________________________________________________________________________________
________________________________________________________________________________
FORM 10-Q
---------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------
(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 for the transition period from ....................
to ....................
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Commission file number: (1-13888)
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UCAR INTERNATIONAL INC.
(Exact name of registrant as specified in its charter)
Delaware 06-1385548
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
---------------
39 Old Ridgebury Road 06817-0001
Danbury, Connecticut (Zip Code)
(Address of principal executive offices)
Registrant's telephone number, including area code: (203) 207-7700
---------------
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 [ ]
As of June 30, 1997, 45,802,588 shares of common stock, par value $.01 per
share, were outstanding.
________________________________________________________________________________
________________________________________________________________________________
<PAGE>
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION:
Item 1. Financial Statements:
-------------------------------
Consolidated Balance Sheets as of June 30, 1997
and December 31, 1996........................................ Page 3
Consolidated Statements of Operations for the Three Months
ended June 30, 1997 and 1996 and for the Six Months ended
June 30, 1997 and 1996....................................... Page 4
Consolidated Statements of Cash Flows for the Six Months
ended June 30, 1997 and 1996................................. Page 5
Consolidated Statement of Stockholders' Equity (Deficit) for the
Six Months ended June 30, 1997............................... Page 6
Notes to Consolidated Financial Statements..................... Page 7
Item 2. Management's Discussion and Analysis of Financial Condition
---------------------------------------------------------------------
and Results of Operations.............................. Page 11
-------------------------
PART II. OTHER INFORMATION:
Item 1. Legal Proceedings...................................... Page 17
---------------------------
Item 4. Submission of Matters to a Vote of Security Holders.... Page 18
-------------------------------------------------------------
Item 6. Exhibits and Reports on Form 8-K....................... Page 18
------------------------------------------
SIGNATURE.......................................................... Page 19
INDEX TO EXHIBITS.................................................. Page E-1
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
- ----------------------------
UCAR INTERNATIONAL INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in millions, except per share data)
June 30, December 31,
ASSETS 1997 1996
---- ----
CURRENT ASSETS: (Unaudited)
Cash and cash equivalents........................... $ 60 $ 95
Short-term investments.............................. 13 -
Notes and accounts receivable....................... 247 185
Inventories:
Raw materials and supplies....................... 49 39
Work in process.................................. 126 100
Finished goods................................... 38 37
------ -----
213 176
Prepaid expenses.................................... 24 27
------ -----
Total current assets....................... 557 483
------ -----
Property, plant and equipment......................... 1,296 1,087
Less: accumulated depreciation........................ 714 653
------ -----
Net fixed assets........................... 582 434
------ -----
Company carried at equity............................. - 18
Other assets.......................................... 62 53
------ -----
Total assets............................... $ 1,201 $ 988
====== =====
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES:
Accounts payable.................................... $ 67 $ 67
Short-term debt..................................... 73 53
Payments due within one year on long-term debt...... 26 1
Accrued income and other taxes...................... 34 37
Other accrued liabilities........................... 79 91
------ -----
Total current liabilities.................. 279 249
------ -----
Long-term debt........................................ 667 581
Other long-term obligations........................... 148 138
Deferred income taxes................................. 62 16
Minority stockholders' equity in consolidated entities 14 6
------ -----
STOCKHOLDERS' EQUITY (DEFICIT):
Preferred stock, par value $.01, 10,000,000 shares
authorized, none issued........................... - -
Common stock, par value $.01, 100,000,000 shares
authorized, 47,102,588 shares issued at June 30,
1997, 46,614,724 shares issued at
December 31, 1996................................. - -
Additional paid-in capital.......................... 504 498
Cumulative foreign currency translation adjustment.. (120) (116)
Retained earnings (deficit)......................... (305) (384)
------ -----
79 (2)
Less cost of common stock held in treasury,
1,300,000 shares at June 30, 1997................. (48) -
------ -----
Total stockholders' equity (deficit).... 31 (2)
------ -----
Total liabilities and stockholders' equity
(deficit).............................. $ 1,201 $ 988
====== =====
See accompanying Notes to Consolidated Financial Statements.
3
<PAGE>
<TABLE>
PART I (Cont.)
UCAR INTERNATIONAL INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in millions, except per share data)
(Unaudited)
<CAPTION>
Three Months Six Months
Ended June 30, Ended June 30,
-------------- --------------
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net sales.............................................................. $ 290 $ 241 $ 528 $ 484
Cost of sales.......................................................... 180 145 330 295
------ ------ ------ ------
Gross profit........................................................... 110 96 198 189
Research and development............................................... 2 2 4 4
Selling, administrative and other expenses............................. 27 23 50 45
Other (income) expense (net)........................................... - - 1 1
------ ------ ------ ------
Operating profit................................................ 81 71 143 139
Interest expense....................................................... 16 15 31 31
------ ------ ------ ------
Income before provision for income taxes........................ 65 56 112 108
Provision for income taxes............................................. 22 19 34 38
------ ------ ------ ------
Income of consolidated entities................................. 43 37 78 70
Less: minority stockholders' share of income........................... 1 - 1 -
Plus: UCAR share of net income from company carried at equity.......... - 1 2 3
------ ------ ------ ------
Income before cumulative effect of change in
accounting principle.......................................... 42 38 79 73
Cumulative effect on prior years of change in
accounting for inventories......................................... - - - 7
------ ------ ------ ------
Net income...................................................... $ 42 $ 38 $ 79 $ 80
====== ====== ====== ======
PRIMARY NET INCOME PER COMMON SHARE:
Income before cumulative effect of change in
accounting principle............................................ $ 0.89 $ 0.78 $ 1.64 $ 1.51
Cumulative effect on prior years of change in
accounting for inventories...................................... - - - 0.15
------ ------ ------ ------
Primary net income per share................................ $ 0.89 $ 0.78 $ 1.64 $ 1.66
====== ====== ====== ======
Weighted average common shares outstanding
(in thousands).............................................. 47,724 48,407 48,256 48,299
====== ====== ====== ======
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
4
<PAGE>
PART I (Cont.)
UCAR INTERNATIONAL INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Increase (Decrease) in Cash and Cash Equivalents
(Dollars in millions)
(Unaudited)
Six Months
Ended June 30,
--------------
1997 1996
---- ----
CASH FLOW FROM OPERATING ACTIVITIES:
Net income .................................................. $ 79 $ 80
Cumulative effect on prior years of change in
accounting for inventories................................ - (7)
Non-cash charges to net income:
Depreciation.............................................. 24 19
Deferred income taxes..................................... - 11
Other non-cash charges.................................... 4 9
Working capital*............................................. (71) (62)
Long-term assets and liabilities............................. 5 (6)
---- ----
NET CASH PROVIDED BY OPERATING ACTIVITIES............... 41 44
---- ----
CASH FLOW FROM INVESTING ACTIVITIES:
Capital expenditures......................................... (28) (23)
Purchase of subsidiaries, net of cash acquired............... (123) (3)
Purchases of short-term investments.......................... (13) -
Redemption/sale of assets.................................... 1 1
---- ----
NET CASH USED IN INVESTING ACTIVITIES................... (163) (25)
---- ----
CASH FLOW FROM FINANCING ACTIVITIES:
Short-term debt.............................................. 20 (3)
Long-term debt borrowings.................................... 168 2
Long-term debt reductions.................................... (57) (35)
Sale of common stock......................................... 3 1
Financing costs.............................................. (2) -
Purchase of treasury stock................................... (48) -
Tax benefit arising from exercise of employee stock options.. 3 2
---- ----
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES..... 87 (33)
---- ----
Net decrease in cash and cash equivalents..................... (35) (14)
Cash and cash equivalents at beginning of period.............. 95 53
---- ----
CASH AND CASH EQUIVALENTS AT END OF PERIOD.................... $ 60 $ 39
==== ====
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Net cash paid during the periods for:
Interest expense.......................................... $ 29 $ 29
Income taxes.............................................. 38 26
*Net change in working capital by component (excluding
cash and cash equivalents, short-term investments,
deferred income taxes and short-term debt):
(Increase) decrease in current assets:
Notes and accounts receivable:
Sale of receivables................................. $ 2 $ 2
Other changes....................................... (37) (22)
Inventories............................................. 3 (24)
Prepaid expenses and other current assets............... (3) 4
Decrease in payables and accruals......................... (36) (22)
---- ----
WORKING CAPITAL..................................... $ (71) $ (62)
==== ====
See accompanying Notes to Consolidated Financial Statements.
5
<PAGE>
<TABLE>
PART I (Cont.)
UCAR INTERNATIONAL INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
(Dollars in millions)
(Unaudited)
<CAPTION>
Cumulative
Foreign
Additional Currency Retained Total
Common Paid-in Translation Earnings Treasury Stockholders'
Stock Capital Adjustment (Deficit) Stock Equity (Deficit)
----- ------- ---------- --------- ----- ----------------
<S> <C> <C> <C> <C> <C> <C>
BALANCE AT DECEMBER 31, 1996........... $ - $ 498 $ (116) $ (384) $ - $ (2)
Exercise of employee stock options..... - 4 - - - 4
Tax benefit arising from exercise
of employee stock options........... - 3 - - - 3
Purchase of treasury stock............. - - - - (48) (48)
Cost of secondary offering............. - (1) - - - (1)
Translation adjustments................ - - (4) - - (4)
Net income............................. - - - 79 - 79
----- ----- ----- ----- ----- -----
BALANCE AT JUNE 30, 1997............... $ - $ 504 $ (120) $ (305) $ (48) $ 31
===== ===== ===== ===== ===== =====
See accompanying Notes to Consolidated Financial Statements.
</TABLE>
6
<PAGE>
PART I (Cont.)
UCAR INTERNATIONAL INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Unaudited)
(1) INTERIM FINANCIAL PRESENTATION
The interim Consolidated Financial Statements are unaudited; however, in
the opinion of management, they have been prepared in accordance with
Rule 10-01 of Regulation S-X adopted by the Securities and Exchange
Commission ("Commission") and reflect all adjustments (all of which are
of a normal, recurring nature) which are necessary for a fair statement
of financial condition, results of operations, cash flows and changes in
stockholders' equity (deficit) for the periods presented. Results of
operations for the six months ended June 30, 1997 are not necessarily
indicative of the results that may be expected for the entire year ending
December 31, 1997.
As used in these Notes, references to "UCAR" mean UCAR International
Inc., to "Global" mean UCAR Global Enterprises Inc., a direct,
wholly-owned subsidiary of UCAR, and to the "Company" mean UCAR and its
subsidiaries (including Global), collectively. Separate financial
statements of Global are not presented because they would not be material
to holders of senior subordinated notes.
(2) UCAR GLOBAL ENTERPRISES INC.
UCAR has no material assets, liabilities or operations other than those
that result from its ownership of 100% of the outstanding common stock of
Global.
The following is a summary of the consolidated assets and liabilities of
Global and its subsidiaries and their consolidated results of operations:
June 30, December 31,
1997 1996
---- ----
Assets: (Dollars in millions)
Current assets........................ $ 557 $ 483
Non-current assets.................... 644 505
------ -----
Total assets................... $ 1,201 $ 988
====== =====
Liabilities:
Current liabilities................... $ 279 249
Non-current liabilities............... 877 735
------ -----
Total liabilities.............. $ 1,156 $ 984
====== =====
Minority stockholders' equity in
consolidated entities................. $ 14 $ 6
====== =====
7
<PAGE>
PART I (Cont.)
UCAR INTERNATIONAL INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Cont.)
(Unaudited)
Three Months Six Months
Ended June 30, Ended June 30,
-------------- --------------
1997 1996 1997 1996
---- ---- ---- ----
(Dollars in millions)
Net sales............................ $ 290 $ 241 $ 528 $ 484
Gross profit......................... 110 96 198 189
Income before cumulative effect of
change in accounting principles.... 42 38 79 73
Net income .......................... 42 38 79 80
(3) CHANGE IN ACCOUNTING FOR INVENTORIES
Effective January 1, 1996, the Company changed its method of determining
LIFO inventories. The new methodology provides specifically identified
parameters for defining new items within the LIFO pool which the Company
believes improves the accuracy of costing those items.
The Company recorded income of $7 million (after related income taxes of
$4 million) as the cumulative effect on prior years of this change in
accounting for inventories. The Company believes this change will not
materially impact the Company's on-going results of operations.
(4) ACQUISITION OF SUBSIDIARY
On April 22, 1997, the Company purchased the shares of EMSA (Pty.) Ltd.
("EMSA") held by Samancor Limited, the Company's joint venture partner in
this 50%-owned affiliate. The purchase price was $75 million, plus
expenses. Prior to April 22, 1997, the Company's investment in EMSA was
carried on the equity basis and its proportional share of the net income
was reported in income under the caption "UCAR share of net income from
company carried at equity". The Consolidated Financial Statements have
not been restated to reflect the increased ownership of EMSA at any date
or for any period prior to the date of purchase.
The acquisition was accounted for as a purchase. Accordingly, the
purchase price has been allocated to the assets purchased and the
liabilities assumed based upon the fair values at the date of
acquisition.
(5) AMENDMENTS TO CREDIT FACILITIES
On March 19, 1997, the Company's senior secured bank credit facilities
(the "Senior Bank Facilities") were amended to reduce the interest rates
on amounts outstanding thereunder, to increase the amount available under
its revolving credit facility to $250 million from $100 million and to
change the covenants to allow more flexibility in uses of free cash flow
for acquisitions,
8
<PAGE>
PART I (Cont.)
UCAR INTERNATIONAL INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Cont.)
(Unaudited)
capital expenditures and stock repurchases. The interest rates applicable
to the Senior Bank Facilities were reduced from an adjusted LIBOR plus a
margin ranging from 1.00% - 2.00% to an adjusted LIBOR plus a margin
ranging from 0.75% - 1.50%.
(6) STOCK REPURCHASE PROGRAM
On February 10, 1997, UCAR's Board of Directors authorized a program to
repurchase up to $100 million of common stock at prevailing prices from
time to time in the open market or otherwise depending on market
conditions and other factors, without any established minimum or maximum
time period or number of shares. On April 8, 1997, concurrent with the
1997 Secondary Offering (as defined below) and as part of this program,
UCAR repurchased 1,300,000 shares of common stock from Blackstone (as
defined below) for $48 million (the "Blackstone Share Repurchase").
(7) SECONDARY OFFERING
On April 8, 1997, 6,411,227 shares of common stock were sold by
Blackstone Capital Partners II Merchant Banking Fund L.P. and its
affiliates (collectively, "Blackstone") in a secondary public offering
(the "1997 Secondary Offering"). After the 1997 Secondary Offering and
the Blackstone Share Repurchase, Blackstone ceased to be a principal
stockholder of UCAR. UCAR did not sell any shares in, or receive any
proceeds from, the 1997 Secondary Offering.
(8) INCOME TAXES
In the six months ended June 30, 1997 and 1996, the Company paid $38
million and $26 million, respectively, to various taxing authorities and
provided $34 million and $38 million, respectively, for income tax
expense. In the six months ended June 30, 1997, income tax expense was
lower than the amount computed by applying the United States Federal
income tax rate primarily due to tax credits in the United States from
research and development expenses and tax benefits recognized in Italy
and Spain associated with capital expenditures and fixed asset
revaluations, respectively.
(9) EARNINGS PER SHARE
Primary net income per share is computed by dividing net income by the
weighted average number of common shares outstanding during the period.
The weighted average number of common shares outstanding includes common
stock equivalents calculated in accordance with the "treasury stock
method," wherein the net proceeds from the exercise thereof are assumed
to be used to repurchase outstanding shares of common stock at the
average market price for the period. Fully diluted earnings per share is
not significantly different than primary net income per share and,
therefore, has not been presented.
9
<PAGE>
PART I (Cont.)
UCAR INTERNATIONAL INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Cont.)
(Unaudited)
(10) CONTINGENCIES
On June 5, 1997, the Company was served with a subpoena issued by a grand
jury empaneled by the United States District Court for the Eastern
District of Pennsylvania and a related search warrant. Counsel for the
Company has been informed by attorneys for the Antitrust Division of the
United States Department of Justice ("DOJ") that the grand jury is
investigating whether there has been any violation of Federal antitrust
laws by producers of graphite electrodes. Concurrently, the antitrust
enforcement authorities of the European Union ("EU authorities") visited
offices of the Company's French subsidiary for purposes of gathering
information to determine if there has been any violation by producers of
graphite electrodes of the antitrust laws of the European Union. The
Company, through its counsel, is cooperating with the DOJ and the EU
authorities. At this time, as far as the Company is aware, no
governmental authority has made a finding or allegation that any person
or company violated any antitrust law. No provision for any liability
related to such matters has been made in the Consolidated Financial
Statements.
On June 17, 1997, UCAR was served with a complaint commencing a putative
class action lawsuit alleging violations of Federal antitrust laws.
Subsequently through July 31, 1997, UCAR has been served with three
additional complaints commencing similar lawsuits. UCAR and other
graphite electrode producers are named as defendants in each complaint.
None of the complaints contains any specific allegations of the factual
basis underlying such violations, and all of the complaints appear to be
based on the existence of the previously announced grand jury
investigation. In each complaint, the proposed class consists of all
persons who purchased graphite electrodes in the United States directly
from the defendants during the period from 1992 through the present. Each
complaint seeks, among other things, an award of treble damages resulting
from the alleged antitrust violations. The Company has not yet responded
to formal discovery and substantive pre-trial motion practice has not yet
begun and, therefore, no evaluation of potential liability has been made.
The Company intends to vigorously defend against these lawsuits. No
provision for any liability related to such matters has been made in the
Consolidated Financial Statements.
10
<PAGE>
PART I (Cont.)
UCAR INTERNATIONAL INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
- --------------------------------------------------------------------------------
OF OPERATIONS
-------------
This Quarterly Report on Form 10-Q contains forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended. Actual results,
events and circumstances could differ materially from those set forth in such
statements due to various factors. Such factors include the possibility that
announced additions to electric arc furnace steel production capacity may not
occur, increased electric arc furnace steel production may not occur or result
in increased demand or higher prices for graphite electrodes, acquired
manufacturing capacity may not be fully utilized, technological advances
expected by the Company (as defined herein) may not be achieved, changing
economic and competitive conditions, other technological developments and other
risks and uncertainties, including those set forth in the Company's other
filings with the Securities and Exchange Commission.
As used herein, references to "UCAR" mean UCAR International Inc., to "Global"
mean UCAR Global Enterprises Inc., a direct, wholly-owned subsidiary of UCAR,
and to the "Company" mean UCAR and its subsidiaries (including Global),
collectively.
GENERAL
In 1995, the Company consummated (i) a leveraged recapitalization as a result of
which Blackstone Capital Partners II Merchant Banking Fund L.P. and its
affiliates (collectively, "Blackstone") became the owners of approximately 69%
of the then outstanding shares of common stock (the "Recapitalization"), (ii) an
initial public offering of common stock (the "Initial Offering"), (iii) a
redemption of $175 million principal amount of senior subordinated notes (the
"Subordinated Notes") at a redemption price equal to 110% of the aggregate
principal amount thereof, plus accrued interest of approximately $4 million
thereon (the "Redemption"), (iv) a refinancing of its then existing
recapitalization credit facilities (the "Recapitalization Bank Facilities") with
new credit facilities (the "Senior Bank Facilities") at more favorable interest
rates and with more favorable covenants and (v) the acquisition of substantially
all of the shares of its Brazilian subsidiary owned by public shareholders in
Brazil for an aggregate purchase price of $52 million, plus expenses of $3
million. Subsequent to 1995, the Company acquired additional shares from such
Brazilian shareholders for $3 million. The acquisitions were accounted for as
purchases.
In March 1996, Blackstone and certain other stockholders sold certain shares of
common stock in a secondary public offering (the "1996 Secondary Offering").
After the 1996 Secondary Offering, Blackstone owned approximately 20% of the
then outstanding shares of common stock. UCAR did not sell any shares in, or
receive any proceeds from, the 1996 Secondary Offering.
In November 1996, the Company acquired 90% of the equity of UCAR Grafit OAO
("UCAR Grafit"). The aggregate investment was $50 million. In the three months
ended March 31, 1997, the Company acquired 70% of the equity of Carbone Savoie
S.A.S. ("Carbone Savoie") for a purchase price of $33 million and, through a
newly-formed 70%-owned subsidiary, UCAR Elektroden GmbH ("UCAR Elektroden"),
acquired the graphite electrode business of Elektrokohle Lichtenberg AG ("EKL")
in
11
<PAGE>
PART I (Cont.)
UCAR INTERNATIONAL INC.
Berlin, Germany, for an aggregate purchase price of $15 million. In addition,
the Company increased its investment in UCAR Grafit by $6 million. In April
1997, the Company acquired the outstanding shares of EMSA (Pty.) Ltd., its
50%-owned affiliate ("EMSA"), held by the Company's joint venture partner in
South Africa, for a purchase price of $75 million. The acquisition of these
businesses and companies (collectively, the "Recently Acquired Businesses"),
which were financed from existing cash balances, cash flow from operations,
short-term borrowings and borrowings under the Company's revolving credit
facility, were accounted for as purchases.
On February 10, 1997, UCAR's Board of Directors authorized a program to
repurchase up to $100 million of common stock at prevailing prices from time to
time in the open market or otherwise depending on market conditions and other
factors, without any established minimum or maximum time period or number of
shares. On April 8, 1997, Blackstone sold shares of common stock in a secondary
public offering (the "1997 Secondary Offering"). Concurrently with the 1997
Secondary Offering and as part of this program, the Company repurchased
1,300,000 shares of common stock from Blackstone for $48 million (the
"Blackstone Share Repurchase"). After the 1997 Secondary Offering and the
Blackstone Share Repurchase, Blackstone ceased to be a principal stockholder of
UCAR. UCAR did not sell any shares in, or receive any proceeds from, the 1997
Secondary Offering. UCAR financed and intends to finance such repurchases from
existing cash balances, cash flow from operations, short-term borrowings and
borrowings under the Company's revolving credit facility.
RESULTS OF OPERATIONS
Three Month and Six Month Periods ended June 30, 1997 as Compared to Three Month
and Six Month Periods ended June 30, 1996
Net sales of $290 million in the second quarter of 1997 ("1997 Second Quarter")
represented a 20% increase from net sales of $241 million in the second quarter
of 1996 ("1996 Second Quarter"). The increase was largely attributable to an
increase in net sales of graphite electrodes and aluminum industry products,
partially offset by the impact of a stronger dollar on net sales (in dollar
terms) in certain countries. Net sales of graphite electrodes increased 22% to
$208 million in the 1997 Second Quarter as compared to $170 million in the 1996
Second Quarter. The increase in net sales of graphite electrodes was largely
attributable to a 28% increase in the volume of graphite electrodes sold.
Excluding graphite electrodes sold by the Recently Acquired Businesses, the
volume of graphite electrodes sold increased by 10%. The Recently Acquired
Businesses added $25 million of graphite electrode net sales on volume of
approximately 8 thousand metric tons of graphite electrodes sold. The average
selling price per metric ton (in dollars and net of changes in currency exchange
rates) for the Company's graphite electrodes increased 2.1% in the 1997 Second
Quarter as compared to the 1996 Second Quarter (after taking into account the
average selling price per metric ton of graphite electrodes sold by the Recently
Acquired Businesses in both the 1997 Second Quarter and the 1996 Second
Quarter). In some countries where the Company sells its products, the average
selling price per metric ton (in dollars) of the Company's graphite electrodes
was lower in the 1997 Second Quarter than in the 1996 Second Quarter as a result
of the continued strengthening of the dollar versus the local currencies. The
Company has already informed customers in certain of these countries of local
currency price increases which will take effect in the third
12
<PAGE>
PART I (Cont.)
UCAR INTERNATIONAL INC.
and fourth quarters of 1997. Primarily due to the recent acquisition of Carbon
Savoie, net sales of aluminum industry products increased approximately $16
million to $22 million in the 1997 Second Quarter. After excluding a one-time
emergency order for carbon refractories of approximately $4 million which was
shipped in the 1996 Second Quarter, net sales of $60 million of carbon and
graphite specialties and Grafoil(registered) in the 1997 Second Quarter were
comparable to those in the 1996 Second Quarter.
Net sales in the six months ended June 30, 1997 (the "1997 Period") were $528
million, an increase of 9% over net sales of $484 million in the six months
ended June 30, 1996 (the "1996 Period"). The increase was largely attributable
to an increase in net sales of graphite electrodes and aluminum industry
products, partially offset by the impact of a stronger dollar on net sales (in
dollar terms) in certain countries. Net sales of graphite electrodes were $370
million in the 1997 Period as compared to $353 million in the 1996 Period. The
Recently Acquired Businesses added $27 million of net sales of graphite
electrodes in the 1997 Period. The volume of graphite electrodes sold increased
by 7,200 tons, or 6.9%, in the 1997 Period as compared to the 1996 Period. The
average selling price per metric ton (in dollars and net of changes in currency
exchange rates) for the Company's graphite electrodes rose by 1.8% in the 1997
Period as compared to the 1996 Period (after taking into account the average
selling price per metric ton of graphite electrodes sold by the Recently
Acquired Businesses in both the 1997 Period and the 1996 Period). Primarily due
to the recent acquisition of Carbon Savoie, net sales of aluminum industry
products increased approximately $34 million to $45 million in the 1997 Period.
After excluding a one-time emergency order for carbon refractories of
approximately $4 million which was shipped in the 1996 Second Quarter, net sales
of $113 million of carbon and graphite specialties and Grafoil(Registered) in
the 1997 Period were comparable to those in the 1996 Period.
Cost of sales increased 24% to $180 million in the 1997 Second Quarter from $145
million in the 1996 Second Quarter. This increase was primarily due to the
impact of the Recently Acquired Businesses and the increased volume of graphite
electrodes sold. The Recently Acquired Businesses currently have profit margins
below the company-wide average of the Company's pre-existing businesses. In the
1997 Period, cost of sales increased 12% to $330 million from $295 million in
the 1996 Period, also due primarily to the impact of the Recently Acquired
Businesses and the increased volume of graphite electrodes sold.
As a result of the changes described above, the Company's gross profit margin
decreased to 37.9% in the 1997 Second Quarter from 39.8% in the 1996 Second
Quarter. In the 1997 Period, the Company's gross profit margin decreased to
37.5% from 39.0% in the 1996 Period. Excluding the impact of the Recently
Acquired Businesses, the gross margin would have been 40.4% in the 1997 Second
Quarter and 39.6% in the 1997 Period.
Selling, administrative and other expenses increased to $27 million in the 1997
Second Quarter from $23 million in the 1996 Second Quarter. For the 1997 Period,
selling, administrative and other expenses increased to $50 million from $45
million in the 1996 Period. Excluding the impact of the Recently Acquired
Businesses, selling, administrative and other expenses would have been $23
million in the 1997 Second Quarter and $44 million in the 1997 Period.
13
<PAGE>
PART I (Cont.)
UCAR INTERNATIONAL INC.
Operating profit in the 1997 Second Quarter was $81 million (27.9% of net sales)
as compared to $71 million (29.5% of net sales) in the 1996 Second Quarter. In
the 1997 Period, operating profit was $143 million (27.1% of net sales) as
compared to $139 million (28.7% of net sales) in the 1996 Period. Excluding the
impact of Recently Acquired Businesses, operating profit margins for the 1997
Second Quarter and the 1997 Period would have been 30.8% and 29.6%,
respectively.
Interest expense was stable at $16 million in the 1997 Second Quarter as
compared to $15 million in the 1996 Second Quarter. The average outstanding
total debt balance in the 1997 Second Quarter was $769 million as compared to
$643 million in the 1996 Second Quarter, and the average annual interest rate in
the 1997 Second Quarter was 8.6% as compared to 9.5% in the 1996 Second Quarter.
The average outstanding total debt balance was $711 million and the average
annual interest rate was 8.8% in the 1997 Period as compared to an average
outstanding total debt of $656 million and an average annual interest rate of
9.5% in the 1996 Period.
The provision for income taxes was $22 million in the 1997 Second Quarter as
compared to $19 million in the 1996 Second Quarter. The provision for income
taxes was $34 million in the 1997 Period as compared to $38 million in the 1996
Period. In the 1997 Period, the provision for income taxes was lower than the
amount computed by applying the United States Federal income tax rate primarily
due to tax credits in the United States from research and development expenses
and tax benefits recognized in Italy and Spain associated with capital
expenditures and fixed asset revaluations, respectively.
LIQUIDITY AND CAPITAL RESOURCES
The Company's sources of funds have consisted principally of invested capital,
operating cash flow and debt financing from banks and institutional investors.
The Company's uses of those funds (other than for operations) have consisted
principally of debt reduction, capital expenditures, distributions to or
repurchases of equity from stockholders (in connection with the Recapitalization
and the Blackstone Share Repurchase), acquisition of controlling interests in
new companies or businesses and acquisition of minority stockholders' shares of
consolidated subsidiaries. Acquisitions and repurchases under UCAR's stock
repurchase program have been and are expected to be financed from existing cash
balances, cash flow from operations, short-term borrowings and borrowings under
the Company's revolving credit facility.
Debt Financing and Amendments to Credit Facilities
At June 30, 1997, the Company had total debt of $766 million and stockholders'
equity of $31 million as compared to total debt of $635 million and a
stockholders' deficit of $2 million at December 31, 1996. At June 30, 1997,
cash, cash equivalents and short-term investments were $73 million as compared
to $95 million at December 31, 1996. The additional borrowings were made and
cash and cash equivalents were used primarily to finance the Blackstone Share
Repurchase and the acquisition of the Recently Acquired Businesses.
14
<PAGE>
PART I (Cont.)
UCAR INTERNATIONAL INC.
On March 19, 1997, the Senior Bank Facilities were amended to reduce the
interest rates on amounts outstanding thereunder, to increase the amount
available under the revolving credit facility to $250 million from $100 million
and to change the covenants to allow more flexibility in uses of free cash flow
for acquisitions, capital expenditures and stock repurchases.
Inventory Levels and Working Capital
During the 1997 Period, working capital increased by $44 million. Excluding the
impact of the Recently Acquired Businesses, working capital remained at $234
million, the same level as December 31, 1996. However, there were significant
fluctuations between the working capital accounts that are explained in the
following comments. Notes and accounts receivable increased $25 million mainly
due to increased sales of graphite electrodes. Accounts payable, accrued income
taxes and other accrued liabilities decreased by $54 million primarily due to
the payment of 1996 income taxes and incentive programs. Short-term debt and
payments due within one year on long-term debt increased by $20 million and $25
million, respectively. These increases were the result of increased short-term
borrowings by certain foreign subsidiaries to meet local cash needs and a
current installment payment due under the Senior Bank Facilities. Inventory
levels declined by $11 million partially as a result of foreign currency
translation adjustments. Inventory levels at any specified date are affected by
increases in inventories of raw materials to meet anticipated increases in sales
of finished products, customer buy-ins and other factors affecting net sales
from quarter to quarter. Cash, cash equivalents and short-term investments were
$22 million lower at June 30, 1997 than at December 31, 1996, as described
above.
Capital Expenditures
Capital expenditures aggregated $28 million in the 1997 Period as compared to
$23 million in the 1996 Period. The Company expects capital expenditures in 1997
to total between approximately $75 million and $80 million (including
approximately $15 million for capital improvements relating to facilities held
by Recently Acquired Businesses). Most of the Company's capital expenditures
have been, and are expected to be, made to maintain existing facilities and
equipment, achieve cost savings and improve operating efficiencies.
Restrictions on Dividends and Distributions
Under the Senior Bank Facilities, as amended on March 19, 1997, Global and UCAR
are generally permitted to pay dividends to their respective stockholders and
repurchase common stock only in an aggregate cumulative amount subsequent to
March 19, 1997 equal to a percentage, ranging from 50% to 65% based on certain
financial tests, of cumulative adjusted consolidated net income subsequent to
December 31, 1996 (provided that (i) in any event, dividends and repurchases
aggregating up to $15 million are permitted in any twelve-month period and (ii)
dividends and repurchases that were permitted during the period from October 19,
1995 through December 31, 1996 but not paid or made (not exceeding $45,000,000)
may be paid or made during 1997 in addition to dividends and repurchases
otherwise permitted in 1997). In addition, if certain financial tests are not
met, total dividends and repurchases in any year may not exceed $65,000,000. In
addition, Global is permitted to pay dividends
15
<PAGE>
PART I (Cont.)
UCAR INTERNATIONAL INC.
to UCAR (i) in respect of UCAR's administrative fees and expenses and (ii) for
the specific purpose of the purchase or redemption by UCAR of capital stock held
by present or former officers of the Company up to $5 million per year or $25
million in the aggregate. In general, amounts which are permitted to be paid as
dividends in a year but are not so paid may be paid in subsequent years. The
indenture relating to the Subordinated Notes also limits the payment of
dividends by Global to UCAR.
CHANGES IN ACCOUNTING PRINCIPLES
Effective January 1, 1996, the Company changed its method of determining LIFO
inventories. The new methodology provides specifically identified parameters for
defining new items within the LIFO pool which the Company believes improves the
accuracy of costing those items. The Company recorded income of $7 million
(after related income taxes of $4 million) as the cumulative effect on prior
years of this change in accounting for inventories. The Company believes this
change will not materially impact the Company's on-going results of operations.
Prior to the acquisition of the outstanding shares of EMSA on April 22, 1997,
the Company's investment in EMSA was carried on the equity basis and its
proportional share of the net income was reported in income under the caption
"UCAR share of net income from company carried at equity". The Consolidated
Financial Statements have not been restated to reflect the increased ownership
of EMSA at any date or for any period prior to the date of acquisition.
In February 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards ("SFAS") 128, "Earnings per Share", which is
effective for financial statements for both interim and annual periods ending
after December 15, 1997. SFAS 128 requires presentation of basic and diluted
per-share amounts for income from continuing operations and for net income. The
Company does not expect the adoption of SFAS 128 to materially impact earnings
per share.
16
<PAGE>
PART II. OTHER INFORMATION
UCAR INTERNATIONAL INC.
ITEM 1. LEGAL PROCEEDINGS
- ---------------------------
On June 5, 1997, the Company was served with a subpoena issued by a grand jury
empaneled by the United States District Court for the Eastern District of
Pennsylvania and a related search warrant. Counsel for the Company has been
informed by attorneys for the Antitrust Division of the United States Department
of Justice ("DOJ") that the grand jury is investigating whether there has been
any violation of Federal antitrust laws by producers of graphite electrodes.
Concurrently, representatives of the European Union Directorate General IV, the
antitrust enforcement authorities of the European Union (the "EU authorities"),
visited the offices of the Company's French subsidiary for purposes of gathering
information to determine if there has been any violation by producers of
graphite electrodes of Article 85-1 of the Treaty of Rome, the antitrust laws of
the European Union. The Company, through its counsel, is cooperating with DOJ
and the EU authorities. At this time, as far as the Company is aware, no
governmental authority has made a finding or allegation that any person or
company violated any antitrust law. No provision for any liability related to
such matters has been made in the Consolidated Financial Statements.
On June 17, 1997, the Company was served with a complaint commencing a putative
class action lawsuit in the United States District Court for the Western
District of Pennsylvania. Subsequently through July 31, 1997, the Company has
been served with three additional complaints commencing similar lawsuits in the
United States District Court for the Eastern District of Pennsylvania. UCAR, SGL
Carbon Corporation and The Carbide/Graphite Group, Inc. are named as defendants
in each complaint. SGL Carbon AG is named as a defendant in each of the three
subsequently served complaints. The plaintiff named in the first served
complaint is Erie Forge and Steel, Inc., and the plaintiffs named in the other
complaints respectively are: Kentucky Electric Steel Corporation, Koppel Steel
Corporation and Newport Steel Corporation; Al Tech Specialty Steel Corporation;
and Caparo Steel Company. In each complaint, the plaintiffs allege that the
defendants violated antitrust laws. None of the complaints contains any specific
allegations of the factual basis underlying such violations, and all of the
complaints appear to be based on the existence of the previously announced grand
jury investigation. In each complaint, the proposed class consists of all
persons who purchased graphite electrodes in the United States directly from the
defendants during the period from 1992 through the present. Each complaint
seeks, among other things, an award of treble damages resulting from the alleged
antitrust violations. The Company expects that the Judicial Panel on
Multidistrict Litigation will consolidate these lawsuits into a single
litigation. The Company has not yet responded to formal discovery and
substantive pre-trial motion practice has not yet begun and, therefore, no
evaluation of potential liability has been made. The Company intends to
vigorously defend against these lawsuits. No provision for any liability related
to such matters has been made in the Consolidated Financial Statements.
17
<PAGE>
PART II. OTHER INFORMATION
UCAR INTERNATIONAL INC.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
- -------------------------------------------------------------
On May 13, 1997, UCAR held its annual meeting of stockholders in Danbury,
Connecticut. The stockholders elected the following directors with corresponding
votes for and withheld:
Number of Number of
Name of Director Shares Voted for Shares Withheld
---------------- ---------------- ---------------
Robert P. Krass.................. 42,582,581 207,745
R. Eugene Cartledge.............. 42,581,969 208,857
John R. Hall..................... 42,582,589 207,737
Robert D. Kennedy................ 42,582,589 207,737
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
- ------------------------------------------
(a) EXHIBITS
The exhibits listed in the following table have been filed as part of
this Quarterly Report on Form 10-Q.
Exhibit
Number Description of Exhibit
------ ----------------------
2.34 Share Sale Agreement between Samancor Limited and UCAR Carbon
Company Inc. dated April 21, 1997
10.32 UCAR Carbon Savings Plan as amended and restated effective
January 1, 1996
11 Statement re: computation of per share earnings
27 Financial Data Schedule
(b) REPORTS ON FORM 8-K
No Report on Form 8-K was filed during the quarter for which this
Quarterly Report on Form 10-Q is filed.
18
<PAGE>
UCAR INTERNATIONAL INC.
SIGNATURE
Pursuant to the requirement 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.
UCAR INTERNATIONAL INC.
Date: August 4, 1997 By: /s/ William P. Wiemels
----------------------
William P. Wiemels
Vice President, Chief
Financial Officer and Treasurer
(Principal Financial Officer)
19
<PAGE>
UCAR INTERNATIONAL INC.
INDEX TO EXHIBITS
EXHIBIT NO. DESCRIPTION
2.34 Share Sale Agreement between Samancor Limited and UCAR Carbon
Company Inc. dated April 21, 1997
10.32 UCAR Carbon Savings Plan as amended and restated effective
January 1, 1996
11 Statement re: computation of per share earnings
27 Financial Data Schedule
E-1
EXHIBIT 2.34
SHARE SALE AGREEMENT
between
SAMANCOR LIMITED
("Seller")
and
UCAR CARBON COMPANY INC.
("Purchaser")
with regard to shares in EMSA (Proprietary) Limited ("EMSA") and
Carbographite Limited ("Carbographite")
<PAGE>
CONTENTS
1. DEFINITIONS............................................................. 2
2. SALE.................................................................... 4
3. CONDITIONS PRECEDENT.................................................... 5
4. CLOSING PREPARATIONS.................................................... 7
5. CLOSING................................................................. 8
6. WAIVER OF RIGHTS........................................................ 10
7. REPRESENTATIONS AND WARRANTIES OF SELLER................................ 10
8. REPRESENTATIONS AND WARRANTIES OF PURCHASER............................. 11
9. INDEMNITIES............................................................. 12
10. RESTRAINT UNDERTAKINGS.................................................. 13
11. SHAREHOLDERS AGREEMENT.................................................. 16
12. DEEDS OF SERVITUDE...................................................... 16
13. EXPENSES................................................................ 17
14. SUPPORT................................................................. 18
15. INDULGENCES............................................................. 18
16. ENTIRE AGREEMENT........................................................ 18
17. ARBITRATION............................................................. 19
18. GOVERNING LAW........................................................... 19
19. INTERPRETATION.......................................................... 20
20. GENERAL................................................................. 20
21. ADDRESSES FOR LEGAL PROCESSES AND NOTICES............................... 21
i
<PAGE>
APPENDICES
APPENDIX 1 NOTICE OF GENERAL MEETING OF EMSA
APPENDIX 2 NOTICE OF GENERAL MEETING OF CARBOGRAPHITE
APPENDIX 3 RETIREMENT FUNDS AND HEALTH PLAN AGREEMENT
APPENDIX 4 POWER OF ATTORNEY (WITH ATTACHED NOTARIAL DEED OR SERVITUDE)
APPENDIX 5 POWER OF ATTORNEY (WITH ATTACHED NOTARIAL DEED OF SERVITUDE)
APPENDIX 6 INTER COMPANY AGREEMENTS AND ARRANGEMENTS
APPENDIX 7 DRAWING OF RAILWAY SIDING SERVITUDE AREA; POWERLINE SERVITUDE
AREA; WATER PIPELINE SERVITUDE AREA; GAS PIPELINE SERVITUDE
AREA AND SEWAGE PIPELINE SERVITUDE AREA
ii
<PAGE>
PREAMBLE
It is recorded, not as part of this Agreement, but purely by way of introduction
and explanation that -
A. the Seller and the Purchaser each own 50% (fifty per centum) of the
issued share capital of EMSA and Carbographite;
B. the parties have negotiated an agreement, in terms of which the Seller
will sell to the Purchaser all of the Seller's shares in EMSA and
Carbographite;
C. this Agreement replaces the Letter of Intent written by the Purchaser's
holding company UCAR International Inc. to the Seller on 12 February
1997.
THE PARTIES AGREE AS FOLLOWS:
1. DEFINITIONS
For the purposes of this Agreement and its Appendices, the following
terms shall, unless the context otherwise indicates or requires, bear the
meaning given in this Clause, and cognate terms shall bear corresponding
meanings -
1.1 "Affiliate" shall mean any company which is Samancor's
subsidiary company within the meaning of
subsidiary company in the South African
Companies Act No. 61 of 1973, as amended;
1.2 "Carbographite" shall mean Carbographite Limited, a company
incorporated and registered in the Republic
of
2
<PAGE>
South Africa under company registration no.
70/14329/06;
1.3 "Closing Date" shall mean 22 April 1997;
1.4 "Companies" shall mean EMSA and Carbographite;
1.5 "Conditions Precedent" shall mean the conditions precedent to this
Share Sale Agreement;
1.6 "Deeds of Servitude" shall mean notarial deeds of servitude
substantially in the form of the drafts which
are attached as part of Appendices 4 and 5;
1.7 "EMSA" shall mean EMSA (Proprietary) Limited, a
company incorporated and registered in the
Republic of South Africa under company
registration no. 65/08320/07;
1.8 "EMSA's Business" shall mean EMSA's past and present businesses
of designing, developing, manufacturing and
selling the kinds of carbon and graphite
products and engineered systems which EMSA
has sold in the past and is selling at
present, including modifications thereto, but
excluding the sale of Soderberg paste
products and calcined anthracite products;
1.9 "EMSA's Premises" shall mean EMSA's premises situated at
Meyerton, Gauteng, Republic of South Africa;
3
<PAGE>
1.10 "Purchased Shares" shall mean the shares in the issued share
capital of the Companies which are sold by
the Seller and purchased by the Purchaser in
terms of this Share Sale Agreement;
1.11 "Purchase Price" shall mean US $75,000,000.00 (seventy five
million US Dollars);
1.12 "Purchaser" shall mean UCAR Carbon Company Inc., a
company incorporated and registered in
Delaware in the United States of America,
being a subsidiary of UCAR International
Inc.;
1.13 "Retirement Funds and shall mean the Retirement Funds and Health
Health Plan Agreement Plan Agreement which is to be executed and
delivered in terms of this Share Sale
Agreement;
1.14 "Seller" shall mean Samancor Limited, a company
incorporated and registered in the Republic
of South Africa under company registration
no. 01/8883/06;
1.15 "Seller's Premises" shall mean the Seller's premises situated at
Meyerton, Gauteng, Republic of South Africa.
2. SALE
2.1 The Seller hereby sells to the Purchaser and the Purchaser hereby
purchases from the Seller all of the shares held by the Seller in the
Companies, being shares comprising 50% (fifty per centum) of the entire
issued share capital of
4
<PAGE>
EMSA and 50% (fifty per centum) of the entire issued share capital of
Carbographite.
2.2 All risk in and benefits of the purchased shares shall pass from the
Seller to the Purchaser at midnight on the day prior to the Closing
Date.
2.3 The Purchase Price shall be paid and this Share Sale Agreement shall be
implemented in the manner provided below.
2.4 The Purchase Price shall be allocated as follows:
2.4.1 R106 500.00 (one hundred and six thousand, five hundred Rand) to
the Purchased Shares in Carbographite; and
2.4.2 the balance to the Purchased Shares in EMSA.
2.5 The Purchaser shall furnish to the Seller within a reasonable time
after the Closing Date unaudited management accounts of EMSA for the
period ending 0H00 on the Closing Date.
3. CONDITIONS PRECEDENT
3.1 This Share Sale Agreement, with the exception of Clauses 13 to 21,
shall be of no force or effect unless the following conditions
precedent are fulfilled by the close of business on 22 April 1997 -
3.1.1 approval of the sale of the Purchased Shares in terms of this
Agreement by the Seller's board of directors;
5
<PAGE>
3.1.2 approval of this Share Sale Agreement, the Retirement Funds and
Health Plan Agreement, the Deeds of Servitude and Appendices 4 and
5 by the Purchaser's board of directors;
3.1.3 receipt by the Purchaser of written confirmation by the Purchaser's
South African bank, acting as a duly authorized agent of the South
African Reserve Bank, that the sale of the Purchased Shares to the
Purchaser, the payment of the Purchase Price and the transfer of
the Purchased Shares to the Purchaser and the Purchaser's nominees,
all in terms of this Share Sale Agreement, has been approved, or
that such approval is not required, in terms of the Exchange
Control Regulations of the Republic of South Africa;
3.1.4 execution of -
3.1.4.1 the Retirement Funds and Health Plan Agreement, in the form of
the draft attached to this Share Sale Agreement and marked
Appendix 3;
3.1.4.2 a Power of Attorney granted by the Seller (with attached draft
Notarial Deed of Servitude between the Seller and EMSA) in the
form of the draft attached to this Share Sale Agreement and
marked Appendix 4.
3.1.4.3 a Power of Attorney granted by the Seller (with attached draft
Notarial Deed of Servitude between the Seller and EMSA) in the
form of the draft attached to this Share Sale Agreement and
marked Appendix 5.
3.1.5 a Power of Attorney granted by the Seller (with attached draft
Notarial Deed of Servitude between the Seller and EMSA) in the
6
<PAGE>
form of the draft attached to this Share Sale Agreement and
marked Appendix 5.
3.1.6 the requisite agreement by the employees of EMSA to the basic terms
and conditions of a Medical Aid / Health Scheme which will operate
for the benefit of persons who are employees of EMSA;
3.1.7 the requisite agreement by the employees of EMSA to the basic terms
and conditions of such new Pension and/or Provident Funds as may be
required for employees of EMSA in consequence of this Agreement.
3.2 Both parties shall use all reasonable endeavors to the extent that it
is within their power to do so, to procure the timely fulfillment of
those Conditions Precedent which are set out in Clauses 3.1.3 and
3.1.4.1.
3.3 The Seller shall use its reasonable endeavors to procure the timely
fulfillment of those Conditions Precedent which are set out in Clauses
3.1.1, 3.1.4.2 and 3.1.4.3.
3.4 The Purchaser shall use its reasonable endeavors to procure the timely
fulfillment of those Conditions Precedent which are set out in Clauses
3.1.2, 3.1.5 and 3.1.6.
4. CLOSING PREPARATIONS
4.1 The parties shall duly execute forms CM25 in terms of which they
consent to waive the statutory period of notice of the general meetings
of shareholders of the Companies which are to be held on the Closing
Date as provided in Clause 5.1.
7
<PAGE>
4.2 The Seller shall before the Closing Date procure the written
resignations which are to be delivered on the Closing Date in terms of
Clauses 5.2 below.
4.3 The parties shall procure that each of the Companies convenes a meeting
of its directors and that resolutions of directors are passed on or
before the Closing Date -
4.3.1 approving the transfer of the Purchased Shares in that Company to
the Purchaser and/or the Purchaser's nominees;
4.3.2 appointing new directors nominated by the Purchaser; and
4.3.3 accepting the resignations of directors which are to be delivered
on the Closing Date in terms of Clause 5.2.
4.4 The Purchaser shall ensure that EMSA shall before the Closing Date
conduct such consultations with its employees and carry out all such
labor relations procedures as may be required in connection with this
Share Sale Agreement, the Retirement Funds and Health Plan Agreement
which is to be executed in the form of Appendix 3, the establishment of
a new Medical Aid / Health Scheme in terms of Clause 3.1.5 and the
establishment of new Pension and/or Provident Funds in terms of Clause
3.1.6.
5. CLOSING
This Share Sale Agreement shall be implemented on the Closing Date in the
following manner -
5.1 general meetings of the shareholders of the Companies shall be held, as
contemplated in the notices attached to this Share Sale Agreement
marked
8
<PAGE>
Appendices 1 and 2 and the parties shall vote (and procure that their
nominees vote) in favor of the resolutions set out in such notices;
5.2 the Seller shall deliver to the Purchaser the written resignations of W
Schroeder, P A Brink, W J Graham, A van Jaarsveld and M J G Grobler as
directors of the Companies as from the Closing Date;
5.3 the Seller shall deliver to the Purchaser the share certificates under
which the Purchased Shares are held by the Seller and the Seller's
nominees, together with securities transfer forms duly executed by the
Seller and the Seller's nominees with the name of the transferee left
blank;
5.4 the parties shall procure that prior to the completion of the closing
in terms of this Clause -
5.4.1 the Companies shall duly enter the transfer of the Purchased Shares
to the Purchaser and the Purchaser's nominees in their respective
share registers and issue new share certificates in the name of the
Purchaser and the Purchaser's nominees in respect of the Purchased
Shares;
5.4.2 such new share certificates are endorsed "non-resident" by the
Standard Bank of South Africa Limited, acting as the authorised
agent of the South African Reserve Bank; and
5.4.3 such duly endorsed share certificates are delivered to the
Purchaser or the Purchaser's agent.
5.5 the Purchaser shall pay the Purchase Price to the Seller by interbank
transfer from the Purchaser's bank, Chase Manhattan Bank, New York, to
Standard and Chartered Bank, New York, for the account of ABSA Bank,
account number 121-41-660-601.
9
<PAGE>
5.6 the Seller shall deliver to the Purchaser -
5.6.1 a duly executed original of the Retirement Funds and Health Plan
Agreement and duly executed originals of Appendices 4 and 5; and
5.6.2 3 (three) certified copies of the resolutions of directors of
Samancor authorising signature of this Agreement, the Retirement
Funds and Health Plan Agreement and Appendices 4 and 5, on behalf
of Samancor.
6. WAIVER OF RIGHTS
With effect from the completion of the closing of this transaction on the
Closing Date, the Seller hereby waives all of its rights under the
Articles of Association of the Companies until registration of the
special resolutions which are to be passed by the Companies on the
Closing Date.
7. REPRESENTATIONS AND WARRANTIES OF SELLER
The Seller hereby represents and warrants to the Purchaser that the
following statements are now true and correct and will be true and
correct as of the Closing Date.
7.1 the Seller is a corporation duly incorporated, validly existing and in
good standing under the laws of Republic of South Africa and has full
corporate power and authority to execute, deliver and perform this
Share Sale Agreement, the Retirement Funds and Health Plan Agreement,
the Deeds of Servitude and Appendices 4 and 5;
7.2 all requisite corporate action to approve, execute and perform this
Share Sale Agreement, the Retirement Funds and Health Plan Agreement,
the Deeds of
10
<PAGE>
Servitude and Appendices 4 and 5, has been taken by the directors of
the Seller, no such action is required of the shareholders of the
Seller and this Agreement has been duly and validly executed and
delivered by the Seller and constitutes the valid and binding
obligations of the Seller in accordance with its terms;
7.3 neither the execution nor the performance of this Share Sale Agreement,
the Retirement Funds and Health Plan Agreement, the Deeds of Servitude
and Appendices 4 and 5 does or will in any way -
7.3.1 conflict with, violate or result in any breach of any judgment,
decree, order, statute, rule or regulation applicable to the
Seller;
7.3.2 conflict with, violate or result in any breach of any material
agreement or instrument to which the Seller is a party or by which
it is bound, or constitute a default thereunder or give rise to a
right of acceleration of any obligation of the Seller thereunder;
or
7.3.3 conflict with or violate any provision of the Memorandum or
Articles of Association or any resolution of shareholders of the
Seller.
7.4 All agreements and business arrangements between the Seller and
Affiliates on the one hand and the Companies or either of them on the
other hand have been concluded at arm's length for market related
consideration and on normal terms and conditions and the only such
agreements and arrangements are those listed in Appendix 6 to this
Share Sale Agreement.
8. REPRESENTATIONS AND WARRANTIES OF PURCHASER
11
<PAGE>
The Purchaser hereby represents and warrants to the Seller that the
following statements are now true and correct and will be true and
correct as of the Closing Date:
8.1 the Purchaser is a corporation duly incorporated, validly existing and
in good standing under the laws of the State of Delaware in the United
States of America and has full corporate power and authority to
execute, deliver and perform this Share Sale Agreement;
8.2 all requisite corporate action to approve, execute and perform this
Share Sale Agreement has been taken by the board of directors of the
Purchaser and this Agreement has been duly and validly executed and
delivered by the Purchaser and constitutes the valid and binding
obligations of the Purchaser in accordance with its terms;
8.3 neither the execution nor performance of this Share Sale Agreement does
or will in any way -
8.3.1 conflict with, violate or result in any breach of any judgment,
decree, order, statute, rule or regulation applicable to the
Seller;
8.3.2 conflict with, violate or result in any breach of any material
agreement or instrument to which the Purchaser is a party or by
which it is bound, or constitute a default thereunder or give rise
to a right of acceleration of any obligation of the Purchaser
thereunder; or
8.3.3 conflict with or violate any provision of the Certificate of
Incorporation, By-laws or any resolution of the board of directors
of the Purchaser.
9. INDEMNITIES
12
<PAGE>
9.1 The Seller hereby indemnifies the Purchaser against and holds the
Purchaser harmless against any and all loss, damage, liability, or
expenses (including reasonable attorney's fees and expenses) resulting
from or arising out of any inaccuracy in or breach of any
representation or warranty made or given by the Seller to the Purchaser
above.
9.2 The Purchaser hereby indemnifies the Seller against and holds the
Seller harmless against any and all loss, damage, liability, or
expenses (including reasonable attorney's fees and expenses) resulting
from or arising out of any inaccuracy in or breach of any
representation or warranty made or given by the Purchaser to the Seller
above.
10. RESTRAINT UNDERTAKINGS
10.1 It is recorded that the Seller has sold and the Purchaser has purchased
the Purchased Shares in the knowledge and on the understanding that any
competition to EMSA's Business by the Seller or Affiliates contrary to
the provisions of these restraint undertakings would diminish or be
damaging to or destroy the goodwill attaching to EMSA and the profit
generated by EMSA. The Seller acknowledges that this would cause loss
or damage to the Purchaser by diminishing the value of the Purchased
Shares sold to the Purchaser, and the Seller therefore acknowledges the
necessity of protecting the goodwill of EMSA and thereby the value of
the Purchased Shares from competition by the Seller and Affiliates
contrary to the provisions of these restraint undertakings after the
Closing Date.
10.2 For one or more of the reasons set forth in Clause 10.1, the Seller
hereby promises and undertakes in favour of the Purchaser that neither
the Seller nor any Affiliates shall at any time after the Closing Date
(subject to the provisions
13
<PAGE>
of Clause 10.5), either in the Republic of South Africa or in any other
country in the world -
10.2.1 directly or indirectly be concerned, engaged or interested in any
business similar to or competing with EMSA's Business;
10.2.2 directly or indirectly accept any material benefit, whether in
money or otherwise from any business, the receipt of which may
place the Seller in opposition to EMSA's Business, provided that
this restraint shall not prohibit the Seller from purchasing
products from and receiving benefits in money or otherwise, in
respect of the purchase of products from alternative suppliers who
carry on business in competition with EMSA's Business;
10.2.3 reveal to any person, firm or corporation, any of the trade secrets
or confidential operations, procedures or dealings or any
information concerning the organisation, functions, transactions or
affairs of EMSA or any details of the customers of EMSA or their
requirements of the products provided to them by EMSA, and shall
not use or attempt to use any such information in any manner which
may injure or cause loss either directly or indirectly to EMSA or
may be liable to do so;
10.3 The Seller further undertakes that neither the Seller nor any Affiliate
of the Seller will during the period of 3 (three) years from the
Closing Date employ any person who is an employee of either of the
Companies at the date of signature of this Agreement.
10.4 The Seller undertakes not to do any of the things set forth in Clause
10.2 or 10.3 either directly or indirectly and whether as partner or
owner or principal or agent or representative or consultant or lessor
or shareholder or financier or in any other manner whatsoever.
14
<PAGE>
10.5 The undertakings by the Seller in terms of Clause 10.2 shall continue
in operation as from the Closing Date for the following periods -
10.5.1 15 (fifteen) years, in the case of Clause 10.2.1 and Clause 10.2.2;
10.5.2 in perpetuity, in the case of Clause 10.2.3.
10.6 No restraint in this Clause shall prevent the Seller from -
10.6.1 holding shares representing up to 5% (five per centum) of any
company or other entity which are listed on a recognized stock
exchange, even though such company itself competes with EMSA's
Business;
10.6.2 holding shares of any company or entity if that company or entity
("the holding company") does no itself compete with EMSA's Business
but controls another company or entity which competes with EMSA's
Business and where such other company or entity constitutes less
than 10% (ten per centum) of the business of the holding company;
or
10.6.3 (notwithstanding the provisions of this Clause 10.6) holding
shareholding interests greater than those provided for in Clauses
10.6.1 and 10.6.2, provided that the prior written approval of the
Purchaser is obtained, which approval shall not be unreasonably
withheld.
10.7 The above restraint undertakings are severable as to -
10.7.1 each calendar year of operation;
10.7.2 each country, state, province and municipal area in the Republic of
South Africa and the rest of the world;
15
<PAGE>
10.7.3 each part of EMSA's Business;
10.7.4 each product which is sold in the course of conduct of EMSA's
Business.
10.8 If any one or more of the restraints set forth above are invalid or
unenforceable for any reason, the validity of any of the other
restraints shall not be affected thereby.
11. SHAREHOLDERS AGREEMENT
11.1 The parties acknowledge that the Deeds of Servitude will incorporate
the servitudes listed in Clause 16(b)(i),(ii),(iii),(iv),(v) and (vi)
of the Shareholders Agreement dated 4 October 1971 between Union
Carbide Corporation and AMCOR Limited.
11.2 Save for the servitudes referred to in Clause 11.1, this Share Sale
Agreement supersedes and cancels the Shareholders Agreement referred to
in Clause 11.1.
12. DEEDS OF SERVITUDE
12.1 The parties shall procure the registration of the Deeds of Servitude as
soon as possible after the Closing Date. If any difficulty should be
experienced by the parties in executing or registering the Deeds of
Servitude in the forms in which they are attached to this Agreement, or
if it for any reason becomes impossible to register the Deeds of
Servitude in their current form, the Seller shall take all reasonable
steps and shall sign all necessary documents to place EMSA in the same
or a similar position as if the Deeds of Servitude were registered.
16
<PAGE>
12.2 As no servitude diagrams approved by the Surveyor General are at
present available, the parties record their mutual intention that the
servitudes which are granted by the Seller in terms of the Deeds of
Servitude shall -
12.2.1 in the case of the railway siding servitude, operate as nearly as
reasonably practical over those portions of the Seller's Premises
which are shown on the drawing attached to this Agreement marked
Appendix 7;
12.2.2 in the case of the powerline servitude, operate as nearly as
reasonably practical over those portions of the Seller's Premises
which are shown on the drawing attached to this Agreement marked
Appendix 7;
12.2.3 in the case of the water pipeline servitude, operate as nearly as
reasonably practical over those portions of the Seller's Premises
which are shown on the drawing attached to this Agreement marked
Appendix 7;
12.2.4 in the case of the gas pipeline servitude, operate as nearly as
reasonably practical over those portions of the Seller's Premises
which are shown on the drawing attached to this Agreement marked
Appendix 7;
12.2.5 in the case of the sewage pipeline servitude, operate as nearly as
reasonably practical over those portions of the Seller's Premises
which are shown on the drawing attached to this Agreement marked
Appendix 7.
12.3 The Seller hereby indemnifies EMSA, Carbographite and the Purchaser
against and holds EMSA, Carbographite and the Purchaser harmless
against any claim for any rehabilitation or otherwise in terms of any
law, regulation or by-law arising out of any past or present operations
by the Seller on EMSA's property outside of the currently fenced
boundaries.
17
<PAGE>
13. EXPENSES
13.1 The stamp duty on the transfer on the Purchased Shares from the Seller
to the Purchaser shall be borne by the Purchaser.
13.2 The attorney's charges, transfer duty, value added tax and stamp duty
incurred in respect of the Deeds of Servitude shall be borne by the
Seller.
13.3 Save as provided in Clause 13.1, Clause 13.2 and the Retirement Funds
and Health Plan Agreement, each of the parties shall pay all of its
expenses incident to the negotiation, preparation and consummation of
this Share Sale Agreement and all transactions contemplated by this
Share Sale Agreement.
14. SUPPORT
Each party undertakes to do all such things and sign all such documents
as may be reasonably necessary or incidental to give effect to the terms,
conditions and import of this Agreement.
15. INDULGENCES
No indulgence, latitude or extension of time that may be allowed by
either party to the other shall in any circumstances be deemed to be
waiver of rights under this Agreement and the party granting the
indulgence, latitude or extension shall remain entitled to require strict
and punctual compliance by the other party with each and every provision
of this Agreement.
18
<PAGE>
16. ENTIRE AGREEMENT
16.1 This Agreement constitutes the entire agreement between the parties
with respect to the subject matter hereof and neither party shall be
bound by any undertakings, representations or warranties not expressly
recorded in this Agreement.
16.2 No amendments, modifications or additions hereto or waiver of rights
hereunder shall be of any force or effect whatsoever unless reduced to
writing and signed by the parties hereto or by their duly authorised
signatories.
17. ARBITRATION
17.1 Any dispute between the parties in regard to any matter arising out of
this Agreement or its interpretation or their respective rights and
obligations under this Agreement or its cancellation or any matter
arising out of its cancellation, shall be submitted to and decided by
arbitration.
17.2 The arbitrator shall be a practising Queen's or Senior Counsel of not
less than 5 (five) years' standing who shall be agreed upon between the
parties, or failing agreement, appointed by the then Chairman of the
Johannesburg Bar Council.
17.3 The arbitration shall be held in Johannesburg in accordance with such
procedures as may be determined by the arbitrator, and may be held, if
he considers it appropriate, in an informal and summary manner on the
basis that it shall not be necessary to observe or carry out the usual
formalities or procedures, including the delivery of pleadings, the
making of discovery or the observance of the strict rules of evidence.
19
<PAGE>
17.4 Subject to the other provisions of this Clause, each arbitration shall
be held in accordance with the provisions of the Arbitration Act, 1965,
as amended.
18. GOVERNING LAW
18.1 This Agreement shall be governed by and interpreted in accordance with
the law of the Republic of South Africa in all respects.
18.2 The parties hereto consent and submit to the jurisdiction of the
Witwatersrand Local Division of the High Court of South Africa for the
purposes of any legal proceedings arising from or in connection with
this Agreement.
19. INTERPRETATION
19.1 In the interpretation of this Agreement, unless the context otherwise
requires or indicates, words signifying -
19.1.1 the singular shall include the plural and vice versa;
19.1.2 any one gender shall include the other genders; and
19.1.3 natural persons shall include juristic persons, trusts,
partnerships, associations, deceased estates and insolvent estates.
19.2 Clause headings do not form part of this Agreement and shall not be
taken into account for the purposes of interpretation.
20
<PAGE>
20. GENERAL
20.1 Neither party may cede or assign any of its rights or delegate any of
its obligations in terms of this Agreement without the prior written
approval of the other party.
20.2 Each party warrants and undertakes to the other that it is not acting
as undisclosed agent or nominee for any person in entering into this
Agreement and is entering into this Agreement to secure the benefits
of this Agreement for itself only and for no other person.
20.3 If any Clause or term of this Agreement should be invalid,
unenforceable or illegal, then the remaining terms and provisions of
this Agreement shall be deemed to be severable therefrom and shall
continue in full force and effect unless such invalidity,
unenforceability or illegality goes to the root of this Agreement.
21. ADDRESSES FOR LEGAL PROCESSES AND NOTICES
21.1 Each party chooses for the purposes of this Agreement the following
addresses:
21.1.1 Samancor:
POSTAL ADDRESS STREET ADDRESS
P.O. Box 8186 88 Marshall Street
Johannesburg 2000 Johannesburg 2001
Republic of South Africa Republic of South Africa
FAX NO.: (+27 11) 378 7063
ATTENTION: Mr. W.J. Murray
21
<PAGE>
21.1.2 UCAR:
POSTAL ADDRESS STREET ADDRESS
UCAR International Inc. UCAR International Inc.
Section J4 Section J4
Danbury, Connecticut Danbury, Connecticut
USA 06817 USA 06817
FAX NO.: (+1 203) 207-7785
ATTENTION: Peter B. Mancino, Vice President
21.2 Any notice to be served on any of the parties may be posted to the
party by registered or certified mail at the Postal Address or sent by
telefax to the party's telefax number or delivered to the party at the
Street Address specified in Clause 21.1. Each party chooses the Street
Address set out in Clause 21.1 as the party's domicilium citandi et
executandi for all purposes under this Agreement.
21.3 Any notice or other communication to be given to any of the parties in
terms of this Agreement shall be valid and effective only if it is
given in writing.
21.4 A notice to any party which is sent by registered post or certified
mail in a correctly addressed envelope to the address specified in
Clause 21.1 shall be deemed to have been received (unless the contrary
is proved) on the fourteenth day after the date it was posted, or which
is delivered to the party by hand at that address shall be deemed to
have been received on the day of delivery, provided it was delivered to
a responsible person during ordinary business hours.
21.5 Each notice by telefax to a party at the telefax number specified in
Clause 21.1 shall be deemed to have received (unless the contrary is
proved) -
22
<PAGE>
21.5.1 if it is transmitted at least 4 (four) hours before the close of
business of the receiving party, within 4 (four) hours of
transmission;
21.5.2 if it is transmitted less than 4 (four) hours before the close of
business of the receiving party, within 4 (four) hours of the
commencement of the first business day of the receiving party after
the day on which it is transmitted.
21.6 Notwithstanding anything to the contrary in this Clause 21, a written
notice or other communication actually received by a party (and for
which written receipt has been obtained) shall be adequate written
notice or communication to the party notwithstanding that the notice
was not sent to or delivered at the party's chosen address.
21.7 Each party shall be entitled to change the party's address or telefax
number for the purposes of this Clause 21 by giving written notice to
that effect to the other parties, provided that such notice shall not
take effect until the expiry of 14 (fourteen) days after the notice is
given.
SIGNED at Sandton on 21 April 1997.
For: SAMANCOR LIMITED
/s/ W. J. Murray
-------------------------------------
Signatory: W. J. Murray
Capacity: Director Samancor
Authority:
/s/ P. A. Brink
-------------------------------------
Signatory: P. A. Brink
Capacity: Director Samancor
Authority:
23
<PAGE>
SIGNED at Sandton on 21 April 1997
For: UCAR CARBON COMPANY INC.
/s/ H. L. Pretorius
-------------------------------------
Signatory: H. L. Pretorius
Capacity: General Manager EMSA
Authority: Power of Attorney
24
EXHIBIT 10.32
UCAR CARBON SAVINGS PLAN
(As Amended and Restated Effective January 1, 1996)
<PAGE>
TABLE OF CONTENTS
-----------------
ARTICLE PAGE
------- ----
INTRODUCTION................................................................ 1
I. DEFINITIONS........................................................ 2
1.1 "Additional Company Contributions"........................ 2
1.2 "Additional Contribution"................................. 2
1.3 "Affiliate"............................................... 2
1.4 "Alternate Payee"......................................... 2
1.5 "Basic Deduction"......................................... 3
1.6 "Before Tax Contribution"................................. 3
1.7 "Beneficiary"............................................. 3
1.8 "Change in Control"....................................... 3
1.9 "Code".................................................... 4
1.10 "Committee" or "Administrative Committee"................. 4
1.11 "Company" or "Corporation"................................ 4
1.12 "Company Contribution".................................... 5
1.13 "Compensation"............................................ 5
1.14 "Disability".............................................. 5
1.15 "Domestic Relations Order"................................ 6
1.16 "Earnings"................................................ 6
1.17 "Eligible Employee"....................................... 7
1.18 "Employee"................................................ 7
1.19 "Employer"................................................ 9
1.20 "ERISA"................................................... 9
1.21 "Normal Retirement Date".................................. 9
1.22 "Participant"............................................. 9
1.23 "Personal Investment Account"............................. 9
1.24 "Plan".................................................... 9
1.25 "Plan Year"............................................... 9
1.26 "Qualified Domestic Relations Order"...................... 9
1.27 "Retirement Program"...................................... 9
1.28 "Subsidiary".............................................. 10
1.29 "Supplemental Deduction".................................. 10
1.30 "Supplemental Deposit".................................... 10
1.31 "Tax Deferred Account".................................... 10
1.32 "Termination of Employment"............................... 10
1.33 "Trust Agreement"......................................... 10
1.34 "Trust Fund".............................................. 10
<PAGE>
1.35 "Trustee"................................................. 11
1.36 "UCAR Stock" or "Company Stock"........................... 11
1.37 "UCC Savings Plan"........................................ 11
1.38 "Valuation Date".......................................... 11
II. PARTICIPATION, CONTRIBUTIONS AND VESTING........................... 12
2.1 Participation............................................. 12
2.2 Exclusions................................................ 13
2.3 Before Tax Contributions.................................. 14
2.4 Adjustment of Before Tax Contributions.................... 16
2.5 Company Contributions..................................... 18
2.6 Additional Contributions.................................. 18
2.7 Basic and Supplemental Deductions......................... 19
2.8 Supplemental Deposits..................................... 20
2.9 Transfers from Tax Deferred Accounts...................... 20
2.10 Additional Company Contributions.......................... 22
2.11 Revocation of Compensation Reduction...................... 22
2.12 Vesting................................................... 23
2.13 Limitations on Contributions.............................. 23
2.14 Allocations of Contributions.............................. 24
2.15 401(m) Limitations........................................ 24
2.16 ADP Adjustments........................................... 25
2.17 Qualified Nonelective or Matching Contributions............27
2.18 Qualified Nonelective and Elective Contributions...........28
III. INVESTMENT AND VALUATION OF ACCOUNTS............................... 29
3.1 Tax Deferred Accounts..................................... 29
3.2 Personal Investment Accounts.............................. 29
3.3 Investment Options........................................ 29
3.4 Supplemental Deposits and Rollover Deposits............... 33
3.5 Change of Investments..................................... 33
3.6 Instructions By a Participant For His Accounts............ 34
3.7 Purchases and Sales....................................... 35
3.8 Cost and Expenses......................................... 36
3.9 Custody of Securities..................................... 36
3.10 Value of Fixed Income Fund................................ 36
3.11 Proceeds of Fixed Income Fund............................. 36
3.12 Value of Equity Investment Fund........................... 37
3.13 Proceeds of Equity Investment Fund........................ 37
3.14 Value of UCAR Stock Fund and UCAR Discounted Stock Fund... 37
3.15 Proceeds of UCAR Stock Fund and UCAR Discounted
Stock Fund................................................ 38
ii
<PAGE>
3.16 Valuation of Tax Deferred Accounts and Personal
Investment Accounts....................................... 38
3.17 Statements Furnished Participants......................... 39
3.18 Proceeds of Stock Sold.................................... 40
3.19 Dividends................................................. 40
3.20 Rights, Warrants and Scrip................................ 40
3.21 Voting Rights............................................. 41
3.22 Tender Offers............................................. 41
3.23 UCAR Stock and UCAR Discounted Stock...................... 42
IV. LIMITATION ON MAXIMUM CONTRIBUTIONS
AND BENEFITS UNDER ALL PLANS....................................... 43
4.1 General................................................... 43
4.2 Affiliate................................................. 43
4.3 Limitation Year........................................... 43
4.4 Annual Additions.......................................... 43
4.5 Defined Benefit and Defined Contribution Plans............ 44
4.6 Aggregation of Defined Contribution Plans................. 44
4.7 Defined Contribution Plan Limitation...................... 44
4.8 Defined Contribution Plan Fraction Determination.......... 45
4.9 Defined Benefit Plan Fraction Determination............... 45
4.10 Combined Limitation....................................... 46
4.11 Alternative Method........................................ 47
4.12 Treatment of Excesses..................................... 47
4.13 Notice of Reduction....................................... 49
V. DISTRIBUTIONS, WITHDRAWALS AND LOANS............................... 50
5.1 Distribution of Tax Deferred Account and Personal
Investment Account on Termination of Employment........... 50
5.2 Form of Payment of Accounts............................... 56
5.3 Rehire Prior to Distribution of Accounts.................. 57
5.4 Withdrawal by Participant From Tax Deferred
Account During Employment Prior to the Attainment
of Age 59 1/2............................................. 57
5.5 Withdrawal by Participant From Tax Deferred
Account During Employment After the Attainment of
Age 59 1/2................................................ 59
5.6 Withdrawal by Participant From Personal Investment
Account During Employment................................. 59
5.7 Commencement of Benefits.................................. 61
5.8 Loans..................................................... 62
5.9 Direct Rollovers.......................................... 66
VI. TOP HEAVY RULES.................................................... 68
iii
<PAGE>
6.1 Top-Heavy Plan............................................ 68
6.2 Minimum Top-Heavy Benefits................................ 69
6.3 Reduction in Combined Limitation.......................... 69
6.4 Key Employee.............................................. 70
6.5 Automatic Removal......................................... 71
VII. TRUST.............................................................. 72
7.1 Trustee................................................... 72
7.2 Trust Expenses............................................ 72
VIII. ADMINISTRATION..................................................... 73
8.1 Administrative Committee.................................. 73
8.2 Limitation of Liability; Indemnity........................ 73
8.3 Compensation and Expenses................................. 74
8.4 Voting, Chairmen, Subcommittees........................... 74
8.5 Payment of Benefits....................................... 75
8.6 Powers and Authority: Action Conclusive................... 75
8.7 Counsel and Agents........................................ 77
8.8 Reliance on Information................................... 77
8.9 Fiduciaries............................................... 78
8.10 Plan Administrator........................................ 80
8.11 Notices and Elections..................................... 80
8.12 Taxes Payable by Trustee.................................. 80
8.13 Rollovers................................................. 80
8.14 Plan-to Plan Transfers.................................... 81
IX. AMENDMENT, TERMINATION, ADOPTION AND MERGER........................ 82
9.1 Modification or Amendment of Plan......................... 82
9.2 Termination of Plan or Discontinuance of
Contributions............................................. 82
9.3 Expenses of Termination................................... 83
9.4 Amendments Required for Qualification..................... 83
9.5 Adoption of Plan by Employers............................. 84
9.6 Discontinuance of Participation........................... 85
9.7 Merger.................................................... 87
9.8 Transfer of a Subsidiary, Division, Branch or
Business Unit............................................. 87
X. MISCELLANEOUS...................................................... 88
10.1 Claims Procedure.......................................... 88
10.2 Plan Not an Employment Contract........................... 88
10.3 Consent to Terms of Plan and Trust Agreement.............. 89
iv
<PAGE>
10.4 Transfer of Interest Not Permitted........................ 89
10.5 Obligations of Employers Limited.......................... 91
10.6 Separation of Invalid Provisions.......................... 91
10.7 Payment to a Minor or Incompetent......................... 91
10.8 Doubt as to Right to Payment.............................. 92
10.9 Forfeiture Upon Inability to Locate Distributee........... 92
10.10 Contributions Conditioned on Initial
Qualification and Deductibility........................... 93
10.11 No Diversion of Trust Fund................................ 93
10.12 Usage..................................................... 94
10.13 Governing Law............................................. 94
10.14 Captions.................................................. 94
v
<PAGE>
UCAR CARBON SAVINGS PLAN
INTRODUCTION
This Plan is an amendment and restatement in its entirety of
the Savings Program For Employees of UCAR Carbon Company, Inc. which was
initially established by UCAR Carbon Company Inc., a Delaware Corporation,
effective January 1, 1991. This amendment and restatement shall be effective as
of January 1, 1996.
Effective January 1, 1994, the name of the Plan was changed to
the "UCAR Carbon Savings Plan." The Plan is for the exclusive benefit of the
Company's eligible employees and their beneficiaries and the eligible employees
and their beneficiaries of any company, partnership or other entity adopting
this Plan. Effective June 1, 1993 all assets previously held in the General
Savings Fund were transferred to the Fixed Income Fund under the Plan. The
provisions previously applicable to the General Savings Fund were eliminated
from the Plan as of June 30, 1993. Effective August 9, 1995, the Company added
the UCAR Stock Fund to the Plan. Effective September 1, 1995, the UCAR
Discounted Stock Fund was added to the Plan. Participation in this Plan by
employees is entirely voluntary.
<PAGE>
ARTICLE I
DEFINITIONS
-----------
1. DEFINITIONS. As used in this Plan, the following terms shall have the
designated meaning.
1.1 "ADDITIONAL COMPANY CONTRIBUTIONS" shall mean a contribution to a
Participant's Personal Investment Account made pursuant to Section 2.10 of the
Plan.
1.2 "ADDITIONAL CONTRIBUTION" shall mean a contribution to a
Participant's Tax Deferred Account made pursuant to Section 2.6 of this Plan.
1.3 "AFFILIATE" shall mean, except as otherwise provided in Article IV,
each of (a) any corporation (other than an Employer) of which at least 80% of
the total combined voting power of all classes of stock entitled to vote is
owned at the time of reference, either directly or indirectly, by the Company,
(b) any other trade or business (other than an Employer), whether or not
incorporated, which, at the time of reference, is controlled by or under common
control with an Employer, within the meaning of section 414(c) of the Code, (c)
any member (other than an Employer), at the time of reference, of an affiliated
service group within the meaning of section 414(m) of the Code, which includes
an Employer or (d) Coast Composite, Inc.
For purposes of Sections 8.13 and 8.14 of the Plan, Affiliate shall also
include any entity owned directly or indirectly by the shareholders of the
Company.
1.4 "ALTERNATE PAYEE" shall mean any spouse, former spouse, child or
other dependent of a Participant who is recognized by a Domestic Relations Order
as having a
2
<PAGE>
right to receive all, or a portion of, the benefits payable under the Plan with
respect to such Participant.
1.5 "BASIC DEDUCTION" shall mean a contribution to a Participant's
Personal Investment Account made pursuant to Section 2.7 of this Plan.
1.6 "BEFORE TAX CONTRIBUTION" shall mean a contribution to a
Participant's Tax Deferred Account made pursuant to Section 2.3 of this Plan.
1.7 "BENEFICIARY" shall mean the person, persons or estate entitled under
Section 5.1.3 to receive any amount under this Plan in the event of a
Participant's death.
1.8 "CHANGE IN CONTROL" shall mean:
(i) the date that:
(A) any "person" (as such term is used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended,
and the rules and regulations thereunder ("Exchange
Act")), other than The Blackstone Group L.P., a Delaware
limited partnership, and its affiliates (excluding UCAR
and its subsidiaries and owned affiliates)
("Blackstone"), is or becomes the "beneficial owner" (as
defined in Rules 13d-3 and 13d-5 under the Exchange Act,
which shall in any event include having the power to vote
(or cause to be voted at Blackstone's direction) pursuant
to contract, irrevocable proxy or otherwise and except
that such person shall be deemed to have "beneficial
ownership" of all shares that such person has the right
to acquire, whether such right is exercisable immediately
or only after the passage of time), directly or
indirectly, of more than 35% of the total voting power of
the Corporation; and
(B) Blackstone "beneficially owns" (as defined in clause (A)
above), directly or indirectly, in the aggregate a lesser
percentage of the total voting power of the Corporation
than such other person and does not have the right or
ability by voting power, contract or otherwise to elect
or
3
<PAGE>
designate for election a majority of the Board of
Directors of the Corporation ("Board"); or
(ii) the date, following the expiration of any period of two
consecutive years (or, at any time during the period expiring on
January 26, 1997), that individuals, who at the beginning of
such period constituted the Board (together with any new
directors whose election by such Board or whose nomination for
election by the stockholders of the Company was approved by a
vote of 66-2/3% of the directors of the Company then still in
office who were either directors at the beginning of such period
or whose election or nomination for election was previously so
approved) cease for any reason to constitute a majority of the
directors of the Corporation then in office.
For purposes of clause (i), Blackstone shall be deemed to
"beneficially own" voting power of an entity held by any other entity (the
"parent entity") so long as Blackstone "beneficially owns" (as so defined),
directly or indirectly, in the aggregate, a majority of the voting power of the
parent entity. For purposes hereof, Blackstone shall be deemed to have voting
power over all shares of Stock owned by Chemical Equity Associates and each
share of Stock owned by any of the Management Investors.
1.9 "CODE" shall mean the Internal Revenue Code of 1986, as from time to
time amended. Reference to a specific provision of the Code shall include such
provision, any valid regulation promulgated thereunder and any comparable
provision of future legislation that amends, supplements or supersedes such
provision.
1.10 "COMMITTEE" or "ADMINISTRATIVE COMMITTEE" shall mean the
Administrative Committee provided for in Article VIII of this Plan.
1.11 "COMPANY" or "CORPORATION" shall mean UCAR Carbon Company Inc., a
Delaware corporation, any predecessor thereof, and any successor thereof by
merger, consolidation or otherwise.
4
<PAGE>
1.12 "COMPANY CONTRIBUTION" shall mean a contribution to a Participant's
Tax Deferred Account made pursuant to Section 2.5 of this Plan.
1.13 "COMPENSATION" shall mean a Participant's regular, basic salary or
basic hourly rate of pay for his regularly scheduled hours including, without
limitation, part or all of a Participant's sales commission, any shift premium,
shift bonus or sales bonus paid to the Participant, and, to the extent
determined by the Committee, lump sum payments in lieu of increases to the
Participant's basic hourly rate of pay or salary increases, and incentive
compensation awards as designated by the Committee on a non-discriminatory
basis, received from the Employer for the established regular working schedule
of the Participant, determined prior to any reduction in such rate of
compensation for any Before Tax Contributions and Additional Contributions to
this Plan or any contributions made on behalf of such Participant or any plan
maintained by the Company which meets the requirements of Code sections 401(a)
and 401(k) or any other plan maintained by the Company which meets the
requirements of Code section 125 and which provides for pre-tax contributions. A
Participant's Compensation in excess of the applicable limit under Section
401(a)(17) of the Code ("applicable limit") shall not be taken into account
under the Plan for any purpose. Such applicable limit shall be adjusted at the
same time and in such manner as the limitation set forth in Section 415(b)(1)(A)
of the Code is adjusted under Section 415(d) of the Code. The determination of
the Committee as to what constitutes Compensation under this Section 1.13 shall
be conclusive.
1.14 "DISABILITY" shall mean a Participant's total physical or mental
inability to perform any work for compensation or profit in any occupation for
which he is reasonably
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qualified by reason of training, education or ability, and which is adjudged to
be permanent, as determined by the Committee on the basis of medical evidence
satisfactory to it.
1.15 "DOMESTIC RELATIONS ORDER" shall mean any judgment, decree, or order
(including approval of a property settlement agreement) which is (a) related to
the provision of child support, alimony payments, or marital property rights to
a spouse, former spouse, child or other dependent of a Participant, and (b) made
pursuant to a state domestic relations law (including a community property law).
1.16 "EARNINGS" for any Limitation Year means total compensation actually
paid or made available by the Company and its Affiliates for such year,
including, but not limited to, bonuses, income from sources without the United
States whether or not excludable for Federal income tax purposes, amounts
related to the value of property transferred in connection with the performance
of services which are includable for Federal income tax purposes under Code
Section 83(b), amounts includable in income under Code Section 132 or any
successor section thereto, and taxable income attributable to employer-provided
life insurance. Earnings shall not include deferred compensation (other than
payments under an unfunded plan that are currently includable in income),
amounts realized from the exercise of a non-qualified stock option or a stock
appreciation right, exercise payments under a stock option plan, amounts
contributed on behalf of a Participant to a plan which meets the requirements of
Code Sections 401(a) and 401(k), amounts contributed on a pre-tax basis to any
plan which meets the requirements of Code Section 125, or other distributions
which receive special tax benefits. A Participant's Earnings in excess of the
applicable limit under Section 401(a)(17) of the Code ("applicable limit") shall
not be taken into account under the
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Plan for purposes of benefits accruing under the Plan. Such applicable limit
shall be adjusted at the same time and in such manner as the limitation set
forth in Section 415(b)(1)(A) of the Code is adjusted under Section 415(d) of
the Code.
1.17 "ELIGIBLE EMPLOYEE" shall mean any Employee, other than an Employee
who is a member of a class of Employees excluded from coverage under this Plan
pursuant to Section 2.2, if such individual is (i) compensated on a salaried,
hourly, or commission basis and (ii) is an Eligible Employee as described under
Section 2.1 of the Plan.
1.18 "EMPLOYEE" shall mean (a) any individual who, under the rules
applicable in determining the employer-employee relationship for purposes of
section 3121 of the Code, has the status of an employee of an Employer or an
Affiliate; (b) any officer of an Employer or an Affiliate; and (c) any United
States citizen employed on a salaried or commission basis outside the United
States, its territories, possessions or Puerto Rico by the Company or a
Subsidiary while designated by the Company as an internationally assigned
employee of the Company.
1.18.1 HIGHLY COMPENSATED EMPLOYEE shall mean any Employee who,
during the preceding Plan Year,
(i) was at any time a five percent owner (within the meaning of
Section 416(i)(1) of the Code) of the Employer;
(ii) received annual Earnings from an Employer in excess of
$100,000 (adjusted annually for increases in the
cost-of-living);
(iii) received annual Earnings from the Employer in excess of
$66,000 (adjusted annually for increases in the
cost-of-living) and was in the
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top 20 percent of Employees when ranked on the basis of
annual Earnings during such Plan Year;
(iv) was at any time an officer and received annual Earnings
greater than 150 percent of the amount in effect under Code
Section 415(c)(1)(A) for such year provided, however, that
notwithstanding the foregoing, not more than 50 Employees (or
if lesser, the greater of 3 employees or 10 percent of all
Employees) shall be treated as officers;
(v) was the highest paid officer of an Employer for the Plan
Year, if no Employee is treated as an officer under
subparagraph (iv);
(vi) was a former Employee of the Employer, if such Employee was a
Highly Compensated Employee when such Employee separated from
service, or was a Highly Compensated Employee at any time
after attaining age 55.
If an Employee is, during the Plan Year or preceding Plan Year, a Family
Member of either a five percent (5%) owner who is an active or former Employee
or a Highly Compensated Employee who is one of the 10 most Highly Compensated
Employees ranked on the basis of Earnings paid by the Employer during such year,
then the Family Member and the five percent (5%) owner or top-ten Highly
Compensated Employee shall be aggregated. In such case, the Family Member and
five percent (5%) owner or top-ten Highly Compensated Employee shall be treated
as a single Employee receiving Earnings and plan contributions or benefits equal
to the sum of such Earnings and contributions or benefits of the Family Member
and five percent (5%) owner or top-ten Highly Compensated
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Employee. For the purposes of this paragraph, "Family Member" shall mean, with
respect to any Participant, such Participant's spouse or lineal ascendants or
descendants and the spouses of such ascendants or descendants.
1.19 "EMPLOYER" shall mean (a) the Company, and (b) any other Subsidiary
which has adopted this Plan in accordance with Section 9.5.
1.20 "ERISA" shall mean the Employee Retirement Income Security Act of
1974, as from time to time amended. Reference to a specific provision of ERISA
shall include such provision, any valid regulation promulgated thereunder and
any comparable provision of future legislation that amends, supplements or
supersedes such provision.
1.21 "NORMAL RETIREMENT DATE" shall mean a Participant's 65th birthday.
1.22 "PARTICIPANT" shall mean an Eligible Employee who becomes a
Participant in this Plan pursuant to Section 2.1.
1.23 "PERSONAL INVESTMENT ACCOUNT" shall mean an account setting forth a
Participant's interest in the Trust Fund as provided in Article III of the Plan.
1.24 "PLAN" shall mean this UCAR Carbon Savings Plan.
1.25 "PLAN YEAR" shall mean the twelve-month period starting January 1
and ending December 31.
1.26 "QUALIFIED DOMESTIC RELATIONS ORDER" shall mean a qualified domestic
relations order as defined in Code Section 414(p) and ERISA Section 206(3).
1.27 "RETIREMENT PROGRAM" shall mean the UCAR Carbon Retirement Plan
(formerly the UCAR Carbon Company Inc. Retirement Program Plan or the Retirement
9
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Program Plan for Employees of Union Carbide Corporation and its Participating
Subsidiary Companies).
1.28 "SUBSIDIARY" shall mean (a) any Affiliate and (b) any other
corporation, partnership or other entity, 20% or more of which is owned at the
time of reference, either directly or indirectly, by the Company.
1.29 "SUPPLEMENTAL DEDUCTION" shall mean a contribution to a
Participant's Personal Investment Account made pursuant to Section 2.7 of the
Plan.
1.30 "SUPPLEMENTAL DEPOSIT" shall mean a contribution to a Participant's
Personal Investment Account made pursuant to Section 2.8 of the Plan.
1.31 "TAX DEFERRED ACCOUNT" shall mean an account setting forth a
Participant's interest in the Trust Fund as provided in Article III of the Plan.
1.32 "TERMINATION OF EMPLOYMENT" and similar references shall mean a
Participant's ceasing to be employed by an Employer or a Subsidiary for any
reason. A transfer between employment by an Employer and employment by a
Subsidiary, between employment by Employers or Subsidiaries, or between
employment compensated on a salaried basis and employment compensated on an
hourly basis shall not constitute a Termination of Employment.
1.33 "TRUST AGREEMENT" shall mean the agreement between the Company and
the Trustee under which this Plan is funded, as such agreement may be amended
from time to time.
1.34 "TRUST FUND" shall mean the fund created by the Trust Agreement.
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1.35 "TRUSTEE" shall mean the trustee or trustees from time to time
designated under the Trust Agreement.
1.36 "UCAR STOCK" or "COMPANY STOCK" means the common stock of UCAR
International Inc.
1.37 "UCC SAVINGS PLAN" shall mean the Savings Plan for Employees of
Union Carbide Corporation and its Participating Subsidiary Companies, as from
time to time in effect until December 31, 1990.
1.38 "VALUATION DATE" shall mean each December 31, and any other date as
of which the Committee, in its sole discretion, determines the value of all or
any portion of the Trust Fund or determines the actual deferral percentage, as
defined in section 401(k)(3)(B) of the Code, of any Employee or any group of
Employees.
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ARTICLE II
PARTICIPATION, CONTRIBUTIONS AND VESTING
----------------------------------------
2.1 PARTICIPATION.
2.1.1 Any Regular Employee of the Company, or any United States
citizen who is employed by the Company or by a foreign subsidiary or
affiliated company which has adopted the Plan while designated as an
internationally assigned employee by the Company, may be an Eligible
Employee under this Plan. A "Regular Employee" is one who is scheduled to
work more than fifty percent (50%) of the set work hours at his location
or actually works at least 1,000 hours a year. Any person who has been
lawfully admitted for permanent residence in the United States, whose
initial employment with the Company was in the United States, who was a
Participant in this Plan immediately prior to transferring to the employ
of a foreign subsidiary or affiliated company which has adopted the Plan
shall be eligible to continue to be a Participant in this Plan while
employed by the foreign subsidiary or affiliated company.
2.1.2 An Eligible Employee shall become a Participant in this Plan
upon his authorizing his Employer to reduce his Compensation for each pay
period by an amount or to make contributions determined in accordance
with Section 2.3, 2.6, 2.7 or 2.8.
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2.1.3 An Eligible Employee shall cease to be a Participant in this
Plan upon the complete distribution to him of his Tax Deferred Account
and Personal Investment Account.
2.2 EXCLUSIONS. (a) The following employees are not within the coverage
of the Plan:
(i) Individuals who perform services for an Employer as leased
employees. For purposes of this Section 2.2(a) (i) the term "leased
employee" shall mean any individual who:
(1) is not an independent contractor with respect to an Employer;
(2) provides services pursuant to an agreement between an Employer
and any other person or entity (hereinafter referred to as "the
leasing organization");
(3) has performed such services for an Employer on a substantially
full-time basis for a period of at least one year;
(4) performs services of a type historically performed in the
business field of an Employer by employees;
(5) is not a participant in a qualified money purchase plan
maintained by the leasing organization which provides for a
nonintegrated employer contribution of at least ten per cent (10%) of
such person's annual compensation and provides for immediate
participation and full and immediate vesting; and
(6) meets such other requirements as may be set forth in Code Section
414(n) and the regulations promulgated thereunder.
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(ii)Individuals (if any) who are considered by an Employer to be
independent contractors and employees of such independent contractors,
but who may be determined for any other purpose to be employees of an
Employer. The characterization by an Employer on its books and records of
the relationship of the individual and an Employer shall be conclusive of
the individual's status for purposes of this Plan.
(iii) Any individual who becomes a part-time or temporary employee
unless such individual's employment status is changed from full-time to
part-time by action of the Employer. For purposes of this Section 2.2,
any individual who is scheduled to work and works fewer than 1,000 hours
a year will be considered a part-time employee. Any individual hired for
work of a temporary nature without the intention of re-employing such
individual intermittently will be considered a temporary employee.
(b) The Committee reserves the right, in its sole discretion, to exclude
from coverage as an Eligible Employee any class or classes of Employees,
provided that any such exclusion does not discriminate in favor of Employees who
are shareholders, officers, or highly compensated, as determined in accordance
with Code Section 410.
2.3 BEFORE TAX CONTRIBUTIONS.
2.3.1 A Participant may authorize his Employer to reduce his
Compensation, the amount of which reduction shall be paid to the Trustee
for such Participant's Tax Deferred Account as Before Tax Contributions.
The reduction in Compensation authorized by a Participant as a Before Tax
Contribution shall range
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from 1/2% to 17 1/2%, inclusive, of his Compensation, in multiples of
1/2%. The sum of a Participant's Before Tax Contributions under this
Section 2.3 and his Basic Deductions under Section 2.7 shall be not less
than 1% of his Compensation and not more than 17 1/2% of his
Compensation. However, the sum of the Participant's Before Tax
Contributions under this Section 2.3 and Basic Deductions under Section
2.7 for which the Company makes a matching contribution under this Plan
shall not be more than 7 1/2% of the Participant's Compensation.
Notwithstanding the foregoing, in no event shall a Participant's Before
Tax Contributions for a Plan Year exceed $9,500 (adjusted annually for
increases in the cost of living in accordance with Section 415 of the
Code), provided, however, that if the Committee relies upon Section
5.4.2(b) to permit a hardship withdrawal by the Participant, such
limitation shall be reduced for the year following the year in which such
withdrawal is made by the amount of the Participant's Before Tax
Contributions in the year such withdrawal is made. If any deferral in
excess of such limitation is made, then the Committee may, in its
discretion, return to the Participant such excess deferral and any income
thereon not later than April 15 of the taxable year following the taxable
year in which such excess deferral occurred or, the Committee may treat
any amounts that would otherwise cause the $9,500 limitation (as
adjusted) to be exceed, as a Basic Deduction or Supplemental Deduction
pursuant to Section 2.7 of the Plan.
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2.3.2 Within the limits of Section 2.3.1, a Participant may, at any
time, increase or decrease the amount by which his Compensation is
reduced for Before Tax Contributions for subsequent pay periods.
2.4 ADJUSTMENT OF BEFORE TAX CONTRIBUTIONS.
2.4.1 Notwithstanding anything to the contrary in this Article II,
the Committee may prospectively decrease a Participant's authorized
reduction in his Compensation at any time if the Participant is a Highly
Compensated Employee and the Committee determines, in its sole
discretion, that such action is necessary in order for the Plan to meet
the actual deferral percentage tests under Section 401(k)(3)(A) of the
Code.
2.4.2 If the Committee determines it is necessary to prospectively
decrease any such Participant's authorized reduction under this Section
2.4, it shall first decrease by 1/2% the authorized reductions of all
such Participants who authorized the maximum reduction in their
Compensation, determined without regard to this Section 2.4. If the
Committee determines further decreases are necessary, it shall decrease
by 1/2% the authorized reductions of all such Participants whose
authorized reductions in their Compensation are the largest, determined
after taking all previous reductions under this Section 2.4 into account.
The Committee shall continue to make such decreases in multiples of 1/2%
until it determines that the actual deferral percentage tests in section
401(k)(3)(A) of the Code have been met.
2.4.3 Any Before Tax Contributions which would have been made to this
Plan on behalf of a Participant but for the decrease in his authorized
Compensation
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reduction under this Section 2.4 shall be paid by his Employer as a Basic
Deduction pursuant to Section 2.7 and such Employer shall make an
Additional Company Contribution as defined in Section 2.10 on account of
such Basic Deduction. If the Participant has not elected to make Basic
Deductions under Section 2.7, such amounts shall be invested in a
Personal Investment Account established for such Participant and shall be
allocated among the investment options in such account in the same
proportions as the latest Before Tax Contribution for his Tax Deferred
Account. If the Participant has elected to make Basic Deductions under
Section 2.7 such amounts shall be invested in his Personal Investment
Account among the various investment options in such Account, in the same
proportions as:
2.4.3.1 His latest Basic Deductions under Section 2.7; or
2.4.3.2 If he has never made any such Basic Deductions under
Section 2.7, his latest Supplemental Deductions under Section 2.7; or
2.4.3.3 If he has never made any such Basic Deductions or
Supplemental Deductions, his latest Supplemental Deposits as defined
in Section 2.8.
2.4.4 If the Committee determines, in its sole discretion, that it is
no longer necessary to decrease a Participant's authorized Compensation
reduction under this Section 2.4, the Committee shall increase the
authorized Compensation reductions of all Participants who had such
reductions decreased, in multiples of 1/2%, until all such Participants
have their authorized Compensation reductions
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restored to their originally authorized level or the Committee determines
that the actual deferral percentage tests of section 401(k)(3)(A) of the
Code will not be met, whichever occurs first.
2.4.5 When increasing or decreasing any Participant's authorized
Compensation reduction under this Section 2.4, the Committee shall treat
all Participants who authorized the same reduction in their Compensation
in the same manner.
2.4.6 Any action taken by the Committee under this Section 2.4 may be
taken without the consent of, or prior notice to, the affected
Participants, but such Participants shall be promptly informed in writing
of the Committee's action.
2.5 COMPANY CONTRIBUTIONS. At the time Before Tax Contributions are paid
to the Trustee on behalf of a Participant, the Participant's Employer shall, to
the extent permitted under Section 2.3.1, pay to the Trustee as Company
Contributions for such Participant's Tax Deferred Account an amount equal to 30%
of the Before Tax Contributions that are subject to a match as set forth in
Section 2.3.1.
2.6 ADDITIONAL CONTRIBUTIONS.
2.6.1 If the Committee determines that contributions made under this
Section 2.6 will not cause the Plan to fail to meet the actual deferral
percentage tests in section 401(k)(3)(A) of the Code or the limitations
under Section 402(g) of the Code, the Committee, in its sole discretion,
may permit Participants who have authorized the maximum allowable
reduction in their Compensation for Before Tax Contributions to authorize
additional reductions in their Compensation, the amount
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of which reductions shall be paid to the Trustee for such Participant's
Tax Deferred Account as Additional Contributions. If permitted by the
Committee, reductions for Additional Contributions shall range from 1/2%
of the Participant's Compensation to such upper limit as the Committee
may set, but in no event more than 10% of the Participant's Compensation,
in multiples of 1/2%; provided, however, that the sum of a Participant's
Additional Contributions under this Section and his Supplemental
Deductions under Section 2.7 shall not exceed 10% of his Compensation.
The Committee may suspend the right to authorize Additional Contributions
and may raise or reduce the limit on Additional Contributions (subject to
the maximum and minimum limits set forth in this Section 2.6) at any
time.
2.6.2 Within the limits of Section 2.6.1, a Participant may, at any
time, increase or decrease the amount by which his Compensation is
reduced for Additional Contributions.
2.6.3 Additional Contributions shall not be taken into consideration
in determining the Company Contribution to be allocated to any
Participant.
2.7 BASIC AND SUPPLEMENTAL DEDUCTIONS.
2.7.1 A Participant may authorize his Employer to make Basic
Deductions and, subject to the provisions of Section 2.7.3, Supplemental
Deductions, from his current Compensation, and to pay over such
Deductions to the Trustee.
2.7.2 The Basic Deductions authorized by a Participant shall range
from 1/2% to 7 1/2%, inclusive, of the Participant's Compensation in
multiples of 1/2%;
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provided, however, that the sum of a Participant's Basic Deductions under
this Section 2.7 and Before Tax Contributions under Section 2.3 shall not
be less than 1% of the Participant's Compensation and not more than 17
1/2% of the Participant's Compensation. However, the sum of a
Participant's Basic Deductions under this Section 2.7 and Before Tax
Contributions under Section 2.3 for which the Company makes a matching
contribution under this Plan shall not be more than 7 1/2% of the
Participant's Compensation.
2.7.3 The Supplemental Deductions authorized by a Participant shall
range from 1/2% to 10%, inclusive, of the Participant's Compensation, in
multiples of 1/2%; provided, however, that the sum of a Participant's
Supplemental Deductions under this Section 2.7 and the Participant's
Additional Contributions under Section 2.6 shall not exceed 10% of the
Participant's Compensation.
2.7.4 A Participant may increase or decrease his Deductions within
these limits for subsequent pay periods.
2.8 SUPPLEMENTAL DEPOSITS. In addition to any Deductions described under
Section 2.7 hereof, a Participant may make Supplemental Deposits to the Trustee,
in an amount of at least $100. However, a Participant's right to make
Supplemental Deposits in accordance with this Section 2.8 shall be subject to
the limitations described in Sections 2.13 and 2.15 hereof.
2.9 TRANSFERS FROM TAX DEFERRED ACCOUNTS. Any amounts which would have
been contributed to the Plan on behalf of an eligible employee but for the
provisions of Section 2.4
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hereof shall be paid by the Company to this Plan as a Basic Deduction,
and the Company shall make an Additional Company Contribution to this
Plan for such eligible employee on account of such Basic Deduction in
accordance with the provisions of Section 2.10, unless otherwise directed
by the Participant. If the Participant does not maintain a Personal
Investment Account in the Plan at the time a Basic Deduction is made for
such eligible employee under this Section 2.9, then, unless otherwise
directed by the Participant, the amount of the Basic Deduction and
Additional Company Contribution shall be invested in a Personal
Investment Account established for such eligible employee and shall be
allocated among the investment options in such account in the same
proportions as the latest Before Tax Contribution made to the Plan on
behalf of the Participant. If the Participant does maintain a Personal
Investment Account in this Plan, then, unless otherwise directed by the
Participant, such amounts shall be invested in the Participant's Personal
Investment Account and among the various investment options in the
Participant's Personal Investment Account, in the same proportions as:
(a) the Participant's latest Basic Deductions for the Plan;
or
(b) if the Participant has never made any such Basic
Deductions for the Plan, the Participant's latest Supplemental
Deductions for the Plan; or
(c) if the Participant has never made any such Basic
Deductions or Supplemental Deductions for the Plan, the
Participant's latest Supplemental Deposits for the Plan.
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2.10 ADDITIONAL COMPANY CONTRIBUTIONS.
2.10.1 The employing Company shall, to the extent permitted under
Section 2.7, pay to the Trustee an amount equal to 30% of the
Participant's Basic Deduction designated for the Participant's Personal
Investment Account.
2.10.2 No Additional Company Contributions shall be made on account
of any Supplemental Deductions or Supplemental Deposits made by a
Participant.
2.11 REVOCATION OF COMPENSATION REDUCTION.
2.11.1 A Participant may revoke his authorization for the reduction
of his Compensation for Before Tax Contributions, Basic Deductions and
Additional Contributions in a time and manner authorized by the
Committee. If a Participant revokes his authorization for the reduction
of his Compensation for Before Tax Contributions or Basic Deductions, the
related Company Contributions and Additional Company Contributions will
be suspended.
2.11.2 Supplemental Deductions are automatically suspended whenever
Basic Deductions are suspended.
2.11.3 A Participant may suspend or resume Supplemental Deductions
at any time.
2.11.4 Authorizations for a reduction in a Participant's
Compensation for Before Tax Contributions and Additional Contributions or
Basic Deductions which a Participant has revoked may be reinstated by the
Participant in a time and manner authorized by the Committee. If a
Participant reinstates the authorization for a reduction in his
Compensation for Before Tax Contributions or Basic Deductions,
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the related Company Contributions and Additional Company Contributions
will be resumed.
2.11.5 If the Committee relies upon Section 5.4.2(b) to permit a
hardship withdrawal by the Participant, such Participant's right to make
Before Tax Contributions, Basic Deductions, Supplemental Deductions,
Supplemental Deposits and Additional Contributions shall be suspended for
a period of twelve (12) months after the hardship withdrawal is received
by the Participant.
2.12 VESTING.
2.12.1 Except as set forth in Section 2.16.3(b), a Participant's
right to his Tax Deferred Account is non-forfeitable (within the meaning
of Section 411 of the Code) at all times.
2.12.2 Except as set forth in Section 2.16.3(b), a Participant's
right in his Personal Investment Account is non-forfeitable at all times.
2.13 LIMITATIONS ON CONTRIBUTIONS. As described in Article IV, in no
event shall the annual sum of the Before Tax Contributions, Company
Contributions and Additional Contributions, Basic Deductions, Supplemental
Deductions, Additional Company Contributions and Supplemental Deposits for a
Participant's Tax Deferred Account and Personal Investment Account in any Plan
Year exceed the lesser of $30,000 (or, if greater, 1/4 of the dollar limitation
in effect under Section 415(b)(1)(A) of the Code) or 25 percent of the
Participant's Earnings for such Plan Year.
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2.14 ALLOCATIONS OF CONTRIBUTIONS.
2.14.1 A Participant's Before Tax Contributions, related Company
Contributions, and Additional Contributions shall be held in the Trust Fund
in a Tax Deferred Account established for such Participant, and invested
and valued in accordance with Article III.
2.14.2 A Participant's Basic Deductions, related Additional Company
Contributions, Supplemental Deductions and Supplemental Deposits shall be
held in the Trust Fund in a Personal Investment Account established for
such Participant, and invested and valued in accordance with Article III.
2.15 401(m) LIMITATIONS. The Committee shall ensure that the requirements
set forth in Section 401(m) of the Code with respect to Participants' Before
Tax Contributions, Company Contributions, Additional Contributions, Basic
Deductions, Supplemental Deductions, Supplemental Deposits and Additional
Company Contributions are satisfied. The Plan shall not be treated as failing
to meet such requirements for any Plan Year, if before the close of the
following Plan Year, the Committee distributes "excess aggregate
contributions," as defined in Section 401(m) of the Code, to Participants in
accordance with procedures set forth in Section 401(m) of the Code and the
Regulations promulgated thereunder.
Any distribution made in accordance with the preceding sentence:
(a) shall be made first from Supplemental Deposits, then
Supplemental Deductions, then Basic Deductions, then Additional
Company Contributions, and then Company Contributions;
(b) shall be adjusted for income; and
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(c) shall be designated by the Committee as a distribution of excess
aggregate contributions and income.
2.16 ADP ADJUSTMENTS. In the event the Committee determines that the Plan
does not meet the actual deferral percentage tests under Section 401(k)(3)(A)
of the Code for a Plan Year, the Committee may adjust Before Tax Contributions
and/or Additional Contributions made to the Plan for such Plan Year pursuant to
the options set forth below:
2.16.1 On or before the fifteenth day of the third month following the
end of the Plan Year, the excess contributions of the Highly Compensated
Employee(s) with the highest actual deferral percentage(s) shall be
distributed to him or her and/or recharacterized as Basic Deductions
and/or Supplemental Deductions until one of the actual deferral percentage
tests is satisfied, or until his or her actual deferral percentage equals
the actual deferral percentage(s) of the Highly Compensated Employee(s)
having the next highest actual deferral percentage. This process shall
continue until one of the actual deferral percentage tests is satisfied.
2.16.2 A Highly Compensated Employee's excess contributions shall mean
such Employee's Before Tax Contributions or Additional Contributions which
must be reduced for the Employee's actual deferral percentage to equal the
highest permitted actual deferral percentage under the Plan. In
determining the amount of excess contributions to be distributed and/or
recharacterized with respect to an affected Highly Compensated Employee as
determined herein, such amount shall be reduced by any excess
contributions previously distributed to such Highly
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Compensated Employee for the taxable year ending with or within such Plan
Year, and any Company Contributions which relate to such excess
contributions.
2.16.3 With respect to a distribution of excess contributions pursuant
to Section 2.16.1, such distribution:
(a) may be postponed but not later than the close of the
Plan Year following the Plan Year to which they are
allocable;
(b) shall be made first from Additional Contributions and,
thereafter, from Before Tax Contributions. Company
Contributions which relate to such Before Tax
Contributions shall be forfeited and used to reduce
Company Contributions and/or Additional Company
Contributions for the year of the distribution and
subsequent years, as necessary;
(c) shall be adjusted for income; and
(d) shall be designated by the Committee as a distribution
of excess contributions and income.
2.16.4 With respect to a recharacterization of excess contributions
pursuant to Section 2.16.1, such recharacterized amounts:
(a) shall be deemed to have occurred on the date on which
the last of those Highly Compensated Employees with
excess contributions to be recharacterized is notified
of
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the recharacterization and the tax consequences of such
recharacterization;
(b) shall be treated as voluntary employee contributions
for purposes of Code Section 401(a)(4) and Regulation
1.401(k)-1(b). However, for purposes of Sections 6.1
and 6.2 hereof, recharacterized excess contributions
shall continue to be treated as employer contributions
that are deferred compensation; and
(c) are not permitted if the amount recharacterized plus
Basic Deductions, Supplemental Deductions and
Supplemental Deposits actually made by such Highly
Compensated Employee, exceed the maximum amount of such
contributions (determined prior to application of
Section 2.15) that such Highly Compensated Employee is
permitted to make under the Plan.
2.17 QUALIFIED NONELECTIVE OR MATCHING CONTRIBUTIONS. For purposes of
satisfying the actual deferral percentage test under Section 401(k)(3)(A) of
the Code for a Plan Year, all or part of Participant's Company Contributions
and Additional Company Contributions may be treated as "elective contributions"
under the Plan provided that the applicable requirements set forth in Treasury
Regulation Sections 1.401(k)-l(b)(5) and (g)(13) are satisfied.
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2.18 QUALIFIED NONELECTIVE AND ELECTIVE CONTRIBUTIONS. For purposes of
satisfying the actual contribution percentage test under Section 401(m)(2) of
the Code for a Plan Year, all or part of Participant's Before Tax Contributions
and Additional Contributions may be treated as "matching contributions" under
the Plan provided that the applicable requirements set forth in Treasury
Regulation Section 1.401(m)-l(b)(5) are satisfied.
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ARTICLE III
INVESTMENT AND VALUATION OF ACCOUNTS
------------------------------------
3.1 TAX DEFERRED ACCOUNTS. Before Tax Contributions, related Company
Contributions, and Additional Contributions authorized by a Participant shall be
paid to the Trustee and held in the Trust Fund in a Tax Deferred Account
established for such Participant.
3.2 PERSONAL INVESTMENT ACCOUNTS. Basic Deductions, related Additional
Company Contributions, Supplemental Deductions and Supplemental Deposits made by
the Participant shall be paid to the Trustee and held in the Trust Fund in a
Personal Investment Account established for such Participant.
3.3 INVESTMENT OPTIONS. Each Participant shall direct that the entire
amount of the Before Tax Contributions, Additional Contributions and related
Company Contributions made to his Tax Deferred Account and the Basic Deductions
and related Additional Company Contributions made for the Participant's Personal
Investment Account, and the Participant's Supplemental Deductions be invested in
one or more of the following Investment Options, in one percentage point
increments:
3.3.1 BALANCED FUND - A fund which invests 50% in stocks that mirror
the investment performance of the S&P 500 Index and 50% in bonds that
correspond to those in the Lehman Corporation and Government Bond Index.
3.3.2 FIXED INCOME FUND - A fund under which monies will be credited
with monthly interest at an annual rate, determined from time to time.
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3.3.3 EQUITY INVESTMENT FUND - A fund under which monies will be
invested primarily in one or more equity type mutual funds. The Committee
may, in its discretion, change the mutual funds offered as part of this
Fund. The value of the Equity Investment Fund will vary to reflect the
investment experience of the Fund. As of July 1, 1993, the options
available under the Equity Investment Fund are as follows:
3.3.3.1 EQUITY INCOME FUND - A fund invested in the Fidelity
Equity Income Fund.
3.3.3.2 EQUITY INDEXED FUND - A fund managed by a bank or
registered investment manager which seeks to mirror the S&P 500
Index.
3.3.3.3 EQUITY GROWTH FUND - A fund invested in the Fidelity
Magellan Fund.
3.3.4 UCC STOCK FUND - A fund established solely for the stock
transferred to the Plan from the Company Stock Fund and the Discounted
Company Stock Fund under the UCC Savings Plan, the 401(k) Opportunity
Plan for Salaried Employees of Union Carbide Corporation and the 401(k)
Opportunity Plan for Hourly Employees of Union Carbide Corporation (which
is referred to herein as the "Transferred Stock"). No additional stock
may be purchased for or invested in the UCC Stock Fund. Transferred Stock
shall remain in the UCC Stock Fund until such time as the Participant
directs that it shall be sold by the Trustee or until such time as it is
distributed to the Participant or his Beneficiary.
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3.3.5 PRAXAIR, INC. STOCK FUND - A fund established solely to hold
common stock of Praxair, Inc. (formerly named Union Carbide Industrial
Gases Inc.) received with respect to Participants in the UCC Stock Fund
as a result of the distribution of such stock to the shareholders of
Union Carbide Corporation (which is referred to herein as the "Praxair
Stock"). No additional Praxair Stock may be purchased or invested in the
Praxair Stock Fund. Praxair Stock shall remain in the Praxair Stock Fund
until such time as the Participant directs that it shall be sold by the
Trustee or until such time as it is distributed to the Participant or his
Beneficiary.
3.3.6 UCAR STOCK FUND - This fund shall invest primarily in common
stock of UCAR International Inc. (which is referred to herein as "Company
Stock" or "UCAR Stock"). In the event of a tender or exchange offer with
respect to any Company Stock held in this fund, this fund may acquire
other securities issued by UCAR International Inc. in exchange for, or in
connection with, such Company Stock.
3.3.7 UCAR DISCOUNTED STOCK FUND - This fund purchases Company Stock
at 90% of market price. In the event of a tender or exchange offer with
respect to any Company Stock held in this fund, this fund may acquire
other securities issued by UCAR International Inc. in exchange for, or in
connection with, such Company Stock. Only a Participant's Before Tax
Contributions and Basic Deductions, related Company Contributions and
Additional Company Contributions, and
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Additional Contributions and Supplemental Deductions may be invested in
the UCAR Discounted Stock Fund.
3.3.8 U.S. SAVINGS BOND FUND - A fund established solely for U.S.
Savings Bonds previously purchased under the Plan as of March 31, 1993.
No additional bonds may be purchased for or invested in the U.S. Savings
Bond Fund. Bonds shall remain in the U.S. Savings Bond Fund until such
time as (i) the Participant directs that they shall be sold by the
Trustee, (ii) they are distributed to the Participant or his Beneficiary,
or (iii) on or after maturity, the Committee determines to redeem the
Bonds and reinvest the proceeds in accordance with the Participant's then
Continuing Investment Order for the Account in which the bonds were
invested.
The Committee reserves the right to add and/or change any of the
Investment options under the Plan, at any time.
Notwithstanding anything to the contrary under this Section 3.3 of
Article III, any monies allocated to any Fund may be invested temporarily in
obligations of a short-term nature, including prime commercial obligations or
part interests therein, or in interests in any trust fund that has been or
shall be created and maintained by the Trustee or any other person or entity as
trustee for the collective short-term investment of funds of trusts for
employee benefit plans qualified under Code Section 401(a). Earnings paid or
accrued on such investments shall be applied towards the payment of costs and
expenses of administering the Trust Fund as set forth in Section 7.2 of Article
VII of the Plan. However, nothing in
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this Article III shall prevent the Trustee from holding any cash in the Trust
Fund pending its investment without obligation to credit interest thereon.
3.4 SUPPLEMENTAL DEPOSITS AND ROLLOVER DEPOSITS. A Participant shall
direct that his Rollover Deposits described in Section 8.13, and his
Supplemental Deposits be invested in any or all of the Investment Options, in
one percentage point increments except that a Participant's Supplemental
Deposits and Rollover Deposits may not be invested in the UCAR Discounted Stock
Fund. The Participant shall give such directions at the time he makes such a
Rollover Deposit or a Supplemental Deposit.
3.5 CHANGE OF INVESTMENTS. Subject to the other provisions of this
Article III:
3.5.1 A Participant may at any time change his Investment Options
currently in effect with respect to subsequent Before Tax Contributions,
related Company Contributions, Basic Deductions, related Additional
Company Contributions, Supplemental Deductions, and Additional
Contributions made to his Tax Deferred Account or Personal Investment
Account, subject to the percentage limitations of Section 3.3 of this
Plan.
3.5.2 A Participant may at any time direct the sale of any or all
shares of stock in the UCC Stock Fund or the Praxair Stock Fund and the
redemption of any or all bonds in the U.S. Savings Bond Fund, and the
reinvestment of the proceeds therefrom in any other Investment Option.
3.5.3 A Participant may elect to redeem his interest, in whole or in
part, in the Fixed Income Fund and/or an Equity Investment Fund and/or
the Balanced
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Fund and/or the UCAR Stock Fund, and reinvest the proceeds therefrom in
any other Investment Option.
3.5.4 Each Participant who invests his Tax Deferred Account or
Personal Investment Account in the UCAR Discounted Stock Fund may not
sell such units in that Account and reinvest in other options until
twelve months after the date on which such Participant purchased the
applicable unit in the UCAR Discounted Stock Fund except that this
sentence shall not apply in the event of a Participant's death,
Disability or other Termination of Employment, or a Change in Control.
3.6 INSTRUCTIONS BY A PARTICIPANT FOR HIS ACCOUNTS. A Participant shall
give orders for the investment, reinvestment, sale or redemption of his Tax
Deferred Account and Personal Investment Account, subject to the provisions of
this Article III, as follows:
3.6.1 A CONTINUING INVESTMENT ORDER which shall direct the
application of contributions to his Tax Deferred Account and
contributions to his Personnel Investment Account to the purchase of any
Investment Options as designated by the Participant in accordance with
the provisions of Section 3.3. A Participant may change his instructions
by making a new Continuing Investment Order.
3.6.2 A SELLING AND REINVESTMENT ORDER which shall direct the
liquidation, in whole or in part, of any Investment Option held in his
Tax Deferred Account or Personal Investment Account, and the reinvestment
of the proceeds in any other Investment Options as designated by the
Participant in accordance with the percentage limitations of Section 3.3.
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3.6.3 THE REPAYMENT OF ANY PLAN LOANS pursuant to Section 5.8 of the
Plan shall be invested solely in the Plan's Fixed Income Fund except to
the extent a Participant directs in his loan application that such
amounts should be invested otherwise. In no event shall loan repayments
be invested in the UCAR Discounted Stock Fund.
3.7 PURCHASES AND SALES.
3.7.1 Investment of amounts directed by a Continuing Investment Order
in the Investment Options shall be made, if administratively practicable,
not later than the business day following the day the Basic Deduction,
related Additional Company Contribution, Before Tax Contribution, related
Company Contribution, Additional Contribution and Supplemental Deduction
are made.
3.7.2 Investment of amounts directed by a Selling and Reinvestment
Order shall be made if administratively practicable, no later than the
business day following the day on which the proceeds from a Selling and
Reinvestment Order are received.
3.7.3 The sale of stock, the redemption of bonds and the liquidation
of a Participant's interest in an Investment Option under a Selling and
Reinvestment Order shall be complied with as soon as administratively
practicable after its receipt by the Trustee in accordance with
procedures adopted by the Administrative Committee, but not later than
the end of the business day following the day the Order is received.
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3.8 COST AND EXPENSES. In accordance with the rules and regulations
adopted by the Committee, all costs and expenses, including transfer taxes and
brokerage commissions, incurred in connection with (i) the sale and redemption
of bonds in the U.S. Savings Bond Fund or stock of Union Carbide Corporation or
Praxair, Inc. for a Participant's Tax Deferred Account and Personal Investment
Account or (ii) the purchase and sale of stock in the UCAR Stock Fund or UCAR
Discounted Stock Fund, shall be deducted from the proceeds of such stock or
bonds and, in the case of purchases for the UCAR Stock Fund or UCAR Discounted
Stock Fund, charged to the applicable Fund.
3.9 CUSTODY OF SECURITIES. All cash, U.S. bonds, certificates for shares
of stock in the UCAR Stock Fund and UCAR Discounted Stock Fund, the UCC Stock
Fund and Praxair Stock Fund, evidences of ownership of Fixed Income Fund units
and Equity Investment Fund and Balanced Fund interests and all other Plan assets
shall be held in the custody of the Trustee until disposed of under the
provisions of this Plan.
3.10 VALUE OF FIXED INCOME FUND. Basic Deductions, related Additional
Company Contributions, Before Tax Contributions, related Company Contributions,
Additional Contributions, Supplemental Deductions and Supplemental Deposits
allocated by a Participant to the Fixed Income Fund shall be converted into
fixed income investment units. At regular intervals, the Administrative
Committee will set an interest rate for the Fixed Income Fund.
3.11 PROCEEDS OF FIXED INCOME FUND. A Participant requesting the
liquidation of his interest in the Fixed Income Fund shall be credited with the
value of his Fixed Income Fund investment, including interest to the date of
such liquidation.
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3.12 VALUE OF EQUITY INVESTMENT FUND. Basic Deductions, related
Additional Company Contributions, Before Tax Contributions, related Company
Contributions, Additional Contributions, Supplemental Deductions and
Supplemental Deposits allocated by a Participant to an Equity Investment Fund or
the Balanced Fund shall be valued at the published price or by the Fund manager,
as appropriate, for the relevant fund.
3.13 PROCEEDS OF EQUITY INVESTMENT FUND. A Participant requesting the
liquidation of his interest in an Equity Investment Fund or the Balanced Fund
shall be credited with the net proceeds received by the Trustee from his
liquidation of such Fund.
3.14 VALUE OF UCAR STOCK FUND AND UCAR DISCOUNTED STOCK FUND. Basic
Deductions, related Additional Company Contributions, Before Tax Contributions,
related Company Contributions, Additional Contributions, Supplemental Deductions
and Supplemental Deposits allocated by a Participant to the UCAR Stock Fund, and
Basic Deductions, related Additional Company Contributions, Before Tax
Contributions and related Company Contributions allocated by a Participant to
the UCAR Discounted Stock Fund, shall be converted into UCAR Stock Fund
investment units, and UCAR Discounted Stock Fund investment units, respectively.
The value of each investment unit for a given day is determined by dividing the
market value (as defined in the next sentence) of the applicable Fund for that
day by the number of outstanding investment units in the applicable Fund. For
these purposes, the market value of the Fund on a day is determined by (i)
multiplying the number of shares of UCAR Stock in the respective Fund on the
relevant day by the closing price of UCAR Stock on the New York Stock Exchange
- -- Composite Transactions for that day, and (ii) adding the value of any cash or
other short-term investments in the Fund. For
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purposes of Participants' investments in the UCAR Discounted Stock Fund, such
investments shall be determined so as to be equivalent to purchasing UCAR Stock
at 90% of its market price.
3.15 PROCEEDS OF UCAR STOCK FUND AND UCAR DISCOUNTED STOCK FUND. A
Participant requesting the liquidation of his interest in the UCAR Stock Fund or
UCAR Discounted Stock Fund shall be credited with an amount equal to the number
of investment units he then has in each Fund times the value of an investment
unit in the Fund for that day, as determined under Section 3.14.
3.16 VALUATION OF TAX DEFERRED ACCOUNTS AND PERSONAL INVESTMENT ACCOUNTS.
On any Valuation Date, a Participant's interest in the Trust Fund shall be equal
to the value of his Tax Deferred Account and his Personal Investment Account.
The value of a Participant's Tax Deferred Account and Personal Investment
Account on any Valuation Date shall equal the greater of zero or the value of
his Tax Deferred Account and Personal Investment Account as of the preceding
Valuation Date, increased by:
(a) all Before Tax Contributions, related Company Contributions,
Additional Contributions, Basic Deductions, related Additional Company
Contributions, Supplemental Deductions and Supplemental Deposits
allocated to such accounts since the preceding Valuation Date;
(b) any income and gains (realized and unrealized) since the
preceding Valuation Date on bonds in the U.S. Savings Bond Fund, stock in
the UCC Stock Fund and Praxair Stock Fund allocated to his Tax Deferred
Account or Personal Investment Account and units in the Fixed Income
Fund, UCAR Stock Fund and
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UCAR Discounted Stock Fund, and units of any Equity Investment Fund and
Balanced Fund allocated to his Tax Deferred Account or Personal
Investment Account;
(c) any assets transferred from the Savings Program for Employees of
Union Carbide Corporation and Participating Subsidiary Companies, if
applicable; and decreased by:
(d) any losses (realized and unrealized) since the preceding
Valuation Date on bonds in the Government Bond fund, stock in the UCC
Stock Fund and Praxair Stock Fund allocated to his Tax Deferred Account
or Personal Investment Account and units in the Fixed Income Fund, UCAR
Stock Fund and UCAR Discounted Stock Fund, and units of any Equity
Investment Fund and Balanced Fund allocated to his Tax Deferred Account
or Personal Investment Account;
(e) the amount of any distributions to such Participant under
Section 5.1 and withdrawals by such Participant under Section 5.4, 5.5 or
5.6 since the preceding Valuation Date; and
(f) any expenses, taxes or other amounts charged to the Trust Fund
since the preceding Valuation Date pursuant to Sections 7.2, 8.3, 8.7,
8.12 and 9.3 of this Plan and allocated to his Tax Deferred Account or
Personal Investment Account.
3.17 STATEMENTS FURNISHED PARTICIPANTS. A Participant shall be furnished
a statement of his Tax Deferred Account and Personal Investment Account by the
Company at least annually.
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3.18 PROCEEDS OF STOCK SOLD. A Participant directing the sale of stock in
the UCC Stock Fund or Praxair Stock Fund for his Tax Deferred Account or
Personal Investment Account shall be credited with the actual net proceeds
received by the Trustee from the sale of such stock less all expenses,
commissions and fees.
3.19 DIVIDENDS. Dividends received on UCAR stock in the UCAR Stock Fund
shall automatically be reinvested in the UCAR Stock Fund at the then unit value
of the Fund.
Dividends received on UCAR Stock in the UCAR Discounted Stock Fund
shall automatically be reinvested in units in the UCAR Discounted Stock Fund
based on reinvestment at 90% of the share price.
Dividends on stock in the UCC Stock Fund and Praxair Stock Fund for
a Participant shall automatically be invested in the Fixed Income Fund for the
Participant.
3.20 RIGHTS, WARRANTS AND SCRIP. If any rights, warrants or scrip are
issued on stock held in the UCAR Stock Fund or UCAR Discounted Stock Fund, the
Trustee shall automatically exercise the rights, warrants or scrip for whole
shares, and shall automatically offer the rights, warrants, or scrip for
fractional shares for sale on the open market and shall reinvest the proceeds in
the UCAR Stock Fund at the then unit value.
If any rights, warrants or scrip are issued on stock held in the UCC
Stock Fund or Praxair Stock Fund, the Trustee shall, if so directed by the
Committee, exercise the rights, warrants or scrip for whole shares, which shares
shall be for such Participant's Account, and shall automatically offer the
rights, warrants, or scrip for fractional shares for sale on the open market and
shall reinvest the proceeds in the Fixed Income Fund for the Participant.
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3.21 VOTING RIGHTS. Forms will be made available to each affected
Participant, as a named fiduciary within the meaning of Section 403(a)(1) of
ERISA ("Named Fiduciary") to instruct the Trustee with regard to the voting of
any shares of stock credited to the UCC Stock Fund and Praxair Stock Fund for
that Participant. The Trustee will vote such shares only as directed by the
Participant. If a Participant fails to give timely directions as to the voting
of such shares of stock, the Trustee will vote such shares in the same
proportion as it votes the shares for which the Trustee receives directions.
Forms will be made available to each affected Participant as a Named
Fiduciary to instruct the Trustee with regard to the voting of all shares of
Company Stock in the UCAR Stock Fund and UCAR Discounted Stock Fund. The Trustee
will vote the shares in each such Fund for or against any proposal in the same
proportion as the proportion of units actually voted by Participants for or
against such proposal.
3.22 TENDER OFFERS. Each affected Participant or Beneficiary, as a Named
Fiduciary, shall have the right to direct the Trustee in writing as to the
manner in which to respond to a tender or exchange offer with respect to stock
of Union Carbide Corporation credited to the UCC Stock Fund and shares of stock
of Praxair, Inc. credited to the Praxair Stock Fund for that Participant or
Beneficiary. If the Trustee does not receive timely directions from a
Participant or Beneficiary as to the manner in which to respond to such a tender
or exchange offer, then the Trustee shall not tender or exchange any such shares
of stock. Union Carbide Corporation and Praxair, Inc. shall use their best
efforts to timely distribute to each Participant or Beneficiary such information
as is distributed to other shareholders in connection with any such tender or
exchange offer.
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Each affected Participant or Beneficiary, as a Named Fiduciary,
shall have the right to direct the Trustee in writing, as to the manner in which
to respond to a tender or exchange offer with respect to Company Stock in the
UCAR Stock Fund or UCAR Discounted Stock Fund. The Trustee will tender or
exchange that number of shares of Company Stock that bears the same proportion
to the total number of shares in the Fund as the number of units for which a
tender or exchange is directed bears to the total number of outstanding units in
each Fund. The Corporation shall use its best efforts to timely distribute to
each Participant or Beneficiary such information as is distributed to other
shareholders in connection with any such tender or exchange offer.
3.23 UCAR STOCK AND UCAR DISCOUNTED STOCK. The following rules shall
apply to UCAR Stock held in the UCAR Stock Fund and UCAR Discounted Stock Fund:
3.23.1 UCAR Stock shall be purchased on the New York Stock Exchange
or from the Corporation.
3.23.2 Notwithstanding anything herein to the contrary, if, in the
discretion of the Trustee, it is necessary to limit the daily volume of
purchases and/or sales of UCAR Stock in the best interests of the Plan
Participants, then such purchases and/or sales may be made over a period of up
to 30 days.
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ARTICLE IV
LIMITATION ON MAXIMUM CONTRIBUTIONS
-----------------------------------
AND BENEFITS UNDER ALL PLANS
----------------------------
4.1 GENERAL. By reason of Section 2.13, Before Tax Contributions, related
Company Contributions, Additional Contributions, Basic Deductions, related
Additional Company Contributions, Supplemental Deductions, and Supplemental
Deposits for a Participant under this Plan will not exceed the maximum
limitations imposed by section 415 of the Code, if all other defined
contribution plans and all defined benefit plans of all Employers and Affiliates
are disregarded. It is intended that any limitation imposed by section 415 of
the Code arising by reason of a Participant's participation in one or more other
such plans shall be implemented as provided in this Article IV, notwithstanding
any contrary provision of the Plan.
4.2 AFFILIATE. For purposes of this Article IV, the definition of
Affiliate in Section 1.3 shall be applied by substituting the phrase "more than
50 percent" for the phrase "at least 80 percent" wherever the phrase "at least
80 percent" would otherwise be applicable under said provision.
4.3 LIMITATION YEAR. For purposes of this Article IV, the limitation year
shall be the Plan Year.
4.4 ANNUAL ADDITIONS. "Annual Addition" means for each Participant the
sum for any year of (i) contributions made by the Company or an Affiliate
allocable to the Participant under all defined contribution plans maintained by
the Company or an Affiliate, (ii) forfeitures allocable to the Participant under
all such plans, (iii) the amount of the
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Participant's contributions to all such plans, (iv) any amount attributable to
post-retirement medical benefits or life insurance allocated to a separate
account after March 31, 1984 on behalf of a Participant under Section 415(1)(1)
and Section 419(d) of the Code. The Participant's contributions described in
clause (iii) of the first sentence and in the second sentence of this Section
4.4 shall not include any rollover amounts (as defined in Section 402(c) of the
Code), any repayments of loans or any prior distributions repaid to a plan upon
the exercise of buy-back rights under the Plan and the Retirement Program. A
contribution shall be taken into account as an Annual Addition for purposes of
this Article IV for the Limitation Year in which it is allocated to the
Participant's account under the applicable plan.
4.5 DEFINED BENEFIT AND DEFINED CONTRIBUTION PLANS. For purposes of this
Article IV, "defined benefit plan" or "defined contribution plan" shall mean
whichever of the following is applicable: a defined benefit plan or a defined
contribution plan described in section 401(a) of the Code, which includes a
trust which is exempt from income tax under section 501(a) of the Code; provided
that a Participant's contributions under a plan which otherwise qualifies as a
defined benefit plan shall be treated as a defined contribution plan.
4.6 AGGREGATION OF DEFINED CONTRIBUTION PLANS. In applying the limitation
on annual additions provided in this Article IV, all defined contribution plans
maintained by all Employers and Affiliates shall be aggregated.
4.7 DEFINED CONTRIBUTION PLAN LIMITATION. The sum of the Annual Additions
for any Participant to all defined contribution plans maintained by all
Employers and Affiliates for any year shall not exceed the lesser of (1) thirty
thousand dollars ($30,000) (or, if
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greater, 1/4 of the dollar limitation in effect under Section 415(b)(1)(A) of
the Code), or (2) twenty-five percent of such Participant's Earnings for such
year.
4.8 DEFINED CONTRIBUTION PLAN FRACTION DETERMINATION. For purposes of
this Section 4.8, a Participant's "Defined Contribution Plan Fraction" shall be
determined as follows:
(A) NUMERATOR. For any Limitation Year, the numerator shall be the sum
of the Annual Additions to the Participant's accounts under all
defined contribution plans maintained by the Company or an Affiliate
in such year and in all prior Limitation Years.
(B) DENOMINATOR. For any Limitation Year, the denominator shall be the
lesser of the following amounts, determined for such year and for
each prior Limitation Year of the Participant's credited service
with the Company or an Affiliate:
(I) One hundred and twenty-five percent (125%) of the maximum
dollar limit for such year determined under Section 6.7 of
this Plan, or
(II) thirty-five percent (35%) of the Participant's Earnings for
such year.
4.9 DEFINED BENEFIT PLAN FRACTION DETERMINATION. For purposes of this
Section 4.9, a Participant's "Defined Benefit Plan Fraction" shall be determined
as follows for any Limitation Year:
(A) NUMERATOR. The numerator shall be the sum of the projected annual
benefits (as defined in section 415(e)(2) of the Code) of the
Participant under all defined benefit plans maintained by the Company
or an Affiliate as of the
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close of such year, disregarding benefits derived from the
Participant's contributions, if any, but the amount of such numerator
shall not be less than the sum of the amount of the Participant's
accrued benefit under each such defined benefit plan determined as of
December 31, 1982 based on the terms of such defined benefit plans as
in effect on July 1, 1982.
(B) DENOMINATOR. The denominator shall be the lesser of the following
amounts:
(I) one hundred and twenty-five percent (125%) of the maximum
dollar limitation applicable to defined benefit plans for such
year under sections 415(b)(1)(A) and 415(d) of the Code, but
not less than the sum of the Participant's accrued benefit
under all defined benefit plans maintained by the Company or
an Affiliate in which the Participant participates, determined
as of December 31, 1982, based on the terms of such defined
benefit plans as in effect on July 1, 1982, or
(II) one hundred forty percent (140%) of the Participant's average
annual Earnings for the three (3) consecutive years in which
the Participant's Earnings were highest.
4.10 COMBINED LIMITATION. If a Participant participates in one or more
defined benefit plans maintained by the Company or an Affiliate, the sum of the
Participant's Defined Contribution Plan Fraction and Defined Benefit Plan
Fraction as of the close of any Limitation Year may not exceed 1.0. In order to
prevent such sum from exceeding 1.0,
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benefits under any defined benefit plan in which the Participant participates
shall be reduced to the extent necessary for that purpose.
4.11 ALTERNATIVE METHOD. The Committee may, in its discretion, determine
any amounts required to be taken into account under this Article IV by such
alternative methods as shall be permitted under applicable regulations or
rulings issued by the United States Department of the Treasury.
4.12 TREATMENT OF EXCESSES.
4.12.1 If amounts contributed to any defined contribution plan by or
on behalf of a Participant must be reduced in any Limitation Year to
comply with the limit on Annual Additions in Section 4.7 of this Plan,
the amounts contributed to such defined contribution plans shall be
reduced in the following order:
(a) Supplemental Deposits made under Section 2.8 of the Plan;
(b) Supplemental Deductions made under Section 2.7 of the Plan;
(c) Additional Contributions made under Section 2.6 of the Plan;
(d) Basic Deductions made under Section 2.7 of the Plan;
(e) Additional Company Contributions made under Section 2.10 of the
Plan;
(f) Before Tax Contributions made under Section 2.3 of the Plan;
(g) Company Contributions made under Section 2.5 of the Plan; and
(h) Contributions to any defined benefit plan treated as a defined
contribution plan. Amounts contributed by or on behalf of a
Participant to one category shall be reduced to zero before any
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reduction is made of any such amounts contributed to the next
lowest category. If, notwithstanding subparagraphs (a) through
(g) of this subsection 4.12.1, a Before Tax Contribution,
Additional Contribution, Supplemental Deposit, Supplemental
Deduction or Basic Deduction is made on behalf of a Participant
which results in the limitations set forth in Section 4.7 of
this Article IV being exceeded, then such excess and any
earnings thereon may be returned to such Participant.
4.12.2 The amount of Company Contributions or Additional Company
Contributions (or forfeitures) which may not be allocated to a
Participant's Tax Deferred Account or Personal Investment Account because
of the limitations of this Article IV or of Section 2.13 of this Plan
shall be used to reduce Company Contributions or Additional Company
Contributions for the following Limitation Year (and succeeding
Limitation Years, if necessary) for that Participant if that Participant
is covered by the Plan as of the end of the Limitation Year. If the
Participant is not covered by the Plan as of the end of the Limitation
Year, such excess Company Contributions or Additional Company
Contributions shall be held unallocated in a suspense account for the
Limitation Year. The amounts in such suspense account shall be used to
reduce Company Contributions or Additional Company Contributions on
behalf of each Participant to whom such amounts are allocated or
reallocated, for the Limitation Year in which such amounts are
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allocated or reallocated, and shall be allocated and reallocated in the
following manner:
(i) The amounts in such suspense account shall be allocated and
reallocated in the following Limitation Year to the Accounts
of the remaining Participants in the Plan.
(ii) If the allocation or reallocation of the amounts in such
suspense account causes the limitations set forth in Article
IV or in Section 2.13 of the Plan to be exceeded with respect
to all Participants' Accounts for that Limitation Year, then
the amounts which may not be allocated as the result of such
limitations shall be held unallocated in the suspense
account. All amounts so remaining in the suspense account
must be allocated and reallocated among the Accounts of the
remaining Participants (subject to the limitations set forth
in this Article IV or in Section 2.13 of the Plan) in the
following Limitation Year, and succeeding Limitation Years,
if necessary.
Notwithstanding the foregoing, any Before Tax Contributions, Additional
Contributions, Basic Deductions, Supplemental Deductions and Supplemental
Deposits may be returned to the Participant.
4.13 NOTICE OF REDUCTION. The Committee shall give prompt notice to any
Participant whose benefit is reduced pursuant to the provisions of this Article
IV.
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ARTICLE V
DISTRIBUTIONS, WITHDRAWALS AND LOANS
------------------------------------
5.1 DISTRIBUTION OF TAX DEFERRED ACCOUNT AND PERSONAL INVESTMENT ACCOUNT
ON TERMINATION OF EMPLOYMENT.
5.1.1 TERMINATION OTHER THAN DEATH. If the total value of the Tax
Deferred Account and Personal Investment Account of a Participant whose
employment terminates for any reason (including termination on account of
disability) other than death is thirty five hundred dollars ($3,500) or
less, or the value exceeds thirty five hundred dollars ($3,500) and such
Participant consents in writing, then such Participant shall receive the
entire value of such Participant's Tax Deferred Account and Personal
Investment Account, valued as of the last Valuation Date preceding such
Participant's termination, in a single-sum payment. Subject to Section
5.7, the payment shall be made to the Participant as soon after such
Participant's employment terminates as the Committee shall determine to
be administratively practicable.
5.1.2 SETTLEMENT OPTIONS. If the total value of the Tax Deferred
Account and Personal Investment Account of a Participant whose employment
terminates for any reason (including termination on account of
disability) other than death exceeds thirty five hundred dollars ($3,500)
and such Participant does not consent in writing to receive the entire
value of such Participant's Tax Deferred Account and Personal Investment
Account in accordance with Section 5.1.1, then such Participant shall be
deemed to have deferred receipt of the entire value of such
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Participant's Tax Deferred Account and Personal Investment Account until
April 1 of the calendar year following the calendar year in which such
Participant attains age seventy and one-half (70 1/2). Such a Participant
may elect, in accordance with procedures determined by the Committee, to
receive the entire value (but not part except as provided in the
following sentence) of such Participant's Tax Deferred Account and
Personal Investment Account in a single-sum payment at any time prior to
April 1 of the calendar year following the Participant's attainment of
age seventy and one-half (70 1/2). In addition, a Participant who has
been deemed to have deferred receipt of the value of his Tax Deferred
Account and Personal Investment Account may elect, in accordance with
procedures determined by the Committee, to receive partial distributions
from his/her Tax Deferred Account and Personal Investment Account at any
time prior to April 1 of the calendar year following his/her attainment
of age seventy and one-half (70 1/2) (provided that the balance in such
accounts remains above thirty five hundred dollars ($3,500)) or to
receive the entire balance of his Tax Deferred Account and Personal
Investment Account in monthly installments (provided that (i) the
aggregate balance in such Accounts is at least ten thousand dollars
($10,000) at the time of such election and (ii) at the time of
termination of employment the Participant is eligible to receive an
immediate benefit under the Company's Retirement Program). The number of
monthly installments shall be selected by the Participant and shall be:
(i) at least twenty four (24), (ii) in increments of twelve (12), and
(iii) last no longer than the Participant's life expectancy based on
appropriate Internal Revenue Service tables.
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The amount of each monthly installment shall be determined by dividing
the aggregate balance of the Participant's Personal Investment Account
and Tax Deferred Account by the number of months selected by the
Participant and shall be re-calculated at the end of every year by
dividing the balance remaining in such Accounts by the number of months
left in the period selected by the Participant. A Participant who elects
to receive monthly installments shall select an investment liquidation
sequence, which may be changed by the Participant no more frequently than
once per month, to provide cash for the monthly installments. The
Participant may stop such monthly installments at any time, but they may
not be started again for at least six months. If monthly installments are
stopped when a Participant has a balance of thirty five hundred dollars
($3,500) or less, the Participant shall receive the entire value of his
Tax Deferred Account and Personal Investment Account in a single-sum
payment. Partial distributions under this Section 5.1.2 must be at least
$500 and in $100 increments and may be made no more frequently than once
every ninety (90) days. A Participant may not receive a partial
distribution while he is receiving monthly installment payments pursuant
to this Section 5.1.2.
A Participant who has been deemed to have deferred receipt of any
part of such Participant's Tax Deferred Account or Personal Investment
Account under this Section 5.1.2 may change such Participant's Investment
Options during such deferral period in accordance with the terms of the
Plan. In the event the Committee determines that it is prudent to do so,
the Committee may defer a
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Participant's election to receive amounts invested in the Fixed Income
Fund prior to age 70 1/2 or defer a Participant's election to another
Investment Option.
Any payment deferral and/or election to receive partial
distributions or monthly installments under this Section 5.1.2 shall be
subject to the provisions of Section 5.1.5 of the Plan.
Unless another settlement option is selected, the entire value of
such Participant's Tax Deferred Account and Personal Investment Account
shall be distributed to such Participant in a single-sum payment as soon
after April 1 of the calendar year following the calendar year in which
such Participant attains age seventy and one-half (70 1/2) or such
earlier date selected by the Participant as provided above, as the
Committee shall determine to be administratively practicable. If a
Participant who has been deemed to have deferred receipt of any part of
such Participant's Tax Deferred Account and Personal Investment Account
under this Section 5.1.2 dies after such Participant's termination of
employment, but prior to April 1 of the calendar year following such
Participant's attainment of age seventy and one-half (70 1/2), then the
Participant shall be deemed to have terminated employment on account of
death and the entire value of such Participant's Tax Deferred Account and
Personal Investment Account shall be paid to such Participant's
Beneficiary in accordance with Section 5.1.3.
5.1.3 TERMINATION ON DEATH. (a) If a Participant's employment
terminates on account of the Participant's death, the value of the
Participant's Tax Deferred Account and Personal Investment Account,
valued as of the last day of the month
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in which occurs the Participant's death, shall be paid in a lump sum to
the Participant's surviving spouse, unless such spouse has consented to
the designation of the Participant's beneficiary as the Participant's
Beneficiary. No consent under this Section 5.1.3 shall, subject to
subsection (d) hereof, be effective unless either (i) such consent is in
writing, the terms of such consent acknowledge its effect, the execution
of such consent is witnessed by a person representing the Plan or a
notary public, as the Committee may determine, and such consent otherwise
complies with such rules as the Committee may adopt, or (ii) it is
established to the satisfaction of the Committee that the required
consent cannot be obtained because the Participant does not have a
spouse, because the spouse cannot be located, or because of such other
circumstances as the Secretary of the Treasury may prescribe by
regulations. Any consent by a spouse (or establishment that the consent
of a spouse cannot be obtained) shall only be effective with respect to
such spouse. The designation of a beneficiary other than the
Participant's surviving spouse shall be subject to the provisions of
Section 5.1.5 of the Plan.
(b) If a Participant's spouse has consented to the designation of
the Participant's beneficiary as the Participant's Beneficiary and either
(i) the Participant has not effectively designated a beneficiary, or (ii)
the beneficiary designated has not survived the Participant and no
alternative designation of beneficiary shall be effective, then the
Participant's Beneficiary shall be the estate of the deceased
Participant. If the Participant's surviving spouse or beneficiary cannot
be located for a period of one year following death, despite mailing to
his
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last known address, and if such surviving spouse or beneficiary has not
made a written claim for benefits within such period to the Committee,
such surviving spouse or beneficiary shall be treated as having
predeceased the Participant. The Committee may require such proof of
death and such evidence of the right of any person to receive all or part
of the benefit of a deceased Participant as the Committee may deem
desirable.
(c) The lump sum payment pursuant to subsection (a) shall be made to
the Participant's surviving spouse or Beneficiary as soon after the
Participant's death as the Committee shall determine to be
administratively practicable but, with respect to a Beneficiary other
than the Participant's spouse, no later than five years after the
Participant's death.
(d) If the total value of the Participant's Tax Deferred Account and
Personal Investment Account exceeds $3,500 and distribution is to be made
to the Participant's surviving spouse, then such surviving spouse may
elect to receive installment payments with the number of payments not to
exceed such surviving spouse's life expectancy.
(e) A surviving spouse entitled to make an election under subsection
(d) of this Section 5.1.3 may defer the commencement of payment under
this Section 5.1.3 until a date not later than December 31 of the
calendar year in which the Participant would have attained age seventy
and one-half (70 1/2).
5.1.4 MANDATORY DISTRIBUTIONS. The Tax Deferred Account and Personal
Investment Account of a Participant shall be entirely distributed to such
Participant
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or shall commence to be distributed not later than April 1 of the
calendar year following the calendar year in which the Participant
attains age seventy and one-half (70 1/2).
5.1.5 ACCOUNT DISTRIBUTION RULES.
5.1.5.1 TERMINATION OF EMPLOYMENT. In the event a Participant
elects to defer the receipt and/or receive payment in partial
distributions or monthly installments of his Tax Deferred Account or
his Personal Investment Account, then such Participant shall be
deemed to have made the same election with regard to the distribution
of his Personal Investment Account and his Tax Deferred Account,
respectively.
5.1.5.2 BENEFICIARY DESIGNATION. In the event a Participant
has designated a beneficiary other than his surviving spouse for his
Tax Deferred Account or his Personal Investment Account in accordance
with Section 5.1.3, then such designation shall also apply to all of
such Participant's Accounts under the Plan.
5.1.5.3 ORDER OF LIQUIDATION. The distribution of a
Participant's Accounts upon termination of employment shall be made
by liquidating his accounts in the following order:
(i) First, the Participant's Personal Investment Account; and
(ii) Second, the Participant's Tax Deferred Account.
5.2 FORM OF PAYMENT OF ACCOUNTS. All payments made under Section 5.1
shall be made entirely in cash, unless the Participant or the Beneficiary, as
the case may be, elects
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to receive any whole shares of stock represented by his units in the UCAR Stock
Fund or UCAR Discounted Stock Fund, or stock in the UCC Stock Fund and/or
Praxair Stock Fund in his accounts, in lieu of the cash value of such stock.
5.3 REHIRE PRIOR TO DISTRIBUTION OF ACCOUNTS. In the event that a
Participant whose employment has terminated again becomes an Employee prior to
the distribution of his Accounts, such distribution shall be deferred until the
subsequent termination of his employment.
5.4 WITHDRAWAL BY PARTICIPANT FROM TAX DEFERRED ACCOUNT DURING EMPLOYMENT
PRIOR TO THE ATTAINMENT OF AGE 59 1/2. Prior to attaining age 59 1/2, a
Participant may make a withdrawal from his Tax Deferred Account prior to his
termination of employment if and only if the withdrawal is made on account of an
immediate and heavy financial need of the Participant and is necessary to
satisfy such financial need. The Committee shall determine whether the
withdrawal is made on account of an immediate and heavy financial need and
whether the withdrawal is necessary to satisfy such financial need in accordance
with uniform and non-discriminatory standards. The Committee may, in its
discretion, adopt either or both of the procedures set forth in Section 5.4.2(a)
and Section 5.4.2(b) of the Plan to assist it in determining whether a
withdrawal is necessary to satisfy an immediate and heavy financial need.
5.4.1 A withdrawal will be deemed to be made on account of an
immediate and heavy financial need of the Participant if the withdrawal
is on account of: (i) medical expenses described in Section 213(d) of the
Code incurred or to be incurred by the Participant, the Participant's
spouse, or any dependents of the
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Participant, (ii) the purchase (excluding mortgage payment) of the
Participant's principal residence, (iii) the payment of tuition for the
next 12 months of post-secondary education for the Participant's spouse
or any dependents of the Participant, (iv) the need to prevent eviction
of the Participant from his principal residence or the foreclosure on the
mortgage of the Participant's principal residence, or (v) other pressing
financial needs of the Participant.
5.4.2 A withdrawal may be treated by the Committee as necessary to
satisfy a Participant's financial need if the requirements of either (a)
or (b) are satisfied:
(a) The Committee may reasonably rely upon the Participant's
representation that such need cannot be relieved:
(i) through reimbursement or compensation by insurance or
otherwise;
(ii) by reasonable liquidation of the Participant's assets to
the extent such liquidation would not itself cause an
immediate and heavy financial need;
(iii) by cessation of Before Tax Contributions and Additional
Contributions under the Plan; or
(iv) by other distributions or nontaxable (at the time of the
loan) loans from plans maintained by the Company or by any
other employer, or by borrowing from commercial sources on
reasonable commercial terms.
(b) A withdrawal will be deemed to be necessary to satisfy an
immediate and heavy financial need of a Participant if all of
the following requirements are satisfied:
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(i) the withdrawal is not in excess of the amount of the
immediate and heavy financial need of the Participant;
(ii) the Participant has obtained all distributions, other than
hardship withdrawals, and all nontaxable loans currently
available under all plans maintained by the Company;
(iii) the Plan, and all other plans maintained by the Company,
provide that the Participant's elective contributions and
Participant contributions will be suspended for at least
12 months after receipt of the hardship withdrawal; and
(iv) the Plan, and all other plans maintained by the Company,
provide that the Participant may not make elective
contributions for the Participant's taxable year
immediately following the taxable year of the hardship
withdrawal in excess of the limitation set forth in
Section 402(g) of the Code for such next taxable year,
less the amount of such Participant's elective
contributions for the taxable year of the hardship
withdrawal.
5.5 WITHDRAWAL BY PARTICIPANT FROM TAX DEFERRED ACCOUNT DURING EMPLOYMENT
AFTER THE ATTAINMENT OF AGE 59 1/2. On or after attaining age 59 1/2, a
Participant may make a withdrawal from his Tax Deferred Account prior to his
termination of employment.
5.6 WITHDRAWAL BY PARTICIPANT FROM PERSONAL INVESTMENT ACCOUNT DURING
EMPLOYMENT.
5.6.1 (a) WITHDRAWALS WITHOUT SUSPENSIONS. A Participant remaining in
the employment of the Company may make the following withdrawals from his
Personal Investment Account, on such prior written notice to the Company
as the Company shall announce from time to time, without incurring a
suspension of Additional Company Contributions under Section 5.6.3:
(i) Up to the entire current value of his Personal Investment
Account, less the sum of the Additional Company Contributions
made to his Personal
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Investment Account during the preceding twenty-four month
period, if at least twenty-four months have elapsed since the
Participant first made Basic Deductions for his Personal
Investment Account or, if he has made a prior withdrawal under
this Subparagraph (a)(i), at least twenty-four months have
elapsed since such last withdrawal. Additional Company
Contributions made to the Participant's Personal Investment
Account during the twenty-four month period preceding the
Participant's withdrawal will remain in the Participant's
Personal Investment Account.
(ii) Up to the sum of his Supplemental Deductions and Supplemental
Deposits, less the sum of any Supplemental Deductions or
Supplemental Deposits previously withdrawn, but not more than
the entire current value of his Personal Investment Account,
if at least twelve months have elapsed since the Participant
first made Supplemental Deductions or Supplemental Deposits
or, if he has made a prior withdrawal under this Subparagraph
(a)(ii), at least twelve months have elapsed since such last
withdrawal.
If a Participant making a withdrawal under this Section 5.6.1 does not
withdraw the entire withdrawable amount in his Personal Investment Account, the
unwithdrawn balance will remain in the Participant's Personal Investment
Account. In the event of any withdrawal under this Section 5.6, the
Participant's interest in the UCAR Discounted Stock Fund shall be the last funds
liquidated.
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5.6.2 WITHDRAWAL WITH SUSPENSIONS. A Participant who is not eligible
to make a withdrawal under Section 5.6.1 may, on such prior written
notice to the Company as the Company shall announce from time to time,
make a withdrawal of an amount up to the entire current value of his
Personal Investment Account, less the sum of Additional Company
Contributions made during the preceding twenty-four month period;
provided, however, that his Company Contributions and Additional Company
Contributions shall be suspended as provided in Section 5.6.3.
5.6.3 SUSPENSIONS. If a Participant makes a withdrawal from his
Personal Investment Account under Section 5.6.2, his Company
Contributions and Additional Company Contributions under the Plan for his
Tax Deferred Account and Personal Investment Account, shall be
automatically suspended until the end of the third calendar month
following such withdrawal.
At the end of such three month period Company Contributions and
Additional Company Contributions will be automatically resumed and
allocated according to the Continuing Investment Order in effect prior to
such withdrawal, unless the Participant gives other instructions.
5.7 COMMENCEMENT OF BENEFITS. Unless the Participant otherwise elects
pursuant to the provisions of this Plan, benefits under this Plan will be paid
to the Participant not later than the 60th day after the close of the Plan Year
in which the latest of the following events occurs:
5.7.1 the date on which the Participant attains his Normal
Retirement Date;
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5.7.2 the tenth anniversary of the year in which the Participant
commenced participation in the Plan, or
5.7.3 the Participant's most recent termination of employment.
5.8 LOANS.
5.8.1 LOANS AUTHORIZED. Commencing on such date as may be determined
by the Committee, an Eligible Individual may apply to the Committee for a
loan under this Plan. Upon receipt of a loan application, the Committee
may in its discretion instruct the Trustee to make a loan to such
Eligible Individual out of the Trust Fund, effective as of such date as
the Committee shall designate, if such loan meets the requirements of
Section 5.8.2. In determining whether to grant a loan under this Section
5.8, the Committee shall consider only those factors which would be
considered in a normal commercial setting of an entity in the business of
making loans, and shall act in accordance with uniform and
non-discriminatory standards. A Participant will be permitted to have
only five loans outstanding at any time.
5.8.2 LOAN REQUIREMENTS. A loan shall not be made to an Eligible
Individual pursuant to this Section 5.8 unless such loan:
(a) Does not exceed the lesser of (i) fifty thousand dollars
($50,000), reduced by the excess (if any) of (I) the
highest outstanding balance of loans from the Plan during
the one (1) year period ending on the day before the date
on which such loan was made, over (II) the outstanding
balance of loans from
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the Plan on the date on which such loan was made, or (ii)
one-half (1/2) of the present value of the Eligible
Individual's Tax Deferred Account and Personal Investment
Account, determined as of no earlier than the last
Valuation Date preceding the Eligible Individual's
application for a loan;
(b) Is exempt from the tax imposed by section 4975 of the Code
by reason of section 4975(d)(1) of the Code;
(c) Is adequately secured by a portion (not in excess of fifty
percent (50%) of the present value) of the Eligible
Individual's Tax Deferred Account and Personal Investment
Account;
(d) Bears interest, payable annually to the Trust Fund or to
such account or accounts in the Trust Fund as the
Committee shall determine and at such rate as the
Committee shall determine;
(e) Is, by its terms, required to be repaid upon the earlier
of the date of the Eligible Individual's death, or the
expiration of a fixed term of not more than five years;
provided, however, that the Committee may permit a thirty
year term in the case of loans used to acquire any
dwelling unit which within a reasonable time is to be used
(determined at the time the loan is made) as the principal
residence of the Eligible Individual;
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(f) Requires substantially level amortization of the principal
and interest of such loan, with payments not less
frequently than quarterly, over the term of the loan;
(g) Is in an amount of at least $1,000;
(h) Is made pursuant to a loan agreement to be executed by the
Eligible Individual and the Trustee, on a form containing
such terms and provisions as the Committee shall in its
sole discretion determine;
(i) Satisfies the requirements of Section 408(b)(1) of ERISA
and the Department of Labor's regulations promulgated
thereunder;
(j) Is made in accordance with the specific provisions set out
by the Committee; and
(k) Meets such other requirements as the Committee may set.
5.8.3 If any loan granted to an Eligible Individual pursuant to this
Section 5.8 is not repaid on the date required under Section 5.8.2(e),
the Committee may, to the extent permitted by law, without prior notice
to the Eligible Individual, direct the Trustee to sell, redeem or
otherwise dispose of such collateral as the Eligible Individual has given
for the loan and apply the proceeds thereof to the repayment of the loan.
A sale, redemption or disposal of a Participant's Account pursuant to
this paragraph will be treated as any other distribution under the Plan
and will be subject to any applicable penalties, including any suspension
of contributions under the Plan.
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5.8.4 If an Eligible Individual receives a loan under this Section
5.8, his status as an Eligible Individual in the Plan and his rights with
respect to his Plan benefits shall not be affected, except to the extent
that the Eligible Individual has used his interest in his Tax Deferred
Account or Personal Investment Account as security for the loan, pursuant
to Section 5.8.2.
5.8.5 For the purposes of this Section 5.8 an "Eligible Individual"
shall include any Participant who is currently an Employee or any
Participant or former Participant who has ceased to be an Employee on
account of retirement.
5.8.6 Loan funds will be made available by first liquidating all of a
Participant's Personal Investment Account, and then such Participant's
Tax Deferred Account. To the extent a Participant's Accounts are invested
in more than one Investment Option, he or she may designate in writing
the order in which such Investment Options will be liquidated for Plan
loans (except that UCAR Discounted Stock will always be the last fund
liquidated). If the Participant does not so designate an order,
Investment Options will be liquidated in the following order (to the
extent applicable):
i. Fixed Income Fund;
ii. Balanced Fund;
iii. Equity Income Fund;
iv. Equity Indexed Fund;
v. Equity Growth Fund;
vi. Praxair Common Stock;
vii. UCC Stock;
viii. U.S. Savings Bonds;
ix. UCAR Stock; and
x. UCAR Discounted Stock (to the extent permitted).
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5.9 DIRECT ROLLOVERS. This Section 5.9 applies to all distributions made
on or after January 1, 1993.
5.9.1 Notwithstanding any provision of the Plan to the contrary that
would otherwise limit a distributee's election under this Section 5.9, a
distributee may elect, at the time and in the manner prescribed by the
Committee, to have any portion of an eligible retirement distribution
paid directly to an eligible retirement plan specified by the distributee
in a direct rollover.
5.9.2 The following definitions shall apply to this Section 5.9:
5.9.2.1 Eligible rollover distribution: An eligible rollover
distribution is any distribution of all or any portion of the balance
to the account of the distributee under the Plan, except that an
eligible rollover distribution does not include (i) any distribution
that is one of a series of substantially equal periodic payments (not
less frequently than annually) made for the life (or life expectancy)
of the distributee or the joint lives (or joint life expectancies) of
the distributee and the distributee's Beneficiary, or for a specified
period of ten years or more; (ii) any distribution to the extent such
distribution is required under section 401(a)(9) of the Code; and
(iii) the portion of a distribution that is not includible in gross
income (determined without regard to the exclusion for net unrealized
appreciation with respect to Employer securities).
5.9.2.2 Eligible retirement plan: An eligible retirement plan
is an individual retirement account described in section 408(a) of
the Code, an
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individual retirement annuity described in section 408(b) of the
Code, an annuity plan described in section 403(a) of the Code, or a
qualified trust described in section 401(a) of the Code, that accepts
the distributee's eligible rollover distribution. However, in the
case of an eligible rollover distribution to the surviving spouse, an
eligible retirement plan is an individual retirement account or
individual retirement annuity.
5.9.2.3 Distributee: A distributee includes a Participant or
former Participant. In addition, the Participant's or former
Participant's surviving spouse and the Participant's or former
Participant's spouse or former spouse who is the alternate payee
under a Qualified Domestic Relations Order are distributees with
regard to the interest of the spouse or former spouse.
5.9.2.4 Direct rollover: A direct rollover is a payment by the
Plan to the eligible retirement plan specified by the distributee.
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ARTICLE VI
TOP HEAVY RULES
---------------
6.1 TOP-HEAVY PLAN.
6.1.1 TOP-HEAVY PLAN DEFINED. If, on the last day of any Plan
Year, the "Determination Date," the aggregate value of the Tax
Deferred Accounts and Personal Investment Accounts of Key Employees
under the Plan exceeds 60% of the aggregate value of the Tax
Deferred Accounts and Personal Investment Accounts of all
Participants in the Plan, the Plan shall be top-heavy and the
provisions of this Article VI shall apply for the following Plan
Year.
The Plan shall also be top-heavy if the Plan is part of a
required aggregation group of plans and the required aggregation
group is top-heavy. The term "required aggregation group" shall mean
(i) each plan of the Company or an Affiliate which qualifies under
Section 401(a) of the Code in which at least one Key Employee is a
Participant, and (ii) any other plan which enables a plan described
in the preceding subsection (i) to meet the requirements of Sections
401(a)(4) or 410 of the Code. The Company may also treat any other
plan not required to be included in the "required aggregation group"
as being part of such group if such group would continue to meet the
requirements of Sections 401(a)(4) or 410 of the Code with such plan
being taken into account. If the Plan is part of an aggregation
group, it will be considered top heavy if the sum of accrued
benefits for Key Employees in the aggregation group is more than 60%
of the aggregate present value of accrued benefits of all
participants in the aggregation group.
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6.1.2 AMOUNTS INCLUDED IN ACCOUNTS. For purposes of
determining whether this Plan is top-heavy, the value of a
Participant's Tax Deferred Account and Personal Investment Accounts
includes the amount of any distribution made to such Participant
pursuant to Section 5.1, and any withdrawal made by such Participant
pursuant to Section 5.4, Section 5.5 or Section 5.6, if such
distribution or withdrawals were made during the Plan Year or the
preceding four Plan Years.
6.2 MINIMUM TOP-HEAVY BENEFITS If the Plan is top-heavy under
Section 6.1, the Company Contribution and Additional Company Contribution for
each Participant other than a Participant who is a Key Employee, shall be
increased by an amount that, when added to the sum of the Participant's Before
Tax Contributions, related Company Contributions, Additional Contributions and
Additional Company Contributions made under this Plan without regard to this
Section 6.2, shall bring the total amount contributed for such Participant under
this Plan to three percent (3%) of such Participant's Earnings.
For purposes of this Section 6.2 only, the term "Participant" shall
also include any Employee who is otherwise eligible to participate in the Plan
but for his failure to authorize his Employer to reduce his Compensation in
accordance with Section 2.3 of this Plan.
6.3 REDUCTION IN COMBINED LIMITATION. If the Plan is top-heavy under
Section 6.1, the Participant's Defined Contribution Plan Fraction and Defined
Benefit Plan Fraction, determined under Sections 4.8 and 4.9, respectively,
shall be determined by substituting "1.0" for "1.25" in each place "1.25"
appears in such sections unless, on the last day of the Plan Year in which the
Plan is found to be top-heavy under Section 6.1, the aggregate value of the Tax
Deferred Accounts and Personal Investment Accounts of Key Employees under
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the Plan does not exceed 90 percent of the aggregate value of the Tax Deferred
Accounts and Personal Investment Accounts for all Participants in the Plan and
the Company elects to substitute "four percent (4%)" for "three percent (3%)" in
Section 6.2.
6.4 KEY EMPLOYEE. For purposes of this Article VI, a "Key Employee" shall
be any employee of an Employer or an Affiliate who, at any time during the Plan
Year or any of the four preceding Plan Years, is:
6.4.1 one of the 50 Employees of an Employer or an Affiliate who has
the highest Earnings during the Plan Year or any of the preceding four
Plan Years of all Employees of all Employers and Affiliates if such
Employee is also an officer of an Employer or an Affiliate and such
Earnings exceed one hundred and fifty percent (150%) of the dollar amount
described in Code Section 415(c)(1)(A);
6.4.2 one of the 10 Employees owning (or considered as owning within
the meaning of Code Section 318) both more than a one-half (1/2) percent
interest and the largest interests in an Employer or an Affiliate among
all Employees of all Employers and Affiliates; provided however, that
such Employee shall not be a Key Employee unless such Employee's Earnings
exceed $30,000 or such other dollar limitation in effect under Code
Section 415(c)(1)(A) for the Plan Year and provided further that if two
or more Employees have the same interest in an Employer or an Affiliate
the Employee having greater annual Earnings from the Employer or an
Affiliate shall be treated as having the larger interest;
6.4.3 a five percent (5%) owner of an Employer or an Affiliate;
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6.4.4 a one percent (1%) owner of an Employer or an Affiliate if such
owner's annual Earnings exceed $150,000; or
6.4.5 a Beneficiary of a Key Employee described in Sections 6.4.1
through 6.4.4, inclusive.
6.5 AUTOMATIC REMOVAL. In the event that it shall be determined by
statute, regulation or ruling of the Internal Revenue Service that the
provisions of this Article VI are no longer necessary in whole or in part to
qualify this Plan under the Code, this Article VI shall be ineffective to such
extent without amendment to the Plan.
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ARTICLE VII
TRUST
-----
7.1 TRUSTEE. To provide for the administration of the Plan, the Company
has entered into a Trust Agreement with a Trustee appointed by the Company, in
such form and containing such provisions as the Company may deem appropriate,
including, but not limited to, provisions with respect to the powers and
authority of the Trustee (including the management of funds and/or providing
Investment Options and retirement elections under this Plan by some other
institution or institutions, as directed by the Committee from time to time),
the authority of the Company to amend the Trust Agreement and to terminate the
Trust, and the authority of the Company to settle the accounts of the Trustee on
behalf of all persons having an interest in the Plan, and a provision that,
except as provided in Section 10.11 of this Plan, it shall be impossible at any
time for any part of the corpus or income of the Trust to be used for or
diverted to purposes other than for the exclusive benefit of Eligible Employees
or their Beneficiaries.
7.2 TRUST EXPENSES. Costs and expenses of administering the Trust Fund,
including Trustees' fees and investment managers' fees, shall be paid from the
Trust Fund, unless they are paid by an Employer.
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ARTICLE VIII
ADMINISTRATION
--------------
8.1 ADMINISTRATIVE COMMITTEE. There is hereby created an Administrative
Committee (the "Committee") which shall consist of not less than three (3)
members, one of whom shall be the Chief Financial Officer of the Company, to be
appointed by and serve at the pleasure of the Chief Executive Officer of the
Company. The Chief Executive Officer may, at any time, fill vacancies or require
the resignation of one or more of the members of a Committee with or without
cause. In the event that a vacancy or vacancies shall occur on the Committee,
the remaining member or members shall act as the Committee until the Chief
Executive Officer fills such vacancy or vacancies. No person shall be ineligible
to be a member of a Committee because he is, was or may become entitled to
benefits under the Plan or because he is a director and/or officer of an
Employer or Affiliate or a Trustee; provided, that no Participant who is a
member of the Committee shall participate in any determination by the Committee
specifically relating to the disposition of his own Tax Deferred Account or
Personal Investment Account (including any determination with respect to a
hardship withdrawal or a loan pursuant to Sections 5.4 and 5.8, respectively).
8.2 LIMITATION OF LIABILITY; INDEMNITY.
8.2.1 Except as otherwise provided by law, no person who is a member
of the Committee, or any employee, director or officer of any Employer or
Affiliate, may incur any liability whatsoever on account of any matter
connected with or related to the Plan or the administration of the Plan.
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8.2.2 The Company shall indemnify and save harmless each member of
the Committee, and each employee, director or officer of any Employer or
Affiliate, from and against any and all loss, liability, claim, damage,
cost and expense which may arise by reason of, or be based upon, any
matter connected with or related to the Plan or the administration of the
Plan (including, but not limited to, any and all expenses whatsoever
reasonably incurred in investigating, preparing or defending against any
litigation, commenced or threatened, or in settlement of any such claim
whatsoever), unless such person shall have acted in bad faith or been
guilty of willful misconduct or gross negligence in respect of his
duties, actions or omissions in respect of the Plan.
8.3 COMPENSATION AND EXPENSES. The members of the Committee shall serve
without compensation for their services as such members. All expenses reasonably
incurred by the Committee shall be treated as an expense of the Trust Fund
unless paid by an Employer. The members of the Committee shall serve without
bond unless the Company or the provisions of any applicable laws shall require
otherwise, in which event the Employers shall pay the premium thereon.
8.4 VOTING, CHAIRMEN, SUBCOMMITTEES.
8.4.1 A majority of the members of the Committee at the time in
office may do any act which the Plan authorizes or requires the Committee
to do. The action of such majority of the members expressed from time to
time by a vote at a meeting, or in writing without a meeting, or by
conference telephone or similar communications equipment allowing all
persons participating in the meeting to hear
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each other at the same time, shall constitute the action of the Committee
and shall have the same effect for all purposes as if assented to by all
members at the time in office. Where action is taken by members of the
Committee by conference telephone or similar communications equipment,
such action shall be confirmed in writing by such members as soon as
practicable thereafter. The Secretary shall maintain minutes reflecting
Committee meetings and shall cause each action taken in writing without a
meeting, and each written confirmation of action taken by conference
telephone or similar communications equipment, to be included in the
minutes of the Committee.
8.4.2 The Chief Executive Officer of the Company shall name one of
the members of the Committee as Chairman. The members of the Committee
shall elect a Secretary who may, but need not be, a member of the
Committee, and they may appoint from their number such subcommittees as
they shall determine.
8.5 PAYMENT OF BENEFITS. The Committee shall advise the Trustee in
writing with respect to all benefits which become payable under the terms of the
Plan and shall direct the Trustee to pay such benefits to or on order of the
Committee. The Committee shall be authorized to give to any party such
instructions as may be necessary or appropriate in order to provide for the
payment of benefits in accordance with the Plan.
8.6 POWERS AND AUTHORITY: ACTION CONCLUSIVE. Except as otherwise
expressly provided in the Plan or in the Trust Agreement, or by the Board of
Directors of the Company:
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8.6.1 The Committee shall be responsible for the administration of
the Plan.
8.6.2 The Committee shall have all powers necessary or helpful for
the carrying out of its responsibilities, and the decisions or action of
the Committee in good faith in respect of any matter hereunder shall be
conclusive and binding upon all parties concerned.
8.6.3 The Committee may delegate to one or more of its members or any
other person the right to act on its behalf in all matters connected with
the administration of the Plan.
8.6.4 Without limiting the generality of the foregoing, the Committee
shall have full discretionary authority to:
8.6.4.1 Determine all questions arising out of or in
connection with the terms and provisions of the Plan except as
otherwise expressly provided herein;
8.6.4.2 Make rules and regulations for the administration of
the Plan which are not inconsistent with the terms and provisions of
the Plan, and fix the annual accounting period of the trust
established under the Trust Agreement as required for tax purposes;
8.6.4.3 Construe all terms, provisions, conditions and
limitations to the Plan;
8.6.4.4 Determine all questions relating to (i) the
eligibility of persons to receive benefits hereunder, (ii) the amount
of Compensation and
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Earnings of a Participant during any period hereunder, and (iii) all
other matters upon which the benefits or other rights of a
Participant or other person shall be based hereunder;
8.6.4.5 Determine all questions relating to the administration
of the Plan (i) when disputes arise between an Employer and a
Participant or his Beneficiary, spouse or legal representatives, and
(ii) whenever the Committee deems it advisable to determine such
questions in order to promote the uniform administration of the Plan.
The foregoing list of powers is not intended to be either complete or exclusive,
and the Committee shall, in addition, have such powers as may be necessary for
the performance of its duties under the Plan and the Trust Agreement.
8.7 COUNSEL AND AGENTS. The Committee may employ such counsel, including
legal counsel, accountants, investment advisors, physicians, agents and such
clerical and other services as it may require in carrying out the provisions of
the Plan, and shall charge the fees, charges and costs resulting from such
employment as an expense of the Trust Fund unless paid by an Employer. Unless
otherwise provided by law, any person so employed by a Committee may be legal or
other counsel to an Employer, a Subsidiary, a member of a Committee or an
officer or member of the Board of Directors of an Employer or a Subsidiary.
8.8 RELIANCE ON INFORMATION. The members of the Committee and any
Employer and its officers, directors and employees shall be entitled to rely
upon all tables, valuations, certificates, opinions, and reports furnished by
any accountant, trustee, insurance company,
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counsel or other expert who shall be engaged by an Employer or the Committee,
and the members of the Committee and any Employer and its officers, directors
and employees shall be fully protected in respect of any action taken or
suffered by them in good faith in reliance thereon, and all action so taken or
suffered shall be conclusive upon all persons affected thereby.
8.9 FIDUCIARIES. The Plan and the operation of the Plan are intended to
satisfy the provisions of Section 404(c) of ERISA. Subject to the preceding
sentence, the provisions of this Section 8.9 shall apply notwithstanding any
other contrary provisions of the Plan or the Trust Agreement.
8.9.1 The named fiduciaries under the Plan shall be the members of
the Committee, who shall be named fiduciaries with respect to control or
management of the assets of the Plan, and who shall have authority to
control or manage the operation and administration of the Plan, except
with respect to those matters which under the Plan or the Trust Agreement
are the responsibility, or subject to the authority, of the Trustee.
8.9.2 The named fiduciaries under the Plan shall have the right,
which shall be exercised in accordance with the procedures set forth in
Section 8.4.1 and/or in the Trust Agreement for action by the Committee,
to allocate responsibilities, fiduciary or otherwise, among named
fiduciaries, and the named fiduciaries (or any of them to whom such right
shall be allocated) shall have the right to designate persons other than
named fiduciaries to carry out responsibilities, fiduciary or otherwise,
under the Plan.
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8.9.3 The members of the Committee shall together establish and carry
out, or cause to be provided by those persons (including without
limitation, any investment manager, trustee or insurance company) to whom
responsibility or authority therefor has been allocated or delegated in
accordance with this Plan or the Trust Agreement, a funding policy and
method consistent with the objectives of the Plan and the requirements of
ERISA. For such purposes, the Committee shall, at a meeting duly called
for the purpose, establish a funding policy and method which satisfies
the requirements of ERISA, and shall meet annually at a stated time of
the year to review such funding policy and method. All actions taken with
respect to such funding policy and method and the reasons therefor shall
be recorded in the minutes of the meetings of the Committee.
8.9.4 Any person or group of persons may serve in more than one
fiduciary capacity with respect to the Plan.
8.9.5 Any named fiduciary under the Plan, and any fiduciary
designated by a named fiduciary pursuant to Section 8.9.2 to whom such
power is granted by a named fiduciary under the Plan, may employ one or
more Persons to render advice with regard to any responsibility such
fiduciary has under the Plan.
8.9.6 The Committee or such of them to whom such power shall be
allocated, may appoint an investment manager or managers, as defined in
section 3(38) of ERISA, to manage (including the power to acquire, invest
and dispose of) any assets of the Plan.
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8.9.7 Except to the extent otherwise provided by law, if any duty or
responsibility of a named fiduciary has been allocated or delegated to
any other person in accordance with any provision of this Plan or of the
Trust Agreement, then such named fiduciary shall not be liable for an act
or omission of such person in carrying out such duty or responsibility.
8.10 PLAN ADMINISTRATOR. The Company shall be the administrator of the
Plan, as defined in section 3(16)(A) of ERISA.
8.11 NOTICES AND ELECTIONS. An Employee shall deliver to the Committee
all directions, orders, designations, notices or other communications on
appropriate forms to be furnished by the Committee. The Committee shall also
receive notices or other communications for Participants from the Trustee and
transmit them to the Participants. All elections which may be made by a
Participant under this Plan shall be made in a time, manner and form determined
by the Committee unless a specific time, manner or form is set forth in the
Plan.
8.12 TAXES PAYABLE BY TRUSTEE. Taxes, if any, other than transfer taxes,
payable by the Trustee shall be charged against the Tax Deferred Accounts and
Personal Investment Accounts pro rata to the values of the cash and/or
securities affected.
8.13 ROLLOVERS. An Employee (whether or not otherwise eligible to
participate in the Plan) may, with the consent of the Committee, transfer to the
Plan all or any portion of the property such Employee received from a plan
qualified under Section 401(a) of the Code provided that such distribution is an
eligible rollover distribution as such term is defined in Section 402(c) of the
Code ("Rollover Deposits").
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8.14 PLAN-TO PLAN TRANSFERS. The Trustee may transfer the balance of a
Participant's Tax Deferred Account and Personal Investment Account to the
trustees of any trust qualified under Section 401(a) of the Code. The Trustee
may make such a transfer only at the direction of the Committee.
The Trustee may accept as part of the Trust Fund property transferred
from a trust qualified under Section 401(a) of the Code. The Trustee may accept
such a transfer only at the direction of the Committee. Such property shall at
all times be maintained by the Trustee in a segregated account. A Participant
shall at all times be one hundred percent (100%) vested in any property so
transferred to the Trust Fund. Such property shall be distributed to the
Participant or his Beneficiary within the time required for distribution of his
Tax Deferred Account and Personal Investment Account under Article V.
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ARTICLE IX
AMENDMENT, TERMINATION, ADOPTION AND MERGER
-------------------------------------------
9.1 Modification or Amendment of Plan. The Company reserves the right at
any time and from time to time to amend the Plan in whole or in part; provided
that, except as provided in Section 9.4 or as otherwise permitted by law, no
amendment shall be made which (a) would cause or permit any part of the corpus
or income of the Trust Fund to be diverted to purposes other than for the
exclusive benefit of Participants or their Beneficiaries, (b) would cause or
permit any portion of the assets of the Trust Fund to revert to or become the
property of any Employer or Affiliate at any time, or (c) would divest any
Participant of any amount previously credited to his Tax Deferred Account or
Personal Investment Account. However, the Committee shall also have the right,
subject to the same restrictions set forth in the first sentence of this Section
9.1, to amend the Plan (a) to retain the Plan's qualified status under Code
Section 401(a), or to comply with any other provision of law, or (b) in any
other respect to the extent that the annual cost of such amendments to the Plan
for the Plan Year under this clause (b), determined without regard to the
effective date of such amendments, does not exceed five hundred thousand dollars
($500,000). The Committee shall report to the Finance and Pension Committee of
the Board of Directors of the Company at its next meeting regarding any
amendments adopted by the Committee pursuant to this Section 9.1.
9.2 TERMINATION OF PLAN OR DISCONTINUANCE OF CONTRIBUTIONS. The Plan may
be terminated by the Company at any time in the Company's sole discretion, in
whole or in
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part. Upon any such termination, the Committee shall instruct the Trustee either
(a) to distribute or dispose of the net assets of the Trust Fund (remaining
after payment of or provision for all expenses of final administration and
liquidation) exclusively for the benefit of all Participants (or their
Beneficiaries, as the case may be) according to their respective shares of the
Trust Fund as of the date of such termination or discontinuance, or (b) to
continue the Trust Fund with distributions to be made at the time and in the
manner provided for by Article V.
9.3 EXPENSES OF TERMINATION In the event of the complete or partial
termination of the Plan, the expenses incident thereto shall be a prior claim
and lien upon the assets of the Trust Fund and shall be paid or provided for
prior to the distribution of any benefits pursuant to such termination, unless
such expenses are paid by an Employer.
9.4 AMENDMENTS REQUIRED FOR QUALIFICATION. All provisions of this Plan,
and all benefits and rights granted hereunder, are subject to any amendments,
modifications or alterations which are necessary from time to time to qualify
the Plan under section 401(a) of the Code or corresponding provisions of
subsequent law, to continue the Plan as so qualified, to meet the requirements
of section 401(k) of the Code or to comply with any other provision of law.
Accordingly, notwithstanding any other provisions of this Plan, the Company may
amend, modify or alter the Plan with retroactive effect in any respect or manner
necessary to qualify the Plan under section 401(a) of the Code, to continue the
Plan as so qualified, to meet the requirements of section 401(k) of the Code or
to comply with any other provision of law.
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9.5 ADOPTION OF PLAN BY EMPLOYERS.
9.5.1 With the consent of the Company, any Subsidiary may adopt the
Plan and the Trust Agreement for any of its divisions or locations as it
may specify by delivering to the Committee and the Trustee:
9.5.1.1 A written instrument, duly executed and acknowledged:
(a) adopting and assuming, jointly and severally, the
obligations of the Company under the Plan and Trust
Agreement;
(b) appointing the Company and the Committee as its agents
and attorneys-in-fact for all purposes with respect to
the Plan and Trust Agreement, including amending or
terminating the Plan and Trust Agreement and giving or
receiving notices, instructions, directions and other
communications to the Trustee; and
(c) specifying the divisions or locations for which it is
adopting the Plan and Trust Agreement.
9.5.1.2 A duly certified copy of resolutions of the board of
directors of the adopting corporation, or a similar document from the
person or persons having the power to bind the partnership or other
entity, authorizing the adoption of the Plan and the Trust Agreement
and approving and authorizing the execution, acknowledgment and
delivery of the written instrument described in Section 9.5.1.1; and
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9.5.1.3 A copy of a document evidencing the Company's consent
to the adoption of the Plan and the Trust Agreement by such
Subsidiary.
9.5.2 The Company's consent to any adoption of this Plan and Trust
Agreement shall be evidenced by:
9.5.2.1 written approval and consent to such adoption by the
Committee if such adoption would add fewer than 100 Eligible
Employees or
9.5.2.2 a resolution of the Company's Board of Directors
approving and consenting to such adoption if such adoption would add
100 or more Eligible Employees on its effective date.
9.5.3 In giving its consent to any adoption of the Plan and Trust
Agreement under Section 9.5.2, the Company or the Committee may make its
consent subject to such terms and conditions as it may prescribe.
9.6 DISCONTINUANCE OF PARTICIPATION. An Employer's discontinuance of its
participation under the Plan may be voluntary or involuntary, partial or
complete, as described below:
9.6.1 Any Employer may, with the approval of the Committee, elect, at
any time, to discontinue its participation hereunder in whole or in part
with respect to any of its divisions or locations by filing written
notice thereof with the Committee and specifying the group or groups of
Participants affected by such election.
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9.6.2 The Plan shall discontinue as to all Participants of any
Employer which shall be declared bankrupt or which makes any general
assignment for the benefit of creditors.
9.6.3 The Plan shall discontinue as to Participants of any Employer
in the event of the dissolution, merger, consolidation, or sale or other
disposition of the business and assets or stock of such Employer, unless
provision is made for the continuance of the Plan by a successor. In the
event the Plan is discontinued pursuant to this Section 9.6.3, the
Committee shall make such current or deferred distribution to the
Participants affected by such discontinuance as it shall deem appropriate
and in accordance with Section 9.7 and the other provisions of the Plan;
provided, however, if provision is made for the continuance of the Plan
by a successor, the Board of Directors of the Company or, if such
disposition of the business is either approved by the Board of Directors
of the Company or is a disposition for which no approval by the Board of
Directors is required, the Committee may, if they so determine, direct
that the portion of the Trust Fund allocable to such Participants be
transferred to a successor qualified plan or funding medium covering such
Participants. The Committee, in its sole discretion, may permit the value
of such Participants' Tax Deferred Accounts and Personal Investment
Accounts to remain in the Plan pending the completion of the dissolution,
merger, consolidation or sale or other disposition of the business and
assets or stock of such Participants' Employer, as the case may be, for
such a period of time as shall be designated by the Committee.
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9.7 MERGER. Subject to the provisions of this Section 9.7, the Plan may
be amended to provide for the merger of the Plan, in whole or in part, or a
transfer of all or a part of its assets or liabilities, to any other qualified
plan within the meaning of section 401(a) or 403(a) of the Code, including such
a merger or transfer in lieu of a distribution which might otherwise be required
under the Plan. In the event of such a merger or consolidation of this Plan or
transfer of its assets or liabilities to any other plan in whole or in part,
each Participant shall be entitled to a benefit immediately after the merger,
consolidation or transfer (if such other plan then terminated) which is equal to
or greater than the benefit he would have been entitled to receive immediately
before the merger, consolidation or transfer (if the Plan had then been
terminated).
9.8 TRANSFER OF A SUBSIDIARY, DIVISION, BRANCH OR BUSINESS UNIT.
Notwithstanding anything herein to the contrary, if at any time a subsidiary or
any division, branch or business unit of the Company shall be transferred as a
going business and on that account certain Participants shall remain in the
employ of any subsidiary or shall transfer to the acquiring company, the Board
of Directors or, if such transfer of a subsidiary, division, branch or business
unit of the Company is either approved by the Board or is a transfer for which
no approval by the Board is required, the Administrative Committee may, if they
so determine, provide for the withdrawal and segregation of the assets of the
Trust Fund attributable to such Participants, based on the value of their
respective accrued benefits including Company payments in the Trust Fund
determined as though such Participants had terminated employment as of the date
of such transfer as a going business.
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ARTICLE X
MISCELLANEOUS
-------------
10.1 CLAIMS PROCEDURE. If a claim for benefits under this Plan is wholly
or partially denied, the claimant shall be provided with a notice setting forth
the specific reason or reasons for the denial, specific reference to pertinent
Plan provisions on which the denial is based, a description of any additional
material or information necessary for the claimant to perfect the claim, an
explanation of why such material or information is necessary, and an explanation
of the Plan's claim review procedure. Within 60 days after notification of a
denial of benefits, such claimant may, upon written application, appeal such
denial to the Committee for a review. Such claimant (or his duly authorized
representative) may review pertinent documents and submit issues and comments in
writing. Within 60 days of receipt of such written application for review, the
Committee shall make a decision in writing, including specific reasons for the
decision, with references to the pertinent Plan provisions. Under special
circumstances the Committee may extend the time for processing such a review,
but a decision shall be rendered not later than 120 days after receipt of the
request for review. In the event that government regulations shall impose a
different standard for review, such required standard shall be followed in lieu
of the above.
10.2 PLAN NOT AN EMPLOYMENT CONTRACT. Neither the adoption of this Plan
by an Employer nor any action of any Employer, the Committee, or the Trustee
under this Plan, nor participation in this Plan or failure to participate in
this Plan by any person, shall be held or construed to confer upon any person
any legal right to be continued as an employee of any Employer or Affiliate. All
employees, whether or not they participate in this Plan, shall be
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subject to discharge to the same extent as they would have been if this Plan had
never been adopted.
10.3 CONSENT TO TERMS OF PLAN AND TRUST AGREEMENT. An Employee by
becoming a Participant in this Plan consents and agrees to all the terms and
provisions of this Plan, the Trust Agreement, and any rules and regulations
adopted by the Committee pursuant to the provisions of this Plan, as they may
each be amended from time to time.
10.4 TRANSFER OF INTEREST NOT PERMITTED. Except as respects any
assignment or encumbrance to secure a loan from the Trust Fund which is made
pursuant to Section 5.8, and except as set forth in Section 10.4.1 and as
otherwise may be required by law, no person shall have any power to assign,
transfer, pledge, encumber, commute, or anticipate any interest in the Trust
Fund or in any payment to be made under the Plan, and any attempt to assign,
transfer, pledge, encumber, commute or anticipate the same shall be void; nor
shall any such interest be in any way liable for or subject to the debts,
contracts, liabilities, engagement or torts of the person entitled to such
benefit or payment or subject to levy, garnishment, attachment, execution or
other legal or equitable process.
10.4.1 QUALIFIED DOMESTIC RELATIONS ORDER. The provisions of Section
10.4 shall not be applicable to a Qualified Domestic Relations Order and
payment of benefits shall be made in accordance with the terms of such
order.
The Committee shall promptly notify a Participant and any Alternate
Payee of the receipt of a Domestic Relations Order and of the Plan's
procedure for determining whether the order constitutes a Qualified
Domestic Relations Order. Within a reasonable period of time after the
receipt of such order, the Committee,
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in accordance with such procedures as it shall from time to time
establish, shall determine whether such order constitutes a Qualified
Domestic Relations Order and shall notify the Participant and each
Alternate Payee of such determination.
During any period of time in which the issue of whether a Domestic
Relations Order constitutes a Qualified Domestic Relations Order is being
determined by the Committee, by a court of competent jurisdiction, or
otherwise, the Committee shall separately account for the amounts which
would have been payable to the alternate payee during such period if the
order had been determined to be a Qualified Domestic Relations Order. If
within the eighteen (18) month period beginning on the date on which the
first payment would be required to be made under the Domestic Relations
Order such order is determined to be a Qualified Domestic Relations
Order, the Committee shall pay such amounts to the person or persons
entitled thereto. If within such eighteen (18) month period it is
determined that such order is not a Qualified Domestic Relations Order,
or the issue as to whether such order so qualifies is not resolved, then
the Committee shall pay such amounts to the person or persons who would
have been entitled to such amounts if there had been no order. Any
determination that an order is a Qualified Domestic Relations Order which
is made after the end of such eighteen-month period shall be applied
prospectively only. The provisions of this Section 10.4.1 became
effective as of January 1, 1985, provided however, that in the case of a
Domestic Relations Order entered before such date, the Committee:
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(a) shall treat such order as a Qualified Domestic Relations Order
if the Trustee is paying benefits pursuant to such order on
January 1, 1985; and
(b) may treat any other Domestic Relations Order entered before
January 1, 1985 as a Qualified Domestic Relations Order even if
such order does not meet the requirements of the preceding
provisions of this Section 10.4.1.
10.5 OBLIGATIONS OF EMPLOYERS LIMITED. The Employers assume no
obligations under this Plan except those specifically stated in this Plan. No
person shall have any right to participate in profits by reason of this Plan
except to the extent expressly set forth herein. The Employers shall be under no
legal obligation to make any contributions to the Trust Fund except as expressly
provided herein.
10.6 SEPARATION OF INVALID PROVISIONS. If any provision of this Plan or
the Trust Agreement is held invalid, the remainder of the Plan or Trust
Agreement shall not be affected thereby.
10.7 PAYMENT TO A MINOR OR INCOMPETENT. In the event that any amount is
payable to a minor or other legally incompetent person, such amount may be paid
in any of the following ways, as the Committee in its sole discretion shall
determine:
10.7.1 To the legal representatives of such minor or other
incompetent person;
10.7.2 Directly to such minor or other incompetent person;
91
<PAGE>
10.7.3 To a parent or guardian of such minor, or to a custodian for
such minor under the Uniform Gifts to Minors Act (or similar statute) of
any jurisdiction or to the person with whom such minor shall reside.
Payment to such minor or incompetent person, or to such other person as may be
determined by the Committee, as above provided, shall discharge all Employers,
the Committee, the Trustee and any insurance company or other person or
corporation making such payment pursuant to the direction of the Committee, and
none of the foregoing shall be required to see to the proper application of any
such payment to such person pursuant to the provisions of this Section 10.7.
10.8 DOUBT AS TO RIGHT TO PAYMENT. If at any time any doubt exists as to
the right of any person to any payment hereunder or as to the amount or time of
such payment (including, without limitation, any doubt as to identity, or any
case in which any notice has been received from any other person claiming any
interest in amounts payable hereunder, or any case in which a claim from other
persons may exist by reason of community property or similar laws), the
Committee shall be entitled, in its discretion, to direct the Trustee (or any
insurance company) to hold such sum as a segregated amount in trust until such
right or amount or time is determined or until order of a court of competent
jurisdiction, or to pay such sum into court in accordance with appropriate rules
of law in such case then provided, or to make payment only upon receipt of a
bond or similar indemnification (in such amount and in such form as is
satisfactory to the Committee).
10.9 FORFEITURE UPON INABILITY TO LOCATE DISTRIBUTEE. Notwithstanding any
other provision of the Plan, in the event that the Committee cannot locate any
person to whom a
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payment is due under the Plan, and no other payee has become entitled thereto
pursuant to any provision of the Plan, the benefit in respect of which such
payment is to be made shall be forfeited at such time as the Committee shall
determine in its sole discretion (but in all events prior to the time such
benefit would otherwise escheat under any applicable state law); provided that
any benefit so forfeited shall be restored if such person subsequently makes a
valid claim for such benefit.
10.10 CONTRIBUTIONS CONDITIONED ON INITIAL QUALIFICATION AND
DEDUCTIBILITY. Notwithstanding any other provision of this Plan, each Before Tax
Contribution, related Company Contribution, Additional Contribution and
Additional Company Contribution made by an Employer under this Plan is
conditioned on:
10.10.1 A determination by the Internal Revenue Service that the
Plan qualifies under section 401 of the Code for the Plan Year as to
which such Employer first makes a contribution hereunder; and
10.10.2 The deductibility of such contribution under section 404
of the Code.
10.11 NO DIVERSION OF TRUST FUND. It shall be impossible at any time for
any part of the Trust Fund to be (within the taxable year or thereafter) used
for or diverted to purposes other than for the exclusive benefit of Participants
and their Beneficiaries (including the payment of the expenses of the
administration of the Plan and of the Trust); provided that:
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<PAGE>
10.11.1 A contribution that is made by an Employer by a mistake of
fact shall be returned to such Employer upon its request within one year
after the payment of the contribution; or
10.11.2 A contribution that is conditioned upon its deductibility
under section 404 of the Code shall be returned to the contributing
Employer upon its request, to the extent that the contribution is
disallowed as a deduction, within one year after such disallowance; or
10.11.3 A contribution that is conditioned on qualification of the
Plan under section 401 of the Code shall, if the Plan does not so
qualify, be returned to the contributing Employer within one year after
the date of denial of qualification of the Plan.
Subject to Article IX, the Trust shall continue for such time as may be
necessary to accomplish the purpose for which it is created.
10.12 USAGE. Whenever applicable the masculine gender, when used in the
Plan, shall include the feminine and neuter genders, and the singular shall
include the plural.
10.13 GOVERNING LAW. The Plan shall be governed by, construed and
administered under the law of the State of Connecticut without regard to the
principles of conflict of laws, to the extent not preempted by Federal law.
10.14 CAPTIONS. The captions contained herein are inserted only as a
matter of convenience and for reference and in no way define, limit, enlarge or
describe the scope or intent of the Plan and in no way shall affect the Plan or
the construction of any provision thereof.
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<PAGE>
IN WITNESS WHEREOF, and as evidence of the adoption of this Plan, the
Company has caused this instrument to be signed by its duly authorized officer
and its corporate seal to be hereunto affixed and attested this day of ,
1997.
UCAR CARBON COMPANY INC.
By /s/ John C. Arnold
------------------
(title)
95
EXHIBIT 11
<TABLE>
UCAR INTERNATIONAL INC.
COMPUTATION OF EARNINGS PER SHARE
(Dollars in millions, except per share data)
<CAPTION>
THREE MONTHS ENDED JUNE 30,
____________________________________________________
1997 1996
_______________________ _______________________
Fully Fully
Primary Diluted Primary Diluted
__________ __________ __________ __________
<S> <C> <C> <C> <C>
Income before cumulative effect of change in accounting principles........... $ 42.4 $ 42.4 $ 37.8 $ 37.8
Cumulative effect on prior years of change in accounting for inventories..... - - - -
__________ __________ __________ __________
Net income - common stockholders.................................... $ 42.4 $ 42.4 $ 37.8 $ 37.8
Weighted average number of common and common equivalent shares
applicable to each earnings per share calculation:
Weighted average number of shares outstanding............................. 45,770,451 45,770,451 46,181,461 46,181,461
Dilutive effect of stock options.......................................... 1,953,396 2,020,195 2,225,151 2,225,545
__________ __________ __________ __________
47,723,847 47,790,646 48,406,612 48,407,006
========== ========== ========== ==========
Net income per common share (A):
Income before cumulative effect of change in accounting principles........ $ 0.89 $ 0.89 $ 0.78 $ 0.78
Cumulative effect on prior years of change in accounting for inventories.. - - - -
__________ __________ __________ __________
Net income per share................................................ $ 0.89 $ 0.89 $ 0.78 $ 0.78
========== ========== ========== ==========
(A) Fully diluted earnings per share is not significantly different than primary net income per share and, therefore, has not been
presented on the face of the Consolidated Statements of Operations.
<CAPTION>
SIX MONTHS ENDED JUNE 30,
____________________________________________________
1997 1996
_______________________ _______________________
Fully Fully
Primary Diluted Primary Diluted
__________ __________ __________ __________
<S> <C> <C> <C> <C>
Income before cumulative effect of change in accounting principles........... $ 79.3 $ 79.3 $ 73.0 $ 73.0
Cumulative effect on prior years of change in accounting for inventories..... - - 7.0 7.0
__________ __________ __________ __________
Net income - common stockholders.................................... $ 79.3 $ 79.3 $ 80.0 $ 80.0
========== ========== ========== ==========
Weighted average number of common and common equivalent shares
applicable to each earnings per share calculation:
Weighted average number of shares outstanding............................. 46,253,314 46,253,314 46,098,338 46,098,338
Dilutive effect of stock options.......................................... 2,002,489 2,037,100 2,200,237 2,230,957
__________ __________ __________ __________
48,255,803 48,290,414 48,298,575 48,329,295
========== ========== ========== ==========
Net income per common share (A):
Income before cumulative effect of change in accounting principles........ $ 1.64 $ 1.64 $ 1.51 $ 1.51
Cumulative effect on prior years of change in accounting for inventories.. - - 0.15 0.15
__________ __________ __________ __________
Net income per share................................................ $ 1.64 $ 1.64 $ 1.66 $ 1.66
========== ========== ========== ==========
(A) Fully diluted earnings per share is not significantly different than primary net income per share and, therefore, has not been
presented on the face of the Consolidated Statements of Operations.
</TABLE>
E-21
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY CONSOLIDATED FINANCIAL INFORMATION EXTRACTED FROM
THE CONSOLIDATED FINANCIAL STATEMENTS OF UCAR INTERNATIONAL INC. INCLUDED IN ITS
FORM 10-Q FOR THE QUARTER ENDED JUNE 30, 1997 AND ITS FORM 10-Q FOR THE QUARTER
ENDED JUNE 30, 1996, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
CONSOLIDATED FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000931148
<NAME> UCAR INTERNATIONAL INC.
<MULTIPLIER> 1,000,000
<S> <C> <C>
<PERIOD-TYPE> 6-MOS 6-MOS
<FISCAL-YEAR-END> DEC-31-1997 DEC-31-1996
<PERIOD-START> JAN-01-1997 JAN-01-1996
<PERIOD-END> JUN-30-1997 JUN-30-1996
<CASH> 60 39
<SECURITIES> 13 0
<RECEIVABLES> 253 209
<ALLOWANCES> 6 12
<INVENTORY> 213 169
<CURRENT-ASSETS> 557 430
<PP&E> 1296 1023
<DEPRECIATION> 714 647
<TOTAL-ASSETS> 1201 877
<CURRENT-LIABILITIES> 279 199
<BONDS> 667 603
0 0
0 0
<COMMON> 0 0
<OTHER-SE> 31 (79)
<TOTAL-LIABILITY-AND-EQUITY> 1201 877
<SALES> 528 484
<TOTAL-REVENUES> 528 484
<CGS> 330 295
<TOTAL-COSTS> 330 295
<OTHER-EXPENSES> 4 4
<LOSS-PROVISION> (1) 1
<INTEREST-EXPENSE> 31 31
<INCOME-PRETAX> 112 108
<INCOME-TAX> 34 38
<INCOME-CONTINUING> 79 73
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 7
<NET-INCOME> 79 80
<EPS-PRIMARY> 1.64 1.66
<EPS-DILUTED> 1.64 1.66
</TABLE>
