SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
X Annual Report pursuant to Section 13 or 15(d) of the Securities
- --- Exchange Act of 1934
For the fiscal year ended June 30, 1997 or
Transaction report pursuant to Section 13 or 15(d) of the Securities
- --- Exchange Act of 1934 Commission File Number 0-16032
MELAMINE CHEMICALS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 64-0475913
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification
Number)
Highway 18 West, Donaldsonville, Louisiana 70346
(Address of principal executive offices) (zip code)
(504) 473-3121
(Registrant's telephone number,
including area code)
Securities registered pursuant to Section 12(g) of the Act: Common
stock, $.01 par value.
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]
The aggregate market value of the voting stock held by non-
affiliates (affiliates being directors, executive officers and holders
of more than 5% of the Company's common stock) of the Registrant at
September 5, 1997 was approximately $21,427,000.
The number of shares of the Registrant's common stock, par value
one cent ($.01) per share, outstanding at September 5, 1997 was
5,626,934.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant's definitive proxy statement prepared
for use in connection with the registrant's 1997 Annual Meeting of
Shareholders have been incorporated by reference into Part III of this
Form 10-K.
PART I
Item 1. Business
General
Melamine Chemicals, Inc. (the "Company") is engaged in the
production and marketing of melamine crystal, a specialty chemical
having numerous industrial and commercial applications. Principal
products in which melamine is used include coatings such as paints for
automobiles and major household appliances; laminates such as kitchen
countertops, wood paneling and furniture; virtually unbreakable
dinnerware; adhesives for composite wood products such as
particleboard; and as a flame retardant additive in certain
polyurethane foams, paints and polymeric compounds. The Company, one
of only two producers of melamine in North America, is one of the
three largest producers in the world and estimates that it has 60% of
the domestic merchant market. The Company is engaged in the
development of new melamine process and applications technology and
the development and commercialization of melamine-related compounds.
The Company was formed in 1968 as a Delaware corporation by Ashland
Inc. ("Ashland") and First Mississippi Corporation, the predecessor of
ChemFirst, Inc. ("ChemFirst"), each of which owned 50% of the
Company's outstanding capital stock prior to the Company's initial
public offering in August 1987. Ashland and ChemFirst each owns 23.1%
of the Company. The Company's plant in Donaldsonville, Louisiana (the
"M-I plant"), which has a design and operating capacity of 75 million
pounds per year, was completed in 1971 and has been producing melamine
with approximately 99.9% purity levels since that date.
In June 1987, the Company started construction of a new production
facility at the Donaldsonville plant that utilizes a high-pressure,
high-temperature non-catalytic process developed and patented by the
Company (the "M-II process") with a design and operating capacity of
30 million pounds per year (the "M-II plant"). Management believed
that the M-II process would result in significant improvements over
the low-pressure, catalytic process (the "M-I process") used by the M-
I plant, including savings in capital costs and energy costs over
comparable production facilities utilizing the M-I technology. During
fiscal 1995, the M-II plant produced 23.8 million pounds, during
fiscal 1996, the plant produced 24.6 million pounds and during fiscal
1997, the plant produced 25.8 million pounds.
The purity of the product produced by the M-II plant is averaging
in excess of 97%, and 100% of the product's ingredients are chemically
active. The Company has been successful in introducing this product
into a variety of markets including adhesive resins, molding compounds
and concrete additives. While not all market segments are expected to
be able to use the M-II product, the Company believes that
approximately 70% of the current worldwide melamine market could
utilize this product. During fiscal 1997, sales of the M-II product
totaled 27.4 million pounds compared to 21.8 million pounds in fiscal
1996 and 21.8 million pounds in fiscal 1995.
In June 1995, the Company filed patent applications in the United
States covering what it believes to be significant improvements to the
M-II process. Laboratory tests of these improvements indicate that
they can increase the purity of the M-II product up to 99.5% plus.
With this improvement, the M-II product is expected to be suitable for
approximately 90% of the current worldwide consumption. The patents
were issued in May 1996. In April 1997, the Company sold the M-II and
associated patents to DSM Melamine B.V. (DSM) for $25 million ($15
million in cash and $10 million in interest bearing notes). In
addition, DSM will assist the Company in modifying its M-I plant to
implement certain improvements developed by DSM. The Company retained
the right to use the M-II process to build up to two additional plants
in the Americas.
End-Uses of Melamine
Three principal characteristics make melamine crystal chemically
unique: (i) stability that makes it resistant to chemical, thermal and
physical degradation; (ii) a structure that allows it to be combined
with other chemical compounds, particularly formaldehyde and other
monomers, in a wide variety of chemical reactions and polymerizations;
and (iii) a 66% nitrogen content. Melamine has excellent fire
retardant properties because: (i) when exposed to intense heat, it
gives off nitrogen-containing compounds that dilute oxygen, thereby
inhibiting combustion; and (ii) it is endothermic and, therefore, acts
as a heat-sink which also inhibits combustion.
Over 80% of the melamine sold by the Company is used in the
manufacture of melamine-formaldehyde resins. These resins have
numerous end-uses including: (i) surface coatings, which account for
more than one-third of domestic melamine consumption; (ii) laminates,
which account for more than one-quarter; and (iii) plastic molding
compounds, which account for approximately one-sixth of domestic
consumption. Melamine-based resins are also used in paper treatments
and coatings, textile treatments and coatings, wood adhesives and
other uses. These markets, together with other end-uses of melamine,
are described below:
Surface coating resins. Melamine resins are used as clear finishes
for paper, fabrics, wood and metals and can be pigmented with white
and colored pigments to produce opaque enamel finishes. The finishes
are color retentive and water and chemical resistant, and can be used
for both interior and exterior applications. Finishes are formulated
for refrigerators, washing machines, automobiles, hospital equipment,
kitchen utensils and cans. In combination with other materials,
melamine resins can be used as flexible finishes for paper textiles
and fabrics. Surface and automotive coatings represent the largest
single domestic use of melamine. The Company believes that over 95%
of all automobiles produced in the United States are now being painted
with high solids melamine-based paints that emit less fumes during
application and produce higher quality finishes than traditional
coatings.
Laminating resins. Melamine resins are used in laminated products.
Decorative melamine laminates are often used when durability,
especially heat and stain resistance, is desired. Typical
applications include countertops, cabinet surfaces, simulated wood
paneling, furniture surfaces and shelving. Kitchen and bathroom
countertops are a principal household use of melamine.
Plastic molding compounds. Melamine resins with strong thermosetting
attributes are molded into a variety of translucent, heat-resistant
products that are odorless and tasteless, with pale color. Fillers,
pigments and dyes can be incorporated into the plastic to produce
various combinations of opacity and color. These plastics are used in
tableware, wash-resistant buttons, arc-resistant ignition housings,
insulation and many other products. The primary advantages of these
plastics are their strong resistance to water, heat, chemicals and
discoloration and their relative non-conductivity and virtual
unbreakability.
Paper-treating resins. Melamine resins are widely used to impart wet-
strength, dimensional stability and other favorable properties to
paper.
Adhesive-binding resins. Melamine resins produce excellent weather-
resistant adhesive bonds and are used in particleboard and as binders
for glass fibers in air filters, brake linings and foundry sand cores.
Flame retardant products. Melamine is used as a fire retardant in
specialized paints, certain thermoplastics, textile products and in
flexible polyurethane foam used in furniture and bedding. Because of
heightened public awareness of fire hazards created by the use of
combustible materials in fabrics and furniture, the Company believes
the opportunity for sales growth in this area is promising.
Other uses. Melamine is also used in varied applications such as
flocculating agents in water treatment, in fluorescent pigments, as
concrete additives and as polymeric stabilizers.
Marketing and Sales
The Company's domestic and international sales are managed by a
Vice President of Sales and Marketing. The Company uses a number of
agents outside the United States.
During the last three years, approximately 50% of the Company's
output was purchased by less than ten industrial customers, including
Monsanto Chemical Company and Sun Coast Industries, Inc. More than
10% of the Company's output was purchased by Monsanto Chemical Company
during this period, and in fiscal 1995, Sun Coast Industries, Inc.
also purchased more than 10% of the Company's output.
During fiscal year 1995, approximately 38% of the net sales of the
Company were derived from customers in foreign countries.
Approximately 8% were to customers in Italy, 4% in Belgium, 4% in
Brazil, 4% in the Netherlands, 2% in Chile, 2% in France, 2% in
Germany, 2% in Turkey and 10% in other countries. During fiscal 1996,
approximately 43% of the net sales of the Company were derived from
customers in foreign countries. Approximately 6% were to customers in
Italy, 5% in the Netherlands, 5% in Belgium, 5% in Australia, 4% in
Indonesia, 2% in India, 2% in Israel, 2% in Korea, 2% in Taiwan and
10% in other countries. During fiscal 1997, approximately 36% of the
net sales of the Company were derived from customers in foreign
countries. Approximately 5% were to customers in Italy, 5% in the
Netherlands, 3% in Brazil, 3% in Belgium, 3% in Korea, 2% in
Australia, 2% in Argentina, and 2% in Chile and 11% in other
countries.
For additional information on sales to significant customers and
export sales, see footnote 6 to the financial statements on Page 23.
Competition
The Company and American Melamine Industries (AMEL) are the only
two domestic producers of melamine crystal. AMEL's facility, located
in Fortier, Louisiana, has production capacity of approximately 140
million pounds per year. AMEL is a manufacturing joint venture
between Cytec Industries Inc. ("Cytec") and DSM, the world's largest
melamine producer.
The Company estimates its share of the domestic merchant market to
be approximately 60%. The addition in 1990 of approximately 65
million pounds of production capacity at the AMEL plant and increased
competition from foreign producers have made competition in the
domestic market intense. In the last four fiscal years, the Company
has placed greater emphasis on selling in the domestic market.
Melamine is also produced through several different process
technologies at approximately 20 plants in 15 other countries.
Industry reports indicate that worldwide nameplate capacity is
approximately 1.4 billion pounds per year, although the Company
believes that effective capacity is lower. The Company cannot
reliably analyze worldwide competitive conditions because production
and consumption data are not available in all countries outside of the
United States.
Melamine imports during the twelve months ended June 30, 1997 have
constituted less than 10% of the total merchant market.
The Company attempts to differentiate itself from competitors to
the greatest extent possible on the basis of custom packaging, a
variety of particle sizes, offering M-II type melamine crystal (under
the trademark G. P. Crystal(TM)), superior and flexible customer
service and new technology. Also emphasized is the fact that all
production is sold to customers, there being no internal consumption.
Those factors, combined with competitive price levels in the various
geographic markets, have led to the Company's share of the domestic
merchant market (the total domestic market less the portion
attributable to Cytec's internal consumption) and to its role in
supplying export customers.
The Company generally has been protected from competition from
substitute materials because of melamine's unique physical
characteristics, including its clarity, heat and chemical resistance,
colorability and surface hardness.
Market Development and Research
In its research and market development programs, the Company uses
its own employees and outside consultants to improve melamine process
technology, provide marketing support and applications development and
develop new proprietary products and applications for melamine.
Patents
The Company possesses technical know-how and trade secrets, as well
as two United States patents, that cover various industrial
applications. None of the Company's patents will expire before the
year 2011. The Company also holds or has applied for the equivalent
of many of its United States patents in various foreign countries.
Melamine Production
General. Because of their complexity, the corrosive nature of
their chemical reaction processes, and their integration with urea
production, melamine plants throughout the world historically have
proven difficult to operate on a continuous basis. The Company's M-I
plant experienced operating difficulties from the time of its
construction in 1971 through 1985. Refinement of critical plant
processes and careful maintenance have enabled the Company to produce
nearer to full capacity since January 1986. The Company believes the
difficulties associated with operating a melamine plant represent a
significant competitive barrier to entry into the industry.
The Melamine-I Process. Currently, the Company produces
approximately 75% of its melamine through a continuous chemical
process that heats urea, which is made from ammonia and carbon
dioxide, under low pressure in the presence of a catalyst. In the
Company's M-I process, hot urea melt (liquid urea) is pumped from
Triad Nitrogen, Inc.'s ("Triad") adjacent urea plant into a reactor
where it is atomized with heated ammonia and converted into gaseous
melamine with gaseous ammonia and carbon dioxide formed as by-
products. The gaseous melamine flows from the reactor to a saturator
cooler where it is converted to a slurry through a cooling process.
The ammonia and carbon dioxide by-products are diverted into an
ammonia recovery system where pure ammonia is recovered for reuse in
the reactor. The remaining ammonia and all of the carbon dioxide are
then combined with water into a concentrated liquid solution known as
carbamate, returned by pipeline to the urea plant and recycled to
produce additional urea. The melamine slurry is pumped into a
filtration and recrystallization system designed to produce melamine
crystal that is approximately 99.9% pure.
The Melamine-II Process. The M-II process is a continuous, high-
pressure, non-catalytic anhydrous process in which hot urea melt is
fed into a reactor under high-pressure and converted directly into
melamine in liquid form with ammonia and carbon dioxide formed as
gaseous by-products. After separation from the ammonia and carbon
dioxide, the liquid melamine is injected into a cooling unit where it
is depressurized and rapidly cooled. This process allows the
formation of melamine crystal that has purity averaging in excess of
97%. The Company has found that the melamine produced with the M-
II process is sufficiently pure for use in adhesive resins, as a flame
retardant in flexible polyurethane foam, as a concrete additive and in
certain molding compounds. While not all markets are expected to be
able to use the product currently produced with the M-II process, the
Company believes that approximately 70% of the current worldwide
consumption could utilize this product.
Sources of Raw Materials
Under a feedstock supply agreement between the Company and Triad,
the Company obtains all of its urea and anhydrous ammonia from Triad,
a subsidiary of Mississippi Chemical Corporation ("Mississippi
Chemical"). Urea is fed directly from Triad's adjacent facility into
the Company's reactor. The maximum amount of feedstock available
under the agreement is sufficient for the production of approximately
95 million pounds per year. The feedstock agreement is scheduled to
expire in June 2000. The Company pays Triad for feedstock an amount
related to, but less than, the weighted average sales price that First
Mississippi charges bulk purchasers of solid urea. The Company
receives, as a credit against the price, an amount based on carbamate
returned to Triad. Until December 1996, Triad was a joint venture
between First Mississippi and Mississippi Chemical. When Mississippi
Chemical acquired 100% of Triad, the feedstock supply agreement was
assigned to Triad, and Mississippi Chemical guarantees its
performance. See Item 13. "Certain Relationships and Related
Transactions".
The Company currently purchases approximately 25% of Triad's urea
output. Because of the advantages of receiving feedstock from and
returning carbamate to an adjacent urea plant, the continued operation
of Triad's plant is important to the Company. Mississippi Chemical has
not agreed to guarantee the continuation of Triad's operations and has
reserved the right to suspend or terminate delivery of feedstock upon
any suspension or termination of those operations. Except for
temporary shutdowns for maintenance and repairs, Triad's facility has
been in continuous operation for 26 years and is believed by the
Company to be one of the most cost efficient urea plants in the United
States. During such temporary shutdowns, the Company has been
required to suspend melamine production. To the extent practicable,
the Company stockpiles melamine in anticipation of Triad's regularly
scheduled maintenance shut downs. The Company does not believe that
its ability to fill customer orders in a timely manner has been
significantly affected by any suspension of operations at the Triad
facility.
Energy Requirements
The Company uses natural gas as an energy source to operate its
production facilities. The Company's production facilities are
connected to three pipeline systems, enabling it to purchase natural
gas from different suppliers. Under a three-year contract executed in
August 1986 and extended every six months thereafter under the terms
of the contract, the Company is purchasing all of its natural gas
requirements from one supplier.
Environmental and Other Regulatory Considerations
The Company is subject to regulation under federal, state and local
environmental laws and regulations. During the last three years, the
Company's operations did not result in the production of any
significant effluents or emissions. Catalyst residues occur in such
small quantities that no further processing is necessary for either
environmental or safety reasons. Substantially all of the ammonia and
carbon dioxide off-gases from the M-I plant are returned to Triad as
carbamate and are used for the production of additional urea. Ammonia
from the M-II plant is recycled to the M-I plant while carbon dioxide
is vented to the atmosphere. The Company disposes off-site of a small
quantity of material used in its filtration system. Except for
ammonia, none of the Company's products or by-products are considered
to be toxic within the meaning of current environmental laws. It is
the Company's policy to operate its facility in compliance with all
applicable environmental laws, and the Company does not believe that
it is subject to any material liability under any such laws.
On August 24, 1990, the Louisiana Department of
Environmental Quality ("DEQ") issued an order requiring the Company to
submit within 60 days a comprehensive plan for reducing nitrogen
oxides and reactive hydrocarbon emissions. Similar orders were sent
to other facilities in the Baton Rouge area. Subsequently, the
Company voluntarily agreed to participate in a Baton Rouge area
industrial task force formed for the purpose of developing plans for
the control and reduction of ozone pollution. The task force, in
cooperation with the DEQ, has performed ozone modeling studies to
determine whether nitrogen oxides controls are necessary to reduce
ozone levels in the Baton Rouge area. The task force has submitted
its recommended plan, and the DEQ has lifted its order.
See Item 3. "Legal Proceedings" for a description of the potential
liability associated with the cleaning up of Superfund site near the
town of Sorrento, Louisiana.
Employee safety in the United States is regulated under the
Occupational Safety and Health Act, and management believes that the
Company is in compliance in all material respects with its
requirements.
Employees
The Company employs 93 persons at the Donaldsonville facility. In
addition, the Company regularly has approximately 60 independent
contractors working at its facility. None of the Company's regular
full-time employees or its independent contractors are represented by
unions.
Insurance
In addition to other customary insurance coverage, the Company
maintains insurance against property damage and business interruption
loss caused by fire, explosion or similar catastrophic events that
result in physical damage or destruction to (i) the Company's premises
or plants, (ii) the utility transmission lines or equipment that
service its property and (iii) the facilities of Triad.
Item 2. Properties
The Company's plant is located on an eight-acre site that is leased
from Triad near Donaldsonville, Louisiana. The plant site lease will
expire June 1, 2000, and the lessee has the right to extend the lease
for four additional five-year terms or until 2020. The annual rent
under the lease is $2,500 during the primary term and any additional
terms. Because the plant site is surrounded by land owned by Triad
and would otherwise have no access to public thoroughfares, railroad
lines or feedstock or utility sources, Triad has granted in the site
lease certain non-exclusive rights-of-way over its property for all
purposes necessary to permit operation of the plant.
The M-I plant was constructed by First Mississippi and Ashland in
1971 and leased to the Company. In June 1987, the Company purchased
the M-I plant from subsidiaries of Ashland and First Mississippi.
During fiscal 1989, construction of the M-II plant was completed
and start-up of the plant began. The start-up of the M-II plant was
completed in April 1991.
The Company leases approximately 5,500 square feet of office space
at the plant site from Triad. Lease of the office space is included
in the plant site lease.
The Company owns a 17,600 square foot warehouse building and four
silos on the plant site with combined capacity to store up to 5.5
million pounds of melamine. The Company uses common carriers to
transport all of the melamine it produces. The Company has truck
loading facilities at its warehouse and an adjacent rail spur that
permits direct loading onto railroad cars.
Item 3. Legal Proceedings
The Company is one of seventeen defendants in a Superfund site
clean-up cost contribution action brought by four plaintiff companies.
Fifteen of the defendants have settled or been dismissed from this
litigation. The plaintiff companies have been identified by the
United States Environmental Protection Agency (the "EPA") as the major
generators of wastes disposed at the Cleve Reber Superfund site near
the town of Sorrento, Louisiana. In September 1988, the plaintiff
companies were ordered by the EPA to clean up the site, and they have
agreed to do so. The plaintiff companies subsequently brought this
suit seeking to recover approximately $51 million plus $6 million for
reimbursement to the EPA for remedial costs. While the lawsuit is
still in the discovery stage, it appears that the Company has
substantial defenses to the action by plaintiffs. Material generated
by the Company is alleged to have been disposed of at this site for
only one brief period when the regular disposal site used by its waste
disposal contractor was unavailable. The Company contends that any of
its materials transported to the site were not hazardous waste and
represent only a de minimis contribution to the site as compared to
material disposed of there by the plaintiffs and other defendants.
The Company has moved for summary judgment seeking dismissal from this
lawsuit. The motion is presently pending before the court, but placed
in abeyance pending settlement discussions.
In a purported class action suit for recovery of property damages
and personal injuries, the Company and 87 other defendants are accused
of disposing of materials at two sites in Iberville Parish, Louisiana.
One of these two sites was identified as a Superfund site and is
subject to a Consent Decree. The Company was previously named as a
potential responsible party to this site and settled with the
Environmental Protection Agency in fiscal 1988. This lawsuit has been
stayed pending a decision to grant the defendants' motion to deny
class certification. While the lawsuit is in the very early stage of
discovery, it is management's opinion after discussion with counsel
that the case is not likely to have a material adverse effect on the
Company.
Item 4. Submission of Matters to a Vote of Security Holders
The Company did not submit any matters to a vote of security
holders during the fourth quarter of fiscal year ended June 30, 1997.
Item 4(a). Executive Officers of the Registrant
Set forth below is certain information regarding the executive
officers of the Company as of September 5, 1997.
James W. Crook, 67, has served as Chairman of the Board since June
1987. Mr. Crook, a private investor, has served on the Board of
Directors since 1972.
Frederic R. Huber, 62, has served as President and Chief Executive
Officer since November 1991.
Wayne D. DeLeo, 50, has served as Vice President and Chief
Financial Officer since 1987.
Martin F. Lapari, 49, has served as Vice President of Manufacturing
and Engineering since August 1992.
William A. Sorensen, 61, has served as Vice President of Sales and
Marketing since January 1994. From January 1993 to December 1993, Mr.
Sorensen served as Director of National Account Sales of LaRoche
Chemicals, Inc. From 1989 to 1992, Mr. Sorensen served as Director of
Corporate Relations of LaRoche Chemicals Inc., a manufacturer of
specialty and industrial aluminas, chlor alkali and conditioned
comfort products.
PART II
Item 5. Market for the Registrant's Common Stock and Related
Stockholder Matters
The Company's common stock trades on the Nasdaq National Market
under the symbol MTWO.
The following table sets forth the high and low sales price of the
Company's common stock as quoted on Nasdaq for the fiscal years ending
June 30, 1997 and 1996:
1997 1996
------------ ------------
High Low High Low
First Quarter 9 6 1/4 10 1/4 8 1/2
Second Quarter 8 3/4 6 1/4 10 1/4 8 1/4
Third Quarter 11 3/4 7 5/8 9 1/2 7 5/8
Fourth Quarter 14 1/2 10 1/2 9 3/4 7 49/64
As of September 5, 1997, there were 175 record holders of the
Company's common stock and approximately 1,398 beneficial
shareholders.
In May 1992, the Board of Directors eliminated the payment of
dividends for the foreseeable future because of the lack of earnings
and the need to conserve cash. The declaration and payment of
dividends are at the discretion of the Board of Directors of the
Company. The payment of future dividends will be considered by the
Board of Directors from time to time based on the Company's results of
operations, financial position, capital requirements and other
factors.
Item 6. Selected Financial Data
<TABLE>
<CAPTION>
(In thousands, except per shar and operating data)
Fiscal year Ended June 30,
<S> <C> <C> <C> <C> <C>
1997 1996 1995 1994 1993
---- ---- ---- ---- ----
Operations Statement Data:
Net Sales $ 59,978 55,619 45,501 39,085 35,423
Cost of Sales 51,142 46,976 38,204 41,670 37,353
------ ------ ------ ------ ------
Gross Profit (loss) 8,836 8,643 7,297 (2,585) (1,930)
Selling, general and
administrative expenses 3,512 3,293 2,994 2,820 3,285
Research and development costs 250 229 230 182 129
----- ----- ----- ----- -----
Operating income (loss) 5,074 5,121 4,073 (5,587) (5,344)
Other income (expense), net 17,844(1)(1,106) 205 1,668 (266)
Earnings (loss) before income tax ------ ----- ----- ----- -----
expense (benefit) 22,918 4,015 4,278 (3,919) (5,610)
Income tax expense (benefit) 8,176 1,285 945 (1,411) (2,019)
------ ----- ----- ----- -----
Net earnings (loss) $ 14,742 2,730 3,333 (2,508) (3,591)
====== ===== ===== ===== =====
Earnings (loss) per common share $ 2.63 0.50 0.60 (0.46) (0.66)
====== ===== ===== ===== =====
Dividends per common share $ 0.00 0.00 0.00 0.00 0.18
====== ===== ===== ===== =====
- ---------------
(1) Includes $17.4 million from sale of technology in April 1997.
</TABLE>
<TABLE>
<CAPTION>
(In thousands, except per share and operating data)
---------------------------------------------------
As of June 30,
----------------------------------------
1997 1996 1995 1994 1993
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Balance Sheet Data:
Working Capital $ 34,193 18,364 14,020 9,656 12,678
Total Assets $ 75,749 47,143 44,289 40,610 46,954
Stockholders'equity $ 50,044 34,850 32,095 28,760 31,268
Fiscal year Ended June 30,
----------------------------------------
1997 1996 1995 1994 1993
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Operating Data (in millions
of pounds):
Melamine produced 107.1 106.0 99.3 84.5 94.5
Domestic sales 72.2 58.0 62.6 53.9 47.0
Export sales 41.5 44.5 37.8 51.2 40.4
</TABLE>
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Results of Operations
Sales in fiscal 1997 increased by $4.3 million to $60.0 million.
The increase was due to an 11% increase in sales volume offset by a 3%
decrease in sales prices. Sales volume for fiscal 1997 exceeded
production by 6.6 million pounds. Of this amount, 3.6 million pounds
were sold out of inventory and 3.0 million pounds were purchased from
another producer to satisfy strong customer demand.
Sales in fiscal 1996 increased to $55.6 million from $45.5 million
in fiscal 1995. Sales volume increased by 2% while the sales prices
increased by 20%. The sales volume for fiscal 1996 was curtailed by
the Company to build inventory to a more acceptable level. The sales
price increases during fiscal 1996 reflect the impact of strong
worldwide demand.
The following table, which is derived from Item 6. "Selected
Financial Data," sets forth for the periods indicated certain items
from the Company's statements of operations as a percentage of the
Company's sales:
Fiscal Year Ended June 30,
---------------------------
1997 1996 1995
---- ---- ----
As a percentage of sales
Cost of sales 85.3% 84.5% 84.0%
Gross profit 14.7 15.5 16.0
Selling, general and
administrative expenses 5.9 5.9 6.6
Research and development costs 0.4 0.4 0.5
Operating income 8.5 9.2 9.0
Net earnings 24.6 4.9 7.3
The gross profit margins in fiscal 1997 decreased slightly as
compared to fiscal 1996. Net sales prices decreased by 1.4 cents per pound
because of the impact of the strengthening U.S. dollar in Europe.
Most of the Company's European sales are denominated in foreign
currencies and a strengthening of the U.S. dollar reduces the net
sales price in U.S. dollars. While sales prices decreased, the cost
of production also dropped by 1.2 cents per pound. The decrease in
production cost was due entirely to a decrease in the price of raw
materials.
Gross profit margins in fiscal 1996 decreased slightly as compared
to fiscal 1995. Net sales price for the fiscal year increased by 8.9 cents
per pound while the Company experienced an increase in the cost of
production of 7.8 cents per pound. The increase in the cost of production
was due to:
- a 52% increase in the price of raw material increased the cost of
production by 7.5 cents per pound; and
- an increase in the price of natural gas increased the cost of
production by .9 cents per pound.
Offsetting these increases was the benefit that increased
production volume had on spreading fixed cost.
Selling, general and administrative expenses increased by 7% in
fiscal 1997 as compared to 1996. The increase was due mostly to an
increase in salary levels, increased travel costs and a $25,000
provision for bad debts. During the first quarter of fiscal 1997, the
Company ended its association with its sales agent in Europe and
appointed a new agent to act on its behalf in Europe. In this
connection, Company personnel traveled extensively in Europe visiting
its customers to assist in the transition from one agent to another.
Selling, general and administrative expenses increased by 10% in
fiscal 1996 as compared to fiscal 1995. The increase was caused by a
number of factors including:
- increase in salaries and an increase in the number of people in the
sales and customer service area;
- increase in bad debts expenses; and
- increase in consulting fees paid.
During fiscal 1997 and 1996, the amount of interest income
increased significantly as compared to prior years. The change was
due to an increase in the level of cash balances during the year and
$208,000 of interest earned on tax refunds received during fiscal
1996.
In fiscal 1996, there was a $195,000 miscellaneous expense compared
to miscellaneous income of $159,000 in fiscal 1995. The expense was
attributable to foreign exchange losses in fiscal 1996 as compared to
foreign exchange gains in fiscal 1995.
In the fourth quarter of fiscal 1997, the Company sold certain
process patents to DSM in exchange for $25 million. Of this amount,
$15 million was paid in cash, and the remainder was paid to the
Company in the form of two $5 million interest bearing notes due in
2000 and 2005. Income of $17.4 million, net of certain transaction
costs, was recognized. Approximately $6.9 million of the proceeds has
been deferred and will be recognized as costs are incurred or
obligations fulfilled relating to joint technical developments and
testing over the next 10 fiscal years. In addition to the $25
million, the Company will also receive DSM's assistance in modifying
its M-I plant to implement improvements developed by DSM. The
benefits that may be derived from these improvements are unknown. The
Company retains certain rights to the process patents including the
right to use the processes to build two additional plants in the
Americas.
In the fourth quarter of fiscal 1996, the Company's net results
were impacted by a $1,863,000 charge for costs associated with two
expansion projects that were terminated. In fiscal 1992, the Company
announced that it was going to evaluate the feasibility of
constructing a melamine plant in a joint venture with a subsidiary of
Norsk Hydro A.S. (Hydro). The Company was informed by Hydro during
the last week of June 1996 that it had decided not to proceed with the
project. In addition, the Company entered into negotiations with
Arcadian Corporation (Arcadian) in August 1995 to build a melamine
plant in Memphis, Tennessee. The Company and Arcadian were unable to
agree on several substantive commercial terms and agreed jointly to
terminate their negotiations. The costs associated with engineering
and design of the two plant sites were expensed when the decision was
reached not to proceed.
In addition, the fourth quarter of fiscal 1996 included a $480,000
gain from a contract dispute resolution. During 1986, the Company and
its natural gas supplies were unable to resolve a contract dispute
regarding the price of natural gas. In the fourth quarter of fiscal
1996, the statute of limitation expired on the issue.
In the fourth quarter of fiscal 1995, the Company's operating
results were negatively affected by:
- A 34% increase in the cost of raw material, which reduced operating
income by $1.3 million; and
- A maintenance shut down during the last nine days of the month,
which reduced production by about three million pounds.
Partially offsetting these negative factors was a 2.5 cents per pound
increase in the average selling price.
During the first quarter of fiscal 1998, the Company's raw material
supplier temporarily reduced the amount of raw materials it is able to
supply the Company because of equipment repairs being performed. The
repairs are expected to be completed by the end of October 1997, and
the Company anticipates returning to full production levels shortly
thereafter. The Company expects that first quarter production will be
approximately seven million pounds below normal levels resulting in a
substantial reduction in earnings in the first fiscal quarter of 1998.
The Company is subject to extensive regulation under federal, state
and local environmental laws and regulations (see Item 1. "Business-
Environmental and Other Regulatory Considerations"). In addition, the
Company obtains its urea and anhydrous ammonia from Triad, which also
is subject to extensive environmental regulation. The inability of
Triad to comply with those laws and regulations could severely
restrict the Company's ability to produce melamine. The Company is
not aware of any existing circumstances that materially affect its or
Triad's ability to comply with the applicable regulations.
Liquidity and Capital Resources
During fiscal 1997, the Company generated cash flow from operation
of $14.2 million and spent $1.2 million on capital expenditures. In
addition, the Company received $15.0 million from the sale of
technology to DSM. While capital expenditures for fiscal 1998 are
expected to be around $1.7 million, the Company expects to increase
inventories to more acceptable levels and may increase inventories by
as much as $2.0 million. The Company attempts to keep inventory to a
four-week supply, but because of strong demand has been unable to do
so.
During fiscal 1996, the Company generated cash flow from operations
of $2.8 million and spent $3.1 million in capital expenditures. Cash
flow from operations would have been greater, but the Company used
$2.2 million in increasing trade receivables for the increased level
of sales and $1.7 million in increasing inventory to more acceptable
levels.
In fiscal 1995, the Company generated cash flow from operations of
$9.1 million, a $7.4 million increase from the prior year. The
increase was due mainly to increased profitability and an increase in
deferred income taxes. Capital expenditures increased to $1.7 million
in fiscal 1995 and included about $500,000 for the construction of new
salt coils.
The Company has a $7.5 million line of credit that expires in
September 1998. The Company expects that the lines of credit will be
sufficient to finance planned capital expenditures and any cash
shortfalls from operations.
The Company does not consider the impact of inflation to be
significant in the business in which it operates.
In May 1992, the Board of Directors eliminated the payment of
dividends because of the lack of earnings and the need to conserve
cash. While the future payment of dividends is at the discretion of
the Board of Directors, any future payments will depend on the
Company's profitability, financial position and all liquidity
requirements.
The Financial Accounting Standards Board (FASB) issued Statement of
Financial Accounting Standards (SFAS) No. 128, "Earnings Per Share".
SFAS No. 128 is effective for annual and interim periods ending after
December 15, 1997. Management does not believe that this
pronouncement will have a material impact on the Company's earnings
per share.
Additionally, the FASB issued SFAS No. 129, "Disclosure of
Information About Capital Structure", SFAS No. 130 "Reporting
Comprehensive Income" and SFAS No 131 "Reporting Disaggregated
Information about a Business Enterprise." SFAS No. 129 is effective
for fiscal years ending after December 15, 1997. Statements Nos. 130
and 131 are effective for fiscal years beginning after December 1997.
These statements principally relate to disclosure requirements.
Item 8. Financial Statements and Supplementary Data
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS,
SUPPLEMENTARY DATA AND FINANCIAL STATEMENT SCHEDULES
Page
-------
Independent Auditors' Report 14
Consolidated Balance Sheets as of June 30, 1997 and 1996 15
Consolidated Statements of Operations for the years ended
June 30, 1997, 1996 and 1995 16
Consolidated Statements of Stockholders' Equity for the years
ended June 30, 1997, 1996 and 1995 16
Consolidated Statements of Cash Flows for the years ended
June 30, 1997, 1996 and 1995 17
Notes to Consolidated Financial Statements 18
Supplemental Information 26
Schedule II - Valuation and Qualifying Accounts 31
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Stockholders
Melamine Chemicals, Inc.:
We have audited the consolidated financial statements of Melamine
Chemicals, Inc. as listed in the accompanying index. In connection
with our audits of the consolidated financial statements, we also have
audited the consolidated financial statement schedule as listed in the
accompanying index. These 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 financial position
of Melamine Chemicals, Inc. as of June 30, 1997 and 1996, and the
results of its operations and its cash flows for each of the years in
the three-year period ended June 30, 1997, 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.
/s/ KPMG PEAT MARWICK, L.L.P.
Baton Rouge, Louisiana
July 18, 1997
<TABLE>
<CAPTION>
MELAMINE CHEMICALS, INC.
CONSOLIDATED BALANCE SHEETS
JUNE 30, 1997 AND 1996
<S> <C> <C>
1997 1996
ASSETS ---- ----
Current assets:
Cash and temporary investments $ 33,381,898 5,529,644
Receivables:
Trade (net of allowance for doubtful
debts of $175,000 at June 1997 and
$150,000 at June 1996) 8,902,384 12,170,229
Income tax refund 0 24,877
Other 183,889 167,373
---------- ----------
Total receivables 9,086,273 12,362,479
---------- ----------
Inventories:
Finished goods 588,000 2,225,000
Supplies 214,958 288,300
---------- ----------
Total inventories 802,958 2,513,300
---------- ----------
Prepaid expenses:
Spare parts 2,179,773 2,357,090
Other 517,855 1,410
---------- ----------
Total prepaid expenses 2,697,628 2,358,500
---------- ----------
Deferred income taxes 37,957 1,522,315
---------- ----------
Total current assets 46,006,714 24,286,238
---------- ----------
Plant and equipment, at cost 48,052,680 46,860,949
Less accumulated depreciation 28,380,158 24,082,467
---------- ----------
Net plant and equipment 19,672,522 22,778,482
---------- ----------
Notes receivable 10,000,000 0
Other assets 70,083 78,073
---------- ----------
$75,749,319 47,142,793
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 5,248,930 3,175,843
Accounts expenses 1,834,217 1,518,082
Income taxes 4,730,304 0
Amounts due to related parties 0 1,227,711
---------- ----------
Total current liabilities 11,813,451 5,921,636
---------- ----------
Deferred income taxes 6,926,892 6,371,250
Deferred income 6,965,000 0
Stockholders' equity:
Preferred stock of $1 par value.
Authorized 2,000,000 shares; none
issued 0 0
Common stock of $.01 par value.
Authorized 20,000,000 shares; issued
and outstanding 5,529,000 at June
1997 and 5,455,300 at June 1996 55,299 54,553
Additional paid-in capital 17,275,399 16,823,920
Retained earnings 32,713,278 17,971,434
---------- ----------
Total stockholders' equity 50,043,976 34,849,907
---------- ----------
$75,749,319 47,142,793
========== ==========
See accompanying notes to consolidated financial statements.
</TABLE>
MELAMINE CHEMICALS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
Years ended June 30, 1997, 1996 and 1995
1997 1996 1995
---- ---- ----
Net sales $ 59,978,341 55,618,937 45,500,736
Cost of sales, including amounts
to related parties 51,142,490 46,976,007 38,203,570
---------- ---------- ----------
Gross profit 8,835,851 8,642,930 7,297,166
---------- ---------- ----------
Selling, general and
administrative expenses 3,512,041 3,292,634 2,993,748
Research and development costs 249,853 229,460 229,955
---------- ---------- ----------
3,761,894 3,522,094 3,223,703
---------- ---------- ----------
Operating income 5,073,957 5,120,836 4,073,463
---------- ---------- ----------
Other income (expenses):
Interest income 833,020 472,240 95,227
Interest expense (160,000) 0 (48,799)
Projects cost 0 (1,863,000) 0
Contract dispute resolution 0 479,827 0
Gain on sale of technology 17,400,00 0 0
Miscellaneous (229,118) (194,691) 158,533
---------- ---------- ----------
17,843,902 (1,105,624) 204,961
---------- ---------- ----------
Income before income tax 22,917,859 4,015,212 4,278,424
Income tax expense 8,176,015 1,284,868 945,533
---------- ---------- ----------
Net earnings $ 14,741,844 2,730,344 3,332, 891
========== ========= ==========
Net earnings per common share $ 2.63 0.50 0.60
========== ========= ==========
See accompanying notes to consolidated financial statements.
MELAMINE CHEMICALS, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
Years ended June 30, 1997, 1996 and 1995
Additional
Common Paid-in Retained
Stock Capital Earnings Total
------- ---------- ---------- ----------
Balance June 30, 1994 $ 54,500 16,797,398 11,908,199 28,760,097
Exercise of stock 3 1,572 0 1,575
options
Net earnings for fiscal 1995 0 0 3,332,891 3,332,891
------ ---------- ---------- ----------
Balance June 30, 1995 54,503 16,798,970 15,241,090 32,094,563
Exercise of stock 50 24,950 0 25,000
options
Net earnings for fiscal 1996 0 0 2,730,344 2,730,344
------ ---------- ---------- ----------
Balance June 30, 1996 54,553 16,823,920 17,971,434 34,849,907
Exercise of stock 746 451,479 0 452,225
options
Net earnings for fiscal 1997 0 0 14,741,844 14,741,844
------ ---------- ---------- ----------
Balance June 30, 1997 $ 55,299 17,275,399 32,713,278 50,043,976
====== ========== ========== ==========
See accompanying notes to consolidated financial statements.
MELAMINE CHEMICALS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years ended June 30, 1997, 1996 and 1995
<TABLE>
<CAPTION>
1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
Cash flows from operating activities:
Net earnings 14,741,844 2,730,344 3,332,891
Adjustments to reconcile net earnings
to net cash provided by operating activities:
Depreciation 4,302,702 3,904,538 3,623,109
Increase in deferred income taxes 555,642 483,237 1,381,950
Gain on sale of technology and other assets (17,400,000) 0 (5,906)
Change in assets and liabilities
(Increase) decrease in:
Receivables 3,276,206 (2,211,111) (231,862)
Inventories 1,710,342 (1,714,617) 243,824
Prepaid expenses (339,128) (50,789) 26,441
Deferred income taxes 1,484,358 87,846 (494,648)
Increase (decrease) in:
Accounts payable 2,073,087 (599,632) 635,918
Accrued expenses 316,135 767,158 73,372
Income taxes 4,730,304 0 0
Amounts due to related parties (1,227,711) (552,399) 556,946
---------- --------- ---------
Cash from operating activities 14,223,781 2,844,575 9,142,035
---------- --------- ---------
Cash flows from investing activities:
Proceeds from sale of technology and other assets
net of transaction cost 14,365,000 0 8,025
Capital expenditures (1,196,742) (3,144,707) (1,741,711)
Decrease (increase) in other assets 7,990 346,282 (5,975)
---------- ---------- ----------
Cash from investing activities 13,176,248 (2,798,425) (1,739,661)
---------- ---------- ----------
Cash flows from financing activities:
Repayment of note payable 0 0 (2,000,000)
Proceeds from exercise of stock options 452,225 25,000 1,575
Other financing activities 0 0 (303,276)
---------- ---------- ----------
Cash from financing activities 452,225 25,000 (2,301,701)
---------- ---------- ----------
Increase in cash and temporary investments 27,852,254 71,150 5,100,673
Cash and temporary investments at beginning
of year 5,529,644 5,458,494 357,821
---------- --------- ---------
Cash and temporary investments at end of year $ 33,381,898 5,529,644 5,458,494
========== ========= =========
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Income taxes $ 1,405,711 625,000 460,000
========== ========= =========
Interest $ 0 0 73,318
========== ========= =========
Non cash transactions:
Note receivable for sale of technology $ 10,000,000 0 0
========== ========= =========
See accompanying notes to consolidated financial statements.
</TABLE>
MELAMINE CHEMICALS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 1997, 1996 and 1995
(1) Summary of Significant Accounting Policies
(a) Organization and Operations
Melamine Chemicals, Inc. (the Company) is engaged in the production and
marketing of melamine crystal, a specialty chemical having numerous
industrial and commercial applications. The Company is actively involved
in the development of new uses for melamine and also in melamine related
compounds that modify the characteristics of melamine resins.
At June 30, 1997, ChemFirst, Inc. (ChemFirst) and a division of Ashland
Inc. (Ashland) each owned 23.1% of the Company, which operates a melamine
production facility. ChemFirst acquired its interest in the Company
through the spin-off of certain of First Mississippi Corporation's
("First Mississippi") assets.
The Company has a foreign sales corporation incorporated in the Virgin
Islands and a holding company incorporated in Louisiana. The financial
statements include the accounts of the Company and these subsidiaries.
All significant intercompany balances and transactions are eliminated in
consolidation.
(b) Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that could affect the reported amounts of assets at the date
of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results and the results of
future periods could differ from those estimates.
(c) Inventories
Inventories of finished goods are stated at the lower of cost or market
as determined by the last-in, first-out (LIFO) method. Supplies are
stated at the lower of average cost or net realizable value. If the
average cost method was used, finished goods inventories would be
higher by $615,000 and $653,000 at June 30, 1997 and 1996, respectively.
(d) Plant and Equipment
Plant and equipment are stated at cost. Depreciation is provided over
the estimated useful lives of the assets using the straight-line
method. The estimated useful lives used to depreciate assets are:
Years
------
Plant and leasehold equipment 3 - 15
Buildings 5 - 15
Machinery and equipment 3 - 10
Furniture and fixtures 3 - 12
Expenditures on an asset are capitalized until the asset is placed in
service or until the recoverability of the expenditures becomes uncertain.
Modifications to existing assets are capitalized when the modification
increases the production capacity or extends the useful life of the
assets.
(e) Income Taxes
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to 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.
(f) Postemployment, Pension and Other Postretirement Benefits.
The Company has a defined benefit pension plan covering all employees who
have completed six months of employment. The benefits are based on years
of service and the employee's highest average monthly compensation for
any successive five year period.
The expected cost of post-retirement benefits is accrued during the years
that an employee renders service to the employer.
The Company's pension funding policy is consistent with Federal laws and
regulations. Prior service costs are being amortized over a 17-year
period.
(g) Patent Costs
Patent costs are charged to research and development costs as incurred.
(h) Earnings Per Share
Primary and fully diluted earnings per share are computed based on the
weighted average number of shares and dilutive equivalent shares of common
stock (stock options) outstanding during each year using the treasury
stock method.
(i) Cash and Temporary Investments
For purposes of the Statements of Cash Flows, the Company considers all
highly liquid investment instruments purchased with a maturity of three
months or less to be cash equivalents.
(j) Concentrations of Credit Risk and Other Risk
Financial instruments which potentially subject the Company to
concentrations of credit risk consist principally of trade accounts
receivable. The credit risk in trade accounts receivable is mitigated
by the Company's credit evaluation process and the geographical
dispersion of sales transactions.
The Company currently purchases all of its urea and anhydrous ammonia,
two significant raw materials, from one plant under a feedstock supply
agreement. Periodic temporary shutdowns by the supplier are anticipated
and the Company is generally able to build its finished goods inventory
in sufficient quantity to prevent suspension of shipments to customers.
(k) Stock Compensation
On July 1, 1996, the Company elected to continue to use the intrinsic
value method of accounting for stock-based compensation prescribed by
Accounting Principles Board (APB) Opinion No. 25 and, accordingly,
adopted the disclosure provisions of SFAS No. 123, "Accounting for
Stock based Compensation."
(2) Related Party Transactions
A summary of significant transactions with related parties follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
1997 1996 1995
Purchases of raw materials from First --------- ---------- ----------
Mississippi at prices approximating market $ 5,357,884 11,592,109 7,153,290
========= ========== ==========
Amounts paid to Triad Chemical, an affiliate
of First Mississippi, for certain utilities
and services as well as shared costs such as
security, maintenance and related services $ 207,518 265,851 428,502
========= ========== ==========
</TABLE>
Prior to December 24, 1996, direct expenses incurred by First Mississippi
were allocated to the Company based on the actual costs incurred. Amounts
paid to Triad for utilities and certain other services were based on actual
costs, and shared costs and services were based on pro-rata allocations that
reasonably approximate actual costs. Management believes that these methods
of allocation were reasonable and that the costs would not be materially
different on a stand-alone basis. On December 23, 1996, First Mississippi
spun-off certain of its assets, including its investment in the Company, to
ChemFirst, Inc. Accordingly, First Mississippi is no longer a related party.
Until December 23, 1996, the Company purchased one-half of its raw materials
at approximate market prices from First Mississippi under a long-term
contract which expires in June 2000. The Company now purchases all of its
raw material under the same contract that has been assigned to Triad.
(3) Plant and Equipment
A summary of plant and equipment follows:
June 30, June 30,
1997 1996
---------- ----------
Plant and leasehold improvements $ 44,065,494 43,070,652
Buildings 669,510 669,510
Machinery and equipment 1,952,142 1,872,139
Furniture and fixtures 1,082,208 714,124
Construction in progress 283,326 534,524
---------- ----------
Total plant and equipment $ 48,052,680 46,860,949
========== ==========
Maintenance and repairs charged to costs and expenses were $6,367,000,
$5,957,000 and $6,599,000 for fiscal 1997, 1996 and 1995, respectively.
Rent expense for all operating leases amounted to $12,025, $12,025 and
$22,000 for fiscal 1997, 1996, and 1995, respectively.
(4) Income Taxes
Income tax expense amounted to $8,176,015 for 1997 (an effective rate of
36%), $1,284,868 for 1996 (an effective rate of 32%) and $945,533 for 1995
(an effective rate of 22%).The actual tax expense for these years differs
from the expected tax expense as follows:
<TABLE>
<CAPTION>
Years ended June 30
-------------------
1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
Computed expected tax expense
(35% for 1997; 34% for 1996 and 1995) $ 8,021,251 1,365,172 1,454,664
State income taxes (net of Federal Income
tax benefit) 581,495 96,695 65,068
Settlement of fiscal 1987 through 1994 audit 0 0 (594,700)
Tax benefit from foreign sales corporation (166,951) (189,041) 0
Other (259,780) 12,042 20,501
--------- --------- ---------
Actual tax expense $ 8,176,015 1,284,868 945,533
========= ========= =========
Components of income tax expense are as follows:
Current Deferred Total
--------- --------- ---------
Year ended June 30, 1997:
Federal $ 5,360,725 1,920,682 7,281,407
State 775,290 119,318 894,608
--------- --------- ---------
$ 6,136,015 2,040,000 8,176,015
========= ========= =========
Year ended June 30, 1996:
Federal 630,732 507,629 1,138,361
State 83,053 63,454 146,507
--------- --------- ---------
$ 713,785 571,083 1,284,868
========= ========= =========
Year ended June 30, 1995:
Federal 58,231 788,713 846,944
State 0 98,589 98,589
--------- --------- ---------
$ 58,231 887,302 945,533
========= ========= =========
</TABLE>
The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and tax liabilities at June 30, 1997
and 1996 are presented below:
<TABLE>
<CAPTION>
<S> <C> <C>
1997 1996
---- ----
Deferred tax assets:
Deferred income related to sale of technology $ 2,539,757 0
Alternative minimum tax credit carryforwards 0 1,323,430
Uniform capitalization of LIFO inventory 78,119 56,252
Expense accrual 24,946 35,440
Deferral of profit during plant start-up 0 64,080
Other 48,882 43,113
--------- ---------
Total gross deferred tax assets 2,691,704 1,522,315
--------- ---------
Deferred tax liabilities:
Depreciation and amortization of plant and
equipment 5,838,733 6,292,794
Installment sale of technology 3,613,317 0
Prepaid pension costs 128,589 0
Other 0 78,457
--------- ---------
Net deferred tax liability $ 6,888,935 4,848,935
========= =========
The Company reached an agreement in fiscal 1995 with the Internal Revenue
Service (IRS) in connection with its audit of fiscal years 1987 through
1994. The IRS allowed additional tax basis for certain assets purchased
in fiscal 1987. The impact of the agreement was a net tax benefit of
$594,700.
(5) Employee Pension and Thrift Plans
The Company has a noncontributory group annuity pension plan that covers all
full-time employees who have completed six months of service, were hired
prior to their 60th birthday and work 1,000 or more hours during the year.
The right to discontinue the plan has been reserved by the Company, and, in
such event, the accumulated plan benefits would be distributed to the
participants. Approximately one-third of the plan assets are invested in
U.S. government bonds with the remainder invested in U.S. equity securities.
Employee pension costs amounted to $276,895 for 1997, $257,994 for 1996,
$205,862 for 1995. Pension expense for fiscal 1995 decreased because of the
change in the assumed rate of compensation increase.
</TABLE>
<TABLE>
<CAPTION>
The net pension cost included the following components:
1997 1996 1995
------- ------- -------
<S> <C> <C> <C>
Service cost benefit earned during the period $ 341,689 294,394 245,658
Interest cost on projected benefit obligation 406,606 348,323 281,122
Expected return on assets (474,889) (388,212) (324,408)
Net amortization 3,489 3,489 3,490
------- ------- -------
Net pension cost $ 276,895 257,994 205,862
======= ======= =======
Assumptions used in the accounting were:
Discount rates 7.75% 7.5% 7.5%
======= ======= =======
Rate of increase in compensation 3.5% 3.5% 3.5%
======= ======= =======
Expected long-term rate of return on assets 9.0% 9.0% 9.0%
======= ======= =======
The following table sets forth the plan's funded status and amounts
recognized in the Balance Sheets at June 30, 1997 and 1996.
1997 1996
--------- ---------
Actuarial present value of vested benefit obligations $ 3,412,894 3,007,143
========= =========
Accumulated benefit obligation $ 4,002,377 3,524,978
========= =========
Plan assets at fair value $ 6,465,837 5,084,380
Projected benefit obligation 5,879,128 5,260,621
Plan assets in excess of (less than) projected --------- ---------
benefit obligation 586,709 (176,241)
Unrecognized transition amount (200,310) (227,194)
Unrecognized prior service loss 273,360 303,733
Unrecognized actuarial loss (gain) (306,452) 80,152
Pension asset (liability) recognized in the --------- ---------
Balance Sheets $ 353,307 (19,550)
========= =========
</TABLE>
The Company has a contributory 401(k) thrift plan covering substantially all
employees who have completed one year of service. Total expenses under the
plan amounted to approximately $187,000 for 1997, $166,000 for 1996 and
$153,000 for 1995.
(6) Industry Segment and Export Sales
The Company's operations consist of one industry segment, and all of the
operations are located in the United States. Export sales comprised 36%,
43% and 38% of net sales in fiscal 1997, 1996 and 1995, respectively. The
same customer accounted for 13% of net sales in fiscal 1997, 1996 and 1995,
and another customer also accounted for 13% of the net sales in fiscal 1995.
(7) Stockholders' Equity
A long-term incentive plan for officers and certain key employees of the
company was adopted in 1987 and amended in 1991 by the Company's stock-
holders. The Company reserved 500,000 shares of common stock for issuance
upon exercise of incentives awarded under the plan. In 1997, the Company's
stockholders adopted a new plan, and the Company reserved 350,000 shares
of common stock for issuance upon exercise of incentives awarded under the
plan. Awards under the plan may be in the form of options to purchase
common stock, convertible debentures, convertible preferred stock, stock
appreciation rights, performance units, restricted stock, supplemental cash
or other forms as the Board of Directors may direct. Stock options are
granted with an exercise price equal to the stock's fair market value at
the date of grant. Options generally vest over a three year period
commencing on the date of grant and expire ten years from the date of grant.
The Company applies APB Opinion No. 25 in accounting for its plan and,
accordingly, no compensation cost has been recognized for the stock option
grants in the consolidated financial statements. Had compensation cost for
the Company's stock option plan been determined based on the fair value at
the grant date for its stock options under SFAS No. 123, the Company's net
earnings and net earnings per common share would have been reduced to the
proforma amounts as follows:
1997 1996
Net earnings ---------- ---------
As reported $14,741,844 2,730,344
Pro forma $14,626,293 2,669,358
Net earnings per common share
As reported $ 2.63 0.50
Pro forma $ 2.61 0.48
Pro forma net earnings and earnings per common share reflect only options
granted during fiscal years 1997 and 1996. Therefore, the full impact of
calculating compensation cost for stock options under SFAS No. 123 is not
reflected in the proforma amounts presented above because compensation cost
is reflected over the options' vesting period of three years and
compensation cost for options granted prior to July 1, 1995 is not
considered.
The per share weighted average fair value of stock options granted during
fiscal years 1997 and 1996 were $3.63 and $4.36, respectively, on the dates
of grant using the Black-Scholes option pricing model with the following
weighted average assumptions.
1997 1996
---- ----
Risk-free interest rate 6.23% 5.37%
Expected dividend yield rate 0% 0%
Expected stock price volatility 48.76% 48.76%
Expected stock option life 5 years 5 years
<TABLE>
<CAPTION>
Information regarding the option plan for 1997, 1996 and 1995 follows:
1997 1996 1995
------------------------- -------------------------- -------------------------
<S> <C> <C> <C> <C> <C> <C>
Weighted Average Weighted Average Weighted Average
Shares Exercise Price Shares Exercise Price Shares Exercise Price
------ ---------------- ------ ---------------- ------ ----------------
Options outstanding,
Beginning of year 394,100 $8.83 328,200 8.79 269,100 9.03
Options granted 64,953 7.13 70,900 8.75 60,000 7.50
Options exercised (74,600) 6.06 (5,000) 5.00 (300) 5.25
Options expired 3,833 7.68 0 0.00 600 5.25
Options outstanding, ------- ---- ------- ---- ------- ----
end of year 380,620 9.10 394,100 8.83 328,200 8.79
Options exercisable ======= ==== ======= ==== ======= ====
at end of year 254,186 261,934 214,399
======= ======= =======
Weighted average
exercise price
of options
exercisable $ 9.76 8.78 10.00
======= ======= =======
</TABLE>
<TABLE>
<CAPTION>
Options Outstanding Options Exercisable
---------------------------------------------------- --------------------------------
<C> <C> <C> <C> <C> <C>
Weighted-
Average Weighted
Remaining Average Number
Range of Outstanding Contractual Exercise Exercisable Weighted-Average
Exercise Price at 6/30/97 Life Price at 6/30/97 Exercise Price
-------------- ----------- ----------- --------- ----------- -----------------
$5.00 - $7.50 183,220 7.4 $ 6.63 101,742 $ 6.17
$8.00 - $8.75 72,400 7.8 $ 8.70 27,444 $ 8.61
$12.75 - $13.75 125,000 0.6 $ 12.94 125,000 $ 12.94
------- --- -------- ------- --------
380,620 5.3 $ 9.10 254,186 $ 9.76
======= === ======== ======= ========
</TABLE>
The Company adopted a Share Purchase Rights Plan ("Plan") on November 6,
1990 and amended the Plan August 7,1991 and August 3, 1994. Under the Plan,
one Preferred Share Purchase Right ("Right") was distributed for each out-
standing common share. The Right becomes exercisable if a person or group
acquires 10% or more of the Company's common stock or announces a tender
offer, the consummation of which would result in the ownership by such a
person or group of 10% or more of the common stock. The terms of the Plan
provide that current holdings of ChemFirst and Ashland do not trigger the
provisions of the Plan. The Right entitles its holder to purchase, at the
Right's then current exercise price, a number of the Company's common shares
having a market value of twice such price. The plan expires on November 15,
1997 unless extended.
(8) Commitments
The Company's plant is located on an eight-acre site near Donaldsonville,
Louisiana. In June 1969, the plant site was leased by Triad to Ashland,
which subsequently assigned a one-half interest in the lease to First
Mississippi. Ashland and First Mississippi have assigned the lease to the
Company. The plant site lease will expire on June 1, 2000, and the lessee
has the right to extend the lease for four additional five-year terms or
until 2020. The annual rent under the lease is $2,500 during the primary
term and any additional terms.
The Company is obligated under other operating leases. At June 30, 1997,
estimated minimum rental expense under noncancelable operating leases was as
follows:
Fiscal Year
-----------
1998 4,881
1999 2,500
2000 2,292
2001 0
2002 0
After 2002 0
-----
$ 9,673
=====
Various legal actions are pending against the Company which seek relief or
damages including an action seeking contribution to cleaning costs of a
Superfund site by plaintiff parties identified by the United States
Environmental Protection Agency (EPA). The plaintiff companies seek to
recover an unspecified amount of the cost of cleaning a Superfund site near
the town of Sorrento, Louisiana. The plaintiff contends that they have
spent $51 million and that the EPA is seeking reimbursement of $6 million.
While the final outcome of these matters cannot be predicted with certainty
at this time, management believes, after consulting with counsel, that the
ultimate liability, if any, will not have a material effect on the consol-
idated financial position, results of operations and cash flow of the
Company.
The Company has a $7.5 million revolving loan agreement with a bank which
provides for a line of credit. Under the provisions of this agreement,
the Company must pay interest at prime and maintain certain quarterly
financial covenants as follows: current ratio 1.25 : 1; debt to equity
ratio .50 : 1; minimum working capital of $8 million; and minimum net worth
of $31 million. This line of credit expires on September 1998 and is
unsecured. At June 30, 1997, there was no amount outstanding under this
line of credit.
Foreign currency transaction gains and losses are included in the
determination of net income (loss). Transaction gains (losses) increased
(decreased) net earnings in 1997, 1996, and 1995 by $(337,000), $(192,000)
and $93,000, respectively.
(9) Other Income and Expense
In the fourth quarter of fiscal 1997, the Company transferred its M-II and
M-IV technology in exchange for a fee of $25,000,000. The Company retained
the right to use this technology to operate its current plant as well as to
operate certain expansion opportunities as specified in the transfer
agreement. In addition, the Company is obligated to allow the transferee
limited use of its existing facility for testing purposes.
The fee consisted of a cash payment of $15,000,000 and two $5,000,000
promissory notes which mature in 2000 and 2005 and bear interest at 5.94 and
6.32%, respectively. Income of $17.4 million, net of certain transaction
costs, was recognized in 1997. Approximately $6.9 million of the fee has
been deferred and will be recognized as costs are incurred or obligations
are fulfilled.
The estimated fair value of the notes receivable approximates their carrying
value at June 30, 1997.
In fiscal 1996, the Company wrote off $1,863,000 of costs associated with
two expansion projects which were terminated. The write off included costs
associated with the engineering and design of a plant to be located in
Europe and a plant to be located in Memphis, Tennessee. In addition, the
Company recognized a $479,827 gain from a contract dispute resolution.
The contract dispute related to the price the Company's previous natural
gas supplier was charging.
(10) New Accounting Pronouncements
The Financial Accounting Standards Board (FASB) issued Statement of
Financial Accounting Standards (SFAS) No. 128, "Earnings Per Share". SFAS
No. 128 is effective for annual and interim periods ending after December
15, 1997. This pronouncement will not have a material impact on its
earnings per share.
Additionally, the FASB issued SFAS No. 129, "Disclosure of Information About
Capital Structure", SFAS No. 130 "Reporting Comprehensive Income" and SFAS
No 131 "Reporting Disaggregated Information about a Business Enterprise."
SFAS No. 129 is effective for fiscal years ending after December 15, 1997.
Statements Nos. 130 and 131 are effective for fiscal years beginning after
December 1997. These statements principally relate to disclosure
requirements.
SUPPLEMENTAL INFORMATION
The quarterly financial data (unaudited) for the three years ended June 30,
1997 follows:
<TABLE>
<CAPTION>
Earnings
Before Income Primary and Fully
Gross Income Tax Net Diluted Earnings Tax
Revenue Profit Taxes Expense Earnings Per Share Rate
------- ------ -------- ------- -------- ----------------- ----
(In thousands, except per share data)
<S> <C> <C> <C> <C> <C> <C> <C>
1997:
1st Quarter $ 15,357 2,382 1,548 495 1,053 .19 32.0%
2nd Quarter 14,553 2,215 1,407 450 957 .17 32.0
3rd Quarter 14,998 2,997 1,885 603 1,282 .23 32.0
4th Quarter 15,070 1,242 18,078 6,628 11,450 2.04 36.7
1996:
1st Quarter $ 11,057 2,115 1,353 433 920 .17 32.0%
2nd Quarter 12,237 2,050 1,446 463 983 .18 32.0
3rd Quarter 14,787 2,127 1,148 367 781 .14 32.0
4th Quarter 17,538 2,349 68 22 46 .01 32.0
1995:
1st Quarter $ 9,391 1,559 744 268 476 .09 36.0%
2nd Quarter 11,584 2,333 1,508 543 965 .17 36.0
3rd Quarter 12,156 2,197 1,559 (33) 1,593 .29 2.1
4th Quarter 12,370 1,209 467 168 298 .05 36.0
</TABLE>
The tax rate for each quarter is based upon an estimate of the effective tax
rate of the entire year. The tax rate in the third quarter of fiscal 1995
was impacted by a $594,700 settlement reached with the Internal Revenue
Service. The tax rate in the fourth quarter of fiscal 1997 was impacted by
$17.4 million gain on the sale of technology.
Item 9. Changes in and Disagreements on Accounting and Financial Disclosures
There have been no changes in accountants and no disagreements on accounting
principles or practices, financial statement disclosure or auditing scope or
procedure between the Company and its independent certified public
accountants during the period beginning July 1, 1994 and ending on the date
hereof.
PART III
Item 10. Directors and Executive Officers of the Registrant
Information regarding directors of the Company is included on pages 3 to 6
of the Company's definitive proxy statement prepared in connection with the
1997 Annual Meeting of Shareholders and is incorporated herein by reference.
Certain information concerning the Company's officers is included in Item
4(a) of Part I of this report.
Item 11. Executive Compensation
Information regarding executive compensation is included on pages 6 to 9 of
the Company's definitive proxy statement prepared in connection with the
1997 Annual Meeting of and is incorporated herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management
Information regarding security ownership of certain beneficial owners and
management is included on pages 2 to 3 of the Company's definitive proxy
statement prepared in connection with the 1997 Annual Meeting of
Shareholders and is incorporated herein by reference.
Item 13. Certain Relationships and Related Transactions
Information regarding certain relationships and related transactions is
included on pages 11 to 12 of the Company's definitive proxy statement
prepared in connection with the 1997 Annual Meeting of Shareholders and is
incorporated herein by reference.
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a) 1. Financial Statements
See Item 8 of PART II of this report.
2. Financial Statement Schedules
See Item 8 of Part II of this report.
3. Exhibits
3.1 Restated Certificate of Incorporation of the Company.1
3.2 Amended By-laws of the Company.1
3.3 Amendment No. 1 to the Amended By-laws.2
3.4 Amendment No. 2 to the Amended By-laws.
4.1 See Exhibits 3.1 and 3.2 for provisions of the Company's
Restated Certificate of Incorporation and Amended By-laws defining
the rights of holders of Common Stock.
4.2 Specimen of Common Stock Certificate.1
4.3 Registration Rights Agreement by and among the Company, Ashland
and First Mississippi.1
4.4 Rights Agreement dated November 15, 1990 between the Company
and Wachovia Bank and Trust Company, N.A. as Rights Agent.3
4.5 Amendment to Rights Agreement dated as of August 7, 1991.3
4.6 Second Amendment to Rights Agreement dated as of August 3,
1994.3
10.1 Feedstock Agreement dated April 30, 1987, by and between the
Company and First Mississippi, certain portions of which are filed
under a request for confidential treatment under Rule 406 of the
Securities Act of 1933, as amended, and the Freedom of Information
Act.1
10.2 Amendment to Feedstock Agreement dated February 20, 1997 by and
between the Company and First Mississippi.
10.3 Standby Feedstock Agreement dated July 1, 1988, by and between
the Company and First Mississippi.
10.4 MCI/Triad Intercompany Agreement dated June 10, 1987, by and
between the Companyand Triad.1
10.5 Gas Sales Contract dated August 1, 1986, by and between
Ponchartrain Natural Gas System and the Company.1
10.6 Site Lease Agreement dated November 4, 1970 and July 1, 1972,
by and among Triad, First Mississippi, Mis Coa, Mississippi Chemical
Corporation, Coastal Chemical Corporation, Ashland and the Company.1
10.7 Assignment of Site Lease dated July 23, 1987, by and among
Triad, First Mississippi, Mississippi Chemical Corporation, Ashland
and the Company.1
10.8 Amended and Restated Long-Term Incentive Plan.1
10.9 Second Amended and Restated Long-Term Incentive Plan.4
10.10 1996 Long-Term Incentive Plan.
10.11 Employee 401(K) Thrift Plan and related Trust (Restated 1996).
10.12 Amendment No. 1 to Employee 401(k) Thrift Plan.
10.13 Amendment No. 2 to Employee 401(k) Thrift Plan.
10.14 Amended and Restated Retirement Plan for Employees of the
Company including First Supplement and related Trust. (The related
Trust is incorporated by reference from the Company's Registration
Statement on Form S-1 (Registration No. 33-15181).
10.15 Amendment No. 1 to the Retirement Plan.
10.16 Form of Indemnity Agreement.1
10.17 Schedule describing differences between Indemnity Agreements.
10.18 Description of Annual Incentive Plan.
10.19 Assignment Agreement dated July 1, 1988, by and among the
Company, Mississippi Chemical Corporation and First Mississippi.1
10.20 Form of Single Trigger Change of Control Severance Agreement.
10.21 Schedule describing differences between Single Trigger Change
of Control Agreement.
10.22 Form of Double Trigger Change of Control Severance Agreement.
10.23 Schedule describing differences between Double Trigger Change
of Control Agreement.
10.24 Form of renewal of Change of Control Agreements.
10.25 Technology Transfer and Technical Cooperation Agreement, dated
as of February 25, 1997, by and between Melamine Chemicals, Inc. and
DSM Melamine B.V. (Portions of this agreement are confidential and
have been omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential
treatment).5
10.26 $5 million 5.94% Promissory Note due 2000 dated April 3, 1997,
DSM Melamine B.V. to the Company.
10.27 $5 million 6.23% Promissory Note due 2005 dated April 3, 1997,
DSM Melamine B.V. to the Company.
24.1 Consent of KPMG Peat Marwick LLP.
1 Incorporated by reference from the Company's Registration Statement
on form S-1 (Registration No. 33-15181).
2 Incorporated by reference from the Company's Registration Statement
on Form S-8 (Registration No. 33-20497).
3 Incorporated by reference from the Company's Registration Statement
on Form 8-A dated November 9, 1990 as amended by the Company's Form 8
dated August 20, 1991 and the Company's Form 8-A/A dated December 8,
1994.
4 Incorporated by reference from the Company's Registration Statement
on Form S-8 (Registration N. 33-43979).
5 Incorporated by reference from the Company's Current Report on Form
8-K filed with the Commission on April 11, 1997.
(b) Reports on Form 8-K
A Form 8-K dated July 1, 1996 was filed by the Company announcing the end
of its consideration of expansion projects in Europe and in Memphis,
Tennessee.
A Form 8-K dated July 30, 1996 was filed by the Company relating to the
financial results for the year ended June 30, 1996.
A Form 8-K dated October 14, 1996 was filed by the Company relating to
the financial results for the three month period ended September 30,
1996.
A Form 8-K dated January 14, 1997 was filed by the Company relating to
the financial results for the three and six month periods ended December
31, 1996.
A Form 8-K dated February 26, 1997 was filed by the Company announcing
the signing of an agreement relating to the sale of Melamine Chemicals
Inc.'s patented high-pressure melamine production technologies to DSM
Melamine B.V.
A Form 8-K dated March 25, 1997 was filed by the Company announcing the
closing date for the sale of technology.
A Form 8-K dated April 3, 1997 was filed by the Company relating to the
definitive agreement executed with DSM.
A Form 8-K dated April 17, 1997 was filed by the Company relating to the
financial results for the three and nine month periods ended March 31,
1997.
A Form 8-K dated June 30, 1997 was filed by the Company relating to an
unsolicited proposal by Ashland, Inc. to acquire all of Melamine's
outstanding stock that Ashland does not currently own.
A Form 8-K dated July 18, 1997 was filed by the Company relating to the
financial results for the year ended June 30, 1997.
A Form 8-K dated August 15, 1997 was filed by the Company relating
Ashland's increased offer to purchase the Company.
A Form 8-K dated August 26, 1997 was filed by the Company relating to its
financial advisor's, Goldman, Sachs & Co.'s, continuing review of
Ashland's offer and other available alternatives.
A Form 8-K dated August 27, 1997 was filed by the Company relating to
Ashland Inc. confirming its offer of August 14 to purchase all of the
issued and outstanding shares of the Company that it does not own.
A Form 8-K dated September 8, 1997 was filed by the Company announcing
that it has temporarily reduced its melamine production due to equipment
repairs being performed by its primary raw materials supplier, Triad
Nitrogen Inc.
<TABLE>
<CAPTION>
SCHEDULE II
MELAMINE CHEMICALS, INC.
VALUATION AND QUALIFYING ACCOUNTS
==================================================================================
<S> <C> <C> <C> <C>
Additions-
Balance at amounts Deductions- Balance at
beginning charged toreceivables end of
Description of Year expense written off Year
- ----------------------------------------------------------------------------------
Allowance for doubtful accounts
Year ended June 30, 1997 $150,000 $25,000 Nil $175,000
Year ended June 30, 1996 $150,000 25,486 25,486 $150,000
Year ended June 30, 1995 $150,000 Nil Nil $150,000
- ----------------------------------------------------------------------------------
</TABLE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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 on September 26, 1997.
MELAMINE CHEMICALS, INC.
/S/ FREDERIC R. HUBER
---------------------
Frederic R. Huber
President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed by the following persons on behalf of the Registrant
and on the dates indicated.
Signature Title Date
/s/ JAMES W. CROOK Chairman of the Board September 26, 1997
- ------------------
(James W. Crook)
/s/ CHARLES M. MCAULEY Director September 26, 1997
- ----------------------
(Charles M. McAuley)
/s/ SCOTTY B. PATRICK Director September 26, 1997
- ---------------------
(Scotty B. Patrick)
/s/ R. MICHAEL SUMMERFORD Director September 26, 1997
- -------------------------
(R. Michael Summerford)
/s/ DANIEL D. RENEAU, JR. Director September 26, 1997
- -------------------------
(Daniel D. Reneau, Jr.)
/s/ NILON H. PRATER Director September 26, 1997
- -------------------
(Nilon H. Prater)
/s/ DAVID J. D'ANTONI Director September 26, 1997
- ---------------------
(David J. D'Antoni)
/s/ WAYNE D. DELEO Vice President and September 26, 1997
- ------------------ Chief Financial Officer
(Wayne D. DeLeo)
(Principal Financial and
Accounting Officer)
Exhibit Index
Exhibit No. Description
3.4 Amendment No. 2 to the Amended By-laws.
10.2 Amendment to Feedstock Agreement dated January 1, 1997 by and
between the Company and First Mississippi.
10.3 Standby Feedstock Agreement dated July 1, 1998, by and between
the Company and First Mississippi.
10.10 1996 Long-Term Incentive Plan.
10.11 Employee 401(K) Thrift Plan and related Trust (Restated 1996).
10.12 Amendment No. 1 to Employee 401(K) Thrift Plan.
10.13 Amendment No. 2 to Employee 401(K) Thrift Plan.
10.14 Amended and Restated Retirement Plan for Employees of the Company
including First Supplement and related Trust. (The related Trust
is incorporated by reference from the Company's Registration
Statement on Form S-1 (Registration No. 33-15181).
10.15 Amendment No. 1 to the Retirement Plan.
10.17 Schedule describing differences between Indemnity Agreements.
10.18 Description of Annual Incentive Plan.
10.20 Form of Single Trigger Change of Control Severance Agreement.
10.21 Schedule describing differences between Single Trigger Change of
Control Agreement.
10.22 Form of Double Trigger Change of Control Severance Agreement.
10.23 Schedule describing differences between Double Trigger Change of
Control Agreement.
10.24 Form of renewal of Change of Control Agreements.
10.26 $5 million 5.94% Promissory Note due 2000 dated April 3, 1997, DSM
Melamine B.V. to the Company.
10.27 $5 million 6.23% Promissory Note due 2005 dated April 3, 1997, DSM
Melamine B.V. to the Company.
24.1 Consent of KPMG Peat Marwick LLP.
AMENDMENT NO. 2 TO AMENDED BY-LAWS
OF MELAMINE CHEMICALS, INC.
ADOPTED BY THE BOARD OF DIRECTORS
MAY 1, 1991
Article III, Section 3, of the Amended By-laws of the Company is
amended by the addition of the following sentence to the second
paragraph of such Section 3:
Notwithstanding anything in this Section 3 to the contrary,
the term of any director will expire at the annual meeting
of stockholders immediately following such director's 70th
birthday.
[Letterhead of Triad Nitrogen, Inc.]
February 20, 1997
Melamine Chemicals, Inc.
P.O. Box 748
Donaldsonville, LA 70346
Attention: Mr. Wayne Deleo
Gentlemen:
Reference is made to that certain Feedstock Agreement (the
"Agreement") dated April 30, 1987, between Melamine Chemicals, Inc.
("MCI") and Triad Nitrogen, Inc. ("TNI"), as successor to First
Mississippi Corporation ("FMC").
The Agreement provides inter alia that the price for Urea will be
market price as reflected by the weighted average price (excluding all
taxes reflected therein) TNI receives on all bulk, prilled and/or
granulated Urea sales, FOB Donaldsonville, Louisiana, excluding sales
to MCI, sales to TNI subsidiaries and intra-company transfers, less
Five and 00/100 Dollars ($5.00) per ton and that the price and credits
for quantities of Anhydrous Ammonia and Anhydrous Ammonia Equivalent
obtained from recycled carbamate delivered under the Agreement will be
the market price as reflected by the weighted average price (excluding
all taxes reflected therein) TNI receives on all Anhydrous Ammonia
sales FOB Donaldsonville, Louisiana, excluding sales to MCI and sales
to TNI subsidiaries or intra-company transfers, less Five and 00/100
Dollars ($5.00) per ton.
TNI intends to sell substantially all of the Urea and Anhydrous
Ammonia produced by it at Donaldsonville, Louisiana, to an affiliated
entity, Mississippi Chemical Company, L.P. ("MCCLP"). The prices to
be paid by MCCLP are established based on a contract formula agreed
upon by MCCLP and TNI and may vary from prevailing market prices.
MCCLP will resell Urea and Anhydrous Ammonia purchased from TNI to its
customers in industrial and agricultural markets at prevailing market
prices.
This Letter Agreement confirms our understanding and agreement
that the price for quantities of urea sold under the Agreement will be
the market price as reflected by the weighted average price (excluding
all taxes reflected therein) that MCCLP receives on all bulk, prilled
and/or granulated Urea sales FOB Donaldsonville, Louisiana, excluding
sales to MCI, TNI or MCCLP affiliates, subsidiaries, partners and
intra-company transfers, less Five and 00/100 Dollars ($5.00) per ton.
The average price shall be determined quarterly by utilizing the sales
from the immediately preceding calendar quarter in which MCCLP has
sales. In the event that either party feels the volume of MCCLP's
sales is not sufficient to accurately reflect market price for the
given period, then either party may request a meeting to discuss a
pricing change using appropriate industry indices. However, in the
absence of mutual written agreement by the parties otherwise, MCCLP's
weighted average price as outlined above shall prevail. The prices
and credits for quantities of Anhydrous Ammonia and Anhydrous Ammonia
Equivalent obtained from recycled carbamate delivered under the
Agreement will be the market price as reflected by the weighted
average price (excluding all taxes reflected therein) that MCCLP
receives on all Anhydrous Ammonia sales FOB Donaldsonville, Louisiana,
excluding sales to MCI, TNI or MCCLP affiliates, subsidiaries,
partners and intra-company transfers, less Five and 00/100 Dollars
($5.00) per ton. The average price shall be determined quarterly by
utilizing the sales from the immediately preceding calendar quarter in
which MCCLP has sales. In the event that either party feels the
volume of MCCLP's sales is not sufficient to accurately reflect market
price for the given period, then either party may request a meeting to
discuss a pricing change using appropriate industry indices. However,
in the absence of mutual written agreement by the parties otherwise,
MCCLP's weighted average price as outlined above shall prevail.
TNI shall cause MCCLP to keep complete and accurate books and
records on all sales on which the price under the Agreement is
determined and to permit, on request by MCI, an independent auditor
selected by MCI and to whom MCCLP shall have no reasonable objection
to examine such books and records for any period ending not more than
two (2) years prior to such request to determine the correctness of
any price under the Agreement. Said auditor shall not disclose any
information relating to said books or records except his opinions as
to the correctness of such price.
This Letter Agreement shall take effect on March 31, 1997, for
determination of the price of urea and the price and credits for
anhydrous ammonia for the second quarter of 1997 and for every quarter
thereafter.
This Letter Agreement confirms our understanding and agreement
that TNI has succeeded to all rights and obligations of Triad, FMC and
MCC under the Agreement such that the defined term "Triad" in the
Agreement now refers to TNI, and the defined term "FMC" in the
Agreement now means TNI.
All capitalized terms used in this Letter Agreement and not
otherwise defined, shall have the meanings set forth in the Agreement.
Except as expressly amended herein, all other terms and
conditions shall remain in full force and effect.
If you are in agreement with the foregoing, please so indicated
by signing in the space provided below and returning one fully
executed original of this Letter Agreement to us for our files.
Very truly yours,
TRIAD NITROGEN, INC.
/s/ C. E. McCraw
-----------------
C. E. McCraw
Vice President
AGREED TO AND ACCEPTED
this the 27th day of February, 1997.
MELAMINE CHEMICALS, INC.
By: /s/ Fred Huber
---------------
Fred Huber
President and
Chief Executive Officer
STANDBY FEEDSTOCK AGREEMENT
This Agreement made and entered into on the 22nd day of July,
1988, by and between MELAMINE CHEMICALS, INC., a Delaware corporation
(hereinafter referred to as "MCI"), and FIRST MISSISSIPPI CORPORATION,
a Mississippi corporation (hereinafter referred to as "FMC"). This
Agreement shall hereinafter be referred to as the "Standby Feedstock
Agreement."
WITNESSETH:
WHEREAS, FMC and MCI are parties to an Agreement dated April 30,
1987, a copy of which is attached hereto and referred to as Exhibit A
(hereinafter referred to as the "Feedstock Agreement"); and
WHEREAS, FMC desires that MCI execute a document of even date,
attached hereto and referred to as Exhibit B, wherein MCI would
approve the assignment by FMC to Mississippi Chemical Corporation
(hereinafter referred to as "MCC") of FMC's rights, duties and
obligations, subject to the terms and conditions as set forth in the
Feedstock Agreement, to supply to MCI one-half (1/2) of the Urea Melt
and Anhydrous Ammonia required under the Feedstock Agreement, and to
receive one-half (1/2) of the Carbamate recycle returned to FMC under
the Feedstock Agreement (such Agreement of even date being hereinafter
referred to as the "Assignment Agreement"); and
WHEREAS, MCI is willing to execute said Assignment Agreement
subject to the provisions set out below;
NOW, THEREFORE, in consideration of these premises, the parties
hereby agree as follows:
1. Subject to the conditions set out herein, FMC hereby agrees
that in the event MCC wrongfully ceases to make deliveries of Ammonia
and Urea and accept Carbamate as required of it under the Feedstock
Agreement, then FMC will increase its deliveries of Ammonia and Urea
to MCI and its receipt of Carbamate from MCI, subject to the terms of
the Feedstock Agreement, so that MCI will be supplied with the total
quantity of Ammonia and Urea as provided under the Feedstock
Agreement. However, in no event shall the quantities supplied by FMC
under this Standby Feedstock Agreement exceed MCC's deficiencies under
the Feedstock Agreement and the Assignment Agreement. FMC's
obligation to supply Ammonia or Urea relative to MCC's default under
the Feedstock Agreement and the Assignment Agreement shall begin
thirty (30) days after notice by MCI to FMC of MCC's improper
cessation of deliveries under the Feedstock Agreement. Such notice
shall be given in accordance with Paragraph 17 of the Feedstock
Agreement.
2. MCI hereby agrees to make reasonable efforts to force MCC to
comply with the Feedstock Agreement and to force MCC to cure any
breach by MCC of the Feedstock Agreement. FMC's obligation to make up
the short fall in deliveries of Ammonia and Urea to MCI and receipt of
Carbamate from MCI shall cease in the event that MCI fails to initiate
or at any time ceases to use reasonable efforts to force compliance by
MCC or if MCC once again reinstates deliveries of Ammonia and Urea and
resumes acceptance of Carbamate from MCI in accordance with the
Feedstock Agreement.
3. Prior to consenting to any assignment by MCC of its rights,
duties and obligations under the Feedstock Agreement and the
Assignment Agreement, MCI will first consult with FMC and obtain its
consent to such transfer. FMC agrees to not unreasonably withhold its
consent thereto.
4. Nothing contained herein is intended to or shall be
construed to increase or change in any way the total contract quantity
which FMC and MCC are jointly obligated to supply to MCI under the
Feedstock Agreement and Assignment Agreement generally and
particularly without way of limitation under Paragraph 3 entitled
"Contract Quantity" of the Feedstock Agreement. Further, nothing
herein shall be construed as imposing any obligation on FMC to make
any deliveries if such deliveries would be otherwise excused by a
force majeure event as described in Paragraph 12 of the Feedstock
Agreement or a cessation of operation of the Triad Chemical plant for
any reason.
5. In the event of any conflict or ambiguity between the
provisions of this Standby Feedstock Agreement and the provisions of
Paragraph 4 of the Assignment Agreement, the provisions of this
Standby Feedstock Agreement shall govern and prevail.
IN WITNESS WHEREOF, the parties hereto have caused this Standby
Feedstock Agreement to be executed as of the date first above written.
ATTEST: FIRST MISSISSIPPI CORPORATION
By: /s/ Bonnie H. Kelley By: /s/ J. Kelley Williams
--------------------- -----------------------
Bonnie H. Kelley J. Kelley Williams
Assistant Secretary President
ATTEST: MELAMINE CHEMICALS, INC.
By: /s/ Ann Kistenmacher By: /s/ J. W. Crook
--------------------- ----------------
Typed Name: Ann Kistenmacher Typed Name: J. W. Crook
Title: Title: Chairman of the Board
MELAMINE CHEMICALS, INC.
1996 LONG-TERM INCENTIVE PLAN,
1. Purpose. The purpose of the 1996 Long-Term Incentive Plan
(the "Plan") of Melamine Chemicals, Inc. ("Melamine") is to increase
shareholder value and to advance the interests of Melamine and its
subsidiaries (collectively, the "Company") by furnishing a variety of
economic incentives (the "Incentives") designed to attract, retain and
motivate key employees, officers and directors and to strengthen the
mutuality of interests between such employees, officers and directors
and Melamine's shareholders. Incentives may consist of opportunities
to purchase or receive shares of common stock, $.01 par value per
share, of Melamine (the "Common Stock"), on terms determined under the
Plan. As used in the Plan, the term "subsidiary" means any
corporation of which Melamine owns (directly or indirectly) within the
meaning of Section 425(f) of the Internal Revenue Code of 1986, as
amended (the "Code"), 50% or more of the total combined voting power
of all classes of stock.
2. Administration.
2.1. Composition. The Plan shall be administered by the
long-term incentive plan committee of the Board of Directors of
Melamine (the "Committee"). The Committee shall consist of not
fewer than two members of the Board of Directors, each of whom
shall (a) qualify as a "non-employee director" under Rule 16b-3
under the Securities Exchange Act of 1934 (the "1934 Act"), as in
effect on August 15, 1996, or any successor rule, and (b) qualify
as "outside directors" under Section 162(m) of the Code.
2.2. Authority. The Committee shall have plenary authority
to award Incentives under the Plan, to interpret the Plan, to
establish any rules or regulations relating to the Plan that it
determines to be appropriate, to enter into agreements with
participants as to the terms of the Incentives (the "Incentive
Agreements") and to make any other determination that it believes
necessary or advisable for the proper administration of the Plan.
Its decisions in matters relating to the Plan shall be final and
conclusive on the Company and participants. The Committee may
delegate its authority hereunder to the extent provided in
Section 3 hereof. The Committee shall not have authority to
award Incentives under the Plan to directors who are not also
employees of the Company ("Outside Directors"). Outside
Directors may receive awards under the Plan only as specifically
provided in Section 12 hereof.
3. Eligible Participants. Key employees and officers of the
Company (including the Chairman of the Board and any other officer who
also serves as director of the Company) and persons providing services
as consultants or advisors to the Company shall become eligible to
receive Incentives under the Plan when designated by the Committee.
Employees may be designated individually or by groups or categories,
as the Committee deems appropriate. With respect to participants not
subject to Section 162(m) of the Code, the Committee may delegate to
appropriate personnel of the Company its authority to designate
participants, to determine the size and type of Incentives to be
received by those participants and to determine or modify performance
objectives for those participants. Outside Directors may participate
in the Plan only as specifically provided in Section 12 hereof.
4. Types of Incentives. Incentives may be granted under the
Plan to eligible participants in any of the following forms, either
individually or in combination, (a) incentive stock options and non-
qualified stock options; (b) stock appreciation rights ("SARs") (c)
restricted stock; (d) performance shares; (e) stock awards; and (f)
cash awards.
5. Shares Subject to the Plan.
5.1. Number of Shares. Subject to adjustment as provided in
Section 10.6, a total of 350,000 shares of Common Stock are
authorized to be issued under the Plan. Incentives with respect
to no more than 35,000 shares of Common Stock may be granted
through the Plan to a single participant in one calendar year.
In the event that a stock option, SAR or performance share
granted hereunder expires or is terminated or cancelled prior to
exercise or payment, any shares of Common Stock that were
issuable thereunder may again be issued under the Plan. In the
event that shares of Common Stock are issued as Incentives under
the Plan and thereafter are forfeited or reacquired by the
Company pursuant to rights reserved upon issuance thereof, such
forfeited and reacquired shares may again be issued under the
Plan. If an Incentive is to be paid in cash by its terms, the
Committee need not make a deduction from the shares of Common
Stock issuable under the Plan with respect thereto. If and to
the extent that an Incentive may be paid in cash or shares of
Common Stock, the total number of shares available for issuance
hereunder shall be debited by the number of shares payable under
such Incentive, provided that upon any payment of all or part of
such Incentive in cash, the total number of shares available for
issuance hereunder shall be credited with the appropriate number
of shares represented by the cash payment, as determined in the
sole discretion of the Committee. Additional rules for
determining the number of shares granted under the Plan may be
made by the Committee, as it deems necessary or appropriate.
5.2. Type of Common Stock. Common Stock issued under the
Plan may be authorized and unissued shares or issued shares held
as treasury shares.
6. Stock Options. A stock option is a right to purchase shares
of Common Stock from Melamine. Stock options granted under this Plan
may be incentive stock options or non-qualified stock options. Any
option that is designated as a non-qualified stock option shall not be
treated as an incentive stock option. Each stock option granted by
the Committee under this Plan shall be subject to the following terms
and conditions:
6.1. Price. The exercise price per share shall be
determined by the Committee, subject to adjustment under Section
13.5; provided that in no event shall the exercise price be less
than the Fair Market Value of a share of Common Stock on the date
of grant.
6.2. Number. The number of shares of Common Stock subject
to the option shall be determined by the Committee, subject to
Section 5.1 and subject to adjustment as provided in Section
13.5.
6.3. Duration and Time for Exercise. Subject to earlier
termination as provided in Section 13.3, the term of each stock
option shall be determined by the Committee. Subject to Section
13.11, each stock option shall become exercisable at such time or
times during its term as shall be determined by the Committee.
Notwithstanding the foregoing, the Committee may accelerate the
exercisability of any stock option at any time, in addition to
the automatic acceleration of stock options under Section 13.11.
6.4. Repurchase. Upon approval of the Committee, the
Company may repurchase a previously granted stock option from a
participant by mutual agreement before such option has been
exercised by payment to the participant of the amount per share
by which: (i) the Fair Market Value (as defined in Section
13.12) of the Common Stock subject to the option on the business
day immediately preceding the date of purchase exceeds (ii) the
exercise price.
6.5. Manner of Exercise. A stock option may be exercised,
in whole or in part, by giving written notice to the Company,
specifying the number of shares of Common Stock to be purchased.
The exercise notice shall be accompanied by the full purchase
price for such shares. The option price shall be payable in
United States dollars and may be paid by (a) cash; (b)
uncertified or certified check; (c) unless otherwise determined
by the Committee, by delivery of shares of Common Stock held by
the optionee for at least six months, which shares shall be
valued for this purpose at the Fair Market Value on the business
day immediately preceding the date such option is exercised; (d)
by delivering a properly executed exercise notice together with
irrevocable instructions to a broker approved by Melamine (with a
copy to Melamine) to promptly deliver to Melamine the amount of
sale or loan proceeds to pay the exercise price; (e) in such
other manner as may be authorized from time to time by the
Committee. In the case of delivery of an uncertified check upon
exercise of a stock option, no shares shall be issued until the
check has been paid in full. Prior to the issuance of shares of
Common Stock upon the exercise of a stock option, a participant
shall have no rights as a shareholder.
6.6. Incentive Stock Options. Notwithstanding anything in
the Plan to the contrary, the following additional provisions
shall apply to the grant of stock options that are intended to
qualify as Incentive Stock Options (as such term is defined in
Section 422 of the Code):
(a) Any Incentive Stock Option agreement authorized
under the Plan shall contain such other provisions as the
Committee shall deem advisable, but shall in all events be
consistent with and contain or be deemed to contain all
provisions required in order to qualify the options as
Incentive Stock Options.
(b) All Incentive Stock Options must be granted within
ten years from the date on which this Plan is adopted by the
Board of Directors.
(c) Unless sooner exercised, all Incentive Stock
Options shall expire no later than ten years after the date
of grant.
(d) No Incentive Stock Options shall be granted to any
participant who, at the time such option is granted, would
own (within the meaning of Section 422 of the Code) stock
possessing more than 10% of the total combined voting power
of all classes of stock of the employer corporation or of
its parent or subsidiary corporation.
(e) The aggregate Fair Market Value (determined with
respect to each Incentive Stock Option as of the time such
Incentive Stock Option is granted) of the Common Stock with
respect to which Incentive Stock Options are exercisable for
the first time by a participant during any calendar year
(under the Plan or any other plan of Melamine or any of its
subsidiaries) shall not exceed $100,000. To the extent that
such limitation is exceeded, such options shall not be
treated, for federal income tax purposes, as Incentive Stock
Options.
6.7. Equity Maintenance. If a participant exercises an
option during the term of his employment with the Company, and
pays the exercise price (or any portion thereof) through the
surrender of shares of outstanding Common Stock owned by the
participant, the Committee may, in its discretion, grant to such
participant an additional option to purchase the number of shares
of Common Stock equal to the shares of Common Stock so
surrendered by such participant. Any such additional options
granted by the Committee shall be exercisable at the Fair Market
Value of the Common Stock determined as of the business day
immediately preceding the respective dates such additional
options may be granted. As stated above, such additional options
may be granted only in connection with the exercise of options by
the participant during the term of his active employment with the
Company. The grant of such additional options under this Section
6.7 shall be made upon such other terms and conditions as the
Committee may from time to time determine.
7. Restricted Stock.
7.1. Grant of Restricted Stock. The Committee may award
shares of restricted stock to such officers and key employees as
the Committee determines pursuant to the terms of Section 3. An
award of restricted stock may be subject to the attainment of
specified performance goals or targets, restrictions on transfer,
forfeitability provisions and such other terms and conditions as
the Committee may determine, subject to the provisions of the
Plan. To the extent restricted stock is intended to qualify as
performance based compensation under Section 162(m) of the Code,
it must meet the additional requirements imposed thereby.
7.2. The Restricted Period. At the time an award of
restricted stock is made, the Committee shall establish a period
of time during which the transfer of the shares of restricted
stock shall be restricted (the "Restricted Period"). The
Restricted Period shall be a minimum of three years, except that
if the vesting of the shares of Restricted Stock is based upon
the attainment of performance goals, a minimum Restricted Period
of one year is permitted. Each award of restricted stock may
have a different Restricted Period. The expiration of the
Restricted Period shall also occur as provided under Section 13.3
and under the conditions described in Section 13.11 hereof.
7.3. Escrow. The participant receiving restricted stock
shall enter into an Incentive Agreement with the Company setting
forth the conditions of the grant. Certificates representing
shares of restricted stock shall be registered in the name of the
participant and deposited with the Company, together with a stock
power endorsed in blank by the participant. Each such
certificate shall bear a legend in substantially the following
form:
The transferability of this certificate and the shares
of Common Stock represented by it are subject to the
terms and conditions (including conditions of
forfeiture) contained in the Melamine Chemicals, Inc.
1996 Long-Term Incentive Plan (the "Plan"), and an
agreement entered into between the registered owner and
Melamine Chemicals, Inc. thereunder. Copies of the
Plan and the agreement are on file at the principal
office of the Company.
7.4. Dividends on Restricted Stock. Any and all cash and
stock dividends paid with respect to the shares of restricted
stock shall be subject to any restrictions on transfer,
forfeitability provisions or reinvestment requirements as the
Committee may, in its discretion, prescribe in the Incentive
Agreement.
7.5. Forfeiture. In the event of the forfeiture of any
shares of restricted stock under the terms provided in the
Incentive Agreement (including any additional shares of
restricted stock that may result from the reinvestment of cash
and stock dividends, if so provided in the Incentive Agreement),
such forfeited shares shall be surrendered and the certificates
cancelled. The participants shall have the same rights and
privileges, and be subject to the same forfeiture provisions,
with respect to any additional shares received pursuant to
Section 13.5 due to a recapitalization, merger or other change in
capitalization.
7.6. Expiration of Restricted Period. Upon the expiration
or termination of the Restricted Period and the satisfaction of
any other conditions prescribed by the Committee or at such
earlier time as provided for in Section 7.2 and in the Incentive
Agreement or an amendment thereto, the restrictions applicable to
the restricted stock shall lapse and a stock certificate for the
number of shares of restricted stock with respect to which the
restrictions have lapsed shall be delivered, free of all such
restrictions and legends, except any that may be imposed by law,
to the participant or the participant's estate, as the case may
be.
7.7. Rights as a Shareholder. Subject to the terms and
conditions of the Plan and subject to any restrictions on the
receipt of dividends that may be imposed in the Incentive
Agreement, each participant receiving restricted stock shall have
all the rights of a shareholder with respect to shares of stock
during any period in which such shares are subject to forfeiture
and restrictions on transfer, including without limitation, the
right to vote any shares of voting Common Stock.
8. Stock Appreciation Rights. A SAR is a right to receive,
without payment to the Company, a number of shares of Common Stock,
cash or any combination thereof, the amount of which is determined
pursuant to the formula set forth in Section 8.4. A SAR may be
granted (a) with respect to any stock option granted under the Plan,
either concurrently with the grant of such stock option or at such
later time as determined by the Committee (as to all or any portion of
the shares of Common Stock subject to the stock option), or (b) alone,
without reference to any related stock option. Each SAR granted by
the Committee under the Plan shall be subject to the following terms
and conditions:
8.1. Number. Each SAR granted to any participant shall
relate to such number of shares of Common Stock as shall be
determined by the Committee, subject to Section 5.1 and subject
to adjustment as provided in Section 13.5. In the case of a SAR
granted with respect to a stock option, the number of shares of
Common Stock to which the SAR pertains shall be reduced in the
same proportion that the holder of the option exercises the
related stock option.
8.2. Duration and Time for Exercise. Subject to Section
13.11, the term and exercisability of each SAR shall be
determined by the Committee. Unless otherwise provided by the
Committee in the Incentive Agreement, each SAR issued in
connection with a stock option shall become exercisable at the
same time or times, to the same extent and upon the same
conditions as the related stock option. Notwithstanding the
foregoing, the Committee may in its discretion accelerate the
exercisability of any SAR at any time in addition to automatic
acceleration of SARs under Section 13.11.
8.3. Exercise. A SAR may be exercised, in whole or in part,
by giving written notice to the Company, specifying the number of
SARs that the holder wishes to exercise. The Company shall,
within 30 days of receipt of notice of exercise by the Company,
deliver to the exercising holder certificates for the shares of
Common Stock or cash or both, as determined by the Committee, to
which the holder is entitled pursuant to Section 8.4.
8.4. Payment. Subject to the right of the Committee to
deliver cash in lieu of shares of Common Stock, the number of
shares of Common Stock that shall be issuable upon the exercise
of an SAR shall be determined by dividing:
(a) the number of shares of Common Stock as to which
the SAR is exercised multiplied by the dollar amount of the
appreciation in such shares (for this purpose, the
"appreciation" shall be the amount by which the Fair Market
Value of the shares of Common Stock subject to the SAR on
the Exercise Date exceeds (1) in the case of a SAR related
to a stock option, the purchase price of the shares of
Common Stock under the stock option or (2) in the case of a
SAR granted alone, without reference to a related stock
option, an amount equal to the Fair Market Value of a share
of Common Stock on the date of grant, which shall be
determined by the Committee at the time of grant, subject to
adjustment under Section 13.5); by
(b) the Fair Market Value of a share of Common Stock on
the Exercise Date.
In lieu of issuing shares of Common Stock upon the exercise
of a SAR, the Committee may elect to pay the holder of the SAR
cash equal to the Fair Market Value on the Exercise Date of any
or all of the shares which would otherwise be issuable. No
fractional shares of Common Stock shall be issued upon the
exercise of a SAR; instead, the holder of a SAR shall be entitled
to receive a cash adjustment equal to the same fraction of the
Fair Market Value of a share of Common Stock on the Exercise Date
or to purchase the portion necessary to make a whole share at its
Fair Market Value on the Exercise Date.
9. Performance Shares. A performance share consists of an
award that may be paid in shares of Common Stock or in cash, as
described below. The award of performance shares shall be subject to
such terms and conditions as the Committee deems appropriate.
9.1. Performance Objectives. Each performance share will be
subject to performance objectives for Melamine or one of its
subsidiaries, divisions or departments to be achieved by the end
of a specified period. The number of performance shares awarded
shall be determined by the Committee and may be subject to such
terms and conditions as the Committee shall determine. If the
performance objectives are achieved, each participant will be
paid (a) a number of shares of Common Stock equal to the number
of performance shares initially granted to that participant; (b)
a cash payment equal to the Fair Market Value of such number of
shares of Common Stock on the date the performance objectives are
met or such other date as may be provided by the Committee or (c)
a combination of shares of Common Stock and cash, as may be
provided by the Committee. If such objectives are not met, each
award of performance shares may provide for lesser payments in
accordance with a pre-established formula set forth in the
Incentive Agreement. To the extent a performance share is
intended to qualify as performance based compensation under
Section 162(m) of the Code, it must meet the additional
requirements imposed thereby.
9.2. Not a Shareholder. The award of performance shares to
a participant shall not create any rights in such participant as
a shareholder of the Company, until the payment of shares of
Common Stock with respect to an award, at which time such stock
shall be considered issued and outstanding.
9.3. Dividend Equivalent Payments. A performance share
award may be granted by the Committee in conjunction with
dividend equivalent payment rights or other such rights.
Dividend equivalent payments may be made to the participant at
the time of the payment of the dividend or issuance of the other
right or at the end of the specified performance period or may be
deemed to be invested in additional performance shares at the
Fair Market Value of a share of Common Stock on the date of
payment of the dividend or issuance of the right.
10. Stock Awards. A stock award consists of the transfer by the
Company to a participant of shares of Common Stock, without other
payment therefore, as additional compensation for services
previously provided to the Company. The number of shares to be
transferred by the Company to a participant pursuant to a stock
award shall be determined by the Committee.
11. Cash Awards. A cash award consists of a monetary payment
made by the Company to a participant as additional compensation
for his services to the Company. Payment of a cash award may
relate to the tax liability of a participant in connection with
the grant, exercise, or payment of an Incentive or may depend on
achievement of performance objectives by the Company or by
individuals. The amount of any monetary payment constituting a
cash award shall be determined by the Committee in its sole
discretion. Cash awards may be subject to other terms and
conditions, which may vary from time to time among participants,
as the Committee determines to be appropriate.
12. Stock Options for Outside Directors.
12.1 Eligibility Period. For as long as the Plan remains in
effect and shares of Common Stock remain available for issuance
hereunder, each Outside Director shall be automatically granted a
non-qualified stock option to acquire shares of Common Stock on
the day immediately following the annual meeting of shareholders
of Melamine. The number of shares of Common Stock with respect
to which options shall be granted to each Outside Director shall
be determined by dividing the total cash compensation paid to the
Outside Director for services rendered as a director for the
previous twelve months divided by the Fair Market Value of a
share of Common Stock on the date of grant, rounded up to the
nearest whole share.
12.2 Exercisability of Stock Options. The stock options
granted to Outside Directors under this Section 12 shall become
exercisable one year following the date of grant and shall expire
ten years following the date of grant.
12.3 Exercise Price. The Exercise Price of the Stock
Options granted to Outside Directors shall be equal to the Fair
Market Value, as defined in the Plan, of a share of Common Stock
on the date of grant. The Exercise Price may be paid as provided
in Section 6.5 hereof, including pursuant to a brokerage
arrangement approved in advance by the Committee.
12.4 Exercise After Termination of Board Service. In the
event an Outside Director ceases to serve on the Board, the stock
options granted hereunder must be exercised, to the extent
otherwise exercisable at the time of termination of Board
service, within one year from termination of Board service;
provided, however, that in the event of termination of Board
service as a result of retirement on or after reaching age 65,
the stock options must be exercised within five years from the
date of retirement; and further provided, that no stock options
may be exercised later than ten years after the date of grant.
13. General.
13.1. Duration. Subject to Section 13.10, the Plan shall
remain in effect until all Incentives granted under the Plan have
either been satisfied by the issuance of shares of Common Stock
or the payment of cash or been terminated under the terms of the
Plan and all restrictions imposed on shares of Common Stock in
connection with their issuance under the Plan have lapsed.
13.2. Transferability of Incentives. Options, SARs and
performance shares granted under the Plan shall not be
transferred, pledged, assigned or otherwise encumbered by the
holder thereof except: (a) by will; (b) by the laws of descent
and distribution; or (c) in the case of non-qualified stock
options, SARs, and performance shares only, pursuant to a
domestic relations order, as defined in the Code, to family
members, to a family partnership, to a family limited liability
company, to a trust for the benefit of family members or to
charitable institutions, if permitted by the Committee and so
provided in the Incentive Agreement or an amendment thereto. Any
attempted assignment, transfer, pledge, hypothecation or other
disposition of an Incentive, or levy of attachment or similar
process upon the Incentive not specifically permitted herein,
shall be null and void and without effect.
13.3. Effect of Termination of Employment or Death. Except
as provided in Section 12.4 with respect to Outside Directors, in
the event that a participant ceases to be an employee of the
Company for any reason, including death, disability, early
retirement or normal retirement, any Incentives may be exercised,
shall vest or shall expire at such times as may be determined by
the Committee in the Incentive Agreement. The Committee has
complete authority to modify the treatment of an Incentive in the
event of termination of employment of a participant by means of
an amendment to the Incentive Agreement. Consent of the
participant to the modification is required only if the
modification impairs the rights previously provided to the
participant in the Incentive Agreement.
13.4. Additional Condition. Anything in this Plan to the
contrary notwithstanding: (a) the Company may, if it shall
determine it necessary or desirable for any reason, at the time
of award of any Incentive or the issuance of any shares of Common
Stock pursuant to any Incentive, require the recipient of the
Incentive, as a condition to the receipt thereof or to the
receipt of shares of Common Stock issued pursuant thereto, to
deliver to the Company a written representation of present
intention to acquire the Incentive or the shares of Common Stock
issued pursuant thereto for his own account for investment and
not for distribution; and (b) if at any time the Company further
determines, in its sole discretion, that the listing,
registration or qualification (or any updating of any such
document) of any Incentive or the shares of Common Stock issuable
pursuant thereto is necessary on any securities exchange or under
any federal or state securities or blue sky law, or that the
consent or approval of any governmental regulatory body is
necessary or desirable as a condition of, or in connection with
the award of any Incentive, the issuance of shares of Common
Stock pursuant thereto, or the removal of any restrictions
imposed on such shares, such Incentive shall not be awarded or
such shares of Common Stock shall not be issued or such restric-
tions shall not be removed, as the case may be, in whole or in
part, unless such listing, registration, qualification, consent
or approval shall have been effected or obtained free of any
conditions not acceptable to the Company.
13.5. Adjustment. In the event of any recapitalization,
stock dividend, stock split, combination of shares or other
change in the Common Stock, the number of shares of Common Stock
then subject to the Plan, including shares subject to outstanding
Incentives, shall be adjusted in proportion to the change in
outstanding shares of Common Stock. In the event of any such
adjustments, the purchase price of any option, the performance
objectives of any Incentive, and the shares of Common Stock
issuable pursuant to any Incentive shall be adjusted as and to
the extent appropriate, in the reasonable discretion of the
Committee, to provide participants with the same relative rights
before and after such adjustment.
13.6. Incentive Agreements. The terms of each Incentive
shall be stated in an agreement approved by the Committee. The
Committee may also determine to enter into agreements with
holders of options to reclassify or convert certain outstanding
options, within the terms of the Plan, as Incentive Stock Options
or as non-qualified stock options.
13.7. Withholding.
(a) The Company shall have the right to withhold from
any payments made under the Plan or to collect as a
condition of payment, any taxes required by law to be
withheld. At any time that a participant is required to pay
to the Company an amount required to be withheld under
applicable income tax laws in connection with the issuance
of Common Stock, the lapse of restrictions on Common Stock
or the exercise of an option, the participant may, subject
to the approval of the Committee, satisfy this obligation in
whole or in part by electing (the "Election") to have the
Company withhold shares of Common Stock having a value equal
to the amount required to be withheld. The value of the
shares to be withheld shall be based on the Fair Market
Value of the Common Stock on the date that the amount of tax
to be withheld shall be determined ("Tax Date").
(b) Each Election must be made prior to the Tax Date.
The Committee may disapprove of any Election, may suspend or
terminate the right to make Elections, or may provide with
respect to any Incentive that the right to make Elections
shall not apply to such Incentive. If a participant makes
an election under Section 83(b) of the Internal Revenue Code
with respect to shares of restricted stock, an Election is
not permitted to be made.
13.8. No Continued Employment. No participant under the
Plan shall have any right, because of his or her participation,
to continue in the employ of the Company for any period of time
or to any right to continue his or her present or any other rate
of compensation.
13.9. Deferral Permitted. Payment of cash or distribution
of any shares of Common Stock to which a participant is entitled
under any Incentive shall be made as provided in the Incentive
Agreement. Payment may be deferred at the option of the
participant if provided in the Incentive Agreement.
13.10. Amendment of the Plan. The Board may amend or
discontinue the Plan at any time. In addition, no amendment or
discontinuance shall, subject to adjustments permitted under
Section 12.5, change or impair, without the consent of the
recipient, an Incentive previously granted, except that the
Company retains the right to (a) convert any outstanding
Incentive Stock Option to a non-qualified stock option, (b)
require the forfeiture of an Incentive if a participant's
employment is terminated for cause, and (c) exercise all rights
under Section 13.11.
13.11. Change of Control.
(a) Notwithstanding anything to the contrary in the
Plan or any related Incentive Agreement, if
(1.) Melamine shall not be the surviving entity in
any merger, consolidation or other reorganization (or
survives only as a subsidiary of an entity other than a
previously wholly-owned subsidiary of the Company),
(2.) the Company sells, leases or exchanges all or
substantially all of its assets to any other person or
entity (other than a wholly-owned subsidiary of the
Company),
(3.) Melamine is to be dissolved or liquidated,
(4.) any person or entity, including a "group" as
contemplated by section 13(d)(3) of the 1934 Act, other
than an employee benefit plan of the Company or a
related trust, acquires or gains ownership or control
(including, without limitation, power to vote) of more
than 30% of the outstanding shares of Melamine's voting
stock, or
(5.) as a result of or in connection with a
contested election of directors, the persons who were
directors of Melamine before such election shall cease
to constitute a majority of the Board of Directors of
Melamine (each such event is referred to herein as a
"Corporate Change"),
then upon the approval by the Board of Directors of Melamine
of any Corporate Change of the type described in clauses
(a)(1.) to (a)(3.) or upon a Corporate Change described in
clauses (a)(4.) or (a)(5.), all outstanding options and SARs
shall automatically become fully exercisable, all
restrictions or limitations on any Incentives shall lapse
and all performance criteria and other conditions relating
to the payment of Incentives shall be deemed to be achieved
or waived by the Company, without the necessity of any
action by any person.
(b) In addition, no later than (i.) 30 days after the
approval by the Board of Directors of Melamine of any
Corporate Change of the type described in clauses (a)(1.) to
(a)(3.) or (ii.) 30 days after a Corporate Change of the
type described in clauses (a)(4.) or (a)(5.), the Committee,
acting in its sole discretion without the consent or
approval of any participant (and notwithstanding any removal
or attempted removal of some or all of the members thereof
as directors or committee members), may act to effect one or
more of the following alternatives, which may vary among
individual participants and which may vary among Incentives
held by any individual participant:
(1.) require that all outstanding options and/or
SARs be exercised on or before a specified date (before
or after such Corporate Change) fixed by the Committee,
after which specified date all unexercised options and
SARs and all rights of participants thereunder shall
terminate,
(2.) provide for mandatory conversion of some or
all of the outstanding options and SARs held by some or
all participants as of a date, before or after such
Corporate Change, specified by the Committee, in which
event such options and SARs shall be deemed
automatically cancelled and the Company shall pay, or
cause to be paid, to each such participant an amount of
cash per share equal to the excess, if any, of the
Change of Control Value of the shares subject to such
option or SAR, as defined and calculated below, over
the exercise price(s) of such options or SARs, or, in
lieu of such cash payment, the issuance of Common Stock
having a Fair Market Value equal to such excess,
(3.) make such equitable adjustments to Incentives
then outstanding as the Committee deems appropriate to
reflect such Corporate Change (provided, however, that
the Committee may determine in its sole discretion that
no adjustment is necessary to Incentives then
outstanding) or
(4.) provide that thereafter upon any exercise of
an option or SAR theretofore granted the participant
shall be entitled to purchase under such option or SAR,
in lieu of the number of shares of Common Stock then
covered by such option or SAR, the number and class of
shares of stock or other securities or property
(including, without limitation, cash) to which the
participant would have been entitled pursuant to the
terms of the agreement providing for the merger,
consolidation, asset sale, dissolution or other
Corporate Change of the type described in clause
(a)(1.) to (a)(3.) above, if, immediately prior to such
Corporate Change, the participant had been the holder
of record of the number of shares of Common Stock then
covered by such options or SARs.
(c) For the purposes of clause B.(ii)) above, the
"Change of Control Value" shall equal the amount determined
by whichever of the following items is applicable:
(1.) the per share price offered to shareholders
of Melamine in any such merger, consolidation or other
reorganization, determined as of the date of the
definitive agreement providing for such transaction,
(2.) the price per share offered to shareholders
of Melamine in any tender offer or exchange offer
whereby a Corporate Change takes place, or
(3.) in all other events, the Fair Market Value
per share of Common Stock into which such options or
SARs being converted are exercisable, as determined by
the Committee as of the date determined by the
Committee to be the date of conversion of such options
or SARs.
(d) In the event that the consideration offered to
shareholders of Melamine in any transaction described herein
consists of anything other than cash, the Committee shall
determine the fair cash equivalent of the portion of the
consideration offered which is other than cash.
13.12. Definition of Fair Market Value. Whenever "Fair
Market Value" of Common Stock shall be determined for purposes of
this Plan, it shall be determined as follows: (i) if the Common
Stock is listed on an established stock exchange or any automated
quotation system that provides sale quotations, the closing sale
price for a share of the Common Stock on such exchange or
quotation system on the applicable date, or if no sale of the
Common Stock shall have been made on that day, on the next
preceding day on which there was a sale of the Common Stock; (ii)
if the Common Stock is not listed on any exchange or quotation
system, but bid and asked prices are quoted and published, the
mean between the quoted bid and asked prices on the applicable
date, and if bid and asked prices are not available on such day,
on the next preceding day on which such prices were available;
and (iii) if the Common Stock is not regularly quoted, the fair
market value of a share of Common Stock on the applicable date as
established by the Committee in good faith.
MELAMINE CHEMICALS, INC.
EMPLOYEE 401(K) THRIFT PLAN
(RESTATED 1996)
TABLE OF CONTENTS
Page
I DEFINITIONS................................................1
Alternate Payee
Base Compensation
Beneficiary
Benefit Commencement Date
Board of Directors
Break in Service
Change of Control
Code
Company
Company Stock
Controlled Group Member
Disability
Employee
ERISA
Family
Funds
Highly-Compensated Employee
Hour of Service
Matching Contribution
Matching Contribution Account
Net Compensation
Nondeferred Account
Non-Key Employee
Normal Retirement Age
Participant
Plan
Plan Administrator
Plan Year
Qualified Election
Qualified Joint and Survivor Annuity
Required Beginning Date
Retirement Benefit Election Period
Rollover Contribution Account
Salary Deferral Agreement
Salary Deferral Account
Salary Deferral Contribution
Spouse
Top-Heavy
Total Compensation
Trust
Trustee
Valuation Date - Annual Valuation Date
Year of Service
II PARTICIPATION.............................................10
Eligibility Date
Participation
Participation After Reemployment
Rollover Contributions
III SALARY DEFERRAL CONTRIBUTIONS.............................11
Salary Deferral Agreements
Delivery of Salary Deferral Contributions
Dollar Limitation
Return of Excess Deferrals
Actual Deferral Percentage
Discrimination Tests
Special Rules in Connection with ADP Testing
Excess Contributions
IV MATCHING CONTRIBUTIONS....................................14
Matching Contributions
Forfeitures
Delivery of Contributions
Top-Heavy Contributions
Reversion to Company
Adjustments if Salary Deferral Contributions Adjusted
Discrimination Test - Matching Contributions
V VESTING...................................................19
Salary Deferral Account
Matching Contribution Account
Other Accounts
Forfeitures
Aggregation of Periods of Service
Recovery of Forfeiture Upon Retirement
VI ANNUAL ADDITION LIMITATION................................20
Definitions
Annual Additions
Limitation for Other Defined Contribution Plans
Limitation for Defined Benefit Plan
VII INVESTMENTS...............................................22
Trust Fund
Separate Accounts
Investment Funds
Company Stock
Dividends
Stock Dividends, Splits and Recapitalization
Liability for Investment Decisions
VIII ACCOUNTING AND VALUATION..................................24
Allocation of Contributions
Valuation of Trust Funds
Valuation of Participants' Accounts
Accounting Procedures
IX BENEFITS..................................................25
Benefits Upon Termination of Employment
Form of Benefits
When Benefits are Paid or Begin to be Paid
Distribution of Annuity and Installment Benefits
Deferred Payments
Minority or Disability Payments
Form of Distribution
Distributions When Employment Continues after Age 70 1/2
Qualified Domestic Relations Orders
Suspension of Benefits Upon Receipt of a Claim
Direct Rollovers
X LOANS AND WITHDRAWALS.....................................30
Participant Loan Procedures
Withdrawal of Nondeferred Account
Withdrawal From Matching Contribution Account or Rollover
Contribution Account
Withdrawal From Salary Deferral Amount
Financial Hardship
Form of Withdrawal
Order of Withdrawal
Withdrawal By Married Participant
XI DEATH BENEFITS............................................34
Death Benefits
Designation of Beneficiary
Spousal Annuity
XII TOP-HEAVY PROVISIONS......................................34
Definitions
Top-Heavy Status
Minimum Contribution Requirement
Allocation
Accelerated Vesting
XIII ADMINISTRATION............................................37
Administration
Powers
Actions
Bond
Compensation
Expenses
Claims
XIV AMENDMENT AND TERMINATION.................................39
Amendment
Merger
Termination
XV MISCELLANEOUS PROVISIONS..................................39
Governing Law
Diversion
Employment Rights
Action
Liability for Benefits
Evidence
Anticipation of Benefits
Named Fiduciary
Indemnification
Failure to Locate Beneficiary
Voting Rights
Insider Trading Restrictions
Procedure for Participant Elections
XVI TRUST PROVISIONS..........................................41
General Duties
General Powers
Reliance on Committee and Company
Accounts and Reports
Disbursements
Authority of Trustee
Funding Policy; Parties in Interest
Removal or Resignation of Trustee
Successor Trustee
MELAMINE CHEMICALS, INC.
EMPLOYEE 401(K) THRIFT PLAN
(RESTATED 1996)
PREAMBLE
Effective June 1, 1974, Melamine Chemicals, Inc., a
Delaware corporation located in Donaldsonville, Louisiana,
adopted the Triad-Melamine Savings and Investment Plan intended
to qualify as a profit-sharing plan under Section 401(a) of the
Internal Revenue Code, which plan has been amended, on numerous
occasions. Effective July 1, 1985, the Plan was amended,
restated and renamed the Melamine Chemicals, Inc. Employee
401(k) Thrift Plan, and since then the Plan has been intended
to qualify as both a profit-sharing plan under Section 401(a)
and a cash-or-deferred arrangement under Section 401(k) of the
Internal Revenue Code.
In order to incorporate into the Plan the provisions of
six amendments made since the previous restatement, to bring
the Plan into full compliance with the provisions of the Tax
Reform Act of 1986 and subsequent legislation, to modify
certain administration provisions, to allow in-service
withdrawals of Rollover Contributions, and to make other
improvements and clarifications, the Plan is hereby amended and
restated in its entirety, effective (except as otherwise
indicated) July 1, 1989. This restatement shall be effective
for all Employees who are credited with an Hour of Service
after June 30, 1989. The rights and benefits, if any, of
Employees terminated prior to July 1, 1989, shall be determined
in accordance with the provisions of the Plan as in effect on
the respective dates of termination of service of such former
Employees.
ARTICLE I
DEFINITIONS
1. Alternate Payee means any spouse, former spouse,
child, or other dependent of a Participant who is entitled to
benefits from the Participant's accounts under a Qualified
Domestic Relations Order, pursuant to Paragraph 9 of Article
IX.
2. Base Compensation means an Employee's basic salary
or wages (excluding bonuses, overtime and other items of
additional compensation) paid by the Company during the portion
of the Plan Year during which the Employee is eligible to
participate, without deducting any Salary Deferral
Contributions or salary reductions under Code Section 125, but
limited to the amount allowed under Code Section 401(a)(17) to
be taken into account, which amounts are specified in Paragraph
40 of this Article I.
3. Beneficiary means the person or persons to whom a
deceased Participant's benefits are payable.
4. Benefit Commencement Date means the date as of
which an installment or annuity benefit is required to begin,
or the date as of which a lump sum benefit is required to be
paid.
5. Board of Directors means the Board of Directors of
Melamine Chemicals, Inc.
6. Break in Service shall mean a Plan Year during
which an Employee does not complete more than 500 Hours of
Service. If an Employee is absent from work by reason of the
Employee's pregnancy, birth of the Employee's child, placement
of the child with the Employee in connection with the adoption
of such child, or any absence for the purpose of caring for
such child for a period immediately following such birth or
placement, for the purpose of determining whether a Break in
Service has occurred Hours of Service shall be credited for the
computation period in which the absence from work begins, if
credit therefor is necessary to prevent the Employee from
incurring a Break in Service in that computation period,
otherwise Hours of Service shall be credited for the
immediately following computation period. The Hours of Service
shall be equal to those that would normally have been credited
but for such absence or, in any case in which the Plan
Administrator is unable to determine such hours normally
credited, eight Hours of Service per day. The total Hours of
Service required to be credited shall not exceed 501.
7. Change of Control shall mean:
a. The acquisition by any individual, entity or
group (within the meaning of Section 13(d)(3) or
14(d)(2) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act")) (a "Person") of
beneficial ownership (within the meaning of Rule
13d-3 promulgated under the Exchange Act) of 20% or
more of either (A) the then outstanding shares of
common stock of the Company (the "Outstanding
Company Common Stock") or (B) the combined voting
power of the then outstanding voting securities of
the Company entitled to vote generally in the
election of directors (the "Outstanding Company
Voting Securities"); provided, however, that the
following acquisitions shall not constitute a
Change of Control: (1) any acquisition directly
from the Company, (2) any acquisition by the
Company, (3) any acquisition by any employee
benefit plan (or related trust) sponsored or
maintained by the Company or any corporation
controlled by the Company or (4) any acquisition by
any corporation pursuant to a transaction which
complies with clauses (A), (B) and (C) of paragraph
(c) of this Paragraph 7; or
b. Any change in the composition of the Board of
Directors of the Company such that individuals who,
as of April 9, 1991, constitute the Board of
Directors (the "Incumbent Board") cease for any
reason to constitute at least a majority of the
Board of Directors; provided, however, that any
individual becoming a director subsequent to that
date whose election, or nomination for election by
the Company's shareholders, was approved by a vote
of at least a majority of the directors then
comprising the Incumbent Board shall be considered
as though such individual were a member of the
Incumbent Board, but excluding, for this purpose,
any such individual whose initial assumption of
office occurs as a result of an actual or
threatened election content with respect to the
election or removal of directors or other actual or
threatened solicitation of proxies or consents by
or on behalf of a Person other than the Board of
Directors; or
c. Approval by the shareholders of the Company of a
reorganization, merger or consolidation (a
"Business Combination"), unless, in each case,
following such Business Combination, (A) all or
substantially all of the individuals and entities
who were the beneficial owners, respectively, of
the Outstanding Company Common Stock and
Outstanding Company Voting Securities immediately
prior to such Business Combination beneficially
own, directly or indirectly, more than 60% of,
respectively, the then outstanding shares of common
stock and the combined voting power of the then
outstanding voting securities entitled to vote
generally in the election of directors, as the case
may be, of the corporation resulting from such
Business Combination (including, without
limitation, a corporation which as a result of such
transaction owns the Company through one or more
subsidiaries) in substantially the same proportions
as their ownership, immediately prior to such
Business Combination of the Outstanding Company
Common Stock and Outstanding Company Voting
Securities, as the case may be, (B) no Person
(excluding any employee benefit plan (or related
trust) of the Company or such corporation resulting
from such Business Combination) beneficially owns,
directly or indirectly, 20% or more of,
respectively, the then outstanding shares of common
stock of the corporation resulting from such
Business Combination or the combined voting power
of the then outstanding voting securities of such
corporation except to the extent that such
ownership existed prior to the Business Combination
and (C) at least a majority of the members of the
board of directors of the corporation resulting
from such Business Combination were members of the
Incumbent Board at the time of the execution of the
initial agreement, or of the action of the Board of
Directors, providing for such Business Combination;
or
d. Approval by the shareholders of the Company of
(A) a complete liquidation or dissolution of the
Company or (B) the sale or other disposition of all
or substantially all of the assets of the Company,
other than to a corporation, with respect to which
following such sale or other disposition, (1) more
than 60% of, respectively, the then outstanding
shares of common stock of such corporation and the
combined voting power of the then outstanding
voting securities of such corporation entitled to
vote generally in the election of directors is then
beneficially owned, directly or indirectly, by all
or substantially all of the individuals and the
entities who were the beneficial owners,
respectively, of the Outstanding Company Common
Stock and Outstanding Company Voting Securities
immediately prior to such sale or other disposition
in substantially the same proportion as their
ownership, immediately prior to such sale or other
disposition, of the Outstanding Company Common
Stock and Outstanding Company Voting Securities, as
the case may be, (2) less than 20% of,
respectively, the then outstanding shares of common
stock of such corporation and the combined voting
power of the then outstanding voting securities of
such corporation entitled to vote generally in the
election of directors is then beneficially owned,
directly or indirectly, by any Person (excluding
any employee benefit plan (or related trust) of the
company or such corporation), except to the extent
that such Person owned 20% or more of the
Outstanding Company Common Stock or Outstanding
Company Voting Securities prior to the sale or
disposition and (3) at least a majority of the
members of the board of directors of such
corporation were members of the Incumbent Board at
the time of the execution of the initial agreement,
or of the action of the Board of Directors,
providing for such sale or other disposition of
assets of the Company or were elected, appointed or
nominated by the Board of Directors.
8. Code means the Internal Revenue Code of 1986, as
amended.
9. Company shall mean Melamine Chemicals, Inc., a
Delaware corporation located in Donaldsonville, Louisiana, and
any entity into which Melamine Chemicals, Inc. may be merged or
consolidated or by which it may be succeeded.
10. Company Stock means voting common stock issued by
the Company.
11. Controlled Group Member shall mean any corporation
which is included with the Company in a controlled group of
corporations, as determined in accordance with Section 414(b)
of the Code, or any unincorporated trade or business which is
under common control with the Company in accordance with
Section 414(c) of the Code, or any organization (whether or not
incorporated) which is a member of an affiliated service group
with the Company in accordance with Section 414(m) of the Code,
or any other entity required to be aggregated with the Company
pursuant to regulations under Section 414(o) of the Code.
12. Disability shall mean a Participant's total and
permanent disability as a result of disease or bodily injury so
as to render the Participant incapable of engaging in any
substantial gainful activity by reason of any medically
determinable physical or mental impairment or impairments that
can be expected to result in death or that have lasted or can
be expected to last for a continuous period of not less than 12
months. The Plan Administrator shall have the exclusive right,
power and discretion to determine, with the assistance of a
competent physician, whether a Participant has suffered
Disability, and a certificate to that effect executed by a duly
authorized officer of the Company and supported by the
affidavit of an examining physician shall be sufficient
evidence of such fact and may be so accepted by the Plan
Administrator without further inquiry, provided that all
Participants under similar circumstances shall be treated
alike.
13. Employee shall mean any person employed by the
Company and who is not represented by a collective bargaining
unit, except as otherwise provided in any applicable collective
bargaining agreement. The term "Employee" shall not include
any person who is a "leased employee", as defined in Code
Section 414(n).
14. ERISA means the Employee Retirement Income Security
Act of 1974, as amended.
15. Family (of an Employee) means the Employee's
spouse, and his lineal ascendants and descendants and their
spouses.
16. Funds means the investment funds available under
Paragraph 3 of Article VII of the Plan.
17. Highly-Compensated Employee means any Employee who
a. During the preceding Plan Year -
i. Was a 5% owner, as defined in Paragraph
19(c),below;
ii. Received Total Compensation in excess of
$75,000, as adjusted under Code Section 414(q) to
reflect increases in the cost-of-living;
iii. Received Total Compensation in excess of
$50,000, as adjusted under Code Section 414(q) to
reflect increases in the cost-of-living, and in the
top-paid group of employees for the year. An
Employee is in the top-paid group of employees if
he was in the group consisting of the top 20% of
employees when ranked on the basis of Total
Compensation paid during such year. In determining
the employees in the top-paid group the following
shall be excluded: employees who have not completed
6 months of service, who normally work less than 17
1/2 hours per week, who normally work during not
more than 6 months of a year, have not obtained age
21, and, except to the extent provided in
regulations, who are included in a collective
bargaining agreement; or
iv. Was an officer described in Paragraph
19(a) below (provided, however, that no more than
50 employees (or, if less, the greater of 3
employees or 10% of the employees) shall be treated
as officers of the Company, but when no officer has
Total Compensation in excess of 50% of the Code
Section 415(b)(1)(A) limit, the highest paid
officer is treated as highly compensated); or
b. During the current Plan Year is -
i. A 5% owner, as defined in Paragraph
19(c), below, or
ii. One of the 100 Employees paid the highest
Total Compensation during the year, if he also
falls in one of the categories of Subparagraphs
a.ii, iii or iv for the current Plan Year.
If any individual is a member of the Family of either (i)
a 5% owner or (ii) a Highly-Compensated Employee in the group
consisting of the 10 Highly-Compensated Employees paid the
greatest Total Compensation during the year (a "Most-Highly-
Compensated Employee"), then such individual shall not be
considered a separate Employee and any compensation paid to
such individual (and any applicable contribution on behalf of
such individual) shall be treated as if it were paid to (or on
behalf of ) the 5% owner or Most-Highly-Compensated Employee.
For purposes of determining who is a Highly-Compensated
Employee, the Company and any Controlled Group Member are
treated as a single employer.
18. Hour of Service means:
a. Each hour for which an Employee is paid, or
entitled to payment, for the performance of duties for the
Company. These hours shall be credited to the Employee
for the computation period in which the duties are
performed; and
b. Each hour for which an Employee is paid, or en-
titled to payment, by the Company on account of a period
of time during which no duties are performed (irrespective
of whether the employment relationship has been termi-
nated) due to vacation, holiday, illness, incapacity
(including Disability), layoff, jury duty, military duty
or leave of absence. No more than five hundred and one
Hours of Service shall be credited under this Subparagraph
(b) for any single continuous period (whether or not such
period occurs in a single computation period). Hours of
Service under this Subparagraph (b) shall be calculated
and credited pursuant to the Department of Labor
Regulation Section 2530.200b-2, which regulation is
incorporated in the Plan by this reference; and
c. Each hour for which back pay, irrespective of
mitigation of damages, is either awarded or agreed to by
the Company. The same Hours of Service shall not be
credited both under Subparagraph (a) or (b) and
Subparagraph (c). These Hours of Service shall be
credited to the Employee for the computation period to
which the award, agreement or payment pertains rather than
the computation period in which the award, agreement or
payment is made.
19. Key Employee means any Employee or former Employee
(or his or her Beneficiary) who at any time during the Plan
Year, or any of the four preceding Plan Years, is:
a. An officer of the Company (within the meaning of
Code Section 416) with annual Total Compensation greater
than 50% of the dollar limitation described in Code
Section 415(b)(1)(A). No more than 50 Employees shall be
included in this category.
b. One of the ten Employees owning (or considered as
owning within the meaning of Code Section 318) the largest
interests in the Company and all employers required to be
aggregated with the Company under Code Sections 414(b),
(c) or (m), provided (i) such Employee has annual Total
Compensation greater than the dollar limitation described
in Code Section 415(c)(1)(A) (currently $30,000), and
(ii) the ownership interest of such Employee exceeds one-
half of one percent.
c. A five percent owner of the Company. A five
percent owner means any person who owns (or is considered
as owning within the meaning of Code Section 318) (i) more
than five percent of the outstanding stock of the Company,
or (ii) stock possessing more than five percent of the
total combined voting power of all stock of the Company.
In determining percent ownership, employers that would
otherwise be aggregated under Code Sections 414(b), (c),
and (m) shall be treated as separate employers.
d. A one percent owner of the Company with Total
Compensation of more than $150,000. A one percent owner
means any person who owns (or is considered as owning
within the meaning of Code Section 318) (i) more than one
percent of the outstanding stock of the Company, or
(ii) stock possessing more than one percent of the total
combined voting power of all stock of the Company. In
determining percentage ownership, employers that would
otherwise be aggregated under Code Sections 414(b), (c),
and (m) shall be treated as separate employers. However,
in determining whether an individual has Compensation of
more than $150,000, Compensation from each employer
required to be aggregated under Code Sections 414(b), (c),
and (m) shall be taken into account.
20. Matching Contribution means the amount contributed to
a Participant's Matching Contribution Account by the Company,
pursuant to Article IV.
21. Matching Contribution Account means the account
established for a Participant which is funded by (a) Matching
Contributions, and (b) contributions required on account of a
Top-Heavy Plan Year, if any.
22. Net Compensation means a Participant's Total
Compensation, except that all deferrals elected by the
Participant under Code Sections 125, 402(a)(8) and 402(h)(1)(B)
are subtracted before applying the Code Section 401(a)(17)
limitation specified in Paragraph 40.
23. Nondeferred Account shall mean any account maintained
on behalf of a Participant that consists of the Participant's
after-tax contributions that were allowed to be contributed
prior to July 1, 1985, as well as any amounts recharacterized
pursuant to Section 3.2(b) of the Plan document prior to July
1, 1985, and the investment earnings of the Trust allocable to
such contributions.
24. Non-Key Employee means any Employee who is not a Key
Employee.
25. Normal Retirement Age means a Participant's 65th
birthday.
26. Participant means an Employee for whom one or more
accounts are established under the terms of the Plan.
27. Plan means the Melamine Chemicals, Inc. Employee
401(k) Thrift Plan described in this document and any
amendments hereto.
28. Plan Administrator means the Employee Benefits
Committee, described in Article XIII.
29. Plan Year means the 12 months ending June 30.
30. Qualified Election. A Qualified Election is an
election by a Participant to which his Spouse has consented.
The Qualified Election must be signed by both the Participant
and the Spouse, and must acknowledge the effect of the
election. The Spouse's signature must be witnessed by a
representative of the Plan Administrator or by a notary public.
A Qualified Election can be made without the Spouse's consent
only if the Participant establishes to the satisfaction of the
Plan Administrator that the Participant's Spouse cannot be
located, in which event the Spouse is deemed to have consented.
A Participant may revoke a Qualified Election without the
consent of his Spouse, at any time before the Benefit
Commencement Date.
31. Qualified Joint and Survivor Annuity shall mean an
annuity for the life of the Participant, with a survivor
annuity for the remaining life of the Participant's Spouse
which is 50% of the amount of the annuity payable while the
Participant is living.
32. Required Beginning Date means April 1st of the
calendar year following the calendar year in which a
Participant attains age 70 1/2, provided, however, that if a
Participant who is not a five percent owner of the Company
reached age 70 1/2 prior to 1988 his Required Beginning Date
shall be April 1st following the calendar year in which he or
she terminates employment.
33. Retirement Benefit Election Period means the period
which begins 90 days prior to the Benefit Commencement Date,
and ends 30 days prior to the Benefit Commencement Date.
34. Rollover Contribution Account means the account
established to hold a Participant's Rollover Contribution made
by authority of Paragraph 4 of Article II.
35. Salary Deferral Agreement means the agreement
described in Article III which is executed by a Participant and
an authorized representative of the Company.
36. Salary Deferral Account means the account maintained
for a Participant which is funded with Salary Deferral
Contributions made on his or her behalf by the Company.
37. Salary Deferral Contribution means the contributions
made by the Company on behalf of a Participant pursuant to such
Participant's Salary Deferral Agreement.
38. Spouse means the person to whom a Participant is
married at the earlier of the Participant's Benefit
Commencement Date or death.
39. Top-Heavy means, as of a Determination Date, that the
sum of (a) the Aggregate Value of accounts of Key Employees,
and (b) the Present Value of Accrued Benefits of Key Employees
exceeds sixty percent of such sum determined for all Employees.
The determination shall be made in accordance with the
provisions of Code Section 416(g) and Article XII of the Plan.
The determination of whether the Plan is Top-Heavy shall be
made after (a) aggregating all other plans of the Company and
its affiliates, if any, which constitute a Required Aggregation
Group, and (b) after aggregating any other plan of the Company
or an affiliate, if any, which constitutes a Permissive
Aggregation Group, if such permissive aggregation eliminates
the Top-Heavy status of any plan within such group.
Notwithstanding the provisions of this Paragraph, in no event
shall the Aggregate Value of Accounts or the Present Value of
Accrued Benefits of an individual who has not received any
Total Compensation from the Company during the five-year period
ending on the Determination Date be taken into account for
purposes of determining whether the Plan is Top-Heavy.
40. Total Compensation means "Wages" within the meaning
of Code Section 3401(a) and all other payments of compensation
to an Employee for which the Company is required to furnish the
Employee a written statement under Code Sections 6041(d) and
6051(a)(3), but without regard to any rules under Code Section
3401(a) that limit the remuneration included in wages based on
the nature or location of the employment or the services
performed (such as the exception for agricultural labor in Code
Section 3401(a)(2)); but limited to the amount allowed to be
taken into account under Code Section 401(a)(17), which amount
shall be $200,000 for the Plan Year beginning July 1, 1989,
$209,200 for the Plan Year beginning July 1, 1990, $222,220 for
the Plan Year beginning July 1, 1991, $228,860 for the Plan
Year beginning July 1, 1992, $235,840 for the Plan Year
beginning July 1, 1993, $150,000 for the Plan Year beginning
July 1, 1994, and in each Plan Year thereafter such amount as
is determined pursuant to Code Section 401(a)(17).
41. Trust shall mean the trust established by the Plan
under which contributions to the Plan shall be received, held,
invested and disbursed to, or for the benefit of Participants
and their Beneficiaries and Alternate Payees.
42. Trustee shall mean such individual, individuals or
entity that has or shall have accepted the appointment by the
Company as Trustee under the Plan.
43. Valuation Date means March 31st, June 30th, September
30th, and December 31st. Annual Valuation Date means June
30th.
44. Year of Service shall mean a 12-month period
beginning with an Employee's date of hire, or any anniversary
of that date, in which the Employee completes 1,000 Hours of
Service with the Company or a Controlled Group Member.
ARTICLE II
PARTICIPATION
1. Eligibility Date. Each Employee as of July 1, 1989,
who was participating under the Plan on June 30, 1989, shall,
without further requirements, continue as a Participant in the
Plan.
Each other Employee on July 1, 1989, and each person who
becomes an Employee after July 1, 1989, shall be eligible to
become a Participant on the first day of the month coincident
with or next following the date he completes one Year of
Service, provided he is still an Employee on such date.
2. Participation. Prior to the date on which an
Employee shall, if he continues in Service with the Company,
satisfy the eligibility requirements set forth above, the Plan
Administrator shall forward to the Employee such application
for participation as the Plan Administrator shall require and
shall notify him of the requirements to become a Participant.
An employee who does not apply for participation when he first
becomes eligible may apply for participation by completing the
application for participation and returning it to the Plan
Administrator. In such event, his participation shall commence
as of the first day of the month following receipt of
application by the Plan Administrator. All determinations of
eligibility to participate in the Plan shall be made by the
Plan Administrator in a uniform and nondiscriminatory manner.
An Employee who has become a Participant shall continue to
be a Participant until he no longer has an account balance
under the Plan.
3. Participation After Reemployment. If an Employee
terminates his or her employment with the Company and is later
reemployed, he or she shall be entitled to participate in the
Plan as of the date following the date on which such
Participant first performs an Hour of Service for the Employer
after reemployment, if his termination occurred after he had
become eligible to participate. If he was not eligible but no
Break in Service occurred before he was reemployed, his service
shall be aggregated as if his employment had not terminated.
In all other cases the Employee will be treated as a new
Employee for purposes of determining eligibility to participate
in the Plan.
4. Rollover Contributions. The Plan Administrator, in
its complete discretion, exercised in a uniform and non-
discriminatory manner, may allow a Rollover Contribution to be
made by an Employee. Rollover Contributions must be made in
cash. A Rollover Contribution is a contribution from another
plan qualified under Code Section 401(a) or from an individual
retirement account under Code Section 408(a) that has been
funded pursuant to Code Section 402(a) only by distributions
from one or more other qualified plans. A Rollover
Contribution shall be allocated to a Rollover Contribution
Account for the Employee. Effective February 5, 1992, an
Employee can make a Rollover Contribution even if not eligible
to make Salary Deferral Contributions.
ARTICLE III
SALARY DEFERRAL CONTRIBUTIONS
1. Salary Deferral Agreements. An Employee eligible to
participate in the Plan may execute a Salary Deferral Agreement
effective as of the first day of the month following receipt of
the Agreement by the Plan Administrator. In such a Salary
Deferral Agreement the Employee shall agree to accept a
deferral of Base Compensation expressed as a whole percentage
no less than 1% and no more than 16%. A Salary Deferral
Agreement shall remain in effect until revoked or modified by a
subsequent Salary Deferral Agreement.
A new Salary Deferral Agreement or a revocation of a
Participant's Salary Deferral Agreement shall be effective on
the first day of the payroll period following receipt of the
new Agreement by the Plan Administrator; except that a
Participant who has increased his rate of deferral must wait
six months before making another increase. A Participant who
revokes his Salary Deferral Agreement shall be unable to resume
participation until the first day of the sixth month following
the effective date of the revocation.
2. Delivery of Salary Deferral Contributions. Salary
Deferral Contributions shall be withheld from a Participant's
Base Compensation and delivered to the Trustee as soon as
practicable after the close of the calendar month in which the
deferral occurs; provided, however, that Salary Deferral
Contributions for a Plan Year shall be delivered to the Trustee
no later than thirty days after the close of such year.
3. Dollar Limitation. In no event shall a Participant's
Salary Deferral Contributions for a taxable year of the
Participant exceed $7,000, or such larger amount as allowed
under Code Section 402(g) to reflect increases in the cost of
living.
4. Return of Excess Deferrals. If a Participant's
Salary Deferral Contributions under the Plan should exceed the
dollar limitation under Paragraph 3 for a taxable year, the
excess amount and the earnings thereon through the end of that
taxable year shall be distributed to the Participant no later
than the April 15 following the end of that taxable year. If a
Participant notifies the Plan Administrator in writing no later
than the March 1 immediately following a taxable year that
during that taxable year he was also a participant in a plan of
an unrelated employer governed by the Code Section 402(g)
dollar limitation, that the total deferrals under the plans for
that taxable year exceeded the dollar limitation, and that he
has allocated some or all of the excess deferrals to this Plan,
then the excess allocated to this Plan (and the earnings
thereon through the end of that taxable year) shall be
distributed to the Participant no later than the immediately
following April 15. Any Matching Contributions attributable to
returned Salary Deferral Contributions shall be forfeited.
5. Actual Deferral Percentage . "Actual Deferral
Percentage" (hereinafter "ADP") shall mean for each specified
group of Participants for a Plan Year, the average of the
ratios (calculated separately for each Participant in such
group) of (1) the amount of Salary Deferral Contributions
actually delivered to the Trustee for the Participant for the
Plan Year to (2) the Participant's Total Compensation for such
Plan Year (whether or not the Employee was a Participant for
the entire Plan Year). The ADP shall be calculated separately
for the group consisting of Highly-Compensated Employees and
the group consisting of Non-Highly-Compensated Employees. The
term "Participant" for purposes of computing ADPs (and ACPs
under Paragraph 7, Article IV) includes any Employee who would
be a Participant but for the failure to make Salary Deferral
Contributions; he shall be treated as a Participant on whose
behalf no Salary Deferral Contribution is made.
6. Discrimination Tests. In each Plan Year the Plan
must satisfy one of the following tests:
a. The ADP for Participants who are Highly-
Compensated Employees for the Plan Year shall not exceed
the ADP for Participants who are Non-Highly-Compensated
Employees for the same Plan Year multiplied by 1.25; or
b. The ADP for Participants who are Highly-
Compensated Employees for the Plan Year shall not exceed
the ADP for Participants who are Non-Highly-Compensated
Employees for the same Plan Year multiplied by 2.0,
provided that the ADP for Participants who are Highly-
Compensated Employees does not exceed the ADP for
Participants who are Non-Highly-Compensated Employees by
more than two (2) percentage points.
7. Special Rules in Connection with ADP Testing:
a. The ADP for any Participant who is a Highly-
Compensated Employee for the Plan Year and who is eligible
to have Salary Deferral Contributions allocated to his or
her accounts under two or more arrangements described in
Code Section 401(k) ("cash-or-deferred arrangements")
that are maintained by the Company shall be determined as
if such Salary Deferral Contributions were made under a
single such arrangement. If a Highly-Compensated Employee
participates in two or more cash-or-deferred arrangements
that have different plan years, all cash-or-deferred
arrangements ending with or within the same calendar year
shall be treated as a single arrangement.
b. In the event that this Plan satisfies the
requirements of Code Sections 401(k), 401(a)(4), or 410(b)
only if aggregated with one or more other plans, or if one
or more other plans satisfy the requirements of such Code
Sections only if aggregated with this Plan, then this
Section shall be applied by determining the ADP of
Employees as if all such plans were a single plan.
c. For purposes of determining the ADP of a
Participant who is a five percent (5%) owner or one of the
ten (10) most highly-paid Highly- Compensated Employees,
the Salary Deferral Contributions and Total Compensation
of such Participant shall include the Salary Deferral
Contributions and Total Compensation for the Plan Year of
members of the Participant's Family. Family members, with
respect to such Highly-Compensated Employees, shall be
disregarded as separate Employees in determining the ADP
both for Participants who are Non-Highly-Compensated
Employees and for Participants who are Highly-Compensated
Employees.
d. For purposes of the ADP test, there shall be taken
into account only those Salary Deferral Contributions:
made before the last day of the twelve (12) month period
immediately following the Plan Year to which the Salary
Deferral Contributions relate; and which relate to Base
Compensation which would have been received by the
Participant in the Plan Year (but for the deferral
election) or which is attributable to services performed
by the Participant in the Plan Year and would have been
received by the Participant within 2 1/2 months after the
close of the Plan Year (but for the deferral election).
e. The determination and treatment of the ADP amounts
of any Participant shall satisfy such other requirements
as may be prescribed by the Secretary of the Treasury.
f. In the event that the ADP of the Highly-
Compensated Employees for the Plan Year determined at a
date prior to the end of the Plan Year indicates that the
Plan for the year will not otherwise comply with either
ADP test, the Plan Administrator has the authority to
reduce the Salary Deferral Contribution rate for the
remainder of the Plan Year for all or a portion of the
Highly-Compensated Employees in an equitable manner to
increase the likelihood that one of the ADP tests will be
satisfied.
8. Excess Contributions
a. "Excess Contributions" shall mean, with respect to
any Plan Year, the excess of:
(i) The aggregate amount of Salary Deferral
Contributions actually taken into account in
computing the ADP of Highly Compensated Employees for
such Plan Year, over
(ii) The maximum amount of such contributions
permitted by the ADP test (determined by reducing
Salary Deferral Contributions made on behalf of
Highly-Compensated Employees in order of the ADPs,
beginning with the highest of such percentages).
b. Determination of Income or Loss. Excess
Contributions shall be adjusted for any income or loss
attributable thereto in the year in which the
contributions were made. The income or loss allocable to
Excess Contributions is the income or loss allocable to
the Participant's Salary Deferral Account for the Plan
Year multiplied by a fraction, the numerator of which is
such Participant's Excess Contributions for the year and
the denominator of which is the Participant's account
balance attributable to Salary Deferral Contributions
without regard to any income or loss occurring during such
Plan Year.
c. Distribution of Excess Contributions.
Notwithstanding any other provision of this Plan, Excess
Contributions for a Plan Year, plus any income and minus
any loss allocable thereto, shall be distributed from a
Participant's Salary Deferral Account no later than 2 1/2
months after the end of the Plan Year to Participants to
whose accounts such Excess Contributions were allocated
for the Plan Year. Such distributions shall be made to
Highly Compensated Employees on the basis of the
respective portions of the Excess Contributions
attributable to each of such Employees. With respect to
Participants who are subject to the family member
aggregation rules of Code Section 414(q)(6), the ADP of
such Participants shall be reduced in accordance with the
"leveling" method described in the regulations and the
Excess Contributions of such Participants shall be
allocated in the manner prescribed by the regulations.
Excess Contributions shall be treated as Annual Additions
under the Plan.
ARTICLE IV
MATCHING CONTRIBUTIONS
1. Matching Contributions. As of the end of each
calendar month, the Company shall contribute to the Matching
Contribution Account of each Participant a Matching
Contribution equal to 100% of the first 4% of Base Compensation
for which the Participant elected to have Salary Deferral
Contributions made for the month. If a Participant elected to
have Salary Deferral Contributions made at a rate in excess of
4% of Base Compensation, and the Participant is unable to make
further Salary Deferral Contributions during the Plan Year
because of the limitation in Paragraph 3 of Article III,
additional Matching Contributions shall be made in each
remaining month of the Plan Year that the Participant remains
employed, equal to 100% of the lesser of 4% of the
Participant's Base Compensation for the current month and the
amount of the Participant's Salary Deferral Contributions made
that year that were not previously the basis for a Matching
Contribution.
Employer Matching Contributions will be made in cash,
unless the Board of Directors of the Company determines to make
a contribution in the form of Company Stock to the extent the
Participants have elected to have contributions to their
accounts invested in the Melamine Fund. A contribution by the
Company in Company Stock will be valued at the closing price of
such stock as quoted on the National Market System of the
National Association of Securities Dealers Automated Quotation
System or such other national quotation system or exchange on
which the Company Stock is quoted or listed on the last trading
day before the delivery of the stock to the Trustee. Delivery
shall mean the date placed with the United States postal
service or another carrier.
2. Forfeitures. Forfeitures shall be applied to reduce
Matching Contributions otherwise required under Paragraph (1)
to be made after the forfeiture occurs. Until applied in this
way the forfeiture shall be held in the Trust but shall not
share in the allocation of earnings.
3. Delivery of Contributions. Matching Contributions
shall be delivered to the Trustee as soon as practicable after
the close of the calendar month for which the contribution is
made.
4. Top-Heavy Contributions. As of the end of any Plan
Year in which the Plan is Top-Heavy, the Company shall
contribute to the Matching Contribution Account of each
Participant who is a Non-Key Employee the amount required under
Article XI, if any.
5. Reversion to Company. Notwithstanding any provision
of the Plan to the contrary, every contribution by the Company
is conditioned upon the deductibility of such contribution
under Code Section 404. To the extent any such deduction is
disallowed, the Company may demand repayment of the affected
contributions, and the Trustee shall return such contributions.
Any such demand shall be made within one year following a final
determination of the disallowance by the Internal Revenue
Service.
In the event all or any portion of a contribution made by
the Company is attributable to a good faith mistake of fact,
the Trustee shall return the affected portion of the
contribution, provided the Company furnishes the Trustee
evidence of the mistake within one year of the contribution.
Subject only to the two exceptions just described, in no
event shall the assets of the Plan and Trust revert to the
benefit of the Company.
6. Adjustments if Salary Deferral Contributions
Adjusted. If under Paragraph (4) or Paragraph (8) of Article
III a Participant's Salary Deferral Contributions are returned
to him, and as a result the net Salary Deferral Contributions
for the Plan Year are a smaller percentage of Base Compensation
than the amount taken into account in making Matching
Contributions, the amount of the Matching Contributions shall
be reduced accordingly. The reduction in the Matching
Contribution (and any earnings attributable to the reduction)
shall be treated as a forfeiture under the provisions of
Paragraph (2) of this Article.
7. Discrimination Test - Matching Contributions.
a. Definitions:
(1) "Aggregate Limit" shall mean the greater of
(A) or (B) below:
(A) is the sum of
(i) one hundred twenty-five percent
(125%) of the greater of the ADP of the
Non-Highly-Compensated Employees under the
Plan for the Plan Year or the ACP of Non-
Highly- Compensated Employees eligible
under the Plan for the Plan Year, and
(ii) the lesser of two hundred percent
(200%) or two plus the lesser of such ADP
or ACP, or
(B) is the sum of
(i) one hundred twenty-five percent
(125%) of the lesser of the ADP of the
group of Non-Highly- Compensated Employees
eligible under the Plan for the Plan Year,
or the ACP of the group of Non-Highly-
Compensated Employees eligible under the
Plan for the Plan Year, and
(ii) The lesser of two hundred percent
(200%) or two plus the greater of such ADP
or ACP.
(2) "Average Contribution Percentage" or "ACP"
shall mean the average of the Contribution
Percentages of the eligible Participants in a group.
(3) "Contribution Percentage" shall mean the
ratio (expressed as a percentage) of a Participant's
Total Contribution Amounts to the Participant's Total
Compensation for the portion of the Plan Year in
which he was eligible to make Salary Deferral
Contributions.
(4) "Total Contribution Amounts" shall mean the
Matching Contributions under the Plan on behalf of
the Participant for the Plan Year. The Company may
elect to include Salary Deferral Contributions so
long as the ADP test is met before the Salary
Deferral Contributions are used in the ACP test and
continues to be met following the exclusion of those
Salary Deferral Contributions that are used to meet
the ACP test.
b. The Tests. In each Plan Year the Plan must
satisfy one of the following tests:
(1) The ACP for Participants who are Highly-
Compensated Employees for the Plan Year shall not
exceed the ACP for Participants who are Non-Highly-
Compensated Employees for the same Plan Year
multiplied by 1.25; or
(2) The ACP for Participants who are Highly-
Compensated Employees for the Plan Year shall not
exceed the ACP for Participants who are Non-Highly-
Compensated Employees for the same Plan Year
multiplied by two (2), provided that the ACP for
Participants who are Highly-Compensated Employees
does not exceed the ACP for Participants who are Non-
Highly-Compensated Employees by more than (2)
percentage points.
c. Special Rules:
(1) Multiple Use: If the sum of the ADP and ACP
of the Highly- Compensated Employees exceeds the
Aggregate Limit, then the ACP of the Highly-
Compensated Employees shall be reduced (beginning
with the Highly-Compensated Employee whose ACP is the
highest) so that the limit is not exceeded. The
amount by which each Highly-Compensated Employee's
Total Contribution Amount is reduced shall be treated
as an Excess Aggregate Contribution. The ADP and ACP
of the Highly- Compensated Employees are determined
after any corrections required to meet the ADP and
ACP tests. Multiple use does not occur if both the
ADP and ACP of the Highly-Compensated Employees does
not exceed 1.25 multiplied by the ADP and ACP of the
Non-Highly-Compensated Employees.
(2) For purposes of this Section, the
Contribution Percentage for any Participant who is a
Highly-Compensated Employee and who is eligible to
have Total Contribution Amounts allocated to his or
her account under two (2) or more plans described in
Code Section 401(a), or arrangements described in
Code Section 401(k) that are maintained by the
Company, shall be determined as if the total of such
Total Contribution Amounts was made under each plan.
If a Highly-Compensated Employee participates in two
(2) or more cash or deferred arrangements under Code
Section 401(k) ("CODA"), that have different plan
years, all CODAs ending with or within the same
calendar year shall be treated as a single
arrangement.
(3) In the event that this Plan satisfies the
requirements of Code Section 401(m), 401(a)(4) or
410(b) only if aggregated with one or more other
plans, or if one or more other plans satisfy the
requirements of such Code Sections only if aggregated
with this Plan, then this Section shall be applied by
determining the Contribution Percentages of Employees
as if all such plans were a single plan.
(4) For purposes of determining the Contribution
Percentage of a Participant who is a five percent
(5%) owner or one of the ten (10) most highly-paid
Highly-Compensated Employees, the Total Contribution
Amounts and Total Compensation of such Participant
shall include the Total Contribution Amounts and
Total Compensation for the Plan Year of Family
members. Family members, with respect to Highly-
Compensated Employees, shall be disregarded as
separate Employees in determining the Contribution
Percentage both for Participants who are Non-Highly-
Compensated Employees and for Participants who are
Highly-Compensated Employees.
(5) For purposes of determining the Average
Contributions Percentage test, Matching Contributions
will be considered made for a Plan Year if made no
later than the end of the twelve (12) month period
beginning on the day after the close of the Plan
Year.
d. Excess Aggregate Contributions.
(1) Definition.
"Excess Aggregate Contributions" shall
mean, with respect to any Plan Year, the excess
of:
(i) The aggregate Total Contribution
Amounts taken into account in computing the
numerator of the Contribution Percentage
actually made on behalf of Highly-
Compensated Employees for such Plan Year,
over
(ii) The maximum Total Contribution
Amounts permitted by the ACP test
(determined by reducing Contributions made
on behalf of Highly-Compensated Employees
in order of their Contribution Percentages
beginning with the highest of such
percentages).
Such determination shall be made after
determining Excess Contributions pursuant
to Paragraph 8 of Article III, above.
(2) Disposition of Excess Aggregate
Contributions. Notwithstanding any other provision
of this Plan, Excess Aggregate Contributions for a
Plan Year, plus any income and minus any loss
allocable thereto, shall be distributed no later than
2 1/2 months after the end of the Plan Year to
Participants to whose accounts such Excess Aggregate
Contributions were allocated. Excess Aggregate
Contributions shall be allocated to Participants who
are subject to the family member aggregation rules of
Code Section 414(g)(6) in the manner prescribed by
the regulations. Excess Aggregate Contributions
shall be treated as Annual Additions under the Plan.
(3) Determination of Income or Loss. Excess
Aggregate Contributions shall be adjusted for any
income or loss attributable thereto in the year in
which the contribution was made. The income or loss
allocable to Excess Aggregate Contributions is the
income or loss allocable to the Participant's
Matching Contribution Account (if all amounts therein
are not used in the ADP test) and, if applicable,
Salary Deferral Contributions of the Plan Year
multiplied by a fraction, the numerator of which is
such Participant's Excess Aggregate Contributions for
the year and the denominator is the Participant's
account balance(s) attributable to Total
Contribution Amounts without regard to any income or
loss occurring during such Plan Year.
(4) Accounting for Excess Aggregate
Contributions. Excess Aggregate Contributions shall
be distributed on a pro-rata basis from the
Participant's Matching Contribution Account (and, if
applicable, the Participant's Salary Deferral
Account).
ARTICLE V
VESTING
1. Salary Deferral Account. The interest of a
Participant in the Participant's Salary Deferral Account shall
be fully vested and nonforfeitable at all times.
2. Matching Contribution Account. The interest of a
Participant in his or her Matching Contribution Account shall
be fully vested and nonforfeitable upon such Participant's
death while employed, attainment of the Normal Retirement Age
or Disability. When a Participant's employment is terminated
for any other reason, the vested and nonforfeitable interest of
such Participant shall be determined in accordance with
whichever of the following schedules applies to that
Participant.
a. Pre-1989 Participant. If an Employee became a
Participant prior to 1989 the following schedule
shall apply:
Years of Service Vested Percentage
Less than 1 year 0%
1 year but less than 2 years 10%
2 years but less than 3 years 20%
3 years but less than 4 years 30%
4 years but less than 5 years 40%
5 years or more 100%
b. Post-1988 Participant. If an Employee became a
Participant after 1988, the following schedule shall
apply:
Years of Service Vested Percentage
Less than 5 years 0%
5 years or more 100%
In the event of a Change of Control occurring after April
9, 1991, a Participant's Vested Percentage shall be 100%,
regardless of the number of the Participant's Years of Service.
3. Other Accounts. The interest of a Participant in his
or her Nondeferred Account or Rollover Contribution Account
shall be fully vested and nonforfeitable.
4. Forfeitures. A Participant shall forfeit the non-
vested portion of his or her Matching Contribution Account as
of the earlier of the Valuation Date preceding the
Participant's Benefit Commencement Date, or the Valuation Date
next following five consecutive Breaks in Service. If the
vested portion of the Participant's accounts is zero, the
Participant's Benefit Commencement Date shall be deemed to be
the first day following the Valuation Date coincident with or
next following the termination of employment.
5. Aggregation of Periods of Service. Except as
provided in Paragraph (6), below, if an Employee terminates his
or her employment with the Employer, incurs a Break in Service,
and is later reemployed, his or her Years of Service before and
after the Break in Service shall be aggregated if, and only if,
(a) such Employee is reemployed by the Company before he or she
experiences five consecutive Breaks in Service, or (b) such
Employee had any vesting in his or her Matching Contribution
Account before the prior employment terminated.
If an Employee terminates his or her employment with the
Company and is reemployed before a Break in Service occurs, he
or she shall be treated as if the termination had not occurred.
6. Recovery of Forfeiture Upon Reemployment. If a
partially-vested Participant terminates his or her employment
with the Company and receives a distribution of his or her
vested interest in the Plan, the forfeited portion of his or
her Matching Contribution Account shall be restored if, and
only if, the Participant (a) is employed before five
consecutive Breaks in Service and (b) returns to the Plan the
vested amount he recovered from such accounts before the
earlier of five years from the reemployment date or the
occurrence of five Breaks in Service.
If any forfeitures are required to be credited under this
Paragraph (6), the credit shall be made at the close of the
Plan Year in which occurs the later of the reemployment or the
repayment. The credit shall be satisfied (a) first, from
forfeitures (notwithstanding the provisions of Article IV,
Paragraph (2) to the contrary), and (b) second, from additional
contributions by the Company.
ARTICLE VI
ANNUAL ADDITION LIMITATION
1. Definitions. For purposes of this Article VI, the
term Accounts means a Participant's Salary Deferral Account and
Matching Contribution Account.
The term Annual Addition means, for any Limitation Year,
the sum of (a) Matching Contributions, including forfeitures,
and (b) Salary Deferral Contributions.
The term Defined Benefit Plan Fraction means, for any
year, a fraction (a) the numerator of which is the projected
annual benefit of the Participant under any defined benefit
plan maintained by the Company (determined as of the close of
the Plan Year), and (b) the denominator of which is the lesser
of (i) the product of 1.25 multiplied by the maximum dollar
limitation in effect under Code Section 415(b)(1)(A) for such
year, or (ii) the product of 1.4 multiplied by the amount which
may be taken into account under Code Section 415(b)(1)(B) for
such year.
The term Defined Contribution Plan Fraction means, for any
year, a fraction (a) the numerator of which is the sum of the
Annual Additions to the Participant's Accounts as of the close
of the Plan Year, and (b) the denominator of which is the sum
of the lesser of the following amounts determined for such year
and each prior year of service with a Company: (i) the product
of 1.25 multiplied by the dollar limitation in effect under
Code Section 415(c)(1)(A) for such year (determined without
regard to Code Section 415(c)(6)), or (ii) the product of 1.4
multiplied by the amount which may be taken into account under
Code Section 415(c)(1)(B) for such year.
For this purpose the term Company includes the Company and
any Controlled Group Members. All such employers shall be
treated as a single employer for purposes of applying the Code
Section 415 limitations.
The term Limitation Year means the Plan Year, unless the
Board of Directors designates a different twelve-month period
as the Limitation Year.
2. Annual Additions. No contribution or forfeiture
shall be allocated to the Accounts of an Employee for a
Limitation Year in excess of an amount which, when expressed as
an Annual Addition to such Employee's Accounts, is equal to the
lesser of (a) $30,000 (as may be adjusted under Code Section
415), or (b) twenty-five percent of such Employee's Net
Compensation for the Plan Year.
3. Limitation for Other Defined Contribution Plans. In
the event that the Annual Addition which would otherwise be
made to an Employee's accounts under all defined contribution
plans maintained by the Company for any Limitation Year exceeds
the limitations set forth in this Article VI, the excess Annual
Addition shall be attributed first to the Plan, and the Company
shall treat such excess as follows:
a. First, the portion of the excess consisting of Salary
Deferral Contributions in excess of four percent of Base
Compensation shall be returned to the Employee.
b. Second, if the Employee is covered by the Plan at end
of the Limitation Year, any remaining portion of the
excess consisting of Salary Deferral Contributions shall
be returned to the Employee and the remaining excess shall
be held in the Employee's Matching Contribution Account or
Salary Deferral Account, as the case may be, and used to
reduce Matching Contributions, contributions required on
account of a Top-Heavy Plan Year or Salary Deferral
Contributions in succeeding Limitation Years. Such excess
shall not share in the earnings and losses of the Trust,
however, until it is actually credited to the Employee's
Account.
c. Third, if the Employee is not covered by the Plan
at the end of the Limitation Year, any remaining portion
of the excess consisting of Salary Deferral Contributions
shall be returned to the Employee and the remaining excess
shall be held in a suspense account. Amounts held in the
suspense account shall be applied to reduce Matching
Contributions and contributions required on account of a
Top-Heavy Plan Year for all remaining Employees in each
succeeding Limitation Year. In no event shall amounts
held in a suspense account share in the earnings and
losses of the Trust.
4. Limitation for Defined Benefit Plan. If an Employee
is also a participant in one or more defined benefit plans
maintained by the Company (or an Employee was a participant in
any defined benefit plan previously maintained by the Company),
the sum of such Employee's Defined Benefit Plan Fraction and
Defined Contribution Plan Fraction (as determined pursuant to
Code Section 415(e)) for any Limitation Year may not exceed
1.0.
In the event that the sum of an Employee's Defined
Contribution Plan and Defined Benefit Plan Fractions would
otherwise exceed 1.0 for any Limitation Year, the benefit
accrual which would otherwise be made under all applicable
defined benefit plans for such Employee shall be considered not
to have accrued, to the extent necessary, so that the sum of
such fractions does not exceed 1.0. If after all such
adjustments the sum of the fractions would still exceed 1.0,
then the annual addition which would otherwise be made with
respect to such Employee under any applicable defined
contribution plan shall be reduced to the extent necessary so
that the sum does not exceed 1.0.
Notwithstanding any provision of this Paragraph (4) to the
contrary, for any Plan Year in which the Plan is Top-Heavy, 1.0
shall be substituted for 1.25 in the Defined Benefit Plan and
Defined Contribution Plan Fractions; provided, however, that if
the Plan would not be Top-Heavy if 90% were substituted for 60%
in the definition of Top-Heavy, such adjustment shall not be
necessary if a qualified defined-benefit plan of the Company
provides a benefit of at least 3% for each such year for each
Participant who is not credited with a contribution of 7 1/2%
or more of Total Compensation under the terms of this Plan
exclusive of Article XII.
ARTICLE VII
INVESTMENTS
1. Trust Fund. All contributions, and the earnings on
such amounts, shall be delivered to the Trustee and held in
trust pursuant to the terms of the Plan, and in particular the
terms of this Article VII and Article XVI.
2. Separate Accounts. Each Salary Deferral Account,
Matching Contribution Account, Rollover Contribution Account,
and Nondeferred Account of each Participant shall be maintained
separately by the Trustee or recordkeeping agent appointed by
the Plan Administrator for each Participant.
3. Investment Funds. Effective July 1, 1992, each
Participant shall elect to have contributions to his accounts
invested in one or more of the following:
a. Diversified Investment Advisers Government Fixed
Fund (the "Government Fixed Fund"),
b. The Certificate of Deposit Investment Fund
administered by Wachovia Bank (the "CD Fund"),
c. Diversified Investment Advisers Equity Investment
Fund (the "Equity Fund"), and
d. The fund consisting of Company Stock (the
"Melamine Fund").
A Participant's election shall require all contributions
made to the Participant's accounts thereafter (until a
different election is delivered to the Plan Administrator) to
be allocated among the Funds in multiples of 25%; that is, the
percentage allocated to each Fund shall be (i) 0%, (ii) 25%,
(iii) 50%, (iv) 75% or (v) 100%. The total of the allocations
shall equal 100%.
All investment elections shall be effective for the entire
amount of all the Participant's accounts. The form and manner
of all elections under this Section 3 shall be prescribed by
the Plan Administrator.
In the event an acceptable allocation is not received by
the Plan Administrator for all or any portion of a
Participant's accounts, such Participant's affected interest
shall automatically be invested in the CD Fund until adequate
instructions are received.
The Funds are constituent parts of the Trust, but each
Fund shall be separately invested, with all investment income
of each Fund credited to that Fund.
A Participant may modify or revoke an election for the
future investment of contributions under the Plan as of the
first day of any future month, provided sufficient notice is
given to allow the modification to be made and provided that no
more than one modification or revocation may be made per
calendar quarter. Such election shall remain in effect for all
subsequent contributions allocated on behalf of the Participant
to the Funds until the election is effectively modified or
revoked.
In addition, a Participant can transfer amounts in the
Participant's accounts between Funds effective as of the first
day of the calendar quarter following the Plan Administrator's
receipt of the election, subject to any transfer restrictions
that may be imposed by the sponsor of any of the Funds.
4. Company Stock. Neither the Trustee, nor the
Employer, nor the Plan Administrator shall have any
responsibility or duty to anticipate market conditions or
changes in the value of Company Stock in order to maximize
return or minimize loss with respect to any acquisition or sale
of such securities.
5. Dividends. Cash dividends payable with respect to
Company Stock shall be reinvested in Company Stock as soon as
practicable.
6. Stock Dividends, Splits and Recapitalization.
Company Stock received by the Trustee as a result of a stock
dividend, stock split, reorganization or other recapitalization
of the Company shall be allocated to the accounts of
Participants as of the date on which such stock is received in
the same proportion that Company Stock was allocated to such
accounts as of the record date for the dividend.
7. Liability for Investment Decisions. Each Participant
shall have exclusive responsibility for and control over the
investment of amounts allocated to his or her accounts.
Neither the Company, nor the Trustee, nor the Plan
Administrator shall have any duty, responsibility or right to
question a Participant's investment directions or to advise a
Participant with respect to the investment of his or her
accounts. The Company, the Trustee, and the Plan Administrator
shall have no responsibility for any loss which may result from
a Participant's exercise of control over the investment of the
Participant's accounts.
ARTICLE VIII
ACCOUNTING AND VALUATION
1. Allocation of Contributions. Contributions under the
Plan shall be allocated in the following manner:
a. Matching Contributions shall be allocated to the
Matching Contribution Accounts of the Participants in
accordance with the provisions of Article IV.
b. Salary Deferral Contributions shall be allocated
to the Salary Deferral Accounts of the Participants in
accordance with the provisions of Article III.
c. Rollover Contribution Accounts shall be funded by
Rollover Contributions made in accordance with the
provisions of Paragraph 4 of Article II.
2. Valuation of Trust Funds. The fair market value of
the assets of each Fund shall be determined as of each
Valuation Date, in accordance with generally accepted valuation
methods and accounting practices.
3. Valuation of Participants' Accounts. As of each
Valuation Date, the balance of each account of each Participant
in each Fund as of the previous Valuation Date shall be
adjusted, first by taking into account any transfers made
between Funds effective the first day of the current calendar
quarter (which produces the "Starting Account Balance" in each
Fund for the current quarter), and then by making the following
adjustments:
a. As to the Melamine Fund:
i. The number of shares of Company Stock that is
the Starting Account Balance for shall be increased
by the number of shares allocated pursuant to
Paragraph (1) as of the current Valuation Date, and
shall be decreased by the number of shares
distributed or withdrawn from the account since the
preceding Valuation Date.
ii. Dividends on Company Stock received since
the preceding Valuation Date shall be credited to
each such account in proportion to the holdings of
Company Stock as of the record date for the dividend.
iii. To the extent that the Melamine Fund holds
assets other than Company Stock, accounts shall be
adjusted following the principles set forth in the
following Subparagraph (b).
b. As to all Funds other than the Melamine Fund:
i. Any withdrawals or distributions from an
account's holding in the Fund since the preceding
Valuation Date shall be deducted from the account.
ii. 2/3rds of all Salary Deferral Contributions
and Matching Contributions to the Fund for the first
month of the Valuation Period, and 1/3rd of such
contributions for the second month shall be allocated
to the accounts.
iii. Any gain or loss in the value of the Fund
since the preceding Valuation Date shall be allocated
to the accounts in the Fund in proportion to the
Starting Account Balances, after they have been
adjusted pursuant to Subparagraphs (b)(i) and (ii),
above.
iv. All remaining contributions to the Fund for
the Valuation Period ending on the Valuation Date
shall be allocated to the accounts.
c. After making the adjustments described in (a) and
(b), any forfeitures as of the Valuation Date shall be
subtracted from applicable accounts, thereby producing the
account balances as of the current Valuation Date.
4. Accounting Procedures. The Plan Administrator shall
establish such equitable accounting procedures as may be
required to make (a) allocations, (b) valuations, and
(c) adjustments to accounts in accordance with the provisions
of the Plan. The Plan Administrator may modify its accounting
procedures, from time to time, for the purpose of achieving
equitable and nondiscriminatory allocations.
ARTICLE IX
BENEFITS
1. Benefits Upon Termination of Employment. Upon the
termination of a Participant's employment for any reason, the
Participant shall be entitled to receive, or begin to receive,
a benefit under the Plan as of the Benefit Commencement Date
selected pursuant to Paragraph 3. Payment of the Participant's
benefit shall be made in accordance with Paragraph 2.
2. Forms of Benefits.
a. In General. If the total vested balances in a
Participant's accounts as of the Valuation Date or
coinciding with or next following the date of the
termination of employment does not exceed $3500 (or such
other amount as may be provided under regulations), the
Participant's total vested account balances shall be
distributed to the Participant in a lump sum as soon as
administratively convenient. In all other cases, the
benefit shall be paid in the mode elected by the
Participant, but if the Participant fails to elect a form
of benefit, his benefit will be paid in the Normal Form
described in Subparagraph (b).
b. Normal Form of Benefit. The Normal Form of
Benefit depends on whether the Participant is married on
his Benefit Commencement Date.
i. Normal Form If Employee Not Married. In the
event that a Participant has not elected an optional
form of benefit payment described in Paragraph (c)
within the Retirement Benefit Election Period and the
Participant has no Spouse on his Benefit Commencement
Date the Normal Form of the Participant's benefit
shall be a Life Only Annuity.
ii. Normal Form If Employee Is Married. In the
event a Participant has not made a Qualified Election
of an optional form of benefit payment described in
Paragraph (c) within the Retirement Benefit Election
Period, and the Participant has a Spouse on his
Benefit Commencement Date, the Normal Form of the
Participant's benefit shall be a Qualified Joint and
Survivor Annuity.
iii. Notice of Qualified Joint and Survivor
Annuity. Within a reasonable period prior to the
Benefit Commencement Date, the Plan Administrator
shall provide each Participant notice in the form of
a written explanation containing (i) the terms and
conditions of a Qualified Joint and Survivor Annuity,
(ii) the Participant's right to make, and the effect
of, an election to waive the Qualified Joint and
Survivor Annuity form of benefit, (iii) the rights of
the Participant's Spouse and (iv) the right to make,
and the effect of, a revocation of a previous
election to waive a Qualified Joint and Survivor
Annuity.
c. Optional Forms of Benefits. The optional forms of
benefits are set forth below:
i. The benefit may be paid in monthly,
quarterly, semi-annual or annual installments as
nearly equal as practicable for a period not to
exceed the lesser of (i) 20 years, or (ii) the life
expectancy of the Participant or the life expectancy
of the Participant and his Spouse. In no event shall
the amount distributed in installments in any year be
less than the amount required to be distributed in
that year under Code Section 401(a)(9). Even if an
installment option has been elected the recipient
shall have the right at any time to elect to receive
the remaining account balances in a lump sum.
ii. The benefit may be paid in the form of an
annuity payable during the Participant's lifetime,
either with no payments guaranteed ("the Life Only
Annuity"), or with the first 60, 120 or 180 payments
guaranteed.
iii. The benefit may be paid as a single sum.
If a Participant dies while benefit payments are
being made in accordance with option (i) then payment
shall be made to the Participant's Beneficiary
determined under Article XI, to the extent of the
unpaid installments. If a Participant dies while
benefit payments are being made in accordance with
option (ii) then any further payments shall be
determined pursuant to the terms of the annuity
purchased thereunder.
3. When Benefits Are Paid or Begin to be Paid.
If the total value of the Participant's vested account
balances as of the Valuation Date following the termination of
employment does not exceed $3500, immediate distribution is
required. This rule takes precedence over the other rules of
this Paragraph 3.
If the Participant is over the age of 55 at the time of
his termination of employment, he can elect an immediate
distribution or a later Benefit Commencement Date, but no later
than the later of (i) the last day of the Plan Year following
the Plan Year in which the Participant terminates employment
(but subject to Paragraph 8 of this Article IX) or (ii) the
last day of the Plan Year in which the Participant reaches his
Normal Retirement Age.
If the Participant is under the age of 55 at the time of
his termination of employment, within 90 days following his
termination he shall be entitled to elect an immediate
distribution. If he does not make such an election within the
allowed time, his Benefit Commencement Date shall be no earlier
than his 55th birthday (or death or Disability, if either
should occur before that age), and no later than the last day
of the Plan Year in which he reaches his Normal Retirement Age.
If a Participant is required to receive, or elects to
receive, an immediate distribution, the benefit is determinated
as of the Valuation Date immediately following the termination
of employment, unless the Participant elects to receive the
benefit as of the immediately preceding Valuation Date.
An election by a married Participant of a Benefit
Commencement Date prior to Normal Retirement Age must be made
by a Qualified Election.
A benefit other than an immediate distribution is based on
account balances as of the Valuation Date immediately preceding
the Benefit Commencement Date.
No provision of the Plan shall have the effect of
requiring payment of a Participant's benefits under the Plan to
commence as of a date that is more than 60 days after the close
of the later of (i) the Plan Year in which the Participant
attains age 65, or (ii) the Plan Year in which said Participant
terminates employment with the Company.
4. Distribution of Annuity and Installment Benefits.
This Paragraph 4 applies to benefits under the Plan which are
to be paid in the form of an annuity involving life
contingencies under the terms of any provisions of this Plan.
The Trustee shall purchase such annuity contracts from a life
insurance company, utilizing for such purchase the entire
amount in the Participant's accounts, as of the date of the
purchase.
Subject to the provisions of any investment or insurance
contract under which the assets of the Plan are invested, this
Paragraph 4 may also apply to benefits under the Plan which are
to be paid in the form of installments not involving life
contingencies. The Trustee may purchase annuity contracts from
a life insurance company, utilizing for such purchase the
entire amount in the Participant's accounts.
Any annuity contract which is purchased hereunder and
distributed to a Participant, Beneficiary or Alternate Payee
shall be endorsed as "nontransferable".
5. Deferred Payments. Any portion of a Participant's
accounts hereunder payment of which the Participant elects
under Paragraph 3 to delay shall be retained in the same
accounts, which shall continue to be adjusted in accordance
with Article VIII hereof until distributed (or an annuity is
purchased).
6. Minority or Disability Payments. During the minority
or disability of any person entitled to receive benefits
hereunder, the Plan Administrator may direct the Trustee to
make payments directly to such person, or to his spouse, or to
a relative or to any individual or institution having custody
of such person, or to a custodian (if a minor) under the
Louisiana Uniform Transfers to Minors Act. Neither the Plan
Administrator nor the Trustee shall be required to see to the
application of any payments so made, and the receipt of the
payee (including the endorsement of a check or checks) shall be
conclusive as to all interested parties.
7. Form of Distribution. A distribution out of a
Participant's account that is invested in Company Stock shall
be made in Company Stock, except as to fractional shares,
unless the recipient elects to receive cash for some or all of
the shares. The amount of any distribution or withdrawal of
cash from the Melamine Fund shall be based on the price of the
stock on the Valuation Date preceding the Benefit Commencement
Date.
The value of accounts not invested in Company Stock
shall be distributed in the form of cash.
8. Distributions When Employment Continues After Age
70 1/2. The following provisions apply in the event that a
Participant remains employed after the end of the Plan Year
that immediately precedes his Required Beginning Date.
a. Such a Participant is required to receive a
benefit.
b. If the Participant elects a lump-sum benefit or an
annuity the Benefit Commencement Date shall be prior to
the Required Beginning Date based on the value of the
Participant's accounts on the December 31 immediately
proceeding the Required Beginning Date.
c. If the Participant elects to be paid in
installments, the Benefit Commencement Date cannot be
later than the last day of the first month (if monthly
installments), the third month (if quarterly
installments), or the last month (if annual installments)
of the year in which the Participant reaches age 70 1/2.
d. If the Participant elects to be paid in a lump or
annuity, the Benefit Commencement Date cannot be later
than the March 31 that immediately precedes his Required
Beginning Date. Any account balances of the Participant
as of a subsequent December 31 shall be distributed as
soon as possible in the following year.
9. Qualified Domestic Relations Orders. Payment to an
Alternate Payee pursuant to a Qualified Domestic Relations
Order ("QDRO"), as defined in ERISA section 206(d)(3)(A)),
shall be made at such time and in such form as determined
pursuant to the QDRO, based on the value of the Alternate
Payee's interest in the account as of the Valuation Date
preceding the date the payment is made or commences. Effective
July 1, 1994, a payment can be made prior to the Participant's
"earliest retirement age", as defined at ERISA
Section 206(d)(3)(E)(ii), but only in a lump sum. After the
Participant's earliest retirement age the benefit can be made
in any of the forms described in Paragraph 2 of Article IX of
the Plan. No payment to an Alternate Payee can be made later
than the Participant's benefit is paid to him as a result of
his termination of employment. The Plan Administrator is
authorized to establish any additional rules necessary to
determine the rights of Alternate Payees under Qualified
Domestic Relations Orders.
10. Suspension of Benefits Upon Receipt of a Claim.
Effective July 1, 1994, in the event that the Plan
Administrator is informed in writing of a claim by a person (a
"claimant") that may result in the rendering of a Qualified
Domestic Relations Order with respect to a Participant's
interest in the Plan, the Plan Administrator is authorized to
suspend any payments from the Participant's account until
receipt of a Qualified Domestic Relations Order setting forth
the rights of such claimant as an Alternate Payee, or upon
receipt of an order or written release by the claimant
evidencing that the claimant has no further claim to the
Participant's interest in the Plan.
11. Direct Rollovers - If the Distributee of an Eligible
Rollover Amount elects to have such amount paid directly to an
Eligible Retirement Plan, in such form and at such time as the
Plan Administrator may prescribe, such distribution shall be
made in the form of a direct trustee-to-trustee transfer to the
Eligible Retirement Plan so specified. This requirement
applies only to the extent that the Eligible Rollover Amount
would be includible in gross income if not transferred.
"Eligible Rollover Amount" means any distribution all or
any portion of balance to the credit of the Distributee in the
Plan, other than an annuity or an installment when the
installments are payable over the life expectancy of the
Distributee (or the joint life expectancies of the Distributee
and his designated beneficiary) or for a specified period of
ten years or more, or any amount required to be distributed in
such year under Code Section 401(a)(9).
"Eligible Retirement Plan" means an individual retirement
account described in Code Section 408(a), an individual
retirement annuity described in Code Section 408(b), a plan
qualified under Section 401(a) of the Code if it is a defined
contribution plan the terms of which permit the acceptance of
rollover distributions, or an annuity plan described in Code
Section 403(a). If, however, the Distributee is the Employee's
surviving spouse, Eligible Retirement Plan means an individual
retirement account or individual retirement annuity.
A "Distributee" includes an Employee or former Employee.
In addition, the Employee's or former Employee's surviving
spouse and the Employee's or former Employee's spouse or former
spouse who is the alternate payee under a Qualified Domestic
Relations Order, as defined in Paragraph 9, above, are
Distributees with regard to the interest of the spouse or
former spouse.
The provisions of this Paragraph 11 are effective with
respect to distributions made after 1992.
ARTICLE X
LOANS AND WITHDRAWALS
1. Participant Loan Procedures. Upon the application of
a Participant for a loan, the Plan Administrator, in accordance
with a uniform and non-discriminatory policy, may approve such
loan to the Participant.
The following special rules apply with respect to loans
under the Plan:
a. In no event shall the total value of any loan
exceed the lesser of (i) $50,000 reduced by the
Participant's highest outstanding loan balance during the
preceding 12 month period, or (ii) one-half of the
Participant's vested interest in the Plan. For purposes
of applying the foregoing limitation, loans from all plans
of the Company and loans from the plans of all Controlled
Group Members shall be aggregated.
b. No loan shall be for less than $1,000.
c. Each loan shall be deemed a directed investment of
the Participant receiving the loan and shall be charged to
his accounts. Effective July 1, 1992, the loan amount
shall first reduce the investment of his accounts in the
Government Fixed Fund, then his investment in the Equity
Fund, then his investment in the Melamine Fund, and
finally his investment in the CD Fund. No loan can be
made out of a Participant's Nondeferred Account, nor from
the Matching Contribution Account if it is not vested, but
otherwise shall be from his accounts as he elects.
d. All loans shall bear a reasonable rate of interest
as determined by the Plan Administrator in accordance with
final Department of Labor regulations. A reasonable rate
of interest shall provide the Plan with a return
commensurate with the prevailing interest rate charged on
similar commercial loans by the Trustee, or such other
entity or entities designated by the Plan Administrator.
e. The Plan Administrator shall provide each loan
applicant with a clear statement of the charges with
respect to each loan transaction. Such statement shall
include the dollar amount and annual interest rate.
f. The term of the loan shall be determined by the
Participant and the Plan Administrator, but such term
shall not exceed 5 years; provided, however, that the
maximum term of a loan used in connection with the
purchase of a principal residence of the Participant may
exceed 5 years. The determination as to whether the
dwelling is the principal residence of the Participant
shall be made by the Committee at the time the loan is
extended.
g. All loans shall require amortization in level
payments made each pay period over the term of the loan
and such payments shall be automatically deducted from the
Participant's paychecks.
h. Each loan shall be evidenced by the Participant's
promissory note for the amount of the loan, including
interest, payable to the order of the Trustee and each
loan shall be secured by the Participant's account
balances from which the loan is made.
i. No Participant shall have more than one loan
outstanding at a time. A Participant may apply for a new
loan prior to repayment of an existing loan only if the
proceeds of the new loan are immediately applied to repay
the existing loan. A Participant shall not be entitled to
make a loan application within 6 months of the date an
existing loan was granted.
j. If a Participant defaults on a loan made in
accordance with this Paragraph 1, the Trustee shall not be
required to attach the Participant's interest in the Plan
securing such loan until the Participant is entitled to
receive a distribution from the Plan. Upon such
Participant's distribution from the Plan, his unpaid loan
balance shall be treated as a lump sum distribution to the
Participant.
k. If the Participant is married on the date of the
application for a loan, a loan shall be permitted only
pursuant to a Qualified Election.
2. Withdrawal of Nondeferred Account. A Participant
shall be entitled to withdraw any of the balance of his
Nondeferred Contribution Amount at any time, provided that the
amount of the withdrawal is no less then the lesser of $300 or
the total balance in the account.
3. Withdrawal From Matching Contribution Account or
Rollover Contribution Account. Effective July 1, 1995, while
employed by the Company, a Participant may withdraw all or a
portion of the Matching Contribution Account or Rollover
Contribution Account (but no less than $300), provided:
a. the Participant has been a Participant in the Plan
for 5 or more years, or
b. the Participant has attained age 59-1/2, or
c. the Participant demonstrates to the satisfaction
of the Plan Administrator that he needs funds for an
emergency, such as educational or medical expenses, to
recover from an uninsured natural disaster, to purchase or
improve his primary residence, or for any other purpose
that the Plan Administrator recognizes as an emergency.
4. Withdrawal From Salary Deferral Amount. While
employed by the Company a Participant may apply to the Plan
Administrator for a withdrawal of funds held in his or her
Salary Deferral Account on account of a Financial Hardship, as
defined in Paragraph 5, subject to the following rules:
a. The withdrawal cannot exceed the amount necessary
to satisfy the Financial Hardship, plus any amounts
necessary to pay any federal, state and local income taxes
and penalties reasonably anticipated to result from the
withdrawal.
b. The withdrawal shall be limited to the amount of
the Participant's Salary Deferral Contributions (and
earnings thereon prior to 1989) then remaining in the
account.
c. The Participant has obtained all distributions,
other than hardship distributions, and all non-taxable
loans currently available under all "plans" (as
contemplated by U.S. Treasury Regulation Section
1.401(k)-1(d)(2)(iv)(B)(2)), maintained by the Company.
d. The Participant shall not be allowed to make
Salary Deferral Contributions until the first month
following the 12 months anniversary of the withdrawal.
The election to resume contributions must be made prior to
the date it is effective.
e. The Participant's limit on Salary Deferral
Contributions in the year immediately following the year
of the withdrawal shall be the limit under Paragraph 4 of
Article III for that year, less the amount of the
Participant's Salary Deferral Contributions made in the
year of the hardship withdrawal.
f. The amount withdrawn must be no less than $300.
5. Financial Hardship. A withdrawal is made for a
Financial Hardship if it is made to meet one of the following
needs:
a. To pay medical expenses described in Code Section
213(d), incurred by the Participant, the
Participant's spouse, or any dependent (as defined in
Code Section 152) of the Participant;
b. To purchase (excluding mortgage payments) a
principal residence for the Participant;
c. To pay tuition and related education fees, and
room and board expenses, for some or all of the next
twelve months of post-secondary education for any of
the Participant, his or her spouse, or his children
or dependents;
d. To prevent the eviction of the Participant from
his principal resident or foreclosure on the mortgage
of the Participant's principal residence;
e. To pay for the funeral of a family member; or
f. For any other need permitted under Code Section
401(k) and the regulations issued thereunder and
authorized by the Plan Administrator.
6. Form of Withdrawal. A withdrawal from the Company
Stock Fund can, at the election of the Participant, be in cash
rather than Company Stock. The amount of cash shall be
determined as provided in Paragraph 7 of Article IX. All other
withdrawals shall be in cash.
7. Order of Withdrawal. Effective July 1, 1992, if the
account or accounts from which an in-service withdrawal is made
are invested in more than one Fund, the order of withdrawal
shall be as follows: first from the Government Fixed Fund,
then from the Equity Fund, then from the Melamine Fund, and
finally from the CD Fund.
8. Withdrawal By Married Participant. A married
Participant can make an in-service withdrawal under this
Article IX only through a Qualified Election.
ARTICLE XI
DEATH BENEFITS
1. Death Benefits. Except as provided in Paragraph 3,
if a Participant dies with a balance in his accounts, the
interest of such Participant shall be distributed to the
Participant's Beneficiary in a single-sum payment as soon as
practicable after the end of the Plan Year in which the
Participant dies. If death occurs after the Participant has
begun to receive an installment benefit, the installment
payments shall continue until the end of the Plan Year of the
Participant's death.
2. Designation of Beneficiary. A Participant shall be
entitled to designate one or more persons and/or entities as
his or her Beneficiary, in writing, on a form acceptable to the
Plan Administrator. In the event the Participant is married as
of the date of his or her death, someone other than the
Participant's Spouse can be a primary Beneficiary only if the
Participant's Spouse acknowledges the effect of such
designation, in writing, on a form acceptable to the Plan
Administrator, and witnessed by an authorized representative of
the Plan Administrator or a notary public. The Participant's
Spouse can waive the right to consent to future changes of
Beneficiary designations in the same form if the consent
acknowledges the waiver of the right to consent to future
designations.
If a Participant fails to designate a Beneficiary or if no
designated Beneficiary survives the Participant, the
Beneficiary shall be the Participant's Spouse or, if there is
no Spouse, the Participant's estate.
3. Spousal Annuity. If the Participant's Beneficiary is
his Spouse, and the Spouse has not elected to receive the death
benefit in a lump sum, the full amount of the Participant's
accounts shall be applied to the purchase of an annuity payable
to the Participant's Spouse for the Spouse's life.
ARTICLE XII
TOP-HEAVY PROVISIONS
1. Definitions. The term Aggregate Value of Accounts
means with respect to the Plan and any defined contribution
plan within an Aggregation Group:
a. A Participant's or Employee's balance in his or
her Salary Deferral Account and Matching Contribution
Account (and any other account funded by employer
contributions in a defined contribution plan of the
Aggregation Group) as of the most recent Valuation Date
occurring within the twelve-month period ending on a
Determination Date.
b. Increased by any contributions due as of the
Determination Date. Such increase shall take into account
the amount of any contribution actually made after the
Valuation Date but before the Determination Date.
c. Increased by any distribution made within the Plan
Year that includes the Determination Date or within the
four preceding Plan Years. However, with respect to
distributions made after the Valuation Date and prior to
the Determination Date, such distributions shall not be
included as distributions for purposes of this Paragraph
to the extent that they are already included in the
Participant's or Employee's balance as of the Valuation
Date.
d. Unrelated rollovers and plan-to-plan transfers and
related rollovers and plan-to-plan transfers shall be
treated in accordance with Code Section 416.
The term Aggregation Group means a Required Aggregation
Group or a Permissive Aggregation Group.
The term Determination Date means the last day of the
preceding Plan Year; provided, however, that for the first Plan
Year the Determination Date shall be the last day of such year.
The term Permissive Aggregation Group means any other plan
of the Company or a Controlled Group Member not included in the
Required Aggregation Group if the resulting group, when
aggregated, continues to satisfy the provisions of Code
Sections 401(a)(4) and 410. Only a plan which is part of a
Required Aggregation Group shall be considered Top-Heavy if the
Permissive Aggregation Group is a Top-Heavy Group. No plan in
the Permissive Aggregation Group will be Top-Heavy if the
Permissive Aggregation Group is not a Top- Heavy Group.
The term Present Value of Accrued Benefits shall mean an
Employee's benefit determined in accordance with the provisions
of Code Section 416(g) and the provisions of any defined
benefit plan maintained by a member of the Aggregation Group.
The term Required Aggregation Group shall mean each plan
of the Company or a Controlled Group Member in which a Key
Employee participates and each other plan of First Commerce
Corporation or a Controlled Group Member which enables any plan
in which a Key Employee participates to meet the requirements
of Code Sections 401(a)(4) or 410. Each plan within the
Required Aggregation Group will be Top-Heavy if the Required
Aggregation Group is a Top-Heavy Group. No plan within such
Group shall be Top-Heavy if the Required Aggregation Group is
not a Top-Heavy Group.
The term Top-Heavy Group means an Aggregation Group which
is Top-Heavy.
2. Top-Heavy Status. Notwithstanding anything to the
contrary, if the Plan is Top-Heavy for any Plan Year (within
the meaning of Code Section 416) then the Plan shall meet the
requirements set forth in this Article XII for such Plan Year.
3. Minimum Contribution Requirement. The Employer shall
provide a minimum contribution for any Plan Year in which the
Plan is Top-Heavy for each Employee who is a Non-Key Employee.
The contribution shall equal at least three percent of such
Employee's Net Compensation for such Plan Year.
The three percent minimum contribution requirement may be
increased for any year in which the Employer also maintains a
defined benefit plan if the increase is necessary to avoid the
application of Code Section 416(h)(1), relating to special
adjustments to the Code Section 415 limits for Top-Heavy plans.
As of the close of any Plan Year in which such restriction
applies, the Plan Administrator shall determine whether the
minimum contribution under the Plan shall be increased or
whether the benefit provided under the defined-benefit plan
shall be increased. The amount of any such increase shall be
sufficient to avoid the limitation imposed under Code Section
416(h)(1).
The minimum contribution requirements set forth above
shall be reduced in the following circumstances:
a. The percentage minimum contribution for any Plan
Year shall in no event exceed the percentage contribution
made for the Key Employee for whom such percentage is the
highest for such Plan Year after taking into account all
Matching Contributions and Tax-Deferred Contributions to
the Key Employee's accounts under this Plan as well as
contributions or benefits under other qualified plans in
the Plan's Required Aggregation Group as provided pursuant
to Section 416(c)(2)(B)(iii).
b. If the Employer maintains a qualified defined-
benefit plan and the minimum contribution required under
Code Section 416 is not provided under the other articles
of this Plan, the minimum benefit required under Code
Section 416 shall be provided by the defined-benefit plan
and no minimum contribution will be required for the
Employee under this Article XII; and
c. Matching Contributions shall reduce any minimum
contribution required under the provisions of this
Paragraph (3).
4. Allocation. For any Plan Year in which the Plan is
Top-Heavy, the minimum contribution described above shall be
allocated to the Matching Contribution Accounts of all Non-Key
Employees employed by the Company on the last day of such Plan
Year. In the event a Matching Contribution Account is not
maintained for any such Non-Key Employee, such an account shall
be established.
5. Accelerated Vesting. Notwithstanding the provisions
of Paragraph 2 of Article V, in the event this Plan is deemed
Top Heavy in any Plan Year, then a Participant's vesting in his
Matching Contribution Account shall be determined in accordance
with the following schedule:
Years of Service Vested Percentage
Less than 2 0%
2 but less than 3 20
3 but less than 4 40
4 but less than 5 60
5 or more 100
In the event this Plan becomes Top Heavy and thereafter ceases
to be Top Heavy, the vesting schedule shall revert to the
schedule contained in Paragraph 2 of Article V, but subject to
the provisions of Paragraph 1(b) of Article XIV. In the event
of a Change of Control, however, each Participant's Vested
Percentage shall be 100%, regardless of the number of the
Participants' Years of Vesting Service.
ARTICLE XIII
ADMINISTRATION
1. Administration. The Plan shall be administered by a
Committee appointed by the Board of Directors.
The Committee (which is referred to elsewhere in this
document as the "Plan Administrator") shall have the authority
to delegate its responsibilities, provided that the
Participants are notified of the delegation when it relates to
the exercise of their rights under the Plan.
2. Powers. The Plan Administrator shall have the power
to administer the Plan; such power shall include, but is not
limited to:
a. The power to interpret and construe the provisions
of the Plan.
b. The power to determine all questions of eligi-
bility to participate, eligibility for benefits, the
allocation of contributions, and the status and rights of
Participants and their Beneficiaries.
c. The power to determine and decide any dispute
arising under the Plan.
d. The power to direct the Trustee concerning all
payments which shall be made out of the Trust in
accordance with the provisions of the Plan.
e. The power to establish procedures for the with-
holding of federal income tax from distributions.
f. The power to determine the existence and amount of
a financial hardship.
g. The power to establish equitable procedures for
compliance with the discrimination tests set forth in
Article III, Paragraph (6) and Article IV, Paragraph (7).
3. Actions. Any action taken by the Plan Administrator
on matters within its discretion shall be final and binding on
the parties and on all Participants, Beneficiaries or other
persons claiming any right or benefit under the Plan, in the
Trust, or in the administration of the Plan.
All decisions of the Plan Administrator shall be uniform
and made in a nondiscriminatory manner.
4. Bond. The Company shall purchase a bond for the Plan
Administrator and any other fiduciaries of the Plan in
accordance with the requirements of the Code and ERISA.
5. Compensation. No person employed by the Company and
serving on the Committee shall receive compensation for the
performance of his or her duties as such.
6. Expenses. All expenses of administration shall be
paid from the Trust unless paid directly by the Company. The
Company may reimburse the Trust for any administrative expense
paid by the Trust; such reimbursement shall not be treated as a
Company contribution under the terms of the Plan.
7. Claims. If a Participant or other person
("claimant") believes a benefit or distribution is due under
the Plan, he or she may request the distribution of such
benefit, in writing, on forms acceptable to the Plan
Administrator. At such time, the claimant will be given the
information and materials' necessary to complete any request
for the distribution of a benefit.
If the request for distribution is disputed or denied, the
following action shall be taken:
a. First, the claimant will be notified, in writing, of
the dispute or denial as soon as possible (but no later
than ninety business days) after receipt of the request
for a distribution. The notice will set forth the
specific reasons for the denial, including any relevant
provisions of the Plan. The notice will also explain the
claims review procedure of the Plan.
b. Second, the claimant shall be entitled to a full
review of his or her request for a distribution. A
claimant desiring a review of the dispute or denial must
request such a review, in writing, no later than sixty
business days after notification of the dispute or denial
is received. During the review, the claimant may be
represented and will have the right to inspect all
documents pertaining to the dispute or denial. Any such
review may include a hearing for the claimant or his or
her designated representative.
c. The Plan Administrator shall render its decision
within sixty business days after receipt of the request
for the review. In the event special circumstances
require an extension of time, the Plan Administrator shall
notify the claimant, in writing, and the decision shall be
rendered no later than one hundred and twenty business
days after the receipt of the request. The decision of
the Plan Administrator shall be in writing. The decision
shall include specific reasons for the action taken and
specific references to the Plan provisions on which the
decision is based.
ARTICLE XIV
AMENDMENT AND TERMINATION
1. Amendment. The Board of Directors reserves the right
at any time to amend the Plan; provided, however, that no such
amendment:
a. Shall authorize or permit any portion of the accounts
established under the Plan to be used for or diverted to
purposes other than for the exclusive benefit of Employees
and their Beneficiaries and Alternate Payees; or
b. Shall deprive an Employee of his or her nonforfeitable
right to benefits accrued as of the date of such
amendment. If the vesting schedule of the Plan is amended
in such a way that an Employee with at least three Years
of Service might in any Plan Year have less vesting credit
under the new schedule than under the schedule prior to
the amendment, that Employee may elect to have his or her
nonforfeitable percentage computed without regard to such
amendment. The period during which such election may be
made shall commence with the date the amendment is adopted
and shall end on the later of (i) sixty days after the
amendment is adopted, (ii) sixty days after the amendment
becomes effective, or (iii) sixty days after the Employee
is provided with written notice of the amendment.
The Trustee shall be notified in writing of any amendment
within a reasonable time.
2. Merger. The Plan may be merged or consolidated with,
or its assets and liabilities may be transferred to any other
plan only if the benefits which would be received by a
Participant in the event of a termination of the Plan
immediately after such transfer, merger or consolidation are at
least equal to the benefit such Participant would have received
if the Plan had terminated immediately prior to the transfer,
merger or consolidation.
3. Termination. The Board of Directors shall have the
right, at any time, to terminate the Plan, in whole or in part,
by delivering written notice to the Trustee of such
termination. A complete discontinuance of the Company's
contributions to the Plan shall be deemed to constitute a
termination.
Upon any termination (whether full or partial) or a
complete discontinuance of contributions, all amounts credited
to the affected Participants' accounts shall become fully
vested and nonforfeitable. Upon such termination, the Plan
Administrator shall direct the Trustee to distribute the assets
held in the Trust to the Participants.
ARTICLE XV
MISCELLANEOUS PROVISIONS
1. Governing Law. The Plan shall be governed by federal
law to the extent applicable, otherwise by the laws of the
State of Louisiana.
2. Diversion. In no event shall any portion of the
Trust be used for, or diverted to, purposes other than the
exclusive benefit of the Participants, their Beneficiaries, or
their Alternate Payees.
3. Employment Rights. Participation in the Plan will
not give any Participant the right to be retained in the employ
of the Company or any right or claim to any benefit under the
Plan, unless such right has specifically accrued under the
terms of the Plan.
4. Action. Except as may be specifically provided
herein, any action required or permitted to be taken by the
Company may be taken on behalf of the Company by any authorized
officer of the Company.
5. Liability for Benefits. None of the Trustee, the
Company or the Plan Administrator guarantee the Trust from loss
or depreciation, nor do they guarantee any payment to any
person. The liability of the Trustee, the Company, and the
Plan Administrator to make any payment is limited to the
available assets of the Trust.
6. Evidence. Evidence required of anyone under the Plan
may be supplied by certificate, affidavit, document or other
information which the persons relying on it consider pertinent
and reliable.
7. Anticipation of Benefits. Except as provided in
Paragraph 9 of Article IX, no benefit under the Plan shall be
subject in any manner to anticipation, alienation, sale,
transfer, assignment, pledge, encumbrance or charge, and any
attempt to anticipate, alienate, sell, transfer, sign, pledge,
encumber or charge such benefit shall be void; nor shall the
benefits payable under the Plan be subject to any attachment or
legal process.
8. Named Fiduciary. The "named fiduciaries" of the Plan
within the meaning of ERISA Section 403 shall be (a) the Board
of Directors, (b) the Plan Administrator, and (c) the Trustee.
9. Indemnification. The Employer agrees to defend the
individuals performing services on behalf of the Plan
Administrator against any claim or any liability, including any
tax, imposed as a result of a claim asserted by any person or
persons or entity (including a governmental entity) under the
laws of any state or of the United States with respect to any
action or failure to act of such individuals taken in good
faith and in accordance with the terms of the Plan.
10. Failure to Locate Beneficiary. The Plan
Administrator shall retain the address of each Participant,
Beneficiary and Alternate Payee. Any notice sent to the last
address filed with the Plan Administrator or for the last
address indicated on the Company's records will be binding upon
a Participant, Beneficiary or Alternate Payee. If the Plan
Administrator notifies a Participant, Beneficiary or Alternate
Payee that he or she is entitled to a distribution and the
Participant, Beneficiary or Alternate Payee fails to claim the
benefit within five years of notification, the amount
representing the benefits shall be treated as a forfeiture and
reallocated in accordance with the provisions of Article IV,
Paragraph (2); provided, however, that the benefit will be
reinstated if a claim is subsequently made by the Participant,
Beneficiary or Alternate Payee.
11. Voting Rights. Each Participant shall be entitled to
direct the Trustee as to the exercise of voting rights
attributable to Company Stock allocated to any of his or her
accounts as of the Valuation Date immediately preceding the
relevant shareholders' meeting date. If the Trustee does not
receive adequate instructions from a Participant, the Trustee
shall not be entitled to vote Company Stock allocated to such
Participant's accounts.
Prior to each annual or special shareholders' meeting, the
Plan Administrator, through the Trustee, shall provide each
Participant with (a) a copy of any proxy solicitation or other
material furnished to other shareholders, and (b) a form
requesting instructions as to the exercise of voting rights
attributable to Company Stock credited to such Participant's
accounts. Instructions received by the Trustee shall be held
in confidence and shall not be divulged or released to any
person, including the officers or Employees of the Company.
Neither the Trustee nor the Plan Administrator shall make
recommendations as to the manner in which Company Stock
allocated to a Participant's accounts should be voted.
12. Insider Trading Restrictions. In order to assure
compliance by Participants who are subject to Section 16 of the
Securities Exchange Act of 1934, as amended ("insiders") with
Rule 16b-3, as amended, or other applicable rules under Section
16 of the Securities Exchange Act of 1934, as amended, the Plan
Administrator shall have the authority to impose additional
requirements on insiders (a) concerning the time at which
transfers in or out of the Melamine Fund can be made under
Paragraph 3 of Article VII, (b) restricting investments in the
Melamine Fund after a transfer out of such fund, and (c)
suspending the ability to have Salary Deferral Contributions
made after a withdrawal or a loan from the Plan.
13. Procedure for Participant Elections. The Plan
Administrator shall establish procedures for making Participant
elections concerning contribution amounts and investment
allocations.
ARTICLE XVI
TRUST PROVISIONS
1. General Duties. The Trustee shall establish a Trust
pursuant to the terms of the Plan to hold all property received
by it, and shall manage, invest and reinvest the assets of the
Trust, collect the Trust income, and make payments from the
Trust, all as provided in the Plan.
The Trustee shall be responsible only for the property
actually received by it. It shall have no duty or authority to
compute any amount to be paid to it by the Company or to bring
any action or proceeding to enforce the collection from the
Company of any contribution to the Trust.
Title to the assets of the Trust, including all funds and
investments held by the Trustee, shall be and remain in the
Trustee, and no Participant, Beneficiary or Alternate Payee
shall have any legal or equitable right or interest in the
Trust Fund except to the extent that such rights or interests
are expressly granted under the provisions of the Plan.
2. General Powers. The Trustee shall have all the powers
necessary for the performance of its duties as Trustee. The
Trustee shall have the following powers and immunities and be
subject to the following duties:
a. The Trustee shall receive all contributions to the
Trust and apply such contributions as set forth below.
The Trustee shall have the custody of and safely keep all
cash, securities, property and investments, including any
insurance company contracts, received or purchased in
accordance with the terms of the Plan.
b. Subject to any limitations that may be contained
elsewhere in the Plan, the Trustee shall take control and
management of the Trust and shall hold, sell, buy,
exchange, invest and reinvest the corpus and income of the
Trust. All contributions paid to the Trustee under the
Plan shall be held and administered by the Trustee as a
single Fund, and the Trustee shall not be required to
segregate and invest separately any part of the Trust
representing accruals or interests of individual
Participants in the Plan.
c. The Trustee may invest and reinvest the funds of
the Trust in any property, real, personal or mixed,
wherever situated, and whether or not productive of income
or consisting of wasting assets, including, without
limitation, common and preferred stock, bonds, notes,
debentures, leaseholds, mortgages (including without
limitation, any collective or part interest in any bond
and mortgage or note and mortgage), certificates of
deposit, and oil, mineral or gas properties, royalties,
interest or rights (including equipment pertaining
thereto), without being limited to the classes of property
in which trustees are authorized by law or any rule of
court to invest trust funds and without regard to the
proportion any such property may bear to the entire amount
of the Trust.
The Trustee may invest and reinvest all or any portion of
the Trust assets collectively with funds of other
retirement plan trusts exempt from tax under Section
501(a) of the Code, including, without limitation, power
to invest collectively with such other funds through the
medium of one or more common, collective or commingled
trust funds which have been or may hereafter be
established and maintained by the Trustee, the instrument
or instruments establishing such trust fund or funds, as
amended from time to time, being made part of the Trust so
long as any portion of the Trust shall be invested through
the medium thereof.
d. The Trustee may sell or exchange any property or
asset of the Trust at public or private sale, with or
without advertisement, upon terms acceptable to the
Trustee and in such manner as the Trustee may deem wise
and proper. The proceeds of any such sale or exchange may
be reinvested as is provided hereunder. The purchaser of
any such property from the Trustee shall not be required
to look to the application of the proceeds of any such
sale or exchange by the Trustee.
e. The Trustee shall have full power to mortgage,
pledge, lease or otherwise dispose of the property of the
Trust without securing any order of court therefor,
without advertisement, and to execute any instrument
containing any provisions which the Trustee may deem
proper in order to carry out such actions. Any such lease
so made by the Trustee shall be binding, notwithstanding
the fact that the term of the lease may extend beyond the
termination of the Plan.
f. The Trustee shall have the power to borrow money
upon terms agreeable to the Trustee and pay interest
thereon at rates agreeable to the Trustee, and to repay
any debts so created.
g. The Trustee may participate in the reorganization,
recapitalization, merger or consolidation of any
corporation wherein the Trustee may own stock or
securities and may deposit such stock or other securities
in any voting trust or protective committee or like
committee or trustee, or with the depositaries designated
thereby, and may exercise any subscription rights or
conversion privileges, and generally may exercise any of
the powers of any owner with respect to any stock or other
securities or property included in the Trust.
h. The Trustee may, through any duly authorized
officer or proxy, vote any share of stock which the
Trustee may own from time to time.
i. The Trustee shall retain in cash and keep
unproductive of income such funds as from time to time it
may deem advisable. The Trustee shall not be required to
pay interest on any such cash in its hands pending
investment, nor shall the Trustee be responsible for the
adequacy of the Trust assets to discharge any and all
payments under the Plan. All persons dealing with the
Trustee are released from inquiry into the decision or
authority of the Trustee to act.
j. The Trustee may hold stocks, bonds, or other
securities in its own name as Trustee, with or without the
designation of said trust estate, or in the name of a
nominee selected by it for the purpose, but said Trustee
shall nevertheless be obligated to account for all
securities received by it as part of the corpus of the
trust estate herein created, notwithstanding the name in
which the same may be held.
k. The Trustee may consult with legal counsel (who
may be of counsel to the Employer or the Committee)
concerning any questions which may arise with reference to
the construction of this Plan, its duties under the terms
of the Plan, or any action which it proposes to take or
omit.
l. The Trustee may employee such counsel,
accountants, and other agents as it shall deem advisable.
The Trustee may charge the compensation of such counsel,
accountants and other agents and the Trustee's
compensation for its services in such amounts as may be
agreed upon from time to time by the Employer and the
Trustee, and any other expenses necessary in the
administration of this Plan against the Trust Fund to the
extent they are not paid by the Employer.
m. The Trustee shall have the power to designate a
bank, insurance company or trust company as depositary of
the funds or property of the Trust and also to retain
investment counsel.
n. Without diminution or restriction of the powers
vested by law or elsewhere in this Plan, and subject to
all the provisions of the Plan, the Trustee, without the
necessity of procuring any judicial authorization or
approval, shall be vested with and, in the application of
its best judgment and discretion on behalf of the
beneficiaries of this Plan, shall be authorized to
exercise all or any of the powers specifically permitted
by statute or judicial decision in the State of Louisiana.
3. Reliance on Committee and Company. Until notified
pursuant to Article XIII that any Committee member or other
person authorized to act for the Plan Administrator has ceased
to act or is no longer authorized to act for the Plan
Administrator, the Trustee may continue to rely on the
authority of such member or other person. The Trustee may rely
upon any certificate, notice or direction purporting to have
been signed on behalf of the Plan Administrator which the
Trustee believes to have been signed by the Plan Administrator
or the person or persons authorized to act for the Plan
Administrator. The Trustee may rely upon any certificate,
notice or direction of the Company which the Trustee believes
to have been signed by a duly authorized officer or agent of
the Company. The Trustee may request instructions in writing
from the Plan Administrator on other matters and may rely and
act on such written instructions.
4. Accounts and Reports. The Trustee shall keep an
accurate record of its administration of the Trust Fund,
including a detailed account of all investments, receipts and
disbursements, and other transactions. All accounts, books and
records relating to the Plan or Trust shall be open for
inspection to any person designed by the Plan Administrator or
the Company at all reasonable times. Within 60 days following
the close of each Plan Year, the Trustee shall file with the
Plan Administrator a written report setting forth all
investments, receipts and disbursements and other transactions
during the Plan Year, and such report shall contain an exact
description of all securities purchased, exchanged or sold, the
cost or net proceeds of sale, and shall show the securities and
investments held at the end of such Plan Year, and the cost and
fair market value of each item, as carried on the books of the
Trustee.
The Trustee shall also provide the Company and the Plan
Administrator with such other information in its possession as
may be necessary for the Plan Administrator or the Company to
comply with the reporting and disclosure requirements of ERISA.
5. Disbursements. The Trustee, upon written
instructions from the Plan Administrator, shall make
distributions and/or payments, including monthly payments to
the Participants, Beneficiaries and Alternate Payees who
qualify for such benefits and shall purchase, transfer,
discontinue or surrender any insurance contracts. The Trustee
shall have no liability to the Company, the Plan Administrator
or any other person in making such distributions and/or
payments. The Trustee shall not be required to determine or
make any investigation to determine the identity or mailing
address of any person entitled to benefits under the Plan and
shall have discharged its obligation in that respect when it
shall have sent checks and other papers by ordinary mail to
such person or persons at such addresses as may be certified to
it in writing by the Plan Administrator.
6. Authority of Trustee. At no time during the
administration of the Trust shall the Trustee be required to
obtain any court approval of any act required of it in
connection with the performance of its duties or in the
performance of any act required of it in the administration of
its duties as Trustee. The Trustee shall have full authority
to exercise its judgment in all matters and at all times
without court approval of such decisions; provided, however,
that if any application to, or proceeding or action in, the
courts is made, only the Company and the Trustee shall be
necessary parties, and no Participant in the Plan or other
person having an interest in the Trust shall be entitled to any
notice or service of process. Any judgment entered in such
proceeding or action shall be conclusive upon all persons
claiming an interest under the Trust.
7. Funding Policy; Parties in Interest. From time to
time the Plan Administrator shall communicate to the Trustee
the current funding policy and method that have been
established to carry out the objectives of the Plan.
Upon the written request of the Trustee, the Company shall
file with the Trustee a roster of the names of all persons,
corporations, partnerships, organizations and entities which
are "parties in interest" with respect to the Plan, as that
term is defined in ERISA.
8. Removal or Resignation of Trustee. The Trustee may
at any time be removed as Trustee of the Plan by action of the
Board of Directors and written notice to the Trustee, such
removal to be effective 60 days after such notice is given.
The Trustee may resign as Trustee of the Plan upon written
notice to the Company, such resignation to be effective 60 days
after such notice is given.
Upon mutual, written agreement by the Company and the
Trustee, the 60 day period in this Paragraph 9 may be waived or
a shorter period substituted.
9. Successor Trustee. In the event of the resignation
or removal of the Trustee, the Company shall appoint a
successor trustee in place of the resigned or removed Trustee.
Within 120 days after written notice of removal or
resignation, the Trustee shall file with the Company a written
report setting forth all investments, receipts and
disbursements and other transactions effected by it since the
end of the preceding Plan year. Such report shall be in the
same form and be subject to the same requirements as the annual
report.
The Trustee, if not paid by the Company, is authorized to
reserve such sum of money or to liquidate such property and
reserve the proceeds thereof as it may deem advisable for the
payment of its expenses and/or charges in connection with the
settlement of its account or otherwise, and any such balance of
such reserve remaining after the payment of such expenses and
charges shall be paid over to the successor trustee or
trustees, or to the Participants in the event of termination.
Premier Bank, N.A., through its undersigned authorized
officer, appears herein to acknowledge the foregoing
restatement of the Plan and agree to be bound thereby.
The foregoing restatement of the Melamine Chemicals, Inc.
Employee 401(k) Thrift Plan is EXECUTED this 8th day of April,
1996, in multiple counterparts, each of which shall be deemed
an original, as set forth below:
WITNESSES: MELAMINE CHEMICALS, INC.
/s/ Witness
- -----------------------------
BY: /s/ Fred Huber
--------------------------
/s/ Witness
- ----------------------------- TITLE: PRESIDENT AND CEO
PREMIER BANK, N.A.
/s/ Witness
- ------------------------------
BY: /s/ Rebecca G. Fontenot
---------------------------
/s/ Witness
- ------------------------------
ACKNOWLEDGEMENT
STATE OF LOUISIANA
PARISH OF ASCENSION
BEFORE ME, the undersigned Notary Public, personally came
and appeared FREDERIC R. HUBER, President and CEO, of Melamine
Chemicals, Inc., who being by me sworn did depose and state
that he signed the foregoing Amended and Restated Employee
401(k) Thrift Plan as his free act and deed on behalf of
Melamine Chemicals, Inc. for the purposes therein set forth.
/s/ Fred Huber
------------------------------
SWORN TO AND SUBSCRIBED BEFORE
ME THIS 8th DAY OF APRIL, 1996.
/s/ Monica B. Crews
- -------------------------------
NOTARY PUBLIC
ACKNOWLEDGEMENT BY PREMIER BANK, N.A.
STATE OF LOUISIANA
PARISH OF EAST BATON ROUGE
BEFORE ME, the undersigned Notary Public, in and for the Parish and
State aforementioned, on this day personally appeared Rebecca G. Fontenot,
known to me, personally, who, after being by me first duly sworn, did say that
he is the officer whose name is subscribed to the foregoing instrument and that
he executed the same as an act of said PREMIER BANK, NATIONAL ASSOCIATION, a
banking corporation, for the purposes and considerations therein stated.
THUS DONE AND SIGNED on this 26th day of April, 1996 and in the
presence of the undersigned competent witnesses, at Baton Rouge, Louisiana.
WITNESSES: PREMIER BANK, NATIONAL ASSOCIATION
/s/ Witness BY: /s/ Rebecca G. Fontenot
- ------------------------ -------------------------------
Authorized Officer
/s/ Witness
- ------------------------
/s/ Notary Public
-------------------------------
NOTARY PUBLIC
MELAMINE CHEMICALS, INC.
EMPLOYEE 401(K) THRIFT PLAN
AMENDMENT NO. 1
Effective June 1, 1974 Melamine Chemicals, Inc., a Delaware
corporation located in Donaldsonville, Louisiana (the "Company"),
adopted a plan which is now known as the Melamine Chemicals, Inc.
Employee 401(k) Thrift Plan, which Plan was most recently restated on
April 8, 1996.
The Board of Directors of the Company having reserved the right
to amend the Plan document, and having authorized the addition of four
new investment funds by means of this amendment to the Plan, the Plan
document is hereby amended as follows, effective October 1, 1996:
I.
The first 14 lines of Paragraph 3 of Article VII of the Plan are
hereby deleted, and the following language is added in their place:
3. Investment Funds. Each Participant shall elect to have
contributions to his accounts invested in one or more of the
following:
a. Diversified Investment Advisers Government Fixed
Fund,
b. Diversified Investment Advisers Equity Income Fund,
c. Diversified Investment Advisers Growth and Income
Fund,
d. Diversified Investment Advisers Equity Growth Fund,
e. Diversified Investment Advisers Stock Index Fund,
f. Diversified Investment Advisers Aggressive
Strategic Allocation Fund,
g. The fund consisting of Company Stock (the
"Melamine Fund"), and
h. The Certificate of Deposit Investment Fund
administered by Wachovia Bank (the "CD Fund").
A Participant's election shall require all contributions
made to the Participant's accounts thereafter (until a different
election is delivered to the Plan Administrator) to be allocated
among the Funds in multiples of 10%. The total of the
allocations shall equal 100%.
II.
In place of the order of withdrawal from investment funds set
forth in Paragraph 1(c) of Article X of the Plan document, with
respect to a Plan loan, and in Paragraph 7 of Article IX of the Plan
document, with respect to an in-service withdrawal, any such loan or
in-service withdrawal shall be made from the Participant's accounts in
the investment funds in the same order in which the investment funds
are listed in Section 3 of Article VII.
Bank One, Louisiana, N. A., the Trustee of the Plan's Trust,
acting through its undersigned authorized officer, appears herein to
acknowledge the foregoing amendment of the Plan and agree to be bound
thereby.
The foregoing amendment of the Melamine Chemicals, Inc. Employee
401(k) Thrift Plan is EXECUTED this 9th day of October, 1996, in
multiple counterparts, each of which shall be deemed an original, as
set forth below:
WITNESSES: MELAMINE CHEMICALS, INC.
/s/ Nila Jordan BY: /s/ Frederic R. Huber
- ---------------- ----------------------
/s/ Annette LeBlanc TITLE: PRESIDENT AND CEO
- --------------------
BANK ONE, LOUISIANA, N.A.
/s/ Witness BY: /s/ Rebecca G. Fontenot
- ------------ ------------------------
/s/ Witness
- ------------
ACKNOWLEDGMENT
STATE OF LOUISIANA
PARISH OF ASCENSION
BEFORE ME, the undersigned Notary Public, personally came and
appeared FREDERIC R. HUBER, President and CEO, of Melamine Chemicals,
Inc., who being by me sworn did depose and state that he signed the
foregoing Amendment No. 1 of the Employee 401(k) Thrift Plan as his
free act and deed on behalf of Melamine Chemicals, Inc. for the
purposes therein set forth.
/s/ Frederic R. Huber
----------------------
SWORN TO AND SUBSCRIBED BEFORE
ME THIS 9TH DAY OF OCTOBER, 1996.
/s/ Notary Public
- ------------------
NOTARY PUBLIC
ACKNOWLEDGEMENT BY BANK ONE, LOUISIANA, N.A.
STATE OF LOUISIANA
PARISH OF EAST BATON ROUGE
BEFORE ME, the undersigned Notary Public, in and for the Parish and
State aforementioned, on this day personally appeared Rebecca G. Fontenot,
known to me personally, who, after being by me first duly sworn, did say that
he is the officer whose name is subscribed to the foregoing instrument and that
he executed same as an act of said Bank One, Louisiana, N. A., a banking
corporation, for the purposes and considerations therein stated.
THUS DONE AND SIGNED on this 16th day of October 1996, in the presence
of the undersigned competent witnesses, at Baton Rouge, Louisiana.
WITNESSES: BANK ONE, LOUISIANA, N.A.
/s/ Witness BY: /s/ Rebecca G. Fontenot
- ------------ ------------------------
Authorized Officer
/s/ Witness
/s/ Notary Public
------------------
Notary Public
MELAMINE CHEMICALS, INC.
EMPLOYEE 401(K) THRIFT PLAN
AMENDMENT NO. 2
Effective June 1, 1974 Melamine Chemicals, Inc., a Delaware
corporation located in Donaldsonville, Louisiana (the "Company"),
adopted a plan which is now known as the Melamine Chemicals, Inc.
Employee 401(k) Thrift Plan, which Plan was most recently restated on
April 8, 1996.
The Board of Directors of the Company having reserved the right
to amend the Plan document, and having authorized the following
Amendment in order: to provide that all benefits are based on account
balances as of the most recent Valuation Date, except that any cash
benefit attributable to Company stock that is sold after that
Valuation Date will be based on the proceeds from the sale of the
stock; to allow in-service withdrawals from the Employee Deferral
Account after reaching age 59-1/2 without having to prove hardship;
and to require a Participant requesting a hardship withdrawal to
affirm that the need cannot be satisfied by other means; the Plan
document is hereby amended as follows, effective January 1, 1997:
I.
The sixth sub-paragraph of Paragraph 3 of Article IX (the sub-
paragraph formerly beginning with the wrods "A benefit other than an
immediate distribution") is hereby amended to read in its entirety as
follows:
All benefits are based on account balances as of the
Valuation Date immediately preceding the Benefit
Commencement Date, except that a Participant who elects to
receive cash instead of Company Stock will receive the
proceeds from the sale of the stock even if the sale of the
stock occurs after the Valuation Date immediately preceding
the Benefit Commencement Date.
II.
The first four lines of Paragraph 4 of Article X of the Plan
document are hereby deleted and the following lines are hereby
inserted at that point:
While employed by the Company, a Participant may withdraw
all or a portion of the Participant's Salary Deferral
Account if the Participant has attained age 59-1/2 or if the
Participant has a Financial Hardship, as defined at
Paragraph 5. The following additional rules apply to a
withdrawal from the Salary Deferral Account on account of a
Financial Hardship:
III.
Paragraph 4 of Article X of the Plan document is hereby amended
by added thereto a new sub-paragraph g. which shall read in its
entirety as follows:
g. The Participant signs a written affirmation that
the need cannot be satisfied by any other means.
The foregoing amendment of the Melamine Chemicals, Inc. Employee
401(k) Thrift Plan is EXECUTED this 7th day of August, 1997,
in multiple counterpart originals.
WITNESSES: MELAMINE CHEMICALS, INC.
/s/ Keely B. Landry BY: /s/ Frederic R. Huber
- -------------------- ----------------------
TITLE: PRESIDENT AND CEO
/s/ Nila N. Jordan
- -------------------
ACKNOWLEDGMENT
STATE OF LOUISIANA
PARISH OF ASCENSION
BEFORE ME, the undersigned Notary Public, personally came and
appeared FREDERIC R. HUBER, President and CEO, of Melamine Chemicals,
Inc., who being by me sworn did depose and state that he signed the
foregoing Amendment No. 2 of the Melamine Chemicals, Inc. Employee
401(k) Thrift Plan as his free act and deed on behalf of Melamine
Chemicals, Inc. for the purposes therein set forth.
/s/ Frederic R. Huber
----------------------
SWORN TO AND SUBSCRIBED BEFORE
ME THIS 7TH DAY OF AUGUST, 1997.
/s/ Notary Public
- ------------------
NOTARY PUBLIC
EXHIBIT 10.14
RETIREMENT PLAN FOR EMPLOYEES OF
MELAMINE CHEMICALS, INC.
As Amended and Restated Effective
July 1, 1989
TABLE OF CONTENTS
SECTION PAGE
DEFINITIONS: PARTICIPATION
1.1 - Definitions...............................................1-1
1.2 - Participation............................................1-16
1.3 - Leave of Absence and Termination of Service..............1-18
1.4 - Reemployment.............................................1-20
1.5 - Transfer to or From Status as an Eligible Employee.......1-27
1.6 - Participation and Benefits for Former Leased Employees...1-30
1.7 - Rights of Other Employers to Participate.................1-31
NORMAL AMOUNT AND PAYMENT OF RETIREMENT INCOME
2.1 - Normal Retirement and Retirement Income...................2-1
2.2 - Early Retirement and Retirement Income....................2-4
2.3 - Disability Retirement and Retirement Income...............2-6
2.4 - Benefits Other Than on Retirement.........................2-9
SPECIAL PROVISIONS REGARDING PAYMENT OF BENEFITS
3.1 - Optional Forms of Retirement Income.......................3-1
3.2 - Lump-Sum Payment of Small Retirement Income...............3-6
3.3 - Benefits Applicable to Participant Who Has
Been or Is Employed by Two or More Employers..............3-6
3.4 - No Duplication of Benefits................................3-7
3.5 - Funding of Benefits Through Purchase of
Life Insurance Contract or Contracts......................3-7
GOVERNMENTAL REQUIREMENTS AFFECTING BENEFITS
4.1 - Special Provisions Regarding Amount
and Payment of Retirement Income..........................4-1
4.2 - Limitations on Benefits Required by the Internal Revenue
Service................................................. 4-15
4.3 - Benefits Nonforfeitable if Plan Is Terminated............4-16
4.4 - Merger of Plan...........................................4-16
4.5 - Termination of Plan and Distribution of Trust Fund.......4-17
4.6 - Special Provisions that Apply if Plan is Top-Heavy.......4-19
MISCELLANEOUS PROVISIONS REGARDING PARTICIPANTS
5.1 - Participants to Furnish Required Information..............5-1
5.2 - Beneficiaries.............................................5-2
5.3 - Contingent Beneficiaries..................................5-3
5.4 - Participants' Rights in Trust Fund........................5-3
5.5 - Benefits Not Assignable...................................5-4
5.6 - Benefits Payable to Minors and Incompetents...............5-4
5.7 - Conditions of Employment Not Affected by Plan.............5-4
5.8 - Notification of Mailing Address...........................5-5
5.9 - Written Communications Required...........................5-6
5.10 - Benefits Payable at Office of Trustee.....................5-6
5.11 - Appeal to Committee.......................................5-6
MISCELLANEOUS PROVISIONS REGARDING THE EMPLOYER
6.1 - Contributions.............................................6-1
6.2 - Employer's Contributions Irrevocable......................6-1
6.3 - Forfeitures...............................................6-2
6.4 - Amendment of Plan.........................................6-2
6.5 - Termination of Plan.......................................6-4
6.6 - Expenses of Administration................................6-5
6.7 - Formal Action by Employer.................................6-5
ADMINISTRATION
7.1 - Administration by Committee...............................7-1
7.2 - Officers and Employees of Committee.......................7-1
7.3 - Action by Committee.......................................7-2
7.4 - Rules and Regulations of Committee........................7-3
7.5 - Powers of Committee.......................................7-3
7.6 - Duties of Committee.......................................7-3
7.7 - Indemnification of Members of Committee...................7-5
7.8 - Actuary...................................................7-5
7.9 - Fiduciaries...............................................7-5
7.10 - Applicable Law............................................7-7
TRUST FUND
8.1 - Purpose of Trust Fund.....................................8-1
8.2 - Benefits Supported Only by Trust Fund.....................8-1
8.3 - Trust Fund Applicable Only to Payment of Benefits.........8-1
EXHIBIT A
RETIREMENT PLAN FOR EMPLOYEES OF
MELAMINE CHEMICALS, INC.
As Amended and Restated Effective July 1, 1989
INTRODUCTION
The Retirement Plan for Employees of Melamine Chemicals, Inc. and
the Retirement Trust for Employees of Melamine Chemicals, Inc. were adopted
by Melamine Chemicals, Inc. effective as of July 1, 1985, as an amendment
and complete restatement of the retirement plan and trust originally adopted
by Melamine Chemicals, Inc. effective as of January 1, 1972, and as
subsequently amended and in effect on June 30, 1985.
The said Retirement Plan for Employees of Melamine Chemicals, Inc.
has subsequently been amended from time to time, and said retirement plan is
being further amended and is being restated in its entirety effective as of
July 1, 1989 (with an earlier effective date with respect to certain
provisions as described in Section 1.2 hereof) as set forth in this
instrument. This instrument shall be attached to and form a part of the
said Retirement Trust for Employees of Melamine Chemicals, Inc. as in effect
on and after July 1, 1985.
Subject to the provisions of Section 1.4, a Participant's benefits
under this Plan will be determined by the provisions of the Plan that are in
effect on the date that his employment with the Employer terminates.
Subject to receipt by Melamine Chemicals, Inc. of a favorable
ruling that the qualified status of the Retirement Plan for Employees of
Melamine Chemicals, Inc. and the Retirement Trust for Employees of Melamine
Chemicals, Inc. under Sections 401(a) and 501(a) of the Code is not
adversely affected by such amendment and restatement, each person who
becomes a participant hereunder shall be entitled upon his retirement or
termination of service to such benefits as are specified in the provisions
which follow.
SECTION 1
DEFINITIONS: PARTICIPATION
1.1 - DEFINITIONS
(A) The following terms as used herein shall have the meanings stated
below unless a different meaning is plainly required by the context:
(1) "Accrued Benefit" shall mean the monthly retirement income,
payable in the manner described in Section 2.1(C) hereof
commencing at the Participant's Normal Retirement Date, which he
has accrued as of a given date and shall be equal to the monthly
retirement income to which the Participant would have been
entitled on his Normal Retirement Date in accordance with the
provisions of Section 2.1(B) hereof using his rate of Final
Average Monthly Compensation and Credited Service determined as of
such given date in lieu of the corresponding amounts determined as
of his Normal Retirement Date.
The Accrued Benefit which a Participant has accrued as of a given
date shall not exceed an amount that is actuarially equivalent as
of such given date to that amount which would cause the monthly
retirement income payable to or on behalf of the Participant under
the Plan to be in excess of the maximum amount of retirement
income permitted under Section 415 of the Code; and provided
further, however, that the provisions of Section 4.6 hereof shall
apply in determining the Accrued Benefit of a Participant who has
accrued Vesting Service during any Plan Year that the Plan is
top-heavy.
(2) "Annuity Starting Date" shall have the meaning assigned in Section
417(f) of the Code and regulations issued with respect thereto and
shall be the first day of the first period for which an amount is
payable (not the actual date of payment) as an annuity or any
other form. Any auxiliary disability benefits shall be
disregarded in determining the Annuity Starting Date.
Unless otherwise qualified by the context, the Annuity Starting
Date of a Participant shall be:
(a) in the case of the benefit payable under Section 2.1 or 2.2
in the event of his normal or early retirement, the first day
of the month coincident with or next following the date of
his retirement;
(b) in the case of the benefit payable under Section 2.3 in the
event of his disability retirement, the date as of which his
disability retirement income payments are scheduled to start
under Section 2.3(F); and
(c) in the case of the benefit payable under
Section 2.4(A) in the event of termination of service with a
vested benefit, the Participant's Normal Retirement Date or,
if applicable, the first day of the month prior to his Normal
Retirement Date that the Participant has elected in
accordance with the provisions of Section 2.4(A) to start
receiving the benefits to which he is entitled under such
section;
provided, however, if the Participant elects pursuant to the
provisions of Section 3.1 hereof a later commencement date, his
Annuity Starting Date shall be such later date of commencement
specified in his election, or, if the Participant continues in the
service of the Employer beyond his Required Beginning Date, his
Annuity Starting Date shall be his Required Beginning Date.
(3) "Beneficiary" shall mean the person or persons on whose behalf
benefits may be payable under the Plan after a Participant's death
in accordance with the provisions hereof.
(4) "Break in Service" shall mean a period of severance of 12
consecutive months or longer that immediately follows an
employee's date of termination of service and immediately precedes
the date, if any, on which he next performs an Hour of Service.
(5) "Change in Control" shall mean:
(i) The acquisition by any individual, entity or group (within
the meaning of Section 13(d)(3) or 14(d)(2) of the
Securities Exchange Act of 1934, as amended (the "Exchange
Act")) (a Person) of beneficial ownership (within the meaning
of Rule 13d-3 promulgated under the Exchange Act) of 20% or
more of either (A) the then outstanding shares of common
stock of the Company (the "Outstanding Company Common Stock")
or (B) the combined voting power of the then outstanding
voting securities of the Company entitled to vote generally
in the election of directors (the "Outstanding Company Voting
Securities"); provided, however, that the following
acquisitions shall not constitute a Change of Control: (1)
any acquisition directly from the Company, (2) any
acquisition by the Company, (3) any acquisition by any
employee benefit plan (or related trust) sponsored or
maintained by the Company or any corporation controlled by
the Company or (4) any acquisition by any corporation
pursuant to a transaction which complies with clauses (A),
(B) and (C) of paragraph (iii) of this paragraph (5); or
(ii) Any change in the composition of the Board of Directors of
the Company such that individuals who, as of April 9, 1991,
constitute the Board of Directors (the "Incumbent Board")
cease for any reason the constitute at least a majority of
the Board of Directors; provided, however, that any
individual becoming a director subsequent to April 9, 1991
whose election, or nomination for election b the Company's
shareholders, was approved by a vote of at least a majority
of the directors then comprising the Incumbent Board shall be
considered as though such individual were a Member of the
Incumbent Board, but excluding. for this purpose, any such
individual whose initial assumption of office occurs as a
result of an actual or threatened election contest with
respect to the election or removal of directors or other
actual or threatened solicitation of proxies or consents by
or on behalf of a Person other than the Board of Directors;
or
(iii) Approval by the shareholders of the Company of a
reorganization, merger or consolidation (a "Business
Combination"), unless, in each case, following such Business
Combination, (A) all or substantially all of the individuals
and entities who were the beneficial owners, respectively, of
the Outstanding Company Common Stock and Outstanding Company
Voting Securities immediately prior to such Business
Combination beneficially own, directly or indirectly, more
than 60% of, respectively, the then outstanding shares of
common stock and the combined voting power of the then
outstanding voting securities entitled to vote generally i
the election of directors, as the case may be, of the
corporation resulting from such Business Combination
(including, without limitation, a corporation which as a
result of such transaction owns the Company through one or
more subsidiaries) in substantially the same proportions as
their ownership, immediately prior to such Business
Combination, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities, as the case may be,
(B) no Person (excluding any employee benefit plan (or
related trust) of the Company or such corporation resulting
from such Business Combination) beneficially owns, directly
or indirectly, 20% or more of, respectively, the then
outstanding shares of common stock of the corporation
resulting from such Business Combination or the combined
voting power of the then outstanding voting securities of
such corporation except to the extent that such ownership
existed prior to the Business Combination and (C) at least a
majority of the members of the board of directors of the
corporation resulting from such Business Combination were
members of the Incumbent Board at the time of execution of
the initial agreement, or of the action of the Board of
Directors, providing for such Business Combination; or
(iv) Approval by the shareholders of the Company of (A) a complete
liquidation or dissolution of the Company or (B) the sale or
other disposition of all or substantially all of the assets
of the Company, other than to a corporation, with respect to
which following such sale or other disposition, (1) more than
60% of, respectively, the then outstanding shares of common
stock of such corporation and the combined voting power of
the then outstanding voting securities of such corporation
entitled to vote generally in the election of directors is
then beneficially owned, directly or indirectly, by all or
substantially all of the individuals and the entities who
were the beneficial owners, respectively, of the Outstanding
Company Common Stock and Outstanding Company Voting
Securities immediately prior to such sale or other
disposition in substantially the same proportion as their
ownership, immediately prior to such sale or other
disposition, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities, as the case may be,
(2) less than 20% of, respectively, the then outstanding
shares of common stock of such corporation and the combined
voting power of the then outstanding voting securities of
such corporation entitled to vote generally in the election
of directors is then beneficially owned, directly or
indirectly, to any Person (excluding any employee benefit
plan (or related trust) of the Company or such corporation),
except to the extent that such Person owned 20% or more of
the Outstanding Company Common Stock and Outstanding Company
Voting Securities prior to such sale or disposition and (3)
at least a majority of the members of the board of directors
of such corporation were members of the Incumbent Board at
the time of the execution of the initial agreement, or of the
action of the Board of Directors, providing for such sale or
other disposition of assets of the Company or were elected,
appointed or nominated by the Board of Directors.
(6) "Committee" shall mean the Retirement Committee appointed from
time to time to administer the Plan pursuant to the provisions of
Section 7.1 hereof.
(7) "Company" shall mean Melamine Chemicals, Inc., a Louisiana
corporation, and its successor or successors.
(8) "Compensation" shall mean the Participant's rate of monthly wages
from the Employer on each July 1 excluding any overtime pay,
expense allowances, commissions, bonus payments, shift
differential, relief pay and any other additions to or deduction
from regular compensation, but shall include amounts, if any,
which would have been includable in the employee's Compensation if
they have not received special tax treatment because they were
deferred by the employee through a plan of deferred compensation
under Section 401(k) of the Internal Revenue Code or under a
salary reduction agreement pursuant to Section 125 of the Code.
The annual Compensation of a Participant for any given plan year
which is taken into account with respect to contributions to the
Plan and to benefits accruing under the Plan on and after July 1,
1989, shall not exceed the maximum annual compensation that may be
taken into account under Section 401(a)(17) of the Code and
regulations issued with respect thereto (the "IRC Section
401(a)(17) Annual Compensation Limit").
The IRC Section 401(a)(17) Annual Compensation Limit shall be
equal to:
(a) with respect to any given plan year beginning in 1989 or
earlier, $200,000;
and
(b) with respect to any given plan year beginning after 1989, the
sum of $200,000 plus the accumulated increments, determined
as of the January 1 coincident with or immediately preceding
the beginning of such given plan year that have been added to
such figure after January 1, 1989 for increases in cost of
living pursuant to the provisions of Section 401(a)(17) of
the Code.
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 July 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 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.
For plan years beginning on or after July 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
determination periods beginning before July 1, 1994, the OBRA '93
annual compensation limit is $150,000.
In the event that Compensation under the Plan is determined based
on a period of time that contains fewer than 12 calendar months,
the IRC Section 401(a)(17) Annual Compensation Limit for that
period of time shall be equal to the IRC Section 401(a)(17) Annual
Compensation Limit for the calendar year during which such period
of time begins multiplied by the fraction in which the numerator
is the number of full months in such period of time and the
denominator is 12.
In determining the IRC Section 401(a)(17) Annual Compensation
Limit of an individual who is a member of the family of a
5-percent owner or of a Highly Compensated Employee who is in the
group consisting of the 10 Highly Compensated Employees paid the
greatest compensation during the year, the rules of Section
414(q)(6) of the Code shall apply, except that in applying such
rules for the purposes of this section, the term "family" shall
include only the spouse of the employee and any lineal descendants
who have not attained the age of 19 years before the close of such
year.
Any provisions herein to the contrary notwithstanding, any
benefits that a Participant has accrued as of June 30, 1989 shall
not be reduced due to the IRC Section 401(a)(17) Annual
Compensation Limit imposed effective as of July 1, 1989 on the
amount of his Compensation.
(9) "Controlled Group Member" shall mean:
(a) the Employer;
(b) any corporation or association that is a member of a con-
trolled group of corporations (within the meaning of Section
1563(a) of the Code, determined without regard to Section
1563(a)(4) and Section 1563(e)(3)(C) of said Code, except
that, for the purposes of applying the limitations on
benefits and contributions that are required under Section
415 of the Code and are described in Section 4.1(A) hereof,
such meaning shall be determined by substituting the phrase
"more than 50%" for the phrase "at least 80%" each place that
it appears in Section 1563(a)(1) of said Code) with respect
to which the Employer is a member;
(c) any trade or business (whether or not incorporated) that is
under common control with the Employer as determined in
accordance with Section 414(c) of the Code and regulations
issued thereunder;
(d) any service organization that is a member of an affiliated
service group (within the meaning of Section 414(m) of the
Code) with respect to which the Employer is a member; and
(e) any other entity required to be aggregated with the Employer
pursuant to regulations under Section 414(o) of the Code.
(10) "Credited Service" shall mean the total period of an employee's
service with the Employer, computed in completed months, during
the period beginning on his Last Date of Commencement of Service
and ending on the date of his retirement or termination of service
or, where applicable, ending on such other date as is specified
hereunder; provided, however, that the following provisions shall
apply with respect to any period of such an employee's service
that would be included in his Credited Service in accordance with
the provisions above:
(a) any complete calendar month that the employee is absent from
the service of the Employer will be excluded from his
Credited Service unless he receives regular Compensation from
the Employer for all or any portion of such calendar month
and except as otherwise provided below; and
(b) any absence due to the employee's engagement in military
service will, except as provided below, be included in his
Credited Service if such absence is covered by a leave of
absence granted by the Employer or is by reason of compulsory
military service and provided that such employee returns from
such absence within the period of time prescribed in Section
1.3 hereof.
However, the provisions of Section 1.4 hereof shall apply in the
case of an employee who is reemployed with a reinstatement of
Credited Service accrued prior to his Last Date of Commencement of
Service and the provisions of Section 1.5 hereof shall apply in
the case of an employee who is transferred to or from his status
as an eligible Employee.
Any period of an employee's service prior to the Effective Date of
the Plan that was either included with or excluded from the
service used to determine his accrued retirement income under the
Superseded Plan for any reason specified under the terms of the
Superseded Plan as in effect on the day immediately preceding the
Effective Date of the Plan shall be included with or excluded
from, as the case may be, his Credited Service under the
provisions of the Plan, except that any such period of service
shall not be excluded on or after July 1, 1988 from a
Participant's Credited Service solely because of the fact that it
was accrued after his Normal Retirement Date.
Prior to July 1, 1994, Credited Service shall be determined
according to the terms of the Superseded Plan. On or after July
1, 1994 a Participant's Credited Service shall not be less than
the Credited Service as of June 30, 1994 determined in accordance
with the Superseded Plan.
(11) "Designated Nonparticipating Employer" shall mean:
(a) any Controlled Group Member that is not an Employer as
defined herein; and
(b) any other corporation, association, proprietorship, part-
nership or other business organization that (i) is not an
Employer as defined herein and (ii) the Company, by formal
action on its part in the manner described in Section 6.7
hereof, designates on the basis of a uniform policy applied
without discrimination as a "Designated Nonparticipating
Employer" for the purposes of the Plan.
(12) "Earliest Annuity Commencement Date" is:
(a) the first day of the month coincident with or next following
the date of termination of the Participant's service if he
has satisfied the age and service requirements to be eligible
for a normal or early retirement benefit under the provisions
hereof as of such termination date; or
(b) the earliest date as of which the Participant could elect to
start receiving retirement income payments under the
provisions of Section 2.4(A) hereof if his service were
terminated and he had not satisfied the age and service
requirements to be eligible for a normal or early retirement
benefit under the provisions hereof as of such termination
date.
(13) "Early Retirement Date" shall have the meaning assigned in Section
2.2 hereof.
(14) "Effective Date of the Plan" shall mean July 1, 1989 or such later
date as of which the Plan first became effective with respect to
the particular Employer concerned.
(15) "Eligibility Break in Service" shall mean an Eligibility
Computation Period that consists of a full Plan Year during the
period which immediately follows an employee's date of termination
of service and immediately precedes his date of reemployment
during which he fails to complete an Hour of Service. Solely for
the purpose of determining an Eligibility Break in Service, if the
employee is absent from the service of the Employer beginning on
or after July 1, 1985 due to (a) the pregnancy of the employee,
(b) the birth of a child of the employee, (c) the placement of a
child with the employee in connection with the adoption of such
child by such employee or (d) caring for such child described in
(b) or (c) above for a period beginning immediately following such
birth or placement, the employee shall be credited during such
absence with no less than the number of Hours of Service required
to avoid incurring an Eligibility Break in Service either (i)
during the Plan Year in which the absence began if the employee
would otherwise have incurred an Eligibility Break in Service in
such Plan Year or (ii) in the Plan Year next following the Plan
Year in which the absence began in all other cases.
(16) "Eligibility Computation Period" shall mean the
12-consecutive-month period that is used for the purpose of
determining a year of service for eligibility to participate in
the Plan. Initially, the Eligibility Computation Period shall be
the 12-consecutive-month period beginning on the Employee's Last
Date of Commencement of Service and ending with the first
anniversary of his Last Date of Commencement of Service; provided,
however, if the Employee fails to complete 1,000 Hours of Service
in such initial Eligibility Computation Period, the Eligibility
Computation Period shall mean the Plan Year, and the first of such
Plan Year Eligibility Computation Periods shall be the Plan Year
that overlaps the first anniversary of the Employee's Last Date of
Commencement of Service.
(17) "Employee" shall mean any person on the payroll of the Employer or
any other entity required to be aggregated with such Employer
under Sections 414 (b), (c), (m) or (o) of the Code, whose wages
from the Employer are subject to withholding for the purposes of
Federal income taxes and for the purposes of the Federal Insurance
Contributions Act; provided, however, that such term shall not
include:
(a) any such person who is employed at any division or branch of
any Employer that is acquired by or merged into the Employer
after the Effective Date of the Plan unless the Employer, by
formal action on its part in the manner described in Section
6.7 hereof, provides that such persons who are employed at
such division or branch shall, subject to the provisions of
(b), (c) and (d) below, be eligible for participation in the
Plan in accordance with the provisions hereof;
(b) any such person who is a participant and is accruing benefits
(or who, upon his satisfaction of any age and service
requirements specified thereunder as a condition of
participation, will be eligible to become a participant and
accrue benefits) under any other qualified defined benefit
pension plan maintained by the Employer or to which the
Employer makes contributions on his behalf based upon his
employment with the Employer;
(c) any such person who is included in a unit of persons employed
by the Employer who are covered by an agreement which the
Secretary of Labor finds to be a collective bargaining
agreement between employee representatives and the Employer
if retirement benefits were the subject of good faith
bargaining between such employee representatives and the
Employer and such persons are not required by that agreement
to be covered in the Plan;
(d) any such person who is a nonresident alien and who receives
no earned income (within the meaning of Section 911(b) of the
Code) from the Employer which constitutes income from sources
within the United States (within the meaning of Section
861(a)(3) of the Code).
(18) "Employer" shall mean, collectively or distributively as the
context may indicate, the Company and any other corporations,
associations, joint ventures, proprietorships, partnerships or
other business organizations that have adopted and are
participating in the Plan in accordance with the provisions of
Section 1.7 hereof.
(19) "Final Average Monthly Compensation" shall mean the Participant's
average monthly rate of Compensation from the Employer for the
five successive Plan Years immediately preceding the first day of
the month coincident with or next following the date on which his
service terminates for any reason (or, where applicable,
immediately preceding such other date as is specified hereunder),
that give the highest average monthly rate of Compensation for the
Participant.
The Participant's average monthly rate of Compensation will be
determined by dividing the total Compensation received by him
during such five Plan Year period by the number of months for
which he received Compensation from the Employer in such five Plan
Years period. The number of months for which he received
Compensation from the Employer may be computed, to the extent he
was paid on other than a monthly basis, by determining the number
of pay periods ending within such five Plan Year period for which
he received Compensation from the Employer and converting such pay
periods into months by dividing the number thereof, if weekly, by
4-1/3, if biweekly, by 2-1/6, and, if semi-monthly, by 2.
In computing Final Average Monthly Compensation for a Participant
who has returned to the active service of the Employer following a
full Plan Year or Years during which he did not receive any
regular Compensation from the Employer because of a leave of
absence granted by the Employer or because of his reemployment
with a reinstatement of his prior Vesting Service and Credited
Service as described in Section 1.4 hereof, such full Plan Year or
Years during which he did not receive any regular Compensation
from the Employer shall be ignored or excluded in determining the
five successive years to be used in determining the Participant's
Final Average Monthly Compensation at a subsequent date.
Anything above to the contrary notwithstanding, if a Participant's
service is terminated for any reason and he has not received any
Compensation during any preceding Plan Years, his "Final Average
Monthly Compensation" shall mean his average monthly rate of
compensation received from the Employer during the Plan Year in
which his service was terminated. Such average monthly rate of
Compensation will be determined in accordance with the procedure
described above, based upon the total Compensation that he
received and the number of months for which he received
Compensation from the Employer during such Plan Year.
(20) "Highly Compensated Employee" shall mean an employee who is a
"highly compensated employee" within the meaning of Section 414(q)
of the Code and regulations issued with respect thereto.
(21) "Hour of Service" shall mean each hour for which an employee is
directly or indirectly paid, or is entitled to payment, by the
Employer (including any predecessor business of an Employer
conducted as a corporation, partnership or proprietorship) for (a)
the performance of duties or (b) reasons other than the
performance of duties, including but not limited to vacation,
holidays, sickness, disability, paid layoff and similar paid
periods of nonworking time. Such Hours of Service shall be
credited to the employee for the period in which such duties were
performed or in which occurred the period during which no duties
were performed. An Hour of Service also includes each hour, not
credited above, for which backpay, irrespective of mitigation of
damages, has been either awarded or agreed to by the Employer.
These Hours of Service shall be credited to the employee for the
period to which the award or agreement pertains. The number of
Hours of Service to be credited to an employee for any period
shall be governed by Sections 2530.200b-2(b) and 2530.200b-2(c) of
Part 2530 of Subchapter C of Chapter XXV of Title 29 of the Code
of Federal Regulations (Department of Labor regulations relating
to minimum standards for employee pension benefit plans).
Any employee, who has been or is absent from the service of the
Employer on or after January 1, 1985 due to (a) the pregnancy of
the employee, (b) the birth of a child of the employee, (c) the
placement of a child with the employee in connection with the
adoption of such child by such employee or (d) caring for such
child described in (b) or (c) above for a period beginning
immediately following such birth or placement, shall be credited,
solely for the purpose of determining whether or not he has
incurred a Break in Service, with an Hour of Service during both
the computation period in which his absence began and the
computation period next following the computation period in which
his absence began.
(22) "Initial Vesting Date" shall mean the earlier to occur of the
following dates:
(a) the date on which the Participant has completed five years of
Vesting Service;
or
(b) the date on which the Participant attains his Normal
Retirement Age;
provided, however, that the provisions of Section 4.6 hereof shall
apply in determining the Initial Vesting Date of a Participant who
has accrued Vesting Service during any Plan Year that the Plan is
top-heavy; and provided further that the Initial Vesting Date of a
Participant shall not be earlier than the Effective Date of the
Plan.
(23) "Internal Revenue Code" or "Code" shall mean the Internal Revenue
Code of 1986, as amended from time to time.
(24) "Last Date of Commencement of Service" shall mean:
(a) if the employee's service has not been previously terminated
in accordance with the provisions hereof, the date on which
he first performs an Hour of Service; or
(b) if the employee's service has been previously terminated in
accordance with the provisions hereof, the first day
following his last termination of service on which he
performs an Hour of Service;
provided, however, that the provisions of Section 1.4(A) hereof
shall apply in determining the Last Date of Commencement of
Service of any employee whose service is terminated and who is
reemployed on or after the Effective Date of the Plan and prior to
his incurring a Break in Service.
An Employer may at the time of its initial adoption of the Plan
provide, with respect to all or any specified classification of
its employees, that the Last Date of Commencement of Service of
such employees shall not be earlier than a specified date, which
is later than the otherwise applicable date described above but is
not later than the date as of which the Plan first became
effective with respect to such Employer, and may provide that such
specified date will be different for the purposes of determining
the eligibility to participate in the Plan, the Credited Service
and the Vesting Service of such employees; provided, however, that
the date or dates established to determine the eligibility to
participate in the Plan and the Vesting Service of such employees
shall not be later than the date or dates established for such
purposes under the Superseded Plan, if any, of the Employer.
The Last Date of Commencement of Service of an employee by a
predecessor or acquired business shall not be earlier than the
date of such merger or acquisition unless the Employer provides
that a uniformly applied earlier date or dates will be used for
the purposes of the Plan.
(25) "Leased Employee" shall mean 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.
Contribution 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 leased
employer.
A Leased Employee shall not be considered an employee of the
recipient if:
(a) such employee is covered by a money purchase pension plan
providing:
(1) a nonintegrated employer contribution of at least 10
percent of compensation as defined in Section 415(c)(3)
of the Code but including amounts contributed pursuant
to a salary reduction agreement which are excludable
from the employee's gross income under Section 125,
402(a)(8), 402(h) or 403(b) of the Code,
(2) immediate participation, and
(3) full and immediate vesting;
and
(b) leased employees do not constitute more than 20 percent of
the recipient's nonhighly compensated workforce.
(26) "Normal Retirement Age" shall mean the age of 65 years.
(27) "Normal Retirement Date" shall have the meaning assigned in
Section 2.1 hereof.
(28) "Participant" shall mean:
(a) any active Employee who has satisfied the requirements of
Section 1.2 hereof;
(b) any former Employee who has satisfied the requirements of
Section 1.2 hereof, whose service has not been terminated but
who has subsequently been transferred from his status as an
eligible Employee as described in Section 1.5 hereof; and
(c) any retired or terminated Employee who has vested rights to
benefits under the provisions of the Plan.
(29) "Plan" shall mean the Retirement Plan for Employees of Melamine
Chemicals, Inc., as amended and restated effective as of July,
1989, as set forth in this document and as it may hereafter be
amended from time to time.
(30) "Plan Year" shall mean the calendar, policy or fiscal year on
which the records of the Plan are kept as reported from time to
time by the plan administrator to the Internal Revenue Service.
The Plan Year, unless subsequently changed in accordance with
rules or regulations issued by the Internal Revenue Service or
Department of Labor, shall be the 12-month period beginning July 1
of each calendar year.
(31) "Post Payment Recalculation Date" shall have the meaning assigned
in Section 2.1(D) hereof.
(32) "Qualified Joint and Survivor Annuity" means an annuity that (a)
commences immediately, (b) is payable for the life of the
Participant with a survivor annuity payable for the life of his
spouse which is not less than 50% and is not greater than 100% of
the amount of the annuity which is payable during the joint lives
of the Participant and his spouse and (c) is the actuarial
equivalent of the monthly retirement income payable to the
Participant for life under the provisions of the Plan.
(33) "Qualified Joint and 50% Survivor Annuity Option" shall have the
meaning assigned in Section 3.1 hereof.
(34) "Qualified Preretirement Survivor Annuity" shall mean the minimum
death benefit, if any, described in Section 4.1(D) hereof that may
be payable to the spouse of a Participant who dies prior to his
Annuity Starting Date.
(35) "Required Beginning Date" shall have the meaning assigned in
Section 401(a)(9) of the Code and shall mean:
(a) if the date of birth of the Participant is on or after
July 1, 1917, (i) April 1 of the calendar year that next
follows the calendar year in which he attains or will attain
the age of 70-1/2 years or (ii) April 1, 1990, whichever is
later;
and
(b) if the date of birth of the Participant is prior to July 1,
1917, April 1 of the calendar year that next follows the
calendar year in which he retires or his service is
terminated;
provided, however, that the Required Beginning Date of any
Participant who is a 5-percent owner (within the meaning of
Section 416 of the Code) and of any Participant who had retired or
whose service had been terminated prior to January 1, 1989 shall
not be later than his required beginning date as determined under
the provisions of Section 401(a)(9) of the Code as such section
applied with respect to tax years beginning before January 1,
1989.
(36) "Superseded Plan" shall mean, collectively or distributively, as
the context may indicate, the qualified retirement plan, if any,
that was maintained by an Employer for its eligible employees
prior to the Effective Date of the Plan and that the Plan
represents an amendment and restatement thereof. References to
the Superseded Plan as of any given date shall refer to the
provisions as set forth under the terms of the applicable document
describing such qualified retirement plan as amended and in effect
on such given date prior to the Effective Date of the Plan.
(37) "Supplement" shall mean any supplement that is attached to and
made a part of the Plan and that describes provisions of the Plan
that apply only to employees of an Employer or Employers specified
in such Supplement. The term "Supplement" shall include, but
shall not be limited to, the First Supplement to Retirement Plan
for Employees of Melamine Chemicals, Inc. as amended and restated
effective July 1, 1985, which was attached to and made a part of
the Superseded Plan and which, on and after the Effective Date of
the Plan, shall also be attached to and made a part of the Plan;
provided, however, that, unless in the opinion of the Committee
such a change would be inappropriate due to the context thereof,
any references in said Supplement to sections of the Superseded
Plan shall refer to the corresponding sections of the Plan (even
though the corresponding section in the Plan may not have the same
section number that is specified in the Supplement), and said
Supplement shall be deemed to have been amended effective as of
the Effective Date of the Plan to reflect all applicable changes
in section number references.
(38) "Trust" and "Trust Fund" shall mean the trust fund established
pursuant to the terms of the Trust Agreement.
(39) "Trust Agreement" shall mean the Retirement Trust for Employees of
Melamine Chemicals, Inc., as amended and restated effective as of
July 1, 1985, as set forth in the trust agreement of that title,
and as such trust agreement may be amended from time to time.
This Plan shall be attached to such Trust Agreement as Exhibit A
(in lieu of the Retirement Plan for Employees of Melamine
Chemicals, Inc. as amended and restated effective July 1, 1985).
(40) "Trustee" shall mean the corporate trustee or trustees or the
individual trustee or trustees, as the case may be, appointed from
time to time pursuant to the provisions of the Trust Agreement to
administer the Trust Fund maintained for the purposes of the Plan.
(41) "Vested Percentage" shall mean the percentage specified in the
schedule below in which the Participant has a nonforfeitable right
to his Accrued Benefit, based upon his number of years (ignoring
fractions) of Vesting Service as of the date that such percentage
is being determined.
Years of
Vesting Service Vested Percentage
less than 5 years 0%
5 or more years 100%
In the event of a Change of Control, each Participant's Vested
Percentage shall be 100%, regardless of the number of the
Participant's years of Vesting Service.
The Vested Percentage of a Participant who has accrued Vesting
Service during any Plan Year in which the Plan is "a top-heavy
plan" shall be subject to the provisions of Section 4.6 hereof.
If a Participant has attained his Normal retirement Age, his
vested Percentage shall be 100% regardless of his years of Vesting
Service.
(42) "Vesting Service" shall mean the total period of elapsed time,
computed in years and days, during the period beginning on the
employee's Last Date of Commencement of Service and ending on his
date of retirement or termination of service, or, where
applicable, ending on such other date as is specified hereunder;
provided, however, that:
(a) the first 12 months of any continuous absence during such
period will be included in the employee's Vesting Service but
the portion, if any, of such absence that is in excess of 12
months will be excluded from his Vesting Service, except that
any period of such absence that is included in his Credited
Service will also be included in his Vesting Service;
(b) the provisions of Section 1.4 hereof shall apply in the case
of an employee who is reemployed with a reinstatement of
Vesting Service accrued prior to his Last Date of
Commencement of Service, the provisions of Section 1.5 hereof
shall apply in the case of an employee who is transferred to
or from his status as an eligible Employee and the provisions
of Section 1.6 hereof shall apply in the case of an employee
who has previously been employed as a leased employee;
and
(c) with respect to any Participant in the Plan whose Last Date
of Commencement of Service is prior to the Effective Date of
the Plan and who was a participant in the Superseded Plan as
in effect on the day immediately preceding the Effective Date
of the Plan, the Vesting Service that he has accrued under
the Plan as of the Effective Date of the Plan shall not be
less than the service that he had accrued for the purposes of
determining his nonforfeitable right as of such date to the
portion of his accrued benefit attributable to employer
contributions under the terms of the Superseded Plan as in
effect on the day immediately preceding the Effective Date of
the Plan.
Prior to July 1, 1994, Vesting Service shall be determined
according to the terms of the Superseded Plan. On or after July
1, 1994 a Participant's Vesting Service shall not be less than the
Vesting Service as of June 30, 1994 determined in accordance with
the Superseded Plan.
(B) The terms "actuarially equivalent," "equivalent actuarial value,"
"actuarial equivalent" and similar terms as used herein mean equality in
value of the aggregate amounts expected to be received under different forms
of payment based upon the same mortality and interest rate assumptions,
which shall be determined as follows.
(1) Unless specifically provided otherwise under the provisions
hereof, the mortality and interest rate assumptions used in
computing benefits payable on behalf of a Participant upon his
retirement or termination of employment and upon the exercise of
optional forms of retirement income under the Plan shall be as
follows:
(a) the mortality assumptions shall be based upon the "Unisex
Pension Mortality Table Projected to 1984" (UP-1984 Mortality
Table); and
(b) the interest rate assumption shall be 6%;
provided, however, that for the purposes of determining the
maximum retirement income permitted under the provisions of
Section 415 of the Code, the mortality and interest rate
assumptions used to determine actuarial equivalence for early
retirement shall be the assumptions that would produce the early
retirement adjustment factors that apply under the provisions
hereof in the event of early retirement.
(2) Any provisions of Subsection (1) above to the contrary not-
withstanding, if payment to any Participant (or his Beneficiary)
is an actuarially equivalent lump-sum distribution, the amount of
payment shall be equal to the actuarial equivalent of the Partic-
ipant's "accrued benefit" (within the meaning of Section 411(a)(7)
of the Code and regulations issued with respect thereto)
commencing at his Normal Retirement Age or the date of termination
of his service, whichever is later. Such actuarially equivalent
distribution determined under this Subsection (2) shall be
determined using the mortality assumptions specified in Subsection
(1)(a) above and the interest rate that was being used by the
Pension Benefit Guaranty Corporation for purposes of determining
the present value of a lump-sum distribution on plan termination
(as determined under Sections 411(a)(11) and 417 of the Code and
regulations issued pursuant thereto) as of the first day of the
Plan Year during which the distribution is made or commences.
(C) The term "single-sum value" as used herein shall mean the actu-
arially computed present value, as of a given date, of the retirement income
payments for which it is determined based upon the interest and mortality
assumptions specified in the provisions of the Plan. Unless specifically
provided otherwise under the provisions hereof, the single-sum value as of a
given date of a Participant's accrued benefit that is scheduled to commence
at a later date shall be discounted for both interest and mortality from
such scheduled commencement date to such given date.
(D) The terms "herein", "hereof", "hereunder" and similar terms refer
to this document, including the Trust Agreement of which this document is a
part, unless otherwise qualified by the context.
(E) The pronouns "he", "him" and "his" used in the Plan shall also
refer to similar pronouns of the feminine gender unless otherwise qualified
by the context.
1.2 - PARTICIPATION
(A) Continuation of Participation of Superseded Plan Participants and
Retroactive Amendments to Superseded Plan: Each person who was a
participant in the Superseded Plan, if any, of the Employer as of the day
immediately preceding the Effective Date of the Plan will become a
Participant in the Plan on the Effective Date of the Plan; provided,
however, that any such Participant who had retired or whose service had been
terminated prior to the Effective Date of the Plan and who is not an active
employee of an Employer or in the employment of a Designated
Nonparticipating Employer or on a leave of absence granted by an Employer or
Designated Nonparticipating Employer as of the Effective Date of the Plan
shall be entitled on and after the Effective Date of the Plan to only those
benefits, if any, to which he is entitled on and after the Effective Date of
the Plan under the provisions of the Superseded Plan, and he and his
Beneficiaries shall not be entitled to any additional benefits under the
Plan as set forth herein unless he reenters the service of an Employer after
the Effective Date of the Plan or unless the Plan is amended on or after the
Effective Date of the Plan specifically to provide otherwise; provided
further, however, that:
(1) the provisions of the Plan governing the availability and payment
of optional forms of settlement shall be applied with respect to
such persons in the same manner as though the Superseded Plan had
been amended to incorporate similar provisions, and those forms of
payment that are available under the provisions of the Plan shall
be the only forms of payment that are available on and after July
1, 1989 to such persons and their beneficiaries, except, with
respect to such benefits accrued prior to the Effective Date of
the Plan, (i) if a form of payment could be elected under the
provisions of the Superseded Plan at the sole discretion of the
participant or his beneficiary, such form of payment shall be
available to him on and after the Effective Date of the Plan and
(ii) if a form of payment had been duly elected and duly approved
and is in effect on June 30, 1989 under the provisions of the
Superseded Plan, such elected form of payment will continue in
effect unless it is subsequently revoked or changed on or after
July 1, 1989 (a change of beneficiaries under the election will
not be considered to be a revocation or change in such election so
long as the change in beneficiaries does not alter, directly or
indirectly, the period over which distributions are to be made
under such elected form of payment) and provided that such form of
payment complies with the provisions of Section 401(a)(9) of the
Code and regulations and rulings issued with respect thereto;
(2) in determining the benefits accrued by and payable to a person who
was a participant in the Superseded Plan prior to July 1, 1989,
the provisions of the Plan that apply to the maximum retirement
income permitted under Section 415 of the Code shall be applied
retroactively to the first day of the limitation year beginning in
1987, and the Superseded Plan is amended effective as of the first
day of the limitation year beginning in 1987 to incorporate provi-
sions that will produce the same result;
(3) in determining the eligibility of an employee to participate in
the Superseded Plan on or after July 1, 1988 and prior to July 1,
1989, the provisions of the Plan that apply to the eligibility of
employees hired on or after age 60 years to participate in the
Plan shall be applied retroactively to July 1, 1988, with respect
to employees who have completed at least one Hour of Service with
the Employer after such date, and the Superseded Plan is amended
effective as of July 1, 1988 to incorporate provisions that will
produce the same result;
(4) in determining the benefit accrued after his Normal Retirement
Date and prior to July 1, 1989 by a participant in the Superseded
Plan who completed at least one Hour of Service with the Employer
which was after both July 1, 1988 and his Normal Retirement Date,
the provisions of the Plan that take into account, in the
calculation of the accrued benefit of a Participant who continues
in the employment of the Employer after his Normal Retirement
Date, his Compensation received and his Credited Service accrued
after his Normal Retirement Date shall be applied retroactively to
July 1, 1988, and the Superseded Plan is amended effective as of
July 1, 1988 to incorporate provisions that will recognize
compensation received and service accrued after the participant's
Normal Retirement Date in a similar manner to determine the
"Credited Service," and "Final Average Monthly Compensation" that
are applied in determining his benefit accrued prior to July 1,
1989 under the benefit formulas of the Superseded Plan, but the
benefit formulas of the Superseded Plan, including any
restrictions or maximums on his Final Average Monthly Compensation
and Credited Service (or their corresponding terms under the
Superseded Plan) that were imposed under the Superseded Plan for a
reason other than the attainment of his Normal Retirement Date,
shall apply in determining such benefit accrued prior to
January 1, 1989;
and
(5) if the benefits that are payable on behalf of any such Participant
under the provisions of the Superseded Plan require modification
to permit benefits to be paid to specified individuals other than
the Participant in order to comply with any qualified domestic
relations order under Section 414(p) of the Code, or to comply
with any other provisions of said Code, the terms and benefits of
the Superseded Plan will be considered to have been modified with
respect to the Participant affected to the extent necessary to
comply with such provisions of said Code.
(B) Participation of Other Employees: Each Employee who does not
become a Participant in accordance with the provisions of Section 1.2(A)
above and who is in the service of the Employer on or after the Effective
Date of the Plan will become a Participant in the Plan on the completion of
both six months of employment and at least 1,000 hours of service during an
eligibility computation period.
(C) Participation Following Reemployment: The above provisions of
this Section 1.2 describe the date on which an eligible Employee will
initially become a Participant in the Plan. In the event that an Employee's
service is terminated and he subsequently reenters the service of the
Employer, the date on or after the date of his reentry as of which he will
become a Participant in the Plan is subject to the provisions of Section 1.4
hereof.
1.3 - LEAVE OF ABSENCE AND TERMINATION OF SERVICE
Any absence from the active service of the Employer by reason of an
approved absence granted by the Employer because of accident, illness,
layoff with the right of recall or military service, or for any other reason
on the basis of a uniform policy applied by the Employer without
discrimination, will be considered a leave of absence for the purposes of
the Plan and will not terminate an employee's service provided he returns to
the active service of the Employer at or prior to the expiration of his
leave or, if not specified therein, within the period of time which accords
with the Employer's policy with respect to permitted absences.
Absence from the active service of the Employer because of compulsory
engagement in military service will be considered a leave of absence granted
by the Employer and will not terminate the service of an employee if he
returns to the active service of the Employer within the period of time
during which he has reemployment rights under any applicable Federal law or
within 60 days from and after discharge or separation from such compulsory
engagement if no Federal law is applicable. No provision of this section or
in the Plan shall require reemployment of any employee whose active service
with the Employer was terminated by reason of military service.
If the employee does not return to the active service of the Employer at
or prior to the expiration of his leave of absence as above defined, his
service will be considered terminated as of the earliest to occur of (i) the
date on which his leave of absence expired, (ii) the first anniversary of
the date on which his leave of absence began or (iii) the date of his
resignation, quit, discharge or death; provided, however, that if any such
employee, who is on a leave of absence and who was a Participant in the Plan
or Superseded Plan on the date on which his leave began, is prevented from
his timely return to the active service of the Employer because of his total
and permanent disability prior to his Normal Retirement Date or his death,
he shall, nevertheless, be entitled, if he meets the requirements necessary
to qualify therefor, to any disability benefit as provided in Section 2.3
hereof or to any death benefit as provided in Section 2.4 hereof, whichever
is applicable, as though he returned to active service immediately preceding
the date of his total and permanent disability or his death.
If an employee has an absence from the service of the Employer which
begins on or after July 1, 1985 and is due to the pregnancy of the employee,
the birth of a child of the employee or the placement of a child with the
employee in connection with the adoption of such child by such employee or
is for the purpose of caring for such child for a period beginning
immediately following such birth or placement, the rights of such employee
under the Plan shall not be less favorable to the employee than those rights
that he would have had if he had been granted a one-year leave of absence
beginning on the date on which his absence began. If the service of such
employee is terminated during such absence, the date of termination of such
employee for purposes of determining his accrued Vesting Service shall be
deemed to be the first anniversary of the date on which such absence began
and the rights of such employee under Section 1.4 hereof to resume
participation in the Plan and to a reinstatement of his previous Credited
Service and Vesting Service upon his reemployment shall not be less
favorable to the employee than those corresponding rights that he would have
under such section if the date of termination of his service had been the
second anniversary of the date on which his absence began and if the length
of such employee's Break in Service were based on that termination date.
In the event that an employee's service with the Employer is interrupted
because of any absence from the active service of the Employer which is not
deemed a leave of absence as defined above, his service will be considered
terminated as of the date of his retirement, quit, discharge, resignation or
death or, if earlier, as of the first anniversary of the date of such inter-
ruption for any other reason.
Transfers of an employee's service among the Employers and Designated
Nonparticipating Employers shall not be deemed interruptions of his service
and shall not constitute a termination of service for the purposes of the
Plan.
1.4 - REEMPLOYMENT
(A) Reemployment Prior to Incurring a Break in Service: If any
employee, whose service is terminated on or after the Effective Date of the
Plan, reenters the active service of the Employer and performs an Hour of
Service within the 12-month period immediately following the date of
termination of his service, he shall not incur a Break in Service, and his
Last Date of Commencement of Service shall be determined as though his
service had not previously been terminated. On and after such reentry, any
such employee shall be treated under the Plan as though he had been on a
leave of absence granted by the Employer during the period between such date
that his service was previously terminated and such date of reentry.
However, if any such employee was entitled to a benefit under Section 2.1,
2.2, 2.3 or 2.4(A) hereof prior to his reentry, his rights under the Plan on
and after his date of reentry shall be determined under Section 1.4(B),
1.4(C), 1.4(D) or 1.4(E) below, whichever is applicable, except that his
reinstated Vesting Service shall not be less than that determined under the
above provisions of this Section 1.4(A).
(B) Reemployment of Vested Terminated Participant Prior to
Commencement of Payments: If a Participant's service is terminated on or
after his Initial Vesting Date for a reason other than his normal
retirement, early retirement or disability retirement as described in
Sections 2.1, 2.2 and 2.3 hereof, respectively, and he subsequently reenters
the active service of the Employer prior to his Annuity Starting Date, he
will become a Participant upon the date of such reentry and will be entitled
to a reinstatement of the Vesting Service and Credited Service that he had
accrued on the date of termination of his service in lieu of the benefits to
which he was entitled under the Plan prior to his reentry.
(C) Reemployment of Retired or Vested Terminated
Participant After Commencement of Payments:
(1) If a Participant, whose service is terminated on or after the
Effective Date of the Plan and who has received a portion but not
all of the retirement income to which he is entitled under the
provisions of Section 2.1, 2.2 or 2.4(A)(1) hereof, subsequently
reenters the active service of the Employer, he shall become a
Participant upon the date of such reentry and the following
provisions shall apply.
(a) If the date of his reentry is prior to his Required Beginning
Date, subject to the provisions of Sections 1.4(C)(2) and
2.1(D) hereof, no retirement income payments shall be made
during the period of such reemployment. Upon the subsequent
retirement or termination of service of such a Participant,
his benefit under the Plan shall be determined in the same
manner as that of a vested terminated Participant whose
retirement income payments have not commenced and who
subsequently reenters the service of the Employer as
described in Section 1.4(B) above, except that the benefit
payable under the Plan to or on behalf of such Participant
upon his subsequent retirement or termination of service
shall be reduced on an actuarially equivalent basis by an
amount equal to the sum of the retirement income and other
benefit payments that he received under the provisions of
Section 2.1, 2.2, 2.4(A) or 3.1 hereof, whichever is
applicable, prior to such reentry into the service of the
Employer; provided, however, that the monthly retirement
income payable to any such Participant on and after the date
of his subsequent retirement shall not be less than the
actuarial equivalent, determined as of the date of his
subsequent retirement, of the retirement income that would
have been payable on and after such date if he had not
reentered the service of the Employer but had continued to
receive his retirement income payments during the period of
his reemployment; and provided further, however, if any such
Participant reenters the active service of the Employer on or
after his Normal Retirement Date, the monthly retirement
income payable on behalf of such Participant in accordance
with the provisions of Section 2.1 upon his subsequent
retirement shall not be less than the amount that can be
provided on an actuarially equivalent basis by the single-sum
value required, as of such date of reentry, to provide the
retirement income that otherwise would have been payable on
his behalf after such date of reentry, accumulated with
interest from such date of reentry to the date of his
subsequent retirement or termination of service.
(b) If the date of his reentry is on or after his Required
Beginning Date, he shall continue to receive the benefits to
which he is entitled on and after such date, and any future
benefits that he accrues after his Required Beginning Date
shall be determined in accordance with the provisions of
Section 411(b)(1)(H) of the Code and regulations issued with
respect thereto in a manner similar to that described in
Section 2.1(D) hereof.
(2) In lieu of having his retirement income payments discontinued and
his benefit payable upon his subsequent retirement or termination
determined in accordance with the provisions of Section 1.4(C)(1)
above, any such Participant, whose Vested Percentage at the date
of his retirement or termination of service was 100%, who is
receiving retirement income payments under the Plan and who
reenters the active service of the Employer on less than a
full-time basis, may upon such reentry elect in writing filed with
the Committee to continue to receive his retirement income
payments after his reemployment in the same manner as though he
had not reentered the service of the Employer. Any such
Participant whose retirement income payments are continued in
accordance with the provisions above shall be treated as if he
then first entered the service of the Employer except that:
(a) upon the date after his reentry that he satisfies the
requirements to become a Participant in the Plan, he shall
become a Participant, retroactively, as of the date of his
reentry; provided, however, if the period of his severance
from service is less than one year, he shall become a
Participant immediately on the date of his reentry;
(b) upon his becoming a Participant, he shall be entitled to a
reinstatement of the Vesting Service that he had accrued as
of the date of his previous retirement or termination of
service; and
(c) he shall not accrue any additional Credited Service during
any "reemployment benefit accrual computation period" that he
is credited with less than 1,000 Hours of Service. The
"reemployment benefit accrual computation period" of any such
Participant shall mean the 12-month period beginning on the
date of his reentry and on each anniversary of such date.
The benefit which any such Participant accrues after the date of his
reentry, which is payable to such Participant or his Beneficiary upon his
subsequent retirement or termination of service, shall be limited to the
amount that can be provided by the monthly retirement income, if any, that
he accrues subsequent to such date of reentry based upon his Credited
Service and Final Average Monthly Compensation determined in the same manner
as though he then first entered the service of the Employer on the date on
or after his reentry that he commences to accrue additional Credited
Service; provided, however, that such income that such a Participant accrues
subsequent to his date of reentry shall not cause the actuarial equivalent
of the total income payable to the Participant or his Beneficiary under the
Plan to exceed the amount that would have been payable if he had not elected
to continue to receive his retirement income after his reemployment. The
retirement income that is continued during the period of reemployment of any
such Participant who is reemployed on less than a full-time basis shall be
discontinued if the Participant is employed on a full-time basis at any time
after his reentry. If the retirement income of any such Participant is
subsequently discontinued, his benefit under the Plan shall be determined
under this Section 1.4(C) (and not under Section 1.4(A) above) as though his
service had been terminated on the date that his retirement income was
discontinued and as though he had reentered the service of the Employer
immediately thereafter.
(D) Reemployment After Disability Retirement: If a Participant, who
has retired on or after the Effective Date of the Plan under the provisions
of Section 2.3 and who has not prior to his reentry received the full
actuarially equivalent value of the disability retirement income to which he
was entitled under Section 2.3 hereof, recovers from disability and reenters
the active service of the Employer within one year after the date of his
recovery from disability by accepting reemployment offered by the Employer
within 30 days after such offer, his service will be deemed to have been
continuous and he will receive Credited Service and Vesting Service under
the Plan for that period during which he was considered totally and
permanently disabled as provided herein.
(E) Reemployment After Full Settlement: If a Participant's service
has been terminated on or after the Effective Date of the Plan for any
reason and he was entitled, upon such termination, to a monthly retirement
income under the provisions of Section 2.1, 2.2, 2.3 or 2.4(A)(1) hereof and
he reenters the active service of the Employer after the full actuarial
equivalent value of such retirement income has been paid on his behalf, he
shall become a Participant on the date of his reentry and shall be entitled
to a reinstatement of the Vesting Service and Credited Service that he had
accrued as of such previous date of termination, but the benefit payable
under the Plan to or on behalf of such Participant upon his subsequent
retirement or termination of service shall be reduced by the actuarially
equivalent value of such retirement income that has been previously paid on
his behalf.
(F) Reemployment of Other Employees: Any other former employee who is
not included under the provisions of Section 1.4(A), 1.4(B), 1.4(C), 1.4(D)
or 1.4(E) above and who subsequently reenters the active service of the
Employer following his termination of service will be treated as though he
then first entered the service of the Employer; provided, however, that:
(1) with respect to any such employee whose service is terminated on
or after the Effective Date of the Plan and who incurred a Break
in Service prior to the date of his reentry, the following special
provisions shall apply:
(a) if the number of years and days included in his Break in
Service is less than either five years or the number of years
and days of Vesting Service that he had accrued as of the
date of termination of his service, such employee shall be
entitled, upon the date as of which he becomes a Participant
in the Plan, to a reinstatement of the Credited Service and
Vesting Service that he had accrued as of such previous date
of termination of service;
(b) if such employee was a Participant in the Plan as of the date
of termination of his service and he is entitled to a
reinstatement of his previous Credited Service and Vesting
Service under (a) above, he shall be eligible to become a
Participant in the Plan as of the date of his reentry; and
(c) if such employee was not a Participant in the Plan as of the
date of termination of his service but he is entitled to a
reinstatement of his previous Credited Service and Vesting
Service under (a) above, the date on which he will be
eligible to become a Participant in the Plan following his
date of reentry shall not be later than the date on which he
would have been eligible to become a Participant if he had
been on a leave of absence during the period between the date
of his previous termination of service and the date of his
reentry; and
(2) for purposes of determining Vesting Service and Credited Service
under the Plan following such date of reemployment, the following
special provisions shall apply:
(a) if the Break in Service of any such employee whose service is
terminated on or after the Effective Date of the Plan is for
a period of less than five years or if the number of years
and days included in the Break in Service is less than the
number of years and days of Vesting Service that he had
accrued as of the date of termination of his service, such
employee shall be entitled, upon the date as of which he
becomes a Participant in the Plan, to a reinstatement of the
Credited Service and Vesting Service that he had accrued as
of such previous date of termination of service; and
(b) with respect to any such employee whose service was ter-
minated prior to the Effective Date of the Plan (while the
Superseded Plan was in effect with respect to the Employer by
which he was employed at the date of termination of his
service) and who had reentered the active service of the
Employer prior to the Effective Date of the Plan or who
reenters the active service of the Employer on or after the
Effective Date of the Plan, his rights under the Plan to
reinstatement of the period of his service prior to such date
of reentry into the service of the Employer for purposes of
determining his Vesting Service and Credited Service shall be
determined under the applicable provisions of the Superseded
Plan as in effect on the date of his prior termination of
service; provided, however, if any such employee, whose ser-
vice was terminated prior to the first day of the 1985 plan
year of the applicable Superseded Plan and whose next
succeeding date of reentry into the service of the Employer
is on or after the Effective Date of the Plan, would have
been entitled to a reinstatement of the service used to
determine his nonforfeitable right to benefits under the
provisions of the Superseded Plan as of his previous
termination of service if he had reentered the service of the
Employer on the first day of such applicable 1985 plan year,
the rights upon such reentry of any such employee shall not
be less favorable to the employee than the corresponding
rights of an employee whose service is terminated on or after
the Effective Date of the Plan as described in (a) above.
(G) Reemployment of Employee Who Does Not Qualify as an "Employee":
The rights of any terminated employee of the Employer who was not an
Employee as defined herein on the date of termination of his service and who
is reemployed in a status in which he qualifies as an Employee as defined
herein shall be determined in accordance with the provisions of the Plan in
the same manner as though such employee had been an Employee as defined
herein on the date of termination of his service (but his benefits, if any,
under the Plan shall be determined ignoring such one day of assumed
employment as an Employee as defined herein). The rights of any terminated
employee of an Employer who is reemployed by the Employer in a status in
which he does not qualify as an Employee as defined herein shall be
determined in accordance with the provisions of the Plan in the same manner
as though such employee had been reemployed by the Employer as an Employee
as defined herein and had immediately thereafter been transferred from his
status as an Employee as defined herein (but his benefits, if any, under the
Plan shall be determined ignoring such one day of assumed employment as an
Employee as defined herein).
(H) Reemployment of Employee of Designated Nonparticipating Employer:
The rights of any terminated employee of a Designated Nonparticipating
Employer who is reemployed by an Employer as an Employee as defined herein
shall be determined in accordance with the provisions of the Plan in the
same manner as though such employee had been an Employee as defined herein
on the date of termination of his service (but his benefits, if any, under
the Plan shall be determined ignoring such one day of assumed employment as
an Employee as defined herein). The rights of any terminated Employee of an
Employer who is reemployed by a Designated Nonparticipating Employer shall
be determined in accordance with the provisions of the Plan in the same
manner as though such Employee had been reemployed by the Employer as an Em-
ployee as defined herein and had immediately thereafter been transferred to
such Designated Nonparticipating Employer (but his benefits, if any, under
the Plan shall be determined ignoring such one day of assumed employment as
an Employee as defined herein).
(I) Employment with Former Employer or Former Designated
Nonparticipating Employer: In determining the rights under the Plan of any
employee who was previously employed (either before, on or after the
Effective Date of the Plan) by an employer, which was formerly an Employer
participating in the Plan or Superseded Plan or was formerly a Designated
Nonparticipating Employer but which is not currently an Employer or
Designated Nonparticipating Employer, the period of such employee's
employment with such employer while it was an Employer or Designated
Nonparticipating Employer, as the case may be, shall be recognized in
determining the Vesting Service of such employee in the same manner as
though such employment during such period had been with a current Employer
or Designated Nonparticipating Employer, but any period of employment with
such employer after the date that it ceased to be an Employer or Designated
Nonparticipating Employer shall not be recognized and his service shall be
deemed to have been terminated during such period that such employer is not
an Employer or Designated Nonparticipating Employer.
1.5 - TRANSFER TO OR FROM STATUS AS AN ELIGIBLE EMPLOYEE
An employee will be deemed to be transferred from his status as an
eligible Employee in the event that he remains in the service of the
Employer but has a change in his employee status so that he no longer quali-
fies as an Employee as defined herein or in the event that he is transferred
to and becomes an employee of a Designated Nonparticipating Employer.
Conversely, an employee of an Employer who is not an Employee as defined
herein will be deemed to be transferred to the status of an eligible
Employee in the event that he remains in the service of the Employers but
has a change in his employee status so that he becomes an Employee as
defined herein or, if he was an employee of a Designated Nonparticipating
Employer, in the event that he is transferred to an Employer from such
Designated Nonparticipating Employer and becomes an Employee as defined
herein. The service of such a person described above shall not be
considered to be interrupted by reason of any such transfer, and service
with the Designated Nonparticipating Employer or with the Employer while not
qualified as an Employee as defined herein shall be determined in the same
manner as service with the Employer while qualified as an Employee as
defined herein. Any provisions of Section 2.1, 2.2, 2.3 or 2.4 hereof to
the contrary notwithstanding, the benefits of any such Participant who has
been transferred to or from the status as an eligible Employee on or after
the date that the Plan or Superseded Plan first became effective with
respect to his Employer shall be determined in accordance with the following
provisions of this Section 1.5. With respect to any employee who had been
transferred to or from the status as an eligible Employee prior to the date
that the Plan or Superseded Plan first became effective with respect to his
Employer, his employee status as of his first day of employment on or after
such date that the Plan or Superseded Plan first became effective with
respect to his Employer shall be deemed for the purposes of the Plan
(subject to the provisions of Section 1.5(C)(1) below) to have been his
employee status during the entire period of his prior service, except that
he shall not accrue any Credited Service under the Plan for any such period
of service that he was in the service of a Designated Nonparticipating
Employer and not in the service of the Employer and he shall not accrue any
Credited Service during such period prior to the Effective Date of the Plan
that would have been excluded from his Credited Service under the provisions
of the Superseded Plan. Upon transfer of employment of a Participant to or
from a Designated Nonparticipating Employer assets shall be transferred in
an amount actuarially equivalent to the Participant's Accrued Benefit on the
date of transfer. If an annuity was purchased for any Participant, the
value of such annuity shall be considered assets of the plan, and any
benefit payable under the Plan shall be reduced by such annuity. If, after
transfer of employment to the Employer from a Designated Nonparticipating
Employer a Participant terminates employment with the Employer resulting in
the forfeiture of any benefits, a credit shall be given to each previous
employer. The amount of such credit shall be a percentage of the forfeiture
determined by dividing the portion of the Participant's Accrued Benefit (as
of the date of termination) that is attributable to employment with each
previous employer by the total Accrued Benefit. The portion of the
Participant's Accrued Benefit attributable to employment with a previous
employer is described in Section 1.5(B) below. In no event shall a
Participant's Vested Percentage as to his Accrued Benefit be decreased by
transferring to or from a Designated Nonparticipating Employer.
(A) Eligibility for Benefits: In determining the eligibility of such
an employee to whom the provisions of this Section 1.5 are applicable for
participation in the Plan and in determining his eligibility for the
benefits provided under the Plan, his Vesting Service and Hours of Service
shall be determined in the same manner as though his service with the
Designated Nonparticipating Employers and with the Employers while not
qualified as an Employee as defined herein had been accrued with the
Employers while qualified as an Employee as defined herein. Any such
employee who is transferred to the status of an Employee as defined herein
shall become a Participant in the Plan on the date that he becomes an
Employee as defined herein if he has otherwise satisfied the requirements to
become a Participant in the Plan as described in Section 1.2 hereof prior to
such date that he becomes an Employee as defined herein.
(B) Computation of Benefits: A Participant to whom the provisions of
this Section 1.5 are applicable shall be entitled upon his retirement or
termination of service (or his Beneficiary shall be entitled in the event
his service is terminated by reason of his death), if he meets all
requirements necessary to qualify for a benefit under the provisions of
Section 2.1, 2.2, 2.3 or 2.4 hereof or under the provisions of any
applicable Supplement hereto, as the case may be, to a benefit payable in
accordance with the provisions of Section 2.1, 2.2, 2.3 or 2.4 hereof or in
accordance with the provisions of any applicable Supplement hereto, as the
case may be, but the amount of the monthly retirement income that is payable
on his behalf under the Plan shall, subject to the provisions of Section
1.5(C) below, be equal to the sum of:
(1) the monthly retirement income payable on behalf of such
Participant under the provisions of Section 2.1, 2.2, 2.3 or 2.4
hereof or under the provisions of any Supplement hereto, as the
case may be, using the Participant's Credited Service which he
accrued while in the service of the Employers hereunder while
qualified as an Employee as defined herein;
plus
(2) the monthly retirement income payable on behalf of such
Participant computed using (i) the Credited Service which he
accrued while in the service of the Designated Nonparticipating
Employer, (ii) the retirement benefit formula of such prior plan
as in effect on the date that the employee's service with the
Designated Nonparticipating Employer terminated and (iii) the
Participant's Final Average Monthly Compensation as determined
under the terms of this plan.
(C) Special Provisions Applicable to Benefits: The monthly income
computed under this Section 1.5 shall be subject to the following:
(1) there shall be no duplication of service in computing benefits
under the Plan and under any other qualified pension or annuity
plan to which any Employer or Designated Nonparticipating Employer
makes contributions on behalf of its employees who are not Em-
ployees as defined herein, and, if service accrued while qualified
as an Employee as defined herein is used in determining the
accrued benefit of the Participant under any such other qualified
pension or annuity plan, then the portion of the benefit payable
under the Plan based on such duplicated service shall be reduced
(but not so as to produce a negative amount) by the actuarially
equivalent amount of the benefit payable under such other
qualified pension or annuity plan based on such duplicated
service;
(2) all compensation that the Participant received from the Designated
Nonparticipating Employers and from the Employers while not
qualified as an Employee as defined herein shall be treated in
determining his Final Average Monthly Compensation in the same
manner as though such compensation had been received from the
Employer while qualified as an Employee as defined herein;
(D) Payments From One Trust Fund: In lieu of the payment of
retirement income or other benefits to such a Participant from the trust
fund of more than one qualified pension plan of the Designated Nonpar-
ticipating Employers and the Employers, the administrators of the pension
plans may, by mutual agreement, provide for payment of the entire monthly
income or other benefit from one trust fund with appropriate reimbursement
to the trustee of the trust fund from which the benefits are to be paid by
transfer of funds equal to the single-sum value of the benefits payable
under the other plan (or plans) to the trust fund from which benefits
actually will be paid.
1.6 - PARTICIPATION AND BENEFITS FOR FORMER LEASED EMPLOYEES
A Leased Employee of an Employer or Designated Nonparticipating Employer
shall not be deemed for any purposes of the Plan to be an Employee of such
Employer or Designated Nonparticipating Employer. However, in the event
that any such former Leased Employee qualifies as an Employee as defined
herein on or after the Effective Date of the Plan, unless the Plan is other-
wise excluded by applicable regulations from the requirements of Section
414(n) of the Code, the total period that he provided services to the
Employer or Designated Nonparticipating Employer as a Leased Employee shall
be treated under the Plan in determining his nonforfeitable right to his
Accrued Benefit and his eligibility to become a Participant in the Plan in
the manner described in Section 1.5(A) hereof as though he had been an
Employee of a Designated Nonparticipating Employer during such period of
service (but such service shall not be included in the service that is used
to calculate any benefits that he accrues under the Plan).
1.7 - RIGHTS OF OTHER EMPLOYERS TO PARTICIPATE
Any corporation, association, joint venture, proprietorship, partnership
or other business organization may, in the future, adopt the Plan on behalf
of all or certain of its Employees by formal action on its part in the man-
ner described in Section 6.7 hereof provided that the Company, by formal
action on its part in the manner described in Section 6.7 hereof, and the
Committee both approve such participation.
The administrative powers and control of the Company, as provided in the
Plan, shall not be deemed diminished under the Plan by reason of the
participation of any other Employers in the Plan, and such administrative
powers and control specifically granted herein to the Company with respect
to the appointment of the Committee, amendment of the Plan and other matters
shall apply only with respect to the Company.
The Plan is a single plan with respect to all Employers unless the
Company, by formal action on its part in the manner described in Section 6.7
hereof, specifically provides that the Plan shall be a separate plan with
respect to any Employer or to any division of any Employer or with respect
to any group of Employers and/or divisions. In the event that the Plan does
not represent a single plan with respect to all divisions of any Employer,
the division or divisions with respect to which the Plan represents a
separate plan shall be considered for the purposes of this section and
treated under the Plan as one Employer and its other division or divisions
shall be considered for the purposes of this section and treated under the
Plan as a separate Employer or, if applicable, as separate Employers.
The contributions of any Employer that is a member of a group of
Employers with respect to which the Plan represents a single plan shall be
available to provide benefits on behalf of any Participants who are em-
ployees of any other Employers that are members of such group but shall not
be available to provide benefits on behalf of any Participants who are
employees of any Employers that are not members of such group. The
contributions of any Employer with respect to which the Plan represents a
single plan for only that Employer shall be available to provide benefits on
behalf of Participants who are its employees but shall not be available to
provide benefits on behalf of Participants who are employees of any other
Employers.
Any Employer may withdraw from the Plan at any time by formal action on
its part, in the manner described in Section 6.7 hereof, specifying its
determination to withdraw. Any such withdrawing Employer shall furnish the
Committee and the Trustee with evidence of the formal action of its determi-
nation to withdraw. Any such withdrawal may be accompanied by such modifi-
cations to the Plan as such Employer shall deem proper to continue a retire-
ment plan for its Employees separate and distinct from the retirement plan
herein set forth. Withdrawal from the Plan by any Employer shall not affect
the continued operation of the Plan with respect to the other Employers;
provided, however, in the event of the withdrawal of an Employer that is a
member of a group of Employers with respect to which the Plan represents a
single plan and in the event that provision is made for the continuation of
a retirement plan for its Employees separate and distinct from the
retirement plan herein set forth, the share, if any, of the assets of the
Trust Fund allocable to such group of Employers that is transferred on
behalf of such withdrawing Employer to such other retirement plan shall be
equal to the assets, if any, that would have been allocated on behalf of
the employees of such withdrawing Employer under the provisions of Section
4.5 hereof if such withdrawing Employer had terminated its participation in
the Plan on the date of such withdrawal; provided, however, that the Company
may, in its absolute discretion, direct that an additional amount of assets
be transferred on behalf of such withdrawing Employer to such other
retirement plan provided that the transfer of such additional amount of
assets would not lower the amount of the distributions that would be made on
behalf of the Participants who are employees of the other Employers that are
members of such group of Employers with respect to which the Plan represents
a single plan if the Plan were terminated as of the effective date of such
transfer with respect to all of the Employers that are members of such group
of Employers.
The Company, by formal action on its part in the manner described in
Section 6.7 hereof, may in its absolute discretion terminate any Employer's
participation in the Plan at any time, and the provisions of the Plan shall
be applied with respect to such Employer in the same manner as though it had
voluntarily withdrawn as a participating Employer.
SECTION 2
NORMAL AMOUNT AND PAYMENT OF RETIREMENT INCOME
2.1 - NORMAL RETIREMENT AND RETIREMENT INCOME
Normal retirement under the Plan is retirement from the service of the
Employer on or after the date that the Participant attains his Normal
Retirement Age. No provision of this section or the Plan shall require the
retirement of a Participant upon his attainment of his Normal Retirement
Age, but actual retirement shall be governed by the policy of the Employer.
In the event of normal retirement, payment of retirement income will be
governed, subject to the provisions of Section 4 hereof, by the following
provisions of this Section 2.1.
(A) Normal Retirement Date: The Normal Retirement Date of each
Participant will be the first day of the month coincident with or next
following (a) the date on which he attains his Normal Retirement Age. Any
Participant who retires after attaining his Normal Retirement Age but prior
to his Normal Retirement Date and who is surviving on his Normal Retirement
Date shall be considered for the purposes of the Plan to have retired on his
Normal Retirement Date.
(B) Amount of Retirement Income: The monthly retirement income
payable in the manner described in Section 2.1(C) hereof to a Participant
who retires on or after his Normal Retirement Date shall be an amount equal
to his Credited Service multiplied by the sum of (i) 1.4% of that portion of
his Final Average Monthly Compensation which is not in excess of $600 and
(ii) 1.8% of that portion, if any, of his Final Average Monthly Compensation
which is in excess of $600.
Each section 401(a)(17) employee's Accrued Benefit under this plan will
be greater of the Accrued Benefit determined for the employee under 1 or 2
below:
(1) the employee's Accrued Benefit determined with respect to the
benefit formula applicable for the plan year on or after July 1,
1994, as applied to the employee's total years of Credited Ser-
vice, or
(2) the sum of
(a) the employee's accrued benefit as of June 30, 1994, frozen in
accordance with section 1.401(a)(4)-13 of the regulations,
and
(b) The employee's accrued benefit determined under the benefit
formula applicable for the plan year beginning on or after
July 1, 1994, as applied to the employee's years of Credited
Service credited to the employee for plan years beginning on
or after July 1, 1994.
A section 401(a)(17) employee means an employee whose current Accrued
Benefit as of a date on or after July 1, 1994 is based on compensation for a
year beginning prior July 1, 1994 that exceeded $150,000.
The monthly amount of retirement income payable to a Participant who
retires after his Normal Retirement Date, however, shall not be less than
that amount that can be provided on an actuarially equivalent basis by the
sum of (i) the single-sum value as of his Normal Retirement Date of the
normal monthly retirement income that would have been payable to him under
the provisions of the Plan or Superseded Plan, whichever is applicable, as
in effect on his Normal Retirement Date if he had retired on his Normal
Retirement Date (based upon his Credited Service and Final Average Monthly
Compensation determined as though he had actually retired on his Normal
Retirement Date) and (ii) the amount of interest on such single-sum value in
(i) above, where the interest shall be compounded annually from the
Participant's Normal Retirement Date to his actual retirement date. All
computations to determine such minimum monthly retirement income payable to
or on behalf of such a Participant (including any computations to convert
such minimum monthly retirement income to an actuarially equivalent retire-
ment income or other benefit that may be payable on his behalf under Section
2.4(B) or 3.1 hereof) shall be on the basis of the interest and mortality
assumptions that were being used as of his Normal Retirement Date to
determine actuarially equivalent non-decreasing annuities.
(C) Payment of Retirement Income: The monthly retirement income pay-
able in the event of normal retirement will be payable on the first day of
each month. The first payment will be made on the Participant's Normal
Retirement Date, or, if the Participant retires after his Normal Retirement
Date, the first payment will be made on the first day of the month
coincident with or next following the date of his actual retirement. The
last payment will be the payment due immediately preceding the retired
Participant's death; except that, in the event the Participant dies after
his retirement but before he received retirement income payments for a
period of 10 years, the same monthly benefit that was payable to the
Participant will be paid for the remainder of such 10-year period to the
Beneficiary designated by the Participant or, if no designated Beneficiary
is surviving, the same monthly benefit shall be payable for the remainder of
such 10-year period as provided in Sections 5.2 and 5.3 hereof.
(D) Special Provisions Applicable to Participants Who Receive Retire-
ment Income Payments While Continuing in Employment of Employer After
Required Beginning Date: Any of the above provisions of this Section 2.1 to
the contrary notwithstanding, but subject to the provisions of Section 4.1
hereof, a Participant who continues in the employment of the Employer beyond
his Required Beginning Date shall start receiving monthly retirement income
payments commencing as of his Required Beginning Date. Such monthly retire-
ment income payments shall be determined and payable in the same manner as
though the Participant had actually retired on his Required Beginning Date.
The retirement income payable to such a Participant shall thereafter be
subject to adjustment as of the first day of each Plan Year which begins
after his Required Beginning Date and prior to the date of his actual
retirement and shall be subject to adjustment as of the first day of the
month coincident with or next following the date of his actual retirement
(each such adjustment day is herein referred to as a "Post Payment
Recalculation Date") to reflect the additional accruals, if any, that such
Participant is entitled to receive because of his employment after his
Required Beginning Date. The additional retirement income, if any, payable
to any such Participant on and after an applicable Post Payment Recalcula-
tion Date shall be determined in accordance with the provisions of Section
411(b)(1)(H) of the Code and regulations issued with respect thereto, and
the actuarial equivalent of the retirement income payments that the
Participant has received under the provisions of this Section 2.1 on and
after his Required Beginning Date and prior to the applicable Post Payment
Recalculation Date shall be used as an offset in the determination of such
additional income, but such offset shall not result in the retirement income
payable to the Participant being reduced below the amount that was payable
on his behalf immediately prior to such Post Payment Recalculation Date.
The additional amount of monthly retirement income, if any, that a
Participant accrues after his Required Beginning Date shall be converted to
an actuarially equivalent amount of monthly retirement income that is
payable in the same manner and form as the monthly retirement income that is
payable on his behalf immediately prior to the applicable Post Payment
Recalculation Date, and such additional actuarially equivalent income shall
be payable to the Participant commencing as of the applicable Post Payment
Recalculation Date.
2.2 - EARLY RETIREMENT AND RETIREMENT INCOME
Early retirement under the Plan is retirement from the service of the
Employer prior to the Participant's Normal Retirement Date and on or after
the date as of which he has both attained the age of 55 years and completed
10 years of Vesting Service. In order to receive benefits under the
provisions of this Section, the written consent of the Participant must be
filed with the Committee no earlier than 90 days, and no later than 30 days,
prior to the date as of which retirement income payments are to commence.
In the event of early retirement, payment of retirement income will be gov-
erned, subject to the provisions of Section 4 hereof, by the following
provisions of this Section 2.2.
(A) Early Retirement Date: The Early Retirement Date will be the
first day of the month coincident with or next following the date a
Participant retires from the service of the Employer under the provisions of
this Section 2.2 prior to his Normal Retirement Date.
(B) Amount of Retirement Income: The monthly amount of retirement
income payable in the manner described in Section 2.2(C) hereof to a
Participant who retires prior to his Normal Retirement Date under the
provisions of this Section 2.2 shall be equal to the product of:
(1) the Accrued Benefit which the Participant has accrued as of his
Early Retirement Date;
multiplied by
(2) a factor, specified in the schedule below, based upon the number
of years and full months by which the Participant's Early
Retirement Date precedes his Normal Retirement Date:
Early Retirement Reduction Factors By Years and Months
By Which Early Retirement Date Precedes Normal Retirement Date
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Months
Years 0 1 2 3 4 5 6 7 8 9 10 11
0 1.000 .994 .989 .983 .978 .972 .967 .961 .956 .950 .944 .939
1 .933 .928 .922 .917 .911 .906 .900 .894 .889 .883 .878 .872
2 .867 .861 .856 .850 .844 .839 .833 .828 .822 .817 .811 .806
3 .800 .794 .789 .783 .778 .772 .767 .761 .756 .750 .744 .739
4 .733 .728 .722 .717 .711 .706 .700 .694 .689 .683 .678 .672
5 .667 .664 .661 .658 .656 .653 .650 .647 .644 .642 .639 .636
6 .633 .631 .628 .625 .622 .619 .617 .614 .611 .608 .606 .603
7 .600 .597 .594 .592 .589 .586 .583 .581 .578 .575 .572 .569
8 .567 .564 .561 .558 .556 .553 .550 .547 .544 .542 .539 .536
9 .533 .531 .528 .525 .522 .519 .517 .514 .511 .508 .506 .503
10 .500
</TABLE>
In no event, however, shall such monthly early retirement income be less
than the amount that can be provided on an actuarially equivalent basis by
the single-sum value, determined as of his Early Retirement Date, of the Ac-
crued Benefit that he has accrued as of his Early Retirement Date.
(C) Payment of Retirement Income: The retirement income payable in the
event of early retirement will be payable on the first day of the month.
The first payment will be made on the Participant's Early Retirement Date
and the last payment will be the payment due immediately preceding the
retired Participant's death; except that, in the event the Participant dies
before he has received retirement income payments for a period of 10 years,
the same monthly benefit that was payable to the Participant will be paid
for the remainder of such 10-year period to the Beneficiary designated by
the Participant, or, if no designated Beneficiary is surviving, the same
monthly benefit shall be payable for the remainder of such 10-year period as
provided in Sections 5.2 and 5.3 hereof.
2.3 - DISABILITY RETIREMENT AND RETIREMENT INCOME
A Participant may retire from the service of the Employer under the Plan
if his service is terminated prior to his Normal Retirement Date and on or
after the Effective Date of the Plan by reason of his becoming totally and
permanently disabled as defined in Section 2.3(A) below. Such retirement
from the service of the Employer shall herein be referred to as disability
retirement. In the event of disability retirement, uniformly and
consistently applied rules shall be used with respect to all Participants in
similar circumstances and payment of retirement income will be governed,
subject to the provisions of Section 4 hereof, by the following provisions
of this Section 2.3.
(A) Total and Permanent Disability: A Participant shall be considered
totally and permanently disabled for the purposes of the Plan if, in the
opinion of the Committee, he is wholly prevented, due to sickness or injury,
from engaging in any occupation for wage or profit, and if, in the opinion
of the Committee, such disability is likely to be continuous and permanent
from a cause other than specified in Section 2.3(B) hereof.
(B) Nonadmissible Causes of Disability: A Participant will not be
entitled to receive any disability retirement income if, in the opinion of
the Committee, the disability is a result of:
(1) excessive and habitual use by the Participant of drugs, intox-
icants or narcotics;
(2) injury or disease sustained by the Participant while willfully and
illegally participating in fights, riots, civil insurrections or
while committing a felony;
(3) injury or disease sustained by the Participant while serving in
any armed forces;
(4) injury or disease sustained by the Participant which was diagnosed
or discovered subsequent to the date his employment was
terminated;
(5) injury or disease sustained by the Participant while working for
anyone other than the Employer and arising out of such employment;
or
(6) injury or disease sustained by the Participant as a result of an
act of war, whether or not such act arises from a formally
declared state of war.
(C) Proof of Disability: The Committee, before approving the payment
of any disability retirement income, shall require satisfactory proof (which
may be in the form of a certificate from a duly licensed physician selected
by the Committee) that the Participant has become disabled as provided
herein. Every six months after the commencement of disability retirement
income, or more frequently, the Committee may similarly require proof of the
continued disability of the Participant.
(D) Disability Retirement Income: The monthly amount of retirement
income payable in the manner described in Section 2.3(E) hereof to a
Participant who retires from the service of the Employer under the
provisions of this Section 2.3 due to total and permanent disability shall
be equal to the Accrued Benefit which the Participant has accrued as of the
date of termination of his service due to disability.
(E) Payment of Disability Retirement Income: The monthly retirement
income to which a Participant is entitled in the event of his disability
retirement will be payable on the first day of each month. The first
payment will be made on the first day of the month coincident with or next
following his Normal Retirement Date. The last payment will be the payment
due immediately preceding the date of his death; except that, in the event
the disabled Participant dies before he has received retirement benefits for
a period of 10 years, the same monthly benefit that was payable to the
Participant will be paid for the remainder of such 10-year period to the
Beneficiary designated by the Participant, or, if no designated Beneficiary
is surviving, the same monthly benefit shall be payable for the remainder of
such 10-year period as provided in Sections 5.2 and 5.3 hereof.
(F) Benefit Payable in the Event of Death of Disabled Participant
Prior to Disability Retirement Income Date: In the event that the death of
a disabled Participant occurs after he has been determined to be disabled by
the Committee and prior to his recovery from his total and permanent
disability and prior to the date retirement income payments are to commence
as specified in Section 2.3(E), his Beneficiary will receive, in lieu of all
other benefits payable on behalf of the Participant under the Plan, a death
benefit, payable in the manner described in Section 2.4(B) hereof,
commencing on the first day of the month coincident with or next following
the date of the disabled Participant's death, which can be provided on an
actuarially equivalent basis by an amount equal t o the single-sum value of
the death benefit which would have been payable on behalf of the Participant
under the provisions of such Section 2.4(B) if his service had been
terminated by reason of his death on the date of termination of his service
due to disability.
(G) Recovery from Disability: If the Committee finds that any
Participant who is entitled to receive a disability retirement income under
the provisions of this Section 2.3 has, at any time prior to his Normal
Retirement Date, recovered from his total and permanent disability, such
Participant and his Beneficiary shall not be entitled to any benefits under
this Section 2.3 unless he reenters the service of the Employer and his
service is subsequently terminated by reason of his total and permanent
disability in accordance with the provisions hereof. A Participant shall be
deemed to have recovered from his total and permanent disability for the
purposes of the Plan if, in the opinion of the Committee, he is capable of
engaging in any occupation for wage or profit; provided, however, if the
Participant engages in an occupation which, in the opinion of the
Committee, is for the purpose of rehabilitation and is not incompatible wit
ha finding of total and permanent disability, such Participant will not be
considered to have recovered from his total and permanent disability as a
result of such rehabilitative occupation. Any such Participant who recovers
from his disability and whose retirement is not discontinued by the
Committee shall accrue Vesting Service during the period that he is
considered by the Committee to have been totally and permanently disabled as
provided herein; and, if the date of his recovery from his total and
permanent disability is on or after his Initial vesting Date and he does not
reenter the service of the Employer, he shall be entitled to the vested
retirement income, payable in accordance with the provisions of Section
2.4(A) hereof, computed as though his service had been terminated on the
date of his recovery from his total and permanent disability but based upon
his Credited Service and Final Average Monthly Compensation determined as of
the date of termination of his service due to disability.
2.4 - BENEFITS OTHER THAN ON RETIREMENT
(A) Benefit on Termination of Service and on Death After Termination
of Service:
(1) In the event that a Participant's service is terminated prior to
his Normal Retirement Date and on or after his Initial Vesting
Date for any reason other than his death, early retirement as
described in Section 2.2 hereof or disability retirement as
described in Section 2.3 hereof, he will be entitled to a monthly
retirement income to commence on his Normal Retirement Date or, if
he had completed at least 10 years of Vesting Service and he so
requests in writing filed with the Committee at least 30 but not
more than 90 days prior to the effective date thereof, to commence
on the first day of any month which is prior to his Normal Retire-
ment Date and is on or after the date on which he attained the age
of 55 years. Such monthly retirement income payable in the manner
described in Section 2.4(A)(2) hereof to a Participant under the
provisions of this Section 2.4(A) shall be equal to the product
of:
(a) the Accrued Benefit which he has accrued to the date of
termination of his service;
multiplied by
(b) his Vested Percentage;
with the resulting product multiplied by
(c) an actuarially computed factor that will convert, if
applicable, the amount of monthly retirement income that is
payable to the Participant in the manner described in Section
2.4(A)(2) hereof commencing at his Normal Retirement Date to
an actuarially equivalent amount of monthly retirement income
that is payable to the Participant in the manner described in
Section 2.4(A)(2) hereof commencing on his Annuity Starting
date.
(2) The retirement income payable under Section 2.4(A)(1) above will
be payable on the first day of each month. The first payment will
be made, if the Participant shall then be living, on his Normal
Retirement Date or, if he has elected an earlier commencement date
in accordance with the provisions of Section 2.4(A)(1) above, on
the first day of such earlier month as of which he has elected to
commence receiving his retirement income payments. The last
payment will be the payment due immediately preceding his death;
except that, in the event the Participant dies on or after such
date of commencement of payments but before he has received
retirement income payments for a period of 10 years, the same
monthly benefit that was payable to the Participant will be paid
for the remainder of such 10-year period to the Beneficiary
designated by the Participant, or, if no designated Beneficiary is
surviving, the same monthly benefit shall be payable for the
remainder of such 10-year period as provided in Sections 5.2 and
5.3 hereof.
(3) In the event that the terminated Participant dies prior to his
Annuity Starting Date (without his having waived, in accordance
with the provisions of Section 2.4(A)(4) below, the benefit
provided under this Section 2.4(A)(3) and without his having
received, prior to his death, the actuarially equivalent value of
the benefit provided on his behalf under Section 2.4(A)(1) above),
his Beneficiary will receive the monthly retirement income, begin-
ning on the first day of the month coincident with or next
following the date of the terminated Participant's death, which
can be provided on an actuarially equivalent basis by the single-
sum value of the benefit determined in accordance with Section
2.4(A)(1) above to which the terminated Participant was entitled
as of the date of termination of his service, accumulated with
interest from such date to the date of his death. The monthly
retirement income payments under this Section 2.4(A)(3) shall,
subject to the provisions of Section 2.4(B)(4) hereof, be payable
for the life of the Beneficiary designated or selected under
Section 5.2 hereof to receive such benefit, and, in the event of
such Beneficiary's death within a period of 10 years after the
Participant's death, the same monthly amount that was payable to
the Beneficiary shall be payable for the remainder of such 10-year
period in the manner and subject to the provisions of Section 5.3
hereof; provided, however, in lieu of payment of such benefit in
the form of monthly income described above, the single-sum value
of such benefit may be paid on an actuarially equivalent basis to
the Participant's designated Beneficiary in such other manner and
form permitted under Section 2.4(B) hereof and commencing on such
other date permitted under Section 2.4(B) hereof as the Partici-
pant may elect in writing filed with the Committee or, in the
event that a specific election has not been made by the
Participant and filed with the Committee prior to his death, as
the Beneficiary may elect in writing filed with the Committee.
(4) A terminated Participant may elect, with the consent of his
spouse, if any, at any time prior to his Annuity Starting Date, to
waive the death benefit provided under Section 2.4(A)(3) above
and, in lieu thereof, an increased retirement income, which
reflects on an actuarially equivalent basis the period that the
death benefit coverage under Section 2.4(A)(3) is waived, will be
payable to the Participant under the provisions of Section
2.4(A)(1) if he shall be living on his Annuity Starting Date.
Within one year after the date of termination of service of a
Participant who is entitled to a benefit under the provisions of
this Section 2.4(A), or as soon thereafter as is administratively
practicable, the Committee shall furnish the Participant with
written notification informing him of his right to waive the death
benefit provided under Section 2.4(A)(3) above and the
consequences of such a waiver. Any Participant who has waived the
death benefit provided under Section 2.4(A)(3) may subsequently
revoke such waiver at any time prior to his Annuity Starting Date
by filing written notice of such revocation with the Committee
prior to the date on which such revocation is to become effective.
Any Participant who has waived the death benefit provided under
Section 2.4(A)(3) and who subsequently marries or remarries after
such waiver and prior to his Annuity Starting Date shall auto-
matically be deemed to have revoked his prior waiver of such death
benefit effective as of the first anniversary of the date of such
marriage or remarriage unless his spouse (following such marriage
or remarriage) consents to the waiver of such death benefit.
(5) Any Participant, who is entitled to a benefit under the provisions
of Section 2.4(A)(1) above and who is married on his Annuity
Starting Date or who is married on the date of his death and on
whose behalf a benefit is payable under Section 2.4(A)(3) above,
shall be assumed for the purposes of this Section 2.4(A) to have
been married for the total period of time beginning on the date of
termination of his service and ending on his Annuity Starting Date
or the date of his death, whichever is earlier, except for such
portions, if any, of such period of time for which evidence is
furnished to the Committee which, in the opinion of the Committee,
satisfactorily proves that the Participant was not married.
(6) In the event that the terminated Participant dies subsequent to
his Annuity Starting Date, the only benefit payable shall be that
provided by the form of payment elected by the Participant under
the provisions of Section 3.1
(7) The provisions of Sections 3.1 and 4 hereof are applicable to the
benefits provided under this Section 2.4(A).
(8) Except as specifically provided otherwise in any Supplement hereto
and except as provided in Section 2.3 with respect to disability
retirement and Section 2.4 with respect to death, and unless
specifically provided otherwise in the Plan, the Participant whose
service is terminated prior to his Initial Vesting Date shall not
be entitled to any benefit under the Plan whatever.
(B) Benefit Payable in Event of Death While in Service:
(1) If the service of a Participant is terminated by reason of his
death prior to his Required Beginning Date, there shall be payable
to the Participant's designated Beneficiary the monthly retirement
income, beginning on the first day of the month coincident with or
next following the date of the Participant's death, that can be
provided on an actuarially equivalent basis by an amount equal the
single-sum value, determined as of the date of his death, of the
Accrued Benefit that the Participant has accrued to the date of
his death.
(2) Except as provided in Section 2.4(B)(3) below and subject to the
provisions of Section 2.4(B)(4) below, the monthly retirement
income payments under this Section 2.4(B) shall be payable for the
life of the Beneficiary designated or selected under Section 5.2
hereof to receive such benefit, and, in the event of such
Beneficiary's death within a period of 10 years after the
Participant's death, the same monthly amount that was payable to
the Beneficiary shall be payable for the remainder of such 10-year
period in the manner and subject to the provisions of Section 5.3
hereof.
(3) A Participant may elect, or, in the event that a specific election
has not been made by the Participant and filed with the Committee
prior to his death, his designated Beneficiary may elect, in
writing filed with the Committee, that, in lieu of payment of the
benefit provided under this Section 2.4(B) (or, if applicable,
under Section 2.3(G) or 2.4(A)(3) hereof) in the manner described
above, the actuarial equivalent of such benefit will be paid in a
lump-sum.
Provided, however, that payment of any such benefit shall be
subject to the provisions of Section 2.4(B)(4) below.
(4) Any form of payment applicable to the death benefit provided under
this Section 2.4(B) (or, if applicable, under Section 2.3(G) or
2.4(A)(3) hereof), which has been designated by a Participant
prior to January 1, 1984 under the terms of the Superseded Plan
and which satisfies the transitional rule in Section 242(b)(2) of
the Tax Equity and Fiscal Responsibility Act of 1982 (P.L.
97-248), will continue in effect on and after the Effective Date
of the Plan with respect to the death benefits provided under this
Section 2.4(B) (or, if applicable, under Section 2.3(G) or
2.4(A)(3) hereof) unless such designated form of payment has been
or is subsequently revoked or changed (a change of Beneficiaries
under the designation will not be considered to be a revocation or
change of such form of payment so long as the change in Beneficia-
ries does not alter, directly or indirectly, the period over which
distributions are to be made under such form of payment);
provided, however, if a Participant, whose death occurs on or
after his Initial Vesting Date, had been married to his spouse
throughout the one-year period immediately preceding his death and
he had designated a person other than his spouse as his
Beneficiary and such spouse has not consented to such other person
being designated, the provisions of Section 4.1(D) hereof shall
apply with respect to payments due his surviving spouse, if any.
Subject to the preceding sentence and except to the extent
otherwise permissible under Section 401(a)(9) of the Code and
regulations issued pursuant thereto, the benefit payable under
this Section 2.4(B) (or, if applicable, under Section 2.3(G) or
2.4(A)(3) hereof) on behalf of any Participant must be payable in
a manner that satisfies the restrictions of Section 401(a)(9) of
the Code and must:
(a) commence not later than the Participant's Required Beginning
Date; provided, however, if the Beneficiary is not the
Participant's spouse, distribution must commence not later
than one year after the date of the Participant's death or,
if the Participant's surviving spouse was his Beneficiary and
such surviving spouse dies prior to the commencement of
benefit payments, distribution must commence not later than
one year after the date of such surviving spouse's death;
and
(b) such benefit must be distributed in its entirety to the
Beneficiary not later than the 5th anniversary of (i) the
Participant's death or (ii) the death of the Participant's
spouse, whichever death is later to occur, unless the
Beneficiary is an individual, or the Beneficiary is a trust,
a beneficiary of which can be taken into account under
Section 401(a)(9) of the Code.
In the event that the Beneficiary to receive the death benefit
payable under Section 2.3(G), 2.4(A)(3) or 2.4(B) hereof on behalf
of a Participant whose death occurs prior to his Normal Retirement
Date is his surviving spouse, the retirement income payable to
such surviving spouse under Section 2.3(G), 2.4(A)(3) or 2.4(B)
hereof shall be deferred and be payable on an actuarially
equivalent basis to such surviving spouse commencing on the
Participant's Normal Retirement Date, if such surviving spouse is
then living, unless (i) the surviving spouse consents or elects in
writing to receive such benefit commencing as of a date that is
prior to the Participant's Normal Retirement Date and is on or
after the date of the Participant's death, (ii) the date of death
of the Participant is prior to his Initial Vesting Date, (iii) the
Participant had not been married to his surviving spouse
throughout the one-year period immediately preceding his death or
(iv) a lump-sum payment is payable to his surviving spouse under
the provisions of Section 3.2 hereof.
(5) If the service of a Participant is terminated by reason of his
death on or after his Required Beginning Date, no benefit will be
payable to his Beneficiary under the provisions of this Section
2.4(B). Additional retirement income payments may be payable,
however, after the Participant's death to his joint pensioner or
other Beneficiary, depending upon the form of payment of the
retirement income that the Participant was receiving immediately
prior to his death and taking into account the increase, if any,
that would have applied under the provisions of Section 2.1(D)
hereof to the amount of retirement income payable to the
Participant commencing as of the first day of the month coincident
with or next following the date of the Participant's death if the
Participant had retired immediately prior to his death and had
survived to such day.
SECTION 3
SPECIAL PROVISIONS REGARDING PAYMENT OF BENEFITS
3.1 - OPTIONAL FORMS OF RETIREMENT INCOME
In lieu of the amount and form of retirement income commencing on the
Participant's Annuity Starting Date which is payable, subject to the
provisions of Section 4.1 hereof, in the event of his normal retirement,
early retirement, disability retirement or termination of service, as
determined and specified in Section 2.1, 2.2, 2.3 or 2.4(A) hereof, which-
ever is applicable, such Participant, upon written request to the Committee,
may elect to receive a retirement income or benefit of equivalent actuarial
value payable in accordance with one of the options described below
commencing on his Annuity Starting Date or commencing on such later date,
which shall not be later than his Required Beginning Date, as the
Participant may specify in his written request to the Committee.
Option 1: A retirement income of larger monthly amount that is payable
in equal monthly amounts to the Participant for his lifetime
with no survivor benefit.
Option 2: A retirement income of modified monthly amount that is pay-
able in equal monthly amounts to the Participant during the
joint lifetime of the Participant and a joint pensioner
designated by him, and, following the death of either of
them, 2/3 of such modified monthly amount will be payable to
the survivor for the lifetime of the survivor.
Option 3: If the Participant has a spouse on his Annuity Starting Date,
a retirement income of modified monthly amount that is pay-
able in equal monthly amounts to the Participant for his
lifetime, and, in the event that the Participant predeceases
that spouse 50% of such modified monthly amount will be
payable after the death of the Participant to such spouse for
the lifetime of the spouse. This option is also referred to
herein as the "Qualified Joint and 50% Survivor Annuity
Option".
Option 4: A lump-sum payment, but such payment shall be available only
within 90 days following the date of the Participant's
termination of employment.
The amount of retirement income determined under any of the above
optional forms of payment must satisfy the permitted disparity requirements
of Sections 401(a)(4) and 401(l) of the Code and rulings and regulations
issued with respect thereto, and, any provisions hereof to the contrary
notwithstanding, any optional form of payment which would otherwise be
permitted under the provisions of this Section 3.1 shall not be available to
a Participant if the amount of retirement income payable under such option
would result in the amount of retirement income payable on behalf of such
Participant under the Plan being increased by a percentage that would cause
the disparity in the rate of employer-derived benefits under the Plan to
exceed the maximum disparity permitted under Sections 401(a)(4) and 401(l)
of the Code and rulings and regulations issued with respect thereto.
Any optional form of payment designated by a Participant prior to
January 1, 1984, which satisfies the transitional rule in Section 242(b)(2)
of the Tax Equity and Fiscal Responsibility Act of 1982 (P.L. 97-248), will
continue in effect on and after the Effective Date of the Plan unless such
optional form of payment has been or is subsequently revoked or changed (a
change of Beneficiaries under the designation will not be considered to be a
revocation or change of such optional form of payment so long as the change
in Beneficiaries does not alter, directly or indirectly, the period over
which distributions are to be made under such form of payment); provided,
however, that the provisions of Section 4.1(C) hereof shall apply if the
Participant has a spouse at the date on which his initial payment under such
optional form is due and his spouse does not consent to such optional form
of payment. Subject to the preceding sentence but notwithstanding any other
provision of this Section 3.1 to the contrary, any option elected under this
Section 3.1 must provide that the entire interest of the Participant will be
expected to be distributed to the Participant and his Beneficiaries and
joint pensioners, in a manner that satisfies the restrictions of Section
401(a)(9) of the Code, over one or a combination of the following periods:
(1) the life of the Participant;
(2) the lives of the Participant and his designated Beneficiary or
joint pensioner;
(3) a period certain not extending beyond the life expectancy of the
Participant;
or
(4) a period certain not extending beyond the joint life and last
survivor expectancy of the Participant and his designated
Beneficiary or joint pensioner.
Any amount that is payable to the child of a Participant under an
optional form of payment hereunder shall be treated for the purposes of
satisfying the requirements of this paragraph as if it had been payable to
the surviving spouse of the Participant if such amount that is payable to
the child will become payable to such surviving spouse upon such child's
reaching majority (or upon the occurrence of such other designated event
permitted under regulations issued with respect to Section 401(a)(9) of the
Code).
If a Participant's retirement income benefits have commenced in either
the form and amount specified in Section 2 hereof or under an optional form
elected under the provisions of this Section 3.1, upon his written request
to the Committee at least 30 but not more than 90 days prior to the
effective date thereof, he may elect to discontinue receiving his retirement
income under such form and amount of payment and, in lieu thereof, to
receive a retirement income or benefit of equivalent actuarial value that is
payable to him in accordance with one of the options provided above;
provided, however, that only one such change may be made by any Participant
after his retirement income payments have commenced; and provided further,
however, that a change after the Annuity Starting Date will not be permitted
if the retirement income or benefit payments are being made under the terms
of an annuity contract purchased on behalf of the Participant from an insur-
ance company. A Participant who elects to change his form of payment after
his Annuity Starting Date must submit to the Committee such evidence of his
good health as the Committee requires and, if the Participant is receiving
payments in a form in which a joint pensioner is involved, such evidence of
the good health of his joint pensioner as the Committee requires; and any
such change will not be permitted if, in the opinion of the Committee, such
Participant or, if applicable, such joint pensioner is not in good health.
The consent of the Participant's spouse (which shall include, if applicable,
his former spouse to whom he was married on his Annuity Starting Date), if
any, shall be required before any such change in a form of payment that
involves such spouse may become effective, including any change that
represents a change in a form of payment that was previously consented to by
such spouse unless, to the extent permitted by law, the previous consent
acknowledged that the Participant may change the form of payment without the
further consent of said spouse.
The Participant upon electing any option of this section will designate
the joint pensioner or Beneficiary to receive the benefit, if any, payable
under the Plan in the event of his death and will have the power to change
such designation from time to time, subject to the provisions of this
section. Any such designation will name a joint pensioner or one or more
primary Beneficiaries where applicable. If a Participant is receiving
payments under a form in which a joint pensioner or Beneficiary is involved,
he may change his designated joint pensioner or Beneficiary after his
retirement income payments have commenced but, in the case where the
designation to be changed is one involving a joint pensioner, only if the
joint pensioner last previously designated by him is alive when he files
with the Committee his request for such change. Any such change in joint
pensioners will be considered and treated under the Plan in the same manner
as a change in the form of payment. The consent of the Participant's spouse
(which shall include, if applicable, his former spouse to whom he was
married on his Annuity Starting Date), if any, shall be required before any
such change in Beneficiary or joint pensioner under an option in which such
spouse is not the primary Beneficiary or joint pensioner may become
effective, unless, to the extent permitted by law, such spouse has
previously consented to and acknowledged that the Participant may change
Beneficiaries or joint pensioners without the further consent of said
spouse. A Participant who wants to change his joint pensioner after his
retirement income payments have started must submit to the Committee such
evidence of the good health of any joint pensioner that is being removed as
the Committee requires, and any such change shall be denied if, in the
opinion of the Committee, such joint pensioner is not in good health. The
amount of retirement income payable to the Participant upon the designation
of a new joint pensioner shall be actuarially redetermined, taking into
account the age of the former joint pensioner, the new joint pensioner and
the Participant. Each such designation will be made in writing on a form
prepared by the Committee. In the event that no designated Beneficiary sur-
vives the Participant, such benefits as are payable in the event of the
death of the Participant subsequent to his retirement shall be paid as
provided in Section 5.2 hereof.
Retirement income payments will be made under the option elected in
accordance with the provisions of this section and will be subject to the
following limitations:
(1) If a Participant's service is terminated by reason of his death
prior to his Annuity Starting Date, no benefit will be payable
under the option to any person, but a benefit may be payable on
his behalf in accordance with the provisions of Section 2.4(B)
hereof.
(2) If a terminated Participant dies after the date of termination of
his service and prior to his Annuity Starting Date, no benefit
will be payable under the option to any person, but a benefit may
be payable on his behalf under the provisions of Section 2.4(A)(3)
hereof.
(3) In the case of a Participant who is married and who elects an
option under which the commencement of payment of his retirement
income is deferred beyond his Annuity Starting Date, the option
elected by such Participant must provide that a monthly lifetime
income equal to or greater than a qualified preretirement survivor
annuity (within the meaning of Section 417(c) of the Code) will be
payable to his surviving spouse in the event of his death after
such Annuity Starting Date and prior to his elected Annuity
Starting Date unless his spouse consents to the option not
providing such an income.
(4) If the designated Beneficiary or joint pensioner dies before the
Participant's Annuity Starting Date, the option elected will be
canceled automatically and the retirement income payable to the
Participant will be paid in the applicable form described in
Section 2 hereof unless a new election is made in accordance with
the provisions of this section or unless a new Beneficiary or
joint pensioner is designated by the Participant prior to the date
that his retirement income commences under the Plan.
(5) If the Participant and, if applicable, his joint pensioner and his
designated Beneficiary all die after the Participant's Annuity
Starting Date but before the full payment has been effected under
any option providing for payments for a period certain and if the
commuted value of the remaining payments is equal to or less than
the maximum amount that is permissible as an involuntary cashout
of accrued benefits under Sections 411(a)(11) and 417(e) of the
Code and regulations issued with respect thereto, the commuted
value of the remaining payments shall, subject to the provisions
of Section 3.2 hereof, be paid in a lump sum in accordance with
the provisions of Section 5.3 hereof.
(6) If the Participant dies after his Annuity Starting Date, payment
of his remaining interest, if any, shall be distributed, to the
extent required by Section 401(a)(9) of the Code and regulations
issued with respect thereto, at least as rapidly as provided under
the method of payment in effect prior to his death.
3.2 - LUMP-SUM PAYMENT OF SMALL RETIREMENT INCOME
Notwithstanding any provision of the Plan to the contrary, if the
single-sum value of the retirement income or other benefit payable to any
person entitled to any benefit hereunder is equal to or less than the
maximum amount that is permissible as an involuntary cash-out of accrued
benefits under Sections 411(a)(11) and 417(e) of the Code and regulations
issued with respect thereto ($3,500 as of July 1, 1989), the actuarial
equivalent of such retirement income or other benefit shall, subject to the
provisions below, be paid in a lump sum. For the purposes of the Plan, a
payment shall not be considered to occur after the Annuity Starting Date
merely because actual payment is reasonably delayed for calculation of the
benefit amount if all payments due are actually made.
If the present value of the vested accrued benefit that is payable on
behalf of any Participant whose service is terminated (either before, on or
after the Effective Date of the Plan) is zero, the Participant shall be
deemed to have received a distribution of his vested accrued benefit as of
the date of termination of his service.
3.3 - BENEFITS APPLICABLE TO PARTICIPANT WHO HAS
BEEN OR IS EMPLOYED BY TWO OR MORE EMPLOYERS:
In the event that a Participant's service is terminated for any reason
and such Participant has been or is employed by any two or more Employers,
his retirement or termination benefit, if any, shall be computed by applying
the benefit formulas as if all the Employers were a single Employer;
provided, however, if the Plan does not represent a single plan with respect
to all such Employers, there must be a proper allocation (taking into
account the Credited Service and Compensation applicable to each Employer or
group of Employers with respect to which the Plan represents a single plan)
of the costs of the resulting benefits among the Employers (with respect to
which the Plan does not represent a single plan) by which such Participant
has been or is employed.
3.4 - NO DUPLICATION OF BENEFITS
Unless the context clearly provides otherwise, there shall be no dupli-
cation of benefits under the Plan or under any Supplement hereto, and the
benefits payable under any section of the Plan to or on behalf of a Partici-
pant shall be inclusive of the benefits, if any, concurrently payable to or
on behalf of the same Participant under all other sections of the Plan and
under any Supplement hereto.
3.5 - FUNDING OF BENEFITS THROUGH PURCHASE OF
LIFE INSURANCE CONTRACT OR CONTRACTS:
In lieu of paying benefits from the Trust Fund to a Participant or his
Beneficiary, upon direction of the Committee with specific prior
authorization in writing from the Employer, the Trustee shall enter into a
contract or contracts, or an agreement or agreements, with one or more legal
reserve life insurance companies for the purchase, with funds in the Trust,
of a retirement annuity or other form of life insurance contract which, as
far as possible, provides benefits equal to (or actuarially equivalent to)
those provided in the Plan for such Participant or Beneficiary, but provides
no optional form of retirement income or benefit which would not be
permitted under Section 3.1 hereof, whereupon such contract shall thereafter
govern the payment of the amount of benefit, if any, represented by such
contract, which is payable under the Plan upon the Participant's retirement
or termination of service, and the liability of the Trust Fund and of the
Plan will cease and terminate with respect to such benefits that are
purchased and for which the premiums are duly paid.
Any policy or contract issued under this section shall be subject to the
provisions hereof pertaining to the Qualified Joint and 50% Survivor Annuity
Option and to the Qualified Preretirement Survivor Annuity.
In the event of any conflict between the terms of this plan and the
terms of any policy or contract issued hereunder the plan provisions shall
control.
Any payments by the insurer on account of credits such as dividends,
experience rating credits, or surrender or cancellation credits shall be
applied, within the taxable year of the Employer in which received or within
the next succeeding taxable year, toward the next premiums due before any
further employer contributions are so applied.
Any policy or contract issued under this section prior to the termi-
nation of the Plan or prior to the distribution of the policy or contract to
a Participant or Beneficiary hereunder shall provide that the Trustee shall
retain all rights of ownership at all times except the right, unless such
policy or contract provides otherwise, to designate the Beneficiary to
receive any benefits payable upon the death of the Participant and shall
further provide that all dividends or experience rating credits shall be
paid to the Trustee and applied to reduce future Employer contributions to
the Plan.
Any annuity contract distributed by the Trustee to a Participant or
Beneficiary hereunder shall contain a provision to the effect that the con-
tract may not be sold, assigned, discounted or pledged as collateral for a
loan or as security for the performance of an obligation or for any other
purpose, to any person other than the issuer thereof.
SECTION 4
GOVERNMENTAL REQUIREMENTS AFFECTING BENEFITS
4.1 - SPECIAL PROVISIONS REGARDING AMOUNT
AND PAYMENT OF RETIREMENT INCOME
The amount and payment of retirement income determined under Sections
2.1, 2.2, 2.3 and 2.4 hereof shall be subjected to the following provisions
of this Section 4.1.
(A) Limitations Imposed by Section 415 of Code:
(1) Maximum Amount of Retirement Income: Any provisions herein to the
contrary notwithstanding, in no event shall the monthly retirement
income that is payable on or after the first day of the limitation
year beginning in 1987 to a Participant hereunder exceed the
maximum amount of retirement income for defined benefit plans as
specified in Section 415 of the Code and regulations and rulings
issued pursuant thereto; provided, however, that:
(a) the maximum amount of retirement income applicable to a
Participant who was a participant in the Superseded Plan, if
any, before the limitation year beginning in 1983 and whose
Credited Service includes service that was accrued prior to
such limitation year, shall not be less than his current
accrued benefit within the meaning of Section 235(g)(4) of
the Tax Equity and Fiscal Responsibility Act of 1982;
and
(b) such maximum amount of retirement income applicable to a
Participant who was a participant in the Superseded Plan, if
any, before the limitation year beginning in 1987 and whose
Credited Service includes service that was accrued prior to
such limitation year, shall not be less than his current
accrued benefit within the meaning of Section 1106(i)(3)(B)
of the Tax Reform Act of 1986;
and provided further, however, in the event that the sum of the
defined benefit plan fraction and defined contribution plan
fraction of a Participant, who is a participant in both a defined
benefit plan and a defined contribution plan maintained by any
Controlled Group Members, would exceed 1.0, the monthly retirement
income payable on his behalf under the defined benefit plans shall
be reduced to the amount that will result in such sum being equal
to 1.0. In determining the maximum monthly retirement income
payable on behalf of any Participant, all defined benefit plans
(whether or not terminated) of the Controlled Group Members are to
be treated as one defined benefit plan; and all defined
contribution plans (whether or not terminated) of the Controlled
Group Members are to be treated as one defined contribution plan.
The proportion of the maximum monthly retirement income applicable
to all such defined benefit plans of the Controlled Group Members
shall be determined on a pro rata basis depending upon the
actuarially equivalent amount of retirement income otherwise
accrued under each such defined benefit plan.
(2) Actuarial Assumptions: The mortality and interest assumptions
that are used to compute the actuarially equivalent maximum
amounts of retirement income permitted under the provisions of
this Section 4.1(A) shall be the same as those that are used in
computing actuarially equivalent benefits payable on behalf of a
Participant upon his retirement or termination of service and upon
the exercise of optional forms of retirement income under the Plan
except that:
(a) the interest rate assumption shall not be less than 5% for
the purposes of converting the maximum retirement income to a
form other than a straight life annuity (with no ancillary
benefits);
(b) the interest rate assumption shall not be greater than 5% for
the purposes of adjusting the maximum retirement income
payable to a Participant who is over the social security
retirement age within the meaning of Section 415(b)(8) of the
Code (or age 65 in the case of a governmental plan or a plan
maintained by a tax exempt organization) so that it is
actuarially equivalent to such a retirement income commencing
at the social security retirement age (or age 65 in the case
of a governmental plan or a plan maintained by a tax exempt
organization); and
(c) the factor for adjusting the maximum permissible retirement
income to a Participant who is less than age 62 years so that
it is actuarially equivalent to such a retirement income
commencing at age 62 years shall be equal to (i) the factor
for determining actuarial equivalence for early retirement
under the Plan or (ii) an actuarially computed reduction
factor determined using an interest rate assumption of 5% and
the UP-1984 Mortality Table (except that the mortality
decrement shall be ignored if a death benefit at least equal
to the single-sum value of the Participant's Accrued Benefit
would be payable under the Plan on behalf of the Participant
if he remained in the service of the Employer and his service
were to be terminated by reason of his death prior to his
Normal Retirement Date), whichever factor will provide the
greater reduction. The factor for determining actuarial
equivalence for early retirement under the Plan for any given
age below age 62 years shall be determined by dividing (aa)
the product of the early retirement adjustment factor that
applies under the Plan at such given age multiplied by a
factor that will convert, if applicable, the amount of
retirement income payable in the manner described in Section
2.2(C) hereof commencing at such given age to an actuarially
equivalent amount of retirement income payable as straight
life annuity commencing at such given age by (bb) the product
of the early retirement adjustment factor that applies under
the Plan at age 62 years multiplied by a factor that will
convert, if applicable, the amount of retirement income
payable in the manner described in Section 2.2 hereof
commencing at age 62 years to an actuarially equivalent
amount of retirement income payable as a straight life
annuity commencing at age 62 years (where such actuarial
conversion factors used in (aa) and (bb) above shall be
determined in accordance with the provisions of this Section
4.1(A)).
(3) Cost-of-Living Adjustments: In the event that the maximum amount
of retirement income permitted under Section 415 of the Code is
increased after the date of commencement of a Participant's
retirement income and prior to the date of termination of the Plan
due to any cost-of-living adjustment announced by the Internal
Revenue Service pursuant to the provisions of Section 415(d) of
the Code, the amount of monthly retirement income payable under
the Plan to a Participant whose retirement income is restricted
due to the provisions of such section of the Code shall be
increased, effective as of January 1st of the calendar year for
which such increase becomes effective or, if applicable, as of
such other date as the Secretary of the Treasury or his delegate
may prescribe as the date on which such increase shall become
effective, to reflect the increase in the amount of retirement
income that may be payable under the Plan as a result of such
cost-of-living adjustment; provided, however, if the Employer
maintains an "excess benefit plan" (within the meaning of Section
3(36) of the Employee Retirement Income Security Act of 1974) for
the purpose of providing benefits for certain Participants in
excess of the limitations on contributions and benefits imposed by
Section 415 of the Code and if the Participant or his Beneficiary
receives or has received a benefit or benefits under such excess
benefit plan and a portion of such benefit or benefits would be
duplicated by the cost-of-living adjustment provided under this
paragraph, then such cost-of-living adjustment that would
represent a duplication of benefits shall not apply to the
Participant or Beneficiary unless the value of the benefit payable
from the excess benefit plan that would cause such duplication of
benefits under this Plan is returned to the Employer by the
Participant or Beneficiary within 60 days of the effective date of
such cost-of-living adjustment or the date that such
cost-of-living adjustment is announced by the Internal Revenue
Service, whichever date is later; and provided further, however,
that such 60-day period may be extended by the Committee if, in
its opinion, reasonable cause exists for such an extension.
(4) IRC Section 415 Definitions: Following are certain terms that are
used herein for the purposes of the limitations under Section 415
of the Code and that shall have the meanings assigned to them in
Section 415 of said Code and regulations and rulings issued with
respect thereto:
(a) The term "defined benefit plan" shall have the meaning
assigned in Section 414(j) of the Code.
(b) The term "defined benefit plan fraction" is the fraction in
which the numerator is the Participant's projected annual
benefit (determined as of the end of the limitation year)
under all defined benefit plans of the Controlled Group
Members and the denominator is the lesser of (i) 1.25
multiplied by the dollar limitation in effect under Section
415(b)(1)(A) of the Code (as modified by the provisions of
Section 415(d) of said Code) for such limitation year or (ii)
1.4 multiplied by the amount that may be taken into account
under Section 415(b)(1)(B) of the Code for such limitation
year.
(c) The term "defined contribution plan" shall have the meaning
assigned in Section 414(i) of the Code.
(d) The term "defined contribution plan fraction" is, subject to
any transition adjustments allowed by law and adopted by the
Committee, the fraction in which the numerator is the sum of
the actual annual additions (where such annual additions
shall have the meaning assigned in Section 415(c) of the Code
and regulations and rulings issued with respect thereto) to
the Participant's accounts in such limitation year and for
all prior limitation years under all defined contribution
plans of the Controlled Group Members and the denominator is
the sum of the lesser of the following amounts determined for
each limitation year during such Participant's employment
(assuming for this purpose that Sections 415(c) and 415(d) of
the Code had been in effect during all prior limitation years
of such Participant's employment): (i) 1.25 multiplied by
the dollar limitation in effect under Section 415(c) of the
Code (as modified by the provisions of Section 415(d) of said
Code) for the applicable limitation year and (ii) 1.4
multiplied by 25% of the Participant's IRC 415 Compensation
for the applicable limitation year.
(e) The term "IRC 415 Compensation" shall include (i) wages,
salaries, fees for professional services, and other amounts
received (without regard to whether or not an amount is paid
in cash) for personal services actually rendered in the
course of employment with the Employer to the extent that the
amounts are includable in gross income (including, but not
limited to, commissions paid salesmen, compensation for
services on the basis of a percentage of profits, commissions
on insurance premiums, tips, bonuses, fringe benefits,
reimbursements and expense allowances), (ii) earned income
(as described in Section 401(c)(2) of the Code and the
regulations thereunder), (iii) amounts described in Sections
104(a)(3), 105(a) and 105(h) of the Code, but only to the
extent that these amounts are includable in the gross income
of the Participant, (iv) amounts paid or reimbursed by the
Employer for moving expenses incurred by the Participant, but
only to the extent that these amounts are not deductible by
the Participant under Section 217 of the Code, (v) the value
of a non-qualified stock option granted to the Participant by
the Employer, but only to the extent that the value of the
stock option is includable in the gross income of the
Participant for the taxable year in which granted, (vi) the
amount includable in the gross income of the Participant upon
making the election described in Section 83(b) of the Code
and (vii) any amounts received by the Participant pursuant to
an unfunded non-qualified plan in the year such amounts are
includable in the gross income of the Participant. The
amounts described in (i) and (ii) above shall include foreign
earned income as defined in Section 911(b) of the Code,
whether or not excludable from gross income under Section 911
of said Code. Such compensation shall exclude (1)
contributions by the Employer to a plan of deferred
compensation which are not included in the Participant's
gross income for the taxable year in which contributed, (2)
contributions by the Employer under a simplified employee
pension plan to the extent such contributions are deductible
by the Participant, (3) any distribution from a plan of
deferred compensation, (4) amounts realized from the exercise
of a non-qualified stock option, (5) amounts realized when
restricted stock (or property) held by the Participant either
becomes freely transferable or is no longer subject to a
substantial risk of forfeiture, (6) amounts realized from the
sale, exchange or other disposition of stock acquired under a
qualified stock option, (7) other amounts which received
special tax benefits and (8) contributions made by the
Employer (whether or not under a salary reduction agreement)
towards the purchase of an annuity described in Section
403(b) of the Code (whether or not the amounts are actually
excludable from the gross income of the Participant).
(f) The term "limitation year" is the 12-month period which is
used for application of the limitations under Section 415 of
the Code and, unless a different 12-month period has been
elected by the Employer in accordance with rules or
regulations issued by the Internal Revenue Service or the
Department of Labor, shall be the calendar year.
(B) Minimum Benefits on Normal or Early Retirement: Any provisions of
Section 2.1 or 2.2 hereof to the contrary notwithstanding, in the event of
the normal retirement or early retirement of a Participant in accordance
with the provisions of Section 2.1 or 2.2 hereof, his monthly retirement
income determined in accordance with the provisions of Section 2.1(B) or
2.2(B) hereof, whichever is applicable, shall not be less than the monthly
retirement income, if any, determined in accordance with the provisions of
Section 2.1(B) or 2.2(B) hereof that such Participant would have received as
of any earlier date of retirement if he had retired under the provisions of
Section 2.1 or 2.2 at any time prior to his actual date of retirement.
(C) Requirement With Respect to Form of Payment: The Committee shall
provide each Participant, during the period beginning 90 days before his
Annuity Starting Date and ending 30 days before his Annuity Starting Date
(or as soon after the expiration of such period as is administratively
practicable), written notification of the terms and conditions of payment
that is provided under Section 2.1(C), 2.2(C), 2.3(F) or 2.4(A) hereof,
whichever is applicable, commencing as of his Annuity Starting Date, and, if
the Participant is married, the terms and conditions of payment that is
provided under the Qualified Joint and 50% Survivor Annuity Option
commencing as of such date and the relative financial effect on the
Participant's retirement income under such forms of payment. Any provisions
of Section 2.1, 2.2, 2.3, 2.4(A) or 3.1 hereof to the contrary
notwithstanding, if a Participant does not elect, in writing filed with the
Committee during the election period described below, to receive the
retirement income payable on his behalf on and after his Annuity Starting
Date either (i) under the form of payment that is specified in Section
2.1(C), 2.2(C), 2.3(F) or 2.4(A)(2), whichever is applicable, or (ii) under
an optional form of payment described in and subject to the provisions of
Section 3.1 hereof, such Participant shall be deemed to have elected, and
the retirement income payable on and after his Annuity Starting Date shall
automatically be paid in accordance with the provisions of, either:
(1) if he does not have a spouse at his Annuity Starting Date, the
form of payment that is specified in Section 2.1(C), 2.2(C),
2.3(F) or 2.4(A)(2), whichever is applicable; or
(2) if he has a spouse at his Annuity Starting Date, the Qualified
Joint and 50% Survivor Annuity Option; provided, however, if
payment to the Participant in the form of a Qualified Joint and
50% Survivor Annuity would result in the amount of retirement
income payable on behalf of such Participant being increased by a
percentage that would cause the disparity in the rate of his
employer-derived benefits under the Plan to exceed the maximum
disparity permitted under Section 401(l) of the Code and rulings
and regulations issued with respect thereto, the Qualified Joint
and Survivor Annuity of such Participant shall be changed to an
actuarially equivalent Qualified Joint and Survivor Annuity that
provides payments in equal monthly amounts to the Participant for
his lifetime and in the event that he predeceases his spouse, the
percentage of the monthly retirement income payable to such
surviving spouse for life shall be increased (in increments of 5%)
until the permitted disparity provided under Section 401(l) of the
Code is satisfied or until reaching a maximum of 100%, and, if a
joint and 100% survivor annuity will not satisfy the permitted
disparity requirements of said Section 401(l), a period certain
for which payments will be made shall be added to the joint and
100% survivor annuity (in increments of one year) until such
permitted disparity requirements are satisfied.
Any Participant may make an election under this section at any time (and
any number of times) prior to the commencement of his retirement income or
other benefit payments and during the period beginning on the date which is
90 days prior to his Annuity Starting Date and ending on the latest to occur
of (i) his Annuity Starting Date, (ii) the date which is 90 days after the
date on which he was provided with the general written explanation described
above or (iii) the date which is 90 days after the date on which he was
provided with any specific detailed information concerning the payment of
his retirement income that is required to be furnished due to the request of
the Participant. If any such Participant does not file his election with
the Committee prior to the expiration of the election period described
above, the commencement of his retirement income will be delayed until the
end of such election period or until such earlier date as of which he files
his election with the Committee, but he will be entitled to a retroactive
payment with respect to those retirement income payments which were delayed.
If any Participant has elected a form of payment other than the automatic
form provided above and his retirement income or other benefit payments have
not commenced, he may subsequently revoke such election, in writing filed
with the Committee within the election period described above, in order to
receive his retirement income payable in accordance with the automatic form
provided above. Any provisions of Section 3.1 hereof to the contrary
notwithstanding, if any Participant is not provided with the written
notification described in the first sentence of this section at least 30
days before his Annuity Starting Date but he files his election with the
Committee, and his retirement income or other benefit commences, prior to
the date which is 30 days after the date on which he was provided with such
written notification, he may subsequently, in writing filed with the
Committee prior to the expiration of such 30-day period, revoke such
election and elect to receive his retirement income payable under any other
form of payment that was available to him on his Annuity Starting Date;
provided, however, in order for such revocation and new election to become
effective, he shall be required to return to the Trust Fund, prior to the
expiration of such 30-day period, the portion, if any, of the payments that
he has received that is in excess of the payments due under his newly
elected form of payment, or, at the option of the Participant, future
payments due under such newly elected form of payment may be reduced, over a
period not to exceed 12 months (or such longer period as is required to
recover such excess if the Participant's payments are reduced to zero),
until such excess has been recovered. Any provisions herein to the contrary
notwithstanding, the consent of the Participant's spouse during the
applicable election period shall be required in order for the Participant to
receive his retirement income in a form other than that provided under a
Qualified Joint and Survivor Annuity.
(D) Qualified Preretirement Survivor Annuity: If a deceased Partici-
pant, whose death occurs on or after his Initial Vesting Date and prior to
his Annuity Starting Date had been married to his spouse throughout the
one-year period immediately preceding his death and he had designated a
person other than his spouse as his Beneficiary and such spouse has not
consented to such other person being designated as the Beneficiary, the
Participant shall be deemed to have:
(1) revoked his prior designation of Beneficiary;
(2) designated such spouse as his Beneficiary to receive a portion of
the death benefit payable on his behalf under Section 2.3(G),
2.4(A)(3) or 2.4(B), whichever is applicable;
(3) specified that the portion of the benefit provided under Section
2.3(G), 2.4(A)(3) or 2.4(B) that is payable to his surviving
spouse will be payable as an actuarially equivalent monthly income
payable on the first day of each month with the first payment
being due (only if said spouse is then living) on the
Participant's Normal Retirement Date or the first day of the month
coincident with or next following the date of the Participant's
death, whichever is later, and with the last payment being the
payment due immediately preceding such spouse's death;
(4) specified that the portion of the benefit provided under Section
2.3(G), 2.4(A)(3) or 2.4(B) that is payable to the surviving
spouse shall have an actuarially equivalent single-sum value,
determined as of the date of his death, equal to the single-sum
value, determined as of the date of his death, of the monthly
retirement income that would be payable to his surviving spouse,
commencing on the Participant's Earliest Annuity Commencement
Date, under the Qualified Joint and 50% Survivor Annuity Option
if:
(a) the Participant's service terminated by reason of his death
on or after his Earliest Annuity Commencement Date:
(i) the Participant had retired on the day immediately
preceding the date of his death;
(ii) the Participant had elected the Qualified Joint and 50%
Survivor Annuity; and
(iii) the Participant had died immediately after such
commencement of payments (one-half of the initial
payment which would have been due the Participant shall
be included in the determination of such single-sum
value).
(b) the Participant's service terminated by reason of his death
prior to his Earliest Annuity Commencement Date:
(i) the Participant's service had been terminated for a
reason other than his disability retirement or death on
the earlier of the date of his actual separation from
service or the date of his death;
(ii) the Participant had (for the purpose of determining the
amount of such monthly retirement income commencing at
his Earliest Annuity Commencement Date) waived the death
benefit coverage under Section 2.4(A)(3), if applicable,
during the period beginning on the date of his death and
ending on his Earliest Annuity Commencement Date;
(iii) the Participant had elected the Qualified Joint and 50%
Survivor Annuity; and
(iv) the Participant had died immediately after such
commencement of payments (one-half of the initial
payment which would have been due the Participant on his
earliest Annuity Commencement Date shall be included in
the determination of such single-sum value).
(5) designated such other person (or persons) that was named as his
Beneficiary under such revoked designation as the Beneficiary to
receive the remaining portion of such benefit payable on his
behalf under and in accordance with the provisions of Section
2.3(G), 2.4(A)(3) or 2.4(B) hereof.
In lieu of the payment of such benefit to the surviving spouse of a
Participant in the form of monthly income described in Section 4.1(D)(3)
above commencing at the Participant's Normal Retirement Date, such benefit
may be paid on an actuarially equivalent basis to the Participant's spouse
in such other manner and form permitted under Section 2.4(B) hereof and
commencing on such other date permitted under Section 2.4(B) hereof as the
surviving spouse may elect in writing filed with the Committee. For the
purposes of Sections 4.1(D)(3) and 4.1(D)(4) above, the Earliest Annuity
Commencement Date of a deceased disabled Participant on whose behalf a death
benefit is payable under Section 2.3(G) hereof and the monthly retirement
income that would be payable to his surviving spouse, commencing on his
Earliest Annuity Commencement Date, under the Qualified Joint and 50%
Survivor Annuity Option, shall be determined as though such Participant had
recovered from his total and permanent disability and had reentered the
service of the Employer immediately prior to his death.
If a deceased Participant, whose death occurs on or after his Initial
Vesting Date and prior to his Annuity Starting Date, had been married to his
spouse throughout the one-year period immediately preceding his death and he
had designated a person other than his spouse as his Beneficiary and such
spouse has consented prior to the Participant's attainment of the age of 35
years to such other person being designated as the Beneficiary but has not
consented to such designation on or after either the Participant's
attainment of such age or his separation from service, unless it is
otherwise permissible under the provisions of Section 417 (or any other
applicable section) of the Code or regulations or rulings issued pursuant
thereto for such a spouse to elect to waive his or her right to the
qualified preretirement survivor annuity, such consent of such spouse shall
be invalid and the benefit payable on behalf of such Participant shall be
determined and payable in the manner described above as though the
Participant's spouse had not consented to such other person being designated
as the Beneficiary of the Participant.
The Committee shall provide each Employee, who is a Participant in the
Plan, within the one-year period immediately following the date on which he
attains the age of 32 years or on which he becomes a Participant in the
Plan, whichever is later, or, if his service is terminated on or after his
Initial Vesting Date and prior to his attaining the age of 32 years, the
date of termination of his service, or as soon thereafter as is
administratively practicable, with written notification of (i) the terms and
conditions upon which the Qualified Preretirement Survivor Annuity described
above will be payable to his surviving spouse, (ii) the Participant's right
to designate at any time prior to his death a person other than his spouse
as his Beneficiary and the effect that such a designation will have on the
Qualified Preretirement Survivor Annuity, (iii) the rights of the
Participant's spouse in the event that the spouse does not consent to such
designation and (iv) the right of the Participant to change his Beneficiary
designation in accordance with the provisions of Section 5.2 hereof at any
time prior to his death and the effect that such a change will have upon the
Qualified Preretirement Survivor Annuity.
If the Beneficiary of a Participant is his spouse but the Participant
elects, pursuant to the provisions of Section 2.4(A)(3) or 2.4(B) hereof,
whichever is applicable, an actuarially equivalent form of payment of the
benefit provided under such applicable section that does not provide for
monthly payments during the lifetime of his spouse in an amount at least as
great as the actuarially equivalent income, if any, that would have been
payable to such spouse under the provisions of the Qualified Joint and 50%
Survivor Annuity Option if the Participant had retired under the provisions
of Section 2.1 or 2.2 hereof or his retirement income payments due under
Section 2.4(A) hereof had commenced, whichever is applicable, on the day
before his death while said option was in effect and he had died immediately
thereafter, the Committee shall inform such Participant that such election
will constitute an election not to receive a benefit which has the effect of
a Qualified Preretirement Survivor Annuity provided under a qualified joint
and survivor annuity as described in Section 417 of the Code, and the con-
sent of the Participant's spouse shall be required in order for such an
election to become effective.
There shall be no duplication between the benefits provided under
Sections 2.3(G), 2.4(A)(3) and 2.4(B) and under the Qualified Preretirement
Survivor Annuity described in this Section 4.1(D), but the benefits under
each shall be inclusive of the benefits under the other.
(E) Spousal Consent Requirement and Waiver: Any provisions herein to
the contrary notwithstanding, if the consent of the spouse of the
Participant is required for any reason under the provisions hereof, such
consent in order to be effective must be in writing and witnessed by a Plan
representative or a notary public. In the event that such consent is with
respect to the election of a form of payment other than a Qualified Joint
and Survivor Annuity or the designation of a person other than the spouse as
the Participant's Beneficiary, such consent must acknowledge the specific
form of payment that has been elected or the person who has been designated
as Beneficiary, as the case may be, and must acknowledge the effect of such
consent. Any of the above to the contrary notwithstanding, such spousal
consent for any reason hereunder shall, unless otherwise required by the
Committee or by applicable law, be waived for the purposes of the Plan if:
(1) the spouse has previously consented to such specified action in
accordance with the provisions above and such previous consent (a)
permits changes with respect to such specified action without any
requirement of further consent by such spouse and (b) acknowledges
the effect of such consent by the spouse;
or
(2) it is established to the satisfaction of the Committee that such
consent may not be obtained because there is no spouse, because
the spouse cannot be located or because of such other
circumstances as the Secretary of the Treasury or his delegate may
prescribe by regulations as reasons for waiving the spousal
consent requirement.
(F) Latest Date of Commencement of Payments: Except to the extent
otherwise permissible under rules or regulations issued by the Internal
Revenue Service, distribution of the accrued benefit to which a Participant
has a nonforfeitable interest must commence on a date not later than the
earlier to occur of:
(1) his Required Beginning Date, regardless of whether or not his
service has been terminated;
or
(2) the later of:
(a) the date that is no later than the 60th day after the close
of the Plan Year during which (i) his service is terminated
for any reason, (ii) he attains the age of 65 years or (iii)
the tenth anniversary of the date on which he initially
commenced participation in the Plan or Superseded Plan,
whichever is latest, occurs; or
(b) the date that the Participant elects in accordance with the
provisions of Section 3.1 hereof as the date of commencement
of his retirement income;
provided, however, if an election of a form of payment has been made by a
Participant prior to January 1, 1984 that provides for the commencement of
his benefit at a date later than the date applicable under (1) or (2) above
and such election both (i) satisfies the transitional rule in Section
242(b)(2) of the Tax Equity and Fiscal Responsibility Act of 1982 (P.L.
97-248) and (ii) has not been subsequently revoked or changed (a change of
Beneficiaries under the designation will not be considered to be a
revocation or change of such form of payment so long as the change in
Beneficiaries does not alter, directly or indirectly, the period over which
distributions are to be made under such form of payment), distribution of
the Participant's accrued benefit shall not be required to commence prior to
the date of commencement specified in such election.
(G) No Benefit Reduction Due to Post Termination Social Security
Changes: Benefits under the Plan shall not be decreased by reason of any
increase in the benefit levels payable under Title II of the Social Security
Act or by reason of any increase in the wage base under such Title II, if
such increase takes place after September 2, 1974 or (if later) the earlier
of the date of first receipt of such benefits or the date of the
Participant's separation from service, as the case may be.
(H) Minimum Preserved Benefit Due to Certain Amendments: In the event
that the Plan or Superseded Plan has been or is amended effective as of a
date on or after July 1, 1989 to eliminate or reduce a subsidy or an early
retirement benefit or to change the actuarial assumptions used to determine
actuarially equivalent benefits payable thereunder, the monthly retirement
income or other benefit, if any, payable under the provisions of Section
2.1, 2.2, 2.3 or 2.4 (and Section 3.1 if an optional form of payment is
applicable) to a Participant, who was a participant in the Plan or
Superseded Plan as of the day immediately preceding the date that the
elimination, reduction or change becomes effective (herein referred to as
the "Preservation Date") and who retires or whose service is terminated
after the Preservation Date, shall be at least equal to the corresponding
amount of the monthly retirement income or other benefit, if any, payable to
him under the provisions of such applicable section of the Plan (or, if
applicable, the section of the Superseded Plan that corresponds to such
applicable section of the Plan) as in effect on the Preservation Date
computed using his Credited Service and Final Average Monthly Compensation
(or, if applicable, their corresponding terms under the Superseded Plan)
determined as of the Preservation Date under the provisions of the Plan (or,
if applicable, the Superseded Plan) as in effect on such date and using, if
applicable, the mortality table and interest rate assumptions that applied
under the provisions of the Plan (or, if applicable, the Superseded Plan) as
in effect on the Preservation Date to compute actuarially equivalent
benefits payable to a Participant who retired or whose service was
terminated on the Preservation Date.
(I) Direct Rollover Options for Eligible Rollover Distributions: This
section applies to distributions made on or after January 1, 1993.
Notwithstanding any provision of the Plan to the contrary that would
otherwise limit a distributee's election under this section, a distributee
may elect, at the time and in the manner prescribed by the plan
administrator, to have any portion of an eligible rollover distribution paid
directly to an eligible retirement plan specified by the distributee in a
direct rollover. The following definitions apply to this section:
(1) Eligible rollover distribution: An eligible rollover distribution
is any distribution of all or any portion of the balance of 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 10 years or 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 includible in
gross income (determined without regard to the exclusion for
net unrealized appreciation with respect to employer
securities).
(2) 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.
(3) Distributee: A distributee includes an employee or former
employee. In addition, the employee's or former employee's
surviving spouse and the employee's or former employee's spouse or
former spouse who is the alternate payee under a qualified
domestic relations order, as defined in Section 414(p) of the
Code, are distributees with regard to the interest of the spouse
or former spouse.
(4) Direct rollover: A direct rollover is a payment by the Plan to
the eligible retirement plan specified by the distributee.
Any options set forth in this section shall automatically become inoperative
and of no effect upon a ruling by the Treasury Department that such options
set forth herein are no longer required.
4.2 - LIMITATIONS ON BENEFITS REQUIRED
BY THE INTERNAL REVENUE SERVICE
(A) Limitation in the Event of Plan Termination: In the event that
the Plan is terminated, the benefit of any Participant who is a Highly
Compensated Employee (or a highly compensated former employee) shall be
limited to a benefit that is nondiscriminatory under Section 401(a)(4) of
the Code and regulations issued with respect thereto.
(B) Limitation on Annual Payments:
(1) The provisions of this Section (B) shall apply during each Plan
Year to those Participants who during such Plan Year (a) are among
the 25 highest-paid Participants (including former Participants)
in the Plan (determined with respect to each Employer or group of
Employers with respect to which the Plan represents a separate
single plan) and (b) are Highly Compensated Employees (or highly
compensated former employees) and whose annual payments under the
Plan must be restricted due to the provisions of Section 401(a)(4)
of the Code and regulations issued with respect thereto.
(2) To the extent required by Section 401(a)(4) of the Code and
regulations issued with respect thereto, the annual benefit
payable under the Plan to any such Participant to whom the
provisions of this Section (B) are applicable shall not exceed an
amount equal to the payments that would be made on his behalf
under a single life annuity that is the actuarial equivalent of
the sum of his accrued benefit and his other benefits under the
Plan; provided, however, that such restriction shall not apply if:
(a) after payment of the "benefits" (as defined below) to the
Participants to whom the provisions of this Section (B) are
applicable, the remaining value of Plan assets equals or
exceeds 110% of the value of current liabilities within the
meaning of Section 412(l)(7) of the Code and regulations
issued with respect thereto;
or
(b) the value of the "benefits" (as defined below) for such
Participant is less than 1% of the value of current lia-
bilities within the meaning of Section 412(l)(7) of the Code
and regulations issued with respect thereto.
(3) For the purposes of this Section (B), the term "benefit" shall
have the meaning assigned in Treasury Regulation 1.401(a)(4)-5(c)
and shall include loans in excess of the amounts set forth in
Section 72(p)(2)(A) of the Code, any periodic income, any
withdrawal values payable to a living employee, and any death
benefits not provided for by insurance on the employee's life.
4.3 - BENEFITS NONFORFEITABLE IF PLAN IS TERMINATED
In the event of the termination or partial termination of the Plan, the
rights of each affected Participant in the Plan to benefits accrued to such
date of termination, to the extent then funded, shall be nonforfeitable,
where such benefits shall be determined and distributed as provided in
Section 4.5 hereof; provided, however, if the participation in the Plan of
one or more but not all Employers that are members of a group of Employers
with respect to which the Plan represents a single plan is terminated, the
Plan shall not be considered to have been terminated for the purposes of
this Section 4.3 (although a partial termination of the Plan may result
because of such termination of participation). Unless specifically required
otherwise by law or by rules or regulations of the Internal Revenue Service,
the nonforfeitable rights granted to Participants under the provisions of
this section shall not apply with respect to (i) any benefits (or portions
thereof) that have been cashed out, whether voluntarily or involuntarily,
under the provisions hereof and that have not been reinstated (by repayment
or by the reinstatement of Credited Service accrued prior to the date of
such cashout) in accordance with the provisions hereof prior to the date of
the termination or partial termination of the Plan or (ii) any nonvested
benefits at the date of termination of service of a terminated or retired
Participant whose service was terminated prior to the date of termination or
partial termination of the Plan.
4.4 - MERGER OF PLAN
In the case of the merger or consolidation of the Plan with, or the
transfer of assets or liabilities to, another qualified retirement plan,
each Participant must be entitled to receive a benefit, upon termination of
such other retirement plan after such merger, consolidation or transfer,
which is at least equal to the benefit which he would have been entitled to
receive immediately before the merger, consolidation or transfer if the Plan
had been terminated at that time.
4.5 - TERMINATION OF PLAN AND DISTRIBUTION OF TRUST FUND
Upon termination of the Plan in accordance with the provisions hereof,
the share of the assets of the Trust Fund available for distribution to the
affected Participants and Beneficiaries shall be allocated and distributed
in accordance with the following procedure.
(A) The Committee shall determine the date of distribution and the
share in the value of the assets of the Trust Fund that is attributable to
each Employer or group of Employers with respect to which the Plan
represents a single plan.
(B) The distribution of the asset value will, subject to the provi-
sions of Section 417(e)(1) of the Code, be provided by the purchase of
insured annuities from a company or companies selected by the Committee for
each class of Participants and other persons entitled to benefits under the
Plan, as specified in (C) below, except that, in lieu of the purchase of an
annuity, a lump-sum distribution shall be made to or on behalf of a
Participant if (i) the actuarially equivalent single-sum value of the
benefit (payable as a lump-sum settlement) to be distributed to him or on
his behalf under the provisions of this Section 4.5 is equal to or less than
$3,500, or is equal to or less than such larger amount that is permitted as
an involuntary cashout of benefits under rules and regulations of the
Internal Revenue Service and Pension Benefit Guaranty Corporation, and (ii)
such distribution may be made without the necessity of having the consent of
the recipient under any applicable rules or regulations of the Internal
Revenue Service or Pension Benefit Guaranty Corporation. Any annuities
purchased pursuant to the provisions of this Section 4.5 will be subject to
the provisions hereof pertaining to the Qualified Joint and 50% Survivor
Annuity Option and to the Qualified Preretirement Survivor Annuity.
(C) The Committee shall determine the asset value available for
distribution on behalf of each Employer or group of Employers with respect
to which the Plan represents a single plan after taking into account the
expenses of such distribution. After having determined such asset value
available for distribution to each such Employer or group of Employers, as
the case may be, and subject to the applicable provisions of any Supplement
hereto pertaining to the distribution of assets upon the termination of the
Plan, the Committee shall allocate such asset value (allocated to the
particular Employer or group of Employers) as of the date of termination of
the Plan in accordance with Section 4044 of the Employee Retirement Income
Security Act of 1974, as amended. For the purposes of determining the
amount of the allocation to which a disabled Participant, who is entitled to
a benefit under the provisions of Section 2.3 hereof but whose Annuity
Starting Date is after the date of termination of the Plan, is entitled
under this Section 4.5, his accrued benefit as of the date of termination of
the Plan shall be computed as though he had recovered from his total and
permanent disability, reentered the service of the Employer on the date of
termination of the Plan and his service had been terminated immediately
after his reentry and prior to the termination of the Plan.
(D) In the event that there be asset value remaining after the satis-
faction of all liabilities of the Plan to Participants and the
Beneficiaries, such residual assets shall be distributed to the Employer,
except that, in the case of a group of Employers with respect to which the
Plan represents a single plan, such residual assets shall remain in the
Trust Fund if the Plan is not being terminated with respect to all of such
Employers.
(E) The order of priorities for, and the amounts and methods of, the
distributions set forth in (C) above and the rights of Participants and
Beneficiaries to benefits under the Plan shall be subject (i) to the
distribution rules set forth in the Plan, (ii) to the limitations provided
by Section 4.2 of the Plan, (iii) to any changes, including the recapture of
any prior distributions to Participants, as may be ordered by the Pension
Benefit Guaranty Corporation and (iv) to any changes required by the
Internal Revenue Service as a condition for issuing a favorable
determination letter stating that the distribution of assets will not
adversely affect the continued qualified status of the Plan under Section
401(a) of the Code.
(F) As soon as practicable after both (a) the date that the assets may
be distributed under the rules and regulations of the Pension Benefit
Guaranty Corporation and (b) the date that a favorable determination letter
is received from the Internal Revenue Service stating that in its opinion
the method of distribution will not adversely affect the continued qualified
status of the Plan under Section 401(a) of the Code, the Committee shall
direct the Trustee to distribute the assets to the affected parties in
accordance with such method.
4.6 SPECIAL PROVISIONS THAT APPLY IF PLAN IS TOP-HEAVY
The provisions of this Section 4.6 shall apply if the Superseded Plan
was or the Plan is a "top-heavy plan" within the meaning of Section 416(g)
of the Code with respect to any Plan Year beginning after December 31, 1983.
(A) Determination of Plan Years in Which Plan Is Top-Heavy: The Plan
shall be top-heavy with respect to an applicable Plan Year if:
(1) either:
(a) any Participant, former Participant or Beneficiary in the
Plan is a "key employee" within the meanings of Sections
416(i)(1) and 416(i)(5) of the Code (hereinafter referred to
in this Section 4.6 as "Key-Employees"); or
(b) the Plan is required to be combined with any other plan,
which is included in the Aggregation Group (as defined below)
and which has a participant who is a Key Employee, in order
to enable such other plan to meet the requirements of Section
401(a)(4) or Section 410 of the Code;
and
(2) the ratio (determined in accordance with Section 416 of the Code)
as of the last day of the preceding Plan Year or, in the case of
the first Plan Year, the last day of such first Plan Year (such
day, whether applicable to the first Plan Year or to subsequent
Plan Years, is hereinafter referred to in this Section 4.6 as the
"Determination Date") of:
(a) the sum of (i) the present value of the cumulative accrued
benefits for all Key Employees under all defined benefit
plans included in the Aggregation Group plus (ii) the
aggregate of the individual accounts of all Key Employees
under all defined contribution plans included in such
Aggregation Group;
to
(b) a similar sum determined for all Participants, former
Participants and Beneficiaries - excluding any such
Participant or former Participant (or his Beneficiary) who
was a Key Employee for any prior Plan Year but who is not
currently a Key Employee and also excluding, for Plan Years
beginning after December 31, 1984, any Participant or former
Participant (or his Beneficiary) who has not at any time
during the five-year period ending on the Determination Date
performed services for any employer maintaining a plan
included in the Aggregation Group - under all defined benefit
plans and defined contribution plans included in such
Aggregation Group;
is greater than 60%.
For the purposes of this Section 4.6, the Aggregation Group shall mean
the Plan plus all other defined benefit plans and defined contribution plans
(including any such plans that terminated during the five-year period ending
on the Determination Date), if any, maintained by the Controlled Group
Members; provided, however, that any defined benefit plan or defined
contribution plan of any Controlled Group Member that (i) does not have any
participant who is a Key Employee and (ii) is not required to be combined
with any other plan, which is included in the Aggregation Group and which
has a participant who is a Key Employee, in order to enable such other plan
to meet the requirements of Section 401(a)(4) or Section 410 of the Code,
shall be included in the Aggregation Group only if such defined benefit plan
or defined contribution plan, together with the other plans that are
included in the Aggregation Group, as a combined group satisfy the
requirements of Sections 401(a)(4) and 410 of the Code.
The present value of an accrued benefit under the Plan shall, for the
purposes of this Section 4.6, be determined as of the most recent valuation
date that (i) is used for the Plan Year for computing Plan costs for minimum
funding purposes (regardless of whether a valuation is actually performed
for that year) and (ii) is within the 12-month period ending on the
applicable Determination Date (such valuation date is herein referred to in
this Section 4.6 as the "Valuation Date"). Such present value of accrued
benefits under the Plan shall be computed using 5% interest and the
mortality table used for such Plan Year for computing Plan costs for minimum
funding purposes.
The present value of the cumulative accrued benefits under the other
defined benefit plans included in the Aggregation Group and the aggregate of
the individual accounts under the defined contribution plans included in
such Aggregation Group shall be determined separately for each such plan in
accordance with Section 416 of the Code and regulations issued with respect
thereto as of the "determination date" that is applicable to each such
separate plan and that falls within the same calendar year that the
Determination Date applicable to the Plan falls.
Unless required otherwise under Section 416 of the Code and regulations
issued thereunder, a Participant's (or Beneficiary's) accrued benefit under
the Plan shall be equal to the sum of:
(1) an amount equal to either:
(a) if his service has not been terminated and he has not reached
his Normal Retirement Date as of the Valuation Date, the
Accrued Benefit that he has accrued as of the Valuation Date;
(b) if his service has not been terminated and he has reached his
Normal Retirement Date as of the Valuation Date, the monthly
retirement income to which he would have been entitled under
the normal retirement provisions of the Plan if he had
retired on the Valuation Date;
or
(c) if his service has been terminated as of the Valuation Date,
the amount of retirement income or other benefit that is
payable on his behalf under the Plan on and after the
Valuation Date;
plus
(2) the aggregate distributions made on his behalf during the
five-year period ending on the Determination Date;
provided, however, that his estimated accrued benefit between the Valuation
Date and Determination Date applicable to the first Plan Year shall be
included as part of his accrued benefit with respect to the first Plan Year
only. Any provisions hereof to the contrary notwithstanding and solely for
the purpose of determining if the Plan is top-heavy with respect to an
applicable Plan Year beginning after December 31, 1986, the accrued benefit
of any employee who is not a Key Employee shall be determined under the
method which is used for accrual purposes for all defined benefit plans
included in the Aggregation Group or, if a single method is not used for all
such defined benefit plans, the accrued benefit of such employee shall be
determined as though it accrued not more rapidly than the slowest accrual
rate permitted under the fractional accrual rule of Section 411(b)(1)(C) of
the Code.
(B) Minimum Vesting Provisions if Plan Becomes Top-Heavy: Any other
provision of the Plan to the contrary notwithstanding, the Initial Vesting
Date of a Participant in the Plan, who has accrued an Hour of Service during
any Plan Year that is subsequent to the last Plan Year that the Plan was not
top-heavy, for the purpose of determining his eligibility for the benefit
provided under Section 2.4(A) hereof during any Plan Year that is subsequent
to the last Plan Year that the Plan was not top-heavy, shall not be later
than (i) the date as of which he completes two years of Vesting Service or
(ii) the first day of the Plan Year immediately following the last Plan Year
that the Plan was not top-heavy, whichever is later, but the Vested
Percentage of the Participant for the purposes of Section 2.4(A)(1) shall
not be less than the percentage specified in the schedule below, based upon
the Participant's number of years (ignoring fractions) of Vesting Service as
of the date of termination of his service, with respect to the portion of
his Accrued Benefit that is attributable to employer contributions:
Years of Vesting Vested
Service Percentage
Less than 2 0%
2 20%
3 40%
4 60%
5 80%
6 or More 100%
In the event of a Change of Control, however, each Participant's Vested
Percentage shall be 100%, regardless of the number of the Participant's
years of vested Service.
In the event that the Plan ceases to be top-heavy with respect to any
subsequent Plan Year, the following provisions will apply with respect to
the minimum benefits to which such a Participant is entitled under Section
2.4(A) hereof during such subsequent Plan Years that the Plan is not
top-heavy:
(1) if the Participant had not completed at least two years of Vesting
Service as of the last day of the last Plan Year during which the
Plan was top-heavy, his nonforfeitable right to the benefits to
which he is entitled under Section 2.4(A) hereof shall be
determined as though the Plan had never been top-heavy;
(2) if the Participant had completed at least two but had not
completed at least three years of Vesting Service as of the last
day of the last Plan Year during which the Plan was top-heavy, he
shall be eligible for a minimum benefit payable under Section
2.4(A) hereof; such minimum benefit provided under Section
2.4(A)(1) shall be based upon the product of (i) the portion of
the Accrued Benefit that he had accrued as of the date of
termination of his service multiplied by (ii) his Vested
Percentage determined as of the last day of the last Plan Year
during which the Plan was top-heavy;
(3) if the Participant had completed at least three years of Vesting
Service as of the last day of the last Plan Year during which the
Plan was top-heavy, he shall be eligible for the benefit provided
under Section 2.4(A) hereof, but the Participant's Vested
Percentage shall be determined in the same manner as though the
Plan had remained top-heavy; and
(4) the Accrued Benefit that a Participant, whose Vesting Service
includes service that was accrued on or prior to the last day of
the last Plan Year that the Plan was top-heavy, has accrued as of
any given date shall not be less than the actuarial equivalent of
(a) the benefit provided on his behalf under Section 4.6(C)(1)
below as of such given date plus (b) the benefit provided on his
behalf under Section 4.6(C)(2)(a) below as of the last day of the
last Plan Year during which the Plan was top-heavy less (c) the
amount of the benefit provided on his behalf under Section
4.6(C)(2)(b) below as of such given date.
(C) Minimum Benefit If Plan Becomes Top-Heavy: In the event that the
service of a Participant is terminated on or after his Initial Vesting Date
for any reason, the retirement income payable to the Participant under the
provisions of Section 2.1, 2.2, 2.3 or 2.4(A) hereof or, if the service of
the Participant is terminated by reason of his death, the retirement income
which he has accrued as of the date of his death that is used to determine
the benefit payable on his behalf under the provisions of Section 2.4(B)
hereof, whichever is applicable, shall not be less than that amount of
retirement income which is actuarially equivalent (based upon the interest
and mortality assumptions that are being used under the Plan as of the date
of his retirement or termination of service to determine actuarially
equivalent non-decreasing annuities) to an amount equal to the excess, if
any, of:
(1) a monthly retirement income payable to the Participant for
life (with no ancillary benefits) commencing at his Normal
Retirement Date in an amount equal to (i) 2% of his "IRC 416
Final Average Monthly Compensation" multiplied by (ii) his
number of years of Vesting Service, not in excess of 10
years, that were accrued during those Plan Years in which the
Plan was top-heavy, with the resulting product of (i) and
(ii) multiplied by (iii) his Vested Percentage at the date of
his retirement or termination of service; provided, however,
if the Participant retires after his Normal Retirement Date,
the amount of the monthly retirement income determined under
this Subparagraph (a) shall not be less than the actuarial
equivalent of the monthly retirement income determined in
accordance with this subparagraph that would have been
payable to the Participant if he had retired on his Normal
Retirement Date;
over
(2) the monthly retirement income payable to the Participant for
life (with no ancillary benefits) commencing at his Normal
Retirement Date in an amount equal to the sum of:
(a) such amount of income, if any, that he has a
nonforfeitable right to receive and that is attributable
to employer contributions and is payable to the
Participant under the other defined benefit plans, if
any, which are included in the Aggregation Group;
plus
(b) such amount of income that can be provided on an
actuarially equivalent basis (based upon the interest
and mortality assumptions that are being used under the
Plan as of the date of his retirement or termination of
service to determine actuarially equivalent
non-decreasing annuities) by the amounts, if any, that
he has a nonforfeitable right to receive and that are
attributable to employer contributions and forfeitures
that are credited to his account under the defined
contribution plans, if any, included in the Aggregation
Group;
provided, however, if the Aggregation Group includes one or more defined
contribution plans and if, with respect to each Plan Year that the Plan is
top-heavy, the Participant has received an allocation of employer
contributions and forfeitures to his account under such defined contribution
plan or plans which is equal to or greater than 5% of the IRC 415
Compensation that he received during such Plan Year from the employers
maintaining plans included in the Aggregation Group, the minimum benefit
described above in this Section 4.6(C) shall not apply to such Participant.
For the purposes of this Section 4.6(C), a Participant's "IRC 416 Final
Average Monthly Compensation" shall be equal to his average monthly rate of
IRC 415 Compensation for the five consecutive calendar years, which are
prior to the January 1st immediately following (i) the date of the Partici-
pant's retirement or termination of service or (ii) the close of the last
Plan Year in which the Plan is top-heavy, whichever is earlier, during which
he received the highest aggregate IRC 415 Compensation. Such average
monthly rate will be determined by dividing the total of such IRC 415
Compensation that he received during such five-consecutive-calendar year
period from the employers maintaining plans included in the Aggregation
Group by the product equal to 12 times the number of years of Vesting
Service which he accrued during such five-calendar-year period. In the
event that the Participant does not receive both IRC 415 Compensation and
Vesting Service during a calendar year or calendar years, such calendar year
or calendar years during which he did not receive both IRC 415 Compensation
and Vesting Service shall be ignored and excluded in determining the five
consecutive calendar years during which he received the highest aggregate
IRC 415 Compensation.
(D) Maximum Amount of Retirement Income Due to Restrictions of Section
416(h) of the Code if Plan Is Top-Heavy: Any provision of Section 4.1(A)
hereof to the contrary notwithstanding, the monthly retirement income
payable during any Plan Year that the Plan is top-heavy to a Participant
hereunder who is a participant in both a defined contribution plan and a
defined benefit plan, which are either maintained by the Employer or
included in the Aggregation Group, shall not exceed the maximum amount
permitted under Section 416(h) of the Code. The benefits payable under the
defined benefit plans shall be reduced, if necessary, so that such maximum
is not exceeded.
SECTION 5
MISCELLANEOUS PROVISIONS REGARDING PARTICIPANTS
5.1 - PARTICIPANTS TO FURNISH REQUIRED INFORMATION
Each Participant, his spouse and his Beneficiaries and joint pensioners
will furnish to the Committee such information as the Committee considers
necessary or desirable for purposes of administering the Plan, and the
provisions of the Plan respecting any payments thereunder are conditional
upon the Participant's, Beneficiary's or joint pensioner's furnishing
promptly such true, full and complete information as the Committee may
request.
Each Participant will submit proof of his age and marital status and
proof of the age and continued life of each Beneficiary and joint pensioner
designated or selected by him to the Committee at such time as required by
the Committee. The Committee will, if such proof of age, marital status or
continued life is not submitted as required, use as conclusive evidence
thereof, such information as is deemed by it to be reliable, regardless of
the source of such information. Any adjustment required by reason of lack
of proof or the misstatement of the age of persons entitled to benefits
hereunder, by the Participant or otherwise, will be in such manner as the
Committee deems equitable.
Any notice or information which, according to the terms of the Plan or
the rules of the Committee, must be filed with the Committee, shall be
deemed so filed at the time that it is actually received by the Committee.
The Employer, the Committee, and any person or persons involved in the
administration of the Plan shall be entitled to rely upon any certification,
statement, or representation made or evidence furnished by an employee,
Participant, Beneficiary or joint pensioner with respect to his age or other
facts required to be determined under any of the provisions of the Plan and
shall not be liable on account of the payment of any monies or the doing of
any act or failure to act in reliance thereon. Any such certification,
statement, representation or evidence, upon being duly made or furnished,
shall be conclusively binding upon the person furnishing same; but it shall
not be binding upon the Employer, the Committee, or any other person or
persons involved in the administration of the Plan, and nothing herein
contained shall be construed to prevent any of such parties from contesting
any such certification, statement, representation or evidence or to relieve
the Employee, Participant, Beneficiary or joint pensioner from the duty of
submitting satisfactory proof of any such fact.
5.2 - BENEFICIARIES
Subject to the provisions of the following paragraphs of this section,
each Participant may, on a form provided for that purpose, signed and filed
with the Committee, designate a Beneficiary to receive the benefit, if any,
which may be payable under the Plan in the event of his death, and each
designation may be revoked by such Participant by signing and filing with
the Committee a new designation of Beneficiary form.
If a deceased Participant, who has been married to his spouse throughout
the one-year period immediately preceding his death, has designated a person
other than his spouse as his Beneficiary and such spouse has not consented
in accordance with the provisions of Section 4.1(E) hereof, either after the
date of the Participant's separation from service or on or after the date
that the Participant attained the age of 35 years, to such other person
being designated as the Beneficiary, the provisions of Section 4.1(D)
hereof, relating to the qualified preretirement survivor annuity payable to
his surviving spouse, will apply in the event of his death on or after his
Initial Vesting Date, and the Participant will automatically be deemed to
have changed his designation of Beneficiary to the extent necessary to
comply with the provisions of Section 4.1(D).
If a deceased Participant who had a spouse at the date of his death
failed to designate a Beneficiary in accordance with the provisions of this
section, he shall be deemed to have designated his spouse as his
Beneficiary. If a deceased Participant who had no spouse at the date of his
death failed to designate a Beneficiary in accordance with the provisions of
this section or if a deceased Participant (whether or not he has a surviving
spouse at the date of his death) had previously designated a Beneficiary but
no designated Beneficiary is surviving at the date of his death, the death
benefit, if any, that may be payable under the Plan with respect to such
deceased Participant shall be paid to the estate of such deceased
Participant.
5.3 - CONTINGENT BENEFICIARIES
In the event of the death of a Beneficiary who survives the Participant
and who, at the Beneficiary's death, is receiving benefits pursuant to the
provisions of the Plan within any certain period specified under the Plan
with respect to which death benefits are payable under the Plan after the
Participant's death, the same amount of monthly retirement income that the
Beneficiary was receiving shall be payable for the remainder of such
specified certain period to a person designated by the Participant (in the
manner provided in Section 5.2) to receive the remaining death benefits, if
any, payable in the event of such contingency or, if no person was so named,
then to a person designated by the Beneficiary (in the manner provided in
Section 5.2) of the deceased Participant to receive the remaining death
benefits, if any, payable in the event of such contingency; provided,
however, that if no person so designated be living upon the occurrence of
such contingency, then the remaining death benefits, if any, shall be
payable for the remainder of such specified certain period, to the estate of
such deceased Beneficiary.
5.4 - PARTICIPANTS' RIGHTS IN TRUST FUND
No Participant or other person shall have any interest in or any right
in, to or under the Trust Fund, or any part of the assets held thereunder,
except as to the extent expressly provided in the Plan.
5.5 - BENEFITS NOT ASSIGNABLE
Except to the extent required to comply with a qualified domestic rela-
tions order as described in Sections 401(a)(13) and 414(p) of the Code, no
benefits, rights or accounts shall exist under the Plan which are subject in
any manner to voluntary or involuntary anticipation, alienation, sale,
transfer, assignment, pledge, encumbrance or charge, and any attempt so to
anticipate, alienate, transfer, assign, pledge, encumber or charge the same
shall be null and void; nor shall any such benefit, right or account under
the Plan be in any manner liable for or subject to the debts, contracts,
liabilities, engagements, torts or other obligations of the person entitled
to such benefit, right or account; nor shall any benefit, right or account
under the Plan constitute an asset in case of the bankruptcy, receivership
or divorce of any person entitled under the Plan; and any such benefit,
right or account under the Plan shall be payable only directly to the
Participant or Beneficiary, as the case may be. Where a qualified domestic
relations order has been received by the Committee, the terms and benefits
of the Plan will be considered to have been modified with respect to the
Participant affected to the extent that such order requires benefits to be
paid to specified individuals other than the Participant.
5.6 - BENEFITS PAYABLE TO MINORS AND INCOMPETENTS
In the event that a benefit is payable to a person who is a minor or
incompetent, the Committee may direct that such benefit be paid to such
person's legal representative, or in the case of a minor for whom no legal
representative has been appointed, to a parent of such minor or incompetent,
or to the custodian for such minor under the Uniform Gift to Minors Act or
Uniform Transfers to Minors Act, if such is permitted by the laws of the
state in which the minor resides.
5.7 - CONDITIONS OF EMPLOYMENT NOT AFFECTED BY PLAN
The establishment and maintenance of the Plan will not be construed as
conferring any legal rights upon any Participant to the continuation of his
employment with the Employer, nor will the Plan interfere with the right of
the Employer to discipline, lay off or discharge any Participant. The
adoption and maintenance of the Plan shall not be deemed to constitute a
contract between the Employer and any employee or to be a consideration for,
inducement to, or condition of employment of any person.
5.8 - NOTIFICATION OF MAILING ADDRESS
Each Participant and other person entitled to benefits hereunder shall
file with the Committee from time to time, in writing, his post office
address and each change of post office address, and any check representing
payment hereunder and any communication addressed to a Participant, a former
Participant, a Beneficiary or a pensioner hereunder at his last address
filed with the Committee (or, if no such address has been filed, then at his
last address as indicated on the records of the Employer) shall be binding
on such person for all purposes of the Plan, and neither the Committee nor
the Trustee shall be obliged to search for or ascertain the location of any
such person.
If the Committee, for any reason, is in doubt as to whether retirement
income payments are being received by the person entitled thereto, it may,
by registered mail addressed to such person and to such person's designated
Beneficiary, if any, at their address last known to the Committee, notify
such person and his Beneficiary that all unmailed and future retirement
income payments shall be henceforth withheld until the Committee is provided
with evidence of such person's continued life and his proper mailing address
or with evidence of such person's death. In the event that (i) such
notification is mailed to such person and his designated Beneficiary, (ii)
the Committee is not furnished with evidence of such person's continued life
and proper mailing address or with evidence of his death within three years
of the date such notification was mailed and (iii) the Committee is unable
to find any person to whom payment is due under the provisions of the Plan
within three years of the date such notification was mailed, all retirement
income and other benefit payments due shall be forfeited at the end of such
three-year period following the date such notification was mailed; provided,
however, if claim for any forfeited benefit is subsequently made by any such
person to whom payment is due under the Plan, such forfeited benefits due
such person shall be reinstated.
5.9 - WRITTEN COMMUNICATIONS REQUIRED
Any notice, request, instruction, or other communication to be given or
made hereunder shall be in writing and may be delivered to the addressee
personally, may be delivered to the addressee by a commercial delivery
service at the last address for notice shown on the Committee's records, or
may be deposited in the United States mail fully postpaid and properly
addressed to such addressee at the last address for notice shown on the
Committee's records.
5.10 - BENEFITS PAYABLE AT OFFICE OF TRUSTEE
All benefits hereunder, and installments thereof, shall be payable at
the office of the Trustee.
5.11 - APPEAL TO COMMITTEE
A Participant or Beneficiary who feels he is being denied any benefit or
right provided under the Plan must file a written claim with the Committee.
All such claims shall be considered filed on the date the claim is received
by the Committee.
Upon the receipt of such a claim and in the event the claim is denied,
the Committee shall, within 90 days after its receipt of such claim, provide
such claimant a written statement which shall be delivered or mailed to the
claimant by certified or registered mail to his last known address, which
statement shall contain the following:
(A) the specific reason or reasons for the denial of benefits;
(B) a specific reference to the pertinent provisions of the Plan upon
which the denial is based;
(C) a description of any additional material or information that is
necessary; and
(D) an explanation of the review procedure provided below;
provided, however, in the event that special circumstances require an exten-
sion of time for processing the claim, the Committee shall provide such
claimant with such written statement described above not later than 180 days
after receipt of the claimant's claim, but, in such event, the Committee
shall furnish the claimant, within 90 days after its receipt of such claim,
written notification of the extension explaining the circumstances requiring
such extension and the date that it is anticipated that such written
statement will be furnished.
Within 60 days after receipt of a notice of a denial of benefits as
provided above, if the claimant disagrees with the denial of benefits, the
claimant or his authorized representative must request, in writing, that the
Committee review his claim and may request to appear before the Committee
for such review. In conducting its review, the Committee shall consider any
written statement or other evidence presented by the claimant or his autho-
rized representative in support of his claim. The Committee shall give the
claimant and his authorized representative reasonable access to all
pertinent documents which the Committee deems pertinent and necessary for
the preparation of his claim.
Within 60 days after receipt by the Committee of a written application
for review of his claim, the Committee shall notify the claimant of its
decision by delivery or by certified or registered mail to his last known
address; provided, however, in the event that special circumstances require
an extension of time for processing such application, the Committee shall so
notify the claimant of its decision not later than 120 days after receipt of
such application, but, in such event, the Committee shall furnish the
claimant, within 60 days after its receipt of such application, written
notification of the extension explaining the circumstances requiring such
extension and the date that it is anticipated that its decision will be
furnished. The decision of the Committee shall be in writing and shall
include the specific reasons for the decision presented in a manner
calculated to be understood by the claimant and shall contain reference to
all relevant Plan provisions on which the decision was based. The decision
of the Committee shall be final and conclusive.
SECTION 6
MISCELLANEOUS PROVISIONS REGARDING THE EMPLOYER
6.1 - CONTRIBUTIONS
No contributions shall be required of or permitted to be made by any
Participant. The Employer intends, but does not guarantee, to make annual
contributions in amounts at least equal to the amounts, if any, required to
meet the minimum funding requirements of Section 412 of the Code, as
specified in the actuary's valuation reports for the applicable periods of
time. Subject to applicable provisions of law, neither the Employer nor any
of its officers, agents or employees, nor any member of its board of
directors, nor any partner or sole proprietor, guarantees, in any manner the
payment of benefits under the Plan.
6.2 - EMPLOYER'S CONTRIBUTIONS IRREVOCABLE
The Employer shall have no right, title or interest in the Trust Fund or
in any part thereof, and no contributions made thereto shall revert to the
Employer except such part of the Trust Fund, if any, that remains therein
after the satisfaction of all liabilities to persons entitled to benefits
under the Plan and except as provided in the following paragraph.
All contributions to the Plan are made subject to the qualification of
the Plan under Section 401 of the Code and to their deductibility under
Section 404 of said Code. In the event that the Plan represents a newly
established retirement plan (and not an amendment of an existing retirement
plan) with respect to an Employer and such qualification of the Plan is
denied, the total contributions of the Employer, adjusted for any earnings
or losses of the Trust Fund attributable thereto, shall be returned to the
Employer within one year of the date of denial of qualification. In the
event that a contribution either is made by a good faith mistake of fact or
is disallowed as a tax deductible expense under Section 404 of the Code, the
excess of the amount contributed over either the amount that would have been
contributed if there had not been such a mistake or the amount that is
allowed as a tax deductible expense, as the case may be, with such excess
reduced by the net losses, if any, of the Trust Fund attributable thereto
(but without any increase due to the net earnings, if any, of the Trust Fund
attributable thereto), shall be returned to the Employer within one year of
the date of the mistaken payment or the disallowance of the deduction, as
the case may be.
6.3 - FORFEITURES
Forfeitures shall not be used to increase the benefits that any Partici-
pant would otherwise receive under the Plan at any time prior to the termi-
nation of the Plan but shall be anticipated in determining the costs under
the Plan.
6.4 - AMENDMENT OF PLAN
The Plan may be amended from time to time in any respect whatever by
formal action on the part of the Company in the manner described in Section
6.7 hereof specifying such amendment, subject only to the following
imitations:
(A) Under no condition shall such amendment result in or permit the
return or repayment to any Employer of any property held or acquired by the
Trustee hereunder or the proceeds thereof or result in or permit the
distribution of any such property for the benefit of anyone other than the
Participants and their Beneficiaries or joint pensioners, except to the
extent provided by Section 4.5 and Section 6.6 hereof with respect to
termination of the Plan and expenses of administration, respectively.
(B) Under no condition shall such amendment change the duties or
responsibilities of the Trustee hereunder without its written consent.
Except to the extent permissible to comply with any laws or regulations
of the United States or of any state to qualify this as a tax-exempt plan
and trust, no amendment may be made that would result in a slower rate of
vesting under the Plan for any Participant who has completed at least three
years of Vesting Service as of the effective date of such amendment or, if
later, as of the date such amendment is adopted, unless such amendment
provides that each such Participant may elect, during the period described
below, to retain the rate of vesting in effect under the Plan prior to such
amendment in lieu of the new rate of vesting. The period during which the
election described in the preceding sentence may be made shall begin no
later than the date the Plan amendment is adopted and shall end no earlier
than 60 days after (i) the date the amendment is adopted, (ii) the effective
date of such amendment or (iii) the date the Participant is notified in
writing of the amendment by the Committee, whichever is the latest date to
occur.
Subject to the foregoing limitations, any amendment may be made retro-
actively which, in the judgment of the Committee, is necessary or advisable
provided that such retroactive amendment does not deprive a Participant,
without his consent, of a right to receive benefits hereunder which have
already vested and matured in such Participant, except such modification or
amendment as shall be necessary to comply with any laws or regulations of
the United States or of any state to qualify this as a tax-exempt plan and
trust.
The participation in the Plan of Employers other than the Company shall
not limit the power of the Company under the foregoing provisions, and all
amendments by the Company to the Plan shall be binding upon all other
Employers. Each Employer may, with the consent of the Company, modify the
provisions of the Plan as it pertains only to its own employees by the
adoption, by formal action on its part in the manner described in Section
6.7 hereof, of a Supplement to the Plan specifying such modifications that
shall pertain only to its employees.
Any Supplement to the Plan adopted by an Employer or Employers shall
apply only to the employees of the Employer or Employers adopting such
supplement and shall not affect the continued operation of the Plan with
respect to any other Employers.
6.5 - TERMINATION OF PLAN
The Plan may be terminated by the Employers at any time by formal
action, in the manner described in Section 6.7 hereof, on the part of each
Employer then a party to the Plan specifying (a) that the Plan is being
terminated and (b) the date as of which the termination is to be effective.
In the event the Plan is to be terminated, the Employer shall notify the
Committee and the Trustee of such termination.
The Plan or participation in the Plan may be terminated in the manner
described above with respect to one, but less than all, of the Employers
theretofore parties hereto and the Plan continued for the remaining Employer
or Employers. The Plan or participation in the Plan shall automatically
terminate as to a particular Employer only upon adjudication by a court of
competent jurisdiction that such Employer is bankrupt or insolvent (whether
such proceedings be voluntary or involuntary), upon dissolution of such
Employer or upon its liquidation, merger or consolidation without provisions
being made by its successor, if any, for the continuation of the Plan.
In the event of the liquidation, dissolution, merger or consolidation of
the Employer under such circumstances that there shall be a successor
person, firm or corporation continuing and carrying on all or a substantial
part of its business, such successor may be substituted for the Employer
under the terms of the Plan by formal action on the part of such successor
in the manner described in Section 6.7 hereof specifying its election to
continue the Plan.
Any provisions herein to the contrary notwithstanding, in the event of
termination of the Plan the following will apply:
(1) a disability retirement benefit shall not be payable on behalf of
any Participant whose service is terminated on or after the date
of termination of the Plan by reason of his total and permanent
disability; and
(2) the death benefits provided under Sections 2.3(G), 2.4(A)(3) and
2.4(B) (or under any Supplements hereto) shall not be payable on
behalf of any Participant whose death occurs on or after the date
of termination of the Plan, but the Qualified Preretirement
Survivor Annuity may be payable on behalf of any such Participant
whose death occurs prior to his Annuity Starting Date based upon
the amount of retirement income, if any, that is payable on his
behalf under the Plan as of the date of his death.
6.6 - EXPENSES OF ADMINISTRATION
The Employer may pay all expenses incurred in the establishment and
administration of the Plan, including expenses and fees of the Trustee, but
it shall not be obligated to do so, and any such expenses not so paid by the
Employer shall be paid from the Trust Fund.
6.7 - FORMAL ACTION BY EMPLOYER
Any formal action herein permitted or required to be taken by an
Employer shall be:
(1) if and when a partnership, by written instrument executed by one
or more of its general partners or by written instrument executed
by a person or group of persons who has been authorized by written
instrument executed by one or more general partners as having
authority to take such action;
(2) if and when a proprietorship, by written instrument executed by
the proprietor or by written instrument executed by a person or
group of persons who has been authorized by written instrument
executed by the proprietor as having authority to take such
action;
(3) if and when a corporation, by resolution of its board of directors
or other governing board, or by written instrument executed by a
person or group of persons who has been authorized by resolution
of its board of directors or other governing board as having
authority to take such action; or
(4) if and when a joint venture, by formal action on the part of the
joint venturers in the manner described above.
SECTION 7
ADMINISTRATION
7.1 - ADMINISTRATION BY COMMITTEE
The Plan will be administered by the Retirement Committee appointed by
the Company by formal action on its part in the manner described in Section
6.7 hereof. Such Committee will consist of (a) a chairman and at least two
additional members or (b) a single individual. Each member may, but need
not, be a director, proprietor, partner, officer or employee of any
Employer, and each such member shall be appointed by the Company to serve
until his successor shall be appointed in like manner. Any member of the
Committee may resign by delivering his written resignation to the Company
and to the other members, if any, of the Committee. The Company by formal
action on its part in the manner described in Section 6.7 hereof may remove
any member of the Committee by so notifying the member and other Committee
members, if any, in writing. Vacancies on the Committee shall be filled by
formal action on the part of the Company in the manner described in Section
6.7 hereof.
The Committee, in its discretion, may delegate all or any part of its
responsibilities of administering the provisions of the Plan with respect to
any Employer or group of Employers to an administrative committee which will
be appointed by such Employer or group of Employers by formal action on its
or their part in the manner described in Section 6.7 hereof. In such event,
references to the "Committee" in any provisions hereof which apply with
respect to such delegated responsibilities shall refer to such
administrative committee instead of the Retirement Committee.
7.2 - OFFICERS AND EMPLOYEES OF COMMITTEE
The Committee may appoint a secretary who may, but need not, be a member
of the Committee and may employ such agents, clerical and other services,
legal counsel, accountants and actuaries as may be required for the purpose
of administering the Plan. Any person or firm so employed may be a person
or firm then, theretofore or thereafter serving the Employer in any
capacity. The Committee and any individual member of the Committee and any
agent thereof shall be fully protected when acting in a prudent manner and
relying in good faith upon the advice of the following professional
consultants or advisors employed by the Employer or the Committee: any
attorney insofar as legal matters are concerned, any certified public
accountant insofar as accounting matters are concerned and any enrolled
actuary insofar as actuarial matters are concerned.
7.3 - ACTION BY COMMITTEE
A majority of the members of the Committee shall constitute a quorum for
the transaction of business and shall have full power to act hereunder. The
Committee may act either at a meeting at which a quorum is present or by a
writing subscribed by at least a majority of the members of the Committee
then serving. Any written memorandum signed by the secretary or any member
of the Committee who has been authorized to act on behalf of the Committee
shall have the same force and effect as a formal resolution adopted in open
meeting. Minutes of all meetings of the Committee and a record of any
action taken by the Committee shall be kept in written form by the secretary
appointed by the Committee or, if no secretary has been appointed by the
Committee, by an individual member of the Committee. The Committee shall
give to the Trustee any order, direction, consent or advice required under
the terms of the Trust Agreement, and the Trustee shall be entitled to rely
on any instrument delivered to it and signed by the secretary or any
authorized member of the Committee as evidencing the action of the
Committee.
A member of the Committee may not vote or decide upon any matter
relating solely to himself or vote in any case in which his individual right
or claim to any benefit under the Plan is particularly involved. If, in any
case in which any Committee member is so disqualified to act, the remaining
members cannot agree or if there is only one individual member of the
Committee, the Company, by formal action on its part in the manner described
in Section 6.7 hereof, will appoint a temporary substitute member to
exercise all of the powers of a qualified member concerning the matter in
which the disqualified member is not qualified to act.
7.4 - RULES AND REGULATIONS OF COMMITTEE
The Committee shall have the authority to make such rules and regula-
tions and to take such action as may be necessary to carry out the
provisions of the Plan and will, subject to the provisions of the Plan,
decide any questions arising in the administration, interpretation and
application of the Plan, which decisions shall be conclusive and binding on
all parties. The Committee may allocate or delegate any part of its
authority and duties as it deems expedient.
7.5 - POWERS OF COMMITTEE
In order to effectuate the purposes of the Plan, the Committee shall
have the power to construe the Plan and to make equitable adjustments for
any mistakes or errors made in the administration of the Plan, and all such
actions or determinations made by the Committee in good faith shall not be
subject to review by anyone. The Committee is given the power to appoint,
in its discretion, one or more Investment Managers to manage, including the
power to acquire or dispose of, all or any portion of the assets of the Plan
and Trust Fund. The Committee is also given the power to serve as paying
agent for the Trust Fund, if it so desires, or to appoint, in its
discretion, a paying agent or agents to disburse the benefits payable from
the Trust Fund and to authorize and direct the Trustee to make distribution
to the Committee as paying agent or to such other paying agent as the
Committee shall direct in writing.
7.6 - DUTIES OF COMMITTEE
The Committee shall, as a part of its general duty to supervise and
administer the Plan:
(1) determine all facts and maintain records with respect to any
Employee's age, amount of Compensation, length of service, Hours
of Service, Vesting Service, Credited Service and date of initial
coverage under the Plan, and by application of the facts so deter-
mined and any other facts deemed material, determine the amount,
if any, of benefit payable under the Plan on behalf of a
Participant;
(2) establish, carry out and periodically review a funding policy and
method consistent with the objectives of the Plan and the appli-
cable lawful requirements of Title I of the Employee Retirement
Income Security Act of 1974; provided, however, that any decisions
pertaining to the amount and timing of contributions by the
Employer to the Trust Fund are delegated to the Employer;
(3) give the Trustee specific directions in writing with respect to:
(a) the making of distribution payments, giving the names of the
payees, the amounts to be paid and the time or times when
payments shall be made; and
(b) the making of any other payments which the Trustee is not by
the terms of the Trust Agreement authorized to make without a
direction in writing of the Committee;
(4) furnish the Trustee with such information (including information
relative to the liquidity needs of the Plan) as is deemed
necessary for the Trustee to carry out the purposes of the Trust
Agreement;
(5) comply with all applicable lawful reporting and disclosure
requirements of the Employee Retirement Income Security Act of
1974;
(6) comply (or transfer responsibility for compliance to the Trustee)
with all applicable Federal income tax withholding requirements
for distribution payments imposed by the Tax Equity and Fiscal
Responsibility Act of 1982;
(7) engage on behalf of all Plan Participants an independent qualified
public accountant to examine the financial statements and other
records of the Plan for the purposes of an annual audit and
opinion as to whether the financial statements and schedules in
the annual report of the Plan are presented fairly in conformity
with generally accepted accounting principles, unless such audit
is waived by the Secretary of Labor or his delegate or unless such
audit is otherwise not required; and
(8) engage on behalf of all Plan Participants an enrolled actuary to
prepare required actuarial statements, unless this requirement is
waived by the Secretary of Labor or his delegate or unless such
actuarial statements are otherwise not required.
The foregoing list of express duties is not intended to be either
complete or conclusive, and the Committee shall, in addition, exercise such
other powers and perform such other duties as it may deem necessary,
desirable, advisable or proper for the supervision and administration of the
Plan.
7.7 - INDEMNIFICATION OF MEMBERS OF COMMITTEE
To the extent not covered by insurance or if there is a failure to
provide full insurance coverage for any reason and to the extent permissible
under corporate by-laws and other applicable laws and regulations, the
Employers agree to hold harmless and indemnify the members of the Committee
against any and all claims and causes of action by or on behalf of any and
all parties whomsoever, and all losses therefrom, including, without
limitation, costs of defense and attorneys' fees, based upon or arising out
of any act or omission relating to or in connection with the Plan and Trust
Agreement other than losses resulting from any such person's fraud or
willful misconduct.
7.8 - ACTUARY
The actuary will do such technical and advisory work as the Committee or
the Employer may request, including analysis of the experience of the Plan
from time to time, the preparation of actuarial tables for the making of
computations thereunder, and the submission of actuarial reports to Company,
which reports shall contain an actuarial valuation showing the financial
condition of the Plan, a statement of the contributions to be made by the
Employers and such other information as may be required by the Committee.
The actuary shall be appointed by the Committee with the approval of the
Company to serve as long as it is agreeable to the Committee, the Company
and the actuary.
7.9 - FIDUCIARIES
The Trustee is the named fiduciary hereunder with respect to the powers,
duties and responsibilities of investment of the Trust Fund, and the
Committee is the plan administrator and is the named fiduciary hereunder
with respect to the other powers, duties and responsibilities of the
administration of the Plan; provided, however, that certain powers, duties
and responsibilities of each of said named fiduciaries are specifically
delegated to others under the provisions of the Plan and Trust Agreement,
and other powers, duties and responsibilities of any fiduciaries may be
delegated by written agreement to others to the extent permitted under the
provisions of the Plan and Trust Agreement.
The powers and duties of each fiduciary hereunder, whether or not a
named fiduciary, shall be limited to those specifically delegated to each of
them under the terms of the Plan and Trust Agreement. It is intended that
the provisions of the Plan and Trust Agreement allocate to each fiduciary
the individual responsibilities for the prudent execution of the functions
assigned to each fiduciary. None of the allocated responsibilities or any
other responsibilities shall be shared by two or more fiduciaries unless
such sharing shall be provided by a specific provision in the Plan or the
Trust Agreement. If any of the enumerated responsibilities of a fiduciary
are specifically waived by the Secretary of Labor, then such enumerated
responsibilities shall also be deemed to be waived for the purposes of the
Plan and Trust Agreement. Whenever one fiduciary is required by the Plan or
the Trust Agreement to follow the directions of another fiduciary, the two
fiduciaries shall not be deemed to have been assigned a share of any
responsibility, but the responsibility of the fiduciary giving the
directions shall be deemed to be his sole responsibility and the
responsibility of the fiduciary receiving those directions shall be to
follow same insofar as such instructions on their face are proper under
applicable law. Any fiduciary may employ one or more persons to render
advice with respect to any responsibility such fiduciary has under the Plan
or Trust Agreement.
Each fiduciary may, but need not, be a director, proprietor, partner,
officer or employee of the Employer. Nothing in the Plan shall be construed
to prohibit any fiduciary from:
(1) serving in more than one fiduciary capacity with respect to the
Plan and Trust Agreement;
(2) receiving any benefit to which he may be entitled as a Participant
or Beneficiary in the Plan, so long as the benefit is computed and
paid on a basis that is consistent with the terms of the Plan as
applied to all other Participants and Beneficiaries; or
(3) receiving any reasonable compensation for services rendered, or
for the reimbursement of expenses properly and actually incurred
in the performance of his duties with respect to the Plan, except
that no person so serving who already receives full-time pay from
an Employer shall receive compensation from the Plan, except for
reimbursement of expenses properly and actually incurred.
Each fiduciary shall be bonded as required by applicable law or statute
of the United States, or of any state having appropriate jurisdiction,
unless such bond may under such law or statute be waived by the parties to
the Trust Agreement. The Employer shall pay the cost of bonding any
fiduciary who is an employee of the Employer.
7.10 - APPLICABLE LAW
The Plan will, unless superseded by federal law, be construed and
enforced according to the laws of the State of Louisiana, and all provisions
of the Plan will, unless superseded by federal law, be administered
according to the laws of the said state.
SECTION 8
TRUST FUND
8.1 - PURPOSE OF TRUST FUND
The Trust Fund has been created and will be maintained for the purposes
of the Plan, and the moneys thereof will be invested in accordance with the
terms of the agreement and declaration of trust which forms a part of the
Plan. All contributions will be paid into the Trust Fund, and all benefits
under the Plan will be paid from the Trust Fund, except to the extent
provided by Section 3.5 hereof.
8.2 - BENEFITS SUPPORTED ONLY BY TRUST FUND
Subject to applicable provisions of law, any person having any claim
under the Plan will look solely to the assets of the Trust Fund for satis-
faction.
8.3 - TRUST FUND APPLICABLE ONLY TO PAYMENT OF BENEFITS
The Trust Fund will be used and applied only in accordance with the
provisions of the Plan, to provide the benefits thereof, and no part of the
corpus or income of the Trust Fund will be used for, or diverted to,
purposes other than for the exclusive benefit of Participants and other
persons thereunder entitled to benefits, except to the extent provided in
Section 4.5 and Section 6.6 hereof with respect to termination of the Plan
and expenses of administration, respectively.
IN WITNESS WHEREOF, MELAMINE CHEMICALS, INC. has caused this instrument
to be executed by its duly authorized officers on this 9th day of
September, 1996, effective as of July 1, 1989.
(CORPORATE SEAL)
WITNESSES: MELAMINE CHEMICALS, INC.
/s/ Nila Jordan BY /s/ Frederic R. Huber
- ---------------- -----------------------
/s/ Keely Landry TITLE: PRESIDENT AND CEO
- -----------------
ACKNOWLEDGEMENT
STATE OF LOUISIANA
PARISH OF ASCENSION
BEFORE ME, the undersigned Notary Public, personally came and appeared
FREDERIC R. HUBER, President and CEO, of Melamine Chemicals, Inc., who being
by me sworn did depose and state that he signed the foregoing restated
Retirement Plan for Employees of Melamine Chemicals, Inc. as his free act and
deed on behalf of Melamine Chemicals, Inc. for the purposes therein set forth.
/s/ Frederic R. Huber
----------------------
SWORN TO AND SUBSCRIBED BEFORE ME
THIS 9TH DAY OF SEPTEMBER, 1996.
/s/ Notary Public
- ------------------
NOTARY PUBLIC
MELAMINE CHEMICALS, INC.
RETIREMENT PLAN
AMENDMENT NO. 1
WHEREAS, the Retirement Plan for Employees of Melamine Chemicals,
Inc. was amended and restated in its entirety on September 9, 1996;
WHEREAS, the Board of Directors reserved the right to amend the
Plan; and
WHEREAS, the Board of Directors has authorized the amendment of
the Plan in order to set forth the rules that apply if a Participant
eligible for an early retirement benefit does not elect to commence
receiving the benefit immediately, and to make it clear that a
Participant who is otherwise not eligible for an immediate
distribution can elect to receive an immediate benefit if he elects to
so within 90 days following the termination of employment;
NOW, THEREFORE, the Plan is hereby amended as follows, effective
immediately:
I.
Section 2.2(C) of the Plan is hereby amended and restated to read
in its entirety as follows:
(C) Payment of Retirement Income: The retirement income
payable in the event of early retirement will be payable on
the first day of the month. The payments will normally be
made as follows: the first payment will be made on the
Participant's Early Retirement Date and the last payment
will be the payment due immediately preceding the retired
Participant's death; except that, in the event the
Participant dies before he has received retirement income
payments for a period of 10 years, the same monthly benefit
that was payable to the Participant will be paid for the
remainder of such 10-year period to the Beneficiary
designated by the Participant or, if no designated
Beneficiary is surviving, the same monthly benefit will be
paid for the remainder of such 10-year period as provided in
Sections 5.2 and 5.3 hereof. Instead of an immediate
benefit, a Participant can elect to defer the commencement
of retirement income payments, in which event the provisions
of Section 2.4(A) (other than Section 2.4(A)(1)) shall
apply, except that all references therein to Section
2.4(A)(1) shall be deemed to be references to Section
2.2(B). If the benefit commences after Early Retirement
Date the benefit shall be the actuarial equivalent of the
benefit that would have been paid commencing at Early
Retirement Date.
II.
The is hereby added to Section 2.4(A) of the Plan a new paragraph
(9) which shall read in its entirety as follows:
(9) If A Participant terminates employment under
circumstances that would not otherwise allow him to receive
an immediate distribution of his benefit under the Plan, the
Participant can elect, no later than 90 days following
termination of employment, to receive an immediate
distribution of his benefit, in the form described at
Section 2.4(A)(2) or any of the optional forms described at
Section 3.1.
IN WITNESS WHEREOF, MELAMINE CHEMICALS, INC. has caused this
instrument to be executed in multiple originals by its duly authorized
officer on this 7th day of August, 1997.
WITNESSES: MELAMINE CHEMICALS, INC.
/s/ Keely B. Landry BY /s/ Frederic R. Huber
- -------------------- ----------------------
/s/ Nila N. Jordan TITLE: PRESIDENT AND CEO
- --------------------
ACKNOWLEDGEMENT
STATE OF LOUISIANA
PARISH OF ASCENSION
BEFORE ME, the undersigned Notary Public, personally came and
appeared FREDERIC R. HUBER, President and CEO, of Melamine Chemicals,
Inc., who being by me sworn did depose and state that he signed the
foregoing restated Retirement Plan for Employees of Melamine
Chemicals, Inc. as his free act and deed on behalf of Melamine
Chemicals, Inc. for the purposes therein set forth.
/s/ Frederic R. Huber
---------------------
SWORN TO AND SUBSCRIBED BEFORE ME
THIS 7TH DAY OF AUGUST, 1997.
/s/ Notary Public
- ------------------
NOTARY PUBLIC
Melamine Chemicals, Inc.
Exhibit to Form 10-K
10.17
Schedule of Differences
between
Indemnity Agreements
The persons listed below have entered into substantially
identical forms of Indemnity Agreements, effective for the duration of
their service as directors. The form of Indemnity Agreement has been
incorporated by reference to the Company's registration statement on
Form S-1 (Registration No. 33-15181).
James W. Cook
Charles McAuley
Scotty B. Patrick
R. Michael Summerford
Daniel D. Reneau, Jr.
Nilon H. Prater
David J. D'Antoni
DESCRIPTION OF
MELAMINE CHEMICALS, INC.
ANNUAL INCENTIVE AWARD PLAN
Each year the board of directors of Melamine Chemicals, Inc.
("Melamine") adopts an Annual Incentive Award Plan (the "Plan"). The
Plan is not set forth in a formal plan document.
All salaried employees of Melamine who are not required to be paid
overtime (currently 32 persons) are eligible to receive annual
incentive cash awards under the Plan in a maximum amount equal to a
percentage of the employee's annual salary. The applicable percentage
is set for each eligible employee each year and for 1997 ranged from a
high of 50% to a low of 6%. All individuals other than officers are
awarded incentives based on a return on equity, yearly performance
evaluation and reaching certain agreed upon goals. All officers are
awarded incentives based on a return on equity and yearly performance
evaluation.
The board of directors have the authority to choose the persons who
are eligible to participate in the Plan each year and set the
percentage of salary for which an employee is eligible. The Board
also has the power to award discretionary bonuses at any time based on
special, highly significant contributions by a particular employee or
group of employees.
CHANGE OF CONTROL SEVERANCE AGREEMENT
AGREEMENT by and between Melamine Chemicals, Inc., a Delaware
corporation (the "Company") and _______________________ (the
"Employee"), dated as of the ___ day of _____ 1992.
The Board of Directors of the Company (the "Board"), has
determined that it is in the best interests of the Company and its
shareholders to assure that the Company will have the continued
dedication of the Employee, notwithstanding the possibility, threat or
occurrence of a Change of Control (as defined below) of the Company.
The Board believes it is imperative to diminish the inevitable
distraction of the Employee by virtue of the personal uncertainties
and risks created by a pending or threatened Change of Control and to
encourage the Employee's full attention and dedication to the Company
currently and in the event of any threatened or pending Change of
Control, and to provide the Employee with compensation and benefits
arrangements upon a Change of Control which ensure that the
compensation and benefits expectations of the Employee will be
satisfied and which are competitive with those of other
corporations. Therefore, in order to accomplish these objectives, the
Board has caused the Company to enter into this Agreement.
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
1. Certain Definitions. (a) The "Effective Date" shall mean
first date during the Change of Control Period (as defined in Section
1(b)) on which a Change of Control (as defined in Section 2) occurs.
Anything in this Agreement to the contrary notwithstanding, if a
Change of Control occurs and if the Employee's employment with the
Company is terminated prior to the date on which the Change of Control
occurs, and if it is reasonably demonstrated by the Employee that such
termination of employment (i) was at the request of a third party who
has taken steps reasonably calculated to effect a Change of Control or
(ii) otherwise arose in connection with or anticipation of a Change of
Control (in each case, a "Potential Change of Control"), then for all
purposes of this Agreement the "Effective Date" shall mean the date
immediately prior to the date of such termination of employment.
(b) The "Change of Control Period" shall mean the period
commencing on the date hereof and ending on November 15, 1992, unless
otherwise extended by the Company.
2. Change of Control. For the purpose of this Agreement, "Change
of Control" shall mean:
(a) The acquisition after the date hereof by any individual,
entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"))
(a "Person") of beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of 20% or more of either (i) the
then outstanding shares of common stock of the Company (the
"Outstanding Company Common Stock") or (ii) the combined voting power
of the then outstanding voting securities of the Company entitled to
vote generally in the election of directors (the "Outstanding Company
Voting Securities"); provided, however, that the following
acquisitions shall not constitute a Change of Control: (i) any
acquisition directly from the Company, (ii) any acquisition by the
Company, (iii) any acquisition by any employee benefit plan (or
related trust) sponsored or maintained by the Company or any
corporation controlled by the Company or (iv) any acquisition by any
corporation pursuant to a transaction which complies with clauses (i),
(ii) and (iii) of subsection (c) of this Section 2; or
(b) Individuals who, as of the date hereof, constitute the Board
(the "Incumbent Board") cease for any reason to constitute at least a
majority of the Board; provided, however, that any individual becoming
a director subsequent to the date hereof whose election, or nomination
for election by the Company's shareholders, was approved by a vote of
at least a majority of the directors then comprising the Incumbent
Board shall be considered as though such individual were a member of
the Incumbent Board, but excluding, for this purpose, any such
individual whose initial assumption of office occurs as a result of an
actual or threatened election contest with respect to the election or
removal of directors or other actual or threatened solicitation of
proxies or consents by or on behalf of a Person other than the Board;
or
(c) Approval by the shareholders of the Company of a
reorganization, merger or consolidation (a "Business Combination"), in
each case, unless, following such Business Combination, (i) all or
substantially all of the individuals and entities who were the
beneficial owners, respectively, of the Outstanding Company Common
Stock and Outstanding Company Voting Securities immediately prior to
such Business Combination beneficially own, directly or indirectly,
more than 60% of, respectively, the then outstanding shares of common
stock and the combined voting power of the then outstanding voting
securities entitled to vote generally in the election of directors, as
the case may be, of the corporation resulting from such Business
Combination (including, without limitation, a corporation which as a
result of such transaction owns the Company through one or more
subsidiaries) in substantially the same proportions as their
ownership, immediately prior to such Business Combination of the
Outstanding Company Common Stock and Outstanding Company Voting
Securities, as the case may be, (ii) no Person (excluding any employee
benefit plan (or related trust) of the Company or such corporation
resulting from such Business Combination) beneficially owns, directly
or indirectly, 20% or more of, respectively, the then outstanding
shares of common stock of the corporation resulting from such Business
Combination or the combined voting power of the then outstanding
voting securities of such corporation except to the extent that such
ownership existed prior to the Business Combination and (iii) at least
a majority of the members of the board of directors of the corporation
resulting from such Business Combination were members of the Incumbent
Board at the time of the execution of the initial agreement, or of the
action of the Board, providing for such Business Combination; or
(d) Approval by the shareholders of the Company of (i) a complete
liquidation or dissolution of the Company or (ii) the sale or other
disposition of all or substantially all of the assets of the Company,
other than to a corporation, with respect to which following such sale
or other disposition, (A) more than 60% of, respectively, the then
outstanding shares of common stock of such corporation and the
combined voting power of the then outstanding voting securities of
such corporation entitled to vote generally in the election of
directors is then beneficially owned, directly or indirectly, by all
or substantially all of the individuals and the entities who were the
beneficial owners, respectively, of the Outstanding Company Common
Stock and Outstanding Company Voting Securities immediately prior to
such sale or other disposition in substantially the same proportion as
their ownership, immediately prior to such sale or other disposition,
of the Outstanding Company Common Stock and Outstanding Company Voting
Securities, as the case may be, (B) less than 20% of, respectively,
the then outstanding shares of common stock of such corporation and
the combined voting power of the then outstanding voting securities of
such corporation entitled to vote generally in the election of
directors is then beneficially owned, directly or indirectly, by any
Person (excluding any employee benefit plan (or related trust) of the
Company or such corporation), except to the extent that such Person
owned 20% or more of the Outstanding Company Common Stock or
Outstanding Company Voting Securities prior to the sale or disposition
and (C) at least a majority of the members of the board of directors
of such corporation were members of the Incumbent Board at the time of
the execution of the initial agreement, or of the action of the Board,
providing for such sale or other disposition of assets of the Company
or were elected, appointed or nominated by the Board.
3. Employment Period. The Company hereby agrees to continue
Employee in its employ and the Employee hereby agrees to remain in the
employ of the Company subject to the terms and conditions of this
Agreement, for the period commencing on the Effective Date and ending
on the second anniversary of such date (the "Employment Period").
4. Terms of Employment. (a) Position and Duties. (i) During
the Employment Period, (A) the Employee's position (including status,
offices, titles and reporting requirements), authority, duties and
responsibilities shall be at least commensurate in all material
respects with the most significant of those held, exercised and
assigned at any time during the 120-day period immediately preceding
the Effective Date and (B) the Employee's services shall be performed
at the location where the Employee was employed immediately preceding
the Effective Date or any office or location less than 35 miles from
such location.
(ii) During the Employment Period, and excluding any periods
of vacation and sick leave to which the Employee is entitled, the
Employee agrees to devote reasonable attention and time during normal
business hours to the business and affairs of the Company and, to the
extent necessary to discharge the responsibilities assigned to the
Employee hereunder, to use the Employee's reasonable best efforts to
perform faithfully and efficiently such responsibilities. During the
Employment Period it shall not be a violation of this Agreement for
the Employee to (A) serve on corporate, civic or charitable boards or
committees, (B) deliver lectures, fulfill speaking engagements or
teach at educational institutions and (C) manage personal investments,
so long as such activities do not significantly interfere with the
performance of the Employee's responsibilities as an employee of the
Company in accordance with this Agreement. It is expressly understood
and agreed that to the extent that any such activities have been
conducted by the Employee prior to the Effective Date, the continued
conduct of such activities (or the conduct of activities similar in
nature and scope thereto) subsequent to the Effective Date shall not
thereafter be deemed to interfere with the performance of the
Employee's responsibilities to the Company.
(b) Compensation. (i) Base Salary. During the Employment
Period, the Employee shall receive an annual base salary ("Annual Base
Salary"), which shall be paid at a monthly rate, at least equal to
twelve times the highest monthly base salary paid or payable,
including any base salary which has been earned but deferred to the
Employee by the Company and its affiliated companies in respect of the
twelve-month period immediately preceding the month in which the
Effective Date occurs. During the Employment Period, the Annual Base
Salary shall be reviewed no more than 12 months after the last salary
increase awarded to the Employee prior to the Effective Date and
thereafter at least annually and shall be first increased no more than
12 months after the last salary increase awarded to the Employee prior
to the Effective Date and thereafter at least annually by the higher
of (x) the average increase (excluding promotional increases) in base
salary awarded to the Employee for each of the three full fiscal years
(annualized in the case of any fiscal year consisting of less than
twelve full months or during which the Employee was employed for less
than twelve months) prior to the Effective Date, and (y) the
percentage increase (excluding promotional increases) in base salary
generally awarded to peer executives of the Company and its affiliated
companies for the year of determination. Any increase in Annual Base
Salary shall not serve to limit or reduce any other obligation to the
Employee under this Agreement. Annual Base Salary shall not be reduced
after any such increase and the term Annual Base Salary as utilized in
this Agreement shall refer to Annual Base Salary as so increased. As
used in this Agreement, the term "affiliated companies" shall include
any company controlled by, controlling or under common control with
the Company.
(ii) Annual Bonus. In addition to Annual Base Salary, the
Employee shall be awarded, for each fiscal year ending during the
Employment Period, an annual bonus (the "Annual Bonus") in cash at
least equal to the executive's target bonus under the Company's Annual
Incentive Compensation Plan, or any comparable bonus under a successor
plan, for the last full fiscal year prior to the Change of Control
(annualized in the event that the Employee was not employed by the
Company for the whole of such fiscal year) (the "Recent Annual
Bonus"). Each such Annual Bonus shall be paid no later than the end
of the third month of the fiscal year next following the fiscal year
for which the Annual Bonus is awarded, unless the Employee shall elect
to defer the receipt of such Annual Bonus.
Incentive, Savings and Retirement Plans. During the Employment
Period, the Employee shall be entitled to participate in all
incentive, savings and retirement plans, practices, policies and
programs applicable generally to other peer executives of the Company
and its affiliated companies, but in no event shall such plans,
practices, policies and programs provide the Employee with incentive
opportunities (measure with respect to both regular and special
incentive opportunities, to the extent, if any, that such distinction
is applicable), savings opportunities and retirement benefit
opportunities, in each case, less favorable, in the aggregate, than
the most favorable of those provided by the Company and its affiliated
companies for the Employee under such plans, practices, policies and
programs as in effect at any time during the 120-day period
immediately preceding the Effective Date or if more favorable to the
Employee, those provided generally at any time after the Effective
Date to other peer executives of the Company and its affiliated
companies.
(iv) Welfare Benefit Plans. During the Employment Period, the
Employee and/or the Employee's family, as the case may be, shall be
eligible for participation in an shall receive all benefits under the
welfare benefit plans, practices, policies and programs provided by
the Company and its affiliated companies (including, without
limitation, medical, prescription, dental, disability, salary
continuance, employee life, group life, accidental death and travel
accident insurance plans and programs) to the extent applicable
generally to other peer executives of the Company and its affiliated
companies, but in no event shall such plans, practices, policies and
programs provide the Employee with benefits which are less favorable,
in the aggregate, than the most favorable of such plans, practices,
policies and programs in effect for the Employee at any time during
the 120-day period immediately preceding the Effective Date or, if
more favorable to the Employee, those provided generally at any time
after the Effective Date to other peer executives of the Company and
its affiliated companies.
(v) Expenses. During the Employment Period, the Employee shall
be entitled to receive prompt reimbursement for all reasonable
expenses incurred by the Employee in accordance with the most
favorable policies, practices and procedures of the Company and its
affiliated companies in effect for the Employee at any time during the
120-day period immediately preceding the Effective Date or, if more
favorable to the Employee, as in effect generally at any time
thereafter with respect to other peer executives of the Company and
its affiliated companies.
(vi) Fringe Benefits. During the Employment Period, the Employee
shall be entitled to fringe benefits, including, without limitation,
tax and financial planning services, payment of club dues, and if
applicable, use of an automobile and payment of related expenses, in
accordance with the most favorable plans, practices, programs and
policies of the Company and its affiliated companies in effect for the
Employee at any time during the 120-day period immediately preceding
the Effective Date or, if more favorable to the Employee, as in effect
generally at anytime thereafter with respect to other peer executives
of the Company and its affiliated companies.
(vii) Office and Support Staff. During the Employment Period, the
Employee shall be entitled to an office or offices of a size and with
furnishings and other appointments, and to exclusive personal
secretarial and other assistance, at least equal to the most favorable
of the foregoing provided to the Employee by the Company and its
affiliated companies at any time during the 120-day period immediately
preceding the Effective Date or, if more favorable to the Employee, as
provided generally at any time thereafter with respect to other peer
executives of the Company and its affiliated companies.
(viii) Vacation. During the Employment Period, the Employee shall
be entitled to paid vacation in accordance with the most favorable
plans, policies, programs and practices of the Company and its
affiliated companies as in effect for the Employee at any time during
the 120-day period immediately preceding the Effective Date or, if
more favorable to the Employee, as in effect generally at any time
thereafter with respect to other peer executives of the Company and
its affiliated companies.
5. Termination of Employment. (a) Death or Disability. The
Employee's employment shall terminate automatically upon the
Employee's death during the Employment Period. If the Company
determines in good faith that the Disability of the Employee has
occurred during the Employment Period (pursuant to the definition of
Disability set forth below), it may give to the Employee written
notice in accordance with Section 12(b) of this Agreement of its
intention to terminate the Employee's employment. In such event, the
Employee's employment with the Company shall terminate effective on
the 30th day after receipt of such notice by the Employee (the
"Disability Effective Date"), provided that, within the 30 days after
such receipt, the Employee shall not have returned to full-time
performance of the Employee's duties. For purposes of this Agreement,
"Disability" shall mean the absence of the Employee from the
Employee's duties with the Company on a full-time basis for 180
consecutive business days as a result of incapacity due to mental or
physical illness which is determined to be total and permanent by a
physician selected by the Company or its insurers and acceptable to
the Employee or the Employee's legal representative (such agreement as
to acceptability not to be withheld unreasonably).
(b) Cause. The Company may terminate the Employee's employment
during the Employment Period for Cause. For the sole and exclusive
purposes of this Agreement, "Cause" shall mean:
(i) the willful and continued failure of the Employee to
perform substantially the Employee's duties with the Company or one of
affiliates (other than any such failure resulting from incapacity due
to physical or mental illness), after a written demand for substantial
performance is delivered to the Employee by the Board or the Chief
Employee Officer of the Company which specifically identifies the
manner in which the Board or Chief Employee Officer believes that the
Employee has not substantially performed the Employee's duties, or
(ii) the willful engaging by the Employee in illegal conduct
or gross misconduct which is materially and demonstrably injurious to
the Company.
For purposes of this provision, no act or failure to act, on
the part of the Employee, shall be considered "willful" unless it is
done, or omitted to be done, by the Employee in bad faith or without
reasonable belief that the Employee's action or omission was in the
best interests of the Company. Any act, or failure to act, based upon
authority given pursuant to a resolution duly adopted by the Board or
upon the instructions of the Chief Employee Officer or a senior
officer of the Company or based upon the advice of counsel for the
Company shall be conclusively presumed to be done, or omitted to be
done, by the Employee in good faith and in the best interests of the
Company. The cessation of employment of the Employee shall not be
deemed to be for Cause unless and until there shall have been
delivered to the Employee a copy of a resolution duly adopted by the
affirmative vote of not less than three-quarters of the entire
membership of the Board at a meeting of the Board called and held for
such purpose (after reasonable notice is provided to the Employee and
the Employee is given the opportunity, together with counsel, to be
heard before the Board), finding that, in the good faith opinion of
the Board, the Employee is guilty of the conduct described in
subparagraph (i) or (ii) above, and specifying the particulars thereof
in detail.
(c) Notice of Termination. Any termination by the Company for
Cause, or by the Employee, shall be communicated by Notice of
Termination to the other party hereto given in accordance with
Sections 12(b) of this Agreement. For purposes of this Agreement, a
"Notice of Termination" means a written notice which (i) indicates the
specific termination provision in this Agreement relied upon, (ii) to
the extent applicable, sets forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the
Employee's employment under the provision so indicated and (iii) if
the Date of Termination (as defined below) is other than the date of
receipt of such notice, specifies the termination date (which date
shall be not more than thirty days after the giving of such notice).
The failure by the Employee or the Company to set forth in the Notice
of Termination any fact or circumstance which contributes to a showing
of Cause shall not waive any right of the Company hereunder or
preclude the Company from asserting such fact or circumstance in
enforcing the Company's rights hereunder.
(d) Date of Termination. "Date of Termination" means (i) if the
Employee's employment is terminated by the Company for Cause, or by
the Employee, the date of receipt of the Notice of Termination or any
later date specified therein, as the case may be, (ii) if the
Employee's employment is terminated by the Company other than for
Cause or Disability, the Date of Termination shall be the date on
which the Company notifies the Employee of such termination and (iii)
if the Employee's employment is terminated by reason of death or
Disability, the Date of Termination shall be the date of death of the
Employee or the Disability Effective Date, as the case may be.
6. Obligations of the Company upon Termination. (a) Other than
for Cause, Death or Disability. If, during the Employment Period, the
Company shall terminate the Employee's employment other than for Cause
or Disability or the Employee shall terminate employment for any
reason:
(i) the Company shall pay to the Employee in a lump sum
in cash within 30 days after the Date of Termination the aggregate of
the following amounts:
A. the sum of (1) the Employee's Annual Base Salary through the
Date of Termination to the extent not theretofore paid, (2) the
product of (x) the higher of (I) the Recent Annual Bonus and (II)
the Annual Bonus paid or payable, including any bonus or portion
thereof which has been earned but deferred (and annualized for any
fiscal year consisting of less than twelve full months or during
which the Employee was employed for less than twelve full months),
for the most recently completed fiscal year during the Employment
Period, if any (such higher amount being referred to as the "Highest
Annual Bonus") and (y) a fraction, the numerator of which is the
number of days in the current fiscal year through the Date of
Termination, and the denominator of which is 365 and (3) any
compensation previously deferred by the Employee (together with any
accrued interest or earnings thereon) and any accrued vacation pay,
in each case to the extent not theretofore paid (the sum of the
amounts described in clauses (1), (2) and (3) shall be hereinafter
referred to as the "Accrued Obligations"); and
B. the amount equal to the product of (1) two and (2) the sum of
(X) the Employee's Annual Base Salary and (Y) the Highest Annual
Bonus; and
C. an amount equal to the difference between (a) the actuarial
equivalent of the benefit (utilizing actuarial assumptions no less
favorable to the Employee than those in effect under the Retirement
Plan (as defined below) immediately prior to the Effective Date,
except as specified below with respect to increases in base salary
and annual bonus) under or the qualified retirement plan in which
the Employee participates (the "Retirement Plan") and any excess or
supplemental retirement plan in which the Employee participates
(together, the "SERP") which the Employee would receive if the
Employee's employment continued for two year after the Date of
Termination assuming for this purpose that all accrued benefits are
fully vested, and, assuming the (1) the Employee's base salary
increased in each of the two years by the amount required by
Section 4(b)(i) had the Employee remained employed, and (2) the
Employee's annual bonus (annualized for any fiscal year consisting
of less than twelve full months or during which the Employee was
employed for less than twelve full months) in each of the two years
bears the same proportion to the Employee's base salary in such year
or fraction thereof as it did for the last full year prior to the
Date of Termination, and (b) the actuarial equivalent of the
Employee's actual benefit (paid or payable), if any, under the
Retirement Plan and the SERP as of the Date of Termination;
(ii) for two years after the Employee's Date of Termination,
or such longer period as may be provided by the terms of the
appropriate plan, program, practice or policy, the Company shall
continue benefits to the Employee and/or the Employee's family at
least equal to those which would have been provided to them in
accordance with the plans, programs, practices and policies described
in Section 4(b)(iv) of this Agreement if the Employee's employment had
not been terminated in accordance with the most favorable plans,
practices, programs or policies of the Company and its affiliated
companies applicable generally to other peer executives and their
families during the 120-day period immediately preceding the Effective
Date or, if more favorable to the Employee, as in effect generally at
any time thereafter with respect to other peer executives of the
Company and its affiliated companies and their families, provided,
however, that if the Employee becomes re-employed with another
employer and is eligible to receive medical or other welfare benefits
under another employer provided plan, the medical and other welfare
benefits described herein shall be secondary to those provided under
such other plan during such applicable period of eligibility. For
purposes of determining eligibility (but not the time of commencement
of benefits) of the Employee for retiree benefits pursuant to such
plans, practices, programs and policies, the Employee shall be
considered to have remained employed until two and one-half years
after the Date of Termination and to have retired on the last day of
such period;
(iii) the Company shall, at its sole expense as incurred,
provide the Employee with outplacement services the scope and provider
of which shall be selected by the Employee in his sole discretion; and
(iv) to the extent not theretofore paid or provided, the
Company shall timely pay or provide to the Employee any other amounts
or benefits required to be paid or provided or which the Employee is
eligible to receive under any plan, program, policy or practice or
contract or agreement of the Company and its affiliated companies
(such other amounts and benefits shall be hereinafter referred to as
the "Other Benefits").
(b) Death. If the Employee's employment is terminated by reason
of the Employee's death during the Employment Period, this Agreement
shall terminate without further obligations to the Employee's legal
representatives under this Agreement, other than for payment of
Accrued Obligations and the timely payment or provision of Other
Benefits. Accrued Obligations shall be paid to the Employee's estate
or beneficiary, as applicable, in a lump sum in cash within 30 days of
the Date of Termination. With respect to the provision of Other
Benefits, the term Other Benefits as utilized in this Section 6(b)
shall include, without limitation, and the Employee's estate and/or
beneficiaries shall be entitled to receive, benefits at least equal to
the most favorable benefits provided by the Company and affiliated
companies to the estates and beneficiaries of peer executives of the
Company and such affiliated companies under such plans, programs,
practices and policies relating to death benefits, if any, as in
effect with respect to other peer executives and their beneficiaries
at any time during the 120-day period immediately preceding the
Effective Date or, if more favorable to the Employee's estate and/or
the Employee's beneficiaries, as in effect on the date of the
Employee's death with respect to other peer executives of the Company
and its affiliated companies and their beneficiaries.
(c) Disability. If the Employee's employment is terminated by
reason of the Employee's Disability during the Employment Period, this
Agreement shall terminate without further obligations to the Employee,
other than for payment of Accrued Obligations and the timely payment
or provision of Other Benefits. Accrued Obligations shall be paid to
the Employee in a lump sum in cash within 30 days of the Date of
Termination. With respect to the provision of Other Benefits, the term
Other Benefits as utilized in this Section 6(c) shall include, and the
Employee shall be entitled after the Disability Effective Date to
receive, disability and other benefits at least equal to the most
favorable of those generally provided by the Company and its
affiliated companies to disabled executives and/or their families in
accordance with such plans, programs, practices and policies relating
to disability, if any, as in effect generally with respect to other
peer executives and their families at any time during the 120-day
period immediately preceding the Effective Date or, if more favorable
to the Employee and/or the Employee's family, as in effect at any time
thereafter generally with respect to other peer executives of the
Company and its affiliated companies and their families.
(d) Cause. If the Employee's employment shall be terminated for
Cause during the Employment Period, this Agreement shall terminate
without further obligations to the Employee other than the obligation
to pay to the Employee (x) his Annual Base Salary through the Date of
Termination, (y) the amount of any compensation previously deferred by
the Employee, and (z) Other Benefits, in each case to the extent
theretofore unpaid.
7. Non-exclusivity of Rights. Nothing in this Agreement shall
prevent or limit the Employee's continuing or future participation in
any plan, program, policy or practice provided by the Company or any
of its affiliated companies and for which the Employee may qualify,
nor shall anything herein limit or otherwise affect such rights as the
Employee may have under any contract or agreement with the Company or
any of its affiliated companies. Amounts which are vested benefits or
which the Employee is otherwise entitled to receive under any plan,
policy, practice or program of or any contract or agreement with the
Company or any of its affiliated companies at or subsequent to the
Date of Termination shall be payable in accordance with such plan,
policy, practice or program or contract or agreement except as
explicitly modified by this Agreement.
8. Full Settlement. The Company's obligation to make the
payments provided for in this Agreement and otherwise to perform its
obligations hereunder shall not be affected by any set-off,
counterclaim, recoupment, defense or other claim, right or action
which the Company may have against the Employee or others. In no
event shall the Employee be obligated to seek other employment or take
any other action by way of mitigation of the amounts payable to the
Employee under any of the provisions of this agreement and such
amounts shall not be reduced whether or not the Employee obtains other
employment. The Company agrees to pay as incurred, to the full extent
permitted by law, all legal fees and expenses which the Employee may
reasonably incur as a result of any contest (regardless of the outcome
thereof) by the Company, the Employee or others of the validity or
enforceability of, or liability under, any provision of this Agreement
or any guarantee of performance thereof (including as a result of any
contest by the Employee about the amount of any payment pursuant to
this Agreement), plus in each case interest on any delayed payment at
the applicable Federal rate provided for in Section 7872(f)(2)(A) of
the Internal Revenue Code of 1986, as amended (the "Code").
9. Certain Reduction of Payments by the Company
(a) Anything in this Agreement to the contrary notwithstanding,
in the event it shall be determined that any payment or distribution
by the Company to or for the Employee's benefit (whether paid or
payable or distributed or distributable pursuant to the terms of this
Agreement or otherwise) (a "Payment") would be nondeductible by the
Company for Federal income tax purposes because of Section 280G of the
Code, then the aggregate present value of amounts payable or
distributable to or for your benefit pursuant to this Agreement (such
payments or distributions pursuant to this Agreement are hereinafter
referred to as "Agreement Payments") shall be reduced (but not below
zero) to the Reduced Amount. The "Reduced Amount" shall be an amount
expressed in present value which maximizes the aggregate present value
of Agreement Payments without causing any Payment to be nondeductible
by the Company because of Section 280G of the Code. For purposes of
this Section 9, present value shall be determined in accordance with
Section 280G(d)(4) of the Code.
(b) All determinations required to be made under this Section 9
shall be made at the Company's expense by a nationally recognized
accounting firm acceptable to the Employee (the "Accounting Firm")
which shall provide detailed supporting calculations both to the
Company and the Employee within 15 business days of the Date of
Termination or such earlier time as is requested by the Company. Any
such determination by the Accounting Firm shall be binding upon the
Company and the Employee. The Employee shall determine which and how
much of the Agreement Payments (or, at the election of the Employee,
other payments) shall be eliminated or reduced consistent with the
requirements of this Section 9, provided that, if the Employee does
not make such determination within ten business days of the receipt of
the calculations made by the Accounting Firm, the Company shall elect
which and how much of the Agreement Payments shall be eliminated or
reduced consistent with the Requirements of this Section 9 and shall
notify the Employee promptly of such election. Within five business
days thereafter, the Company shall pay the Employee or distribute to
or for the Employee's benefit such amounts as are then due to the
Employee under this Agreement.
(c) As a result of the uncertainty in the application of Section
280G of the Code at the time of the initial determination by the
Accounting Firm hereunder, it is possible that Agreement Payments will
have been made by the Company which should not have been made
("Overpayment") or that additional Agreement Payments which will have
not been made by the Company could have been made ("Underpayment"), in
each case, consistent with the calculations required to be made
hereunder. In the event that the Accounting Firm determines that an
Overpayment has been made, any such Overpayment shall be treated for
all purposes as a loan to the Employee which the Employee shall repay
to the Company together with interest at the applicable Federal rate
provided for in Section 7872(f)(2) of the Code. In the event that the
Accounting Firm determines that an Underpayment has occurred, any such
Underpayment shall be promptly paid by the Company to or for the
benefit of the Employee together with interest at the applicable
Federal rate provided for in Section 7872(f)(2) of the Code.
10. Confidential Information. The Employee shall hold in a
fiduciary capacity for the benefit of the Company all secret or
confidential information, knowledge or data relating to the Company or
any of its affiliated companies and their respective businesses, which
shall have been obtained by the Employee during the Employee's
employment by the Company or any of its affiliated companies and which
shall not be or become public knowledge (other than by acts by the
Employees or representatives of the Employee in violation of this
Agreement). After termination of the Employee's employment with the
Company, the Employee shall not, without the prior written consent of
the Company or as may otherwise be required by law or legal process,
communicate or divulge any such information, knowledge or data to
anyone other than the Company and those designated by it. In no event
shall an asserted violation of the provisions of this Section 10
constitute a basis for deferring or withholding any amounts otherwise
payable to the Employee under this Agreement.
11. Successors. (a) This Agreement is personal to the Employee
and without the prior written consent of the Company shall not be
assignable by the Employee otherwise than by will or the laws of
descent and distribution. This Agreement shall inure to the benefit
of and been forceable by the Employee's legal representatives.
(b) This Agreement shall inure to the benefit of and be binding
upon the Company and its successors and assigns.
(c) The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to
assume expressly and agree to perform this Agreement in the same
manner and to the same extent that the Company would be required to
perform it if no such succession had taken place. As used in this
Agreement, "Company" shall mean the Company as hereinbefore defined
and any successor to its business and/or assets as aforesaid which
assumes and agrees to perform this Agreement by Operation of law, or
otherwise.
12. Miscellaneous. (a) This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware,
without reference to principles of conflict of laws. The captions of
this Agreement are not part of the provisions hereof and shall have no
force or effect. This Agreement may not be amended or modified
otherwise than by a written agreement executed by the parties hereto
or their respective successors and legal representatives.
(b) All notices and other communications hereunder shall be in
writing and shall be given by hand delivery to the other party or by
registered or certified mail, return receipt requested, postage
prepaid, addressed as follows:
If to the Employee:
If to the Company:
Melamine Chemicals, Inc.
39041 Highway 18 West
Donaldsonville, Louisiana 70346
Attention: Chief Financial Officer
or to such other address as either party shall have furnished to the
other in writing in accordance herewith. Notice and communications
shall be effective when actually received by the addressee.
(c) The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other
provision of this Agreement.
(d) The Company may withhold from any amounts payable under this
Agreement such Federal, state, local or foreign taxes as shall be
required to be withheld pursuant to any applicable law or regulation.
(e) The Employee's or the Company's failure to insist upon strict
compliance with any provision hereof or any other provision of this
Agreement or the failure to assert any right the Employee or the
Company may have hereunder shall not be deemed to be a waiver of such
provision or right or any other provision or right of this Agreement.
(f) The Employee and the Company acknowledge that, except as may
otherwise be provided under any other written agreement between the
Employee and the Company, the employment of the Employee by the
Company is "at will" and, prior to the Effective Date, the Employee's
employment may be terminated by either the Employee or the Company at
any time prior to the Effective Date. Moreover, if prior to the
Effective Date, the Employee's employment with the Company terminates,
except in connection with a Potential Change of Control, then the
Employee shall have no further rights under this Agreement. From and
after the Effective Date this Agreement shall supersede any other
agreement between the parties with respect to the subject matter
hereof.
IN WITNESS WHEREOF, the Employee has hereunto set the Employee's
hand and, pursuant to the authorization from its Board of Directors,
the Company has caused these presents to be executed in its name on
its behalf, all as of the day and year first above written.
---------------------------
Employee
MELAMINE CHEMICALS, INC.
By:
------------------------------
James W. Crook
Chairman of the Board
Melamine Chemicals, Inc.
Exhibit to Form 10-K
10.21
Schedule of Differences
between
Single Trigger Change of Control Severance Agreements
The persons listed below have entered into substantially
identical forms of Single Trigger Change of Control Severance
Agreements:
James W. Cook
Wayne D. DeLeo
Frederic R. Huber
CHANGE OF CONTROL SEVERANCE AGREEMENT
AGREEMENT by and between Melamine Chemicals, Inc., a Delaware
corporation (the "Company") and____________ (the "Employee"), dated as
of the ____ day of __________, 19__.
The Board of Directors of the Company (the "Board"), has
determined that it is in the best interests of the Company and its
shareholders to assure that the Company will have the continued
dedication of the Employee, notwithstanding the possibility, threat or
occurrence of a Change of Control (as defined below) of the Company.
The Board believes it is imperative to diminish the inevitable
distraction of the Employee by virtue of the personal uncertainties
and risks created by a pending or threatened Change of Control and to
encourage the Employee's full attention and dedication to the Company
currently and in the event of any threatened or pending Change of
Control, and to provide the Employee with compensation and benefits
arrangements upon a Change of Control which ensure that the
compensation and benefits expectations of the Employee will be
satisfied and which are competitive with those of other corporations.
Therefore, in order to accomplish these objectives, the Board has
caused the Company to enter into this Agreement.
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
1. Certain Definitions. (a) The "Effective Date" shall mean the
first date during the Change of Control Period (as defined in Section
1(b)) on which a Change of Control (as defined in Section 2) occurs.
Anything in this Agreement to the contrary notwithstanding, if a
Change of Control occurs and if the Employee's employment with the
Company is terminated prior to the date on which the Change of Control
occurs, and if it is reasonably demonstrated by the Employee that such
termination of employment (i) was at the request of a third party who
has taken steps reasonably calculated to effect a Change of Control or
(ii) otherwise arose in connection with or anticipation of a Change of
Control (in each case, a "Potential Change of Control"), then for all
purposes of this Agreement the "Effective Date" shall mean the date
immediately prior to the date of such termination of employment.
(b) The "Change of Control Period" shall mean the period
commencing on the date hereof and ending on November 15, 19__, unless
otherwise extended by the Company.
2. Change of Control. For the purpose of this Agreement, a
"Change of Control" shall mean:
(a) The acquisition after the date hereof by any individual, entity
or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act")) (a
"Person") of beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of 20% or more of either (i) the
then outstanding shares of common stock of the Company (the
"Outstanding Company Common Stock") or (ii) the combined voting power
of the then outstanding voting securities of the Company entitled to
vote generally in the election of directors (the "Outstanding Company
Voting Securities"); provided, however, that the following
acquisitions shall not constitute a Change of Control: (i) any
acquisition directly from the Company, (ii) any acquisition by the
Company, (iii) any acquisition by any employee benefit plan (or
related trust) sponsored or maintained by the Company or any
corporation controlled by the Company or (iv) any acquisition by any
corporation pursuant to a transaction which complies with clauses (i),
(ii) and (iii) of subsection (c) of this Section 2; or
(b) Individuals who, as of the date hereof, constitute the Board
(the "Incumbent Board") cease for any reason to constitute at least a
majority of the Board; provided, however, that any individual becoming
a director subsequent to the date hereof whose election, or nomination
for election by the Company's shareholders, was approved by a vote of
at least a majority of the directors then comprising the Incumbent
Board shall be considered as though such individual were a member of
the Incumbent Board, but excluding, for this purpose, any such
individual whose initial assumption of office occurs as a result of an
actual or threatened election contest with respect to the election or
removal of directors or other actual or threatened solicitation of
proxies or consents by or on behalf of a Person other than the Board;
or
(c) Approval by the shareholders of the Company of a
reorganization, merger or consolidation (a "Business Combination"), in
each case, unless, following such Business Combination, (i) all or
substantially all of the individuals and entities who were the
beneficial owners, respectively, of the Outstanding Company Common
Stock and Outstanding Company Voting Securities immediately prior to
such Business Combination beneficially own, directly or indirectly,
more than 60% of, respectively, the then outstanding shares of common
stock and the combined voting power of the then outstanding voting
securities entitled to vote generally in the election of directors, as
the case may be, of the corporation resulting from such Business
Combination (including, without limitation, a corporation which as a
result of such transaction owns the Company through one or more
subsidiaries) in substantially the same proportions as their
ownership, immediately prior to such Business Combination of the
Outstanding Company Common Stock and Outstanding Company Voting
Securities, as the case may be, (ii) no Person (excluding any employee
benefit plan (or related trust) of the Company or such corporation
resulting from such Business Combination) beneficially owns, directly
or indirectly, 20% or more of, respectively, the then outstanding
shares of common stock of the corporation resulting from such Business
Combination or the combined voting power of the then outstanding
voting securities of such corporation except to the extent that such
ownership existed prior to the Business Combination and (iii) at least
a majority of the members of the board of directors of the corporation
resulting from such Business Combination were members of the Incumbent
Board at the time of the execution of the initial agreement, or of the
action of the Board, providing for such Business Combination; or
(d) Approval by the shareholders of the Company of (i) a complete
liquidation or dissolution of the Company or (ii) the sale or other
disposition of all or substantially all of the assets of the Company,
other than to a corporation, with respect to which following such sale
or other disposition, (A) more than 60% of, respectively, the then
outstanding shares of common stock of such corporation and the
combined voting power of the then outstanding voting securities of
such corporation entitled to vote generally in the election of
directors is then beneficially owned, directly or indirectly, by all
or substantially all of the individuals and the entities who were the
beneficial owners, respectively, of the Outstanding Company Common
Stock and Outstanding Company Voting Securities immediately prior to
such sale or other disposition in substantially the same proportion as
their ownership, immediately prior to such sale or other disposition,
of the Outstanding Company Common Stock and Outstanding Company Voting
Securities, as the case may be, (B) less than 20% of, respectively,
the then outstanding shares of common stock of such corporation and
the combined voting power of the then outstanding voting securities of
such corporation entitled to vote generally in the election of
directors is then beneficially owned, directly or indirectly, by any
Person (excluding any employee benefit plan (or related trust) of the
Company or such corporation), except to the extent that such Person
owned 20% or more of the Outstanding Company Common Stock or
Outstanding Company Voting Securities prior to the sale or disposition
and (C) at least a majority of the members of the board of directors
of such corporation were members of the Incumbent Board at the time of
the execution of the initial agreement, or of the action of the Board,
providing for such sale or other disposition of assets of the Company
or were elected, appointed or nominated by the Board.
3. Employment Period. The Company hereby agrees to continue the
Employee in its employ and the Employee hereby agrees to remain in the
employ of the Company subject to the terms and conditions of this
Agreement, for the period commencing on the Effective Date and ending
on the second anniversary of such date (the "Employment Period").
4. Terms of Employment. (a) Position and Duties. (i) During
the Employment Period, (A) the Employee's position (including status,
offices, titles and reporting requirements), authority, duties and
responsibilities shall be at least commensurate in all material
respects with the most significant of those held, exercised and
assigned at any time during the 120-day period immediately preceding
the Effective Date and (B) the Employee's services shall be performed
at the location where the Employee was employed immediately preceding
the Effective Date or any office or location less than 35 miles from
such location.
(ii) During the Employment Period, and excluding any periods
of vacation and sick leave to which the Employee is entitled, the
Employee agrees to devote reasonable attention and time during normal
business hours to the business and affairs of the Company and, to the
extent necessary to discharge the responsibilities assigned to the
Employee hereunder, to use the Employee's reasonable best efforts to
perform faithfully and efficiently such responsibilities. During the
Employment Period it shall not be a violation of this Agreement for
the Employee to (A) serve on corporate, civic or charitable boards or
committees, (B) deliver lectures, fulfill speaking engagements or
teach at educational institutions and (C) manage personal investments,
so long as such activities do not significantly interfere with the
performance of the Employee's responsibilities as an employee of the
Company in accordance with this Agreement. It is expressly understood
and agreed that to the extent that any such activities have been
conducted by the Employee prior to the Effective Date, the continued
conduct of such activities (or the conduct of activities similar in
nature and scope thereto) subsequent to the Effective Date shall not
thereafter be deemed to interfere with the performance of the
Employee's responsibilities to the Company.
(b) Compensation. (i) Base Salary. During the Employment
Period, the Employee shall receive an annual base salary ("Annual Base
Salary"), which shall be paid at a monthly rate, at least equal to
twelve times the highest monthly base salary paid or payable,
including any base salary which has been earned but deferred to the
Employee by the Company and its affiliated companies in respect of the
twelve-month period immediately preceding the month in which the
Effective Date occurs. During the Employment Period, the Annual Base
Salary shall be reviewed no more than 12 months after the last salary
increase awarded to the Employee prior to the Effective Date and
thereafter at least annually and shall be first increased no more than
12 months after the last salary increase awarded to the Employee prior
to the Effective Date and thereafter at least annually by the higher
of (x) the average increase (excluding promotional increases) in base
salary awarded to the Employee for each of the three full fiscal years
(annualized in the case of any fiscal year consisting of less than
twelve full months or during which the Employee was employed for less
than twelve months) prior to the Effective Date, and (y) the
percentage increase (excluding promotional increases) in base salary
generally awarded to peer executives of the Company and its affiliated
companies for the year of determination. Any increase in Annual Base
Salary shall not serve to limit or reduce any other obligation to the
Employee under this Agreement. Annual Base Salary shall not be
reduced after any such increase and the term Annual Base Salary as
utilized in this Agreement shall refer to Annual Base Salary as so
increased. As used in this Agreement, the term "affiliated companies"
shall include any company controlled by, controlling or under common
control with the Company.
(ii) Annual Bonus. In addition to Annual Base Salary, the
Employee shall be awarded, for each fiscal year ending during the
Employment Period, an annual bonus (the "Annual Bonus") in cash at
least equal to the executive's target bonus under the Company's Annual
Incentive Compensation Plan, or any comparable bonus under a successor
plan, for the last full fiscal year prior to the Change of Control
(annualized in the event that the Employee was not employed by the
Company for the whole such fiscal year) ( the "Recent Annual Bonus").
Each such Annual Bonus shall be paid no later than the end of the
third month of the fiscal year next following the fiscal year for
which the Annual Bonus is awarded, unless the Employee shall elect to
defer the receipt of such Annual Bonus.
(iii) Incentive, Savings and Retirement Plans. During the
Employment Period, the Employee shall be entitled to participate in
all incentive, savings and retirement plans, practices, policies and
programs applicable generally to other peer executives of the Company
and its affiliated companies, but in no event shall such plans,
practices, policies and programs provide the Employee with incentive
opportunities (measure with respect to both regular and special
incentive opportunities, to the extent, if any, that such distinction
is applicable), savings opportunities and retirement benefit
opportunities, in each case, less favorable, in the aggregate, than
the most favorable of those provided by the Company and its affiliated
companies for the Employee under such plans, practices, policies and
programs as in effect at any time during the 120-day period
immediately preceding the Effective Date or if more favorable to the
Employee, those provided generally at any time after the Effective
Date to other peer executives of the Company and its affiliated
companies.
(iv) Welfare Benefit Plans. During the Employment Period, the
Employee and/or the Employee's family, as the case may be, shall be
eligible for participation in and shall receive all benefits under the
welfare benefit plans, practices, policies and programs provided by
the Company and its affiliated companies (including, without
limitation, medical, prescription, dental, disability, salary
continuance, employee life, group life, accidental death and travel
accident insurance plans and programs) to the extent applicable
generally to other peer executives of the Company and its affiliated
companies, but in no event shall such plans, practices, policies and
programs provide the Employee with benefits which are less favorable,
in the aggregate, than the most favorable of such plans, practices,
policies and programs in effect for the Employee at any time during
the 120-day period immediately preceding the Effective Date or, if
more favorable to the Employee, those provided generally at any time
after the Effective Date to other peer executives of the Company and
its affiliated companies.
(v) Expenses. During the Employment Period, the Employee shall
be entitled to receive prompt reimbursement for all reasonable
expenses incurred by the Employee in accordance with the most
favorable policies, practices and procedures of the Company and its
affiliated companies in effect for the Employee at any time during the
120-day period immediately preceding the Effective Date or, if more
favorable to the Employee, as in effect generally at any time
thereafter with respect to other peer executives of the Company and
its affiliated companies.
(vi) Fringe Benefits. During the Employment Period, the Employee
shall be entitled to fringe benefits, including, without limitation,
tax and financial planning services, payment of club dues, and if
applicable, use of an automobile and payment of related expenses, in
accordance with the most favorable plans, practices, programs and
policies of the Company and its affiliated companies in effect for the
Employee at any time during the 120-day period immediately preceding
the Effective Date or, if more favorable to the Employee, as in effect
generally at any time thereafter with respect to other peer executives
of the Company and its affiliated companies.
(vii) Office and Support Staff. During the Employment Period,
the Employee shall be entitled to an office or offices of a size and
with furnishings and other appointments, and to exclusive personal
secretarial and other assistance, at least equal to the most favorable
of the foregoing provided to the Employee by the Company and its
affiliated companies at any time during the 120-day period immediately
preceding the Effective Date or, if more favorable to the Employee, as
provided generally at any time thereafter with respect to other peer
executives of the Company and its affiliated companies.
(viii) Vacation. During the Employment Period, the Employee
shall be entitled to paid vacation in accordance with the most
favorable plans, policies, programs and practices of the Company and
its affiliated companies as in effect for the Employee at any time
during the 120-day period immediately preceding the Effective Date or,
if more favorable to the Employee, as in effect generally at any time
thereafter with respect to other peer executives of the Company and
its affiliated companies.
5. Termination of Employment. (a) Death or Disability. The
Employee's employment shall terminate automatically upon the
Employee's death during the Employment Period. If the Company
determines in good faith that the Disability of the Employee has
occurred during the Employment Period (pursuant to the definition of
Disability set forth below), it may give to the Employee written
notice in accordance with Section 12(b) of this Agreement of its
intention to terminate the Employee's employment. In such event, the
Employee's employment with the Company shall terminate effective on
the 30th day after receipt of such notice by the Employee (the
"Disability Effective Date"), provided that, within the 30 days after
such receipt, the Employee shall not have returned to full-time
performance of the Employee's duties. For purposes of this Agreement,
"Disability" shall mean the absence of the Employee from the
Employee's duties with the Company on a full-time basis for 180
consecutive business days as a result of incapacity due to mental or
physical illness which is determined to be total and permanent by a
physician selected by the Company or its insurers and acceptable to
the Employee or the Employee's legal representative (such agreement as
to acceptability not to be withheld unreasonably).
(b) Cause. The Company may terminate the Employee's employment
during the Employment Period for Cause. For the sole and exclusive
purposes of this Agreement, "Cause" shall mean:
(i) the willful and continued failure of the Employee to perform
substantially the Employee's duties with the Company or one of its
affiliates (other than any such failure resulting from incapacity to
physical or mental illness), after a written demand for substantial
performance is delivered to the Employee by the Board or the Chief
Employee Officer of the Company which specifically identifies the
manner in which the Board or Chief Employee Officer believes that the
Employee has not substantially performed the Employee's duties, or
(ii) the willful engaging by the Employee in illegal conduct or
gross misconduct which is materially and demonstrably injurious to the
Company.
For purposes of this provision, no act or failure to act, on the part
of the Employee, shall be considered "willful" unless it is done, or
omitted to be done, by the Employee in bad faith or without reasonable
belief that the Employee's action or omission was in the best
interests of the Company. Any act, or failure to act, based upon
authority given pursuant to a resolution duly adopted by the Board or
upon the instructions of the Chief Employee Officer or a senior
officer of the Company or based upon the advice of counsel for the
Company shall be conclusively presumed to be done, or omitted to be
done, by the Employee in good faith and in the best interests of the
Company. The cessation of employment of the Employee shall not be
deemed to be for Cause unless and until there shall have been
delivered to the Employee a copy of a resolution duly adopted by the
affirmative vote of not less than three-quarters of the entire
membership of the Board at a meeting of the Board called and held for
such purpose (after reasonable notice is provided to the Employee and
the Employee is given the opportunity, together with counsel, to be
heard before the Board), finding that, in the good faith opinion of
the Board, the Employee is guilty of the conduct described in
subparagraph (i) or (ii) above, and specifying the particulars thereof
in detail.
(c) Good Reason. The Employee's employment may be terminated by
the Employee for Good Reason. For the sole and exclusive purposes of
this Agreement, "Good Reason" shall mean:
(i) the assignment to the Employee of any duties inconsistent in
any respect with the Employee's position (including status, offices,
titles and reporting requirements), authority, duties or
responsibilities as contemplated by Section 4(a) of this Agreement, or
any other action by the Company which results in a diminution in such
position, authority, duties or responsibilities, excluding for this
purpose an isolated, insubstantial and inadvertent action not taken in
bad faith and which is remedied by the Company promptly after receipt
of notice thereof given by the Employee;
(ii) any failure by the Company to comply with any of the
provisions of Section 4(b) of this Agreement, other than an isolated,
insubstantial and inadvertent failure not occurring in bad faith and
which is remedied by the Company promptly after receipt of notice
thereof given by the Employee;
(iii) the Company's requiring the Employee to be based at any
office or location other than as provided in Section 4(a)(i)(B) hereof
or the Company's requiring the Employee to travel on Company business
to a substantially greater extent than required immediately prior to
the Effective Date;
(iv) any purported termination by the Company of the Employee's
employment otherwise than as expressly permitted by this Agreement; or
(v) any failure by the Company to comply with and satisfy Section
11(c) of this Agreement.
For purposes of this Section 5(c), any good faith determination
of "Good Reason" made by the Employee shall be conclusive.
(d) Notice of Termination. Any termination by the Company for
Cause, or by the Employee for Good Reason, shall be communicated by
Notice of Termination to the other party hereto given in accordance
with Section 12(b) of this Agreement. For purposes of this Agreement,
a "Notice of Termination" means a written notice which (i) indicates
the specific termination provision in this Agreement relied upon, (ii)
to the extent applicable, sets forth in reasonable detail the facts
and circumstances claimed to provide a basis for termination of the
Employee's employment under the provision so indicated and (iii) if
the Date of Termination (as defined below) is other than the date of
receipt of such notice, specifies the termination date (which date
shall be not more than thirty days after the giving of such notice).
The failure by the Employee or the Company to set forth in the Notice
of Termination any fact or circumstance which contributes to a showing
of Good Reason or Cause shall not waive any right of the Employee or
the Company, respectively, hereunder or preclude the Employee or the
Company, respectively, from asserting such fact or circumstance in
enforcing the Employee's or the Company's rights hereunder.
(e) Date of Termination. "Date of Termination" means (i) if the
Employee's employment is terminated by the Company for Cause, or by
the Employee for Good Reason, the date of receipt of the Notice of
Termination or any later date specified therein, as the case may be,
(ii) if the Employee's employment is terminated by the Company other
than for Cause or Disability, the Date of Termination shall be the
date on which the Company notifies the Employee of such termination
and (iii) if the Employee's employment is terminated by reason of
death or Disability, the Date of Termination shall be the date of
death of the Employee or the Disability Effective Date, as the case
may be.
6. Obligations of the Company upon Termination. (a) Good Reason
Other than for Cause, Death or Disability. If, during the Employment
Period, the Company shall terminate the Employee's employment other
than for Cause or Disability or the Employee shall terminate
employment for Good Reason and if on the Date of Termination the
executive has at least one year of service with the Company:
(i) the Company shall pay to the Employee in a lump sum in cash
within 30 days after the Date of Termination the aggregate of the
following amounts:
A. the sum of (1) the Employee's Annual Base Salary through the
Date of Termination to the extent not theretofore paid, (2) the
product of (x) the higher of (I) the Recent Annual Bonus and (II)
the Annual Bonus paid or payable, including any bonus or portion
thereof which has been earned but deferred (and annualized for any
fiscal year consisting of less than twelve full months or during
which the Employee was employed for less than twelve full months),
for the most recently completed fiscal year during the Employment
Period, if any (such higher amount being referred to as the
"Highest Annual Bonus") and (y) a fraction, the numerator of which
is the number of days in the current fiscal year through the Date
of Termination, and the denominator of which is 365 and (3) any
compensation previously deferred by the Employee (together with any
accrued interest or earnings thereon) and any accrued vacation pay,
in each case to the extent not theretofore paid (the sum of the
amounts described in clauses (1), (2) and (3) shall be hereinafter
referred to as the "Accrued Obligations"); and
B. the amount equal to the sum of (x) the Employee's Annual Base
Salary and (y) the Highest Annual Bonus; and
C. an amount equal to the difference between (a) the actuarial
equivalent of the benefit (utilizing actuarial assumptions no less
favorable to the Employee than those in effect under the Retirement
Plan (as defined below) immediately prior to the Effective Date,
except as specified below with respect to increases in base salary
and annual bonus) under or the qualified retirement plan in which
the Employee participates (the "Retirement Plan") and any excess or
supplemental retirement plan in which the Employee participates
(together, the "SERP") which the Employee would receive if the
Employee's employment continued for two years after the Date of
Termination assuming for this purpose that all accrued benefits are
fully vested, and, assuming the (1) the Employee's base salary
increased in each of the two years by the amount required by
Section 4(b)(i) had the Employee remained employed, and (2) the
Employee's annual bonus (annualized for any fiscal year consisting
of less than twelve full months or during which the Employee was
employed for less than twelve full months) in each of the two years
bears the same proportion to the Employee's base salary in such
year or fraction thereof as it did for the last full year prior to
the Date of Termination, and (b) the actuarial equivalent of the
Employee's actual benefit (paid or payable), if any, under the
Retirement Plan and the SERP as of the Date of Termination;
(ii) for two years after the Employee's Date of Termination, or
such longer period as may be provided by the terms of the
appropriate plan, program, practice or policy, the Company shall
continue benefits to the Employee and/or the Employee's family at
least equal to those which would have been provided to them in
accordance with the plans, programs, practices and policies
described in Section 4(b)(iv) of this Agreement if the Employee's
employment had not been terminated in accordance with the most
favorable plans, practices, programs or policies of the Company and
its affiliated companies applicable generally to other peer
executives and their families during the 120-day period immediately
preceding the Effective Date or, if more favorable to the Employee,
as in effect generally at any time thereafter with respect to other
peer executives of the Company and its affiliated companies and
their families, provided, however, that if the Employee becomes
reemployed with another employer and is eligible to receive medical
or other welfare benefits under another employer provided plan, the
medical and other welfare benefits described herein shall be
secondary to those provided under such other plan during such
applicable period of eligibility. For purposes of determining
eligibility (but not the time of commencement of benefits) of the
Employee for retiree benefits pursuant to such plans, practices,
programs and policies, the Employee shall be considered to have
remained employed until two years after the Date of Termination and
to have retired on the last day of such period;
(iii) the Company shall, at its sole expense as incurred,
provide the Employee with outplacement services the scope and
provider of which shall be selected by the Employee in his sole
discretion; and
(iv) to the extent not theretofore paid or provided, the Company
shall timely pay or provide to the Employee any other amounts or
benefits required to be paid or provided or which the Employee is
eligible to receive under any plan, program, policy or practice or
contract or agreement of the Company and its affiliated companies
(such other amounts and benefits shall be hereinafter referred to
as the "Other Benefits").
(b) Death. If the Employee's employment is terminated by reason
of the Employee's death during the Employment Period, this Agreement
shall terminate without further obligations to the Employee's legal
representatives under this Agreement, other than for payment of
Accrued Obligations and the timely payment or provision of Other
Benefits. Accrued Obligations shall be paid to the Employee's estate
or beneficiary, as applicable, in a lump sum in cash within 30 days of
the Date of Termination. With respect to the provision of Other
Benefits, the term Other Benefits as utilized in this Section 6(b)
shall include, without limitation, and the Employee's estate and/or
beneficiaries shall be entitled to receive, benefits at least equal to
the most favorable benefits provided by the Company and affiliated
companies to the estates and beneficiaries of peer executives of the
Company and such affiliated companies under such plans, programs,
practices and policies relating to death benefits, if any, as in
effect with respect to other peer executives and their beneficiaries
at any time during the 120-day period immediately preceding the
Effective Date or, if more favorable to the Employee's estate and/or
the Employee's beneficiaries, as in effect on the date of the
Employee's death with respect to other peer executives of the Company
and its affiliated companies and their beneficiaries.
(c) Disability. If the Employee's employment is terminated by
reason of the Employee's Disability during the Employment Period, this
Agreement shall terminate without further obligations to the Employee,
other than for payment of Accrued Obligations and the timely payment
or provision of Other Benefits. Accrued Obligations shall be paid to
the Employee in a lump sum in cash within 30 days of the Date of
Termination. With respect to the provision of Other Benefits, the
term Other Benefits as utilized in this Section 6(c) shall include,
and the Employee shall be entitled after the Disability Effective Date
to receive, disability and other benefits at least equal to the most
favorable of those generally provided by the Company and its
affiliated companies to disabled executives and/or their families in
accordance with such plans, programs, practices and policies relating
to disability, if any, as in effect generally with respect to other
peer executives and their families at any time during the 120-day
period immediately preceding the Effective Date or, if more favorable
to the Employee and/or the Employee's family, as in effect at any time
thereafter generally with respect to other peer executives of the
Company and its affiliated companies and their families.
(d) Cause; Other than for Good Reason. If the Employee's
employment shall be terminated for Cause during the Employment Period,
this Agreement shall terminate without further obligations to the
Employee other than the obligation to pay to the Employee (x) his
Annual Base Salary through the Date of Termination, (y) the amount of
any compensation previously deferred by the Employee, and (z) Other
Benefits, in each case to the extent theretofore unpaid. If the
Employee voluntarily terminates employment during the Employment
Period, excluding termination for Good Reason, this Agreement shall
terminate without further obligations to the Employee, other than for
Accrued Obligations and the timely payment or provision of Other
Benefits. In such case, all Accrued Obligations shall be paid to the
Employee in a lump sum in cash within 30 days of the Date of
Termination.
7. Non-exclusivity of Rights. Nothing in this Agreement shall
prevent or limit the Employee's continuing or future participation in
any plan, program, policy or practice provided by the Company or any
of its affiliated companies and for which the Employee may qualify,
nor shall anything herein limit or otherwise affect such rights as the
Employee may have under any contract or agreement with the Company or
any of its affiliated companies. Amounts which are vested benefits or
which the Employee is otherwise entitled to receive under any plan,
policy, practice or program of or any contract or agreement with the
Company or any of its affiliated companies at or subsequent to the
Date of Termination shall be payable in accordance with such plan,
policy, practice or program or contract or agreement except as
explicitly modified by this Agreement.
8. Full Settlement. The Company's obligation to make the
payments provided for in this Agreement and otherwise to perform its
obligations hereunder shall not be affected by any set-off,
counterclaim, recoupment, defense or other claim, right or action
which the Company may have against the Employee or others. In no
event shall the Employee be obligated to seek other employment or take
any other action by way of mitigation of the amounts payable to the
Employee under any of the provisions of this agreement and such
amounts shall not be reduced whether or not the Employee obtains other
employment. The Company agrees to pay as incurred, to the full extent
permitted by law, all legal fees and expenses which the Employee may
reasonably incur as a result of any contest (regardless of the outcome
thereof) by the Company, the Employee or others of the validity or
enforceability of, or liability under, any provision of this Agreement
or any guarantee of performance thereof (including as a result of any
contest by the Employee about the amount of any payment pursuant to
this Agreement), plus in each case interest on any delayed payment at
the applicable Federal rate provided for in Section 7872(f)(2)(A) of
the Internal Revenue Code of 1986, as amended (the "Code").
9. Certain Reduction of Payments by the Company.
(a) Anything in this Agreement to the contrary notwithstanding,
in the event it shall be determined that any payment or distribution
by the Company to or for the Employee's benefit (whether paid or
payable or distributed or distributable pursuant to the terms of this
Agreement or otherwise) (a "Payment") would be nondeductible by the
Company for Federal income tax purposes because of Section 280G of the
Code, then the aggregate present value of amounts payable or
distributable to or for your benefit pursuant to this Agreement (such
payments or distributions pursuant to this Agreement are hereinafter
referred to as "Agreement Payments") shall be reduced (but not below
zero) to the Reduced Amount. The "Reduced Amount" shall be an amount
expressed in present value which maximizes the aggregate present value
of Agreement Payments without causing any Payment to be nondeductible
by the Company because of Section 280G of the Code. For purposes of
this Section 9, present value shall be determined in accordance with
Section 280G(d)(4) of the Code.
(b) All determinations required to be made under this Section 9
shall be made at the Company's expense by a nationally recognized
accounting firm acceptable to the Employee (the "Accounting Firm")
which shall provide detailed supporting calculations both to the
Company and the Employee within 15 business days of the Date of
Termination or such earlier time as is requested by the Company. Any
such determination by the Accounting Firm shall be binding upon the
Company and the Employee. The Employee shall determine which and how
much of the Agreement Payments (or, at the election of the Employee,
other payments) shall be eliminated or reduced consistent with the
requirements of this Section 9, provided that, if the Employee does
not make such determination within ten business days of the receipt of
the calculations made by the Accounting Firm, the Company shall elect
which and how much of the Agreement Payments shall be eliminated or
reduced consistent with the Requirements of this Section 9 and shall
notify the Employee promptly of such election. Within five business
days thereafter, the Company shall pay the Employee or distribute to
or for the Employee's benefit such amounts as are then due to the
Employee under this Agreement.
(c) As a result of the uncertainty in the application of Section
280G of the Code at the time of the initial determination by the
Accounting Firm hereunder, it is possible that Agreement Payments will
have been made by the Company which should not have been made
("Overpayment") or that additional Agreement Payments which will have
not been made by the Company could have been made ("Underpayment"), in
each case, consistent with the calculations required to be made
hereunder. In the event that the Accounting Firm determines that an
Overpayment has been made, any such Overpayment shall be treated for
all purposes as a loan to the Employee which the Employee shall repay
to the Company together with interest at the applicable Federal rate
provided for in Section 7872(f)(2) of the Code. In the event that the
Accounting Firm determines that an Underpayment has occurred, any such
Underpayment shall be promptly paid by the Company to or for the
benefit of the Employee together with interest at the applicable
Federal rate provided for in Section 7872(f)(2) of the Code.
10. Confidential Information. The Employee shall hold in a
fiduciary capacity for the benefit of the Company all secret or
confidential information, knowledge or data relating to the Company or
any of its affiliated companies and their respective businesses, which
shall have been obtained by the Employee during the Employee's
employment by the Company or any of its affiliated companies and which
shall not be or become public knowledge (other than by acts by the
Employees or representatives of the Employee in violation of this
Agreement). After termination of the Employee's employment with the
Company, the Employee shall not, without the prior written consent of
the Company or as may otherwise be required by law or legal process,
communicate or divulge any such information, knowledge or data to
anyone other than the Company and those designated by it. In no event
shall an asserted violation of the provisions of this Section 10
constitute a basis for deferring or withholding any amounts otherwise
payable to the Employee under this Agreement.
11. Successors. (a) This Agreement is personal to the Employee
and without the prior written consent of the Company shall not be
assignable by the Employee otherwise than by will or the laws of
descent and distribution. This Agreement shall inure to the benefit
of and be enforceable by the Employee's legal representatives.
(b) This Agreement shall inure to the benefit of and be binding
upon the Company and its successors and assigns.
(c) The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to
assume expressly and agree to perform this Agreement in the same
manner and to the same extent that the Company would be required to
perform it if no such succession had taken place. As used in this
Agreement, "Company" shall mean the Company as hereinbefore defined
and any successor to its business and/or assets as aforesaid which
assumes and agrees to perform this Agreement by Operation of law, or
otherwise.
12. Miscellaneous. (a) This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware,
without reference to principles of conflict of laws. The captions of
this Agreement are not part of the provisions hereof and shall have no
force or effect. This Agreement may not be amended or modified
otherwise than by a written agreement executed by the parties hereto
or their respective successors and legal representatives.
(b) All notices and other communications hereunder shall be in
writing and shall be given by hand delivery to the other party or by
registered or certified mail, return receipt requested, postage
prepaid, addressed as follows:
If to the Employee:
If to the Company:
Melamine Chemicals, Inc.
39041 Highway 18 West
Donaldsonville, Louisiana 70346
Attention: Chief Financial Officer
or to such other address as either party shall have furnished to the
other in writing in accordance herewith. Notice and communications
shall be effective when actually received by the addressee.
(c) The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other
provision of this Agreement.
(d) The Company may withhold from any amounts payable under this
Agreement such Federal, state, local or foreign taxes as shall be
required to be withheld pursuant to any applicable law or regulation.
(e) The Employee's or the Company's failure to insist upon strict
compliance with any provision hereof or any other provision of this
Agreement or the failure to assert any right the Employee or the
Company may have hereunder, including, without limitation, the right
of the Employee to terminate employment for Good Reason pursuant to
Sections 5(c)(i)-(v) of this Agreement, shall not be deemed to be a
waiver of such provision or right or any other provision or right of
this Agreement.
(f) The Employee and the Company acknowledge that, except as may
otherwise be provided under any other written agreement between the
Employee and the Company, the employment of the Employee by the
Company is "at will" and, prior to the Effective Date, the Employee's
employment may be terminated by either the Employee or the Company at
any time prior to the Effective Date. Moreover, if prior to the
Effective Date, the Employee's employment with the Company terminates,
except in connection with a Potential Change of Control, then the
Employee shall have no further rights under this Agreement. From and
after the Effective Date this Agreement shall supersede any other
agreement between the parties with respect to the subject matter
hereof.
IN WITNESS WHEREOF, the Employee has hereunto set the Employee's
hand and, pursuant to the authorization from its Board of Directors,
the Company has caused these presents to be executed in its name on
its behalf, all as of the day and year first above written.
---------------------------
Employee
MELAMINE CHEMICALS, INC.
By:
-----------------------------
Fred Huber
President and Chief Executive Officer
Melamine Chemicals, Inc.
Exhibit to Form 10-K
10.23
Schedule of Differences
between
Double Trigger Change of Control Severance Agreements
The persons listed below have entered into substantially
identical forms of Double Trigger Change of Control Severance
Agreements except for the following provision:
Payout of two years:
Section 6, paragraph (i)(B) reads as follows:
"the amount equal to the product of (1) two and
(2) the sum of (x) the Employee's Annual Base
Salary and (y) the Highest Annual Bonus"
or
Payout of one year:
Section 6, paragraph (i)(B) reads as follows:
"the amount equal to the sum of (x) the Employee's
Annual Base Salary and (y) the Highest Annual
Bonus"
Employee: Two Years or One Year
--------- ---------------------
Willie P. Arcement One Year
Bryan P. Baldwin One Year
Jerry L. Bass One Year
David E. Best One Year
Charles A. Borne, III One Year
Ronald J. Canova One Year
Linda G. Castro One Year
Philip J. Cedotal, Jr. One Year
George M. Crews One Year
Luke J. Dipuma One Year
Raymond J. Duet One Year
Michael B. Dunn One Year
Sammy A. Edwards One Year
Paul G. Fortenberry One Year
K. Michael Fowler One Year
Gabriel Gautreaux One Year
James E. Hartman One Year
E. Wayne Jones One Year
Robert A. Kumse One Year
Martin F. Lapari Two Years
Wayne P. Martinez One Year
Thomas C. Pettitt One Year
Thad A. Prather One Year
Lesley W. Rhodes One Year
Ronnie M. Rome, Jr. One Year
Ronald W. Sessions One Year
Ji Shen One Year
Charles L. Shivers One Year
William A. Sorenson Two Years
Gregory A. Taylor One Year
Yin Wang One Year
Chuan-Lan Wen One Year
Israel Williams One Year
AMENDMENT TO CHANGE OF CONTROL
SEVERANCE AGREEMENT
This Amendment to the Change of Control Severance Agreement as amended
(the "Severance Agreement"), by and between Melamine Chemicals, Inc., a
Delaware corporation (the "Company") and _________________ (the "Employee"),
is entered into as of August 6, 1997.
WHEREAS, the Company and Employee have entered into the Severance
Agreement to provide for certain benefits to Employee upon a Change of
Control of the Company, as defined in the Severance Agreement;
WHEREAS, Section 1(b) of the Severance Agreement provides that it shall
expire on November 15, 1997; and
WHEREAS, the Board of Directors of the Company has determined that it is
in the best interest of the Company and its shareholders to extend the term
of the Severance Agreement until November 15, 1998 in order to assure that
the Company will have the continued dedication of the Employee,
notwithstanding the possibility, threat or occurrence of a Change of Control
of the Company;
NOW, THEREFORE, for and in consideration of the continued dedication of
Employee to the Company, the parties hereto hereby agree as follows:
Section 1(b) of the Severance Agreement is hereby amended to read in its
entirety as follows:
(b) The "Change of Control Period" shall mean the period commencing
the date originally entered into and ending on November 15, 1998, unless
otherwise extended by the Company.
IN WITNESS WHEREOF, the Employee has hereunto set the Employee's hand
and, pursuant to the authorization of its Board of Directors, the Company
has caused these presents to be executed in its name on its behalf, all as
of the day and year first above written.
EMPLOYEE:
_________________________
(Name of Employee)
MELAMINE CHEMICALS, INC.
By: _________________________
Fred R. Huber
President and
Chief Executive Officer
PROMISSORY NOTE DUE 2000
US $5,000,000.00 Donaldsonville, Louisiana
April 3, 1997
The undersigned unconditionally promises to pay to the order of
Melamine Chemicals, Inc., at its offices at 39046 Highway 18 West,
Donaldsonville, Louisiana 70346, or at such other location as is
designated by the holder hereof, in lawful money of the United States
of America, the principal amount of FIVE MILLION AND NO/100 DOLLARS
(US $5,000,000.00), all of which shall be payable in full on January
1, 2000 (the "Maturity Date").
The outstanding principal amount of this Note shall bear interest
("Ordinary Interest") from and including the date hereof until paid at
the rate of FIVE AND NINETY-FOUR ONE-HUNDREDTHS PERCENT (5.94%) per
annum. Interest shall be calculated on a 365 day per year basis and
shall be payable annually in arrears on January 1 of each year, with
the first such interest payment being due on January 1, 1998 and with
a final interest payment in the amount of all outstanding interest
then unpaid being due on the Maturity Date.
If a payment of principal or interest falls due on a Saturday,
Sunday, or any other day on which financial institutions are generally
not open for business in New Orleans, Louisiana, payment shall be made
on the next business day.
If, on any date on which an installment of principal or interest
is due under this Note, the undersigned is owed money by Melamine
Chemicals, Inc. under the terms of a final award rendered by
arbitrators in accordance with Section 14.6 of that certain Technology
Transfer and Technical Cooperation Agreement (the "Technology Transfer
Agreement") dated as of February 25, 1997, between Melamine Chemicals,
Inc. and the undersigned, the undersigned may offset the amount of
such unpaid award against the installment of principal or interest
then due under this Note. If the amount of such installment of
principal or interest is insufficient to satisfy the unpaid award in
full, the remaining unpaid amount of the award may be used to offset
subsequent installments of principal or interest under this Note until
the award is satisfied in its entirety. If the amount of such
installment of principal or interest is greater than the amount of the
unpaid award, the undersigned shall pay the remainder of such
installment of principal or interest to the holder of this Note on the
date due. Except as expressly set forth in this paragraph, this Note
is not subject to any other right of offset or compensation in favor
of the undersigned. Neither the enforcement nor the collection of
this Note is subject to arbitration under the Technology Transfer
Agreement.
Any amounts payable pursuant to this Note, whether principal or
interest, which are not paid on the date due shall bear interest
("Default Interest") at a rate equal to twelve percent (12%) per annum
from such due date until paid in full.
All payments on this Note shall be applied first to attorneys'
fees and other costs then accrued, if any; second, to the Default
Interest then accrued, if any; third, to Ordinary Interest then
accrued, if any; and, finally, to the principal installments in the
inverse order of maturity. The undersigned shall have the right and
privilege of prepaying all or any part of this Note at any time
without notice or penalty.
This Note shall become immediately due and payable at the option
of the holder hereof, without presentment or demand or any notice to
the undersigned or any other person obligated hereon, upon (a) the
undersigned's failure to pay any installment of principal or interest
under this Note on or before the due date thereof, (b) the undersigned
becoming subject to bankruptcy, receivership, liquidation, or other
insolvency proceedings, whether voluntarily or involuntarily, whether
under federal, state or foreign law or (c) the undersigned making a
general assignment for the benefit of its creditors or becoming unable
to pay its bills as they become due in the regular course of its
business.
If this Note is collected by suit or through any bankruptcy
court, or any judicial proceedings, or if this Note is not paid at
maturity, however such maturity may be brought about, and it is placed
in the hands of an attorney for collection, then the undersigned
unconditionally promises to pay all reasonable attorneys' fees and
court costs associated with the enforcement of this Note.
The undersigned and all sureties, endorsers and guarantors of
this Note waive demand, presentment for payment, notice of non-
payment, protest, notice of protest, all pleas of division and
discussion and all other notice, filing of suit and diligence in
collecting this Note or enforcing any security herefor, and agree to
any substitution, exchange or release of any of such security or the
release of any party primarily or secondarily liable hereon and
further agree that it will not be necessary for any holder hereof, in
order to enforce payment of this Note, to first institute suit or
exhaust its remedies against any maker or others liable herefor, or to
enforce its rights against any security herefor, and consent to any
extensions or postponements of the time of payment of this Note or any
other indulgences with respect hereto, without notice thereof to any
of them and hereby bind themselves in solido for the payment hereof in
principal, interest, costs and attorneys' fees; provided, however,
that nothing in the foregoing paragraph shall operate as a waiver of
the rights of the undersigned against MCI or its successors under the
fourth paragraph of this Note.
This Note shall be governed by and construed in accordance with
the laws of the State of Louisiana, United States of America.
DSM MELAMINE B.V.
By: /s/ Pieter Harten
------------------
Pieter Harten
Business Group Director
PROMISSORY NOTE DUE 2005
US $5,000,000.00 Donaldsonville, Louisiana
April 3, 1997
The undersigned unconditionally promises to pay to the order of
Melamine Chemicals, Inc., at its offices at 39046 Highway 18 West,
Donaldsonville, Louisiana 70346, or at such other location as is
designated by the holder hereof, in lawful money of the United States
of America, the principal amount of FIVE MILLION AND NO/100 DOLLARS
(US $5,000,000.00), all of which shall be payable in full on January
1, 2005 (the "Maturity Date").
The outstanding principal amount of this Note shall bear interest
("Ordinary Interest") from and including the date hereof until paid at
the rate of SIX AND THIRTY-TWO ONE-HUNDREDTHS PERCENT (6.32%) per
annum. Interest shall be calculated on a 365 day per year basis and
shall be payable annually in arrears on January 1 of each year, with
the first such interest payment being due on January 1, 1998 and with
a final interest payment in the amount of all outstanding interest
then unpaid being due on the Maturity Date.
If a payment of principal or interest falls due on a Saturday,
Sunday, or any other day on which financial institutions are generally
not open for business in New Orleans, Louisiana, payment shall be made
on the next business day.
If, on any date on which an installment of principal or interest
is due under this Note, the undersigned is owed money by Melamine
Chemicals, Inc. under the terms of a final award rendered by
arbitrators in accordance with Section 14.6 of that certain Technology
Transfer and Technical Cooperation Agreement (the "Technology Transfer
Agreement") dated as of February 25, 1997, between Melamine Chemicals,
Inc. and the undersigned, the undersigned may offset the amount of
such unpaid award against the installment of principal or interest
then due under this Note. If the amount of such installment of
principal or interest is insufficient to satisfy the unpaid award in
full, the remaining unpaid amount of the award may be used to offset
subsequent installments of principal or interest under this Note until
the award is satisfied in its entirety. If the amount of such
installment of principal or interest is greater than the amount of the
unpaid award, the undersigned shall pay the remainder of such
installment of principal or interest to the holder of this Note on the
date due. Except as expressly set forth in this paragraph, this Note
is not subject to any other right of offset or compensation in favor
of the undersigned. Neither the enforcement nor the collection of
this Note is subject to arbitration under the Technology Transfer
Agreement.
Any amounts payable pursuant to this Note, whether principal or
interest, which are not paid on the date due shall bear interest
("Default Interest") at a rate equal to twelve percent (12%) per annum
from such due date until paid in full.
All payments on this Note shall be applied first to attorneys'
fees and other costs then accrued, if any; second, to the Default
Interest then accrued, if any; third, to Ordinary Interest then
accrued, if any; and, finally, to the principal installments in the
inverse order of maturity. The undersigned shall have the right and
privilege of prepaying all or any part of this Note at any time
without notice or penalty.
This Note shall become immediately due and payable at the option
of the holder hereof, without presentment or demand or any notice to
the undersigned or any other person obligated hereon, upon (a) the
undersigned's failure to pay any installment of principal or interest
under this Note on or before the due date thereof, (b) the undersigned
becoming subject to bankruptcy, receivership, liquidation, or other
insolvency proceedings, whether voluntarily or involuntarily, whether
under federal, state or foreign law or (c) the undersigned making a
general assignment for the benefit of its creditors or becoming unable
to pay its bills as they become due in the regular course of its
business.
If this Note is collected by suit or through any bankruptcy
court, or any judicial proceedings, or if this Note is not paid at
maturity, however such maturity may be brought about, and it is placed
in the hands of an attorney for collection, then the undersigned
unconditionally promises to pay all reasonable attorneys' fees and
court costs associated with the enforcement of this Note.
The undersigned and all sureties, endorsers and guarantors of
this Note waive demand, presentment for payment, notice of non-
payment, protest, notice of protest, all pleas of division and
discussion and all other notice, filing of suit and diligence in
collecting this Note or enforcing any security herefor, and agree to
any substitution, exchange or release of any of such security or the
release of any party primarily or secondarily liable hereon and
further agree that it will not be necessary for any holder hereof, in
order to enforce payment of this Note, to first institute suit or
exhaust its remedies against any maker or others liable herefor, or to
enforce its rights against any security herefor, and consent to any
extensions or postponements of the time of payment of this Note or any
other indulgences with respect hereto, without notice thereof to any
of them and hereby bind themselves in solido for the payment hereof in
principal, interest, costs and attorneys' fees; provided, however,
that nothing in the foregoing paragraph shall operate as a waiver of
the rights of the undersigned against MCI or its successors under the
fourth paragraph of this Note.
This Note shall be governed by and construed in accordance with
the laws of the State of Louisiana, United States of America.
DSM MELAMINE B.V.
By: /s/ Pieter Harten
------------------
Pieter Harten
Business Group Director
The Board of Directors
Melamine Chemicals, Inc.
We consent to incorporation by reference in the registration statement
(No. 33-20502) on Form S-8 of Melamine Chemicals, Inc. of our report
dated July 30, 1997 relating to the consolidated balance sheets of
Melamine Chemicals, Inc. as of June 30, 1997 and 1996, 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 June 30, 1997, which report appears in the June 30, 1997
annual report on Form 10-K of Melamine Chemicals, Inc.
/s/ KPMG PEAT MARWICK LLP
- --------------------------
KPMG PEAT MARWICK LLP
Baton Rouge, Louisiana
September 22, 1997
