<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission file number 1-12430
WESTERN ATLAS INC.
(Exact name of registrant as specified in its charter)
DELAWARE 95-3899675
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
360 NORTH CRESCENT DRIVE
BEVERLY HILLS, CALIFORNIA 90210-4867
(Address of principal executive offices) (Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (310) 888-2500
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 [ ]
On July 31, 1997 there were 53,930,001 shares of Common Stock outstanding.
Page 1 of 19
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WESTERN ATLAS INC.
INDEX
REPORT ON FORM 10-Q
FOR THE QUARTER ENDED JUNE 30, 1997
PAGE
NUMBER
------
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements
Consolidated Statements of Operations
Six months ended June 30, 1997 and
June 30, 1996 3
Consolidated Statements of Operations
Three months ended June 30, 1997 and
June 30, 1996 4
Consolidated Balance Sheets
June 30, 1997 and December 31, 1996 5
Consolidated Statements of Cash Flows
Six months ended June 30, 1997 and
June 30, 1996 6
Notes to Consolidated Financial Statements 7
ITEM 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 10
PART II. OTHER INFORMATION
ITEM 6. Exhibits and Reports on Form 8-K 13
Signature 19
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<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
WESTERN ATLAS INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(THOUSANDS OF DOLLARS, EXCEPT PER SHARE AMOUNTS)
SIX MONTHS ENDED
JUNE 30,
1997 1996
---------- ----------
Sales and Service Revenues $ 798,451 $ 671,476
---------- ----------
Costs and Expenses
Cost of sales 554,188 456,508
Selling, general and administrative 64,776 54,756
Depreciation and amortization 97,003 96,383
Interest - net 19,627 15,565
Spin-off related costs 8,350
---------- ----------
Total Costs and Expenses 743,944 623,212
---------- ----------
Earnings from Continuing Operations
before Taxes on Income 54,507 48,264
Taxes on Income (21,803) (19,291)
---------- ----------
Earnings from Continuing Operations 32,704 28,973
(Loss) Earnings from Discontinued Operations (171,880) 23,564
---------- ----------
Net (Loss) Earnings $ (139,176) $ 52,537
---------- ----------
---------- ----------
Net (Loss) Earnings Per Share:
Continuing Operations $ 0.60 $ 0.53
Discontinued Operations (3.14) 0.44
----- ----
Total $(2.54) $ 0.97
------ -------
------ -------
Shares used in computing
net (loss) earnings per share 54,873,123 54,328,152
See accompanying notes to consolidated financial statements.
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WESTERN ATLAS INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(THOUSANDS OF DOLLARS, EXCEPT PER SHARE AMOUNTS)
THREE MONTHS ENDED
JUNE 30,
1997 1996
---------- ----------
Sales and Service Revenues $ 418,505 $ 362,437
---------- ----------
Costs and Expenses
Cost of sales 286,895 247,364
Selling, general and administrative 33,302 28,660
Depreciation and amortization 50,795 48,910
Interest - net 11,464 8,168
Spin-off related costs 8,350
---------- ----------
Total Costs and Expenses 390,806 333,102
---------- ----------
Earnings from Continuing Operations
before Taxes on Income 27,699 29,335
Taxes on Income (11,079) (11,720)
---------- ----------
Earnings from Continuing Operations 16,620 17,615
(Loss) Earnings from Discontinued Operations (186,598) 12,238
---------- ----------
Net (Loss) Earnings $ (169,978) $ 29,853
---------- ----------
---------- ----------
Net (Loss) Earnings Per Share:
Continuing Operations $ 0.30 $ 0.32
Discontinued Operations (3.39) 0.23
------ ----
Total $(3.09) $ 0.55
------- -------
------- -------
Shares used in computing
net (loss) earnings per share 54,944,714 54,414,281
See accompanying notes to consolidated financial statements.
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WESTERN ATLAS INC.
CONSOLIDATED BALANCE SHEETS
(THOUSANDS OF DOLLARS)
JUNE 30, DECEMBER 31,
1997 1996
---------- ----------
ASSETS
Current Assets
Cash and cash equivalents $ 18,707 $ 16,296
Accounts receivable, net 344,068 360,935
Inventories 38,789 42,706
Deferred tax assets 38,518 43,049
Net assets of UNOVA, Inc. to be distributed to
Western Atlas shareholders 590,210 574,508
Due from UNOVA, Inc. 228,244 109,574
Other current assets 43,132 35,158
---------- ----------
Total Current Assets 1,301,668 1,182,226
---------- ----------
Property, Plant and Equipment, at cost 1,306,633 1,152,230
Less: accumulated depreciation (455,148) (459,978)
---------- ----------
Property, Plant and Equipment, Net 851,485 692,252
Goodwill and Other Intangibles, Net 324,807 299,494
Geophysical Data and Other Assets 195,546 225,836
---------- ----------
Total Assets $ 2,673,506 $ 2,399,808
---------- ----------
---------- ----------
LIABILITIES AND SHAREHOLDERS' INVESTMENT
Current Liabilities
Accounts payable $ 216,330 $ 262,620
Payrolls and related expenses 81,988 97,147
Notes payable and current portion
of long-term obligations 563,138 53,055
---------- ----------
Total Current Liabilities 861,456 412,822
---------- ----------
Long-term Obligations 407,929 456,465
---------- ----------
Deferred Taxes and Other Long-term Liabilities 30,760 27,583
---------- ----------
Shareholders' Investment
Common stock 53,892 53,706
Additional paid-in capital 1,158,103 1,146,066
Retained earnings 152,282 291,458
Cumulative currency translation adjustment 10,105 12,482
Less: 17,718 and 13,552 treasury shares at cost at
June 30, 1997 and December 31, 1996, respectively (1,021) (774)
---------- ----------
Total Shareholders' Investment 1,373,361 1,502,938
---------- ----------
Total Liabilities and Shareholders' Investment $ 2,673,506 $ 2,399,808
---------- ----------
---------- ----------
See accompanying notes to consolidated financial statements.
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WESTERN ATLAS INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(THOUSANDS OF DOLLARS)
SIX MONTHS ENDED
JUNE 30,
1997 1996
---------- ----------
Cash and Cash Equivalents at Beginning of Period $ 16,296 $ 13,214
---------- ----------
Cash Flows from Operating Activities:
Continuing Operations
Net earnings 32,704 28,973
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Depreciation and amortization 97,003 96,383
Change in accounts receivable 22,150 (6,860)
Change in inventories 5,055 (11,030)
Change in other current assets (7,850) 21,308
Change in accounts payable (48,581) (37,289)
Other operating activities (7,531) (1,609)
---------- ----------
Total from continuing operations 92,950 89,876
Net operating activities of discontinued operations (5,644) (27,765)
---------- ----------
Net Cash Provided by Operating Activities 87,306 62,111
---------- ----------
Cash Flows from Investing Activities:
Continuing Operations
Capital expenditures (242,458) (106,970)
Acquisition of businesses, net of cash acquired (45,547) (890)
Geophysical data, net 34,497 (21,097)
Other investing activities (1,746) (3,586)
---------- ----------
Total from continuing operations (255,254) (132,543)
Net investing activities of discontinued operations (383,496) (9,432)
---------- ----------
Net Cash Used in Investing Activities (638,750) (141,975)
---------- ----------
Cash Flows from Financing Activities:
Continuing Operations
Short-term obligations, net 460,574 (1,602)
Receivable from UNOVA, Inc. (118,670) (305)
Issuance of common stock 12,223 10,548
Other financing activities 841 514
---------- ----------
Total from continuing operations 354,968 9,155
Net financing activities of discontinued operations 198,887 61,527
---------- ----------
Net Cash Provided by Financing Activities 553,855 70,682
---------- ----------
Resulting in Increase (Decrease) in Cash
and Cash Equivalents 2,411 (9,182)
---------- ----------
Cash and Cash Equivalents at End of Period $ 18,707 $ 4,032
---------- ----------
---------- ----------
Supplemental disclosure of cash flow information
Interest paid $ 22,699 $ 20,494
Income taxes paid (refunded) $ 33,607 $ (2,893)
See accompanying notes to consolidated financial statements.
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WESTERN ATLAS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SIX MONTHS ENDED JUNE 30, 1997
1. The amounts included in this report are unaudited; however in the opinion
of management, all adjustments necessary for a fair statement of results
for the stated periods have been included. These adjustments are of a
normal recurring nature. Certain information and footnote disclosures
normally included in financial statements prepared in accordance with
generally accepted accounting principles have been condensed or omitted. It
is suggested that these consolidated financial statements be read in
conjunction with the audited financial statements and notes thereto
included in the Company's 1996 Annual Report on Form 10-K. The results of
operations for the six months ended June 30, 1997 are not necessarily
indicative of operating results for the entire year.
2. On May 4, 1997, the Company's Board of Directors approved, in principle, a
plan to distribute to Western Atlas Inc. ("WAI") shareholders all of the
outstanding common stock of UNOVA, Inc. ("UNOVA"), a wholly owned
subsidiary of WAI. UNOVA will own and conduct substantially all of WAI's
industrial automation systems operations, which include its automated data
collection ("ADC") and manufacturing systems businesses. The distribution
of such stock, which is expected to be tax free to WAI and its shareholders,
should be formally declared and completed by the end of 1997.
The consolidated financial statements of WAI and related
notes thereto have been restated to present the operations of UNOVA as
discontinued. Interest expense attributable to UNOVA and therefore
reclassified to discontinued operations in the Company's consolidated
statements of operations is as follows: $5.7 million and $2.8 million for
the three months ended June 30, 1997 and 1996, respectively; and $9.3
million and $5.8 million for the six months ended June 30, 1997 and 1996,
respectively. Interest income attributable to UNOVA is as follows: $0.5
million and $1.1 million for the three months ended June 30, 1997 and 1996,
respectively; and $2.2 million and $2.7 million for the six months ended
June 30, 1997 and 1996, respectively. Corporate general and administrative
costs of the Company have not been allocated to UNOVA for any of the
presented periods.
Net assets of UNOVA as of June 30, 1997 and December 31, 1996 are as
follows:
JUNE 30, DECEMBER 31,
1997 1996
---------------------------------
(THOUSANDS OF DOLLARS)
Current assets $ 766,958 $ 695,791
Noncurrent assets 584,344 378,002
---------- ----------
Total assets 1,351,302 1,073,793
---------- ----------
Current liabilities 683,543 429,770
Noncurrent liabilities 77,549 69,515
---------- ----------
Total liabilities 761,092 499,285
---------- ----------
Net assets $ 590,210 $ 574,508
---------- ----------
---------- ----------
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<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
3. The Company acquired Norand Corporation ("Norand") on March 3, 1997, and
United Barcode Industries ("UBI") on April 4, 1997. Norand designs,
manufactures and markets mobile computing systems and wireless data
communications networks using radio frequency technology. UBI is a
European based ADC company headquartered in Sweden, with fiscal 1996
sales of approximately $100 million. These companies are currently being
integrated into the ADC business of the Company's industrial automation
systems operations, which is included in discontinued operations. Both
transactions were funded using a combination of committed credit
facilities, short-term uncommitted credit lines and excess cash, and are
being accounted for under the purchase method of accounting.
Accordingly, the acquisition costs (approximately $280 million and $107
million for Norand and UBI, respectively) have been allocated to the net
assets acquired based upon their relative fair values. Such allocation
resulted in $203 million assigned to in-process research and development
activities; $156 million assigned to goodwill (to be amortized over 25
years using the straight-line method); and $29 million assigned to other
intangibles (to be amortized over periods ranging from 4 to 18 years
using the straight-line method). During the period ended June 30, 1997,
the Company expensed the amounts assigned to in-process research and
development in accordance with Financial Accounting Standards Board
Interpretation No. 4.
The Company acquired the remaining 51% of Honsberg, a German machine
tool maker, in the second quarter of 1997. The original 49% of Honsberg
was acquired during 1995.
In May 1997, the Company acquired Sungroup Energy Services Company ("Sun"),
a Canadian well-logging, production testing and completion services
provider. Sun had revenues in excess of $30 million in 1996.
4. The Company established a commercial paper ("CP") program subsequent to
the end of the 1997 second quarter. The CP program is secured by the
committed credit facilities described below, and allows the Company to
borrow up to $400 million at CP market rates with maturities up to 270
days. Currently, $280 million is borrowed under the CP program at annual
interest rates approximating 5.7% with maturities up to about 60 days.
The Company currently has committed credit facilities with a group of
banks which permit the borrowing of up to $400 million. The amount
available under this facility is reduced by the amount of CP borrowings
outstanding, thus $120 million is currently available under this facility.
5. The components of inventory balances are summarized below:
JUNE 30, DECEMBER 31,
1997 1996
---------------------------
(THOUSANDS OF DOLLARS)
Raw materials and work in process $ 36,036 $ 36,107
Finished goods 2,753 6,599
---------- ----------
Net inventories $ 38,789 $ 42,706
---------- ----------
---------- ----------
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<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
6. Net interest expense is composed of the following:
SIX MONTHS ENDED THREE MONTHS ENDED
JUNE 30, JUNE 30,
1997 1996 1997 1996
---------------------- ----------------------
(THOUSANDS OF DOLLARS) (THOUSANDS OF DOLLARS)
Interest expense $20,617 $16,466 $11,948 $ 8,424
Interest income (990) (901) (484) (256)
-------- -------- -------- --------
Net interest expense $19,627 $15,565 $11,464 $ 8,168
------- ------- ------- -------
------- ------- ------- -------
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<PAGE>
WESTERN ATLAS INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
On May 4, 1997, the Company's Board of Directors approved, in principle, a plan
to distribute to Western Atlas Inc. ("WAI") shareholders all of the outstanding
common stock of UNOVA, Inc. ("UNOVA"), a wholly owned subsidiary of WAI. UNOVA
will own and conduct substantially all of WAI's industrial automation systems
operations, which include its automated data collection and manufacturing
systems businesses. The distribution of such stock, which is expected to be tax
free to WAI and its shareholders, should be formally declared and completed by
the end of 1997.
The operations of UNOVA have been reported as discontinued operations in the
Company's consolidated financial statements. Corporate general and
administrative costs of the Company have not been allocated to UNOVA for any
of the periods presented. Management estimates that approximately 85% of
general corporate and administrative costs are attributable to UNOVA.
Furthermore, estimated spin-off related costs of $8.35 million were accrued
in continuing operations during the second quarter of 1997.
Sales and service revenues and segment profit of continuing operations,
reflecting the Oilfield Services segment, and the amounts included within
discontinued operations, reflecting the Industrial Automation Systems segment
are summarized below. The $203 million charge for acquired in-process
research and development is excluded from the operating profit of the
Industrial Automation Systems segment in the 1997 periods presented below:
SIX MONTHS ENDED THREE MONTHS ENDED
JUNE 30, JUNE 30,
1997 1996 1997 1996
---------------------- ----------------------
(THOUSANDS OF DOLLARS) (THOUSANDS OF DOLLARS)
SALES AND SERVICE
- -----------------
REVENUES
- --------
Oilfield Services $798,451 $671,476 $418,505 $362,437
-------- -------- -------- --------
-------- -------- -------- --------
Industrial Automation Systems $732,343 $504,471 $409,277 $264,054
-------- -------- -------- --------
-------- -------- -------- --------
SEGMENT OPERATING PROFIT
- --------------------------
Oilfield Services $ 93,477 $ 76,867 $ 52,350 $ 44,364
-------- -------- -------- --------
-------- -------- -------- --------
Industrial Automation Systems $ 60,670 $ 42,054 $ 33,588 $ 21,860
-------- -------- -------- --------
- ------- -------- -------- --------
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<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (CONTINUED)
CONTINUING OPERATIONS:
The Company's Oilfield Services segment, which represents continuing
operations, reported higher sales and service revenues and operating profit
in the current three and six months compared with the corresponding prior
periods. Increases were driven primarily by the expansion of the segment's
seismic operations due to oil companies renewed emphasis on exploration
projects in response to the continuing rise in the worldwide demand for
energy. The Company's wireline business also experienced growth as a result
of the introduction of a new generation of logging tools and services.
Oilfield Services' operating margins were comparable to those of the
corresponding prior periods.
Beginning the first quarter of 1997, the Company began major upgrades on three
of the Company's large-capacity seismic vessels. The Company returned these
vessels to service in May, which historically has been the beginning of
increased seismic survey activity in the North Sea. Upgrades include the
equipping of vessels with additional streamers, new automated streamer
deployment and retrieval systems, as well as new seismic data
acquisition/processing systems. One of the vessels is the first in the world to
utilize new proprietary seismic solid-streamer technology.
In May 1997, the Company acquired Sungroup Energy Services Company ("Sun"), a
Canadian well-logging, production testing and completion services provider. Sun
had revenues in excess of $30 million in 1996.
DISCONTINUED OPERATIONS:
The Industrial Automation Systems segment, which represents discontinued
operations, reported higher sales and service revenues and operating
profit (excluding the $203 million charge for acquired in-process research
and development) for the three and six months compared with the
corresponding prior periods. Sales and service revenues and operating profit
of the Manufacturing Systems group were higher than the corresponding prior
periods, due primarily to an increase in the proportion of projects moving
into installation and final delivery phases.
The Company acquired Norand Corporation ("Norand") on March 3, 1997, and
United Barcode Industries ("UBI") on April 4, 1997. Norand designs,
manufactures and markets mobile computing systems and wireless data
communications networks using radio frequency technology. UBI is a European
based ADC company headquartered in Sweden, and had fiscal 1996 sales of
approximately $100 million. These companies are currently being integrated
into the ADC business of the Company's industrial automation systems
operations. Both transactions were funded using a combination of WAI
committed credit facilities, short-term uncommitted credit lines and excess
cash, and are being accounted for under the purchase method of accounting.
Accordingly, the acquisition costs (approximately $280 million and $107
million for Norand and UBI, respectively) have been allocated to the net
assets acquired based upon their relative fair values. Such allocation
resulted in $203 million assigned to in-process research and development
activities; $156 million assigned to goodwill (to be amortized over 25 years
using the straight-line method); and $29 million assigned to other
intangibles (to be amortized over periods ranging from 4 to 18 years using
the straight-line method). During the period ended June 30, 1997, the
Company expensed the amounts assigned to in-process research and development
in accordance with Financial Accounting Standards Board Interpretation No. 4.
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<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (CONTINUED)
The Company acquired the remaining 51% of Honsberg, a German machine tool
maker, in the second quarter of 1997. The original 49% of Honsberg was
acquired during 1995.
Revenues at Intermec, the Company's ADC/Mobile Computing business, reflected the
recent acquisitions of Norand and UBI. Approximately $100 million of the
revenue increase is attributable to the operations of these newly acquired
companies. The process of integrating the formerly separate organizations has
had a temporary negative impact on the operating margins of the combined
entities.
LIQUIDITY AND CAPITAL RESOURCES
Continuing operations had cash and cash equivalents of $18.7 million at
June 30, 1997, compared with $16.3 million at December 31, 1996. The cash and
cash equivalents balance included within the net assets of UNOVA decreased
from $149.5 at December 31, 1996 to $21.8 at June 30, 1997 primarily as a
result of the Norand acquisition.
Overall Company debt, including both continuing and discontinued operations,
increased from $545.6 million at December 31, 1996 to $1,039.3 million at
June 30, 1997 due in part to the use of a combination of committed credit
facilities and short-term uncommitted credit lines to fund the Norand and UBI
acquisitions. The remaining increase is attributable to capital expenditures
and working capital needs of the continuing operations. The short-term
borrowings currently bear interest at an annual rate of approximately 5.75%,
and have current maturities of up to 60 days.
The Company established a commercial paper ("CP") program subsequent to the end
of the 1997 second quarter. The CP program is secured by the committed credit
facilities described below, and allows the Company to borrow up to $400 million
at CP market rates with maturities up to 270 days. Currently, $280 million is
borrowed under the CP program at annual interest rates approximating 5.7% with
maturities up to about 60 days.
The Company currently has committed credit facilities with a group of banks
which permit the borrowing of up to $400 million. The amount available under
this facility is reduced by the amount of CP borrowings outstanding, thus $120
million is currently available under this facility. The Company expects that
cash flow from operations, along with available borrowing capacity, will be
adequate to meet working capital requirements.
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<PAGE>
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Reports on Form 8-K: No reports on Form 8-K have been filed by the
Registrant during the quarter ended June 30, 1997.
(b) See Exhibit Index included herein on page 14.
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<PAGE>
WESTERN ATLAS INC.
INDEX TO EXHIBITS
EXHIBIT NO. DESCRIPTION OF EXHIBIT
----------- ----------------------
2.1 Stock Purchase Agreement dated December 7, 1993,
among Western Atlas Inc., Western Atlas
International, Inc., Western Research Holdings,
Inc., Litton Industries, Inc. and Dresser
Industries, Inc. (Filed as Exhibit 10M to Amendment
No. 1, filed with the Commission on December 13,
1993 ("Amendment No. 1") to the Company's
Registration Statement on Form 10 No. 1-12430 filed
with the Commission on October 12, 1993 and
incorporated herein by reference.)
2.2 Agreement dated as of January 13, 1994, between
Western Atlas International, Inc. and Halliburton
Company (Filed as Exhibit 10S to Amendment No. 2,
filed with the Commission on January 19, 1994
("Amendment No. 2"), to the Company's Registration
Statement on Form 10 No. 1-12430 filed with the
Commission on October 12, 1993 and incorporated
herein by reference.)
4.1 Indenture dated as of May 15, 1994 between the
Company and The Bank of New York, Trustee, providing
for the issuance of securities in series, filed as
exhibit 4.4 to the Company's June 30, 1994 Quarterly
Report on Form 10-Q, and incorporated herein by
reference.
4.2 Form of 8.55% Debentures due 2024 issued by the
Company under such indenture, filed as exhibit 4.5
to the Company's June 30, 1994 Quarterly Report on
Form 10-Q, and incorporated herein by reference.
4.3 Form of 7-7/8% Notes due 2004 issued by the Company
under such indenture, filed as exhibit 4.6 to the
Company's June 30, 1994 Quarterly Report on Form 10-Q,
and incorporated herein by reference.
4.4 Other instruments defining the rights of holders of
other long-term debt of the Company are not filed as
exhibits because the amount of debt authorized under
any such instrument does not exceed 10% of the total
assets of the Company and its consolidated
subsidiaries. The Company hereby undertakes to
furnish a copy of any such instrument to the
Commission upon request.
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<PAGE>
INDEX TO EXHIBITS, (CONTINUED)
4.5 Rights Agreement, dated as of August 17, 1994
between Western Atlas Inc. and Chemical Trust
Company of California, as Rights Agent, which
includes the form of Certificate of Designations
setting forth the terms of the Series A Junior
Participating Preferred Stock, par value $1.00 per
share, of Western Atlas Inc., as Exhibit A; the form
of Right Certificate, as Exhibit B; and the Summary
of Rights to Purchase Preferred Shares, as Exhibit
C, filed as Exhibit 4 to the Company's August 17,
1994 current report on Form 8-K, and incorporated
herein by reference. Pursuant to the Rights Agreement,
printed Right Certificates will not be mailed until as soon
as practicable after the earlier of the tenth day after
the public announcement that a person or group has
acquired beneficial ownership of 15% or more of the
Common Shares or the tenth business day (or such
later date as may be determined by action of the
Board of Directors) after a person commences, or
announces its intention to commence, a tender offer
or exchange offer the consummation of which would
result in the beneficial ownership by a person or
group of 15% of the Common Shares.
4.6 $400,000,000 Amended and Restated Credit Agreement
dated as of March 19, 1997, among Western Atlas
Inc., the Banks listed therein, and Morgan Guaranty
Trust Company of New York as Agent, and Bank of
America National Trust and Savings Association, The
Bank of New York, CIBC Inc., The Chase Manhattan
Bank, The First National Bank of Chicago,
NationsBank of Texas, N.A., and Wells Fargo Bank,
N.A. as Co-Agents, filed as exhibit 4.6 to the
Company's March 31, 1997 Quarterly Report on Form 10-Q,
and incorporated herein by reference.
4.7 Amendment No. 1 to the Amended and Restated Credit
Agreement dated as of June 30, 1997, among Western
Atlas Inc., the Banks listed therein, and Morgan
Guaranty Trust Company of New York as Agent, and Bank
of America National Trust and Savings Association, The
Bank of New York, CIBC Inc., The Chase Manhattan Bank,
The First National Bank of Chicago, NationsBank of Texas,
N.A., and Wells Fargo Bank, N.A. as Co-Agents, included
in this Quarterly Report on Form 10-Q filed with the
Securities and Exchange Commission.
10.1 Distribution and Indemnity Agreement dated March 17,
1994, between Litton Industries, Inc. and Western
Atlas Inc., filed as Exhibit 10.1 to the Company's
March 31, 1994 Quarterly Report on Form 10-Q, and
incorporated herein by reference.
10.2 Tax Sharing Agreement entered into March 17, 1994,
between Litton Industries, Inc., and Western Atlas
Inc., filed as Exhibit 10.2 to the Company's March
31, 1994 Quarterly Report on Form 10-Q, and
incorporated herein by reference.
-15-
<PAGE>
INDEX TO EXHIBITS, (CONTINUED)
10.3 Employee Benefits Agreement dated as of March 17,
1994, between Litton Industries, Inc., and Western
Atlas Inc., filed as Exhibit 10.4 to the Company's
March 31, 1994 Quarterly Report on Form 10-Q, and
incorporated herein by reference.
10.4 Intellectual Property Agreement dated March 17,
1994, between Litton Industries, Inc., and Western
Atlas Inc., filed as Exhibit 10.5 to the Company's
March 31, 1994 Quarterly Report on Form 10-Q, and
incorporated herein by reference.
10.5 Western Atlas International Agreement made as of
March 17, 1994, among Litton Industries, Inc.,
Western Research Holdings, Inc., and Western Atlas
Inc., filed as Exhibit 10.8 to the Company's March
31, 1994 Quarterly Report on Form 10-Q, and
incorporated herein by reference.
10.6 Western Tax Agreement made as of March 17, 1994,
between Litton Industries, Inc., and Western
Research Holdings, Inc., filed as Exhibit 10.9 to
the Company's March 31, 1994 Quarterly Report on
Form 10-Q, and incorporated herein by reference.
10.7 Change in Control Employment Agreements dated as of
March 17, 1994, between Western Atlas Inc., and each
of Alton J. Brann, John R. Russell and Norman L. Roberts,
filed as Exhibit 10.11 to the Company's March 31, 1994
Quarterly Report on Form 10-Q, and incorporated herein by
reference.
10.8 Change in Control Employment Agreements dated as of
November 16, 1995, between Western Atlas Inc., and
each of Orval F. Brannan and Damir S. Skerl, filed
as exhibit 10.20 to the Company's 1995 Annual Report
on Form 10-K and incorporated herein by reference.
10.9 Western Atlas Inc. Director Stock Option Plan, filed
as Exhibit 10.12 to the Company's March 31, 1994
Quarterly Report on Form 10-Q, and incorporated
herein by reference.
10.10 Western Atlas International, Inc. Benefit
Restoration Plan (Filed as Exhibit 100 to Amendment
No. 2 and incorporated herein by reference.)
10.11 Western Atlas International, Inc., Supplemental
Retirement Plan (Filed as Exhibit 10P to Amendment
No. 1 and incorporated herein by reference.)
10.12 Supplemental Retirement Agreement between Western
Atlas Inc. and Alton J. Brann dated March 17, 1994,
filed as Exhibit 10.16 to the Company's March 31,
1994 Quarterly Report on Form 10-Q, and incorporated
herein by reference.
-16-
<PAGE>
INDEX TO EXHIBITS, (CONTINUED)
10.13 Western Atlas Inc. Restoration Plan (Filed as
Exhibit 10U to Amendment No. 2 and incorporated
herein by reference.)
10.14 Resolutions adopted by Board of Directors of Western
Atlas Inc. on March 17, 1994, with respect to
Incentive Loan Program and form of promissory note
to evidence loans made thereunder, filed as Exhibit
10.20 to the Company's March 31, 1994 Quarterly
Report on Form 10-Q, and incorporated herein by
reference.
10.15 Western Atlas Inc. Deferred Compensation Plan for
Directors, filed as exhibit 10.22 to the Company's
1994 Annual Report on Form 10-K and incorporated
herein by reference.
10.16 Western Atlas Inc. Individual Performance Award
Plan, filed as exhibit 10.23 to the Company's 1994
Annual Report on Form 10-K and incorporated herein
by reference.
10.17 Western Atlas Inc. 1995 Incentive Compensation
Plan, filed as exhibit 10.24 to the Company's 1994
Annual Report on Form 10-K and incorporated herein
by reference.
10.18 Western Atlas Inc. Supplemental Executive
Retirement Plan, as amended January 1, 1997,
included in this Quarterly Report on Form 10-Q
filed with the Securities and Exchange Commission.
10.19 Employment Agreement dated as of December 9, 1995,
between Western Atlas Inc., and Clayton A.
Williams, filed as exhibit 10.22 to the Company's
1995 Annual Report on Form 10-K and incorporated
herein by reference.
10.20 Western Atlas Inc. 1993 Stock Incentive Plan, as
amended on February 13, 1996, filed as exhibit
10.23 to the Company's 1995 Annual Report on Form
10-K and incorporated herein by reference.
10.21 Consulting Agreement dated as of August 1, 1996,
between Western Atlas Inc., and Joseph T. Casey,
filed as exhibit 10.21 to the Company's 1996 Annual
Report on Form 10-K and incorporated herein by
reference.
11 Statement of Computation of Earnings per share
included herein on page 18.
27 Financial Data Schedule (filed only electronically
with the Securities and Exchange Commission).
-17-
<PAGE>
<TABLE>
WESTERN ATLAS INC.
PRIMARY EARNINGS PER SHARE AND FULLY DILUTED EARNINGS PER SHARE
(THOUSANDS OF DOLLARS, EXCEPT PER SHARE DATA)
<CAPTION>
SIX MONTHS ENDED THREE MONTHS ENDED
JUNE 30, JUNE 30,
1997 1996 1997 1996
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
EARNINGS PER SHARE
Earnings from Continuing Operations $ 32,704 $ 28,973 $ 16,620 $ 17,615
(Loss) Earnings from Discontinued
Operations (171,880) 23,564 (186,598) 12,238
--------- --------- --------- ---------
Net (Loss) Earnings $(139,176) $ 52,537 $(169,978) $ 29,853
--------- --------- --------- ---------
--------- --------- --------- ---------
Primary (loss) earnings per share
Continuing Operations $ 0.60 $ 0.53 $ 0.30 $ 0.32
Discontinued Operations ($ 3.14) $ 0.44 ($ 3.39) $ 0.23
--------- --------- --------- ---------
Total ($ 2.54) $ 0.97 ($ 3.09) $ 0.55
--------- --------- --------- ---------
--------- --------- --------- ---------
Fully diluted (loss) earnings per share
Continuing Operations $ 0.59 $ 0.53 $ 0.30 $ 0.32
Discontinued Operations ($ 3.12) $ 0.44 ($ 3.39) $ 0.23
--------- --------- --------- ---------
Total ($ 2.53) $ 0.97 ($ 3.09) $ 0.55
--------- --------- --------- ---------
--------- --------- --------- ---------
SHARES USED IN PRIMARY
EARNINGS PER SHARE COMPUTATION
Weighted average common shares
outstanding 53,817,945 53,363,289 53,838,179 53,446,811
Common stock equivalents 1,055,178 964,863 1,106,535 967,470
---------- ---------- ---------- ----------
Common and common equivalent
shares - primary 54,873,123 54,328,152 54,944,714 54,414,281
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
SHARES USED IN FULLY DILUTED
EARNINGS PER SHARE COMPUTATION
Common and common equivalent
shares - primary 54,873,123 54,328,152 54,944,714 54,414,281
Additional potentially dilutive
effect of stock options 210,773 23,641 147,185 -
---------- ---------- ---------- ----------
Common and common equivalent
shares - fully diluted 55,083,896 54,351,793 55,091,899 54,414,281
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
</TABLE>
-18-
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
WESTERN ATLAS INC.
(Registrant)
By /s/ Michael E. Keane
----------------------
Michael E. Keane
Senior Vice President and
Chief Financial Officer
August 13, 1997
-19-
<PAGE>
EXHIBIT 4.7
CONFORMED COPY
AMENDMENT NO. 1 TO AMENDED AND
RESTATED CREDIT AGREEMENT
AMENDMENT dated as of June 30, 1997 to the Amended and Restated Credit
Agreement dated as of March 19, 1997 (the "CREDIT AGREEMENT") among WESTERN
ATLAS INC. (the "BORROWER"), the BANKS party thereto (the "BANKS"), MORGAN
GUARANTY TRUST COMPANY OF NEW YORK, as Agent (the "AGENT") and BANK OF
AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, THE BANK OF NEW YORK, THE
CHASE MANHATTAN BANK, CIBC INC., THE FIRST NATIONAL BANK OF CHICAGO,
NATIONSBANK OF TEXAS, N.A. and WELLS FARGO BANK, N.A., as Co-Agents.
The parties hereto agree as follows:
SECTION 1. DEFINED TERMS; REFERENCES. Unless otherwise specifically
defined herein, each term used herein which is defined in the Credit
Agreement has the meaning assigned to such term in the Credit Agreement. Each
reference to "hereof", "hereunder", "herein" and "hereby" and each other
similar reference and each reference to "this Agreement" and each other
similar reference contained in the Credit Agreement shall, after this
Amendment becomes effective, refer to the Credit Agreement as amended hereby.
SECTION 2. AMENDMENT. Section 5.05 of the Credit Agreement is amended
by the addition of the following sentence:
Compliance calculations under this Section shall be adjusted to exclude the
effect of one-time charges relating to in-process research and development
activities at Norand Corporation and United Barcode Industries and
estimated costs associated with the proposed spin-off of the Borrower's
industrial automation businesses in an aggregate amount not to exceed
$215,000,000.
SECTION 3. REPRESENTATIONS OF BORROWER. The Borrower represents and
warrants that (i) the representations and warranties of the Borrower set
forth in Article IV of the Credit Agreement will be true on and as of the
Amendment Effective Date and (ii) no Default will have occurred and be
continuing on such date.
1
<PAGE>
SECTION 4. GOVERNING LAW. This Amendment shall be governed by and
construed in accordance with the laws of the State of New York.
SECTION 5. COUNTERPARTS. This Amendment may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if
the signatures thereto and hereto were upon the same instrument.
SECTION 6. EFFECTIVENESS. This Amendment shall become effective as of
the date hereof on the date (the "AMENDMENT EFFECTIVE DATE") on which the
Agent shall have received from each of the Borrower and the Required Banks a
counterpart hereof signed by such party or facsimile or other written
confirmation (in form satisfactory to the Agent) that such party has signed a
counterpart hereof.
2
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed as of the date first above written.
WESTERN ATLAS INC.
By: /s/ Lori J. Segale
-------------------------------
Title: Treasurer
MORGAN GUARANTY TRUST COMPANY OF NEW YORK
By: /s/ Robert R. Bottamedi
-------------------------------
Title: Vice President
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
By: /s/ Gina M. West
-------------------------------
Title: Vice President
THE BANK OF NEW YORK
By: /s/ Craig Rethmeyer
-------------------------------
Title: Vice President
3
<PAGE>
THE CHASE MANHATTAN BANK
By: /s/ Mark Malloy
-------------------------------
Title: Managing Director
CIBC INC.
By: /s/ Daniel H. Hom
-------------------------------
Title: Director, CIBC Wood Gundy
Securities Corp., as Agent
THE FIRST NATIONAL BANK OF
CHICAGO
By: /s/ Michael P. Gage
-------------------------------
Title: Vice President
NATIONSBANK OF TEXAS, N.A.
By: /s/ Patrick M. Delaney
-------------------------------
Title: Senior Vice President
WELLS FARGO BANK, N.A.
By: /s/ Freida Youlis
-------------------------------
Title: Vice President
4
<PAGE>
By: /s/ Gene Fuentes
-------------------------------
Title: Assistant Vice President
BANK OF HAWAII
By: /s/ Robert M. Wheeler, III
-------------------------------
Title: Vice President
CREDIT SUISSE FIRST BOSTON
By: /s/ Stephen Flynn
-------------------------------
Title: Director
By: /s/ Deborah Shea
-------------------------------
Title: Vice President
DRESDNER BANK A.G., NEW YORK
BRANCH AND GRAND CAYMAN BRANCH
By: /s/ John W. Sweeney
-------------------------------
Title: Assistant Vice President
By: /s/ Christopher E. Sarisky
-------------------------------
Title: Assistant Treasurer
5
<PAGE>
MELLON BANK, N.A.
By: /s/ Lawrence C. Ivey
-------------------------------
Title: Vice President
THE NORTHERN TRUST COMPANY
By: /s/ John E. Burda
-------------------------------
Title: Second Vice President
TORONTO DOMINION (TEXAS), INC.
By: /s/ Neva Nesbitt
-------------------------------
Title: Vice President
6
<PAGE>
EXHIBIT 10.18
WESTERN ATLAS INC.
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
THIS PLAN CONTAINS ARBITRATION CLAUSES
<PAGE>
WESTERN ATLAS INC.
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
TABLE OF CONTENTS
----------------- PAGE
----
ARTICLE I INTRODUCTION AND PURPOSE . . . . . . . . . . . . . . . . . 1
ARTICLE II DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . 1
Section 2.1 Active Participant. . . . . . . . . . . . . . . . . . 1
2.2 Actuarial Equivalent. . . . . . . . . . . . . . . . . 1
2.3 Average Earnings. . . . . . . . . . . . . . . . . . . 2
2.4 Base Compensation Amount. . . . . . . . . . . . . . . 3
2.5 Beneficiary or Beneficiaries. . . . . . . . . . . . . 3
2.6 Board . . . . . . . . . . . . . . . . . . . . . . . . 3
2.7 Bonus or Bonuses. . . . . . . . . . . . . . . . . . . 3
2.8 Business Combination. . . . . . . . . . . . . . . . . 3
2.9 Change of Control . . . . . . . . . . . . . . . . . . 3
2.10 Chief Executive Officer . . . . . . . . . . . . . . . 4
2.11 Code. . . . . . . . . . . . . . . . . . . . . . . . . 4
2.12 Committee . . . . . . . . . . . . . . . . . . . . . . 4
2.13 Company . . . . . . . . . . . . . . . . . . . . . . . 5
2.14 Death Benefit . . . . . . . . . . . . . . . . . . . . 5
2.15 Dependent Children. . . . . . . . . . . . . . . . . . 5
2.16 Director. . . . . . . . . . . . . . . . . . . . . . . 5
2.17 Disability or Disabled. . . . . . . . . . . . . . . . 5
2.18 Disability Benefit. . . . . . . . . . . . . . . . . . 5
2.19 Employee Benefits Agreements. . . . . . . . . . . . . 5
2.20 ERISA . . . . . . . . . . . . . . . . . . . . . . . . 5
2.21 Exchange Act. . . . . . . . . . . . . . . . . . . . . 6
2.22 Litton. . . . . . . . . . . . . . . . . . . . . . . . 6
2.23 Leave of Absence. . . . . . . . . . . . . . . . . . . 6
2.24 Normal Form . . . . . . . . . . . . . . . . . . . . . 6
2.25 Offset Amount . . . . . . . . . . . . . . . . . . . . 6
2.26 Outstanding Company Common Stock. . . . . . . . . . . 7
2.27 Participant . . . . . . . . . . . . . . . . . . . . . 7
2.28 Person. . . . . . . . . . . . . . . . . . . . . . . . 7
2.29 Qualified Plan. . . . . . . . . . . . . . . . . . . . 7
2.30 Retired Participant . . . . . . . . . . . . . . . . . 7
2.31 Retirement Benefit. . . . . . . . . . . . . . . . . . 7
2.32 Special Administrator . . . . . . . . . . . . . . . . 7
2.33 Successor or Successors . . . . . . . . . . . . . . . 7
2.34 Supplemental Plan . . . . . . . . . . . . . . . . . . 7
2.35 Trust . . . . . . . . . . . . . . . . . . . . . . . . 7
2.36 Trustee . . . . . . . . . . . . . . . . . . . . . . . 7
i
<PAGE>
2.37 Trust Agreement . . . . . . . . . . . . . . . . . . . 7
2.38 Years of Service. . . . . . . . . . . . . . . . . . . 7
ARTICLE III PARTICIPATION. . . . . . . . . . . . . . . . . . . . . . . 8
Section 3.1 General . . . . . . . . . . . . . . . . . . . . . . . 8
3.2 Entry and Continuing Participation. . . . . . . . . . 8
ARTICLE IV RETIREMENT BENEFITS. . . . . . . . . . . . . . . . . . . . 9
Section 4.1 Eligibility for Retirement Benefit. . . . . . . . . . 9
4.2 Retirement Benefit Formula. . . . . . . . . . . . . .10
4.3 Vesting in Retirement Benefit . . . . . . . . . . . .10
4.4 Retirement Benefit Forms. . . . . . . . . . . . . . .10
4.5 Normal Form of Retirement Benefit . . . . . . . . . .10
4.6 Alternative Forms of Benefit. . . . . . . . . . . . .11
ARTICLE V BENEFITS UPON PARTICIPANT'S DEATH. . . . . . . . . . . . .11
Section 5.1 Eligibility for Death Benefit . . . . . . . . . . . .11
5.2 Death Benefit . . . . . . . . . . . . . . . . . . . .12
5.3 Spouse Retirement Benefit . . . . . . . . . . . . . .12
5.4 Change of Control . . . . . . . . . . . . . . . . . .12
ARTICLE VI BENEFITS OF DISABLED PARTICIPANTS. . . . . . . . . . . . .12
Section 6.1 Eligibility for Disability Benefit. . . . . . . . . .12
6.2 Disability Formula. . . . . . . . . . . . . . . . . .13
6.3 Vesting Disability Benefit. . . . . . . . . . . . . .13
6.4 Disabled Participant's Retirement
Benefit . . . . . . . . . . . . . . . . . . . . . . .13
ARTICLE VII ELECTIONS, CLAIMS, COMMENCEMENT OF PAYMENTS
AND BENEFICIARY DESIGNATIONS . . . . . . . . . . . . . . .13
Section 7.1 General . . . . . . . . . . . . . . . . . . . . . . .13
7.2 Commencement of Payments. . . . . . . . . . . . . . .13
7.3 Form of Benefit Elections . . . . . . . . . . . . . .14
7.4 Beneficiaries . . . . . . . . . . . . . . . . . . . .14
7.5 Failure to Claim. . . . . . . . . . . . . . . . . . .14
ARTICLE VIII ADMINISTRATION . . . . . . . . . . . . . . . . . . . . . .15
ARTICLE IX SOURCE OF PAYMENTS . . . . . . . . . . . . . . . . . . . .15
ii
<PAGE>
Section 9.1 General Assets of Company . . . . . . . . . . . . . .15
ARTICLE X CLAIMS AND ENFORCEMENT . . . . . . . . . . . . . . . . . .15
Section 10.1 Administrative Procedures . . . . . . . . . . . . . .15
10.2 Enforcement . . . . . . . . . . . . . . . . . . . . .16
10.3 Arbitration . . . . . . . . . . . . . . . . . . . . .16
ARTICLE XI AMENDMENT AND TERMINATION. . . . . . . . . . . . . . . . .18
Section 11.1 Amendment and Termination of the Plan . . . . . . . .18
11.2 Contractual Obligation. . . . . . . . . . . . . . . .18
ARTICLE XII MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . .18
Section 12.1 Employment Rights . . . . . . . . . . . . . . . . . .18
12.2 Rights of the Committee . . . . . . . . . . . . . . .19
12.3 Benefit Statements. . . . . . . . . . . . . . . . . .19
12.4 Assignment. . . . . . . . . . . . . . . . . . . . . .19
12.5 Applicable Law. . . . . . . . . . . . . . . . . . . .19
12.6 Effective Date. . . . . . . . . . . . . . . . . . . .19
12.7 Entire Plan . . . . . . . . . . . . . . . . . . . . .19
12.8 Terms . . . . . . . . . . . . . . . . . . . . . . . .19
12.9 Waiver. . . . . . . . . . . . . . . . . . . . . . . .19
iii
<PAGE>
WESTERN ATLAS INC.
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
(AS AMENDED JANUARY 1, 1997)
ARTICLE I--INTRODUCTION AND PURPOSE
Western Atlas Inc. establishes this Western Atlas Inc. Supplemental
Executive Retirement Plan (the "Supplemental Plan") effective January 1, 1996.
The purpose of the Supplemental Plan is to provide for supplemental retirement
benefits to selected key employees of the Company (as that term is defined in
Section 2.13 and as used hereinafter such term shall have such defined meaning),
and thereby encourage those employees to continue providing services to the
Company until retirement. The Supplemental Plan is intended to provide benefits
solely for a select group of management or highly compensated employees within
the meaning of Sections 201(2), 301(a)(3) and 401(a)(1) of Title I of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"). Payments
under the Supplemental Plan shall be made either from general assets of the
Company or from the assets of a trust which may be established hereunder. It is
intended that the Supplemental Plan remain at all times an unfunded plan for
purposes of ERISA and that the trust, if established, shall constitute a grantor
trust under Sections 671 through 679 of the Internal Revenue Code of 1986, as
amended (the "Code").
ARTICLE II--DEFINITIONS
SECTION 2.1 "ACTIVE PARTICIPANT" shall mean a person who has been
designated as a Participant in the Supplemental Plan pursuant to Article III,
and who continues to be employed by the Company continuously from such
designation, except as provided for in Section 3.2 A Participant (other than a
Disabled Participant during the period of Disability) shall be treated as having
terminated from employment during any period of Leave of Absence, unless the
Committee, in its sole and absolute discretion, and subject to such terms and
conditions as the Committee may specify, decides otherwise. However, a Disabled
or deceased Participant shall continue to be treated as an Active Participant
and, thus, continue to accrue additional Years of Service until the earlier of
the date that the Participant attains (or, if deceased, would have attained) age
65, or the date that the Participant is no longer Disabled. A Disabled
Participant who returns to active employment with the Company when Disability
ends shall thereafter be an Active Participant, so long as such employment
continues, without further designation pursuant to Article III. An Active
Participant who terminates employment with the Company (other than for
Disability) and is subsequently re-employed with the Company shall not be
treated as an Active Participant unless such individual is redesignated as an
Active Participant pursuant to Article III.
SECTION 2.2 "ACTUARIAL EQUIVALENT" shall mean the adjustment of an
amount or amounts using actuarial methods and factors identical with those
actuarial methods and factors then being used, at the time such calculations are
to be made hereunder, under the Western Atlas Retirement Plan adopted by Western
Atlas Inc. as of January 1, 1994 and intended to be qualified under Section
401(a) of the Code, as such Plan may be amended from time to time and any
retirement plan intended to replace such Plan (the "Qualified Plan").
SECTION 2.3 "AVERAGE EARNINGS" shall mean the average of gross base
salary payments plus gross cash payments of Bonuses by the Company to the
Participant in the three twelve consecutive
1
<PAGE>
month periods (with no overlap), in which such Participant's gross base
salary payments plus gross cash Bonus payments are the highest, in the
Participant's final 60 months of employment. For all purposes of calculating
"Average Earnings" under this Supplemental Plan "gross base salary" shall
include cash payments, during the relevant period, of commissions payable to
a Participant as a regular part of the Participant's compensation, e.g. to a
person engaged in sales or marketing; however, commissions not payable as a
regular part of a Participant's compensation shall not be included in the
calculation of Average Earnings. Commissions or portions thereof otherwise
included in the calculation of Average Earnings pursuant to the preceding
sentence which are deferred (other than at the election of a Participant)
shall be included in the calculation of Average Earnings in the relevant
period in which cash payments are made. For purposes of calculating Average
Earnings under this Supplemental Plan salary (including relevant commission
payments and bonuses) paid in a non-U.S. currency shall be converted to U.S.
dollar equivalents using the quarterly Western Atlas Inc. Official Rates of
Exchange.
(a). Average Earnings for purposes of calculating a Disability or
Death Benefit for or with respect to a Disabled Participant shall be calculated
using the 60 months that include and precede the month that his or her
Disability commenced. If a formerly Disabled Participant who has returned to
active employment with the Company does not have a minimum of 36 consecutive
calendar months of employment with the Company after such return to active
employment, then Average Earnings shall be calculated by the Committee in
accordance with subparagraph (e).
(b). Average Earnings in the case of an Active Participant who
dies prior to attaining age 65 shall be calculated using the 60 months that
include and precede the month of the Participant's death (or Disability, in the
case of a Disabled Participant who dies). For purposes of calculating a lump
sum payment pursuant to Section 4.1(d) in the event of a Change of Control, with
respect to a person (other than a Disabled or deceased Participant) who is an
Active Participant as of the date of such calculation, Average Earnings shall be
calculated as if the person's employment with the Company ended on such date.
(c). For purposes of calculating Average Earnings, the
Participant's gross base salary plus gross cash Bonuses received while employed
by Litton, if and to the extent such Litton employment is included within the
period of 60 months to be used in such calculation, shall be taken into account
provided that the Participant's benefits under the Litton retirement plans were
transferred to the Company pursuant to the Employee Benefits Agreement dated
March 17, 1994, between Litton and Western Atlas Inc. (the "Employee Benefits
Agreement").
(d). If a Participant is eligible to receive payments under the
Supplemental Plan but does not have 36 consecutive months of employment with
Litton and the Company, then Average Earnings shall be calculated by the
Committee in accordance with subparagraph (e).
(e). Notwithstanding the foregoing, the Committee may determine
Average Earnings for the purposes of this Section by another methodology which
it determines to be more appropriate under the facts and circumstances;
provided, however, that, following a Change of Control, the authority of the
Committee under this subparagraph (e) shall be limited to matters referred to in
the last sentence of subparagraph (a) above and the matters referred to in
subparagraph (d) above.
SECTION 2.4 "BASE COMPENSATION AMOUNT" shall mean the applicable dollar
amount on the date that the Active Participant terminates from employment with
the Company, calculated as follows:
2
<PAGE>
(a). $125,000 for the first 12 months beginning on the effective
date of the Supplemental Plan.
(b). For each 12-month period following the period described
above in Section 2.4(a), the Base Compensation Amount shall be the dollar amount
applicable for the immediately preceding 12-month period increased by a
percentage, which shall be the sum of: (1) the percentage increase in the U.S.
Department of Labor consumer price index for all urban consumers from the index
amount in effect at the beginning of the immediately preceding 12-month period
to the index amount in effect at the beginning of the current 12-month period,
and; (2) one percent.
(c). In the case of an Active Participant who dies, the Base
Compensation Amount shall be the dollar amount in effect under Section 2.4(a) or
(b) for the month in which the Participant died and, in the case of a Disabled
Participant (who does not return to active employment with the Company), the
Base Compensation Amount shall be the dollar amount in effect under Section
2.4(a) or (b) for the month in which the Disabled Participant becomes disabled.
For purposes of calculating a lump sum payment pursuant to Section 4.1(d) in the
event of a Change of Control, with respect to a person (other than a Disabled or
deceased Participant) who is an Active Participant as of the date of such
calculation, the Base Compensation Amount shall be the Base Compensation amount
in effect as of the date of such calculation.
SECTION 2.5 "BENEFICIARY" or "BENEFICIARIES" shall mean those who are
designated under the Supplemental Plan to receive payment of a benefit on
account of a Participant's death. If and to the extent the spouse of a deceased
Participant is living, only the spouse may be the Beneficiary. Upon the death
of the spouse of a deceased Participant prior to commencement of Retirement
Benefit payments, the Dependent Children of the Participant may be
Beneficiaries, but only of the Death Benefit.
SECTION 2.6 "BOARD" shall mean the Board of Directors of Western Atlas
Inc. or of its Successor, as of the time in question, the succession of which
did not result from or constitute or follow a Change of Control ("Successor" or
"Successors").
SECTION 2.7 "BONUS" or "BONUSES" shall mean actual cash compensation
payments by the Company to the Participant, in addition to base salary, under
Company-sponsored, formal or informal, incentive compensation or bonus plans,
excluding, however, any payments under Company Stock-based option or award
plans; provided, however, that, for purposes of calculating Average Earnings,
any portion of a Bonus, the payment of which is deferred at the election of the
Participant, shall be treated as paid at the time of award, notwithstanding such
elected deferral, and payment of the deferred portion shall be disregarded for
purposes of calculating Average Earnings. "Bonus or Bonuses" shall not include
any bonus, commission or fee paid to a Participant for the accomplishment of a
particular non-ordinary course transaction or circumstance.
SECTION 2.8 "BUSINESS COMBINATION" shall have the meaning specified in
Section 2.9(c).
SECTION 2.9 "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 thirty percent (30%) or more of either (1) the then
outstanding shares of common stock of the Company (the "Outstanding Company
Common Stock") or (2) the combined voting power of the then
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outstanding voting securities of the Company entitled to vote generally in
the election of Directors (the "Outstanding Company Voting Securities");
provided, however, that for purposes of this Section 2.9(a), the following
acquisitions of stock shall not constitute a Change of Control: (A) any
acquisition directly from the Company; (B) any acquisition by the Company;
(C) any acquisition by any employee benefit plan (or related trust) sponsored
or maintained by the Company or any corporation controlled by the Company; or
(D) any acquisition by any corporation pursuant to a transaction which
complies with clauses (1), (2), and (3) of paragraph (c) below of this
Section 2.9; 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). Consummation of a reorganization, merger or consolidation or
sale or other disposition of all or substantially all of the assets of the
Company (a "Business Combination"), in each case, unless following such Business
Combination: (1) 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 sixty
percent (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
or all or substantially all of the Company's assets either directly or 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; (2) 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, thirty percent (30%) 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 resulting corporation except to the
extent that such ownership existed prior to the Business Combination; and (3) 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 a complete
liquidation or dissolution of the Company.
SECTION 2.10 "CHIEF EXECUTIVE OFFICER" shall mean the chief executive
officer of Western Atlas Inc. or of its Successor.
SECTION 2.11 "CODE" shall mean the Internal Revenue Code of 1986, as
amended.
SECTION 2.12 "COMMITTEE" shall mean:
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(a). The Compensation Committee of the Board.
(b). Notwithstanding Section 2.12(a), upon a Change of Control,
the Committee shall mean exclusively the "special administrators." The "special
administrators" shall be the individuals who constituted the Company's
Compensation Committee of the Board immediately prior to the Change of Control.
The "special administrators" shall constitute the Committee until the earlier of
the termination of the Supplemental Plan or the last day of the 18-month period
following the month in which the Change of Control occurred. The "special
administrators" shall have all rights and authority reserved to the Committee
under the Supplemental Plan, including, but not limited to, the rights specified
in Section 12.2.
(c). If a "special administrator" dies, becomes disabled, or
resigns as "special administrator" during the period that the "special
administrators" constitute the Committee, the remaining "special
administrator(s)" shall continue to serve as the Committee without interruption,
and successor "special administrator(s)" shall be designated, and subject to
removal, by the individual who was Chief Executive Officer immediately prior to
the Change of Control from among the then remaining Participants, but such Chief
Executive Officer shall also have the right to designate himself or herself as a
successor "special administrator" but, in the event of the death or disability
of such Chief Executive Officer, successor "special administrators" shall be
designated by that one of the remaining "special administrators" who has the
greatest seniority in terms of years of employment with the Company and Litton
including, for this purpose, years of service prior to age 40. No Participant
who has been designated as a "special administrator" shall participate in any
decision which addresses peculiarly the Benefits of or with respect to such
Participant.
If at any time there are no remaining "special
administrators," the presiding Judge of the Superior Court of the State of
California for Los Angeles County shall designate three "special
administrators" from among the remaining Participants upon the application of
any of the Participants. For purposes of this Section, the term
"Participant" means a Participant who has satisfied the conditions of Section
4.1(a)(3) or is a Disabled Participant, or is receiving Retirement Benefits.
SECTION 2.13 "COMPANY" shall mean Western Atlas Inc., a Delaware
corporation, and its Successors, and their respective subsidiaries. Any
reference to stock or securities of the Company shall mean only the stock or
securities of Western Atlas Inc. or of its Successor.
SECTION 2.14 "DEATH BENEFIT" shall mean the benefit payable pursuant to
Article V to the Participant's Beneficiary or Beneficiaries, if any.
SECTION 2.15 "DEPENDENT CHILDREN" shall mean a natural or legally adopted
son or daughter who either: (a) has not attained age 19; or (b) has attained age
19 but has not attained age 23 and is a full-time student at an accredited
educational institution.
SECTION 2.16 "DIRECTOR" shall mean a member of the Board of Directors of
Western Atlas Inc. or of its Successor.
SECTION 2.17 "DISABILITY" or "DISABLED" shall mean the condition of a
person, or a person, who has been determined by the Committee to be unable to
perform the material and substantive duties of the person's position or
profession, to an extent which prevents the person from engaging in the
person's regular position or profession, due to injury or sickness for which
the person is receiving medical care
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from, or with respect to which a current certification of disability is
received by the Committee from, a professional person appropriate for such
injury or sickness.
SECTION 2.18 "DISABILITY BENEFIT" shall mean the benefit payable pursuant
to Article VI to an Active Participant who becomes Disabled.
SECTION 2.19 "EMPLOYEE BENEFITS AGREEMENT" shall have the meaning
specified in Section 2.3(c).
SECTION 2.20 "ERISA" shall have the meaning specified in Article I.
SECTION 2.21 "EXCHANGE ACT" shall have the meaning specified in
Section 2.9(a).
SECTION 2.22 "LITTON" shall mean Litton Industries, Inc., a Delaware
corporation, and its subsidiaries at the time in question.
SECTION 2.23 "LEAVE OF ABSENCE," with respect to a person who has been
designated a Participant, shall mean and refer to a discontinuance of regular,
full-time services by the person for the Company resulting in the
discontinuance, in whole or in part, of base salary payments by the Company to
such person during such discontinuance of service, provided, however, that, to
the extent federal or state so-called "Family Leave Acts" or "Maternity or
Pregnancy Leave Acts" may make unlawful the treatment of an absence or a portion
of an absence as a termination for purposes of the Supplemental Plan, such
absence or portion shall not constitute a Leave of Absence.
SECTION 2.24 "NORMAL FORM" shall mean the form of Retirement Benefit
payable under Section 4.5 to a Retired Participant.
SECTION 2.25 "OFFSET AMOUNT" shall mean the sum of the annual "primary
insurance amount" and the annual "Company-provided pension."
(a). The "primary insurance amount" shall mean the annual benefit
determined under the Social Security Act that is payable to the Participant as
of the calendar year that Retirement Benefits to the Participant, if any, would
commence under this Supplemental Plan. If no "primary insurance amount" is
payable to a Participant, who is otherwise covered by the Social Security Act,
as of the calendar year in which Retirement Benefit commences to the
Participant, if any, would commence under the Supplemental Plan, then the
"primary insurance amount" shall be deemed to be the "primary insurance amount"
that would be payable to the Participant at the earliest date thereafter (or
would have been payable at the earliest date thereafter, in the case of a
deceased Participant); provided, however, that the amount payable under the
Social Security Act shall be determined without regard to any election by the
Participant or a Beneficiary to defer receipt of a benefit and without regard to
any reduction of the amount of the Social Security Act benefit by virtue of the
receipt of earned income by the Participant or a Beneficiary. The "primary
insurance amount" shall also include any annual retirement benefit payable under
any public retirement program of a foreign country that the Committee determines
is comparable in purpose to the benefits payable under the Social Security Act.
(b). The "Company-provided pension" shall mean the annual amount
that would be payable to a Participant under any defined benefit or defined
contribution plan sponsored by the Company, which is either intended to qualify
under Section 401(a) of the Code or is intended to restore benefits under such
plan (excluding only this Supplemental Plan and Part II of the Western Atlas
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Restoration Plan). Any non-United States defined benefit or defined
contribution plan of the Company which is not subject to the Code but which is
comparable in purpose to plans which would qualify under Section 401(a) of the
Code shall be included within the meaning of "Company-provided pension." Annual
amounts payable under any retirement plans of a Participant's former employer,
assuming for purposes of calculating such annual amount that the Participant
withdrew his or her actual contributions, if any, and earnings thereon, shall be
included in the calculations of the "Company-provided pension," if such former
employer, or substantially all of such former employer's assets, have been
acquired by the Company and the Participant's service with such former employer
are included in the calculation of "Years of Service"; provided, however, that
amounts payable under the Landis Tool Savings Plan shall not be included in the
calculation of "Company-provided pension"; and provided further, however, that
amounts payable under the Intermec Canada Savings Plan, to the extent
attributable to Company contributions or Company matching amounts, shall be
included in the calculation of "Company-provided pensions." The amount of the
"Company-provided pension" shall be deemed to be the amount which would have
been payable if the Participant joined each such plan at the earliest date on
which the Participant was eligible to join such plan and participated in the
plan to the fullest extent possible and withdrew his or her actual and presumed
contributions, plus income thereon. The amount of the "Company-provided
pension" shall be calculated under the terms that were in effect during the
Participant's actual, if any, and presumed participation, except that a
subsequent, retroactive amendment to any of such plans shall be taken into
account only to the extent that it actually would have increased the
Participant's benefit under that plan. The "Company-provided pension" shall be
computed as if the Participant actually received the plan benefits under such
"Company-provided pension" as a single life annuity beginning on the date that
Retirement Benefits commence under this Supplemental Plan.
SECTION 2.26 "OUTSTANDING COMPANY COMMON STOCK" and "OUTSTANDING COMPANY
VOTING SECURITIES" shall have the meanings specified for those items in Section
2.9(a).
SECTION 2.27 "PARTICIPANT" shall mean a person who has been designated as
a Participant in the Supplemental Plan pursuant to Article III and who is either
an Active Participant, a Disabled Participant, a Retired Participant, a former
Active Participant who has satisfied the condition of Section 4.1(a)(3), or a
Participant who died while an Active Participant.
SECTION 2.28 "PERSON" shall have the meaning specified in Section 2.9(a).
SECTION 2.29 "QUALIFIED PLAN" shall have the meaning specified in
Section 2.2.
SECTION 2.30 "RETIRED PARTICIPANT" shall mean a Participant who has
terminated from employment with the Company, and who has satisfied the
conditions of Section 4.1.
SECTION 2.31 "RETIREMENT BENEFIT" shall mean the benefits payable to a
Retired Participant and, if applicable, the Beneficiary of a Retired
Participant, as provided in Article IV.
SECTION 2.32 "SPECIAL ADMINISTRATORS" shall have the meaning specified in
Section 2.12(b).
SECTION 2.33 "SUCCESSOR" or "SUCCESSORS" shall have the meaning specified
in Section 2.6.
SECTION 2.34 "SUPPLEMENTAL PLAN" shall mean the Western Atlas Inc.
Supplemental Executive Retirement Plan that is described in this document, as
amended from time to time, and including any rules and regulations promulgated
by the Committee for purposes of administering the Supplemental Plan.
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SECTION 2.35 "TRUST" shall mean a grantor trust under Section 671 through
679 of the Code, if and when established. The decision to establish a Trust
shall be in the sole and absolute discretion of the Company.
SECTION 2.36 "TRUSTEE" shall mean the trustee of the Trust.
SECTION 2.37 "TRUST AGREEMENT" shall mean the terms of the agreement,
entered into between Western Atlas Inc. or its Successor and the Trustee, that
establishes the Trust.
SECTION 2.38 "YEARS OF SERVICE" shall mean the number resulting from:
(a). The division of twelve into the number of consecutive and
continuous calendar months of employment with the Company (and with an
employer, all or substantially all of the assets of which were acquired by
the Company only to the extent the Participant was employed by the employer
at the date of the acquisition of the employer) that elapse from and
including the month that an Active Participant commenced the period of
employment with the Company (or such employer) and which ends: (1) upon the
Active Participant's death; or (2) upon termination of an Active
Participant's employment with the Company other than by death, until and
including the earlier of the month of such death or termination; provided,
however, the calculation of Years of Service shall not include any calendar
months of employment preceding the calendar month in which the Active
Participant attained age 40, nor shall such calculation include any calendar
months of employment with the Company in any separate period of employment
with the Company preceding the most recent and continuous period of
employment with the Company; and provided, further, that an Active
Participant who dies or becomes Disabled shall continue to accrue Years of
Service from the date of such death or Disability until the earlier of the
calendar month (x) in which such person attains or, if deceased, would have
attained age 65, or (y) in which such Participant is no longer Disabled.
(b). For purposes of determining a Participant's Years of Service
under the terms of Section 2.38(a), service with Litton immediately preceding
the period of service with the Company referred to in Section 2.38(a) which ends
upon the Active Participant's death, or which ends upon an Active Participant's
termination of employment with the Company other than by death, and after the
Participant attains age 40, shall be taken into account, provided that the
Participant's benefits under the Litton retirement plans were transferred to
Western Atlas Inc. pursuant to the Employee Benefits Agreement.
(c). In its discretion, the Committee may: (1) compute a
Participant's Years of Service by treating separate but not continuous periods
of employment with Litton or the Company as continuous periods of employment;
(2) credit a Participant with Years of Service in addition to the Years of
Service accrued while actually employed with Litton or the Company; and (3)
credit a Participant for Years of Service solely for purposes of satisfying the
vesting requirements of Sections 4.3.
(d). For purposes of calculating a lump sum payment pursuant to
Section 4. 1(d) in the event of a Change of Control, with respect to a person
(other than a Disabled or deceased Participant) who is an Active Participant,
Years of Service shall be determined as if the person's employment with the
Company ended on such date.
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ARTICLE III--PARTICIPATION
SECTION 3.1 GENERAL. Participation in the Supplemental Plan is limited
solely to key employees of the Company who are designated by the Committee,
after nomination by the Chief Executive Officer. A key employee shall not be
designated as an Active Participant prior to attaining age 40. A key employee
shall not be disqualified from becoming an Active Participant solely because the
key employee is also a Director.
SECTION 3.2 ENTRY AND CONTINUING PARTICIPATION. A key employee shall
become an Active Participant as of the date specified by the Committee. A key
employee who is designated as an Active Participant shall continue to be an
Active Participant until termination of employment with the Company, except as
provided in Section 2.1 with respect to Disabled or deceased Participants.
ARTICLE IV--RETIREMENT BENEFITS
SECTION 4.1 ELIGIBILITY FOR RETIREMENT BENEFIT.
(a). GENERAL. A Participant shall be eligible to begin receiving
a Retirement Benefit if the Participant has (1) either attained age 65 or
satisfied the conditions in Section 4.1(b) or (c) below; (2) filed an election
to receive payments under Article VII; (3) satisfied the vesting requirement of
Section 4.3; (4) terminated employment with the Company; and, (5) except for a
Participant whose employment with the Company is terminated in connection with a
Change of Control, the Participant agrees that for a period of five years after
commencement of receipt of Retirement Benefits under this Supplemental Plan, not
to engage in any activity which interferes with the economic or business
interests, or contractual relationships of Western Atlas Inc. or its Successors
or of any of its subsidiaries or affiliates with third parties in connection
with which the Participant worked for Western Atlas or its subsidiaries or
affiliates or to perform services for any entity in competition with a business
of Western Atlas Inc. or of its subsidiaries or affiliates for which the
Participant worked and with respect to which the Participant possesses trade
secrets or business confidential information of Western Atlas or of its
subsidiaries or affiliates. In the event that any provision of the covenant
provided for in (5) immediately above shall be held invalid or unenforceable by
a Court of competent jurisdiction by reason of the geographic or business matter
scope, or the duration thereof, such invalidity or unenforceability shall attach
only to such provisions and shall not affect or render invalid or unenforceable
any other provision of the Supplemental Plan, and this Supplemental Plan shall
be construed as if the geographic or subject matter scope, or the duration
thereof, had been more narrowly drafted so as not to be invalid or
unenforceable.
(b). RETIREMENT BENEFITS AT AGE 62. A Participant who has
attained age 62, but not yet attained age 65, and who has satisfied the
conditions of Section 4.1(a)(2), (3) and (4), and agrees to the covenant
provided for in Section 4.1(a)(5), shall be eligible to begin receiving the
Actuarial Equivalent, based upon the Participant's age (below 65) and the age
of Participant's spouse, if applicable, at which the Participant commences
receiving the Retirement Benefit, of the Retirement Benefit payable at age 65.
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(c). RETIREMENT BENEFITS PRIOR TO AGE 62. A Participant shall
not be entitled to begin receiving a Retirement Benefit prior to attainment of
age 62, except in the sole and absolute discretion of the Committee, and subject
to such terms and conditions, including the imposition of Retirement Benefit
reductions, that the Committee may specify.
(d). CHANGE OF CONTROL. Notwithstanding anything herein to the
contrary, upon a Change of Control, an Active Participant and a Participant who
has satisfied the conditions of Section 4.1(a)(3) and (4) shall be entitled to a
lump sum payment equal to the Actuarial Equivalent, at the age of such
Participant at the date of the Change of Control, of the Retirement Benefit
which would be payable to such Participant at the later of age 65 or, if the
Active Participant continued in employment with the Company after attaining age
65, at the earlier of the age at which such employment ended or at the age of
such Participant at the date of such Change of Control, which has been earned by
the Participant to the date of Change of Control assuming, for such purposes,
that the Retirement Benefit is payable in the form of a single life annuity. In
addition, there shall be waived any condition concerning eligibility for payment
of a Retirement Benefit that requires: (1) the filing of any election; (2) the
attainment of a specified age; (3) an agreement not to engage in competitive
activities with the Company; (4) satisfaction, as to such Active Participant, of
the conditions of Section 4.1(a)(3) or of any other terms or conditions or the
application of any benefit reductions described in Section 4.1(b) or (c); and
(5) as to such Active Participant, termination of employment with the Company,
in order to begin receiving Retirement Benefits.
SECTION 4.2 RETIREMENT BENEFIT FORMULA. A Participant's annual
Retirement Benefit shall be the Actuarial Equivalent of the amount calculated
under the formula: [(A + B) x C] - D = Retirement Benefit, where:
(a). "A" is Average Earnings up to the Base Compensation Amount
multiplied by 1.6 percent;
(b). "B" is Average Earnings in excess of the Base Compensation
Amount multiplied by 2.2 percent;
(c). "C" is Years of Service not in excess of 25; and
(d). "D" is the Offset Amount.
SECTION 4.3 VESTING IN RETIREMENT BENEFIT. A Participant shall have no
vested right to a Retirement Benefit prior to the later of attaining: (1) age 60
while an Active Participant; or (2) 15 Years of Service after attainment of age
40. Upon a Change of Control and thereafter, an Active Participant shall be
vested in his or her Retirement Benefit regardless of Years of Service or age.
SECTION 4.4 RETIREMENT BENEFIT FORMS.
(a). GENERAL RULE. Unless a Participant had made an election to
receive payment of Retirement Benefits in an available alternative form, a
Participant shall be deemed to have elected the Normal Form.
(b). ACTUARIAL EQUIVALENT. All forms of payment of Retirement
Benefits shall be the Actuarial Equivalent of a single life annuity payable at
age 65, except that, in the case of an Active
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Participant who remains in continuous employment with the Company after
attaining age 65, the amount of the benefit shall be actuarially increased to
reflect the commencement of the benefit after age 65.
SECTION 4.5 NORMAL FORM OF RETIREMENT BENEFIT.
(a). SINGLE LIFE ANNUITY. The Normal Form of payment of a
Retirement Benefit for a Participant who is living at the time payment
commences shall be a single life annuity for a Participant who is unmarried
at the time that payment of the annual Retirement Benefit commences. Under a
single life annuity, a Retired Participant shall receive a monthly benefit
for life equal to the Actuarial Equivalent of 1/12 of his or her Retirement
Benefit and all payments shall cease upon the Retired Participant's death.
(b). JOINT AND SURVIVOR ANNUITY. If a Participant is married
at the time that payment of the Retirement Benefit commences, the Normal Form
of Retirement Benefit shall be a joint and survivor annuity (which shall be
the Actuarial Equivalent of a single life annuity) for the benefit of the
Participant's spouse as of the date that payment of the Retirement Benefit
commences. Under the Normal Form of a joint and survivor annuity, a
Participant shall receive a monthly benefit for life and, upon the
Participant's death, the spouse, if living, shall receive a monthly benefit
for life equal to 100% of the monthly benefit that was payable to the
Participant. If a Participant, who has satisfied the conditions of Section
4.1(a)(3) (including consideration of Years of Service accrued for Disabled
or deceased Participants pursuant to Section 2.1), dies prior to the
commencement of the payment of Retirement Benefits, and was married at the
date of death, the spouse Beneficiary of such Participant shall have the
right to a survivor Retirement Benefit, commencing at the date such
Participant would have attained age 65, if the Participant died prior to
attaining age 65, or commencing on the first day of the month following the
month in which the Participant died if the Participant continued in
continuous employment with the Company after attaining age 65 and until the
date of Participant's death, calculated under Section 4.2 as if the
Participant had survived to such entitlement date and begun receiving payment
of the Retirement Benefit at such entitlement date as a joint and 100%
survivor annuity and then died on the following date.
SECTION 4.6 ALTERNATIVE FORMS OF BENEFIT.
(a). ELECTION OF FORMS OF BENEFIT. Prior to the commencement of
payment of a Retirement Benefit, a Participant may file an election designating
a payment form other than the Normal Form of Retirement Benefit; provided,
however, that any such alternate payment form is a payment form available under
the Qualified Plan and, if such Participant is entitled to a benefit under such
Qualified Plan, is the same as the payment form elected under such Qualified
Plan. If a Participant is married, an election to receive a Retirement Benefit
in a form other than the Normal Form shall be valid only if such election
includes the written consent of the Participant's spouse in the form and manner
specified by the Committee. However, a joint and survivor annuity shall not be
available under this Supplemental Plan with respect to any Beneficiary other
than the spouse of the Participant as of the date that the Retirement Benefit
commences.
(b). ADDITIONAL FORMS OF BENEFIT. From time to time, the
Committee may, in its sole discretion, make other forms of payment of Retirement
Benefits available; provided, however, that once a Participant or the
Participant's Beneficiary begins receiving Retirement Benefit payments, no
change may be made in the form of payment except as provided for in Section
4.6(c) below.
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(c). FORM OF BENEFIT ON CHANGE OF CONTROL. Notwithstanding the
other provisions of this Section, upon a Change of Control, all Retirement
Benefits including, without limitation, benefits payable to Active Participants
who remain employed by the Company, shall be paid in a single sum payment that
is the Actuarial Equivalent at the age of the Participant as of the date of
Change of Control of a single life annuity payable at the later of age 65 or, if
the Participant had remained in continuous employment with the Company after
attaining age 65, the age of the Participant at the date of Change of Control or
at the date Participant's employment terminated, whichever is earlier.
ARTICLE V--BENEFITS UPON PARTICIPANT'S DEATH
SECTION 5. 1 ELIGIBILITY FOR DEATH BENEFIT. The Beneficiary or
Beneficiaries of an Active or Disabled Participant who dies prior to attaining
age 65 and prior to the time Retirement Benefits to such Participant commence,
shall be eligible to begin receiving a Death Benefit if the Beneficiary or
Beneficiaries have filed a claim under Article VII. The Beneficiary or
Beneficiaries of a Participant who is not a Disabled Participant and whose
employment with the Company terminated prior to that Participant's death shall
not be eligible for a Death Benefit. If there are no Beneficiaries at the date
of the Participant's death, no Death Benefit shall be payable. The class of
individuals who are eligible to be Beneficiaries of the Death Benefit is limited
to the Participant's spouse, as of the date of the Participant's death, and the
Participant's Dependent Children as of the date of Participant's death;
provided, however, that such term also shall include any natural children of
Participant born after Participant's death and any child who is in the process
of being adopted by the Participant at the date of Participant's death and the
adoption of whom is completed by the spouse of Participant after the date of
Participant's death. If there is both a living spouse and Dependent Children as
of the date of Participant's death, the Beneficiary shall be the spouse. The
Dependent Children shall become the Beneficiaries of the Death Benefit, but only
upon the death of Participant's spouse prior to the earlier of the date the
Participant would have attained age 65, or the date the Participant's spouse
commences to receive a Retirement Benefit.
SECTION 5.2 DEATH BENEFIT.
(a). SPOUSAL BENEFIT. The Death Benefit for the surviving
spouse of an Active or Disabled Participant shall be an annual amount equal
to 40% of the Participant's Average Earnings. The spouse Beneficiary shall
receive the Death Benefit as a monthly benefit equal to 1/12 of the Death
Benefit. The Death Benefit for the spouse Beneficiary shall cease on the
earlier of: (1) the death of the spouse Beneficiary; or (2) the date at which
the Participant would have attained age 65.
(b). DEPENDENT CHILDREN BENEFIT. If a spouse Beneficiary of a
deceased Participant dies prior to the date at which the Participant would have
attained age 65, then a Death Benefit shall be paid to any then Dependent
Children for so long as any such remain Dependent Children. The aggregate
amount of any Death Benefit payable to Dependent Children after the death of the
spouse for each month is the amount equal to the monthly Death Benefit that
would be payable to a spouse Beneficiary multiplied by a fraction (not greater
than one), the numerator of which is the number of Dependent Children at the
time of each monthly payment and the denominator of which is three. If there
are no remaining living Dependent Children Beneficiaries, no further Death
Benefit shall be paid.
(c). VESTING IN DEATH BENEFIT. An Active or Disabled Participant
shall at all times be vested in his or her right to a Death Benefit.
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SECTION 5.3 SPOUSE RETIREMENT BENEFIT. To the extent that a spouse
Beneficiary is receiving a Death Benefit on the date the Participant would have
attained age 65, the spouse Beneficiary thereafter shall receive a Retirement
Benefit pursuant to Article IV, if eligible, in the amount calculated pursuant
to Article IV, and no further Death Benefit payments shall be payable to the
spouse Beneficiary or to any Dependent Children Beneficiaries or otherwise.
SECTION 5.4 CHANGE OF CONTROL. Upon a Change of Control, after the
Participant's death but prior to the date the Participant would have attained
age 65, the Participant's spouse, if then living, shall receive a single sum
payment that is the Actuarial Equivalent, at the date of such lump sum payment,
of the Death Benefit, calculated through the date that Participant would have
attained age 65. The spouse Beneficiary, if then living, shall also be entitled
to the lump sum payment of the Retirement Benefit, if any, pursuant to Section
4.1(d). Upon a Change of Control occurring after commencement of the payment of
Death Benefits to the Dependent Children Beneficiaries pursuant to Section
5.2(b), the Dependent Children shall receive a single sum payment that is the
Actuarial Equivalent, based upon the ages of the Dependent Children, of the
Death Benefit calculated without regard to the date the Participant would have
attained age 65.
ARTICLE VI--BENEFITS OF DISABLED PARTICIPANTS
SECTION 6.1 ELIGIBILITY FOR DISABILITY BENEFIT. An Active Participant
who becomes Disabled prior to attaining age 65 shall be eligible to begin
receiving a Disability Benefit if the Disabled Participant has filed a claim
under Article VII. The Disability Benefit shall cease on the earlier of: (1)
the first day of the calendar month following the Disabled Participant's
attainment of age 65; (2) the date on which the Committee determines that the
Participant is no longer Disabled; or (3) the date of the Disabled Participant's
death (in which case a Death Benefit may be payable under Article V).
SECTION 6.2 DISABILITY FORMULA. A Disability Benefit shall be a monthly
amount equal to 1/12 of 40% of the Participant's Average Earnings, offset by the
sum of: (a) any other payment to the Disabled Participant that would be made by
or on behalf of the Company on account of the Disability (including, without
limitation, a Company-sponsored disability insurance plan or any other benefit
plan of the Company, any amounts payable as sick pay, and any amounts payable
under so-called Workers Compensation Acts or similar laws of foreign governments
other than lump sum amounts for the loss of an organ or other body member and
other than amounts paid for medical expenses), calculated as if the Participant
participated to the fullest extent possible in such disability programs; and (b)
the Social Security (or comparable foreign government) disability benefits
received by the Disabled Participant. For purposes of determining any offset
under the preceding sentence, any payments that are not made on a monthly basis
shall be converted to monthly payments under a methodology approved by the
Committee.
SECTION 6.3 VESTING DISABILITY BENEFIT. An Active Participant shall at
all times be vested in his or her right to a Disability Benefit.
SECTION 6.4 DISABLED PARTICIPANT'S RETIREMENT BENEFIT. If a Disabled
Participant attains age 65, then he or she may be eligible to receive a
Retirement Benefit subject to the rules of Article IV, as if such Disabled
Participant continued his or her employment until age 65 with Average Earnings
calculated as provided for in Section 2.3(a).
13
<PAGE>
ARTICLE VII--ELECTIONS, CLAIMS, COMMENCEMENT OF
PAYMENTS AND BENEFICIARY DESIGNATIONS
SECTION 7.1 GENERAL. All elections to receive benefits under this
Supplemental Plan must be made in writing to the Committee in the form specified
by the Committee and include the information or documentation that the Committee
deems necessary. The Committee, in its discretion, may request additional
information or reasonable documentation from time to time in order to determine
whether a Participant receiving a Disability Benefit continues to be Disabled,
and in order to determine whether any Beneficiary who is receiving a Death
Benefit is entitled hereunder to continue receiving a Death Benefit or the
amount thereof.
SECTION 7.2 COMMENCEMENT OF PAYMENTS. Payment of benefits under this
Supplemental Plan shall begin as soon as administratively feasible after the
Participant (or Beneficiary, if applicable) has provided a claim for benefits in
writing to the Committee, including any supporting documentation required by the
Committee, and the Committee has determined that the Participant (or
Beneficiary, if applicable) satisfies the requirements for payment. Retirement
Benefits shall be payable on the later of:
(a) the first day of the month following the month in which the
Participant satisfies all of the conditions set forth in Section 4.1(a), or
(b) if later, the first day of the month following the month
in which the Participant attains the earlier of age 65, or the age, below 65,
elected by the Participant pursuant to and in accordance with the conditions
of Section 4.1(b) or (c);
provided, however, that in the event a Participant has satisfied the conditions
of Section 4.1(a)(1), (3) and (4) in or as of a particular month (the
"Termination Month") and satisfies the conditions of Section 4.1(a)(2) and (5)
(effective as of the date of termination of employment) either subsequently or
contemporaneously with the Termination Month, and provided that the Participant
has attained during
14
<PAGE>
the Termination Month age 65 or an age less than 65 but 62 or older, or an
age less than 62 with respect to which the Committee has approved retirement
pursuant to Section 4.1(c), Retirement Benefits shall be payable to the
Participant as of the first day of the month following the Termination Month
and, in the case of retirement pursuant to Section 4.1(c), on such terms and
conditions as specified by the Committee. Disability and Death Benefits
shall be payable from the first day of the month following the month in which
the Participant becomes disabled or dies, as the case may be. In the event
of any administrative delay in actual payments, payments shall be made
retroactively to the first day of the month following the month in which the
event which is the basis for the payment occurs but without any payment of
interest or other compensation for such delay in payment. Notwithstanding
any provision of the Supplemental Plan, upon a Change of Control the
Committee may, in its sole discretion, determine to postpone the lump sum
payment of Retirement, Death and Disability Benefits payable upon a Change of
Control, in which case such Benefit payments shall be made as otherwise
provided in the Supplemental Plan, without regard to the Change of Control.
In the event the Committee later determines, in its sole discretion, to
effect such a lump sum payment of the remainder of such Benefits, it shall
have the power and authority to do so.
SECTION 7.3 FORM OF BENEFIT ELECTIONS. An election to receive payment
of Retirement Benefits in a form other than the Normal Form must be submitted to
the Committee in writing at any time prior to the commencement of payments. An
election must be made in the form specified by the Committee and include the
information or documentation that the Committee deems necessary, including
written consent of the spouse in the case of a married Participant who elects a
Retirement Benefit in a form other than the Normal Form. The filing of an
election as to the form of Retirement Benefits shall revoke any pre-existing
election, except that a revocation of an election for a married Participant
shall be valid only if accompanied by the spouse's written consent to the
subsequent election (other than a subsequent election to receive payments in the
Normal Form), and except that once Retirement Benefits have commenced under this
Supplemental Plan, the form of the Retirement Benefit payable is irrevocable.
SECTION 7.4 BENEFICIARIES. If the Committee makes available alternative
benefit forms that provide for payments after a Participant's death, the
Participant shall designate the Beneficiary under such payment form in
accordance with the procedures set forth by the Committee.
SECTION 7.5 FAILURE TO CLAIM. If a Participant whose employment with
the Company terminated on or before attaining age 65 fails to claim payment of
Retirement Benefits until after such Participant attains age 65, the Retirement
Benefits payable to or with respect to such Participant shall be the monthly
amount which would have been payable to such Participant at age 65, and such
Participant shall be entitled to receive Retirement Benefit payments retroactive
to the month such payments would have first accrued following attainment of age
65, but without interest or other payment on account of such deferred receipt.
Similarly, if a Participant remains employed by the Company after attaining age
65 but, upon termination of employment by the Company after attaining age 65,
fails to claim payment of Retirement Benefits until a date after such
termination of employment, the Retirement Benefits payable to or with respect to
such person shall, nevertheless, be the monthly amount which would have been
payable to such person upon termination of employment with the Company, and such
Participant shall be entitled to receive Retirement Benefit payments retroactive
to the month such payments would have first accrued following termination of
employment, but without interest or other payment on account of such deferred
payment. Participants do not have the right to defer payment of Retirement
Benefits beyond the date Participants are otherwise eligible to begin receiving
Retirement Benefits.
15
<PAGE>
ARTICLE VIII--ADMINISTRATION
The Committee shall administer the Supplemental Plan in accordance with its
terms and purposes. The Committee shall have full authority and discretion to
interpret the Supplemental Plan, to determine benefits pursuant to the terms of
the Supplemental Plan, to establish rules and procedures necessary to carry out
the terms of the Supplemental Plan, and to waive or modify any requirements or
conditions on the receipt or calculation of benefits under the Supplemental Plan
where the Committee determines that such a waiver or modification is
appropriate. In the event a Participant is or was also a participant in a
similar supplemental retirement plan for highly-compensated employees within the
meaning of Sections 201(2), 301(a), and 401(a)(1) of Title I of ERISA and
maintained by Western Atlas Inc. or one of its subsidiaries or affiliates (a
"Subsidiary Plan"), the Committee shall have the power and authority to modify
and integrate the benefits payable under this Supplemental Plan with the
benefits payable under the Subsidiary Plan. All decisions by the Committee
shall be final and binding on all parties. The Committee may appoint one or
more officers or employees of the Company to act on the Committee's behalf with
respect to administrative matters related to the Supplemental Plan.
ARTICLE IX--SOURCE OF PAYMENTS
SECTION 9.1 GENERAL ASSETS OF COMPANY. Benefits payable under this
Supplemental Plan shall be paid directly to the Participant, or to the
Participant's Beneficiary, as applicable, from the general assets of the
Company, including the assets of the grantor Trust to the extent that such a
trust is created and so provides. If any person acquires a right to receive
payments from the Company under this Supplemental Plan, such right shall be no
greater than the right of any unsecured general creditor of the Company
notwithstanding the fact that the Company may establish an advance accrual
reserve on its books against its future liability under the Supplemental Plan.
ARTICLE X--CLAIMS AND ENFORCEMENTS
SECTION 10.1 ADMINISTRATIVE PROCEDURES.
(a). NOTICE OF DENIAL. If the Committee determines that any
person who has submitted a claim for payment of benefits under this Supplemental
Plan is not eligible for payment of benefits or, if applicable, is not eligible
for payment of benefits in the form or amount requested, then the Committee
shall, within a reasonable period of time, but no later than 90 days after
receipt of the written claim, notify the claimant of the denial of the claim.
Such notice of denial: (1) shall be in writing; (2) shall be written in a manner
calculated to be understood by the claimant; and (3) shall contain: (A) the
specific reason or reasons for denial of the claim; (B) a specific reference to
the pertinent Supplemental Plan provisions or administrative rules and
regulations upon which the denial is based; (C) a description of any additional
material or information necessary for the claimant to perfect the claim; and (D)
an explanation of the Supplemental Plan's appeal procedures.
(b). RECONSIDERATION PROCEDURES. Within 90 days of the receipt
by the claimant of the written notice of denial of the claim, the claimant may
file a written request with the Committee that it conduct a full and fair review
of the denial of the claimant's claim for benefits. The claimant's written
request must include a statement of the grounds on which the claimant appeals
the original claim denial.
16
<PAGE>
The Committee shall deliver to the claimant a written decision on the claim
promptly, but not later than 60 days after the receipt of the claimant's
request for review, except that if there are special circumstances that
require an extension of time for processing, the 60-day period shall be
extended to 120 days, in which case written notice of the extension shall be
furnished to the claimant prior to the end of the 60-day period.
SECTION 10.2 ENFORCEMENT.
(a). RIGHT TO ENFORCE. Within 90 days after exhaustion of the
review and appeal procedures provided for in Section 10.1 or, if the
Committee fails to grant or deny the claim within 120 days after the
claimant's original claim or fails to provide the written decision of the
Committee on any written request for reconsideration within the time period
in Section 10.1(b), within 90 days after such failure, the Company's
obligations under the Supplemental Plan may be enforced only through binding
arbitration as provided for hereinafter, initiated by any Participant or,
upon the death of a Participant, by any Participant's surviving spouse,
Dependent Child, or personal representative (as the case may be, the
"Claimant").
(b). ATTORNEYS' FEES AND COSTS. If, prior to a Change of
Control, any Claimant is denied a claim, in whole or in part, for benefits
under the Supplemental Plan and the Claimant requests reconsideration under
the procedures described in Section 10.1(b), or initiates any other legal
proceeding (other than binding arbitration pursuant to the following
provisions of this Article X) with respect to such alleged claim, the Company
shall have no obligation to pay or reimburse the Claimant for attorneys' fees
and costs. If, on or after a Change of Control, any Claimant is denied a
claim for benefits under the Supplemental Plan and the Claimant has requested
reconsideration under the procedures described in Section 10.1(b), or
initiates binding arbitration or both reconsideration and binding
arbitration, to enforce any obligation of the Company under the Supplemental
Plan the basis of which is alleged failure of the Committee to administer the
Supplemental Plan in accordance with its terms or, if following a Change of
Control, the Company fails to make payment of Benefits as determined by the
Committee, the Company shall pay such Claimant's attorneys' fees and costs
incurred in connection with the review and binding arbitration proceedings,
provided that the arbitrator determines that the claim is not frivolous;
provided, however, that in no case shall the Company be liable for attorneys'
fees and costs to the extent incurred relative to any dispute regarding any
determination by the Committee made based upon the terms of the Supplemental
Plan. All attorneys' fees and costs payable under this Section 10.2(b) shall
be paid by the Company as they are incurred by the Claimant, but no later
than 30 days from the date that the Claimant submits a bill or other
statement to the Company.
(c). INTEREST. If any Claimant prevails in a reconsideration
procedure described in Section 10.1(b), or if a Claimant prevails in the binding
arbitration proceeding pursuant to Section 10.3(a) to enforce the payment of
benefits under the Supplemental Plan, the Company shall pay interest to the
Claimant on any unpaid benefits accruing from the date that benefit payments
should have commenced and continuing until the date that such owed and unpaid
benefits are paid to the Claimant in full. For purposes of the preceding
sentence, interest shall accrue at an annual rate equal to one percent, plus the
prime rate reported by THE WALL STREET JOURNAL as in effect from time to time,
each change in the prime rate to be effective for purposes of any interest
computation on the date of publication of such changed prime rate in THE WALL
STREET JOURNAL.
SECTION 10.3 ARBITRATION. The rights resulting from the designation of a
Participant pursuant to Article III are conditional upon the acceptance by the
Participant, on the Participant's behalf and on behalf of the Claimants, of all
of the terms and conditions of this Supplemental Plan including
17
<PAGE>
specifically and without limitation this Article X. Any controversy or claim
arising out of or under the Supplemental Plan which is not resolved by the
reconsideration referred to in Section 10.1(b) shall be settled by
arbitration in accordance with the National Rules for the Resolution of
Employment Disputes of the American Arbitration Association ("AAA") or the
Employment Arbitration Rules of the Judicial
Arbitration and Mediation Services/Endispute ("JAMS"), subject to the further
provisions of this Section 10.3. Hereinafter the term "Rules" means and refers
to the aforesaid AAA Rules or the JAMS Rules, as the case may be. Judgment upon
the award rendered by the arbitrator may be rendered in any court having
jurisdiction. The Rules are modified or supplemented as follows:
(a). There shall be one arbitrator, unless the parties agree to
more than one arbitrator;
(b). The arbitrator shall be a retired judge or attorney with
professional experience and expertise in designing or administering corporate
retirement benefits and plans, and resident in the Southern California area,
unless the parties agree otherwise;
(c). The arbitration shall be conducted within Los Angeles
County, California, unless the parties agree otherwise;
(d). The party desiring to initiate the arbitration shall advise
the other party in writing of such desire;
(e). Within 10 days of receipt of a notice pursuant to
subparagraph (d) above the party receiving the notice shall designate either
the AAA or JAMS as the arbitration agency, but in the event such party fails
to designate within such period the initiating party shall have the right to
designate the AAA or JAMS;
(f). All claims arising under the Supplemental Plan known or
which should be known to the party initiating the arbitration shall be included
in the issues presented to the AAA or JAMS, as the case may be, for arbitration
and any which are not included shall be effectively waived;
(g). The expedited procedures of the AAA or JAMS, as the case may
be, shall be applied in any case where no disclosed claim or counterclaim
exceeds the amount then established by the AAA or JAMS for use of expedited
procedures, exclusive of interest and arbitration costs;
(h). The decision of the arbitrator shall be rendered within 60
days after the close of hearings;
(i). The Company and the Claimant shall furnish to the other, 30
days prior to the first hearing, a list and identification of all witnesses, and
copies of all exhibits intended to be submitted by that party. Ten days prior
to the first hearing, each party shall have the right to supplement their
intended list of witnesses and provide additional exhibits. Only such witnesses
and such exhibits identified by one party or the other may be offered in the
arbitration hearings; and
(j). Any documents, affidavits or other evidence requested by the
arbitrator must be submitted within ten days after conclusion of the arbitration
hearings, unless the arbitrator grants additional time.
18
<PAGE>
ARTICLE XI--AMENDMENT AND TERMINATION
SECTION 11.1 AMENDMENT AND TERMINATION OF THE PLAN.
(a). GENERAL. Although the Company intends to maintain the
Supplemental Plan, the Company reserves the right to amend or terminate the
Supplemental Plan at any time for whatever purposes it may deem appropriate,
except as specifically limited by this Article XI. The Company shall amend,
terminate, or suspend the Supplemental Plan only by the action of the Board,
except that the Committee shall have the authority to make any amendments that
do not decrease the level of benefits payable and that it deems necessary for
the proper administration of the Supplemental Plan.
(b). AUTOMATIC TERMINATION. The Supplemental Plan may be
terminated or suspended only by authorization of the Board, except that the
Supplemental Plan shall terminate automatically if there are no Active
Participants remaining and all Retirement Benefits, Death Benefits, and
Disability Benefits have been paid.
(c). PROTECTION OF BENEFITS. No amendment, termination, or
suspension of the Supplemental Plan shall be effective to the extent that it
reduces: (1) the Retirement Benefit payable to any Participant who has
satisfied the conditions of Section 4.1(a)(3) and (4) immediately prior to
such amendment, termination or suspension; or (2) Retirement Benefits, Death
Benefits or Disability Benefits, which are being paid immediately prior to
such amendment, termination or suspension.
(d). PROTECTION OF ACTIVE PARTICIPANTS. No amendment,
termination, or suspension of the Supplemental Plan shall be effective to the
extent that it reduces the Retirement Benefits that an Active Participant may
accrue unless the amendment, termination, or suspension also provides that
the Active Participant is immediately vested in a Retirement Benefit
calculated as if the Active Participant terminated employment immediately
prior to the later of the date that the amendment, termination, or suspension
is enacted or is effective.
(e). CHANGE OF CONTROL. On or after a Change of Control, any
amendment, termination, or suspension of the Supplemental Plan shall be
effective only upon the written consent of at least eighty-five percent (85
%) of all Participants. The preceding sentence shall not apply to: (1) a
termination that occurs under Section 11.1(b); (2) any amendment,
termination, or suspension that affects the accrual of Retirement Benefits
and that complies with the terms of Section 11.1(c) and (d); or (3) any
amendment, termination, or suspension of the Supplemental Plan that reduces
Death or Disability Benefits but that: (i) does not reduce Death or
Disability Benefit payments that have commenced; and (ii) does not reduce the
Death or Disability Benefit that an Active Participant is eligible to
receive, calculated as if he or she died or became Disabled as of the later
of the effective date or enactment of the amendment, termination, or
suspension.
SECTION 11.2 CONTRACTUAL OBLIGATION. The Company makes a contractual
obligation that any amendment, suspension, or termination of the Supplemental
Plan shall comply with the terms of Section 11.1.
ARTICLE XII--MISCELLANEOUS
SECTION 12.1 EMPLOYMENT RIGHTS. Nothing contained in the Supplemental
Plan shall be construed as a contract of employment between the Company and
the Participant, or as a right of any
19
<PAGE>
employee to be continued in the employment of the Company, or as a limitation
of the right of the Company to discharge any of its employees, with or
without cause.
SECTION 12.2 RIGHTS OF THE COMMITTEE. To the extent permitted by law,
the Company shall indemnify the Committee (including any officers and employees
of the Company appointed to act on behalf of the Committee) and hold such
individuals harmless from and against any damages, losses, costs, and expenses
incurred (including, without limitation, expenses of investigation and the fees
and expenses of counsel) in the course of administering the Supplemental Plan.
The Company shall bear all expenses of the Committee incurred in the course of
administering the Supplemental Plan.
SECTION 12.3 BENEFIT STATEMENTS. At least annually, the Company shall
provide a statement of benefits under the Supplemental Plan to all Participants
(or Beneficiaries) that includes the information necessary to calculate the
possible prospective Retirement Benefit, Disability Benefit, and Death Benefit
with respect to the Participant, based upon Participant's compensation through
such year.
SECTION 12.4 ASSIGNMENT. The benefits payable under the Supplemental
Plan may not be assigned or alienated.
SECTION 12.5 APPLICABLE LAW. The Supplemental Plan shall be governed by
the laws of Delaware.
SECTION 12.6 EFFECTIVE DATE. The Supplemental Plan shall take effect as
of January 1, 1996.
SECTION 12.7 ENTIRE PLAN. This writing is the final expression of the
Supplemental Plan and a complete and exclusive statement of its terms, except
that to the extent that this Supplemental Plan refers to the Trust, the terms of
the Trust Agreement, as of the date immediately preceding a Change of Control,
shall be deemed to be incorporated herein.
SECTION 12.8 TERMS. Except as required otherwise by the context,
capitalized terms that are used in this Supplemental Plan shall have the meaning
assigned to them in Article II or elsewhere in this Supplemental Plan. Feminine
or neuter pronouns shall be substituted for those of the masculine form and the
plural shall be substituted for the singular, in any place or places herein
where the context may require such substitution or substitutions. The title and
headings of the Sections of this Supplemental Plan are for convenience only, and
are not intended to be a part of or to affect the meaning or interpretation of
this Supplemental Plan.
SECTION 12.9 WAIVER. Any waiver of or failure to enforce any provision
of this Supplemental Plan in any instance shall not be deemed a waiver of such
provision as to any other or subsequent instance.
20
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<PERIOD-START> JAN-01-1997
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0
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<COMMON> 53,892
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