdrawal, if
such Participant has not completed five or more full years of
Plan participation.
TWO YEAR RULE
12.02 Withdrawals from Matching Contribution Account
Subject to the general withdrawal rules below, a member who
has a 100% vested interest in his Matching Contribution Account
may withdraw up to [100%][[50%][ %], inclusive of all prior
withdrawals,] of that portion of such Account on deposit for at
least two full years as of the date of such withdrawal.
FIVE YEAR RULE
12.02 Withdrawals from Matching Contribution Account
Subject to the general withdrawal rules below, a Participant
who has completed five or more full years of Plan participation
and has a 100% vested interest in his Matching Contribution
Account may withdraw up to [100%][[50%][ %], inclusive of all
prior withdrawals,] of such Account.
COMPANY REGULAR CONTRIBUTION ACCOUNT
NO WITHDRAWALS
12.02/
12.03 Withdrawals from Regular Contribution Account
No withdrawals shall be permitted from a Participant's
Regular Contribution Account.
<PAGE>
FINANCIAL HARDSHIP REQUIRED
12.02/
12.03 Withdrawals from Regular Contribution Account
Subject to the general withdrawal rules below, a Participant
who has a 100% vested interest in his Regular Contribution may
withdraw up to [100%][[50%][ %], inclusive of all prior
withdrawals,] of such Account, provided such withdrawal meets the
Financial Hardship Rules below.
TWO AND FIVE YEAR RULE
12.02/
12.03 Withdrawals from Regular Contribution Account
Subject to the general withdrawal rules below, a Participant
who has a 100% vested interest in his Regular Contribution
Account may
(a) withdraw up to [100%][[50%][ %], inclusive of all
prior withdrawals,] of such Account, provided he has completed
five or more full years of Plan participation; or
(b) withdraw up to [100%][[50%][ %], inclusive of all
prior withdrawals,] of that portion of such Account on deposit
for at least two full years as of the date of such withdrawal, if
such Participant has not completed five or more full years of
Plan participation.
TWO YEAR RULE
12.02/
12.03 Withdrawals from Regular Contribution Account
Subject to the general withdrawal rules below, a member who
has a 100% vested interest in his Regular Contribution Account
may withdraw up to [100%][[50%][ %], inclusive of all prior
withdrawals,] of that portion of such Account on deposit for at
least two full years as of the date of such withdrawal.
FIVE YEAR RULE
12.02/
12.03 Withdrawals from Regular Contribution Account
Subject to the general withdrawal rules below, a Participant
who has completed five or more full years of Plan participation
and has a 100% vested interest in his Regular Contribution
Account may withdraw up to [100%][[50%][ %], inclusive of all
prior withdrawals,] of such Account.
ROLLOVER ACCOUNT
12.0[] Withdrawals from Rollover Account
Subject to the general withdrawal rules below, a Participant
may elect to withdraw up to 100% of his Rollover Account.
<PAGE>
TRANSFER ACCOUNT
NO WITHDRAWALS
12.0[] Withdrawals from Transfer Account
No withdrawals shall be permitted from a Participant's
Transfer Account.
WITHDRAWALS WITH SPOUSAL CONSENT
12.0[] Withdrawals from Transfer Account
Subject to the general withdrawal rules below, a Participant
may elect to withdraw up to 100% of his Transfer Account.
Subject to the consent requirements of Section 7.04, such
withdrawal will be distributed under a Qualified Annuity unless
the Participant elects to receive such withdrawal in a lump sum.
USE UNLESS NO VOLUNTARY CONTRIBUTIONS
12.0[] Withdrawals from Voluntary Contribution Account
Subject to the general withdrawal rules below, a Participant
may elect to withdraw up to 100% of his Voluntary Contribution
Account.
PRIOR PARTICIPATING CONTRIBUTIONS - DELETE BRACKETED
MATERIAL IF ACCOUNT "DIED" AT LEAST TWO YEARS AGO
12.0[] Withdrawals from Participating Contribution Account
Subject to the general withdrawal rules below, a Participant
may withdraw up to 100%[ of that portion] of his Prior
Participating Contribution Account[ which has been on deposit for
at least two full years as of the date of such withdrawal].
QUALIFIED ACCOUNTS
12.0[] Withdrawals from Qualified Matching Contribution and
Qualified
Nonelective Contribution Accounts
Subject to the general withdrawal rules below, a Participant
who has attained age 59-1/2 may withdraw up to 100% of his
Qualified Matching Contribution and Qualified Nonelective
Contribution Accounts.
12.0[] Financial Hardship Rules
(a) For purposes of this Article, a Financial Hardship
withdrawal may be made only if it is on account of an immediate
and heavy financial need of the Participant and is necessary to
satisfy such financial need.
<PAGE>
(b) The following needs shall be recognized as immediate
and heavy financial needs:
(i) medical expenses, as described in Section 213(d)
of the Code, previously incurred by the Participant, the
Participant's spouse or the Participant's dependents, or funds
necessary for these persons to obtain medical care described in
Section 213(d) of the Code,
(ii) purchase of a principal residence for the
Participant,
(iii) tuition payments and related educational fees
for the next 12 months of post-secondary education for the
Participant or the Participant's spouse, children or other
dependents,
(iv) the need to prevent eviction from or foreclosure
on the mortgage of the Participant's principal residence,
(v) any other financial need as may be promulgated by
the Internal Revenue Service, and
(vi) any other financial stress the satisfaction of
which is necessary for the safety, well-being, livelihood or
health of the Participant or his immediate family.
(c) Unless otherwise provided in Subsection (d), the
Participant shall provide the Committee with a signed written
statement certifying that the Financial Hardship cannot be
relieved
(i) through reimbursement or compensation by insurance
or otherwise,
(ii) by reasonable liquidation of such Participant's
assets, including those of his spouse and minor children if they
are reasonably available to him,
(iii) by discontinuance of Elective Deferral [or
Voluntary ]Contributions, or
(iv) by other distributions or loans from the Plan or
any other qualified plan or loans from commercial sources on
reasonable commercial terms.
<PAGE>
(d) In the absence of the above certification, the
following requirements will be applicable:
(i) The Participant must have obtained all other
distributions and loans available under all plans maintained by
the Employer.
(ii) Elective Deferral Contributions and any other
Employee contributions under all plans maintained by the Employer
will be suspended for 12 months following the receipt of the
Financial Hardship withdrawal. The Participant's Elective
Deferral Contributions under Section 3.01 will automatically be
resumed following the required period of suspension, unless the
Participant elects otherwise.
(iii) The limitation of Section 4.01 which is
imposed on a Participant's Elective Deferral Contributions for
the calendar year immediately following the calendar year of the
Financial Hardship withdrawal will be reduced by the amount of
such contributions and/or deferrals for the calendar year of such
withdrawal.
(e) The amount of such Financial Hardship withdrawal may
not exceed the amount required to meet the specified need plus
any amounts necessary to pay any federal, state or local income
taxes or penalties reasonably anticipated to result from the
withdrawal. In addition,[ effective for Plan Years beginning
after December 31, 1988,] the amount of such withdrawal from a
Participant's Elective Deferral Contribution Account shall be
limited to the sum of the Participant's Elective Deferral
Contributions made[, plus the income credited to such Account as
of the last Valuation Date in 1988].
(f) A Financial Hardship withdrawal from a Participant's
Elective Deferral Contribution Account will be available only
after the total amount available from all other Accounts has been
withdrawn.
ONE INVESTMENT FUND - FIXED INCOME FUND OR GENERAL OR EQUITY FUND
12.0[] General Withdrawal Rules
Any withdrawal shall be subject to the following
requirements:
OMIT (a) IF NO LIFE ANNUITIES
(a) If a Participant elected to receive his benefits in the
form of a life annuity in accordance with the provisions of
Sections 7.03 and 7.04 at any time, any withdrawal will be
distributed under a Qualified Annuity unless such Participant
elects to receive such withdrawal in a lump sum. All withdrawals
will be considered separate Annuity Starting Dates for purposes
of Sections 7.02 and 7.04.
(a)/(b) Only one withdrawal will be permitted during any
Plan Year.
<PAGE>
(b)/(c) A written request for a withdrawal must be
submitted to the Committee at least [30][ ] days prior to the
withdrawal date.[ Withdrawals will be taken from the
Participant's Accounts in the following order:]
SHORT OR MEDIUM-TERM FIXED INCOME ASSETS OR INSURANCE
COMPANY INVESTMENT CONTRACTS - WITHDRAWALS AS OF FIRST OF ANY
MONTH OR FIRST DAY OF SPECIFIC MONTHS
W/WO INTEREST - IF NO INTEREST, USE FIRST BRACKETED
WORDS OF SECOND SENTENCE - IF INTEREST, OMIT FIRST BRACKETED
WORDS OF SECOND SENTENCE AND SELECT APPLICABLE MODE - USE LAST
BRACKETED PHRASE IF INTEREST CREDITED
(c)/(d) A withdrawal may be requested as of [the first day
of any month] [any [MONTH ] or [MONTH ] 1] or at
such other dates as the Committee may fix from time to time with
respect to a hardship withdrawal. If requested as of any date
other than the day after a Valuation Date, [no investment
earnings] [interest at the lowest annual effective rate
guaranteed under any insurance company investment contract used
for the investment of all or any portion of the Trust Fund]
[interest at an annual effective rate of [ %]] will be credited
on the amount withdrawn for the period from the last Valuation
Date to the [first day of the month preceding or coincident with
the ]date specified for the withdrawal.
GENERAL ASSETS OR LONG-TERM FIXED INCOME ASSETS -
WITHDRAWALS PERMITTED AS OF ANNIVERSARY DATE OR FIRST DAY OF
MONTH FOLLOWING VALUATION DATES (IF MORE THAN ONE)
(c)/(d) A withdrawal may be requested as of any
[Anniversary Date] [[MONTH ] or [MONTH ] 1]
or at such other dates as the Committee may fix from time to time
with respect to a hardship withdrawal, providing the market value
of Trust Fund assets, adjusted for contributions and payment
activity has not declined and there is no significant adverse
economic effect on the Trust Fund. If requested as of any date
other than the day after a Valuation Date, no investment earnings
will be credited on the amount withdrawn for the period from the
last Valuation Date to the date specified for the withdrawal.
ALL PLANS
(d)/(e) The minimum amount that may be withdrawn is [$500]
[$ ] or the balance in the Participant's Accounts from which
a current withdrawal is permitted, if less. The minimum amount
limitation shall not apply in the case of a hardship withdrawal.
OMIT IF NO LOANS
(e)/(f) If a loan is outstanding at the time a withdrawal
is requested, such withdrawal shall be permitted only to the
extent that the remaining vested Account balance under the Plan
will be at least 100% of the outstanding loan balance as of the
date of the withdrawal.
<PAGE>
TWO INVESTMENT FUNDS
12.0[] General Withdrawal Rules
Any withdrawal shall be subject to the following
requirements:
OMIT (a) NO LIFE ANNUITIES
(a) If a Participant elected to receive his benefits in the
form of a life annuity in accordance with the provisions of
Sections 7.03 and 7.04 at any time, any withdrawal will be
distributed under a Qualified Annuity unless such Participant
elects to receive such withdrawal in a lump sum. All withdrawals
will be considered separate Annuity Starting Dates for purposes
of Sections 7.02 and 7.04.
(a)/(b) Only one withdrawal will be permitted during any
Plan Year.
(b)/(c) A written request for a withdrawal must be
submitted to the Committee at least [ ][30] days prior to the
withdrawal date[ and must specify the investment fund from which
the withdrawal is to be taken].[ Withdrawals will be taken from
the investment funds proportionately.] [ Withdrawals will be
taken from the Participant's Accounts in the following order:]
WITHDRAWALS AS OF FIRST OF ANY MONTH OR FIRST DAY OF SPECIFIC
MONTHS
(c)/(d) A withdrawal may be requested as of
(i) [the first day of any month][any [MONTH ]
or [MONTH ] 1], or at such other dates as the Committee
may fix from time to time with respect to a hardship withdrawal,
from that portion of the Participant's Account which is invested
in the [NAME OF FIXED INCOME FUND ]. If requested as
of any date other than the day after a Valuation Date, [no
investment earnings] [interest at the lowest annual effective
rate guaranteed under any insurance company investment contract
used for the investment of all or any portion of the Trust Fund]
[interest at an annual effective rate of [ %]] will be credited
on the amount withdrawn for the period from the last Valuation
Date to the [first day of the month preceding or coincident with
the ]date specified for the withdrawal.
(ii) any [ANNIVERSARY DATE] [[MONTH ] or
[MONTH ] 1], or such other dates that the Committee
may fix from time to time with respect to a hardship withdrawal,
from that portion of the Participant's Account which is invested
in the [NAME OF EQUITY OR GENERAL FUND ], providing
the market value of such fund, adjusted for contributions and
payment activity, has not declined and there is no significant
adverse economic effect on the Trust Fund. If requested as of
any date other than the day after a Valuation Date, no investment
earnings will be credited on the amount withdrawn for the period
from the last Valuation Date to the date specified for the
withdrawal.
<PAGE>
WITHDRAWALS PERMITTED AS OF ANNIVERSARY DATE OR FIRST DAY OF
MONTH FOLLOWING VALUATION DATES (IF MORE THAN ONE)
(c)/(d) A withdrawal may be requested as of any
[ANNIVERSARY DATE] [MONTH ] or [MONTH ] 1], or
at such other dates as the Committee may fix from time to time
with respect to a hardship withdrawal, providing that if the
Participant's Account includes any investment in the [NAME OF
GENERAL FUND], withdrawal of such portion of the Participant's
Account will be permitted only if the market value of Trust Fund
assets invested in such fund, adjusted for contributions and
payment activity has not declined and there is no significant
adverse economic effect on the Trust Fund. If requested as of
any date other than the day after a Valuation Date, no investment
earnings will be credited on the amount withdrawn for the period
from the last Valuation Date to the date specified for the
withdrawal.
ALL PLANS
(d)/(e) The minimum amount that may be withdrawn is [$500]
[$ ] or the balance in the Participant's Accounts from which
a current withdrawal is permitted, if less. The minimum amount
limitation shall not apply in the case of a hardship withdrawal.
OMIT IF NO LOANS
(e)/(f) If a loan is outstanding at the time a withdrawal
is requested, such withdrawal shall be permitted only to the
extent that the remaining vested Account balance under the Plan
will be at least 100% of the outstanding loan balance as of the
date of the withdrawal.
USE FOLLOWING, IF APPLICABLE WITH EITHER GENERAL WITHDRAWAL RULES
(f)/(g) The Company's Matching Contributions to the
Participant's Matching Contribution Account shall be suspended
for [six][ ] months if a withdrawal is made from his Elective
Deferral Contribution or Matching Contribution Account.
(g)/(h) All suspension periods run consecutively.
(h)/(i) The Company's contributions shall automatically be
resumed following the required period of suspension, unless the
Participant elects not to make Elective Deferral Contributions.
<PAGE>
ARTICLE 13
LOANS
INACTIVE LOAN PROVISIONS
13.01 Activation of Loan Provisions
The Committee, solely in its discretion and in accordance
with the provisions of this Article, may permit Participants to
borrow from the Trust Fund.
13.02 Amount of Loans and Terms of Repayment
At such time as loans are permitted, the Committee shall
promulgate any additional specific rules and regulations
governing all aspects of this Article as it deems necessary. The
following general rules shall serve as the basis for any specific
rules and regulations:
ACTIVATED LOAN PROVISIONS
13.01 Amount of Loans and Terms of Repayment
The Committee shall promulgate any additional specific rules
and regulations governing all aspects of this Article as it deems
necessary. The following general rules shall serve as the basis
for any specific rules and regulations:
ALL PLANS
USE IF LOANS FOR ANY REASON
(a) Upon written application on forms provided by the
Committee, the Committee may grant a loan to a Participant,
except shareholder employees or owner employees as referred to in
Section 4975(d) of the Code.
USE IF LOANS FOR HARDSHIP ONLY
(a) Upon written application on forms provided by the
Committee, the Committee may grant a loan to a Participant,
except shareholder employees or owner employees as referred to in
Section 4975(d) of the Code, for the following purposes:
(i) medical expenses, as described in Section 213(d)
of the Code, previously incurred by the Participant, the
Participant's spouse or the Participant's dependents, or the
funds necessary for these persons to obtain medical care
described in Section 213(d) of the Code,
(ii) purchase of a principal residence for the
Participant,
<PAGE>
(iii) tuition payments and related educational fees
for the next 12 months of post-secondary education for the
Participant or the Participant's spouse, children or other
dependents,
(iv) the need to prevent eviction from or foreclosure
on the mortgage of the Participant's principal residence, or
(v) any other financial stress the satisfaction of
which is necessary for the safety, well-being, livelihood or
health of the Participant or his immediate family.
The Participant may be required to furnish such
evidence of purpose and need as the Committee deems necessary.
ALL PLANS
(b) The minimum amount of any loan shall be [$1,000][$
].
(c) In no event shall a loan exceed the lesser of
(i) $50,000, reduced by the highest outstanding loan
balance during the one-year period ending on the day before the
date on which any new loan is to be granted, or
(ii) 50% of the amount to which the Participant is
vested under this Plan on the date the loan is granted.
(d) Each loan granted to a Participant must be repaid in
full before any subsequent loan is granted to such Participant.
(e) All loans [issued ]under this Article [subsequent to
October 18, 1989]shall be considered investments of the [Trust
Fund][Account of the Participant to whom the loan is granted[ and
shall be charged to the Accounts[and investment funds] [as
designated by the Participant][proportionately]]].
[The Participant's Accounts shall be charged in the
following order:]
LIST ACCOUNTS AS SPECIFIED ON SPECS
Interest shall be charged thereon at a rate determined
on the basis of loans granted under similar circumstances by
financial institutions in the locale of the Company's principal
place of business.
PLANS IN EFFECT BEFORE OCTOBER 18, 1989 WITH ACTIVATED
LOANS
Notwithstanding the foregoing, the interest rate
charged on any prior loans outstanding as of October 18, 1989
shall be determined under the provisions of the Plan prior to
this amendment, unless such loans are renegotiated, renewed or
extended, in which event such prior loans shall be treated as new
loans.
<PAGE>
If a loan is granted as of any date other than the day
after a Valuation Date, no investment earnings will be credited
on the amount of the loan for the period from the last Valuation
Date to the date the loan is granted.
(f) Each loan shall be secured by the assignment of not
more than 50% of the Participant's vested Account balance on the
date the loan is granted, a promissory note executed by the
Participant and such additional collateral as the Committee shall
require to assure repayment of the loan and all interest payable
thereon.
(g) Each loan shall be repaid by the Participant either
through payroll deductions or in such other manner as the
Committee shall determine, provided such payment schedule does
not permit payment less frequently than quarterly. All payment
schedules shall be calculated to amortize principal and interest
in level payments over the period of the loan as agreed to by the
Committee and the Participant not to exceed five years from the
date of such loan. Notwithstanding the foregoing, in the event a
loan is approved for the purchase of a principal residence, the
five-year repayment requirement will not be applicable.
USE FOLLOWING PARAGRAPH IF LOAN IS INVESTMENT OF
MEMBER'S ACCOUNT
Principal and interest payments shall be credited to
the Account of the Participant to whom the loan is granted[ in
the same manner as the loan was charged[ and shall be invested in
accordance with the Participant's current investment election]].
USE IF ACCELERATION CLAUSE DESIRED
[(h) Except as provided in Subsection (k), upon a
Participant's termination of employment for any reason, the
entire unpaid balance of the loan shall be due and payable.]
(h)/(i) If a Participant should fail to make a payment
when due, the entire unpaid balance of the loan shall be in
default and the Committee shall take any one or more of the
following steps, as it deems necessary, to secure repayment of
such loan:
(i) Deduct the amount of the outstanding indebtedness
from the Participant's Account, to the extent permitted and
available under law and in accordance with the terms of the Plan.
Such deduction will not occur until a distributable event occurs
under the terms of the Plan.
(ii) Instruct the Trustee to sell any property held as
collateral for such loan.
(iii) Take such other steps as may be required.
<PAGE>
(i)/
(j) Each loan will require that within the 90-day period
before the granting of the loan, the Participant and, if married,
his spouse, consent to such loan in writing, and acknowledge the
reduction in the Participant's Account in the event the loan is
in default.
(j)/
(k) Any Participant who is a "party in interest" as defined
in ERISA Section 3(14) and who ceases to be an active Eligible
Employee may be eligible to borrow from the Plan under terms and
conditions reflecting valid differences between active
Participants and other Participants which would be considered in
a normal commercial setting, such as the unavailability of
payroll deductions for repayment. In addition, there will be an
annual fee for the administration of each of such loans of $100.
In no event will loans be unreasonably withheld from any eligible
applicant.
(k)/
(l) No distribution from the Plan upon termination of
employment for any reason shall be made to any Participant or
Beneficiary unless and until all loans, including interest
thereon, have been fully repaid.
PLANS IN EFFECT BEFORE AUG. 13, 1982 WITH ACTIVATED LOAN
PROVISIONS
(l)/
(m) Notwithstanding the foregoing, any prior loans
outstanding as of August 13, 1982, shall not be subject to the
limitations set forth in Subsection (b) and shall be repaid in
accordance with the terms agreed upon when the loans were
granted, unless such loans are renegotiated, renewed or extended,
in which event such prior loans shall be treated as new loans.
PLANS IN EFFECT BEFORE JAN. 1, 1987 WITH ACTIVATED LOAN PROVISION
(m)/
(n) Notwithstanding the foregoing, any prior loans
outstanding as of January 1, 1987 shall be repaid in accordance
with the terms agreed upon when the loans were granted, unless
such loans are renegotiated, renewed or extended, in which event
such prior loans shall be treated as new loans.
<PAGE>
ARTICLE 14
GENERAL PROVISIONS
14.01 Exclusiveness of Benefits
IF AMENDED PLAN USE FIRST BRACKETED MATERIAL - IF NEW PLAN USE
SECOND BRACKETED MATERIAL - USE 3.08 and 4.02 for PROFIT-SHARING
AND MONEY PURCHASE AND 3.10 AND 4.03 FOR 401(K) AND THRIFT
USE FOR ALL PLANS UNLESS TAX-EXEMPT
The Plan has been created for the exclusive benefit of the
Participants and their Beneficiaries. No part of the Trust Fund
shall ever revert to the Company nor shall such Trust Fund ever
be used other than for the exclusive benefit of the Participants
and their Beneficiaries, except as provided in Sections 3.10[ and
9.03][, 9.03 and [14.10][ ]]] and Subsection 4.03(d)
provided, however, that contributions made by the Company by
mistake of fact or which are not deductible under Section 404 of
the Code, may be returned to the Company within one year of the
mistaken payment of the contribution or the date of disallowance
of the deduction, as the case may be. All contributions made by
the Company shall be conditional upon their deductibility under
Section 404 of the Code. No person shall have any interest in or
right to any part of the Trust Fund, or any equitable right under
the Trust Agreement, except to the extent expressly provided in
the Plan or Trust Agreement.
USE IF TAX-EXEMPT
The Plan has been created for the exclusive benefit of the
Participants and their Beneficiaries. No part of the Trust Fund
shall ever revert to the Company nor shall such Trust Fund ever
be used other than for the exclusive benefit of the Participants
and their Beneficiaries, except as provided in Sections 3.10[ and
9.03][, 9.03 and [14.10][ ]]] provided, however, that
contributions made by the Company by mistake of fact, may be
returned to the Company within one year of the mistaken payment
of the contribution. No person shall have any interest in or
right to any part of the Trust Fund, or any equitable right under
the Trust Agreement, except to the extent expressly provided in
the Plan or Trust Agreement.
14.02 Limitation of Rights
Neither the establishment of the Plan, nor any modification
thereof, nor the creation of any fund, trust or account, nor the
purchase of any policy, nor the payment of any benefits shall be
construed as giving any Participant, Beneficiary, or any other
person whomsoever, any legal or equitable right against the
Company, the Committee, or the Trustee, unless such right shall
be specifically provided for in the Plan or conferred by
affirmative action of the Committee or the Company in accordance
with the terms and provisions of the Plan; or as giving any
Participant or any other employee of the Company the right to be
retained in the service of the Company and all Participants and
other employees shall remain subject to discharge to the same
extent as if the Plan had never been adopted.
<PAGE>
14.03 Limitation of Liability and Legal Actions
In any action or proceeding involving the Trust Fund, or any
part thereof, or the administration thereof, the Company, the
Committee, and the Trustee shall be the only necessary parties.
Any final judgment entered in any such action or proceeding,
which is not appealed or appealable, shall be binding and
conclusive on the parties thereto, and all persons having or
claiming to have an interest in the Trust Fund or under the Plan.
14.04 Construction of Agreement
The Plan shall be construed according to the laws of the
State in which the Company named under Article l has its
principal place of business, and all provisions hereof shall be
administered according to, and its validity shall be determined
under, the laws of such State except where pre-empted by Federal
law.
14.05 Title to Assets
No Participant, Beneficiary or any other person shall have
any legal or equitable right or interest in the funds set aside
by the Company, or otherwise received or held under the Plan, or
in any assets of the Trust Fund, except as expressly provided in
the Plan, and no Participant, Beneficiary or any other person
shall be deemed to possess a right to any assets except as herein
provided.
14.06 Severability
Should any provision of the Plan or any regulations adopted
thereunder be deemed or held to be unlawful or invalid for any
reason, such fact shall not adversely affect the other provisions
or regulations unless such invalidity shall render impossible or
impractical the functioning of the Plan and, in such case, the
appropriate parties shall immediately adopt a new provision or
regulation to take the place of the one held illegal or invalid.
14.07 Titles and Headings
The titles and headings of the Sections in this instrument
are for convenience of reference only and, in the event of any
conflict, the text rather than such titles or headings shall
control.
14.08 Counterparts as Original
The Plan has been prepared in counterparts, each of which so
prepared shall be construed an original.
<PAGE>
14.09 Merger of Plans
Upon the merger or consolidation of any other plan with this
Plan or the transfer of assets or liabilities from this Plan to
any other plan, all Participants of this Plan shall be entitled
to a benefit immediately after the merger, consolidation or
transfer (if the merged, consolidated or transferee plan had then
been terminated) at least equal to the benefit they would have
been entitled to immediately prior to such merger, consolidation
or transfer (if the Plan had then terminated).
USE ONLY IF PLAN HAS OWNER-EMPLOYEES PARTICIPATING
14.10 Special Rules with Respect to Owner-Employees
If this Plan provides contributions or benefits for one or
more Owner-Employees who control both the business for which this
Plan is established and one or more other trades or businesses,
this Plan and the plan established for other trades or businesses
must, when looked at as a single plan, satisfy Sections 401(a)
and (d) of the Code for the employees of this Plan and all other
trades and businesses.
If the Plan provides contributions or benefits for one or
more Owner-Employees who control one or more other trades or
businesses, the employees of the other trades or businesses must
be included in a plan which satisfies Sections 401(a) and (d) of
the Code and which provides contributions and benefits not less
favorable than provided for Owner-Employees under this Plan.
If an individual is covered as an Owner-Employee under the
plans of two or more trades or businesses which are not
controlled and the individual controls a trade or business, then
the contributions or benefits of the employees under the plan of
the trades or businesses which are controlled must be as
favorable as those provided for him under the most favorable plan
of the trade or business which is not controlled.
For purposes of the preceding paragraphs, an Owner-Employee,
or two or more Owner-Employees, will be considered to control a
trade or business if the Owner-Employee, or two or more Owner-
Employees together:
(a) own the entire interest in an unincorporated trade or
business, or
(b) in the case of a partnership, own more than 50 percent
of either the capital interest or the profits interest in the
partnership.
For purposes of the preceding sentence, an Owner-Employee,
or two or more Owner-Employees shall be treated as owning any
interest in a partnership which is owned, directly or indirectly,
by a partnership which such Owner-Employee or such two or more
Owner- Employees, are considered to control within the meaning of
the preceding sentence.
<PAGE>
NEW PLANS ONLY
14.10 Internal Revenue Service Approval
USE FOR ALL NEW PLANS UNLESS TAX EXEMPT
If the Plan shall not be initially approved and qualified by
the Internal Revenue Service as meeting the requirements of the
Code or any other applicable act so as to permit the Company, for
income tax purposes, to deduct its contributions to the Trust,
all of the Company's contributions to the Trust Fund shall be
returned to the Company, provided the application for the
determination is made by the time prescribed by law for the
filing of the Company's return for the taxable year in which such
Plan was adopted, or such later date as the Secretary of the
Treasury may prescribe. In such event, the Plan shall be null
and void.
USE IF TAX EXEMPT
If the Plan shall not be initially approved and qualified by
the Internal Revenue Service as meeting the requirements of the
Code or any other applicable act, all of the Company's
contributions to the Trust Fund shall be returned to the Company,
provided the application for the determination is made by the
time prescribed by law for the filing of the Company's return for
the fiscal year in which such Plan was adopted, or such later
date as the Secretary of the Treasury may prescribe. In such
event, the Plan shall be null and void.
IN WITNESS WHEREOF, the parties hereto have caused this Plan to
be duly executed this day of , 199 .
[C]
ATTEST: By:
<PAGE>
NEW JERSEY STEEL CORPORATION
THRIFT SAVINGS TRUST AGREEMENT
(AS AMENDED 1994)
<PAGE>
TABLE OF CONTENTS
Page No.
ARTICLE 1 - ESTABLISHMENT OF TRUST FUND 2
ARTICLE 2 - DISBURSEMENT OF FUNDS
2.1 Disbursement of Funds 2
2.2 Excess Contributions 2
ARTICLE 3 - INVESTMENT OF TRUST FUND
3.1 Investment of Trust Fund 3
3.2 Fiduciary Standard of Conduct 4
ARTICLE 4 - POWERS OF TRUSTEES
4.1 Purchase of Property 4
4.2 Sale, Exchange, Conveyance and Transfer of Property 4
4.3 Exercise of Owners' Rights 5
4.4 Right to Borrow 5
4.5 Settlement of Claims and Debts 5
4.6 Retention of Cash 5
4.7 Retention of Property Acquired 5
4.8 Maintaining Real Estate 5
4.9 Mortgage Powers 6
4.10 Registration of Investments 6
4.11 Employment of Agents and Counsel 6
4.12 Execution of Instruments 6
4.13 Power to do any Necessary Act 6
ARTICLE 5 - COMPENSATION, EXPENSES AND TAXES 7
ARTICLE 6 - MAINTENANCE OF RECORDS 7
ARTICLE 7 - REMOVAL, RESIGNATION OR DEATH OF TRUSTEE AND
APPOINTMENT OF SUCCESSOR TRUSTEE 8
ARTICLE 8 - IMMUNITY OF TRUSTEES
8.1 Protection of Trustees 8
8.2 Limitation of Liability 9
8.3 Power to Allocate Responsibilities 9
8.4 Evidence of Action of Company 9
8.5 Reliance on Counsel 10
8.6 Indemnification 10
<PAGE>
TABLE OF CONTENTS
Page No.
ARTICLE 9 - QUALIFIED INVESTMENT MANAGER
9.1 Appointment and Acknowledgement 10
9.2 Qualification 10
9.3 Relation to Trustees 10
9.4 Resignation or Removal 11
ARTICLE 10 - CONCERNING INSURANCE COMPANIES 11
ARTICLE 11 - AMENDMENT AND TERMINATION
11.1 Amendment 11
11.2 Termination 12
ARTICLE 12 - SPENDTHRIFT PROVISIONS 12
ARTICLE 13 - ADOPTION BY OTHER BUSINESS ENTITIES 12
ARTICLE 14 - CONSTRUCTION OF AGREEMENT 13
ARTICLE 15 - MISCELLANEOUS PROVISIONS
15.1 Disposition of Unclaimed Benefits 13
15.2 Severability 13
15.3 Titles, Headings, Number, and Gender 14
15.4 Counterparts as Original 14
<PAGE>
NEW JERSEY STEEL CORPORATION
THRIFT SAVINGS TRUST AGREEMENT
(AS AMENDED 1994)
TRUST AGREEMENT (the "Agreement") made as of January 1, 1994, by and
between New Jersey Steel Corporation, a New Jersey corporation (the
"Company"), and Robert J. Pasquarelli and Paul Roik (the "Trustees").
W I T N E S S E T H :
WHEREAS, effective January 1, 1981, the Company established the New
Jersey Steel Corporation Thrift Savings Plan (the "Plan"); and
WHEREAS, effective January 1, 1981, pursuant to the terms of such plan,
the Company and Trustee adopted a separate trust agreement, the New
Jersey Steel Corporation Thrift Savings Trust Agreement (the "Trust");
and
WHEREAS, Robert J. Pasquarelli and Paul Roik have been acting as
Trustees of the Trust; and
WHEREAS, effective January 1, 1994 the Plan was amended in its entirety
and restated into the New Jersey Steel Corporation Thrift Savings Plan
(As Amended 1994), copy of which is annexed hereto; and
WHEREAS, the Company and Trustees desire to amend the Trust Agreement in
its entirety;
NOW, THEREFORE, based on the foregoing premises it is mutually agreed by
and between the Company and the Trustee as follows:
ARTICLE 1
ESTABLISHMENT OF TRUST FUND
1.1 The Company hereby continues with the Trustees a trust fund (the
"Fund") consisting of cash and such other property acceptable to
the Trustees as shall, from time to time, be paid or delivered to
the Trustees and the earnings and profits thereon. The Fund shall
be held, managed and administered by the Trustees in trust in
accordance with the provisions of this Agreement without
distinction between principal and income. At no time shall any
part of the Fund (whether by reason of any amendment of this
Agreement, or otherwise) be used for, or diverted to, purposes
other than the exclusive benefit of participants of the Plan or
their beneficiaries; provided, however, that contributions made by
the Company by mistake of fact or which are not deductible under
Section 404 of the Internal Revenue Code of 1986 (the "Code") may,
at the request of the Company, be returned to the Company within
one year of the mistaken payment of contribution or the date of
disallowance of the deduction, as the case may be. Any amounts
refunded to the Company shall not include investment earnings and
must be reduced by its share of investment losses, if any.
<PAGE>
ARTICLE 2
DISBURSEMENT OF FUNDS
2.1 Disbursement of Funds
The Trustees shall, from time to time, on the written directions
of the committee provided for in the Plan (the "Committee"), make
payments out of the Fund to such persons, in such manner, in such
amounts and for such purposes as may be specified in the written
directions of the Committee, and upon any such payment being made,
the amount thereof shall no longer constitute a part of the Fund.
The Trustees shall not be responsible in any way with respect to
the application of such payments or for the administration of the
Plan. The Trustees shall be under no duty to enforce payment of
any contributions to the Fund and shall not be responsible for the
adequacy of the Fund to meet and discharge any and all liabilities
under the Plan.
2.2 Excess Contributions
Notwithstanding anything contained herein to the contrary, the
amount of "excess contributions" (as such term is defined by
Section 401(k)(8)(B) of the Code), "excess deferrals" (as such
term is defined by Section 402(g)(3) of the Code) and "excess
aggregate contributions" (as such term is defined by Section
401(m)(6)(B) of the Code) may be returned to the Company or
distributed to "highly compensated employees" (as such term is
defined by Section 414(q) of the Code), as the case may be,
pursuant to Sections 401(k)(8), 402(g)(2) and 401(m)(6) of the
Code and regulations thereunder.
ARTICLE 3
INVESTMENT OF TRUST FUND
3.1 Investment of Trust Fund
The Trustees shall invest and reinvest the Fund, in such
securities or in such property, real or personal wherever
situated, as the Trustees shall deem advisable. Investments of
the Fund shall not be limited to the classes of property in which
trustees are authorized to invest by any state or local law. The
assets in which the Fund may be invested include, but are not
limited to, stocks, common or preferred, trust and participation
certificates, bonds and mortgages (including part interests in
bonds and mortgages or notes and mortgages insured by the Federal
Housing, Veterans Administration or similar agencies), group
annuity or insurance company investment contracts, leaseholds on
improved and unimproved real estate, and other evidence of
indebtedness or ownership and interests in any trust fund that has
been or shall be created and maintained for the collective
investment of funds of trusts for employee benefit plans
(qualified under sections 401 and 501 of the Code) and to the
extent not prohibited by the Plan and by section 407 of The
Employee Retirement Income Security Act of 1974 (ERISA),
qualifying employer securities (as defined in section 407(d)(5) of
ERISA) issued by the Company and qualifying employer real property
(as defined in section 407(d)(4) of ERISA).
<PAGE>
Without limiting the generality of the foregoing, the Trustees
shall, as and when directed by the Committee, invest a portion of
the Fund in (a) annuity or other insurance policies issued by any
insurance company approved by the Committee and shall deal with
such policies as directed by the Committee; (b) such separate
investment fund or funds as designated by the Committee, approved
by the Trustees and established in accordance with the terms of
the Plan; and (c) loans, if any, granted to participants in
accordance with the terms of the Plan.
The Committee shall advise the Trustees in writing of the amounts
which shall be allocated for such annuity or other insurance
policies, to each of said investment fund or funds, and to each of
said loans if any. The Trustees shall hold the amounts so
specified as part of the investment fund to which it shall have
been allocated.
If the Plan meets the requirements of Section 404(c) of ERISA, the
Trustees shall not be liable for any loss or expense which is (a)
the direct and necessary result of the participant's or
beneficiary's exercise of control and/or (b) the result of the
Trustees' refusal or failure to comply with any such direction
which if implemented would violate plan provisions or applicable
law.
3.2 Fiduciary Standard of Conduct
The Trustees shall discharge their duties in the investment of the
Fund solely in the interest of the participants and their
beneficiaries for the exclusive purpose of providing benefits to
participants and their beneficiaries and defraying reasonable
expenses of administering the Plan. They shall act with the care,
skill, prudence, and diligence under the circumstances then
prevailing that a prudent man, acting in a like capacity and
familiar with such matters, would use in conducting an enterprise
of like character and with like aims, and shall diversify
investments of the Fund so as to minimize the risk of large
losses, unless under the circumstances it is clearly prudent not
to do so.
From time to time the Committee shall communicate to the Trustees
and to any investment manager information relating to the
liquidity needs of the Plan so that investment discretion can be
exercised to effect specified objectives.
<PAGE>
ARTICLE 4
POWERS OF TRUSTEES
The Trustees shall have the following powers and authority in the
administration of the trust hereby created:
4.1 Purchase of Property
To purchase, or subscribe for, any security or property and to
retain the same in trust.
4.2 Sale, Exchange, Conveyance and Transfer of Property
To sell or otherwise dispose of, by private or public sale, any
real or personal property held by the Trustees. No person dealing
with the Trustees shall be bound to verify the application of the
purchase money or to inquire into the validity, expediency or
propriety of any such sale or other disposition.
4.3 Exercise of Owners' Rights
To exercise any ownership rights relating to any assets of the
Fund including, but not limited to, any rights as owner of any
securities or any interest in real property which are part of the
Fund.
4.4 Right to Borrow
To borrow or raise monies for the purposes of the trust in such
amount, and upon such terms and conditions, as the Trustees in
their absolute discretion may deem advisable; and, for any sums so
borrowed, to issue their promissory note as Trustees and to secure
the repayment thereof by pledging all, or any part of, the Fund,
provided, however, that if any borrowing is made against life
insurance policies (other than such policies which are
specifically allocated to participants in accordance with the
terms of the Plan), the interests of all participants shall be
adjusted to reflect such borrowing on a pro rata basis. No person
lending money to the Trustees shall be bound to verify the
application of the money lent or to inquire into the validity,
expediency or propriety of any such borrowing.
4.5 Settlement of Claims and Debts
To settle, compromise or submit to arbitration any claim, debt or
damage due or owing to or from the Fund; to commence or defend
suits or legal or administrative proceedings; and to represent the
Fund in all suits and legal and administrative proceedings.
4.6 Retention of Cash
To keep such portion of the Fund in cash or cash balances as the
Trustees may, from time to time, deem to be in the best interests
of the trust created hereby, it being understood that the Trustees
shall not be required to pay any interest on any such cash
balances.
<PAGE>
4.7 Retention of Property Acquired
To accept and retain for such time as they may deem advisable any
security or other property received or acquired by them as
Trustees hereunder, whether or not such security or other property
is productive of income or would normally be purchased as
investments hereunder.
4.8 Maintaining Real Estate
To repair, alter, improve or lease any building or structure on
any real property forming part of the Fund, including, but not
necessarily limited to, the right to erect entirely new buildings
or structures.
4.9 Mortgage Powers
To renew or extend or to participate in the renewal or extension
of any mortgage upon such terms as may be deemed advisable, and to
agree to a reduction in the rate of interest charged on any
mortgage or to any other modification or change in the terms of
any mortgage or of any guarantee pertaining thereto in any manner
and to any extent that may be deemed advisable for the protection
of the Fund or the preservation of the value of the investment; to
waive any default, whether in the performance of any covenant or
condition of any mortgage or in the performance of any guarantee,
or to enforce any such default, in such manner and to such extent
as may be deemed advisable; to exercise and enforce any and all
rights of foreclosure; to bid on property in foreclosure; to take
a deed in lieu of foreclosure with or without paying a
consideration therefore and in connection therewith to release the
obligation on the bond secured by such mortgage; and to exercise
and enforce in any action, suit or proceeding at law or in equity
any rights or remedies in respect to any mortgage or guarantee.
4.10 Registration of Investments
To register any investment held as part of the Fund in the name of
the Trustees or in the name of a nominee and to hold any
investment in bearer form, but the books and records of the
Trustees shall at all times show that all such investments are
part of the Fund.
4.11 Employment of Agents and Counsel
To employ suitable agents and counsel (who may be counsel for the
Company or any Trustee in his individual capacity) and to pay
their reasonable expenses and compensation.
4.12 Execution of Instruments
To make, execute, acknowledge and deliver any and all documents of
transfer and conveyance and any and all other instruments that may
be necessary or appropriate to carry out the powers herein
granted; any instrument or document to be executed by the
Trustees, may be made, executed, acknowledged and delivered by
either of the Trustees; any person, firm, or corporation,
including any insurance company or bank, may rely upon and shall
be protected in relying upon the signatures of either of the
Trustees, with the same force and effect as though all Trustees
had signed.
4.13 Power to do Any Necessary Act
To do all such acts, undertake all such proceedings and exercise
all such rights and privileges, although not specifically
mentioned herein, as necessary or proper for the accomplishment of
the foregoing powers or otherwise in the best interests of the
Fund.
ARTICLE 5
COMPENSATION, EXPENSES AND TAXES
5.1 The Company may elect to pay (a) the expenses incurred by the
Trustees in performance of their duties, including reasonable fees
for legal services rendered to the Trustees; (b) such compensation
to the Trustees, other than Trustees who are full-time paid
employees of the Company, as may be agreed upon in writing from
time to time between the Company and the Trustees; (c) all other
proper charges and disbursements of the Trustees; (d)
administrative expenses of the Plan including premiums for any
surety bond covering fiduciaries of the Plan and trust which may
be required under Section 412 of ERISA and (e) the fees and
retainers of the Plan's actuary, consultant, custodian,
administrator and counsel. If the Company does not elect to pay
all or part of these expenses, the Trustees shall pay these
expenses and charge the payment thereof against the assets of the
Fund. Until paid, any such fees and expenses shall constitute a
charge against the Fund. All taxes of any kind whatsoever that
may be levied or assessed under existing or future laws upon, or
in respect of, the Fund or the income thereof, and any expense
directly relating to the investments of the Fund such as brokerage
commissions and registration charges, shall be paid from the Fund.
<PAGE>
ARTICLE 6
MAINTENANCE OF RECORDS
6.1 The Trustees shall keep accurate and detailed accounts of all
investments, receipts, disbursements and other transactions
hereunder, so as to reflect each separate investment fund, if
applicable, and all accounts, books and records relating thereto
shall be open to inspection and audit at all reasonable times by
any person designated by the Company. Within 60 days following
the close of the fiscal year of the Plan and within 60 days after
the removal or resignation of the Trustees as provided in Article
7 hereof, the Trustees shall file with the Company a written
account setting forth all investments, the receipts, the
disbursements and other transactions effected by them during such
fiscal year or during the period from the close of the last fiscal
year to the date of such removal or resignation, and setting forth
the current value of the Fund. Upon the expiration of 60 days
from the date of filing such annual or other account the Trustees
shall, to the extent permitted by law, be forever released and
discharged from all liability and accountability to anyone with
respect to the propriety of their acts and transactions shown in
such account, except with respect to such acts or transactions to
which the Company shall file with the Trustees written objections
within such 60 day period. No person other than the Company may
require an accounting or bring an action against the Trustees with
respect to the trust created hereby or their actions as Trustees,
except to the extent permitted by law.
ARTICLE 7
REMOVAL, RESIGNATION OR DEATH OF TRUSTEE
AND APPOINTMENT OF SUCCESSOR TRUSTEE
7.1 Any Trustee may be removed by the Company at any time upon written
notice to such Trustee and the remaining Trustees. Any Trustee
may resign at any time upon written notice to the Company and the
remaining Trustees. Such resignation shall take effect upon the
expiration of 60 days (or at any other time agreed upon by the
Trustee and the Company). In the event of a vacancy in the office
of Trustee as the result of a Trustee's death, removal,
resignation, refusal or inability to act, the Company shall
appoint a successor individual or corporate trustee, who, upon
acceptance of such appointment, shall have the same powers and
duties as those conferred upon the original Trustee hereunder;
and, the title to all funds and properties constituting the Fund
shall vest jointly in whoever shall from time to time be the
Trustees hereunder. Pending the appointment of any successor
trustee and the acceptance of such appointment, the remaining
Trustees shall have full power to take any action hereunder.
<PAGE>
ARTICLE 8
IMMUNITY OF TRUSTEES
8.1 Protection of Trustees
The Trustees shall be fully protected in relying upon a
certification of a member of the Committee with respect to any
instruction or direction of the Committee, in relying upon the
certification of an officer or agent of the Company as to the
membership of the Committee as it then exists, and in continuing
to rely upon such certification until a subsequent certification
is filed with the Trustees. The Trustees shall be fully protected
in acting upon any instrument, certificate or paper believed by
them to be genuine and to be signed or presented by the proper
person or persons, and the Trustees shall be under no duty to make
any investigation or inquiry as to any statement contained in any
such writing, but may accept the same as conclusive evidence of
the truth and accuracy of the statements therein contained. The
Trustees shall not be liable for the proper application of any
part of the Fund if action is taken by the Trustees in accordance
with written directions of the Committee as herein provided.
8.2 Limitation of Liability
The Trustees shall not be liable for the making, retention or sale
of any investment or reinvestment made by them, in their own
discretion, nor for any loss to, or diminution of the Fund, except
due to their own negligence, willful misconduct, lack of good
faith or failure to discharge their duties in accordance with
Section 3.2, nor shall a Trustee be liable for the breach of
responsibility of a co-trustee, the Committee or other fiduciary
of the Plan except in the following circumstances:
(a) if he knowingly participates in or knowingly conceals an act
or omission of the co-trustee, the Committee or other
fiduciary, knowing such act or omission to be a breach;
(b) if by failure to discharge his duties in accordance with
Section 3.2, he has enabled such other fiduciary to commit
a breach; or
(c) if he has knowledge of a breach by such other fiduciary and
fails to make reasonable efforts under the circumstances to
remedy the breach.
8.3 Power to Allocate Responsibilities
If at any time two or more persons serve as Trustees, they are
specifically authorized, by written agreement, to allocate
specific responsibilities, obligations or duties between
themselves, to be effective upon delivery of such agreement to the
Company for retention with other Plan documents. In the event
such agreement is entered into, it shall be deemed a part of this
Trust and no Trustee shall be liable either individually or as a
Trustee for any loss resulting from the acts or omissions of
another Trustee with respect to responsibilities, obligations or
duties allocated to such other Trustee, except as provided in
Section 8.2.
<PAGE>
8.4 Evidence of Action of Company
Except as otherwise herein specifically provided, any action by
the Company in accordance with any of the provisions of this
Agreement shall be evidenced by:
(a) a resolution of its board of directors (or similar governing
body) certified to the Trustees over the signature of its
secretary or assistant secretary or other duly authorized
agent; or
(b) an appropriate written authorization of any person or
committee to which the board of directors has delegated the
authority to take such action, and the Trustees shall be
fully protected in acting in accordance with any such
resolution or other authorization.
8.5 Reliance on Counsel
The Trustees may from time to time consult with counsel (who may
be counsel for the Company or any Trustee in his individual
capacity) and shall be fully protected in acting upon the advice
of counsel.
8.6 Indemnification
The Company agrees to indemnify the Fund and the Trustees against
any liability imposed as a result of a claim asserted by any
person or persons under the community property or other laws of
any state where the Trustees have acted in good faith in reliance
on a written direction of the Company or Committee. Claims
against the Trustees by persons dealing with them shall be limited
to the Fund, and each Trustee shall not be responsible for such
claims in his individual capacity.
ARTICLE 9
QUALIFIED INVESTMENT MANAGER
9.1 Appointment and Acknowledgement
The Company may appoint a qualified investment manager to manage
and control the investment and reinvestment of the Fund or a
portion of the Fund in his sole discretion in accordance with
Article 3. The accounts, books, and records of the Trustees shall
reflect the segregation of said portion of the Fund in separate
investment management accounts. Such investment manager shall
accept his appointment and acknowledge his status as a fiduciary
under the Plan in writing to the Trustees and shall be subject to
the standard of conduct described in Section 3.2.
<PAGE>
9.2 Qualification
A qualified investment manager shall be (a) an investment adviser
currently registered under the Investment Advisers Act of 1940;
(b) a bank, as defined in the Act, or (c) an insurance company
qualified to perform investment management services under the laws
of more than one state. A certificate evidencing such
qualification shall be delivered to the Trustees.
9.3 Relation to Trustees
The appointed investment manager shall direct the Trustees in
exercising the powers enumerated in Sections 3.1 and Article 4
with respect to the separate investment management accounts under
its management and control. The Trustees shall be under no duty
to review such investment directions. Notwithstanding the
provisions of Section 3.2, the Trustees shall not be liable for
acting pursuant to any direction of, or failing to act in the
absence of any direction from the investment manager, except as
stated in Section 8.2.
9.4 Resignation or Removal
Until notified by the Company of the resignation or removal of the
investment manager, the Trustees shall be fully protected in
relying on the acknowledgement and certification as delivered to
them. On receipt of such notice, the Trustees shall assume
management responsibility for the Fund in accordance with Articles
3 and 4. The Trustees shall relinquish management responsibility
for the Fund to a successor investment manager upon receipt of
such successor's acknowledgement and certification.
ARTICLE 10
CONCERNING INSURANCE COMPANIES
10.1 No insurance company which shall have issued or which shall issue
a contract or policy which forms a part of the Fund shall be
deemed a party to this Agreement. A certification in writing by
the Trustees as to the occurrence of any event contemplated by
this Agreement shall be conclusive evidence thereof and the
insurance company shall be protected in relying upon such
certification and shall incur no liability for so doing.
With respect to any action under any such contract, the insurance
company may deal with the Trustees as the sole owner thereof and
need not see that any action of the Trustees is authorized by this
Agreement. Any change made or action taken by an insurance
company upon the direction of the Trustees shall fully discharge
the insurance company from all liability with respect thereto, and
it need not see to the distribution or further application of any
monies paid by it to the Trustees or paid in accordance with the
direction of the Trustees.
<PAGE>
ARTICLE 11
AMENDMENT AND TERMINATION
11.1 Amendment
The Company reserves the right to amend, at any time, in whole or
in part, any or all of the provisions of this Agreement by notice
thereof in writing delivered to the Trustees, provided no such
amendment which affects the rights, duties or responsibilities of
the Trustees may be made without their consent.
11.2 Termination
This Agreement and the trust created hereby may be terminated by
the Company, upon 60 days' prior notice in writing to the
Trustees, as of the last business day of any month. Upon such
termination or upon the dissolution or liquidation of the Company,
the Fund shall be paid out by the Trustees as and when directed by
the Committee in accordance with the provisions of Section 2.1
hereof and, to the extent directed by the Committee, shall be used
to purchase annuity or other contracts issued by any insurance
company approved by the Committee.
ARTICLE 12
SPENDTHRIFT PROVISIONS
12.1 No benefit, which shall be payable out of the Fund to any person
(including a participant of the Plan or his beneficiary), shall be
subject in any manner to anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance or charge, and any such attempt
shall be void. No benefit shall in any manner be subject to the
debts, contracts, liabilities, engagements or torts of any
participant of the Plan or his beneficiary, nor shall any benefit
be subject to attachment or other legal process for or against
such person, and any such attempt shall not be recognized by the
Trustees except with respect to (a) loans to participants, if
applicable, under the terms of the Plan, (b) a Qualified Domestic
Relations Order as defined in Section 414(p) of the Code and (c)
such other instances as required by law.
ARTICLE 13
ADOPTION BY OTHER BUSINESS ENTITIES
13.1 Any corporation or other business entity may, with the approval of
the board of directors (or similar governing body) of the Company,
by resolution of its own board of directors (or similar governing
body), adopt the trust hereby created if such corporation or other
business entity shall have adopted the Plan. Contributions made by
such business entity shall be invested and maintained together
with the contributions made hereunder by the Company and any other
adopting business entity.
<PAGE>
ARTICLE 14
CONSTRUCTION OF AGREEMENT
14.1 This Agreement and the trust created hereby shall be administered,
construed and enforced according to the laws of the State of New
Jersey, and the Trustees shall be liable to account only in the
courts of that state. All transfers of funds or other property to
the Trustees shall be deemed to take place in the State of New
Jersey. The Trustees may at any time initiate an action or
proceeding for the settlement of their accounts or for the
determination of any question of construction which may arise or
for instructions, and the only necessary parties defendant to such
action or proceeding shall be the Company and the Committee,
except that the Trustees may, if they so elect, bring in as
parties defendant any other person or persons.
ARTICLE 15
MISCELLANEOUS PROVISIONS
15.1 Disposition of Unclaimed Benefits
In the event that any check in payment of benefits under the Plan
remains outstanding at the expiration of six months from the date
of mailing of such check to the last known address of the payee,
the Trustees, upon written notification from the Committee, shall
stop payment of all such outstanding checks and shall suspend the
issuance of any further checks, if any, to such payee. If, during
the three-year period from the date of mailing of the first such
check, the Committee cannot establish contact with the payee by
taking such action as it deems appropriate and the payee does not
make contact with the Committee, the Committee shall notify the
Trustees to dispose of such unpaid benefits in the manner
prescribed by the Plan.
15.2 Severability
Should any provision of this Agreement or any regulation adopted
hereunder be deemed or held to be unlawful or invalid for any
reason, such fact shall not adversely affect the other provisions
herein or regulations hereunder contained unless such invalidity
shall render impossible or impractical the functioning of this
Agreement and, in such case, the appropriate parties shall
immediately adopt a new provision or regulation to take the place
of the one held illegal or invalid.
<PAGE>
15.3 Titles, Headings, Number, and Gender
The titles and headings of the Sections in this instrument are for
convenience of reference only and, in the event of any conflict,
the text of this instrument, rather than such titles and headings,
shall control. Wherever used, the masculine pronoun shall include
the feminine and the feminine pronoun shall include the masculine
and the singular shall include the plural and the plural shall
include the singular.
15.4 Counterparts as Original
This Agreement has been executed in counterparts, each of which so
executed shall be construed an original.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed this day of , 199 .
NEW JERSEY STEEL CORPORATION
ATTEST: By:
TRUSTEES:
WITNESSED:
Robert J. Pasquarelli
Paul Roik
<PAGE>
Exhibit 23
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
New Jersey Steel Corporation:
We consent to incorporation by reference in the Registration Statements (No.
33-17435 and 33-52194) on Forms S-8 of New Jersey Steel Corporation of our
report dated January 11, 1995, except as to the second paragraph of note 12,
which is as of February 1, 1995,the fourth paragraph of note 10, which is as
of February 8, 1995, and the twelfth paragraph of note 10, which is as of
February 23, 1995, relating to the consolidated balance sheets of New Jersey
Steel Corporation and subsidiary as of November 30, 1994 and 1993 and the
related consolidated statements of operations, stockholders' equity, and cash
flows and related schedule for each of the years in the three-year period ended
November 30, 1994, which report appears in the November 30, 1994 annual report
on Form 10-K of New Jersey Steel Corporation.
KPMG Peat Marwick LLP
Short Hills, New Jersey
February 24, 1995
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
REGISTRANT'S CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED NOVEMBER 30,
1994 AND IS QUALIFIED IN IT'S ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> NOV-30-1994
<PERIOD-END> NOV-30-1994
<CASH> 337
<SECURITIES> 0
<RECEIVABLES> 24,942
<ALLOWANCES> (1,846)
<INVENTORY> 14,853
<CURRENT-ASSETS> 39,906
<PP&E> 158,431
<DEPRECIATION> (84,503)
<TOTAL-ASSETS> 136,236
<CURRENT-LIABILITIES> 36,250
<BONDS> 10,536
<COMMON> 0
0
59
<OTHER-SE> 89,391
<TOTAL-LIABILITY-AND-EQUITY> 136,236
<SALES> 137,755
<TOTAL-REVENUES> 137,755
<CGS> 128,733
<TOTAL-COSTS> 128,733
<OTHER-EXPENSES> 0
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