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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C 20549
FORM 10-K
Annual Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the fiscal year ended Commission file number
December 31, 1998 1-9608
NEWELL CO.
(Exact name of Registrant as specified in its charter)
DELAWARE 36-3514169
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Newell Center
29 East Stephenson Street
Freeport, Illinois
(Address of principal 61032-0943
executive offices) (Zip Code)
Registrant's telephone number, including area code: (815) 235-4171
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
------------------- ---------------------
Common Stock, $1 par value per New York Stock Exchange
share, and associated Common Chicago Stock Exchange
Stock Purchase Rights
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (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
----- -----
2
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of Registrant's knowledge, in definitive proxy
or information statements incorporated by reference in Part III of
this Form 10-K or any amendment to this Form 10-K. (X)
There were 162.7 million shares of the Registrant's Common Stock
outstanding as of December 31, 1998. The aggregate market value of
the shares of Common Stock (based upon the closing price on the New
York Stock Exchange on that date) beneficially owned by nonaffiliates
of the Registrant was approximately $6,381.3 million. For purposes of
the foregoing calculation only, which is required by Form 10-K, the
Registrant has included in the shares owned by affiliates those shares
owned by directors and officers of the Registrant, and such inclusion
shall not be construed as an admission that any such person is an
affiliate for any purpose.
Documents Incorporated by Reference
Part III
Portions of the Registrant's Definitive Proxy Statement for its
Annual Meeting of Stockholders to be held May 26, 1999.
3
Item 1. Business
--------
"Newell" or the "Company" refers to Newell Co. alone or with its
wholly-owned subsidiaries, as the context requires.
GENERAL
-------
The Company is a manufacturer and full-service marketer of staple
consumer products sold to high-volume purchasers, including, but not
limited to, discount stores and warehouse clubs, home centers and
hardware stores, and office superstores and contract stationers. The
Company's basic business strategy is to merchandise a multi-product
offering of brand name consumer products, which are concentrated in
product categories with relatively steady demand not dependent on
changes in fashion, technology or season, and to differentiate itself
by emphasizing superior customer service. The Company's multi-product
offering consists of staple consumer products in three major product
groups: Hardware and Home Furnishings, Office Products, and
Housewares. The Company's primary financial goals are to increase
sales and earnings per share an average of 15% per year, to achieve an
annual return on beginning equity of 20% or above, to increase
dividends per share in line with earnings growth and to maintain a
prudent ratio of total debt to total capitalization, net of cash
("leverage"). For the ten years ended December 31, 1998, the
Company's compound annual growth rates for sales and earnings per
share were 13% and 16%, respectively, its average annual return on
beginning equity was 21%, its compound annual growth rate for
dividends per share was 18% and its average leverage were 26%.
The Company's growth strategy emphasizes acquisitions and
internal growth. The Company has grown both domestically and
internationally by acquiring businesses with brand name product lines
and improving the profitability of such businesses through an
integration process called "Newellization." Since 1990, the Company
has completed more than 20 major acquisitions (excluding Rubbermaid)
representing approximately $3 billion in additional sales. The
Company supplements acquisition growth with internal growth,
principally by introducing new products, entering new domestic and
international markets, adding new customers, cross-selling existing
product lines to current customers and supporting its U.S.-based
customers' international expansion.
On October 20, 1998, the Company and Rubbermaid Incorporated
("Rubbermaid") entered into an Agreement and Plan of Merger ("Merger
Agreement"), providing for the merger of a subsidiary of the Company
into Rubbermaid, leaving Rubbermaid a wholly owned subsidiary of
Newell ("Proposed Merger"). After the Proposed Merger, the Company
will be re-named "Newell Rubbermaid Inc." The Proposed Merger will be
accounted for as a pooling of interests and will be tax-free for
federal income tax purposes. The Company and Rubbermaid expect the
4
Proposed Merger to become effective before the end of the first
quarter of 1999. All information in this Report pertains to the
Company prior to the Proposed Merger, unless explicity stated
otherwise.
Forward-looking statements in this Report are made in reliance
upon the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995. Such forward-looking statements may relate to,
but are not limited to, such matters as sales, income, earnings per
share, return on equity, capital expenditures, dividends, capital
structure, free cash flow, debt to capitalization ratios, internal
growth rates, Euro conversion plans and related risks, Year
2000 plans and related risks, pending legal proceedings and claims
(including environmental matters), future economic performance,
management's plans, goals and objectives for future operations and
growth or the assumptions relating to any of the forward-looking
information. The Company cautions that forward-looking statements are
not guarantees since there are inherent difficulties in predicting
future results. Actual results could differ materially from those
expressed or implied in the forward-looking statements. Factors that
could cause actual results to differ include, but are not limited to,
those matters set forth in this Report, the documents incorporated by
reference herein and Exhibit 99 to this Report.
PRODUCT GROUPS
--------------
The Company's three product groups are Hardware and Home Furnishings,
Office Products, and Housewares.
HARDWARE AND HOME FURNISHINGS
-----------------------------
Window Treatments
-----------------
The Company's window treatments business is conducted by the
Levolor Home Fashions, Newell Window Furnishings and Newell Window
Fashions Europe divisions. Levolor Home Fashions and Newell Window
Furnishings primarily design, manufacture or import, package and
distribute drapery hardware, made-to-order and stock horizontal and
vertical blinds, and pleated, cellular and roller shades for the
retail marketplace. Levolor Home Fashions also produces window
treatment components for custom window treatment fabricators. Newell
Window Fashions Europe primarily designs, manufactures, packages and
distributes drapery hardware and made-to-order window treatments for
the European retail marketplace.
Levolor Home Fashions, Newell Window Furnishings and Newell
Window Fashions Europe products are sold primarily under the
trademarks Newell{R}, Levolor{R}, Louverdrape{R}, Del Mar{R},
5
Kirsch{R}, Acrimo{TM}, Swish{R}, Gardinia{TM}, Spectrim{R},
MagicFit{R}, Riviera{R} and Levolor Cordless{TM}.
Levolor Home Fashions and Newell Window Furnishings market their
products directly and through distributors to mass merchants, home
centers, department/specialty stores, hardware distributors, custom
shops and select contract customers, using a network of manufacturers'
representatives, as well as regional account and market-specific sales
managers. Newell Window Fashions Europe markets its products to mass
merchants and buying groups using a direct sales force.
Principal U.S. facilities are located in Freeport, Illinois; High
Point, North Carolina and Sturgis, Michigan. Principal foreign
facilities are located in Prescott, Ontario, Canada; Ablis, France;
Isny, Germany; Milan, Italy; Lisbon, Portugal; Vitoria, Spain; Malmo,
Sweden; and Tamworth, Great Britain.
Hardware and Tools
------------------
The Company's hardware and tools business is conducted by the
Amerock Cabinet and Window Hardware Systems, Bulldog Fastener, EZ
Paintr and BernzOmatic divisions. Amerock Cabinet and Window Hardware
Systems manufacture or import, package and distribute cabinet hardware
for the retail and O.E.M. marketplace and window hardware for window
manufacturers. Bulldog packages and distributes hardware, which
includes bolts, screws and mechanical fasteners. EZ Paintr
manufactures and distributes manual paint applicator products.
BernzOmatic manufactures and distributes propane/oxygen hand torches.
Amerock, Bulldog, EZ Paintr and BernzOmatic products are sold
primarily under the trademarks Amerock{R}, Allison{R}, Bulldog{R},
EZ Paintr{R} and BernzOmatic{R}.
Amerock, Bulldog, EZ Paintr and BernzOmatic market their products
directly and through distributors to mass merchants, home centers,
hardware distributors, cabinet shops and window manufacturers, using a
network of manufacturers' representatives, as well as regional zone
and market-specific sales managers.
Principal facilities are located in Rockford, Illinois; St.
Francis, Wisconsin; and Medina, New York.
Picture Frames
--------------
The Company's picture frame business is conducted by the
Intercraft/Burnes division. Intercraft/Burnes primarily designs,
manufactures or imports, packages and distributes wood, wood composite
and metal ready-made picture frames and photo albums.
6
Intercraft/Burnes ready-made picture frames are sold primarily
under the trademarks Intercraft{R}, Decorel{R}, Burnes of Boston{R},
Carr{R}, Rare Woods{R} and Terragrafics{R}, while photo albums are
sold primarily under the Holson{R} trademark.
Intercraft/Burnes markets its products directly to mass
merchants, warehouse clubs, grocery/drug stores and
department/specialty stores, using a network of manufacturers'
representatives, as well as regional zone and market-specific sales
managers. Intercraft{R}, Decorel{R} and Holson{R} products are sold
primarily to mass merchants, while the remaining brands are sold
primarily to department/specialty stores.
Principal U.S facilities are located in Taylor, Texas;
Statesville, North Carolina; Claremont, New Hampshire; and Covington,
Tennessee. Principal foreign facilities are located in Mississauga,
Ontario, Canada and Durango, Mexico.
Home Storage Products
---------------------
The Company's home storage business is conducted by its Lee Rowan
division. Lee Rowan primarily designs, manufactures or imports,
packages and distributes wire storage and laminate products and
ready-to-assemble closet, organization and work shop cabinets.
Lee Rowan products are sold primarily under the trademarks Lee
Rowan{R} and System Works{R}.
Lee Rowan markets its products directly to mass merchants,
warehouse clubs, home centers and hardware stores, using a network of
manufacturers' representatives, as well as regional zone and
market-specific sales managers.
Principal facilities are located in Jackson, Missouri; Vista,
California; and Watford, Ontario, Canada.
OFFICE PRODUCTS
---------------
Markers and Writing Instruments
-------------------------------
The Company's Markers and Writing Instruments business is
conducted by the Sanford North America, Sanford International and
Cosmolab divisions. Sanford North America primarily designs,
manufactures or imports, packages and distributes permanent/waterbase
markers, dry erase markers, overhead projector pens, highlighters,
wood-cased pencils, ballpoint pens and inks, and other art supplies,
and distributes other writing instruments including roller ball pens
and mechanical pencils for the retail marketplace. Sanford
International primarily designs and manufactures, packages and
7
distributes ball point pens, wood-cased pencils, roller ball pens and
other art supplies for the retail marketplace. Cosmolab primarily
designs and manufactures, packages and distributes private label
cosmetic pencils for commercial customers.
Sanford products are sold primarily under the trademarks
Sanford{R}, Eberhard Faber{R}, Berol{R}, Grumbacher{R}, Koh-I-Noor{R}
and Rotring{R}, and the brands Sharpie{R}, Uni-Ball{R} (used under
exclusive license from Mitsubishi Pencil Co. Ltd. and its
subsidiaries), Expo{R}, Zeze{R}, Vis-a-Vis{R}, Expresso{R} and
Mongol{R}.
Sanford North America markets its products directly and through
distributors to mass merchants, warehouse clubs, grocery/drug stores,
office superstores, office supply stores, contract stationers, and
hardware distributors, using a network of manufacturers'
representatives, as well as regional direct sales representatives and
market-specific sales managers. Sanford International markets its
products directly to retailers and distributors using a direct sales
force.
Principal U.S. facilities are located in Bellwood, Illinois and
Lewisburg and Shelbyville, Tennessee. Principal foreign facilities
are located in Tlalnepantla, Mexico; Bogota, Colombia; Maracay,
Venezuela; King's Lynn, United Kingdom; Oakville, Ontario, Canada; and
Hamburg, Germany.
Office Storage and Organization Products
----------------------------------------
The Company's office storage and organization business is
conducted through its Newell Office Products division. Newell Office
Products primarily designs, manufactures or imports, packages and
distributes desktop accessories, computer accessories, storage
products, card files and chair mats.
Newell Office Products markets its products under the Rolodex{R},
Eldon{R} and Rogers{R} trademarks.
Newell Office Products markets its products directly and through
distributors to mass merchants, warehouse clubs, grocery/drug stores,
office superstores, office supply stores and contract stationers,
using a network of manufacturers' representatives, as well as regional
zone and market-specific sales managers.
Principal facilities are located in Moca, Puerto Rico; Maryville,
Tennessee; and Madison, Wisconsin.
8
HOUSEWARES
----------
Glassware
---------
The Company's glassware business is conducted by the Anchor
Hocking and Newell Europe divisions. These divisions primarily
design, manufacture, package and distribute glass products. These
products include glass ovenware, servingware, cookware and dinnerware
products. Anchor Hocking also produces foodservice products, glass
lamp parts, lighting components, meter covers and appliance covers for
the foodservice and specialty markets. Newell Europe also produces
glass components for appliance manufacturers, and its products are
marketed primarily in Europe, the Middle East and Africa only.
Anchor Hocking products are sold primarily under the Anchor
Hocking{R} trademark and the Oven Basics{R} brand name. Newell
Europe's products are sold primarily under the brand names of Pyrex{R}
and Visions{R} (both used under exclusive license from Corning
Incorporated and its subsidiaries in Europe, the Middle East and
Africa only), Pyroflam{TM}, and Vitri{TM}.
Anchor Hocking markets its products directly to mass merchants,
warehouse clubs, grocery/drug stores, department/specialty stores,
hardware distributors and select contract customers, using a network
of manufacturers' representatives, as well as regional zone and
market-specific sales managers. Anchor Hocking markets its products
to manufacturers that supply the mass merchant and home party channels
of trade. Newell Europe markets its products to mass merchants,
industrial manufacturers and buying groups using a direct sales force
and manufacturers' representatives in some markets.
Principal U.S. facilities are located in Lancaster, Ohio and
Monaca, Pennsylvania. Principal foreign facilities are located in
Sunderland, Great Britain; Muhltal, Germany; and Chateauroux, France.
Aluminum Cookware and Bakeware
------------------------------
The Company's aluminum cookware and bakeware business is
conducted by the Mirro and Calphalon divisions. Mirro primarily
designs, manufactures, packages and distributes aluminum cookware and
bakeware for the U.S. and Latin American retail marketplace. Mirro
also designs, manufactures, packages and distributes various
specialized aluminum cookware and bakeware items for the food service
industry. It also produces aluminum contract stampings and components
for other manufacturers and makes aluminum and plastic kitchen tools
and utensils. Mirro manufacturing operations are highly integrated,
rolling sheet stock from aluminum ingot, and producing phenolic
handles and knobs at its own plastics molding facility. Calphalon
9
primarily designs, manufactures or imports, packages and distributes
aluminum cookware and bakeware for the department/specialty store
marketplace.
Mirro and Calphalon products are sold primarily under the
trademarks Mirro{R}, Wearever{R}, Calphalon {R}, Panex{TM},
Penedo{TM}, Rochedo {TM} and Clock {TM}, and the brand names of
Airbake{R}, Cushionaire{R}, Concentric Air{R}, Channelon{R}, Wearever
Air{TM} and Kitchen Essentials{TM}.
Mirro markets its products directly to mass merchants, warehouse
clubs, grocery/drug stores, department/specialty stores, hardware
distributors, cable TV networks and select contract customers, using a
network of manufacturers' representatives, as well as regional zone
and market-specific sales managers. Calphalon markets its products
directly to department/specialty stores.
Principal U.S. facilities are located in Manitowoc and Chilton,
Wisconsin; and Toledo, Ohio. The principal foreign facility is
located in Sao Paulo, Brazil.
Hair Accessories and Beauty Organizers
--------------------------------------
The Company's hair accessory and beauty organizer business is
conducted through its Goody division. Goody primarily designs,
manufactures or imports, packages and distributes hair accessories and
beauty organizers.
Goody products are sold primarily under the trademarks Goody{R},
Ace{R} and Wilhold{R}.
Goody markets its products directly to mass merchants, warehouse
clubs, grocery/drug stores and department/specialty stores, using a
network of manufacturers' representatives, as well as regional zone
and market-specific sales managers.
Principal facilities are located in Peach Tree City and
Manchester, Georgia.
Net Sales By Industry Segment
-----------------------------
The Company reviewed the criteria for determining segments of an
enterprise in accordance with SFAS No. 131 and concluded it has three
reportable operating segments: Hardware & Home Furnishings, Office
Products, and Housewares. This segmentation is appropriate because
the Company organizes its product categories into these groups when
making operating decisions and assessing performance. The Company
Divisions included in each group also sell primarily to the same
retail channel: Hardware & Home Furnishings (home centers and
10
hardware stores), Office Products (office superstores and contract
stationers), and Housewares (discount stores and warehouse clubs).
The principal product categories included in each of the
Company's business segments are as follows:
Segment Product Category
----------------------------------------------------------------------
Hardware & Home Window Treatments,
Furnishings Hardware and Tools, Picture
Frames, Home Storage
Office Products Markers and Writing
Instruments, Office Storage and
Organization, School Supplies and
Stationery (sold in 1998)
Housewares Aluminum Cookware and Bakeware,
Glassware, Hair Accessories,
Plasticware (sold in 1998)
The following table sets forth the amounts and percentages of the
Company's net sales for the three years ended December 31 (including
sales of acquired businesses from the time of acquisition and sales of
divested businesses through date of sale), for the Company's three
operating segments and the product categories included therein.
Sales to Wal-Mart Stores, Inc. and subsidiaries amounted to
approximately 14% of consolidated net sales in 1998 and 15% in both
1997 and 1996. Sales to no other customer exceeded 10% of
consolidated net sales.
11
1998 % of total 1997* % of total 1996* % of total
---- ---------- ---- ---------- ---- ----------
(In millions, except percentages)
Hardware and Home Furnishings:
Window Treatments $ 808.7 22% $ 562.6 17% $ 385.6 13%
Hardware and Tools 398.5 11 392.6 12 383.1 13
Picture Frames 386.6 10 359.4 10 339.8 11
Home Storage Products 164.3 4 170.2 5 190.8 7
Total Hardware and ------- ----- ------- --- ------- ---
Home Furnishings $ 1,758.1 47% 1,484.8 49 1,299.3 44
Office Products:
Markers and Writing
Instruments $ 714.7 19% $ 601.4 18% $ 570.2 19%
Office Storage and Organization 254.8 7 209.9 6 85.6 3
School Supplies and Stationery 70.8 2 87.9 3 86.0 3
-------- --- ------- --- ----- ---
Total Office Products 1,043.3 28 899.2 27 741.8 25
Housewares:
Aluminum Cookware and Bakeware $ 400.6 11% $ 386.2 12% $ 373.4 13%
Glassware and Plasticware 368.2 10 394.4 12 394.2 13
Hair Accessories 152.8 4 171.6 5 164.1 5
-------- --- ------- --- ----- ---
Total Housewares 921.6 25 952.2 29 931.7 31
Newell Consolidated $ 3,720.0 100% $3,336.2 100% $2,972.8 100%
======== === ======= === ======== ===
*Restated for the merger with Calphalon Corporation, which was
accounted for as a pooling of interests.
Certain 1997 and 1996 amounts have been reclassified to conform
with the 1998 presentation.
Export Sales
------------
The Company's export sales business, defined as sales of products
made in the U.S. and sold abroad, is conducted through its Newell
International division. For purposes of the table immediately above,
sales attributable to the Newell International division are allocated
to the operating segment that manufactured the products.
12
GROWTH STRATEGY
---------------
The Company's growth strategy emphasizes acquisitions and
internal growth. The Company has grown both domestically and
internationally by acquiring businesses with brand name product lines
and improving the profitability of such businesses through an
integration process referred to as "Newellization." Since 1990, the
Company has completed more than 20 major acquisitions (excluding
Rubbermaid) representing approximately $3 billion in additional sales.
The Company supplements acquisition growth with internal growth,
principally by introducing new products, entering new domestic and
international markets, adding new customers, cross-selling existing
product lines to current customers and supporting its U.S.-based
customers' international expansion.
ACQUISITIONS AND INTEGRATION
----------------------------
Acquisition Strategy
-------------------
The Company primarily grows by acquiring businesses and product
lines with a strategic fit with the Company's existing businesses. It
also seeks to acquire product lines with a number one or two position
in the markets in which they compete, a low technology level, a long
product life cycle and the potential to reach the Company's standard
of profitability. In addition to adding entirely new product lines,
the Company uses acquisitions to round out existing businesses and
fill gaps in its product offering, add new customers and distribution
channels, expand shelf space for the Company's products with existing
customers, and improve operational efficiency through shared
resources.
Newellization
-------------
"Newellization" is the Company's well-established profit
improvement and productivity enhancement process that is applied to
integrate newly acquired product lines. The Newellization process
includes establishing a more focused business strategy, improving
customer service, reducing corporate overhead through centralization
of administrative functions and tightening financial controls. In
integrating acquired businesses, the Company typically centralizes
accounting systems, capital expenditure approval, cash management,
order processing, billing, credit, accounts receivable and data
processing operations. To enhance efficiency, Newellization also
focuses on improving manufacturing processes, eliminating
non-productive lines, reducing inventories, increasing accounts
receivable turnover and trimming excess costs.
Newellization also builds partnerships with customers and
improves sales mix profitability through program merchandising
13
techniques. The Newellization process usually takes approximately two
to three years to complete.
History of Acquiring and Integrating Businesses
-----------------------------------------------
The Company's growth from a small manufacturer of drapery
hardware with approximately $15 million in annual sales in 1967 has
largely been the result of the acquisition and integration of nearly
100 businesses and product lines to build a strong multi-product
offering. Set forth below is a list of the Company's major
acquisitions since 1991 along with the approximate amount of aggregate
annual sales for the businesses acquired in the full year prior to
acquisition.
Major Acquisitions Since 1991
-----------------------------
Acquired Trade or Annual Sales
Year Brand Name (1) Product Category When Acquired
---- ----------------- ---------------- -------------
(In millions)
1998 Swish, Gardinia Window Treatments $700
Panex, Calphalon Aluminum Cookware
Rotring Writing Instruments
1997 Rolodex, Eldon Office Storage and Organization $550
Kirsch Window Treatments
1996 Holson and Burnes of Boston Picture Frames $130
1995 Decorel Picture Frames $300
Berol Markers and Writing Instruments
1994 Del Mar and LouverDrape Window Treatments $470
Eberhard Faber (including Markers and Writing Instruments
Uni-Ball(2))
Pyrex (3) Glassware and Plasticware
1993 Goody Hair Accessories $500
Levolor Window Treatments
Lee Rowan Home Storage Products
1992 Sanford (including Markers and Writing Instruments $120
Sharpie and Expo)
Intercraft Picture Frames
1991 Rogers and Keene Office Storage and Organization $ 50
14
(1) All listed trade and brand names are trademarks, which are
registered in the United States Patent and Trademark Office, except
for Gardinia and Panex.
(2) Used under exclusive license from Mitsubishi Pencil Co. Ltd. and
its subsidiaries.
(3) Used under exclusive license from Corning Incorporated and its
subsidiaries in Europe, the Middle East and Africa only.
Internal Growth
---------------
The second element of the Company's growth strategy is internal
growth. Once an acquired business has been Newellized, the Company's
strategy is to build profitable sales and contribute to the Company's
internal growth. Avenues for internal growth include introducing new
products, entering new domestic and international markets, adding new
customers, cross-selling existing product lines to current customers
and supporting its U.S.-based customers' international expansion. The
Company's goal is to achieve an internal growth rate of 3-5% per year,
and over the last five years, the Company has achieved an average of
5% annual internal growth. Internal growth is defined by the Company
as growth from its "core businesses," which include continuing
businesses owned more than two years and minor acquisitions. The
Company intends to continue to pursue internal growth opportunities to
complement its acquisition growth.
International
-------------
The Company is pursuing international opportunities to further
its acquisition and internal growth objectives. The rapid growth of
consumer goods economies and retail structures in several regions
outside the U.S., particularly Europe, Mexico and South America, makes
them attractive to the Company by providing opportunities to acquire
businesses, develop partnerships with new foreign customers and extend
relationships with the Company's domestic customers whose businesses
are growing internationally. The Company's recent acquisitions,
combined with existing sales to foreign customers, increased its sales
outside the U.S. to approximately 22% of total sales in 1998 from
approximately 8% in 1992.
Within the last few years, the Company acquired a number of
businesses with significant foreign sales. The Company's first
significant foreign acquisition was the 1994 acquisition of Corning
Incorporated's European consumer product business, with annual sales
of approximately $130 million. Now known as Newell Europe, the
acquisition included Corning's manufacturing facilities in England,
France and Germany, as well as the trademark rights and product lines
of Pyrex{R} glass cookware used under exclusive license from Corning
15
Incorporated and its subsidiaries in Europe, Africa and the Middle
East only. The 1995 acquisition of Berol, an international
manufacturer and marketer of writing instruments provided annual
international sales of more than $80 million and several foreign
manufacturing facilities. The 1997 acquisition of Kirsch added annual
international sales of drapery hardware and window coverings of
approximately $150 million and several European manufacturing
facilities. The 1998 foreign acquisitions included Swish and
Gardinia, drapery hardware manufacturers in Europe, Panex, a maker of
aluminum cookware in Latin America, and Rotring, a manufacturer of
writing and drawing instruments in Europe. These 1998 acquisitions
represent approximately $450 million in annualized sales outside the
United States.
Additional information regarding acquisitions of businesses is
included in Item 6 and note 2 to the consolidated financial
statements.
MARKETING AND DISTRIBUTION
--------------------------
Customer Service
----------------
The Company believes that one of the primary ways it
distinguishes itself from its competitors is through customer service.
The Company's ability to provide superior customer service is a result
of its information technology, marketing and merchandising programs
designed to enhance the sales and profitability of its customers and
consistent on-time delivery of its products.
Information Technology
----------------------
The Company is an industry leader in the application of
Electronic Data Interchange ("EDI") technology, an electronic link
between the Company and many of its retail customers, and invests in
advanced computer systems. The Company uses EDI to receive and
transmit purchase orders, invoices and payments. By replacing
paper-based processing with computer-to-computer business
transactions, EDI has cut days off the order/shipping cycle.
Building upon its EDI expertise, the Company has established
"Quick Response" programs with several major customers. These
programs allow the Company to implement customized features such as
vendor-managed inventories in which the Company manages certain or all
aspects of inventory of several product categories at customer
locations. The Company's experience is that its customers benefit
from such programs by increased inventory turnover and reduced
customer waiting periods for out-of-stock product.
16
On-Time Delivery
----------------
A critical element of the Company's customer service is
consistent on-time delivery of products to its customers. Retailers
are pursuing a number of strategies to deliver the highest-quality,
lowest-cost products to their customers. A growing trend among
retailers is to purchase on a "just-in-time" basis in order to reduce
inventory costs and increase returns on investment. As retailers
shorten their lead times for orders, manufacturers need to more
closely anticipate consumer buying patterns. The Company supports its
retail customers' "just-in-time" inventory strategies through
investments in improved forecasting systems, more responsive
manufacturing and distribution capabilities and electronic
communications. The Company manufactures the vast majority of its
products and has extensive experience in high-volume, cost-effective
manufacturing. The high-volume nature of its manufacturing processes
and the relatively consistent demand for its products enables the
Company to ship most products directly from its factories without the
need for independent warehousing and distribution centers. For 1998,
approximately 98% of the items ordered by customers were shipped on
time, typically within two to three days of the customer's order.
Marketing and Merchandising
---------------------------
The Company's objective is to develop long-term, mutually
beneficial partnerships with its customers and become their supplier
of choice. To achieve this goal, the Company has a value-added
marketing program that offers a family of leading brand name staple
products, tailored sales programs, innovative merchandising support,
in-store services and responsive top management.
The Company's merchandising skills help customers stimulate store
traffic and sales through timely advertising and innovative
promotions. The Company also assists customers in differentiating
their offerings by customizing products and packaging. Through
self-selling packaging and displays that emphasize good-better-best
value relationships, retail customers are encouraged to trade up to
higher-value, best quality products.
Customer service also involves customer contact with top-level
decision makers at the Company's divisions. As part of its
decentralized structure, the Company's division presidents are the
chief marketing officers of their product lines and communicate
directly with customers. This structure permits early recognition of
market trends and timely response to customer problems.
Multi-Product Offering
----------------------
The Company's increasingly broad product coverage in multiple
product lines permits it to more effectively meet the needs of its
17
customers. With families of leading, brand name products and
profitable new products, the Company also can help volume purchasers
sell a more profitable product mix. As a potential single source for
an entire product line, the Company can use program merchandising to
improve product presentation, optimize display space for both sales
and income and encourage impulse buying by retail customers.
Corporate Structure
-------------------
By decentralizing its manufacturing and marketing efforts while
centralizing key administrative functions, the Company seeks to foster
a responsive entrepreneurial culture. The Company's divisions
concentrate on designing, manufacturing, merchandising, selling their
products and servicing their customers, which facilitates product
development and responsiveness to customers. Administrative functions
that are centralized at the corporate level include cash management,
accounting systems, capital expenditure approvals, order processing,
billing, credit, accounts receivable, data processing operations and
legal functions. Centralization concentrates technical expertise in
one location, making it easier to observe overall business trends and
manage the Company's businesses.
BACKLOG
-------
The dollar value of unshipped factory orders is not material.
SEASONAL VARIATIONS
-------------------
The Company's product groups are only moderately affected by
seasonal trends. Hardware and Home Furnishings products have higher
sales in the second and third quarters due to an increased level of
do-it-yourself projects completed in the summer months; Office
Products have higher sales in the second and third quarters due to the
back-to-school season; and Housewares products typically have higher
sales in the second half of the year due to retail stocking related to
the holiday season. Because these seasonal trends are moderate, the
Company's consolidated quarterly sales do not fluctuate significantly,
unless a significant acquisition is made.
FOREIGN OPERATIONS
------------------
Information regarding the Company's 1998, 1997 and 1996 foreign
operations is included in note 13 to the consolidated financial
statements and is incorporated by reference herein.
18
RAW MATERIALS
-------------
The Company has multiple foreign and domestic sources of supply
for substantially all of its material requirements. The raw materials
and various purchased components required for its products have
generally been available in sufficient quantities.
PATENTS AND TRADEMARKS
----------------------
The Company has many patents, trademarks, brand names and trade
names, none of which is considered material to the consolidated
operations.
COMPETITION
-----------
The rapid growth of high-volume retailers, such as discount
stores and warehouse clubs, home centers and hardware stores, and
office superstores and contract stationers, together with changes in
consumer shopping patterns, have contributed to a significant
consolidation of the U.S. retail industry and the formation of
dominant multi-category retailers. Other trends among retailers are
to require manufacturers to maintain or reduce product prices or
deliver products with shorter lead times, or for the retailer to
import generic products directly from foreign sources. The
combination of these market influences creates a highly competitive
environment in which the Company's principal customers continuously
evaluate which product suppliers to use, resulting in pricing
pressures and the need for ongoing improvements in customer service.
For more than 30 years, the Company has positioned itself to
respond to the challenges of this retail environment by developing
strong relationships with large, high-volume purchasers. The Company
markets its strong multi-product offering through virtually every
category of high-volume retailer, including discount, drug, grocery
and variety chains, warehouse clubs, department, hardware and
specialty stores, home centers, office superstores, contract
stationers and military exchanges. The Company's largest customer,
Wal-Mart (including Sam's Club), accounted for approximately 14% of
net sales in 1998. Other top ten customers included Kmart, The Home
Depot, The Office Depot, Target, JCPenney, United Stationers,
Hechinger, Office Max and Lowe's.
The Company's other principal methods of meeting its competitive
challenges are high brand name recognition, superior customer service
(including industry leading information technology, innovative
"good-better-best" marketing and merchandising programs), consistent
on-time delivery, decentralized manufacturing and marketing,
centralized administration, and experienced management.
19
ENVIRONMENT
-----------
Information regarding the Company's environmental matters is
included in the Management's Discussion and Analysis section of this
report and in note 14 to the consolidated financial statements and is
incorporated by reference herein.
EMPLOYEES
---------
The Company has approximately 32,000 employees worldwide, of whom
approximately 9,300 are covered by collective bargaining agreements
or, in certain countries, other collective arrangements decreed by
statute.
Item 2. Properties
----------
The following table shows the location and general character of
the principal operating facilities owned or leased by the Company.
The executive offices are located in Beloit, Wisconsin, which is an
owned facility occupying approximately 9,000 square feet. Other
Corporate offices are located in Illinois in owned facilities at
Freeport (occupying 73,000 square feet) and owned and leased space in
Rockford (occupying 7,000 square feet). Most of the idle facilities,
which are excluded from the following list, are subleased while being
held pending sale or lease expiration. The Company considers its
properties to be in generally good condition and well-maintained, and
are generally suitable and adequate to carry on the Company's
business. The properties are used for manufacturing ("M"),
distribution ("D") and administrative offices ("A").
Owned or
Exp. Date General
Location City if Leased Character
----------- ----- ------------ ------------
UNITED STATES
Arkansas Bentonville 05/99 A
Bentonville M-T-M A
Arizona Phoenix 03/04 D
Bizbes Owned M
20
Owned or
Exp. Date General
Location City if Leased Character
----------- ----- ------------ ------------
California Irvine Owned M
Irvine Owned M & A
Santa Fe Springs 04/00 D
Vista 06/03 M, D & A
Westminister 09/02 M
Westminister 04/99 M
Georgia Athens Owned M
Augusta 08/01 A
Columbus Owned D
Columbus 12/99 D
Manchester Owned M
Peachtree City Owned A
St. Simons 12/99 A
Illinois Bannockburn 12/03 A
Bellwood Owned M & A
Bellwood 11/99 M, D & A
Freeport 10/01 M & D
Freeport Owned A
Freeport Owned M, D & A
Freeport 09/00 A
Itasca M-T-M A
Itasca 08/99 A
Lake Bluff 12/00 A
Mundelein 09/99 M & A
Rockford Owned M, D & A
Rockford Owned A
Rockford 04/04 D
Rockford 05/06 A
Rockford 10/03 A
South Holland 06/02 M
Waukegan 07/99 D
Indiana Lowell Owned M, D & A
Middlebury Owned M
Maine Libson Falls 03/03 M & D
Massachusetts Montague Owned M
Michigan Sturgis Owned M & D
Sturgis Owned M & D
21
Owned or
Exp. Date General
Location City if Leased Character
----------- ----- ------------ ------------
Missouri Fenton 12/99 D
Fenton 11/99 D
Jackson Owned M, D & A
Jackson 12/01 D
Nebraska Omaha 09/00 D
New Hampshire Claremont Owned M & D
Claremont 10/00 D
New Jersey Rockaway 03/02 M
Bloomsbury Owned M, D & A
Cranbury 12/05 D
Greenwich Twp Owned M & D
Secaucus 12/99 D
New York Farmingdale 12/99 M & A
Medina Owned M, D & A
New York 01/01 D
Ogdensburg Owned M & A
Ogdensburg Owned D
North Carolina High Point Owned M
Statesville 05/99 M & A
Ohio Bremen Owned M
Bremen Owned D
Lancaster M-T-M A
Lancaster Owned M, D & A
Lancaster Owned D
Perrysburg Owned M, D & A
Toledo M-T-M D
Toledo 05/02 D
Westerville Owned M & A
Pennsylvania Ambridge M-T-M D
Monaca Owned M & A
Monaca M-T-M D
Shamokin Owned M & D
Shamokin Owned M
Sunbury Owned D
Wampum M-T-M D
Puerto Rico Carolina 06/03 D & A
Moca 04/02 M & A
Rhode Island North Smithfield 05/05 A
22
Owned or
Exp. Date General
Location City if Leased Character
----------- ----- ------------ ------------
Tennessee Covington M-T-M D
Johnson City 12/99 D
Johnson City Owned M
Johnson City 05/00 D
Lewisburg Owned M, D & A
Lewisburg M-T-M D
Maryville Owned M, D & A
Memphis 12/01 D & A
Memphis 02/06 M, D & A
Shelbyville Owned M, D & A
Texas Carrollton 01/00 D
Taylor M-T-M M & A
Waco Owned M
Waco 07/99 D
Waco 01/06 M
Utah Ogden Owned M
Salt Lake City 04/99 M
Vermont Brangboro 12/07 M & A
West Virginia Clarksburg Owned D
Wisconsin Beloit Owned A
Chilton Owned M
Madison 04/00 D
Madison M-T-M D
Madison Owned M, D & A
Manitowoc 04/02 D
Manitowoc Owned M, D & A
St. Francis Owned M, D & A
Cudahy 06/99 D
CANADA
Alberta Calgary 07/01 M
23
Owned or
Exp. Date General
Location City if Leased Character
----------- ----- ------------ ------------
Ontario Concord 09/99 A
Meaford Owned D
Mississauga Owned M & D
Oakville 10/99 D & A
Pickering 03/07 D
Pickering Corp. D
Pickering Corp. D
Prescott 09/00 A
Prescott Owned M & A
Prescott M-T-M D
Richmond Hills 10/00 A
Toronto 08/02 M & A
Watford 01/04 M, D & A
Quebec Repentigny M-T-M M
EUROPE
Austria St. Polten M-T-M D
Wien M-T-M D
Worgl Tirol Owned M, D & A
Belarus Minskij Rajon 03/00 D
Minskij Rajon 12/99 D & A
Belgium Aarschot Owned D & A
Zellick 07/07 D & A
Bornem 03/99 D
Czechia Zalec Owned D & A
Denmark Aars Owned M
Hedehusene M-T-M M & A
Risskov 07/01 A
Finland Helsinki M-T-M A
France Ablis 02/06 D
Avon 11/99 A
Bordeaux 07/99 A
Briand Owned M & A
Chateauroux Owned M, D & A
Chateauroux 12/99 D
Feuquieres en Virneu Owned A
Les Ulls Cedex 07/04 D & A
Melun Cedex 06/99 M, D & A
Mitra Mory 03/07 D & A
24
Owned or
Exp. Date General
Location City if Leased Character
----------- ----- ------------ ------------
Germany Bunde 11/01 D & A
Bunde Owned M, D & A
Eckental Owned D & A
Ernskirchen Owned M
Garching/Munchen 12/99 D & A
Gobritz M-T-M D
Gobritz 12/05 A
Haan Owned D & A
Hamburg 11/03 A
Hamburg Owned D
Hamburg Owned M, D & A
Hamburg M-T-M D
Henstadt-Ulzburg Owned D & A
Isny 10/00 D
Isny Owned M & A
Isny Owned M, D & A
Isny M-T-M D
Kirchen Owned M
Malerhofen Owned M, D & A
Muhltal Owned M, D & A
Saara 12/99 M
Schmolin Owned M, D & A
Schwabisch-Gmund M-T-M D & A
Tudingen Owned D & A
Wiebelsheim Owned M, D & A
Zachow/Berlin Owned M, D & A
Greece Athens 12/02 D & A
Hungary Budapest M-T-M D & A
Italy Albignasego M-T-M D & A
Figino Serenza Owned M
Milan 12/01 A
Milano 03/04 D & A
Milan 04/99 D
Supino Owned M
Netherlands Almere-haven Owned D & A
Norway Moss 01/03 M, D & A
Oslo 03/04 D & A
25
Owned or
Exp. Date General
Location City if Leased Character
----------- ----- ------------ ------------
Poland Gdansk 07/00 D & A
Otwock M-T-M D & A
Swietochiowice 08/00 D & A
Tyniec Maly Owned M, D & A
Portugal Amadora Owned D & A
Lisbon M-T-M D
Porto Owned D
Romania Bukarest 10/01 D
Bukarest 12/99 A
Slovakia Priavidza 04/99 D & A
Spain Barcelona Owned D
Barcelona 12/03 A
Madrid 12/99 A
Madrid Owned D
Malaga Owned D
Ovledo Owned D
Tenerife M-T-M D
Valladolid Owned D
Victoria Owned M
Sweden Andestorp Owned M, D & A
Malmo Owned M & A
Malmo M-T-M M & D
Nykoping 06/99 M, D & A
Switzerland Riedstr Owned D & A
Turkey Istanbul 03/00 D & A
26
Owned or
Exp. Date General
Location City if Leased Character
----------- ----- ------------ ------------
United Kingdom Bercl House Owned M & A
Dunstable 02/05 D
King's Lynn Owned M, D & A
Sheffield 12/12 M & D
Sheffield 12/15 D
Sheffield M-T-M M & D
Sheffield 09/10 D
Shefford 07/01 D
Shefford 05/06 D
Slough 06/07 A
Sunderland Owned M
Sunderland 11/99 D
Sunderland 12/00 D
Tamworth Owned M & A
Tamworth 03/00 M
Tipton 12/18 D
Venus House Owned M & D
Worcastershire Owned A
Ukraine Kiev 03/00 A
LATIN AMERICA
Argentina Buenos Aires 10/00 D & A
Brazil Sao Paulo 01/00 D
Sao Paulo 12/99 M & A
Colombia Bogota Owned M, D & A
Mexico Cancun Owned A
Durango M-T-M M
Estado de Mexico 06/99 D
Jocotitian 06/03 M
Tijuana M-T-M M
Tlalnepantla Owned M, D & A
Venezuela Caracas Owned D
Maracay Owned M, D & A
Maracay M-T-M M
San Vicente Owned M & D
ASIA
Australia Noble Park 06/00 D & A
Victoria 07/99 A
China Hong Kong 09/99 D & A
27
Owned or
Exp. Date General
Location City if Leased Character
----------- ----- ------------ ------------
Japan Fukuoka 12/99 A
Osaka 12/99 A
Saitama M-T-M D
Tokyo 05/99 A
Item 3. Legal Proceedings
--------------------------
Information regarding legal proceedings is included in note 14 to
the consolidated financial statements and is incorporated by reference
herein.
28
Item 4. Submission of Matters to a Vote of Security Holders
------------------------------------------------------------
There were no matters submitted to a vote of the Company's
shareholders during the fourth quarter of fiscal year 1998.
Supplementary Item - Executive Officers of the Registrant as of
12/31/98
Name Age Present Position With the Company
---- --- ---------------------------------
William P. Sovey 65 Chairman of the Board
John J. McDonough 62 Vice Chairman and Chief Executive
Officer
Thomas A. Ferguson, Jr. 51 President and Chief Operating Officer
Donald L. Krause 59 Senior Vice President-Corporate
Controller
William T. Alldredge 58 Vice President-Finance
Richard C. Dell 52 Group President
William J. Denton 54 Group President
Robert S. Parker 53 Group President
Gilbert A. Niesen 54 Vice President - Personnel Relations
William P. Sovey has been Chairman of the Board since January 1, 1998.
He was Vice Chairman and Chief Executive Officer of the Company from
May 1992 through December 1997. From January 1986 through July 1992,
he was President and Chief Operating Officer.
John J. McDonough has been Vice Chairman and Chief Executive Officer
of the Company since January 1, 1998 and a Director since 1992. He
was Senior Vice President-Finance of the Company from November 1981
through April 1983. Mr. McDonough has also been President and Chief
Executive Officer of McDonough Capital Company LLC (an investment
management company) since April 1995. Prior thereto, he was Vice
Chairman and a Director of Dentsply International Inc. (a manufacturer
and distributor of dental and medical x-ray equipment and other dental
products) from 1983 through October 1995, and was Chief Executive
Officer from April 1983 through February 1995.
Thomas A. Ferguson, Jr. has been President and Chief Operating Officer
since May 1992. From January 1989 to May 1992, he was
President-Operating Companies.
29
Donald L. Krause was appointed Senior Vice President-Corporate
Controller in March 1990. He was President-Industrial Companies from
February 1988 to March 1990.
William T. Alldredge has been Vice President-Finance of the Company
since August 1983.
Richard C. Dell has been Group President since June 1992. He was
President of Amerock from November 1989 to June 1992. He was
President of EZ Paintr from September 1987 to November 1989.
William J. Denton has been Group President since March 1990. From
April 1989 to March 1990, he was Vice President-Corporate Controller.
He was President of Anchor Hocking Glass from August 1987 to April
1989.
Robert S. Parker has been Group President since August 1998. He was
President of Sanford Corporation from February 1992 to August 1998.
Gilbert A. Niesen has been Vice President-Personnel Relations since
May 1998. He was Vice President of Human Resources of the Mirro
Division from March 1994 to May 1998, and Vice President of Human
Resources of Amerock Corporation from December 1987 to March 1994.
30
PART II
Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters
-------------------------------------------------
The Company's Common Stock is listed on the New York and Chicago
Stock Exchanges (symbol: NWL). As of December 31, 1998, there were
16,315 stockholders of record. The following table sets forth the
high and low sales prices of the Common Stock on the New York Stock
Exchange Composite Tape (as published in the Wall Street Journal) for
the calendar periods indicated.
1998 1997 1996
------------------ ------------------ ------------------
High Low High Low High Low
--------- ------- ------- ------- -------- -------
Quarters:
First $50 3/16 $40 7/8 $38 3/8 $30 3/8 $28 7/8 $25 5/8
Second 49 13/16 45 7/16 40 1/16 32 7/8 32 25 1/2
Third 54 7/16 43 3/16 43 1/4 37 1/2 32 28 1/2
Fourth 49 1/16 37 13/16 43 3/16 35 1/8 33 1/4 28 1/4
The Company has paid regular cash dividends on its Common Stock
since 1947. On February 8, 1999, the quarterly cash dividend was
increased to $0.20 per share from the $0.18 per share that had been
paid since February 10, 1998. Prior to this date, the quarterly cash
dividend paid was $0.16 per share since February 11, 1997, which was
an increase from the $0.14 per share paid since February 6, 1996.
Information about the 5.25% convertible quarterly income
preferred securities issued by a wholly owned subsidiary trust of the
Company, which are reflected as outstanding in the Company's
consolidated financial statements as Company-Obligated Mandatorily
Redeemable Convertible Preferred Securities of a Subsidiary Trust, is
included in note 5 to the consolidated financial statements and is
incorporated by reference herein.
31
Item 6. Selected Financial Data
-----------------------
The following is a summary of certain consolidated financial
information relating to the Company at December 31. The summary has
been derived in part from, and should be read in conjunction with, the
consolidated financial statements of the Company included elsewhere in
this report and the schedules thereto.
1998 1997* 1996* 1995* 1994*
---- ---- ---- ---- ----
(In thousands, except per share data)
INCOME STATEMENT DATA
Net sales $3,720,040 $3,336,233 $2,972,839 $2,580,313 $2,141,600
Cost of products sold 2,548,064 2,259,551 2,020,116 1,759,871 1,437,518
---------- --------- --------- ---------- ----------
Gross income 1,171,976 1,076,682 952,723 820,442 704,082
Selling, general
and administrative expenses 583,016 497,739 461,802 392,921 335,532
Trade names and goodwill
amortization and other 54,860 31,882 23,554 19,280 15,400
---------- -------- --------- --------- ----------
Operating income 534,100 547,061 467,367 408,241 353,150
Nonoperating expenses (income):
Interest expense 60,397 76,413 58,541 51,443 31,435
Other, net (211,143) (14,686) (19,474) (20,353) (16,717)
---------- -------- --------- --------- ----------
Net (150,746) 61,727 39,067 31,090 14,718
---------- -------- --------- --------- ----------
Income before income taxes 684,846 485,334 428,300 377,151 338,432
Income taxes 288,690 192,187 169,258 150,676 137,141
---------- -------- --------- --------- ----------
Net income $ 396,156 $ 293,147 $ 259,042 $ 266,475 $ 201,291
========== ======== ========= ========= ==========
Earnings Per Share
Basic $ 2.44 $ 1.81 $ 1.60 $ 1.40 $ 1.25
Diluted $ 2.38 $ 1.80 $ 1.60 $ 1.40 $ 1.25
Dividends per share $ 0.72 $ 0.64 $ 0.56 $ 0.46 $ 0.39
Weighted Average Shares Outstanding
Basic 162,544 162,173 161,858 161,306 160,868
Diluted 173,041 163,308 162,281 161,624 161,094
32
1998 1997* 1996* 1995* 1994*
---- ---- ---- ---- ----
(In thousands)
BALANCE SHEET DATA
Inventories $ 714,531 $ 653,200 $ 524,444 $ 518,039 $ 426,847
Working capital 769,619 719,215 482,580 462,683 141,592
Total assets 4,327,912 4,011,734 3,058,430 2,965,190 2,517,780
Short-term debt 76,250 83,914 108,814 165,050 310,790
Long-term debt, net of
current maturities 866,211 786,793 685,608 776,565 423,975
Stockholders' equity 1,912,007 1,725,221 1,500,022 1,301,585 1,126,941
* Restated for the merger with Calphalon Corporation, which was
accounted for as a pooling of interests.
1994
----
On August 29, 1994, the Company acquired the assets of the
decorative window coverings business of Home Fashions, Inc.("HFI"),
including vertical blinds and pleated shades sold under the Del Mar{R}
and LouverDrape{R} brand names. HFI was combined with Levolor and
together they are operated as a single entity called Levolor Home
Fashions. On October 18, 1994, the Company acquired Faber-Castell
Corporation ("Faber"), a maker and marketer of markers and writing
instruments, including wood-cased pencils and rolling ball pens, sold
under the Eberhard Faber{R} brand name. Faber was combined with
Sanford and together they are operated as a single entity called
Sanford North America. On November 30, 1994, the Company acquired the
European consumer products business of Corning Incorporated (now known
as "Newell Europe"). This acquisition included Corning's consumer
products manufacturing facilities in England, France and Germany, the
product lines and right to use the foreign registered trademarks
Pyrex{R}, Pyroflam{TM} and Visions{TM} brands in Europe, the Middle
East and Africa, and Corning's consumer distribution network
throughout these areas under exclusive license from Corning
Incorporated. Additionally, the Company became the distributor in
Europe, the Middle East and Africa for Corning's U.S. manufactured
cookware and dinnerware brands. For these and other minor 1994
acquisitions, the Company paid $360.8 million in cash and assumed
$12.8 million of debt.
These transactions were accounted for as purchases; therefore,
results of operations are included in the accompanying consolidated
financial statements since their respective dates of acquisition. The
acquisition costs were allocated to the fair market value of the
assets acquired and liabilities assumed and resulted in trade names
and goodwill of approximately $202.2 million.
1995
----
On October 2, 1995, the Company acquired Decorel Incorporated
("Decorel"), a manufacturer and marketer of ready-made picture frames.
33
Decorel was combined with Intercraft. On November 2, 1995, the
Company acquired Berol Corporation ("Berol"), a designer, manufacturer
and marketer and markers and writing instruments. Berol was combined
with Sanford. The U.S. component of Berol is operated as part of the
Sanford North America division. The international piece is operated
as part of Sanford International. For these and other minor 1995
acquisitions, the Company paid $210.6 million in cash, issued 379,507
shares of the Company's Common Stock (valued at approximately $9.5
million) and assumed $144.2 million of debt.
The transactions were accounted for as purchases; therefore
results of operations are included in the accompanying consolidated
financial statements since their respective dates of acquisition. The
acquisition costs were allocated to the fair market value of the
assets acquired and liabilities assumed and resulted in trade names
and goodwill of approximately $181.1 million.
34
Subsequent Years
----------------
Information regarding businesses acquired in the last three years
is included in note 2 to the consolidated financial statements.
QUARTERLY SUMMARIES
Summarized quarterly data for the last three years is as follows
(unaudited):
Calendar Year 1st 2nd 3rd 4th Year
------------- --- --- --- --- ----
(In millions, except per share data)
1998
----
Net sales $ 770.5 $ 922.7 $ 957.1 $1,069.7 $3,720.0
Gross income 231.0 307.4 325.2 308.4 1,172.0
Net income 148.9 88.7 99.2 59.4 396.2
Earnings per share:
Basic 0.92 0.55 0.61 0.36 2.44
Diluted 0.88 0.54 0.60 0.36 2.38
1997*
----
Net sales $ 650.0 $ 819.3 $ 925.7 $ 941.2 $3,336.2
Gross income 195.1 270.1 298.6 312.9 1,076.7
Net income 37.7 77.0 87.2 91.2 293.1
Earnings per share:
Basic 0.23 0.48 0.54 0.56 1.81
Diluted 0.23 0.47 0.54 0.56 1.80
1996*
----
Net sales $ 638.8 $ 753.2 $ 791.7 $ 789.1 $2,972.8
Gross income 189.6 243.8 257.8 261.5 952.7
Net income 33.0 67.3 76.3 82.4 259.0
Earnings per share:
Basic 0.20 0.42 0.47 0.51 1.60
Diluted 0.20 0.42 0.47 0.51 1.60
* Restated for the merger with Calphalon Corporation, which was
accounted for as a pooling of interests.
35
Item 7. Management's Discussion and Analysis of Results of
Operations and Financial Condition
--------------------------------------------------
The following discussion and analysis provides information
which management believes is relevant to an assessment and
understanding of the Company's consolidated results of operations and
financial condition. The discussion should be read in conjunction
with the consolidated financial statements and notes thereto.
Introduction
------------
The Company's primary financial goals are to increase sales
and earnings per share an average of 15% per year, to achieve an
annual return on beginning equity ("ROE") of 20% or above, to increase
dividends per share in line with earnings growth, and to maintain a
prudent ratio of total debt to total capitalization, net of cash
("leverage"). The Company has achieved most of these goals over the
last ten years, increasing sales and earnings per share at compound
annual rates of 13% and 16%, respectively, averaging 21% ROE,
increasing dividends per share at a compound annual rate of 18% and
averaging 26% leverage. The Company believes that the principal
factors affecting its ability to achieve these objectives in the
future are likely to be the realized rates of both acquisition and
internal growth and the Company's continued ability to integrate
acquired businesses through a process called "Newellization."
Since 1990, the Company has more than tripled its sales by
acquiring businesses with aggregate annual sales of approximately $3
billion (excluding Rubbermaid). The rate at which the Company can
integrate Rubbermaid and other recent acquisitions to meet the
Company's standards of profitability will affect near-term financial
results. Over the longer term, the Company's ability both to make and
to integrate strategic acquisitions will impact the Company's
financial results.
The Company pursues internal growth by introducing new
products, entering new domestic and international markets, adding new
customers, cross-selling existing product lines to current customers
and supporting its U.S. based customers' international expansion. The
Company's goal is to achieve an internal growth rate of 3-5% per year,
and over the last five years, it has achieved an average of 5% annual
internal growth. Internal growth is defined by the Company as growth
from its "core businesses," which include continuing businesses owned
more than two years and minor acquisitions. The Company believes that
its future internal growth will likely depend on its continued success
in these areas, as well as external factors.
36
RESULTS OF OPERATIONS
The following table sets forth for the period indicated
items from the Consolidated Statements of Income as a percentage of
net sales:
Year Ended December 31, 1998 1997* 1996*
----- ----- -----
Net sales 100.0% 100.0% 100.0%
Cost of products sold 68.5 67.7 68.0
----------------------------------------------------------
Gross income 31.5 32.3 32.0
Selling, general and
administrative expenses 15.6 14.9 15.5
Goodwill amortization
and other 1.5 1.0 0.8
-----------------------------------------------------------
Operating income 14.4 16.4 15.7
Nonoperating expenses:
Interest expense 1.6 2.3 2.0
Other, net (5.6) (0.4) (0.7)
------------------------------------------------------------
(4.0) 1.9 1.3
------------------------------------------------------------
Pre-tax income 18.4 14.5 14.4
Income taxes 7.8 5.7 5.7
------------------------------------------------------------
Net income 10.6% 8.8% 8.7%
============================================================
* Restated for the merger with Calphalon Corporation, which was accounted for
as a pooling of interests.
1998 vs. 1997
-------------
Net sales for 1998 were $3,720.0 million, representing an
increase of $383.8 million or 11.5% from $3,336.2 million in 1997. The
overall increase in net sales was primarily attributable to
contributions from Rolodex (acquired in March 1997), Kirsch (acquired
in May 1997), Eldon (acquired in June 1997), Swish (acquired in March
1998), Panex (acquired in June 1998), Gardinia (acquired in August
1998), Rotring (acquired in September 1998) and 4% internal growth.
The 1997 and 1998 acquisitions are described in note 2 to the
consolidated financial statements.
As of December 31, 1998, the Company adopted SFAS No. 131,
"Disclosure about Segments of an Enterprise and Related Information."
After reviewing the criteria for determining segments, the Company
believes it has three reportable operating segments: Hardware and Home
Furnishings, Office Products, and Housewares. This segmentation is
37
appropriate because the Company organizes its product categories into
these groups when making operating decisions and assessing
performance, and the Company divisions included in each group sell
primarily to the same retail channel: Hardware and Home Furnishings
(home centers and hardware stores), Office Products (office
superstores and contract stationers), and Housewares (discount stores
and warehouse clubs).
Net sales for each of the Company's segments (and the
primary reasons for the year-to-year changes) were as follows, in
millions:
Year Ended December 31, 1998 1997* % Change
--------------------------------------------------------------------------------------
Hardware and
Home Furnishings $1,758.1 $1,484.8 18.4%(1)
Office Products 1,040.3 899.2 15.7%(2)
Housewares 921.6 952.2 (3.2)%(3)
---------------------------------------------
$3,720.0 $3,336.2 11.5%
=============================================
Primary Reasons for Changes:
(1) 6% internal growth and Kirsch (May 1997), Swish (March 1998),
and Gardinia (August 1998) acquisitions
(2) 8% internal growth and Rolodex (March 1997), Eldon (June 1997)
and Rotring (September 1998) acquisitions, offset partially by
Stuart Hall divestiture
(3) 3% internal sales declines and Newell Plastics divestiture,
offset partially by Panex (June 1998) acquisition.
* Restated for the merger with Calphalon Corporation, which was
accounted for as a pooling of interests.
Gross income as a percent of net sales in 1998 was 31.5% or
$1,172.0 million versus 32.3% or $1,076.7 million in 1997. Excluding
costs associated with the 1998 Calphalon acquisition and certain
realignment and other charges, gross income as a percent of net sales
in 1998 was 32.2%. The slight decrease in gross margins was due to the
1998 acquisitions, which had gross margins lower than the Company's
average gross margins. As the 1998 acquisitions are integrated, the
Company expects its gross margins to improve. This decline was
partially offset by increases in gross margins at several of the
Company's core businesses.
Selling, general and administrative expenses ("SG&A") in
1998 were 15.6% of net sales or $583.0 million versus 14.9% or $497.7
million in 1997. Excluding costs associated with the 1998 Calphalon
38
acquisition and certain realignment and other charges, SG&A was 15.0%
of net sales. The slight increase in SG&A as a percent of net sales
was primarily due to the 1998 acquisitions, whose spending levels are
higher than the Company's average. As these acquisitions are
integrated, the Company expects its SG&A spending levels as a
percentage of net sales to decline.
The Company has reclassified trade names and goodwill
amortization from nonoperating expense to operating expense for all
periods presented. Trade names and goodwill amortization as a
percentage of net sales was 1.0% in both 1998 and 1997, excluding
charges of $16.2 million (which included write-offs of intangible
assets) recorded in 1998.
Operating income in 1998 was 14.4% of net sales or $534.1
million versus 16.4% or $547.1 million in 1997. Excluding costs
associated with the 1998 Calphalon acquisition ($28.8 million) and
certain realignment and other charges ($38.8 million), operating
income in 1998 was $601.7 or 16.2% of net sales. The slight decrease
in operating margins in 1998 was primarily due to the 1998
acquisitions, whose operating margins are improving as they are being
integrated but are still operating at less than the Company's average
operating margins. This decline was offset partially by increases in
operating margins at several of the Company's core businesses.
Other nonoperating income in 1998 was 4.0% of net sales or
$150.7 million versus other nonoperating expenses of 1.9% or $61.8
million in 1997. The $212.5 million increase in income was due
primarily to a net pre-tax gain of $191.5 million on the sale of the
Company's stake in The Black & Decker Corporation and a pre-tax gain
of $35.6 million on the sales of Stuart Hall and Newell Plastics. This
increase was partially offset by increases in distributions of $25.2
million related to the convertible preferred securities issued by a
subsidiary trust in December 1997.
For 1998 and 1997, the effective tax rates were 42.2% and
39.6%, respectively. The rate increase was the result of
non-deductible goodwill related to the sales of the two businesses;
excluding this item, the overall tax rate was 39.0% in 1998. See Note
11 to the consolidated financial statements for an explanation of the
effective tax rate.
Net income for 1998 was $396.2 million, representing an
increase of $103.1 million or 35.2% from 1997. Basic earnings per
share in 1998 increased 34.8% to $2.44 versus $1.81 in 1997; diluted
earnings per share in 1998 increased 32.2% to $2.38 versus $1.80 in
1997. Excluding the net pre-tax gain on the sale of Black & Decker
stock of $191.5 million ($116.8 million after taxes), the net pre-tax
gain of $35.6 million on the sales of Stuart Hall and Newell Plastics
($0.4 million after taxes) and costs associated with the 1998
Calphalon acquisition and certain realignment and other charges of
$67.6 million ($40.8 million after taxes), net income in 1998
39
increased $26.7 million or 9.1% to $319.8 million. The increase in net
income, excluding the gains and charges noted above, was primarily due
to strong shipments at the Company's core Office Products and Hardware
and Home Furnishings businesses.
1997 vs. 1996
-------------
Net sales for 1997 were $3,336.2 million, representing an
increase of $363.4 million or 12.2% from $2,972.8 million in 1996. The
overall increase in net sales was primarily attributable to
contributions from Rolodex (acquired in March 1997), Kirsch (acquired
in May 1997), Eldon (acquired in June 1997) and 3% internal growth.
The 1997 acquisitions are described in note 2 to the consolidated
financial statements.
40
Net sales for each of the Company's segments (and the
primary reasons for the year-to-year changes) were as follows, in
millions:
Year Ended December 31, 1997* 1996* % Change
------------------------------------------------------------------------------------------------------
Hardware and
Home Furnishings $1,484.8 $1,299.3 14.3%(1)
Office Products 899.2 741.8 21.2%(2)
Housewares 952.2 931.7 2.2%(3)
-------------------------------------------------------------
$3,336.2 $2,972.8 12.2%
=============================================================
Primary Reasons for Changes:
(1) 2% internal growth and Kirsch (May 1997) acquisition
(2) 6% internal growth and Rolodex (March 1997) and Eldon (June 1997)
acquisitions
(3) Internal growth
* Restated for the merger with Calphalon Corporation, which was
accounted for as a pooling of interests.
Gross income as a percent of net sales in 1997 was 32.3% or
$1,076.7 million versus 32.0% or $952.7 million in 1996. Gross margins
improved as a result of cost savings achieved through the integration
of several picture frame businesses acquired by the Company in recent
years, profitability improvement at the Company's Levolor Home
Fashions division and increased gross margins at several of the
Company's other core businesses. The increase in gross margins was
offset partially by 1997 acquisitions which had gross margins lower
than the Company's average gross margins. As these acquisitions are
integrated, the Company expects its gross margins to improve.
SG&A in 1997 was 14.9% of net sales or $497.7 million versus
15.5% or $461.8 million in 1996. Core business SG&A spending as a
percentage of sales decreased primarily as a result of cost savings
arising from the picture frame business integration. This decrease was
offset partially by the 1997 acquisitions, which had higher SG&A than
the Company's average SG&A as a percent of net sales. As these
acquisitions are integrated, the Company expects its SG&A spending
levels as a percentage of net sales to decline.
Trade names and goodwill amortization as a percentage of net
sales in 1997 was comparable to 1996.
Operating income in 1997 was 16.4% of net sales or $547.1
million versus 15.7% or $467.3 million in 1996. The increase in
operating margins was primarily due to cost savings as a result of the
41
picture frame business integration, profitability improvement at the
Company's Levolor Home Fashions division and increased core business
gross margins, offset partially by 1997 acquisitions which had average
operating margins lower than the Company's average operating margins.
Net nonoperating expenses in 1997 were 1.9% of net sales or
$61.8 million versus 1.3% or $39.0 million in 1996. The $22.8 million
increase was due primarily to a $16.6 million increase in interest
expense (as a result of additional borrowings related to the 1997
acquisitions) and a $7.0 million decrease in dividend income. Dividend
income decreased as a result of the conversion on October 15, 1996 by
Black & Decker of 150,000 shares of privately placed Black & Decker
convertible preferred stock, Series B, owned by the Company (purchased
at a cost of $150.0 million) into 6.4 million shares of Black & Decker
Common Stock. Prior to conversion, the preferred stock paid a 7.75%
cumulative dividend, aggregating $2.9 million per quarter, before the
effect of income taxes. After the conversion, the dividends paid to
the Company on the shares of Black & Decker Common Stock owned by the
Company as a result of the conversion totaled $0.8 million per
quarter, before the effect of income taxes. For supplementary
information regarding other nonoperating expenses, see note 12 to the
consolidated financial statements.
The effective tax rate was 39.6% and 39.5% in 1997 and 1996,
respectively. See Note 11 to the consolidated financial statements for
an explanation of the effective tax rate.
Net income for 1997 was $293.1 million, representing an
increase of $34.1 million or 13.2% from 1996. Basic earnings per share
in 1997 increased 13.1% to $1.81 versus $1.60 in 1996; diluted
earnings per share in 1997 increased 12.5% to $1.80 versus $1.60 in
1996. The increases in net income and earnings per share were
primarily attributable to cost savings arising from the picture frame
business integration, profitability improvement at the Company's
Levolor Home Fashions division, cost savings as a result of the Kirsch
integration into the Newell Window Furnishings division and increased
operating margins at several of the Company's other core businesses.
LIQUIDITY AND CAPITAL RESOURCES
Sources
-------
The Company's primary sources of liquidity and capital
resources include cash provided from operations and use of available
borrowing facilities.
Cash provided by operating activities in 1998 was $302.6
million, representing a decrease of $73.8 million from $376.4 million
for 1997. This decrease was primarily due to an increase in payments
related to liabilities at acquired businesses.
42
On March 3, 1998, the Company received $378.3 million
(before the payment of taxes on the net gain) from the sale of
7,862,300 shares of Black & Decker common stock. The proceeds from the
sale were used to pay down commercial paper.
In the third quarter of 1998, the Company received $199.0
million (before the payment of taxes on the net gains) from the sales
of Stuart Hall and Newell Plastics.
The Company has short-term foreign and domestic uncommitted
lines of credit with various banks which are available for short-term
financing. Borrowings under the Company's uncommitted lines of credit
are subject to discretion of the lender. The Company's uncommitted
lines of credit do not have a material impact on the Company's
liquidity. Borrowings under the Company's uncommitted lines of credit
at December 31, 1998 totaled $69.2 million.
During 1997, the Company amended its revolving credit
agreement to increase the aggregate borrowing limit to $1.3 billion,
at a floating interest rate. The revolving credit agreement will
terminate in August 2002. At December 31, 1998, there were no
borrowings under the revolving credit agreement.
In lieu of borrowings under the Company's revolving credit
agreement, the Company may issue up to $1.3 billion of commercial
paper. The Company's revolving credit agreement provides the committed
backup liquidity required to issue commercial paper. Accordingly,
commercial paper may only be issued up to the amount available for
borrowing under the Company's revolving credit agreement. At December
31, 1998, $125.0 million (principal amount) of commercial paper was
outstanding. The entire amount is classified as long-term debt.
The Company has a universal shelf registration statement on
file for the issuance of up to $500.0 million of debt and equity
securities from time to time. The Company issued during 1998 and has
outstanding as of December 31, 1998 a total of $470.5 million of
Medium-term notes under this program. The maturities on these notes
range from five to thirty years at an average interest rate of 6.0%.
At December 31, 1998, the Company had outstanding $263.0
million (principal amount) of Medium-term notes issued under a
previous shelf registration statement with maturities ranging from
five to ten years at an average interest rate of 6.3%.
Uses
----
The Company's primary uses of liquidity and capital
resources include acquisitions, dividend payments and capital
expenditures.
43
In 1998, the Company acquired Swish, Panex, Gardinia and
Rotring and made other minor acquisitions for cash purchase prices
totaling $413.3 million. In 1997, the Company acquired Rolodex, Kirsch
and Eldon and made other minor acquisitions for cash purchase prices
totaling $762.1 million. In 1996, the Company acquired Holson Burnes
and completed other minor acquisitions for consideration that included
cash of $42.6 million. All of these acquisitions were accounted for as
purchases and were paid for with proceeds obtained from the issuance
of commercial paper, medium-term notes and notes payable under the
Company's lines of credit.
Capital expenditures were $147.7 million, $103.2 million and
$96.2 million in 1998, 1997 and 1996, respectively. The increase in
1998 was primarily due to the replacement of glass manufacturing tanks
at the Newell Europe and Anchor Hocking divisions.
The Company has paid regular cash dividends on its Common
Stock since 1947. On February 8, 1999, the quarterly cash dividend was
increased to $0.20 per share from the $0.18 per share that had been
paid since February 10, 1998. Prior to this date, the quarterly cash
dividend paid was $0.16 per share since February 11, 1997, which was
an increase from the $0.14 per share paid since February 6, 1996.
Dividends paid during 1998, 1997 and 1996 were $116.5 million, $101.8
million and $88.9 million, respectively.
Retained earnings increased in 1998, 1997 and 1996 by $279.7
million, $191.3 million and $170.1 million, respectively. The higher
increase in 1998 versus the increase in 1997 was primarily due to a
pre-tax gain of $191.5 million ($116.8 million after taxes) on the
sale of the Black & Decker common stock. The average dividend payout
ratio to common stockholders in 1998, 1997 and 1996 was 30%, 36% and
35%, respectively (represents the percentage of diluted earnings per
share paid in cash to stockholders).
Working capital at December 31, 1998 was $769.6 million
compared to $719.2 million at December 31, 1997 and $482.6 million at
December 31, 1996. The current ratio at December 31, 1998 was 1.94:1
compared to 2.01:1 at December 31, 1997 and 1.72:1 at December 31,
1996.
Total debt to total capitalization (total debt is net of
cash and cash equivalents, and total capitalization includes total
debt, company-obligated mandatorily redeemable convertible preferred
securities of a subsidiary trust and stockholders' equity) was .27:1
at December 31, 1998, .27:1 at December 31, 1997 and .35:1 at December
31, 1996.
The Company believes that cash provided from operations and
available borrowing facilities will continue to provide adequate
support for the cash needs of existing businesses; however, certain
events, such as significant acquisitions, could require additional
external financing.
44
LEGAL AND ENVIRONMENTAL MATTERS
The Company is subject to certain legal proceedings and
claims, including various environmental matters, that have arisen in
the ordinary conduct of its business. Such matters are more fully
described in Note 14 to the Company's consolidated financial
statements. The Company does not expect any amount it may be required
to pay in excess of amounts reserved will have a material effect on
its consolidated financial statements.
YEAR 2000 COMPUTER COMPLIANCE
State of Readiness
------------------
Any computer equipment that uses two digits instead of four
to specify the year will be unable to interpret dates beyond the year
1999. This "Year 2000" issue could result in system failures or
miscalculations causing disruptions of operations.
In order to address Year 2000 compliance issues, the Company
has initiated a comprehensive project designed to minimize or
eliminate these kinds of operational disruptions in its information
technology ("IT") systems, as well as its non-IT systems (e.g., HVAC
systems and building security systems). The project consists of six
phases: company recognition, inventory of systems, impact analysis,
planning, fixing and testing.
The Company has substantially completed all phases for its
IT and non-IT systems in the United States. With respect to
International IT systems, approximately 60% of the Company's critical
business systems are currently compliant and approximately 40% are in
the process of being fixed and tested. With respect to International
non-IT systems, the assessment phase indicated a need for only minor
fixing. For both International IT and non-IT systems, the fixing and
testing phases currently underway are generally expected to be
completed by June 1999.
As part of its Year 2000 project, the Company has initiated
communications with all of its key vendors and services suppliers
(including raw material and utility providers) to assess their state
of Year 2000 readiness. Over 80% of its key vendors and service
suppliers have responded in writing to the Company's Year 2000
readiness inquiries and have said they will be Year 2000 compliant.
The Company plans to continue assessment of its third party business
partners, including face-to-face meetings with management and/or
onsite visits as deemed appropriate. The Company is prepared in cases
where its main vendor or service provider cannot continue with its
business due to Year 2000 problems to use alternate vendors as sources
for required materials. Despite the Company's efforts, there can be no
45
guarantee that the systems of other companies which the Company relies
upon to conduct its day-to-day business will be compliant.
Costs
-----
The Company estimates that it will incur total expenses of
$14 million to $16 million in conjunction with the Year 2000
compliance project (excluding such expenses relating to the Rubbermaid
operations). As of December 31, 1998, the Company has spent $14
million in conjunction with this project. The majority of these
expenditures were capitalized since they were associated with
purchased software that would have been replaced in the normal course
of business.
Risks
-----
With respect to the risks associated with its IT and non-IT
systems, the Company believes that the most likely worst case scenario
is that the Company may experience minor system malfunctions and
errors in the early days and weeks of 2000 that were not detected
during its fixing and testing efforts. The Company also believes that
these problems will not have a material effect on the Company's
financial condition or results of operations.
With respect to the risks associated with third parties, the
Company believes that the most likely worst case scenario is that some
of the Company's vendors will not be compliant and will have
difficulty filling orders and delivering goods. Management also
believes that the number of such vendors will have been minimized by
the Company's program of identifying non-compliant vendors and
replacing or jointly developing alternative supply or delivery
solutions prior to 2000. Due to the diversity of its product lines,
the Company does not have material sensitivity to any one vendor or
service supplier.
The Company has limited the scope of its risk assessment to
those factors upon which it can reasonably be expected to have an
influence. For example, the Company has made the assumption that
government agencies, utility companies and telecommunications
providers will continue to operate. Obviously, the lack of such
services could have a material effect on the Company's ability to
operate, but the Company has little if any ability to influence such
an outcome, or to reasonably make alternative arrangements in advance
for such services in the event they are unavailable.
46
Contingency Plans
-----------------
In the United States, the Company has all of its major
business systems running on a centralized system for all of its
operating divisions. Although extensive testing has been completed for
these systems, the following contingency plan has been adopted for
Year 2000 issues that may occur on January 1, 2000 and thereafter:
- A triage team has been assembled which has the
authority and financial capabilities to rectify all
systems problems that may occur.
- The team consists of Corporate officers and managers
from every support function.
- The team has access to vendor support hotlines and
internal staffs.
- Once a problem has been identified and course of action
determined, staff will be assigned to provide
around-the-clock corrective actions until the problem
is resolved.
INTERNATIONAL OPERATIONS
------------------------
The Company's non-U.S. business is growing at a faster pace
than its business in the United States. This growth outside the U.S.
has been fueled by recent international acquisitions, which
supplemented the Company's existing Canadian businesses and Newell
International, the Company's subsidiary responsible for the majority
of exports of the Company's products. For the year ended December 31,
1998, the Company's non-U.S. business accounted for approximately 22%
of sales and 16% of operating income (see note 13 to the consolidated
financial statements). Growth of both the U.S. and the non-U.S.
businesses is shown below:
47
Year Ended December 31, 1998 1997* % Change
-------------------------------------------------------------------------
(in millions)
Net sales:
U.S. $2,906.1 $2,796.6 3.9%
Non-U.S. 813.9 539.6 50.8
------------------------------
Total $3,720.0 $3,336.2 11.5%
==============================
Operating income:
U.S. $ 449.0 $ 460.8 (2.6)%
Non-U.S. 85.1 86.3 (1.4)
------------------------------
Total $ 534.1 $ 547.1 (2.4)%
==============================
Year Ended December 31, 1997* 1996* % Change
--------------------------------------------------------------------------
(in millions)
Net sales:
U.S. $2,796.6 $2,558.2 9.3%
Non-U.S. 539.6 414.6 30.1
----------------------------
Total $3,336.2 $2,972.8 12.2%
=============================
Operating income:
U.S. $ 460.8 $ 401.7 14.7%
Non-U.S. 86.3 65.7 31.4
------------------------------
Total $ 547.1 $ 467.4 17.1%
=============================
* Restated for the merger with Calphalon Corporation, which was
accounted for as a pooling of interests.
MARKET RISK
The Company's market risk is impacted by changes in interest
rates, foreign currency exchange rates, and certain commodity prices.
Pursuant to the Company's policies, natural hedging techniques and
derivative financial instruments may be utilized to reduce the impact
of adverse changes in market prices. The Company does not hold or
issue derivative instruments for trading purposes.
The Company's primary market risk is interest rate exposure,
primarily in the United States. The Company manages interest rate
exposure through its conservative debt ratio target and its mix of
fixed and floating rate debt. Interest rate exposure was reduced
48
significantly in 1997 from the issuance of $500 million 5.25%
Company-Obligated Mandatorily Redeemable Convertible Preferred
Securities of a Subsidiary Trust, the proceeds of which reduced
commercial paper. Interest rate swaps may be used to adjust interest
rate exposures when appropriate based on market conditions, and, for
qualifying hedges, the interest differential of swaps is included in
interest expense.
The Company's foreign exchange risk management policy
emphasizes hedging anticipated intercompany and third-party commercial
transaction exposures of one year duration or less. The Company
focuses on natural hedging techniques of the following form: 1)
offsetting or netting of like foreign currency cash flows, 2)
structuring foreign subsidiary balance sheets with appropriate levels
of debt to reduce subsidiary net investments and subsidiary cash flows
subject to conversion risk, 3) converting excess foreign currency
deposits into U.S. dollars or the relevant functional currency and 4)
avoidance of risk by denominating contracts in the appropriate
functional currency. In addition, the Company utilizes forward
contracts and purchased options to hedge commercial and intercompany
transactions. Gains and losses related to qualifying hedges of
commercial transactions are deferred and included in the basis of the
underlying transactions. Derivatives used to hedge intercompany
transactions are marked to market with the corresponding gains or
losses included in the consolidated statements of income.
Due to the diversity of its product lines, the Company does
not have material sensitivity to any one commodity. The Company
manages commodity price exposures primarily through the duration and
terms of its vendor contracts.
The amounts shown below represent the estimated potential
economic loss that the Company could incur from adverse changes in
either interest rates or foreign exchange rates using the
value-at-risk estimation model. The value-at-risk model uses
historical foreign exchange rates and interest rates to estimate the
volatility and correlation of these rates in future periods. It
estimates a loss in fair market value using statistical modeling
techniques and including substantially all market risk exposures
(specifically excluding equity-method investments). The fair value
losses shown in the table below have no impact on results of
operations or financial condition as they represent economic not
financial losses.
49
Time Confidence
Amount Period Level
-------------------------------------------------------------------------
(In millions)
Interest rates $8.6 1 day 95%
Foreign exchange $1.8 1 day 95%
The 95% confidence interval signifies the Company's degree
of confidence that actual losses would not exceed the estimated losses
shown above. The amounts shown here disregard the possibility that
interest rates and foreign currency exchange rates could move in the
Company's favor. The value-at-risk model assumes that all movements in
these rates will be adverse. Actual experience has shown that gains
and losses tend to offset each other over time, and it is highly
unlikely that the Company could experience losses such as these over
an extended period of time. These amounts should not be considered
projections of future losses, since actual results may differ
significantly depending upon activity in the global financial markets.
EURO CURRENCY CONVERSION
On January 1, 1999, the "Euro" became the common legal
currency for 11 of the 15 member countries of the European Union. On
that date, the participating countries fixed conversion rates between
their exiting sovereign currencies ("legacy currencies") and the Euro.
On January 4, 1999, the Euro began trading on currency exchanges and
became available for non-cash transactions, if the parties elect to
use it. The legacy currencies will remain legal tender through
December 31, 2001. Beginning January 1, 2002, participating countries
will introduce Euro-denominated bills and coins, and effective July 1,
2002, legacy currencies will no longer be legal tender.
After the dual currency phase, all businesses in
participating countries must conduct all transactions in the Euro and
must convert their financial records and reports to be Euro-based. The
Company has commenced an internal analysis of the Euro conversion
process to prepare its information technology systems for the
conversion and analyze related risks and issues, such as the benefit
of the decreased exchange rate risk in cross-border transactions
involving participating countries and the impact of increased price
transparency on cross-border competition in these countries.
The Company believes that the Euro conversion process will
not have a material impact on the Company's businesses or financial
condition on a consolidated basis.
FORWARD LOOKING STATEMENTS
Forward-looking statements in this Report are made in
reliance upon the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995. Such forward-looking statements may
50
relate to, but are not limited to, such matters as sales, income,
earnings per share, return on equity, capital expenditures, dividends,
capital structure, free cash flow, debt to capitalization ratios,
interest rates, internal growth rates, Euro conversion plans and
related risks, Year 2000 plans and related risks, pending legal
proceeding and claims (including environmental matters), future
economic performance, management's plans, goals and objectives for
future operations and growth or the assumptions relating to any of the
forward-looking information. The Company cautions that forward-looking
statements are not guarantees since there are inherent difficulties in
predicting future results. Actual results could differ materially from
those expressed or implied in the forward-looking statements. Factors
that could cause actual results to differ include, but are not limited
to, those matters set forth in this Report, the documents incorporated
by reference herein and Exhibit 99 to this Report.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
----------------------------------------------------------
The information required by this item is incorporated herein by
reference to the section entitled "Market Risk" in the Company's
Management's Discussion and Analysis of Results of Operations and
Financial Condition (Part II, Item 7).
51
Item 8. Financial Statements and Supplementary Data
-------------------------------------------
Report of Independent Public Accountants
----------------------------------------
To the Stockholders of Newell Co.:
We have audited the accompanying consolidated balance sheets
of Newell Co. (a Delaware corporation) and subsidiaries as of December
31, 1998, 1997 and 1996, and the related consolidated statements of income,
stockholders' equity and comprehensive income and cash flows for each of
the three years in the period ended December 31, 1998. These consolidated
financial statements are the responsibility of Newell Co. management.
Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.
We conducted our audits in accordance with generally
accepted auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial position of
Newell Co. and subsidiaries as of December 31, 1998, 1997 and 1996,
and the results of their operations and their cash flows for each of
the three years in the period ended December 31, 1998, in conformity
with generally accepted accounting principles.
Our audit was made for the purpose of forming an opinion on
the basic financial statements taken as a whole. The schedule listed
in Part IV Item 14(a)(2) of this Form 10-K is presented for purposes
of complying with the Securities and Exchange Commission's rules and
is not a part of the basic financial statements. This schedule has
been subjected to the auditing procedures applied in our audit of the
basic financial statements and, in our opinion, fairly states in all
material respects the financial data required to be set forth therein
in relation to the basic financial statements taken as a whole.
Arthur Andersen LLP
Milwaukee, Wisconsin
January 27, 1999
52
CONSOLIDATED STATEMENTS OF INCOME
----------------------------------------------------------------------------------------------
Year Ended December 31, 1998 1997* 1996*
----------------------------------------------------------------------------------------------
(In thousands, except per share data)
Net sales $3,720,040 $3,336,233 $2,972,839
Cost of products sold 2,548,064 2,259,551 2,020,116
-----------------------------------------------
Gross Income 1,171,976 1,076,682 952,723
Selling, general and administrative expenses 583,016 497,739 461,802
Trade names and goodwill amortization and other 54,860 31,882 23,554
----------------------------------------------
Operating Income 534,100 547,061 467,367
Nonoperating (income) expenses:
Interest expense 60,397 76,413 58,541
Other, net (211,143) (14,686) (19,474)
-----------------------------------------------
Net (150,746) 61,727 39,067
-----------------------------------------------
Income Before Income Taxes 684,846 485,334 428,300
Income taxes 288,690 192,187 169,258
-----------------------------------------------
Net Income $396,156 $293,147 $259,042
===============================================
Earnings per share
Basic $2.44 $1.81 $1.60
Diluted $2.38 $1.80 $1.60
Weighted average shares outstanding
Basic 162,544 162,173 161,858
Diluted 173,041 163,308 162,281
* Restated for the merger with Calphalon Corporation, which was
accounted for as a pooling of interests.
See notes to consolidated financial statements.
53
CONSOLIDATED STATEMENTS OF CASH FLOWS
----------------------------------------------------------------------------------------------------
Year Ended December 31, 1998 1997* 1996*
----------------------------------------------------------------------------------------------------
(In thousands)
Operating Activities
Net income $ 396,156 $293,147 $259,042
Adjustments to reconcile net income to
Net cash provided by operating activities:
Depreciation and amortization 147,526 131,964 118,109
Deferred income taxes 56,600 57,792 44,203
Net gains on:
Marketable equity securities (116,800) (1,723) -
Sales of businesses (388) - -
Write-off of intangible assets and other 4,288 2,365 1,338
Other 3,610 (6,961) (6,364)
Changes in current accounts, excluding
the effects of acquisitions:
Accounts receivable 9,005 675 (5,956)
Inventories (16,667) 5,233 21,110
Other current assets 3,928 (5,577) (214)
Accounts payable (44,583) (21,974) (22,416)
Accrued liabilities and other (140,097) (78,544) (42,832)
------------------------------------------------
Net Cash Provided By Operating
Activities 302,578 376,397 366,020
Investing Activities
Acquisitions, net (437,639) (715,316) (58,213)
Expenditures for property, plant and equipment (147,741) (103,195) (96,230)
Purchase of marketable equity securities (26,056) - (3,513)
Sale of businesses, net of taxes paid 162,225 - -
Sale of marketable securities, net of taxes paid 303,869 6,389 -
Disposals of non-current assets and other 10,633 5,082 8,430
----------------------------------------------
Net Cash Used in Investing Activities (134,709) (807,040) (149,526)
Financing Activities
Proceeds from issuance of debt 502,670 148,073 4,164
Proceeds from the issuance of company-obligated
mandatorily redeemable convertible preferred
securities of a subsidiary trust - 500,000 -
Proceeds from exercised stock options and other 3,859 17,026 7,274
Payments on notes payable and long-term debt (535,043) (98,714) (195,799)
Cash dividends (116,472) (101,798) (88,900)
----------------------------------------------
Net Cash Provided by (Used in)
Financing Activities (144,986) 464,587 (273,261)
----------------------------------------------
Exchange rate effect on cash (1,477) (2,200) 338
Increase (decrease) in cash and cash 21,406 31,744 (56,429)
equivalents
Cash and cash equivalents at beginning of year 36,107 4,363 60,792
54
------------------------------------------------
Cash and Cash Equivalents at
End of Year $ 57,513 $ 36,107 $ 4,363
================================================
Supplemental cash flow disclosures -
Cash paid during the year for:
Income taxes $217,391 $ 162,100 $ 127,392
Interest 68,053 69,270 57,036
* Restated for the merger with Calphalon Corporation, which was
accounted for as a pooling of interests.
See notes to consolidated financial statements.
55
CONSOLIDATED BALANCE SHEETS
---------------------------------------------------------------------------------------------------------
December 31, 1998 1997* 1996*
---------------------------------------------------------------------------------------------------------
(In thousands)
Assets
Current Assets
Cash and cash equivalents $ 57,513 $ 36,107 $ 4,363
Accounts receivable, net 652,354 544,375 424,479
Inventories, net 714,531 653,200 524,444
Deferred income taxes 90,437 134,732 126,200
Prepaid expenses and other 76,240 65,280 68,978
------------------------------------------------
Total Current Assets 1,591,075 1,433,694 1,148,464
Marketable Equity Securities 19,317 307,121 240,789
Other Long-Term Investments 57,967 51,020 58,703
Other Assets 166,543 144,475 119,720
Property, Plant and Equipment, Net 835,646 711,325 567,880
Trade Names and Goodwill, Net 1,657,364 1,364,099 922,874
------------------------------------------------
Total Assets $ 4,327,912 $4,011,734 $3,058,430
================================================
Liabilities and Stockholders'
Equity
Current Liabilities
Notes payable $ 69,167 $ 52,636 $ 73,877
Accounts payable 164,328 138,531 114,158
Accrued compensation 80,794 82,676 67,269
Other accrued liabilities 480,048 397,561 337,729
Income taxes 20,036 11,797 37,914
Current portion of long-term debt 7,083 31,278 34,937
--------------------------------------------------
Total Current Liabilities 821,456 714,479 665,884
Long-Term Debt 866,211 786,793 685,608
Other Non-Current Liabilities 206,560 186,673 159,439
Deferred Income Taxes 20,821 90,216 47,477
Minority Interest 857 8,352 -
Company-Obligated Mandatorily Redeemable Convertible
Preferred Securities of a Subsidiary Trust 500,000 500,000 -
Stockholders' Equity
Common Stock - authorized shares,
400.0 million at $1 par value; 162,739 162,330 161,965
Outstanding shares:
1998 - 162.7 million
1997 - 162.3 million
1996 - 162.0 million
Additional paid-in capital 204,495 201,045 194,829
Retained earnings 1,585,327 1,305,643 1,114,294
56
Accumulated other comprehensive income (40,554) 56,203 28,934
--------------------------------------------------
Total Stockholders' Equity 1,912,007 1,725,221 1,500,022
--------------------------------------------------
Total Liabilities and Stockholders $ 4,327,912 $4,011,734 $3,058,430
Equity
==================================================
* Restated for the merger with Calphalon Corporation, which was
accounted for as a pooling of interests.
See notes to consolidated financial statements.
57
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY AND COMPREHENSIVE INCOME
------------------------------------------------------------------------------------------------------------
Accumulated Current
Other Year
Additional Compre- Compre-
Common Paid-In Retained hensive hensive
Stock Capital(1) Earnings Income Income
-------------------------------------------------------------------------------------------------------------------------
(In thousands, except per share data)
Balance at December 31, 1995* $161,720 $187,800 $944,152 $ 7,913
Net income 259,042 $ 259,042
Other comprehensive income:
Unrealized gain on securities
available for sale, net of tax
of $13.6 million 20,683 20,683
Foreign currency translation adjustments,
net of tax of $0.2 million 338 338
-----------
Total comprehensive income $ 280,063
===========
Cash dividends:
Common stock $0.56 per share (88,900)
Exercise of stock options 245 7,088
Other (59)
---------------------------------------------------------------------------
Balance at December 31, 1996* 161,965 194,829 1,114,294 28,934
Net income 293,147 $ 293,147
Other comprehensive income:
Unrealized gain on securities
available for sale, net of tax of $27.7 million 42,244 42,244
Foreign currency translation adjustments,
net of tax of $9.8 million (14,975) (14,975)
-----------
Total comprehensive income $ 320,416
===========
Cash dividends:
Common stock $.64 per share (101,798)
Exercise of stock options 365 6,818
Other (602)
---------------------------------------------------------------------------
Balance at December 31, 1997* 162,330 201,045 1,305,643 56,203
Net income 396,156 $ 396,156
Other comprehensive income:
Unrealized gain on securities
available for sale, net of
tax of $21.6 million 33,850 33,850
Reclassification adjustment for gains realized
in net income, net of tax of $74.7 million (116,800) (116,800)
58
Foreign currency translation adjustments,
net of tax of $8.8 million (13,807) (13,807)
---------
Total comprehensive income $ 299,399
=========
Cash dividends:
Common stock $.72 per share (116,472)
Exercise of stock options 409 8,080
Other (4,630)
--------------------------------------------------------------------------
Balance at December 31, 1998 $162,739 $204,495 $1,585,327 $ (40,554)
===========================================================================
(1) Net of treasury stock (at cost) of $1,534, $665 and $199 as of
December 31, 1998, 1997 and 1996, respectively.
* Restated for the merger with Calphalon Corporation, which was
accounted for as a pooling of interests.
See notes to consolidated financial statements.
59
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1998, 1997 AND 1996
1) SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION: The consolidated financial statements
include the accounts of Newell and its majority owned subsidiaries
("the Company") after elimination of intercompany accounts and
transactions.
USE OF ESTIMATES: The preparation of these financial statements
required the use of certain estimates by management in determining the
Company's assets, liabilities, revenue and expenses and related
disclosures.
REVENUE RECOGNITION: Sales of merchandise are recognized upon
shipment to customers.
DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS: The following
methods and assumptions were used to estimate the fair value of each
class of financial instruments:
LONG-TERM DEBT: The fair value of the Company's long-term debt
issued under the Medium-term note program is estimated based on
quoted market prices which approximate cost. All other
significant long-term debt is pursuant to floating rate
instruments whose carrying amounts approximate fair value.
COMPANY-OBLIGATED MANDATORILY REDEEMABLE CONVERTIBLE PREFERRED
SECURITIES OF A SUBSIDIARY TRUST: The fair value of the
Company-Obligated Mandatorily Redeemable Convertible Preferred
Securities of a Subsidiary Trust was $527.5 million at December
31, 1998 based on quoted market prices.
ALLOWANCES FOR DOUBTFUL ACCOUNTS: Allowances for doubtful accounts
at December 31 totaled $24.5 million in 1998, $21.2 million in 1997
and $15.0 million in 1996.
INVENTORIES: Inventories are stated at the lower of cost or market
value. Cost of certain domestic inventories (approximately 74%, 84%
and 90% of total inventories at December 31, 1998, 1997 and 1996,
respectively) was determined by the "last-in, first-out" ("LIFO")
method; for the balance, cost was determined using the "first-in,
first-out" ("FIFO") method. If the FIFO inventory valuation method had
been used exclusively, inventories would have increased by $3.5
million, $19.2 million and $27.4 million at December 31, 1998, 1997
and 1996, respectively.
60
The components of inventories, net of the LIFO reserve, were as
follows:
December 31, 1998 1997 1996
-----------------------------------------------------------------------------------------------
(In millions)
Materials and supplies $150.4 $142.8 $128.7
Work in process 122.1 109.9 91.4
Finished products 442.0 400.5 304.3
------------------------------------------------------
$714.5 $653.2 $524.4
======================================================
Inventory reserves at December 31 totaled $103.0 million in 1998,
$93.9 million in 1997 and $82.6 million in 1996.
OTHER LONG-TERM INVESTMENTS: The Company has a 49% ownership
interest in American Tool Companies, Inc., a manufacturer of hand
tools and power tool accessory products marketed primarily under the
Vise-Grip(TM) and Irwin(TM) trademarks. This investment is accounted
for on the equity method with a net investment of $58.0 million at
December 31, 1998.
LONG-TERM MARKETABLE EQUITY SECURITIES: Long-term Marketable
Equity Securities classified as available for sale are carried at fair
value with adjustments to fair value reported separately, net of tax,
as a component of stockholders' equity (and excluded from earnings).
Gains and losses on the sales of Long-term Marketable Equity
Securities are based upon the average cost of securities sold. On
March 8, 1998, the Company sold 7,862,300 shares it held in The Black
& Decker Corporation. The Black & Decker transaction resulted in net
proceeds of approximately $378.3 million and a net pre-tax gain, after
fees and expenses, of approximately $191.5 million. Long-term
Marketable Equity Securities are summarized as follows:
December 31, 1998 1997 1996
-----------------------------------------------------------------------------------------------
(In millions)
Aggregate market value $19.3 $307.1 $240.8
Aggregate cost 26.0 176.8 180.3
-----------------------------------------------------
Unrealized gain (loss) $(6.7) $130.3 $ 60.5
=====================================================
61
PROPERTY, PLANT AND EQUIPMENT: Property, plant and equipment
consisted of the following:
December 31, 1998 1997 1996
----------------------------------------------------------------------------------------------
(In millions)
Land $ 41.2 $ 34.1 $ 21.4
Buildings and
improvements 337.7 278.6 213.2
Machinery and
equipment 951.9 854.9 714.5
-------------------------------------------------------
1,330.8 1,167.6 949.1
Allowance for
depreciation (495.2) (456.3) (381.2)
--------------------------------------------------------
$ 835.6 $ 711.3 $ 567.9
========================================================
Replacements and improvements are capitalized. Expenditures for
maintenance and repairs are charged to expense. The components of
depreciation are provided by annual charges to income calculated to
amortize, principally on the straight-line basis, the cost of the
depreciable assets over their depreciable lives. Estimated useful
lives determined by the Company are: buildings and improvements (20-40
years), machinery and equipment (5-12 years).
TRADE NAMES AND GOODWILL: The cost of trade names and goodwill
represent the excess of cost over identifiable net assets of
businesses acquired. The Company does not allocate such excess cost to
trade names separate from goodwill. In addition, the Company may
allocate excess cost to other identifiable intangible assets and
record such intangible assets in Other Assets (long-term). Trade names
and goodwill are amortized over 40 years and other identifiable
intangible assets are amortized over 5 to 40 years. Trade names and
goodwill and other indentifiable intangible assets consisted of the
following:
December 31, 1998 1997 1996
-----------------------------------------------------------------------------------------------
(In millions)
Trade Names and Goodwill
Cost $1,838.6 $1,502.9 $1,029.6
Accumulated amortization (181.2) (138.8) (106.7)
---------------------------------------------------------
Net Trade Names and Goodwill $1,657.4 $1,364.1 $ 922.9
=========================================================
62
December 31, 1998 1997 1996
-----------------------------------------------------------------------------------------------
(In millions)
Other Identifiable
Intangible Assets
Cost $66.7 $60.2 $55.8
Accumulated amortization (26.3) (28.2) (20.9)
-----------------------------------------------------
Net other identifiable
intangible assets recorded
in Other Assets $40.4 $32.0 $34.9
=====================================================
Subsequent to an acquisition, the Company periodically evaluates
whether later events and circumstances have occurred that indicate the
remaining estimated useful life of goodwill may warrant revision or
that the remaining balance of goodwill may not be recoverable. If
factors indicate that goodwill should be evaluated for possible
impairment, the Company would use an estimate of the relevant
business' undiscounted net cash flow over the remaining life of the
goodwill in measuring whether the goodwill is recoverable. An
impairment loss would be measured by reducing the carrying value to
fair value, based on a discounted cash flow analysis.
ACCRUED LIABILITIES: Accrued Liabilities included the following:
December 31, 1998 1997 1996
----------------------------------------------------------------------------------------------
(In millions)
Customer accruals $131.5 $135.9 $ 95.8
Accrued self-insurance
liability 43.7 42.8 47.0
Customer accruals are promotional allowances and rebates given to
customers in exchange for their selling efforts. The self-insurance
accrual is primarily for workers' compensation and is estimated based
upon historical claim experience.
FOREIGN CURRENCY TRANSLATION: Foreign currency balance sheet
accounts are translated into U.S. dollars at the rates of exchange in
effect at fiscal year end. Income and expenses are translated at the
average rates of exchange in effect during the year. The related
translation adjustments are made directly to a separate component of
stockholders' equity. International subsidiaries operating in highly
inflationary economies translate non-monetary assets at historical
rates, while net monetary assets are translated at current rates, with
the resulting translation adjustment included in net income as other
nonoperating (income) expenses. Foreign currency transaction gains and
losses were immaterial in 1998, 1997 and 1996.
63
ADVERTISING COSTS: The company expenses advertising costs as
incurred, including cooperative advertising programs with customers.
Total advertising expense was $111.1 million, $101.1 million, and
$78.9 million for 1998, 1997, and 1996, respectively. Cooperative
advertising is recorded in the financial statements as a reduction of
sales because it is viewed as part of the negotiated price of its
products. All other advertising costs are charged to selling, general
and administrative expenses.
EARNINGS PER SHARE: The earnings per share amounts are computed
based on the weighted average monthly number of shares outstanding
during the year. "Basic" earnings per share is calculated by dividing
net income (before cumulative effect of accounting change) by weighted
average shares outstanding. "Diluted" earnings per share is calculated
by dividing net income (before cumulative effect of accounting change)
by weighted average shares outstanding, including the assumption of
the exercise and/or conversion of all potentially dilutive securities
("in the money" stock options and company-obligated mandatorily
redeemable convertible preferred securities of a subsidiary trust).
Effective December 31, 1997, the Company adopted SFAS No. 128,
"Earnings Per Share." As a result, the Company's reported earnings per
share for 1996 was restated.
A reconciliation of the difference between basic and diluted
earnings per share for the years 1998, 1997 and 1996 is shown below:
"In the Convertible
Year Ended Basic Money" Preferred Diluted
December 31, 1998 Method Stock Options Securities Method
-------------------------------------------------------------------------------------------------------------------
(In millions, except per share data)
Net Income $396.2 - $16.1 $412.3
Weighted average
shares outstanding 162.5 0.6 9.9 173.0
Earnings per share 2.44 2.38
"In the Convertible
Year Ended Basic Money" Preferred Diluted
December 31, 1997 Method Stock Options Securities Method
-------------------------------------------------------------------------------------------------------------------
(In millions, except per share data)
Net Income $293.1 - $0.9 $294.0
Weighted average
shares outstanding 162.2 0.6 0.5 163.3
Earnings per share 1.81 1.80
64
"In the Convertible
Year Ended Basic Money" Preferred Diluted
December 31, 1996 Method Stock Options Securities Method
-------------------------------------------------------------------------------------------------------------------
(In millions, except per share data)
Net Income $259.0 - $ - $259.0
Weighted average
shares outstanding 161.9 0.4 - 162.3
Earnings per share 1.60 1.60
COMPREHENSIVE INCOME: In 1998, the Company adopted Statement of
Financial Accounting Standards No. 130, "Reporting Comprehensive
Income," (SFAS No. 130), which requires companies to report all
changes in equity during a period, except those resulting from
investment by owners and distribution to owners, in a financial
statement for the period in which they are recognized. The Company has
chosen to report Comprehensive Income and Accumulated Other
Comprehensive Income, which encompasses net income, net unrealized
gains on securities available for sale and foreign currency
translation adjustments, in the Consolidated Statements of
Stockholders' Equity and Comprehensive Income. Prior years have been
restated to conform to the SFAS No. 130 requirements.
The following table displays the components of Accumulated Other
Comprehensive Income:
Accumulated
Unrealized Foreign Other
Gains/(Losses) Currency Comprehensive
on Securities Translation Income
----------------------------------------------------------------------------------------------------------
(In millions)
Balance at Dec. 31, 1995 $15.9 $(8.0) $7.9
Current year change 20.7 0.3 21.0
-------------------------------------------------------------------
Balance at Dec. 31, 1996 36.6 (7.7) 28.9
Current year change 42.2 (14.9) 27.3
-------------------------------------------------------------------
Balance at Dec. 31, 1997 78.8 (22.6) 56.2
Current year change (82.9) (13.9) (96.8)
-------------------------------------------------------------------
Balance at Dec. 31, 1998 $ (4.1) $(36.5) $(40.6)
===================================================================
NEW ACCOUNTING PRONOUNCEMENTS: Effective December 31, 1998, the
Company adopted SFAS No. 131, "Disclosure about Segments of an
Enterprise and Related Information (SFAS No. 131)." See note 13 to the
consolidated financial statements.
Effective December 31, 1998, the Company adopted SFAS No. 132,
"Employers' Disclosures about Pensions and Other Postretirement
65
Benefits (SFAS No.132)." See note 8 to the consolidated financial
statements.
Effective January 1, 2000, the Company will adopt SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities."
Management believes that the adoption of this statement will not be
material to the consolidated financial statements.
RECLASSIFICATIONS: Certain 1997 and 1996 amounts have been
reclassified to conform with the 1998 presentation. In particular, the
Company began reclassifying the amortization of trade names and
goodwill from non-operating expenses to operating expenses in the
first quarter of 1998. This change required a restatement for all
periods presented.
2) ACQUISITIONS OF BUSINESSES
1996 and 1997
-------------
On January 19, 1996, the Company acquired The Holson Burnes
Group, Inc. ("Holson Burnes"), a manufacturer and marketer of photo
albums and picture frames. Holson Burnes was combined with Intercraft,
creating the Intercraft/Burnes division.
On March 5, 1997, the Company purchased Insilco Corporation's
Rolodex business unit ("Rolodex"), a marketer of office products
including card files, personal organizers and paper punches. Rolodex
was integrated into the Company's Newell Office Products division. On
May 30, 1997, the Company acquired Cooper Industries Incorporated's
Kirsch business ("Kirsch"), a manufacturer and distributor of drapery
hardware and custom window coverings in the United States and
international markets. The Kirsch North American operations were
combined with the Newell Window Furnishings division. The European
operations of Kirsch exist as a separate division called Newell Window
Fashions Europe. On June 13, 1997, the Company acquired Rubbermaid
Incorporated's office products business, including the Eldon{R} brand
name (now referred to as "Eldon"). Eldon is a designer, manufacturer
and supplier of computer and plastic desk accessories, and storage and
organization products. Eldon was integrated into the Company's Newell
Office Products division.
For these and other minor acquisitions, the Company paid $804.7
million in cash and assumed $48.8 million of debt. The transactions
were accounted for as purchases; therefore, results of operations are
included in the accompanying consolidated financial statements since
their respective dates of acquisition. The acquisition costs were
allocated to the fair market value of the assets acquired and
liabilities assumed and resulted in trade names and goodwill of
approximately $621.2 million.
66
1998
----
On March 27, 1998, the Company acquired Swish Track and Pole
("Swish") from Newmond PLC. Swish is a manufacturer and marketer of
decorative and functional window furnishings in Europe and operates as
part of Newell Window Fashions Europe. On June 30, 1998, the Company
purchased Panex S.A. Industria e Comercio ("Panex"), a manufacturer
and marketer of aluminum cookware products based in Brazil. Panex
operates as part of the Mirro division. On August 31, 1998, the
Company purchased the Gardinia Group ("Gardinia"), a manufacturer and
supplier of window treatments based in Germany. Gardinia operates as
part of Newell Window Fashions Europe. On September 30, 1998 the
Company purchased the Rotring Group ("Rotring"), a manufacturer and
supplier of writing instruments, drawing instruments, art materials
and color cosmetic products based in Germany. The writing and drawing
instruments piece of Rotring operates as part of the Company's Sanford
International division. The art materials portion of Rotring operates
as part of the Company's Sanford North America division. The color
cosmetic products piece of Rotring operates as a separate U.S.
division called Cosmolab.
For these and other minor acquisitions, the Company paid $413.3
million in cash and assumed $118.2 million of debt. The transactions
were accounted for as purchases; therefore, results of operations are
included in the accompanying consolidated financial statements since
their respective dates of acquisition. The acquisition costs were
allocated on a preliminary basis to the fair market value of the
assets acquired and liabilities assumed and resulted in trade names
and goodwill of approximately $360.5 million. The Company began to
formulate an integration plan for these acquisitions as of their
respective acquisition dates. No integration liabilities have been
included in the allocation of purchase price as of December 31, 1998.
Such costs will be accrued upon finalization of each acquisition's
integration plan. The Company's finalized integration plan will
include exit costs for certain plants and product lines and employee
terminations associated with the integration of the Swish and Gardinia
businesses into the existing Newell Window Fashions Europe businesses,
the Rotring business into the existing Sanford International writing
instruments businesses and the Panex business into the existing
housewares businesses. The final adjustments to the purchase price
allocations are not expected to be material to the consolidated
financial statements.
On May 7, 1998, a subsidiary of the Company merged with Calphalon
Corporation ("Calphalon"), a manufacturer and marketer of gourmet
cookware. The Company issued approximately 3.1 million shares of
common stock for all of the common stock of Calphalon. This
transaction was accounted for as a pooling of interests; therefore,
prior financial statements were restated to reflect this merger. Net
sales and net income for the individual companies for periods prior to
the merger were as follows:
67
Four months Year Year
ended ended ended
April 30, 1998 Dec. 31, 1997 Dec. 31, 1996
----------------------------------------------------------------------------------
(In millions)
Net sales:
Newell $1,009.9 $3,234.3 $2,872.8
Calphalon 28.5 101.9 100.0
---------------------------------------------------
Total net sales $1,038.4 $3,336.2 $2,972.8
===================================================
Net income:
Newell $ 169.6 $ 290.4 $ 256.5
Calphalon (0.7) 2.7 2.5
---------------------------------------------------
Total net income $ 168.9 $ 293.1 $ 259.0
===================================================
Conforming Calphalon's accounting practices to those of
Newell resulted in no adjustments to net income or stockholders'
equity. There were no significant intercompany transactions between
Newell and Calphalon.
On August 21, 1998, the Company sold its school supplies and
stationery business. On September 9, 1998, the Company sold its
plastic storage and serveware business. The pre-tax net gain on the
sales of these businesses was $35.6 million, which was primarily
offset by non-deductible goodwill, resulting in a net after-tax gain
which was immaterial. Sales for these businesses prior to their
divestitures were approximately $110 million in 1998 and $160 million
in 1997.
The unaudited consolidated results of operations for the
year ended December 31, 1998 and 1997 on a pro forma basis, as though
the Rolodex, Kirsch, Eldon, Swish, Panex, Gardinia and Rotring
businesses had been acquired on January 1, 1997, are as follows:
Year Ended December 31, 1998 1997
-------------------------------------------------------
(In millions, except per share amounts)
Net sales $4,103.9 $4,162.9
Net income 381.7 265.5
Earnings per share (basic) $2.35 $1.64
68
Proposed Merger of the Company
------------------------------
On October 20, 1998, Newell and Rubbermaid Incorporated
("Rubbermaid") entered into an Agreement and Plan of Merger ("Merger
Agreement"), providing for the merger of a subsidiary of Newell into
Rubbermaid, leaving Rubbermaid a wholly owned subsidiary of Newell
("Proposed Merger"). After the Proposed Merger, Newell will be
re-named "Newell Rubbermaid Inc." The Proposed Merger, which will be
accounted for as a pooling of interests and will be tax-free for
federal income tax purposes, has been approved by the respective
Boards of Directors, as well as the applicable regulatory agencies.
The Companies expect the Proposed Merger to become effective before
the end of the first quarter of 1999.
Under the terms of the Merger Agreement, the outstanding shares of
Newell's common stock will remain unchanged and outstanding, and each
outstanding share of Rubbermaid common stock will be converted into
0.7883 shares of Newell common stock.
The following summary contains selected unaudited pro forma
financial data as of and for the year ended December 31, 1998. The pro
forma combined earnings per share reflect the issuance of shares based
on the exhange ratio.
Pro Forma Pro Forma
Newell Rubbermaid Adjustments Combined
-----------------------------------------------------------------------------------------------
(In millions, except per share amounts)
Net Sales $3,720.0 $2,553.7 $(98.6)(1) $6,175.1
Operating Income 534.1 136.4 (2.3)(2) 668.2
Net Income 396.2 82.9 1.4(2) 480.5
Earnings per share:
-Basic 2.44 0.55 1.71
-Diluted 2.38 0.55 1.71
Total Assets 4,327.9 2,127.9 (97.0)(2) 6,358.8
Long-term debt 866.2 152.5 1,018.7
(1) The Pro Forma net sales adjustment represents a reclassification
of Rubbermaid's cooperative advertising to conform with Newell's
classification.
(2) The Pro Forma adjustments primarily represent the elimination of
the accounting effects related to Newell's purchase of a former
Rubbermaid operating division (Eldon) in 1997. Because the Newell
Rubbermaid merger will be accounted for as a pooling of interests, the
69
accounting effects of Newell's purchase of Eldon must be eliminated as
if Newell has always owned Eldon.
Rubbermaid is an international manufacturer and marketer of consumer
products sold primarily under the Rubbermaid{R}, Little Tikes{R},
Graco{R}, Century{R}, and Curver{R} brands. Rubbermaid's major
customers include discount stores and warehouse clubs, toy stores,
home centers and hardware stores, drug and grocery stores, catalog
showrooms, and distributors serving institutional markets. Rubbermaid
has approximately 12,000 employees.
3) CREDIT ARRANGEMENTS
The Company has short-term foreign and domestic uncommitted lines
of credit with various banks which are available for short-term
financing. Borrowings under the Company's uncommitted lines of credit
are subject to discretion of the lender. The Company's uncommitted
lines of credit do not have a material impact on the Company's
liquidity. Borrowings under the Company's uncommitted lines of credit
at December 31, 1998 totaled $69.2 million.
The following is a summary of borrowings under foreign and
domestic lines of credit:
December 31, 1998 1997 1996
--------------------------------------------------------------------------------------
(In millions)
Notes payable to banks:
Outstanding at year-end
- borrowing $69.2 $ 52.6 $ 73.9
- weighted average interest rate 5.9% 4.5% 4.7%
Average for the year
- borrowing $45.0 $132.6 $100.9
- weighted average interest rate 7.5% 5.4% 5.3%
Maximum borrowing
outstanding during the year $69.2 $417.3 $127.0
The Company can also issue commercial paper (as described in note
4 to the consolidated financial statements) as summarized below:
December 31, 1998 1997 1996
----------------------------------------------------------------------------------------
(In millions)
Commercial paper:
Outstanding at year-end
- borrowing $125.0 $517.0 $404.0
- average interest rate 5.6% 6.5% 5.9%
Average for the year
70
- borrowing $287.9 $731.3 $512.3
- average interest rate 5.5% 5.6% 5.3%
Maximum borrowing
outstanding during
the year $572.0 $1,177.6 $594.0
4) LONG-TERM DEBT
The following is a summary of long-term debt:
December 31, 1998 1997 1996
--------------------------------------------------------------------------------------
(In millions)
Medium-term notes $733.5 $263.0 $295.0
Commercial paper 125.0 517.0 404.0
Other long-term debt 14.8 38.1 21.5
-----------------------------------------
873.3 818.1 720.5
Current portion (7.1) (31.3) (34.9)
-----------------------------------------
$866.2 $786.8 $685.6
=========================================
During 1997, the Company amended its revolving credit agreement to
increase the aggregate borrowing limit to $1.3 billion, at a floating
interest rate. The revolving credit agreement will terminate in August
2002. At December 31, 1998, there were no borrowings under the
revolving credit agreement.
In lieu of borrowings under the Company's revolving credit
agreement, the Company may issue up to $1.3 billion of commercial
paper. The Company's revolving credit agreement provides the committed
backup liquidity required to issue commercial paper. Accordingly,
commercial paper may only be issued up to the amount available for
borrowing under the Company's revolving credit agreement. At December
31, 1998, $125.0 million (principal amount) of commercial paper was
outstanding. The entire amount is classified as long-term debt.
The revolving credit agreement permits the Company to borrow funds
on a variety of interest rate terms. This agreement requires, among
other things, that the Company maintain a certain Total Indebtedness
to Total Capital Ratio, as defined in this agreement. As of December
31, 1998, the Company was in compliance with this agreement.
The Company has a universal shelf registration statement on file
for the issuance of up to $500.0 million of debt and equity securities
from time to time. The Company issued during 1998 and has outstanding
as of December 31, 1998 a total of $470.5 million of Medium-term notes
under this program. The maturities on these notes range from five to
thirty years at an average interest rate of 6.0%.
71
At December 31, 1998, the Company had outstanding $263.0 million
(principal amount) of medium-term notes issued under a previous shelf
registration statement with maturities ranging from five to ten years
at an average interest rate of 6.3%.
The aggregate maturities of Long-term Debt outstanding are as
follows:
December 31, Aggregate Maturities
----------------------------------------
(In millions)
1999 $ 7.1
2000 148.1
2001 2.9
2002 227.4
2003 117.9
Thereafter 369.9
-------
$873.3
=======
5) COMPANY-OBLIGATED MANDATORILY REDEEMABLE CONVERTIBLE PREFERRED
SECURITIES OF A SUBSIDIARY TRUST OF THE COMPANY
In December 1997, a wholly owned subsidiary trust of the Company
issued 10,000,000 of its 5.25% convertible quarterly income preferred
securities (the "Convertible Preferred Securities"), with a
liquidation preference of $50 per security, to certain institutional
buyers. The Convertible Preferred Securities represent an undivided
beneficial interest in the assets of the trust. Each of the
Convertible Preferred Securities is convertible at the option of the
holder into shares of the Company's Common Stock at the rate of 0.9865
shares of Common Stock for each preferred security (equivalent to the
approximate conversion price of $50.685 per share of Common Stock),
subject to adjustment in certain circumstances. Holders of the
Convertible Preferred Securities are entitled to a quarterly cash
distribution at the annual rate of 5.25% of the $50 liquidation
preference commencing March 1, 1998. The Convertible Preferred
Securities are subject to a limited guarantee by the Company and are
callable by the Company initially at 103.15% of the liquidation
preference beginning in December 2001 and decreasing over time to 100%
of the liquidation preference beginning in December 2007.
The trust invested the proceeds of this issuance of Convertible
Preferred Securities in $500 million of the Company's 5.25% Junior
Convertible Subordinated Debentures due 2027 (the "Debentures"). The
72
Debentures are the sole assets of the trust, mature on December 1,
2027, bear interest at the rate of 5.25%, payable quarterly,
commencing March 1, 1998, and are redeemable by the Company beginning
in December 2001. The Company may defer interest payments on the
Debentures for a period not to exceed 20 consecutive quarters during
which time distribution payments on the Convertible Preferred
Securities are also deferred. Under this circumstance, the Company may
not declare or pay any cash distributions with respect to its capital
stock or debt securities that rank pari passu with or junior to the
Debentures. The Company has no current intention to exercise its right
to defer payments of interest on the Debentures.
The Convertible Preferred Securities are reflected as outstanding
in the Company's consolidated financial statements as
Company-Obligated Mandatorily Redeemable Convertible Preferred
Securities of a Subsidiary Trust.
6) DERIVATIVE FINANCIAL INSTRUMENTS
The Company has only limited involvement with derivative financial
instruments and does not use them for trading purposes. They are used
to manage certain interest rate and foreign currency risks.
Interest rate swap agreements are utilized to convert certain
floating rate debt instruments into fixed rate debt. Cash flows
related to interest rate swap agreements are included in interest
expense over the terms of the agreements.
The Company utilizes forward exchange contracts to manage foreign
exchange risk related to anticipated intercompany and third-party
commercial transaction exposures of one year duration or less. Gains
and losses related to qualifying hedges of commercial transactions are
deferred and included in the basis of the underlying transactions.
Derivatives used to hedge intercompany transactions are marked to
market with the corresponding gains or losses included in the
consolidated statements of income.
The following table summarizes the Company's forward contracts in
U.S. dollars by major currency and contractual amount. The "buy"
amounts represent the U.S. equivalent of commitments to purchase
foreign currencies, and the "sell" amounts represent the U.S.
equivalent of commitments to purchase foreign currencies according to
local needs in foreign subsidiaries. The contractual amounts of
significant forward contracts and their fair value were as follows:
73
December 31, 1998 1997
---------------------------------------------------------
(In millions)
Buy Sell Buy Sell
----------------------------------
French francs $ - $154.8 $ 8.4 $23.5
Deutsch marks 0.4 171.5 0.3 4.1
Japanese yen - - 18.2 -
----------------------------------
$0.4 $326.3 $26.9 $27.6
==================================
Fair Value $0.3 $324.5 $26.2 $27.3
==================================
The Company's forward contracts do not subject the Company to risk
due to foreign exchange rate movement, since gains and losses on these
contracts generally offset losses and gains on the assets, liabilities
and other transactions being hedged.
The Company does not obtain collateral or other security to
support derivative financial instruments subject to credit risk but
monitors the credit standing of the counterparties.
74
7) LEASES
The Company has minimum rental payments through the year 2018
under noncancellable operating leases as follows:
Year ended December 31, Minimum Payments
-------------------------------------------
(In millions)
1999 $34.6
2000 24.0
2001 17.5
2002 13.4
2003 7.7
Thereafter 11.9
------
$109.1
======
Total rental expense for all operating leases was approximately
$57.1 million, $50.9 million and $45.2 million in 1998, 1997 and 1996,
respectively.
8) EMPLOYEE BENEFIT RETIREMENT PLANS
The Company and its subsidiaries have noncontributory pension and
profit sharing plans covering substantially all of its foreign and
domestic employees. Pension plan benefits are generally based on years
of service and/or compensation. The Company's funding policy is to
contribute not less than the minimum amounts required by the Employee
Retirement Income Security Act of 1974 or local statutes to assure
that plan assets will be adequate to provide retirement benefits. The
Company's common stock comprised $69.3 million, $71.4 million and
$52.9 million of pension plan assets at December 31, 1998, 1997 and
1996, respectively.
Total expense under all profit sharing plans was $7.6 million,
$8.0 million, and $7.1 million for the years ended December 31, 1998,
1997 and 1996, respectively.
In addition to the Company's pension and profit sharing plans,
several of the Company's subsidiaries currently provide retiree health
care benefits for certain employee groups.
The following provides a reconciliation of benefit obligations,
plan assets and funded status of the plans, within the guidelines of
SFAS No. 132:
75
Pension Benefits Other Postretirement Benefits
December 31, 1998 1997 1996 1998 1997 1996
---------------------------------------------------------------------------------------------------------------------
(In millions)
Change in benefit obligation
Benefit obligation at January 1 $578.0 $484.7 $313.4 $ 114.9 $ 96.9 $ 95.1
Service cost 20.1 15.9 16.3 1.7 1.7 2.1
Interest cost 42.7 38.7 36.2 8.5 8.0 7.7
Amendments 2.2 0.1 - - - -
Actuarial loss/(gain) 34.3 11.9 (13.1) 2.9 (5.6) 3.4
Acquisitions 33.7 60.6 162.3 - 24.7 -
Currency exchange (0.3) - 1.6 - - -
Benefits paid from plan assets (37.1) (33.9) (32.0) (12.1) (10.8) (11.4)
----------------------------------------------------------------------------
Benefit obligation at December 31 $673.6 $578.0 $484.7 $ 115.9 $ 114.9 $ 96.9
============================================================================
Change in plan assets
Fair value of plan assets at
January 1 $738.4 $587.6 $341.9 $ - $ - $ -
Actual return on plan assets (5.9) 111.6 73.1 - - -
Employer contributions 5.0 4.1 4.5 12.1 10.8 11.4
Acquisitions 14.1 69.1 198.7 - - -
Currency exchange (0.8) (0.1) 1.4 - - -
Benefits paid from plan assets (37.1) (33.9) (32.0) (12.1) (10.8) (11.4)
----------------------------------------------------------------------------
Fair value of plan assets at
December 31 $713.7 $738.4 $587.6 $ - $ - $ -
============================================================================
Funded Status
Funded status at December 31 $40.1 $160.4 $102.9 $(115.9) $ (114.9) $ (96.9)
Unrecognized net gain (7.9) (105.4) (46.8) (15.0) (18.3) (13.0)
Unrecognized prior service cost (2.0) (5.1) (5.6) - - -
Unrecognized net asset (4.9) (5.2) (6.2) - - -
----------------------------------------------------------------------------
Net amount recognized $25.3 $ 44.7 $44.3 $(130.9) $ (133.2) $ (109.9)
============================================================================
Amounts recognized in the
Consolidated Balance Sheets
Prepaid benefit cost(1) $ 71.8 $ 77.4 $ 71.3 $ - $ - $ -
Accrued benefit cost(2) (50.4) (34.4) (27.6) (130.9) (133.2) (109.9)
Intangible asset(1) 3.9 1.7 0.6 - - -
----------------------------------------------------------------------------
Net amount recognized $ 25.3 $ 44.7 $ 44.3 $(130.9) $ (133.2) $ (109.9)
============================================================================
Assumptions as of December 31
Discount rate 7.00% 7.75% 7.75% 7.00% 7.50% 7.75%
Long-term rate of return on
76
plan assets 10.00% 9.00% 9.00% - - -
Long-term rate of compensation
increase 5.00% 5.00% 5.00% - - -
Health care cost trend rate(3) - - - 8.00% 9.00% 10.00%
(1) Recorded in Other Non-Current Assets.
(2) Recorded in Other Non-Current Liabilities.
(3) The assumed health care cost trend rate decreases one percent
every year through 2000 to 6% and remains constant beyond that point.
Net pension costs and other postretirement benefit costs include the
following components:
Pension Benefits Other Retirement Benefits
Year Ended December 31, 1998 1997 1996 1998 1997 1996
--------------------------------------------------------------------------------------------------------------------
(In millions)
Service cost-benefits earned
during the year $19.3 $16.0 $16 .3 $ 1.7 $ 1.6 $ 2.1
Interest cost on projected
benefit obligation 45.3 38.7 36.2 8.6 8.0 7.7
Expected return on plan assets (59.0) (57.7) (50.0) - - -
Amortization of:
Transition asset (1.1) (1.1) (1.1) (0.5) (0.2) (0.2)
Prior service cost recognized (0.3) (0.3) (0.3) - - -
Actuarial (gain)/loss (1.8) 5.5 1.6 - - -
--------------------------------------------------------------------------
$2.4 $ 1.1 $2.7 $9.8 $9.4 $9.6
==========================================================================
The projected benefit obligation, accumulated benefit obligation
and fair value of plan assets for the pension plans with accumulated
benefit obligations in excess of plan assets are as follows:
December 31, 1998 1997 1996
-----------------------------------------------------
(In millions)
Projected benefit
obligation $129.6 $68.4 $39.7
Accumulated benefit
obligation 110.0 55.1 28.4
Fair value of plan assets 52.1 22.1 1.8
77
The health care cost trend rate significantly affects the reported
postretirement benefit costs and benefit obligations. A one percentage
point change in the assumed rate would have the following effects:
1% Increase 1% Decrease
--------------------------------------------------------
(In millions)
Effect on total of
service and interest
cost components $1.0 $(0.9)
Effect on postretirement
benefit obligations 8.7 (8.1)
9) STOCKHOLDERS' EQUITY
The Company's Common Stock consists of 400.0 million authorized
shares, with a par value of $1 per share. Of the total unissued common
shares at December 31, 1998, total shares in reserve included 8.0
million shares for issuance under the Company's stock option plans.
Each share of Common Stock includes a stock purchase right (a
"Right"). Each Right will entitle the holder, until the earlier of
October 31, 2008 or the redemption of the Rights, to buy one share of
Common Stock at an exercise price of $200 per share, subject to
adjustment under certain circumstances. The Rights will be exercisable
only if a person or group acquires 15% or more of voting power of the
Company or announces a tender offer following which it would hold 15%
or more of the Company's voting power.
In the event that any person or group becomes the beneficial owner
of 15% or more of the Company's voting stock, the Rights (other than
Rights held by the 15% stockholder) would become exercisable for that
number of shares of the Company's Common Stock having a market value
of two times the exercise price of the Right. Furthermore, if,
following the acquisition by a person or group of 15% or more of the
Company's voting stock, the Company was acquired in a merger or other
business combination or 50% or more of its assets were sold, each
Right (other than Rights held by the 15% stockholder) would become
exercisable for that number of shares of Common Stock of the Company
(or the surviving company in a business combination) having a market
value of two times the exercise price of the Right.
The Company may redeem the Rights at $0.001 per Right prior to the
occurrence of an event that causes the Rights to become exercisable
for Common Stock.
10) STOCK OPTIONS
The Company's stock option plans are accounted for under APB
Opinion No. 25. As a result, the Company grants fixed stock options
under which no compensation cost is recognized. Had compensation cost
for the plans been determined consistent with FASB Statement No. 123,
the Company's net income and earnings per share would have been
reduced to the following pro forma amounts:
78
Year Ended December 31, 1998 1997
---------------------------------------------------------
(In millions, except per share data)
Net income: As reported $396.2 $293.1
Pro forma 389.9 290.0
Diluted EPS: As reported $2.38 $1.80
Pro forma 2.35 1.78
Because the FASB Statement No. 123 method of accounting has not
been applied to options granted prior to January 1, 1995, the
resulting pro forma compensation cost may not be representative of
that to be expected in future years.
The Company may grant up to 8.0 million shares under the 1993
Stock Option Plan, of which, the Company has granted 2.5 million
shares and cancelled 0.3 million shares through December 31, 1998.
Under this plan, the option exercise price equals the Common Stock's
closing price on the date of grant, vests over a five-year period and
expires after ten years.
The following summarizes the changes in number of shares of Common
Stock under option:
Weighted
Average
Exercise
1998 Shares Price
--------------------------------------------------------
Outstanding at
beginning of year 1,921,359 $24
Granted 583,214 45
Exercised (430,676) 17
Cancelled (45,915) 25
----------
Outstanding at end of year 2,027,982 31
==========
Exercisable at end of year 864,151 21
==========
Weighted average
fair value of options
granted during the year $18
==========
79
The 2,027,982 options outstanding at December 31, 1998 have
exercise prices between $12 and $49 and are summarized below:
Options Outstanding
------------------- Weighted
Range of Number Weighted Average
Exercise Outstanding at Average Remaining
Prices December 31, 1998 Exercise Price Contractual Life
-------------------------------------------------------------------------------------------------
$12-15 142,676 $14 2
16-25 662,787 21 5
26-35 347,800 29 7
36-45 714,019 41 9
46-49 160,700 48 9
----------
$12-49 2,027,982 31 7
==========
The 864,151 options exercisable at December 31, 1998 have exercise
prices between $12 and $43 and are summarized below:
Options Exercisable
-------------------
Range of Number Weighted
Exercise Exercisable at Average
Prices December 31, 1998 Exercise Price
-------------------------------------------------------------------
$12-15 142,676 $14
16-25 540,435 20
26-35 120,660 28
36-43 60,380 37
---------
$12-43 864,151 21
=========
80
Weighted
Average
Exercise
1997 Shares Price
-------------------------------------------------------------------
Outstanding at
beginning of year 1,959,034 $21
Granted 395,600 38
Exercised (364,587) 18
Cancelled (68,688) 22
---------
Outstanding at end of year 1,921,359 24
=========
Exercisable at end of year 886,445 19
==========
Weighted average
fair value of options
granted during the year $13
==========
81
Weighted
Average
Exercise
1996 Shares Price
-------------------------------------------------------------------
Outstanding at
beginning of year 1,945,730 $20
Granted 400,820 21
Exercised (243,596) 17
Cancelled (143,920) 21
---------
Outstanding at end of year 1,959,034 21
=========
Exercisable at end of year 999,118 18
=========
Weighted average
fair value of options
granted during the year $10
=========
The fair value of each option grant is estimated on the date of
grant using the Black-Scholes option pricing model with the following
assumptions used for grants in 1998, 1997 and 1996, respectively:
risk-free interest rate of 4.1%, 6.3% and 6.4%; expected dividend
yields of 1.6%, 1.8% and 1.8%; expected lives of 9.9, 9.9 and 9.9
years; and expected volatility of 34%, 23% and 20%.
11) INCOME TAXES
The provision for income taxes consists of the following:
Year Ended December 31, 1998 1997 1996
----------------------------------------------------------------------------------------
(In millions)
Current:
Federal $ 197.8 $ 97.7 $ 98.6
State 23.8 17.6 15.9
Foreign 10.5 19.1 10.6
---------------------------------------------------
232.1 134.4 125.1
Deferred 56.6 57.8 44.2
---------------------------------------------------
Total $288.7 $192.2 $169.3
===================================================
The non-U.S. component of income before income taxes was $30.5
million in 1998, $64.5 million in 1997 and $40.4 million in 1996.
82
The components of the net deferred tax asset are as follows:
December 31, 1998 1997 1996
----------------------------------------------------------------------------------------
(In millions)
Deferred tax assets:
Accruals, not currently
deductible for
tax purposes $101.9 $117.3 $111.9
Postretirement liabilities 51.3 53.0 43.9
Inventory reserves 25.3 35.7 29.2
Self-insurance liability 16.3 15.4 16.5
Other 2.9 1.0 1.9
--------------------------------------------------
197.7 222.4 203.4
Deferred tax liabilities:
Accelerated depreciation (64.4) (60.3) (46.9)
Prepaid pension asset (27.1) (31.1) (30.5)
Unrealized gain on
securities available
for sale - (51.5) (23.9)
Amortization of
intangibles (22.1) (11.9) (4.1)
Other (14.5) (23.1) (19.3)
--------------------------------------------------
(128.1) (177.9) (124.7)
--------------------------------------------------
Net deferred tax asset $ 69.6 $ 44.5 $ 78.7
==================================================
The net deferred tax asset is classified in the consolidated
balance sheets as follows:
December 31, 1998 1997 1996
----------------------------------------------------------------------------------------
(In millions)
Current net deferred
income tax asset $90.4 $134.7 $126.2
Non-current deferred
income tax liability (20.8) (90.2) (47.5)
-------------------------------------------------
$69.6 $ 44.5 $ 78.7
=================================================
83
A reconciliation of the U.S. statutory rate to the effective
income tax rate is as follows:
Year Ended December 31, 1998 1997 1996
----------------------------------------------------------------------------------------
(In percent)
Statutory rate 35.0% 35.0% 35.0%
Add (deduct) effect of:
State income taxes, net of
federal income tax effect 3.3 3.6 3.6
Nondeductible trade names
and goodwill amortization 1.3 1.6 1.5
Tax basis differential on
sales of businesses 3.2 - -
Other (0.6) (0.6) (0.6)
------------------------------------------------
Effective rate 42.2% 39.6% 39.5%
================================================
No U.S. deferred taxes have been provided on the undistributed
non-U.S. subsidiary earnings which are considered to be permanently
invested. At December 31, 1998, the estimated amount of total
unremitted non-U.S. subsidiary earnings is $72.9 million.
12) OTHER NONOPERATING (INCOME) EXPENSES
Total other nonoperating (income) expenses consist of the
following:
Year Ended December 31, 1998 1997 1996
-----------------------------------------------------------------------------------------
(In millions)
Equity earnings* $ (7.1) $ (5.8) $ (6.4)
Interest income (12.1) (5.3) (3.7)
Dividend income - (4.0) (11.0)
Gain on sale of marketable
equity securities (191.5) (2.9) -
Gain on sales
of businesses (35.6) - -
Minority interest in income
of subsidiary trust 26.7 1.5 -
Currency translation loss 6.0 0.3 -
Other 2.5 1.5 1.6
------------------------------------------------------
$(211.1) $(14.7) $(19.5)
======================================================
* in American Tool Companies, Inc., in which the Company has a 49%
interest.
84
13) OTHER OPERATING INFORMATION
Industry Segment Information
----------------------------
The Company reviewed the criteria for determining segments of an
enterprise in accordance with SFAS No. 131 and concluded it has three
reportable operating segments: Hardware & Home Furnishings, Office
Products, and Housewares. This segmentation is appropriate because the
Company organizes its product categories into these groups when making
operating decisions and assessing performance. The Company Divisions
included in each group also sell primarily to the same retail channel:
Hardware & Home Furnishings (home centers and hardware stores), Office
Products (office superstores and contract stationers), and Housewares
(discount stores and warehouse clubs).
The principal product categories included in each of the Company's
business segments are as follows:
Segment Product Category
---------------------------------------------------------------
Hardware & Home Window Treatments,
Furnishings Hardware and Tools, Picture
Frames, Home Storage
Office Products Markers and Writing
Instruments, Office Storage and
Organization
Housewares Aluminum Cookware and Bakeware,
Glassware, Hair Accessories
Net Sales*
Year Ended December 31, 1998 1997 1996
-----------------------------------------------------------------------------------------------
(In millions)
Hardware &
Home Furnishings $1,758.1 $1,484.8 $1,299.3
Office Products 1,040.3 899.2 741.8
Housewares 921.6 952.2 931.7
----------------------------------------------------------
Total $3,720.0 $3,336.2 $2,972.8
==========================================================
* Sales to Wal-Mart Stores, Inc. and subsidiaries amounted to
approximately 14% of consolidated net sales in 1998 and 15% in both
1997 and 1996. Sales to no other customer exceeded 10% of consolidated
net sales.
85
Operating Income
Year Ended December 31, 1998 1997 1996
-------------------------------------------------------------------------------------------------
(In millions)
Hardware &
Home Furnishings $290.2 $241.1 $185.3
Office Products 212.3 187.1 161.7
Housewares 101.0 165.5 157.8
Corporate (69.4) (46.6) (37.4)
--------------------------------------------------------
Total $534.1 $547.1 $467.4
========================================================
Identifiable Assets
December 31, 1998 1997 1996
-------------------------------------------------------------------------------------------------
(In millions)
Hardware &
Home Furnishings $ 995.8 $850.8 $ 656.8
Office Products 643.0 520.7 355.4
Housewares 664.8 616.4 583.5
Corporate 2,024.3 2,023.8 1,462.7
----------------------------------------------------------
Total $4,327.9 $4,011.7 $3,058.4
==========================================================
Capital Expenditures
Year Ended December 31, 1998 1997 1996
-------------------------------------------------------------------------------------------------
(In millions)
Hardware &
Home Furnishings $ 39.1 $30.3 $27.7
Office Products 24.9 26.4 20.3
Housewares 53.4 38.7 45.4
Corporate 30.3 7.8 2.8
--------------------------------------------------------
Total $147.7 $103.2 $96.2
========================================================
86
Depreciation and Amortization
Year Ended December 31, 1998 1997 1996
-------------------------------------------------------------------------------------------------
(In millions)
Hardware &
Home Furnishings $ 31.2 $ 33.4 $ 27.9
Office Products 28.7 21.6 16.0
Housewares 39.6 35.4 35.7
Corporate 48.0 41.6 38.5
----------------------------------------------------------
Total $147.5 $132.0 $118.1
==========================================================
87
GEOGRAPHIC AREA INFORMATION
Net Sales
Year Ended December 31, 1998 1997 1996
-------------------------------------------------------------------------------------------------
(In millions)
United States $2,906.1 $2,796.6 $2,558.2
Canada 159.4 163.9 145.4
--------------------------------------------------------------
North America 3,065.5 2,960.5 2,703.6
Europe 463.0 247.2 162.2
Latin America+ 177.9 109.3 89.0
All other 13.6 19.2 18.0
-------------------------------------------------------------
Total $3,720.0 $3,336.2 $2,972.8
=============================================================
Operating Income
Year Ended December 31, 1998 1997 1996
--------------------------------------------------------------------------------------------------
(In millions)
United States $449.0 $460.8 $401.7
Canada 6.3 21.2 14.3
-------------------------------------------------------------
North America 455.3 482.0 416.0
Europe 41.0 33.0 25.7
Latin America+ 38.3 30.8 23.9
All other (0.5) 1.3 1.8
-----------------------------------------------------------
Total $534.1 $547.1 $467.4
===========================================================
Identifiable Assets
December 31, 1998 1997 1996
--------------------------------------------------------------------------------------------------
(In millions)
United States $3,183.8 $3,536.3 $2,789.0
Canada 68.9 106.5 73.4
-------------------------------------------------------------
North America 3,252.7 3,642.8 2,862.4
Europe 796.2 264.7 133.6
Latin America+ 263.8 99.3 59.9
All other 15.2 4.9 2.5
-------------------------------------------------------------
Total $4,327.9 $4,011.7 $3,058.4
=============================================================
+ Includes Mexico, Venezuela, and Colombia, and in 1998, Brazil and
Argentina.
88
Operating income is net sales less cost of products sold and
S,G&A expenses, but is not affected either by nonoperating (income)
expenses or by income taxes. Nonoperating (income) expenses consists
principally of net interest expense, and in 1998, the net gain on the
sale of Black & Decker common stock and the net gains on the sales of
Stuart Hall and Newell Plastics. In calculating operating income for
individual business segments, certain headquarters expenses of an
operational nature are allocated to business segments and geographic
areas primarily on a net sales basis. Trade names and goodwill
amortization is considered a corporate expense and not allocated to
business segments.
All intercompany transactions have been eliminated, and transfers
of finished goods between geographic areas are not significant.
Corporate assets primarily include trade names and goodwill, equity
investments and deferred tax assets.
14) LITIGATION
The Company is subject to certain legal proceedings and claims,
including the environmental matters described below, that have arisen
in the ordinary conduct of its business.
As of December 31, 1998, the Company was involved in various
matters concerning federal and state environmental laws and
regulations, including matters in which the Company has been
identified by the U.S. Environmental Protection Agency and certain
state environmental agencies as a potentially responsible party
("PRPs") at contaminated sites under the Federal Comprehensive
Environmental Response, Compensation and Liability Act ("CERCLA") and
equivalent state laws.
In assessing its environmental response costs, the Company has
considered several factors, including: the extent of the Company's
volumetric contribution at each site relative to that of other PRPs;
the kind of waste; the terms of existing cost sharing and other
applicable agreements; the financial ability of other PRPs to share in
the payment of requisite costs; the Company's prior experience with
similar sites; environmental studies and cost estimates available to
the Company; the effects of inflation on cost estimates; and the
extent to which the Company's and other parties' status as PRPs is
disputed.
Based on information available to it, the Company's estimate of
environmental response costs associated with these matters as of
December 31, 1998 ranged between $15.0 million and $19.5 million. As
of December 31, 1998, the Company had a reserve equal to $18.0 million
for such environmental response costs in the aggregate. No insurance
recovery was taken into account in determining the Company's cost
89
estimates or reserve, nor do the Company's cost estimates or reserve
reflect any discounting for present value purposes.
Because of the uncertainties associated with environmental
investigations and response activities, the possibility that the
Company could be identified as a PRP at sites identified in the future
that require the incurrence of environmental response costs and the
possibility of additional sites as a result of businesses acquired,
actual costs to be incurred by the Company may vary from the Company's
estimates.
Subject to difficulties in estimating future environmental
response costs, the Company does not expect that any amount it may
have to pay in connection with environmental matters in excess of
amounts reserved will have a material adverse effect on its
consolidated financial statements.
The Company is involved in several legal proceedings relating to
the importation and distribution of vinyl mini-blinds made with
plastic containing lead stabilizers. In 1996, the Consumer Product
Safety Commission found that such stabilizers deteriorate over time
from exposure to sunlight and heat, causing lead dust to form on
mini-blind surfaces and presenting a health risk to children under six
years of age.
In July 1996, the California Attorney General and the Alameda
County District Attorney filed a civil suit against 12 named
companies, including a subsidiary of the Company, alleging failure to
warn consumers adequately about the presence of lead in accordance
with California law and seeking injunctions, civil penalties and
restitutionary relief.
In August 1996, 15 companies, including a subsidiary of the
Company, were named as defendants in a national and California private
class action in Sacramento County Superior Court. In October 1997, 16
additional companies were named as defendants in this case, in which
the plaintiffs alleged that the Company's subsidiary used false and
misleading advertising and employed unfair or fraudulent business
practices in connection with the presence of lead in their blinds.
These two cases were coordinated in 1996.
On June 22, 1998, the Court entered a Stipulated Consent
Judgement resolving the Attorney General's case as to the Company's
subsidiary and most of the defendants. On July 27, 1998, the
coordination trial judge ruled that this Consent Judgment barred the
California claims of the private class action plaintiffs, and on
October 6, 1998, judgment was entered for the Company's subsidiary and
22 of the other defendants in the private class action. The private
class action plaintiffs have filed an appeal for both the Consent
Judgment and the Judgment entered in their action and applying for
attorneys' fees for their efforts at the trial court level. The
90
Company's contribution to the judgment amount was not material to the
Company's consolidated financial statements.
In February 1997, a subsidiary of the Company was named as the
defendant in another case involving the importation and distribution
of vinyl mini-blinds containing lead, which was filed as an Illinois
and national private class action in the Cook County Chancery
Division. In this case, the plaintiffs alleged violations of the
Illinois Consumer Fraud and Deceptive Trade Practices Act and the
Illinois version of the Uniform Deceptive Trade Practices Act, breach
of implied warranty, fraud, negligent misrepresentation, negligence,
unjust enrichment, and reception and retention of money unlawfully
received. The plaintiffs seek injunctive relief, unspecified damages,
suit costs and punitive damages.
In December 1998, 13 companies, including a subsidiary of the
Company, were named as defendants in a third case involving the
importation and distribution of vinyl mini-blinds containing lead. The
case, filed as a Massachusetts class action in the Superior Court,
alleges misrepresentation, breaches of express and implied warranties,
negligence, loss of consortium and violation of Massachusetts consumer
protection laws. The plaintiffs seek injunctive relief, unspecified
damages, compensatory damages for personal injury and court costs.
Although management of the Company cannot predict the ultimate
outcome of these matters with certainty, it believes that their
ultimate resolution will not have a material effect on the Company's
consolidated financial statements.
91
Item 9. Changes In and Disagreements with Accountants on Accounting
and Financial Disclosure
-----------------------------------------------------------
None.
PART III
--------
Item 10. Directors and Executive Officers of the Registrant
--------------------------------------------------
Information regarding executive officers of the Company is
included as a Supplementary Item at the end of Part I of this Form
10-K.
Information regarding directors of the Company is included in the
Company's Definitive Proxy Statement for the Annual Meeting of
Stockholders to be held May 26, 1999 ("Proxy Statement") under the
caption "Proposal 1 - Election of Directors," which information is
hereby incorporated by reference herein.
Information regarding compliance with Section 16(a) of the
Exchange Act is included in the Proxy Statement under the caption
"Section 16(a) Beneficial Ownership Compliance Reporting," which
information is hereby incorporated by reference herein.
Item 11. Executive Compensation
----------------------
Information regarding executive compensation is included in the
Proxy Statement under the caption "Proposal 1 - Election of Directors
- Information Regarding Board of Directors and Committees," the
captions "Executive Compensation - Summary; - Option Grants in 1998; -
Option Exercises in 1998; - Pension and Retirement Plans; - Employment
Security Agreements," and the caption "Executive Compensation
Committee Interlocks and Insider Participation," which information is
hereby incorporated by reference herein.
Item 12. Security Ownership of Certain Beneficial Owners and
Management
---------------------------------------------------
Information regarding security ownership is included in the Proxy
Statement under the caption "Certain Beneficial Owners," which
information is hereby incorporated by reference herein.
Item 13. Certain Relationships and Related Transactions
----------------------------------------------
Not applicable.
92
PART IV
-------
Item 14. Exhibits, Financial Statement Schedules and Reports on
Form 8-K
------------------------------------------------------
(a)(1) The following is a list of the financial statements of
Newell Co. included in this report on Form 10-K which are filed
herewith pursuant to Item 8:
Report of Independent Public Accountants
Consolidated Statements of Income - Years Ended December 31, 1998
1997 and 1996
Consolidated Balance Sheets - December 31, 1998, 1997 and 1996
Consolidated Statements of Cash Flows - Years Ended December 31,
1998, 1997 and 1996
Consolidated Statements of Stockholders' Equity - Years Ended
December 31, 1998, 1997 and 1996
Notes to Consolidated Financial Statements - December 31, 1998,
1997 and 1996
(2) The following consolidated financial statement schedule of
the Company included in this report on Form 10-K is filed
herewith pursuant to Item 14(d) and appears immediately preceding
the Exhibit Index:
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
--------------------------------------------------
(3) The exhibits filed herewith are listed on the Exhibit Index
filed as part of this report on Form 10-K. Each management
contract or compensatory plan or arrangement of the Company
listed on the Exhibit Index is separately identified by an
asterisk.
(b) Reports on Form 8-K:
Registrant filed a Current Report on Form 8-K dated October 21,
1998 reporting the agreement between Registrant and Rubbermaid
Incorporated pursuant to which a subsidiary of Newell will merge
with Rubbermaid in a transaction to be accounted for using the
pooling of interests method of accounting.
Registrant filed a Current Report on Form 8-K dated November 17,
1998 to file its Selected Financial Data, Management's Discussion
and Analysis of Financial Condition and Results of Operations,
and Consolidated Financial Statements, each restated to reflect
the merger of a subsidiary of Registrant into Calphalon
Corporation, which was accounted for using the pooling of
interests method of accounting.
93
Registrant filed Current Reports on Form 8-K and 8-K/A, each
dated November 20, 1998, to disclose Financial Statements of
Rubbermaid Incorporated and related pro forma financial
information.
94
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
-------------------------------------------------
Additions
-----------------------
Charged Charged
Balance at to Costs to Other Balance at
Beginning and Accounts Deductions End of
Description of Period Expenses (A) (B) Period
----------- --------- -------- -------- ---------- -----------
Allowance for
doubtful accounts
for the years ended:
December 31, 1998 $21,193 $4,683 $14,028 ($15,434) $24,470
December 31, 1997* 14,990 5,888 8,321 (8,006) 21,193
December 31, 1996* 12,314 6,534 2,200 (6,058) 14,990
Note A - Represents recovery of accounts previously written off, along with net reserves of acquired and divested businesses.
Note B - Represents accounts charged off.
Balance at Balance at
Beginning Other End of
of Period Provision Write-offs (C) Period
--------- --------- ---------- ------- ----------
Inventory reserves for
the years ended:
December 31, 1998 $93,894 $27,894 ($29,293) $10,551 $103,046
December 31, 1997* 82,554 22,469 (30,332) 19,203 93,894
December 31, 1996* 68,675 22,251 (30,721) 22,349 82,554
Note C - Represents net reserves of acquired and divested businesses, including provisions for product line rationalization.
* Restated for the May 1998 merger with Calphalon Corporation,
which was accounted for as a pooling of interests.
95
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly
authorized.
NEWELL CO.
Registrant
By /s/ William T. Alldredge
------------------------
William T. Alldredge
Vice President-Finance
Date March 19, 1999
------------------
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below on March 19, 1999 by the
following persons on behalf of the Registrant and in the capacities
indicated.
Signature Title
--------- -----
/s/ William P. Sovey Chairman of the Board and Director
--------------------------------
William P. Sovey
/s/ John J. McDonough Vice Chairman of the Board, Chief Executive
-------------------------------- Officer and Director
John J. McDonough (Principal Executive Officer)
/s/ Thomas A. Ferguson, Jr. President and Chief Operating Officer
-------------------------------- and Director
Thomas A. Ferguson, Jr.
/s/ Donald L. Krause Senior Vice President-Corporate Controller
-------------------------------- (Principal Accounting Officer)
Donald L. Krause
/s/ William T. Alldredge Vice President-Finance
------------------------------- (Principal Financial Officer)
William T. Alldredge
Director
------------------------------
Alton F. Doody
Director
------------------------------
Gary H. Driggs
96
/s/ Daniel C. Ferguson Director
------------------------------
Daniel C. Ferguson
/s/ Robert L. Katz Director
------------------------------
Robert L. Katz
Director
------------------------------
Elizabeth Cuthbert Millett
Director
------------------------------
Cynthia A. Montgomery
/s/ Allan P. Newell Director
------------------------------
Allan P. Newell
Director
------------------------------
Henry B. Pearsall
97
(C) EXHIBIT INDEX
Exhibit
Number Description of Exhibit
------- ----------------------
Item 3. Articles of 3.1 Restated Certificate of Incorporation of Newell Co., as amended as of
Incorporation September 7, 1995 (incorporated by reference to Exhibit 3.1 to the
and By-Laws Company's Annual Report on Form 10-K for the year ended December 31, 1995
(the "1995 Form 10-K")).
3.2 By-Laws of Newell Co., as amended through November 9, 1995 (incorporated by
reference to Exhibit 4.2 to Pre-effective Amendment No. 1 to the Company's
Registration Statement on Form S-3, File No. 33-64225, filed January 23,
1996).
Item 4. Instruments 4.1 Restated Certificate of Incorporation of Newell Co., as amended as
defining the of September 7, 1995, is included in Item 3.1.
rights of
security
holders,
including
indentures
4.2 By-Laws of Newell Co., as amended through November 9, 1995, are
included in Item 3.2.
4.3 Rights Agreement dated as of August 6, 1998 between the
Company and First Chicago Trust Company of New York, as Rights Agent
(incorporated by reference to Exhibit 4 to the Company's Current Report on
Form 8-K dated August 6, 1998).
4.4 Indenture dated as of April 15, 1992, between the Company and The Chase
Manhattan Bank (National Association), as Trustee (incorporated by reference
to Exhibit 4.4 to the Company's Report on Form 8 amending the Company's
Quarterly Report on Form 10-Q for the quarterly period ended March 31,
1992).
4.5 Indenture dated as of November 1, 1995 between the Company and The Chase
Manhattan Bank (National Association), as Trustee (incorporated by reference
to Exhibit 4.1 to the Company's Current Report on Form 8-K dated May 3,
1996).
4.6 Specimen Common Stock (incorporated by reference to Exhibit 4.1 to the
Company's Registration Statement on Form S-4, File No. 333-71747, filed
February 4, 1999).
Pursuant to item 601(b)(4)(iii)(A) of Regulation S-K, the Company is not
filing certain documents. The Company agrees to furnish a copy of each such
document upon the request of the Commission.
Item 10. Material *10.1 The Newell Long-Term Savings and Investment Plan, as amended and
Contracts restated effective May 1, 1993 and amended through December 29, 1995.
98
*10.2 The Company's Amended and Restated 1984 Stock Option Plan, as amended
through February 14, 1990 (incorporated by reference to Exhibit 10.2 to the
Company's Annual Report on Form 10-K for the year ended December 31, 1990
File No. 1-09608 (the "1990 Form 10-K")).
*10.3 Newell Co. Deferred Compensation Plan, as amended, effective August 1, 1980,
as amended and restated effective January 1, 1997.
*10.4 Newell Operating Company's ROA Cash Bonus Plan, effective January 1, 1977,
as amended (incorporated by reference to Exhibit 10.8 to the Company's
Registration Statement on Form S-14, Reg. No. 002-71121, filed March 4,
1981).
*10.5 Newell Operating Company's ROI Cash Bonus Plan, effective January 1, 1986.
*10.6 Newell Operating Company's Pension Plan for Salaried and Clerical Employees,
as amended and restated, effective January 1, 1996, as amended through June 15,
1998.
*10.7 Newell Operating Company's Pension Plan for Factory and Distribution
Hourly-Paid Employees, as amended and restated effective January 1, 1989 and
amended through September 30, 1997.
*10.8 Newell Operating Company's Restated Supplemental Retirement Plan for Key
Executives, effective January 1, 1982, as amended effective May 13, 1998.
*10.9 Form of Employment Security Agreement with seven executive officers
(incorporated by reference to Exhibit 10.10 to the 1990 Form 10-K).
10.10 Credit Agreement dated as of June 12, 1995 and amended and restated as of
August 5, 1997 among the Company, certain of its affiliates, The Chase
Manhattan Bank (National Association), as Agent, and the banks whose names
appear on the signature pages thereto (incorporated by reference to Exhibit
10.17 to the Company's Quarterly Report on Form 10-Q for the quarterly
period ended June 30, 1997).
10.11 Shareholder's Agreement and Irrevocable Proxy dated as of June 21, 1985.
among American Tool Companies, Inc., Newell Co., Allen D. Petersen, Kenneth
L. Cheloha, Robert W. Brady, William L. Kiburz, Flemming Andresen and Ane C.
Patterson (incorporated by reference to Exhibit 10.15 to the Company's
Annual Report on From 10-K for the year ended December 31, 1997 (the "1997
Form 10-K")).
*10.12 Newell Co. 1993 Stock Option Plan, effective February 9, 1993, as amended in
November 1997 (incorporated by reference to Exhibit 10.16 to the 1997 Form
10-K).
10.13 Amended and Restated Trust Agreement, dated as of December 12, 1997 among
Newell Co., as Depositor, The Chase Manhattan Bank, as Property Trustee,
99
Chase Manhattan Delaware, as Delaware Trustee, and the Administrative
Trustees (incorporated by reference to Exhibit 4.2 to the Company's
Registration Statement on Form S-3, File No. 333-47261, filed March 3, 1998
(the "1998 Form S-3")).
10.14 Junior Convertible Subordinated Indenture for the 5.25% Convertible
Subordinated Debentures, dated as of December 12, 1997, among Newell Co. and
The Chase Manhattan Bank, as Indenture Trustee (Incorporated by reference to
Exhibit 4.3 to the 1998 Form S-3).
10.15 Registration Rights Agreement, dated December 12, 1997, between Newell
Financial Trust I and Goldman, Sachs & Co., Morgan Stanley & Co.
Incorporated, Robert W. Baird & Co. Incorporated, Bear, Sterns & Co. Inc.
and Merrill Lynch & Co., as Initial Purchasers (incorporated by reference to
Exhibit 10.1 to the 1998 Form S-3).
10.16 Terms Agreement dated as of July 9, 1998 among Newell Co., Morgan Stanley
Dean Witter, Merrill Lynch, Pierce, Fenner & Smith Incorporated, Chase
Securities Inc. and First Chicago Capital Markets, Inc. (incorporated by
reference to Exhibit 1.1 to the Company's Current Report on Form 8-K dated
July 9, 1998).
10.17 Agreement and Plan of Merger dated as of October 20, 1998 among Newell Co.,
Rooster Company and Rubbermaid Incorporated (incorporated by reference to
Exhibit 2.1 to the Company's Current Report on Form 8-K dated October 20,
1998).
Item 11. Exhibit 11 Statement of Computation of Earnings per Share of Common Stock.
Item 12. Exhibit 12 Statement of Computation of Earnings to Fixed Charges.
Item 21. Subsidiaries 21.1 Significant Subsidiaries of the Company.
of the
Registrant
Item 23. Consent of 23.1 Consent of Arthur Andersen LLP.
experts and
counsel
Item 27. Financial 27 Financial Data Schedule.
Data Schedule
Item 99. Additional 99 Safe Harbor Statement.
Exhibits
* Management contract or compensatory plan or arrangement of the Company.
EX-10
2
EXHIBIT 10.1
THE NEWELL
LONG-TERM SAVINGS AND INVESTMENT PLAN
(As Amended and Restated Effective
May 1, 1993)
101
THE NEWELL
LONG-TERM SAVINGS AND INVESTMENT PLAN
(As Amended and Restated Effective May 1, 1993)
This Plan was adopted by the Company effective January 1,
1989, and has been amended and restated effective as of May 1, 1993,
except where otherwise provided. The Plan and the related Trust
Agreement will continue to permit Eligible Employees to defer the
Federal income tax on certain portions of their wages as provided by
the Internal Revenue Code and to furnish them with additional security
in the form of retirement and disability benefits. Except as may be
required by ERISA or the Internal Revenue Code, the rights of any
person whose status as an Employee has terminated shall be determined
pursuant to the Plan as in effect on the date such employment status
terminated, unless a subsequently adopted provision of the Plan is
made specifically applicable to such person.
ARTICLE I
DEFINITIONS
-----------
Whenever used herein the following words and phrases shall
have the meanings stated below unless a different meaning is plainly
required by the context:
1.1 "Account" means all or any one of the Savings Account,
Matching Contributions Account, Transfer Account, Rogers Account,
Sanford Account Anchor Account, Intercraft Account and/or Levolor
Account maintained by the Trustee for an individual Participant,
Surviving Spouse or Beneficiary.
1.2 "Actual Deferral Percentage" for a specified group of
Eligible Employees for a given Plan Year means the average of the
ratios, calculated separately for each Eligible Employee in such
group, of: (a) the aggregate of (i) the Earnings Deferral
Contribution, if any, contributed by the Company on behalf of each
such Eligible Employee for the Plan Year, and (ii) the Supplemental
Contribution, if any, made by an Employer on behalf of each such
Eligible Employee for such Plan Year; to(b) the Eligible Employee's
Earnings for such Plan Year.
1.3 "Adjusted Balance" means the balance in a Participant's
Savings Account, Matching Contributions Account, Transfer Account,
Rogers Account, Sanford Account, Anchor Account, Intercraft Account or
Levolor Account.
1.4 "Affiliated Employer" means (a) any corporation that is
a member of a controlled group of corporations (as defined in
Section 414(b) of the Code) that includes the Company; (b) any trade
or business (whether or not incorporated) that is under common control
102
(as defined in Section 414(c) of the Code) with the Company; (c) any
member of an affiliated service group (as defined in Section 414(m) of
the Code) that includes the Company; and (d) any member of the same
group of associated organizations (as defined in Section 414(o) of the
Code). For purposes of applying the limitations of Section 415 of the
Code referred to in Section 1.29, "Affiliated Employer" is determined
in accordance with Sections 414(b) and (c) of the Code, as modified by
Section 415(h) therein.
1.5 "Anchor Account" means the record of money and assets
held by the Trustee for an individual Participant, Surviving Spouse or
Beneficiary pursuant to the provisions of the Plan, derived from the
account balances of the accounts held under the Anchor Plan as of
December 31, 1988. The Anchor Account shall consist of sub-accounts
corresponding to the various sub-accounts maintained under the Anchor
Plan.
1.6 "Anchor Plan" means the Anchor Hocking Corporation
Savings and Investment Plan, as Amended and Restated Effective
January 1, 1987.
1.7 "Annual Additions" means the total of: (a) Employer
contributions allocated to a Participant's accounts under this Plan
and any Related Plan during any Limitation Year; (b) the amount of
employee contributions made by the Participant under this Plan and any
Related Plan; and (c) forfeitures allocated to a Participant's
accounts under any Related Plan.
1.8 "Beneficiary" means the person, persons, or entity
designated or determined pursuant to the provisions of Section 7.2(b)
of the Plan.
1.9 "Board" means the Board of Directors of the Company.
1.10 "Break in Service" means the period of an Employee's
absence from active employment commencing upon his Severance Date from
the Company, and all Affiliated Employers, and ending (if at all) when
he again performs an Hour of Service within the meaning of Section
1.23(a).
1.11 "Code" means the Internal Revenue Code of 1986, as
amended from time to time. Reference to a section of the Code shall
include that section and any comparable section or sections of any
future legislation that amends, supplements or supersedes said
section.
1.12 "Committee" means the Retirement Committee described in
Section 9.1.
1.13 "Company" means Newell Operating Company, a Delaware
corporation, or any successor corporation resulting from a merger or
consolidation of the Company or transfer of substantially all of the
assets of the Company, if such successor or transferee shall adopt and
continue the Plan by appropriate corporate action pursuant to
Section 12.3 of the Plan.
103
1.14 (a) "Compensation" means a Participant's total
earnings from the Company and all Affiliated Employers paid during a
Plan Year for services rendered, including the regular rate portion of
overtime pay, commissions and any lump sum payments received in lieu
of an increase in such Participant's base pay (as agreed upon by the
Company and any collective bargaining unit during the term of the
applicable collective bargaining agreement), but excluding any
bonuses, the premium rate portion of overtime pay, moving expenses,
automobile expenses, stock options, contributions or benefits under
this Plan or any other pension, profit sharing, insurance,
hospitalization or other plan or policy maintained by any Employer for
the benefit of such Participant, and all other extraordinary and
unusual payments. Notwithstanding the preceding provisions of this
Section 1.14, for purposes of Section 1.29 and Section 6.7
"Compensation" shall have the meaning set forth in Section 1.29, and
for purposes of Article XIV "Compensation" shall have the meaning set
forth in Section 14.2(a). In no event shall the Compensation taken
into account for an Employee under the Plan for any Plan Year exceed
(a) $200,000 (or such greater amount provided pursuant to
Section 401(a)(17) of the Code), in Plan Years commencing on and after
January 1, 1989 and prior to January 1, 1994.
(b) In addition to other applicable limitations set forth in the
Plan and notwithstanding any other provision of the Plan to the
contrary, for Plan Years beginning on or after January 1, 1994, the
annual Compensation of each Participant taken into account under the
Plan shall not exceed the OBRA '93 annual Compensation limit. The
OBRA '93 annual Compensation limit is $150,000, as adjusted by the
Commissioner for increases in the cost of living in accordance with
Section 401(a)(17)(B) of the Code. The cost-of-living adjustment in
effect for a calendar year applies to any period, not exceeding 12
months, over which Compensation is determined (determination period)
beginning in such calendar year. If a determination period consists
of fewer than 12 months, the OBRA '93 annual Compensation limit will
be multiplied by a fraction, the numerator of which is the number of
months in the determination period, and the denominator of which is
12.
(c) For Plan Years beginning on or after January 1, 1994, any
reference in this Plan to the limitation under Section 401(a)(17) of
the Code shall mean the OBRA '93 annual Compensation limit set forth
in this provision.
(d) If Compensation for any prior determination period is taken
into account in determining a Participant's benefits accruing in the
current Plan Year, the Compensation for that prior determination
period is subject to the OBRA '93 annual Compensation limit in effect
for that prior determination period. For this purpose, for
determination periods beginning before the first day of the first Plan
Year beginning on or after January 1, 1994, the OBRA '93 annual
Compensation limit is $150,000.
1.15 (a) "Earnings" means a Participant's Compensation paid
during a Plan Year, increased by (a) the amount subject to any Long-
Term Savings Agreement entered into by the Participant for such Plan
104
Year, and (b) the amount contributed on behalf of the Participant to
the Newell Flexible Benefits Account Plan. In no event shall the
Earnings taken into account for an Employee under the Plan for any
Plan Year exceed (a) $200,000 (or such greater amount provided
pursuant to Section 401(a)(17) of the Code), in Plan Years commencing
on and after January 1, 1989 and prior to January 1, 1994.
(b) In addition to other applicable limitations set forth in the
Plan and notwithstanding any other provision of the Plan to the
contrary, for Plan Years beginning on or after January 1, 1994, the
annual Earnings of each Participant taken into account under the Plan
shall not exceed the OBRA '93 annual Compensation limit. The OBRA '93
annual Compensation limit is $150,000, as adjusted by the Commissioner
for increases in the cost of living in accordance with Section
401(a)(17)(B) of the Code. The cost-of-living adjustment in effect
for a calendar year applies to any period, not exceeding 12 months,
over which Earnings are determined (determination period) beginning in
such calendar year. If a determination period consists of fewer than
12 months, the OBRA '93 annual Compensation limit will be multiplied
by a fraction, the numerator of which is the number of months in the
determination period, and the denominator of which is 12.
(c) For Plan Years beginning on or after January 1, 1994, any
reference in this Plan to the limitation under Section 401(a)(17) of
the Code shall mean the OBRA '93 annual Compensation limit set forth
in this provision.
(d) If Earnings for any prior determination period are taken
into account in determining a Participant's benefits accruing in the
current Plan Year, the Earnings for that prior determination period
are subject to the OBRA '93 annual Compensation limit in effect for
that prior determination period. For this purpose, for determination
periods beginning before the first day of the first Plan Year
beginning on or after January 1, 1994, the OBRA '93 annual
Compensation limit is $150,000.
1.16 "Earnings Deferral Contributions" means amounts con-
tributed by the Company at the direction of a Participant pursuant to
the provisions of Section 3.1 of the Plan.
1.17 "Eligibility Year of Service" means the twelve (12)
month period, commencing with the date an Employee first performs an
Hour of Service for the Company or an Affiliated Employer, during
which he completes at least 1,000 Hours of Service, or if he does not
complete 1,000 Hours of Service during such twelve (12) month period,
then the first Plan Year ending thereafter in which he does complete
1,000 Hours of Service.
1.18 "Eligible Employee" means any Employee who has met the
eligibility requirements contained in Section 2.1 or 2.2, excluding
any person who is a leased employee pursuant to Section 1.19.
1.19 "Employee" means an individual employed by an Employer
on or after January 1, 1989 and who is in a covered classification of
Employees, as listed on Appendix A hereto; provided that "Employee"
105
does not include any individual covered under the terms and conditions
of a collective bargaining agreement to which any Employer is a party,
unless such agreement provides for the participation of such
individual. A person who is not an employee of the Company and who
performs services for an Employer pursuant to an agreement between an
Employer and a leasing organization shall be considered a "leased
employee" after such person has performed such services on a
substantially full-time basis for at least twelve months and if the
services are of a type historically performed by employees in the
business field of such Employer. A person who is considered a leased
employee of an Employer shall not be considered an Employee for
purposes of the Plan other than for purposes of determining the Hours
of Service and Vesting Service a person earns that would be considered
if and when he becomes an Employee other than by reason of being a
leased employee. Notwithstanding the preceding sentence, a leased
employee's Hours of Service and Vesting Service shall not be
considered if the requirements of Section 414(n)(5) of the Code are
satisfied with respect to such person.
1.20 "Employer" means the Company, any Affiliated Employer
listed in Appendix A hereto or any Affiliated Employer that may
hereafter adopt the Plan, pursuant to Section 13.15.
1.21 "ERISA" means Public Law No. 93-406, the Employee
Retirement Income Security Act of 1974, as from time to time amended.
1.22 "Highly Compensated Eligible Employee" means an Eligi-
ble Employee who during the Plan Year or preceding Plan Year:
(a) was at any time a five percent owner of the Company or
an Affiliated Employer;
(b) received compensation from the Company or an Affiliated
Employer in excess of $75,000 (or such greater amount provided by the
Secretary of the Treasury pursuant to Section 414(q) of the Code);
(c) received compensation from the Company or an Affiliated
Employer in excess of $50,000 (or such greater amount provided by the
Secretary of the Treasury pursuant to Section 414(q) of the Code) and
was in the top-paid group of employees for such Plan Year (as defined
in Section 414(q)(4) of the Code); or
(d) was at any time an officer of the Company or an
Affiliated Employer (as defined in Section 414(q)(5) of the Code) and
received compensation from the Company or an Affiliated Employer
greater than 50% of the amount in effect under Section 415(b)(1)(A) of
the Code for such Plan Year.
The provisions of Section 414(q) of the Code shall apply in
determining whether an Eligible Employee is a Highly Compensated
Eligible Employee. The Company may elect, for any Plan Year, to
identify Highly Compensated Eligible Employees based upon only the
current Plan Year to the extent permitted by Section 414(q) of the
Code and regulations issued thereunder.
106
1.23 "Hour of Service" means:
(a) each hour for which an Employee is paid or entitled to
payment for the performance of duties for the Company or an Affiliated
Employer on and after the date the Employee is first hired by the
Company or an Affiliated Employer; and
(b) each hour for which an Employee is directly or
indirectly paid by the Company or an Affiliated Employer or is
entitled to payment from the Company or an Affiliated Employer during
which no duties are performed by reason of vacation, holiday, illness,
incapacity (including disability), layoff, jury duty, military duty or
leave of absence (but not in excess of 501 hours in any continuous
period during which no duties are performed), on and after the date
the Employee is first hired by the Company or an Affiliated Employer.
(c) Each Hour of Service for which back pay, irrespective
of mitigation of damages, is either awarded or agreed to by the
Company or an Affiliated Employer shall be included under either
subsection (a) or (b) above as may be appropriate.
Hours of Service shall be credited:
(i) in the case of Hours referred to in subsection (a)
above, for the computation period in which the duties are
performed;
(ii) in the case of Hours referred to in subsection (b)
above and (d) below, for the computation period or periods in
which the period during which no duties are performed occurs; and
(iii) in the case of Hours of Service for which
back pay is awarded or agreed to by the Company or an Affiliated
Employer in subsection (c) above, for the computation period or
periods to which the award or agreement pertains rather than to
the computation period in which the award, agreement or payment
is made.
(d) Solely for purposes of determining an Employee's
eligibility to participate in the Plan under Sections 2.1 and 2.2,
Hours of Service shall include an approved leave of absence granted by
an Employer to the Employee on or after August 5, 1993 pursuant to the
Family and Medical Leave Act, if the Employee returns to work for an
Employer at the end of such leave of absence.
In determining Hours of Service with respect to an Employee
who is employed on other than an hourly-rated basis, such Employee
shall be credited with ten (10) Hours of Service per day for each day,
or forty-five (45) Hours of Service per week for each week, the
Employee would, if hourly-rated, be credited with service pursuant to
subsection (a) above. If an Employee is paid for reasons other than
the performance of duties pursuant to subsection (b) or (d) above:
(i) in the case of a payment made or due which is calculated on the
basis of units of time, an Employee shall be credited with the number
of regularly scheduled working hours included in the units of time on
107
the basis of which the payment is calculated; and (ii) an Employee
without a regular work schedule shall be credited with eight (8) Hours
of Service per day (to a maximum of forty (40) Hours of Service per
week) for each day that the Employee is so paid. Hours of Service
shall be calculated in accordance with Department of Labor Regulations
Section 2530.200b-2 or any future legislation or regulation that
amends, supplements or supersedes said section.
1.24 "Investment Fund" or "Fund" means any of the funds
maintained by the Trustee and referred to in Article XI.
1.25 "Limitation Year" means the twelve (12) consecutive
month period to be used in determining the Plan's compliance with Code
Section 415 and the regulations thereunder.
1.26 "Long-Term Savings Agreement" means a written agreement
entered into by a Participant pursuant to the provisions of Section
3.1 of the Plan.
1.27 "Matching Contributions" mean contributions made by an
Employer pursuant to the provisions of Section 4.1 of the Plan.
1.28 "Matching Contributions Account" means the record of
money and assets held by the Trustee for an individual Participant,
Surviving Spouse or Beneficiary pursuant to the provisions of the
Plan, derived from Matching Contributions.
1.29 "Maximum Permissible Amount" means the lesser of: (a)
25% of a Participant's Compensation; or (b) thirty thousand dollars
($30,000)(or, if greater, one-quarter (1/4) of the dollar limitation
in effect pursuant to Section 415(b)(1)(A) of the Code). For purposes
of this Section 1.29 and Section 6.7 Compensation shall mean wages,
salaries, fees for professional services and other amounts received
for personal services actually rendered in the course of employment
with the Company or an Affiliated Employer that is currently
includable in gross income (including, but not limited to commissions
paid salesmen, compensation for services on the basis of a percentage
of profits, tips and bonuses); shall include all compensation actually
paid or made available to a Participant for an entire Limitation Year
(other than amounts subject to the Long-Term Savings Agreement of such
Participant); and shall not include any other items or amounts paid to
or for the benefit of a Participant.
1.30 "Newell Common Stock" means the common stock of Newell
Co., a Delaware Corporation.
1.31 "Normal Retirement Date" means the date a Participant
attains age sixty-five (65).
1.32 "Participant" means an Eligible Employee who becomes a
Participant under the provisions of Section 2.3 of the Plan. However,
an Employee who has made a Rollover Contribution pursuant to Section
5.1 of the Plan shall be deemed a Participant for purposes of the Plan
to the extent that the provisions of the Plan apply to the Transfer
Account of such Employee.
108
1.33 "Plan" means the NEWELL LONG-TERM SAVINGS AND
INVESTMENT PLAN, as Amended and Restated Effective May 1, 1993.
1.34 "Plan Year" means the eight-month period from January
1, 1989 through August 31, 1989; the twelve month period from
September 1, 1989 through August 31, 1990; the four-month period from
September 1, 1990 through December 31, 1990; and, thereafter, the
twelve-month period from January 1 through December 31 of each
calendar year.
1.35 "Related Plan" means any other defined contribution
plan (as defined in Section 415 of the Code) maintained by the Company
or by an Affiliated Employer.
1.36 "Rogers Account" means the record of money and assets
held by the Trustee for an individual Participant, Surviving Spouse or
Beneficiary pursuant to the provisions of the Plan, derived from
account balances of the accounts held under the Rogers Plan as of
December 31, 1991. The Rogers Account shall consist of sub-accounts
corresponding to the various sub-accounts maintained under the Rogers
Plan.
1.37 "Rogers Plan" means the W.T. Rogers Company Profit
Sharing and Savings Master Plan, the Defined Contribution Master Plan
Adoption Agreement Profit Sharing Plan Formula with Code
Section 401(k) Arrangement, and Amendments No. 1 and No. 2 thereto.
1.38 "Rollover Contribution" means an amount received by the
Trustee pursuant to the provisions of Section 5.1 of the Plan. In no
event shall Rollover Contribution include amounts directly transferred
to the Plan from the Anchor Plan, the Rogers Plan or the Sanford Plan.
1.39 "Sanford Account" means the record of money and assets
by the Trustee for an individual Participant, Surviving Spouse or
Beneficiary pursuant to the provisions of the Plan, derived from
account balances of the accounts held under the Sanford Plan as of
December 31, 1992. The Sanford Account shall consist of sub-accounts
corresponding to the various sub-accounts maintained under the Sanford
Plan.
1.40 "Sanford Plan" means the Sanford Corporation Incentive
Savings Plan, as amended and restated effective December 1, 1987,
including the amendment thereto dated August 1990 and the Second
Amendment thereto dated November 21, 1991.
1.41 "Savings Account" means the record of money and assets
held by the Trustee for an individual Participant, Surviving Spouse or
Beneficiary pursuant to the provisions of the Plan, derived from
Earnings Deferral Contributions and Supplemental Employer
Contributions.
1.42 "Severance Date" means the earlier of:
(a) the date the employment of an employee terminates by
reason of quitting, retirement, death or discharge; or
109
(b) the first anniversary of the first date of an absence
from the performance of duties as an Employee (with or without pay)
for any other reason (such as vacation, holidays, sickness,
disability, leave of absence or layoff).
If any Employee who is absent from work because of (i) the
Employee's pregnancy, (ii) the birth of the Employee's child, (iii)
the placement of a child with the Employee in connection with the
Employee's adoption of the child, or (iv) caring for such child
immediately following such birth or placement, shall be absent for
such reason beyond the first anniversary of the first date of absence,
his Severance Date shall be the second anniversary of the first day of
such absence, provided that the Employee furnishes to the Committee
such timely information that the Committee may reasonably require to
establish (A) that the absence from work is for one of the reasons
specified in clauses (i) through (iv), and (B) the number of days for
which there was such an absence. Notwithstanding anything to the
contrary contained herein, in no event shall an Employee who is absent
from work because of one of the reasons set forth in clauses (i)
through (iv) above receive Vesting Service for the period between the
first and second anniversary of the first day of such absence.
1.43 "Supplemental Employer Contribution" means a contribu-
tion made by an Employer pursuant to the provisions of Section 3.4 of
the Plan.
1.44 "Surviving Spouse" means the person to whom a Partici-
pant is married throughout the twelve (12) month period ending on the
date of his death.
1.45 "Transfer Account" means the record of money and assets
held by the Trustee for an individual Participant, Surviving Spouse or
Beneficiary pursuant to the provisions of the Plan, derived from a
Rollover Contribution described in Section 5.1. In no event shall
Transfer Accounts include amounts held in the Anchor Account, the
Rogers Account, the Sanford Account, the Intercraft Account or the
Levolor Account.
1.46 "Trust" or "Trust Fund" means all money, securities and
other property held under the Trust Agreement for the purposes of the
Plan.
1.47 "Trust Agreement" means the agreement between the
Company and the Trustee governing the administration of the Trust, as
it may be amended from time to time.
1.48 "Trustee" means the corporation or individuals
appointed by the Board to administer the Trust.
1.49 "Valuation Date" means the date of any valuation of the
Trust Fund and underlying Accounts performed by the recordkeeper on
behalf of the Trustee for the Plan, provided that such valuation be
performed at least annually.
110
1.50 "Vesting Service" means the aggregate of:
(a) all service of an Employee with the Company or an
Affiliated Employer, counted from the date the Employee is first hired
by the Company or an Affiliated Employer, to his last Severance Date;
(b) for an Employee who was a participant in the Anchor
Plan, all service, if any, of an Employee with Anchor Hocking
Corporation, or any entity that would satisfy the definition of
Affiliated Employer if Anchor Hocking Corporation were the Company,
counted from the date on which such Employee first commenced
employment and ending on December 31, 1988;
(c) for an Employee who was a participant in the Rogers
Plan, all service, if any, of an Employee with W.T. Rogers Company, or
any entity that would satisfy the definition of Affiliated Employer if
W.T. Rogers Company were the Company, counted from the date on which
such Employee first commenced employment and ending on December 31,
1991; and
(d) for an Employee who was a participant in the Sanford
Plan, all service, if any, of an Employee with Sanford Corporation, or
any entity that would satisfy the definition of Affiliated Employer if
Sanford Corporation were the Company, counted from the date on which
such Employee first commenced employment and ending on December 31,
1992; subject, HOWEVER, to the following special rules:
(i) Breaks in Service will be excluded in determining
Vesting Service, except that a Break in Service incurred when an
Employee quits, retires, or is discharged will not be excluded if
the Employee returns to the performance of duties as an Employee
with the Company or an Affiliated Employer prior to the first
anniversary of his absence from the performance of duties;
provided that if such Break in Service commenced while the
Employee was absent from the performance of duties for one of the
reasons described in paragraph (b) of the definition of "Sever-
ance Date," the Break in Service will not be excluded only if it
is incurred, and the Employee returns to the performance of
duties as an Employee with the Company or an Affiliated Employer,
prior to the first anniversary of his absence from the
performance of duties.
(ii) If a Participant's employment under the Anchor Plan
terminated prior to January 1, 1989 and recommences with the
Company or an Affiliated Employer on or after January 1, 1989,
the consequences of his absence from employment shall be
determined under the rules regarding Break in Service contained
in the Plan and not under the terms of the Anchor Plan.
(iii) If a Participant's employment under the Rogers
Plan terminated prior to January 1, 1992 and recommences with the
Company or an Affiliated Employer on or after January 1, 1992,
the consequences of his absence from employment shall be
determined under the rules regarding Break in Service contained
in the Plan and not under the terms of the Rogers Plan.
111
(iv) If a Participant's employment under the Sanford Plan
terminated prior to January 1, 1993 and recommences with the
Company or an Affiliated Employer on or after January 1, 1993,
the consequences of his absence from employment shall be
determined under the rules regarding Break in Service contained
in the Plan and not under the terms of the Sanford Plan.
(v) If a Participant's employment under an Intercraft
Plan terminated prior to January 1, 1994 and recommences
with the Company or an Affiliated Employer on or after
January 1, 1994, the consequences of his absence from
employment shall be determined under the rules regarding
Break in Service contained in the Plan and not under the
terms of the Intercraft Plan.
(vi) If a Participant's employment under the Levolor
Plan terminated prior to October 1, 1994 and recommences
with the Company or an Affiliated Employer on or after
October 1, 1994, the consequences of his absence from
employment shall be determined under the rules regarding
Break in Service contained in the Plan and not under the
terms of the Levolor Plan.
(vii) Notwithstanding anything to the contrary contained
in the Plan, Vesting Service shall include, to the extent
required by law, a period of time during which an Employee is
absent from the Company and all Affiliated Employers to serve in
the armed forces of the United States, for as long as his
reemployment rights are guaranteed by law, if he returns or
offers to return to work for the Company or an Affiliated
Employer prior to the expiration of such reemployment rights.
(viii) Notwithstanding anything to the contrary in the
Plan, Vesting Service shall include any period of time during
which an Employee is on an approved leave of absence granted by
an Employer to the Employee on or after August 5, 1993 pursuant
to the Family and Medical Leave Act, if the Employee returns to
work for an Employer at the end of such leave of absence.
(e) for an Employee who was a participant in an Intercraft
Plan, all service, if any, of an Employee with Intercraft Corporation,
or any entity that would satisfy the definition of Affiliated Employer
if Intercraft Corporation were the Company, counted from the date on
which the Employee first commenced employment and ending on December
31, 1993.
(f) for an Employee who was a participant in the Levolor
Plan, all service, if any, of an Employee with Levolor Corporation, or
any entity that would satisfy the definition of Affiliated Employer if
Levolor Corporation were the Company, counted from the date on which
the Employee first commenced employment and ending on September 30,
1994.
1.51 "Wage Payment Date" means a date on which an Employee
receives Compensation from an Employer.
112
1.52 "Wage Payment Period" means the period of time ending
on a Wage Payment Date for which a Participant is paid Compensation.
1.53 "Intercraft Account" means the record of money and
assets held by the Trustee for an individual Participant, Surviving
Spouse or Beneficiary pursuant to the provisions of the Plan, derived
from account balances of the accounts held under the Intercraft Profit
Sharing Plan and the Intercraft Retirement Program as of December 31,
1993. The Intercraft Account shall consist of sub-accounts
corresponding to the various sub-accounts maintained under the
Intercraft Profit Sharing Plan and the Intercraft Retirement Program.
1.54 "Intercraft Plan" means the Intercraft Company
Employees' Profit Sharing and Variable Investment Plan, as Amended and
Restated Effective January 1, 1989, including amendments thereto (the
"Intercraft Profit Sharing Plan"), and/or the Intercraft Industries
Retirement Program, as Amended and Restated Effective September 1,
1990, including amendments thereto (the "Intercraft Retirement
Program").
1.55 "Levolor Account" means the record of money and assets
held by the Trustee for an individual Participant, Surviving Spouse or
Beneficiary pursuant to the provisions of the Plan, derived from
account balances of the accounts held under the Levolor Plan as of
September 30, 1994. The Levolor Account shall consist of sub-accounts
corresponding to the various sub-accounts maintained under the Levolor
Plan.
1.56 "Levolor Plan" means the Levolor Profit Sharing and
401(k) Plan, as Amended and Restated Effective September 1, 1990,
including amendments thereto.
ARTICLE II
PARTICIPATION
-------------
2.1 ELIGIBILITY REQUIREMENTS. (a) Any Employee who was
an Eligible Employee under the terms of the Plan in effect on
April 30, 1993 shall remain an Eligible Employee.
(b) Every other Employee shall become an Eligible Employee
as of the first day of his first Wage Payment Period of the month
following his completion of an Eligibility Year of Service.
(c) Notwithstanding (b) above, effective as of April 1,
1993, each Employee who is regularly and permanently scheduled to
complete 30 or more hours of work per week for an Employer shall
become an Eligible Employee for purposes of electing Earnings Deferral
Contributions pursuant to Section 3.1 of the Plan as of the first day
of his first Wage Payment Period of the month following his date of
hire.
113
(d) Notwithstanding the above, (i) each Employee who was
employed by Intercraft Corporation on December 31, 1993 shall become
an Eligible Employee on January 1, 1994; and (ii) each Employee who
was employed at the Levolor division of the Company on September 30,
1994 shall become an Eligible Employee on October 1, 1994.
2.2 REEMPLOYMENT OF AN ELIGIBLE EMPLOYEE. If an Eligible
Employee shall incur a Break in Service and shall thereafter be
reemployed by an Employer, he shall again become an Eligible Employee
as of his first Wage Payment Period of the month following the date of
his resumption of employment.
2.3 ELECTION TO PARTICIPATE. (a) An Eligible Employee may
become a Participant by executing and filing with the Committee a
Long-Term Savings Agreement, an investment election form and such
other forms as may be required by the Committee, which will be
provided by the Committee.
(b) Each Eligible Employee shall become a Participant for
his first Wage Payment Period of any month designated by him if (i)
such Period begins on or after the date on which he becomes an
Eligible Employee, and (ii) such Eligible Employee executes and files
with the Committee a Long-Term Savings Agreement, an investment
election form in accordance with Section 11.3 of the Plan and any
other forms required by the Committee within a reasonable time, as
prescribed by the Committee, prior to the beginning of such Period.
No application to participate will be effective until all required
documents have been completed by the Eligible Employee and delivered
to the Committee.
ARTICLE III
SALARY DEFERRAL CONTRIBUTIONS
-----------------------------
3.1 EARNINGS DEFERRAL CONTRIBUTIONS. (a) Each Participant
shall elect, by entering into a Long-Term Savings Agreement with his
Employer, to reduce his Earnings from his Employer by a percentage
between one percent (1%) and fifteen percent (15%) (in increments of
one percent (1%), as elected by the Participant). Reductions to a
Participant's Earnings pursuant to his Long-Term Savings Agreement
shall be effected through payroll deductions, commencing with the Wage
Payment Date corresponding to the Wage Payment Period with respect to
which he becomes a Participant pursuant to Section 2.3(b), in accord-
ance with procedures established by the Committee. Long-Term Savings
Agreements shall be subject to the special rules set forth in this
Article III.
(b) Amounts subject to Long-Term Savings Agreements effec-
tive for a given Plan Year shall be reduced proportionately to the
extent that the aggregate of Earnings Deferral Contributions under
this Article III and Matching Contributions under Article IV exceed
the maximum deduction allowable for such Plan Year under Section 404
of the Code. All amounts so reduced, adjusted for earnings, gains and
114
losses allocable thereto, shall be returned to the Employers and
immediately thereafter paid by the Employers directly to the
applicable Participants.
(c) Notwithstanding any provision of the Plan to the
contrary, the elective deferrals (as defined in Section 402(g)(3) of
the Code) of any Participant for any taxable year of the Participant
shall not exceed the amount set forth in Section 402(g) of the Code,
as adjusted by the Secretary of the Treasury pursuant to
Section 402(g)(5) and 415(d) of the Code. Any amount contributed to
the Plan on behalf of a Participant during any Plan Year, pursuant to
the Participant's Long-Term Savings Agreement, in excess of the
limitation set forth in this paragraph, adjusted for earnings, gains
and losses allocable thereto, shall be returned to such Participant
within the time period set forth in Section 402(g)(2) of the Code.
(d) Each Employer shall contribute to the Trust for each
Wage Payment Period an Earnings Deferral Contribution in an amount
equal to the amounts designated by Participants pursuant to Long-Term
Savings Agreements and deducted from Earnings during such Wage Payment
Period and not reduced pursuant to paragraphs (b) or (c) of this
Section 3.1.
3.2 ADMINISTRATIVE RULES GOVERNING LONG-TERM SAVINGS
AGREEMENTS. (a) A Participant may change the percentage by which his
Earnings have been reduced pursuant to a Long-Term Savings Agreement,
within the percentage limits set forth in Section 3.1(a) of the Plan,
effective as of his first Wage Payment Period designated by him if
such Participant executes and delivers an amendment to such Long-Term
Savings Agreement designating such change, and any other forms
required by the Committee, within a reasonable time, as prescribed by
the Committee, prior to the beginning of such Period.
(b) Earnings Deferral Contributions shall be held unin-
vested by the Employers and shall be remitted to the Trustee as of the
earliest date on which such Contributions can reasonably be segregated
from the Employers' general assets, but no later than ninety (90) days
after each Wage Payment Date. In any event, each Employer shall pay
to the Trustee its Earnings Deferral Contribution with respect to a
particular Plan Year within the period of time prescribed by law for
filing the Employer's Federal income tax return for such Plan Year,
including extensions duly granted.
3.3 SUSPENSION OF LONG-TERM SAVINGS AGREEMENTS. (a) A
Participant may voluntarily suspend a Long-Term Savings Agreement for
an indefinite period of time; provided, however, that no period of
suspension shall be shorter in duration than one month. Such
suspension shall be effective as of the beginning of the Participant's
Wage Payment Period designated by him if a notice of suspension, on
such forms as shall be required by the Committee, is received by the
Committee within a reasonable time, as prescribed by the Committee,
prior to the beginning of such Period. If such notice is not received
by the Committee within such reasonable time prior to the beginning of
such Period, such suspension shall be effective as of the beginning of
the Participant's next succeeding Wage Payment Period. A Participant
115
will not be permitted to make up amounts subject to a Long-Term
Savings Agreement for any period of suspension. A Participant who
makes an election to suspend a Long-Term Savings Agreement pursuant to
this Section 3.3 may reinstate such Agreement effective as of his
first Wage Payment Period of any month following the period of
suspension if such Participant again executes and files with the
Committee a Long-Term Savings Agreement, and any other forms required
by the Committee, within a reasonable time, as prescribed by the
Committee, prior to the beginning of such Wage Payment Period.
(b) The Committee, at its election, may amend, suspend or
revoke a Long-Term Savings Agreement with a Participant at any time if
the Committee determines that such amendment or revocation is
necessary to ensure that the Annual Additions to the Accounts of a
Participant do not exceed the Maximum Permissible Amount for such
Participant for that Year or to ensure that the requirements of
Section 3.5 are met for such Year.
3.4 SUPPLEMENTAL EMPLOYER CONTRIBUTIONS. Each Employer
shall contribute to the Trust with respect to any Plan Year a
Supplemental Employer Contribution in such amount as the Board, in its
discretion, may determine by resolution adopted within thirty (30)
days after the end of such Plan Year. A Supplemental Employer
Contribution may be made to the Trust only if, and to the extent that,
such Contribution is necessary to satisfy one of the tests contained
in Section 3.5(b) of the Plan. The Supplemental Employer Contribution
for any Plan Year shall be allocated to Participants' Savings Accounts
pursuant to the provisions of Section 6.6 of the Plan. Upon
allocation to the Savings Accounts of Participants, the Supplemental
Employer Contribution shall be considered for all purposes of the Plan
as Earnings Deferral Contributions and be subject to all of the
provisions of the Plan regarding Earnings Deferral Contributions;
provided that no Matching Contribution shall be made with respect to a
Supplemental Employer Contribution. Within thirty (30) days after the
end of each Plan Year, the Company shall pay to the Trustee the
Supplemental Employer Contribution collected from each Employer with
respect to such Plan Year.
3.5 LIMITATIONS ON EARNINGS DEFERRAL CONTRIBUTIONS.
(a) Notwithstanding anything to the contrary contained elsewhere in
the Plan or contained in any Long-Term Savings Agreement, all Long-
Term Savings Agreements entered into with respect to any Plan Year
shall be valid only if one of the tests set forth in paragraph (b)
next below is satisfied for such Plan Year. In determining whether
such tests are satisfied, all Earnings Deferral Contributions and
Supplemental Employer Contributions made with respect to such Plan
Year shall be considered.
(b) For each Plan Year the Actual Deferral Percentage for
Highly Compensated Eligible Employees shall bear to the Actual
Deferral Percentage for all other Eligible Employees a relationship
that satisfies either of the following tests:
116
(i) The Actual Deferral Percentage for Highly Compensated
Eligible Employees is not more than the Actual Deferral
Percentage of all other Eligible Employees multiplied by 1.25; or
(ii) The Actual Deferral Percentage for Highly Compensated
Eligible Employees is not more than the Actual Deferral
Percentage for all other Eligible Employees multiplied by two and
the excess of the Actual Deferral Percentage for the group of
Highly Compensated Eligible Employees over that of all other Eli-
gible Employees is not more than two percentage points.
(c) If at the end of any Plan Year neither of the tests set
forth in paragraph (b) next above is satisfied for such Year, then:
(i) Long-Term Savings Agreements entered into for such Year
by Highly Compensated Eligible Employees shall be valid only to
the extent permitted by one of the tests set forth in paragraph
(b) next above, and Earnings Deferral Contributions made for such
Year on behalf of Highly Compensated Eligible Employees shall be
reduced to the extent necessary to comply with one of the tests
set forth in paragraph (b) next above. All Earnings Deferral
Contributions so reduced, adjusted for earnings, gains and losses
allocable thereto, shall be allocated and distributed in the
manner provided in Section 3.6.
(ii) Reductions pursuant to (i) next above shall be effected
with respect to Highly Compensated Eligible Employees pursuant to
the following procedure: The Actual Deferral Percentage of the
Highly Compensated Eligible Employee with the highest Actual
Deferral Percentage shall be reduced to the extent necessary to
cause such Highly Compensated Eligible Employee's Actual Deferral
Percentage to equal the Actual Deferral Percentage of the Highly
Compensated Eligible Employee with the next highest Actual
Deferral Percentage. This process shall be repeated until the
Plan satisfies one of the tests set forth in paragraph (b) for
such Plan Year.
(iii) Long-Term Savings Agreements entered into by all
Participants who are not Highly Compensated Eligible Employees
shall be valid and Earnings Deferral Contributions made on behalf
of such Participants shall not be changed.
The calculations, reductions and allocations required by this Section
3.5(c) and Section 3.6 shall be made by the Committee with respect to
a Plan Year at any time prior to the close of the following Plan Year.
(d) If at any time during a Plan Year the Committee, in its
sole discretion, determines that neither of the tests set forth in
paragraph (b) of this Section 3.5 may be met for such Plan Year, then:
(i) The Committee shall have the unilateral right during
the Plan Year to require the prospective reduction, for the
balance of such Plan Year or any part thereof, of the percentage
of the Earnings of Highly Compensated Eligible Employees that may
be subject to Long-Term Savings Agreements. Such reductions
117
shall be made to the extent necessary, in the discretion of the
Committee, to assure that one of the tests set forth in paragraph
(b) of this Section 3.5 shall be met for the Plan Year and shall
be based upon estimates made from data available to the Committee
at any time during the Plan Year.
(ii) Reductions pursuant to subsection (i) next above shall
be effected with respect to Highly Compensated Eligible Employees
pursuant to the following procedure: the Actual Deferral
Percentage of the Highly Compensated Eligible Employee with the
highest Actual Deferral Percentage shall be reduced to the extent
necessary to cause such Highly Compensated Eligible Employee's
Actual Deferral Percentage to equal the Actual Deferral
Percentage of the Highly Compensated Eligible Employee with the
next highest Actual Deferral Percentage. This process shall be
repeated to the extent necessary to assure that one of the tests
set forth in paragraph (b) shall not be exceeded for such Plan
Year.
3.6 RETURN OF CERTAIN EARNINGS DEFERRAL CONTRIBUTIONS.
(a) If an Earnings Deferral Contribution made on behalf of a
Participant who is a Highly Compensated Eligible Employee is reduced
for a Plan Year pursuant to Section 3.5(c), the amount so reduced,
adjusted for earnings, gains and losses allocable thereto for the Plan
Year , pursuant to Section 401(k)(8) of the Code, shall be returned to
the Participant's Employer and as soon as practicable thereafter paid
by the Employer directly to such Participant.
(b) Notwithstanding anything to the contrary contained
elsewhere in the Plan, if a Participant's Earnings Deferral
Contributions are returned pursuant to paragraph (a) above, any
Matching Contributions attributable thereto shall be forfeited and
shall be used as described in Section 6.10.
ARTICLE IV
MATCHING CONTRIBUTIONS
----------------------
4.1 MATCHING CONTRIBUTIONS. (a) As of each Wage Payment
Date, each Employer shall contribute to the Trust for each Participant
who satisfies Section 2.1(a) or (b) of the Plan and who is an Employee
of such Employer a Matching Contribution in an amount equal to fifty
percent (50%) of the amount deducted from his Earnings through a
payroll deduction as of such Wage Payment Date pursuant to a Long-Term
Savings Agreement; provided, however, that in no event shall the
Matching Contribution for a Participant on any Wage Payment Date
exceed three percent (3%) of such Participant's Earnings for the Wage
Payment Period corresponding to such Wage Payment Date.
(b) Matching Contributions shall be held uninvested by the
Employers and shall be remitted to the Trustee on the earliest date on
which such Contributions can reasonably be segregated from the
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Employers' general assets, but no later than ninety (90) days
following each Wage Payment Date.
(c) Matching Contributions made with respect to a Plan Year
or any part thereof pursuant to this Section 4.1 shall in no event be
made later than the time prescribed by law for filing the income tax
return of the Company for the fiscal year of the Company that
corresponds to such Plan Year, including extensions duly granted.
4.2 SPECIAL RULES APPLICABLE TO MATCHING CONTRIBUTIONS .
(a) Notwithstanding any provision of the Plan to the contrary, for
each Plan Year the Contribution Percentage for Highly Compensated
Eligible Employees shall not exceed the greater of:
(i) The Contribution Percentage for all other Eligible
Employees multiplied by 1.25; or
(ii) The lesser of the Contribution Percentage for all other
Eligible Employees multiplied by two or the Contribution
Percentage for all other Eligible Employees plus two percentage
points.
(b) For purposes of this Section, the term "Contribution
Percentage" for a specified group of Eligible Employees for a given
Plan Year means the average of the ratios, calculated separately for
each Eligible Employee in such group, of (i) the aggregate of (A) the
Matching Contributions, if any, made on behalf of each such Eligible
Employee for such Plan Year, and (B) in the discretion of the
Committee and pursuant to applicable Treasury regulations, the
Earnings Deferral Contribution, if any, contributed on behalf of each
such Eligible Employee for such Plan Year, and (ii) the Eligible
Employee's Earnings for such Plan Year.
(c) If, at the end of any Plan Year, neither of the tests
set forth in paragraph (a) above is satisfied for such Plan Year, then
the Matching Contributions made for such Plan Year on behalf of Highly
Compensated Eligible Employees shall be reduced in the manner set
forth in the next sentence to the extent necessary to comply with one
of the tests set forth in paragraph (a). Reductions pursuant to the
preceding sentence shall be effected with respect to Highly
Compensated Eligible Employees pursuant to the following procedure:
the Contribution Percentage of the Highly Compensated Eligible
Employee with the Highest Contribution Percentage shall be reduced to
the extent necessary to cause such Highly Compensated Eligible
Employee's Contribution Percentage to equal the Contribution
Percentage of the Highly Compensated Eligible Employee with the next
highest Contribution Percentage. This process shall be repeated until
the Plan satisfies one of the tests set forth in paragraph (a) for
such Plan Year.
(d) Matching Contributions made on behalf of Participants
who are not Highly Compensated Eligible Employees shall be valid and
shall not be changed.
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(e) Matching Contributions that are reduced pursuant to the
preceding provisions of this Section for a Plan Year, adjusted for
earnings, gains and losses allocable thereto for such Plan Year ,
pursuant to Section 401(m) of the Code, shall be returned to the
Employers and as soon as practicable thereafter paid by the Employers
directly to the applicable Participant.
(f) The calculations, reductions and payments required by
this Article shall be made by the Committee with respect to a Plan
Year at any time prior to the close of the following Plan Year.
(g) If a "Multiple Use of the Alternative Limitation," as
defined below, occurs in a Plan Year, then, notwithstanding any other
provisions of Section 3.5 or of this Section 4.2, the test in
paragraph (a)(ii) of this Section shall not be used to satisfy the
requirements of this Section for Matching Contributions in the same
Plan Year that the test contained in Section 3.5(b)(ii) is used to
satisfy the requirements of Section 3.5 with respect to Earnings
Deferral Contributions. If the preceding sentence shall be applicable
for a Plan Year, then the Committee shall determine whether to use the
test in paragraph (a)(ii) of this Section to satisfy the requirements
of this Section 4.2, or to use the test in paragraph (b)(ii) of
Section 3.5 to satisfy the requirements of Section 3.5, for such Plan
Year.
A Multiple Use of the Alternative Limitation shall occur in
a Plan Year if both of the following conditions are satisfied in the
Plan Year:
(i) At least one Highly Compensated Eligible Employee
employed by the Company or an Affiliated Employer is eligible to
participate both in a cash or deferred arrangement subject to
Section 401(k) of the Code and in a plan subject to Section
401(m) of the Code; and
(ii) The sum of the Actual Deferral Percentage of the entire
group of Highly Compensated Eligible Employees under such
arrangement subject to Section 401(k) and the Contribution
Percentage of the entire group of Highly Compensated Eligible
Employees under such plan subject to Section 401(m) for such Plan
Year exceeds the greater of:
(A) the sum of:
(I) 125% of the greater of (a) the Actual
Deferral Percentage of the Group of Eligible
Employees who are not Highly Compensated Eligible
Employees for such Plan Year, or (b) the
Contribution Percentage of the group of Eligible
Employees who are not Highly Compensated Eligible
Employees for such Plan Year, and
(II) Two plus the lesser of (A)(I)(a) or
(I)(b) above. In no event, however, shall this
120
amount exceed 200% of the lesser of (A)(I)(a) or
(A)(I)(b) above; or
(B) the sum of:
(I) 125% of the lesser of (a) the Actual
Deferral Percentage of the group of Eligible
Employees who are not Highly Compensated Eligible
Employees for such Plan Year, or (b) the
Contribution Percentage of the group of Eligible
Employees who are not Highly Compensated Eligible
Employees for such Plan Year, and
(II) Two plus the greater of (B)(I)(a) or
(B)(I)(b) above. In no event, however, shall this
amount exceed 200% of the greater of (B)(I)(a) or
(B)(I)(b) above.
(iii) The Actual Deferral Percentage of the entire group
of Highly Compensated Eligible Employees exceeds the amount
described in Section 3.5(b)(i); and
(iv) The Contribution Percentage of the entire group of
Highly Compensated Eligible Employees exceeds the amount
described in Section 4.2(a)(i).
ARTICLE V
ROLLOVERS AND TRANSFERS FROM OTHER PLANS
----------------------------------------
5.1 ROLLOVERS AND TRANSFERS FROM OTHER PLANS. (a) An Em-
ployee who has received a distribution of his interest in a qualified
plan of the Company or an Affiliated Employer or a former employer
under circumstances meeting the requirements of Section 402(c)(4) of
the Code relating to distributions from qualified plans may elect to
deposit all or any portion (as designated by such Employee in writing
to the Committee) of the amount of such distribution as a Rollover
Contribution to this Plan. A Rollover Contribution may be made only
within sixty (60) days following the date such Employee receives the
distribution from the plan of the Company or an Affiliated Employer or
his former employer (or within such additional period as may be
provided under Section 408 of the Code if the Employee shall have made
a timely deposit of the distribution in an individual retirement
account).
(b) The Trustee may also receive a Rollover Contribution
directly from the trustee under a plan of the Company or an Affiliated
Employer or former employer of all or any portion (as designated by
such Employee in writing to the Committee) of the amount that would
otherwise be distributable to the Employee from such plan; provided
that no such Rollover Contribution shall be received directly from a
plan if such plan is a defined benefit plan or a defined contribution
plan that provides for a life annuity form of payment except to the
121
extent that such Rollover Contribution is made pursuant to Section
401(a)(31) of the Code. In the event that a Participant has a loan
outstanding under a plan of the Company or an Affiliated Employer at
the time the Trustee receives a direct transfer of such Participant's
accounts from the trustee under the plan, such loan, at the discretion
of the Committee, shall be transferred to and assumed by the Trustee
and shall thereafter be treated as a loan made pursuant to
Article VIII of this Plan.
(c) The Committee shall establish rules and procedures to
implement this Section 5.1, including, without limitation, such
procedures as may be appropriate to permit the Committee to verify the
tax qualified status of the plan of the former employer or the Company
or an Affiliated Employer and compliance with any applicable pro-
visions of the Code relating to Rollover Contributions. Rollover
Contributions may be received in cash or in Newell Common Stock. No
Rollover Contribution shall be accepted until the Employee has
completed an investment election form in accordance with Section 11.3
of the Plan and delivered such form to the Committee. The amount
contributed or transferred to the Trustee pursuant to this Section
shall be placed in the Employee's Transfer Account for the benefit of
the Employee. Each Transfer Account shall share in the earnings,
gains and losses of the Trust Fund as set forth in Section 6.9 of the
Plan and shall be distributed at the same times and in the manner set
forth in Article VII below.
ARTICLE VI
ALLOCATIONS TO PARTICIPANTS' ACCOUNTS
-------------------------------------
6.1 SEPARATE ACCOUNTS. The Committee shall create and
maintain a separate Savings Account, Matching Contributions Account,
Transfer Account, Rogers Account, Sanford Account, Anchor Account,
Intercraft Account and Levolor Account for each Participant, as shall
be needed. Participants' Accounts (and, where applicable, their sub-
accounts) are primarily for accounting purposes and do not require a
segregation of the Trust Fund. The Committee may delegate the
responsibility for the maintenance of the Accounts to the Trustee or
any agent or agents.
6.2 SUSPENSE ACCOUNT. The Committee shall maintain a Sus-
pense Account, if necessary, pursuant to the provisions of
Section 6.7. The investment of the balance in the Suspense Account
shall be within the sole discretion of the Committee.
6.3 ALLOCATION OF MATCHING CONTRIBUTIONS. As of each Wage
Payment Date , there shall be allocated to the Matching Contribution
Account of each Participant the Matching Contribution made on behalf
of such Participant pursuant to Section 4.1(a) for the Wage Payment
Period corresponding to such Date. Subject to Section 3.5(c), an
allocation pursuant to this Section shall be made only to the Matching
Contributions Account of a Participant whose Earnings were reduced
through payroll deductions pursuant to a Long-Term Savings Agreement
during the Wage Payment Period corresponding to such Date .
122
6.4 ALLOCATION OF EARNINGS DEFERRAL CONTRIBUTIONS. As of
each Wage Payment Date , there shall be allocated to the Savings
Account of each Participant an Earnings Deferral Contribution equal to
(a) the amount by which the Participant's Earnings were reduced by
payroll deductions during the Wage Payment Period corresponding to
such Wage Payment Date , pursuant to such Participant's Long-Term
Savings Agreement, reduced by (b) any applicable amounts pursuant to
the provisions of Sections 3.1(b), 3.1(c) and 3.5(c).
6.5 ALLOCATION OF ROLLOVER CONTRIBUTIONS. Rollover
Contributions made by or for an Employee shall be allocated to his
Transfer Account as soon as practicable following receipt of such
Contributions by the Trustee and the deposit of such funds into the
Trust Fund.
6.6 ALLOCATION OF SUPPLEMENTAL EMPLOYER CONTRIBUTIONS. In
the event that a Supplemental Employer Contribution is made with
respect to any Plan Year, such Contribution shall be allocated to the
Savings Accounts of all Participants who are not Highly Compensated
Eligible Employees. Such allocation shall be in the proportion to the
ratio that each such Participant's Earnings bears to the total
Earnings of all such Participants. Supplemental Employer
Contributions made for a Plan Year shall be allocated to Participants'
Savings Accounts as of the last day of such Plan Year.
6.7 MAXIMUM ALLOCATION.
(a) Except as provided in paragraph (b) below, the
allocations to the Account of any Participant in any Limitation Year
shall be limited so that the Participant's Annual Additions for such
Year do not exceed the Maximum Permissible Amount.
(b) If the foregoing limitation on allocations would be ex-
ceeded in any Limitation Year for any Participant as a result of
(i) the allocation of forfeitures; (ii) reasonable error in estimating
a Participant's Compensation (as defined in Section 1.29);
(iii) reasonable error in determining the amount of elective deferrals
(within the meaning of Section 402(g)(3) of the Code) that may be made
with respect to a Participant; or (iv) under such other limited facts
and circumstances which the Commissioner of the Internal Revenue
Service, pursuant to Treasury Regulation 1.415-6(b)(6), finds justify
the availability of this subsection 6.7(b), the Participant's Earnings
Deferral Contributions shall be distributed to him to the extent that
such distribution would reduce the amount in excess of the limits of
subsection 6.7(a). Any amounts in excess of the limits of subsection
6.7(a) remaining after such distribution shall be placed, unallocated
to any Participant, in a Suspense Account. If a Suspense Account is
in existence at any time during a particular Limitation Year, other
than the Limitation Year described in the preceding sentence, all
amounts in the Suspense Account must be allocated to Participants'
Accounts (subject to the limits of this Section 6.7) before any
contributions that constitute Annual Additions may be made to the Plan
for that Limitation Year. The excess amount allocated pursuant to
this subsection 6.7(b) shall be used to reduce Matching Contributions
for the next Limitation Year (and succeeding Limitation Years, as
123
necessary) for that Participant. However, if that Participant is not
covered by the Plan as of the end of the applicable Limitation Year,
then the excess amount must be held unallocated in the Suspense
Account for the Limitation Year and reallocated in the next Limitation
Year to all of the remaining Participants in the Plan. The Suspense
Account will not share in the valuation of Participants' Accounts and
the allocation of earnings set forth in Section 6.9 of the Plan, and
the change in fair market value and allocation of earnings
attributable to the Suspense Account shall be allocated to the
remaining Accounts hereunder as set forth in Section 6.9.
(c) Any reduction in the contributions and allocations made
under this Plan for a Participant's Account required pursuant to this
Section 6.7 and Section 415 of the Code shall be effected, to the
extent necessary, in the following manner: (i) first, the Matching
Contribution that would have been made for the applicable Plan Year
with respect to such Participant shall be reduced; (ii) next, the
Supplemental Employer Contribution that would have been made for the
applicable Plan Year with respect to such Participant shall be
reduced; and (iii) last, the Earnings Deferral Contribution that would
have been made for the applicable Plan Year with respect to such
Participant, adjusted for earnings, gains and losses allocable
thereto, shall be reduced. Any reductions in Matching Contributions
and Supplemental Employer Contributions pursuant to clauses (i) and
(ii), adjusted for gains, earnings and losses allocable thereto, shall
be treated pursuant to subsection (b) of this Section. The amount of
any reductions in Earnings Deferral Contributions pursuant to
clause (iii), adjusted for gains, earnings and losses allocable
thereto, shall be paid by the Trustee directly to the affected
Participant pursuant to subsection (b) of this Section.
(d) Upon termination of the Plan, any amounts in a Suspense
Account at the time of such termination shall revert to the Company.
(e) In the event that any Participant under this Plan is
also a Participant in a defined benefit plan (as defined in Section
415(k) of the Code) maintained by the Company, the sum of the defined
benefit plan fraction and the defined contribution plan fraction (as
such terms are defined in Section 415(e) of the Code) for any
Limitation Year with respect to such Participant shall not exceed
one (1). If such sum exceeds one (1), the contributions and
allocations to the Participant's Account under this Plan shall be
reduced (prior to the reduction of any benefit of such Participant
under such defined benefit plan), as necessary, to obtain compliance
with Section 415(e) of the Code. Any such reduction under this Plan
shall be made only to the extent necessary so that the sum of such
fractions shall equal one (1). For purposes of this Section 6.7, a
plan is deemed to be maintained by the Company if the plan is
maintained by any Affiliated Employer.
(f) If a Participant is entitled to receive an allocation
under this Plan and any Related Plan and, in the absence of the
limitations contained in this Section 6.7, the Company would
contribute or allocate to the Account of that Participant an amount
for a Limitation Year that would cause the Annual Additions to the
124
Account of the Participant to exceed the Maximum Permissible Amount
for such Year, then the contributions and allocations made with
respect to the Participant under this Plan shall not be reduced until
the contributions or allocations under the Related Plan have been
reduced to the extent necessary so that the allocation of such Annual
Additions does not exceed the Maximum Permissible Amount.
(g) The provisions of this Section shall be interpreted by
the Committee, in the administration of the Plan, to reduce
allocations (as required by this Section) only to the minimum extent
necessary to reflect the requirements of Section 415 of the Code, as
amended and in force from time to time, and Treasury Regulations
promulgated pursuant to said Section, which are hereby incorporated by
reference herein.
6.8 VESTING. (a) Each Participant shall at all times be
fully vested in the Adjusted Balance of his Savings Account and
Transfer Account under the Plan.
(b) Each Participant who was a participant in the Anchor
Plan, and who was a "Member" within the meaning of that plan, on
July 2, 1987, shall at all times be fully vested in the Adjusted
Balance of his Anchor Account and Matching Contributions Account under
the Plan.
(c) Each Participant who was a participant in the Anchor
Plan, but who was not a "Member" within the meaning of that plan, on
July 2, 1987, shall have a vested interest in the Adjusted Balance of
his Anchor Account in accordance with the provisions of Article VII of
the Anchor Plan as in effect on December 31, 1988.
(d) Each Participant who was a participant in the Rogers
Plan shall at all times be fully vested in the Adjusted Balance of his
Rogers Account.
(e) Each Participant who was a participant in the Sanford
Plan shall at all times be fully vested in the Adjusted Balance of his
Sanford Account.
(f) Each Participant who was employed in the Packaging
Division of Anchor Hocking Corporation at its locations in Lancaster,
Ohio, Weirton, West Virginia, Connellsville, Pennsylvania and
Glassboro, New Jersey on December 31, 1992 shall be fully vested in
the Adjusted Balance of his Matching Contributions Account as of
December 31, 1992.
(g) Each Participant who was employed by the Counselor Borg
Scale Company on October 27, 1993 shall be fully vested in the
Adjusted Balance of his Matching Contributions Account as of October
27, 1993.
(h) Each Participant who was a participant in an Intercraft
Plan shall at all times be fully vested in the Adjusted Balance of his
Intercraft Account.
125
(i) Each Participant who was a participant in the Levolor
Plan shall at all times be fully vested in the Adjusted Balance of his
Levolor Account.
(j) Each Participant not described in paragraph (b), (f),
or (g) shall have a vested interest in the Adjusted Balance of his
Matching Contributions Account in accordance with the following
Schedule:
Vested Forfeitable
Years of Vesting Service Percentage Percentage
------------------------ ---------- -----------
Fewer than 5 years 0% 100%
5 years or more 100% 0%
(k) On reaching his Normal Retirement Date while an Em-
ployee, a Participant shall be one hundred percent (100%) vested in
the Adjusted Balance of his Anchor Account and Matching Contributions
Account.
(l) In the event a Participant dies or becomes permanently
disabled (as defined in Section 7.3) while an Employee, he shall be
one hundred percent (100%) vested in the Adjusted Balance of his
Anchor Account and Matching Contributions Account as of the date of
his death or termination due to disability.
6.9 ALLOCATIONS AND ADJUSTMENTS TO ACCOUNT. As of the
close of business of each business day , the Trustee shall determine,
on an accrual basis of accounting, the Adjusted Balance of the Account
of each Participant in the following manner:
(a) The Trustee shall determine the earnings and the amount
of any realized or unrealized appreciation or depreciation in the fair
market value of each of the Investment Funds, determined as of the
close of business of the preceding business day. Such determination
shall reflect a reduction for any investment manager fees charged with
respect to a particular Investment Fund. In determining such value
the Trustee shall use such generally accepted methods and bases as the
Trustee, in its discretion, shall deem advisable. The judgment of the
Trustee as to the fair market value of any asset shall be
presumptively conclusive and binding on all persons.
(b) Except as otherwise provided in paragraph (c) next
below, the earnings and market appreciation or depreciation of each
Investment Fund (including earnings and appreciation or depreciation
attributable to the investment of any Suspense Account in such
Investment Fund) shall be allocated to each applicable Account
(excluding any Suspense Account) that is invested in such Investment
Fund on the current business day by multiplying the earnings and
market appreciation or depreciation of such Fund by a fraction, the
numerator of which is the Adjusted Balance of such Account invested in
the applicable Fund as of the close of business of the preceding
business day and the denominator of which is the total of the Adjusted
126
Balances of all such Accounts (excluding any Suspense Account)
invested in such Fund as of the close of business of the preceding
business day (subtracting for purposes of determining such fraction
all distributions, withdrawals and loans made from any such Account
since such prior business day). Each such Account (excluding any
Suspense Account) shall be adjusted by adding thereto or subtracting
therefrom its share of the earnings and market appreciation or
depreciation of each Investment Fund as determined by the preceding
sentence. Each Account shall then be further adjusted by adding to it
the amount of contributions, if any, allocable thereto for each
Participant pursuant to Sections 6.3, 6.4, 6.5 and 6.6 since the close
of business of the preceding business day, and subtracting therefrom
all distributions, withdrawals and loans from such Account since such
preceding business day.
(c) Earnings on amounts relating to Rollover Contributions,
benefit payments and loan repayments that are invested by the Trustee
in short term investment obligations pending allocation to
Participants' Accounts or distribution to Participants or
Beneficiaries, as the case may be, shall first be used to pay certain
administrative expenses described in Section 9.6. Any remaining
earnings on such amounts shall be allocated among the Accounts of all
Participants employed by an Employer in proportion to the ratio that
each such Participant's Account balance bears to the total Account
balances of all such Participants.
6.10 ALLOCATION OF FORFEITURES. As of each Wage Payment
Date any amount that may have become allocable during the
corresponding Wage Payment Period by reason of a forfeiture of the
Adjusted Balance of the Anchor Account or Matching Contributions
Account of any Participant pursuant to Section 7.4 shall first be used
to pay certain administrative expenses described in Section 9.6. Any
remaining amounts of forfeitures shall be used to offset the amount of
Matching Contributions to be made for the next Wage Payment Period by
such Participant's Employer pursuant to Section 4.1 and shall be
allocated among the Matching Contributions Accounts of all
Participants employed by such Employer pursuant to the provisions of
Section 6.3.
6.11 ACCOUNTS TRANSFERRED FROM THE ROGERS PLAN. If a
Participant who was a participant in the Rogers Plan prior to January
1, 1992 had accounts transferred from the Rogers Plan to this Plan by
reason of the termination of the Rogers Plan as of December 31, 1991,
such transferred accounts, and the earnings and losses allocable
thereto, shall be held in the Rogers Account established in the
Participant's name under the Trust.
6.12 ACCOUNTS TRANSFERRED FROM THE SANFORD PLAN. If a
Participant who was a participant in the Sanford Plan prior to January
1, 1993 had accounts transferred from the Sanford Plan to this Plan by
reason of the merger of the Sanford Plan as of December 31, 1992, such
transferred accounts, and the earnings and losses allocable thereto,
shall be held in the Sanford Account established in the Participant's
name under the Trust.
127
6.13 ACCOUNTS TRANSFERRED FROM AN INTERCRAFT PLAN. If a
Participant who was a participant in an Intercraft Plan prior to
January 1, 1994 has accounts transferred from the Intercraft Plan to
this Plan by reason of the merger of the Intercraft Plan as of January
1, 1994, such transferred accounts, and the earnings and losses
allocable thereto, shall be held in the Intercraft Account established
in the Participant's name under the Trust.
6.14 ACCOUNTS TRANSFERRED FROM THE LEVOLOR PLAN. If a
Participant who was a participant in the Levolor Plan prior to October
1, 1994 has accounts transferred from the Levolor Plan to this Plan by
reason of the merger of the Levolor Plan as of October 1, 1994, such
transferred accounts, and the earnings and losses allocable thereto,
shall be held in the Levolor Account established in the Participant's
name under the Trust.
ARTICLE VII
PAYMENT OF BENEFITS
-------------------
7.1 PAYMENTS ON RETIREMENT. A Participant who attains his
Normal Retirement Date and continues to be an Employee shall continue
to share in the allocation of Earnings Deferral Contributions,
Supplemental Employer Contributions, Matching Contributions, and may
elect or continue to enter into Long-Term Savings Agreements. Upon
the retirement of a Participant at or after his Normal Retirement
Date, the Committee shall notify the Trustee in writing of the
Participant's retirement and shall direct the Trustee to make payment,
in a method provided in the Plan, of the Adjusted Balance of the
Participant's Account as of the Participant's retirement date.
7.2 PAYMENTS ON DEATH.
(a) Upon the death of a Participant the Committee shall
promptly notify the Trustee in writing of the Participant's death and
the name of his Beneficiary (or Surviving Spouse if paragraph (c) is
applicable) and shall direct the Trustee to make payment, in a method
provided in the Plan, of the Adjusted Balance of the Participant's
Account as of his date of death, to his Beneficiary or Surviving
Spouse, as the case may be, in accordance with Section 7.5.
(b) Each Participant who is not married to a Surviving
Spouse at the date of his death, and each married Participant whose
Surviving Spouse has consented to an alternate Beneficiary
designation, shall have the right to designate, by giving a written
designation to the Committee, a person or persons or entity as
Beneficiary to receive the death benefit provided under this Section
7.2. Successive designations may be made, and the last designation
received by the Committee prior to the death of the Participant shall
be effective and shall revoke all prior designations. If a designated
Beneficiary shall die before the Participant, his interest shall
terminate and, unless otherwise provided in the Participant's
designation, if such designation named more than one Beneficiary, such
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interest shall be paid in equal shares to those Beneficiaries, if any,
who survive the Participant. The Participant shall have the right to
revoke the designation of any Beneficiary without the consent of the
Beneficiary.
(c) The Beneficiary of each married Participant shall be
the Surviving Spouse of the Participant and the death benefits of any
Participant who is married to a Surviving Spouse at the date of his
death shall be paid in full to his Surviving Spouse in a single lump
sum. Notwithstanding the preceding sentence, the death benefits
provided pursuant to Section 7.2(a) shall be distributed to a married
Participant's Beneficiary (if any) designated as provided in paragraph
(b) and pursuant to the method, if any, designated by the Participant
as provided in paragraph (b), if the Participant's Surviving Spouse
consented to such designation by the Participant, prior to the date of
his death, in writing in accordance with the requirements of Sections
205(b)(1)(C)(i) and 205(c)(2)(A) of ERISA. Such consent must
acknowledge the effect of the election and the identity of any non-
Surviving Spouse Beneficiary, including any class of Beneficiaries or
contingent Beneficiaries, and must be witnessed by a representative of
the Plan or a notary public. The consent of the Participant's
Surviving Spouse shall not be required if the Participant establishes
to the satisfaction of the Committee that such consent may not be
obtained because there is no Surviving Spouse or the Surviving Spouse
cannot be located, or because of such other circumstances as the
Secretary of the Treasury may prescribe by regulations. The
Participant may not subsequently change the method of distribution
elected by the Participant or the designation of his Beneficiary
unless his Surviving Spouse consents to the new election or
designation in accordance with the requirements set forth in the
preceding sentence, or unless the Surviving Spouse's consent permits
the Participant to change the election of method of payment or the
designation of his Beneficiary without the Surviving Spouse's further
consent. A Spouse's consent shall be irrevocable. Any consent by a
Surviving Spouse, or establishment that the consent of the Surviving
Spouse may not be obtained, shall be effective only with respect to
that Surviving Spouse.
(d) If a Participant shall fail to designate a Beneficiary,
or if such designation shall for any reason be illegal or ineffective,
or if no Beneficiary shall survive the Participant, his death benefits
shall be paid:
(i) to his Surviving Spouse;
(ii) if there is no Surviving Spouse, to his surviving
children (including legally adopted children) in equal shares;
(iii) if there is neither a Surviving Spouse nor
surviving children, to his surviving parents in equal shares;
(iv) if there is neither a Surviving Spouse, nor surviving
children or surviving parents, to the duly appointed and
qualified executor or other personal representative of the
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Participant to be distributed in accordance with the
Participant's will or applicable intestacy law; or
(v) in the event that there shall be no such representative
duly appointed and qualified within six (6) months after the date
of death of such deceased Participant, then to such persons as,
at the date of his death, would be entitled to share in the
distribution of such deceased Participant's personal estate under
the provisions of the applicable statute then in force governing
the descent of intestate property, in the proportions specified
in such statute.
(e) The Committee may determine the identity of the dis-
tributees and in so doing may act and rely upon any information
it may deem reliable upon reasonable inquiry, and upon any
affidavit, certificate, or other paper believed by it to be
genuine, and upon any evidence believed by it sufficient.
7.3 PAYMENTS ON DISABILITY. Upon the termination of a
Participant's employment with all Employers by reason of a disability,
the Committee shall notify the Trustee in writing of said disability
termination, and shall direct the Trustee to make payment, in a method
provided in the Plan, of the Adjusted Balance of the Participant's
Accounts as of the date of such Participant's disability termination.
For purposes of this section "disability" means a physical or mental
condition that is expected to render the Participant permanently
unable to perform his usual duties or any comparable duties for his
Employer. The determination of the existence of such disability shall
be made by the Committee and shall be final and binding upon such
Participant and all other parties. The Committee may require
submission of such medical evidence as it may deem necessary in order
to arrive at its determination. The Committee's determination of the
existence of a disability will be made with reference to the nature of
the injury without regard to the period the Participant is absent from
work.
7.4 PAYMENTS ON TERMINATION FOR REASONS OTHER THAN RETIRE-
MENT, DEATH OR DISABILITY. Upon the termination of employment with
all Employers of a Participant for any reason other than retirement,
death or disability, the Committee shall notify the Trustee in writing
of the Participant's termination and shall direct the Trustee to make
payment of the Adjusted Balance of the Participant's Savings Account,
Rogers Account, Intercraft Account, Levolor Account, Sanford Account
and Transfer Account, and the vested portion of the Adjusted Balance
of his Anchor Account and Matching Contributions Account, as of the
Valuation Date immediately succeeding his application for
distribution, in accordance with Section 7.5. The non-vested
portion, if any, of the Adjusted Balance of the Participant's Anchor
Account and Matching Contributions Account shall be forfeited after
the Participant incurs a one-year Break in Service. Forfeitures shall
be used first to pay certain administrative expenses described in
Section 9.6, and then to reduce Matching Contributions for the Plan
Year next following the Year the forfeiture occurs and for succeeding
Years, to the extent necessary, as provided in Section 6.10. If a
Participant is reemployed before he incurs a Break in Service of at
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least five years, the forfeited portion of his Anchor Account and
Matching Contribution Account will be reinstated and he will
continue to vest in such Accounts. If a Participant who is rehired
before he incurs a Break in Service of at least five years again
incurs a termination of employment under circumstances in which he is
not fully vested in his Anchor Account and Matching Contributions
Account, a portion of his Anchor Account and Matching Contributions
Account distributable on the date of his later termination of
employment shall be calculated as follows:
(i) the amount distributed to the Participant from his
Anchor Account and Matching Contributions Account upon his
earlier termination of employment shall be added to the Adjusted
Balance of his Anchor Account and Matching Contributions Account;
(ii) the amount determined under paragraph (i) shall be
multiplied by the vested percentage as of the date of his later
termination of employment determined under Section 6.8; and
(iii) the amount distributed to the Participant upon his
earlier termination of employment shall be deducted from the
product calculated under paragraph (ii) to determine the amount
distributable upon his termination of employment.
7.5 MANNER AND TIMING OF PAYMENT. (a) Whenever the
Committee shall direct the Trustee to make payment to a Participant,
his Beneficiary, or his Surviving Spouse upon termination of the
Participant's employment (whether by reason of retirement, death,
disability or for other reasons), the Committee shall direct the
Trustee to pay the Adjusted Balance of his Savings Account, Transfer
Account, Rogers Account, Intercraft Account, Levolor Account and
Sanford Account, if any, and the vested portion of the Adjusted
Balance of his Matching Contributions Account and Anchor Account, if
any, to or for the benefit of the Participant, his Beneficiary, or his
Surviving Spouse, in cash or wholly or partly in kind, in either of
the following ways as the Participant (or, in the case of a deceased
former Participant, his Beneficiary or Surviving Spouse) shall
determine:
(i) In a lump sum, payable sixty days after termination of
the Participant's employment with all Employers unless the
Participant elects to defer payment until March 31 of the
succeeding Plan Year; provided that distributions in kind shall
be valued at the fair market value of the assets distributed on
the date of such distribution; or
(ii) In installments payable in fixed and substantially
equal monthly, quarterly, semi-annual or annual amounts, com-
mencing sixty days after termination of the Participant's
employment with all Employers, unless the Participant elects to
defer commencement of payments until March 31 of the succeeding
Plan Year; and continuing over a period not longer than the maxi-
mum period permitted under paragraph (c) below; provided that
distributions in kind shall be valued at the fair market value of
the assets distributed on the date of such distribution. The
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Participant, or Beneficiary or Surviving Spouse, as the case may
be, may increase the fixed amount of the installment payment
previously elected, or may elect to have the remaining vested
portions of the Adjusted Balance of the Accounts paid in a lump
sum. Such election shall be effective as of the first day of any
month if written notice is received by the Committee no later
than the fifteenth day of the preceding month.
(b) Notwithstanding anything to the contrary in the Plan,
and subject to subsection 7.5(d), if on the last day of the Plan Year
corresponding to or following the date of a Participant's termination
of employment, the total amount payable under paragraph (a), excluding
amounts distributable from his Transfer Account, is $3,500 or less,
such amount shall be distributed to the Participant in a lump sum as
soon as is administratively feasible following such date.
Notwithstanding the foregoing, if on the last day of the Plan Year
corresponding to or following the date of a Participant's termination
of employment, the total amount payable under paragraph (a), excluding
amounts distributable from the Participant's Transfer Account, exceeds
$3,500, no part of such amount may be distributed prior to the earlier
of the Participant's Normal Retirement Date or the date of his death
without the written consent of the Participant.
(c) Notwithstanding anything to the contrary contained
elsewhere in the Plan:
(i) The payment of benefits under the Plan to any
Participant will:
(A) be distributed to him not later than the Required
Distribution Date (as defined in paragraph (c)(iii)), or
(B) be distributed to him commencing not later than
the Required Distribution Date in accordance with regu-
lations prescribed by the Secretary of the Treasury (I) over
the life of the Participant or over the lives of the
Participant and his Beneficiary, or (II) over a period not
extending beyond the life expectancy of the Participant or
the life expectancy of the Participant and his Beneficiary.
(ii) (A) If the Participant dies after distribution
to him has commenced pursuant to paragraph (c)(i)(B) but
before his entire interest in the Plan has been distributed
to him, then the remaining portion of that interest will be
distributed at least as rapidly as under the method of
distribution being used under paragraph (c)(i)(B) at the
date of his death.
(B) If the Participant dies before distribution
to him has commenced pursuant to paragraph (c)(i)(B), then,
except as provided in paragraphs (c)(ii)(C) and (c)(ii)(D),
his entire interest in the Plan will be distributed within
five years after his death.
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(C) Notwithstanding the provisions of paragraph
(c)(ii)(B), if the Participant dies before distribution to
him has commenced pursuant to paragraph (c)(i)(B) and if any
portion of his interest in the Plan is payable (I) to or for
the benefit of a Beneficiary, (II) in accordance with
regulations prescribed by the Secretary of the Treasury over
the life of the Beneficiary or over a period not extending
beyond the life expectancy of the Beneficiary, and (III)
beginning not later than one year after the date of the
Participant's death or such later date as the Secretary of
the Treasury may prescribe by regulations, then the portion
of his interest referred to in this paragraph (c)(ii)(C)
shall be treated as distributed on the date on which such
distributions begin.
(D) Notwithstanding the provisions of paragraphs
(c)(ii)(B) and (c)(ii)(C), if the Beneficiary referred to in
paragraph (c)(ii)(C) is the Surviving Spouse of the
Participant, then
(I) the date on which the distributions are
required to begin under paragraph
(c)(ii)(C)(III) of this Section shall not be
earlier than the date on which the
Participant would have attained age 70 1/2,
and
(II) if the Surviving Spouse dies before the
distributions to that Spouse begin, then this
paragraph (c)(ii)(D) shall be applied as if
the Surviving Spouse were the Participant.
(iii) For purposes of this paragraph (c), the Required
Distribution Date means April 1 of the calendar year following
the calendar year in which the Participant attains age 70 1/2.
(iv) For purposes of this paragraph (c), the life expectancy
of a Participant and his Spouse may be redetermined, but not more
frequently than annually. This subsection (c)(iv) shall not
apply in the case of a life annuity.
(v) A Participant may not elect a form of distribution
providing for payments after the Participant's death to a
Beneficiary other than his Spouse unless the actuarial value of
the payments expected to be made to the Participant during his
lifetime is more than fifty percent (50%) of the actuarial value
of the total payments expected to be made under such form of
distribution.
(d) This subsection 7.5(d) applies to distributions made on
or after January 1, 1993. Notwithstanding any provision of the Plan
to the contrary that would otherwise limit a Distributee's election
under this subsection, a Distributee may elect, at the time and in the
manner prescribed by the Plan Administrator, to have any portion of an
133
Eligible Rollover Distribution paid directly to an Eligible Retirement
Plan specified by the Distributee in a Direct Rollover.
(i) Definitions.
(A) "Eligible Rollover Distribution" is any
distribution of all or any portion of the balance to the
credit of the Distributee, except that an Eligible Rollover
Distribution does not include: any distribution that is one
of a series of substantially equal periodic payments (not
less frequently than annually) made for the life (or life
expectancy) of the Distributee or the joint lives (or joint
life expectancies) of the Distributee and the Distributee's
designated Beneficiary, or for a specified period of ten
years or more; any distribution to the extent such
distribution is required under section 401(a)(9) of the
Code; and the portion of any distribution that is not
includible in gross income (determined without regard to the
exclusion for net unrealized appreciation with respect to
employer securities).
(B) "Eligible Retirement Plan" is an individual
retirement account described in section 408(a) of the Code,
an individual retirement annuity described in section 408(b)
of the Code, an annuity plan described in section 403(a) of
the Code, or a qualified trust described in section 401(a)
of the Code, that accepts the Distributee's eligible
rollover distribution. However, in the case of an Eligible
Rollover Distribution to the Surviving Spouse, an Eligible
Retirement Plan is an individual retirement account or
individual retirement annuity.
(C) "Distributee" includes an Employee or former
Employee. In addition, the Employee's or former Employee's
Surviving Spouse and the Employee's or former Employee's
spouse or former spouse who is the alternate payee under a
qualified domestic relations order, as defined in section
414(p) of the Code, are Distributees with regard to the
interest of the spouse or former spouse.
(D) "Direct Rollover" is a payment by the Plan to the
Eligible Retirement Plan specified by the Distributee.
(e) If a distribution is one to which Sections 401(a)(11)
and 417 of the Code do not apply, such distribution may commence less
than 30 days after the notice required under section 1.411(a)-11(c)
of the Income Tax Regulations is given, provided that:
(i) the Committee clearly informs the Participant that
the Participant has a right to a period of at least 30 days
after receiving the notice to consider the decision of
whether or not to elect a distribution (and, if applicable,
a particular distribution option), and
134
(ii) the Participant, after receiving the notice,
affirmatively elects a distribution.
(f) A Participant who entered the Levolor Plan prior to
September 1, 1990 and for whom a Levolor Account has been established
under the Plan may elect to have the Adjusted Balance of the portion
of such Levolor Account attributable to employer profit sharing
contributions paid either pursuant to paragraph (g) below or in the
form of a paid-up annuity policy.
(g) Notwithstanding the above, the following provisions of
this paragraph (g) apply with respect to the Adjusted Balance of (i)
the portion of a Participant's Intercraft Account held under the
Intercraft Retirement Program, and (ii) the portion of a Participant's
Levolor Account referred to in paragraph (f) above, in the case of a
Participant who elects payment of such portion in the form of an
annuity pursuant to paragraph (f) above:
(i) Payment for reasons other than death.
(A) Upon termination of a Participant's employment with all
Employers for any reason other than death, the Committee shall
direct the Trustee to pay such portion as follows:
(I) If the Participant has a Spouse at the date
payments to him are to commence, such amount shall
be payable to the Participant in the form of a
Joint and Survivor Annuity. However, the
Participant, with the consent of his Spouse, may
elect during the Election Period to waive payment
in the form of a Joint and Survivor Annuity
pursuant to subsection (i)(B) below and elect
payment of such portion in a method described in
Section 7.5(a) and (d) above. For purposes of
this subsection (i), the term "Joint and Survivor
Annuity" means an annuity payable to the
Participant for his life, with a survivor annuity
payable to his Spouse for the life of such Spouse
commencing on the first day of the month
immediately following the date of death of the
Participant, in an amount equal to one-half of the
amount payable during the life of the Participant.
(II) If a Participant does not have a Spouse at the
date payments to him are to commence, such portion
shall be payable to him in the form of a Single
Life Annuity. However, the Participant may elect
during the Election Period to waive payment in the
form of a Single Life Annuity pursuant to
subsection (i)(B) below and elect payment of such
portion in a method described in Section 7.5(a)
and (d) above. For purposes of this paragraph
(i), the term "Single Life Annuity" means an
annuity payable to the Participant for his life.
135
(B) Within a reasonable time prior to the commencement
of payments to a Participant under the Plan, the Committee
shall give the Participant a written notice, in nontechnical
terms, of his right to waive payment of such portion in the
form of a Joint and Survivor Annuity or Single Life Annuity,
as the case may be, pursuant to paragraph (i)(A) and of his
right to elect the method of such payment as described in
Section 7.5(a) and (d) above. Such notice shall include a
description of (I) the terms and conditions of the Joint and
Survivor Annuity or Single Life Annuity, whichever is
applicable, (II) the Participant's right to make, and the
effect of making, an election to waive the Joint and
Survivor Annuity or Single Life Annuity, (III) the right of
the Participant's Spouse, if any, not to consent to such an
election, (IV) the right to make, and the effect of, a
revocation of such an election, and (V) the methods of
payment pursuant to Section 7.5(a) and (d) above. A
Participant may elect at any time during the Election Period
to waive the Joint and Survivor Annuity or Single Live
Annuity, as the case may be, and to elect a method of
payment described in Section 7.5(a) and (d) above. For
purposes of this subsection (i), the term "Election Period"
means the ninety-day period ending on the earliest date with
respect to which payments to the Participant commence. Any
election pursuant to this paragraph (i) may be modified or
revoked during the Election Period and shall be
automatically revoked if the Participant dies before
payments commence.
(C) Any election by a married Participant to
waive payment in the form of a Joint and Survivor
Annuity shall not take effect unless the Participant's
Spouse consents in writing to the election and such
consent acknowledges the effect of the election. Such
a consent must acknowledge the effect of the election
and the identity of any non-Spouse Beneficiary,
including any class of Beneficiaries or contingent
Beneficiaries, designated to receive any installments
remaining unpaid at the date of his death, and must be
witnessed by a representative of the Plan or a notary
public. The consent of the Participant's Spouse shall
not be required if the Participant establishes to the
satisfaction of the Committee that consent may not be
obtained because there is no Spouse or the Spouse
cannot be located, or because of such other
circumstances as the Secretary of the Treasury may
prescribe by regulations. Any designation by a
Participant of a new Beneficiary or alternate method of
payment shall not take effect unless the Participant's
Spouse, if any, consents to the new designation
pursuant to the procedures set forth in the preceding
sentence or unless the Spouse's consent permits the
Participant to change the designation of his
Beneficiary or the method of payment without the
136
Spouse's consent. A Spouse's consent shall be
irrevocable.
(ii) Payment By Reason of Death.
(A) Upon the death of a Participant prior to commencement
of payment of such portion to him, the Committee shall direct the
Trustee to pay such amount as follows:
(I) If the Participant has a Spouse at the date of his
death, the Adjusted Balance of such portion shall
be payable to his Spouse as a Preretirement
Survivor Annuity. However, the Participant, with
the consent of his Spouse, may elect during the
Election Period to waive the Preretirement
Survivor Annuity pursuant to (ii)(B) below and
elect payment of such portion in a method
described in Section 7.5(a) and (d) above. For
purposes of this paragraph (ii), the term
"Preretirement Survivor Annuity" means an annuity
payable for the life of the Participant's Spouse,
commencing on the first day of the month after the
date of death of the Participant.
(II) If a Participant does not have a Spouse at the
date of his death, such portion shall be payable
to his Beneficiary in any of the ways set forth in
Section 7.5(a) above as the Participant shall
elect by written notice delivered to the Committee
during the Election Period.
(B) The Committee shall provide each married
Participant with a written explanation of the Preretirement
Survivor Annuity. The explanation shall be provided to each
such Participant as soon as may be practicable after his
date of employment. If the employment of the Participant
with the all Employers terminates prior to the date of his
death and he is then reemployed, he must receive such
written explanation as soon as practicable after the date of
reemployment. Such notice shall include a description of
(I) the terms and conditions of the Preretirement Survivor
Annuity, (II) the Participant's right to make, and the
effect of, an election to waive the Preretirement Survivor
Annuity and to designate a beneficiary to receive the
adjusted balances in his accounts, (III) the rights of the
Participant's spouse not to consent to such an election,
(IV) the right to make, and the effect of, the revocation of
such an election, and (V) the methods of payment pursuant to
paragraph (iv) below. A Participant may elect at any time
during the Election Period to waive the Preretirement
Survivor Annuity, if applicable, and to elect a method of
payment described in Section 7.5(a) and (d) above. For
purposes of this subsection (ii), the term "Election Period"
means the period that begins on the date on which the
Participant receives the aforementioned explanation and ends
137
on the date of the Participant's death. Any election
pursuant to this subsection (ii) may be modified or revoked
during the Election Period.
(C) Any election by a married Participant to waive payment
in the event of his death in the form of a Preretirement Survivor
Annuity and to designate a non-Spouse Beneficiary shall not take
effect unless the Participant's Spouse consents in writing to the
election and designation prior to the Participant's death. The
Spousal consent provisions described in (i)(C) above shall apply.
7.6 WITHDRAWALS FROM TRANSFER ACCOUNT. As of the last day
of his first full Wage Payment Period of any month Participant may
withdraw from his Transfer Account an amount not in excess of the
Adjusted Balance thereof determined as of such day. Each request for
distribution pursuant to this Section 7.6 must be made by written
application to the Committee no later than the fifteenth day of the
month preceding the last day of the applicable calendar month.
7.7 WITHDRAWALS FROM ANCHOR ACCOUNT. A Participant for
whom an Anchor Account has been established under the Plan shall be
entitled to withdraw amounts from his various sub-accounts thereunder
pursuant to this Section. The sub-accounts referred to below have the
meaning as set forth in the Anchor Plan and consist of the funds
accumulated thereunder as of December 31, 1988. Such withdrawals are
effective as of the first day of any month if written notice is
received by the Committee no later than the fifteen day of preceding
month.
(a) A Participant may elect to withdraw 25%, 50%, 75% or
100% of the portion of his Voluntary Member Contributions Sub-
Account that is attributable to Voluntary Member Contributions
made prior to January 1, 1987, excluding any net earnings and
gain thereon.
(b) A Participant who has withdrawn 100% of his pre-1987
Voluntary Member Contributions may elect to withdraw 25%, 50%,
75% or 100% of the portion of his Basic Member Contribution Sub-
Account that is attributable to Basic Member Contributions made
prior to January 1, 1987, excluding any net earnings and gains
thereon.
(c) Any Participant who has withdrawn 100% of his pre-1987
Voluntary Member and Basic Member Contributions may elect to
withdraw 25%, 50%, 75% or 100% of the remainder of his Voluntary
Member Contribution Sub-Account, including any net earnings and
gain thereon.
(d) A Participant who has withdrawn 100% of his pre-1987
Basic Member Contributions and 100% of his Voluntary Member
Contributions Sub-Accounts may elect to withdraw 25%, 50%, 75% or
100% of the remainder of his Basic Member Contributions Sub-
Account, including any net earnings and gain thereon.
138
(e) A Participant who has withdrawn 100% of his Voluntary
Member and Basic Member Contributions Sub-Accounts including any
net earnings and gain thereon, may elect to withdraw 100% of his
PAYSOP Sub-Account, including any net earnings and gain thereon.
(f) A Participant who is at least 59-1/2 years old, or who
has demonstrated the existence of a Hardship (as defined in
paragraph (j) below), and who has withdrawn 100% of his Voluntary
Member and Basic Member Contributions Sub-Accounts and 100% of
his PAYSOP Sub-Account, may elect to withdraw 25%, 50%, 75% or
100% of his Voluntary Employer Contributions Sub-Account,
including any net earnings and gain thereon earned through
December 31, 1988; provided, however, that in the case of any
Hardship withdrawal, the amount withdrawn pursuant to this
paragraph shall be determined without regard to the percentages
set forth in this paragraph and shall in no event exceed the
amount necessary to relieve the Hardship.
(g) A Participant who is at least 59-1/2 years old, or who
has demonstrated the existence of a Hardship (as defined in
paragraph (j) below), and who has withdrawn 100% of his Voluntary
Contributions and Basic Member Contributions Sub-Accounts and
100% of his PAYSOP Sub-Account pursuant to subsections (a)
through (f) may elect to withdraw 25%, 50%, 75% or 100% of his
Basic Employer Contributions Sub-Account, including any net
earnings and gain thereon earned through December 31, 1988;
provided, however, that in the case of any Hardship withdrawal,
the amount withdrawn pursuant to this paragraph shall be
determined without regard to the percentages set forth in this
paragraph and shall in no event exceed the amount necessary to
relieve the Hardship.
(h) A Participant who has withdrawn 100% of his Voluntary
Contributions and Basic Contributions Sub-Accounts and 100% of
his PAYSOP Sub-Account in accordance with (and as permitted by)
paragraphs (a) through (g) of this Section may elect to withdraw
25%, 50%, 75% or 100% of his Matching Employer Contributions Sub-
Account in which he has a vested interest, including any net
earnings and gain thereon.
(i) If a Participant makes a withdrawal under
paragraphs (f) and/or (g) of this Section on account of a
Hardship, such withdrawal shall be subject to the following
rules:
(i) Each request for such a withdrawal must be made by
written application to the Committee supported by such
evidence as the Committee may require;
(ii) Each withdrawal shall be an account of a Hardship (as
defined in paragraph (j)) suffered by the Participant;
(iii) The amount withdrawn shall not be in excess of the
immediate and heavy financial need of the
Participant, which need shall be deemed to include
139
any amounts necessary to satisfy any Federal,
state or local income taxes or penalties
reasonably expected to be incurred by the
Participant as a result of the withdrawal;
(iv) The Participant shall first obtain all distributions,
other than hardship distributions, and all nontaxable
loans currently available under the Plan and all other
plans maintained by the Company or any Affiliated
Employer;
(v) The Participant's elective contributions and employee
contributions (as defined in Treasury Regulation
Section 1.401(k)) shall be suspended under the Plan and
all other plans maintained by the Company or any
Affiliated Employer for twelve (12) months after his
receipt of the Hardship withdrawal; and
(vi) The Participant may not make elective contributions (as
defined in Treasury Regulation Section 1.401(k)) under
the Plan or any other plan maintained by the Company or
any Affiliated Employer for the Participant's taxable
year immediately following the taxable year of the
Hardship withdrawal in excess of the applicable limit
under Code Section 402(g) for such next taxable year
less the amount of such Participant's elective
contributions for the taxable year of the Hardship
withdrawal.
(j) For purposes of this Section and Section 7.12, a
distribution will be on account of Hardship if it is needed for:
(i) medical expenses described in Section 213(d) of the Code
previously incurred by, or expected to be incurred by, the
Participant, his spouse, or any of his dependents (as defined in
Section 152 of the Code) or necessary for any of these persons to
obtain medical care (as defined in Section 213(d) of the Code);
(ii) payment of tuition and related educational fees for the next
twelve months of post-secondary education for the Participant,
his spouse, or any of his dependents (as defined in Section 152
of the Code); (iii) the purchase (excluding mortgage payments) of
a principal residence for the Participant; or (iv) the need to
prevent the eviction of the Participant from his principal
residence or foreclosure on the mortgage of the Participant's
principal residence.
(k) A Participant who has made a withdrawal pursuant to
this Section and desires to resume having Earnings Deferral and
Matching Contributions made for him, after the expiration of the
periods provided in clauses v and vi of paragraph (i) above shall
execute and file with the Committee a Long-Term Savings Agreement
and any other forms required by the Committee, no later than the
fifteenth day of the month preceding the beginning of any
succeeding Wage Payment Period. In the event a Participant makes
either concurrent or consecutive withdrawals under more than one
of such paragraphs of this Section 7.7, the periods provided in
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such paragraphs shall run concurrently, with each period
commencing on the effective date of the applicable withdrawal.
7.8 WITHDRAWALS FROM ROGERS ACCOUNT. A Participant for
whom a Rogers Account has been established under this Plan and who is
at least 59-1/2 years old may elect to withdraw all or any portion of
his Rogers Account. Such withdrawal shall be effective as of the
first day of any month if written notice is received by the Committee
no later than the fifteenth day of the preceding month.
7.9 WITHDRAWALS FROM SANFORD ACCOUNT. (a) A Participant
for whom a Sanford Account has been established under the Plan and who
is at least 59-1/2 years old may elect to withdraw all or any portion
of his Sanford Account. Such withdrawal shall be effective as of the
first day of any month if written notice is received by the Committee
no later than the fifteenth day of the preceding month.
(b) A Participant for whom a Sanford Account has been
established under the Plan and who has demonstrated the existence of a
Hardship (as defined in paragraph 7.7(j)) may elect a withdrawal from
his Sanford Account; provided, however, that in the case of any
Hardship withdrawal, the amount withdrawn pursuant to this paragraph
shall be made in accordance with paragraphs 7.7(i) and (k) and shall
in no event exceed the amount necessary to relieve the Hardship.
7.10 WITHDRAWALS FROM SAVINGS ACCOUNT. A Participant who is
at least 59-1/2 years old may elect to withdraw from his Savings
Account all or any portion of the Adjusted Balance thereof. Such
withdrawal shall be effective as of the first day of any month if
written notice is received by the Committee no later than the
fifteenth day of the preceding month.
7.11 WITHDRAWALS FROM INTERCRAFT ACCOUNT. (a) A Participant
for whom an Intercraft Account has been established under the Plan and
who is at least 59-1/2 may elect to withdraw all or any portion of his
Intercraft Account, other than those amounts in the Intercraft Account
attributable to (i) discretionary employer contributions made pursuant
to Section 4.1 of the Intercraft Profit Sharing Plan and (ii)
contributions made under the Intercraft Retirement Program. Such
withdrawal shall be effective as of the first day of any month if
written notice is received by the Committee no later than the
fifteenth day of the preceding month.
(b) A Participant for whom an Intercraft Account has been
established under the Plan and who has demonstrated the existence of a
Hardship (as defined in paragraph 7.7(j)) may elect a withdrawal from
his Intercraft Account of amounts other than those attributable to the
Intercraft Retirement Program; provided, however, that in the case of
any Hardship withdrawal, the amount withdrawn pursuant to this
paragraph shall be made in accordance with paragraphs 7.7(i) and (k)
and shall in no event exceed the amount necessary to relieve the
Hardship.
(c) A Participant for whom an Intercraft Account has been
established under the Plan and who is at least 65 may elect to
141
withdraw all or any portion of his Intercraft Plan attributable to
discretionary employer contributions made pursuant to Section 4.1 of
the Intercraft Profit Sharing Plan. Such withdrawal shall be
effective as of the first day of any month if written notice is
received by the Committee no later than the fifteenth day of the
preceding month.
7.12 WITHDRAWALS FROM LEVOLOR ACCOUNT. (a) A Participant
for whom a Levolor Account has been established under the Plan and who
is at least 59-1/2 may elect to withdraw all or any portion of his
Levolor Account, other than those amounts in the Levolor Account
attributable to discretionary employer contributions made under the
Levolor Plan. Such withdrawal shall be effective as of the first day
of any month if written notice is received by the Committee no later
than the fifteenth day of the preceding month.
(b) A Participant for whom a Levolor Account has been
established under the Plan and who has demonstrated the existence of a
Hardship (as defined in paragraph 7.7(j)) may elect a withdrawal from
his Levolor Account; provided, however, that in the case of any
Hardship withdrawal, the amount withdrawn pursuant to this paragraph
shall be made in accordance with paragraphs 7.7(i) and (k) and shall
in no event exceed the amount necessary to relieve the Hardship.
(c) A Participant for whom a Levolor Account has been
established under the Plan and who is at least 65 may elect to
withdraw all or any portion of his Levolor Plan attributable to
discretionary employer contributions made under the Levolor Plan.
Such withdrawal shall be effective as of the first day of any month if
written notice is received by the Committee no later than the
fifteenth day of the preceding month.
7.13 RULES GOVERNING IN-SERVICE DISTRIBUTIONS. (a) In the
event a Participant requests to receive a distribution pursuant to
Sections 7.6, 7.7, 7.8, 7.9, 7.10, 7.11 or 7.12, and the distribution
is approved if necessary, the distribution shall be paid to the
Participant as soon as is reasonably practicable upon receipt of the
written request for such distribution. If a Participant's termination
of employment with all Employers occurs after an election is made in
accordance with those Sections, but prior to distribution of the full
amount elected, such election shall be automatically void and the
benefits he or his Surviving Spouse or Beneficiary are entitled to
receive under the Plan shall be distributed in accordance with the
other provisions of this Article.
(b) A Participant may not make more than one withdrawal per
Plan Year pursuant to each of Section 7.6, 7.7, 7.8, 7.9, 7.10, 7.11
or 7.12.
7.14 DISTRIBUTION OF UNALLOCATED CONTRIBUTIONS. (a) If on
the date of termination of a Participant's employment, the
Participant's Employer shall be holding a Rollover Contribution made
by the Participant, but not yet allocated to his Transfer Account,
such Employer shall pay such amounts either directly to the Partici-
pant (or his Beneficiary or Surviving Spouse, as the case may be) or
142
to the Trustee, to be distributed by the Trustee in accordance with
Section 7.5.
(b) If on the date of termination of a Participant's
employment, a Participant's Earnings have been reduced by any amount
pursuant to a Long-Term Savings Agreement, or a Matching Contribution
has been made on behalf of such Participant pursuant to Section
4.1(a), and any such amount has not yet been allocated to his Savings
Account or Matching Contributions Account (whichever is applicable),
the Participant's Employer shall pay such amounts to the Trustee to be
credited to the Participant's Savings Account or Matching
Contributions Account (whichever is applicable), to be distributed by
the Trustee in accordance with Section 7.5.
7.15 ADMINISTRATIVE POWERS RELATING TO PAYMENTS. If a
Participant, Beneficiary, or Surviving Spouse, is under a legal
disability or, by reason of illness or mental or physical disability,
is in the opinion of the Committee unable properly to attend to his
personal financial matters, the Trustee may make such payments in such
of the following ways as the Committee shall direct:
(a) directly to such Participant, Beneficiary, or Surviving
Spouse;
(b) to the legal representative of such Participant,
Beneficiary, or Surviving Spouse; or
(c) to some relative by blood or marriage, or friend, for
the benefit of such Participant, Beneficiary or Surviving Spouse.
Any payment made pursuant to this Section shall be in complete
discharge of the obligation therefor under the Plan.
7.16 DISTRIBUTIONS FROM SAVINGS ACCOUNT. Notwithstanding
anything to the contrary contained elsewhere in the Plan, a
Participant's Savings Account, that portion of his Anchor Account
attributable to Basic Employer Contributions and Voluntary Employer
Contributions (as defined in the Anchor Plan), that portion of his
Rogers Account attributable to elective deferrals (within the meaning
of the Rogers Plan), that portion of his Sanford Account attributable
to elective deferrals (within the meaning of the Sanford Plan), that
portion of his Intercraft Account attributable to elective deferrals
(within the meaning of the Intercraft Profit Sharing Plan) and that
portion of his Levolor Account attributable to elective deferrals
(within the meaning of the Levolor Plan) shall not be distributable
other than upon:
(a) the Participant's separation from service, death, or
disability;
(b) termination of the Plan without establishment or
maintenance of another defined contribution plan (other than an
employee stock ownership plan as defined in Section 4975(e)(f) of
the Code);
143
(c) the date of the sale or other disposition by the
Participant's Employer to an unrelated corporation of
substantially all of the assets (within the meaning of Sec-
tion 409(d)(2) of the Code) used by such Employer in a trade or
business of the Employer, but only if (i) the Participant is
employed by such trade or business and continues employment with
the entity acquiring such assets, and (ii) the Company continues
to maintain the Plan after the sale or other disposition. The
sale of 85% of the assets used in the trade or business shall be
deemed a sale of "substantially all" of the assets used in such
trade or business;
(d) the date of the sale by the Participant's Employer of
such Employer's interest in a subsidiary (within the meaning of
Section 409(d)(3) of the Code), but only if (i) the Participant
is employed by such subsidiary and continues employment with such
subsidiary following such sale, and (ii) the Company continues to
maintain the Plan after the sale or other disposition;
(e) the Participant's attainment of age 59-1/2; or
(f) the Participant's Hardship (in the case of a
distribution from a Participant's Anchor Account, Sanford
Account, Intercraft Account and Levolor Account).
Notwithstanding anything to the contrary contained herein, an event
shall not be treated as described in clauses (b), (c) or (d) above
with respect to any Participant unless the Participant receives a lump
sum distribution (as defined in Section 401(k)(10)(B)(ii) of the Code)
by reason of the event. Nothing in this Section is intended to expand
the instances in which distributions may be made to Participants.
This Section is included in the Plan solely to set forth the
restrictions of Section 401(k) of the Code.
ARTICLE VIII
LOANS TO PARTICIPANTS
---------------------
8.1 LOANS TO PARTICIPANTS. (a) The Committee shall direct
the Trustee to make a loan to active Participants, and, to the extent
not inconsistent with Section 401(a) of the Code, to former
Participants who are parties in interest (as defined in Section 3(14)
of ERISA) and who retain account balances under the Plan pursuant to
Section 7.5(b) ("Former Participants"), applied for pursuant to the
terms of this Article. No more than one such loan may be outstanding
from the Plan to any Participant at any time. Such loan shall be in
an amount which does not exceed the amount set forth in Section 8.2
below. A loan shall be made on the written application of the
Participant to the Committee and on such terms and conditions as are
set forth in this Section 8.1 and Sections 8.2 and 8.3 below. In
making such loans the Committee shall pursue uniform policies and
shall not discriminate in favor of or against any Participant or group
of Participants.
144
(b) Each borrowing Participant shall, as a condition to
receiving a loan hereunder, specify in his loan application the
Investment Funds in which each of his Accounts are invested from which
such loan shall be paid. Each such loan shall be made in accordance
with the specification of the borrowing Participant except that if any
Investment Fund imposes any restriction or penalty on a distribution,
the loan shall be paid from the Investment Funds in such manner as
will comply with such restriction and avoid such penalty. Principal
and interest payments on a loan shall be allocated among Investment
Funds in accordance with subsection 8.4(e).
(c) The Committee may impose such additional uniform and
nondiscriminatory administrative requirements upon Participants
applying for loans as the Committee may determine.
8.2 MAXIMUM LOAN AMOUNT. (a) In no event shall any loan
made pursuant to this Article to any Participant be in an amount which
shall cause the outstanding aggregate balance of all loans made to
such Participant under this Plan and all other qualified employer
plans (as defined in Section 72(p)(4)(A) of the Code) maintained by
the Participant's Employer to exceed the lesser of:
(i) $50,000, reduced by the excess (if any) of:
(A) the highest outstanding balance of loans from the
Plan and such plans to the Participant during the one-year
period ending on the day before the date such loan is made,
over
(B) the outstanding balance of loans from the Plan and
such plans to the Participant on the date on which such loan
is made; or
(ii) fifty percent (50%) of the vested portion of the
Adjusted Balance of the Participant's Accounts. For purposes of
this clause, the Adjusted Balance of the Accounts of the
Participant shall be determined as of the valuation of such
Accounts most recently available as of the date the loan is
effective.
8.3 REPAYMENT OF LOANS. Any loan made under this Article
shall mature and be payable in full on a date elected by the borrowing
Participant that (a) in the case of a loan which does not exceed
$2,000, is within three (3) years from the date such loan is made, (b)
in the case of a loan which exceeds $2,000, but does not exceed
$3,000, is within four (4) years from the date such loan is made, and
(c) in the case of a loan which exceeds $3,000, is within five (5)
years from the date such loan is made. Notwithstanding the foregoing,
in the case of a loan used to acquire any dwelling unit that within a
reasonable time after the loan is made is to be used (determined at
the time the loan is made) as the Participant's principal residence,
the terms specified in clauses (a) and (b) above apply, but in
addition, such loans shall mature and be payable on the date elected
by the borrowing Participant that (i) in the case of such a loan which
exceeds $3,000, but does not exceed $4,000, is within five (5) years
145
from the date such loan is made, (ii) in the case of such a loan which
exceeds $4,000, but does not exceed $5,000, is within six (6) years
from the date such loan is made, (iii) in the case of such a loan
which exceeds $5,000, but does not exceed $6,000, is within seven (7)
years from the date such loan is made, (iv) in the case of such a loan
which exceeds $6,000, but does not exceed $7,000, is within eight (8)
years from the date the loan is made, (v) in the case of such a loan
which exceeds $7,000, but does not exceed $8,000, is within nine (9)
years from the date the loan is made, and (vi) in the case of such a
loan which exceeds $8,000, is within ten (10) years from the date the
loan is made.
8.4 TERMS. (a) Loans to Participants shall be made
according to the following terms:
(i) the minimum principal amount of any loan, at the time
it is made, shall be $1,000.
(ii) proceeds of the loan shall be disbursed to a Partici-
pant no later than sixty (60) days after he has applied for the
loan in accordance with procedures established by the Committee;
(iii) each loan shall be adequately secured, provided
that such security shall not include a portion in excess of fifty
percent (50%) of the vested portion of the Adjusted Balance of
the Participant's Accounts as of the date the loan is effective;
(iv) interest shall be charged on a loan at a rate that is
commensurate with the interest rates charged by persons in the
business of lending money for loans that would be made under
similar circumstances. The Committee shall determine a
reasonable rate of interest based on the foregoing;
(v) payments of principal and interest shall be made
through payroll deductions, which deductions shall be irrevocably
authorized by the borrowing Participant in writing on a form
supplied by the Committee at the time the loan is made to him,
and such payroll deductions shall be sufficient to amortize the
principal and interest payable pursuant to the loan during the
term thereof on a substantially level basis in equal installments
(but not less frequently than quarterly). In the case of a
Former Participant, payment of principal and interest shall be
made by personal payment in quarterly or more frequent
installments according to procedures established by the
Committee;
(vi) the borrowing Participant shall have the right to
prepay all (but not a portion) of the interest and principal of
such loan without penalty;
(vii) the loans shall be evidenced by such forms of
obligations, and shall be made upon such additional terms as to
default, prepayment, security and otherwise as the Committee
shall determine; and
146
(viii) the Committee may charge a borrowing Participant
reasonable administrative fees (payable to the Plan), on a
nondiscriminatory basis, with respect to each loan.
(b) The entire unpaid balance of any loan made under this
Article and all interest due thereon, including all arrearages
thereon, shall immediately become due and payable without further
notice or demand, if with respect to the borrowing Participant, any of
the following events of default occurs:
(i) any payment of principal and/or accrued interest on the
loan remains due and unpaid for a period of thirty (30) days
after the same becomes due and payable under the terms of the
loan;
(ii) a proceeding in bankruptcy, receivership or insolvency
is commenced by or against the borrowing Participant;
(iii) the employment of the borrowing Participant with
all Employers is terminated for any reason and the Participant
does not become a Former Participant (except to the extent
inconsistent with Section 401(a) of the Code); provided, however,
that in the case of a Participant who terminates employment with
an Employer but immediately commences employment with the
purchaser of substantially all of the stock or assets of such
Employer and continues employment with such purchaser, any such
unpaid balance shall become due and payable pursuant to this
subsection (b) upon the expiration of a reasonable period of time
(as prescribed by the Committee) following the purchase of the
Employer's stock or assets. During such period, the Participant
shall continue to make payments of the principal and interest
through payroll deductions pursuant to subsection 8.3(v) of the
Plan, or by such other method deemed appropriate by the
Committee.
(iv) the borrowing Participant attempts to make an
assignment, for the benefit of creditors, of any security for the
loan; or
(v) the borrowing Participant becomes a Former Participant
and thereafter receives a distribution of the vested portion of
the Adjusted Balance of his Accounts (except to the extent
inconsistent with Section 401(a) of the Code).
Any payments of principal and/or interest on the loan not paid when
due shall bear interest thereafter, to the extent permitted by law, at
the rate specified by the terms of the loan. The payment and
acceptance of any sum or sums at any time on account of the loan after
an event of default, or any failure to act or enforce the rights
granted hereunder upon an event of default, shall not be a waiver of
the right of acceleration set forth in this paragraph.
(c) If an event of default and an acceleration of the
unpaid balance of the loan and interest due thereon shall occur, the
Committee shall direct the Trustee to pursue any remedies available to
147
a creditor at law or under the terms of the loan, including the right
to execute on the security for the loan; provided, however, that
neither the Trustee nor the Committee may execute on any amount in the
borrowing Participant's Savings Account at any time prior to the time
that a distribution of the Account could occur consistent with the
provisions of Section 7.14 of the Plan.
(d) Each such loan shall be a first lien against the vested
portion of the Adjusted Balances of the Accounts of the borrowing
Participant, unless the Committee shall accept other security. If:
(i) any portion of a loan shall be outstanding; and (ii) an event
occurs pursuant to which the Participant or his estate or his Bene-
ficiaries will receive a distribution or withdrawal from the Accounts
of such Participant under the provisions of the Plan, then such
distribution or withdrawal shall, to the extent necessary to liquidate
the unpaid portion of the loan, be made to the Trustee as payment on
the loan or loans. No distribution or withdrawal shall be made to a
Participant or his estate or his Beneficiaries from his Accounts in an
amount greater than the excess of the portion of his Accounts
otherwise distributable over the aggregate of the amounts owing with
respect to such loan plus interest, if any, thereon.
(e) All loans made pursuant to this Article shall be funded
from the vested portion of the Adjusted Balance of the borrowing
Participant's Accounts as set forth in Section 8.2(b). The Accounts
of a Participant shall, to the extent used to fund such loan, not
participate in the allocation of earnings and losses pursuant to Sec-
tion 6.9 or Article XI. All principal and interest paid by a
Participant with respect to a loan shall be credited to the borrowing
Participant's Accounts and shall not be allocated pursuant to Section
6.9 as earnings of the Investment Funds. All payments of principal
and interest made by a Participant with respect to a loan shall be
allocated to one or more of the Investment Funds in the same ratio as
the allocation of the Participant's Earnings Deferral Contributions to
such Investment Funds, which is in effect pursuant to Section 11.3 at
the time such payment is received by the Trustee. If no allocation
direction is in effect at the time such payment is received, the
payments shall be allocated based upon the last such allocation
direction which was in effect for such Participant. If no such
allocation direction was in effect at any time, such payment shall be
allocated on a pro rata basis to each of the Investment Funds
described in the schedule attached to the Trust Agreement.
ARTICLE IX
PLAN ADMINISTRATION
-------------------
9.1 COMPANY RESPONSIBILITY. The Company shall be respon-
sible for and shall control and manage the operation and
administration of the Plan. It shall be the "Plan Administrator" and
"Named Fiduciary" for purposes of ERISA and shall be subject to
service of process on behalf of the Plan. The Company shall appoint a
Committee of two or more persons to be known as the Retirement
148
Committee and to act on behalf of the Company in performing these
duties. The Company shall advise the Trustee in writing of the names
of the Committee members and of changes in membership from time to
time.
9.2 POWERS AND DUTIES OF COMMITTEE. The Committee shall
administer the Plan in accordance with its terms and shall have all
powers necessary to carry out the provisions of the Plan. The
Committee shall direct the Trustee concerning all payments which shall
be made out of the Trust pursuant to the Plan. The Committee shall
interpret the Plan and shall determine all questions arising in the
administration, interpretation, and application of the Plan, including
but not limited to, questions of eligibility and the status and rights
of Participants, Beneficiaries, Surviving Spouses and other persons.
Any such determination by the Committee shall presumptively be
conclusive and binding on all persons. The regularly kept records of
an Employee's Employer shall be conclusive and binding upon all
persons with respect to an Employee's age, time and amount of Com-
pensation and Earnings and the manner of payment thereof, and all
other matters contained therein relating to Employees. All rules and
determinations of the Committee shall be uniformly and consistently
applied to all persons in similar circumstances.
9.3 RECORDS AND REPORTS OF COMMITTEE. The Committee shall
keep all such books of account, records, and other data as may be
necessary for proper administration of the Plan. The Committee shall
notify the Trustee of any action taken by the Committee and, when
required, shall notify any other interested person or persons.
9.4 ORGANIZATION AND OPERATION OF COMMITTEE. (a) The Com-
mittee shall act by majority vote of its members at the time in
office, and such action may be taken either by a vote at a meeting or
in writing without a meeting. The signature of any one of the members
will be sufficient to authorize Committee action.
(b) The Committee may authorize any one of the members or
any other person to execute any document on behalf of the Committee,
in which event the Committee shall notify the Trustee in writing of
such action and the name or names of such member or person. The
Trustee thereafter shall accept and rely upon any document executed by
such member or persons as representing action by the Committee, until
the Committee shall file with the Trustee a written revocation of such
designation.
(c) The Committee may adopt such bylaws and regulations as
it deems desirable for the conduct of its affairs and may appoint such
accountants, counsel, specialists, and other persons as it deems
necessary or desirable in connection with the administration of the
Plan. The Committee shall be entitled to rely conclusively upon, and
shall be fully protected by the Company in any action taken by it in
good faith in relying upon, any opinions or reports that shall be
furnished to it by any such accountant, counsel, or other specialist.
9.5 CLAIMS PROCEDURE. Claims for benefits under the Plan
shall be made in writing to the Committee. In the event a claim for
149
benefits is wholly or partially denied by the Committee, the Committee
shall, within a reasonable period of time, but no later than ninety
(90) days after receipt of the claim, notify the claimant in writing
of the denial of the claim. If the claimant shall not be notified in
writing of the denial of the claim within ninety (90) days after it is
received by the Committee, the claim shall be deemed denied. A notice
of denial shall be written in a manner calculated to be understood by
the claimant, and shall contain (a) the specific reason or reasons for
denial of the claim, (b) a specific reference to the pertinent Plan
provisions upon which the denial is based, (c) a description of any
additional material or information necessary for the claimant to
perfect the claim, together with an explanation of why such material
or information is necessary, and (d) an explanation of the Plan's
review procedure. Within sixty (60) days of the receipt by the
claimant of the written notice of denial of the claim, or within sixty
(60) days after the claim is deemed denied as set forth above, if ap-
plicable, the claimant may file a written request with the Committee
that it conduct a full and fair review of the denial of the claimant's
claim for benefits, including the conducting of a hearing, if deemed
necessary by the Committee. In connection with the claimant's appeal
of the denial of his benefit, the claimant may review pertinent
documents and may submit issues and comments in writing. The
Committee shall render a decision on the claim appeal promptly, but
not later than sixty (60) days after the receipt of the claimant's
request for review, unless special circumstances (such as the need to
hold a hearing, if necessary), require an extension of time for
processing, in which case the sixty (60) day period may be extended to
one hundred and twenty (120) days. The Committee shall notify the
claimant in writing of any such extension. The decision upon review
shall (a) include specific reasons for the decision, (b) be written in
a manner calculated to be understood by the claimant and (c) contain
specific references to the pertinent Plan provisions upon which the
decision is based.
9.6 EXPENSES. All proper expenses related to the Trustee
and recordkeeping fees in connection with the operation of the Plan,
including check charges for distributions made under Article VII of
the Plan, shall be paid by the Company. Costs relating to de minimis
corrective adjustments to Participants' Accounts or Investment Funds
shall be deemed administrative expenses of the Plan and shall first be
paid out of forfeitures allocable under Section 6.10, and then out of
amounts described in subsection 6.9(c). All other costs, including
costs and expenses of litigation involving the Plan and losses, if
any, of the Plan of any kind or character, shall be deemed expenses of
the Plan and shall be borne by the Plan, and paid out of the Plan
assets, except to the extent the Board elects to have such expenses
paid directly by the Company.
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ARTICLE X
TRUST AGREEMENT
---------------
10.1 ESTABLISHMENT OF TRUST. A Trust has been created and
shall be maintained for the purposes of the Plan. All contributions
under the Plan shall be paid into the Trust. The Trust Fund shall be
held, invested and disposed of by the Trustee from time to time acting
in accordance with the Trust Agreement. All withdrawals and
distributions payable under the Plan shall be paid solely from the
Trust Fund.
ARTICLE XI
INVESTMENT FUNDS
----------------
11.1 INVESTMENT FUNDS. The Adjusted Balance of each Parti-
cipant's Savings Account, Transfer Account, Matching Contributions
Account, Rogers Account, Sanford Account, Anchor Account, Intercraft
Account and Levolor Account shall be invested in the various
Investment Funds described in the schedule attached to the Trust
Agreement.
11.2 INITIAL INVESTMENT. All Earnings Deferral
Contributions, Matching Contributions and Rollover Contributions
received by the Trustee shall be allocated among the Investment Funds
no later than the close of business of the business day next following
receipt by the Trustee of such Contributions in accordance with
Participants' selection of Investment Funds pursuant to Section 11.3.
In the event that Contributions cannot be allocated among the
Investment Funds on the business day next following receipt by the
Trustee, such Contributions shall be initially invested in such short
term investment obligations as are selected by the Trustee pending
such allocation.
11.3 SELECTION OF INVESTMENT FUNDS. (a) Each Participant
shall complete an investment election form provided by the Committee
directing that his Earnings Deferral Contributions, Matching
Contributions and Rollover Contribution be invested, in specified
multiples of ten percent (10%), in any of the Investment Funds.
(b) Each Participant shall have the right to modify the
direction made in paragraph (a) above with respect to subsequent
Earnings Deferral Contributions, Matching Contributions and Rollover
Contributions under the Plan.
(c) Each Participant shall have the right to direct that
the portion of his Savings Account, Transfer Account, Matching
Contributions Account, Rogers Account, Sanford Account, Anchor
Account, Intercraft Account and Levolor Account held in any one
Investment Fund be transferred, in whole or in part, to any other
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Investment Fund. This direction shall not be made more than one time
each month, and shall be made by designating the whole percentage of
the Adjusted Balance of such Accounts that is to be divided among the
various applicable Funds as of the date set forth in paragraph (d)
next below.
(d) Any direction by a Participant pursuant to this Section
shall be given to the Committee or to the recordkeeper acting on
behalf of the Trustee. Any such direction given to the Committee
shall be effective as of the Participant's next Wage Payment Period
designated by him if such direction, on such forms as shall be
required by the Committee is received within a reasonable time, as
prescribed by the Committee, prior to the beginning of such Period.
Any such direction given to the recordkeeper shall be pursuant to
rules it establishes, and shall be given no later than the close of
business on the business day preceding the business day for which such
direction is to be given effect.
(e) The recordkeeper as shall be appointed by the Committee
shall separately account for the interests of each Participant in the
several Investment Funds. Each Investment Fund may be invested as a
single fund, however, without segregation of Fund assets to represent
the interests of Participants.
(f) The portion of any Account invested in the Newell
Common Stock Fund will be charged a fee of $.05 per each equivalent
share of Newell Common Stock at the time it is credited to such
Account.
11.4 INVESTMENT OF ANCHOR ACCOUNT. (a) Within a reasonable
time prior to January 1, 1989, each Participant who was expected to
have an Anchor Account established under the Plan was given the
opportunity to direct that his Anchor Account be invested, in
specified multiples of ten percent (10%), in any of the Investment
Funds.
(b) Each Participant for whom an Anchor Account has been
established shall have the right to direct a transfer of amounts held
in any one Investment Fund to any other Investment Fund in accordance
with the provisions of Section 11.3(c).
11.5 REGISTRATION OF NEWELL COMMON STOCK. All shares of
Newell Common Stock acquired by the Trustee shall be held in the
possession of the Trustee until disposed of pursuant to provisions of
the Plan and Trust. Such securities may be registered in the name of
the Trustee or its nominee or deposited with a depository.
11.6 INVESTMENT OF ROGERS ACCOUNT. (a) Within a reasonable
time prior to the transfer of assets from the Rogers Plan, each
Participant who was expected to have a Rogers Account established
under the Plan was given the opportunity to direct that his Rogers
Account be invested, in specified multiples of ten percent (10%), in
any of the Investment Funds.
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(b) Each Participant for whom a Rogers Account has been
established shall have the right to direct a transfer of amounts held
in any one Investment Fund to any other Investment Fund in accordance
with the provisions of Section 11.3(c).
11.7 INVESTMENT OF SANFORD ACCOUNT. (a) Within a
reasonable time prior to the transfer of assets from the Sanford Plan,
each Participant who was expected to have a Sanford Account
established under the Plan was given the opportunity to direct that
his Sanford Account be invested, in specified multiples of ten percent
(10%), in any of the Investment Funds.
(b) Each Participant for whom a Sanford Account has been
established shall have the right to direct a transfer of amount held
in any one Investment Fund to any other Investment Fund in accordance
with the provisions of Section 11.3(c).
11.8 INVESTMENT OF INTERCRAFT ACCOUNT. (a) Within a
reasonable time prior to the transfer of assets from the Intercraft
Plan, each Participant who was expected to have an Intercraft Account
established under the Plan was given the opportunity to direct that
his Intercraft Account be invested, in specified multiples of ten
percent (10%), in any of the Investment Funds.
(b) Each Participant for whom an Intercraft Account has
been established shall have the right to direct a transfer of amounts
held in any one Investment Fund to any other Investment Fund in
accordance with the provisions of Section 11.3(c).
11.9 INVESTMENT OF LEVOLOR ACCOUNT. (a) Within a
reasonable time prior to the transfer of assets from the Levolor Plan,
each Participant who was expected to have an Levolor Account
established under the Plan was given the opportunity to direct that
his Levolor Account be invested, in specified multiples of ten percent
(10%), in any of the Investment Funds.
(b) Each Participant for whom a Levolor Account has been
established shall have the right to direct a transfer of amounts held
in any one Investment Fund to any other Investment Fund in accordance
with the provisions of Section 11.3(c).
11.10 DEFAULT OF INVESTMENT ELECTION. Any portion of a
Participant's Account that as of May 1, 1993 was invested by the
Trustee in the Merrill Lynch Ready Assets Fund due to the
Participant's failure to direct the investment thereof pursuant to the
terms of the Plan, to the extent identifiable, and all identifiable
earnings thereon, shall be invested in accordance with the most recent
investment election received from the Participant with respect to
other amounts in his Account. If no such investment election has been
received from the Participant, such portion of his Account shall be
divided equally and invested in each of the Investment Funds described
in the schedule attached to the Trust Agreement, subject to the
minimum amount requirements of each Fund, until such time as the
Trustee is directed otherwise by the Participant. Any portion of a
Participant's Account that as of May 1, 1993 was invested in the
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Merrill Lynch Ready Assets Fund due to the Participant's failure to
direct the investment thereof pursuant to the terms of the Plan,
including the earnings thereon, that are not identifiable shall remain
invested in such Fund until the Trustee is directed otherwise by the
Participant.
ARTICLE XII
AMENDMENT AND TERMINATION
--------------------------
12.1 AMENDMENT OF PLAN. The Company shall have the right to
amend the Plan at any time and from time to time by resolution of the
Board, and all Employers and all persons claiming any interest
hereunder shall be bound thereby; provided, however, that no amendment
shall have the effect of: (i) directly or indirectly divesting the
interest of any Participant in any amount that he would have received
had he terminated his employment with all Employers immediately prior
to the effective date of such amendment, or the interest of any
Beneficiary or Surviving Spouse as such interest existed immediately
prior to the effective date of such amendment; (ii) directly or
indirectly affecting the vested interest of a Participant under the
Plan as determined by Sections 6.8 and 14.4 unless the conditions of
Section 203(c) of ERISA are satisfied; (iii) vesting in any Employer
any right, title or interest in or to any Trust assets; (iv) causing
or effecting discrimination in favor of officers, shareholders, or
Highly Compensated Eligible Employees; or (v) causing any part of the
Plan assets to be used for any purpose other than for the exclusive
benefit of the Participants and their Beneficiaries and Surviving
Spouses.
12.2 VOLUNTARY TERMINATION OF OR PERMANENT DISCONTINUANCE OF
CONTRIBUTIONS TO THE PLAN. The Company shall have the right to
terminate the Plan in whole or in part, or to permanently discontinue
contributions to the Plan, at any time by resolution of its Board and
by giving written notice of such termination or permanent discontinu-
ance to the Trustee. Such resolution shall specify the effective date
of termination or permanent discontinuance, which shall not be earlier
than the first day of the Plan Year which includes the date of the
resolution.
12.3 INVOLUNTARY TERMINATION OF PLAN. The Plan shall auto-
matically terminate if the Company is legally adjudicated a bankrupt,
makes a general assignment for the benefit of creditors, or is
dissolved. In the event of the merger or consolidation of the Company
into or with any other corporation, respectively, or in the event
substantially all of the assets of the Company shall be transferred to
another corporation, the successor corporation resulting from the con-
solidation or merger, or transfer of such assets, as the case may be,
shall have the right to adopt and continue the Plan and succeed to the
position of the Company hereunder. If, however, the Plan is not so
adopted within ninety (90) days after the effective date of such
consolidation, merger or sale, the Plan shall automatically be deemed
terminated as of the effective date of such transaction. Nothing in
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this Plan shall prevent the dissolution, liquidation, consolidation or
merger of the Company, or the sale or transfer of all or substantially
all of its assets.
12.4 PAYMENTS ON TERMINATION OF, OR PERMANENT DISCONTINUANCE
OF CONTRIBUTIONS TO, THE PLAN. If the Plan is terminated as herein
provided, or if it should be partially terminated, or upon the
complete discontinuance of Employer contributions to the Plan, the
following procedure shall be followed, except that in the event of a
partial termination it shall be followed only in case of those
Participants, Beneficiaries and Surviving Spouses directly affected:
(a) The Committee may continue to administer the Plan, but
if it fails to do so, its records, books of account and other
necessary data shall be turned over to the Trustee and the Trustee
shall act on its own motion as hereinafter provided.
(b) Notwithstanding any other provisions of the Plan all
interests of Participants shall continue to be fully vested and
nonforfeitable.
(c) The value of the Trust Fund and the Accounts of all
Participants, Beneficiaries and Surviving Spouses shall be determined
as of the date of termination or discontinuance.
(d) Distribution to Participants, Beneficiaries and
Surviving Spouses shall be made at such time after termination of or
discontinuance of contributions to the Plan as provided in Section 7.5
above and not later than the time specified in Section 7.5.
ARTICLE XIII
MISCELLANEOUS
-------------
13.1 DUTY TO FURNISH INFORMATION AND DOCUMENTS. Partici-
pants and their Beneficiaries and Surviving Spouses must furnish to
the Committee and the Trustee such evidence, data or information as
the Committee considers necessary or desirable for the purpose of
administering the Plan, and the provisions of the Plan for each person
are upon the condition that he will furnish promptly full, true, and
complete evidence, data, and information requested by the Committee.
All parties to, or claiming any interest under, the Plan hereby agree
to perform any and all acts, and to execute any and all documents and
papers, necessary or desirable for carrying out the Plan and the
Trust.
13.2 STATEMENTS AND AVAILABLE INFORMATION. The Committee
shall advise its Employees of the eligibility requirements and
benefits under the Plan. As soon as practicable after the end of each
calendar year, the Committee shall provide each Participant, and each
former Participant and Beneficiary or Surviving Spouse with respect to
whom an Account is maintained, with a statement reflecting the
current status of his Accounts including the Adjusted Balance thereof.
155
No Participant shall have the right to inspect the records reflecting
the Account of any other Participant. The Committee shall make
available for inspection at reasonable times by Participants and Bene-
ficiaries or Surviving Spouses, copies of the Plan, any amendments
thereto, Plan summary, and all reports of Plan and Trust operations
required by law.
13.3 NO ENLARGEMENT OF EMPLOYMENT RIGHTS. Nothing contained
in the Plan shall be construed as a contract of employment between any
Employer and any person, nor shall the Plan be deemed to give any
person the right to be retained in the employ of any Employer or limit
the right of any Employer to employ or discharge any person with or
without cause, or to discipline any Employee.
13.4 APPLICABLE LAW. All questions pertaining to the
validity, construction and administration of the Plan shall be
determined in conformity with the laws of Illinois to the extent that
such laws are not preempted by ERISA and valid regulations published
thereunder.
13.5 NO GUARANTEE. None of the Trustee, the Committee and
any Employer in any way guarantees the Trust Fund from loss or
depreciation nor the payment of any benefits which may be or become
due to any person from the Trust Fund. No Participant or other person
shall have any recourse against the Trustee, the Committee or any
Employer if the Trust Fund is insufficient to provide Plan benefits in
full. Nothing herein contained shall be deemed to give any
Participant, former Participant, or Beneficiary or Surviving Spouse an
interest in any specific part of the Trust Fund or any other interest
except the right to receive benefits out of the Trust Fund in ac-
cordance with the provisions of the Plan and Trust.
13.6 UNCLAIMED FUNDS. Each Participant shall keep the Com-
mittee informed of his current address and the current address of his
Surviving Spouse, Beneficiary or Beneficiaries. None of the
Committee, the Trustee and any Employer shall be obligated to search
for the whereabouts of any person. If the location of a Participant
is not made known to the Committee within three years after the date
on which distribution of the Participant's accounts may first be made,
distribution may be made as though the Participant had died at the end
of the three-year period. If, within one additional year after such
three year period has elapsed, or, within three years after the actual
death of a Participant, the Committee is unable to locate any indi-
vidual who would receive a distribution under the Plan upon the death
of the Participant pursuant to Section 7.2 of the Plan, the Adjusted
Balance in the Participant's Account shall be deemed a forfeiture and
shall be used to reduce Matching Contributions to the Plan for the
Plan Year next following the year in which the forfeiture occurs and
for succeeding years to the extent necessary; provided, however, that
in the event that the Participant or a Beneficiary or Surviving Spouse
makes a valid claim for any amount that has been forfeited, the
benefits that have been forfeited shall be reinstated.
13.7 MERGER OR CONSOLIDATION OF PLAN. Any merger or
consolidation of the Plan with another plan, or transfer of Plan
156
assets or liabilities to any other plan, shall be effected in
accordance with such regulations, if any, as may be issued pursuant to
Section 208 of ERISA, in such a manner that each Participant in the
Plan would receive, if the merged, consolidated or transferee plan
were terminated immediately following such event, a benefit which is
equal to or greater than the benefit he would have been entitled to
receive if the Plan had terminated immediately before such event.
13.8 INTEREST NON-TRANSFERABLE. (a) Except as provided in
Article VIII of the Plan, no interest of any person or entity in, or
right to receive distributions from, the Trust Fund shall be subject
in any manner to sale, transfer, assignment, pledge, attachment,
garnishment, or other alienation or encumbrance of any kind; nor may
such interest or right to receive distributions be taken, either
voluntarily or involuntarily, for the satisfaction of the debts of, or
other obligations or claims against, such person or entity, including
claims for alimony, support, separate maintenance and claims in
bankruptcy proceedings. The Account of any Participant, however,
shall be subject to and payable in accordance with the applicable
requirements of any qualified domestic relations order, as that term
is defined in Section 206(d)(3) of ERISA, and the Committee shall
direct the Trustee to provide for payment from a Participant's Account
in accordance with such order and with the provisions of Section
206(d)(3) of ERISA and any regulations promulgated thereunder. All
such payments pursuant to a qualified domestic relations order shall
be subject to reasonable rules and regulations promulgated by the
Committee respecting the time of payment pursuant to such order and
the valuation of the Participant's Account from which payment is made;
provided, that all such payments are made in accordance with such
order and Section 206(d)(3). A payment from a Participant's Account
may be made to an alternate payee (as defined in Section 414(p)(8) of
the Code) prior to the date the Participant reaches his earliest
retirement age (as defined in Section 414(p)(4)(B) of the Code) if
such payments are made pursuant to a qualified domestic relations
order. The balance of an Account that is subject to any qualified
domestic relations order shall be reduced by the amount of any payment
made pursuant to such order.
(b) Notwithstanding paragraph (a) next above, if any
Participant borrows money pursuant to Article VIII of the Plan, the
Trustee and the Committee shall have all rights to collect upon such
indebtedness as are granted pursuant to Article VIII of the Plan and
any agreements or documents executed in connection with such loan.
13.9 PRUDENT MAN RULE. Notwithstanding any other provision
of the Plan and the Trust Agreement, the Trustee and the Committee
shall exercise their powers and discharge their duties under the Plan
and the Trust Agreement for the exclusive purpose of providing
benefits to Employees and their Beneficiaries and Surviving Spouses,
and shall act with the care, skill, prudence and diligence under the
circumstances that a prudent man acting in a like capacity and
familiar with such matters would use in the conduct of an enterprise
of a like character and with like aims. Subject to the terms of the
preceding sentence and the provisions of Article XI, the Trustee shall
diversify investments of the Trust Fund so as to minimize the risk of
157
large losses, unless under the circumstances it is clearly prudent not
to do so.
13.10 LIMITATIONS ON LIABILITY. Notwithstanding any
other provisions of the Plan or the Trust, none of the Trustees, the
Committee, any member thereof, any Employer or Affiliated Employer and
each individual acting as an employee or agent of any of them shall be
liable to any Participant, former Participant, Beneficiary, or
Surviving Spouse for any claim, loss, liability or expense incurred in
connection with the Plan or the Trust, except when the same shall have
been judicially determined to be a result of liability under Part 4 of
Title I of ERISA or due to the gross negligence or willful misconduct
of such person. The Company shall indemnify and hold harmless each
Trustee, Committee member, employee of the Company, or any individual
acting as an employee or agent of any of them or the Company (to the
extent not indemnified or held harmless under any liability insurance
or any other indemnification arrangement with respect to the Plan or
the Trust) from any and all claims, losses, liabilities, costs and
expense (including attorneys' fees) arising out of any actual or
alleged act or failure to act with respect to the administration of
the Plan or the Trust, except that no indemnification or defense shall
be provided to any person with respect to conduct which has been
judicially determined, or agreed by the parties, to have constituted
bad faith or willful misconduct on the part of such person, or to have
resulted in his receipt of personal profit or advantage to which he is
not entitled. In connection with the indemnification provided by the
preceding sentence, expenses incurred in defending a civil or criminal
action, suit or proceeding, or incurred in connection with a civil or
criminal investigation, may be paid by the Company in advance of the
final disposition of such action, suit, proceeding, or investigation,
as authorized by the Board in the specific case, upon receipt of an
undertaking by or on behalf of the party to be indemnified to repay
such amount, unless it shall ultimately be determined that he is
entitled to be indemnified by the Company pursuant to this Section.
The preceding provisions of this Section shall not apply to any
claims, losses, liabilities, costs and expenses arising out of any
actual or alleged act or failure to act of a Participant, or any
individual acting as an employee or agent of a Participant, in the
selection of investment media for his Account, or the investment of
the assets in his Account.
13.11 HEADINGS. The headings in this Plan are inserted
for convenience of reference only and are not to be considered in
construction of the provisions hereof.
13.12 GENDER AND NUMBER. Except when otherwise required
by the context, any masculine terminology in this document shall
include the feminine, and any singular terminology shall include the
plural.
13.13 ERISA AND APPROVAL UNDER INTERNAL REVENUE CODE.
This Plan is intended to qualify as a Plan and Trust meeting the
requirements of Sections 401 and 501(a) of the Code, as now in effect
or hereafter amended, so that the income of the Trust Fund may be
exempt from taxation under Section 501(a) of the Code, contributions
158
of the Company under the Plan may be deductible for Federal income tax
purposes under Section 404 of the Code, and amounts subject to Long-
Term Savings Agreements are not treated as distributed to Participants
for Federal income tax purposes under Section 402(a)(8) of the Code,
all as now in effect or hereafter amended. Any modification or
amendment of the Plan and/or Trust may be made retroactively, as
necessary or appropriate, to establish and maintain such qualification
and to meet any requirement of the Code or ERISA.
13.14 EXCLUSIVE BENEFIT OF EMPLOYEES. All contributions
made pursuant to the Plan shall be held by the Trustee in accordance
with the terms of the Trust Agreement for the exclusive benefit of
those Employees who are Participants under the Plan, including former
Participants and their Beneficiaries and Surviving Spouses, and shall
be applied to provide benefits under the Plan and to pay expenses of
administration of the Plan and the Trust, to the extent that such
expenses are not otherwise paid. At no time prior to the satisfaction
of all liabilities with respect to such Employees and their Bene-
ficiaries shall any part of the Trust Fund (other than such part as
may be required to pay administration expenses and taxes), be used
for, or diverted to, purposes other than for the exclusive benefit of
such Employees and their Beneficiaries and Surviving Spouses.
However, without regard to the provisions of this Section
13.14: (a) if any contribution under the Plan is conditioned on
initial qualification of the Plan under Section 401 of the Code and if
the Plan receives an adverse determination with respect to its initial
qualification, nothing in this Section 13.14 shall prohibit the return
of such contribution to the Employers within one calendar year after
such determination, but only if the application for determination is
made by the time prescribed by law for filing the Company's return for
the taxable year in which the Plan is adopted, or such later date as
the Secretary of the Treasury may prescribe, (b) if a contribution is
conditioned upon the deductibility of the contribution under
Section 404 of the Code, then, to the extent the deduction is
disallowed, the Trustee shall, upon written request of an Employer,
return the contribution (to the extent disallowed), to the Employer
within one year after the date the deduction is disallowed; and (c) if
a contribution or any portion thereof is made by an Employer by a
mistake of fact, the Trustee shall, upon written request of the
Employer, return the contribution or such portion to the Employer
within one year after the date of payment to the Trustee; and (d)
earnings attributable to amounts to be returned to an Employer
pursuant to (b) or (c) above shall not be returned, and losses
attributable to amounts to be returned pursuant to (b) or (c) shall
reduce the amount so returned.
13.15 EXTENSION OF PLAN TO AFFILIATED EMPLOYERS.
(a) With the approval of the Board, any Affiliated Employer may adopt
the Plan and become a party to the Trust Agreement, and may qualify
its Employees to become Participants in the Plan, by taking proper
action to adopt the Plan. Any Affiliated Employer that adopts the Plan
shall become an Employer hereunder.
(b) The Plan will terminate with respect to any Affiliated
Employer that has adopted the Plan pursuant to this Section, or that
159
is listed in Appendix A hereto, if the Affiliated Employer ceases to
be an Affiliated Employer, revokes its adoption of the Plan by
appropriate corporate action, permanently discontinues its contribu-
tions on behalf of its Eligible Employees, is judicially declared
bankrupt, makes a general assignment for the benefit of creditors, or
is dissolved. If the Plan is terminated or contributions are
discontinued with respect to any Affiliated Employer the provisions of
Article XII shall apply to the interest in the Plan of the Employees
of such Affiliated Employer, and their Beneficiaries and Surviving
Spouses.
(c) The Company shall act as the agent for each Affiliated
Employer that adopts the Plan, or that is listed in Appendix A hereto,
for all purposes of administration thereof.
13.16 SECTION 16 OF THE SECURITIES EXCHANGE ACT OF 1934.
Notwithstanding anything to the contrary contained in the Plan, in no
event shall any provision hereof be given effect to the extent that
such provision may result in a violation of Section 16 of the
Securities Exchange Act of 1934 or the rules promulgated thereunder.
The Committee shall have the sole discretion to establish, adopt and
modify administrative procedures to insure compliance with Section 16
and all related rules, which procedures shall be binding on all
Participants.
13.17 SEVERABILITY. Each of the Sections contained in
the Plan shall be enforceable independently of every other Section in
the Plan, and the invalidity or nonenforceability of any Section shall
not invalidate or render nonenforceable any other section contained
herein. If any Section or provision in a Section is found invalid or
unenforceable, it is the intent of the parties that a court of
competent jurisdiction shall reform the Section or provisions to
produce its nearest enforceable economic equivalent.
ARTICLE XIV
TOP-HEAVY PROVISIONS
--------------------
14.1 TOP-HEAVY STATUS. The provisions of this Article shall
not apply to the Plan with respect to any Plan Year for which the Plan
is not Top-Heavy (except as provided in paragraphs (b) and (c) of
Section 14.4). If the Plan is or becomes Top-Heavy in any Plan Year,
the provisions of this Article XIV will supersede any conflicting
provisions elsewhere in the Plan.
14.2 DEFINITIONS. For purposes of this Article XIV, the
following words and phrases shall have the meanings stated below
unless a different meaning is plainly required by the context:
(a) "Compensation" shall, solely for purposes of this
Article XIV, have the meaning set forth in Section 414(q)(7) of the
Code. In no event shall the Compensation taken into account for a
Participant under the Plan for any Plan Year exceed (a) $200,000 (or
160
such greater amount provided pursuant to Section 401(a)(17) of the
Code), in Plan Years commencing on and after January 1, 1989 and prior
to January 1, 1994. For Plan Years commencing on and after January 1,
1994, subsections 1.14(b) through (d) shall apply with respect to
Compensation for purposes of this Article XIV.
(b) "Determination Date" shall mean, with respect to any
Plan Year: (i) the last day of the preceding Plan Year, or (ii) in the
case of the first Plan Year of the Plan, the last day of such Plan
Year.
(c) "Key Employee" shall mean an Employee meeting the
definition of "key employee" contained in Section 416(i)(1) of the
Code and the Treasury Regulations and other governmental releases
interpreting said Section. For purposes of applying such definition,
"Compensation" shall have the meaning set forth in Section 14.2(a)
above.
(d) "Non-key Employee" shall mean any Employee who is not a
Key Employee.
(e) "Permissive Aggregation Group Plan" shall mean any plan
of the Company or an Affiliated Employer that is not in the Required
Aggregation Group and that, when considered with the Required Aggre-
gation Group Plans, meets the requirements of Section 401(a)(4) and
410 of the Code.
(f) "Required Aggregation Group Plan" shall mean (1) each
plan of the Company or an Affiliated Employer in which a Key Employee
is a participant, and (2) each other plan of the Company or an
Affiliated Employer that enables any plan described in (1) to meet the
requirements of Sections 401(a)(4) and 410 of the Code.
(g) "Valuation Date" shall mean with respect to a
particular Determination Date, the most recent date for valuation of
the Investment Fund occurring within a twelve (12) month period ending
on the applicable Determination Date and used for computing Plan costs
for purposes of the minimum funding requirements of the Code.
14.3 DETERMINATION OF TOP-HEAVY STATUS. (a) The Plan will
be "Top-Heavy" with respect to any Plan Year if, as of the
Determination Date applicable to such Year, the ratio of the Adjusted
Balances in the Accounts of Key Employees (determined as of the
Valuation Date applicable to such Determination Date) to the Adjusted
Balances in the Accounts of all Employees (determined as of such
Valuation Date) exceeds sixty percent (60%). For purposes of
computing such ratio, and for all other purposes of applying and
interpreting this paragraph (a): (i) the amount of the Accounts of
any Employee shall be increased by the aggregate distributions made
with respect to such Employee under the Plan during the five-year
period ending on any Determination Date, (ii) benefits provided under
all plans that are aggregated pursuant to (b) of this Section must be
considered, and (iii) the provisions of Section 416 of the Code, and
all Treasury Regulations and other governmental releases interpreting
said Section shall be applied. If any Employee has not performed
161
services for the Company or any Affiliated Employer at any time during
the five-year period ending on any Determination Date, the balances of
the accounts of such Employee shall not be taken into consideration
for purposes of determining whether the Plan is Top-Heavy with respect
to the Plan Year to which such Determination Date applies.
(b) For purposes of determining whether the Plan is Top -
Heavy, all qualified retirement plans that are Required Aggregation
Group Plans shall be aggregated. All qualified retirement plans that
are Permissive Aggregation Group Plans shall be aggregated only to the
extent permitted by Section 416 of the Code and Treasury Regulations
promulgated thereunder elected by the Company.
14.4 VESTING. (a) If the Plan becomes Top-Heavy, the
vested interest of a Participant in the portion of his Matching
Contributions Account referred to in paragraph (d) below shall be
determined in accordance with the following formula in lieu of the
formula set forth in Section 6.8, unless the Participant would have a
greater vested interest under Section 6.8:
Vested Forfeitable
Years of Service Percentage Percentage
---------------- ---------- ------------
Fewer than 2 years 0% 100%
2 years 20% 80%
3 years 40% 60%
4 years 60% 40%
5 years or more 100% 0%
For purposes of the above schedule, years of Service shall include all
years of Service required to be counted under Section 411(a) of the
Code, disregarding all years of Service permitted to be disregarded
under Section 411(a)(4) of the Code.
(b) The vesting schedule set forth in paragraph (a) next
above shall apply to all amounts allocated to a Participant's Matching
Contributions Account while the Plan is Top-Heavy and during the
period of time before the Plan becomes Top-Heavy. This vesting
schedule shall not apply to the Matching Contributions Account of any
Employee who does not have an Hour of Service after the Plan becomes
Top-Heavy.
(c) If the Plan becomes Top-Heavy and subsequently ceases
to be Top-Heavy, the vesting schedule set forth in paragraph (a) of
this Section shall automatically cease to apply, and the vesting
provisions of Section 6.8 above shall automatically apply, with
respect to all amounts allocated to a Participant's Matching
Contributions Account for all Plan Years after the Plan Year with
respect to which the Plan was last Top-Heavy. For purposes of this
paragraph (c), this change in vesting schedules shall only be valid to
the extent that the conditions of Section 411(a)(10) of the Code are
satisfied.
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14.5 MINIMUM CONTRIBUTION. For each Plan Year that the Plan
is Top-Heavy, each Employer will contribute and allocate to the
Savings Account of each Non-key Employee who is eligible to
participate in the Plan and is employed by such Employer on the last
day of such Plan Year an amount equal to the lesser of (i) three
percent (3%) of such Participant's Compensation (as defined in Section
14.2(a)) for such Plan Year and (ii) the largest percentage of
Employer contributions and forfeitures, as a percentage of the Key
Employee's Compensation (as defined in Section 14.2(a)), allocated to
the Savings Account of any Key Employee for such Year. The minimum
contribution allocable pursuant to this Section 14.5 will be deter-
mined without regard to any Earnings Deferral Contributions or
contributions by an Employer for any Employee under the Federal Social
Security Act. A Non-key Employee will not be excluded from an
allocation pursuant
to this Section merely because his Compensation is less than the
stated amount. A Non-key Employee who has become a Participant but
who fails to complete at least 1,000 Hours of Service in a Plan Year
in which the Plan is Top-Heavy shall not be excluded from an
allocation pursuant to this Section. A Non-key Employee who is a
Participant in the Plan and who declined to elect to have Earnings
Deferral Contributions made on his behalf under the Plan for the Plan
Year shall receive an allocation for that Plan Year pursuant to this
Section.
14.6 MAXIMUM ALLOCATION. For purposes of determining
whether the Plan would be Top-Heavy if "90%" were substituted for
"60%" each place it appears in paragraphs (1)(A) and (2)(B) of
Section 416(g) of the Code, as required by Section 416(h) of the Code,
all of the preceding provisions of this Article XV shall be applicable
except that the phrase "90%" shall be substituted for the phrase "60%"
where it appears in paragraph (a) of Section 14.3. If, pursuant to
the preceding sentence, it is determined that the Plan would be Top-
Heavy if "90%" were so substituted for "60%," then for purposes of
applying Sections 415(e) and 416(h) of the Code and Section 6.7 of the
Plan to the allocations to the Accounts of any Participant for any
Limitation Year, "1.0" shall be substituted for "1.25" in each
applicable place in paragraphs (2)(B) and (3)(B) of Section 415(e) of
the Code.
14.7 COLLECTIVE BARGAINING AGREEMENTS. The requirements of
Sections 14.4 and 14.5 shall not apply with respect to any Participant
included in a unit of employees covered by a collective bargaining
agreement between employee representatives and the Company or an
Affiliated Employer if retirement benefits were the subject of good
faith bargaining between such employee representatives and the Company
or an Affiliated Employer.
14.8 PARTICIPATION IN MORE THAN ONE PLAN. In the event that
a Participant is simultaneously covered under this Plan, at a time
when such Plan is Top-Heavy, and a defined benefit plan of the Company
or an Affiliated Employer, at a time when the plan is Top-Heavy, the
Participant shall be entitled only to the defined benefit minimum
163
under the defined benefit plan, and not to the defined contribution
minimum under this Plan.
IN WITNESS WHEREOF, the Company has caused the Plan to be
executed in its name by a duly authorized officer this 12th day of
July, 1993, effective as of May 1, 1993.
NEWELL OPERATING COMPANY
By____________________________
164
EXHIBIT A
---------
FIRST AMENDMENT TO THE
NEWELL LONG TERM SAVINGS AND INVESTMENT PLAN
(As Amended and Restated Effective May 1, 1993)
WHEREAS, Newell Operating Company, a Delaware corporation,
(the "Company") maintains the Newell Long-Term Savings and Investment
Plan, as Amended and Restated Effective May 1, 1993 (the "Plan"); and
WHEREAS, the Company has reserved the right to amend the
Plan and now deems it appropriate to do so;
NOW, THEREFORE, the Plan is hereby amended, effective as of
May 1, 1993, except where otherwise specifically indicated, and with
respect to each Employee who earns an Hour of Service on or after the
applicable effective date, except where otherwise specifically
indicated:
1. The first sentence of Section 1.14 of the Plan is hereby
amended to read as follows:
"'Compensation' means a Participant's total earnings from
the Company and all Affiliated Employers paid during a Plan
Year for services rendered, including the regular rate
portion of overtime pay, commissions and any lump sum
payments received in lieu of an increase in such
Participant's base pay (as agreed upon by the Company and
any collective bargaining unit during the term of the
applicable collective bargaining agreement), but excluding
any bonuses, the premium rate portion of overtime pay,
moving expenses, automobile expenses, stock options,
contributions or benefits under this Plan or any other
pension, profit sharing, insurance, hospitalization or other
plan or policy maintained by any Employer for the benefit of
such Participant, and all other extraordinary and unusual
payments."
2. Section 1.14 of the Plan is hereby amended, effective as of
January 1, 1994, by deleting the second sentence and adding a final
sentence to read as follows:
"In no event shall the Compensation taken into account for
an Employee under the Plan for any Plan Year exceed (a)
$200,000 (or such greater amount provided pursuant to
Section 401(a)(17) of the Code), in Plan Years commencing on
and after January 1, 1989 and prior to January 1, 1994."
3. Section 1.14 of the Plan is further amended, effective
January 1, 1994, by designating the first paragraph as subsection (a)
and adding new subsections (b) through (d) to read as follows:
165
"(b) In addition to other applicable limitations set
forth in the Plan and notwithstanding any other provision of
the Plan to the contrary, for Plan Years beginning on or
after January 1, 1994, the annual Compensation of each
Participant taken into account under the Plan shall not
exceed the OBRA '93 annual Compensation limit. The OBRA '93
annual Compensation limit is $150,000, as adjusted by the
Commissioner for increases in the cost of living in
accordance with Section 401(a)(17)(B) of the Code. The
cost-of-living adjustment in effect for a calendar year
applies to any period, not exceeding 12 months, over which
Compensation is determined (determination period) beginning
in such calendar year. If a determination period consists
of fewer than 12 months, the OBRA '93 annual Compensation
limit will be multiplied by a fraction, the numerator of
which is the number of months in the determination period,
and the denominator of which is 12.
(c) For Plan Years beginning on or after January 1,
1994, any reference in this Plan to the limitation under
Section 401(a)(17) of the Code shall mean the OBRA '93
annual Compensation limit set forth in this provision.
(d) If Compensation for any prior determination period
is taken into account in determining a Participant's
benefits accruing in the current Plan Year, the Compensation
for that prior determination period is subject to the OBRA
'93 annual Compensation limit in effect for that prior
determination period. For this purpose, for determination
periods beginning before the first day of the first Plan
Year beginning on or after January 1, 1994, the OBRA '93
annual Compensation limit is $150,000."
4. The second sentence of Section 1.15 of the Plan is hereby
amended, effective as of January 1, 1994, to read as follows:
"In no event shall the Earnings taken into account for an
Employee under the Plan for any Plan Year exceed (a)
$200,000 (or such greater amount provided pursuant to
Section 401(a)(17) of the Code), in Plan Years commencing on
and after January 1, 1989 and prior to January 1, 1994."
5. Section 1.15 of the Plan is further amended, effective
January 1, 1994, by designating the first paragraph as subsection (a)
and adding new subsections (b) through (d) to read as follows:
"(b) In addition to other applicable limitations set
forth in the Plan and notwithstanding any other provision of
the Plan to the contrary, for Plan Years beginning on or
after January 1, 1994, the annual Earnings of each
Participant taken into account under the Plan shall not
exceed the OBRA '93 annual Compensation limit. The OBRA '93
166
annual Compensation limit is $150,000, as adjusted by the
Commissioner for increases in the cost of living in
accordance with Section 401(a)(17)(B) of the Code. The
cost-of-living adjustment in effect for a calendar year
applies to any period, not exceeding 12 months, over which
Earnings are determined (determination period) beginning in
such calendar year. If a determination period consists of
fewer than 12 months, the OBRA '93 annual Compensation limit
will be multiplied by a fraction, the numerator of which is
the number of months in the determination period, and the
denominator of which is 12.
(c) For Plan Years beginning on or after January 1,
1994, any reference in this Plan to the limitation under
Section 401(a)(17) of the Code shall mean the OBRA '93
annual Compensation limit set forth in this provision.
(d) If Earnings for any prior determination period are
taken into account in determining a Participant's benefits
accruing in the current Plan Year, the Earnings for that
prior determination period are subject to the OBRA '93
annual Compensation limit in effect for that prior
determination period. For this purpose, for determination
periods beginning before the first day of the first Plan
Year beginning on or after January 1, 1994, the OBRA '93
annual Compensation limit is $150,000."
6. Section 1.23 of the Plan is hereby amended, effective as of
August 5, 1993, by amending subsection (c)(ii) to read as follows:
"(ii) in the case of Hours referred to in
subsections (b) above and (d) below, for the computation
period or periods in which the period during which no duties
are performed occurs;"
7. Section 1.23 of the Plan is further amended, effective as of
August 5, 1993, by adding a new subsection (d) immediately following
the paragraph designated as subsection (c), to read as follows:
"(d) Solely for purposes of determining an Employee's
eligibility to participate in the Plan under Sections 2.1
and 2.2, Hours of Service shall include an approved leave of
absence granted by an Employer to the Employee on or after
August 5, 1993 pursuant to the Family and Medical Leave Act,
if the Employee returns to work for an Employer at the end
of such leave of absence."
8. Section 1.23 of the Plan is further amended, effective as of
August 5, 1993, by inserting into the second sentence of the final
paragraph thereof the words "or (d)" after the word "(b)".
167
9. Section 1.50 of the Pan is amended, effective as of August
5, 1993, by adding a new paragraph (vi) at the end thereof to read as
follows:
"(vi) Notwithstanding anything to the contrary in
the Plan, Vesting Service shall include any period of time
during which an Employee is on an approved leave of absence
granted by an Employer to the Employee on or after August 5,
1993 pursuant to the Family and Medical Leave Act, if the
Employee returns to work for an Employer at the end of such
leave of absence."
10. Section 6.8 of the Plan is hereby amended, effective as of
October 27, 1993, by redesignating subsections (g), (h) and (i) as
subsections (h), (i) and (j), and inserting a new subsection (g) to
read as follows:
"(g) Each Participant who was employed by the Counselor Borg
Scale Company on October 27, 1993 shall be fully vested in the
Adjusted Balance of his Matching Contributions Account as of
October 27, 1993."
11. Subsection 6.8(h) of the Plan (as resdesignated pursuant to
Item 10 above) is amended, effective as of October 27, 1993, by
deleting the words "(b) or (f)" and inserting "(b), (f) or (g)" in
lieu thereof.
12. Section 7.5 of the Plan is amended, effective with respect
to distributions made on and after January 1, 1993, by adding a new
subsection 7.5(e) to read as follows:
"(e) If a distribution is one to which Sections 401(a)(11)
and 417 of the Code do not apply, such distribution may commence
less than 30 days after the notice required under section
1.411(a)-11(c) of the Income Tax Regulations is given, provided
that:
(i) the Committee clearly informs the Participant that
the Participant has a right to a period of at
least 30 days after receiving the notice to
consider the decision of whether or not to elect a
distribution (and, if applicable, a particular
distribution option), and
(ii) the Participant, after receiving the notice,
affirmatively elects a distribution."
13. Subsection 8.4(b)(iii) of the Plan is hereby amended to read
as follows:
"(iii) the employment of the borrowing Participant
with all Employers is terminated for any reason and the
168
Participant does not become a Former Participant (except to
the extent inconsistent with Section 401(a) of the Code);
provided, however, that in the case of a Participant who
terminates employment with an Employer but immediately
commences employment with the purchaser of substantially all
of the stock or assets of such Employer and continues
employment with such purchaser, any such unpaid balance
shall become due and payable pursuant to this subsection (b)
upon the expiration of a reasonable period of time (as
prescribed by the Committee) following the purchase of the
Employer's stock or assets. During such period, the
Participant shall continue to make payments of the principal
and interest through payroll deductions pursuant to
subsection 8.3(v) of the Plan, or by such other method
deemed appropriate by the Committee."
14. Subsection 14.2(a) of the Plan is hereby amended, effective
as of January 1, 1994, by adding two new sentences thereto to read as
follows:
"In no event shall the Compensation taken into account for a
Participant under the Plan for any Plan Year exceed (a)
$200,000 (or such greater amount provided pursuant to
Section 401(a)(17) of the Code), in Plan Years commencing on
and after January 1, 1989 and prior to January 1, 1994. For
Plan Years commencing on and after January 1, 1994,
subsections 1.14(b) through (d) shall apply with respect to
Compensation for purposes of this Article XIV."
169
IN WITNESS WHEREOF, the Company has caused this First Amendment
to the Plan to be executed on its behalf by its duly authorized
officer as of this 22nd day of February, 1994.
NEWELL OPERATING COMPANY
By: ______________________________
Title ____________________________
170
SECOND AMENDMENT TO THE
NEWELL LONG TERM SAVINGS AND INVESTMENT PLAN
(AS AMENDED AND RESTATED EFFECTIVE MAY 1, 1993)
WHEREAS, Newell Operating Company, a Delaware corporation,
(the "Company") maintains the Newell Long-Term Savings and Investment
Plan, as Amended and Restated Effective May 1, 1993 (the "Plan"); and
WHEREAS, the Company has reserved the right to amend the
Plan and now deems it appropriate to do so;
NOW, THEREFORE, the Plan is hereby amended, effective as of
the dates set forth herein, and with respect to each Employee who
earns an Hour of Service on or after the applicable effective date,
except where otherwise specifically indicated:
1. Section 1.1 of the Plan is hereby amended to read as
follows:
"Account" means all or any one of the Savings Account,
Matching Contributions Account, Transfer Account, Rogers
Account, Anchor Account, Intercraft Account and/or Levolor
Account maintained by the Trustee for an individual
Participant, surviving Spouse or Beneficiary.
2. Section 1.3 of the Plan is hereby amended to read as
follows:
"Adjusted Balance" means the balance in a Participant's
Savings Account, Matching Contributions Account, Transfer
Account, Rogers Account, Sanford Account, Anchor Account,
Intercraft Account or Levolor Account.
3. The first sentence of Section 1.19 of the Plan is hereby
amended, effective as of May 1, 1993, to read as follows:
"Employee" means an individual who is employed by an
Employer on or after January 1, 1989 and who is in a covered
classification of Employees, as listed on Appendix A hereto;
provided that "Employee" does not include any individual
covered under the terms and conditions of a collective
bargaining agreement to which any Employer is a party,
unless such agreement provides for the participation of such
individual.
4. The second sentence of Section 1.45 of the Plan is hereby
amended to read as follows:
In no event shall Transfer Accounts include amounts held in
the Anchor Account, the Rogers Account, the Sanford Account,
the Intercraft Account or the Levolor Account.
171
5. Section 1.50 of the Plan is hereby amended by adding new
paragraphs (e) and (f) immediately following paragraph (d) to read as
follows:
(e) for an Employee who was a participant in an
Intercraft Plan, all service, if any, of an Employee with
Intercraft Corporation, or any entity that would satisfy the
definition of Affiliated Employer if Intercraft Corporation
were the Company, counted from the date on which the
Employee first commenced employment and ending on December
31, 1993.
(f) for an Employee who was a participant in the
Levolor Plan, all service, if any, of an Employee with
Levolor Corporation, or any entity that would satisfy the
definition of Affiliated Employer if Levolor Corporation
were the Company, counted from the date on which the
Employee first commenced employment and ending on September
30, 1994.
6. Section 1.50 of the Plan is hereby further amended by
redesignating paragraphs (v) and (vi) as paragraphs (vii) and (viii)
and adding new paragraphs (v) and (vi) immediately following
subsection (iv) to read as follows:
(v) If a Participant's employment under an Intercraft
Plan terminated prior to January 1,1994 and recommences with
the Company or an Affiliated Employer on or after January 1,
1994, the consequences of his absence from employment shall
be determined under the rules regarding Break in Service
contained in the Plan and not under the terms of the
Intercraft Plan.
(vi) If a Participant's employment under the Levolor
Plan terminated prior to October 1, 1994 and recommences
with the Company or an Affiliated Employer on or after
October 1, 1994, the consequences of his absence from
employment shall be determined under the rules regarding
Break in Service contained in the Plan and not under the
terms of the Levolor Plan.
7. Article I of the Plan is hereby amended by adding the
following definitions thereto:
1.53 "Intercraft Account" means the record of money and
assets held by the Trustee for an individual Participant,
Surviving Spouse or Beneficiary pursuant to the provisions
of the Plan, derived from account balances of the accounts
held under the Intercraft Profit Sharing Plan and the
Intercraft Retirement Program as of December 31, 1993. The
Intercraft Account shall consist of sub-accounts
corresponding to the various sub-accounts maintained under
the Intercraft Profit Sharing Plan and the Intercraft
Retirement Program.
172
1.54 "Intercraft Plan" means the Intercraft Company
Employees' Profit Sharing and Variable Investment Plan, as
Amended and Restated Effective January 1, 1989, including
amendments thereto (the "Intercraft Profit Sharing Plan"),
and/or the Intercraft Industries Retirement Program, as
Amended and Restated Effective September 1, 1990, including
amendments thereto (the "Intercraft Retirement Program").
1.55 "Levolor Account" means the record of money and
assets held by the Trustee for an individual Participant,
Surviving Spouse or Beneficiary pursuant to the provisions
of the Plan, derived from account balances of the accounts
held under the Levolor Plan as of September 30, 1994. The
Levolor Account shall consist of sub-accounts corresponding
to the various sub-accounts maintained under the Levolor
Plan.
1.56 "Levolor Plan" means the Levolor Profit Sharing
and 401(k) Plan, as Amended and Restated Effective September
1, 1990, including amendments thereto.
8. Section 2.1 of the Plan is hereby amended by adding a new
paragraph (d) to read as follows:
(d) Notwithstanding the above, (i) each Employee who
was employed by Intercraft Corporation on December 31, 1993
shall become an Eligible Employee on January 1, 1994; and
(ii) each Employee who was employed at the Levolor division
of the Company on September 30, 1994 shall become an
Eligible Employee on October 1, 1994.
9. Section 3.6(b) of the Plan is hereby amended, effective as
of January 1, 1994, to read as follows:
(b) Notwithstanding anything to the contrary contained
elsewhere in the Plan, if a Participant's Earnings Deferral
Contributions are returned pursuant to (a) above, any
Matching Contributions attributable thereto shall be
forfeited and shall be used as described in Section 6.10.
10. The first sentence of Section 6.1 is hereby amended to read
as follows:
The Committee shall create and maintain a separate Savings
Account, Matching Contributions Account, Transfer Account,
Rogers Account, Sanford Account, Anchor Account, Intercraft
Account and Levolor Account for each Participant, as shall
be needed.
11. Section 6.8 of the Plan is hereby amended by redesignating
paragraphs (h), (i) and (j) as paragraphs (j), (k) and (l) and
inserting new paragraphs (h) and (i) thereto to read as follows:
173
(h) Each Participant who was a participant in an
Intercraft Plan shall at all times be fully vested in the
Adjusted Balance of his Intercraft Account.
(i) Each Participant who was a participant in the
Levolor Plan shall at all times be fully vested in the
Adjusted Balance of his Levolor Account.
12. Article VI of the Plan is hereby amended by adding a new
Section 6.13 to read as follows:
6.13 ACCOUNTS TRANSFERRED FROM AN INTERCRAFT PLAN. If
a Participant who was a participant in an Intercraft Plan
prior to January 1, 1994 has accounts transferred from the
Intercraft Plan to this Plan by reason of the merger of the
Intercraft Plan as of January 1, 1994, such transferred
accounts, and the earnings and losses allocable thereto,
shall be held in the Intercraft Account established in the
Participant's name under the Trust.
13. Article VI is hereby further amended by adding a new Section
6.14 to read as follows:
6.14 ACCOUNTS TRANSFERRED FROM THE LEVOLOR PLAN. If a
Participant who was a participant in the Levolor Plan prior
to October 1, 1994 has accounts transferred from the Levolor
Plan to this Plan by reason of the merger of the Levolor
Plan as of October 1, 1994, such transferred accounts, and
the earnings and losses allocable thereto, shall be held in
the Levolor Account established in the Participant's name
under the Trust.
14. The first sentence of Section 7.4 of the Plan is hereby
amended by inserting immediately after the words "Rogers Account" the
words ", Intercraft Account, Levolor Account".
15. The first sentence of Section 7.5 of the Plan is hereby
amended by inserting immediately after the words "Rogers Account" the
words ", Intercraft Account, Levolor Account".
16. Section 7.5 of the Plan is hereby further amended by adding
a new paragraph (f) to read as follows:
(f) A Participant who entered the Levolor Plan prior
to September 1, 1990 and for whom a Levolor Account has been
established under the Plan may elect to have the Adjusted
Balance of the portion of such Levolor Account attributable
to employer profit sharing contributions paid either
pursuant to paragraph (g) below or in the form of a paid-up
annuity policy.
17. Section 7.5 of the Plan is further amended by adding a new
paragraph (g) to read as follows:
174
(g) Notwithstanding the above, the following
provisions of this paragraph (g) apply with respect to the
Adjusted Balance of (i) the portion of a Participant's
Intercraft Account held under the Intercraft Retirement
Program, and (ii) the portion of a Participant's Levolor
Account referred to in paragraph (f) above, in the case of a
Participant who elects payment of such portion in the form
of an annuity pursuant to paragraph (f) above:
(i) Payment for reasons other than death.
(A) Upon termination of a Participant's
employment with all Employers for any reason other
than death, the Committee shall direct the Trustee
to pay such portion as follows:
(I) If the Participant has a Spouse at
the date payments to him are to commence,
such amount shall be payable to the
Participant in the form of a Joint and
Survivor Annuity. However, the Participant,
with the consent of his Spouse, may elect
during the Election Period to waive payment
in the form of a Joint and Survivor Annuity
pursuant to subsection (i)(B) below and elect
payment of such portion in a method described
in Section 7.5(a) and (d) above. For
purposes of this subsection (i), the term
"Joint and Survivor Annuity" means an annuity
payable to the Participant for his life, with
a survivor annuity payable to his Spouse for
the life of such Spouse commencing on the
first day of the month immediately following
the date of death of the Participant, in an
amount equal to one-half of the amount
payable during the life of the Participant.
(II) If the Participant does not have a
Spouse at the date payments to him are to
commence, such portion shall be payable to
him in the form of a Single Life Annuity.
However, the Participant may elect during the
Election Period to waive payment in the form
of a Single Life Annuity pursuant to
subsection (i)(B) below and elect payment of
such portion in a method described in Section
7.5(a) and (d) above. For purposes of this
paragraph (i), the term "Single Life Annuity"
means an annuity payable to the Participant
for his life.
(B) Within a reasonable time prior to the
commencement of payments to a Participant under
the Plan, the Committee shall give the Participant
175
a written notice, in nontechnical terms, of his
right to waive payment of such portion in the form
of a Joint and Survivor Annuity or Single Life
Annuity, as the case may be, pursuant to paragraph
(i)(A) and of his right to elect the method of
such payment as described in Section 7.5(a) and
(d) above. Such notice shall include a
description of (I) the terms and conditions of the
Joint and Survivor Annuity or Single Life Annuity,
whichever is applicable, (II) the Participant's
right to make, and the effect of making, an
election to waive the Joint and Survivor Annuity
or Single Life Annuity, (III) the right of the
Participant's Spouse, if any, not to consent to
such an election, (IV) the right to make, and the
effect of, a revocation of such an election, and
(V) the methods of payment pursuant to Section
7.5(a) and (d) above. A Participant may elect at
any time during the Election Period to waive the
Joint and Survivor Annuity or Single Live Annuity,
as the case may be, and to elect a method of
payment described in Section 7.5(a) and (d) above.
For purposes of this subsection (i), the term
"Election Period" means the ninety-day period
ending on the earliest date with respect to which
payments to the Participant commence. Any
election pursuant to this paragraph (i) may be
modified or revoked during the Election Period and
shall be automatically revoked if the Participant
dies before payments commence.
(C) Any election by a married Participant to
waive payment in the form of a Joint and Survivor
Annuity shall not take effect unless the
Participant's Spouse consents in writing to the
election and such consent acknowledges the effect
of the election. Such a consent must acknowledge
the effect of the election and the identity of any
non-Spouse Beneficiary, including any class of
Beneficiaries or contingent Beneficiaries,
designated to receive any installments remaining
unpaid at the date of his death, and must be
witnessed by a representative of the Plan or a
notary public. The consent of a Participant's
Spouse shall not be required if the Participant
establishes to the satisfaction of the Committee
that consent may not be obtained because there is
no Spouse or the Spouse cannot be located, or
because of such other circumstances as the
Secretary of the Treasury may prescribe by
regulations. Any designation by a Participant of
a new Beneficiary or alternate method of payment
shall not take effect unless the Participant's
Spouse, if any, consents to the new designation
176
pursuant to the procedures set forth in the
preceding sentence or unless the Spouse's consent
permits the Participant to change the designation
of his Beneficiary or the method of payment
without the Spouse's consent. A Spouse's consent
shall be irrevocable.
(ii) Payment By Reason of Death.
(A) Upon the death of a Participant prior to
commencement of payment of such portion to him,
the Committee shall direct the Trustee to pay such
amount as follows:
(I) If the Participant has a Spouse at
the date of his death, the Adjusted Balance
of such portion shall be payable to his
Spouse as a Preretirement Survivor Annuity.
However, the Participant, with the consent of
his Spouse, may elect during the Election
Period to waive the Preretirement Survivor
Annuity pursuant to (ii)(B) below and elect
payment of such portion in a method described
in Section 7.5(a) and (d) above. For
purposes of this paragraph (ii), the term
"Preretirement Survivor Annuity" means an
annuity payable for the life of the
Participant's Spouse, commencing on the first
day of the month after the date of death of
the Participant.
(II) If a Participant does not have a
Spouse at the date of his death, such portion
shall be payable to his Beneficiary in any of
the ways set forth in Section 7.5(a) above as
the Participant shall elect by written notice
delivered to the Committee during the
Election Period.
(B) The Committee shall provide each married
Participant with a written explanation of the
Preretirement Survivor Annuity. The explanation
shall be provided to each such Participant as soon
as may be practicable after his date of
employment. If the employment of the Participant
with the all Employers terminates prior to the
date of his death and he is then reemployed, he
must receive such written explanation as soon as
practicable after the date of reemployment. Such
notice shall include a description of (I) the
terms and conditions of the Preretirement Survivor
Annuity, (II) the Participant's right to make, and
the effect of, an election to waive the
Prepretirement Survivor Annuity and to designate a
beneficiary to receive the adjusted balances in
his accounts, (III) the rights of the
Participant's spouse not to consent to such an
election, (IV) the right to make, and the effect
of, the revocation of such an election, and (V)
the methods of payment pursuant to paragraph (iv)
below. A Participant may elect at any time during
177
the Election Period to waive the Preretirement
Survivor Annuity, if applicable, and to elect a
method of payment described in Section 7.5(a) and
(d) above. For purposes of this subsection (ii),
the term "Election Period" means the period that
begins on the date on which the Participant
receives the aforementioned explanation and ends
on the date of the eParticipant's death. Any
election pursuant to this subsection (ii) may be
modified or revoked during the Election Period..
(C) Any election by a married Participant to
waive payment in the event of his death in the
form of a Preretirement Survivor Annuity and to
designate a non-Spouse Beneficiary shall not take
effect unless the Participant's Spouse consents in
writing to the election and designation prior to
the Participant's death. The Spousal consent
provisions described in (i)(C) above shall apply.
18. Section 7.9 of the Plan is hereby amended, effective as of
May 1, 1993, by designating the current provisions as paragraph (a)
and adding a new paragraph (b) to read as follows:
(b) A participant for whom a Sanford Account has been
established under the Plan and who has demonstrated the
existence of a Hardship (as defined in paragraph 7.7(j)) may
elect a withdrawal from his Sanford Account; provided,
however, that in the case of any Hardship withdrawal, the
amount withdrawn pursuant to this paragraph shall be made in
accordance with paragraphs 7.7(i) and (k) and shall in no
event exceed the amount necessary to relieve the Hardship.
19. The Plan is hereby further amended by redesignating Sections
7.11-7.14 as Sections 7.13-7.16 and adding new Sections 7.11 and 7.12
to read as follows:
7.11 WITHDRAWALS FROM INTERCRAFT ACCOUNT. (a) A
Participant for whom an Intercraft Account has been
established under the Plan and who is at least 59-1/2 may
elect to withdraw all or any portion of his Intercraft
Account, other than those amounts in the Intercraft Account
attributable to (i) discretionary employer contributions
made pursuant to Section 4.1 of the Intercraft Profit
Sharing Plan and (ii) contributions made under the
Intercraft Retirement Program. Such withdrawal shall be
effective as of the first day of any month if written notice
is received by the Committee no later than the fifteenth day
of the preceding month.
(b) A Participant for whom an Intercraft Account has
been established under the Plan and who has demonstrated the
existence of a Hardship (as defined in paragraph 7.7(j)) may
elect a withdrawal from his Intercraft Retirement Program;
provided, however, that in the case of any Hardship
withdrawal, the amount withdrawn pursuant to this paragraph
shall be made in accordance with paragraphs 7.7(i) and (k)
and shall in no event exceed the amount necessary to relieve
the Hardship.
178
(c) A Participant for whom an Intercraft Account has
been established under the Plan and who is at least 65 may
elect to withdraw all or any portion of his Intercraft Plan
attributable to discretionary employer contributions made
pursuant to Section 4.1 of the Intercraft Profit Sharing
Plan. Such withdrawal shall be effective as of the first
day of any month if written notice is received by the
Committee no later then the fifteenth day of the preceding
month.
7.12 WITHDRAWALS FROM LEVOLOR ACCOUNT. (a) A
Participant for whom a Levolor Account has been established
under the Plan and who is at least 59-1/2 may elect to
withdraw all or any portion of his Levolor Account, other
than those amounts in the Levolor Account attributable to
discretionary employer contributions made under the Levolor
Plan. Such withdrawal shall be effective as of the first
day of any month if written notice is received by the
Committee no later than the fifteenth day of the preceding
month.
(b) A Participant for whom a Levolor Account has been
established under the Plan and who has demonstrated the
existence of a Hardship (as defined in paragraph 7.7(j)) may
elect a withdrawal from his Levolor Account; provided,
however, that in the case of any Hardship withdrawal, the
amount with withdrawn pursuant to this paragraph shall be
made in accordance with paragraphs 7.7(i) and (k) and shall
in no event exceed the amount necessary to relieve the
Hardship.
(c) A Participant for whom a Levolor Account has been
established under the Plan and who is at least 65 may elect
to withdraw all or any portion of his Levolor Plan
attributable to discretionary employer contributions made
under the Levolor Plan. Such withdrawal shall be effective
as of the first day of any month if written notice is
received by the Committee no later than the fifteenth day of
the preceding month.
20. The first sentence of Section 7.13(a) (as redesignated) of
the Plan is hereby amended to read as follows:
In the event a Participant requests to receive a
distribution pursuant to Sections 7.6, 7.7, 7.8, 7.9, 7.10,
7.11, or 7.12, and the distribution is approved if
necessary, the distribution shall be paid to the Participant
as soon as is reasonably practicable upon receipt of the
written request for such distribution.
21. Section 7.13(b) (as redesignated) is hereby amended to read
as follows:
179
(b) A Participant may not make more than one
withdrawal per Plan Year pursuant to each of Section 7.6,
7.7, 7.8, 7.9, 7.10, 7.11 or 7.12.
22. The first clause of the first sentence of Section 7.16 (as
redesignated) is hereby amended to read as follows:
Notwithstanding anything to the contrary contained elsewhere
in the Plan, a Participant's Savings Account, that portion
of his Anchor Account attributable to Basic Employer
Contributions and Voluntary Employer Contributions (as
defined in the Anchor Plan), that portion of his Rogers
Account attributable to elective deferrals (within the
meaning of the Rogers Plan), that portion of his Sanford
Account attributable to elective deferrals (within the
meaning of the Sanford Plan), that portion of his Intercraft
Account attributable to elective deferrals (within the
meaning of the Intercraft Profit Sharing Plan) and that
portion of his Levolor Account attributable to elective
deferrals (within the meaning of the Levolor Plan) shall not
be distributable other upon:
23. Subsection 7.16(f) (as redesignated) is hereby amended to
read as follows:
(f) the Participant's Hardship (in the case of a
distribution from a Participant's Anchor Account, Sanford
Account, Intercraft Account and Levolor Account).
24. The final sentence of Subsection 8.4(e) is hereby amended,
effective as of May 1, 1993, to read as follows:
If no such allocation direction was in effect at any time,
such payment shall be allocated on a pro rata basis to each
of the Investment Funds described in the schedule attached
to the Trust Agreement.
25. Section 11.1 of the Plan is hereby amended to read as
follows:
11.1 INVESTMENT FUNDS. The Adjusted Balance of each
Participant's Savings Account, Transfer Account, Matching
Contributions Account, Rogers Account, Sanford Account,
Anchor Account, Intercraft Account and Levolor Account shall
be invested in the various Investments Funds described in
the schedule attached to the Trust Agreement.
26. The first sentence of Section 11.3(c) of the Plan is hereby
amended to read as follows:
Each Participant shall have the right to direct that
the portion of his Savings Account, Transfer Account,
Matching Contributions Account, Rogers Account, Sanford
Account, Anchor Account, Intercraft Account and Levolor
180
Account held in any one Investment Fund be transferred, in
whole or in part, to any other Investment Fund.
27. Article XI of the Plan is hereby amended by redesignating
Section 11.8 as Section 11.10 and adding new Sections 11.8 and 11.9 to
read as follows:
11.8 INVESTMENT OF INTERCRAFT ACCOUNT. (a) Within a
reasonable time prior to the transfer of assets from the
Intercraft Plan, each Participant who was expected to have
an Intercraft Account established under the Plan was given
the opportunity to direct that his Intercraft Account be
invested, in specified multiples of ten percent (10%), in
any of the Investment Funds.
(b) Each Participant for whom an Intercraft Account
has been established shall have the right to direct a
transfer of amounts held in any one Investment Fund to any
other Investment Fund in accordance with the provisions of
Section 11.3(c).
11.9 INVESTMENT OF LEVOLOR ACCOUNT. (a) Within a
reasonable time prior to the transfer of assets from the
Levolor Plan, each Participant who was expected to have an
Levolor Account established under the Plan was given the
opportunity to direct that his Levolor Account be invested,
in specified multiples of ten percent (10%), in any of the
Investment Funds.
(b) Each Participant for whom a Levolor Account has
been established shall have the right to direct a transfer
of amounts held in any one Investment Fund to any other
Investment Fund in accordance with the provisions of Section
11.3(c).
28. Appendix A of the Plan is hereby amended, as set forth in
the form attached hereto.
Unless otherwise indicated, the amendments set forth above
pertaining specifically to the Intercraft Plan and Levolor Plan are
effective as of January 1, 1994 with respect to the Intercraft Plan
and October 1, 1994 with respect to the Levolor Plan
IN WITNESS WHEREOF, the Company has caused this Second Amendment
to the Plan to be executed on its behalf by its duly authorized
officer as of this 29th day of December, 1994.
NEWELL OPERATING COMPANY
By:
-----------------------------
Title
---------------------------
181
THIRD AMENDMENT TO THE
NEWELL LONG TERM SAVINGS AND INVESTMENT PLAN
(AS AMENDED AND RESTATED EFFECTIVE MAY 1, 1993)
WHEREAS, Newell Operating Company, a Delaware
corporation, (the "Company") maintains the Newell Long-Term
Savings and Investment Plan, as Amended and Restated Effective
May 1, 1993 (the "Plan"); and
WHEREAS, the Company has reserved the right to amend
the Plan and now deems it appropriate to do so;
NOW, THEREFORE, the Plan is hereby amended, effective
with respect to (i) Plan Years commencing September 1, 1990 and
ending December 31, 1993; and (ii) Plan Years commencing on and
after January 1, 1995, as follows:
Section 1.15 of the Plan is hereby amended by inserting a
second sentence immediately following the first sentence thereof
to read as follows:
Notwithstanding the preceding sentence, solely for
purposes of determining a Participant's Actual Deferral
Percentage defined in Section 1.2 and a Participant's
Contribution Percentage defined in Subsection 4.2(b),
Earnings means the amount of total remuneration
reportable on U.S. Treasury Department Form W-2 or any
successor Form thereof and paid to the Participant by
the Company or an Affiliated Employer during the Plan
Year.
IN WITNESS WHEREOF, the Company has caused this Third
Amendment to the Plan to be executed on its behalf by its duly
authorized officer as of this 29th day of December, 1995.
NEWELL OPERATING COMPANY
By: __________________________
Title ________________________
EX-10
3
Exhibit 10.3
NEWELL CO.
DEFERRED COMPENSATION PLAN
--------------------------
SECTION 1 - INTRODUCTION
-------------------------
Effective August 1, 1980, Newell Co. ("Company") established a
Deferred Compensation Plan ("Plan") for members of its Board of
Directors ("Board") and for certain key executives of the Company and
its affiliates and subsidiaries. The Plan is amended and restated,
effective January 1, 1997, to read as set forth below.
SECTION 2 - PLAN PARTICIPANTS
------------------------------
Each member of the Board, and each employee of the Company or an
affiliate who has been approved for participation in the ROA Cash
Bonus Plan, effective January 1, 1977, as amended from time to time,
or the revised ROI Cash Bonus Plan, as revised effective January 1,
1986, as amended from time to time ("collectively the "Cash Bonus
Plans") shall be eligible to be participate in the Plan. Each
eligible member of the Board, and each eligible employee who
participates in a Cash Bonus Plan, may elect to become a Participant
under the Plan by filing the written deferral election described in
Section 3 below.
SECTION 3 - DEFERRAL ELECTIONS
------------------------------
(a) Each Participant who is a member of the Board may elect to
defer annually the established retainer and meeting fee ("Director's
Fee"), or a portion thereof, for each month that such individual acts
as a member of the Board. Each Participant who is a participant in a
Cash Bonus Plan may elect to defer annually the receipt of all or any
portion of his bonus award under a Cash Bonus Plan or any other
portion of his earnings in excess of his base salary ("Bonus"). Any
amount deferred pursuant to the Plan shall be recorded by the Company
in a deferred compensation account ("Account") maintained in the name
of the Participant, which Account shall be credited on each date for
payment of the amount deferred, in accordance with the Company's
normal practices, with a dollar amount equal to the total amount
deferred as of such date.
(b) The Company shall furnish each Participant with a statement
of his Account no less frequently than annually. The Company shall
183
also credit an Account with earnings on investment of amounts credited
to the Account from the date received, pursuant to the provisions of
Section 4 below, until final distribution of the Account pursuant to
Section 5 below. The amount a Participant elects to defer under the
Plan will remain constant until suspended or modified by the filing of
another deferral election with the Company by a Participant in
accordance with paragraph (d) below.
(c) The Vice President, Personnel Relations of the Company shall
send to each eligible Participant an election form pursuant to which
he may elect to defer all or a portion of his Director's Fee or Bonus
as described above. The election form shall specify the amount or
percentage of the Director's Fee or Bonus to be deferred. The
election form shall be signed by the Participant and delivered to the
Vice President, Personnel Relations of the Company prior to January 1
of the calendar year in which the Director's Fee or Bonus to be
deferred is otherwise payable to the Participant.
(d) Deferral elections shall remain in effect from year to year
unless written notice to suspend or change a deferral election is
submitted to the Vice President, Personnel Relations on or before
December 31 of the calendar year prior to the calendar year in which
the change is to become effective. Except as provided in paragraph
(e) below, a new or revised deferral election shall only apply to a
Director's Fee or a Bonus otherwise payable to a Participant after the
end of the calendar year in which such election is delivered to the
Vice President, Personnel Relations. Any deferral election made by a
Participant shall be irrevocable with respect to any Director's Fee or
Bonus covered by the election, including a Director's Fee or Bonus
payable in the calendar year in which the election suspending or
changing the prior election is delivered.
(e) Notwithstanding the preceding provisions of this Section, a
deferral election made by a Participant in the calendar year in which
he first becomes eligible to participate in the Plan may be made
within 30 days after the date on which he initially becomes eligible
to participate, and such election shall be effective with respect to a
Director's Fee or Bonus earned from after the date such election is
delivered to the Vice President, Personnel Relations.
SECTION 4 - INVESTMENT OF ACCOUNTS
----------------------------------
(a) Amounts credited to each Account prior to January 1, 1997,
shall earn interest at a rate based on the yield rate of U.S. Treasury
Bills as quoted in the Midwest Edition of The Wall Street Journal.
Interest rates shall be accrued and compounded quarterly based on the
weighted average for the quarter.
(b) Amounts credited to each Account from and after January 1,
1997, shall earn interest at a fixed rate of 10% per annum. Such
interest shall be accrued and compounded quarterly.
184
SECTION 5 - DISTRIBUTION OF ACCOUNTS
-------------------------------------
(a) A Participant may request a distribution of all or any
portion of the amount that has been credited to his Account for at
least 36 months as of the date such distribution is made to the
Participant, including earnings thereon credited pursuant to Section 4
as of the last day of the calendar month prior to the date of
distribution. Payment shall be made in a lump sum on the date 12
months after the date such request for distribution is delivered to
the Vice President, Personnel Relations of the Company. If a
Participant who makes such a request terminates service on the Board,
or service with the Company or any affiliate, for any reason,
including death, during such 12- month period, such request shall be
null and void and of no effect.
(b) In the written discretion of the Company, and at the written
request of a Participant, an amount up to 100% of the amount credited
to his Account, including earnings thereon credited pursuant to
Section 4 as of the last day of the calendar month prior to the date
of distribution, may be distributed to a Participant in a lump sum in
the case of an "Unforeseeable Emergency," subject to the limitations
set forth below. For purposes of this paragraph, an Unforeseeable
Emergency is a severe financial hardship of the Participant resulting
from a sudden and unexpected illness or accident of the Participant or
of a dependent (as defined in Section 152(a) of the Internal Revenue
Code of 1986, as amended) of the Participant, loss of the
Participant's property due to casualty, or other similar,
extraordinary and unforeseeable circumstances arising as a result of
events beyond the control of the Participant. The circumstances that
will constitute an Unforeseeable Emergency will depend upon the facts
of each case, but in any case, payment may not be made to the extent
that such hardship is or may be relieved:
(i) through reimbursement or compensation by insurance or
otherwise;
(ii) by liquidation of the Participant's assets to the extent the
liquidation of such assets would not itself cause severe financial
hardship; or
(iii) by cessation of deferrals under the Plan.
Examples of what shall not be considered to be Unforeseeable
Emergencies include the need to send a Participant's child to college,
or the desire to purchase a residence. Withdrawal of amounts because
of an Unforeseeable Emergency shall be permitted only to the extent
reasonably needed to satisfy the Unforeseeable Emergency.
(c) Upon the termination of service on the Board, or the
termination of employment with the Company and all affiliates, for any
185
reason other than death, a Participant will be entitled to receive
distribution of all amounts credited to his Account.
(d) Upon termination of service on the Board, or termination of
employment with the Company and all affiliates, by reason of a
Participant's death, all amounts credited to the Participant's Account
will be distributed to his beneficiary or beneficiaries last
designated by written instrument filed with the Vice President,
Personnel Relations of the Company. Each Participant shall designate
a beneficiary or beneficiaries, and may change such designation from
time to time, pursuant to a written designation filed with the Vice
President, Personnel Relations on a form provided by the Company. If
no beneficiary or beneficiaries designated by the Participant survives
him, the balance credited to his Account as of the date of his death
will be paid to his surviving spouse, or if none, to his surviving
descendants, per stirpes, or if none, to the legally appointed
representative of his estate, or if none is appointed within six
months of the date of his death, to his heirs at law pursuant to the
laws of the state in which he is domiciled at the date of his death.
(e) The Company, in its discretion, shall direct distribution of
the amounts credited to a Participant's Account, including earnings
credited thereon pursuant to Section 4 as of the last day of the
calendar month prior to the date of distribution, to a Participant or
his beneficiary or beneficiaries pursuant to paragraphs (c) and (d) of
this Section, either (i) in a lump sum, or (ii) in installments over a
period not to exceed 15 years as the Company shall determine. The
Company shall determine the method of distribution, and the number of
installments, if any, after considering, but not being bound by, the
request of the Participant or his beneficiary or beneficiaries.
(f) Distributions pursuant to paragraph (e) of this Section
shall be made or commence within the ten year period commencing on:
(i) the date upon which the Participant's service on the
Board, or employment with the Company and its affiliates,
terminates prior to death; or
(ii) the date of the Participant's earlier death.
The Company shall determine the date on which distributions shall be
made or commence pursuant to this paragraph (f), after considering,
but not being bound by, the request of the Participant or his
beneficiary or beneficiaries. Subsequent installments, if any, shall
be made on the annual, quarterly or monthly anniversary date, of the
first installment as determined by the Company. Each such
installment, if any, shall include earnings credited to the balance of
the Participant's Account pursuant to Section 4.
(g) During his period of service on the Board, or with the
Company or an affiliate, a Participant will acquire knowledge of the
affairs of the Company and its affiliates. Therefore, notwithstanding
186
any other provision of the Plan, if, without the express consent of
the Company, a Participant or former Participant accepts employment
with, or renders other services to, any entity that is engaged in
substantial competition with the Company or any of its affiliates,
such Participant's Account shall be paid to him as soon as practicable
thereafter in a lump sum.
SECTION 6 - CHANGE IN CONTROL
-----------------------------
Notwithstanding any provision of the Plan, or of a Cash Bonus
Plan, from and after the effective date of a Change in Control of the
Company, each Participant may, at any time prior to his termination of
employment with the Company and all affiliates as an employee, or
termination of service on the Board, elect to receive payment in a
lump sum of the entire balance of his Account held hereunder,
including earnings thereon credited pursuant to Section 4 as of the
last day of the calendar month prior to the date of distribution. Any
such election shall be made by a Participant pursuant to written
notice delivered to the Company at least 10 days prior to the
requested date of distribution. For purposes of this Section, a
Change in Control of the Company shall be deemed to occur on the
earliest of:
(i) The acquisition of beneficial ownership, as that term is
defined in Rule 13d-3 under the Securities Exchange Act of
1934, as amended, by any entity, person or group, of more
than 50% of the outstanding capital stock of the Company
entitled to vote for the election of directors ("voting
stock");
(ii) The effective time of (A) a merger or consolidation of the
Company with one or more other corporations as a result of
which the holders of the outstanding voting stock of the
Company immediately prior to such merger or consolidation
(other than those who are affiliates of such other
corporation) hold less than 80% of the voting stock of the
surviving or resulting corporation, or (B) a transfer of
substantially all of the property of the Company other than
to an entity of which the Company owns at least 80% of the
voting stock; or
(iii)The election to the Board, without the recommendation or
approval of the incumbent Board, of the lesser of (A) three directors
or (B) directors constituting a majority of the number of directors of
the Company then in office.
SECTION 7 - ADMINISTRATION
--------------------------
The Plan shall be administered by the Vice President, Personnel
Relations of the Company who shall, subject to the express provisions
187
of the Plan, interpret the Plan, proscribe, amend and rescind rules
and regulations relating to it, and make such other determinations as
he deems necessary and advisable for the administration of the Plan.
The decisions of the Vice President, Personnel Relations under the
Plan shall be conclusive and binding, and he shall not be liable for
any action taken or determination made hereunder in good faith.
SECTION 8 - GENERAL PROVISIONS
--------------------------------
(a) The right of a Participant or his designated beneficiary to
receive a distribution hereunder shall be an unsecured claim against
the general assets of the Company, and neither the Participant nor his
designated beneficiary shall have any rights in or against any amount
credited to his Account or any other specific assets of the Company or
any affiliate. All amounts credited to an Account shall constitute
general assets of the Company and may be disposed of by the Company at
such time and for such purposes it may deem appropriate.
(b) Whenever a person entitled to a payment under the Plan is
under legal disability, or, in the opinion of the Company, is in any
way incapacitated so as to be unable to manage his financial affairs,
the Company may direct that payment be made to such person's relative
by blood or marriage or friend, for the benefit of such person. Any
payment made in accordance with the preceding sentence shall be in
complete discharge of the Company's obligation to make such payment
under the Plan.
(c) No benefit payable under the Plan shall be subject in any
manner to anticipation, alienation, sale, transfer, assignment,
pledge, encumbrance, or charge prior to actual receipt thereof by the
payee; and any attempt to so anticipate, alienate, sell, transfer,
assign, pledge, encumber or charge prior to such receipt shall be
void; and neither the Company nor the benefits payable under the Plan
shall be liable in any manner for, or subject to, the creditors,
debts, contracts, liabilities, engagements or torts of any such
person.
(d) Any action required or permitted to be taken by the Company
under the terms of the Plan shall be taken by affirmative vote of a
majority of the members of the Board then in office.
(e) Establishment of the Plan and coverage of any person
hereunder shall not be construed to confer upon any person any legal
right to be continued in the employ of the Company or any affiliate.
(f) All costs and expenses of administration of the Plan will be
paid by the Company.
(g) Any notice or election required or permitted to be given
hereunder shall be in writing and shall be deemed to be given:
188
1. on the date it is personally delivered to the Vice
President, Personnel Relations of the Company at its principal
business offices; or three business days after sent by registered
or certified U.S. mail, addressed to the Vice President,
Personnel Relations, at such address, and
2. on the date it is personally delivered to any
Participant, beneficiary or any other person, or three business
days after it is sent by registered or certified U.S. mail,
addressed, to such Participant, beneficiary or other person, at
his last known address set forth on the records of the Company.
(h) The Plan shall be construed in accordance with, and governed
by, the laws of the State of Illinois.
(i) In the event of a sale of substantially all of the assets of
the Company, or a merger, consolidation or a share exchange involving
the Company, all obligations of the Company under the Plan shall be
binding on the successor to the transaction.
(j) Neither the Company nor any employee or agent thereof shall
be liable to any Participant, beneficiary or any other person for any
claim, loss, liability or expense incurred in connection with the
Plan, except when the same shall have been judicially determined to be
due to the gross negligence or willful misconduct of the Company or
such employee or agent thereof.
(k) Notwithstanding anything to the contrary contained in the
Plan, (i) in the event that the Internal Revenue Service prevails in
its claim that amounts credited to an Account, and/or earnings
thereon, constitute taxable income to a Participant or his beneficiary
for any taxable year of his, prior to the taxable year in which such
amounts and/or earnings are distributed to him, or (ii) in the event
that legal counsel satisfactory to the Company and the applicable
Participant or his beneficiary renders an opinion that the Internal
Revenue Service would likely prevail in such a claim, such amounts
credited to the Account of such Participant or beneficiary and/or
earnings thereon shall be immediately distributed to him. For
purposes of this paragraph, the Internal Revenue Service shall be
deemed to have prevailed in a claim if such claim is upheld by a court
of final jurisdiction, or if the Participant or beneficiary, based
upon an opinion of legal counsel satisfactory to the Company and the
Participant or his beneficiary, fails to appeal a decision of the
Internal Revenue Service, or a court of applicable jurisdiction, with
respect to such claim, to an appropriate Internal Revenue Service
appeals authority or to a court of higher jurisdiction, within the
appropriate time period.
189
SECTION 9 - AMENDMENTS TO THE PLAN
----------------------------------
The Board may amend the Plan at any time, without the consent of
the Participants or their beneficiaries; provided, however, that no
amendment shall divest any Participant or beneficiary of the credits
to his Account, or of any rights to which he would have been entitled,
if the Plan had been terminated immediately prior to the effective
date of such amendment.
SECTION 10 - TERMINATION OF THE PLAN
------------------------------------
The Board may terminate the Plan at any time. Upon termination
of the Plan, distribution of the credits to each Participant's Account
shall be made in the manner and at the time heretofore prescribed;
provided that no additional credits shall be made to the Account of
any Participant following termination of the Plan, other than earnings
thereon credited pursuant to Section 4.
IN WITNESS WHEREOF, the Company, by its duly authorized officer,
has executed this amendment and restatement of the Plan, effective
January 1, 1997, on this 27 day of November, 1997.
NEWELL CO.
By__________________________________________
EX-10
4
EXHIBIT 10.5
REVISED ROI CASH BONUS PLAN
---------------------------
1. Name
----
Newell Co. ROI Cash Bonus Plan
2. Effective Date of Revision
--------------------------
January 1, 1986
3. Purpose
-------
To provide an incentive for key employees to improve Company
performance by making them participants in the financial success
of the Company.
4. Definitions
-----------
a. The Term "COMPANY" means Newell Co. and its subsidiaries.
b. The term "BOARD" means the Board of Directors or Newell Co.
c. The term "PLAN" means the arrangement described by these
specifications to be known as Newell Co. Cash Bonus Plan.
d. The term "PLAN YEAR" means a calendar year of the Company.
e. The term "COMPENSATION" means a Participant's base annual
salary earned during a Plan Year while a participant,
exclusive of commissions and bonuses.
f. The term "PLAN EARNINGS" means the consolidated income of
the Company for a given Plan Year before provisions for
awards under this Plan, provisions for awards under division
management bonus plans, and before income taxes; and if
approved by the Board, any unusual gain or loss arising from
a valuation adjustment, or the sale, exchange, or
disposition of a fixed asset, or other asset not acquired
for sale and not of the type in which the Company or any
subsidiary deals; all as determined by a certified public
accountant selected by the Company.
191
g. The term "STOCKHOLDERS EQUITY" means beginning net worth -
common stock plus surpluses at the start of the calendar
year.
h. The term "COMMITTEE" means the committee named by the Board
to administer the Plan.
i. The term "PARTICIPANT" means any key employee of the Company
or any of its subsidiaries who has been selected by the
Committee as eligible to receive incentive compensation
under the Plan.
j. The term "DEFERRED ACCOUNT" means the bookkeeping reserve
account on the books of the Company to which deferred
incentive awards under this plan are credited.
5. Eligibility and Participation
-----------------------------
Employees selected by the Committee as eligible to receive
incentive compensation under the Plan shall be participants. (As
general guideline, this would include those employees who are at
a grade 13 or above level and who have one or more continuous
years of service with the Company.)
When the Committee selects an employee to become a Participant
under the Plan, it shall designate the date as of which his
participation shall begin.
6. Annual Incentive Awards
-----------------------
At the end of each Plan Year when Plan Earnings are in excess of
20% of Stockholders Equity, the incentive compensation to be
awarded to each Participant shall be determined by multiplying
his compensation for the Plan Year by the appropriate
Compensation percentage determined from Tables AA, A and B
attached hereto.
7. Plan Limitations
----------------
Notwithstanding anything herein to the contrary, for Plan
purposes, no award will be made for a Plan Year to a Participant
whose employment terminated during the year unless the
termination was due to retirement, disability, death or any other
cause approved by the Committee.
8. Payment of Incentive Awards
---------------------------
A Participant's award for a Plan Year under the Plan shall be
paid in cash to the Participant, or his beneficiary or
beneficiaries in the event of his death, as soon as practical
after the end of the Plan Year, unless he elects to have a part
or all of the award deferred as provided below.
192
9. Deferral of Awards
------------------
In lieu of receiving an award as provide din Item 8 above, a
participant may elect to defer all or part of his bonus in
accordance with the Newell Deferred Compensation Plan. Election
notices are mailed to all participants in December of each year.
10. Beneficiary Designation
-----------------------
Each person upon becoming a Participant may designate, upon such
forms as may be provided for that purpose by the Company in the
Plan in the event of his death.
11. Amendments
----------
The Board may either modify or eliminate the Plan if in its
judgment such modification or elimination does not materially or
adversely affect the best interests of the Company or of the
shareholders; provided that such modification or elimination
shall not affect the obligation of the Company to pay any
contingent compensation after it has been awarded.
12. Employment Rights
-----------------
Nothing contained in the Plan shall be construed as conferring a
right upon any employee to be continued in the employment of the
Company.
EX-10
5
EXHIBIT 10.6
NEWELL
PENSION PLAN FOR SALARIED AND CLERICAL EMPLOYEES
------------------------------------------------
(As Amended and Restated Effective September 1, 1996)
194
NEWELL
PENSION PLAN FOR SALARIED AND CLERICAL EMPLOYEES
------------------------------------------------
(As Amended and Restated Effective September 1, 1996)
ARTICLE I
Purpose, Intent and Effective Dates
-----------------------------------
1.01 PURPOSE. The Company has established and maintains
the Newell Pension Plan for Salaried and Clerical Employees to aid its
eligible employees to attain a greater degree of post-retirement
financial security for themselves and their families.
1.02 INTENT. The Company intends that the Plan, as set
forth in this amendment and restatement, and as it may from time to
time be further amended, shall constitute a qualified Plan under the
provisions of Section 401(a) (and further or successor applicable
provisions) of the Code and shall be in full compliance with the
provisions of ERISA. The Company intends that the Plan shall continue
to be maintained by it for the above purposes indefinitely, subject
always, however, to the rights reserved in the Company to amend and
terminate as hereinbelow set forth.
1.03 EMPLOYEES TERMINATED PRIOR TO SEPTEMBER 1, 1996. The
provisions of the Plan, as Amended and Restated Effective September 1,
1996, shall not be applicable to any employee of the Company or an
Affiliated Company whose employment terminated prior to September 1,
1996, except as otherwise provided herein. The rights of any such
person to receive benefits, if any, under the Plan and the amount of
and conditions under which such benefits shall be payable shall be
determined in accordance with the provisions of the Plan or such other
retirement plan, if any, as may have been applicable to the employee
as in effect on the date of his termination of employment.
ARTICLE II
Definitions
----------
The following terms, when used herein and initially
capitalized as below indicated, shall, unless otherwise expressly
provided, have the following respective meaning:
"Accrued Benefit" when used in reference to a Participant as
of any given date means his Normal Retirement Benefit determined as
set forth in Section 4.01 hereof based on Credited Service through
195
such given date. The Accrued Benefit of a Participant attributable to
his own contributions shall be his accumulated contributions with
Credited Interest compounded annually to the date of determination,
multiplied by ten percent (10%) to convert such amount to an annual
benefit under a straight-life annuity without ancillary benefits.
Unless otherwise provided under the Plan, each Section 401(a)(17)
Employee's Accrued Benefit under this Plan will be the greater of the
Accrued Benefit determined for the Employee under (a) or (b) below:
(a) the Employee's Accrued Benefit determined with respect
to the benefit formula set forth in Section 4.01, applicable for
the Plan Year beginning on January 1, 1994, as applied to the
Employee's total years of Credited Service taken into account
under the Plan for the purposes of benefit accruals, or
(b) the sum of:
(i) the Employee's Accrued Benefit as of the last day
of the last Plan Year beginning before January 1, 1994,
frozen in accordance with Section 1.401(a)(4)-13 of the
regulations, and
(ii) the Employee's Accrued Benefit determined under
the benefit formula set forth in Section 4.01, applicable
for the Plan Year beginning on January 1, 1994, as applied
to the Employee's total years of Credited Service taken into
account under the Plan for Plan Years beginning on or after
January 1, 1994, for purposes of benefit accruals.
For purposes of this paragraph (b) an Employee's total
years of Credited Service will be considered in determining
the 30-year maximum set forth in Section 4.01.
A Section 401(a)(17) Employee means an Employee whose
current Accrued Benefit as of a date on or after the first day of the
first Plan Year beginning on or after January 1, 1994, is based on
Compensation for a year beginning prior to the first day of the first
Plan Year beginning on or after January 1, 1994, that exceeded
$150,000.
"Actuarial (or Actuarially) Equivalent" or "Actuarial
Equivalence" means the equality in value of the aggregate amounts
expected to be received under different forms of payment, determined
on the basis of the assumptions and methods set forth in Section 5.05
below.
"Actuary" means an actuary who is enrolled by the Joint
Board for the Enrollment of Actuaries established under ERISA and who
is selected by the Company from time to time to provide the actuarial
reports and perform the actuarial services for the Plan.
196
"Affiliated Company" means: (i) any corporation which is a
member of a controlled group of corporations (as defined in
Section 414(b) of the Code) which includes the Company; (ii) any trade
or business, whether or not incorporated, which is under common
control (as defined in Section 414(c) of the Code) with the Company;
and (iii) any member of an affiliated service group (as defined in
Section 414(m) of the Code), which includes the Company.
"Beneficiary" means the person or persons entitled to
receive benefits under the Plan by reason of the death of a
Participant.
"Board" means the Board of Directors of the Company as from
time to time constituted.
"Break in Service" means the period of an Employee's absence
from active employment commencing upon his Severance Date from all
Employers and ending (if at all) when he again performs an Hour of
Service, within the meaning of the first clause (i) of the definition
of "Hour of Service."
"Code" means the Internal Revenue Code of 1986, as from time
to time amended.
"Company" means Newell Operating Company (formerly known as
Newell Co., Newell Companies, Inc., Newell National Co. and Newell
Mfg. Co.), a Delaware corporation and its predecessor, Newell Mfg. Co.
(formerly known as Western Newell Mfg. Co.), an Illinois corporation.
"Covered Compensation" means the annual basic compensation
of a Participant from a Participating Employer for the relevant period
for services rendered to the Participating Employer in any Plan Year,
including (i) regular salary and straight-time wages for regular work
week time, (ii) 100% of earned commissions for commission salesmen,
(iii) any bonus (whether or not paid or deferred pursuant to the
Company's Incentive Bonus Plan) up to $3,000 in any Plan Year,
(iv) any amounts withheld pursuant to the Newell Long-Term Savings and
Investment Plan or the Newell Flexible Benefits Account Plan, but
excluding (i) all shift premiums and overtime and benefits under this
Plan or any other employee benefit plan, and (ii) severance payments.
In no event shall the compensation of a Participant taken into account
under the Plan for any year commencing after December 31, 1988 and
prior to January 1, 1994 exceed $200,000 (or such greater amount
provided pursuant to Section 401(a)(17) of the Code). In addition to
other applicable limitations set forth in the Plan, and
notwithstanding any other provision of the Plan to the contrary, for
Plan Years beginning on or after January 1, 1994, the annual
compensation of each Employee taken into account under the Plan shall
not exceed the OBRA '93 annual compensation limit. The OBRA '93
annual compensation limit is $150,000, as adjusted by the Commissioner
of Internal Revenue for increases in the cost of living in accordance
with Section 401(a)(17)(B) of the Code. The cost-of-living adjustment
197
in effect for a calendar year applies to any period, not exceeding 12
months, over which compensation is determined (determination period)
beginning in such calendar year. If a determination period consists
of fewer than 12 months, the OBRA '93 annual compensation limit will
be multiplied by a fraction, the numerator of which is the number of
months in the determination period, and the denominator of which is
12. For Plan Years beginning on or after January 1, 1994, any
reference in this Plan to the limitation under Section 401(a)(17) of
the Code shall mean the OBRA '93 annual compensation limit set forth
in this provision. If compensation for any prior determination period
is taken into account in determining an Employee's benefits accruing
in the current Plan Year, the compensation for that prior
determination period is subject to the OBRA '93 annual compensation
limit in effect for that prior determination period. For this
purpose, for determination periods beginning before the first day of
the Plan Year, beginning on January 1, 1994, the OBRA '93 annual
compensation limit is $150,000. Notwithstanding the foregoing, for
purposes of Section 4.14 of the Plan, "compensation" shall have the
meaning set forth in Section 4.14(j).
"Credited Interest" means interest compounded annually at
the rate of three percent (3%) per annum through December 31, 1972, at
four percent (4%) per annum from January 1, 1973 through December 31,
1975, at five percent (5%) per annum from January 1, 1976 through
December 31, 1987, and beginning January 1, 1988, at 120% per annum of
the mid-term applicable Federal rate (AFR) (as in effect under Section
1274 of the Code for the first month of the Plan Year) established by
the Secretary of the Treasury pursuant to Section 204(c)(2)(C)(iii) of
ERISA, on the aggregate amount from time to time of a Participant's
contributions to the Plan.
"Credited Service" means all service of an Employee, while
on a salaried or clerical basis with a Participating Employer (on and
after the date specified in column 2 of Exhibit A hereto) that is
included in a period of Vesting Service, and that is completed while
the Employee is a Participant or during such Employee's Eligibility
Year of Service; SUBJECT, HOWEVER, to the following special rules:
(a) Credited Service will not include any service prior to
January 1, 1973 if the Employee was eligible to contribute to
this Plan at any time prior to January 1, 1973 and failed to
contribute the full amount required to this Plan; except that
Credited Service will include any period of service immediately
prior to January 1, 1973, when the Employee was contributing the
full amount required to this Plan.
(b) Credited Service will not include any period of service
during which an Employee is included in a unit of employees
covered by a collective bargaining agreement for which retirement
benefits were a subject of good faith negotiations, unless such
collective bargaining agreement provides for the participation of
such Employees in this Plan.
198
(c) Credited Service will not include leaves of absence
granted by an Employer to an Employee on and after August 5, 1993
pursuant to the Family and Medical Leave Act, regardless of
whether the Employee returns to work for an Employer at the end
of such leave of absence.
"Early Retirement Date" means the first day of the calendar
month following the month in which a Participant completes at least
fifteen (15) years of Vesting Service, attains age sixty (60) and
elects, by written notice delivered to the Pension Administrative
Committee at least thirty (30) days in advance of such Date, to Retire
prior to his Normal Retirement Date.
"Effective Date" means January 1, 1989.
"Eligibility Commencement Date" when used in reference to an
Employee means the later of the Effective Date and the first day
thereafter on which he meets all of the following requirements:
(a) He is employed on a salaried or clerical basis by a
Participating Employer (after it becomes a Participating
Employer);
(b) He is not included in a unit of employees covered by a
collective bargaining agreement for which retirement benefits
were a subject of good faith negotiations, unless such collective
bargaining agreement provides for the participation of such
Employees in this Plan;
(c) He is not a non-resident alien as described in Section
410(b)(3)(C) of the Code; and
(d) He has completed an Eligibility Year of Service.
"Eligibility Year of Service" means the twelve (12) month
period, commencing with the later of (a) the date an Employee first
performs an Hour of Service for an Employer or an Affiliated Company
(whether or not it is a Participating Employer), and (b) the date
specified in column 1 of Exhibit A hereto, during which he completes
at least 1,000 Hours of Service, or if he does not complete 1,000
Hours of Service during such twelve (12) month period, then the first
Plan Year ending thereafter in which he does complete 1,000 Hours of
Service. Eligibility Years of Service shall include leaves of absence
granted by an Employer or an Affiliated Company to an Employee on and
after August 5, 1993 pursuant to the Family and Medical Leave Act, if
the Employee returns to work for an Employer or an Affiliated Company
at the end of such leave of absence.
"Eligible Spouse" means a person to whom a Participant is
legally married on the date benefit payments commence under
Section 4.01 (Normal), 4.02 (Postponed), 4.03 (Early) or 4.04
(Vested).
199
"Employee" means each person, officer or otherwise, in an
employee-employer relationship with an Employer.
"Employer" means (i) the Company's corporate management
group, (ii) each operating division of the Company, and (iii) each
Affiliated Company, whether or not it is a Participating Employer.
"ERISA" means the Employee Retirement Income Security Act of
1974 as from time to time amended.
"Excess Compensation" means that part of the Covered
Compensation (as defined above) of a Participant for a Plan Year that
exceeds $25,000. If a Participant's employment begins or ends during
a Plan Year, his Excess Compensation shall be determined by assuming
that he had Covered Compensation for the entire Plan Year at the same
rate as yields his actual Covered Compensation for so much of the Plan
Year as he was an Employee.
"Forfeiture" means the Accrued Benefit of a Participant to
which he (or his Beneficiary) does not become entitled upon a
Severance Date and which is thus forfeited pursuant to Section 4.11
below.
"Fund" means the entire trust fund from time to time held by
the Trustees pursuant to the Trust for the purposes of this Plan.
"Hour of Service" means:
(i) each hour for which an Employee is paid or
entitled to payment for the performance of duties for an
Employer on and after the later of (i) the date the Employee
is first hired by an Employer, and (ii) the date specified
in column (1) of Exhibit A hereto with respect to such
Employer (provided that, if no date is specified in such
column with respect to an Employer, the date on which such
Employer became an Affiliated Company shall be utilized for
purposes of this clause (ii)); and
(ii) each hour for which an Employee is directly or
indirectly paid by an Employer or is entitled to payment
from an Employer during which no duties are performed by
reason of vacation, holiday, illness, incapacity (including
disability), layoff, jury duty, military duty or leave of
absence (but not in excess of 501 hours in any continuous
period during which no duties are performed), on and after
the later of (i) the date the Employee is first hired by an
Employer, and (ii) the date specified in column (1) of
Exhibit A hereto with respect to such Employer (provided
that, if no date is specified in such column with respect to
an Employer, the date on which such Employer became an
Affiliated Company shall be utilized for purposes of this
clause (ii)).
200
Each Hour of Service for which back pay, irrespective of mitigation of
damages, is either awarded or agreed to by an Employer shall be
included under either subsection (i) or (ii) above as may be
appropriate. Hours of Service shall be credited:
(a) in the case of Hours referred to in subsection (i)
above, for the computation period in which the duties are
performed;
(b) in the case of Hours referred to in subsection (ii)
above, for the computation period or periods in which the period
during which no duties are performed occurs; and
(c) in the case of Hours for which back pay is awarded or
agreed to by an Employer, for the computation period or periods
to which the award or agreement pertains rather than to the
computation period in which the award, agreement or payment is
made.
In determining Hours of Service, with respect to an Employee
who is employed on other than an hourly rated basis, such Employee
shall be credited with ten (10) Hours of Service per day for each day,
or forty-five (45) Hours of Service per week for each week, that the
Employee would, if hourly rated, be credited with service pursuant to
subsection (i) above. If an Employee is paid for reasons other than
the performance of duties pursuant to subsection (ii) above: (i) in
the case of a payment made or due which is calculated on the basis of
units of time, an Employee shall be credited with the number of
regularly scheduled working hours included in the units of time on the
basis of which the payment is calculated; and (ii) an Employee without
a regular work schedule shall be credited with eight (8) Hours of
Service per day (to a maximum of forty (40) Hours of Service per week)
for each day that the Employee is so paid. Hours of Service shall be
calculated in accordance with Department of Labor Regulations Section
2530.200b-2 or any future legislation or regulation that amends,
supplements or supersedes said section. Persons described in
subsection (c) of the definition of "Vesting Service" (subject,
however, to the limitation of that subsection) shall be treated as
Employees of an Employer for purposes of calculating Hours of Service.
"Leased Employee" means a person who is not employed by an
Employer but who performs services for an Employer pursuant to an
agreement between the Employer and a leasing organization after such
person performs such services on a substantially full-time basis for a
twelve-month period, provided that the services are of the type
historically performed by employees in the business field. Subject to
the provisions of subsection (c) of the definition of "Vesting
Service" and the last sentence of the definition of "Hour of Service,"
a Leased Employee of an Employer shall not be considered an Employee
for purposes of the Plan.
201
"Named Fiduciary" means the entity which has ultimate
authority to control and manage the operation and administration of
the Plan and in this Plan means the Company as set forth in Section
8.01 below.
"Normal Retirement Benefit" when used in reference to a
Participant means his normal retirement benefit, if any, determined as
set forth in Section 4.01.
"Normal Retirement Date" means the first day of the calendar
month following a Participant's sixty-fifth (65th) birthday. A
Participant's Accrued Benefit shall be nonforfeitable on his sixty-
fifth (65th) birthday.
"Participant" means an Employee or a former Employee who is
described as a Participant under Article III of the Plan.
"Participating Employer" means the Company and (i) each
Employer whose Employees participated in a Prior Plan immediately
prior to the Effective Date; and (ii) each other Employer (A) to which
the Board has extended this Plan by resolution specifying the date on
which this Plan becomes effective as to that Employer, and (B) if that
other Employer is separately incorporated, which has adopted this Plan
as its own plan by resolution of its board of directors. Each
Employer that is a Participating Employer is identified on Exhibit A
to this Plan, together with the date on and after which Hours of
Service, an Eligibility Year of Service, Vesting Service and Credited
Service shall be counted with respect to such Participating Employer.
"Pension Administrative Committee" means the Plan
administrative committee referred to in Article VIII hereof as from
time to time constituted.
"Pension Finance Committee" means the Plan finance committee
referred to in Article VIII hereof as from time to time constituted.
"Plan" means the NEWELL PENSION PLAN FOR SALARIED AND
CLERICAL EMPLOYEES, as amended and restated effective January 1, 1989,
as herein set forth and as from time to time amended and includes also
the WESTERN NEWELL MFG. CO. PENSION PLAN, as established February 1,
1949, and successive amendments thereto and restatements thereof.
"Plan Year" means the fiscal year of the Plan and of the
Trust and, until changed, shall begin January 1 and end December 31 of
each year.
"Postponed Retirement Date" when used in reference to a
Participant means the date, following his Normal Retirement Date, on
which he Retires.
"Prior Plan" means any of the following:
202
(i) Anchor Hocking Retirement Plan for Salaried
Employees;
(ii) Anchor Hocking Retirement Plan for Salaried
Employees - Hourly Part;
(iii) Sanford Corporation Retirement Plan for
Salaried Employees;
(iv) BernzOmatic Corporation Employees' Pension Plan;
(v) Foley Company Retirement Plan for Office and
Administrative Employees;
(vi) Contributory Pension Plan for the Hourly-Paid
Employees of the Moldcraft Division of Anchor Hocking
Plastic Packaging, Inc.;
(vii) Empire Berol Corporation Revised Basic
Pension Plan;
(viii) Faber-Castell Retirement Plan for Salaried
Employees;
(ix) Goody Products, Inc. Pension Plan for Salaried
Employees; and
(x) Stuart Hall Company, Inc. Non-Bargaining Unit
Rmployees' Retirement Plan.
"Qualified Joint and Survivor Annuity" means a monthly
annuity for the life of the Participant with a survivor annuity for
the life of his Eligible Spouse, the monthly payments of which are
equal to one-half of the monthly amount paid or payable to the
Participant.
"Retirement" or "Retires" or "Retiring" means the first day
of the calendar month following the termination of a Participant's
service with an Employer when he is entitled to a normal, postponed,
or early retirement benefit under Article IV hereof.
"Severance Date" means the earlier of:
(i) the date the employment of an Employee terminates
by reason of quitting, Retirement, death or discharge; and
(ii) the first anniversary of the first date of an
absence from the performance of duties as an Employee (with
or without pay) for any other reason (such as vacation,
holidays, sickness, disability, leave of absence or layoff).
203
If any Employee who is absent from work because of (i) the
Employee's pregnancy, (ii) the birth of the Employee's child,
(iii) the placement of a child with the Employee in connection with
the Employee's adoption of the child, or (iv) caring for such child
immediately following such birth or placement, shall be absent for
such reason beyond the first anniversary of the first date of absence,
his Severance Date shall be the second anniversary of the first day of
such absence, provided that the Employee furnishes to the Pension
Administrative Committee such timely information that the Pension
Administrative Committee may reasonably require to establish (A) that
the absence from work is for one of the reasons specified in clauses
(i) through (iv), and (B) the number of days for which there was such
an absence. Notwithstanding anything to the contrary contained
herein, in no event shall the period between the first and second
anniversary of the first day of such absence be counted as a period of
employment for purposes of calculating Vesting Service or Credited
Service.
"Spouse" means an Eligible Spouse or a Surviving Spouse.
"Surviving Spouse" means a person to whom a Participant is
legally married for at least the one (1) year period ending on the
Participant's date of death.
"Trust" means the Newell Co. Master Retirement Trust as set
forth in the Trust Agreement entered into on July 1, 1989, by and
between the Company and The Northern Trust Company, as Trustee, as the
same may from time to time be amended.
"Trustees" means the trustee under the Trust, or any
successor trustee or trustees under the provisions of the Trust.
"Vesting Service" means all service of an Employee with an
Employer or an Affiliated Company, based on calendar months, counted
from the earlier of (A) the later of (i) the date the Employee is
first hired by an Employer or an Affiliated Company, and (ii) the date
specified in column 1 of Exhibit A hereto with respect to such
Employer (provided that, if no date is specified in such column with
respect to an Employer, the date on which such Employer became an
Affiliated Company shall be utilized for purposes of this clause
(ii)), and (B) the date on which the Employee began accruing Vesting
Service under a Prior Plan, to his last Severance Date; SUBJECT,
HOWEVER, to the following special rules:
(a) Breaks in Service will be excluded in determining
Vesting Service, except that a Break in Service incurred when an
Employee quits, Retires, or is discharged will not be excluded if
the Employee returns to the performance of duties as an Employee
of an Employer prior to the first anniversary of his absence from
the performance of duties; provided that if such Break in Service
commenced while the Employee was absent from the performance of
duties for one of the reasons described in paragraph (ii) of the
204
definition of "Severance Date," the Break in Service will only
not be excluded if it is incurred, and the Employee returns to
the performance of duties as an Employee of an Employer, prior to
the first anniversary of his absence from the performance of
duties.
(b) For an Employee who is entitled to any portion of his
Accrued Benefit in accordance with Article IV or Article XII
hereof, service which would otherwise be Vesting Service which
occurs before a Break in Service of at least twelve (12)
consecutive months will be included in determining Vesting
Service if the Employee completes one Eligibility Year of Service
after the date on which the Break in Service ends.
(c) For an Employee who is not entitled to any portion of
his Accrued Benefit in accordance with Article IV or Article XII
hereof, service which would otherwise be Vesting Service which
occurs before a Break in Service of at least twelve (12) consecu-
tive months will be included in determining Vesting Service if
the Employee completes one year of Eligibility Service after the
date on which the Break in Service ends; provided that in no
event will such service be included in determining Vesting
Service if the length of the Break in Service exceeds: (i) if
the Break in Service commenced before January 1, 1985, the length
of the prior Vesting Service (determined after applying this same
rule to such prior Vesting Service) or (ii) if the Break in Ser-
vice commenced after December 31, 1984, the greater of the period
determined under clause (i) or five (5) years.
(d) Any Leased Employee of an Employer or an Affiliated
Company who subsequently becomes an Employee and thereafter
participates in the Plan shall receive credit for vesting
hereunder for his period of employment as a Leased Employee,
except to the extent that Section 414(n)(5) of the Code was
satisfied with respect to such Employee while he was a Leased
Employee.
(e) Vesting Service shall include leaves of absence granted
by an Employer or an Affiliated Company to an Employee on and
after August 5, 1993 pursuant to the Family and Medical Leave
Act, if the Employee returns to work for an Employer or an
Affiliated Company at the end of such leave of absence.
GENDER AND NUMBER. The masculine pronoun wherever used
herein shall be deemed to include the feminine and the neuter, and the
singular shall be deemed to include the plural whenever the context
requires.
205
ARTICLE III
Eligibility and Participation
-----------------------------
3.01 REQUIREMENTS FOR PARTICIPATION. Each Employee who was
a Participant in the Plan immediately prior to the Effective Date
shall continue to participate in and receive benefits under the Plan
in accordance with its terms. Each other Employee shall become a
Participant on his Eligibility Commencement Date.
3.02 DURATION. (a) An Employee who became a Participant
and attained his Severance Date prior to January 1, 1993 continued to
be a Participant until the end of a Plan Year in which he completed
fewer than 501 Hours of Service and also continued to be a Participant
thereafter for so long as he was entitled to receive any benefits
hereunder regardless of when such benefits are payable. If such
Participant completed fewer than 501 Hours of Service in any Plan Year
before becoming entitled to receive (then or thereafter) a benefit
hereunder, he thereupon ceased to be a Participant unless and until he
thereafter completed another Eligibility Year of Service in which
event he was deemed to have become a Participant on the first day of
such completed Eligibility Year of Service. Notwithstanding the
foregoing, if such Participant who left an Employer to serve in the
armed forces of the United States for a period during which his
reemployment rights are guaranteed by law, ceased to be a Participant
under the preceding provisions of this subsection (a), and such
Participant returned to work for an Employer prior to the expiration
of his reemployment rights, such Participant continued to participate
in the Plan until he so returned (and thereafter in accordance with
the terms of the Plan), despite his failure to complete 501 Hours of
Service during any Plan Year prior to January 1, 1993 because he was
absent for such purpose.
(b) An Employee who is absent from work with an Employer
because of (i) the Employee's pregnancy, (ii) the birth of the
Employee's child, (iii) the placement of a child with the Employee in
connection with the Employee's adoption of the child, or (iv) caring
for such child immediately following such birth or placement shall
receive credit solely for purposes of subsection (a) above for the
Hours of Service provided in subsection (c) below; provided that the
total number of hours credited as Hours of Service under this sub-
section shall not exceed 501 Hours of Service.
(c) In the event of an Employee's absence from work for any
of the reasons set forth in subsection (b) above, the Hours of Service
that the Employee will be credited with under subsection (b) are (i)
the Hours of Service that otherwise would normally have been credited
to the Employee but for such absence, or (ii) eight (8) Hours of
Service per day of such absence if the Pension Administrative
Committee is unable to determine the Hours of Service described in
clause (i).
206
(d) An Employee who is absent from work for any of the
reasons set forth in subsection (b) above shall be credited with Hours
of Service under subsection (b): (i) only in the Plan Year in which
the absence begins, if the Employee would be prevented from ceasing to
be a Participant under subsection (a) above in that Year solely
because he receives credit for Hours of Service for the period of ab-
sence, as provided in subsections (b) and (c) above, or (ii) in any
other case, in the immediately following Plan Year.
(e) No credit for Hours of Service will be given pursuant
to subsections (b), (c) and (d) above unless the Employee furnishes to
the Pension Administrative Committee such timely information that the
Pension Administrative Committee may reasonably require to establish:
(i) that the absence from work is for one of the reasons specified in
subsection (b) and (ii) the number of days for which there was such an
absence. No credit for Hours of Service will be given pursuant to
subsections (b), (c), and (d) for any purpose of the Plan other than
the determination of whether an Employee has ceased to be a Par-
ticipant pursuant to subsection (a).
3.03 CHANGE IN STATUS. If a Participant shall cease to be
employed on a salaried or clerical basis but continues to be an
Employee, he shall be deemed to be an inactive Participant until he
again is employed on a salaried or clerical basis or ceases to be an
Employee, whichever first occurs. After he becomes, and so long as he
remains, an inactive Participant, he shall accrue no Credited Service
for purposes of the Plan but shall continue to accrue Vesting Service
in accordance with its terms. Upon the Retirement, death, disability
or other termination of employment of an inactive Participant, payment
of his benefits will be made to him or to his Spouse or Beneficiary
pursuant to the applicable provisions of Articles IV and V.
ARTICLE IV
Pension Benefits
----------------
4.01 BENEFITS PAYABLE ON NORMAL RETIREMENT. Subject to the
provisions of Section 4.06 below and of subsection (d) of this Section
4.01, each Participant who Retires on his Normal Retirement Date shall
be entitled to receive his Normal Retirement Benefit, a monthly bene-
fit for the remainder of his lifetime, equal to the aggregate of the
amounts determined under subsections (a), (b) and (c) below, based on
Credited Service determined in accordance with subsection (d) below.
(a) The portion of the Normal Retirement Benefit attribu-
table to Credited Service before January 1, 1982, shall be the
accrued benefit (determined under the terms and provisions of the
Plan as in effect on December 31, 1981) to which a Participant is
entitled as of January 1, 1982; PROVIDED, HOWEVER that for
purposes of determining such accrued benefit, the compensation
207
for the Plan Year 1977 for each Participant who was paid
compensation for the entire Plan Year 1978 shall be deemed to be
his compensation for the Plan Year 1978 divided by 1.06. For
purposes of determining the accrued benefit of a Participant as
of January 1, 1982 pursuant to this subsection (a), if the
"Social Security Reduction Amount," as that term was defined in
the Plan as of December 31, 1983, was calculated by using an
estimate of the wages of an Employee for some or all years of
employment for purposes of determining such Employee's "Primary
Social Security Amount," as described in the paragraph in the
Plan as of December 31, 1983, in which such term was so defined:
(i) The pre-termination (or pre-hire) wage history
shall be estimated by applying a salary scale, projected
backwards, to the Employee's compensation (as defined in
section 3.3 of Internal Revenue Service Revenue Ruling 71-
446) at termination of employment (or at hire) and the
salary scale shall be either:
(A) the actual change in the average wages from
year to year as determined by the Social Security
Administration, or
(B) a level percentage per year that is not less
than six percent per annum;
(ii) The Pension Administrative Committee shall give
clear written notice to each Employee of the Employee's
right to supply actual salary history and of the financial
consequences of failing to supply such history. The notice
must be given each time the summary plan description for the
Plan is provided to the Employee and must also be given upon
termination of employment. The notice must also state that
the Employee can obtain the actual salary history from the
Social Security Administration; and
(iii) The accrued benefit for any Participant will be
adjusted based on an actual salary history for years
previously estimated before termination of employment (and
an assumed post-termination compensation in accordance with
section 11.01 of Internal Revenue Service Revenue Ruling 71-
446 when applicable) if the Participant supplies
documentation of that history. Such documentation must be
provided no later than ninety (90) days following the later
of the date of termination of employment and the time when
the Participant is notified of the amount of retirement
income to which he is entitled.
The estimated wages may be used either only for years before
employment or for all years before termination of employment.
208
(b) The portion of the Normal Retirement Benefit attribut-
able to Credited Service from January 1, 1982 through December
31, 1988, shall be one-twelfth (1/12) of the sum of:
(i) one and one-tenth percent (1.1%) of his Covered
Compensation for each year of Credited Service from January
1, 1982 through December 31, 1988, plus
(ii) one and two-tenths percent (1.2%) of his Excess
Compensation for each year of Credited Service from January
1, 1982 through December 31, 1988.
(c) The portion of the Normal Retirement Benefit
attributable to Credited Service from and after the Effective
Date shall be one-twelfth (1/12) of the sum of:
(i) one and thirty-seven hundredths percent (1.37%) of
his Covered Compensation that is not Excess Compensation for
each year of Credited Service from and after the Effective
Date, plus
(ii) one and eighty-five hundredths percent (1.85%) of
his Excess Compensation for each year of Credited Service
from and after the Effective Date.
(d) For purposes of determining the portion of the Normal
Retirement Benefit to which a Participant is entitled pursuant to
subsections (b) and (c) above:
(i) Not more than thirty (30) years of Credited
Service as a Participant under this Plan from and after
January 1, 1982 shall be taken into account for purposes of
subsections (b) and (c) above.
(ii) In the case of a Participant with more than
thirty (30) years of Credited Service as a Participant under
this Plan from and after January 1, 1982, the years of such
Credited Service to be taken into account for purposes of
subsections (b) and (c) shall be those thirty (30) years
(whether or not consecutive) which make the greatest contri-
bution to his Normal Retirement Benefit under this Plan; and
(iii) If a Participant has Credited Service from and
after January 1, 1982, as a Participant under this Plan and
under the Newell Pension Plan for Factory and Distribution
Hourly Paid Employees As Amended and Restated Effective
January 1, 1989 (the "Hourly Plan"), the Participant shall
be entitled to credit for a maximum of thirty (30) years of
Credited Service under both this Plan and the Hourly Plan
for purposes of computing his aggregate benefit from and
after January 1, 1982, under subsections (b) and (c) of this
Section 4.01 and under the Hourly Plan; provided that if a
209
Participant has more than thirty (30) years of such Credited
Service from and after January 1, 1982, the years of such
Credited Service to be taken into account for purposes of
computing such aggregate benefit under this Plan and the
Hourly Plan shall be those 30 years (whether or not
consecutive) which make the greatest contribution to such
aggregate Normal Retirement Benefit under both Plans; and
provided, further, that in no event will a Participant
receive Credited Service for purposes of determining his
Normal Retirement Benefit under this Plan while he is a
Participant under the Hourly Plan.
(e) In no event shall this Section 4.01 be applied to
reduce the Normal Retirement Benefit of any Participant below the
accrued benefit (determined under the terms and provisions of the
Plan as in effect on December 31, 1981) to which he was entitled
as of January 1, 1983, or the accrued benefit (determined under
the terms and provisions of the Plan as in effect on December 31,
1988) to which he was entitled as of January 1, 1989.
4.02 BENEFITS PAYABLE ON POSTPONED RETIREMENT. Subject to
the provisions of Section 4.06 below, each Participant who Retires on
his Postponed Retirement Date shall be entitled to receive a monthly
benefit for the remainder of his lifetime, commencing on the first day
of the month following such Postponed Retirement Date, equal to the
amount determined in Section 4.01 above based on Credited Service (as
limited by subsection 4.01(d)) as of his Postponed Retirement Date.
4.03 BENEFITS PAYABLE ON EARLY RETIREMENT. Subject to the
provisions of Section 4.06 below, each Participant who Retires on his
Early Retirement Date, shall be entitled to receive a monthly benefit
for the remainder of his lifetime equal to his Accrued Benefit upon
such Early Retirement Date, reduced where applicable by one-half of
one percent (0.5%) for each month by which the date such benefit pay-
ments commence precedes his Normal Retirement Date.
4.04 VESTED BENEFITS. Subject to the provisions of
Section 4.05 below, each Participant who upon a Severance Date caused
other than by death is not thereby eligible for the benefits described
in Section 4.01, 4.02 or 4.03 shall be entitled to receive, if the
Participant has completed five (5) years of Vesting Service at his
Severance Date, a monthly benefit equal to his Accrued Benefit at his
Severance Date, reduced where applicable by one-half of one percent
(0.5%) for each month by which the date such payments commence
precedes his Normal Retirement Date.
4.05 COMMENCEMENT OF BENEFITS.
(a) Unless a Participant otherwise elects as provided
below, payment of benefits under Sections 4.01, 4.02, 4.03, and 4.04
will commence on the later of the Participant's Normal Retirement Date
and his Postponed Retirement Date. A Participant who has completed at
210
least fifteen (15) years of Vesting Service may elect to have payment
of reduced benefits under Section 4.03 or 4.04 commence on the first
day of an earlier month but in no event before the later of his
Severance Date and his sixtieth (60th) birthday.
(b) Any election under this Section 4.05 shall be made by
written notice designating the selected date and delivered to the
Pension Administrative Committee at least thirty (30) days in advance
of that date. The provisions of subsections (a) and (b) are hereby
expressly made subject to the terms of subsection (c) below.
(c) Notwithstanding anything to the contrary contained
elsewhere in the Plan:
(i) The payment of benefits under the Plan to any
Participant will:
(A) be distributed to him not later than the
Required Distribution Date (as defined in subsection
(c)(iii)), or
(B) be distributed to him commencing not later
than the Required Distribution Date in accordance with
regulations prescribed by the Secretary of the Treasury
(I) over the life of the Participant or over the lives
of the Participant and his Beneficiary, or (II) over a
period not extending beyond the life expectancy of the
Participant or the life expectancy of the Participant
and his Beneficiary.
(ii) (A) If the Participant dies after distribution to
him has commenced pursuant to subsection (c)(i)(B) but
before his entire interest in a benefit under the Plan
has been distributed to him, then the remaining portion
of that interest will be distributed at least as
rapidly as under the method of distribution being used
under subsection (c)(i)(B) at the date of his death.
(B) If the Participant dies before distribution
to him has commenced pursuant to subsection (c)(i)(B),
then, except as provided in subsections (c)(ii)(C) and
(c)(ii)(D), his entire interest in a benefit under the
Plan will be distributed within five (5) years after
his death.
(C) Notwithstanding the provisions of subsection
(c)(ii)(B), if the Participant dies before distribution
to him has commenced pursuant to subsection (c)(i)(B)
and if any portion of his interest in a benefit under
the Plan is payable (I) to or for the benefit of a
Beneficiary, (II) in accordance with regulations
prescribed by the Secretary of the Treasury over the
211
life of the Beneficiary or over a period not extending
beyond the life expectancy of the Beneficiary, and
(III) beginning not later than one (1) year after the
date of the Participant's death or such later date as
the Secretary of the Treasury may prescribe by regula-
tions, then the portion of such interest referred to in
this subsection (c)(ii)(C) shall be treated as
distributed on the date on which such distributions
begin.
(D) Notwithstanding the provisions of subsections
(c)(ii)(B) and (c)(ii)(C), if the Beneficiary referred
to in subsection (c)(ii)(C) is the Surviving Spouse of
the Participant, then:
(I) the date on which the distributions are
required to begin under subsection
(c)(ii)(C)(III) shall not be earlier than the
date on which the Participant would have
attained age 70 1/2, and
(II) if the Surviving Spouse dies before the distribu-
tions to such Spouse begin, then this subsection
(c)(ii)(D) shall be applied as if the Surviving
Spouse were the Participant.
(iii) For purposes of this subsection (c), the
"Required Distribution Date" means April 1 of the calendar
year following the calendar year in which the Participant
attains age 70 1/2; provided, however, that if the
Participant attained age 70 1/2 in calendar year 1988, the
Required Distribution Date means April 1, 1990, and further
provided that if the Participant attained age 70 1/2 prior
to January 1, 1988, the Required Distribution Date means the
April 1 following the later of the calendar year in which
the Participant: (A) attained age 70 1/2, or (B) terminated
service with all Employers, unless he was a five-percent
owner (as defined in Section 416 of the Code) of the Company
with respect to the Plan Year ending in the calendar year in
which he attained age 70 1/2, in which case clause (B) shall
not apply.
(iv) For purposes of this subsection (c), the life
expectancy of a Participant and his Spouse may be
redetermined, but not more frequently than annually.
4.06 NORMAL FORMS OF BENEFIT.
(a) If a Participant does not make a timely election not to
receive payments pursuant to this subsection (a) and to receive
payments pursuant to one of the optional forms of payment described in
Section 5.01 below, and has an Eligible Spouse at the time payments
212
under Section 4.01, 4.02, 4.03, or 4.04, above, commence, the benefits
payable thereunder to the Participant shall be payable as a Qualified
Joint and Survivor Annuity which shall be the Actuarial Equivalent of
the retirement benefit set forth in the applicable Section. Any elec-
tion by a Participant not to receive payments pursuant to this subsec-
tion (a) shall only be effective if the requirements contained in the
last sentence of Section 5.01(f) have been satisfied.
(b) If a Participant does not make a timely election not to
receive payments pursuant to this subsection (b) and to receive
payments pursuant to one of the optional forms of benefits described
in Section 5.01 below, and does not have an Eligible Spouse at the
time payments under Section 4.01, 4.02, 4.03, or 4.04, above, com-
mence, the benefits payable thereunder to the Participant shall be
payable as an annuity for the Participant's life ending on the first
day of the month during which his death occurs.
4.07 SURVIVING SPOUSE'S BENEFITS.
(a) Qualified Preretirement Survivor Annuity. Subject to
the last sentence of subsection (b) below:
(i) Upon the death of a Participant:
(A) Who dies after he has satisfied the require-
ments for a benefit under Section 4.03, or after he has
satisfied the Vesting Service requirements of Section
4.04 or Section 12.05, if applicable, and
(B) Who has not commenced receiving benefit
payments accrued under the Plan,
his Surviving Spouse shall be entitled to receive a "Qualified
Preretirement Survivor Annuity."
(ii) A Qualified Preretirement Survivor Annuity
payable to a Surviving Spouse shall be a survivor annuity
for the life of the Surviving Spouse based upon the Partici-
pant's Accrued Benefit at his Severance Date (but reduced as
provided below), payable at the following times:
(A) If the Participant shall have completed
fifteen (15) years of Vesting Service at his Severance
Date, and shall not have attained the age of sixty (60)
years on or prior to the date of his death, then such
Qualified Preretirement Survivor Annuity shall commence
on the first day of the month following the date that
would have been the Participant's sixtieth (60th)
birthday if he had lived until that date; provided,
however, his Surviving Spouse shall have the right to
request that payment of such Qualified Preretirement
Survivor Annuity be deferred until the first day of any
213
month after the date that would have been the
Participant's sixtieth (60th) birthday up to and
including the first day of the month following the date
that would have been the Participant's sixty-fifth
(65th) birthday. Any such request must be delivered in
writing to the Pension Administrative Committee at
least thirty (30) days prior to the date selected for
commencement of payment of such Qualified Preretirement
Survivor Annuity. Any such request may be revoked by
the Surviving Spouse by a subsequent written request
delivered to the Pension Administrative Committee at
least thirty (30) days prior to the date selected for
commencement in the request to be revoked.
(B) If the Participant (i) is working past his
Normal Retirement Date for an Employer as of the date
of his death, or (ii) shall have completed fifteen (15)
years of Vesting Service at his Severance Date and
shall have attained the age of sixty (60) years prior
to the date of his death, then such Qualified
Preretirement Survivor Annuity shall commence on the
first day of the month following the date of his death;
provided, however, that in the case of a Participant
described in clause (ii), his Surviving Spouse shall
have the right to request that payment of such
Qualified Preretirement Survivor Annuity be deferred
until the first day of any month after the date of the
Participant's death up to and including the first day
of the month following the date that would have been
the Participant's sixty-fifth (65th) birthday. Any
such deferral request shall be made and may be revoked
pursuant to the procedures described in paragraph (A)
next above.
(C) If the Participant (i) is not working past
his Normal Retirement Date for an Employer, whether or
not he has attained his Normal Retirement Date, as of
the date of his death, and (ii) shall have completed at
least five (5) but less than fifteen (15) years of
Vesting Service at his Severance Date, then such
Qualified Preretirement Survivor Annuity shall commence
on the first day of the month following the later to
occur of (i) the date of his death and (ii) the date
that would have been his sixty-fifth (65th) birthday if
he had lived until such date.
(iii) The amount of the Qualified Preretirement Sur-
vivor Annuity payable to a Surviving Spouse under this
subsection (a) shall be as follows:
(A) If the Participant shall have completed
fifteen (15) years of Vesting Service at his Severance
214
Date, and shall not have attained the age of sixty (60)
years on or prior to the date of his death, then the
amount of such Qualified Preretirement Survivor Annuity
shall be determined as if the Participant had
terminated employment on the date of his death, sur-
vived to his sixtieth (60th) birthday, Retired and com-
menced receiving his early retirement benefit pursuant
to Section 4.03 in the form of a Qualified Joint and
Survivor Annuity on his sixtieth (60th) birthday and
died on the day after his sixtieth (60th) birthday;
provided, however, that if the Surviving Spouse elects
to defer payment of the Qualified Preretirement
Survivor Annuity pursuant to subparagraph (a)(ii)(A) of
this Section, the amount of the Qualified Preretirement
Survivor Annuity shall be determined as if the
Participant had terminated employment on the date of
his death, survived to the selected commencement date,
Retired and commenced receiving a benefit in the form
of a Qualified Joint and Survivor Annuity on the
selected commencement date, and died on the next day.
(B) If the Participant (i) is working past his
Normal Retirement Date for an Employer as of the date
of his death, or (ii) shall have completed fifteen (15)
years of Vesting Service at his Severance Date and
shall have attained the age of sixty (60) years prior
to the date of his death, then the amount of such
Qualified Preretirement Survivor Annuity shall be de-
termined as if the Participant had Retired and com-
menced receiving a benefit in the form of a Qualified
Joint and Survivor Annuity on the day before the date
of his death; provided, however, that if the Surviving
Spouse elects to defer payment of the Qualified
Preretirement Survivor Annuity pursuant to subparagraph
(a)(ii)(B) of this Section, the amount of the Qualified
Preretirement Survivor Annuity shall be determined as
if the Participant had terminated employment on the
date of his death, survived to the selected
commencement date, Retired and commenced receiving a
benefit in the form of a Qualified Joint and Survivor
Annuity on the selected commencement date, and died on
the next day.
(C) If the Participant (i) is not working past
his Normal Retirement Date for an Employer, whether or
not he has attained his Normal Retirement Date, as of
the date of his death, and (ii) shall have completed at
least five (5) but less than fifteen (15) years of
Vesting Service then the amount of such Qualified
Preretirement Survivor Annuity shall be determined as
if the Participant had terminated employment on the
date of his death, survived to his sixty-fifth (65th)
215
birthday, Retired and commenced receiving a benefit in
the form of a Qualified Joint and Survivor Annuity on
his sixty-fifth (65th) birthday and had died on the day
after his sixty-fifth (65th) birthday.
Notwithstanding any provision of this clause (iii) to the
contrary, the benefit payable pursuant to this subsec-
tion (a) shall be based on the Participant's Accrued Benefit
at his Severance Date.
(iv) The Qualified Preretirement Survivor Annuity
payable to a Surviving Spouse pursuant to this Section shall
be payable in equal monthly installments until and including
the installment for the month in which the Surviving Spouse
dies.
(v) Notwithstanding the foregoing provisions of this
paragraph (a) the amount of the Qualified Pre-retirement
Survivor Annuity payable under this subsection (a) shall be
reduced by the Actuarial Equivalent of any payments made to
the Surviving Spouse in accordance with subsection (b) below
prior to the commencement of payment of the Qualified
Pre-retirement Survivor Annuity under the preceding clauses
of this subsection.
(vi) The amount of any Qualified Preretirement Survivor
Annuity shall be reduced by one-half of one percent (0.5%)
for each month by which the date payment of the Qualified
Preretirement Survivor Annuity commences precedes the date
the Participant would have attained the age of sixty-five
(65) years.
(b) Special Survivor Annuity.
(i) Upon the death of a Participant:
(A) Who has attained his thirty-fifth (35th)
birthday,
(B) Who has completed at least five (5) years of
Vesting Service, and
(C) Whose Vesting Service is terminated by such
death,
his Surviving Spouse shall be entitled to receive a monthly
pension equal to the retirement benefit determined for the
Participant as set forth in Section 4.01 above based on
Credited Service (as limited by subsection 4.01(d)) as of
the date of his death, commencing on the first day of the
month next following the death of such Participant and
ending with the earliest to occur of: (i) such Surviving
216
Spouse's death, (ii) such Surviving Spouse's remarriage if,
at the time of such remarriage, there are one or more
Dependent Children of such Participant entitled to receive a
benefit under Section 4.08 below, or (iii) the date when the
aggregate number of monthly payments that were made to such
Surviving Spouse pursuant to this Section 4.07(b), and to
the Participant's Dependent Children pursuant to
Section 4.08 below, equals one hundred twenty (120).
Notwithstanding the foregoing, if a Surviving Spouse's
benefit under this subsection (b) terminates by her
remarriage and, prior to the time that one hundred twenty
(120) payments have been made pursuant to this
Section 4.07(b) and Section 4.08 below, there are no longer
any Dependent Children of the applicable Participant
remaining, the Surviving Spouse (if still living) shall
again become eligible to receive the benefit described in
this subsection (b), commencing on the first day of the
month next following the month in which the benefit under
Section 4.08 ceased to be paid and ending with the earlier
to occur of: (i) such Surviving Spouse's death, or (ii) the
date when the aggregate number of monthly payments that were
made to such Surviving Spouse pursuant to this
Section 4.07(b), and to the Participant's Dependent Children
pursuant to Section 4.08 below, equals one hundred twenty
(120).
In any month in which a Surviving Spouse is eligible to
receive a monthly pension both under this subsection (b) and
under subsection (a) above, such Surviving Spouse shall
receive whichever monthly pension amount is the greater, but
not both, during the period of time that the monthly pension
is payable to the Surviving Spouse under this
subsection (b).
(c) Notwithstanding the provisions of this Section 4.07,
that portion of the Plan as in effect on December 31, 1983 that
provided a benefit to the Surviving Spouse of a Participant who died
prior to the commencement of his benefit shall apply in lieu of the
provisions of this Section 4.07 with respect to (i) any Employee who
died prior to August 23, 1984, or (ii) any Employee who did not
receive credit for an Hour of Service on or after August 23, 1984;
except with respect to any Employee who elected to be covered by the
provisions of this Section 4.07 pursuant to an opportunity provided in
accordance with the Retirement Equity Act of 1984.
(d) If a Participant shall die on or after the date of
commencement of pension benefit payments to him under the Plan,
payments shall be made to his Surviving Spouse or Beneficiary only in
accordance with the form of payment specified in Section 4.06(a), or
as elected by the Participant pursuant to Section 5.01, if applicable.
217
4.08 SURVIVING DEPENDENT CHILDREN'S BENEFIT. Upon the
death of a Participant:
(i) who has attained his thirty-fifth (35th) birthday,
(ii) who has completed at least five (5) years of Vesting
Service,
(iii) whose Vesting Service is terminated by such death,
(iv) who is not survived by a Surviving Spouse, and
(v) who is survived by one or more of his unmarried
children (including posthumous children, and adopted
children but only those adopted at least one (1) year
prior to the date of his death) under the age of
eighteen (18) years at the date of his death or, at the
date of his death, under the age of twenty-two (22)
years while then attending school or college full-time
(in this Section 4.08 called "Dependent Children");
or upon the death or remarriage of such a Participant's said Surviving
Spouse who is receiving, or entitled to receive, a benefit under
Section 4.07(b) above, the Dependent Children of such Participant
shall be entitled to a monthly pension benefit equal in the aggregate
to the monthly pension benefit which was being paid or would have been
payable to such Participant's said unremarried Surviving Spouse under
Section 4.07(b) above. The payment for any month shall be payable in
equal shares to those persons who meet the definition of "Dependent
Children" with respect to such Participant as of the last day of the
preceding month and as of the date of his death. Such surviving
Dependent Children's pension benefit shall be payable on the first day
of each month commencing with the month next following the month in
which such Participant or such Participant's Surviving Spouse dies, or
such Surviving Spouse remarries, as the case may be, and ending with
the earlier to occur of (i) the last payment prior to the time when
there are no longer any Dependent Children remaining; or (ii) the date
when the aggregate number of monthly payments that were made to such
Participant's said Surviving Spouse pursuant to Section 4.07(b) above,
and to his Dependent Children pursuant to this Section 4.08, equals
one hundred twenty (120).
4.09 DISABILITY BENEFITS. No benefits are provided under
the Plan solely by virtue of a Participant's disability.
4.10 RE-EMPLOYMENT AFTER TERMINATION OF SERVICE.
(a) If a Participant who has Retired and commenced
receiving a benefit is reemployed by an Employer after his Retirement,
such benefit shall continue to be paid notwithstanding his
reemployment.
218
(b) A Participant's benefit shall be suspended if he has
commenced receiving a benefit under Section 4.04 by reason of a
Severance Date other than Retirement and is reemployed for more than
three consecutive months by an Employer prior to his Normal Retirement
Date. In such event his benefit shall be suspended during such period
of reemployment beginning with the month following his completion of
three consecutive months of reemployment and up to his Normal
Retirement Date (subject to additional suspension as provided below).
(c) A Participant's benefit shall be suspended on and after
his Normal Retirement Date pursuant to subsection (d) if:
(i) He has commenced receiving a benefit under Section
4.04 by reason of a Severance Date other than Retirement and
is reemployed by an Employer on or after his Normal
Retirement Date for more than three consecutive months,
(ii) He has commenced receiving a benefit under
Section 4.04 by reason of a Severance Date other than
Retirement and is reemployed by an Employer before his
Normal Retirement Date but continues in employment with an
Employer after his Normal Retirement Date and such
employment continues for more than three consecutive month,
or
(iii) He continues in employment with an Employer
beyond his Normal Retirement Date without a prior
termination.
(d) In the case of a Participant described in subsection
(c)(i), (c)(ii), or (c)(iii), with respect to whom the additional
benefit accrued by reason of employment after his Normal Retirement
Date is less than the adjustment that would have been made to the
Participant's benefit if it had been increased to equal the Actuarial
Equivalent of the benefit accrued for such Participant at his Normal
Retirement Date, the Participant's benefit shall be suspended on and
after his Normal Retirement Date only in accordance with the following
provisions of this Section 4.10. Such provisions shall become
applicable to him as of the latest of (i) his Normal Retirement Date,
(ii) the first day of the month following his completion of three
consecutive months of reemployment, or (iii) the date as of which such
additional accrual is less than such adjustment.
(i) For purposes of this Section, the following
definitions shall apply:
(A) "Post-Retirement Date Service" means each
calendar month of employment of a Participant with an
Employer after the Participant's Normal Retirement Date
and subsequent to the time that:
219
(1) payment of a Vested Benefit commenced to
the Participant under Section 4.04 if he returned
to employment, or
(2) payment of a benefit would have
commenced to him if he had not remained in
employment,
if in either case the Participant completes forty (40)
or more Hours of Service in such calendar month. The
determination of the Employee's Employer with respect
to whether an Employee is performing Post-Retirement
Date Service shall be based on a reasonable and good
faith evaluation of the facts, and shall be conclusive
and binding.
(B) "Suspendable Amount" means:
(1) in the case of a benefit payable
periodically on a monthly basis for as long as a
life (or lives) continues, the monthly benefit
otherwise payable in a calendar month in which the
Participant is engaged in Post-Retirement Date
Service,
(2) in the case of a benefit payable other
than in the form described in clause (1) above,
the lesser of (a) the amount of such benefit that
would have been payable to the Participant if he
had been receiving monthly benefits under the Plan
since actual retirement based on a single life
annuity commencing at his actual retirement date;
or (b) the actual amount paid or scheduled to be
paid to the Participant for such month. Payments
which are scheduled to be paid less frequently
than monthly may be converted to monthly payments
for purposes of this clause (b).
(ii) Payment shall be permanently withheld of a
portion of a Participant's benefit, not in excess of the
Suspendable Amount, for each calendar month described in the
first two sentences of this subsection (d) during which the
Participant is employed in Post-Retirement Date Service.
(iii) If payments have been suspended pursuant to
subsection (d)(ii) above, such payments shall resume no
later than the first day of the third calendar month after
the calendar month in which the Participant ceases to be em-
ployed in Post-Retirement Date Service; provided, however,
that no payments shall resume until the Participant has com-
plied with the requirements set forth in subsection (d)(vi)
below. The initial payment upon resumption shall include
220
the payment scheduled to occur in the calendar month in
which payments resume and any amounts withheld during the
period between the cessation of Post-Retirement Date Service
and the resumption of payment, less any amounts which are
subject to offset pursuant to subsection (d)(iv) below.
(iv) Benefit payments made subsequent to Post-Retire-
ment Date Service shall be reduced (A) by the Actuarial
Equivalent of any benefits paid to the Participant prior to
the time he is reemployed by an Employer after his Normal
Retirement Date (such reduction will occur only if such
benefits are not repaid in full to the Trust before the
earlier of five years after the first date on which the
Participant is subsequently reemployed by an Employer, or
the close of the first period of five consecutive one-year
Breaks in Service commencing after the payment of such
benefits; and (B) by the amount of any payments previously
made during those calendar months in which the Participant
was engaged in Post-Retirement Date Service; provided,
however, that such reduction under (B) shall not exceed in
any one month, twenty-five (25) percent of that month's
total benefit payment (excluding amounts described in sub-
section (d)(iii) above) which would have been due but for
the offset.
(v) Any Participant whose benefit payments are
suspended pursuant to subsection (d)(ii) above, shall be
notified (by personal delivery or certified mail) during the
first calendar month in which payments are withheld, that
his benefits are suspended. Such notification shall
include: (A) a description of the specific reasons for the
suspension of payments; (B) a general description of the
Plan provisions relating to the suspension; (C) a copy of
the provisions; (D) a statement to the effect that
applicable Department of Labor regulations may be found at
Section 2530.203-3 of the Code of Federal Regulations; (E)
the procedure for appealing the suspension, which procedure
shall be governed by Section 7.06; and (F) the procedure for
filing a benefits resumption notification pursuant to
subsection (d)(vi) below. If payments subsequent to the
suspension are to be reduced by an offset pursuant to
subsection (d)(iv) above, the notification shall speci-
fically identify the periods of employment for which the
amounts to be offset were paid, the Suspendable Amounts
subject to offset, and the manner in which the Plan intends
to offset such Suspendable Amounts.
If the Summary Plan Description ("SPD") for the Plan
contains information that is substantially the same as
information required pursuant to this subsection (d)(v), the
notification required by this subsection (d)(v) may refer
the Participant to the relevant pages of the SPD. If the
222
notification refers to the SPD, the notification shall also
inform the Participant how to obtain a copy of the SPD, or
relevant pages thereof, and any request for the referenced
information shall be honored within thirty (30) days of the
receipt by the Participant's Employer of such request.
(vi) Payments shall not resume as set forth in
subsection (d)(iii) above until a Participant performing
Post-Retirement Date Service notifies his Employer in
writing of the cessation of such Service and supplies such
Employer with such proof of the cessation as such Employer
may reasonably require.
(vii) A Participant may request, pursuant to the pro-
cedure contained in Section 7.06, a determination whether
specific contemplated employment will constitute Post-
Retirement Date Service.
(e) In the case of a Participant covered by subsection (b),
(c)(i), or (c)(ii), above, the monthly benefit of such Participant
commencing by reason of his subsequent Severance Date (including
Retirement) shall be redetermined in accordance with the Plan. The
Vesting Service and Credited Service of such Participant for purposes
of such redetermination shall include the Vesting Service and Credited
Service which entitled him to a benefit by reason of such prior
Severance Date as well as all subsequent Vesting Service and Credited
Service (as limited by subsection 4.01(d) above). The monthly benefit
amount as so redetermined shall be adjusted, however, so that the
Actuarial Equivalent of the sum of the benefit amounts already paid by
reason of such prior Severance Date and such redetermined benefit will
equal the greater of the amount of such redetermined benefit or the
amount of the benefit that would have been payable from such new
Severance Date by reason of such prior termination of service.
4.11 FORFEITURES. If upon his Severance Date a Participant
(or his Beneficiary) does not become entitled to any benefit under
this Plan other than the Accrued Benefit attributable to his own
contributions, if any, his Accrued Benefit as of such Severance Date
attributable to Employer contributions shall be deemed a Forfeiture
and shall be used to reduce Employer contributions; PROVIDED, HOWEVER,
that except as expressly provided in Sections 7.05 and 7.07 below, a
Participant's Accrued Benefit under this Plan shall become
nonforfeitable after he attains his Normal Retirement Date or
completes five (5) years of Vesting Service, whichever occurs first.
In no event shall any Forfeitures of benefits hereunder for any reason
be applied to increase the benefits any Participant or Beneficiary
would otherwise receive under this Plan.
4.12 RIGHTS FIXED AT SEVERANCE DATE. All rights and
benefits provided under this Plan for a Participant or the Beneficiary
of a Participant are determined under the terms and provisions of the
Plan as they exist on the Participant's Severance Date and such rights
222
and benefits, as so determined, shall become fixed and shall not be
changed by any amendment to the Plan effective after such Severance
Date. Benefits shall not be decreased due to subsequent increases in
social security benefits.
4.13 RETURN OF PARTICIPANT'S CONTRIBUTIONS AND INTEREST.
None of the Participant, his Spouse, or his Beneficiary, may at any
time elect a return of such Participant's contributions to the Plan
and/or Credited Interest thereon. However, upon the death of the
Participant and his Spouse or other Beneficiary, if any, designated
under the form of payment applicable with respect to the Participant
under Sections 4.06 and 5.01, the excess, if any, of the amount of
such contributions and Credited Interest over the aggregate payments
made to the Participant and/or his Spouse or other Beneficiary shall
be paid in cash, as soon as practicable, to his designated
Beneficiary, or if none, then pursuant to Section 5.03, in a lump sum.
4.14 MAXIMUM BENEFIT. (a) Notwithstanding any other pro-
vision of the Plan, in no event may a Participant's annual retirement
income attributable to Employer contributions exceed the equivalent,
determined in accordance with subsection (f) below and with rules
determined by the Commissioner of the Internal Revenue Service
pursuant to Code Section 415, of a straight life annuity payment equal
to the lesser of:
(i) $120,000, or such other amount as may hereafter be
set forth in Section 415 of the Code or determined by
Treasury regulations issued pursuant to Section 415(d) of
the Code; or
(ii) one hundred percent (100%) of the Participant's
average annual compensation over the three consecutive
calendar years during which he had the greatest aggregate
compensation from all Employers, increased to reflect cost
of living adjustments determined by Treasury regulations
issued pursuant to Section 415 of the Code;
(iii) if the Participant has fewer than ten (10) years
of participation in the Plan, the amount determined under
the provisions of clause (i) above multiplied by a fraction,
the numerator of which is the Participant's number of years
of participation (or part thereof) and the denominator of
which is ten (10); provided, however, that such product
shall not be less than one-tenth of the amount determined
under clause (i); and
(iv) if the Participant has fewer than ten (10) years
of service with all Employers, the amount determined under
the provisions of clause (ii) above multiplied by a
fraction, the numerator of which is the Participant's number
of years of service with all Employers (or part thereof) and
the denominator of which is ten (10); provided, however,
223
that such product shall not be less than one-tenth of the
amount determined under clause (ii).
(b) The maximum benefit permitted under subsection (a)
above shall be in the form of a straight life annuity (with no
ancillary benefits) under a plan to which employees do not contribute
and under which no rollover contributions are made.
(c) Notwithstanding the foregoing provisions of this
Section 4.14, a retirement income payable with respect to the Plan
shall not be deemed to exceed the limitation of this Section 4.14 in a
Plan Year if the retirement income derived from Employer contributions
payable with respect to the Participant under this Plan and all other
defined benefit plans of any Employer do not in the aggregate exceed
$10,000 for such Plan Year. The provisions of this subsection (c)
shall not apply with respect to any Participant if an Employer has at
any time maintained a defined contribution plan in which the
Participant participated. If the Participant has fewer than ten (10)
years of service with all Employers, the $10,000 amount referred to
above shall be multiplied by a fraction, the numerator of which is the
Participant's number of years of service with all Employers (or part
thereof) and the denominator of which is ten (10); provided, however,
that the resulting product shall not be less than $1,000.
(d) Participant contributions will be treated as a separate
defined contribution plan maintained by the Company which is subject
to the limitations on contributions and other additions described in
Treasury Regulation Section 1.415-6.
(e) If the amount contained in subsection (a)(i) above is
increased pursuant to Treasury regulations issued under Section 415(d)
of the Code, such increase shall be effective as of January 1 of the
calendar year for which such Treasury regulations were effective and
shall apply with respect to Limitation Years ending with or within
that calendar year.
(f) For purposes of this Section 4.14:
(i) If the retirement income under the Plan is payable
in any form other than a straight life annuity, the deter-
mination as to whether the limitation described in sub-
section (a) above has been satisfied shall be made in
accordance with regulations prescribed by the Secretary of
the Treasury, by adjusting such benefit so that it is the
equivalent to the benefit described in such subsection (a).
For purposes of this subsection (f)(i), any ancillary
benefit which is not directly related to retirement income
benefits shall not be taken into account and that portion of
any joint and survivor annuity which constitutes a Qualified
Joint and Survivor Annuity shall not be taken into account.
224
(ii) If the retirement income under the Plan begins
before the Social Security Age, the determination as to
whether the dollar limitation set forth in subsection (a)
has been satisfied shall be made, in the case of a
retirement income commencing on or after age 62, in
accordance with regulations prescribed by the Secretary of
the Treasury, by adjusting such income so that it is
equivalent to a benefit beginning at the Social Security
Retirement Age. In the case of a retirement income
commencing prior to age 62, such determination shall be made
(A) by reducing such retirement income for the period
between the Social Security Retirement Age and age 62 in
accordance with the procedure described in the preceding
sentence, and (B) by further reducing such retirement income
to its Actuarial Equivalent for the period between age 62
and the date payment commences. The reduction under this
subsection (f)(ii) shall be made in such manner as the
Secretary of the Treasury may prescribe that is consistent
with the reduction for old-age insurance benefits commencing
before the Social Security Retirement Age under the Social
Security Act.
(iii) If the retirement income under the Plan begins
after the Social Security Age, the determination as to
whether the dollar limitation set forth in subsection (a)
has been satisfied shall be made, in accordance with
regulations prescribed by the Secretary of the Treasury, by
adjusting such benefit so that it is equivalent to such a
benefit beginning at the Social Security Age.
(iv)(A) For purposes of adjusting any benefit under
subsection (f)(i) above, the interest rate assumption shall
be the greater of five (5) percent or the rate specified in
Section 5.05 below.
(B) For purposes of adjusting any benefit under
subsection (f)(ii) above, the interest rate assumption
shall be the greater of five (5) percent or the rate
utilized in reducing the amount of retirement income
payable to a Participant on account of commencement
prior to such Participant's Normal Retirement Date
under Section 4.03 above.
(C) For purposes of adjusting any benefit under
subsection (f)(iii) above, the interest rate assumption
shall be five (5) percent.
(g) In the event that any Participant under this Plan is
also a Participant in a defined contribution plan or plans (as defined
in Section 415 of the Code) maintained by an Employer, the sum of the
defined benefit plan fraction and the defined contribution plan
fraction for any Limitation Year with respect to such Participant
225
shall not exceed one (1.0). If such sum exceeds one (1.0) and the
annual additions (as defined in Code Section 415(c)(2)) for such
Participant to such defined contribution plan or plans are not reduced
to obtain compliance with Code Section 415(e), then the Participant's
retirement income under this Plan shall be reduced to obtain such
compliance.
(h) (i) The total annual benefit payable to a Participant
under all qualified plans maintained by his Participating
Employer will not exceed the limits under Section 415 of the
Code as set forth in subsection (a) above.
(ii) For purposes of the limitations imposed by this
Section 4.14, a defined benefit plan or defined contribution
plan shall be treated as maintained by a Participating
Employer if the plan is maintained by any employer that is,
along with such Participating Employer, a member of a
controlled group of corporations or under common control
with such Employer (as defined in Section 414(b) and (c) of
the Code, as modified by Section 415(h) thereof) or a member
of an affiliated service group (as defined in Section 414(m)
of the Code).
(i) For purposes of this Section 4.14, the term "Limitation
Year" means the period to be used in determining the Plan's compliance
with Section 415 of the Code and the regulations thereunder. The
Company shall take all actions to ensure that the Limitation Year is
the same period as the Plan Year.
(j) For purposes of this Section 4.14:
(1) "compensation" shall mean wages, salaries,
fees for professional services actually rendered in the
course of employment with an Employer (including, but
not limited to commissions paid salesmen, compensation
for services on the basis of a percentage of profits,
tips and bonuses); shall include all compensation
actually paid or made available to a Participant; shall
include any other items or amounts paid to or for the
benefit of a Participant that is currently includible
in the Participant's gross income; and shall not
include contributions made by an Employer to a plan of
deferred compensation to the extent that, before the
application of Section 415 of the Code to the Plan, the
contributions are not includible in the gross income of
the Participant for the taxable year in which
contributed. In no event shall the compensation of a
Participant taken into account under the Plan for any
year exceed $150,000 (or such greater amount provided
pursuant to Section 401(a)(17) of the Code);
226
(2) "defined benefit plan fraction" for any
Limitation Year for a Participant means a fraction, the
numerator of which is the projected annual benefit of
the Participant under all defined benefit plans
maintained by the Company and all Affiliated Companies,
determined as of the close of the Limitation Year, and
the denominator of which is the lesser of (A) the
product of 1.25, and the dollar limitation in effect
under Section 415(b)(1)(A) of the Code for such
Limitation Year, or (B) the product of 1.4 and the
amount determined under subsection (a)(ii) of Sub-
section 4.14 hereof for such Limitation Year;
(3) "defined contribution plan fraction" for any
Limitation Year for any Participant is a fraction, the
numerator of which is the sum of the annual additions
to the Participant's accounts under all defined
contribution plans maintained by the Company and all
Affiliated Companies as of the close of the Limitation
Year, and the denominator of which is the sum of the
lesser of the following amounts determined for such
Limitation Year and for each prior year of service with
the Company or an Affiliated Company: (A) the product
of 1.25 and the dollar limitation in effect under
Section 415(c)(1)(A) of the Code for such Year (deter-
mined without regard to Section 415(c)(6) of the Code),
and (B) the product of 1.4 and the amount which may be
taken into account under Section 415(c)(1)(B) of the
Code with respect to such Participant for such
Limitation Year; and
(4) "Social Security Retirement Age" means the
age used as the retirement age for a Participant under
Section 216(l) of the Social Security Act, except that
such section shall be applied (i) without regard to the
age increase factor, and (ii) as if the early
retirement age under Section 216(l)(2) of that Act were
sixty-two (62).
(k) Notwithstanding any provision of this Section 4.13 to
the contrary, in the case of any benefit payable to or with respect to
any person who was a Participant in the Plan before January 1, 1983,
(1) the Pension Administrative Committee may elect to apply the
transition rules set forth in Sections 235(d) and 235(g)(3) of the Tax
Equity and Fiscal Responsibility Act of 1982, and (2) the limitations
of this Section shall be adjusted as necessary in accordance with the
provisions of Section 235(g)(4) of that Act.
Notwithstanding any provisions of this Section 4.14 to
the contrary, in the case of any benefit payable to or with respect to
any person who was a Participant in the Plan before January 1, 1987,
the limitations of this Section shall be adjusted, as necessary, in
227
accordance with the provisions of Section 1106(g)(3) of the Tax Reform
Act of 1986.
4.15 CERTAIN CASH OUTS AND REPAYMENTS. (a) For purposes
of this Section 4.15:
(i) For distributions made before September 1, 1996,
if, following a Participant's Severance Date prior to the
commencement of his monthly benefit payment, (i) the monthly
benefit payment payable hereunder to such Participant, or to
his Spouse or Beneficiary, shall fall below $100, and (ii)
the Actuarial Equivalent of the entire nonforfeitable
benefit to which he is entitled is not in excess of $2000,
the Pension Administrative Committee shall distribute to
such Participant, Spouse or Beneficiary the Actuarial
Equivalent of such nonforfeitable benefit in a lump sum as
soon as administratively feasible after such Severance Date.
(ii) For distributions made on or after September 1,
1996, if, following a Participant's Severance Date prior to
the commencement of his monthly benefit payment, the
Actuarial Equivalent of the entire nonforfeitable benefit to
which he is entitled is not in excess of $3,500, the Pension
Administrative Committee shall distribute to such Partici-
pant, Spouse or Beneficiary the Actuarial Equivalent of such
nonforfeitable benefit in a lump sum as soon as
administratively feasible after such Severance Date.
(iii) If a Participant who receives his benefit
pursuant to subsections 4.15(a)(i) or 4.15(a)(ii) is re-
employed by a Participating Employer and again becomes a
Participant in this Plan, the Credited Service with respect
to which such distributed benefit was determined shall be
disregarded unless such Participant repays to the Fund the
entire amount of such distribution, plus Credited Interest
thereon, before the earlier of five years after the first
date on which the Participant is subsequently reemployed by
an Employer, or the close of the first period of five conse-
cutive one-year Breaks in Service, commencing after the
distribution. For purposes of this Section 4.15, the
Actuarial Equivalent of a benefit to which a Participant,
Spouse or Beneficiary is entitled shall be:
(A) the Actuarial Equivalent of the benefit
payable at an Early Retirement Date pursuant to Section
4.03 in the case of a Participant, Spouse or
Beneficiary who is entitled to such benefit; or
(B) the Actuarial Equivalent of the Normal
Retirement Benefit payable pursuant to Section 4.01
with respect to a Participant, Spouse or Beneficiary
who is not described in clause (A) next above.
228
(b) If a Participant becomes entitled to a distribution
under the Plan following his Severance Date, and if:
(i) such Participant is a Constituent Plan Participant
or a Merged Plan Participant in a Constituent Plan or a
Merged Plan described in any of Articles XIII, XIV or XVI;
(ii) the aggregate Actuarial Equivalent of the entire
non-forfeitable benefit to which the Participant is entitled
under this Plan, and his accrued benefit under a Constituent
Plan or his Merged Plan Benefit under a Merged Plan, exceeds
$3500;
(iii) the Participant receives a lump sum
distribution of the Actuarial Equivalent of his accrued
benefit under a Constituent Plan or his Merged Plan Benefit
under a Merged Plan; and
(iv) following distribution of his accrued benefit
under a Constituent Plan or his Merged Plan Benefit under a
Merged Plan, the entire nonforfeitable benefit to which the
Participant is entitled under this Plan is not in excess of
$3500,
then such Participant may request, by written instrument delivered to
the Pension Administrative Committee within ninety (90) days after his
Severance Date, to receive payment of the Actuarial Equivalent of such
benefit under this Plan in a lump sum. In such event, the Pension
Administrative Committee shall distribute to such Participant the
Actuarial Equivalent of such benefit under this Plan, determined as of
the Severance Date, in a lump sum as soon as administratively feasible
after the date such written instrument is received.
(c) A lump sum benefit that is the Actuarial Equivalent of
zero dollars shall be deemed to be paid to a Participant whose
Severance Date or death occurs before he completes five (5) years of
Vesting Service, and before he attains his Normal
Retirement Date.
(d) (i) This subsection (d) applies to distributions made
pursuant to this Section 4.15 on or after January 1, 1993.
Notwithstanding any provision of the Plan to the contrary
that would otherwise limit a Distributee's election under
this subsection, a Distributee may elect, at the time and in
the manner prescribed by the Pension Administrative
Committee, to have any portion of an Eligible Rollover
Distribution paid directly to an Eligible Retirement Plan
specified by the Distributee in a Direct Rollover.
229
(ii) Definitions.
(A) "Eligible Rollover Distribution" is any
distribution pursuant to this Section 4.15 of all or
any portion of the balance to the credit of the
Distributee, except that an Eligible Rollover
Distribution does not include: any distribution that is
one of a series of substantially equal periodic
payments (not less frequently than annually) made for
the life (or life expectancy) of the Distributee or the
joint lives (or joint life expectancies) of the
Distributee and the Distributee's designated
beneficiary, or for a specified period of ten years or
more; any distribution to the extent such distribution
is required under Section 401(a)(9) of the Code; and
the portion of any distribution that is not includible
in gross income (determined without regard to the
exclusion for net unrealized appreciation with respect
to employer securities).
(B) "Eligible Retirement Plan" is an individual
retirement account described in Section 408(a) of the
Code, an individual retirement annuity described in
Section 408(b) of the Code, an annuity plan described
in Section 403(a) of the Code, or a qualified trust
described in Section 401(a) of the Code, that accepts
the Distributee's Eligible Rollover Distribution.
However, in the case of an Eligible Rollover
Distribution to the Surviving Spouse, an Eligible
Retirement Plan is an individual retirement account or
individual retirement annuity.
(C) "Distributee" includes an Employee or former
Employee. In addition, the Employee's or former
Employee's Surviving Spouse, and the Employee's or
former Employee's Spouse or former Spouse who is the
alternate payee under a qualified domestic relations
order as defined in Section 414(p) of the Code, are
Distributees with regard to the interest of the
Surviving Spouse, Spouse or former Spouse.
4.16 AUTHORIZED DEDUCTIONS. Notwithstanding anything to
the contrary contained herein, if a Participant who has commenced
receiving benefit payments hereunder or a Surviving Spouse or
Beneficiary of a deceased Participant (1) elects to join, or to
continue in, a medical or life insurance program provided by the
Company, and (2) authorizes the deduction of the amount to be paid by
him under any such program from the benefit payable to him pursuant to
the Plan, the Pension Administrative Committee may direct the Trustee
to deduct such amount (as from time to time certified to the Trustee
230
by the Pension Administrative Committee) from the benefit payable to
such Participant Surviving Spouse or Beneficiary pursuant to the Plan
and to pay such amount directly to the Company; provided, however,
that no deduction shall be made until the Company files a written
acknowledgement with the Pension Administrative Committee that
satisfies the requirements of Treasury Regulations
section 1.401(a)-13(e)(2), and no deduction shall be made after such
Participant, Surviving Spouse or Beneficiary shall have revoked his
authorization of such deduction.
ARTICLE V
Optional Forms of Pension
--------------------------------
5.01 ELECTION OF OPTION. (a) In lieu of the amount and
method of payment of a monthly benefit payable under Section 4.06, and
subject to the provisions of this Section 5.01, a Participant may
elect by written request (which may be an original request or a
revocation or an amendment of a prior request) to receive payment of
the Actuarial Equivalent of such benefit in accordance with such of
the following options as he may elect with the consent of his Eligible
Spouse if applicable:
(i) STRAIGHT LIFE ANNUITY. A monthly benefit payable
to a Participant for his lifetime;
(ii) TEN-YEARS CERTAIN. A monthly benefit of a
smaller amount, payable to the Participant for his lifetime
and, in the event of the Participant's death before the end
of a 10-year period commencing with the date on which
payments commenced, the same benefit amount shall be payable
to the Beneficiary designated by the Participant in a
writing filed with the Pension Administrative Committee
before his death for the remainder of such period; or
(iii) JOINT-AND-SURVIVOR. A monthly benefit payable
to the Participant for the joint lives of the Participant
and his Eligible Spouse and thereafter to the Eligible
Spouse if such Spouse survives the Participant in an amount
equal to 100% of the amount payable during their joint
lives.
(b) The value of the single-sum Actuarial Equivalent of any
benefit payable under the Plan to a Participant (other than a
Qualified Joint and Survivor Annuity) shall be greater than the value
of the single-sum Actuarial Equivalent of the benefit, if any, payable
to his Beneficiary or Eligible Spouse, computed at the date of his
Retirement.
232
(c) Within a reasonable time prior to the first to occur of
the commencement of benefit payments to a Participant and the
Participant's Normal Retirement Date, and again within a reasonable
time prior to the commencement of benefit payments to a Participant
who Retires on a Postponed Retirement Date, the Pension Administrative
Committee shall give such Participant written notice, in nontechnical
terms, of his right to elect not to receive benefits pursuant to
Section 4.06 above and of his right to make an election of an optional
form of payment of such benefits pursuant to subsection (a) above.
Such notice shall include a description of (i) the terms and con-
ditions of the normal form of benefit under Section 4.06, (ii) the
Participant's right to make and the effect of an election to waive
such form, (iii) the rights of the Participant's Eligible Spouse, if
any, not to consent to such election, (iv) the right to make, and the
effect of, a revocation of such an election, (v) the optional forms of
payment available under subsection (a) above, and (vi) the right to
request an estimate of the financial effect upon the Participant's
pension benefits of waiving the form of benefit available under
Section 4.06 above and electing one of the optional forms of payment
under subsection (a) above.
(d) The elections provided in Section 4.06 and
subsections (a) above may be made by the Participant by giving a
written notice of election to the Pension Administrative Committee at
any time during the Election Period consisting of the ninety (90) day
period ending on either the date benefit payments commence, or on his
Normal Retirement Date, as applicable. Any election provided in
Section 4.06 and subsection (a) above may be modified or revoked at
any time before the date benefit payments commence and, except as
otherwise provided in Section 5.02, shall be automatically revoked if
the Participant dies before commencement of payment of his benefits to
him.
(e) If a Participant makes a request for additional
information pursuant to subsection (c) above with respect to the
elections provided in Section 4.06 or subsection (a) above on or
before the last day of the Election Period, the Election Period shall
be extended to the extent necessary to include at least the ninety
(90) calendar days immediately following the day the additional
requested information is personally delivered or mailed to the
Participant.
(f) Any election by a Participant not to receive benefits
in the normal form set forth in Section 4.06 shall not take effect
unless such Participant's Eligible Spouse irrevocably consents in
writing to such election, such consent acknowledges the effect of such
election and such consent is witnessed by a representative of the Plan
or a notary public, unless the Participant establishes to the
satisfaction of the Pension Administrative Committee that such consent
may not be obtained because there is no Eligible Spouse, the Eligible
Spouse cannot be located, or because of such other circumstances as
the Secretary of the Treasury may by regulations prescribe. If a
232
Participant who has an Eligible Spouse elects to have benefits paid to
a Beneficiary other than such Eligible Spouse, the consent by such
Eligible Spouse required under this subsection (f) must acknowledge
the specific Beneficiary. In such event, the Participant may not
subsequently change Beneficiaries without the consent of his Eligible
Spouse. Any consent by an Eligible Spouse shall be irrevocable. Any
consent by an Eligible Spouse, or establishment that the consent of an
Eligible Spouse may not be obtained, under this subsection, shall be
effective only with respect to such Eligible Spouse.
5.02 DEATH OF PARTICIPANT BEFORE BENEFIT COMMENCEMENT. If
a Participant who has elected option (ii) or option (iii) under
Section 5.01(a) above shall die prior to his Normal Retirement Date
and prior to the date of commencement of payment pursuant to such
option, no death benefit will be payable under such option to his
Beneficiary (provided that nothing in this sentence shall be construed
as limiting any death benefit payable pursuant to Section 4.07 or 4.08
above). If a Participant who has elected option (i), (ii) or (iii)
under Section 5.01(a) above shall die on or after his Normal
Retirement Date, but before actual Retirement, and if such Participant
is survived by a Surviving Spouse or Dependent Children, the election
of such option shall be automatically revoked. If a Participant
described in the preceding sentence is not survived by a Surviving
Spouse or Dependent Children, a death benefit, if any, shall be
payable to his Beneficiary under such option as if he had retired at
the end of the calendar month next preceding the date of his death.
5.03 PAYMENTS UNDER OPTION (II). A Participant who has
elected option (ii) under Section 5.01(a) above may change his
designation of Beneficiary at any time before his death; but if no
Beneficiary has been designated or if the Beneficiary does not survive
the Participant, the Actuarial Equivalent of the remaining monthly
benefit amounts due under said option (ii) shall be paid to the estate
of such Participant in a lump sum. If the Beneficiary of an option
(ii) election by a Participant shall die subsequent to such Bene-
ficiary's becoming entitled to payments hereunder and no successor
Beneficiary shall have been properly designated by such Participant,
the Actuarial Equivalent of the remaining monthly benefit amounts due
thereunder shall be paid to the estate of such deceased Beneficiary in
a lump sum.
5.04 PAYMENTS UNDER OPTION (III). If the Participant has
elected option (iii) under Section 5.01(a) and his Eligible Spouse
shall die before the date on which payment of the Participant's
benefit commences, the option so elected will be automatically
canceled and the monthly benefit payable to such Participant hereunder
will be made as though the election of the option had not been made,
except that Participant may again elect an optional form of benefit in
accordance with Section 5.01(a) above.
5.05 ACTUARIAL EQUIVALENCE. (a) Actuarial Equivalence of
optional forms of benefit in the normal form, where no other
233
particular assumptions are required by ERISA or other applicable law
or regulations thereunder, shall be determined on the basis of the
adjustment factors specified in: Exhibit B (joint and 50% survivor),
Exhibit C (joint and 100% survivor), or Exhibit D (life with ten years
certain).
(b) The following shall apply for purposes of determining
the Actuarial Equivalent of a lump sum distribution:
(i) For distributions made before September 1, 1996,
the interest rate shall be
(A) the interest rate that would be used (as of
the first day of the applicable Plan Year) by the
Pension Benefit Guaranty Corporation for purposes of
determining the present value of a lump sum
distribution on plan termination if the Actuarial
Equivalent of the Participant's vested Accrued Benefit
(using such rate) does not exceed $25,000, or
(B) 120% of such Pension Benefit Guaranty
Corporation interest rate if the Actuarial Equivalent
of the Participant's vested Accrued Benefit exceeds
$25,000 (as determined under clause (A)). In no event,
however, shall the present value determined under
clause (B) be less than $25,000.
The mortality rate shall be that set forth in the 1984
Unisex Pension Table (set one year forward for males, four
years backward for females, with 75% male/25% female blended
annuities).
(ii) For distributions made on and after September 1,
1996, the interest rate shall be the annual rate of interest
on 30-year Treasury securities in effect for the month of
November last preceding the first day of the Plan Year in
which the distribution is made, and the mortality rate shall
be that set forth in the 1983 Group Annuity Mortality Table
(50% male and 50% female rates). Notwithstanding the
preceding sentence: (A) any determination of Actuarial
Equivalence made on and after September 1, 1996 and prior to
January 1, 1997 pursuant to this subsection 5.05(b)(ii)
shall use the annual rate of interest on 30-year Treasury
securities in effect either for the month of November, 1995,
or for the month of January, 1996, whichever results in the
larger payment, and (B) any determination of lump sum
Actuarial Equivalence made on and after January 1, 1997 and
prior to September 1, 1997 shall use the annual rate of
interest on 30-year Treasury securities in effect either for
the month of November, 1996 or for the month of January,
1997, whichever results in the larger payment.
234
(c) Notwithstanding the foregoing, for purposes of deter-
mining the Actuarial Equivalent of a benefit accrued for a Participant
at his Normal Retirement Date under Section 4.10(d)(iv) and 4.10(e),
an interest rate of 5% shall be used. For purposes of Plan funding,
the Actuary shall retain the right to modify the actuarial assumptions
as needed to enable certification of Plan costs on a reasonable and
appropriate basis. Notwithstanding the foregoing, except as otherwise
permitted by law, in no event shall this Section 5.05 be applied to
reduce the Accrued Benefit of any Participant below the Accrued
Benefit to which he was entitled on the date as of which this Section
was incorporated into the Plan or the effective date of any amendment
to this Section, based on his Credited Service and Covered and Excess
Compensation (as defined in Article II on such date) to such date, and
on the terms of the Plan as in effect immediately prior to such date.
5.06 Other Benefits. This Plan provides for no benefits
payable in the event of death, dismissal, resignation or other
termination of employment of a Participant except as specifically set
forth in Articles IV and V hereof, and except upon termination of this
Plan as set forth in Article XI below, and Participants and their
Surviving Spouses and Beneficiaries shall be entitled to only the
benefits expressly provided for in the Plan.
ARTICLE VI
Contributions
-------------
6.01 COMPANY CONTRIBUTIONS. For each Plan Year during the
continuance of the Plan, the Company shall pay the entire cost of the
Plan with respect to Participants in its employment, and in the
employment of other Participating Employers, and their Spouses and
Beneficiaries; and intends, but does not guarantee, to contribute to
the Fund an amount which will, as shown on the annual report of the
Plan's Actuary, meet the minimum funding standards of Section 412 of
the Code and Sections 302 through 306 of ERISA and the regulations
thereunder. All Company contributions to the Plan are conditioned
upon the qualification of the Plan under Section 401(a) of the Code
and upon deductibility of the contribution under Section 404 of the
Code.
6.02 EMPLOYEE CONTRIBUTIONS. After December 31, 1972, the
Participants are neither required nor permitted to make contributions
to the Fund under the Plan.
235
ARTICLE VII
Miscellaneous Provisions Respecting Participants
------------------------------------------------
7.01 INFORMATION FROM PARTICIPANTS. Participants shall
furnish to the Pension Administrative Committee such information as it
considers necessary or desirable for the purpose of administering the
Plan. If such information is not submitted or shows that such
information previously has been misstated on the records of the Plan,
the Pension Administrative Committee will make such corrections and
adjustments for the purposes of the Plan in accordance with the
available facts as it considers appropriate.
7.02 EMPLOYER RECORDS CONTROLLING. The regularly kept
records of each Employer shall be conclusive and binding upon all
persons with respect to the nature and length of employment, the type
and amount of compensation paid and the manner of payment thereof, the
type and length of absence from work and all other matters contained
therein relating to Employees of such Employer.
7.03 SPENDTHRIFT CLAUSE. (a) Except as provided in
subsection (b) below, or Section 8.07 of the Plan, benefit amounts
payable under the Plan to a Participant, a Spouse, or a Beneficiary
(except a minor or person under legal disability), shall be made only
to him and upon his personal receipt; and no benefit payable under the
provisions of this Plan shall be subject in any manner to antici-
pation, alienation, sale, transfer, assignment, pledge, encumbrance or
charge, and any attempt to anticipate, alienate, sell, transfer,
assign, pledge, encumber or charge shall be void; nor shall the Fund
or any part thereof be in any manner liable for or subject to the
debts, contracts, liabilities, engagements or torts of the person
entitled to any benefit payment.
(b) Notwithstanding the provisions of subsection (a) above,
all or any part of the Accrued Benefit of a Participant shall be
subject to and payable in accordance with the applicable requirements
of any Qualified Domestic Relations Order, as that term is defined in
Section 206(d)(3) of ERISA, and the Pension Administrative Committee
shall direct the Trustees to provide for payment in accordance with
such Order and Section and any regulations promulgated under such
Section. All such payments pursuant to Qualified Domestic Relations
Orders shall be subject to reasonable rules and regulations promul-
gated by the Pension Administrative Committee; provided that such
rules and regulations are consistent with such Section. If prior to
the commencement of payment to or with respect to a Participant of any
benefit hereunder, any amount of his Accrued Benefit is paid to an
alternate payee or payees pursuant to a Qualified Domestic Relations
Order, the amount of his Accrued Benefit shall be reduced by the
Actuarial Equivalent of any such payment.
236
7.04 NOT EMPLOYMENT CONTRACT. Nothing contained in this
Plan shall be construed as a contract of employment between any
Employer and any Employee, or as giving the right to any Employee to
be continued in the employment of such Employer or as a limitation of
the right of any Employer to discharge any Employee at any time with
or without cause.
7.05 FAILURE TO MAINTAIN CONTACT. Each person entitled to
benefits under this Plan shall file with the Pension Administrative
Committee from time to time in writing his complete mailing address
and each change of mailing address. Any check representing payment
hereunder and any communication addressed to a Participant or to any
other person at his last address so filed, or if no such address has
been filed then at his last address indicated on the records of the
Employer, shall be deemed to have been received by such person for all
purposes of the Plan; and neither the Pension Administrative
Committee, nor the Employer, nor the Trustees, shall be obliged to
search for or ascertain the location of any such person. If a check
representing payment of benefits hereunder to a Participant (or a
Surviving Spouse or Beneficiary) is returned unclaimed to the Pension
Administrative Committee and such benefits remain unclaimed for two
years, the benefits of the Participant (or Surviving Spouse or
Beneficiary) shall be deemed forfeited; PROVIDED, HOWEVER, that if at
any time thereafter the Participant (or Surviving Spouse or Benefi-
ciary) makes a claim for such benefits, such benefits shall be rein-
stated and may be paid as an expense of the Plan.
7.06 CLAIMS. No claim or application for benefits is
required for commencement of benefits under this Plan. Any claim for
benefits which are not received shall be made in writing to the
Pension Administrative Committee. In the event a claim for benefits
is wholly or partially denied by the Pension Administrative Committee,
the Pension Administrative Committee shall, within a reasonable period
of time, but no later than ninety (90) days after receipt of the
claim, notify the claimant in writing of the denial of the claim. If
the claimant shall not be notified in writing of the denial of the
claim within ninety (90) days after it is received by the Pension
Administrative Committee, the claim shall be deemed denied. A notice
of denial shall be written in a manner calculated to be understood by
the claimant, and shall contain (a) the specific reason or reasons for
denial of the claim, (b) a specific reference to the pertinent Plan
provisions upon which the denial is based, (c) a description of any
additional material or information necessary for the claimant to
perfect the claim, together with an explanation of why such material
or information is necessary, and (d) an explanation of the Plan's
review procedure. Within sixty (60) days of the receipt by the claim-
ant of the written notice of denial of the claim, or within sixty (60)
days after the claim is deemed denied as set forth above, if
applicable, the claimant may file a written request with the Pension
Administrative Committee that it conduct a full and fair review of the
denial of the claimant's claim for benefits, including the conducting
of a hearing, if deemed necessary by the Pension Administrative
237
Committee. In connection with the claimant's appeal of the denial of
his benefit, the claimant may review pertinent documents and may
submit issues and comments in writing. The Pension Administrative
Committee shall render a decision on the claim appeal promptly, but
not later than sixty (60) days after the receipt of the claimant's
request for review, unless special circumstances (such as the need to
hold a hearing, if necessary) require an extension of time for
processing, in which case the sixty (60) day period may be extended to
one hundred and twenty (120) days. The Pension Administrative
Committee shall notify the claimant in writing of any such extension.
The decision upon review shall (i) include specific reasons for the
decision, (ii) be written in a manner calculated to be understood by
the claimant and (iii) contain specific references to the pertinent
Plan provisions upon which the decision is based.
7.07 SPECIAL BENEFIT LIMITATIONS. To prevent
discrimination in favor of Highly Compensated Participants, the
provisions of this Section 7.07 shall be applicable notwithstanding
anything elsewhere contained in the Plan to the contrary.
(a) In this Section, the following terms shall have the
meaning stated below:
1. "Accrued Benefit" shall have the meaning set forth
in Article II.
2. "Actuarial Equivalent" shall have the meaning set
forth in Article II.
3. "Benefit" shall include among other benefits under
the Plan, loans in excess of the amounts set forth in
Section 72(p)(2)(A) of the Code, any periodic income, any
withdrawal values payable to a living Employee or former
Employee and any death benefits under the Plan not provided
for by insurance on the Employee's or former Employee's
life.
4. "Covered Compensation" shall have the meaning set
forth in Article II.
5. "Current Liabilities" shall have the meaning set
forth in Section 412(1)(7) of the Code.
6. "Highly Compensated Participant" shall mean a
Participant who, during the current Plan Year or the
preceding Plan Year, (a) was at any time a 5% owner of the
Company or any Employer, (b) received Covered Compensation
from the Company or any Employer in excess of $75,000 (or
such greater amount provided by the Secretary of the
Treasury pursuant to Section 414(q) of the Code), (c)
received Covered Compensation from the Company or any
Employer in excess of $50,000 (or such greater amount
238
provided by the Secretary of the Treasury pursuant to
Section 414(q) of the Code) and was in the top paid group of
Employees for such Plan Year, or (d) was at any time an
officer of the Company or any Employer and received Covered
Compensation from the Company or any Employer greater than
50% of the amount in effect under Section 415(b)(1)(A) of
the Code for such Plan Year. The provisions of Section
414(q) of the Code shall apply in determining whether a
Participant is a Highly Compensated Participant. The
Company for any Plan Year may elect to identify Highly
Compensated Participants based upon the current Plan Year to
the extent permitted by Section 414(q) of the Code and
regulations issued thereunder.
7. "Social Security Supplement" shall have the
meaning set forth in Internal Revenue Service Regulation
Section 1.411(a)-7(c)(4)(ii).
(b) LIMITATIONS.
1. In the event of termination of the Plan, the
Benefit of any Highly Compensated Participant (and any
former Highly Compensated Participant) is limited to a
Benefit that is nondiscriminatory under Section 401(a)(4) of
the Code.
2. In any Plan Year, the payments under the Plan to
or on behalf of any Employee described in paragraph (c)
shall not exceed an amount equal to the payments that would
be made to or on behalf of the Employee in that Plan Year
under:
(A) A straight life annuity that is the Actuarial
Equivalent of the Accrued Benefit and other Benefits to
which the Employee is entitled under the Plan (other
than a Social Security Supplement), and
(B) The amount of the payments that the Employee
is entitled to receive under a Social Security
Supplement.
3. The restrictions in subparagraph 2 above do not
apply, if any of the following requirements is satisfied:
(A) After payment to or on behalf of an Employee
described in paragraph (c) of all Benefits payable to
or on behalf of the Employee, the value of Plan assets
equals or exceeds 110% of the value of Current
Liabilities,
(B) The value of Benefits payable to or on behalf
of an Employee described in paragraph (c) is less than
239
1% of the value of the Current Liabilities before
distribution, or
(C) The value of the Benefits payable to or on
behalf of an Employee described in paragraph (c) does
not exceed the amount described in Section
411(a)(11)(A) of the Code.
(c) The Employees whose Benefits are restricted on
distribution include all Highly Compensated Participants and former
Highly Compensated Participants. A Highly Compensated Participant or
former Highly Compensated Participant is not subject to restriction
under this Section if he is not one of the 25 (or larger number chosen
by the Company) nonexcludable Employees and former Employees of the
Employers with the largest amount of Covered Compensation in the
current or in any prior Plan Year.
ARTICLE VIII
Provisions Relating to The Plan Committees
-----------------------------------------
8.01 ALLOCATION OF RESPONSIBILITY AMONG FIDUCIARIES FOR
TRUST ADMINISTRATION. The Company ("Named Fiduciary"), Pension
Finance Committee, Pension Administrative Committee and Trustees
("Fiduciaries") shall have only those specific powers, duties,
responsibilities and obligations as are specifically given them under
this Plan and the Trust. In general, the Company, through the Board,
shall have the sole right to determine who shall be the Trustees
(subject to the terms of the Trust), the members of the Pension
Finance Committee and the members of the Pension Administrative
Committee; the sole right to determine the funding policy of the Fund
(within the limits set by the Actuary); and the sole responsibility to
amend or terminate, in whole or in part, the Plan. The Company shall
have the sole responsibility for making the contributions necessary to
provide benefits under the Plan. The Pension Administrative Committee
shall have the responsibility for administration of the Plan. The
Trustees shall have the responsibility for and shall control and
manage the operation and administration of the Trust and the assets
held under the Trust in accordance with the Trust provisions. Each
Fiduciary may rely upon any direction, information or action of
another Fiduciary as being proper under the Plan, and is not required
under the Plan to inquire into the propriety of any such direction,
information or action. It is intended under this Plan that each
Fiduciary shall be responsible for the proper exercise of its own
powers, duties, responsibilities and obligations under this Plan and
shall not be responsible for any act or failure to act of another
Fiduciary. No Fiduciary guarantees the Fund in any manner against
investment loss or depreciation in asset value. Any person may serve
in more than one fiduciary capacity with respect to the Plan or Trust
if, pursuant to the Plan and/or Trust Agreement, he is assigned or
delegated any multiple fiduciary capacities.
240
8.02 PENSION FINANCE COMMITTEE. The Pension Finance
Committee shall perform such duties and have such authority as is
granted to it in the Trust Agreement, the provisions of which are
hereby incorporated by reference. The Pension Finance Committee shall
consist of one or more members who may be, but are not required to be,
Employees. The members of the Pension Finance Committee shall be
appointed by the President of the Company and shall serve at his
discretion.
8.03 PENSION ADMINISTRATIVE COMMITTEE. Except to the
extent that particular responsibilities are assigned or delegated to
other Fiduciaries, pursuant to the Trust Agreement or other Sections
of the Plan, the Pension Administrative Committee shall have the
responsibility for administration of the Plan and shall have such
powers as are necessary to carry out the provisions of the Plan. The
Pension Administrative Committee shall consist of such members, not
less than three (3), as shall from time to time be appointed and
acting hereunder. The Pension Administrative Committee may also be
the administrator of any other benefit plan or plans of any Employer
if the President so provides. Each member of the Pension
Administrative Committee shall be appointed by the President of the
Company and shall thereafter serve until his death, resignation or
removal from such office. Any member may resign at any time by notice
in writing to the President of the Company and to the remaining
members of the Pension Administrative Committee. The President of the
Company may remove any member of the Pension Administrative Committee
at any time by written notice to him and to the remaining members of
the Pension Administrative Committee. Members of the Pension
Administrative Committee may or may not be Employees. The Company
shall notify the Trustees in writing of the membership of the Pension
Administrative Committee and any changes therein and the Trustees will
be protected in relying on such written notice in dealing with the
Pension Administrative Committee.
The Pension Administrative Committee shall interpret the
Plan and shall solely determine all questions arising in the
administration, interpretation and application of the Plan, including
but not limited to, questions of eligibility and the status and rights
of Participants, Beneficiaries and other persons. The regularly kept
records of the Company shall be conclusive and binding upon all
persons with respect to an Employee's age, time and amount of Covered
Compensation and the manner of payment thereof, and all other matters
contained therein relating to Employees. All rules and determinations
of the Pension Administrative Committee shall be uniformly and
consistently applied to all persons in similar circumstances and shall
be conclusive and binding on all persons.
8.04 THE SECRETARY OF THE PENSION ADMINISTRATIVE COMMITTEE.
The Pension Administrative Committee will appoint a Secretary who may,
but need not, be a member of the Pension Administrative Committee, and
any document required to be filed with, or any notice required to be
given to, the Pension Administrative Committee will be properly filed
241
or given if mailed by registered mail, or delivered, to the Secretary
of the Pension Administrative Committee in care of the Company. The
Company shall notify the Trustees in writing of the person appointed
to act as Secretary of the Pension Administrative Committee and of any
changes therein, and the Trustees will be protected in relying upon
such written notice in dealing with the Secretary. The Secretary
shall be the agent of the Plan for service of process.
8.05 RECORDS AND REPORTS OF THE PENSION ADMINISTRATIVE COM-
MITTEE. The Pension Administrative Committee shall have (a) the
responsibility to comply with the reporting and disclosure require-
ments with respect to the Plan, including annual reports to the
Department of Labor and the Internal Revenue Service and reports and
premium payments to the Pension Benefit Guaranty Corporation, and (b)
such other assignments with respect to the administration of the Plan
designated by the President. The Pension Administrative Committee
shall also exercise such authority and responsibility as it deems
appropriate in order to comply with ERISA and governmental regulations
issued thereunder relating to records of Participants' Vesting and
Credited Service, Accrued Benefits, and whether such benefits are
nonforfeitable under the Plan.
8.06 PENSION ADMINISTRATIVE COMMITTEE'S POWERS. The
Pension Administrative Committee, as the same shall be from time to
time constituted, shall have full power and authority, within the
limits provided by the Plan:
(i) To determine all questions arising concerning the
construction and interpretation of the Plan and in its
administration, including, but not by way of limitation, the
determination of the rights or eligibility under the Plan of
Employees and Participants and their Eligible Spouses and
Beneficiaries, and the amount of their respective benefits,
and of the initial and continuing eligibility of a
Participant's Surviving Spouse and children for benefits
hereunder; and all such determinations shall be final and
binding upon all persons whomsoever;
(ii) To adopt such rules and regulations as it may
deem reasonably necessary for the proper and efficient
administration of the Plan and consistent with its purpose;
(iii) To enforce the Plan, in accordance with its
terms and with its own rules and regulations;
(iv) To direct the Trustees with respect to all
matters involving distributions from the Fund;
(v) To receive and review the periodic reports of the
Actuary;
242
(vi) To prepare and distribute, in such manner as the
Pension Administrative Committee determines to be
appropriate, information explaining the Plan;
(vii) To create subcommittees and appoint agents, and
to delegate such of its rights, powers and discretions to
such subcommittees or agents as it deems desirable; and
(viii) To do all other acts, in its judgment necessary
or desirable, for the proper and advantageous administration
of the Plan;
and the due exercise by the Pension Administrative Committee of any
and all of such powers and authorities shall be conclusive and binding
on all persons whomsoever for the purposes of the Plan.
8.07 DISTRIBUTIONS TO PERSONS UNDER DISABILITY. In the
event any portion of the Fund becomes distributable under the terms
hereof to any person who is a minor or under a legal disability or is,
although not adjudicated incompetent by reason of illness or mental
disability, in the opinion of the Pension Administrative Committee
unable properly to handle his own affairs, the Pension Administrative
Committee, in its sole discretion, may direct that such distributions
shall be made in any one or more of the following ways:
(a) Directly to said minor or other person;
(b) To the legal guardian or conservator of said minor or
other person;
(c) To the spouse, parent, brother, sister, child or other
relative of said minor or other person for the use of said minor
or other person; or
(d) For the expenditures of the same for the education,
health, maintenance and support of said minor or other person.
Except as to (d) above, the Pension Administrative Committee shall not
be required to see to the application of any distributions so made to
any of said persons, but his or their receipts therefor shall be a
full discharge of the liability of the Pension Administrative
Committee and the Fund to such minor or other person therefor.
8.08 COMMITTEE ACTIONS. The Pension Administrative
Committee and each subcommittee shall act with or without a meeting by
the vote or concurrence of a majority of its members; but no member
who is a Participant shall take part in Pension Administrative
Committee action on any matter that has particular reference to his
own interest hereunder. A dissenting Pension Administrative Committee
member who within a reasonable time after he has knowledge of any
action or failure to act by the majority, registers his dissent in
writing delivered to each other Committee members, the Secretary, the
243
Board, and the Trustees shall not be responsible for any such action
or failure to act. All written directions by the Pension
Administrative Committee may be made over the signature of its
Secretary or the signatures of a majority of its members and all
persons shall be protected in relying on such written directions.
8.09 COMMITTEE EXPENSES. The Company shall provide the
Committees with all of the clerical, bookkeeping and stenographic help
and facilities that may be necessary to enable it to perform its
functions hereunder for the cost of which the Company may be
reimbursed out of the Fund if requested by the Company. The
Committees may appoint actuaries, consultants, accountants, legal
counsel, or other agents, including the Trustees with their consent,
as they deem advisable to assist in carrying out their duties
hereunder.
8.10 RULES AND DECISIONS. Subject to Section 5.05 above,
the Committees may adopt such rules and actuarial tables as they deem
necessary, desirable or appropriate. All rules and decisions of the
Committees shall be uniformly and consistently applied to all Partici-
pants in similar circumstances. When making a determination or
calculation, the Committees shall be entitled to rely upon information
furnished by a Participant, Spouse, or Beneficiary, the Company, an
Employer, legal counsel, the Actuary or the Trustees.
8.11 INDEMNIFICATION BY THE COMPANY. The Committees and
the individual members thereof, shall be indemnified by the Company
against any and all liabilities arising by reason of any act or
failure to act in good faith pursuant to the provisions of the Plan,
including expenses reasonably incurred in the defense of any claim
relating thereto.
8.12 FIDUCIARY DUTIES. All Fiduciaries shall discharge
their duties solely in the interest of the Participants, Spouses and
Beneficiaries and for the exclusive purpose of (a) providing benefits
to Participants, Spouses and their Beneficiaries, and (b) defraying
reasonable expenses of administering the Plan and Trust. They shall
discharge their duties with care, skill, prudence and diligence under
the circumstances then prevailing that a prudent man acting in a like
capacity and familiar with such matters would use in the conduct of an
enterprise of a like character and with like aims.
8.13 PROHIBITED TRANSACTIONS TO BE AVOIDED. The
Fiduciaries shall not take any action, and shall not cause the Trust
to engage in any transaction, prohibited under or in violation of Part
4 of Title I of ERISA, or which would subject any person or the
Company to imposition of a tax under Section 4975 of the Code.
8.14 INFORMATION TO BE PROVIDED TO PARTICIPANTS AND OTHERS.
At least once in each Plan Year, the Pension Administrative Committee
shall furnish to each Participant, Spouse and Beneficiary requesting
244
the same in writing a statement indicating on the basis of the latest
available information:
(a) his total Accrued Benefit, under the Plan;
(b) his total accrued benefit, if any, under a Prior Plan;
and
(c) his nonforfeitable pension benefits, if any, which have
accrued, or the earliest date on which benefits will become
nonforfeitable.
For every Plan Year, the Pension Administrative Committee shall
furnish to every Participant:
(i) whose employment is terminated during said Plan
Year,
(ii) who is entitled to a deferred nonforfeitable
benefit under the Plan, and
(iii) who was paid no benefit during said Plan Year,
a statement of the nature, amount and form of the deferred
nonforfeitable benefits to which such Participant is entitled. The
Pension Administrative Committee shall furnish and make available to
Participants, Spouses and Beneficiaries, and to the Secretary of Labor
or his delegate and to the Secretary of the Treasury or his delegate,
such plan descriptions, summaries, reports, registration statements,
notifications and other documents that may be required by ERISA and
the Code and regulations thereunder.
8.15 ANNUAL REPORTS. The Pension Finance Committee and the
Pension Administrative Committee shall prepare, or cause to be
prepared, an annual report for each Plan Year containing such
financial statement, actuarial reports and other information in such
form and for such delivery and availability at such times and in such
manner, all as may be required by ERISA and the Code and regulations
thereunder and the Pension Administrative Committee shall retain such
records for such periods as may be required by such laws and
regulations.
245
ARTICLE IX
Provisions Relating to the Trust Fund
-------------------------------------
9.01 PURPOSE OF FUND. The Fund is maintained for the
purposes of the Plan and the assets thereof will be held, invested,
administered and distributed in accordance with the terms of the
Trust.
9.02 NON-DIVERSION OF FUND. The Fund will be used and
applied only in accordance with the Plan and no part of the principal
or income of the Fund will be used for or diverted to purposes other
than for the exclusive benefit of Participants, and their Spouses and
Beneficiaries, in accordance with the provisions hereof, and for the
payment, if not paid by the Company, of the expenses referred to in
Section 9.03 below. Except as otherwise provided in Section 11.01
below, no Employer shall have any right, title or interest in the Fund
or any part thereof and none of the contributions made thereto by the
Company will revert to any Employer. However, without regard to the
foregoing provisions of this Section 9.02:
(i) If contribution under the Plan is conditioned on
initial qualification of the Plan under Section 401(a) of
the Code and the Plan receives an adverse determination with
respect to its initial qualification, the Trustee shall,
upon written request of the Company, return to the Company
the amount of such contribution (increased by earnings
attributable thereto and reduced by losses attributable
thereto) within one calendar year after the date that
qualification of the Plan is denied, provided that the
application for determination is made by the time prescribed
by law for filing the Company's return for the taxable year
in which the Plan is adopted, or such later date as the
Secretary of the Treasury may prescribe;
(ii) If a contribution is conditioned upon the
deductibility of the contribution under Section 404 of the
Code, then, to the extent the deduction is disallowed, the
Trustee shall upon written request of the Company, return
the contribution (to the extent disallowed) to the Company
within one year after the date the deduction is disallowed;
(iii) If a contribution or any portion thereof is made
by the Company by a mistake of fact, the Trustee shall, upon
written request of the Company, return the contribution or
such portion to the Company within one year after the date
of payment to the Trustee; and
(iv) Earnings attributable to amounts to be returned
to the Company pursuant to subsection (b) or (c) above shall
not be returned and losses attributable to amounts to be
246
returned pursuant to subsection (b) or (c) shall reduce the
amount to be so returned.
9.03 FUND EXPENSES. All expenses incurred in the
Administration of the Plan, including, but not limited to, expenses of
the Company, the Pension Finance Committee and the Pension
Administrative Committee and the expenses and compensation of their
counsel, consultants, actuaries, accountants and other agents, and the
expenses incurred by the Trustees in the administration of the Fund,
including fees for legal services rendered to the Trustees, such
compensation to the Trustees as may be agreed upon from time to time
between the Company and the Trustees, and all other proper charges and
expenses of the Trustees and of their agents and counsel, shall be
paid from the Fund except to the extent the Company elects to pay such
items. All taxes of any kind whatsoever that may be levied or
assessed under existing or future laws upon the Fund or the income
thereof, and investment expenses, shall be paid from the Fund.
ARTICLE X
Miscellaneous Provisions Respecting the Employers
-------------------------------------------------
10.01 NON-LIABILITY OF EMPLOYERS AND AGENTS. The Company
will make contributions to the Fund for the purpose of providing the
benefits under the Plan, but neither the Company, nor any other
Employer, nor any of the officers or employees of the Company or any
other Employer, guarantees in any manner the payment of such benefits.
All contributions made by the Company will be paid into the Fund and
all benefits payable under the Plan will be paid from the Fund alone.
Any person claiming benefits under the Plan will look solely to the
Fund for payment and no Participant, Spouse, or Beneficiary, shall
have any right to, or interest in, any part of the Fund assets upon
Retirement or otherwise except as, and to the extent, expressly
provided in this Plan.
10.02 AMENDMENT OF PLAN. This Plan may be amended at any
time and from time to time by the duly adopted resolution of the
Board, but such power of amendment shall under no circumstances
include the right in any way or to any extent to revest or otherwise
transfer any interest in or to the Fund, or any income therefrom, to
the Company or any other Employer, nor shall the power of amendment
include the right in any way or to any extent to divest any
Participant of the interest in the Fund to which he would be entitled
if the Plan were terminated as of the date of such amendment. Neither
shall such power of amendment be exercised in any way which would or
could give to any Participant any right or thing of exchangeable value
in advance of the receipt of distributions in accordance with the
terms provided therefor. No amendment shall ever operate to enable
any part of the corpus or income or other assets of the Fund to be
used for or diverted to any purpose other than the exclusive benefit
of Participants or their Spouses or Beneficiaries. Notwithstanding
247
the foregoing provisions of this Section 10.02, however, this Plan may
be amended in any manner whatsoever, with prospective or retroactive
effect, for the purpose of qualifying it under Section 401 of the Code
or any similar law hereafter applicable.
10.03 COMPANY ACTIONS. All written directions by the
Company and the exercise of any of the Company's rights, powers,
discretions, privileges and duties may be effected by a certified copy
of a resolution of the Board or its executive committee, or by a
person or persons authorized by the Board or said executive committee
to so act on behalf of the Company; and all persons shall be protected
in relying on such written directions.
ARTICLE XI
Termination of the Plan and Distribution of the Fund
----------------------------------------------------
11.01 TERMINATING ACTS AND DISTRIBUTION PROCEDURES. The
Company reserves the right, upon thirty (30) days' written notice to
the Trustees, to terminate the entire Plan at any time by action of
its Board. In the event of any such termination, the rights of all
Participants to the benefits accrued to the date of such termination,
all as more particularly set forth below in this Article XI, shall
become nonforfeitable, except to the extent provided in Sections 7.05
and 7.07 above. For the period required to complete such termination,
the Trustees shall continue to hold, administer, invest and distribute
the Fund in accordance with the provisions of the Trust and the
directions of the Pension Administrative Committee, unless and until
the Pension Benefit Guaranty Corporation institutes proceedings under
Section 4042 of ERISA. In the event of the termination of the Plan,
the assets of the Fund available to provide benefits shall be
allocated among the Participants and Beneficiaries in the following
order:
(1) FIRST, THE ACTUARIAL EQUIVALENT OF THAT
PORTION (IF ANY) OF THE BENEFIT OF EACH PARTICIPANT OR
BENEFICIARY WHICH WAS DERIVED FROM A PARTICIPANT'S
CONTRIBUTIONS;
(2) SECOND, IN THE CASE OF EACH PARTICIPANT AND
BENEFICIARY TO WHOM AN ANNUITY WAS BEING PAID ON THE
DATE OF SUCH TERMINATION AND AS OF THE BEGINNING OF THE
THIRD (3RD) YEAR BEFORE SUCH TERMINATION DATE, THE
ACTUARIAL EQUIVALENT OF THE BENEFIT DETERMINED AT THE
LOWEST BENEFIT LEVEL PAID DURING SUCH THREE (3) YEAR
PERIOD OR PROVIDED UNDER THE PLAN DURING THE FIVE (5)
YEAR PERIOD BEFORE SUCH TERMINATION DATE;
(3) THIRD, IN THE CASE OF EACH PARTICIPANT AND
BENEFICIARY TO WHOM AN ANNUITY WOULD HAVE BEEN PAYABLE
248
AT THE BEGINNING OF THE THIRD (3RD) YEAR BEFORE SUCH
TERMINATION DATE IF THE PARTICIPANT HAD RETIRED PRIOR
THERETO, THE ACTUARIAL EQUIVALENT OF THE BENEFIT DETER-
MINED AT THE LOWEST BENEFIT LEVEL PROVIDED UNDER THE
PLAN DURING THE FIVE (5) YEAR PERIOD BEFORE SUCH
TERMINATION DATE;
(4) FOURTH, THE ACTUARIAL EQUIVALENT OF EACH
BENEFIT OF A PARTICIPANT AND BENEFICIARY OTHER THAN
PROVIDED FOR IN FIRST, SECOND AND THIRD ABOVE WHICH IS
GUARANTEED UNDER ERISA SECTION 4022 (DETERMINED WITHOUT
REGARD TO PARAGRAPH (B)(5) THEREOF);
(5) FIFTH, THE ACTUARIAL EQUIVALENT OF EACH
BENEFIT OF A PARTICIPANT OR BENEFICIARY OTHER THAN
PROVIDED FOR IN FIRST, SECOND, THIRD OR FOURTH ABOVE
WHICH IS NONFORFEITABLE UNDER THE PROVISIONS OF THE
PLAN (OTHER THAN BENEFITS WHICH BECOME NONFORFEITABLE
UPON TERMINATION UNDER THIS SECTION 11.01);
(6) SIXTH, THE ACTUARIAL EQUIVALENT OF EACH
BENEFIT OF A PARTICIPANT OR BENEFICIARY OTHER THAN
PROVIDED FOR IN FIRST, SECOND, THIRD, FOURTH AND FIFTH,
ABOVE, PROVIDED FOR UNDER THE PLAN.
If the assets of the Fund available for allocation under any of
paragraphs FIRST, SECOND, THIRD and FOURTH, above are insufficient to
satisfy in full all of the benefits described in such paragraph, such
assets shall be allocated PRO RATA among such benefits on the basis of
the Actuarial Equivalent referred to in such paragraph of their
respective benefits; and if the assets of the Fund available for allo-
cation under paragraph FIFTH above are insufficient to satisfy in full
all of the benefits described in such paragraph, such assets shall be
allocated among such benefits PRO RATA as such benefits are determined
under the Plan as in effect at the beginning of the five (5) year
period ending on such termination date and if sufficient for that
purpose, and if the Plan has been amended during such five (5) year
period, the remainder available for allocation under paragraph FIFTH
shall be allocated PRO RATA among any benefits in addition to such
benefits (as were in effect at the beginning of such five (5) year
period) for which each such amendment provided, in the order of
occurrence until all such assets are exhausted. The manner and time
of paying benefits not already being paid shall be determined by the
Pension Administrative Committee (or the Company if there is no
Pension Administrative Committee) subject to the applicable provisions
of ERISA and the Code. After all expenses of administration of the
Plan have been provided for, and all liabilities of the Plan to
Participants employed by an Employer, former Participants and their
respective Spouses and Beneficiaries have been satisfied, the Company
shall be entitled to any remaining balance of such assets.
249
11.02 PARTIAL TERMINATION OF PLAN. If a Participating
Employer shall discontinue its participation in the Plan in whole or
in substantial part by any one or more of the following actions:
(a) The termination or partial termination of that
Employer's business with consequent termination of employment of
a substantial number of Participants employed by such Employer;
or
(b) Disposition of all or a substantial part of its
business operations unless the acquiring entity, with the consent
of the Board, continues the Plan and assumes the responsibilities
of a Participating Employer under the Plan,
then the Plan shall be deemed to be terminated with respect to such
Participating Employer and as it relates to, and is for the benefit
of, the affected Participants to the extent that they are or have been
Employees of such Participating Employer, and their respective
Surviving Spouses and Beneficiaries, other than any such Participant
who may by a transfer of his employment continue his participation in
the Plan. In the event of any such partial termination, the rights of
all affected Participants (and Surviving Spouses and Beneficiaries) to
the benefits accrued to the date of such termination, all as more
particularly set forth in this Article XI, shall become non-
forfeitable, except to the extent provided in Sections 7.05 and 7.07
above. Upon any such partial termination, an appropriate portion of
the assets of the Fund attributable to the Participants (and Surviving
Spouses and Beneficiaries) affected by such partial termination shall
be separated by the Trustees with the aid and counsel of the Actuary
and the accountants for the Plan and in accordance with applicable
rules in ERISA or regulations thereunder, and such separated portion
of the assets of the Fund shall be allocated among the Participants
(and Surviving Spouses and Beneficiaries) affected by such partial
termination in accordance with the provisions of Section 11.01 above.
11.03 MERGER. In the event of any merger or consolidation
of part or all of the Plan with, or the transfer of part of all of its
assets or liabilities to, any other plan or trust ("other plan") each
Participant in the Plan whose interests were so merged, consolidated
or transferred into, with, or to the other plan shall be entitled to
receive a benefit immediately thereafter (if the other plan then
terminated) which would be equal to or greater than the benefit he
would have been entitled to receive immediately theretofore (if this
Plan then terminated).
250
ARTICLE XII
Top-Heavy Provisions
--------------------
12.01 TOP-HEAVY STATUS. The provisions of this Article
shall not apply to the Plan with respect to any Plan Year for which
the Plan is not Top-Heavy (except as provided in subsections 12.05(b)
and 12.05(c)). If the Plan is or becomes Top-Heavy in any Plan Year,
the provisions of this Article XII will supersede any conflicting
provisions elsewhere in the Plan.
12.02 DEFINITIONS. For purposes of this Article XII, the
following words and phrases shall have the meanings stated below
unless a different meaning is plainly required by the context:
(a) "Compensation" shall, for any Plan Year in which the
Plan is Top-Heavy, have the meaning set forth in
Section 414(q)(7) of the Code.
(b) "Determination Date" shall mean, with respect to any
Plan Year: (i) the last day of the preceding Plan Year, or (ii)
in the case of the first Plan Year of the Plan, the last day of
such Plan Year.
(c) "Key Employee" shall mean an Employee meeting the
definition of "key employee" contained in Section 416(i)(1) of
the Code and the Treasury Regulations interpreting said Section.
(d) "Non-Key Employee" shall mean any Employee who is not a
Key Employee.
(e) "Permissive Aggregation Group Plan" shall mean any plan
of the Company or an Affiliated Company which is not in the
Required Aggregation Group and which, when considered with the
Required Aggregation Group Plans, meets the requirements of
Sections 401(a)(4) and 410 of the Code.
(f) "Required Aggregation Group Plan" shall mean (1) each
plan of the Company or an Affiliated Company in which a Key
Employee is a participant, and (2) each other plan of the Company
or an Affiliated Company which enables any plan described in (1)
to meet the requirements of Sections 401(a)(4) and 410 of the
Code.
(g) "Valuation Date" shall mean with respect to a
particular Determination Date, the most recent date for valuation
of the Fund occurring within a twelve (12) month period ending on
the applicable Determination Date and used for computing Plan
costs for purposes of the minimum funding requirements of the
Code.
251
12.03 DETERMINATION OF TOP-HEAVY STATUS. (a) The Plan will
be "Top-Heavy" with respect to any Plan Year if, as of the
Determination Date applicable to such Year, the ratio of the present
value of Accrued Benefits under the Plan for Key Employees (determined
as of the Valuation Date applicable to such Determination Date) to the
present value of Accrued Benefits under the Plan for all Employees
(determined as of such Valuation Date) exceeds 60%. For purposes of
computing such ratio, and for all other purposes of applying and
interpreting this subsection (a), the provisions of Section 416 of the
Code and all Treasury Regulations interpreting said Section shall be
applied.
(b) For purposes of determining whether the Plan is Top-
Heavy, all qualified retirement plans that are Required Aggregation
Group Plans shall be aggregated. All qualified retirement plans that
are Permissive Aggregation Group Plans shall be aggregated only to the
extent permitted by Section 416 of the Code, and Treasury Regulations
promulgated thereunder, and elected by the Company.
12.04 ACTUARIAL ASSUMPTIONS. For purposes of determining
whether the Plan is Top-Heavy, the actuarial assumptions provided in
Section 5.05 above shall be used.
12.05 VESTING. (a) If the Plan becomes Top-Heavy, the
vested interest of a Participant in the portion of his Accrued Benefit
referred to in subsection (b) below shall be determined in accordance
with the following formula in lieu of the provisions of Sections 4.04
and 4.10 above:
Years of Vested Forfeitable
Vesting Service Percentage Percentage
--------------- ---------- ----------
Less than 2 0% 100%
2 but less than 3 20% 80%
3 but less than 4 40% 60%
4 but less than 5 60% 40%
5 or more 100% 0%
For purposes of the above schedule, years of Vesting Service shall
include all years of Vesting Service required to be counted under
section 411(a) of the Code, disregarding all years of Vesting Service
permitted to be disregarded under Section 411(a)(4) of the Code.
(b) The vesting schedule set forth in subsection (a) above
shall apply to all Accrued Benefits which have accrued while the Plan
is Top-Heavy and during the period of time before the Plan becomes
253
Top-Heavy. This vesting schedule shall not apply to the Accrued
Benefit of any Employee who does not have an Hour of Service after the
Plan becomes Top-Heavy.
(c) If the Plan becomes Top-Heavy and subsequently ceases
to be Top-Heavy, the vesting schedule set forth in subsection (a)
above shall automatically cease to apply, and the provisions of
Sections 4.04 and 4.10 above shall automatically apply, with respect
to all Accrued Benefits which accrue to a Participant for all Plan
Years after the Plan Year with respect to which the Plan was last Top-
Heavy. For purposes of this subsection (c), this change in vesting
provisions shall only be valid to the extent that the conditions of
Section 10.02 above and Section 411(a)(10) of the Code are satisfied.
12.06 MINIMUM BENEFIT. (a) If the Plan shall be Top-
Heavy, the Accrued Benefit at any point in time for each Non-Key
Employee described in subsection (c) below shall be the Actuarial
Equivalent (based on the assumptions set forth in Section 12.04 above)
of a single life annuity payable over the life of the Non-Key
Employee, commencing on his sixty-fifth (65th) birthday, equal to a
percentage of such Employee's average Compensation for the five
consecutive Plan Years when the Employee had the highest aggregate
amount of such Compensation from any Employers. Such percentage shall
equal the lesser of (i) two percent (2%) multiplied by such Employee's
years of service (as computed pursuant to subsection (b) below), or
(ii) twenty percent (20%). The minimum benefit payable pursuant to
this Section 12.06 will be determined without regard to any
contributions for any Employee under the Federal Social Security Act.
Notwithstanding the provisions of Section 4.09, if the benefit pay-
ments of a Non-Key Employee do not commence until after his sixty-
fifth (65th) birthday or are suspended for any period after his sixty-
fifth (65th) birthday pursuant to Section 4.09, the Accrued Benefit
required under this Section upon the commencement or recommencement of
benefit payments to such Non-Key Employee after his sixty-fifth (65th)
birthday shall be adjusted so that it is equal to the Actuarial
Equivalent of the Accrued Benefit required by this Section at his
sixty-fifth (65th) birthday minus the Actuarial Equivalent of any
benefit payments previously made to or with respect to the
Participant.
(b) For purposes of this Section 12.06, years of service
shall not include Plan Years when (i) the Plan was not Top-Heavy for
any Plan Year ending during such year of service, and (ii) years of
service completed in a Prior Plan year beginning before January 1,
1984.
(c) Each Non-Key Employee who completes at least 1,000
Hours of Service in a Plan Year shall accrue the minimum Accrued
Benefit described in subsection (a) above for such Plan Year. A Non-
Key Employee shall not fail to accrue such benefit merely because the
Employee was not employed on a specific date or because he failed to
earn a minimum amount of Compensation for such Year.
253
(d) For purposes of subsection (c) above, Compensation in
Prior Plan years ending before January 1, 1984 and Compensation in
Plan Years after the close of the last Plan Year in which the Plan is
Top-Heavy shall be disregarded.
12.07 PARTICIPATION IN MORE THAN ONE PLAN. In the event
that a Participant is simultaneously covered under this Plan, at a
time when the Plan is Top-Heavy, and a defined contribution plan of
the Company or an Affiliated Company, at a time when the plan is Top-
Heavy, the Participant shall be entitled only to the defined benefit
minimum under this Plan, and not to the defined contribution minimum
under the defined contribution plan.
12.08 MAXIMUM LIMITATION. For purposes of determining
whether the Plan would be Top-Heavy if "90%" were substituted for
"60%" each place it appears in paragraphs (1) (A) or (2)(B) of Section
416(g) of the Code, as required by Section 416(h) of the Code, all of
the preceding provisions of this Article should be applicable except
that the phrase "90%" shall be substituted for the phrase "60%" where
it appears in subsection 12.03(a). If, pursuant to the preceding
sentence, it is determined that the Plan would be Top-Heavy if "90%"
were substituted for "60%", then for purposes of applying Section
415(e) and 416(h) of the Code, and Section 4.14 of the Plan, to the
benefit of any Participant, "1.0" shall be substituted for "1.25" in
each applicable place in paragraphs (2)(B) and (3)(B) of Section
415(e) of the Code.
Subject to the exceptions provided below, if for any Plan
Year the Plan is Top-Heavy, then the overall limitation imposed by
Section 415(e) and (h) of the Code, and Section 4.14 of the Plan, in
the case of a Key Employee who is a Participant in both the Plan and a
Top-Heavy defined benefit plan maintained by any Employer or any
Affiliated Company, shall be applied by substituting "1.0" for "1.25"
in each applicable place in paragraphs (2)(B) and (3)(B) of Section
415(e) of the Code. The change in the Section 415(e) limitations
specified in the preceding sentence shall not be applicable to a
Participant for a Plan Year in which the Plan is Top-Heavy if (a) the
sum of the present values of the accrued benefits and the account
balances of all participants in all defined benefit plans and all
defined contribution plans maintained by any Employer or any
Affiliated Company who are Key Employees does not exceed 90% of the
sum of the present values of the accrued benefits and the account
balances of all participants in all defined benefit plans and all
defined contribution plans maintained by any Employer or any
Affiliated Company, and (b) the minimum benefit percentage under the
Top-Heavy provisions of such defined benefit plans is increased to 3%.
254
ARTICLE XIII
Provisions Relating to Merger of Plans
--------------------------------------
13.01 DEFINITIONS. For purposes of this Article, the
following words and phrases shall have the meanings set forth below:
(a) "BernzOmatic Salaried Plan" shall mean the BernzOmatic
Corporation Employees' Pension Plan.
(b) "Foley Office Plan" shall mean the Foley Company
Retirement Plan for Office and Administrative Employees.
(c) "Combined Benefit" shall mean the sum of a
Participant's Accrued Benefit as defined in Article II of this Plan,
and his accrued benefit earned under a Constituent Plan.
(d) "Constituent Plan" shall mean each of the Foley Office
Plan or the BernzOmatic Salaried Plan, as in existence on the
applicable Merger Date.
(e) "Constituent Plan Participant" shall mean any person
who has earned an accrued benefit under a Constituent Plan, as of the
Merger Date for such Plan (as set forth in subsection (f) below), if
such benefit has not been fully distributed or an annuity has not been
purchased for and distributed to the Constituent Plan Participant with
respect to such benefit as of such Merger Date.
(f) "Merger Date" shall mean (i) in the case of the
BernzOmatic Salaried Plan, September 14, 1985; and (ii) in the case of
the Foley Office Plan, July 1, 1985.
13.02 GENERAL. (a) Effective July 1, 1985, the assets
held in trust under the Foley Office Plan were merged with and into
the assets held in trust under this Plan. Effective September 14,
1985, the assets held in trust under the BernzOmatic Salaried Plan
were merged with and into the assets held in trust under this Plan.
In connection with these mergers, this Plan assumed all liabilities of
Constituent Plan Participants for accrued benefits under the
Constituent Plans at their respective Merger Dates. This Article will
set forth special rules applicable with respect to Constituent Plan
Participants under this Plan and will supplement the other provisions
of this Plan with respect to such Constituent Plan Participants in
connection with the portion of their Combined Benefits attributable to
the Constituent Plans. The provisions of this Article shall be
applied to such portion of their Combined Benefits, notwithstanding
any inconsistent provision contained elsewhere in this Plan.
(b) The merged assets of the Constituent Plans shall be
used to provide benefits with respect to all Participants under this
Plan, including Constituent Plan Participants.
255
(c) The Combined Benefit, on a termination basis (within
the meaning of Treasury Regulation Section 1.414(1)), to which any
Constituent Plan Participant is entitled under this Plan, shall
immediately after the Merger Date of the applicable Constituent Plan
be equal to or greater than the benefit to which such Constituent Plan
Participant was entitled, on a termination basis, under the applicable
Constituent Plan immediately prior to its Merger Date. This
subsection (c) shall not be construed to increase or decrease the
nonforfeitable benefit accrued for any Constituent Plan Participant
under the applicable Constituent Plan, or under this Plan, as of the
applicable Merger Date. This Article XIII shall be administered
consistent with the requirements of Sections 411 and 414(1) of the
Code, and Treasury Regulations promulgated thereunder.
(d) A Constituent Plan Participant who becomes a
Participant under this Plan shall be deemed to have satisfied the
requirements for a pension under Section 4.04 for purposes of
eligibility for a Qualified Pre-retirement Survivor Annuity under
Section 4.07(a) if he has a nonforfeitable interest in a Combined
Benefit. The Qualified Pre-retirement Survivor Annuity payable under
Section 4.07(a) with respect to a Constituent Plan Participant shall
be based on his Combined Benefit, except to the extent that any
portion of such Benefit is otherwise distributable pursuant to this
Article, or otherwise, and shall be subject to offset as provided in
Section 4.07(a).
(e) Notwithstanding any term to the contrary contained
herein or in either of the Constituent Plans, the provisions of this
Amendment and Restatement included to conform this Plan to the
requirements of (i) the Code as amended by the Tax Equity and Fiscal
Responsibility Act of 1982, the Tax Reform Act of 1984, and the
Retirement Equity Act of 1984 ("REA"); (ii) ERISA as amended by REA;
and (iii) governmental rulings and regulations applicable to this Plan
as of January 1, 1984, shall apply to the Foley Office Plan, and to
the BernzOmatic Salaried Plan, as of the effective date applicable
with respect to each such Plan in the case of each such Act, ruling or
regulation.
(f) All distribution elections made by a Merged Plan
Participant, or his Surviving Spouse or Beneficiary, if applicable,
shall be made by written instrument delivered by the Merged Plan
Participant, Surviving Spouse or Beneficiary to the Pension
Administrative Committee at least thirty days before such election is
to take effect.
13.03 SPECIAL PROVISIONS RELATING TO BERNZOMATIC SALARIED
PLAN. (a) Effective September 1, 1982, contributions to the
BernzOmatic Salaried Plan were permanently discontinued and all
benefits accrued thereunder as of September 1, 1982 became
nonforfeitable. As of such date, participants under the BernzOmatic
Salaried Plan, and other salaried and clerical employees of the
BernzOmatic Division of the Company, became eligible to participate in
256
this Plan in accordance with the terms of this Plan. For purposes of
determining the Accrued Benefit earned from and after September 1,
1982 of Participants who are thereafter employed by such Division,
such Participants shall receive credit for periods of employment with
all Employers from and after September 1, 1982 and not for periods of
employment with any Employer prior to September 1, 1982. Except as
provided in the next sentence, for purposes of determining such
Participants' Vesting Service, nonforfeitable interest in their
Accrued Benefits, and their eligibility to participate in this Plan,
such Participants shall receive credit for periods of employment with
the Company or an Affiliated Company from and after April 1, 1982 and
not for periods of employment with the Company, an Affiliated Company
or BernzOmatic Corporation prior to April 1, 1982. This sentence
shall apply to (i) each individual who is an active employee of the
BernzOmatic Division of the Company at any time on or after June 1,
1995, and (ii) each former employee of the BernzOmatic Division of the
Company who is entitled to a benefit under Section 4.04, the payment
of which had not commenced prior to June 1, 1995:
(A) For purposes of determining such
Participants' Vesting Service, their nonforfeitable
interest in their Accrued Benefits, and their
eligibility to participate in this Plan, such
Participants shall receive credit for periods of
employment with the Company or an Affiliated Company
from and after April 1, 1982 and not for periods of
employment with the Company, an Affiliated Company or
BernzOmatic Corporation prior to April 1, 1982; and
(B) solely for purposes of determining such
Participants' Vesting Service for purposes of (1) the
definition of Early Retirement Date in Article II,
(2) the second sentence of Subsection 4.05(a) hereof,
and (3) determining the commencement and amount of a
Qualified Preretirement Survivior Annuity pursuant to
Subsection 4.07(a) hereof, such Participants shall
receive credit for periods of employment with the
Company or an Affiliated Company prior to and from and
after April 1, 1982, and for periods of employment with
BernzOmatic Corporation prior to April 1, 1982.
(b) The portion of the Combined Benefit of a Constituent
Plan Participant earned under the BernzOmatic Salaried Plan through
its Merger Date shall be payable to such Participant (in addition to
his pension benefit set forth under Article IV of this Plan) at the
times and in the manner set forth in Articles IV and V of this Plan.
Notwithstanding the preceding sentence, if at any time the Constituent
Plan Participant has satisfied all eligibility requirements contained
in the BernzOmatic Salaried Plan necessary to entitle him to receive
payment of the portion of his Combined Benefit earned under the
BernzOmatic Salaried Plan at its Merger Date commencing at a date
earlier than the date applicable under the terms of this Plan, such
257
Participant shall be entitled, subject to the terms and conditions
applicable under the BernzOmatic Salaried Plan, to have payment of
such portion of his Combined Benefit commence as follows:
(i) If a Constituent Plan Participant's employment
with BernzOmatic Corporation and all Employers terminates:
(A) before or after the Merger Date, (B) before he attains
age 65, and (C) after he both attains age 55 and completes
at least the aggregate of five (A) years of Credited Service
(as defined in the BernzOmatic Salaried Plan) on or after
May 15, 1967 and prior to the Merger Date, and (B) years of
Vesting Service (as defined in Article II of this Plan)
after the Merger Date, such Constituent Plan Participant
shall be entitled to commence receipt (in accordance with
the terms of this Plan) of the portion of his Combined
Benefit earned under the BernzOmatic Salaried Plan at its
Merger Date on the first day of any calendar month selected
by the Participant on or after the later to occur of its
Merger Date and the date of his termination of employment
with BernzOmatic Corporation and all Employers, but not
later than his Normal Retirement Date. The amount of such
portion of his Combined Benefit earned under the BernzOmatic
Salaried Plan shall be reduced by one-half of one percent
for each full month that the date as of which payment of
such Benefit portion commences precedes the Constituent Plan
Participant's Normal Retirement Date.
(ii) If a Constituent Plan Participant's employment
with BernzOmatic Corporation and all Employers terminates:
(A) before or after the Merger Date, and (B) before he both
attains age 55 and completes at least the aggregate of five
(A) years of Credited Service (as defined in the BernzOmatic
Salaried Plan) on or after May 15, 1967 and prior to the
Merger Date, and (B) years of Vesting Service (as defined in
Article II of this Plan) after the Merger Date, he shall
immediately receive a lump sum distribution of the present
value of his Participant Contribution Accrued Benefit under
the BernzOmatic Salaried Plan. Notwithstanding any
provision of this clause (ii) to the contrary, if the
Actuarial Equivalent of the Combined Benefit of such
Constituent Plan Participant exceeds $3,500, and such
Participant received credit for at least one (1) Hour of
Service on or after August 23, 1984, then (A) no
distribution shall be made to him before his Normal
Retirement Date without his written consent, and (B) if the
Participant has an Eligible Spouse, distribution must be
made in accordance with Sections 4.06 and 5.01 of this Plan
unless such Eligible Spouse consents, in the manner set
forth in Section 5.01(e) above, to a distribution of the
Constituent Plan Participant's Participant Contribution
Accrued Benefit in a lump sum.
258
13.04 SPECIAL PROVISIONS RELATING TO FOLEY OFFICE PLAN.
(a) All participants in the Foley Office Plan on June 30,
1985 shall become eligible to participate under this Plan as of its
Merger Date and shall remain eligible to participate and receive
benefits hereunder in accordance with the terms of this Plan.
(b) Subject to subsections (c) and (d) below, the portion
of the Combined Benefit of a Constituent Plan Participant earned under
the Foley Office Plan through its Merger Date shall be payable to such
Participant (in addition to his pension benefit set forth under
Article IV of this Plan) at the times and in the manner set forth in
Articles IV and V of this Plan. Notwithstanding the preceding
sentence, if at any time the Constituent Plan Participant has
satisfied all eligibility requirements contained in the Foley Office
Plan necessary to entitle him to receive payment of the portion of his
Combined Benefit earned under the Foley Office Plan at its Merger Date
commencing at a date earlier than the date applicable under the terms
of this Plan, such Participant shall be entitled, subject to the terms
and conditions applicable under the Foley Office Plan, to have payment
of such portion of his Combined benefit commence as follows:
(i) If a Constituent Plan Participant's employment
with Foley-ASC, Inc. and all Employers terminates: (A)
before or after the Merger Date, (B) before he attains age
65, and (c) after he both attains age 55 and completes at
least the aggregate of 10 (A) years of Vesting Service as
defined in the Foley Office Plan prior to the Merger Date,
and (B) years of Vesting Service (as defined in Article II
of this Plan on and after the Merger Date, such Participant
shall be entitled to commence receipt (in accordance with
the terms of this Plan) of the portion of his Combined
Benefit earned under the Foley Office Plan at the Merger
Date on the first day of any calendar month selected by the
Participant on or after the later to occur of the Merger
Date and the date of his termination of employment with
Foley-ASC, Inc. and all Employers, but not later than his
Normal Retirement Date. The amount of such portion of his
Combined Benefit earned under the Foley Office Plan shall be
reduced by one-half of one percent for each full month that
the date as of which payment of such Benefit portion
commences precedes the first day of the month following the
month in which the Constituent Plan Participant attains
age 65. Any selection of a distribution date pursuant to
this paragraph shall be made by written instrument delivered
by the Constituent Plan Participant to the Pension
Administrative Committee at least thirty (30) days before
the selected date.
(ii) If a Constituent Plan Participant's employment
with Foley-ASC, Inc. and all Employers terminates: (A)
before or after the Merger Date, (B) before he attains age
259
55, and (C) after he completes at least the aggregate of 10
(A) years of Vesting Service as defined in the Foley Office
Plan prior to the Merger Date, and (B) years of Vesting
Service (as defined in Article II of this Plan) after the
Merger Date, such Participant shall be entitled to commence
receipt (in accordance with the terms of this Plan) of the
portion of his Combined Benefit earned under the Foley
Office Plan at the Merger Date on the first day of any
calendar month selected by the Participant on or after the
date he attains age 55, but not later than his Normal
Retirement Date. The amount of such portion of his Combined
Benefit under the Foley Office Plan shall be reduced by
one-half of one percent for each full month that the date as
of which payment of such Benefit portion commences precedes
the first day of the month following the month in which the
Constituent Plan Participant attains age 65.
(c) For purposes of determining the nonforfeitable interest
in the portion of the Combined Benefit earned under the Foley Office
Plan as of its Merger Date by any Constituent Plan Participant (under
the vesting provisions of the Foley Office Plan), and for purposes of
determining his nonforfeitable interest in his Accrued Benefit earned
under this Plan from and after its Merger Date (under the vesting
provisions of this Plan):
(i) such Constituent Plan Participant shall receive
credit for periods of employment with Foley-ASC, Inc.,
calculated in accordance with the terms of the Foley Office
Plan and this Plan, respectively, from and after his date of
hire by Foley-ASC, Inc., or its corporate predecessors, and
up to and including September 24, 1984; and
(ii) such Constituent Plan Participant shall receive
credit for periods of employment with the Company,
calculated in accordance with the terms of the Foley Office
Plan and this Plan, respectively, from and after September
24, 1984.
(d) For purposes of determining the portion of a Combined
Benefit earned under the Foley Office Plan as of its Merger Date by
any Constituent Plan Participant:
(i) such Participant shall receive credit for periods
of employment with Foley-ASC, Inc., calculated in accordance
with the terms of the Foley Office Plan, from and after the
date such Participant became a participant in the Foley
Office Plan and up to and including September 24, 1984; and
(ii) such Participant shall receive credit for periods
of employment with the Company, calculated in accordance
with the terms of the Foley Office Plan, from and after
September 24, 1984 and up to and including June 30, 1985.
260
(e) For purposes of determining the Accrued Benefit earned
under this Plan by a Constituent Plan Participant from and after its
Merger Date, such Participant shall receive credit only for periods of
employment with the Company, calculated in accordance with the terms
of this Plan, from and after its Merger Date.
ARTICLE XIV
Provisions Relating to Additional Merger of Plans
-------------------------------------------------
14.01 DEFINITIONS. For purposes of this Article, the
following words and phrases shall have the meanings set forth below:
(a) "Actuarial Equivalent" or "Actuarial Equivalence" shall
mean with respect to each Merged Plan the equality in value of
aggregate amounts expected to be received under different forms of
payment, or to be received at different dates, determined on the basis
of the assumptions and methods set forth in the attached schedule
applicable to each Merged Plan as of the applicable Plan Merger Date,
or, if applicable, Article XVII.
(b) "Anchor Hocking Salaried Plan" shall mean the Anchor
Hocking Retirement Plan for Salaried Employees.
(c) "Anchor Hocking Salaried Plan - Hourly Part" shall mean
the Anchor Hocking Retirement Plan for Salaried Employees (Hourly
Part).
(d) "Benefit Accrual Date" shall mean January 1, 1989 with
respect to each of the Anchor Hocking Salaried Plan and the Anchor
Hocking Plan - Hourly Part and January 1, 1993 with respect to the
Sanford Salaried Plan.
(e) "Merged Plan" shall mean each of the Anchor Hocking
Salaried Plan, the Moldcraft Plan, the Anchor Hocking Salaried Plan -
Hourly Part, and the Sanford Salaried Plan as in existence on the
applicable Plan Merger Date.
(f) "Merged Plan Benefit" shall mean the portion of the
Total Benefit earned by a Merged Plan Participant under a Merged Plan
as of the applicable Plan Merger Date that has not been fully
distributed to, or used to purchase an annuity distributed to, the
Merged Plan Participant.
(g) "Merged Plan Participant" shall mean any person who has
earned an accrued benefit under a Merged Plan, as of the applicable
Plan Merger Date, if such benefit has not been fully distributed to,
or an annuity has not been purchased for and distributed to, the
Merged Plan Participant with respect to such accrued benefit as of the
applicable Plan Merger Date.
261
(h) "Moldcraft Plan" shall mean the Contributory Pension
Plan for the Hourly-Paid Employees of the Moldcraft Division of Anchor
Hocking Plastic Packaging, Inc.
(i) "Plan Merger Date" shall mean September 1, 1991 with
respect to each of the Anchor Hocking Salaried Plan, the Moldcraft
Plan and the Anchor Hocking Salaried Plan - Hourly Parts and December
1, 1992 with respect to the Sanford Salaried Plan.
(j) "Sanford Salaried Plan" shall mean the Sanford
Corporation Retirement Plan for Salaried Employees.
(k) "Total Benefit" shall mean the sum of a Participant's
Accrued Benefit as defined in Article II of this Plan earned from and
after the applicable Benefit Accrual Date, if any, and his Merged Plan
Benefit.
14.02 GENERAL (a) Effective as of the applicable Plan
Merger Date, the assets held in trust under each of the Merged Plans
were merged with and into the assets held in trust under this Plan.
In connection with these mergers, this Plan assumed all liabilities to
Merged Plan Participants for Merged Plan Benefits. This Article sets
forth special rules applicable to Merged Plan Participants under this
Plan and will supplement the other provisions of this Plan with
respect to such Merged Plan Participants in connection with their
Merged Plan Benefits. The provisions of this Article shall be applied
to their Merged Plan Benefits notwithstanding, and in lieu of, any
other provision contained elsewhere in this Plan.
(b) The merged assets of the Merged Plans shall be used to
provide benefits with respect to all Participants under this Plan,
including Merged Plan Participants.
(c) The Total Benefit, on a termination basis (within the
meaning of Treasury Regulation Section 1.414(l)), to which any Merged
Plan Participant is entitled under this Plan shall, immediately after
the applicable Plan Merger Date, be equal to or greater than the
benefit to which such Merged Plan Participant was entitled, on a
termination basis, under the applicable Merged Plan immediately prior
to the applicable Plan Merger Date. This subsection (c) shall not be
construed to increase or decrease the nonforfeitable benefit accrued
for any Merged Plan Participant under the applicable Merged Plan, or
under this Plan, as of the applicable Plan Merger Date. This
Article XIV shall be administered consistent with the requirements of
Sections 411 and 414(l) of the Code, and the Treasury Regulations
promulgated thereunder.
(d) A Merged Plan Participant who becomes a Participant
under this Plan shall be deemed to have satisfied the requirements for
a pension under Section 4.04 hereof for purposes of eligibility for a
Qualified Pre-retirement Survivor Annuity under Section 4.07(a) hereof
if he has a nonforfeitable interest in a Total Benefit. The Qualified
262
Pre-retirement Survivor Annuity payable under Section 4.07(a) with
respect to a Merged Plan Participant shall be based on his Total
Benefit, except to the extent that any portion of such Benefit is
otherwise distributable pursuant to this Article, or otherwise, and
shall be subject to offset as provided in Section 4.07(a).
(e) Notwithstanding any provision to the contrary contained
herein or in any of the Merged Plans, the provisions of this Amendment
and Restatement of this Plan intended to conform this Plan to the
requirements of (i) the Code as amended by the Tax Reform Act of 1986,
the Revenue Act of 1987, the Technical and Miscellaneous Revenue Act
of 1988, the Omnibus Budget Reconciliation Act of 1989, the Revenue
Reconciliation Act of 1990 and the Revenue Reconciliation Act of 1993;
(ii) ERISA as amended by the Retirement Equity Act of 1984; and (iii)
all other statutes and all governmental rulings and regulations
applicable to this Plan as of January 1, 1994, shall apply to each of
the Merged Plans, as of the effective date applicable with respect to
each such Merged Plan in the case of each such Act, statute, ruling or
regulation.
(f) All distribution elections made by a Merged Plan
Participant, or his Surviving Spouse or Beneficiary, if applicable,
shall be made by written instrument delivered by the Merged Plan
Participant, Surviving Spouse or Beneficiary to the Pension
Administrative Committee at least thirty days before such election is
to take effect.
(g) For purposes of the cash out provisions of Section 4.15
of the Plan, the Actuarial Equivalent of a Merged Plan Benefit will be
based upon Section 14.01(a).
14.03 SPECIAL PROVISIONS RELATING TO ANCHOR HOCKING
SALARIED PLAN. The following shall apply with respect to Merged Plan
Participants who participated in the Anchor Hocking Salaried Plan on
or before the Plan Merger Date:
(a) Benefit Accruals under the Anchor Hocking Salaried Plan
were permanently discontinued, and all benefits accrued thereunder by
Merged Plan Participants became nonforfeitable, effective as of the
Benefit Accrual Date. As of the Benefit Accrual Date, Covered Class
Employees (as defined in the Anchor Hocking Salaried Plan for purposes
of this Section 14.03) became eligible to participate in this Plan in
accordance with the terms of this Plan. For purposes of determining
the Accrued Benefit earned from and after the Benefit Accrual Date, of
Merged Plan Participants who were Covered Class Employees under the
Anchor Hocking Salaried Plan on the Benefit Accrual Date, and who
thereafter are employed by an Employer, such Merged Plan Participants
shall receive credit for periods of employment with all Employers from
and after the Benefit Accrual Date and not for periods of employment
with any Employer or any other entity, prior to the Benefit Accrual
Date. For purposes of determining such Merged Plan Participants'
Vesting Service, nonforfeitable interest in their Accrued Benefits,
263
and their eligibility to participate in this Plan, such Merged Plan
Participants shall receive credit (1) for periods of employment with
an Affiliated Company (as defined in Article II of this Plan) from and
after the Benefit Accrual Date and (2) for periods of employment only
with Anchor Hocking Corporation and its affiliates, and not with any
other entity that was not an Affiliated Company, prior to the Benefit
Accrual Date.
(b) A Merged Plan Benefit shall be payable to a Merged Plan
Participant (in addition to his benefit set forth under Article IV of
this Plan) at the times set forth in Article IV of this Plan.
Notwithstanding the preceding sentence, if the Merged Plan Participant
has satisfied all eligibility requirements contained in the Anchor
Hocking Salaried Plan necessary to entitle him to receive payment of
his Merged Plan Benefit commencing at a date earlier than the date
applicable under the terms of this Plan, such Participant shall be
entitled, subject to the terms and conditions applicable under the
Anchor Hocking Salaried Plan, to have payment of his Merged Plan
Benefit commence as follows:
(i) If a Merged Plan Participant's employment with all
Employers terminates before he attains age 65, and if (A) at
the time of such termination (1) he has both attained age 55
and completed at least the aggregate of 10 (I) years of
Vesting Service as defined in the Anchor Hocking Salaried
Plan prior to the Plan Merger Date, and (II) years of
Vesting Service (as defined in Article II of this Plan)
after the Plan Merger Date, or (2) he has attained age 60,
or (B) he was, as of January 1, 1981, an employee of
Moldcraft (as defined in the Anchor Hocking Salaried Plan
for purposes of this Section 14.03) and as of that date had
at least one year of Vesting Service (as defined in the
Anchor Hocking Salaried Plan) and had attained age 55 but
not age 60, such Merged Plan Participant shall be entitled
to commence receipt (in accordance with the terms of this
Plan) of his Merged Plan Benefit on the first day of any
calendar month selected by the Merged Plan Participant on or
after the later to occur of the Plan Merger Date and the
date of his termination of employment with all Employers,
but not later than his Normal Retirement Date (as defined in
the Anchor Hocking Salaried Plan for purposes of this
Section 14.03). If the Merged Plan Participant (1) attained
age 60, or (2) both attained age 55 and completed at least
the aggregate of 30 (A) years of Vesting Service as defined
in the Anchor Hocking Salaried Plan prior to the Plan Merger
Date, and (B) years of Vesting Service (as defined in
Article II of this Plan) after the Plan Merger Date, at the
time of his termination of employment with all Employers,
the amount of his Merged Plan Benefit shall be paid
unreduced. If the Merged Plan Participant had neither
attained age 60, nor both attained age 55 and completed at
least the aggregate of 30 (A) years of Vesting Service (as
264
defined in the Anchor Hocking Salaried Plan prior to the
Plan Merger Date, and (B) years of Vesting Service (as
defined in Article II of this Plan) after the Plan Merger
Date, at the time of his termination, the Merged Plan
Benefit shall be reduced by one-twelfth of 5% for each month
it is paid prior to his 60th birthday.
(ii) If a Merged Plan Participant's employment with all
Employers terminates, and he is not eligible under
subparagraph (i) next above, he shall be entitled to
commence receipt (in accordance with the terms of this Plan)
of his Merged Plan Benefit on the first day of the month
following the Merged Plan Participant's Normal Retirement
Date, unless he elects to have it begin within the ten year
period prior to his Normal Retirement Date. If the Merged
Plan Participant elects to have such Merged Plan Benefit
begin earlier than his Normal Retirement Date, his Merged
Plan Benefit shall be a reduced pension (in a level amount)
equal to the Actuarial Equivalent of the Merged Plan Benefit
that would have been payable on the Merged Plan
Participant's Normal Retirement Date.
(c) If a Merged Plan Participant's employment with all
Employers terminates prior to the Benefit Accrual Date (A) due to a
Merged Plan Participant becoming Totally Disabled under the terms and
conditions of, and as defined under, the Anchor Hocking Salaried Plan,
(B) before he attains age 65, (C) while regularly employed to work for
an Employer at least 30 hours per week, and (D) after completing at
least one full year of Anchor Service (as defined under the Anchor
Hocking Salaried Plan for purposes of this Section 14.03), such Merged
Plan Participant shall be entitled to commence receipt (in accordance
with the terms of this Plan) of his Merged Plan Benefit as follows:
(i) If a Merged Plan Participant satisfies all the
conditions necessary for a disability benefit under the
Anchor Hocking Salaried Plan and he continues to be Totally
Disabled (as defined in the Anchor Hocking Salaried Plan for
purposes of this Section 14.03) until (A) he has both
attained age 55, and completed at least the aggregate of 10
(I) years of Vesting Service (as defined in the Anchor
Hocking Salaried Plan) prior to the Plan Merger Date, and
(II) years of Vesting Service (as defined in Article II of
this Plan) after the Plan Merger Date, or (B) he has
attained age 60, such Merged Plan Participant shall be
entitled to commence receipt (in accordance with the terms
of this Plan) of his Merged Plan Benefit on the first day of
any calendar month selected by the Merged Plan Participant
on or after the last to occur of (1) the Benefit Accrual
Date, (2) the date he meets the criteria in clause (A) or
(B) above of this paragraph, and (3) the date of his
termination of employment with all Employers due to his
disability, but not later than his Normal Retirement Date.
265
If the Merged Plan Participant attained age 60, or both
attained age 55 and completed at least the aggregate of 30
(A) years of Vesting Service (as defined in the Anchor
Hocking Salaried Plan) prior to the Plan Merger Date, and
(B) years of Vesting Service (as defined in Article II of
this Plan) after the Plan Merger Date, at the time of his
termination, the amount of his Merged Plan Benefit shall be
paid unreduced. If the Merged Plan Participant had neither
attained age 60, nor both attained age 55 and completed at
least the aggregate of 30 (A) years of Vesting Service (as
defined in the Anchor Hocking Salaried Plan) prior to the
Plan Merger Date, and (B) years of Vesting Service (as
defined in Article II of this Plan) after the Plan Merger
Date, at the time of his termination, his Merged Plan
Benefit shall be reduced by one-twelfth of 5% for each month
it is paid prior to his 60th birthday.
(ii) Solely for purposes of this paragraph (c), the
Merged Plan Benefit of a Merged Plan Participant who is
Totally Disabled (as defined in the Anchor Hocking Salaried
Plan) shall equal the sum of (1) the portion of his Total
Benefit earned under the Anchor Salaried Plan as of the
Benefit Accrual Date, plus (2) the Accrued Benefit earned
under this Plan from and after the Benefit Accrual Date
based upon the benefit formula in this Plan on the Benefit
Accrual Date, the Merged Plan Participant's monthly rate of
base pay for the month preceding the date he became Totally
Disabled and the consideration of the period of time during
which he continues to be Totally Disabled from and after the
Benefit Accrual Date as Benefit Service under this Plan.
(iii) If a Merged Plan Participant satisfies all
the conditions necessary for a disability benefit under the
Anchor Hocking Salaried Plan and continues to be Totally
Disabled until he reaches his Normal Retirement Date, and he
is not entitled to a benefit pursuant to clause (i) above,
such Merged Plan Participant shall be entitled to commence
receipt (in accordance with the terms of this Plan) of his
Merged Plan Benefit on the first day of the calendar month
after the month in which he attains his Normal Retirement
Date.
(iv) If a Merged Plan Participant satisfies all the
conditions necessary for a disability benefit under the
Anchor Hocking Salaried Plan and ceases to be Totally
Disabled before reaching age 60, and before he has attained
age 55 and completed at least 10 years of Vesting Service
(as defined in the Anchor-Hocking Salaried Plan) prior to
the Plan Merger Date, such Merged Plan Participant shall be
eligible to have his Merged Plan Benefit paid as a Deferred
Vested Pension (as defined under the Anchor Hocking Salaried
Plan for purposes of this Section 14.03) provided he became
266
Totally Disabled on or before August 14, 1978, and his
employment with the Controlled Group (as defined in the
Anchor Hocking Salaried Plan for purposes of this Section
14.03) terminated on account of such Total Disability.
(d) If a Merged Plan Participant dies before payment of his
Merged Plan Benefit commences, his Surviving Spouse shall be entitled
to commence receipt (in accordance with the terms of this Plan) of his
Merged Plan Benefit as follows:
(i) In the case of a Surviving Spouse of a Merged Plan
Participant who died while an active employee and (A) who
had attained age 50, but not age 65, and had completed at
least the aggregate of 10 (I) years of Vesting Service (as
defined in the Anchor Hocking Salaried Plan) prior to the
Plan Merger Date, and (II) years of Vesting Service (as
defined in Article II of this Plan) after the Plan Merger
Date, or (B) who was employed by Moldcraft and who, as of
January 1, 1981, (1) had one year of Vesting Service (as
defined in the Anchor Hocking Salaried Plan), and (2) had
attained age 55 but not age 60, the Merged Plan Benefit to
which she is entitled (a) shall be a monthly pension payable
for her remaining lifetime in the amount specified in
subsequent sentences of this paragraph, (b) shall begin on
the first day of the month after such Merged Plan
Participant would have attained age 65 had he not died or,
if the Surviving Spouse requests earlier commencement
thereof, on the first day of any month following the Merged
Plan Participant's death, but in any case only if the
Surviving Spouse is living on such date and otherwise
eligible to receive such Merged Plan Benefit and (c) shall
cease with the payment for the month in which she dies. If
such Merged Plan Participant died after age 55 (and before
age 65), the monthly amount of such Merged Plan Benefit
payable to his Surviving Spouse shall be equal to 50% of
what would have been the monthly amount of such Merged Plan
Participant's Merged Plan Benefit payable as an Early
Retirement Pension (as defined in the Anchor Hocking
Salaried Plan for purposes of this Section 14.03) if (A) he
had retired at the end of the month in which he died and he
had continued to live, (B) his Early Retirement Pension had
begun in the first month after the later of the month in
which he in fact died or the month in which he would have
reached age 60 if he had continued to live and (C) his Early
Retirement Pension was paid as an annuity for his lifetime
only. If such Merged Plan Participant died on or after age
50 and before age 55, the monthly amount of such Merged Plan
Benefit payable to his Surviving Spouse shall be equal to
50% of the monthly amount of the Merged Plan Benefit payable
as a Deferred Vested Pension (as defined in the Anchor
Hocking Salaried Plan for purposes of this Section 14.03)
beginning on the Merged Plan Participant's Normal Retirement
267
Date, to which he would have been entitled if (A) he had
resigned from employment with all Controlled Group Members
(as defined in the Anchor Hocking Salaried Plan for purposes
of this Section 14.03) at the end of the month in which he
in fact died, (B) he had continued to live until after his
Normal Retirement Date and (C) his Deferred Vested Pension
was paid as an annuity for his lifetime only. In computing
the amount of the Merged Plan Benefit payable to a Surviving
Spouse pursuant to this subparagraph (i), any early
retirement reductions and the Cap (as defined in the Anchor
Hocking Salaried Plan for purposes of this Section 14.03)
shall be ignored.
(ii) In the case of a Surviving Spouse of a Merged Plan
Participant who died while an active employee and (A) had
attained age 60, but not age 65, and had not completed at
least the aggregate of 10 (I) years of Vesting Service (as
defined in the Anchor Hocking Salaried Plan) prior to the
Plan Merger Date, and (II) years of Vesting Service (as
defined in Article II of this Plan) after the Plan Merger
Date, or (B) had attained age 65 (regardless of his
aggregate years of Vesting Service), the Merged Plan Benefit
to which she is entitled shall be such Merged Plan Benefit
as she would have been entitled to receive if (A) such
Merged Plan Participant had retired in the month preceding
his death and under circumstances which would have allowed
the Merged Plan Participant to receive his Merged Plan
Benefit payable as an Early Retirement Pension under the
Anchor Hocking Salaried Plan, (B) his Early Retirement
Pension had begun in the month in which he in fact died and
(C) his Early Retirement Pension was payable under the Semi-
Automatic 50% J & S Option (as defined in the Anchor Hocking
Salaried Plan). In computing the amount of such Merged Plan
Benefit payable to a Surviving Spouse pursuant to this
subparagraph (ii), any early retirement reductions and the
Cap shall be ignored. Such Merged Plan Benefit (1) shall
begin as provided in clause (b) of subparagraph (i) of this
paragraph, (2) shall, except as otherwise provided herein,
be payable monthly thereafter (on the first of each month)
during her remaining lifetime and (3) shall cease with the
payment for the month in which she dies.
(iii) (A) In the case of a Surviving Spouse
of a deceased Merged Plan Participant, not
described in subparagraphs (i) or (ii) above,
the Merged Plan Benefit to which she is
entitled shall be a monthly benefit for the
life of the Surviving Spouse with payments
equal to the payments that would have been
payable to such Surviving Spouse under the
Semi-Automatic 50% J & S Option (based on the
Merged Plan Participant's actual Benefit
268
Service as defined in the Anchor Hocking
Salaried Plan for purposes of this Section
14.03) if --
(1) in the case of a Merged Plan
Participant who dies after his attainment of
the age and Vesting Service requirements of
Section 14.03(b)(i) (the "Qualified Earliest
Retirement Age"), such Merged Plan
Participant had retired on the day before his
death with an immediate Semi-Automatic 50% J
& S Option in effect, or
(2) in the case of a Merged Plan
Participant who dies on or before the date on
which he would have attained his Qualified
Earliest Retirement Age, such Merged Plan
Participant had:
(a) terminated his employment with
the Controlled Group on the date of his
death;
(b) survived to his Qualified
Earliest Retirement Age;
(c) retired at his Qualified
Earliest Retirement Age with an
immediate Semi-Automatic 50% J & S
Option in effect, and
(d) died on the day after the day
on which he would have attained his
Qualified Earliest Retirement Age.
(B) The Merged Plan Benefit provided for in
subparagraph (A) of this subparagraph (iii) shall
commence to be paid to the Surviving Spouse on the
first day of the month after the Merged Plan
Participant would have attained age 65 had he not
died or, if the Surviving Spouse requests earlier
commencement thereof, on the first day of any
earlier month after the later of (1) the first day
of the month after the Merged Plan Participant's
death or (2) the first day of the month in which
the Merged Plan Participant would have attained
his Qualified Earliest Retirement Age, but in any
case only if the Surviving Spouse is living on
such date and is otherwise eligible to receive
such Merged Plan Benefit. Payments shall continue
during the Surviving Spouse's remaining lifetime,
269
and shall cease with the payment for the month in
which such Surviving Spouse dies.
(C) In computing the amount of the Merged
Plan Benefit provided for in subparagraph (A) of
this subparagraph (iii), any early retirement
reductions shall be taken into account, and the
Cap shall be ignored.
(iv) For purposes of subparagraph (i) of this paragraph
(d), Surviving Spouse means a person to whom a Merged Plan
Participant is legally married on the Merged Plan
Participant's date of death. For purposes of subparagraphs
(ii) and (iii) of this paragraph (d), Surviving Spouse means
a person to whom a Merged Plan Participant is legally
married for at least the one (1) year period ending on the
Merged Plan Participant's date of death.
(e) A Merged Plan Participant may elect, pursuant to the
spousal consent provisions of Section 5.01 of this Plan, any one of
the optional forms of benefits specified in this paragraph with
respect to his Merged Plan Benefit. Any optional form of benefit set
forth in Article V of this Plan shall apply only to the Accrued
Benefit earned by the Merged Plan Participant from and after the
Benefit Accrual Date. Any optional form of benefit or combination of
optional forms of benefits set forth in this paragraph shall be the
Actuarial Equivalent of the Merged Plan Benefit otherwise payable with
respect to the Merged Plan Participant.
(i) REGULAR J & S OPTIONS: A Merged Plan Participant
may elect to receive his Merged Plan Benefit as a reduced
pension payable to him during his lifetime on and after the
date on which his Merged Plan Benefit is to commence, and
after his death to have a pension payable during the
surviving lifetime of and for a natural person (herein
called "Joint Pensioner") designated by the Merged Plan
Participant for such purpose at the same reduced rate
payable to the Merged Plan Participant or (if elected by the
Merged Plan Participant) at the rate of 50% of the reduced
pension payable to the Merged Plan Participant. Evidence
satisfactory to the Pension Administrative Committee of the
date of birth of the Merged Plan Participant and of his
Joint Pensioner must be furnished within 90 days of the
filing of such election with the Pension Administrative
Committee. The amount of the reduced pension payable under
such an option depends in part on (A) the age of the Merged
Plan Participant and his Joint Pensioner and (B) the Merged
Plan Participant's choice of the percentage of his reduced
pension to be paid after his death to his Joint Pensioner.
Pension payments for the Joint Pensioner shall begin with
the first day of the month after the month in which the
Merged Plan Participant dies, provided his death does not
270
void the election of this option, and provided his Joint
Pensioner is living on such day, and the last monthly
payment for the Joint Pensioner shall be payable on the
first day of the last month in which he or she is living.
If the Joint Pensioner dies before the Merged Plan
Participant's pension commences, the election shall be of no
effect and the Merged Plan Participant shall be treated the
same as though he had not elected an option pursuant to this
subparagraph. If the Joint Pensioner dies on or after his
Merged Plan Participant's pension commences and while the
Merged Plan Participant is living, the option elected shall
continue in force and the Merged Plan Participant's reduced
pension shall not be increased thereby.
(ii) LEVEL INCOME OPTION: A Merged Plan Participant
who retires before reaching the earliest age at which a
retired worker may elect to have his old age benefits under
the U.S. Social Security Act begin, and who is not eligible
for a Social Security Disability Benefit (as defined in the
Anchor Hocking Salaried Plan for purposes of this Section
14.03), may elect (in accordance with procedures established
by the Pension Administrative Committee) to have the amount
of the Merged Plan Benefit otherwise payable to him
increased before such earliest age and decreased thereafter,
to the end that such portion of his Merged Plan Benefit,
when combined with his old age benefits under the U.S.
Social Security Act (as in effect at his retirement) in the
amount estimated to be payable beginning at such earliest
age, will provide a level amount of retirement income
insofar as practicable. A Merged Plan Participant's
election of the Level Income Option shall become void if (A)
he does not become entitled to a pension under paragraph (b)
of this Section or (B) his Merged Plan Benefit is payable
under a J & S Option pursuant to paragraph (e)(i) of this
Section.
(iii) OTHER OPTIONS: A Merged Plan Participant
whose employment with the Company and all Affiliated
Companies terminated prior to the Plan Merger Date is
entitled to receive his Merged Plan Benefit pursuant to an
optional form of benefit that was available under the Anchor
Hocking Salaried Plan at the date of his termination of
employment, and that was elected by the Merged Plan
Participant prior to the date of his termination of
employment pursuant to the terms of the Anchor Hocking
Salaried Plan.
(f) Notwithstanding the foregoing,
(i) In the case of a Merged Plan Participant who dies
on or after payment of the Merged Plan Benefit is to
commence, and whose Merged Plan Benefit has not been
271
discharged by a lump sum payment, if such death occurs
before he has become entitled to receive 72 monthly payments
of his Merged Plan Benefit and if a J & S Option under
subparagraph (e)(i) of this Section is not applicable to
him, his Beneficiary shall be paid the same Merged Plan
Benefit as would have been payable to such Merged Plan
Participant if he had continued to live until the equivalent
of 72 monthly payments have been made to him and/or his
Beneficiary.
(ii) In the case of a Merged Plan Participant described
in clause (i) above for whom a J & S Option under
subparagraph (e)(i) of this Section is applicable, if he and
his Joint Pensioner die before one or both of them have
become entitled to receive 72 monthly payments with respect
to his Merged Plan Benefit, such Merged Plan Participant's
Beneficiary shall be paid the same monthly benefit as would
have been payable to the survivor of such Merged Plan
Participant and his Joint Pensioner if such survivor had
continued to live until the equivalent of 72 monthly
payments have been made to such Merged Plan Participant, his
Joint Pensioner and/or his Beneficiary, except that, for
this purpose, a Merged Plan Participant's Joint Pensioner
shall not be considered to survive such Merged Plan
Participant if he or she dies before a payment becomes
payable to him or her under such Merged Plan Participant's J
& S Option.
(iii) In the case of a Merged Plan Participant
whose Merged Plan Benefit is payable under the Level Income
Option specified in subparagraph (e)(ii) above, and who dies
during the 72 month period certain specified herein, the
same monthly payments shall be made to his Beneficiary for
the balance of such 72 month period certain as would have
been payable to the Merged Plan Participant if he had
continued to live.
(iv) In the case of a Merged Plan Participant who was a
Member (as defined in the Anchor Hocking Salaried Plan for
purposes of this Section 14.03), who continues in the employ
of a Controlled Group Member after his Normal Retirement
Date, who dies while a Member, and for whom the J & S Option
is applicable, or who has a Surviving Spouse eligible for a
Merged Plan Benefit under paragraph (d) of this Section, if
the Merged Plan Participant's Joint Pensioner or Surviving
Spouse, as the case may be, dies before becoming entitled to
receive 72 monthly payments with respect to his Merged Plan
Benefit, such Merged Plan Participant's Beneficiary shall be
paid the same Merged Plan Benefit as would have been payable
to his Joint Pensioner or Surviving Spouse if such Joint
Pensioner or Surviving Spouse had continued to live until
the equivalent of 72 monthly Merged Plan Benefit payments
272
have been made to such Joint Pensioner or Surviving Spouse
and/or his Beneficiary, except that, for this purpose, a
Merged Plan Participant's Joint Pensioner or Surviving
Spouse shall not be considered to survive such Merged Plan
Participant if he or she dies before a Merged Plan Benefit
payment becomes payable to him or her under such J & S
Option or under paragraph (d) of this Section.
(v) If a Merged Plan Participant who retires before
his Normal Retirement Date dies after the month in which his
retirement occurs, if paragraph (b) of this Section is not
applicable to him, if no Merged Plan Benefit is payable to
his Beneficiary under subparagraphs (f)(i), (ii) or (iii),
solely because the Merged Plan Participant's death occurred
before his Merged Plan Benefit commenced, and if he does not
have a Surviving Spouse who is eligible for a Merged Plan
Benefit under paragraph (d) of this Section, his Beneficiary
shall be paid for 72 months (beginning with the month after
the death of such Merged Plan Participant) the amount of the
Merged Plan Benefit that would have been payable to such
Merged Plan Participant, if he had not died and had duly
elected to have his Merged Plan Benefit payable pursuant to
paragraph (b)(i) of this Section beginning on the first day
of the month after the month in which he in fact did die.
14.04 SPECIAL PROVISIONS RELATING TO MOLDCRAFT PLAN
The following shall apply with respect to Merged Plan
Participants who participated in the Moldcraft Plan on or before the
Plan Merger Date:
(a) Effective November 30, 1990, benefit accruals under the
Moldcraft Plan were permanently discontinued and all benefits accrued
thereunder by Merged Plan Participants as of that date became
nonforfeitable. Merged Plan Participants who participated in the
Moldcraft Plan on or before the Plan Merger Date did not become
participants in this Plan and did not earn an Accrued Benefit under
this Plan.
(b) A Merged Plan Benefit shall be payable to such Merged
Plan Participant at the times set forth in Article IV of this Plan.
Notwithstanding the preceding sentence, if the Merged Plan Participant
satisfied all eligibility requirements contained in the Moldcraft Plan
necessary to entitle him to receive payment of his Merged Plan Benefit
commencing at a date earlier than the date applicable under the terms
of this Plan, such Participant shall be entitled, subject to the terms
and conditions applicable under the Moldcraft Plan, to have payment of
such Merged Plan Benefit commence as follows:
(i) If a Merged Plan Participant's employment with all
Employers terminated before his Normal Retirement Date (as
defined in the Moldcraft Plan for purposes of this Section
273
14.04), and if at the time of such termination he both (A)
attained age 62 and (B) completed at least the aggregate of
10 (I) years of Vesting Service as defined in the Moldcraft
Plan) prior to the Plan Merger Date, and (II) years of
Vesting Service (as defined in Article II of this Plan)
after the Plan Merger Date, and if the greater of his
Refunded Amount (defined below) and the Actuarial Equivalent
of his Merged Plan Benefit is in excess of $3,500, such
Merged Plan Participant shall be entitled to elect to
receive one of the following benefits:
(A) A retirement income commencing at his Normal
Retirement Date in an amount equal to the greater of
the Actuarial Equivalent of (1) an amount equal to his
Merged Plan Benefit, and (2) his Refunded Amount; or
(B) A retirement income commencing as of the
first day of any earlier month designated by him, after
he attains age 62 and prior to his Normal Retirement
Date, in an amount equal to the greater of the
Actuarial Equivalent of (1) his Merged Plan Benefit
payable to him at his Normal Retirement Date, and (2)
his Refunded Amount.
If the greater of the Refunded Amount and the Actuarial
Equivalent of the Merged Plan Benefit of such Merged Plan
Participant is not in excess of $3,500, such greater amount
shall be paid to the Merged Plan Participant in a lump sum
following his termination of employment, in full
satisfaction and release of all further rights of the Merged
Plan Participant, his Spouse and his Beneficiary to receive
his Merged Plan Benefit. Any such lump sum distribution
shall be paid within 60 days after the end of the Plan Year
in which the Participant's employment with all Employers
terminates.
(ii) If a Merged Plan Participant's employment with all
Employers terminated after he completed at least the
aggregate of five (A) years of Vesting Service (as defined
in the Moldcraft Plan) prior to the Plan Merger Date, and
(B) years of Vesting Service (as defined in Article II of
this Plan) after the Plan Merger Date, and before he both
attained age 62 and completed at least the aggregate of 10
(A) years of Vesting Service (as defined in the Moldcraft
Plan) prior to the Plan Merger Date, and (B) years of
Vesting Service (as defined in Article II of this Plan)
after the Plan Merger Date, and if the greater of his
Refunded Amount and the Actuarial Equivalent of his Merged
Plan Benefit is in excess of $3,500, he shall be entitled to
274
elect, subject to subparagraph (v)(C) below, to receive one
of the following benefits:
(A) A retirement income commencing at his Normal
Retirement Date in an amount equal to the greater of
(1) his Merged Plan Benefit, and (2) the Actuarial
Equivalent of his Refunded Amount;
(B) A retirement income commencing as of the
first day of any earlier month designated by him, after
he attains age 62 and prior to his Normal Retirement
Date, in an amount equal to the greater of the
Actuarial Equivalent of (1) his Merged Plan Benefit
payable to him at his Normal Retirement Date; and (2)
his Refunded Amount; or
(C) His Refunded Amount, payable in a lump sum
following his termination of employment, and a Residual
Vested Annuity (defined below) payable in a form
available under this Plan, commencing either (a) at his
Normal Retirement Date, or (b) at his election at any
time after the later to occur of his termination of
employment with all Employers and his attainment of age
62, and prior to his Normal Retirement Date, in an
amount equal to the Actuarial Equivalent of the
Residual Benefit payable at his Normal Retirement Date.
If the Merged Plan Participant is married, payment of
the Refunded Amount may not be made in a lump sum
unless the Participant's Spouse consents in writing to
his election to receive such payment, such consent
acknowledges the effect of such election and is
witnessed by a representative of the Plan or a notary
public, unless the Merged Plan Participant establishes
to the satisfaction of a Plan representative that
consent may not be obtained because his Spouse cannot
be located or under such other circumstances as the
Secretary of the Treasury may by regulation prescribe.
If a Merged Plan Participant who makes an election to
receive payment of his Refunded Amount in a lump sum
pursuant to this subparagraph shall die after making
such election and before receiving such payment, and if
such Merged Plan Participant is survived by a Surviving
Spouse, such election shall automatically be canceled.
(iii) If a Merged Plan Participant's employment
with all Employers terminated before he completed at least
the aggregate of five (A) years of Vesting Service (as
defined in the Moldcraft Plan) prior to the Plan Merger
Date, and (B) years of Vesting Service (as defined in
Article II of this Plan) after the Plan Merger Date, and if
the greater of his Refunded Amount and the Actuarial
Equivalent of his Merged Plan Benefit is in excess of
275
$3,500, he shall be entitled, subject to subparagraph (v)(C)
below, to elect:
(A) A retirement income commencing at his Normal
Retirement Date in an amount equal to the greater of
(1) his Merged Plan Benefit and (2) the Actuarial
Equivalent of his Refunded Amount;
(B) His Refunded Amount payable in a lump sum
following his termination of employment, and a Residual
Vested Annuity, payable in a form available under this
Plan, commencing either (a) at his Normal Retirement
Date or (b) at his election at any time after the later
to occur of his termination of employment with all
Employers and his attainment of age 62, and prior to
his Normal Retirement Date, in an amount equal to the
Actuarial Equivalent of the Residual Benefit payable at
his Normal Retirement Date. If the Merged Plan
Participant is married, payment of the Refunded Amount
may not be made in a lump sum unless his Spouse
consents in writing to his election to receive such
payment, such consent acknowledges the effect of the
election and is witnessed by a representative of the
Plan or a notary public, unless the Merged Plan
Participant establishes to the satisfaction of a Plan
representative that such consent may not be obtained
because his Spouse cannot be located, or under such
other circumstances as the Secretary of the Treasury
may by regulation prescribe. If a Merged Plan
Participant who makes an election to receive payment of
his Refunded Amount in a lump sum pursuant to this
subparagraph shall die after making such election and
before receiving such payment, and such Merged Plan
Participant is survived by a Surviving Spouse, such
election shall automatically be canceled.
(iv) The term "Credited Interest" used with respect to
a Participant's contributions to the Moldcraft Plan means
interest compounded annually on such contributions at the
rate of:
(A) The rate set forth in the Moldcraft Plan for
Plan Years ending prior to January 1, 1976;
(B) 5% for Plan Years commencing on or after
January 1, 1976 and prior to January 1, 1988;
(C) Thereafter 120% of the federal mid-term rate
(as in effect under Section 1274 of the Code) for the
first month of each Plan Year commencing on or after
January 1, 1988.
276
(v) If a Merged Plan Participant has elected a refund
of his own contributions, together with Credited Interest
earned as of the date of refund (the "Refunded Amount"),
pursuant to subparagraphs (ii)(C) or (iii)(B), the Refunded
Amount, and his retirement income (the "Residual Benefit"),
shall be calculated according to the following provisions of
this paragraph.
(A) The Refunded Amount shall equal the amount of
the Merged Plan Participant's contributions to the
Moldcraft Plan plus Credited Interest thereon.
(B) The Residual Benefit of a Merged Plan
Participant shall be calculated as follows:
(1) DETERMINE THE "VESTED VALUE" OF THE
CONTRIBUTIONS MADE BY AND ON BEHALF OF THE MERGED
PLAN PARTICIPANT. The Vested Value is the greater
of (1) the annual retirement income payable at the
Merged Plan Participant's Normal Retirement Date,
determined under the Moldcraft Plan, and (2) a
single life annuity payable in an annual amount at
his Normal Retirement Date determined by
converting the Refunded Amount into such an
annuity using the annual rate of interest on 30-
year Treasury securities in effect for the month
of November last preceding the first day of the
Plan Year in which the refund is made (the
"Applicable Interest Rate").
(2) DETERMINE THE "VESTED INTEREST" IN THE
REFUNDED AMOUNT. The Vested Interest is a single
life annuity payable in an annual amount at the
Merged Plan Participant's Normal Retirement Date.
The determination of the Vested Interest shall be
made by converting the Refunded Amount into such
an annuity using the Applicable Interest Rate.
(3) DETERMINE THE "RESIDUAL VESTED ANNUITY".
The Residual Vested Annuity is determined by
reducing the Vested Value, but not below zero, by
the amount of the Vested Interest.
(4) DETERMINE THE "RESIDUAL BENEFIT". The
Residual Benefit is the lump sum Actuarial
Equivalent of the Residual Vested Annuity
determined as of the date of refund, based upon
the Applicable Interest Rate.
(C) The following provisions shall apply with
respect to the payment of the aggregate amount of the
Refunded Amount and the Residual Benefit:
277
(1) If such aggregate amount is not in
excess of $3,500, such amount shall be paid to the
Merged Plan Participant in a lump sum following
his termination of employment, in full
satisfaction and release of all further rights of
the Merged Plan Participant, his Spouse and his
Beneficiary to receive his Merged Plan Benefit.
(2) If such aggregate amount is in excess of
$3,500, the Merged Plan Participant shall receive
the Refunded Amount in a lump sum following his
termination of employment, and shall receive the
Residual Vested Annuity, as set forth in
subparagraphs (ii)(C) or (iii)(B).
(3) Any lump sum distribution of the
Refunded Amount, or the aggregate of the Refunded
Amount and the Residual Benefit, pursuant to this
paragraph (b) of Section 14.04 shall be paid
within 60 days after the end of the Plan Year in
which the Merged Plan Participant's employment
with all Employers terminates.
(vi) If a Merged Plan Participant dies after the Plan
Merger Date, and prior to the date of commencement of
payment of his Merged Plan Benefit to him, the excess, if
any, of his Refunded Amount over the aggregate payments made
to his Surviving Spouse under the Qualified Pre-retirement
Survivor Annuity payable under Section 4.07(a), shall be
paid to his Beneficiary in a lump sum within 60 days after
the end of the Plan Year in which the death of the survivor
of the Participant and his Surviving Spouse occurs.
However, payment pursuant to the preceding sentence shall be
made in the form of an annuity payable over the lifetime of
the Beneficiary of the Merged Plan Participant, unless the
Beneficiary waives payment in the form of an annuity and
requests payment in a lump sum pursuant to the election and
notice provisions set forth in Section 5.01 of this Plan.
(c) If a Merged Plan Participant's employment with all
Employers terminated on or before November 30, 1990 (i) due to his
becoming totally and permanently disabled within the meaning of the
Moldcraft Plan, (ii) before he attained age 65, and (iii) after he
completed 10 years of Vesting Service (as defined in the Moldcraft
Plan) prior to the Plan Merger Date, such Merged Plan Participant
shall be entitled to commence receipt of his Merged Plan Benefit as
set forth in the Moldcraft Plan as in existence on November 30, 1990.
Notwithstanding the preceding sentence, if the Actuarial Equivalent of
the Refunded Amount of such Merged Plan Participant exceeds the
Actuarial Equivalent of his Merged Plan Benefit payable pursuant to
the preceding sentence, he shall be entitled to receive payment of his
278
Merged Plan Benefit pursuant to the provisions of either Section
14.04(b)(i) or (ii) as applicable.
(d) A Merged Plan Participant whose employment with the
Company and all Affiliated Companies terminated prior to the Plan
Merger Date is entitled to receive his Merged Plan Benefit pursuant to
an optional form of benefit that was available under the Moldcraft
Plan at the date of his termination of employment, and that was
elected by the Merged Plan Participant prior to the date of his
termination of employment pursuant to the terms of the Moldcraft Plan.
14.05 SPECIAL PROVISIONS RELATING TO ANCHOR HOCKING SALARIED
PLAN - HOURLY PART. The following shall apply with respect to Merged
Plan Participants who participated in the Anchor Hocking Salaried Plan
- Hourly Part on or before the Plan Merger Date:
(a) Contributions to the Anchor Hocking Salaried Plan -
Hourly Part were permanently discontinued, and all benefits accrued
thereunder by Merged Plan Participants became nonforfeitable,
effective as of the Benefit Accrual Date. As of the Benefit Accrual
Date, Covered Class Employees (as defined in the Anchor Hocking
Salaried Plan - Hourly Part for purposes of this Section 14.05),
became eligible to participate in this Plan in accordance with the
terms of this Plan. For purposes of determining the Accrued Benefit
earned from and after the Benefit Accrual Date of Merged Plan
Participants who were Covered Class Employees under the Anchor Hocking
Salaried Plan -- Hourly Part on the Benefit Accrual Date and who
thereafter are employed by an Employer, such Merged Plan Participants
shall receive credit for periods of employment with all Employers from
and after the Benefit Accrual Date and not for periods of employment
with any Employer or any other entity, prior to the Benefit Accrual
Date. For purposes of determining such Merged Plan Participants'
Vesting Service, nonforfeitable interest in their Accrued Benefits,
and their eligibility to participate in this Plan, such Participants
shall receive credit (1) for periods of employment with an Affiliated
Company (as defined in Article II of this Plan), from and after the
Benefit Accrual Date and (2) for periods of employment only with
Anchor Hocking Corporation and its affiliates and not with any other
entity that was not an Affiliated Company, prior to the Benefit
Accrual Date.
(b) A Merged Plan Benefit shall be payable to such Merged
Plan Participant (in addition to his benefit set forth under Article
IV of this Plan) at the times set forth in Article IV of this Plan.
Notwithstanding the preceding sentence, if the Merged Plan Participant
has satisfied all eligibility requirements contained in the Anchor
Hocking Salaried Plan - Hourly Part necessary to entitle him to
receive payment of his Merged Plan Benefit commencing at a date
earlier than the date applicable under the terms of this Plan, such
Merged Plan Participant shall be entitled, subject to the terms and
conditions applicable under the Anchor Hocking Salaried Plan - Hourly
Part, to have payment of his Merged Plan Benefit commence as follows:
279
(i) If a Merged Plan Participant's employment with all
Employers terminates before he attains age 65, and if at the
time of such termination (A) he has attained age 55 and
completed at least the aggregate of 10 (I) years of Vesting
Service (as defined in the Anchor Hocking Salaried Plan -
Hourly Part) prior to the Plan Merger Date, and (II) years
of Vesting Service (as defined in Article II of this Plan)
after the Plan Merger Date, or (B) he has attained age 60,
such Merged Plan Participant shall be entitled to commence
receipt (in accordance with the terms of this Plan) of his
Merged Plan Benefit on the first day of any calendar month
selected by the Merged Plan Participant on or after the
later to occur of the Plan Merger Date and the date of his
termination of employment with all Employers, but not later
than his Normal Retirement Date (as defined in the Anchor
Hocking Salaried Plan - Hourly Part for purposes of this
Section 14.05). If the Merged Plan Participant was in the
Plant 3 Clerical Unit or the Plant 15 Clerical Unit and had
attained age 60, or had attained age 55 and completed at
least the aggregate of 30 (A) full years of Vesting Service
(as defined in the Anchor Hocking Salaried Plan - Hourly
Part) prior to the Plan Merger Date, and (B) years of
Vesting Service (as defined in Article II of this Plan)
after the Plan Merger Date, at the time of his termination,
the amount of his Merged Plan Benefit shall be paid
unreduced. If the Merged Plan Participant was in the Plant
3 Clerical Unit or the Plant 15 Clerical Unit and had
neither attained age 60, nor both attained age 55 and
completed at least the aggregate of 30 (A) full years of
Vesting Service (as defined in the Anchor Hocking Salaried
Plan-Hourly Part) prior to the Plan Merger Date, and
(B) years of Vesting Service (as defined in Article II of
this Plan) after the Plan Merger Date, at the time of his
termination, the Merged Plan Benefit shall be reduced by
one-twelfth of 6% for each month it is to be paid prior to
his 60th birthday. If the Merged Plan Participant was in
the Plant 26 Bargaining Unit, his Merged Plan Benefit shall
be reduced by one-twelfth of 6% for each month it is to be
paid prior to his 60th birthday.
(ii) If a Merged Plan Participant's employment with all
Employers terminates before he has attained age 65, and he
is not eligible under subparagraph (i) next above, he shall
be entitled to commence receipt (in accordance with the
terms of this Plan) of his Merged Plan Benefit on the first
day of the month following the Merged Plan Participant's
Normal Retirement Date, unless he elects to have it begin
within the ten year period prior to his Normal Retirement
Date. If the Merged Plan Participant elects to have such
Merged Plan Benefit begin earlier than his Normal Retirement
Date, his Merged Plan Benefit shall be a reduced pension (in
a level amount) equal to the Actuarial Equivalent of the
280
Merged Plan Benefit that would have been payable on the
Merged Plan Participant's Normal Retirement Date.
(c) If a Merged Plan Participant's employment with all
Employers terminates prior to the Benefit Accrual Date (A) due to a
Merged Plan Participant becoming Totally Disabled under the terms and
conditions defined under the Anchor Hocking Salaried Plan-Hourly Part,
(B) before he reaches his Normal Retirement Date, (C) while regularly
employed to work for an Employer at least 30 hours per week, (D) while
he was a Covered Class Employee, and (E) after completing at least one
full year of Anchor Service (as defined under the Anchor Hocking
Salaried Plan - Hourly Part for purposes of this Section 14.05), such
Merged Plan Participant shall be entitled to commence receipt (in
accordance with the terms of this Plan) of his Merged Plan Benefit as
follows:
(i) If a Merged Plan Participant satisfies all the
conditions necessary for a disability benefit under the
Anchor Hocking Salaried Plan - Hourly Part and he continues
to be Totally Disabled (as defined in the Anchor Hocking
Salaried Plan - Hourly Part for purposes of this Section
14.05) until his Normal Retirement Date and if his
employment with the Controlled Group (as defined in the
Anchor Hocking Salaried Plan - Hourly Part for purposes of
this Section 14.05) is not terminated before his Normal
Retirement Date, his employment shall be considered to have
been terminated on the day before his Normal Retirement Date
and on account of his being Totally Disabled. Such Merged
Plan Participant shall be entitled to commence receipt (in
accordance with the terms of this Plan) of his Merged Plan
Benefit on the first day of the month following the Merged
Plan Participant's Normal Retirement Date, unless he elects
to have it begin within the ten year period prior to his
Normal Retirement Date. If the Merged Plan Participant
elects to have such benefit begin earlier than his Normal
Retirement Date, his Merged Plan Benefit shall be a reduced
pension (in a level amount) equal to the Actuarial
Equivalent of the Merged Plan Benefit that would have been
payable on the Participant's Normal Retirement Date.
(ii) Solely for purposes of this paragraph (c), the
Merged Plan Benefit of a Merged Plan Participant who is
Totally Disabled (as defined in the Anchor Hocking Salaried
Plan - Hourly Part) shall equal the sum of (1) the portion
of his Total Benefit earned under the Anchor Salaried Plan -
Hourly Part as of the Benefit Accrual Date, plus (2) the
Accrued Benefit earned under this Plan from and after the
Benefit Accrual Date based upon the benefit formula in this
Plan on the Benefit Accrual Date, the Merged Plan
Participant's monthly rate of base pay for the month
preceding the date he became Totally Disabled and the
consideration of the period of time during which he
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continues to be Totally Disabled from and after the Benefit
Accrual Date as Benefit Service under this Plan.
(iii) If a Merged Plan Participant satisfies all
the conditions necessary for a disability benefit under the
Anchor Hocking Salaried Plan -- Hourly Part and he ceases to
be Totally Disabled before his Normal Retirement Date, and
he does not thereafter return to work for the Controlled
Group because he is not requested by a Controlled Group
Member to return to work, and if his employment with the
Controlled Group is not terminated before he ceases to be
Totally Disabled, his employment shall be considered to have
been terminated (i) at the time he ceases to be Totally
Disabled and (ii) on account of his being Totally Disabled
and such Merged Plan Participant shall be entitled to
commence receipt (in accordance with the terms of this Plan)
of his Merged Plan Benefit as a deferred pension, if so
entitled under this Section 14.05, on the first day of the
month following the Merged Plan Participant's Normal
Retirement Date, unless he elects to have it begin within
the ten year period prior to his Normal Retirement Date. If
the Merged Plan Participant elects to have such benefit
begin earlier than his Normal Retirement Date, his Merged
Plan Benefit shall be a reduced pension (in a level amount)
equal to the Actuarial Equivalent of the Merged Plan Benefit
that would have been payable on the Merged Plan
Participant's Normal Retirement Date.
(d) If a Merged Plan Participant dies before his Merged
Plan Benefit commences, his Surviving Spouse shall be entitled to
commence receipt (in accordance with the terms of this Plan) of his
Merged Plan Benefit as follows:
(i) In the case of the Surviving Spouse of a Merged
Plan Participant who died while an active employee and who
(A) had attained age 50 (age 55 if on his QTAM, as defined
in the Anchor Hocking Salaried Plan - Hourly Part for
purposes of this Section 14.05, he is in the Plant 26
Bargaining Unit) but not age 65 and (B) had completed at
least the aggregate of 10 (I) years of Vesting Service (as
defined in the Anchor Hocking Salaried Plan - Hourly Part)
prior to the Plan Merger Date, and (II) years of Vesting
Service (as defined in Article II of this Plan) after the
Plan Merger Date, the Merged Plan Benefit to which she is
entitled (a) shall be a monthly pension payable for her
remaining lifetime in the amount specified in subsequent
sentences of this paragraph, (b) shall begin on the first
day of the month after such Merged Plan Participant would
have attained age 65 had he not died or, if the Surviving
Spouse requests earlier commencement thereof, on the first
day of any month following the Merged Plan Participant's
death, but in any case only if the Surviving Spouse is
282
living on such date and otherwise eligible to receive such
Merged Plan Benefit, and (c) shall cease with the payment
for the month in which she dies. If such Merged Plan
Participant died on or after age 55 (and before age 65), the
monthly amount of such Merged Plan Benefit payable to his
Surviving Spouse shall be equal to 50% of what would have
been the monthly amount of such Merged Plan Participant's
Merged Plan Benefit payable as an Early Retirement Pension
(as defined in the Anchor Hocking Salaried Plan - Hourly
Part for the purposes of this Section 14.05) if (A) he had
Retired (as defined in the Anchor Hocking Salaried Plan -
Hourly Part for purposes of this Section 14.05), at the end
of the month in which he died and he had continued to live,
(B) his Early Retirement Pension had begun in the first
month after the later of the month in which he in fact died
or the month in which he would have reached age 60 if he had
continued to live and (C) his Early Retirement Pension was
paid as an annuity for his lifetime only. If such Merged
Plan Participant died on or after age 50 and before age 55,
and at the time of his death (or at the time of his QTAM, if
that is earlier) such Merged Plan Participant was in the
Plant 3 Clerical Unit or the Plant 15 Clerical Unit, the
monthly amount of such Merged Plan Benefit shall be equal to
50% of the monthly amount of the Merged Plan Benefit payable
as a Deferred Vested Pension (as defined in the Anchor
Hocking Salaried Plan - Hourly Part for purposes of this
Section 14.05) beginning on the Merged Plan Participant's
Normal Retirement Date, to which he would have been entitled
if (A) he had resigned from employment with all Controlled
Group Members (as defined in the Anchor Hocking Salaried
Plan - Hourly Part for purposes of this Section 14.05), at
the end of the month in which he in fact died, (B) he had
continued to live until after his Normal Retirement Date and
(C) his Deferred Vested Pension was paid as an annuity for
his lifetime only. In computing the amount of such Merged
Plan Benefit payable to a Surviving Spouse pursuant to this
subparagraph (i), any early retirement reductions, and the
Cap (as defined in the Anchor Hocking Salaried Plan - Hourly
Part for purposes of this Section 14.05) shall be ignored.
(ii) In the case of the Surviving Spouse of a Merged
Plan Participant who died while an active employee and (A)
had attained age 60 but not age 65 and had not completed at
least the aggregate of 10 (I) years of Vesting Service (as
defined in the Anchor Hocking Salaried Plan - Hourly Part)
prior to the Plan Merger Date, and (II) years of Vesting
Service (as defined in Article II of this Plan) after the
Plan Merger Date, or (B) had attained age 65, (regardless of
his aggregate years of Vesting Service), the Merged Plan
Benefit to which she is entitled shall be such Merged Plan
Benefit as she would have been entitled to receive if (1)
such Merged Plan Participant had retired in the month
283
preceding his death and under circumstances which would have
allowed the Merged Plan Participant to receive his Merged
Plan Benefit payable as an Early Retirement Pension under
the Anchor Hocking Salaried Plan - Hourly Part, (2) his
Early Retirement Pension had begun in the month in which he
in fact died and (3) his Early Retirement Pension was
payable under the Semi-Automatic 50% J & S Option (as
defined in the Anchor Hocking Salaried Plan - Hourly Part
for purposes of this Section 14.05). In computing the
amount of such Merged Plan Benefit, payable to a Surviving
Spouse pursuant to this paragraph (ii), any early retirement
reductions and the Cap shall be ignored. Such Merged Plan
Benefit (1) shall begin as provided in clause (b) of
subparagraph (i) of this paragraph, (2) shall, except as
otherwise provided herein, be payable monthly thereafter (on
the first of each month) during her remaining lifetime and
(3) shall cease with the payment for the month in which she
dies.
(iii) (A) In the case of the Surviving Spouse
of a deceased Merged Plan Participant not
described in subparagraphs (i) or (ii) above,
the Merged Plan Benefit to which she is
entitled shall be a monthly Merged Plan
Benefit for the life of the Surviving Spouse
with payments equal to the payments which
would have been payable to such Surviving
Spouse under the Semi-Automatic 50% J & S
Option (based on the Merged Plan
Participant's actual Benefit Service (as
defined in the Anchor Hocking Salaried Plan -
Hourly Part for purposes of this Section
14.05)) if --
(1) in the case of a Merged Plan
Participant who dies after his attainment of
the age and Vesting Service requirements of
Section 14.05(b)(i) (the "Qualified Earliest
Retirement Age"), such Merged Plan
Participant had retired on the day before his
death with an immediate Semi-Automatic 50%
J & S Option in effect, or
(2) in the case of a Merged Plan
Participant who dies on or before the date on
which he would have attained his Qualified
Earliest Retirement Age, such Merged Plan
Participant had:
(a) terminated his employment with
the Controlled Group on the date of his
death;
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(b) survived to his Qualified
Earliest Retirement Age;
(c) retired at his Qualified
Earliest Retirement Age with an
immediate Semi-Automatic 50% J & S
Option in effect, and
(d) died on the day after the day
on which he would have attained his
Qualified Earliest Retirement Age.
(B) The Merged Plan Benefit provided for in
subparagraph (A) of this subparagraph (iii) shall
commence to be paid to the Surviving Spouse on the
first day of the month after the Merged Plan
Participant would have attained age 65 had he not died
or, if the Surviving Spouse requests earlier
commencement thereof, on the first day of any earlier
month after the later of (1) the first day of the month
after the Merged Plan Participant's death or (2) the
first day of the month in which the Merged Plan
Participant would have attained his Qualified Earliest
Retirement Age, but in any case only if the Surviving
Spouse is living on such date and is otherwise eligible
to receive such Merged Plan Benefit. Payments shall
continue during the Surviving Spouse's remaining
lifetime, and shall cease with the payment for the
month in which such Surviving Spouse dies.
(C) In computing the amount of the Merged Plan
Benefit provided for in subparagraph (A) of this
subparagraph (iii), any early retirement reductions
shall be taken into account, and the Cap shall be
ignored.
(e) A Merged Plan Participant may elect, pursuant to the
spousal consent provisions of Section 5.01 of this Plan, any one of
the optional forms of benefits specified in this paragraph with
respect to his Merged Plan Benefit. Any optional form of benefit set
forth in Article V of this Plan shall apply only to the Accrued
Benefit earned by the Merged Plan Participant from and after the
Benefit Accrual Date. Any optional form of benefit or combination of
optional forms of benefits set forth in this paragraph shall be the
Actuarial Equivalent of the Merged Plan Benefit otherwise payable with
respect to the Merged Plan Participant.
(i) REGULAR J & S OPTION: A Merged Plan Participant
may elect to receive his Merged Plan Benefit as a reduced
pension payable to him during his lifetime on and after his
pension commencement date, and after his death to have a
pension payable during the surviving lifetime of and for a
285
natural person (herein called "Joint Pensioner") designated
by the Merged Plan Participant for such purpose at the same
reduced rate as was payable for the Merged Plan Participant
or (if elected by the Merged Plan Participant) at the rate
of 50% of the reduced Merged Plan Benefit as was payable to
the Merged Plan Participant. Evidence satisfactory to the
Pension Administrative Committee of the date of birth of the
Merged Plan Participant and of his Joint Pensioner must be
furnished within 90 days of the filing of such election with
the Pension Administrative Committee. The amount of the
reduced Merged Plan Benefit payable under such an option
depends in part on (A) the normal life expectancy of the
Merged Plan Participant and his Joint Pensioner and (B) the
Merged Plan Participant's choice of the percentage of his
reduced Merged Plan Benefit to be paid after his death to
his Joint Pensioner. Pension payments for the Joint
Pensioner shall begin with the first day of the month after
the month in which the Merged Plan Participant dies,
provided his death does not void the election of this option
of the Anchor Hocking Salaried Plan - Hourly Part, and
provided his Joint Pensioner is living on such day, and the
last monthly payment for him or her shall be payable on the
first day of the last month in which he or she is living.
If a Merged Plan Participant's Joint Pensioner dies before
the Merged Plan Participant's pension commences, the
election shall be of no effect and the Merged Plan
Participant shall be treated the same as though he had not
elected an option pursuant to this subparagraph. If a
Merged Plan Participant's Joint Pensioner dies on or after
the Merged Plan Participant's pension is to commence and
while the Merged Plan Participant is living, the option
elected shall continue in force and the Merged Plan
Participant's reduced Merged Plan Benefit shall not be
increased thereby.
(ii) LEVEL INCOME OPTION: A Merged Plan Participant,
who at the time of his retirement, death or termination is
eligible for a pension benefit under the Anchor Hocking
Salaried Plan - Hourly Part, and who is in the Plant 3
Clerical Unit or the Plant 15 Clerical Unit, who retires
before reaching the earliest age at which a retired worker
may elect to have his old age benefits under the U.S. Social
Security Act begin and who is not eligible for a Social
Security Disability Benefit (as defined in the Anchor
Hocking Salaried Plan - Hourly Part for purposes of this
Section 14.05), may elect (in accordance with procedures
established by the Pension Administrative Committee) to have
the amount of his Merged Plan Benefit otherwise payable for
him increased before such earliest age and decreased
thereafter, to the end that his Merged Plan Benefit, when
combined with his old age benefits under the U.S. Social
Security Act (as in effect at the time of his retirement) in
286
the amount estimated to be payable beginning at such
earliest age, will provide a level amount of retirement
income insofar as practicable. A Merged Plan Participant's
election of this Level Income Option shall become void if
(A) he does not become entitled to an Early Retirement
Pension (as defined under the Anchor Hocking Salaried Plan -
Hourly Part for purposes of this Section 14.05) or (B) his
Merged Plan Benefit is payable under a J & S Option (as
defined under the Anchor Hocking Salaried Plan - Hourly Part
for purposes of this Section 14.05).
(iii) OTHER OPTIONS: A Merged Plan Participant
whose employment with the Company and all Affiliated
Companies terminated prior to the Plan Merger Date is
entitled to receive his Merged Plan Benefit pursuant to an
optional form of benefit that was available under the Anchor
Hocking Salaried Plan - Hourly Part at the date of his
termination of employment, and that was elected by the
Merged Plan Participant prior to the date of his termination
of employment pursuant to the terms of the Anchor Hocking
Salaried Plan - Hourly Part.
(f) Notwithstanding the following, in the case of a Merged
Plan Participant who is in the Plant 26 Bargaining Unit just before
his QTAM, the figure '60' shall be substituted for the figure '72'
whenever the figure '72' appears in the balance of this paragraph (f).
The following shall apply to the payment of a Merged Plan
Benefit:
(i) In the case of a Merged Plan Participant, who
dies on or after his Merged Plan Benefit is to commence and
whose Merged Plan Benefit has not been discharged by a lump
sum payment, if such death occurs before he has become
entitled to receive 72 monthly payments of his Merged Plan
Benefit, and if a J & S Option under subparagraph (e)(i) of
this Section is not applicable to him, his Beneficiary shall
be paid the same Merged Plan Benefit as would have been
payable for such Merged Plan Participant if he had continued
to live until the equivalent of 72 monthly Merged Plan
Benefit payments have been made to him and/or his
Beneficiary.
(ii) In the case of a Merged Plan Participant described
in clause (i) above for whom a J & S Option under
subparagraph (e)(i) of this section is applicable, if he and
his Joint Pensioner die before one or both of them have
become entitled to receive 72 monthly payments with respect
to his Merged Plan Benefit, such Merged Plan Participant's
Beneficiary shall be paid the same monthly Merged Plan
Benefit as would have been payable to the survivor of such
287
Merged Plan Participant and his Joint Pensioner if such
survivor had continued to live, until the equivalent of 72
monthly Merged Plan Benefit payments have been made to such
Merged Plan Participant, his Joint Pensioner and/or his
Beneficiary, except that, for this purpose, a Merged Plan
Participant's Joint Pensioner shall not be considered to
survive such Merged Plan Participant if he or she dies
before a Merged Plan Benefit payment becomes payable for him
or her under such Merged Plan Participant's J & S Option.
(iii) In the case of a Merged Plan Participant
whose Merged Plan Benefit is payable under the Level Income
Option specified in subparagraph (e)(ii) above, and who dies
during the 72 month period certain specified herein, the
same monthly payments shall be made to his Beneficiary for
the balance of such 72 month period certain as would have
been payable to the Merged Plan Participant if he had
continued to live.
(iv) In the case of a Merged Plan Participant who was a
Member (as defined in the Anchor Hocking Salaried Plan -
Hourly Part for purposes of this Section 14.05) who
continues in the employ of the Controlled Group Member after
his Normal Retirement Date, who dies while still a Member,
and for whom the J & S Option is applicable or who has a
Surviving Spouse eligible for a Surviving Spouse Pension
under paragraph (d) of this section, if the Merged Plan
Participant's Joint Pensioner or Surviving Spouse, as the
case may be, dies before becoming entitled to receive 72
monthly payments with respect to his Merged Plan Benefit,
such Merged Plan Participant's Beneficiary shall be paid the
same Merged Plan Benefit as would have been payable to his
Joint Pensioner or Surviving Spouse if such Joint Pensioner
or Surviving Spouse had continued to live until the
equivalent of 72 monthly Merged Plan Benefit payments have
been made to such Joint Pensioner or Surviving Spouse and/or
his Beneficiary, except that, for this purpose, a Merged
Plan Participant's Joint Pensioner or Surviving Spouse shall
not be considered to survive such Merged Plan Participant if
he or she dies before a Merged Plan Benefit payment becomes
payable to him or her under such Merged Plan Participant's J
& S Option or under paragraph (d) of this section.
(v) If a Merged Plan Participant who retires before
his Normal Retirement Date dies after the month in which his
retirement occurs, if paragraph (b) of this section is not
applicable to him, if no Merged Plan Benefit is payable to
his Beneficiary under subparagraphs (f)(i), (ii) or (iii),
solely because the Merged Plan Participant's death occurred
before his Merged Plan Benefit commenced, and if he does not
have a Surviving Spouse who is eligible for a Merged Plan
Benefit under paragraph (d) of this section, his Beneficiary
288
shall be paid for 72 months (beginning with the month after
the death of such Merged Plan Participant) the amount of the
Merged Plan Benefit that would have been payable to such
Merged Plan Participant, if he had not died and had duly
elected to have his Merged Plan Benefit payable pursuant to
paragraph (b)(i) of this Section beginning on the first day
of the month after the month in which he in fact did die.
14.06 SPECIAL PROVISIONS RELATING TO SANFORD SALARIED
PLAN. The following shall apply with respect to Merged Plan
Participants who participated in the Sanford Salaried Plan on or
before the Plan Merger Date:
(a) Benefit accruals under the Sanford Salaried Plan were
permanently discontinued effective as of the Benefit Accrual Date. As
of the Plan Merger Date, Active Members (as defined in the Sanford
Salaried Plan for purposes of this Section 14.06) became eligible to
participate in this Plan in accordance with the terms of this Plan.
For purposes of determining the Accrued Benefit earned from and after
the Plan Merger Date by Merged Plan Participants who were Active
Members in the Sanford Salaried Plan on the Plan Merger Date and who
thereafter are employed by an Employer, such Merged Plan Participants
shall receive credit for periods of employment with all Employers from
and after the Plan Merger Date and for periods of participation in the
Sanford Salaried Plan prior to the Plan Merger Date and not for any
other periods of employment with any Employer or any other entity,
prior to the Plan Merger Date. For purposes of determining such
Merged Plan Participants' Vesting Service, nonforfeitable interest in
their Accrued Benefits, and their eligibility to participate in this
Plan, such Merged Plan Participants shall receive credit (1) for
periods of employment with any Employer or any other Affiliated
Company (as defined in Article II of this Plan) from and after the
Plan Merger Date, and (2) for periods of employment only with Sanford
Corporation, and all Employers and Affiliated Companies, and not for
periods of employment with any other entity that was not an Affiliated
Company, prior to the Plan Merger Date.
(b) A Merged Plan Benefit shall be payable to a Merged Plan
Participant (in addition to his benefit set forth under Article IV of
this Plan) at the times set forth in Article IV of this Plan.
Notwithstanding the preceding sentence, if the Merged Plan Participant
has satisfied all eligibility requirements contained in the Sanford
Salaried Plan necessary to entitle him to receive payment of his
Merged Plan Benefit commencing at a date earlier than the date
applicable under the terms of this Plan, such Participant shall be
entitled, subject to the terms and conditions applicable under the
Sanford Salaried Plan, to have payment of his Merged Plan Benefit
commence as follows:
(i) If a Merged Plan Participant's employment with all
Employers terminates before he attains age 65, and if at the
time of such termination he has both attained age 55 and
289
completed at least the aggregate of 20 (A) years of Vesting
Service (as defined in the Sanford Salaried Plan) prior to
the Plan Merger Date, and (B) years of Vesting Service, (as
defined in Article II of this Plan) after the Plan Merger
Date, such Merged Plan Participant shall be entitled to
commence receipt (in accordance with the terms of this Plan)
of his Merged Plan Benefit on the first day of any calendar
month selected by the Merged Plan Participant on or after
the later to occur of the Plan Merger Date and the date of
his termination of employment with all Employers, but not
later than his Normal Retirement Date (as defined in the
Sanford Salaried Plan for purposes of this Section 14.06).
The Merged Plan Benefit payable to such Merged Plan
Participant shall be reduced pursuant to Table C (attached
to the Sanford Salaried Plan on December 1, 1992).
(ii) If a Merged Plan Participant's employment with all
Employers terminates, and he is not eligible under
subparagraph (i) next above, such Merged Plan Participant
shall be entitled to commence receipt (in accordance with
the terms of this Plan) of his Merged Plan Benefit on the
first day of the month following the Merged Plan
Participant's Normal Retirement Date, unless he elects,
pursuant to the following sentence, to have it begin within
the ten year period prior to his Normal Retirement Date. If
any such Merged Plan Participant who has completed at least
the aggregate of 20 (A) years of Vesting Service (as defined
in the Sanford Salaried Plan) prior to the Plan Merger Date,
and (B) years of Vesting Service (as defined in Article II
of this Plan) after the Plan Merger Date, at the time of
such termination, elects to have his Merged Plan Benefit
begin earlier than his Normal Retirement Date, his Merged
Plan Benefit shall be reduced pursuant to Table C attached
to the Sanford Salaried Plan on December 1, 1992.
(c) If a Merged Plan Participant dies before payment of his
Merged Plan Benefit commences, and after completing at least the
aggregate of five (A) years of Vesting Service (as defined in the
Sanford Salaried Plan) prior to the Plan Merger Date, and (B) years of
Vesting Service (as defined in Article II of this Plan) after the Plan
Merger Date, his Surviving Spouse shall be entitled to commence
receipt (in accordance with the terms of this Plan) of his Merged Plan
Benefit. The Merged Plan Benefit to which she is entitled shall be a
monthly benefit for the life of the Surviving Spouse with payments
equal to the payments that would have been payable to such Surviving
Spouse under the Qualified Joint and Survivor Annuity option if --
(i) in the case of a Merged Plan Participant who dies
after he attains age 55 (the "Qualified Earliest Retirement
Age"), such Merged Plan Participant had retired on the day
before his death with an immediate Qualified Joint and
Survivor Annuity in effect, or
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(ii) in the case of a Merged Plan Participant who dies
on or before the date on which he would have attained his
Qualified Earliest Retirement Age, such Merged Plan
Participant had:
(A) terminated his employment with the Controlled
Group on the date of his death;
(B) survived to his Qualified Earliest Retirement
Age;
(C) retired at his Qualified Earliest Retirement
Age with an immediate Qualified Joint and Survivor
Annuity in effect, and
(D) died on the day after the day on which he
would have attained his Qualified Earliest Retirement
Age.
(ii) The Merged Plan Benefit provided for in this
paragraph shall commence to be paid to the Surviving Spouse
on the first day of the month after the Merged Plan
Participant would have attained age 65 had he not died.
However, if the Merged Plan Participant had completed at
least the aggregate of 20 (A) years of Vesting Service (as
defined in the Sanford Salaried Plan) prior to the Plan
Merger Date, and (B) years of Vesting Service (as defined in
Article II of this Plan) after the Plan Merger Date, at the
date of his death, and if his Surviving Spouse requests
earlier commencement thereof, the Merged Plan Benefit shall
commence to be paid to the Surviving Spouse on the first day
of any earlier month after the later of (A) the first day of
the month after the Merged Plan Participant's death or (B)
the first day of the month in which the Merged Plan
Participant would have attained his Qualified Earliest
Retirement Age, but in any case only if the Surviving Spouse
is living on such date and is otherwise eligible to receive
such benefit. Payments shall continue during the Surviving
Spouse's remaining lifetime, and shall cease with the
payment for the month in which such Surviving Spouse dies.
(iii) In computing the amount of the Merged Plan
Benefit under this paragraph (c), any reductions for early
commencement shall be taken into account pursuant to Table C
attached to the Sanford Salaried Plan on December 1, 1992.
(d) A Merged Plan Participant may elect, pursuant to the
spousal consent provisions of Section 5.01 of this Plan, any one of
the optional forms of benefits specified in this paragraph with
respect to his Merged Plan Benefit. Any optional form of benefit set
forth in Article V of this Plan shall apply only to the Accrued
Benefit earned by the Merged Plan Participant from and after the
291
Benefit Accrual Date. Any optional form of benefit or combination of
optional forms of benefits set forth in this paragraph shall be the
Actuarial Equivalent of the Merged Plan Benefit otherwise payable with
respect to the Merged Plan Participant.
(i) REGULAR J & S OPTIONS: A Merged Plan Participant
may elect to receive his Merged Plan Benefit as a reduced
pension payable to him during his lifetime on and after the
date on which his Merged Plan Benefit is to commence, and
after his death to have a pension payable during the
surviving lifetime of and for a natural person (herein
called "Joint Pensioner") designated by the Merged Plan
Participant for such purpose at the same reduced rate
payable to the Merged Plan Participant or (if elected by the
Merged Plan Participant) at the rate of 50%, 66 % or 75% of
the reduced pension payable to the Merged Plan Participant.
Evidence satisfactory to the Pension Administrative
Committee of the date of birth of the Merged Plan
Participant and of his Joint Pensioner must be furnished
within 90 days of the filing of such election with the
Pension Administrative Committee. The amount of the reduced
pension payable under such an option depends in part on (A)
the age of the Merged Plan Participant and his Joint
Pensioner and (B) the Merged Plan Participant's choice of
the percentage of his reduced pension to be paid after his
death to his Joint Pensioner, as set forth in Table E of
Schedule 4 attached hereto. Pension payments for the Joint
Pensioner shall begin with the first day of the month after
the month in which the Merged Plan Participant dies,
provided his death does not void the election of this
option, and provided his Joint Pensioner is living on such
day, and the last monthly payment for the Joint Pensioner
shall be payable on the first day of the last month in which
he or she is living. If the Joint Pensioner dies before the
Merged Plan Participant's pension commences, the election
shall be of no effect and the Merged Plan Participant shall
be treated the same as though he had not elected an option
pursuant to this subparagraph. If the Joint Pensioner dies
on or after his Merged Plan Participant's pension commences
and while the Merged Plan Participant is living, the option
elected shall continue in force and the Merged Plan
Participant's reduced pension shall not be increased
thereby.
(ii) TEN OR FIFTEEN-YEARS CERTAIN. A Merged Plan
Participant may elect to receive his Merged Plan Benefit as
a reduced pension (as set forth in Table H of Schedule 4
attached hereto) payable to him during his lifetime on and
after the date on which his Merged Plan Benefit is to
commence, and in the event of the Merged Plan Participant's
death before the end of a ten or fifteen year period
commencing with the date on which payments commenced, to
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have the same amount payable to his Beneficiary, designated
by him in writing filed with the Pension Administrative
Committee before his death, for the remainder of such
period.
(iii) OTHER OPTIONS. A Merged Plan Participant
whose employment with the Company and all Affiliated
Companies terminated prior to the Plan Merger Date is
entitled to receive his Merged Plan Benefit pursuant to an
optional form of benefit that was available under the
Sanford Salaried Plan at the date of his termination of
employment, and that was elected by the Merged Plan
Participant prior to the date of his termination of
employment pursuant to the terms of the Sanford Salaried
Plan.
(e) A Merged Plan Participant who participated in the
Sanford Salaried Plan on or before the Plan Merger Date, and who has
not completed at least the aggregate of five (i) years of Vesting
Service (as defined in the Sanford Salaried Plan) prior to the Plan
Merger Date, and (ii) years of Vesting Service (as defined in
Article II of this Plan) after the Plan Merger Date, on his Severance
Date, shall not be entitled to a Merged Plan Benefit under the Sanford
Salaried Plan and the provisions of this Section 14.06 shall not be
applicable with respect to such Merged Plan Participant.
ARTICLE XV
Special Provisions
------------------
15.01 SPECIAL PROVISIONS RELATING TO CERTAIN EMPLOYEES OF
PACKAGING DIVISION OF ANCHOR HOCKING CORPORATION. For purposes of
this Section, Transferred Employees shall mean all Employees who were
actively employed (including Employees on authorized leave of absence,
disability leave, military service or layoff with recall rights) by
the Packaging Division of Anchor Hocking Corporation at its locations
in Lancaster, Ohio, Weirton, West Virginia, Connellsville,
Pennsylvania and Glassboro, New Jersey on December 31, 1992 ("Transfer
Date"). Notwithstanding any other provisions of the Plan, the
following provisions of this Section shall apply to Transferred
Employees:
(a) Accrued Benefits and Credited Service of Transferred
Employees shall cease, and Transferred Employees shall be considered
to have attained their Severance Dates, as of the Transfer Date.
(b) Notwithstanding paragraph (a) above, a Transferred
Employee who commenced employment with CarnaudMetalbox Holdings (USA),
Inc., a Delaware corporation, any successor thereto or any affiliates
thereof ("Subsequent Employer") on the Transfer Date, and whose
293
employment with the Subsequent Employer terminates for any reason at
any time after the Transfer Date, shall receive credit for actual
service with the Subsequent Employer after the Transfer Date for
purposes of determining Eligibility Years of Service, Vesting Service
and attainment of an Early Retirement Date, under the Plan, but shall
not receive credit for any period of service with the Successor
Employer from and after the Transfer Date for purposes of determining
Credited Service, his Normal Retirement Benefit or his Accrued Benefit
under the Plan.
(c) If a Transferred Employee elects payment of his Merged
Plan Benefit (defined in Section 14.01(f)) in the form of a Level
Income Option under Section 14.03(e)(ii) or Section 14.05(e)(ii), he
must deliver to the Pension Administrative Committee, within 120 days
after election of such Option, a written estimate of his social
security benefit prepared by the Social Security Administration. The
Pension Administrative Committee shall be entitled to conclusively
rely upon such estimate in determining the amount of payments under
the Level Income Option. If such estimate is not received within such
time period, the election of the Level Income Option with respect to
the Merged Plan Benefit shall not be valid.
(d) If a Transferred Employee terminates employment with a
Subsequent Employer after the Transfer Date, but prior to qualifying
for a Vested Benefit under Section 4.04, payment of a Vested Benefit
prior to a Normal Retirement Date under Sections 4.04 and 4.05(a), or
payment of a benefit at an Early Retirement Date under Section 4.03,
and if he is later reemployed by the Subsequent Employer, the
Transferred Employee shall receive credit for actual service with the
Subsequent Employer rendered before and after such reemployment for
purposes of determining Eligibility Years of Service, Vesting Service
and the attainment of an Early Retirement Date under the Plan, and
satisfaction of the requirements for such benefit, only to the extent
provided by the provisions set forth in the definition of Vesting
Service in Article II of the Plan, but shall not receive credit for
service after such reemployment for purposes of determining Credited
Service, his Normal Retirement Benefit or his Accrued Benefit under
the Plan. The age of the Transferred Employee for purposes of
determining his eligibility for payment of a benefit under the Plan
shall be his age at the time he initially terminates employment with
the Subsequent Employer, or at the time he later terminates employment
with the Subsequent Employer after an initial termination and
reemployment, as the case may be.
15.02 SPECIAL PROVISIONS RELATING TO SALARIED EMPLOYEES AT
COUNSELOR COMPANY. Notwithstanding any provision of the Plan to the
contrary, each Participant who was a salaried employee of Counselor
Company in Rockford, Illinois on October 27, 1993 is entitled to
receive a monthly benefit equal to his entire Accrued Benefit as of
his Severance Date, determined pursuant to the provisions of Section
4.04 and other applicable provisions of the Plan without regard to the
294
number of years of Vesting Service completed by such Participant on
such date.
15.03 SPECIAL PROVISIONS RELATING TO STERLING SALARIED
EMPLOYEES.
(a) Notwithstanding any provision of the Plan to the
contrary, each Participant who was a salaried employee of Sterling,
Inc. in Mountainside, New Jersey, with spousal consent given pursuant
to the provisions of Section 5.01 if applicable, waived payment of his
Accrued Benefit in the form of an annuity, and received a lump sum
distribution equal to the Actuarial Equivalent of his Accrued Benefit
during the month of December, 1993.
15.04 SPECIAL PROVISIONS RELATING TO EMPLOYEES TRANSFERRING
FROM AFFILIATED COMPANIES. If an Employee transfers from employment
with an Affiliated Company that is not a Participating Employer to
employment with a Participating Employer, and subsequently becomes a
Participant, such Employee shall receive credit for Vesting Service
earned while employed by the Affiliated Company that is not a
Participating Employer. Such Employee shall not receive credit for
any Credited Service as a result of his employment with the Affiliated
Company that is not a Participating Employer.
ARTICLE XVI
Provisions Relating to Additional Merger of Plans
-------------------------------------------------
16.01 DEFINITIONS. For purposes of this Article, the
following words and phrases shall have the meanings set forth below:
(a) "Actuarial Equivalent" or "Actuarial Equivalence" shall
mean with respect to each Merged Plan the equality in value of
aggregate amounts expected to be received under different forms of
payment, or to be received at different dates, determined on the basis
of the assumptions and methods set forth in the attached schedule
applicable to each Merged Plan as of the applicable Plan Merger Date,
or, if applicable, Article XVII.
(b) "Benefit Accrual Date" shall mean January 1, 1995 with
respect to the Goody Salaried Plan and the Stuart Hall Retirement
Plan, January 1, 1996 with respect to the Faber-Castell Salaried Plan,
and April 1, 1996 with respect to the Berol Plan.
(c) "Berol Plan" shall mean the Empire Berol Corporation
Revised Basic Pension Plan.
(d) "Faber-Castell Salaried Plan" shall mean the Faber-
Castell Retirement Plan for Salaried Employees.
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(e) "Goody Salaried Plan" shall mean the Goody Products,
Inc. Pension Plan for Salaried Employees.
(f) "Merged Plan" shall mean each of the Goody Salaried
Plan, the Stuart Hall Retirement Plan, the Faber-Castell Salaried
Plan, and the Berol Plan as in existence on the applicable Plan Merger
Date.
(g) "Merged Plan Benefit" shall mean the vested portion of
the Total Benefit earned by a Merged Plan Participant under a Merged
Plan as of the applicable Plan Merger Date that has not been fully
distributed to, or used to purchase an annuity distributed to, the
Merged Plan Participant.
(h) "Merged Plan Participant" shall mean any person who has
earned a vested accrued benefit under a Merged Plan as of the
applicable Plan Merger Date, if such benefit has not been fully
distributed to, or an annuity has not been purchased for and
distributed to, the Merged Plan Participant with respect to such
vested accrued benefit as of the applicable Plan Merger Date.
(i) "Plan Merger Date" shall mean January 1, 1995 with
respect to each of the Goody Salaried Plan and the Stuart Hall
Retirement Plan, December 31, 1995 with respect to the Faber-Castell
Salaried Plan, and April 1, 1996 with respect to the Berol Plan.
(j) "Stuart Hall Retirement Plan" shall mean the Stuart
Hall Company, Inc. Non-Bargaining Unit Employees' Retirement Plan.
(k) "Total Benefit" shall mean the sum of a Participant's
Accrued Benefit as defined in Article II of this Plan earned from and
after the applicable Benefit Accrual Date, if any, and his Merged Plan
Benefit.
16.02 GENERAL. (a) Effective as of the applicable Plan
Merger Date, the assets held in trust under each of the Merged Plans
were merged with and into the assets held in trust under this Plan.
In connection with these mergers, this Plan assumed all liabilities to
Merged Plan Participants for Merged Plan Benefits. This Article sets
forth special rules applicable to Merged Plan Participants under this
Plan and will supplement the other provisions of this Plan with
respect to such Merged Plan Participants in connection with their
Merged Plan Benefits. The provisions of this Article shall be applied
to their Merged Plan Benefits notwithstanding, and in lieu of, any
other provision contained elsewhere in this Plan.
(b) The merged assets of the Merged Plans shall be used to
provide benefits with respect to all Participants under this Plan,
including Merged Plan Participants.
(c) The Total Benefit, on a termination basis (within the
meaning of Treasury Regulation Section 1.414(1)), to which any Merged
296
Plan Participant is entitled under this Plan shall, immediately after
the applicable Plan Merger Date, be equal to or greater than the
benefit to which such Merged Plan Participant was entitled, on a
termination basis, under the applicable Merged Plan immediately prior
to the applicable Plan Merger Date. This paragraph (c) shall not be
construed to increase or decrease the nonforfeitable benefit accrued
for any Merged Plan Participant under the applicable Merged Plan, or
under this Plan, as of the applicable Plan Merger Date. This
Article XVI shall be administered consistent with the requirements of
Sections 411 and 414(1) of the Code and the Treasury Regulations
promulgated thereunder.
(d) A Merged Plan Participant who becomes a Participant
under this Plan shall be deemed to have satisfied the requirements for
a pension under Section 4.04 hereof for purposes of eligibility for a
Qualified Pre-retirement Survivor Annuity under Section 4.07(a) hereof
if he has a nonforfeitable interest in a Total Benefit. The Qualified
Pre-retirement Survivor Annuity payable under Section 4.07(a) with
respect to a Merged Plan Participant shall be based on his Total
Benefit, except to the extent that any portion of such Benefit is
otherwise distributable pursuant to this Article, or otherwise, and
shall be subject to offset as provided in Section 4.07(a).
(e) Notwithstanding any provision to the contrary contained
herein or in any of the Merged Plans, this Plan is intended to conform
to the requirements of (i) the Code as amended by the Tax Reform Act
of 1986, the Revenue Act of 1987, the Technical and Miscellaneous
Revenue Act of 1988, the Omnibus Budget Reconciliation Act of 1989,
the Revenue Reconciliation Act of 1990 and the Revenue Reconciliation
Act of 1993; (ii) ERISA as amended by the Retirement Equity Act of
1984; and (iii) all other statutes and all governmental rulings and
regulations applicable to this Plan as of December 31, 1995. Each
such Act, statute, ruling or regulation shall apply to each of the
Merged Plans as of the effective date applicable with respect to each
such Merged Plan.
(f) All distribution elections made by a Merged Plan
Participant, or his Surviving Spouse or Beneficiary, if applicable,
shall be made by written instrument delivered by the Merged Plan
Participant, Surviving Spouse or Beneficiary to the Pension
Administrative Committee at least thirty days before such election is
to take effect.
(g) For purposes of the cash out provisions of Section 4.15
of the Plan, the Actuarial Equivalent of a Merged Plan Benefit will be
based upon Section 16.01(a).
16.03 SPECIAL PROVISIONS RELATING TO GOODY SALARIED PLAN.
The following shall apply with respect to Merged Plan Participants who
participated in the Goody Salaried Plan on or before the Plan Merger
Date:
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(a) Benefit Accruals under the Goody Salaried Plan were
permanently discontinued effective as of the Benefit Accrual Date. As
of the Benefit Accrual Date, Covered Employees (as defined in the
Goody Salaried Plan for purposes of this Section 16.03) became
eligible to participate in this Plan in accordance with the terms of
this Plan. For purposes of determining the Accrued Benefit earned
from and after the Benefit Accrual Date of Merged Plan Participants
who were Covered Employees under the Goody Salaried Plan on the
Benefit Accrual Date, and who thereafter are employed by an Employer,
such Merged Plan Participants shall receive credit for periods of
employment with all Employers from and after the Benefit Accrual Date
and not for periods of employment with any Employer or any other
entity, prior to the Benefit Accrual Date. For purposes of
determining such Merged Plan Participants' Vesting Service,
nonforfeitable interests in their Merged Plan Benefits and Accrued
Benefits, and their eligibility to participate in this Plan, such
Merged Plan Participants shall receive credit (1) for periods of
employment with an Affiliated Company (as defined in Article II of
this Plan) from and after the Benefit Accrual Date and (2) for periods
of employment only with Goody Products, Inc. and its affiliates, and
not with any other entity that was not an Affiliated Company of Goody
Products, Inc., prior to the Benefit Accrual Date.
(b) A Merged Plan Benefit shall be payable to a Merged Plan
Participant (in addition to his benefit set forth under Article IV of
this Plan) at the times set forth in Article IV of this Plan.
Notwithstanding the preceding sentence, if the Merged Plan Participant
has satisfied all eligibility requirements contained in the Goody
Salaried Plan necessary to entitle him to receive payment of his
Merged Plan Benefit commencing at a date earlier than the date
applicable under the terms of this Plan, such Participant shall be
entitled, subject to the terms and conditions applicable under the
Goody Salaried Plan, to have payment of his Merged Plan Benefit
commence as follows:
(i) Except as otherwise provided in this
Section 16.03, all Merged Plan Benefits shall commence on
the Normal Retirement Date (as defined in the Goody Salaried
Plan for purposes of this Section 16.03), Actual Retirement
Date (as defined in the Goody Salaried Plan for purposes of
this Section 16.03), death or elected Benefit Commencement
Date (as defined in the Goody Salaried Plan for purposes of
this Section 16.03), as the case may be, and continuing
until the last monthly payment prior to the death of the
payee. A Merged Plan Participant's right to his Merged Plan
Benefit shall become nonforfeitable upon his attainment of
his Normal Retirement Date.
(ii) A Merged Plan Participant may elect to Retire on
the first day of any month coincident with or next following
his attainment of age 55, provided he has then completed at
least the aggregate of five (A) years of Credited Service
298
(as defined in the Goody Salaried Plan) prior to the Plan
Merger Date, and (B) years of Vesting Service (as defined in
Article II of this Plan) after the Plan Merger Date. A
Merged Plan Participant who Retires early shall, upon filing
of any applications prescribed by the Pension Administrative
Committee therefor, be entitled to receive his Merged Plan
Benefit determined in accordance with the provisions of
subparagraph (iii) next below.
(iii) Each Merged Plan Participant who Retires
early in accordance with subparagraph (ii) next above may
elect to have his Merged Plan Benefit commence either (1) on
his Early Retirement Date (as defined in the Goody Salaried
Plan for purposes of this Section 16.03) or (2) on the first
day of any month between his Early Retirement Date and his
Normal Retirement Date. The annual amount of the Merged
Plan Benefit payable to a Merged Plan Participant who
Retires early shall be the Actuarial Equivalent of a
Straight Life Annuity determined as follows:
(A) If the Merged Plan Participant elects to
defer the commencement of his Merged Plan
Benefit until his Normal Retirement Date, the
amount thereof shall be equal to his Merged
Plan Benefit.
(B) If the Merged Plan Participant elects to
receive his Merged Plan Benefit prior to his
Normal Retirement Date, the amount thereof
shall be the amount of his Merged Plan
Benefit, reduced by 1/2% for each month by
which his elected Benefit Commencement Date
precedes his Normal Retirement Date.
(c) A Merged Plan Participant who terminates employment
with all Employers after he has completed an aggregate of at least
five (A) years of Vesting Service (as defined in the Goody Salaried
Plan) prior to the Plan Merger Date, and (B) years of Vesting Service
(as defined in this Plan) after the Plan Merger Date, shall receive
his Merged Plan Benefit as the Actuarial Equivalent of a Straight Life
Annuity determined as follows:
(i) If the Merged Plan Participant did not have at
least the aggregate of five (A) years of Credited Service
(as defined in the Goody Salaried Plan) prior to the Plan
Merger Date, and (B) years of Vesting Service (as defined in
Article II of this Plan) after the Plan Merger Date, payment
of his Merged Plan Benefit shall commence upon his Normal
Retirement Date, or
(ii) If the Merged Plan Participant had at least the
aggregate of five (A) years of Credited Service (as defined
299
in the Goody Salaried Plan) prior to the Plan Merger Date,
and (B) years of Vesting Service (as defined in Article II
of this Plan) after the Plan Merger Date, payment of his
Merged Plan Benefit shall commence on the first day of the
month coinciding with or next following his 55th birthday,
or the first day of any month thereafter that he shall
select between such date and his Normal Retirement Date, in
an amount that is reduced by 1/2% for each month by which
his elected Benefit Commencement Date precedes his Normal
Retirement Date.
(d) A Merged Plan Participant who terminates employment
with all Employers before he has completed an aggregate of at least
five (A) years of Vesting Service (as defined in the Goody Salaried
Plan) prior to the Plan Merger Date, and (B) years of Vesting Service
(as defined in this Plan) after the Plan Merger Date, shall not be
entitled to receive payment of his Merged Plan Benefit.
(e) If a Merged Plan Participant shall be deemed eligible
for Disability Retirement under the terms and conditions of, and as
defined under, Sections 5.04 a. and b. of the Goody Salaried Plan, and
the Merged Plan Participant had at least the aggregate of five
(A) years of Credited Service (as defined in the Goody Salaried Plan)
prior to the Plan Merger Date, and (B) years of Vesting Service (as
defined in Article II of this Plan) after the Plan Merger Date, such
Merged Plan Participant shall be entitled to commence receipt (in
accordance with the terms of this Plan) of his Merged Plan Benefit as
follows:
(i) If the Merged Plan Participant became disabled and
commenced receiving a disability benefit under the Goody
Products, Inc. LTD Plan (the "LTD Plan") prior to the Plan
Merger Date, his Merged Plan Benefit shall be payable on the
Merged Plan Participant's Normal Retirement Date.
Notwithstanding the immediately preceding sentence, if the
Merged Plan Participant ceases receiving LTD Plan benefits
prior to his Normal Retirement Date, he may elect to have
his Merged Plan Benefit commence on the first day of any
month between his Early Retirement Date and his Normal
Retirement Date. Such Merged Plan Benefit shall be reduced
as provided in subsection 16.03(b)(iii)(B).
(ii) If the Merged Plan Participant did not receive a
disability benefit under the LTD Plan as set forth in
subparagraph (i) next above, and the Social Security
Administration (the "SSA") determined that he was disabled
and fixed his disability commencement date, his Merged Plan
Benefit shall be payable on his Normal Retirement Date.
Notwithstanding the immediately preceding sentence, such
Merged Plan Participant may elect to have his Merged Plan
Benefit commence on the first day of any month between his
Early Retirement Date and his Normal Retirement Date. Such
300
Merged Plan Benefit shall be reduced as provided in
subsection 16.03(b)(iii)(B).
(iii) Within thirty (30) days after the request of
the Pension Administrative Committee, which shall be no more
frequently than once each year and not after his Normal
Retirement Date, the disabled Merged Plan Participant shall
submit to the Pension Administrative Committee satisfactory
medical evidence of his continued disability.
(iv) Notwithstanding subparagraphs (i) and (ii) of this
paragraph (e), if, prior to the Merged Plan Participant's
Normal Retirement Date, the SSA or the LTD Carrier,
whichever is applicable (or both, if applicable), revokes a
prior determination of disability or declares that he is no
longer disabled, he shall be deemed to have recovered on the
last day of the month in which such revocation or
declaration is effective, or if the Merged Plan Participant
fails to comply with a request of the Pension Administrative
Committee made pursuant to subparagraph (iii) next above,
and does not submit satisfactory medical evidence of his
continued disability, he shall be deemed to have recovered
as of the last day of the month following that in which such
request was made. The applicable day as of which he is so
deemed to have recovered is herein referred to as his Date
of Recovery. As of his Date of Recovery his disability
retirement payments, if any, shall cease, and except as
otherwise provided below in this Section 16.03, there shall
be no further accrual of Credited Service beyond such date.
(A) If such recovered Merged Plan Participant is
returned to service as a Participant within
30 days after his Date of Recovery, he shall
at that time be reinstated as a Merged Plan
Participant under the Goody Salaried Plan.
(B) If such recovered Merged Plan Participant is
not returned to service as a Participant
within 30 days after his Date of Recovery, he
shall, at such time, be entitled to receive
his Merged Plan Benefit as an early
retirement pension pursuant to
subparagraph (b)(iii) of this Section 16.03
or as a deferred pension pursuant to
paragraph (c) of this Section 16.03, if he
satisfies the conditions for such benefits.
(v) If the Merged Plan Participant should die while
deemed disabled under this subsection 16.03(e), his Spouse
(as defined in subsection 16.03(f)(iii)), if any, shall be
entitled to receive his Merged Plan Benefit as an immediate
or deferred survivor pension benefit pursuant to
301
subsection 16.03(f) below, provided the eligibility
conditions of that Section are met at that time. If the
Merged Plan Participant is receiving his Merged Plan Benefit
under the provisions of subsections 16.03(b)(i),
16.03(b)(ii) or 16.03(c) at the time of his death, survivor
benefits are payable if the Merged Plan Participant so
elected.
(f) If a Merged Plan Participant dies before payment of his
Merged Plan Benefit commences, and after completion of the aggregate
of five (A) years of Vesting Service (as defined in the Goody Salaried
Plan) prior to the Plan Merger Date, and (B) years of Vesting Service
(as defined in this Plan) after the Plan Merger Date, his Spouse (as
defined in subparagraph (iii) of this paragraph (f)) shall be entitled
to commence receipt (in accordance with the terms of this Plan) of his
Merged Plan Benefit as follows:
(i) The annual amount of the Merged Plan Benefit
payable as a Straight Life Annuity to a Spouse of a deceased
Merged Plan Participant who has both attained age 55 and
completed at least the aggregate of 10 (A) years of Vesting
Service (as defined in the Goody Salaried Plan) prior to the
Plan Merger Date, and (B) years of Vesting Service (as
defined in Article II of this Plan) after the Plan Merger
Date, provided such death occurred while actively employed
by the Employer (or while in receipt of a benefit under the
LTD Plan), shall be 50% of the Merged Plan Benefit and shall
commence on the first day of the month following such death.
(ii) The Merged Plan Benefit payable to the Spouse of a
deceased Merged Plan Participant not described in
subparagraph (i) next above who has completed at least the
aggregate of five (A) years of Vesting Service (as defined
in the Goody Salaried Plan) prior to the Plan Merger Date,
and (B) years of Vesting Service (as defined in Article II
of this Plan) after the Plan Merger Date, and who dies while
actively employed by the Employer, or of a deceased former
Merged Plan Participant who dies before commencement of
payment of his Merged Plan Benefit, shall commence on the
first day of the month following the later of the date of
death of the Merged Plan Participant or former Merged Plan
Participant or the date he would have attained age 55;
provided the Spouse may elect any later benefit commencement
date not beyond the date the deceased Merged Plan
Participant would have attained his Normal Retirement Date.
The annual amount of Merged Plan Benefit payable as a
Straight Life Annuity pursuant to this subparagraph (ii)
shall be reduced in accordance with subsection 16.03(b)(iii)
if the Benefit Commencement Date is before the deceased
Merged Plan Participant would have attained age 65, and
further reduced on the presumption that he had elected a
Qualified Joint and Survivor Annuity.
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(iii) For purposes of paragraph (e) above, this
paragraph (f) and paragraph (g) below, Spouse means, in the
case of a Merged Plan Participant who dies while employed by
the Employer, the surviving husband or wife of such deceased
Merged Plan Participant who at the date of death of the
Merged Plan Participant had been legally married to such
Merged Plan Participant. In the case of a terminated Merged
Plan Participant who subsequently dies, Spouse shall mean
the surviving husband or wife of such terminated, deceased
Merged Plan Participant who at the Merged Plan Participant's
benefit commencement date had been legally married to such
terminated, deceased Merged Plan Participant.
(g) A Merged Plan Participant may elect, pursuant to the
spousal consent provisions of Section 5.01 of this Plan, any one of
the optional forms of benefits specified in this paragraph (g) with
respect to his Merged Plan Benefit. Any optional form of benefit set
forth in Article V of this Plan shall apply only to the Accrued
Benefit earned by the Merged Plan Participant from and after the
Benefit Accrual Date. Any optional form of benefit or combination of
optional forms of benefits set forth in this paragraph (g) shall be
the Actuarial Equivalent of the Merged Plan Benefit otherwise payable
with respect to the Merged Plan Participant.
(i) A LIFE ANNUITY: A benefit payable monthly, from
the date on which a Merged Plan Benefit first became payable
to a Merged Plan Participant, continuing for the lifetime of
the Merged Plan Participant.
(ii) JOINT AND SURVIVOR OPTION: A reduced monthly
benefit payable for life to the Merged Plan Participant,
with 100% or 50% of such reduced benefit, as he shall have
specified when electing this option, continuing after the
Merged Plan Participant's death for the remaining lifetime
of his Beneficiary;
(iii) ANNUITY CERTAIN OPTION: A retirement benefit
payable, in equal monthly installments, from the applicable
Benefit Commencement Date for the life of the Merged Plan
Participant and, in the event that he shall fail to live for
five full years or 10 full years from said date, as he shall
have specified when electing this option, a benefit payable
to his Beneficiary, in equal monthly installments in the
amount of such installments paid to the Merged Plan
Participant, from the first day of the month following the
month in which such Merged Plan Participant shall die, for
the balance of the guaranteed payment period; provided,
however, that if such Beneficiary shall not be alive at the
death of the Merged Plan Participant or shall fail to live
for the remainder of the guaranteed payment period, the
Actuarial Equivalent of the payment for the remainder of
such period shall be paid in a cash lump-sum to the estate
303
of the Merged Plan Participant or the estate of the
Beneficiary, as the case may be.
(iv) The election of any optional form of benefit shall
become effective upon the earlier of the Merged Plan
Participant's Normal Retirement Date or Actual Retirement
Date. A Merged Plan Participant may revoke or change such
election at any time prior to commencement of his Merged
Plan Benefit, except that an election of any form of Merged
Plan Benefit other than either the Life Annuity option (i)
above or, with respect to a Retired Covered Employee (as
defined in the Goody Salaried Plan for purposes of this
Section 16.03), who has a Spouse, the Qualified Joint and
Survivor Annuity, must be made at least 30 days prior to his
Actual Retirement Date, unless the Merged Plan Participant
furnishes evidence of good health that is satisfactory to
the Pension Administrative Committee, and during this period
such revocation or change will be subject to the consent of
the Pension Administrative Committee. Death of a Merged
Plan Participant's Beneficiary prior to his Actual
Retirement Date shall automatically revoke the election of a
Joint and Survivor Option.
16.04 SPECIAL PROVISIONS RELATING TO STUART HALL RETIREMENT
PLAN.
The following shall apply with respect to Merged Plan
Participants who participated in the Stuart Hall Retirement Plan on or
before the Plan Merger Date:
(a) Benefit Accruals under the Stuart Hall Retirement Plan
were permanently discontinued effective as of the Benefit Accrual
Date. As of the Benefit Accrual Date, Active Participants (as defined
in the Stuart Hall Retirement Plan for purposes of this Section 16.04)
became eligible to participate in this Plan in accordance with the
terms of this Plan. For purposes of determining the Accrued Benefit
earned from and after the Benefit Accrual Date of Merged Plan
Participants who were Active Participants under the Stuart Hall
Retirement Plan on the Benefit Accrual Date, and who thereafter are
employed by an Employer, such Merged Plan Participants shall receive
credit for periods of employment with all Employers from and after the
Benefit Accrual Date and not for periods of employment with any
Employer or any other entity, prior to the Benefit Accrual Date. For
purposes of determining such Merged Plan Participants' Vesting
Service, nonforfeitable interest in their Merged Plan Benefits and
Accrued Benefits, and their eligibility to participate in this Plan,
such Merged Plan Participants shall receive credit (1) for periods of
employment with an Affiliated Company (as defined in Article II of
this Plan) from and after the Benefit Accrual Date and (2) for periods
of employment only with Stuart Hall Company, Inc. and its affiliates,
and not with any other entity that was not an Affiliated Company of
Stuart Hall Company, Inc., prior to the Benefit Accrual Date.
304
(b) A Merged Plan Benefit shall be payable to a Merged Plan
Participant (in addition to his benefit set forth under Article IV of
this Plan) at the times set forth in Article IV of this Plan.
Notwithstanding the preceding sentence, if the Merged Plan Participant
has satisfied all eligibility requirements contained in the Stuart
Hall Retirement Plan necessary to entitle him to receive payment of
his Merged Plan Benefit commencing at a date earlier than the date
applicable under the terms of this Plan, such Participant shall be
entitled, subject to the terms and conditions applicable under the
Stuart Hall Retirement Plan, to have payment of his Merged Plan
Benefit commence as follows:
(i) Unless otherwise elected, payment of a Merged Plan
Benefit shall begin on the Merged Plan Participant's Normal
Retirement Date (as defined in the Stuart Hall Retirement
Plan for purposes of this Section 16.04) if he ceased to be
an Employee on such date. Even if the Merged Plan
Participant is an Employee on his Normal Retirement Date, he
may elect to have his Merged Plan Benefit commence on his
Normal Retirement Date. A Merged Plan Participant's right
to his Merged Plan Benefit shall become nonforfeitable upon
his attainment of his Normal Retirement Age (as defined in
the Stuart Hall Retirement Plan for purposes of this
Section 16.04).
(ii) If a Merged Plan Participant elects to receive his
Merged Plan Benefit on an Early Retirement Date (as defined
below), he shall receive his Merged Plan Benefit on such
specified Date, multiplied by the factor shown below
corresponding to the number of years his Early Retirement
Date precedes his Normal Retirement Date.
NUMBER OF YEARS
EARLY RETIREMENT
DATE PRECEDES NORMAL
RETIREMENT DATE FACTOR
--------------- ______
1 .9333
2 .8667
3 .8000
The above factors shall be prorated for a partial year
(counting a partial month as a complete month).
For purposes of this Section 16.04, "Early Retirement
Date" means the first day of any month before a Merged Plan
Participant's Normal Retirement Date that the Merged Plan
Participant selects for the start of his Merged Plan
Benefit. This day shall be on or after the date on which he
ceases to be an Employee and the date he meets the following
requirements:
305
(A) He has attained age 62.
(B) He has completed at least the aggregate of 15
(i) years of Vesting Service as defined in
the Stuart Hall Retirement Plan) prior to the
Plan Merger Date, and (ii) years of Vesting
Service (as defined in Article II of this
Plan) after the Plan Merger Date.
(c) The following provisions shall apply if a Merged Plan
Participant elects to commence receipt of his Merged Plan Benefit
after his Normal Retirement Date.
(i) Notwithstanding any provision of this Section
16.04 to the contrary, a Merged Plan Participant may elect
to commence receipt of his Merged Plan Benefit on a Late
Retirement Date (as defined in the Stuart Hall Retirement
Plan for purposes of this Section 16.04). If a Merged Plan
Participant receives his Merged Plan Benefit on a Late
Retirement Date, his Merged Plan Benefit shall be equal to
his Merged Plan Benefit, multiplied by the factor shown
below corresponding to the number of years his Late
Retirement Date follows his Normal Retirement Date.
NUMBER OF YEARS
LATE RETIREMENT DATE
FOLLOWS NORMAL
RETIREMENT DATE FACTOR
--------------- ______
1 1.0600
2 1.1200
3 1.1900
4 1.2600
5 1.3400
6 1.4200
7 1.5000
8 1.5900
9 1.6900
10 1.7900
The above factors shall be prorated for a partial year
(counting a partial month as a complete month). Factors for
numbers of years beyond ten shall be determined using a
consistently applied reasonable actuarial equivalent method.
(ii) Notwithstanding any provision of this Section
16.04 to the contrary, a Merged Plan Participant may elect
to have payment of his Merged Plan Benefit begin on his Late
Retirement Date, subject to the provisions of
subsection 4.05(c) of the Plan.
306
(d) A Merged Plan Participant who becomes an Inactive
Participant (as defined in the Stuart Hall Retirement Plan for
purposes of this Section 16.04) before he Retires or dies shall be
entitled to receive his Merged Plan Benefit as follows and at his
election:
(i) A monthly Merged Plan Benefit in the Normal Form
(as defined in the Stuart Hall Retirement Plan for purposes
of this Section 16.04) to begin on his Normal Retirement
Date. Such monthly Merged Plan Benefit will be equal to the
product of (A) and (B):
(A) The Merged Plan Participant's Merged Plan
Benefit on the day before he became an
Inactive Participant.
(B) The Merged Plan Participant's Vesting
Percentage (as defined below) on the date he
ceases to be an Employee.
(ii) A monthly Merged Plan Benefit in the Normal Form
to begin on his Early Retirement Date (as defined in
subsection 16.04(b)(ii)). Such monthly Merged Plan Benefit
shall be equal to the amount determined under
subparagraph (i)(A) next above multiplied by the applicable
early retirement factor as specified in paragraph (b) of
this Section 16.04.
(iii) A monthly Merged Plan Benefit in the Normal
Form to begin on his Late Retirement Date. Such monthly
Merged Plan Benefit shall be an amount equal to the amount
determined under subparagraph (i)(A) above multiplied by the
applicable late retirement factor in paragraph (c) of this
Section 16.04.
(iv) For purposes of this Section 16.04, "Vesting
Percentage" means the percentage used to determine that
portion of a Merged Plan Participant's Merged Plan Benefit
that is nonforfeitable (cannot be lost since it is vested).
A Merged Plan Participant's Vesting Percentage is
shown in the following schedule opposite the number of
aggregate whole years of his Vesting Service (as defined in
the Stuart Hall Retirement Plan and Article II of this
Plan).
307
VESTING SERVICE VESTING
(aggregate whole years) PERCENTAGE
----------------------- ----------
Less than 3 0
3 20
4 40
5 60
6 80
7 or more 100
The Vesting Percentage for a Merged Plan Participant who is
an Employee on or after the earlier of (A) the date he
reaches his Normal Retirement Age (as defined in the Stuart
Hall Retirement Plan for purposes of this Section 16.04), or
(B) the date he meets the requirement(s) for an Early
Retirement Date (as defined in the Stuart Hall Retirement
Plan for purposes of this Section 16.04), shall be 100%
vested on such date.
(e) If a Merged Plan Participant dies before payment of his
Merged Plan Benefit commences, his spouse, Beneficiary (as defined in
the Stuart Hall Retirement Plan for purposes of this Section 16.04),
or Contingent Annuitant (as defined in the Stuart Hall Retirement Plan
for purposes of this Section 16.04) shall be entitled to commence
receipt (in accordance with the terms of this Plan) of the product of
his Merged Plan Benefit and his Vesting Percentage as of the date of
death as follows:
(i) Qualified Preretirement Survivor Annuity:
A Qualified Preretirement Survivor Annuity shall be payable
if the Merged Plan Participant is survived by a spouse to
whom he was continuously married throughout the one-year
period ending on the date he dies.
If the requirement above is met on the date the Merged Plan
Participant dies, the Merged Plan Benefit shall be payable
to the spouse as a Qualified Preretirement Survivor Annuity
(as defined in the Stuart Hall Retirement Plan for purposes
of this Section 16.04). The spouse may elect to start
payment of the Merged Plan Benefit on the first day of the
month on or after the earliest date the Merged Plan Benefit
could have been paid to the Merged Plan Participant if he
had ceased to be an Employee on the date of his death and
survived to Retire. Payment of the Merged Plan Benefit must
start by the date the Merged Plan Participant would have
been age 70-1/2. The Qualified Preretirement Survivor
Annuity shall be reduced in accordance with subsection
16.04(b)(ii) if payments commence before the deceased Merged
Plan Participant would have attained age 65. If the spouse
308
dies before the Qualified Preretirement Survivor Annuity
starts, no Merged Plan death benefit is payable.
(ii) If a Merged Plan Participant dies on or after his
Normal Retirement Date (as defined in the Stuart Hall
Retirement Plan for purposes of this Section 16.04) and
before his Annuity Starting Date (as defined in the Stuart
Hall Retirement Plan for purposes of this Section 16.04),
and such Merged Plan Participant is survived by a spouse to
whom he was continuously married through the one-year period
ending on the date of his death, the Merged Plan Benefit
shall be payable in the same manner as provided under
subparagraph (i) next above, unless the Merged Plan
Participant has waived the Qualified Preretirement Survivor
Annuity, according to the Election Procedures Section of
Article VI of the Stuart Hall Retirement Plan, by electing
the preservation of retirement options death benefit
described in subparagraph (iii) next below.
(iii) If a Merged Plan Participant dies on or after
his Normal Retirement Date and before his Annuity Starting
Date and such Merged Plan Participant is not survived by a
spouse to whom he was continuously married throughout the
one-year period ending on the date of his death, the
provisions of subparagraph (i) of this paragraph (e) shall
not apply. Instead, the Merged Plan Benefit shall be
payable pursuant to the preservation of retirement options
death benefit. This death benefit is the death benefit that
would have been payable to the Merged Plan Participant's
Beneficiary or Contingent Annuitant if the Merged Plan
Participant's Retirement Date had occurred on the date he
died. The optional form of distribution elected according
to the provisions of the Election Procedures Section of
Article VI of the Stuart Hall Retirement Plan before the
Participant's death is the form in effect for determining
the death benefit. For purposes of this death benefit only,
an election of an optional form of distribution shall be a
qualified election even if it is not made within 90 days of
the date payments would have begun if it meets all of the
other requirements for a qualified election. The automatic
form of distribution under the Automatic Forms of
Distribution Section of Article VI of the Stuart Hall
Retirement Plan shall be in effect if an election has not
been made or an election is revoked without a subsequent
election according to the provisions of the Election
Procedures Section of Article VI of the Stuart Hall
Retirement Plan. Any death benefit payable shall be subject
to the distribution limitations of the Optional Forms of
Distribution and Distribution Requirements Section of
Article VI of the Stuart Hall Retirement Plan.
309
(iv) Any death benefit after the Annuity Starting Date
will be determined by the form of Merged Plan Benefit in
effect on a Merged Plan Participant's Annuity Starting Date.
(f) A Merged Plan Participant may elect, pursuant to the
spousal consent provisions of Section 5.01 of this Plan, any one of
the optional forms of benefits specified in this paragraph (f) with
respect to his Merged Plan Benefit. Any optional form of benefit set
forth in Article V of this Plan shall apply only to the Accrued
Benefit earned by the Merged Plan Participant from and after the
Benefit Accrual Date. Any optional form of benefit or combination of
optional forms of benefits set forth in this paragraph (f) shall be
the Actuarial Equivalent of the Merged Plan Benefit otherwise payable
with respect to the Merged Plan Participant. The optional forms of
Merged Plan Benefit shall be the following: a straight life annuity,
single life annuities with certain periods of five, ten or fifteen
years, and survivorship life annuities with survivorship percentages
of 50, 66 or 100.
16.05 SPECIAL PROVISIONS RELATING TO FABER-CASTELL
SALARIED PLAN. The following shall apply with respect to Merged Plan
Participants who participated in the Faber-Castell Salaried Plan on or
before the Plan Merger Date:
(a) Benefit Accruals under the Faber-Castell Salaried Plan
were permanently discontinued effective as of the Benefit Accrual
Date. As of the Benefit Accrual Date, Salaried Employees (as defined
in the Faber-Castell Salaried Plan for purposes of this Section 16.05)
became eligible to participate in this Plan in accordance with the
terms of this Plan. For purposes of determining the Accrued Benefit
earned from and after the Benefit Accrual Date of Merged Plan
Participants who were Salaried Employees under the Faber-Castell
Salaried Plan on the Benefit Accrual Date, and who thereafter are
employed by an Employer, such Merged Plan Participants shall receive
credit for periods of employment with all Employers from and after the
Benefit Accrual Date and not for periods of employment with any
Employer or any other entity, prior to the Benefit Accrual Date. For
purposes of determining such Merged Plan Participants' Vesting
Service, nonforfeitable interest in their Merged Plan Benefits and
Accrued Benefits, and their eligibility to participate in this Plan,
such Merged Plan Participants shall receive credit (1) for periods of
employment with an Affiliated Company (as defined in Article II of
this Plan) from and after the Benefit Accrual Date and (2) for periods
of employment only with Faber-Castell Corporation and its affiliates,
and not with any other entity that was not an Affiliated Company of
Faber-Castell Corporation, prior to the Benefit Accrual Date.
(b) A Merged Plan Benefit shall be payable to a Merged Plan
Participant (in addition to his benefit set forth under Article IV of
this Plan) at the times set forth in Article IV of this Plan.
Notwithstanding the preceding sentence, if the Merged Plan Participant
has satisfied all eligibility requirements contained in the Faber-
310
Castell Salaried Plan necessary to entitle him to receive payment of
his Merged Plan Benefit commencing at a date earlier than the date
applicable under the terms of this Plan, such Participant shall be
entitled, subject to the terms and conditions applicable under the
Faber-Castell Salaried Plan, to have payment of his Merged Plan
Benefit commence as follows:
(i) If a Merged Plan Participant Retires on his Normal
Retirement Date (as defined in the Faber-Castell Salaried
Plan for purposes of this Section 16.05), his Merged Plan
Benefit shall commence on his Normal Retirement Date. A
Merged Plan Participant's right to his Merged Plan Benefit
shall become nonforfeitable upon his attainment of his
Normal Retirement Date.
(ii) Any Merged Plan Participant may, upon filing a
written application with the Pension Administrative
Committee, be Retired at an earlier date than his Normal
Retirement Date provided he has both attained age 55 and
completed at least the aggregate of 10 (A) years as an
Employee (as defined in the Faber-Castell Salaried Plan)
prior to the Plan Merger Date, and (B) years of Vesting
Service (as defined in Article II of this Plan) after the
Plan Merger Date.
(iii) Any Merged Plan Participant who has completed
at least the aggregate of 10 (A) years as an Employee (as
defined in the Faber-Castell Salaried Plan) prior to the
Plan Merger Date, and (B) years of Vesting Service (as
defined in Article II of this Plan) after the Plan Merger
Date, and who shall be totally and permanently disabled so
that he is eligible for and is receiving Social Security
disability benefits, shall be entitled to payment of his
Merged Plan Benefit pursuant to subparagraph (iv) next
below.
(iv) A Merged Plan Participant who Retires before his
Normal Retirement Date pursuant to either subparagraph (ii)
or (iii) of this paragraph (b) shall receive payment of his
Merged Plan Benefit in the Full Annuity Form (as defined in
paragraph (e) of this Section 16.05) commencing on his
Normal Retirement Date. In lieu thereof, any such Merged
Plan Participant, at any time between ages 55 and 65 may
elect to receive his Merged Plan Benefit reduced by 0.7%
times the number of monthly payments up to 24 to be paid
prior to his 64th birthday, by 0.4% times the number of
monthly payments up to 24 to be paid prior to his 62nd
birthday and by 0.35% times the number of monthly payments
to be paid prior to his 60th birthday, and which shall
commence on the first day of any month (to be selected by
him) between such election and the Normal Retirement Date.
311
(c) If a Merged Plan Participant ceases his Service (as
defined in the Faber Castell Salaried Plan for purposes of this
Section 16.05) other than because of death, but before being eligible
to receive his Merged Plan Benefit as provided in paragraph (b) next
above, he shall be entitled to payment of his Merged Plan Benefit as
follows:
(i) If a Merged Plan Participant ceases his Service
(as defined in the Faber-Castell Salaried Plan for purposes
of this Section 16.05) other than because of death after he
has a Vested Right (as defined below), but before being
eligible to receive his Merged Plan Benefit as provided in
paragraph (b) next above, he shall be entitled to payment of
his Merged Plan Benefit in the Full Annuity Form to commence
on his Normal Retirement Date. Notwithstanding the
immediately preceding sentence, such Merged Plan Participant
may elect to receive reduced Merged Plan Benefit payments to
commence on the first day of any month between his 55th
birthday and his Normal Retirement Date. Such Merged Plan
Benefit shall be reduced for early commencement by 0.7%
times the number of monthly payments up to 36 to be paid
prior to his 65th birthday, by 0.5% times the number of
monthly payments up to 36 to be paid prior to his 62nd
birthday and by 0.3% times the number of monthly payments to
be paid prior to his 59th birthday.
(ii) Notwithstanding anything in this Section 16.05 to
the contrary, if a Merged Plan Participant ceases his
Service before he has a Vested Right (as defined below), and
does not again become an Employee, he shall not be entitled
to receive payment of his Merged Plan Benefit.
(iii) For purposes of this Section 16.05, "Vested
Right" means the nonforfeitable right to a Merged Plan
Benefit acquired by a Merged Plan Participant either upon
attaining age 65 while in employment of an Employer or
having the aggregate of at least five (A) years of Service
(as defined in the Faber-Castell Salaried Plan), excluding
service with Reliance Pen and Pencil Company prior to
September 1, 1985, and (B) years of Vesting Service as
defined in this Plan.
(d) If a Merged Plan Participant dies before payment of his
Merged Plan Benefit commences and such Merged Plan Participant has a
Vested Right (as defined in subsection 16.05(c)(iii)) in his Merged
Plan Benefit at his death, his Spouse (as defined in subparagraph (iv)
of this paragraph) shall be entitled to commence receipt (in
accordance with the terms of this Plan) of his Merged Plan Benefit as
follows:
(i) If a Merged Plan Participant who is not receiving
Merged Plan Benefit payments shall die before he has
312
attained age 55, and regardless of whether or not he is an
Employee, a survivor's death benefit shall be paid to his
Spouse, if living, for her lifetime. The survivor's death
benefit will commence on the first day of the month
following the Merged Plan Participant's 55th birthday equal
to one-half of the portion of the Merged Plan Benefit to
which the Merged Plan Participant would have been entitled
at the earlier of his date of death or separation of service
if he had:
(A) separated from service on his date of death
(if he had not already done so),
(B) survived until age 55, and
(C) elected to have his Merged Plan Benefit
commence at that time under Option 2, as
described in paragraph (e) of this
Section 16.05, with his Spouse designated as
the Contingent Annuitant (as defined in the
Faber-Castell Salaried Plan for purposes of
this Section 16.05).
(ii) If a Merged Plan Participant dies before his
Merged Plan Benefit commences and after his Normal
Retirement Date, or having both attained age 55 and
completed at least the aggregate of five (A) years as an
Employee (as defined in the Faber-Castell Salaried Plan)
prior to the Plan Merger Date, and (B) years of Vesting
Service (as defined in Article II of this Plan) after the
Plan Merger Date, his Spouse, or his Beneficiary (as defined
in the Faber-Castell Salaried Plan for purposes of this
Section 16.05) if there is no Spouse, shall receive his
Merged Plan Benefit. Payment of his Merged Plan Benefit
will commence on the first day of the month coinciding with
or next following the date of death of the Merged Plan
Participant and continue for 120 months, equal to the Merged
Plan Benefit the Merged Plan Participant would have received
if he had Retired on his date of death and elected to have
his Merged Plan Benefit commence immediately under the Full
Annuity Form. If the payee is the Spouse, the Spouse may
elect to convert such Merged Plan Benefit payable hereunder
to a benefit of equivalent value that shall be paid for the
life of the Spouse, and such converted Merged Plan Benefit
(or the Actuarial Equivalent value thereof if paid on the
120 monthly payment term) shall be not less than what would
have been paid if the Merged Plan Participant had elected
Option 2 as described in paragraph (e) of this Section 16.05
and designated the Spouse as Contingent Annuitant. Merged
Plan Benefits payable under this subsection 16.05(d)(ii)
shall be reduced in accordance with subsection 16.05(b)(iv)
313
if payments commence before the deceased Merged Plan
Participant would have attained age 64.
(iii) If a Merged Plan Participant dies while he is
receiving his Merged Plan Benefit on the Full Annuity Form
and before he has received 120 monthly payments, his
Beneficiary shall receive the payment of his Merged Plan
Benefit for the balance of such 120 month period.
(iv) For purposes of this Section 16.05, Spouse means
the person lawfully married to a Participant on the earlier
of the date of the Merged Plan Participant's death or the
date Merged Plan Benefit payments commence.
(e) A Merged Plan Participant may elect, pursuant to the
spousal consent provisions of Section 5.01 of this Plan, any one of
the optional forms of benefits specified in this paragraph (e) with
respect to his Merged Plan Benefit. Any optional form of benefit set
forth in Article V of this Plan shall apply only to the Accrued
Benefit earned by the Merged Plan Participant from and after the
Benefit Accrual Date. Any optional form of benefit or combination of
optional forms of benefits set forth in this paragraph (e) shall be
the Actuarial Equivalent of the Merged Plan Benefit otherwise payable
with respect to the Merged Plan Participant.
(i) A Participant may elect to receive his Merged Plan
Benefit payments in the Full Annuity Form. "Full Annuity
Form" means a manner of paying his Merged Plan Benefit
whereby payments are made during the lifetime of the Merged
Plan Participant and cease upon his death, except if he dies
before receiving payments for 120 months, such Merged Plan
Benefit shall be paid to his Beneficiary for the balance of
the 120 months' period.
(ii) Notwithstanding the provisions of subparagraph (i)
next above, if a Merged Plan Participant has a Spouse on the
date Retirement Income payments are to commence, and if such
Merged Plan Participant has not elected otherwise in writing
filed with the Pension Administrative Committee during the
period set forth in Section 5.01(d) of this Plan, the amount
of Merged Plan Benefit payments on the Full Annuity Form
shall be reduced automatically to a percentage thereof
payable to the Merged Plan Participant for life and upon his
death payable at the rate of one-half of such reduced amount
to his Spouse for life after the Merged Plan Participant's
death. Such percentage shall be 97% if the date of birth of
the Spouse is less than 36 months different from the Merged
Plan Participant's date of birth reduced (increased, but not
to more than 99.9%) by 0.4% if the age of the Spouse is
three full years younger (older) than the Merged Plan
Participant's age and by an additional 0.4% for each
additional full year of age difference that the Spouse is
314
younger (older) than the Merged Plan Participant. Any
election by the Merged Plan Participant to waive such
reduced joint and survivor payment basis shall not become
effective unless the Spouse consents to such election
pursuant to Section 5.01 of this Plan.
(iii) A Merged Plan Participant who elects not to
receive his Merged Plan Benefit pursuant to the provisions
of subparagraphs (i) and (ii) of this paragraph (e), may
file a written election, subject to the spousal consent
provisions of Section 5.01 of this Plan, with the Pension
Administrative Committee electing to receive his Merged Plan
Benefit in one of the following optional forms:
Option 1. Reduced payments payable during the Merged Plan
Participant's life, with the provision that after
his death such reduced payments shall continue
during the life of and shall be paid to such
person as he shall designate.
Option 2. Reduced payments payable during the Merged Plan
Participant's life, with the provision that after
his death payments at one-half the rate of his
reduced payments shall continue during the life of
and shall be paid to such person as he shall
designate.
(iv) The person designated by the Participant under an
option shall be known as a Contingent Annuitant. The
election of an option shall be conditional upon the
Participant's furnishing to the Pension Administrative
Committee, within 90 days after filing such an election,
(A) the name and sex of the Contingent Annuitant,
and
(B) proof satisfactory to the Pension
Administrative Committee of the date of birth
of the Contingent Annuitant.
(v) Election of an option under this paragraph (e)
shall be subject to the following provisions:
(A) If a Merged Plan Participant dies before the
effective date of the option, the option
shall be canceled automatically.
(B) If the Contingent Annuitant designated under
an option dies before the effective date of
the option, the election of the option shall
be canceled automatically and the Merged Plan
Participant may thereafter make another
315
election, subject to the conditions required
therefor.
(C) If the Contingent Annuitant designated under
an option dies after the effective date of
the option, the amount of the Merged Plan
Benefit to which the Merged Plan Participant
is entitled under the option will be paid in
accordance with the option and will cease
upon the Merged Plan Participant's death.
(vi) No change may be made in the election of an option
unless the Merged Plan Participant, with respect to such
change, meets the requirements and conditions for electing
an option. Subject to the spousal consent provisions of
Section 5.01 of this Plan, the consent of the Contingent
Annuitant is not required in the event of any change in
option or Contingent Annuitant.
(vii) The amount of the reduced Merged Plan Benefit
payable under an elected option listed in subparagraph (iii)
of this paragraph (e) shall be a percentage of the Full
Annuity Form of Merged Plan Benefit, based on the ages of
the Merged Plan Participant and the Contingent Annuitant.
Such percentage shall be 87% for Option 1 if the date of
birth of the Contingent Annuitant is less than 12 months
different from the Merged Plan Participant's date of birth
reduced (increased, but not to more than 99.9%) by 0.6% if
the age of the Contingent Annuitant is one full year younger
(older) than the Merged Plan Participant's age and by an
additional 0.6% for each additional full year of age
difference that the Contingent Annuitant is younger (older)
than the Merged Plan Participant. Such percentage shall be
97% for Option 2 if the date of birth of the Contingent
Annuitant is less than 36 months different from the Merged
Plan Participant's date of birth reduced (increased, but not
to more than 99.9%) by 0.4% if the age of the Contingent
Annuitant is three full years younger (older) than the
Merged Plan Participant's age and by an additional 0.4% for
each additional full year of age difference that the
Contingent Annuitant is younger (older) than the Merged Plan
Participant.
(viii) Notwithstanding anything to the contrary in
this paragraph (e), no distribution of benefits shall
provide the following:
(A) a period certain extending beyond the life
expectancy of a Beneficiary designated by the
Merged Plan Participant, and
316
(B) a period certain exceeding five years, if
benefits are payable to a Beneficiary not
designated by the Merged Plan Participant,
and
(C) any other violation of the provisions of
Section 401(a)(9) of the Code.
(f) Except as provided in subsection 16.05(e)(ii), any
Merged Plan Participant who elects to Retire after his Normal
Retirement Date shall receive his Merged Plan Benefit in the Full
Annuity Form equal to the Merged Plan Benefit, increased by 0.75%
times the number of months between the Merged Plan Participant's
Normal Retirement Date and the date on which such increased Merged
Plan Benefit commences.
(g) Notwithstanding anything in this Section 16.05 to the
contrary and subject to Section 401(a)(9) of the Code, if a Merged
Plan Participant continues as an Employee after his Normal Retirement
Date, his Merged Plan Benefit shall not begin until the first day of
the month next following his Severance Date (as defined in the Faber-
Castell Salaried Plan).
16.06 SPECIAL PROVISIONS RELATING TO BEROL PLAN.
The following shall apply with respect to Merged Plan
Participants who participated in the Berol Plan on or before the Plan
Merger Date:
(a) Benefit Accruals under the Berol Plan were permanently
discontinued effective as of the Benefit Accrual Date. As of the
Benefit Accrual Date, Members (as defined in the Berol Plan for
purposes of this Section 16.06) compensated on a salaried basis and
Members compensated on an hourly basis who were not factory hourly
employees ("Salaried Members") became eligible to participate in this
Plan in accordance with the terms of this Plan, and Members
compensated on an hourly basis who were factory hourly employees
("Hourly Members") became eligible to participate in the Newell
Pension Plan for Factory and Distribution Hourly Paid Employees
("Hourly Plan") in accordance with the terms of the Hourly Plan. For
purposes of determining the Accrued Benefit earned from and after the
Benefit Accrual Date of Merged Plan Participants who were Salaried
Members under the Berol Plan on the Benefit Accrual Date, and who
thereafter are employed by an Employer, such Merged Plan Participants
shall receive credit for periods of employment with all Employers from
and after the Benefit Accrual Date and not for periods of employment
with any Employer or any other entity, prior to the Benefit Accrual
Date. For purposes of determining such Merged Plan Participants'
Vesting Service, nonforfeitable interest in their Merged Plan Benefits
and Accrued Benefits, and their eligibility to participate in this
Plan, such Merged Plan Participants shall receive credit (1) for
periods of employment with an Affiliated Company (as defined in
317
Article II of this Plan) from and after the Benefit Accrual Date and
(2) for periods of employment only with Empire Berol Corporation or
its predecessor entities, and its affiliates, and not with any other
entity that was not an Affiliated Company of Empire Berol Corporation
or its predecessor entities prior to the Benefit Accrual Date.
Effective January 1, 1997, the Merged Plan Benefits of all Hourly
Members will be transferred to and assumed by the Hourly Plan.
Accordingly, the provisions of this Section 16.06 shall only apply to
the Merged Plan Benefits of Salaried Members, or of Hourly Members
whose employment with all Employers terminated from and after the Plan
Merger Date and prior to January 1, 1997.
(b) A Merged Plan Benefit shall be payable to a Merged Plan
Participant (in addition to his benefit set forth under Article IV of
this Plan) at the times set forth in Article IV of this Plan.
Notwithstanding the preceding sentence, if the Merged Plan Participant
has satisfied all eligibility requirements contained in the Berol Plan
necessary to entitle him to receive payment of his Merged Plan Benefit
commencing at a date earlier than the date applicable under the terms
of this Plan, such Participant shall be entitled, subject to the terms
and conditions applicable under the Berol Plan, to have payment of his
Merged Plan Benefit commence as follows:
(i) A Merged Plan Participant shall be entitled to
receive payment of his Merged Plan Benefit beginning on his
Normal Retirement Date (as defined in the Berol Plan for
purposes of this Section 16.06).
(ii) A Merged Plan Participant may Retire at any time
after reaching his Early Retirement Date. "Early Retirement
Date" shall mean the first day of the month next succeeding
the date on which a Merged Plan Participant both attains age
fifty-five (55), and completes at least the aggregate of 10
(A) Years of Service (as defined in the Berol Plan) prior to
the Plan Merger Date, and (B) years of Vesting Service (as
defined in Article II of this Plan) after the Plan Merger
Date.
(iii) If a Merged Plan Participant Retires on or
after his Early Retirement Date, he may elect to receive his
Merged Plan Benefit beginning at his Normal Retirement Date
or as a reduced benefit beginning at his Early Retirement
Date, which shall be his Merged Plan Benefit reduced by one-
half percent (1/2%) for each month by which his Early
Retirement Date precedes his Normal Retirement Date. A
Merged Plan Participant's Merged Plan Benefit shall not be
reduced if his Early Retirement Date occurs on or after
attaining age 62. In addition, for such a Merged Plan
Participant, the factors for age 65 in Exhibit A of the
Berol Plan shall be applied to determine the amounts of
benefits payable in optional forms in accordance with
subsection 16.06(f).
318
If a Merged Plan Participant satisfied any service
requirement for an early retirement benefit under the Berol
Plan, but had a Break-in-Service (as defined in the Berol
Plan for purposes of this Section 16.06) with a
nonforfeitable Merged Plan Benefit before satisfying the age
requirement for such early retirement benefit, then such
Merged Plan Participant shall be entitled, upon the
satisfaction of such early retirement benefit age
requirement, to receive at that time a Merged Plan Benefit
not less than that to which he would have been entitled at
the time he satisfied the service requirement had his Early
Retirement Date occurred at that time.
(c) If a Merged Plan Participant's Retirement is deferred
beyond his Normal Retirement Date, he shall upon actual Retirement
receive a benefit equal to the Actuarial Equivalent of his Merged Plan
Benefit.
(d) If a Merged Plan Participant Separates from Service (as
defined in the Berol Plan for purposes of this Section 16.06), he
shall thereupon become an Inactive Member (as defined in the Berol
Plan for purposes of this Section 16.06), and his interest and rights
in this Merged Plan Benefit shall be limited to those provided in this
paragraph (d) as follows:
(i) NONFORFEITABLE INTEREST. If a Merged Plan
Participant who accumulates at least one Hour of Service (as
defined in the Berol Plan for purposes of this
Section 16.06) on or after October 1, 1989 separates from
service prior to his Normal Retirement Date after completion
of at least the aggregate of five (A) Years of Service (as
defined in the Berol Plan) prior to the Plan Merger Date,
and (B) years of Vesting Service (as defined in this Plan)
after the Plan Merger Date, his Merged Plan Benefit at that
time shall be nonforfeitable; prior thereto, it shall be
forfeitable. In all events a Merged Plan Participant's
Merged Plan Benefit shall be nonforfeitable at his Normal
Retirement Date, his Early Retirement Date or his Postponed
Retirement Date (as defined in the Berol Plan for purposes
of this Section 16.06). If a Merged Plan Participant
separates from service with a forfeitable interest in his
entire Merged Plan Benefit, such Merged Plan Participant
shall not be entitled to receive payment of his Merged Plan
Benefit.
(ii) PAYMENT IN THE EVENT OF SEPARATION FROM SERVICE.
If a Merged Plan Participant separates from service after
completion of at least the aggregate of five (A) Years of
Service (as defined in the Berol Plan) prior to the Plan
Merger Date, and (B) Years of Vesting Service (as defined in
this Plan) after the Plan Merger Date, his Merged Plan
319
Benefit shall be paid to him at his Normal Retirement Date,
except as otherwise provided in subsection 16.06(b)(iii).
(e) If a Married Merged Plan Participant (as defined below)
dies before his Annuity Starting Date (as defined in the Berol Plan
for purposes of this Section 16.06) and such Merged Plan Participant
has a nonforfeitable interest in his Merged Plan Benefit, his
Surviving Spouse (as defined below) shall be entitled to commence
receipt (in accordance with the terms of this Plan) of his Merged Plan
Benefit as follows:
(i) DEATH BENEFIT. If a Married Merged Plan
Participant who has a nonforfeitable interest in his Merged
Plan Benefit dies prior to Retirement, his Surviving Spouse
will be entitled to a Qualified Preretirement Survivor
Annuity. No other pre-retirement death benefits are
provided under this Section 16.06.
(ii) QUALIFIED PRERETIREMENT SURVIVOR ANNUITY SHALL
MEAN A SURVIVOR ANNUITY (AS DEFINED IN THE BEROL PLAN FOR
PURPOSES OF THIS SECTION 16.06) for the life of the
Surviving Spouse of a Married Merged Plan Participant as
follows:
(A) The payments to the Surviving Spouse under
such annuity shall be equal to the amounts
which would be payable under the Joint and
Survivor Annuity provided for under this
Section 16.06 (or the Actuarial Equivalent
thereof) as if:
(1) in the case of a Married Merged Plan
Participant who dies after the date on
which the Merged Plan Participant
attained the Earliest Retirement Age (as
defined in the Berol Plan for purposes
of this Section 16.06), such Merged Plan
Participant had Retired with an
immediate Joint and Survivor Annuity (as
defined in the Berol Plan for purposes
of this Section 16.06) on the day before
the Merged Plan Participant's date of
death, or
(2) in the case of a Married Merged Plan
Participant who dies on or before the
date on which the Merged Plan
Participant would have attained the
Earliest Retirement Age, such Merged
Plan Participant had:
320
(I) Separated from Service on the date
of death,
(II) survived to the Earliest Retirement
Age,
(III) Retired with an immediate
Joint and Survivor Annuity at
the Earliest Retirement Age,
and
(IV) died on the day after the day on
which such Merged Plan Participant
would have attained the Earliest
Retirement Age.
(B) The earliest period for which the Surviving
Spouse may receive a payment under such
annuity shall not be later than the month in
which the Merged Plan Participant would have
attained the Earliest Retirement Age. If
payments commence before the Merged Plan
Participant would have attained his Normal
Retirement Date, the Qualified Preretirement
Survivor Annuity shall be reduced by one-half
percent (1/2%) for each month by which such
payment commencement date precedes the date
that he would have attained his Normal
Retirement Date. However, the Qualified
Preretirement Survivor Annuity shall not be
reduced if payments commence on or after the
date that the Merged Plan Participant would
have attained age 62.
(iii) For purposes of this Section 16.06,
"Surviving Spouse" shall mean a Merged Plan Participant's
spouse who survives him.
(iv) For purposes of this Section 16.06, "Married
Merged Plan Participant shall mean a Merged Plan Participant
whose spouse would be considered a Surviving Spouse upon the
Merged Plan Participant's death.
(f) A Merged Plan Participant may elect, pursuant to the
spousal consent provisions of Section 5.01 of this Plan, any one of
the optional forms of benefits specified in this paragraph (f) with
respect to his Merged Plan Benefit. Any optional form of benefit set
forth in Article V of this Plan shall apply only to the Accrued
Benefit earned by the Merged Plan Participant from and after the
Benefit Accrual Date. Any optional form of benefit or combination of
optional forms of benefits set forth in this paragraph (f) shall be
321
the Actuarial Equivalent of the Merged Plan Benefit otherwise payable
with respect to the Merged Plan Participant.
(i) A Merged Plan Participant shall be entitled to
receive his Merged Plan Benefit in a monthly annuity
beginning on the applicable commencement date of his Merged
Plan Benefit and continuing on the first of each month
thereafter during his lifetime for a minimum of sixty (60)
months.
(ii) The portion of the monthly annuity payable under
subparagraph (i) above shall, in the event of a Merged Plan
Participant's death prior to termination of the guaranteed
monthly payments, continue to his Beneficiary (as defined in
the Berol Plan for purposes of this Section 16.06) for the
balance of the guaranteed period.
(iii) Notwithstanding the provisions of
subparagraphs (i) and (ii) next above, unless a Merged Plan
Participant who has a Surviving Spouse otherwise elects or
has elected in the manner set forth in Sections 4.06 and
5.01 of this Plan, the Actuarial Equivalent of his Merged
Plan Benefit shall be paid to him and after his death to his
Surviving Spouse in the form of a monthly annuity having the
effect of a Joint and Survivor Annuity, which shall commence
not later than sixty (60) days after the close of the Plan
Year in which such Merged Plan Participant's actual
Retirement or death after attainment of his Normal
Retirement Date but prior to Retirement occurs.
(iv) A Merged Plan Participant may file a written
election, subject to the spousal consent provisions of
Section 5.01 of this Plan, with the Pension Administrative
Committee electing to receive his Merged Plan Benefit in one
of the following optional forms:
(A) STRAIGHT LIFE ANNUITY. Substantially equal
monthly installments payable directly to the
Merged Plan Participant during his lifetime
only.
(B) TEN YEARS CERTAIN. Substantially equal
monthly installments payable directly to the
Merged Plan Participant during his lifetime
only, with a minimum of one hundred twenty
(120) monthly payments guaranteed. The
portion of the monthly annuity payable shall
in the event of a Merged Plan Participant's
death prior to termination of the guaranteed
monthly payments continue to his Beneficiary.
322
(C) FIVE YEARS CERTAIN. Substantially equal
monthly installments payable directly to the
Merged Plan Participant during his lifetime
only, with a minimum of sixty (60) monthly
payments guaranteed. The portion of the
monthly annuity payable shall in the event of
a Merged Plan Participant's death prior to
termination of the guaranteed monthly
payments continue to his Beneficiary.
(D) JOINT AND SURVIVOR WITH 75% OR 100%
CONTINUANCE ANNUITY. Annuity payments in the
same amount or in an amount equal to seventy-
five percent (75%) of the Merged Plan
Participant's reduced annuity (as elected by
the Merged Plan Participant) shall continue
to his Contingent Annuitant, if surviving,
with the last payment to be made as of the
first day of the month in which the death of
the Merged Plan Participant's Contingent
Annuitant occurs.
(E) CASH OPTION. A lump sum cash payment to the
Merged Plan Participant that is the Actuarial
Equivalent of the Merged Plan Benefit
commencing on the Normal Retirement Date (or
Early Retirement Date if the Merged Plan
Participant has satisfied the requirements
for receiving his Merged Plan Benefit on an
Early Retirement Date).
The election of any of the foregoing
optional forms of benefit referred to in
subparagraphs (A) through (E) hereof must be
made in advance of Early Retirement Date or
Normal Retirement Date, whichever is
applicable.
After payment of a Merged Plan
Participant's Merged Plan Benefit has
commenced, no further elections, or
adjustments in the amount of his Merged Plan
Benefit, will be permitted under any
circumstances. Notwithstanding anything in
this Section 16.06 to the contrary, no method
of distribution may be made that would
violate the minimum distribution incidental
benefit requirements of Section 401(a)(9) of
the Code.
323
ARTICLE XVII
Actuarial Assumptions -
Constituent Plans and Merged Plans
----------------------------------
Effective September 1, 1996, notwithstanding anything in
this Plan to the contrary, the following shall apply to a lump sum
distribution of an accrued benefit earned under any of the Constituent
Plans described in Article XIII, or of a Merged Plan Benefit described
in Article XIV or XVI:
(a) For purposes of determining the Actuarial Equivalence
of lump sum distributions made on and after September 1, 1996, the
interest rate shall be the annual rate of interest on 30-year Treasury
securities in effect for the second full calendar month last preceding
the first day of the Plan Year in which the payment is made, and the
mortality table shall be the 1983 Group Annuity Mortality Table (50%
male and 50% female rates). For purposes of this Article XVII, "Plan
Year" shall mean the Plan Year, as defined immediately prior to the
applicable Merger Date or Plan Merger Date, in the Constituent Plan or
Merged Plan with respect to which the distribution is made.
(b) Notwithstanding anything to the contrary in
paragraph (a) next above:
(1) any determination of Actuarial Equivalence made pursuant
to this Article XVII on and after September 1, 1996 and prior to
September 1, 1997, shall use the annual rate of interest on 30-
year Treasury securities in effect either (A) for the second full
calendar month last preceding the first day of the Plan Year in
which the distribution is made, or (B) on the date that the
applicable interest rate would have been determined prior to
September 1, 1996 under the applicable Constituent Plan or Merged
Plan, whichever results in the larger payment.
(2) The Actuarial Equivalent of a lump sum distribution
under the Anchor Hocking Salaried Plan, the Anchor Hocking
Salaried Plan-Hourly Part, the Goody Salaried Plan or the Berol
Plan, shall not be less than the greater of:
(i) The Actuarial Equivalent determined using the
interest rate (other than the interest rate used by the
Pension Benefit Guaranty Corporation for purposes of
determining the present value of a lump sum distribution on
plan termination), and the associated mortality table, that
were used to determine Actuarial Equivalence of lump sum
distributions prior to September 1, 1996 under the
applicable Constituent Plan or Merged Plan; or
324
(ii) The Actuarial Equivalent determined pursuant to
paragraph (a) or subparagraph (b)(1) of this Article XVII.
IN WITNESS WHEREOF, the Company has caused the Plan to be
executed in its name by its duly authorized officer this 29th day of
December, 1996, effective as of the first day of September,
1996.
NEWELL OPERATING COMPANY
By:_____________________________________
325
EXHIBIT A
---------
(1) (2)
HOURS OF SERVICE,
ELIGIBILITY YEAR OF
SERVICE AND CREDITED
COMPANY OR DIVISION VESTING SERVICE SERVICE
------------------- ---------------- --------
Amerock Date of Hire*(1) January 1, 1989
Anchor Hocking Date of Hire*(1) January 1, 1989
Anchor Hocking Plastics Date of Hire*(1) January 1, 1989
BernzOmatic (3) April 1, 1982 September 1, 1982
Berol Date of Hire* April 1, 1996
Bulldog Jordan
Memphis, TN Date of Hire* Date of Hire
Ogdensburg, NY February 1, 1949 February 1, 1965
Dorfile
Los Angeles December 1, 1978 January 1, 1980
Memphis, TN April 16, 1969 January 1, 1973
EZ Paintr (Masterset) March 31, 1973 January 1, 1975
EZ Paintr (Thomas) Date of Hire* December 5, 1988
Faber-Castell Date of Hire* January 1, 1996
Foley Date of Hire* July 1, 1985
Goody Date of Hire* January 1, 1995
Intercraft Date of Hire* January 1, 1994
Lapcor Plastics Date of Hire* April 1, 1984
Lee Rowan Date of Hire* January 1, 1994
Mirro Date of Hire* September 1, 1983
326
Newell Corporate &
Window Furnishings February 1, 1949 January 1, 1973(2)
Newell Office Products
(formerly W.T. Rogers) Date of Hire* January 1, 1993
Rema Date of Hire* January 1, 1989
Sanford Date of Hire*(1) January 1, 1993
Stuart Hall Date of Hire* January 1, 1995
Systemworks Date of Hire* January 1, 1995
(1) The later of Date of Hire or Vesting Service date under a Prior
Plan.
327
EXHIBIT A (cont.)
-----------------
(2) Benefit Service earned back to February 1, 1949 is counted if, at
all times before 1973 Employee was eligible to contribute to the
Plan, he made the required contributions. If Employee was not
eligible to contribute to the Plan before 1973 (for example,
because he did not meet the age requirements), all pre-1973
service will be included when when determining Credited Service.
If before 1973, Employee did not make the full required
contribution to the Plan at any time he was eligible, only one
period of pre-1973 service may be included in Credited Service.
This is the continuous period immediately before January 1, 1973
when Employee contributed the full amount to the Plan.
(3) For (i) each individual who is an active employee of the
BernzOmatic Division of the Company at any time on or after
June 1, 1995, and (ii) each former employee of the BernzOmatic
Division of the Company who is entitled to a benefit under
Section 4.04, the payment of which has not commenced prior to
June 1, 1995, solely for purposes of determining such
Participants' Vesting Service for purposes of (i) the definition
of Early Retirement Date in Article II, (ii) the second sentence
of Subsection 4.05(a) of the Plan, and (iii) determining the
commencement and amount of a Qualified Preretirement Survivor
Annuity pursuant to Subsection 4.07(a) of the Plan, such
individuals shall receive credit for periods of employment with
the Company or an Affiliated Company prior to and from and after
April 1, 1982, and for periods of employment with BernzOmatic
Corporation prior to April 1, 1982.
* Date of Hire refers to original employment date with Employer.
328
AMENDMENT I TO THE
NEWELL PENSION PLAN FOR SALARIED AND CLERICAL EMPLOYEES
--------------------------------------------------------
(As Amended and Restated Effective as of September 1, 1996)
WHEREAS, Newell Operating Company (the "Company") maintains the
Newell Pension Plan for Salaried and Clerical Employees, as amended
and restated effective as of September 1, 1996 (the "Plan"); and
WHEREAS, the Goody Products, Inc. Pension Plan for Salaried
Employees (the "Goody Salaried Plan") was merged into the Plan,
effective January 1, 1995;
NOW, THEREFORE, IT IS RESOLVED that, pursuant to the power
reserved to the Board of Directors of the Company by Section 10.02 of
the Plan, the Plan is hereby amended, effective as of January 1, 1997,
as follows:
1. By adding the following new Sub-section 16.03(h) immediately
following section 16.03(g) thereof:
"16.03(H) SPECIAL PROVISION RELATING TO MERGED PLAN
PARTICIPANTS WHOSE EMPLOYMENT AT GOODY PRODUCTS, INC.
TERMINATED BETWEEN NOVEMBER 17, 1993, AND DECEMBER 31, 1994.
(i) Solely for purposes of calculating the Merged Plan
Benefit of those Merged Plan Participants who formerly
participated in the Goody Salaried Plan, whose
employment with Goody terminated between November 17,
1993 and December 31, 1994, and who received severance
pay pursuant to the Amended and Restated Goody
Products, Inc. Special Severance Policy (the "Severance
Policy") (hereinafter referred to as the "Goody Severed
Participants"), the term Hour of 'Service' (as defined
in Section 2.17 and applied in Section 3.02 of the
Goody Salaried Plan) shall include any hour following
termination of employment with Goody for which a Goody
Severed Participant is paid or entitled to payment
pursuant to the Severance Policy, and the term Final
Average 'Salary' (as defined in Section 2.16 and applied
in Section 6.01 of the Goody Salaried Plan) shall be
calculated with reference to the five consecutive years
yielding the highest average within the ten year period
ending on the last day for which the Goody Severed
Participant received severance pay pursuant to the
Severance Policy.
(ii) As soon as practicable, the Plan will recalculate the
Merged Plan Benefit (the "Recalculated Merged Plan
Benefit") of each Goody Severed Participant in
accordance with the terms of subparagraph (i) hereof
and will notify each such participant of his or her
Recalculated Merged Plan Benefit. As soon as
practicable, the Plan will also make a lump sum payment
329
equal in amount to the difference between the aggregate
amount of Merged Plan Benefit payments already made to
such participant and the amount such participant would
have received if such payments had been based upon his
or her Recalculated Merged Plan Benefit.
IN WITNESS WHEREOF, this Amendment I to the Plan has been
executed on this 2nd day of April, 1997.
NEWELL OPERATING COMPANY
By:
________________________________________
Title:
________________________________________
330
FIRST AMENDMENT TO THE
NEWELL PENSION PLAN FOR SALARIED
AND CLERICAL EMPLOYEES
(As Amended and Restated Effective as of September 1, 1996)
WHEREAS, Newell Operating Company (the "Company") maintains the
Newell Pension Plan for Salaried and Clerical Employees (As Amended
and Restated Effective as of September 1, 1996) (the "Plan"); and
WHEREAS, the Company has reserved the right to amend the Plan and
now deems it appropriate to do so;
NOW, THEREFORE, the Plan is hereby amended in the following
respects effective as of the dates specified herein and with respect
to each participant who earns an hour of service on or after the
applicable effective date:
1. Exhibit A to the Plan is hereby amended, effective as of May 30,
1995 to add the following Company:
Hours of Service,
Eligibility Year
of Service and
Company or Division Vesting Service Credited Service
------------------- --------------- ----------------
Kirsch, Inc. Date of Hire May 30, 1997
IN WITNESS WHEREOF, the Company has caused this First Amendment
to be executed on its behalf, by its officer duly authorized, this
29th day of May, 1997.
NEWELL OPERATING COMPANY
By:___________________________
331
AMENDMENT II TO THE
NEWELL PENSION PLAN FOR SALARIED AND CLERICAL EMPLOYEES
-------------------------------------------------------
(As Amended and Restated Effective as of September 1, 1996)
WHEREAS, Newell Operating Company (the "Company") maintains the
Newell Pension Plan for Salaried and Clerical Employees, as amended
and restated effective as of September 1, 1996 (the "Plan");
WHEREAS, the Goody Products, Inc. Pension Plan for Salaried
Employees (the "Goody Salaried Plan") was merged into the Plan,
effective January 1, 1995; and
WHEREAS, the Plan previously was amended by virtue of an
amendment titled "Amendment I," and the Company now deems it
appropriate to further amend the Plan to clarify the operation of
Amendment I:
NOW, THEREFORE, IT IS RESOLVED that, pursuant to the power
reserved to the Board of Directors of the Company by Section 10.02 of
the Plan, the Plan is hereby amended, effective as of January 1, 1997,
as follows:
1. By adding the following new subparagraph (iii) to subsection
16.03(h) which was added to the Plan by virtue of Amendment I thereof:
(iii) If, prior to the implementation of Amendment I, a Goody
Severed Participant received a mandatory cash out
pursuant to subsection 4.15(a) of the Plan or Section
7.04 of the Goody Salaried Plan, but, as a result of
the recalculation of the Merged Plan Benefit as
described in subparagraphs (i) and (ii) of this
subsection 16.03(h), the Actuarial Equivalent of such
Goody Severed Participant's Recalculated Merged Plan
Benefit exceeds $3,500, then with respect to that
portion of the Recalculated Merged Plan Benefit that
the Goody Severed Participant has not yet received, the
Goody Severed Participant may elect, pursuant to the
spousal consent provisions of Section 5.01 of the Plan,
to receive payment of such portion in a lump sum. In
such event, the Pension Administrative Committee shall
distribute the Actuarial Equivalent of such portion of
the Recalculated Merged Plan Benefit to the Goody
Severed Participant as soon as administratively
feasible after receipt of such election. In the
absence of such election, the unpaid portion of the
Recalculated Merged Plan Benefit of the Goody Severed
Participant will be paid as described in Section 4.06
and subsections 16.03 (f) and (g) of the Plan.
332
IN WITNESS WHEREOF, this Amendment II to the Plan has been
executed on this 8th day of October, 1997.
NEWELL OPERATING COMPANY
By:
_________________________________
Title:
_________________________________
333
AMENDMENT IV TO THE
NEWELL PENSION PLAN FOR SALARIED
AND CLERICAL EMPLOYEES
(As Amended and Restated Effective as of September 1, 1996)
WHEREAS, Newell Operating Company (the "Company") maintains the
Newell Pension Plan for Salaried and Clerical Employees (As Amended
and Restated Effective as of September 1, 1996) (the "Plan"); and
WHEREAS, the Company has reserved the right to amend the Plan and
now deems it appropriate to do so;
NOW, THEREFORE, the Plan is hereby amended in the following
respects effective as of the date specified herein and with respect to
each participant who earns an hour of service on or after the
applicable effective date:
1. Exhibit A to the Plan is hereby amended, effective as of May 1,
1998, by adding the following Divisions:
Hours of Service,
Eligibility Year
of Service and Credited
Company or Division Vesting Service Service
------------------- --------------- -------
Intercraft at Covington, TN Date of Hire* May 30, 1997
Levolor Home Fashions Date of Hire* July 1, 1998
IN WITNESS WHEREOF, the Company has caused this Fourth Amendment
to be executed on its behalf, by its officer duly authorized, this
15th day of June, 1998.
NEWELL OPERATING COMPANY
By:___________________________