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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
---------
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2002
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ________ to ________
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Commission File No. 0-25642
COMMONWEALTH INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
Delaware 13-3245741
(State of incorporation) (I.R.S. Employer Identification No.)
500 West Jefferson Street
19th Floor
Louisville, Kentucky 40202-2823
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (502) 589-8100
----------
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 proceeding 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 ____
The registrant had 15,997,651 shares of common stock outstanding at July 29,
2002.
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COMMONWEALTH INDUSTRIES, INC.
FORM 10-Q
For the Quarter Ended June 30, 2002
INDEX
Part I - Financial Information
Item 1. Financial Statements (unaudited) Page Number
-----------
Condensed Consolidated Balance Sheet as of June 30, 2002
and December 31, 2001 3
Condensed Consolidated Statement of Operations for the three
months and six months ended June 30, 2002 and 2001 4
Condensed Consolidated Statement of Comprehensive Income
for the three months and six months ended
June 30, 2002 and 2001 5
Condensed Consolidated Statement of Cash Flows for the six
months ended June 30, 2002 and 2001 6
Notes to Condensed Consolidated Financial Statements 7-19
Item 2. Management's Discussion and Analysis of Financial Condition 20-25
and Results of Operations
Part II - Other Information
Item 1. Legal Proceedings 26
Item 4. Submission of Matters to a Vote of Security Holders 26
Item 6. Exhibits and Reports on Form 8-K 26
Signatures 27
COMMONWEALTH INDUSTRIES, INC.
Condensed Consolidated Balance Sheet
(in thousands except share data)
June 30, December 31,
2002 2001
------------- -------------
Assets
Current assets:
Cash and cash equivalents $ 11,296 $ 6,393
Accounts receivable, net 72 81
Inventories 115,630 119,038
Net residual interest in receivables sold 85,115 82,310
Prepayments and other current assets 2,715 3,230
------------- -------------
Total current assets 214,828 211,052
Property, plant and equipment, net 144,603 152,137
Goodwill, net 48,872 74,199
Other noncurrent assets 2,629 2,244
------------- -------------
Total assets $ 410,932 $ 439,632
============= =============
Liabilities
Current liabilities:
Accounts payable $ 53,642 $ 50,693
Accrued liabilities 30,700 38,876
------------- -------------
Total current liabilities 84,342 89,569
Long-term debt 125,000 125,000
Other long-term liabilities 5,816 6,899
Accrued pension benefits 3,939 4,576
Accrued postretirement benefits 77,838 79,422
------------- -------------
Total liabilities 296,935 305,466
------------- -------------
Commitments and contingencies - -
Stockholders' Equity
Common stock, $0.01 par value, 50,000,000 shares authorized,
15,997,651 and 16,459,468 shares outstanding at
June 30, 2002 and December 31, 2001, respectively 160 160
Additional paid-in capital 405,613 405,443
Accumulated deficit (288,783) (258,532)
Notes receivable from sale of common stock - (1,561)
Accumulated other comprehensive income:
Effects of cash flow hedges (2,993) (11,344)
------------- -------------
Total stockholders' equity 113,997 134,166
------------- -------------
Total liabilities and stockholders' equity $ 410,932 $ 439,632
============= =============
See notes to condensed consolidated financial statements.
COMMONWEALTH INDUSTRIES, INC.
Condensed Consolidated Statement of Operations
(in thousands except per share data)
Three months ended Six months ended
June 30, June 30,
---------------------------- -----------------------------
2002 2001 2002 2001
----------- ----------- ------------ -----------
Net sales $ 251,728 $ 235,505 $ 473,586 $ 465,696
Cost of goods sold 236,044 224,197 447,362 443,524
----------- ----------- ------------ -----------
Gross profit 15,684 11,308 26,224 22,172
Selling, general and administrative expenses 10,995 11,086 22,255 22,828
Amortization of goodwill - 1,119 - 2,238
----------- ----------- ------------ -----------
Operating income (loss) 4,689 (897) 3,969 (2,894)
Other income (expense), net 213 118 486 358
Interest expense, net (3,851) (3,946) (7,702) (8,019)
----------- ----------- ------------ -----------
Income (loss) before income taxes and cumulative
effect of change in accounting principle 1,051 (4,725) (3,247) (10,555)
Income tax expense (benefit) (47) 175 78 400
----------- ----------- ------------ -----------
Income (loss) before cumulative effect of
change in accounting principle 1,098 (4,900) (3,325) (10,955)
Cumulative effect of change in accounting principle - - (25,327) -
----------- ----------- ------------ -----------
Net income (loss) $ 1,098 $ (4,900) $ (28,652) $ (10,955)
=========== =========== ============ ===========
Basic and diluted net income (loss) per share:
Income (loss) before cumulative effect of
change in accounting principle $ 0.07 $ (0.30) $ (0.21) $ (0.67)
Cumulative effect of change in accounting principle - - (1.58) -
----------- ----------- ------------ -----------
Net income (loss) $ 0.07 $ (0.30) $ (1.79) $ (0.67)
=========== =========== ============ ===========
Weighted average shares outstanding
Basic 15,994 16,458 15,989 16,456
Diluted 16,140 16,458 15,989 16,456
Dividends paid per share $ 0.05 $ 0.05 $ 0.10 $ 0.10
See notes to condensed consolidated financial statements.
COMMONWEALTH INDUSTRIES, INC.
Condensed Consolidated Statement of Comprehensive Income
(in thousands)
Three months ended Six months ended
June 30, June 30,
--------------------------- ------------------------
2002 2001 2002 2001
----------- ------------ ---------- ---------
Net income (loss) $ 1,098 $ (4,900) $ (28,652) $ (10,955)
Other comprehensive income, net of tax:
Net change related to cash flow hedges:
Cumulative effect of accounting change - - - 6,619
Increase (decrease) in fair value of cash flow hedges (3,097) (10,230) 3,139 (14,755)
Reclassification adjustment for (gains) losses included
in net income 3,302 1,612 5,212 (2,138)
----------- ------------ ---------- ---------
Net change related to cash flow hedges 205 (8,618) 8,351 (10,274)
----------- ------------ ---------- ---------
Comprehensive income (loss) $ 1,303 $ (13,518) $ (20,301) $ (21,229)
=========== ============ ========== =========
See notes to consolidated financial statements.
COMMONWEALTH INDUSTRIES, INC.
Condensed Consolidated Statement of Cash Flows
(in thousands)
Six months ended June 30,
----------------------------------
2002 2001
----------- -------------
Cash flows from operating activities:
Net income (loss) $ (28,652) $ (10,955)
Adjustments to reconcile net income (loss) to net cash provided by
(used in) operations:
Depreciation 10,644 16,496
Amortization 537 2,845
Goodwill inpairment charge 25,327 -
Loss on disposal of property, plant and equipment 81 238
Issuance of common stock in connection with stock awards 170 106
Changes in assets and liabilities:
Decrease (increase) in accounts receivable, net 9 (694)
Decrease in inventories 3,408 10,173
(Increase) in net residual interest in receivables sold (2,805) (31,617)
Decrease in prepayments and other current assets 515 8,182
(Increase) in other noncurrent assets (922) (131)
Increase in accounts payable 2,949 9,198
Increase (decrease) in accrued liabilities 175 (11,177)
(Decrease) in other liabilities (3,304) (1,233)
----------- -------------
Net cash provided by (used in) operating activities 8,132 (8,569)
----------- -------------
Cash flows from investing activities:
Purchases of property, plant and equipment (3,194) (4,161)
Proceeds from sale of property, plant and equipment 3 6
----------- -------------
Net cash (used in) investing activities (3,191) (4,155)
----------- -------------
Cash flows from financing activities:
Increase in outstanding checks in excess of deposits - 1,243
Proceeds from long-term debt 45,970 32,000
Repayments of long-term debt (45,970) (32,000)
Repayments of notes receivable from sale of common stock 1,561 1,613
Cash dividends paid (1,599) (1,646)
----------- -------------
Net cash (used in) provided by financing activities (38) 1,210
----------- -------------
Net increase (decrease) in cash and cash equivalents 4,903 (11,514)
Cash and cash equivalents at beginning of period 6,393 11,514
----------- -------------
Cash and cash equivalents at end of period $11,296 $ -
=========== =============
Supplemental disclosures:
Interest paid $ 7,299 $ 8,237
Income taxes paid (refunds received) (524) 101
Non-cash activities:
Repayment of notes receivable from sale of common stock with
common stock and subsequent retirement of common stock - 450
See notes to condensed consolidated financial statements.
COMMONWEALTH INDUSTRIES, INC.
Notes to Condensed Consolidated Financial Statements
1. Basis of Presentation
The accompanying condensed consolidated financial statements are presented in
accordance with the requirements of Form 10-Q and consequently do not include
all the disclosures normally required by generally accepted accounting
principles. The condensed consolidated financial statements have been prepared
in accordance with Commonwealth Industries, Inc.'s (the "Company's") customary
accounting practices and have not been audited. In the opinion of management,
all adjustments necessary to fairly present the results of operations for the
reporting interim periods have been made and were of a normal recurring nature.
2. Receivables Purchase Agreement
On September 26, 1997, the Company sold all of its trade accounts receivables to
a 100% owned subsidiary, Commonwealth Financing Corp. ("CFC"). Simultaneously,
CFC entered into a three-year receivables purchase agreement with a financial
institution and its affiliate whereby CFC can sell, on a revolving basis, an
undivided interest in certain of its receivables and receive up to $150.0
million from an unrelated third party purchaser at a cost of funds linked to
commercial paper rates plus a charge for administrative and credit support
services. The Company services the receivables for a fee in accordance with the
receivables purchase agreement. In addition, under the agreement, the
receivables are sold with no recourse to the Company and the Company records no
discount on the sale of the receivables. During September 2000, the Company and
the financial institution extended the receivables purchase agreement for an
additional three-year period ending in September 2003. In addition during
September 2001, the Company and the financial institution agreed to reduce the
maximum amount which can be outstanding under the agreement to $95.0 million. At
June 30, 2002 and 2001, the Company had outstanding under the agreement $39.0
million and $32.0 million, respectively, and had $85.1 million and $104.0
million, respectively, of net residual interest in the receivables sold. The
fair value of the net residual interest is measured at the time of the sale and
is based on the sale of similar assets. In the first six months of 2002 and
2001, the Company received gross proceeds of $37.0 million and $30.0 million,
respectively, from the sale of receivables and made gross payments of $18.0 and
$67.0 million, respectively, under the agreement.
3. Inventories
Inventories consist of the following (in thousands):
June 30, 2002 December 31, 2001
------------- -----------------
Raw materials $ 16,769 $ 21,203
Work in process 51,141 45,830
Finished goods 34,966 35,978
Expendable parts and supplies 14,487 14,223
---------- -----------
117,363 117,234
LIFO reserve (1,733) 1,804
---------- -----------
$ 115,630 $ 119,038
========== ===========
The Company uses the last-in, first-out (LIFO), first-in, first-out (FIFO) and
average-cost accounting methods for valuing its inventories. Inventories of
approximately $87.8 million and $87.9 million, included in the above totals
(before the LIFO reserve) at June 30, 2002 and December 31, 2001, respectively,
are accounted for under the LIFO method of accounting while the remainder of the
inventories are accounted for under the FIFO and average-cost methods.
4. Provision for Income Taxes
The Company recognized an income tax benefit of $0.05 million and income tax
expense of $0.1 million for the three months and six months ended June 30, 2002,
respectively, compared to an income tax expense of $0.2 million and $0.4 million
for the three months and six months ended June 30, 2001, respectively.
5. Net Income Per Share Computations
The following is a reconciliation of the numerator and denominator of the basic
and diluted per share computations including the restatement of data for the
three months ended March 31, 2002 for the goodwill impairment loss which was
recorded as a cumulative effect of a change in accounting principle as of
January 1, 2002, as required by SFAS No. 142 (in thousands except per share
data):
Three months ended
March 31,
2002 2001
---- ----
Income (numerator) amounts used for basic and diluted per share computations:
Income (loss) before cumulative effect of change in accounting principle $ (4,423) $(6,055)
Cumulative effect of change in accounting principle (25,327) -
-------- -------
Net income (loss) $(29,750) $(6,055)
======== =======
Shares (denominator) used for basic per share computations:
Weighted average shares of common stock outstanding 15,984 16,455
====== ======
Shares (denominator) used for diluted per share computations:
Weighted average shares of common stock outstanding 15,984 16,455
Plus: dilutive effect of stock options - -
------ ------
Adjusted weighted average shares 15,984 16,455
====== ======
Basic and diluted per share data:
Income (loss) before cumulative effect of change in accounting principle $(0.28) $(0.37)
Cumulative effect of change in accounting principle (1.58) -
------ ------
Net income (loss) $(1.86) $(0.37)
======= =======
Three months ended
June 30,
2002 2001
---- ----
Income (numerator) amounts used for basic and diluted per share computations:
Income (loss) before cumulative effect of change in accounting principle $1,098 $(4,900)
Cumulative effect of change in accounting principle - -
------ --------
Net income (loss) $1,098 $(4,900)
====== ========
Shares (denominator) used for basic per share computations:
Weighted average shares of common stock outstanding 15,994 16,458
====== ======
Shares (denominator) used for diluted per share computations:
Weighted average shares of common stock outstanding 15,994 16,458
Plus: dilutive effect of stock options 146 -
------ ------
Adjusted weighted average shares 16,140 16,458
====== ======
Basic and diluted per share data:
Income (loss) before cumulative effect of change in accounting principle $0.07 $(0.30)
Cumulative effect of change in accounting principle - -
----- -------
Net income (loss) $0.07 $(0.30)
===== =======
Six months ended
June 30,
2002 2001
---- ----
Income (numerator) amounts used for basic and diluted per share computations:
Income (loss) before cumulative effect of change in accounting principle $(3,325) $(10,955)
Cumulative effect of change in accounting principle (25,327) -
-------- -------
Net income (loss) $(28,652) $(10,955)
======== =======
Shares (denominator) used for basic per share computations:
Weighted average shares of common stock outstanding 15,989 16,456
====== ======
Shares (denominator) used for diluted per share computations:
Weighted average shares of common stock outstanding 15,989 16,456
Plus: dilutive effect of stock options - -
------ ------
Adjusted weighted average shares 15,989 16,456
====== ======
Basic and diluted per share data:
Income (loss) before cumulative effect of change in accounting principle $(0.21) $(0.67)
Cumulative effect of change in accounting principle (1.58) -
------ ------
Net income (loss) $(1.79) $(0.67)
====== ======
Options to purchase 600,000 common shares, which equate to 85,025 and 115,574
incremental common equivalent shares, respectively, for the three months ended
March 31, 2002 and the six months ended June 30, 2002 and options to purchase
310,000, 310,000 and 317,500 common shares, which equate to 54,140, 30,431 and
42,286 incremental common equivalent shares, respectively, for the three months
ended March 31, 2002 and the three months and six months ended June 30, 2001
were excluded from the diluted calculation above as their effect would have been
antidilutive. In addition, options to purchase 755,000 and 812,000 common shares
for the three months ended March 31, 2002 and 2001, respectively, and 763,500
and 798,500 common shares for the three months and six months ended June 30,
2002, respectively, and 799,500 for both the three months and six months ended
June 30, 2001, respectively, were excluded from the diluted calculations above
because the exercise prices on the options were greater than the average market
price for the periods.
6. Financial Instruments and Hedging Activities
Effective January 1, 2001, the Company adopted Statement of Financial Accounting
Standards No. 133, "Accounting for Derivative Instruments and Hedging
Activities", including Statement of Financial Accounting Standards No. 138,
"Accounting for Certain Derivative Instruments and Certain Hedging Activities -
an amendment of FASB Statement No. 133" ("SFAS No. 133"). The Company recorded a
cumulative-effect-type net gain transition adjustment of $6.6 million in
accumulated other comprehensive income to recognize at fair value all
derivatives that were designated as cash-flow hedging instruments upon adoption
of SFAS No. 133 on January 1, 2001. This entire amount was reclassified from
accumulated other comprehensive income into cost of goods sold during 2001.
The Company enters into futures contracts, forward contracts and options to
manage exposures to price risk related to aluminum and natural gas purchases.
The Company has designated the futures contracts and forward contracts as cash
flow hedges of anticipated aluminum raw material and natural gas requirements,
respectively.
As of June 30, 2002, approximately $2.9 million of the $3.0 million of deferred
net losses are expected to be reclassified from other comprehensive income into
net income as cost of goods sold over the next twelve months. A net loss of
$0.04 million and $0.11 million was recognized in cost of goods sold during the
three months and six months ended June 30, 2002, respectively, and a net gain of
$0.4 million and a net loss of $0.03 million was recognized in cost of goods
sold during the three months and six months ended June 30, 2001, respectively,
representing the amount of the hedges' ineffectiveness. As of June 30, 2002, the
Company held open aluminum and natural gas futures and forward contracts having
maturity dates extending through December 2003.
In order to hedge a portion of its interest rate risk, the Company was a party
to an interest rate swap agreement with a notional amount of $5 million under
which the Company paid a fixed rate of interest and received a LIBOR-based
floating rate. The interest rate swap agreement expired during September 2001
and currently the Company has no interest rate swap agreements in effect. The
Company's interest rate swap agreement at June 30, 2001 did not qualify for
hedge accounting under SFAS 133 and as such the change in the fair value of the
interest rate swap agreement had been recognized currently as interest expense,
net in the Company's consolidated statement of operations. The amount of such
change in the fair value of the interest rate swap agreement was immaterial for
the three months and six months ended June 30, 2001.
7. Goodwill
Effective January 1, 2002, the Company adopted Statement of Financial Accounting
Standards No. 142, "Goodwill and Other Intangible Assets" ("SFAS No. 142"). The
Statement addresses financial accounting and reporting for acquired goodwill and
other intangible assets and supersedes Accounting Principles Board Opinion No.
17, "Intangible Assets" and amends Statement of Financial Accounting Standards
No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed Of" ("SFAS No. 121"), to exclude from its scope goodwill
and intangible assets that are not amortized. SFAS No. 121 has subsequently been
superceded by Statement of Financial Accounting Standards No. 144, "Accounting
for the Impairment or Disposal of Long-Lived Assets ("SFAS No. 144"). SFAS No.
142 addresses how intangible assets that are acquired individually or with a
group of other assets (but not those acquired in a business combination) should
be accounted for in financial statements upon their acquisition. This Statement
also addresses how goodwill and other intangible assets should be accounted for
after they have been initially recognized in the financial statements. Under
SFAS No. 142, goodwill is no longer amortized but reviewed for impairment
annually or more frequently if certain indicators arise, using a two-step
approach. SFAS No. 142 is effective January 1, 2002 and the Company was required
to complete step one of a transitional impairment test by June 30, 2002 and to
complete step two of the transitional impairment test, if step one indicates
that the reporting unit's carrying value exceeds its fair value, by December 31,
2002. Any impairment loss resulting from the transitional impairment test was
required to be recorded as a cumulative effect of a change in accounting
principle in the quarter ended March 31, 2002. Any subsequent impairment losses
will be reflected in operating income in the consolidated statement of
operations. The net goodwill balances attributable to each of the Company's
reporting units were tested for impairment by comparing the fair value of each
reporting unit to its carrying value. Fair value was determined by using the
valuation technique of calculating the present value of estimated expected
future cash flows (using a discount rate commensurate with the risks involved).
Based upon the transitional impairment test performed upon adoption of SFAS No.
142, the Company has recorded a goodwill impairment loss of $25.3 million ($13.5
million in its aluminum products segment and $11.8 million in its electrical
products segment). This non-cash goodwill impairment charge has no impact on the
calculation of financial covenants under the Company's revolving credit
facility. As required by SFAS No.142 and previously described, the Company
recorded the goodwill write-down as a cumulative effect of a change in
accounting principle as of January 1, 2002 and is restating the Company's first
quarter 2002 financial results.
The following displays the changes in the carrying amount of goodwill in each of
the Company's reportable business segments for the six months ended June 30,
2002 (in thousands):
Electrical
Aluminum Products Total
-------- ---------- -------
Balance December 31, 2001 $13,470 $60,729 $74,199
Goodwill impairment loss as a result of transitional
Impairment test related to adoption of SFAS No. 142 (13,470) (11,857) (25,327)
--------- ------- -------
Balance March 31, 2002 (restated) and June 30, 2002 $ - $48,872 $48,872
========= ======= =======
The following represents transitional disclosures relating to goodwill
amortization including the restatement of net income (loss) for the three months
ended March 31, 2002 for the goodwill impairment loss which was recorded as a
cumulative effect of a change in accounting principle as of January 1, 2002, as
required by SFAS No. 142 (in thousands except per share data):
Three months ended
March 31,
2002 2001
---- ----
Reported net income (loss) $(4,423) $(6,055)
Cumulative effect of change in accounting principle (25,327) -
-------- -------
Restated net income (loss) (29,750) (6,055)
Add back: goodwill amortization - 1,119
-------- -------
Adjusted net income (loss) $(29,750) $(4,936)
======== =======
Reported basic and diluted net income (loss) per share $(0.28) $(0.37)
Cumulative effect of change in accounting principle per basic and diluted per share (1.58) -
------ ------
Restated basic and diluted net income (loss) per share (1.86) (0.37)
Goodwill amortization per basic and diluted per share - 0.07
------ ------
Adjusted basic and diluted net income (loss) per share $(1.86) $(0.30)
====== ======
Weighted average shares outstanding
Basic and diluted 15,994 16,458
Three months ended
June 30,
2002 2001
---- ----
Reported net income (loss) $1,098 $(4,900)
Add back: goodwill amortization - 1,119
------ -------
Adjusted net income (loss) $1,098 $(3,781)
====== =======
Reported basic and diluted net income (loss) per share $0.07 $(0.30)
Goodwill amortization per basic and diluted per share - 0.07
----- ------
Adjusted basic and diluted net income (loss) per share $0.07 $(0.23)
===== ======
Weighted average shares outstanding
Basic 15,994 16,458
Diluted 16,140 16,458
Six months ended
June 30,
2002 2001
---- ----
Reported income (loss) before cumulative effect of change in accounting principle $(3,325) $(10,955)
Cumulative effect of change in accounting principle (25,327) -
------- -------
Reported net income (loss) $(28,652) $(10,955)
Add back: goodwill amortization - 2,238
------- -------
Adjusted net income (loss) $(28,652) $(8,717)
======= =======
Basic and diluted net income (loss) per share:
Reported income (loss) before cumulative effect of change in accounting principle $(0.21) $(0.67)
Cumulative effect of change in accounting principle (1.58) -
------- ------
Reported net income (loss) $(1.79) $(0.67)
Goodwill amortization - 0.14
------- ------
Adjusted net income (loss) $(1.79) $(0.53)
======= ======
Weighted average shares outstanding
Basic and diluted 15,989 16,456
The Company has no other intangible assets other than the goodwill discussed
above.
8. Information Concerning Business Segments
The Company has determined it has two reportable segments: aluminum and
electrical products. The aluminum segment manufactures aluminum sheet for
distributors and the transportation, construction, and consumer durables end-use
markets. The electrical products segment manufactures flexible electrical wiring
products for the commercial construction and do-it-yourself markets.
The accounting policies of the reportable segments are the same as those
described in Note 1, "Basis of Presentation and Summary of Significant
Accounting Policies" in the Company's annual report to stockholders for the year
ended December 31, 2001. All intersegment sales prices are market based. The
Company evaluates the performance of its operating segments based upon operating
income.
The Company's reportable segments are strategic business units that offer
different products to different customer groups. They are managed separately
because each business requires different technology and marketing strategies.
Summarized financial information concerning the Company's reportable segments is
shown in the following table for the three months and six months ended June 30,
2002 and 2001 (in thousands). The "Other" column includes corporate related
items, including elimination of intersegment transactions, and as it relates to
segment operating income, income and expense not allocated to reportable
segments. Total assets at June 30, 2002 include the effects of the $167.3
million non-cash asset impairment charges recorded in the fourth quarter of 2001
and the $25.3 million non-cash goodwill impairment charges ($13.5 million
relating to the aluminum products segment and $11.8 million relating to the
electrical products segment) recorded as a cumulative effect of a change in
accounting principle as of January 1, 2002 during this quarter ended June 30,
2002. The $167.3 million non-cash asset impairment charges were all related to
the aluminum products segment and composed of $85.4 million of property, plant
and equipment write-downs ($1.8 million of net land and improvements, $15.7
million of net building improvements, $59.0 million of net machinery and
equipment and $8.9 million of construction in progress) and $81.9 million of
goodwill write-downs. See note 2 in the Company's annual report to stockholders
for the year ended December 31, 2001 for additional information on the asset
impairment charges and note 7 in this report for additional information on the
goodwill impairment charges.
Electrical
Aluminum Products Other Total
-------- ---------- ------ -------
Three months ended June 30, 2002
- --------------------------------
Net sales to external customers $223,999 $27,729 $ -- $251,728
Intersegment net sales 6,895 -- (6,895) --
Operating income (loss) 6,778 1,969 (4,058) 4,689
Depreciation and amortization 4,976 571 -- 5,547
Total assets 319,837 89,244 1,851 410,932
Capital expenditures 1,755 10 -- 1,765
Three months ended June 30, 2001
- --------------------------------
Net sales to external customers $203,379 $32,126 $ -- $235,505
Intersegment net sales 6,452 -- (6,452) --
Operating income (loss) 824 1,621 (3,342) (897)
Depreciation and amortization 8,664 977 -- 9,641
Total assets 541,440 98,729 2,327 642,496
Capital expenditures 1,168 96 -- 1,264
Six months ended June 30, 2002
- ------------------------------
Net sales to external customers $416,957 $56,629 $ -- $473,586
Intersegment net sales 14,128 -- (14,128) --
Operating income (loss) 7,919 3,932 (7,882) 3,969
Depreciation and amortization 10,040 1,141 -- 11,181
Total assets 319,837 89,244 1,851 410,932
Capital expenditures 2,951 243 -- 3,194
Six months ended June 30, 2001
- ------------------------------
Net sales to external customers $403,224 $62,472 $ -- $465,696
Intersegment net sales 14,433 -- (14,433) --
Operating income (loss) 1,727 2,663 (7,284) (2,894)
Depreciation and amortization 17,380 1,954 7 19,341
Total assets 541,440 98,729 2,327 642,496
Capital expenditures 3,975 186 -- 4,161
9. Guarantor Financial Statements
The $125 million of 10.75% senior subordinated notes due 2006 issued by the
Company, and the $30 million revolving credit facility are guaranteed by the
Company's wholly-owned subsidiaries (collectively the "Subsidiary Guarantors"),
other than Commonwealth Financing Corp. ("CFC"), a Securitization Subsidiary (as
defined in the Indenture with respect to such debt) and certain subsidiaries of
the Company without substantial assets or operations. Such guarantees are full,
unconditional and joint and several. Separate financial statements of the
Subsidiary Guarantors are not presented because management has determined that
they would not be material to investors. The following supplemental financial
information sets forth on a condensed combined basis for the Parent Company
Only, Subsidiary Guarantors, Non-guarantor Subsidiaries and for the Company, a
combining balance sheet as of June 30, 2002 and December 31, 2001, statement of
operations for the three months and six months ended June 30, 2002 and 2001 and
statement of cash flows for the six months ended June 30, 2002 and 2001.
Combining Balance Sheet at June 30, 2002
(in thousands)
Parent
Company Subsidiary Non-guarantor Combined
Only Guarantors Subsidiaries Eliminations Totals
--------- ----------- ----------- ------------ --------
Assets
Current assets:
Cash and cash equivalents $ -- $ 11,296 $ -- $ -- $ 11,296
Accounts receivable, net -- 282,282 -- (282,210) 72
Inventories -- 115,630 -- -- 115,630
Net residual interest in receivables sold -- -- 85,115 -- 85,115
Prepayments and other current assets 435 2,280 -- -- 2,715
--------- --------- --------- --------- ---------
Total current assets 435 411,488 85,115 (282,210) 214,828
Property, plant and equipment, net -- 144,603 -- -- 144,603
Goodwill, net -- 48,872 -- -- 48,872
Other noncurrent assets 403,067 1,213 -- (401,651) 2,629
--------- --------- --------- --------- ---------
Total assets $ 403,502 $ 606,176 $ 85,115 $(683,861) $ 410,932
========= ========= ========= ========= =========
Liabilities
Current liabilities:
Accounts payable $ 155,313 $ 53,642 $ 126,897 $(282,210) $ 53,642
Accrued liabilities 6,199 25,211 (710) -- 30,700
--------- --------- --------- --------- ---------
Total current liabilities 161,512 78,853 126,187 (282,210) 84,342
Long-term debt 125,000 -- -- -- 125,000
Other long-term liabilities -- 5,816 -- -- 5,816
Accrued pension benefits -- 3,939 -- -- 3,939
Accrued postretirement benefits -- 77,838 -- -- 77,838
--------- --------- --------- --------- ---------
Total liabilities 286,512 166,446 126,187 (282,210) 296,935
--------- --------- --------- --------- ---------
Commitments and contingencies -- -- -- -- --
Stockholders' Equity
Common stock 160 1 -- (1) 160
Additional paid-in capital 405,613 486,727 5,000 (491,727) 405,613
Accumulated deficit (288,783) (44,005) (46,072) 90,077 (288,783)
Accumulated other comprehensive income:
Effects of cash flow hedges -- (2,993) -- -- (2,993)
--------- --------- --------- --------- ---------
Total stockholders' equity 116,990 439,730 (41,072) (401,651) 113,997
--------- --------- --------- --------- ---------
Total liabilities and stockholders' equity $ 403,502 $ 606,176 $ 85,115 $(683,861) $ 410,932
========= ========= ========= ========= =========
Combining Balance Sheet at December 31, 2001
(in thousands)
Parent
Company Subsidiary Non-guarantor Combined
Only Guarantors Subsidiaries Eliminations Totals
--------- ----------- ----------- ------------ --------
Assets
Current assets:
Cash and cash equivalents $ -- $ 6,393 $ -- $ -- $ 6,393
Accounts receivable, net -- 271,074 -- (270,993) 81
Inventories -- 119,038 -- -- 119,038
Net residual interest in receivables sold -- -- 82,310 -- 82,310
Prepayments and other current assets 435 2,795 -- -- 3,230
--------- --------- --------- --------- ---------
Total current assets 435 399,300 82,310 (270,993) 211,052
Property, plant and equipment, net -- 152,137 -- -- 152,137
Goodwill, net -- 74,199 -- -- 74,199
Other noncurrent assets 424,830 611 -- (423,197) 2,244
--------- --------- --------- --------- ---------
Total assets $ 425,265 $ 626,247 $ 82,310 $(694,190) $ 439,632
========= ========= ========= ========= =========
Liabilities
Current liabilities:
Accounts payable $ 148,971 $ 50,693 $ 122,022 $(270,993) $ 50,693
Accrued liabilities 5,784 33,997 (905) -- 38,876
--------- --------- --------- --------- ---------
Total current liabilities 154,755 84,690 121,117 (270,993) 89,569
Long-term debt 125,000 -- -- -- 125,000
Other long-term liabilities -- 6,899 -- -- 6,899
Accrued pension benefits -- 4,576 -- -- 4,576
Accrued postretirement benefits -- 79,422 -- -- 79,422
--------- --------- --------- --------- ---------
Total liabilities 279,755 175,587 121,117 (270,993) 305,466
--------- --------- --------- --------- ---------
Commitments and contingencies -- -- -- -- --
Stockholders' Equity
Common stock 160 1 -- (1) 160
Additional paid-in capital 405,443 486,727 5,000 (491,727) 405,443
Accumulated deficit (258,532) (24,724) (43,807) 68,531 (258,532)
Notes receivable from sale of common stock (1,561) -- -- -- (1,561)
Accumulated other comprehensive income:
Effects of cash flow hedges -- (11,344) -- -- (11,344)
--------- --------- --------- --------- ---------
Total stockholders' equity 145,510 450,660 (38,807) (423,197) 134,166
--------- --------- --------- --------- ---------
Total liabilities and stockholders' equity $ 425,265 $ 626,247 $ 82,310 $(694,190) $ 439,632
========= ========= ========= ========= =========
Combining Statement of Income for the three months ended June 30, 2002
(in thousands)
Parent
Company Subsidiary Non-guarantor Combined
Only Guarantors Subsidiaries Eliminations Totals
--------- --------- --------- --------- ---------
Net sales $ -- $ 251,728 $ -- $ -- $ 251,728
Cost of goods sold -- 236,044 -- -- 236,044
--------- --------- --------- --------- ---------
Gross profit -- 15,684 -- -- 15,684
Selling, general and administrative expenses 57 10,938 -- -- 10,995
Amortization of goodwill -- -- -- -- --
--------- --------- --------- --------- ---------
Operating income (loss) (57) 4,746 -- -- 4,689
Other income (expense), net 4,622 213 -- (4,622) 213
Interest income (expense), net (3,467) 948 (1,332) -- (3,851)
--------- --------- --------- --------- ---------
Income (loss) before income taxes and cumulative
effect of change in accounting principle 1,098 5,907 (1,332) (4,622) 1,051
Income tax expense -- (47) -- -- (47)
--------- --------- --------- --------- ---------
Income (loss) before cumulative effect of
change in accounting principle 1,098 5,954 (1,332) (4,622) 1,098
Cumulative effect of change in accounting principle -- -- -- -- --
--------- --------- --------- --------- ---------
Net income (loss) $ 1,098 $ 5,954 $ (1,332) $ (4,622) $ 1,098
========= ========= ========= ========= =========
Combining Statement of Income for the three months ended June 30, 2001
(in thousands)
Parent
Company Subsidiary Non-guarantor Combined
Only Guarantors Subsidiaries Eliminations Totals
--------- --------- --------- --------- ---------
Net sales $ -- $ 235,505 $ -- $ -- $ 235,505
Cost of goods sold -- 224,197 -- -- 224,197
--------- --------- --------- --------- ---------
Gross profit -- 11,308 -- -- 11,308
Selling, general and administrative expenses 47 11,039 -- -- 11,086
Amortization of goodwill -- 1,119 -- -- 1,119
--------- --------- --------- --------- ---------
Operating income (loss) (47) (850) -- -- (897)
Other income (expense), net (1,525) 118 -- 1,525 118
Interest income (expense), net (3,328) 1,191 (1,809) -- (3,946)
--------- --------- --------- --------- ---------
Income (loss) before income taxes and cumulative
effect of change in accounting principle (4,900) 459 (1,809) 1,525 (4,725)
Income tax expense -- 175 -- -- 175
--------- --------- --------- --------- ---------
Income (loss) before cumulative effect of
change in accounting principle (4,900) 284 (1,809) 1,525 (4,900)
Cumulative effect of change in accounting principle -- -- -- -- --
--------- --------- --------- --------- ---------
Net income (loss) $ (4,900) $ 284 $ (1,809) $ 1,525 $ (4,900)
========= ========= ========= ========= =========
Combining Statement of Income for the six months ended June 30, 2002
(in thousands)
Parent
Company Subsidiary Non-guarantor Combined
Only Guarantors Subsidiaries Eliminations Totals
--------- --------- --------- --------- ---------
Net sales $ -- $ 473,586 $ -- $ -- $ 473,586
Cost of goods sold -- 447,362 -- -- 447,362
--------- --------- --------- --------- ---------
Gross profit -- 26,224 -- -- 26,224
Selling, general and administrative expenses 173 22,082 -- -- 22,255
Amortization of goodwill -- -- -- -- --
--------- --------- --------- --------- ---------
Operating income (loss) (173) 4,142 -- -- 3,969
Other income (expense), net 3,781 486 -- (3,781) 486
Interest income (expense), net (6,933) 1,496 (2,265) -- (7,702)
--------- --------- --------- --------- ---------
Income (loss) before income taxes and cumulative
effect of change in accounting principle (3,325) 6,124 (2,265) (3,781) (3,247)
Income tax expense -- 78 -- -- 78
--------- --------- --------- --------- ---------
Income (loss) before cumulative effect of
change in accounting principle (3,325) 6,046 (2,265) (3,781) (3,325)
Cumulative effect of change in accounting principle (25,327) (25,327) -- 25,327 (25,327)
--------- --------- --------- --------- ---------
Net income (loss) $ (28,652) $ (19,281) $ (2,265) $ 21,546 $ (28,652)
========= ========= ========= ========= =========
Combining Statement of Income for the six months ended June 30, 2001
(in thousands)
Parent
Company Subsidiary Non-guarantor Combined
Only Guarantors Subsidiaries Eliminations Totals
--------- --------- --------- --------- ---------
Net sales $ -- $ 465,696 $ -- $ -- $ 465,696
Cost of goods sold -- 443,524 -- -- 443,524
--------- --------- --------- --------- ---------
Gross profit -- 22,172 -- -- 22,172
Selling, general and administrative expenses 176 22,652 -- -- 22,828
Amortization of goodwill -- 2,238 -- -- 2,238
--------- --------- --------- --------- ---------
Operating income (loss) (176) (2,718) -- -- (2,894)
Other income (expense), net (4,090) 358 -- 4,090 358
Interest income (expense), net (6,689) 2,667 (3,997) -- (8,019)
--------- --------- --------- --------- ---------
Income (loss) before income taxes and cumulative
effect of change in accounting principle (10,955) 307 (3,997) 4,090 (10,555)
Income tax expense -- 400 -- -- 400
--------- --------- --------- --------- ---------
Income (loss) before cumulative effect of
change in accounting principle (10,955) (93) (3,997) 4,090 (10,955)
Cumulative effect of change in accounting principle -- -- -- -- --
--------- --------- --------- --------- ---------
Net income (loss) $ (10,955) $ (93) $ (3,997) $ 4,090 $ (10,955)
========= ========= ========= ========= =========
Combining Statement of Cash Flows for the six months ended June 30, 2002
(in thousands)
Parent
Company Subsidiary Non-guarantor Combined
Only Guarantors Subsidiaries Eliminations Totals
--------- ---------- ---------- --------- ----------
Cash flows from operating activities:
Net income (loss) $(28,652) $(19,281) $ (2,265) $ 21,546 $(28,652)
Adjustments to reconcile net income (loss) to
net cash provided by operations:
Depreciation and amortization -- 11,181 -- -- 11,181
Goodwill impairment charge 25,327 25,327 -- (25,327) 25,327
Loss on disposal of property, plant and equipment -- 81 -- -- 81
Issuance of common stock in connection with stock awards 170 -- -- -- 170
Equity in undistributed net income of subsidiaries (3,781) -- -- 3,781 --
Changes in assets and liabilities:
(Increase) decrease in accounts receivable, net -- (11,208) -- 11,217 9
Decrease in inventories -- 3,408 -- -- 3,408
(Increase) in net residual interest in receivables sold -- -- (2,805) -- (2,805)
Decrease in prepayments and other current assets -- 515 -- -- 515
Decrease (increase) in other noncurrent assets 217 (1,139) -- -- (922)
Increase (decrease) in accounts payable 6,342 2,949 4,875 (11,217) 2,949
Increase (decrease) in accrued liabilities 415 (435) 195 -- 175
(Decrease) in other liabilities -- (3,304) -- -- (3,304)
-------- -------- -------- -------- --------
Net cash provided by operating activities 38 8,094 -- -- 8,132
-------- -------- -------- -------- --------
Cash flows from investing activities:
Purchases of property, plant and equipment -- (3,194) -- -- (3,194)
Proceeds from sale of property, plant and equipment -- 3 -- -- 3
-------- -------- -------- -------- --------
Net cash (used in) investing activities -- (3,191) -- -- (3,191)
-------- -------- -------- -------- --------
Cash flows from financing activities:
Proceeds from long-term debt -- 45,970 -- -- 45,970
Repayments of long-term debt -- (45,970) -- -- (45,970)
Repayments of notes receivable from sale of common stock 1,561 -- -- -- 1,561
Cash dividends paid (1,599) -- -- -- (1,599)
-------- -------- -------- -------- --------
Net cash (used in) financing activities (38) -- -- -- (38)
-------- -------- -------- -------- --------
Net increase in cash and cash equivalents -- 4,903 -- -- 4,903
Cash and cash equivalents at beginning of period -- 6,393 -- -- 6,393
-------- -------- -------- -------- --------
Cash and cash equivalents at end of period $ -- $ 11,296 $ -- $ -- $ 11,296
======== ======== ======== ======== ========
Combining Statement of Cash Flows for the six months ended June 30, 2001
(in thousands)
Parent
Company Subsidiary Non-guarantor Combined
Only Guarantors Subsidiaries Eliminations Totals
--------- ---------- ---------- --------- ----------
Cash flows from operating activities:
Net income (loss) $(10,955) $ (93) $ (3,997) $ 4,090 $(10,955)
Adjustments to reconcile net income (loss) to
net cash provided by (used in) operations:
Depreciation and amortization 7 19,334 -- -- 19,341
Loss on disposal of property, plant and equipment -- 238 -- -- 238
Issuance of common stock in connection with stock awards 106 -- -- -- 106
Equity in undistributed net income of subsidiaries 4,090 -- -- (4,090) --
Changes in assets and liabilities:
(Increase) decrease in accounts receivable, net -- (42,561) -- 41,867 (694)
Decrease in inventories -- 10,173 -- -- 10,173
(Increase) in net residual interest in receivables sold -- -- (31,617) -- (31,617)
Decrease in prepayments and other current assets 321 7,861 -- -- 8,182
Decrease (increase) in other noncurrent assets 217 (348) -- -- (131)
Increase (decrease) in accounts payable 5,948 9,198 35,919 (41,867) 9,198
Increase (decrease) in accrued liabilities 299 (897) (305) -- (903)
(Decrease) in other liabilities -- (11,507) -- -- (11,507)
-------- -------- -------- -------- --------
Net cash provided by (used in) operating activities 33 (8,602) -- -- (8,569)
-------- -------- -------- -------- --------
Cash flows from investing activities:
Purchases of property, plant and equipment -- (4,161) -- -- (4,161)
Proceeds from sale of property, plant and equipment -- 6 -- -- 6
-------- -------- -------- -------- --------
Net cash (used in) investing activities -- (4,155) -- -- (4,155)
-------- -------- -------- -------- --------
Cash flows from financing activities:
Increase in outstanding checks in excess of deposits -- 1,243 -- -- 1,243
Proceeds from long-term debt -- 32,000 -- -- 32,000
Repayments of long-term debt -- (32,000) -- -- (32,000)
Repayments of notes receivable from sale of common stock 1,613 -- -- -- 1,613
Cash dividends paid (1,646) -- -- -- (1,646)
-------- -------- -------- -------- --------
Net cash (used in) provided by financing activities (33) 1,243 -- -- 1,210
-------- -------- -------- -------- --------
Net (decrease) in cash and cash equivalents -- (11,514) -- -- (11,514)
Cash and cash equivalents at beginning of period -- 11,514 -- -- 11,514
-------- -------- -------- -------- --------
Cash and cash equivalents at end of period $ -- $ -- $ -- $ -- $ --
======== ======== ======== ======== ========
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
This section should be read in conjunction with the condensed consolidated
financial statements and notes thereto included in item 1 of this report in
addition to the consolidated financial statements of the Company and the notes
thereto included in the Company's annual report to stockholders for the year
ended December 31, 2001, including footnote 1 which describes the Company's
significant accounting policies including its use of estimates. See the caption
entitled "Application of Critical Accounting Policies" in this section for
further information. The following discussion contains statements which are
forward-looking rather than historical fact. These forward-looking statements
are made pursuant to the safe harbor provisions of the Private Securities
Legislation Reform Act of 1995 and involve risks and uncertainties that could
render them materially different, including, but not limited to, the effect of
global economic conditions, the effect (including possible increases in the cost
of doing business) resulting from war and terrorist activities or political
uncertainties, the impact of competitive products and pricing, product
development and commercialization, availability and cost of critical raw
materials, the rate of technological change, product demand and market
acceptance risks, capacity and supply constraints or difficulties, the success
of the Company in implementing its business strategy, and other risks as
detailed in the Company's various Securities and Exchange Commission filings.
Overview
The Company manufactures non-heat treat coiled aluminum sheet for distributors
and the transportation, construction and consumer durables end use markets and
electrical flexible conduit and prewired armored cable for the commercial
construction and renovation markets. The Company's principal raw materials are
aluminum scrap, primary aluminum, copper and steel. Trends in the demand for
aluminum sheet products in the United States and in the prices of aluminum
primary metal, aluminum scrap and copper commodities affect the business of the
Company. The Company's operating results also are affected by factors specific
to the Company, such as the margins between selling prices for its products and
its cost of raw material ("material margins") and its unit cost of converting
raw material into its products ("conversion cost"). While changes in aluminum
and copper prices can cause the Company's net sales to change significantly from
period to period, net income is more directly impacted by the fluctuation in
material margins.
During the first half of 2002, shipments of the Company's aluminum sheet
products increased by 15% from the first half of 2001. This is the second
consecutive quarter of higher year-over-year shipment volume following a
downturn that began in the second quarter of 2000 and extended throughout 2001.
The positive impact of this increased volume, combined with lower depreciation
and amortization charges, more than offset the impact of lower material margins
in the first six months of 2002 versus the first half of 2001 and helped to
increase profitability of the aluminum business unit for both the second quarter
and first six months of 2002 compared to the same periods in 2001. Material
margins have declined somewhat in 2002, as scrap spreads are compressed in their
discount to primary aluminum.
Demand for the Company's electrical products decreased during the first half of
2002. Shipments were down 8% compared to the first half of 2001 as business
conditions remained competitive and commercial construction activity declined.
Material margins for the first half of 2002 increased 7% from the first six
months of 2001 and increased 9% in the second quarter of 2002 from the first
quarter of 2002. The reduction in material costs per foot in the first six
months of 2002 compared to the first half of 2001 more than offset the lower net
selling prices and contributed to the material margin improvement from the first
half of 2002 versus the first half of 2001. The Company's electrical products
business unit continued to report operating profits which were increased over
the first half of 2001 principally due to a decrease in selling, general and
administrative expenses and the elimination of goodwill amortization expense in
2002.
During the second quarter of 2002, the Company completed its previously
announced transitional test of goodwill as called for under Statement of
Financial Accounting Standards No. 142, "Goodwill and Other Intangible Assets"
("SFAS No. 142"). Pursuant to this test, the Company recorded a charge of $25.3
million or $1.58 per diluted share (before and after tax), as a cumulative
effect of a change in accounting principle, to reflect the impairment of
goodwill on the balance sheet as of January 1, 2002. The Company's restated net
loss for the first quarter of 2002, giving effect to the change in accounting
principle, was $29.8 million or $1.86 per diluted share. See the caption
entitled "Cumulative effect of change in accounting principle" in the following
section and note 7 to the condensed consolidated financial statements for
additional information.
Application of Critical Accounting Policies
The Company's discussion and analysis of financial condition and results of
operation is based upon the Company's condensed consolidated financial
statements, which have been prepared in conformity with accounting principles
generally accepted in the United States of America. The preparation of financial
statements in conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates. The Company's most critical accounting policies require the use of
estimates relating to the valuation of property, plant and equipment and
goodwill, assumptions for computing pension and postretirement benefits
obligations, allowance for uncollectible accounts receivable and environmental
liabilities.
Results of Operations for the three months and six months ended June 30, 2002
and 2001
Net Sales. Net sales for the quarter ended June 30, 2002, increased 7% to $252
million (including $27.7 million from Alflex) from $236 million (including $32.1
million from Alflex) for the same period in 2001. The increase is due to an
increase in aluminum shipments which more than offset a decrease in the net
selling prices. Unit sales volume of aluminum increased 20% to 237.9 million
pounds for the second quarter of 2002 from 198.3 million pounds for the second
quarter of 2001. Alflex unit sales volume was 118.5 million feet for the second
quarter of 2002, a decrease of 14% versus 138.2 million feet for the comparable
period in 2001. Net sales for the six-month period ended June 30, 2002, were
$474 million (including $56.6 million from Alflex), a 2% increase from the $466
million recorded in the first half of 2001 (including $62.5 million from
Alflex). The increase is due to the increased shipments resulting from increased
demand for aluminum products across all of the Company's aluminum products'
markets. Unit sales volume of aluminum was 447.4 million pounds for the first
half of 2002, an increase of 15% from the 387.6 million pounds for the first
half of 2001. Alflex unit sales volume was 244.5 million feet for the first six
months of 2002, a decrease of 8%, versus 266.6 million feet for the comparable
period in 2001.
Gross Profit. Gross profit for the quarter ended June 30, 2002, increased to
$15.7 million (6.2% of net sales) from $11.3 million (4.8% of net sales) for the
same period in 2001. Gross profit for the six months ended June 30, 2002 was
$26.2 million (5.5% of net sales) versus $22.2 million (4.8% of net sales) for
the comparable period in 2001. The second quarter and six-month increases were
related entirely to the aluminum business unit and due to increased volumes and
greater manufacturing efficiencies, lower natural gas rates, lower outside
processing costs plus lower depreciation expense as a result of asset impairment
charges recorded in the fourth quarter of 2001. Relating to the six-month
increase only was $2.0 million of one-time severance costs recorded in the first
quarter of 2001. All the above factors more than offset the lower material
margins which were due to the tighter scrap spreads for the six months of 2002
versus the same period in 2001. Alflex business unit's gross profit for the
first six months of 2002 versus the first half of 2001 was down slightly as
decreased net sales revenue resulting from decreased shipments and lower selling
prices offset the improved material margins.
Operating Income. The Company had operating income of $4.7 million for the
second quarter of 2002 compared with an operating loss of $0.9 million for the
second quarter of 2001. For the six-month period ended June 30, 2002, the
Company had operating income of $4.0 million, versus an operating loss of $2.9
million for the first half of 2001. The increase in operating income was related
primarily to the Aluminum business unit which had operating income of $6.8
million and $7.9 million in the second quarter and first half of 2002,
respectively, compared to operating income of $0.8 million and $1.7 million in
the second quarter and first six months of 2001, respectively. The increases
were primarily due to the factors described in the gross profit section in the
preceding paragraph, the elimination of goodwill amortization in 2002 and a
reduction in selling, general and administrative expenses. Depreciation and
amortization was $4.1 million lower in the second quarter of 2002 versus the
second quarter of 2001 and $8.2 million lower in the first half of 2002 compared
to the first six months of 2001. Selling, general and administrative expenses
during the second quarter of 2002 were $11.0 million, compared with $11.1
million for the same period in 2001 and were $22.3 million for the six months
ended June 30, 2002, compared with $22.8 million for the same period in 2001.
The decrease is primarily due to lower depreciation as a result of asset
impairment charges recorded in the fourth quarter of 2001 on assets which the
depreciation expense is classified in selling, general and administrative
expenses.
Cumulative effect of change in accounting principle. A non-cash goodwill
impairment charge of $25.3 million was recorded as a cumulative effect of change
in accounting principle as of January 1, 2002 under SFAS No.142. See note 7 to
the condensed consolidated financial statements for additional information.
Net Income. The Company had net income of $1.1 million for the quarter ended
June 30, 2002, compared with a net loss of $4.9 million for the same period in
2001. The Company's net loss for the six months ended June 30, 2002 was $28.7
million compared with a net loss of $11.0 million for the first half of 2001.
Interest expense was $3.9 million for both the quarter ended June 30, 2002 and
2001 and $7.7 million for the six months ended June 30, 2002, compared with $8.0
million for the first half of 2001. The decrease in the six months amount was
primarily due to lower interest rates under the Company's receivables purchase
agreement combined with a reduction in amounts outstanding under the agreement.
Income tax benefit was $0.05 million in the second quarter of 2002 compared to
income tax expense of $0.2 million for the same period in 2001 and an income tax
expense of $0.1 million for the six months ended June 30, 2002, compared to
income tax expense of $0.4 million for the same period in 2001.
Liquidity and Capital Resources
The Company's sources of liquidity are cash flows from operations, the Company's
receivables purchase agreement described below and borrowings under its $30
million revolving credit facility. The Company believes these sources will be
sufficient to fund its working capital requirements, capital expenditures, debt
service and dividend payments at least through 2002.
During 1997, the Company sold all of its trade accounts receivables to a 100%
owned subsidiary, Commonwealth Financing Corp. ("CFC"). Simultaneously, CFC
entered into a three-year receivables purchase agreement with a financial
institution and its affiliate, whereby CFC sells, on a revolving basis, an
undivided interest in certain of its receivables and receives up to $150.0
million from an unrelated third party purchaser at a cost of funds linked to
commercial paper rates plus a charge for administrative and credit support
services. During 2000, the Company and the financial institution extended the
receivables purchase agreement for an additional three-year period ending in
September 2003. In addition during September 2001, the Company and the financial
institution agreed to reduce the size of the facility to $95.0 million. At June
30, 2002 and 2001, the Company had outstanding under the agreement $39.0 million
and $32.0 million, respectively, and had $85.1 million and $104.0 million,
respectively, of net residual interest in receivables sold. The fair value of
the net residual interest is measured at the time of the sale and is based on
the sale of similar assets. In the first half of 2002, the Company received
gross proceeds of $37.0 million from the sale of receivables and made gross
payments of $18.0 million under the agreement.
The Company's operations provided cash flows of $8.1 million for the six months
ended June 30, 2002 compared to using $8.6 million in the six months ended June
30, 2001. Working capital decreased to $130.5 million at June 30, 2002 from
$131.4 million at June 30, 2001.
Capital expenditures were $1.8 million during the quarter ended June 30, 2002
and $3.2 million for the six months ended June 30, 2002. At June 30, 2002, the
Company had commitments of $8.8 million for the purchase or construction of
capital assets. Total capital expenditures for the year 2002 are expected to be
approximately $18.5 million, all generally related to upgrading and expanding
the Company's manufacturing and other facilities, acquiring and enhancing
software and hardware as part of the Company's information system redesign
project and meeting environmental requirements.
The indicated annual rate of dividends being paid on the Company's Common Stock
is $0.20 per share, or an annual total of approximately $3.2 million.
The following schedules summarize the Company's contractual cash obligations and
unused availability of financing sources at June 30, 2002 (in thousands).
Payments Due By Period
------------------------------------------------------------
Contractual Cash Obligations Total Less than 1 year 1-3 years 4-5 years After 5 years
- ------------------------------------------------------------------------------------------------------------
Long-term debt $125,000 $ -- $ -- $125,000 $ --
Operating leases 14,118 3,649 4,947 1,937 3,585
Standby letters of credit 1,327 1,327 -- -- --
Outstanding obligation under
receivables purchase
agreement 39,000 39,000 -- -- --
----------------------------------------------------------------------
Total contractual cash obligations $179,445 $43,976 $4,947 $126,937 $3,585
======================================================================
Amount of Availability Per Period
Unused Availability of Total Amounts -----------------------------------------------------------
Financing Sources Available Less than 1 year 1-3 years 4-5 years Over 5 years
- ------------------------------------------------------------------------------------------------------------
Unused revolving credit
Facility $ 28,673 $ -- $28,673 $ -- $ --
Unused availability under
receivables purchase
agreement 56,000 -- 56,000 -- --
---------------------------------------------------------------------
Total available $84,673 $ -- $84,673 $ -- $ --
=====================================================================
The Company has approximately 8 1/2 years remaining on a 10-year guaranteed
supply agreement with Glencore Ltd. ("Glencore"), a leading diversified trading
and industrial company, for the purchase of primary aluminum. Under the
agreement, the Company committed to purchase a minimum of 1.2 billion pounds of
P1020/99.7% aluminum at current market prices from Glencore over the 10-year
term beginning in January 2001.
At June 30, 2002, the Company held firm-priced aluminum purchase and sales
commitments through 2003 totaling $5 million and $184 million, respectively. The
Company hedges the impact of changes in prices related to these commitments as
explained in the section entitled "Risk Management" which follows.
Risk Management
The price of aluminum is subject to fluctuations due to unpredictable factors on
the worldwide market. To reduce this market risk, the Company follows a policy
of hedging its anticipated raw material purchases based on firm-priced sales and
purchase orders by purchasing and selling futures contracts, forward contracts
and options on the London Metal Exchange ("LME"). The Company also uses forward
contracts and options to reduce its risks associated with its natural gas
requirements.
As described in note 6 to the condensed consolidated financial statements, the
Company adopted Statement of Financial Accounting Standards No. 133, "Accounting
for Derivative Instruments and Hedging Activities" ("SFAS No. 133") effective
January 1, 2001 and has designated virtually all of its aluminum and natural gas
futures contracts and forward contracts as cash flow hedges.
Gains and losses on these instruments that are deferred in other comprehensive
income are reclassified into net income as cost of goods sold in the periods
when the hedged transactions occur. As of June 30, 2002, approximately $2.9
million of the $3.0 million of deferred net losses are expected to be
reclassified from other comprehensive income into net income as cost of goods
sold over the next twelve months. A net loss of $0.04 million and $0.11 million
was recognized in cost of goods sold during the three months and six months
ended June 30, 2002, respectively, and a net gain of $0.4 million and a net loss
of $0.03 million was recognized in cost of goods sold during the three months
and six months ended June 30, 2001, respectively, representing the amount of the
hedges' ineffectiveness. As of June 30, 2002, the Company held open aluminum and
natural gas futures and forward contracts having maturity dates extending
through December 2003.
Before entering into futures contracts, forward contracts and options, the
Company reviews the credit rating of the counterparty and assesses any possible
credit risk. While the Company is exposed to certain losses in the event of
non-performance by the counterparties to these agreements, the Company does not
anticipate non-performance by such counterparties.
In order to hedge a portion of its interest rate risk, the Company was a party
to an interest rate swap agreement with a notional amount of $5 million under
which the Company paid a fixed rate of interest and received a LIBOR-based
floating rate. The interest rate swap agreement expired during September 2001
and as of June 30, 2002 the Company had no interest rate swap agreements in
effect. The Company's interest rate swap agreement which expired during
September 2001 did not qualify for hedge accounting under SFAS 133 and as such
the change in the fair value of the interest rate swap agreement had been
recognized currently as interest expense, net in the Company's consolidated
statement of operations. The amount of such change in the fair value of the
interest rate swap agreement was immaterial for the three months and six months
ended June 30, 2001.
Recently Issued Accounting Pronouncements
In June 2001, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 143, "Accounting for Asset Retirement
Obligations" ("SFAS No. 143"). The Statement addresses financial and reporting
for obligations associated with the retirement of tangible long-lived assets and
the associated asset retirement costs. SFAS 143 is effective for financial
statements issued for fiscal years beginning after June 15, 2002. Management
does not expect the adoption of this Statement to have a material impact on the
Company's results of operations or financial position.
In October 2001, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets" ("SFAS No. 144"). The Statement addresses
financial accounting and reporting for the impairment or disposal of long-lived
assets. This Statement supersedes SFAS No. 121, and the accounting and reporting
provisions of Accounting Principles Board Opinion No. 30, "Reporting the Results
of Operations - Reporting the Effects of Disposal of a Segment of a Business,
and Extraordinary, Unusual and Infrequently Occurring Events and Transactions",
for the disposal of a "segment of a business" (as previously defined in that
Opinion). This Statement also amends Accounting Research Bulletin No. 51,
"Consolidated Financial Statements", to eliminate the exception to consolidation
for a subsidiary for which control is likely to be temporary. The objectives of
SFAS No. 144 are to address significant issues relating to the implementation of
SFAS No. 121 and to develop a single accounting model, based on the framework
established in SFAS No. 121, for long-lived assets to be disposed of by sale,
whether previously held and used or newly acquired. The Company adopted SFAS No.
144 in the first quarter of 2002, as required. The Statement's initial adoption
did not have a material impact on the Company's results of operations or
financial position.
PART II
OTHER INFORMATION
Item 1. Legal Proceedings
The Company is a party to non-environmental legal proceedings and administrative
actions all of which are of an ordinary routine nature incidental to the
operations of the Company. Although it is impossible to predict the outcome of
any legal proceeding, in the opinion of management such proceedings and actions
should not, individually or in aggregate, have a material adverse effect on the
Company's financial condition, results of operations or cash flows, although
resolution in any year or quarter could be material to the results of operation
for that period.
Item 4. Submission of Matters to a Vote of Security Holders
At the Company's Annual Meeting of Stockholders (the "Meeting"), held April 26,
2002, the following matters were submitted for a vote by the security holders:
C. Frederick Fetterolf, Mark V. Kaminski and Steven J. Demetriou were
elected directors for terms expiring in 2005. There were 15,467,155,
15,392,447 and 15,454,555, respectively, votes cast for and 99,535,
174,243 and 112,135, respectively, abstentions. The terms of office
of Catherine G. Burke, Larry E. Kittelberger, Paul E. Lego and
John E. Merow continued after the meeting.
Ratification of the selection of PricewaterhouseCoopers LLP as the
Company's independent auditors for 2002. There were 15,509,763 votes
for and 33,462 votes against and 23,465 abstentions.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
10.1 Fourth Amendment, dated as of April 12, 2002, to Receivables
Purchase Agreement among Commonwealth Financing Corp.,
the Company, Market Street Funding Corporation and PNC Bank,
National Association, dated as of September 29, 1997.
10.2 Form of Severance Agreements between the Company and
Michael J. Boyle, Henry Del Castillo, Gregory P. Givan,
Katherine R.Gould, Patrick D. King, Lenna Ruth Macdonald and
William R. Witherspoon.
10.3 Cash Balance Plan (defined benefit pension plan covering all
non-bargaining unit employees of the Company).
10.4 401(k) Plan (defined contribution plan covering all
non-bargaining unit employees of the Company).
(b) Reports on Form 8-K
There were no reports on Form 8-K filed during the quarter ended June 30, 2002.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
COMMONWEALTH INDUSTRIES, INC.
By: /s/ Donald L. Marsh, Jr.
------------------------
Donald L. Marsh, Jr.
Executive Vice President and
Chief Financial Officer
Date: August 12, 2002
Exhibit Index
-------------
Exhibit
Number Description
- ------- ----------------------------------------------------------------
10.1 Fourth Amendment, dated as of April 12, 2002, to Receivables
Purchase Agreement among Commonwealth Financing Corp., the
Company, Market Street Funding Corporation and PNC Bank,
National Association, dated as of September 29, 1997.
10.2 Form of Severance Agreements between the Company and
Michael J. Boyle, Henry Del Castillo, Gregory P. Givan,
Katherine R. Gould, Patrick D. King, Lenna Ruth Macdonald and
William R. Witherspoon.
10.3 Cash Balance Plan (defined benefit pension plan covering all
non-bargaining unit employees of the Company).
10.4 401(k) Plan (defined contribution plan covering all non-bargaining
unit employees of the Company).
Exhibit 10.1
------------
FOURTH AMENDMENT
TO
RECEIVABLES PURCHASE AGREEMENT
THIS FOURTH AMENDMENT TO RECEIVABLES PURCHASE AGREEMENT, dated as of April 12,
2002 (this "Amendment"), is entered into among COMMONWEALTH FINANCING CORP., a
Delaware corporation (the "Seller"), COMMONWEALTH INDUSTRIES, INC., a Delaware
corporation ("Commonwealth"), MARKET STREET FUNDING CORPORATION, a Delaware
corporation (the "Issuer"), and PNC BANK, NATIONAL ASSOCIATION, as Administrator
(the "Administrator").
RECITALS
1. The Seller, Commonwealth, the Issuer and the Administrator are parties to the
Receivables Purchase Agreement, dated as of September 29, 1997 (as amended
through the date hereof, the "Agreement"); and
2. The parties hereto desire to amend the Agreement as hereinafter set forth.
NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties agree as follows:
1. Certain Defined Terms. Capitalized terms that are used herein without
definition and that are defined in Exhibit I to the
Agreement shall have the same meanings herein as therein defined.
2. Amendments to Agreement.
-----------------------
2.1 Clause (a) of the definition of "Dilution Reserve Factor" set forth
in Exhibit I of the Agreement is hereby amended by replacing the number
"2" with the number "2.25" therein.
2.2 Clause (a) of the definition of "Dilution Reserve Percentage" set
forth in Exhibit I of the Agreement is hereby amended by replacing the
percentage "7%" with the percentage "9%" therein.
2.3 Clause (a) of the definition of "Loss Reserve Percentage" set forth
in Exhibit I of the Agreement is hereby amended by replacing the number
"5%" with the number "8.5%" therein.
2.4 Clause (b) of the definition of "Loss Reserve Percentage" set forth
in Exhibit I of the Agreement is hereby amended by replacing the number
"2" with the number "2.25" therein.
3. Effect of Amendment. All provisions of the Agreement, as expressly
amended and
modified by this Amendment, shall remain in full force and effect and are hereby
ratified and confirmed in all respects. After this Amendment becomes effective,
all references in the Agreement (or in any other Transaction Document) to "this
Agreement", "hereof", "herein" or words of similar effect referring to the
Agreement shall be deemed to be references to the Agreement as amended by this
Amendment. This Amendment shall not be deemed, either expressly or impliedly, to
waive, amend or supplement any provision of the Agreement other than as set
forth herein.
4. Effectiveness. This Amendment shall become effective as of the date hereof
upon receipt by the Administrator of counterparts of this Amendment (whether by
facsimile or otherwise) executed by each of the other parties hereto, in form
and substance satisfactory to the Administrator in its sole discretion.
5. Counterparts. This Amendment may be executed in any number of
counterparts and by different parties on separate counterparts, each
of which when so executed shall be deemed to be an original and all of
which when taken together shall constitute but one and the same instrument.
6. Governing Law. This Amendment shall be governed by, and construed in
accordance with, the internal laws of the State of New York (without regard to
any otherwise applicable principles of conflicts of law), except to the extent
that the validity or perfection of the interests of the Issuer in the
Receivables or remedies hereunder in respect thereof are governed by the laws of
a jurisdiction other than the State of New York.
7. Section Headings. The various headings of this Amendment are included
for convenience only and shall not affect the meaning or
interpretation of this Amendment, the Agreement or any provision hereof or
thereof.
(continued on following page)
Fourth Amendment
to Receivables Purchase Agreement
12932805.3 97396451
IN WITNESS WHEREOF, the parties have executed this Amendment as of the date
firstwritten above.
COMMONWEALTH FINANCING CORP.
By: ___________________________________
Name: ________________________________
Title: _________________________________
COMMONWEALTH INDUSTRIES, INC.
By: ___________________________________
Name: ________________________________
Title: _________________________________
MARKET STREET FUNDING CORPORATION,
as Issuer
By: ___________________________________
Name: ________________________________
Title: _________________________________
PNC BANK, NATIONAL ASSOCIATION,
as Administrator
By: ___________________________________
Name: ________________________________
Title: _________________________________
Exhibit 10.2
------------
SEVERANCE AGREEMENT
THIS AGREEMENT is entered into as of the ____ day of [May],
2002 by and between Commonwealth Industries, Inc., a Delaware corporation (the
"Company"), and _____________________ ("Executive").
W I T N E S S E T H
WHEREAS, Executive currently serves as a key employee of the
Company and his services and knowledge are valuable to the Company in connection
with the management of one or more of the Company's principal operating
facilities, divisions, departments or Subsidiaries (as defined in Section 1);
and
WHEREAS, the Board (as defined in Section 1) has determined
that it is in the best interests of the Company and its stockholders to secure
Executive's continued services and to ensure Executive's continued and undivided
dedication in the event of any threat or occurrence of, or negotiation or other
action that could lead to, or create the possibility of, a Change in Control (as
defined in Section 1) of the Company, the Board has authorized the Company to
enter into this Agreement.
NOW, THEREFORE, for and in consideration of the premises and
the mutual covenants and agreements herein contained, the Company and Executive
hereby agree as follows:
1. Definitions. As used in this Agreement, the following terms shall have
the respective meanings set forth below:
-----------
(a) "Board" means the Board of Directors of the Company.
(b) "Cause" means (1) a material breach by Executive of the duties and
responsibilities of Executive (other than
as a result of incapacity due to physical or mental illness) which is (x)
demonstrably willful and deliberate on Executive's part, (y) committed in bad
faith or without reasonable belief that such breach is in the best interests of
the Company and (z) not remedied in a reasonable period of time after receipt of
written notice from the Company specifying such breach or (2) the Executive's
conviction of, or plea of nolo contendere to, a felony involving moral
turpitude. Cause shall not exist unless and until the Company has delivered to
Executive a copy of a resolution duly adopted by three-quarters (3/4) of the
entire Board at a meeting of the Board called and held for such purpose (after
reasonable notice to Executive and an opportunity for Executive, together with
counsel, to be heard before the Board), finding that in the good faith opinion
of the Board an event set forth in clauses (1) or (2) has occurred and
specifying the particulars thereof in detail. The Company must notify Executive
of any event constituting Cause within ninety(90) days following the Company's
knowledge of its existence or such event shall not constitute Cause under this
Agreement.
(c) "Change in Control" means the occurrence of any one of the following
events:
(i) any "person" (as such term is defined in Section 3(a)(9)
of the Securities Exchange Act of 1934 (the "Exchange Act") and as used
in Sections 13(d)(3) and 14(d)(2) of the Exchange Act) is or becomes a
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of the Company representing 20%
or more of the combined voting power of the Company's then outstanding
securities eligible to vote for the election of the Board (the "Company
Voting Securities"); provided, however, that the event described in
this paragraph (i) shall not be deemed to be a Change in Control by
virtue of any of the following acquisitions: (A) by the Company or any
Subsidiary, (B) by any employee benefit plan sponsored or maintained by
the Company or any Subsidiary, (C) by any underwriter temporarily
holding securities pursuant to an offering of such securities, (D)
pursuant to a Non-Control Transaction (as defined in paragraph (iii)),
(E) pursuant to any acquisition by Executive or any group of persons
including Executive; or (F) a transaction (other than one described in
(iii) below) in which Company Voting Securities are acquired from the
Company, if a majority of the Incumbent Board (as defined below)
approves a resolution providing expressly that the acquisition pursuant
to this clause (F) does not constitute a Change in Control under this
paragraph (i);
(ii) individuals who, on January 25, 1996, constitute the
Board (the "Incumbent Board") cease for any reason to constitute at
least a majority thereof, provided that any person becoming a director
subsequent to January 25, 1996, whose election or nomination for
election was approved by a vote of at least two-thirds of the directors
comprising the Incumbent Board (either by a specific vote or by
approval of the proxy statement of the Company in which such person is
named as a nominee for director, without objection to such nomination)
shall be considered a member of the Incumbent Board; provided, however,
that no individual initially elected or nominated as a director of the
Company as a result of an actual or threatened election contest with
respect to directors or any other actual or threatened solicitation of
proxies or consents by or on behalf of any person other than the Board
of Directors shall be deemed to be a member of the Incumbent Board;
(iii) the consummation of a merger, consolidation, share
exchange or similar form of corporate reorganization of the Company or
any such type of transaction involving the Company or any of its
Subsidiaries that requires the approval of the Company's stockholders
(whether for such transaction or the issuance of securities in the
transaction or otherwise), or the consummation of the direct or
indirect sale or other disposition of all or substantially all of the
assets, of the Company and its Subsidiaries (a "Business Combination"),
unless immediately following such Business Combination: (A) more than
60% of the total voting power of the publicly traded corporation
resulting from such Business Combination (including, without
limitation, any corporation which directly or indirectly has beneficial
ownership of 100% of the Company Voting Securities or all or
substantially all of the assets of the Company and its Subsidiaries)
eligible to elect directors of such corporation is represented by
shares that were Company Voting Securities immediately prior to such
Business Combination (either by remaining outstanding or being
converted), and such voting power is in substantially the same
proportion as the voting power of such Company Voting Securities
immediately prior to the Business Combination, (B) no person (other
than any publicly traded holding company resulting from such Business
Combination, any employee benefit plan sponsored or maintained by the
Company (or the corporation resulting from such Business Combination),
or any person which beneficially owned, immediately prior to such
Business Combination, directly or indirectly, 20% or more of the
Company Voting Securities (a "Company 20% Stockholder")) becomes the
beneficial owner, directly or indirectly, of 20% or more of the total
voting power of the outstanding voting securities eligible to elect
directors of the corporation resulting from such Business Combination
and no Company 20% Stockholder increases its percentage of such total
voting power, and (C) at least a majority of the members of the board
of directors of the corporation resulting from such Business
Combination were members of the Incumbent Board at the time of the
Board's approval of the execution of the initial agreement providing
for such Business Combination (a "Non-Control Transaction"); or
(iv) the stockholders of the Company approve a plan of complete liquidation
or dissolution of the Company. Notwithstanding the foregoing, a Change in
Control of the Company shall not be deemed to occur solely because any person
acquires beneficial ownership of more than 20% of the Company Voting
Securities as a result of the acquisition of Company Voting Securities by the
Company which, by reducing the number of Company Voting Securities outstanding,
increases the percentage of shares beneficially owned by such person; provided,
that if a Change in Control of the Company would occur as a result of such an
acquisition by the Company (if not for the operation of this sentence), and
after the Company's acquisition such person becomes the beneficial owner of
additional Company Voting Securities that increases the percentage of
outstanding Company Voting Securities beneficially owned by such person, then a
Change in Control of the Company shall occur.
Notwithstanding anything in this Agreement to the contrary, if
Executive's employment is terminated prior to a Change in Control, and Executive
reasonably demonstrates that such termination was at the request of a third
party who has indicated an intention or taken steps reasonably calculated to
effect a Change in Control (a "Third Party") and who effectuates a Change in
Control, then for all purposes of this Agreement, the date of a Change in
Control shall mean the date immediately prior to the date of such termination of
employment.
(d) "Date of Termination" means (1) the effective date on
which Executive's employment by the Company terminates as specified in a prior
written notice by the Company or Executive, as the case may be, to the other,
delivered pursuant to Section 10 or (2) if Executive's employment by the Company
terminates by reason of death, the date of death of Executive.
(e) "Good Reason" means, without Executive's express written
consent, the occurrence of any of the following events after a Change in
Control:
(1) (i) the assignment to Executive of any duties or
responsibilities inconsistent in any adverse respect with Executive's
position(s), duties, responsibilities or status with the Company immediately
prior to such Change in Control (including any dimunition of such duties or
responsibilities) or (ii) an adverse change in Executive's reporting
responsibilities, titles or offices with the Company as in effect immediately
prior to such Change in Control;
(2) a reduction by the Company in Executive's rate of annual
base salary or annual target bonus opportunity (including any adverse change in
the formula for such annual bonus target) as in effect immediately prior to such
Change in Control or as the same may be increased from time to time thereafter;
(3) any requirement of the Company that Executive (i) be based
anywhere more than fifty (50) miles from the facility where Executive is located
at the time of the Change in Control or (ii) travel on Company business to an
extent substantially greater than the travel obligations of Executive
immediately prior to such Change in Control;
(4) the failure of the Company to (i) continue in effect any
employee benefit plan or compensation plan in which Executive is participating
immediately prior to such Change in Control, unless Executive is permitted to
participate in other plans providing Executive with substantially comparable
benefits, or the taking of any action by the Company which would adversely
affect Executive's participation in or reduce Executive's benefits under any
such plan, (ii) provide Executive and Executive's dependents with welfare
benefits in accordance with the most favorable plans, practices, programs and
policies of the Company and its affiliated companies in effect for Executive and
Executive's dependents immediately prior to such Change in Control or provide
substantially comparable benefits at a substantially comparable cost to
Executive, (iii) provide fringe benefits in accordance with the most favorable
plans, practices, programs and policies of the Company and its affiliated
companies in effect for Executive immediately prior to such Change in Control,
or provide substantially comparable fringe benefits, or (iv) provide Executive
with paid vacation in accordance with the most favorable plans, policies,
programs and practices of the Company and its affiliated companies as in effect
for Executive immediately prior to such Change in Control;
(5) the failure of the Company to obtain the assumption agreement from any
successor as contemplated in Section 9(b); or
(6) termination by Executive for any reason during the "Window Period" (as
defined below).
Any event described in this Section 1(e)(1) through (4) which
occurs prior to a Change in Control, but was at the request of a Third Party who
effectuates a Change in Control, shall constitute Good Reason following a Change
in Control for purposes of this Agreement (treating the date of such event as
the date of the Change in Control) notwithstanding that it occurred prior to the
Change in Control. For purposes of this Agreement, any good faith determination
of Good Reason made by Executive shall be conclusive; provided, however, that an
isolated, insubstantial and inadvertent action taken in good faith and which is
remedied by the Company promptly after receipt of notice thereof given by
Executive shall not constitute Good Reason. Executive must provide notice of
termination of employment within ninety (90) days of Executive's knowledge of an
event constituting Good Reason or such event shall not constitute Good Reason
under this Agreement.
(f) "Nonqualifying Termination" means a termination of
Executive's employment (1) by the Company for Cause, (2) by Executive for any
reason other than Good Reason, (3) as a result of Executive's death, (4) by the
Company due to Executive's absence from Executive's duties with the Company on a
full-time basis for at least one hundred eighty (180) consecutive days as a
result of Executive's incapacity due to physical or mental illness or (5) as a
result of Executive's retirement (not including any early retirement) in
accordance with the Company's retirement policy generally applicable to its
salaried employees, as in effect immediately prior to the Change in Control, or
in accordance with any retirement arrangement established with respect to
Executive with Executive's written consent.
(g) "Subsidiary" means any corporation or other entity in
which the Company has a direct or indirect ownership interest of 50% or more of
the total combined voting power of the then outstanding securities of such
corporation or other entity entitled to vote generally in the election of
directors or in which the Company has the right to receive 50% or more of the
distribution of profits or 50% of the assets or liquidation or dissolution.
(h) "Termination Period" means the period of time beginning
with a Change in Control and ending two (2) years following such Change in
Control.
(i) "Window Period" means the 30-day period commencing one (1) year after
the date of a Change in Control.
2. Obligations of Executive. Executive agrees that if a Change in Control
shall occur, Executive shall not voluntarily leave the employ of the
Company without Good Reason until ninety (90) days following such Change in
Control.
3. Payments Upon Termination of Employment.
---------------------------------------
(a) If during the Termination Period the employment of Executive shall
terminate, other than by reason of a
Nonqualifying Termination, then the Company shall pay to Executive (or
Executive's beneficiary or estate) within thirty (30) days following the Date of
Termination, as compensation for services rendered to the Company:
(1) a lump-sum cash amount equal to the sum of (i) Executive's
base salary through the Date of Termination, to the extent not theretofore paid,
(ii) a pro rata portion of Executive's annual bonus in an amount at least equal
to (A) the greater of (i) Executive's target bonus for the fiscal year in which
the Change in Control occurs and (ii) Executive's target bonus for the fiscal
year in which Executive's Date of Termination occurs, multiplied by (B) a
fraction, the numerator of which is the number of days in the fiscal year in
which the Date of Termination occurs through the Date of Termination and the
denominator of which is three hundred sixty-five (365), and (iii) any
compensation previously deferred by Executive other than pursuant to a
tax-qualified plan (together with any interest and earnings thereon) and any
accrued vacation pay, in each case to the extent not theretofore paid. For
purposes of the foregoing, annual bonus and target bonus amounts shall not
include any payments received by the Executive under the Company's 1999
Executive Stock Purchase Incentive Program ("LEPP").
(2) a lump-sum cash amount equal to (i) one (1) times
Executive's highest annual rate of base salary during the 12-month period prior
to the Date of Termination, plus (ii) one (1) times the greatest of (A) the
highest bonus earned by Executive in respect of the three (3) fiscal years of
the Company immediately preceding the fiscal year in which the Change in Control
occurs or (B) Executive's target bonus for the fiscal year in which the Change
in Control occurs or (C) Executive's target bonus for the fiscal year in which
Executive's Date of Termination occurs. For purposes of the foregoing, annual
bonus and target bonus amounts shall not include any payments received by the
Executive under the LEPP. Any amount paid pursuant to this Section 3(a)(2) shall
reduce any other amount of severance relating to salary or bonus continuation to
be received by Executive upon termination of employment of Executive under any
severance plan or policy or employment agreement of the Company.
(b) If during the Termination Period the employment of
Executive shall terminate, other than by reason of a Nonqualifying Termination,
the Company shall continue to provide, for a period of one (1) year following
the Date of Termination, Executive (and Executive's dependents if applicable)
with the same level of medical, dental, accident, disability and life insurance
benefits upon substantially the same terms and conditions (including cost of
coverage to Executive) as existed immediately prior to Executive's Date of
Termination (or, if more favorable to Executive, as such benefits and terms and
conditions existed immediately prior to the Change in Control); provided, that,
if Executive cannot continue to participate in the Company plans providing such
benefits, the Company shall otherwise provide such benefits on the same
after-tax basis as if continued participation had been permitted.
Notwithstanding the foregoing, in the event Executive becomes reemployed with
another employer and becomes eligible to receive welfare benefits from such
employer, the welfare benefits described herein shall be secondary to such
benefits during the period of Executive's eligibility, but only to the extent
that the Company reimburses Executive for any increased cost and provides any
additional benefits necessary to give Executive the benefits provided hereunder.
(c) If during the Termination Period the employment of
Executive shall terminate by reason of a Nonqualifying Termination, then the
Company shall pay to Executive within thirty (30) days following the Date of
Termination, a cash amount equal to the sum of (1) Executive's base salary
through the Date of Termination, to the extent not theretofore paid, and (2) any
compensation previously deferred by Executive other than pursuant to a
tax-qualified plan (together with any interest and earnings thereon) and any
accrued vacation pay, in each case to the extent not theretofore paid. The
Company may make such additional payments, and provide such additional benefits,
to Executive as the Company and Executive may agree in writing.
4. Certain Additional Payments by the Company.
------------------------------------------
(a) Anything in this Agreement to the contrary
notwithstanding, in the event it shall be determined that any payment or
distribution by the Company or its affiliated companies to or for the benefit of
Executive (whether paid or payable or distributed or distributable pursuant to
the terms of this Agreement or otherwise, but determined without regard to any
additional payments required under this Section 4) (a "Payment") would be
subject to the excise tax imposed by Section 4999 of the Internal Revenue Code
of 1986, as amended (the "Code"), or any interest or penalties are incurred by
Executive with respect to such excise tax (such excise tax, together with any
such interest and penalties, are hereinafter collectively referred to as the
"Excise Tax"), then Executive shall be entitled to receive an additional payment
(a "Gross-Up Payment") in an amount such that after payment by Executive of all
taxes (including any interest or penalties imposed with respect to such taxes)
including, without limitation, any income and employment taxes (and any interest
and penalties imposed with respect thereto) and Excise Tax, imposed upon the
Gross-Up Payment, Executive retains an amount of the Gross-Up Payment equal to
the Excise Tax imposed upon the Payments. For purposes of determining the amount
of the Gross-up Payment, the Executive shall be deemed to pay federal income
taxes at the highest marginal rates of federal income taxation for the calendar
year in which the Gross-up Payment is to be made and applicable state and local
income taxes at the highest marginal rate of taxation for the calendar year in
which the Gross-up Payment is to be made, net of the maximum reduction in
federal income taxes which could be obtained from deduction of such state and
local taxes.
(b) Subject to the provisions of Section 4(a), all
determinations required to be made under this Section 4, including whether and
when a Gross-Up Payment is required and the amount of such Gross-Up Payment and
the assumptions to be utilized in arriving at such determination, shall be made
by the public accounting firm that is retained by the Company as of the date
immediately prior to the Change in Control (the "Accounting Firm") which shall
provide detailed supporting calculations both to the Company and Executive
within fifteen (15) business days of the receipt of notice from the Company or
the Executive that there has been a Payment, or such earlier time as is
requested by the Company (collectively, the "Determination"). In the event that
the Accounting Firm is serving as accountant or auditor for the individual,
entity or group effecting the Change in Control, Executive may appoint another
nationally recognized public accounting firm to make the determinations required
hereunder (which accounting firm shall then be referred to as the Accounting
Firm hereunder). All fees and expenses of the Accounting Firm shall be borne
solely by the Company and the Company shall enter into any agreement requested
by the Accounting Firm in connection with the performance of the services
hereunder. The Gross-up Payment under this Section 4 with respect to any
Payments shall be made no later than thirty (30) days following such Payment. If
the Accounting Firm determines that no Excise Tax is payable by Executive, it
shall furnish Executive with a written opinion to such effect, and to the effect
that failure to report the Excise Tax, if any, on Executive's applicable federal
income tax return will not result in the imposition of a negligence or similar
penalty. The Determination by the Accounting Firm shall be binding upon the
Company and Executive. As a result of the uncertainty in the application of
Section 4999 of the Code at the time of the Determination, it is possible that
Gross-Up Payments which will not have been made by the Company should have been
made ("Underpayment") or Gross-up Payments are made by the Company which should
not have been made ("Overpayment"), consistent with the calculations required to
be made hereunder. In the event that the Executive thereafter is required to
make payment of any additional Excise Tax, the Accounting Firm shall determine
the amount of the Underpayment that has occurred and any such Underpayment
(together with interest at the rate provided in Section 1274(b)(2)(B) of the
Code) shall be promptly paid by the Company to or for the benefit of Executive.
In the event the amount of the Gross-up Payment exceeds the amount necessary to
reimburse the Executive for his Excise Tax, the Accounting Firm shall determine
the amount of the Overpayment that has been made and any such Overpayment
(together with interest at the rate provided in Section 1274(b)(2) of the Code)
shall be promptly paid by Executive to or for the benefit of the Company.
Executive shall cooperate, to the extent his expenses are reimbursed by the
Company, with any reasonable requests by the Company in connection with any
contests or disputes with the Internal Revenue Service in connection with the
Excise Tax.
5. Withholding Taxes. The Company may withhold from all payments due to
Executive (or his beneficiary or estate) hereunder all taxes which, by
applicable federal, state, local or other law, the Company is required to
withhold therefrom.
6. Reimbursement of Expenses. If any contest or dispute shall
arise under this Agreement involving termination of Executive's employment with
the Company or involving the failure or refusal of the Company to perform fully
in accordance with the terms hereof, the Company shall reimburse Executive, on a
current basis, for all legal fees and expenses, if any, incurred by Executive in
connection with such contest or dispute (regardless of the result thereof),
together with interest in an amount equal to the prime rate of Citibank N.A.
from time to time in effect, but in no event higher than the maximum legal rate
permissible under applicable law, such interest to accrue from the date the
Company receives Executive's statement for such fees and expenses through the
date of payment thereof.
7. Termination of Agreement. This Agreement shall be effective
on the date hereof and shall terminate upon one year after the date of any
written notification from the Company to Executive terminating this Agreement;
provided, however, that this Agreement shall continue in effect following any
Change in Control which occurs prior to such termination with respect to all
rights and obligations accruing as a result of such Change in Control.
8. Scope of Agreement. Nothing in this Agreement shall be
deemed to entitle Executive to continued employment with the Company or its
Subsidiaries, and if Executive's employment with the Company shall terminate
prior to a Change in Control or following the end of the Termination Period,
Executive shall have no further rights under this Agreement.
9. Successors; Binding Agreement.
-----------------------------
(a) This Agreement shall not be terminated by any Business
Combination. In the event of any Business Combination, the provisions of this
Agreement shall be binding upon the surviving or resulting corporation or the
person or entity to which such assets are transferred.
(b) The Company agrees that concurrently with any Business
Combination that does not constitute a Non-Control Transaction, it will cause
any successor or transferee unconditionally to assume, by written instrument
delivered to Executive (or his beneficiary or estate), all of the obligations of
the Company hereunder. Failure of the Company to obtain such assumption prior to
the effectiveness of any such Business Combination, shall be a breach of this
Agreement and shall constitute Good Reason hereunder and shall entitle Executive
to compensation and other benefits from the Company in the same amount and on
the same terms as Executive would be entitled hereunder if Executive's
employment were terminated following a Change in Control other than by reason of
a Nonqualifying Termination. For purposes of implementing the foregoing, the
date on which any such Business Combination becomes effective shall be deemed
the date Good Reason occurs, and shall be the Date of Termination if requested
by Executive.
(c) This Agreement shall inure to the benefit of and be
enforceable by Executive's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If
Executive shall die while any amounts would be payable to Executive hereunder
had Executive continued to live, all such amounts, unless otherwise provided
herein, shall be paid in accordance with the terms of this Agreement to such
person or persons appointed in writing by Executive to receive such amounts or,
if no person is so appointed, to Executive's estate.
10. Notice. (a) For purposes of this Agreement, all notices
and other communications required or permitted hereunder shall be in writing and
shall be deemed to have been duly given when delivered or five (5) days after
deposit in the United States mail, certified and return receipt requested,
postage prepaid, addressed as follows:
If to the Executive:
===================
-------------------
If to the Company:
Commonwealth Industries, Inc.
PNC Building, 19th Floor
500 West Jefferson Street
Louisville, KY 40202
Att: Corporate Secretary
or to such other address as either party may have furnished to the other in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.
(b) A written notice of Executive's Date of Termination by the
Company or Executive, as the case may be, to the other, shall (i) indicate the
specific termination provision in this Agreement relied upon, (ii) to the extent
applicable, set forth in reasonable detail the facts and circumstances claimed
to provide a basis for termination of Executive's employment under the provision
so indicated and (iii) specify the termination date (which date shall be not
less than fifteen (15) nor more than sixty (60) days after the giving of such
notice). The failure by Executive or the Company to set forth in such notice any
fact or circumstance which contributes to a showing of Good Reason or Cause
shall not waive any right of Executive or the Company hereunder or preclude
Executive or the Company from asserting such fact or circumstance in enforcing
Executive's or the Company's rights hereunder.
11. Full Settlement; Resolution of Disputes. The Company's
obligation to make any payments provided for in this Agreement and otherwise to
perform its obligations hereunder shall not be affected by any set-off,
counterclaim, recoupment, defense or other claim, right or action which the
Company may have against Executive or others. In no event shall Executive be
obligated to seek other employment or take other action by way of mitigation of
the amounts payable to Executive under any of the provisions of this Agreement
and, except as provided in Section 3(b)(3), such amounts shall not be reduced
whether or not Executive obtains other employment.
12. Employment with Subsidiaries. Employment with the Company for purposes
of this Agreement shall include employment with any Subsidiary.
13. GOVERNING LAW; VALIDITY. THE INTERPRETATION, CONSTRUCTION
AND PERFORMANCE OF THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF DELAWARE WITHOUT
REGARD TO THE PRINCIPLE OF CONFLICTS OF LAWS. THE INVALIDITY OR UNENFORCEABILITY
OF ANY PROVISION OF THIS AGREEMENT SHALL NOT AFFECT THE VALIDITY OR
ENFORCEABILITY OF ANY OTHER PROVISION OF THIS AGREEMENT, WHICH OTHER PROVISIONS
SHALL REMAIN IN FULL FORCE AND EFFECT.
14. Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed to be an original and all of which together shall
constitute one and the same instrument.
15. Miscellaneous. No provision of this Agreement may be
modified or waived unless such modification or waiver is agreed to in writing
and signed by Executive and by a duly authorized officer of the Company. No
waiver by either party hereto at any time of any breach by the other party
hereto of, or compliance with, any condition or provision of this Agreement to
be performed by such other party shall be deemed a waiver of similar or
dissimilar provisions or conditions at the same or at any prior or subsequent
time. Failure by Executive or the Company to insist upon strict compliance with
any provision of this Agreement or to assert any right Executive or the Company
may have hereunder, including without limitation, the right of Executive to
terminate employment for Good Reason, shall not be deemed to be a waiver of such
provision or right or any other provision or right of this Agreement. Except as
otherwise specifically provided herein, the rights of, and benefits payable to,
Executive, his estate or his beneficiaries pursuant to this Agreement are in
addition to any rights of, or benefits payable to, Executive, his estate or his
beneficiaries under any other employee benefit plan or compensation program of
the Company.
IN WITNESS WHEREOF, the Company has caused this Agreement to
be executed by a duly authorized officer of the Company and Executive has
executed this Agreement as of the day and year first above written.
COMMONWEALTH INDUSTRIES, INC.
BY: ___________________________
Mark V. Kaminski
President & CEO
-------------------------------
[EXECUTIVE]
Exhibit 10.3
------------
COMMONWEALTH INDUSTRIES, INC.
CASH BALANCE PLAN
Amended and Restated
Effective January 1, 1997
TABLE OF CONTENTS
Section Page
- vi -
ARTICLE 1
PURPOSE AND APPLICABILITY OF PLAN
1.1 Purpose of Plan....................................... 1
1.2 Applicability of Plan................................. 1
ARTICLE 2
DEFINITIONS
2.1 Accounts............................................ 2
2.2 Account Balance..................................... 2
2.3 Accrued Benefit..................................... 3
2.4 Actuarial Equivalent................................ 3
2.5 Actuary............................................. 4
2.6 Anniversary Date.................................... 4
2.7 Annuity Starting Date............................... 4
2.8 Beneficiary......................................... 4
2.9 Benefits Committee or Committee..................... 4
2.10 Board of Directors................................... 4
2.11 Break in Service..................................... 5
2.12 Code ............................................. 5
2.13 Company ............................................. 5
2.14 Compensation......................................... 5
2.15 Covered Compensation................................. 6
2.16 Credited Service..................................... 6
2.17 Direct Rollover...................................... 6
2.18 Disability or Disabled............................... 6
2.19 Distributee.......................................... 7
2.20 Distribution Calendar Year........................... 7
2.21 Earliest Retirement Age.............................. 7
2.22 Early Retirement Benefit............................. 7
2.23 Early Retirement Date................................ 7
2.24 Effective Date....................................... 7
2.25 Election Period...................................... 7
2.26 Eligible Retirement Plan............................. 8
2.27 Eligible Rollover Distribution....................... 8
2.28 Employee............................................. 8
2.29 Entry Date........................................... 9
2.30 ERISA ............................................. 9
2.31 Final Average Compensation........................... 9
2.32 5% Owner............................................. 9
2.33 Forfeiture........................................... 9
2.34 Highly Compensated Employee.......................... 9
2.35 Hour of Service...................................... 10
2.36 Joinder Agreement.................................... 11
2.37 Leased Employee...................................... 11
2.38 Late Retirement Date................................. 12
2.39 Normal Form.......................................... 12
2.40 Normal Retirement Age................................ 12
2.41 Normal Retirement Benefit............................ 12
2.42 1% Owner............................................. 12
2.43 Normal Retirement Date............................... 12
2.44 Participant.......................................... 12
2.45 Plan ............................................. 12
2.46 Plan Administrator or Administrator.................. 12
2.47 Plan Year............................................ 12
2.48 Prior Plan........................................... 13
2.49 Qualified Domestic Relations Order................... 13
2.50 Qualified Election................................... 13
2.51 Qualified Joint and Survivor Annuity................. 13
2.52 Qualified Preretirement Survivor Annuity............. 13
2.53 Related Company...................................... 14
2.54 Required Beginning Date.............................. 14
2.55 Social Security Retirement Age....................... 15
2.56 Sponsoring Company................................... 15
2.57 Spouse ............................................. 15
2.58 Substantive Amendment Date........................... 16
2.59 Termination of Employment............................ 16
2.60 Trust ............................................. 16
2.61 Trust Fund........................................... 16
2.62 Trustee ............................................. 16
2.63 Years of Credited Service............................ 16
2.64 Years of Vesting Service............................. 17
ARTICLE 3
PARTICIPATION AND SERVICE
3.1 Date Employees Become Participants.................... 19
3.2 Eligibility of Rehired Employees...................... 19
3.3 Notice of Participation............................... 19
3.4 Change In Employment Status........................... 19
3.5 Provisions of Plan Binding On Participants............ 21
3.6 Correction of Inadvertent Error....................... 21
3.7 Correcting a Coverage or Participation Failure........ 21
ARTICLE 4
BENEFITS
4.1 Normal Retirement Benefit............................. 22
4.2 Late Retirement Benefit............................... 22
4.3 Early Retirement Benefit.............................. 22
4.4 Disability Benefit.................................... 23
4.5 Deferred Vested Benefit............................... 23
4.6 Qualified Preretirement Survivor Annuity.............. 24
4.7 Additional Death Benefit.............................. 24
ARTICLE 5
MANNER OF BENEFIT PAYMENTS AND OPTIONAL FORMS
5.1 Benefit Payments...................................... 26
5.2 Conflicting Provisions................................ 33
5.3 Rollover Notice and Rollover Election................. 33
5.4 Payment of Benefits................................... 34
5.5 Claim Not Filed....................................... 34
5.6 Duplication of Benefits............................... 34
5.7 Suspension of Benefits................................ 35
ARTICLE 6
DESIGNATION OF BENEFICIARY
6.1 Manner of Designation of Beneficiary.................. 37
6.2 Distribution If No Beneficiary Designated............. 37
ARTICLE 7
FUNDING OF BENEFITS; EXPENSES
7.1 Forfeitures........................................... 38
7.2 Company Contributions................................. 38
7.3 Return of Contributions............................... 38
7.4 Payment of Expenses of Plan........................... 39
ARTICLE 8
TOP-HEAVY PROVISIONS
8.1 Purpose............................................... 40
8.2 Key Employee.......................................... 40
8.3 Determination Date.................................... 40
8.4 Determination of Top-Heavy Status..................... 40
8.5 Top-Heavy Compensation................................ 41
8.6 Top-Heavy Vesting..................................... 42
8.7 Top-Heavy Minimum Benefit............................. 42
8.8 Top-Heavy Benefit Adjustment.......................... 42
ARTICLE 9
LIMITATIONS ON BENEFITS
9.1 Maximum Annual Benefit................................ 43
9.2 Participation in Other Qualified Plans................ 45
9.3 Benefits Upon Early Termination of Plan............... 47
ARTICLE 10
ORGANIZATION AND RESPONSIBILITIESOF BENEFITS COMMITTEE
10.1 Appointment and Tenure of Benefits Committee......... 49
10.2 Organization and Decisions of Benefits Committee..... 49
10.3 Duties of Benefits Committee......................... 49
10.4 Benefits Committee Decisions Final and Binding....... 51
10.5 Powers and Authority of Benefits Committee........... 51
10.6 Benefits Committee Directions to Trustee............. 51
10.7 Employment of Counsel, Etc........................... 51
10.8 Payment of Expenses of Benefits Committee............ 52
10.9 Benefits Committee and Trustee to be Furnished
Information Concerning Employees..................... 52
ARTICLE 11
THE TRUST FUND AND TRUSTEE
11.1 Establishment of Trust Fund.......................... 53
11.2 No Diversion of Trust Fund........................... 53
11.3 Resignation or Removal of Trustee.................... 53
11.4 Trust Part of Plan................................... 53
11.5 Trustee Powers....................................... 53
11.6 No Guarantee of Losses in Trust Fund................. 53
ARTICLE 12
PLAN AMENDMENT, MERGER OR TERMINATION
12.1 Right Generally to Make Amendments................... 54
12.2 Right to Make Amendments Relating to Qualification
of Plan.............................................. 54
12.3 Amendment by Benefits Committee...................... 54
12.4 Merger of Plan or Assets............................. 54
12.5 Right to Terminate................................... 55
12.6 Board of Directors' Action........................... 55
12.7 Liquidation of Assets................................ 55
ARTICLE 13
RESERVATIONS OF RIGHTSBY THE COMPANY ANDLIMITATIONS ON RIGHTS OF PARTICIPANTS
13.1 Plan Voluntary on Part of Company.................... 57
13.2 Plan Not Contract of Employment...................... 57
ARTICLE 14
ADDITION AND WITHDRAWAL OF A COMPANY
14.1 Adoption of Plan by Related Company.................. 58
14.2 Withdrawal From Plan by Company...................... 58
ARTICLE 15
CHANGE IN EMPLOYMENT
15.1 Participant Transfer From Company to Company......... 60
15.2 Participant Transfer From Company to Related Company. 60
15.3 Employee Credit for Services With Related Company.... 60
ARTICLE 16
LIMITATIONS ON VESTINGANDALIENABILITY OF BENEFITS
16.1 Participant Interests Limited to Benefits Actually
Accrued.............................................. 61
16.2 Spendthrift Clause................................... 61
ARTICLE 17
BENEFIT CLAIMS PROCEDURE
17.1 Claims for Benefits.................................. 62
17.2 Review of Denial of Claims........................... 62
17.3 Decision on Review of Denial......................... 62
ARTICLE 18
FIDUCIARY RESPONSIBILITIES
18.1 Duties and Obligations of Fiduciaries................ 63
18.2 Allocation of Fiduciary Responsibilities............. 63
ARTICLE 19
INDEMNIFICATION OF CERTAIN FIDUCIARIES
19.1 Rights To Indemnification............................ 65
19.2 Advancement of Expenses.............................. 65
19.3 Determination of Right to Indemnity.................. 65
19.4 Other Rights......................................... 66
19.5 Indemnification By More Than One Company............. 66
ARTICLE 20
MISCELLANEOUS
20.1 Unclaimed Benefits................................. 67
20.2 Protected Benefits................................. 67
20.3 No Diversion of Trust Fund......................... 67
20.4 Construction....................................... 67
20.5 Gender and Number.................................. 67
20.6 Discretionary Acts to be Non-Discriminatory........ 68
20.7 Titles and Headings................................ 68
20.8 Distributions to Incompetents or Minors............ 68
20.9 Qualified Domestic Relations Order................. 68
20.10 Compliance with the Uniformed Services Employment
and Reemployment Rights Act of 1994................ 68
20.11 Appointment of Administrator........................ 68
20.12 Effective Date...................................... 68
COMMONWEALTH INDUSTRIES, INC.
CASH BALANCE PLAN
WHEREAS, Commonwealth Industries, Inc., a Delaware corporation with its
principal office and place of business in Louisville, Kentucky ("Sponsoring
Company"), by its predecessor adopted the Commonwealth Aluminum Corporation
Pension Plan for Salaried Employees ("Prior Plan"), a defined benefit plan for
the benefit of its eligible employees, which Prior Plan has been amended from
time to time; and
WHEREAS, the Board of Directors of the Sponsoring Company has authorized
and approved the amendment and restatement of the Prior Plan in the form of the
Commonwealth Industries, Inc. Cash Balance Plan ("Plan") as set forth herein.
NOW, THEREFORE, the Sponsoring Company hereby approves and adopts the Plan,
which shall read as follows:
ARTICLE 1
PURPOSE AND APPLICABILITY OF PLAN
1.1 PURPOSE OF PLAN. The purpose of the Plan shall continue to be to
provide benefits to Participants upon retirement, death and, in certain events,
upon Termination of Employment, upon the terms and conditions, and subject to
the limitations, contained herein. The Plan is hereby designated as a defined
benefit pension plan for purposes of section 401(a) of the Code.
1.2 APPLICABILITY OF PLAN. The provisions of the Plan shall apply only
to persons in the employ of the Company on or after the Effective Date. The
rights and benefits, if any, of persons who were employed by the Company prior
to the Effective Date, but who are not employed on or after the Effective Date,
shall be determined in accordance with the provisions of the Prior Plan in
effect on the date their employment terminated.
- 43 -
ARTICLE 2
DEFINITIONS
2.1 ACCOUNTS. Effective January 1, 1998, a bookkeeping account for a
Participant for purposes of computing the Participant's Benefit in accordance
with Article 4. A Participant shall have no actual individual account, and shall
have no claim on any particular assets of the Plan.
2.2 ACCOUNT BALANCE. Effective January 1, 1998, the hypothetical value
of a Participant's Account as of any given date, which shall be determined as
follows:
(a) Initial Account Balances. A Participant's initial Account
Balance shall be the lump sum value of a Participant's Accrued Benefit payable
at age 65 under the terms of the Plan as of December 31, 1997, and calculated
using the mortality table and interest rate then in effect under the Plan,
determined based on the Participant's attained age as of December 31, 1997,
payable at age 62.
(b) Benefit Credits. Effective January 1, 1998, the Account of
each Participant who accrues Credited Service for a Plan Year shall be credited
with a percentage of the Participant's Compensation for such Plan Year, which
shall be applied as of the end of the Plan Year, as determined in accordance
with the schedule set forth below.
Age of Participant Percentage
39 and under 3.5%
40 - 49 4.5%
50 - 54 6.0%
55 and older 8.0%
For purposes of determining a Participant's Benefit Credit each Plan Year, such
Participant's age shall be the Participant's age as of the Participant's
birthday nearest to January 1 of the Plan Year for which the Benefit Credit is
applied. Effective January 1, 2002, Benefit Credits in accordance with this
Section 2.2(b) shall be credited to the Account of each Participant who accrues
1,000 or more Hours of Service for a Plan Year; provided, if a Participant
experiences a Termination of Employment for a Plan Year, Benefit Credits shall
be credited to the Account of such Participant, regardless of whether or not the
Participant accrues 1,000 Hours or more of Service during the Plan Year.
(c) Interest Credits. For each Plan Year beginning on or after
January 1, 1998, the Company will announce the interest rate that will be
credited to each Participant's Account Balance. Such interest rate shall be the
lesser of the following:
(1) the average of the average auction yields on a three-year
Treasury bill for each of the months during the 12-month period ending on
November 1 of each Plan Year; or
(2) the "Applicable Interest Rate," which is the interest rate
of 30-year Treasury securities as specified by the Commissioner of Internal
Revenue as of November 1 (the "lookback month") of each Plan Year (the
"stability period").
The interest rate announced by the Company for each Plan Year according to the
foregoing determination shall be credited to the Account Balances of
Participants on a yearly basis. Solely with respect to a Participant who
receives a distribution of the Participant's Account Balance prior to the end of
a Plan Year, the interest credit for the distribution Plan Year shall be
determined as follows: the Participant's Account Balance at the beginning of the
Plan Year shall be multiplied by the interest rate for the Plan Year, and the
resulting product shall be further multiplied by a fraction, the denominator of
which is 24 and the numerator of which is the number of half-months
corresponding to the period between the beginning of the Plan Year and the date
of distribution of the Participant's Account Balance, with the appropriate
half-month determined as of the first or fifteenth day of a given month which is
coincident with or immediately preceding the date of distribution. Solely to
estimate a Participant's Account Balance for purposes of providing an estimated
quarterly statement, the interest rate shall be the fraction of the interest
rate announced by the Company for each Plan Year corresponding to each calendar
quarter.
(d) Cash Balance Conversion Transitional Provisions.
Notwithstanding the foregoing, in no event shall the amount of a Participant's
Normal Retirement Benefit determined according to this Section 2.2 and Section
4.1 be less than the Participant's Accrued Benefit determined in accordance with
the terms of the Plan as of December 31, 1997. Provided, for each Participant
who has attained age 55 and completed 10 Years of Credited Service as of
December 31, 1997, in no event shall the amount of Normal Retirement Benefit
determined according to this Section 2.2 and Section 4.1 be less than the
greater of (1) or (2) below, where:
(1) is the benefit determined in accordance with the preceding
provisions of this Section 2.2 based on a Participant's total Years of
Credited Service (subject to any Credited Service maximum limitations that
might apply); and
(2) is the benefit determined as of the date the Participant
stops accruing Years of Credited Service, in accordance with the terms of
the Plan as in effect on December 31, 1997.
2.3 ACCRUED BENEFIT. The benefit to which the Participant would be
entitled under the Normal Form commencing at age 65 and computed under the
provisions of Section 4.1 as of any date.
2.4 ACTUARIAL EQUIVALENT.
(a) General Rule. A benefit of equivalent value as certified by
the Actuary. The amount of the benefit for Participants shall be calculated
based upon the 1971 Group Annuity Mortality Table (Male) and a 5-1/2% annual
interest rate assumption (compounded annually). Provided, effective January 1,
1995, in determining the value of a Participant's Accrued Benefit for purposes
of the cash-out provisions of Section 5.1(f), the calculation shall be made
using the mortality table prescribed by the Internal Revenue Service in
accordance with section 417(e) of the Code and the interest rate on 30-year
Treasury securities in effect for the month before the month in which the
distribution is made. Effective January 1, 1998, the applicable interest rate
for cash-out distribution shall be the interest rate on 30-year Treasury
securities in the effect for the November (the "lookback month") preceding the
first day of the Plan Year (the "stability period") in which the benefit
distribution is made. However, in no event shall the Actuarial Equivalent value
of a Participant's Accrued Benefit be less than the value determined under the
terms of the Plan in effect as of December 31, 1997.
(b) Special Rules. Effective January 1, 1998, the Actuarial
Equivalent value of a Participant's Accrued Benefit for a Participant who has
not attained such Participant's Normal Retirement Age shall be determined by
multiplying the Participant's vested Accrued Benefit at Normal Retirement Date
by the actuarial value of $1 per year, as determined above, based on the
Participant's age as of the date the Actuarial Equivalent value is determined,
payable at the Participant's Normal Retirement Age. The Actuarial Equivalent
value of a Participant's Accrued Benefit for a Participant who has attained such
Participant's Normal Retirement Age shall be determined by multiplying the
Participant's vested Accrued Benefit at Normal Retirement Date by the actuarial
value of $1 per year, as determined above, based on the Participant's age as of
the date such Actuarial Equivalent value is determined.
2.5 ACTUARY. The individual enrolled actuary, or firm including one or
more enrolled actuaries, selected by the Company to provide actuarial services
in connection with the administration of the Plan.
2.6 ANNIVERSARY DATE. The last day of each Plan Year.
2.7 ANNUITY STARTING DATE. The first day of the first period for which
an amount is payable as an annuity (or any other form) whether by reason of
death, retirement or Termination of Employment. If benefit payments are
suspended pursuant to Section 5.7, the recommencement of benefit payments shall
be treated as a new Annuity Starting Date.
2.8 BENEFICIARY. The person or entity entitled pursuant to Article 6 to
receive the Participant Account, Rollover Account and certain other death
benefits payable hereunder upon a Participant's death.
2.9 BENEFITS COMMITTEE OR COMMITTEE. The person or persons designated by
the Board of Directors of the Sponsoring Company pursuant to Article 10 as the
Benefits Committee, provided, that if none is so appointed, then the Sponsoring
Company.
2.10 BOARD OF DIRECTORS. The Board of Directors (or other managing body)
of each Company or, where the reference is to a single Board of Directors, the
Board of Directors of the Sponsoring Company.
2.11 BREAK IN SERVICE. A Plan Year during which an Employee has not
completed more than 500 Hours of Service. For Plan Years beginning prior to
December 31, 1993, a "Break in Service" was a Plan Year during which an Employee
had not completed more than 173.33 Hours of Service.
2.12 CODE. The Internal Revenue Code of 1986, as it has been and may be
amended from time to time. Reference to any section of the Code shall include
any provision successor thereto.
2.13 COMPANY. The Sponsoring Company and each Related Company which
adopts the Plan. The term Company shall include any successor employer, whether
by merger, purchase of assets or otherwise, which adopts the Plan. When used
with reference to an Employee or Participant the term shall mean the Company
employing the Employee or Participant.
2.14 COMPENSATION.
(a) General Definition.
(1) On or After January 1, 2002. Effective for Plan Years
beginning on or after January 1, 2002, the base salary or wages for
services rendered which are paid by the Company to or for an Employee for a
Plan Year which are subject to withholding for federal income tax purposes
plus the amount deferred by such Employee pursuant to an election made
under a 401(k) plan sponsored by the Company, under a cafeteria plan
maintained by the Company and intended to comply with section 125 of the
Code, or under a salary reduction fringe benefit transportation arrangement
maintained by the Company and intended to comply with section 132(f)(4) of
the Code. Compensation shall also include cost of living adjustments,
overtime, shift differentials, discretionary incentive compensation
bonuses, discretionary income bonuses, gain sharing pay, production-related
bonuses, variable pay, other bonuses (except sign-on bonuses and retention
bonuses), commissions, salary continuation payments, jury duty and witness
pay, bereavement pay, vacation pay, compensation in lieu of vacation, and
severance pay. Compensation shall exclude taxable fringe benefits including
short term and long term disability pay, income imputed to the Participant
such as by reason of the Participant's use of Company-owned or -furnished
property or group term life insurance in excess of $50,000, allowances for
automobiles, country club fees, education, expense and reimbursements,
carpools, relocation, rental assistance, travel and uniform allotments,
sign-on bonuses and retention bonuses, Company contributions and matching
contributions under any defined contribution plan sponsored by the Company,
and amounts allocated for or distributed to or for the Participant under a
nonqualified deferred compensation plan during the Plan Year. Compensation
shall be taken into account only while an Employee is a Participant in the
Plan.
(2) Before January 1, 2002. Effective for Plan Years beginning
before January 1, 2002, the base salaries or wages for services rendered,
which are paid by the Company to or for an Employee for the Plan Year which
are subject to withholding for federal income tax purposes, plus the amount
deferred by such Employee pursuant to an election made under a qualified
plan or simplified employee pension maintained by the Company intended to
comply with sections 401(a), 401(k), and 408(k) of the Code or under a
cafeteria plan maintained by the Company intended to comply with section
125 of the Code. Compensation shall also include overtime, shift
differential, bonuses, commissions, and severance pay. Compensation shall
not include taxable fringe benefits including short-term and long-term
disability pay; income imputed to an Employee by reason of the Employee's
use of Company-owned or -furnished property; expense allowance and
reimbursements including rental allowance or assistance, education,
relocation, and travel allowances; items of imputed income such as the cost
of group term life insurance in excess of $50,000; vacation allowance and
reimbursement for compensation in lieu of vacation time; and any amounts
distributed to or by the Employee under a nonqualified deferred
compensation plan during the Plan Year.
(b) Limitations. For Plan Years beginning on or after January 1,
2002, the Compensation of each Employee taken into account under the Plan in
determining Accrued Benefits shall not exceed $200,000, or such larger amount as
may be determined by the Secretary of Treasury pursuant to section 401(a)(17)(B)
of the Code. For Plan Years beginning before January 1, 2002, the Compensation
of each Employee taken into account under the Plan in determining Accrued
Benefits shall not exceed $160,000, or such larger amount as may be determined
by the Secretary of the Treasury pursuant to section 401(a)(17)(B) of the Code.
2.15 COVERED COMPENSATION. The average of the "taxable wage bases" that
are in effect for each calendar year during the 35-year period ending with the
last day of the calendar year in which the Participant attains (or will attain)
Social Security Retirement Age. No increase in Covered Compensation shall
decrease a Participant's Accrued Benefit. Covered Compensation will be
determined based on the Plan Year. In determining a Participant's Covered
Compensation for a Plan Year, the taxable wage base in effect for the current
Plan Year and any subsequent Plan Year will be assumed to be the same as the
taxable wage base in effect at the beginning of the Plan Year for which the
determination is being made. A Participant's Covered Compensation for a Plan
Year before the 35-year period ending with the last day of the calendar year in
which the Participant attains Social Security Retirement Age is the taxable wage
base in effect at the beginning of the Plan Year. A Participant's Covered
Compensation for a Plan Year after such 35-year period is the Participant's
Covered Compensation for the Plan Year during which the 35-year period ends. For
purposes hereof, the term "taxable wage base" shall mean the maximum amount of
earnings which may be considered wages under section 3121(a)(l) of the Code.
2.16 CREDITED SERVICE. The period of a Participant's employment as an
Employee of a Company. Solely for purposes of determining a Participant's
Credited Service under this Section 2.16 for a Plan Year, Credited Service shall
include periods during which a Participant receives severance pay from a
Company.
2.17 DIRECT ROLLOVER. A payment by the Plan to the Eligible Retirement
Plan specified by the Distributee.
2.18 DISABILITY OR DISABLED. Effective for disabilities incurred on or
after January 1, 2001, a Participant who is covered by the Company's long term
disability plan and who meets the criteria for a benefit under such long term
disability plan. A determination by the insurer of the long term disability plan
that the Participant meets the criteria for a benefit under such long term
disability plan shall also constitute a determination as to whether a
Participant is Disabled under this Section 2.18 for Plan purposes.
2.19 DISTRIBUTEE. A Distributee includes an Employee or former Employee.
In addition, the Employee's or former Employee's surviving Spouse and the
Employee's or former Employee's Spouse or former spouse who is the alternate
payee under a Qualified Domestic Relations Order are Distributees with regard to
the interest of the Spouse or former Spouse.
2.20 DISTRIBUTION CALENDAR YEAR. A calendar year for which a minimum
distribution is required. In the case of distributions required before death
where a Participant's Required Beginning Date is April 1 of the calendar year
following the calendar year in which the Participant attains age 70-1/2, the
Employee's first Distribution Calendar Year shall be the year the Employee
attains age 70-1/2. For distributions beginning after the Participant's death,
the first Distribution Calendar Year is the calendar year in which distributions
are required to begin under Section 5.1(g).
2.21 EARLIEST RETIREMENT AGE. The earliest date on which a Participant
could elect to receive retirement benefits under the Plan.
2.22 EARLY RETIREMENT BENEFIT. The benefit amount determined in Section
4.3.
2.23 EARLY RETIREMENT DATE. The first day of the month coinciding with
or immediately following the date on which a Participant terminates employment
after having attained age 55 and completed at least five Years of Credited
Service.
2.24 EFFECTIVE DATE. The effective date of the amendment and restatement
of the Prior Plan, which is January 1, 1997, except as otherwise specifically
provided herein. The term shall also mean the effective date of the Joinder
Agreement of a Company which adopts the Plan.
2.25 ELECTION PERIOD.
(a) In the case of an election to waive the Qualified Joint and
Survivor Annuity, the 90-day period ending on the Annuity Starting Date.
(b) In the case of an election to waive the Qualified
Preretirement Survivor Annuity, the period which begins on the first day of the
Plan Year in which the Participant attains age 35 and ends on the date of the
Participant's death.
(c) In the case of a Participant who is separated from service,
the Election Period under 2.25(b), above, with respect to the Participant's
vested Accrued Benefit earned before the date of such separation from service,
shall not begin later than such date.
(d) A Participant who will not attain age 35 by the close of a
current Plan Year and who receives a written explanation under Section
5.1(d)(3), may make a special qualified election to waive the Qualified
Preretirement Survivor Annuity which will remain in effect until the first day
of the Plan Year in which the Participant will attain age 35. Qualified
Preretirement Survivor Annuity coverage will be automatically reinstated as of
the first day of the Plan Year in which the Participant attains age 35, and any
new waiver must meet the requirements of a Qualified Election in Section 2.50,
below.
2.26 ELIGIBLE RETIREMENT PLAN. 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 plan 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. Effective for Eligible Rollover Distributions made after December 31,
2001, an Eligible Retirement Plan shall also mean an annuity contract described
in section 403(b) of the Code and an eligible plan under section 457(b) of the
Code which is maintained by a state, political subdivision of s state, or any
agency or instrumentality of a state or political subdivision of a state and
which agrees to separately account for amounts transferred into such plan from
this Plan. The definition of Eligible Retirement Plan shall also apply in the
case of a distribution to a surviving spouse, or to a spouse or former spouse
who is alternate payee under a Qualified Domestic Relations Order.
2.27 ELIGIBLE ROLLOVER DISTRIBUTION. A distribution of all or any
portion of the benefit of the Distributee, except that an Eligible Rollover
Distribution does not include:
(a) any distribution that is one of a series of substantially
equal periodic payments (not less frequently than annually) made for the life
(or life expectancy) of the Distributee or the joint lives (or joint life
expectancies) of the Distributee and the Distributee's designated Beneficiary,
or for a specified period of ten years or more;
(b) any distribution to the extent such distribution is required under
section 401(a)(9) of the Code;
(c) the portion of any distribution that is not includable in
gross income (determined without regard to the exclusion for net unrealized
appreciation with respect to employer securities);
(d) effective for distributions made after December 31, 1998, a
distribution which is a hardship distribution as defined in section
401(k)(2)(B)(i)(IV) of the Code; and
(e) any distribution that is includable in gross income which,
when combined with all other such distributions to the Distributee during the
taxable year of the Distributee, is reasonably expected to total less than $200.
2.28 EMPLOYEE. Any person employed by the Company as a salaried or
non-union hourly employee, or, before January 1, 2001, such salaried or
non-union hourly employee who is receiving long-term disability benefits from
the Company's long-term disability group insurance plan; provided, the term
Employee shall not include (a) any person whose employment becomes the subject
matter of a collective bargaining agreement between employee representatives and
the Company unless such collective bargaining agreement expressly provides that
such person is eligible for participation in the Plan, (b) any person who is a
Leased Employee, (c) any person, whether or not deemed a common-law employee,
who is not a Leased Employee but who provides services to the Company pursuant
to an agreement between the Company and any other person whether for periods of
a year or more or for periods of less than one year, or (d) any person
classified by the Company as an independent contractor, whether or not deemed a
common-law employee.
2.29 ENTRY DATE. The date on which an Employee first completes an Hour
of Service.
2.30 ERISA. The Employee Retirement Income Security Act of 1974, as it
has been and may be amended from time to time. Reference to any section of ERISA
shall include any provision successor thereto.
2.31 FINAL AVERAGE COMPENSATION. The average of a Participant's
Compensation for the five consecutive full Plan Years out of the last 10
consecutive full Plan Years of employment with the Company which produce the
highest average, divided by 12. If a Participant has completed less than five
Plan Years prior to Termination of Employment, the Participant's Average Monthly
Compensation shall be the average of the Participant's Compensation in such Plan
Years prior to Termination of Employment, divided by 12. For purposes of
determining Final Average Compensation, periods of employment otherwise counted
under the Plan for (a) military service and (b) long-term disability shall not
be considered.
2.32 5% OWNER. Any person who owns (or is considered as owning within
the meaning of section 318 of the Code) more than 5% of the outstanding stock of
the Company or stock possessing more than 5% of the total combined voting power
of all stock of the Company.
2.33 FORFEITURE. The portion of a Participant's Accrued Benefit which is
subject to forfeiture pursuant to application of Section 4.5, Section 8.6 and
Section 20.1 by reason of the Participant's Termination of Employment, and any
other Forfeitures provided for herein.
2.34 HIGHLY COMPENSATED EMPLOYEE.
(a) General Definition. Any Employee who, (i) during the Plan Year
or the preceding Plan Year was at any time a 5% Owner, or (ii) during the
preceding Plan Year received compensation in excess of $80,000 (as adjusted
pursuant to section 415(d) of the Code), and was also in the top-paid group of
employees for such preceding Plan year. For purposes of this Section 2.34(a),
"compensation" shall include compensation from the Company and any employer
required to be aggregated with the Company under section 414(b), (c), (m), or
(o) of the Code. The term Highly Compensated Employees includes highly
compensated active employees and highly compensated former employees.
(b) Highly Compensated Former Employee. Any Employee who (i)
separated from service with the Company, or is deemed to have separated from
service, prior to the Plan Year, (ii) performs no service for the Company during
the Plan Year, and (iii) was a Highly Compensated Employee during either the
Plan Year in which such separation from service occurred or in any Plan Year
ending on or after the Employee's 55th birthday.
(c) Inclusion in Top Paid Group. For purposes of (a)(ii), above,
an Employee shall be considered a member of the "top paid group" for any year if
such Employee is in the group consisting of the top 20% of the employees of the
Company when ranked on the basis of compensation paid during the year, pursuant
to section 414(q)(3) of the Code.
(d) Application of Section 414(q). For purposes of determining
whether an Employee is a Highly Compensated Employee, the provisions of section
414(q) of the Code, and the regulations thereunder, shall apply.
2.35 HOUR OF SERVICE. The following shall constitute Hours of Service
under the Plan:
(a) Hours Paid For Performance of Duties. Each hour for which an
Employee is paid, or entitled to payment, for the performance of duties for the
Company. These hours shall be credited to the Employee for the computation
period or periods in which the duties are performed.
(b) Hours Paid When No Performance of Duties. Each hour for which
an Employee is paid, or entitled to payment, by the Company on account of a
period during which no duties are performed (irrespective of whether the
employment relationship has terminated) due to vacation, holiday, illness,
incapacity (including disability), layoff, jury duty, military duty or leave of
absence. Effective January 1, 2001, no Hours of Service shall be credited under
this Section 2.35(b) for a period during which an Employee is eligible to
receive long-term disability benefits under a group insurance plan sponsored by
a Company. No more than 501 Hours of Service shall be credited under this
Section 2.35(b) for any single continuous period (whether or not such period
occurs in a single computation period). Hours under this Section 2.35(b) shall
be calculated and credited pursuant to section 2530.200b-2 of the Department of
Labor Regulations which are incorporated herein by this reference.
(c) Hours Paid For Back Pay. Each hour for which back pay,
irrespective of mitigation of damages, is either awarded or agreed to by the
Company. The same Hours of Service shall not be credited both under Section
2.35(a) or (b), above, as the case may be, and under this Section 2.35(c). These
hours shall be credited to the Employee for the computation period or periods to
which the award or agreement pertains rather than the computation period in
which the award, agreement or payment is made.
(d) Child Related Absences Affecting Break in Service. Effective
for absences in Plan Years beginning after December 31, 1984, in determining
whether a Break in Service has been incurred by a Participant who is absent from
work for any period (1) by reason of pregnancy, (2) by reason of the birth of
the Participant's child, (3) by reason of the placement of a child with the
Participant in connection with the adoption of such child by the Participant or
(4) for purposes of caring for such child for a period beginning immediately
following such birth or placement, Hours of Service shall include each hour
which normally would have been credited to such Participant but for such
absence. If the Plan is unable to determine the number of hours which normally
would have been credited to such Participant but for such absence, eight Hours
of Service for each normal work day of absence shall be credited. No more than
501 Hours of Service shall be credited under this Section 2.35(d). The Hours of
Service credited under this Section 2.35(d) shall be credited only for the Plan
Year in which the absence begins if the Participant would be prevented from
incurring a Break in Service in such Plan Year solely because the period of
absence is treated as Hours of Service, or, in any other case, in the
immediately following Plan Year. A Participant to whom this Section 2.35(d)
applies shall furnish to the Benefits Committee or its representative evidence
that the absence from work is for the reasons set forth in this Section 2.35(d)
and the number of days for which there was an absence.
(e) Determination Made Based On Actual Hours Paid or Entitled to
Payment. Except as provided in Section 2.35(d), Hours of Service shall be
determined on the basis of actual hours for which an Employee is paid or
entitled to payment; provided, when records are not available for tabulating
actual hours worked, an Employee shall be credited with 45 hours for each week
or 95 hours for each semi-monthly payroll, whichever is applicable, in which the
Employee is paid, or entitled to be paid, for at least one hour for the
performance of duties for the Company.
(f) Determination of Service. Anything in the Plan to the contrary
notwithstanding, in determining an Employee's service, the Employee shall be
entitled to such credit, if any, as is required by federal law. For purposes of
determining service under the Plan, service for the following shall be treated
as if it were service for the Company:
(1) each Related Company; and
(2) any other predecessor employer within the meaning of, and to the
extent required under, section 414(a) of the Code; and
(3) any entity required to be aggregated with the Company
pursuant to section 414(o) of the Code and regulations promulgated
thereunder.
(g) A leave of absence pursuant to the Family and Medical Leave
Act of 1993 shall not be included as Hours of Service; provided, however, that
such leave shall be disregarded in determining whether an Employee has incurred
a Break in Service.
2.36 JOINDER AGREEMENT. The form prescribed by the Benefits Committee
pursuant to which a Related Company adopts the Plan, as provided in Section
14.1.
2.37 LEASED EMPLOYEE. Any person who provides services to the Company
(other than an employee of the Company) if such services are provided pursuant
to an agreement between the Company and any other person, such person has
performed such services for the Company (or for the Company and related persons
determined in accordance with section 414(n)(6) of the Code) on a substantially
full-time basis for a period of at least one year, and such services are
performed under the primary direction or control of the Company. Provided,
however, that such Leased Employee shall be treated as an Employee solely for
purposes of demonstrating compliance with certain nondiscrimination tests set
forth in section 414(n)(3) of the Code, unless: (a) such Leased Employee is
covered under a money purchase pension plan providing a non-integrated employer
contribution rate of at least 10% of compensation (as defined in section
415(c)(3) of the Code, but including amounts contributed pursuant to a salary
reduction agreement which are excludable from the employee's gross income under
sections 125, 402(a)(8), 402(h) or 403(b) of the Code), immediate participation
and full and immediate vesting, and (b) not more than 20% of the Company's
employees who are not Highly Compensated Employees are Leased Employees. In
determining whether an individual is a Leased Employee, the provisions of
section 414(n) of the Code, and the regulations thereunder, shall apply.
2.38 LATE RETIREMENT DATE. The first day of the month coincident with or
immediately following Termination of Employment after the Participant attains
Normal Retirement Age, if such termination is for a reason other than death.
2.39 NORMAL FORM. A monthly benefit in the form of an annuity for the
life of the Participant.
2.40 NORMAL RETIREMENT AGE. A Participant's 65th birthday. For an
Employee who becomes a Participant after the Employee's 65th birthday, the
Normal Retirement Age shall be the date the Employee becomes a Participant.
2.41 NORMAL RETIREMENT BENEFIT. The benefit amount determined in Section
4.1.
2.42 1% OWNER. Any person who owns (or is considered as owning within
the meaning of section 318 of the Code) more than 1% of the outstanding stock of
the Company or stock possessing more than 1% of the total combined voting power
of all stock of the Company.
2.43 NORMAL RETIREMENT DATE. The first day of the month coinciding with
or immediately following a Participant's Normal Retirement Age.
2.44 PARTICIPANT. An eligible Employee who becomes a Participant. The
term shall also include, where appropriate, a former Participant whose service
with the Company has terminated when such person is entitled to a benefit
hereunder.
2.45 PLAN. The Commonwealth Industries, Inc. Cash Balance Plan provided
for herein, as it may be amended from time to time. Prior to January 1, 1998,
the Plan was known as the Commonwealth Aluminum Corporation Pension Plan for
Salaried Employees.
2.46 PLAN ADMINISTRATOR OR ADMINISTRATOR. The Sponsoring Company or
other person or persons designated by the Board of Directors of the Sponsoring
Company as the Plan Administrator.
2.47 PLAN YEAR. The consecutive 12-month period beginning on the first
day of January in each year and ending on the last day of December.
2.48 PRIOR PLAN. The defined benefit pension plan of the Company, as
constituted on the day prior to the Effective Date.
2.49 QUALIFIED DOMESTIC RELATIONS ORDER. A "qualified domestic relations
order," as defined in section 414(p) of the Code and section 206(d)(3) of ERISA.
2.50 QUALIFIED ELECTION.
(a) Waiver. A waiver of a Qualified Joint and Survivor Annuity or
a Qualified Preretirement Survivor Annuity. The waiver must be in writing and
must be consented to by the Participant's Spouse. The Spouse's consent to a
waiver must be witnessed by a Plan representative or Notary Public. A Qualified
Election shall not be effective until such time as the notice requirements of
Section 5.1(d), as applicable, have been met.
(b) Absence of Spouse. Notwithstanding this consent requirement,
if the Participant establishes to the satisfaction of a Plan representative that
such written consent may not be obtained because there is no Spouse, the Spouse
cannot be located, the Participant has been abandoned (within the meaning of
local law and pursuant to a court order), or the Spouse and Participant are
legally separated pursuant to a court order, a waiver will be deemed a Qualified
Election.
(c) Consent Limited to One Spouse. Any consent necessary under
this provision will be valid only with respect to the Spouse who signs the
consent, or in the event of a deemed Qualified Election, the designated Spouse,
and shall only be effective in favor of the individual or entity in whose favor
the Spouse has waived the Spouse's rights and as to the form of benefit (and
Beneficiary) selected by the Participant. A revocation of a prior waiver may be
made by a Participant without the consent of the Participant's Spouse at any
time before the commencement of the distribution of the Participant's benefits.
A Spouse may not revoke the Spouse's consent.
(d) Consent Not Required. No Qualified Election or other consent
requirement shall apply to any Beneficiary who is not a Spouse. Following the
death of a Participant, spousal consent shall not be required for the
distribution of a Qualified Preretirement Survivor Annuity or a Qualified Joint
and Survivor Annuity.
2.51 QUALIFIED JOINT AND SURVIVOR ANNUITY. In the case of a married
Participant, an immediate annuity which provides equal monthly payments for the
life of the Participant with a survivor annuity for the life of the
Participant's Spouse which is 50% of the amount of the annuity payment which was
payable during the joint lives of the Participant and the Participant's Spouse.
For a single Participant, an immediate annuity for the life of the Participant.
2.52 QUALIFIED PRERETIREMENT SURVIVOR ANNUITY.
(a) Death of Participant After Earliest Retirement Age. In the
case of a Participant who dies after attaining Earliest Retirement Age with a
vested benefit, a monthly benefit for the life of the Participant's Spouse
commencing on the first day of the month following the date of the Participant's
death in an amount equal to that which the Spouse would have received had the
Participant retired with an immediate Qualified Joint and Survivor Annuity on
the day before the Participant's date of death, except that the survivorship
percentage shall be 75% rather than 50%.
(b) Death of Participant On or Before Earliest Retirement Age. In
the case of a Participant who dies on or before the date on which the
Participant would have attained the Earliest Retirement Age, a monthly benefit
for the life of the Spouse commencing on the first day of the month following
the date of the Participant's death in an amount equal to that which the Spouse
would have been entitled to receive had the Participant separated from service
on the day before the Participant's death, survived to the Earliest Retirement
Age, retired with an immediate Qualified Joint and Survivor Annuity at the
Earliest Retirement Age, except that the survivorship percentage shall be 75%
rather than 50%, and died on the day after the day on which the Participant
would have attained the Earliest Retirement Age.
2.53 RELATED COMPANY. Either (a) a member of a "controlled group of
corporations" (as defined in section 1563(a) of the Code, determined without
regard to sections 1563(a)(4) and (e)(3)(C) of the Code, except that, for the
purposes of Article 9, the phrase "more than 50%" shall be substituted for the
phrase "at least 80%" in section 1563(a)(1) of the Code) of which the Company is
a member, (b) an unincorporated trade or business which is under common control
with the Company, as determined under section 414(c) of the Code, (c) a member
of an "affiliated service group" (as defined under section 414(m) of the Code)
of which the Company is a member, (d) any entity required to be aggregated with
the Company under section 414(o) of the Code or (e) any other subsidiary or
affiliate of the Company designated by the Board of Directors to be a Related
Company.
2.54 REQUIRED BEGINNING DATE. Effective for Participants who attain age
70-1/2 before January 1, 1996, the first day of April following the calendar
year in which the Participant attains age 70-1/2. Effective January 1, 1997, the
Required Beginning Date for Participants, including Participants who attain age
70-1/2 during the 1996 calendar year, shall be determined as follows:
(a) Non-5% Owners. The first day of April following the calendar year in
which the later of separation from service or age 70-1/2 occurs.
(b) 5% Owners. For Participants who are 5% Owners at any time
during the Plan Year ending with or within the calendar year in which such
Participant attains age 70-1/2, the first day of April following the calendar
year in which the Participant attains age 70-1/2.
(c) Special Election. For Participants who attain age 70-1/2 on or
after January 1, 1996 but prior to January 1, 1999, the Participant's Required
Beginning Date may be as set forth above for Participants who attain age 70-1/2
before January 1, 1996, pursuant to a written election by the Participant which
is filed with the Plan Administrator or its representative.
(d) Actuarial Increase. Except with respect to 5% Owners, a
Participant's Accrued Benefit is actuarially increased to take into account the
period after age 70-1/2 in which the Participant does not receive any benefit
under the Plan. The actuarial increase begins on the April 1 following the
calendar year in which the Participant attains age 70-1/2 (January 1, 1997 in
the case of a Participant who attained age 70-1/2 prior to 1996), and ends on
the date on which benefits commence after retirement in an amount sufficient to
satisfy section 401(a)(9) of the Code. The amount of actuarial increase payable
as of the end of the period for actuarial increases must be no less than the
Actuarial Equivalent of the Participant's retirement benefits that would have
been payable as of the date the actuarial increase must commence plus the
Actuarial Equivalent of additional benefits accrued after that date, reduced by
the Actuarial Equivalent of any distributions made after that date. The
actuarial increase must generally be the same as, and not in addition to, the
actuarial increase required for that same period under section 411 of the Code
to reflect the delay in payments after normal retirement, except that the
actuarial increase required under section 401(a)(9) of the Code must be provided
even during the period during which a Participant is in service pursuant to
section 203(a)(3)(B) of the Code. For purposes of section 411(b)(1)(H) of the
Code, the actuarial increase will be treated as an adjustment attributable to
the delay in distribution of benefits after the attainment of Normal Retirement
Age. Accordingly, to the extent permitted under section 411(b)(1)(H) of the
Code, the actuarial increase required under section 401(a)(9)(C)(iii) of the
Code may reduce the benefit accrual otherwise required under section
411(b)(1)(H)(i) of the Code, except that the rules on the suspension of benefits
are not applicable.
2.55 SOCIAL SECURITY RETIREMENT AGE. Age 65 in the case of a Participant
attaining age 62 before January 1, 2000 (i.e., born before January 1, 1938), age
66 for a Participant attaining age 62 after December 31, 1999, and before
January 1, 2017 (i.e., born after December 31, 1937, but before January 1,
1955), and age 67 for a Participant attaining age 62 after December 31, 2016
(i.e., born after December 31, 1954).
2.56 SPONSORING COMPANY. Commonwealth Industries, Inc., a Delaware
corporation, and any successor employer, whether by merger, purchase of assets
or otherwise, who adopts the Plan. Prior to January 1, 1998, the Sponsoring
Company was known as the Commonwealth Aluminum Corporation, a Delaware
corporation.
2.57 SPOUSE.
(a) On and After January 1, 2002. A surviving Spouse who was
legally married to a Participant on the Participant's Annuity Starting Date, or
if the Participant dies before the Participant's Annuity Starting Date, a
surviving Spouse who was legally married to a Participant at the time of the
Participant's death, provided that a former Spouse will be treated as a Spouse
to the extent provided under a Qualified Domestic Relations Order.
(b) Before January 1, 2002. A surviving Spouse who was legally
married to a Participant on the Participant's Annuity Starting Date for at least
one year, or if the Participant dies before the Participant's Annuity Starting
Date, a surviving Spouse who was legally married to a Participant at the time of
the Participant's death at least one year, provided that a former Spouse will be
treated as a Spouse to the extent provided under a Qualified Domestic Relations
Order.
2.58 SUBSTANTIVE AMENDMENT DATE. The Effective Date or, if later, the
date of the most recent amendment which substantially increased the extent of
possible discrimination in favor of highly compensated employees as to
contributions and benefits actually payable upon termination of the Plan.
2.59 TERMINATION OF EMPLOYMENT. The termination of a Participant's
employment with the Company, whether voluntary or involuntary, prior to the
Participant's death or attainment of the Participant's Normal Retirement Age.
2.60 TRUST. The Trust Agreement effective August 1, 1989, by and between
Commonwealth Industries, Inc. (then known as Commonwealth Aluminum Corporation)
and National City Bank of Kentucky, and as it may be further amended from time
to time.
2.61 TRUST FUND. All cash, securities or other property received by the
Trustee in the Trust on the date hereof and received hereafter by the Trustee as
Contributions and all securities or other property purchased or acquired
therewith or therefrom, together with any increase, accretion or accumulation
thereon, and income therefrom, less distributions, payments or expenditures
therefrom as authorized herein, which is held in the Trust Fund pursuant to the
Plan.
2.62 TRUSTEE. National City Bank of Kentucky and any successor trustee
or trustees designated in the manner set forth in the Trust, which accepts the
Trust Fund.
2.63 YEARS OF CREDITED SERVICE.
(a) General Rule.
(1) Effective January 1, 2001, Years of Credited Service shall
consist of each twelve consecutive period, beginning on the first day of
each Plan Year, including full years and completed months, during which an
Employee is employed by a Company. Effective January 1, 2001, no Years of
Credited Service for years or completed months shall be credited for a
period during which an Employee is eligible to receive long-term disability
under a group insurance plan sponsored by a Company. Effective on and after
January 1, 1998 but prior to January 1, 2001, Years of Credited Service
shall consist of each twelve consecutive month period, beginning on an
Employee's date of hire by a Company and each anniversary thereafter,
including full years and completed months, during which an Employee is
employed by a Company. Effective prior to January 1, 1998, the Plan Years
commencing on an Employee's date of hire in which the Employee has Credited
Service and completes at least 1,000 Hours of Service.
(2) If a Participant who is not vested shall have five or more
consecutive Breaks in Service, Years of Credited Service completed prior
thereto shall be included only if (1) such Participant completes a Year of
Credited Service after the Participant's latest date of reemployment, and
(2) the number of consecutive Breaks in Service is less than the greater of
five or the number of Years of Credited Service completed by the
Participant prior to the first Plan Year in which a Break in Service
occurs.
(b) Special Rules.
(1) On or After January 1, 2001. Effective January 1, 2001,
Years of Credited Service shall be granted for years in which a Participant
is eligible to receive an allocation of contributions under any profit
sharing plan of the Company. In the event that Years of Credited Service
used in determining a retirement benefit under this Plan duplicate service
for which a Participant is entitled to a retirement benefit from another
defined benefit plan to which the Company has contributed on behalf of the
Participant, the monthly amount of the benefit, with respect to which the
service for which the duplication exists, in the accrued form, payable
under this Plan, shall be reduced by the monthly amount of the retirement
benefit, in the accrued form, under such other defined benefit plan.
(2) Before January 1, 2001. Effective before January 1, 2001,
a Participant shall not receive a Year of Credited Service under the Plan
for any year in which (A) the Participant is eligible to receive an
allocation of contributions under any profit sharing plan of the Company
(other than the Commonwealth Aluminum Corporation Performance Sharing Plan
for Salaried Employees, later known as the Commonwealth Industries Savings
Plan), or (B) the Company makes contributions to a multi-employer pension
plan on behalf of such Participant.
2.64 YEARS OF VESTING SERVICE.
(a) General Rule. A twelve consecutive month period, beginning on
an Employee's date of hire by a Company or Related Company and each anniversary
thereafter, including full years and completed months, during which an Employee
is employed by a Company or Related Company. Years of Vesting Service shall be
credited for years of employment while an Employee was employed by CasTech
Aluminum Group, Inc., if such Employee became a Participant in the Plan on
January 1, 1998. For Plan Years beginning on or after January 1, 1994, an
Employee who completes fewer than 1,000 Hours of Service during a Plan Year
shall not receive credit for a Year of Vesting Service for that Plan Year. For
Plan Years beginning before January 1, 1994, credit for Plan Years in which an
Employee completes fewer than 1,000 Hours of Service shall be given according to
the following schedule:
Hours of Service Fraction of Year of
Complete During Plan Year Vesting Service Credited
866 - 999 5/12
693 - 865 4/12
519 - 692 3/12
346 - 518 2/12
173.33 - 345 1/12
(b) Exceptions. If a Participant incurs a Break in Service, the
Participant's pre-break and post-break Years of Service shall be aggregated and
credited only as provided in this Section 2.64(b). If a Participant's pre-break
Years of Service are not to be aggregated with the Participant's post-break
Years of Service as provided in Section 2.64(b), the Participant shall be
credited only with such post-break Years of Service.
(1) If a Participant has a vested interest under the Plan as a
result of the Participant's pre-break Years of Service, the Participant's
post-break Years of Service shall be aggregated with the Participant's
pre-break Years of Service only upon the Participant's completion of one
Year of Service after such Break in Service.
(2) If the Participant does not have a vested interest in the
Plan as a result of the Participant's Years of Service prior to the
Participant's Break in Service, and if the number of consecutive Breaks in
Service equals or exceeds the greater of five, or the number of Years of
Service prior to such Break in Service, the Participant's pre-break Years
of Service shall not be aggregated.
(3) The aggregate number of Years of Service before any Break
in Service under this Section 2.64(b) shall be deemed not to include any
Years of Service not required to be taken into account by reason of any
prior Break in Service. In computing Years of Vesting Service, all Years of
Vesting Service of an Employee shall be taken into account, except in the
case of an Employee who is not entitled to a benefit upon a Termination of
Employment, Years of Vesting Service before a Break in Service shall not be
taken into account in determining the vested percentage of the
Participant's benefit if the number of consecutive Breaks in Service equals
or exceeds the greater of five consecutive Breaks in Service, or the
aggregate number of Years of Vesting Service prior to such Breaks in
Service.
ARTICLE 3
PARTICIPATION AND SERVICE
3.1 DATE EMPLOYEES BECOME PARTICIPANTS.
(a) Participants Eligible on Effective Date. Each Employee who was
a Participant in the Prior Plan on the day before the Effective Date shall
continue to be a Participant in the Plan if the Employee is still employed by
the Company on the Effective Date.
(b) Other Employees. Effective January 1, 2002, only an Employee
who is regularly scheduled to work 1,000 Hours of Service during the Employee's
first year of employment shall become a Participant on the Participant's date of
hire; provided, if an Employee who is not regularly scheduled to work at least
1,000 Hours of Service during the Employee's first year of employment, such
Employee shall become a Participant as of the first day of January or July
immediately following the date on which such Employee actually completes 1,000
Hours of Service. Prior to January 1, 2002, each Employee shall become a
Participant on the first Entry Date coinciding with the date on which the
Employee first becomes employed by the Company. Individuals who were employed by
CasTech Aluminum Group, Inc. and who became Employees of the Company on December
31, 1997 shall become covered under the Plan as of January 1, 1998.
3.2 ELIGIBILITY OF REHIRED EMPLOYEES. A Participant who incurs a
Termination of Employment and again becomes an Employee shall become a
Participant in accordance with Section 3.1. Solely for purposes of this Section
3.2, the phrase Termination of Employment shall include retirement on or after
Normal Retirement Age.
3.3 NOTICE OF PARTICIPATION. Each Employee shall be notified when such
Employee becomes eligible to be a Participant and at such time shall be
furnished with a summary of the Plan.
3.4 CHANGE IN EMPLOYMENT STATUS. In the event that an Employee who has
been included in another defined benefit pension plan of a Company or who
otherwise has not been an Employee for purposes of participating in this Plan is
transferred into a class of employment covered by this Plan, upon subsequent
retirement, death or other Termination of Employment, the following provisions
shall apply:
(a) Years of Credited Service. Such Participant may receive
benefits determined by the provisions of this Plan as though all the
Participant's Years of Credited Service had been under this Plan, except that a
Participant's who has no computation period of 1,000 Hours of Service or more
during participation under this Plan shall not receive Years of Credited Service
for such periods prior to the transfer. However, Years of Credited Service prior
to such transfer, determined by the provisions of this Plan, shall be granted
for Employees for which no other defined benefit pension plan of any Company
applies. If such Years of Credited Service are not granted under this Plan, the
offset provisions of Section 3.4(b) shall apply.
(b) Offset of Benefits. Anything in the foregoing to the contrary
notwithstanding, if any benefits shall be payable to such Participant from such
other defined benefit pension plan the monthly amount of such benefits shall be
offset against the monthly amount of corresponding benefits payable under this
Plan, and only the net amount of any excess benefits provided by this Plan shall
be paid from the Trust. Such offset shall be made based strictly on comparable
forms of benefit which have been elected. If a comparable form of benefit has
not been elected under the other plan, an Actuarial Equivalent (based on the
provisions of this Plan) shall be determined for purposes of establishing a
monthly offset to this Plan's benefits.
(c) Transfers After Cash Balance Conversion. Effective January 1,
2001, if a Participant transfers to this Plan from another defined benefit
pension plan of the Company or a Related Company, the benefit payable from such
other plan shall not be converted to an initial Account Balance under the Plan
but shall remain payable from such other plan and the offset provisions of
Section 3.4(b) shall apply. In the case of such transfer of a Participant from
another defined benefit pension plan of the Company or a Related Company,
Benefit Credits and Interest Credits will accrue in accordance with Section 2.2
as if the Participant had first become employed by the Company as of the
Participant's date of transfer to the Plan and shall be applied only to the
Participant's Account Balance under the Plan. Effective on and after January 1,
1998 but prior to January 1, 2001, if a Participant transfers to this Plan from
another defined benefit pension plan of the Company or a Related Company, the
benefit payable from such other plan may be converted to an initial Account
Balance under this Plan based on the Actuarial Equivalent of the Participant's
retirement benefit from such other defined benefit pension plan, and Benefit
Credits and Interest Credits will accrue in accordance with Section 2.2. If such
conversion to an initial Account Balance is made, the benefit payable upon the
Participant's Termination of Employment, retirement, or death shall be paid
solely from this Plan. If such conversion to an initial Account Balance is not
made, the offset provisions of Section 3.4(b) shall apply. In the event a
Participant transfers from this Plan to another defined benefit pension plan of
the Company or a Related Company, the Participant's Account Balance shall be
converted to an annuity for purposes of the offset that will apply to the
benefit the Participant earns under the other defined benefit pension plan, but
the Account Balance earned under this Plan shall be payable in accordance with
the terms of this Plan.
(d) Transfer to Other Plan. In the event an Employee who shall
have become included under this Plan is transferred to another class of
employment not covered by this Plan, such Employee shall be subject to
retirement under the terms of such other defined benefit pension plan (if any)
as is applicable to the class of employment into which the Employee is
transferred. The Participant's Accrued Benefit under this Plan to the extent
vested shall be later payable after termination of employment in such other
class of employment in accordance with the provisions of this Plan. Years of
Credited Service shall not be granted in this Plan for such subsequent
employment which is not covered by this Plan.
(e) Vesting Service. Notwithstanding anything in the foregoing to the
contrary, Years of Vesting Service shall be aggregated among all class of
employment by an Employee of the Company.
3.5 PROVISIONS OF PLAN BINDING ON PARTICIPANTS. Upon becoming a
Participant, a Participant shall be bound then and thereafter by the terms of
the Plan, including all amendments thereto.
3.6 CORRECTION OF INADVERTENT ERROR. Anything in the Plan to the
contrary notwithstanding, if a Participant is inadvertently excluded from
participation in any Plan Year, or if the Accounts of any Participant are
inadvertently credited or debited with an incorrect amount for any Plan Year,
the Benefits Committee shall correct such error as soon as is administratively
feasible after the discovery of the error. In the event an error in the
Participant's Account cannot be corrected in any other manner, the Company shall
contribute in the Plan Year in which the error is discovered an amount necessary
to place the Participant's Account in the same position in which it would have
been had the error not been made.
3.7 CORRECTING A COVERAGE OR PARTICIPATION FAILURE.
(a) Coverage or Participation Failure. If the Plan would fail to
satisfy sections 401(a)(26) or 410(b) of the Code for a Plan Year because an
insufficient number of non-excludable Employees are not benefitting under the
Plan for such Plan Year, the Company may direct that former Employees who would
otherwise not have been eligible to accrue benefits for such Plan Year be
included as Participants who are eligible to accrue benefits for such Plan Year.
If the Company so directs, the former Employees to be included shall be limited
to the number necessary to cause the Plan to satisfy sections 401(a)(26) or
410(b) of the Code.
(b) Selection of Former Employees. The selection of former
Employees for inclusion shall be as determined by the Company when such
determination becomes necessary from time to time, but shall be in a manner that
does not discriminate in favor of Highly Compensated Employees.
(c) Other Methods. The inclusion of former Employees in the
allocation of Contributions by the Company as set forth in this Section 3.7
shall not be deemed the exclusive method for correcting or preventing the Plan's
failure to satisfy sections 410(b) or 401(a)(26) of the Code. Provided, any
other method shall be applied in a manner that does not discriminate in favor of
Highly Compensated Employees.
ARTICLE 4
BENEFITS
4.1 NORMAL RETIREMENT BENEFIT. Each Participant who attains Normal
Retirement Age shall have a nonforfeitable right to receive such Participant's
Normal Retirement Benefit, commencing on the Participant's Normal Retirement
Date.
(a) Before January 1, 1998. For Participants who retire or
otherwise terminate employment in Plan Years commencing prior to January 1,
1998, a Participant's Normal Retirement Benefit is a benefit in the Normal Form
commencing as of the Participant's Normal Retirement Date equal to the sum of
(1) and (2), where
(1) is 1.15% of such Participant's Average Monthly Compensation,
multiplied by the Participant's Years of Credited Service; and
(2) is 0.45% of the Participant's Average Monthly Compensation
in excess of the Participant's Covered Compensation, multiplied by the
Participant's Years of Credited Service, not to exceed 35 Years of Credited
Service.
If a Participant's Benefit is payable in a form other than the Normal Form, the
amount payable under that form shall be the Actuarial Equivalent of the amount
payable in the Normal Form.
(b) On or After January 1, 1998. For Participants who retire or
otherwise terminate employment in Plan Years commencing on or after January 1,
1998, a Participant's Normal Retirement Benefit is a benefit equal to the
Participant's Account Balance on the Participant's Normal Retirement Date,
converted to a benefit in the Normal Form using the 1983 GAM (50/50) Mortality
Table and an interest rate equal to the lesser of 6% or the Applicable Interest
Rate described in Section 2.2(c)(2).
4.2 LATE RETIREMENT BENEFIT. A Participant may continue employment
beyond the Participant's Normal Retirement Age. During such continuing
employment, no benefits shall be paid from the Plan unless required under
Section 5.1(b). Upon actual retirement after the Participant's Normal Retirement
Age for reasons other than death, the Participant shall receive a monthly
benefit in the Normal Form equal to the greater of (a) the amount determined
under Section 4.1, above, considering all Years of Credited Service or (b) the
Actuarial Equivalent of the Participant's Normal Retirement Benefit. In the
event a Participant begins to receive the benefit while employed because of the
requirements of Section 5.1(b), the Participant's Late Retirement Benefit shall
be the Participant's benefit calculated under Section 4.1 less the Actuarial
Equivalent of the distributions the Participant has received.
4.3 EARLY RETIREMENT BENEFIT. A Participant or former Participant who
attains the Early Retirement Date may retire and be eligible for a monthly
benefit in the Normal Form commencing on the Participant's Normal Retirement
Date or anytime after the Participant's Early Retirement Date, if the
Participant so elects at or following Termination of Employment. The benefit
payable on or after the Participant's Early Retirement Date, but prior to the
Participant's Normal Retirement Date, shall equal the amount of the Normal
Retirement Benefit determined under Section 4.1 above, reduced by 5/12 of 1% for
each month by which the Participant's Early Retirement Date precedes the first
day of the month coincident with or next following attainment of age 62.
Notwithstanding the preceding sentence to the contrary, the Participant's Early
Retirement Benefit shall not be less than the Actuarial Equivalent of the
Participant's Accrued Benefit.
4.4 DISABILITY BENEFIT. Effective January 1, 2001, each Participant who
terminates employment as a result of Disability shall have a nonforfeitable
right to receive such Participant's Normal Retirement Benefit determined under
Section 4.1. A Participant who terminates employment on account of Disability
may elect to receive the Participant's vested Account Balance in a single sum
distribution on the Participant's as soon as administratively practicable
following a final determination that the Participant is Disabled or may defer
payment of the Participant's vested Account Balance until any later date, but no
later than the Participant's Normal Retirement Date. Any election to receive a
single sum distribution shall be subject to the spousal consent requirements of
Section 2.50. A Participant who elects to defer payment of such Participant's
vested Account Balance shall continue to receive interest credits as described
in Section 2.2(c) until the Participant's benefit is distributed or distribution
of such benefit commences. A Participant who elects to defer receipt of the
Participant's vested Account Balance may elect distribution of the Participant's
Account Balance as a single sum distribution at any time, but no later than the
Participant's Normal Retirement Date. If the Participant elects to receive the
Participant's benefit in the form of monthly payments, the Participant's Account
Balance shall be converted to a benefit in the Normal Form using the 1983 GAM
(50/50) Mortality Table and an interest rate equal to the lesser of 6% or the
Applicable Interest Rate described in Section 2.2(c)(2). Distributions available
under this Section 4.4 are subject to the retirement benefit cash-out provisions
of Section 5.1(f).
4.5 DEFERRED VESTED BENEFIT.
(a) Vesting Schedule. If a Participant terminates employment for
any reason other than retirement at or after Early Retirement Age or Normal
Retirement Age or, effective January 1, 2001, on account of Disability, such
Participant shall be entitled to a benefit in the Normal Form which shall
commence on the Participant's Normal Retirement Date, in an amount equal to the
Participant's Accrued Benefit times the percentage set out in the following
schedule:
Vested Percentage
Years of Vesting Service of Accrued Benefit
Less than 5 0%
5 or more 100%
(b) Application of Forfeitures. A Participant who is 0% vested
upon such Participant's termination of employment shall forfeit the
Participant's entire Accrued Benefit and be deemed to have received a cash-out
distribution. Any amounts attributable to a Participant's forfeiture of the
Participant's Accrued Benefit shall be used to reduce Company contributions to
the Plan. If such former Participant is re-employed by the Company before the
earlier of the fifth anniversary of the Participant's Termination Date or the
date the Participant incurs five consecutive Breaks in Service, the
Participant's previously forfeited Accrued Benefit will be restored.
(c) Commencement and Determination of Benefit. A former
Participant who terminates employment and who is entitled to a benefit under
Section 4.5(a) may, prior to attaining Normal Retirement Age, elect to commence
receiving benefits under this Section 4.5 prior to Normal Retirement Age. Such
payment shall commence for any month following the Participant's Termination of
Employment as the Participant elects. The benefit payable prior to the
Participant's Normal Retirement Date shall equal the amount of the Normal
Retirement Benefit determined under Section 4.1, above, reduced by 5/12 of 1%
for each month by which the Participant's Termination of Employment precedes the
Participant's Normal Retirement Date. Notwithstanding the preceding to the
contrary, benefits payable under this Section 4.5 shall not be less than the
Actuarial Equivalent of the Participant's Accrued Benefit.
(d) Commencement and Determination of Benefit for Participants
with Account Balances. Effective January 1, 1998, a Participant who terminates
employment and who is entitled to a benefit under Section 4.5(a) may elect to
receive the Participant's vested Account Balance in a single sum distribution on
the Participant's Termination of Employment date or may defer payment of the
Participant's vested Account Balance until any later date, but no later than the
Participant's Normal Retirement Date. Any election to receive a single sum
distribution shall be subject to the spousal consent requirements of Section
2.50. A Participant who elects to defer payment of such Participant's vested
Account Balance shall continue to receive interest credits as described in
Section 2.2(c) until the Participant's benefit is distributed or distribution of
such benefit commences. A Participant who elects to defer receipt of the
Participant's vested Account Balance may elect distribution of the Participant's
vested Account Balance as a single sum distribution at any time, but no later
than the Participant's Normal Retirement Date. If the Participant elects to
receive the Participant's benefit in the form of monthly payments, the
Participant's vested Account Balance shall be converted to a benefit in the
Normal Form using the 1983 GAM (50/50) Mortality Table and an interest rate
equal to the lesser of 6% or the Applicable Interest Rate described in Section
2.2(c)(2). Distributions available under this Section 4.5(d) are subject to the
retirement benefit cash-out provisions of Section 5.1(f).
4.6 QUALIFIED PRERETIREMENT SURVIVOR ANNUITY. If a married Participant
who is eligible for a benefit under Sections 4.1, 4.2 or 4.3, or who has a
vested benefit under Section 4.5, dies prior to commencement of such benefits,
the Participant's Spouse shall be entitled to a Qualified Preretirement Survivor
Annuity, unless it has been waived pursuant to a Qualified Election in the
Election Period.
4.7 ADDITIONAL DEATH BENEFIT. Effective January 1, 1998, upon the death
of an active Participant with a vested Account Balance, such Participant's
Beneficiary shall receive a preretirement death benefit as described below if
all the following requirements were met when the Participant died:
(a) the Participant's cessation of service had not previously occurred;
and
(b) the Participant has no Spouse or, in the case of a Participant
who has a Spouse, has an election to waive the Qualified Preretirement Survivor
Annuity in effect.
If the above requirements are met, a single sum distribution shall be paid to
the Participant's Beneficiary in an amount equal to the Participant's vested
Account Balance as of the Participant's date of death.
ARTICLE 5
MANNER OF BENEFIT PAYMENTS AND OPTIONAL FORMS
5.1 BENEFIT PAYMENTS.
(a) Form of Distribution of Benefits.
(1) Each married or single Participant who is eligible to
receive benefits provided by the Plan shall receive them in the form of a
Qualified Joint and Survivor Annuity unless such Participant makes a
Qualified Election. Any benefit with a present value of more than $3,500
shall not be distributed before the Participant attains Normal Retirement
Age without the permission of the Participant. Payment in the form of a
Qualified Joint and Survivor Annuity after the Participant attains Normal
Retirement Age shall not require the consent of the Participant or the
Participant's Spouse if the Participant has separated from service. The
Qualified Joint and Survivor Annuity shall be the Actuarial Equivalent of
the Normal Form of benefit due the Participant. Effective January 1, 2002,
"$5,000" shall be substituted for "$3,500" in this Section 5.1(a)
(2) A Participant, pursuant to a Qualified Election, may make
a written request for an alternative form of payment by filing such request
with the Benefits Committee or its representative during the Election
Period. The alternative forms of benefit shall be the Actuarial Equivalent
of the Normal Form. The alternative forms are:
(A) An annuity for the life of the Participant.
(B) An annuity for the life of a Participant and for the
life of the Participant's Beneficiary in an amount equal to the monthly
payments paid to the Participant during the Participant's lifetime.
(C) An annuity for the life of a Participant and for the
life of the Participant's Beneficiary in an amount equal to 75% of the
monthly payments paid to the Participant during the Participant's lifetime.
(D) An annuity for the life of a Participant and for the
life of the Participant's Beneficiary in an amount equal to 66-2/3% of the
monthly payments paid to the Participant during the Participant's lifetime.
(E) An annuity for the life of a Participant and for the
life of the Participant's Beneficiary in an amount equal to 50% of the
monthly payments paid to the Participant during the Participant's lifetime.
(F) An annuity for the life of the Participant with
payments for a minimum of 10 years.
(G) An annuity for the life of the Participant with
payments for a minimum of five years.
(H) For Participants who retire before the earliest date
that Social Security payments can begin, an annuity for the life of the
Participant with monthly payments adjusted so that a level income results
both before and after the Participant's Social Security payments begin,
based on the assumption that the Participant will elect to receive Social
Security payments at the earliest possible date.
(I) For Participants with a present value of vested
Accrued Benefits of $20,000 or less determined on an Actuarial Equivalent
basis, a single sum distribution; provided, if a Participant terminates
employment prior to the Participant's Early Retirement Date, the single sum
distribution available under this Section 5.1(a)(2)(I) may only be elected
following a one-year Break in Service.
(J) Effective January 1, 1998, the single sum distribution
form of benefit shall be available as described in Section 4.5(d);
provided, in the case of a Participant who has attained age 55 and
completed 10 Years of Credited Service as of December 31, 1997, the
following shall apply: in the event the Account Balance of such Participant
is less than the Actuarial Equivalent of such Participant's Accrued Benefit
determined in accordance with Section 2.2(d), such Participant shall
receive a benefit equal to the Participant's vested Account Balance as a
single sum distribution, plus a monthly retirement income determined by
converting the difference of the Participant's Account Balance and the
Actuarial Equivalent of such Participant's Accrued Benefit determined in
accordance with Section 2.2(d) to a benefit in the Normal Form using the
1983 GAM (50/50) Mortality Table and an interest rate equal to the lesser
of 6% or the Applicable Interest Rate described in Section 2.2(c)(2).
(b) Latest Benefit Commencement. The benefit of a Participant
shall be distributed or commence to be distributed no later than the Required
Beginning Date in the minimum amount required under Treasury regulations
implementing section 401(a)(9) of the Code. With respect to distributions under
the Plan made for calendar years beginning on or after January 1, 2001, the Plan
will apply the minimum distribution requirements of section 401(a)(9) of the
Code in accordance with the regulations under section 401(a)(9) of the Code that
were proposed in January 2001, notwithstanding any provision of the Plan to the
contrary. This amendment shall continue in effect until the end of the last
calendar year beginning before the effective date of final regulations under
section 401(a)(9) of the Code or such other date as may be specified in guidance
published by the Internal Revenue Service.
(c) Minimum Distribution Incidental Benefit. If distribution
commences under a distribution option that is in the form of a joint and
survivor annuity for the joint lives of the Participant and a Beneficiary other
than the Participant's Spouse, the applicable percentage of the annuity payment
on or after the Participant's Required Beginning Date shall not be less than
that amount required under Proposed Treasury Regulation section 1.401(a)(9)-2.
If a distribution form includes a period certain feature, the period certain
shall, with respect to the Participant, comply with the requirements of Proposed
Treasury Regulation section 1.401(a)(9)-2.
(d) Notice Requirements.
(1) Qualified Joint and Survivor Annuity. In the case of a
Qualified Joint and Survivor Annuity, the Plan Administrator or its
representative shall provide each Participant no less than 30 days and no
more than 90 days prior to the Participant's Annuity Starting Date with a
written explanation of:
(A) The terms and conditions of a Qualified Joint and Survivor Annuity;
(B) The Participant's right to make, and the effect of, an
election to waive the Qualified Joint and Survivor Annuity form of benefit;
(C) The rights of a Participant's Spouse;
(D) The right to make, and the effect of, a revocation of
a previous election to waive the Qualified Joint and Survivor Annuity; and
(E) The relative value of the optional forms of benefit
under the Plan.
(2) The annuity starting date for a distribution in a form
other than a qualified joint and survivor annuity may be less than 30 days
after receipt of the written explanation described in Section 5.1(d)(1),
provided:
(A) the Participant has been provided with information
that clearly indicates that the Participant has at least 30 days to
consider whether to waive the qualified joint and survivor annuity form of
benefit and elect (with spousal consent) to a form of distribution other
than a qualified joint and survivor annuity form of benefit;
(B) the Participant is permitted to revoke any affirmative
distribution election at least until the annuity starting date or, if
later, at any time prior to the expiration of the 7-day period that begins
the day after the explanation of the qualified joint and survivor annuity
is provided to the Participant; and
(C) the annuity starting date is a date after the date
that the written explanation was provided to the Participant.
(3) Qualified Preretirement Survivor Annuity. In the case of a
Qualified Preretirement Survivor Annuity, the Plan Administrator or its
representative shall provide each Participant with a written explanation of
the Qualified Preretirement Survivor Annuity in such terms and in such
manner as would be comparable to the explanation provided for meeting the
requirements of Section 5.1(d)(1), above, with respect to a Qualified Joint
and Survivor Annuity. Such explanation shall be provided as follows:
(A) Generally, the Plan Administrator or its
representative shall provide such notice to each Participant within the
period beginning on the first day of the Plan Year in which the Participant
attains age 32 and ending with the close of the Plan Year preceding the
Plan Year in which the Participant attains age 35.
(B) If a Participant enters the Plan after the first day
of the Plan Year in which the Participant attained age 32, the Plan
Administrator or its representative shall provide notice no later than the
close of the second Plan Year succeeding the Plan Year in which the
Participant entered the Plan.
(C) If this Section 5.1(d) becomes applicable to a
Participant's benefit not previously subject to the qualified joint and
survivor annuity and qualified preretirement survivor annuity rules, the
Plan Administrator or its representative shall provide notice no later than
the close of the two-year period which begins one year prior to the date
this Section 5.1(d) becomes applicable to the benefit and ends one year
after the benefit becomes subject to this Section 5.1(d).
(D) If a Participant separates from service prior to age
35, the Plan Administrator or its representative shall provide notice no
later than the close of the two-year period which begins one year prior to
the separation and ends one year after the separation. If such Participant
thereafter returns to employment with the Company, the Plan Administrator
or its representative shall provide notice as required by Section 5.1(d)(3)
through (C), above, with respect to such Participant.
(e) Transitional Rules.
(1) Any living Participant not receiving benefits on August
23, 1984, who would otherwise not receive the Benefits in a manner
prescribed by paragraph (a) or (b), above, shall be given the opportunity
to elect to have such sections apply if such Participant is credited with
at least one Hour of Service under the Plan or a Prior Plan in a Plan Year
beginning on or after January 1, 1976, and such Participant had been
credited with at least 10 Years of Vesting Service when such Participant
separated from service.
(2) Any living Participant not receiving Benefits on August
23, 1984, who was credited with at least one Hour of Service under the Plan
or a Prior Plan on or after September 2, 1974, and who is not otherwise
credited with any service in a Plan Year beginning on or after January 1,
1976, shall be given the opportunity to have such Participant's Benefits
paid in accordance with (iv) below.
(3) The respective election, as described in (i) and (ii),
above, shall be afforded to such Participants during the period commencing
on August 23, 1984, and ending on the date Benefits would otherwise
commence to such Participants.
(4) Any Participant who has elected pursuant to (ii), above,
and any Participant who does not elect under (i), above, or who meets the
requirements of (i), above, except that the Participant was not credited
with at least 10 Years of Vesting Service when the Participant separated
from service, shall have the Benefits distributed in accordance with all of
the following requirements if Benefits would have been payable in the form
of a life annuity:
(A) Qualified Joint and Survivor Annuity. If Benefits in
the form of a life annuity become payable to a married Participant who:
(i) Begins to receive payments under the Plan on or after Normal
Retirement Age; or
(ii) Dies on or after Normal Retirement Age while still working for the
Company; or
(iii) Begins to receive payments on or after the qualified early
retirement age (as defined in Section 5.1(e)(4)(C); or
(iv) Separates from service on or after attaining Normal Retirement Age
(or the qualified early retirement age) and after satisfying the eligibility
requirements for the payment of Benefits under the Plan and thereafter dies
before beginning to receive such Benefits; then such Benefits will be
distributed in the form of a Qualified Joint and Survivor Annuity, unless the
Participant has elected otherwise during the election period. The election
period shall begin at least six months before the Participant attains qualified
early retirement age and end not more than 90 days before the commencement of
the distribution of the Participant's Benefits. Any election hereunder shall be
in writing and may be changed by the Participant at any time.
(B) Election of Early Survivor Annuity. A Participant who
is employed after attaining the qualified early retirement age shall be
given the opportunity to elect, during the election period, to have a
survivor annuity payable on death. If the Participant elects the survivor
annuity, payments under such annuity shall not be less than the payments
which would have been made to the Spouse under the Qualified Joint and
Survivor Annuity if the Participant had retired on the day before the
Participant's death. Any election under this provision shall be in writing
and may be changed by the Participant at any time within the election
period. The election period begins on the later of: (1) the 90th day before
the Participant attains the qualified early retirement age, or (2) the
Entry Date on which the Participant entered the Plan, and ends on the date
the Participant terminates employment.
(C) For purposes of paragraph (iv), the qualified early
retirement age is the latest of:
(i) The earliest date, under the Plan, on which the Participant may
elect to receive retirement benefits,
(ii) The first day of the 120th month beginning before the Participant
reaches Normal Retirement Age, or
(iii) The date on which the Participant enters the Plan.
(f) Retirement Benefit Cashout.
(1) Present Value of $3,500 or Less. In the event that the
present value of a Participant's Qualified Joint and Survivor Annuity, a
surviving Spouse's survivor annuity, the Qualified Preretirement Survivor
Annuity or any other benefit does not exceed $3,500 (on the date that such
benefit becomes payable or at the time of any prior distribution), the
Benefits Committee shall cause such benefit to be distributed as a cash
single sum within a reasonable period following the event which gives rise
to payment, notwithstanding the Qualified Joint and Survivor Annuity or
Qualified Preretirement Survivor Annuity provisions of Section 5.1 or
Section 4.6, or the election by the Participant under Section 5.1(a). For
purposes of this Section 5.1(f), if the present value of the Participant's
vested Accrued Benefit is zero, the Participant shall be deemed to have
received a distribution of such vested Accrued Benefit. Effective January
1, 2002, "$5,000 (on the date such benefit becomes payable)" shall be
substituted for "$3,500 (on the date such benefit becomes payable or at the
time of any prior distribution)" in this Section 5.1(f)(1); provided, if a
Participant has begun to receive distributions pursuant to an optional form
of benefit under which at least one scheduled periodic distribution is
still payable, and if the present value of the Participant's nonforfeitable
accrued benefit exceeded $5,000 at the time of the first distribution under
that optional form of benefit, then the present value of the Participant's
nonforfeitable accrued benefit may not be distributed without consent.
(2) Present Value in Excess of $3,500. In the event that the
Qualified Joint and Survivor Annuity, a surviving Spouse's survivor
annuity, the Qualified Preretirement Survivor Annuity or any other benefit
exceeds $3,500 (on the date that such benefit becomes payable or at the
time of any prior distribution), such benefit may begin to be distributed
as a single sum only with the written consent of the Participant and the
Participant's Spouse, or if the Participant has died, the Participant's
surviving Spouse, pursuant to a Qualified Election during the election
period in which the notice requirements of Section 5.1(d), as applicable,
have been met. The Plan Administrator or its representative shall notify
the Participant and the Participant's Spouse in the manner set forth in
Section 5.1(d) of the right to defer any distribution until the Participant
attains or would have attained the later of Normal Retirement Age or age
62. Notwithstanding the preceding, only the written consent of the
Participant is necessary if the benefit is distributed in the form of a
Qualified Joint and Survivor Annuity after the Participant attains the
later of Normal Retirement Age or age 62. Provided, neither the consent of
the Participant nor the Participant's Spouse shall be required for
distributions necessary to satisfy section 401(a)(9) of the Code. Effective
January 1, 2002, "$5,000 (on the date such benefit becomes payable)" shall
be substituted for "$3,500 (on the date that such benefit becomes payable
or at the time of any prior distribution)" in this Section 5.1(f)(2).
(3) Determining Present Value. In determining the value of a
Participant's or Spouse's annuity, the Benefits Committee shall determine the
benefit on an Actuarial Equivalent basis.
(g) Commencement of Benefits on Account of Death. Upon the death of a
Participant, the following distribution provisions shall take effect:
(1) If a Participant dies after distribution of the
Participant's Benefit has commenced, the remaining portion of such Benefit
shall continue to be distributed at least as rapidly as under the method of
distribution in effect immediately prior to the Participant's death.
(2) If a Participant dies before distribution of the
Participant's Benefit has commenced, the Participant's entire Benefit shall
be distributed no later than December 31 of the calendar year containing
the fifth anniversary of the Participant's death, except to the extent that
an election is made to receive distributions in accordance with Sections
5.1(g)(2)(A) or 5.1(g)(2)(B):
(A) Distributions may be made in substantially equal
installments over the life or life expectancy of the Beneficiary commencing
no later than December 31 of the calendar year immediately following the
calendar year in which the Participant died.
(B) If the Beneficiary is the Participant's surviving
Spouse, the date distributions are required to commence in accordance with
Section 5.1(g)(2)(A) shall not be earlier than the later of December 31 of
the calendar year immediately following the calendar year in which the
Participant died, or December 31 of the calendar year in which the
Participant would have attained age 70-1/2.
(C) If the Participant had not elected the method of
distribution prior to the Participant's death, the Beneficiary must elect
the method of distribution no later than the earlier of (1) December 31 of
the calendar year in which distributions would have commenced under Section
5.1(g)(2) or (2) December 31 of the calendar year which contains the fifth
anniversary of the date of the Participant's death. If the Participant has
no Beneficiary, or if the Beneficiary does not elect a method of
distribution, distribution of the Participant's entire interest in the Plan
must be completed by the December 31 of the calendar year containing the
fifth anniversary of the Participant's death.
(3) For purposes of Section 5.1(g)(2), payments will be
calculated by use of the return multiples specified in Table V of the
regulations under section 72 of the Code. The life expectancy of a
surviving Spouse may be recalculated annually, however, in the case of any
other Beneficiary, such life expectancy will be calculated at the time
payment first commences and payments for any 12-consecutive month period
will be based on such life expectancy minus the number of whole years
passed since the distribution first commenced.
(4) If the surviving Spouse dies after the Participant, but
before payments to such Spouse begin, the provisions of Section 5.1(g)(2)
shall apply as if the surviving Spouse were the Participant, except for the
provisions of Section 5.1(g)(2)(B).
(5) For purposes of this Section 5.1(g), any amount paid to a
child or adopted child of the Participant shall be treated as if it had
been paid to the surviving Spouse if the amount becomes payable to the
surviving Spouse when such child, or adopted child, reaches the age of
majority.
(6) For purposes of this Section 5.1(g), distribution of a
Participant's Benefit is considered to commence on the Participant's
Required Beginning Date, or if Section 5.1(g)(4) applies, the date
distribution is required to commence to the surviving Spouse pursuant to
Section 5.1(g)(2)(B).
(h) Annuity Requirements.
(1) Annuity distributions under the Plan shall be paid in
monthly payments for the life (or lives) of the Participant (or
Beneficiary), or over a period certain not longer than the life expectancy
(or joint life and last survivor expectancy) or over the period described
in (f), above, whichever is applicable. The life expectancy (or joint life
and last survivor expectancy) for purposes of determining the length of the
period certain shall be determined in accordance with Treasury regulations,
without recalculation of life expectancy. Once payments have commenced over
a period certain, the period shall not be lengthened even if the period
certain is shorter than the maximum permitted. Payments shall be
non-increasing unless a Participant's benefit increases.
(2) If a Participant elects distribution of the Participant's
Participant Account and Rollover Account in the form of an annuity for the
joint lives of the Participant and a non-Spouse Beneficiary, annuity
payments made on or after the Participant's Required Beginning Date to the
designated Beneficiary after the Participant's death must not at any time
exceed the applicable percentage of the annuity payment for such period
that would have been payable to the Participant pursuant to regulations
under section 401(a)(9) of the Code.
5.2 CONFLICTING PROVISIONS. The provisions of Section 5.1 shall
supersede any conflicting provision of the Plan, including, without limitation,
the provisions of Section 5.4 or Article 4.
5.3 ROLLOVER NOTICE AND ROLLOVER ELECTION.
(a) Distributee to Be Provided With Explanation of Rollovers.
Within a reasonable period of time before making any distribution from the Plan
which is an Eligible Rollover Distribution, the Distributee shall be provided a
written explanation of the provisions under which such distribution will not be
subject to federal income tax if transferred to an Eligible Retirement Plan
within 60 days from the date on which the Distributee received the distribution.
(b) Election to Make Direct Rollover. Notwithstanding any
provision of the Plan to the contrary that would otherwise limit a Distributee's
election under this Section 5.3(b), a Distributee may elect, at the time and in
the manner prescribed by the Benefits 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.
5.4 PAYMENT OF BENEFITS.
(a) Date Benefit Payment Commence. Unless otherwise elected by the
Participant in writing, payment of benefits to a Participant shall begin not
later than the 60th day after the close of the Plan Year in which the latest of
the following occurs:
(1) The Participant's Normal Retirement Age or age 65, if earlier.
(2) Ten years after the Participant commenced participation in the Plan.
(3) The Participant terminates employment with the Company.
Notwithstanding the above provisions of this Section 5.4, the failure of a
Participant to consent to commencement of benefits while benefits are
immediately distributable shall be deemed to be an election to defer
commencement of payment of any benefits sufficient to satisfy the above.
Provided, however, notwithstanding Section 5.4(a)(1), (2) and (3) above,
benefits shall commence not later than the Participant's Required Beginning
Date. Provided further, Participants who are non-5% Owners and attain age 70-1/2
prior to January 1, 1999 while still employed with the Company, may elect to
commence their required minimum distributions pursuant to section 401(a)(9) of
the Code regardless of whether such date constitutes the Participant's Required
Beginning Date.
(b) Payment to Alternate Payees. Anything contained the provisions
of this Article 5 to the contrary notwithstanding, benefits payable to an
alternate payee pursuant to a Qualified Domestic Relations Order may be paid
prior to the Participant's death, Termination of Employment or retirement.
5.5 CLAIM NOT FILED. Nothing in the Plan shall be construed to prevent
the payment of a benefit simply because a claim is not filed by the Participant.
5.6 DUPLICATION OF BENEFITS.
(a) General Rule. Duplication of benefits resulting from a
Participant's re-entry into the Plan shall be prohibited. If a Participant who
receives a benefit pursuant to Section 4.5 is subsequently re-employed and again
becomes a Participant, the Participant's Normal Retirement Benefit or Accrued
Benefit shall be reduced by the Actuarial Equivalent of the present value of the
benefit received as of the date of distribution, unless the amount of such
benefit is repaid to the Trust Fund, plus interest at the rate of 5% per annum
between the date of payment and the date of repayment of the benefit, prior to
the last day of the 60-consecutive month period which commenced on the date the
Participant was re-employed. Such 5% interest rate shall automatically be
adjusted to reflect any regulation issued by the Secretary of Treasury changing
such interest rate for mandatory employee contributions.
(b) On and After January 1, 1998. Effective January 1, 1998, if a
Participant who is receiving retirement benefits from another plan of the
Company is subsequently re-employed as an Employee covered under this Plan, the
Participant's retirement benefit may cease and, if so, any remaining benefit to
which such Participant is entitled shall be converted to an initial Account
Balance under this Plan based on the present value of the Participant's
retirement benefit from such other plan, as determined on an Actuarially
Equivalent basis. If such retirement benefits cease, such Participant shall
receive benefit credits and interest credits as described in Section 2.2 and,
upon the Participant's subsequent retirement, the increase in the Participant's
Account Balance shall be offset by the value of the retirement benefits the
Participant received from the other plan, but in no event shall the
Participant's Account Balance at retirement be less than the Participant's
initial Account Balance.
5.7 SUSPENSION OF BENEFITS.
(a) General Rule. If the Company re-employs a Participant for more
than 83 Hours of Service per month, in each month in which such Participant is
receiving benefits under the Plan on or after Normal Retirement Age, or while
the Participant is receiving early retirement benefits under the Plan, the
Benefits Committee shall instruct the Trustee to suspend payments to the
re-employed Participant until the Participant again terminates employment. When
the Participant terminates reemployment, the Benefits Committee shall not
increase the Participant's Accrued Benefit by the value of the Participant's
suspended monthly payments.
(b) Amount of Suspended Monthly Payments. If the Participant was
receiving benefits in the form of a single life annuity, or a Qualified Joint
and Survivor Annuity, the suspended monthly payment is the portion of the
monthly payment derived from Company contributions which the Participant would
have received if payments had continued. If the Participant was receiving
payments in another form, the suspended monthly payment is the lesser of the
following:
(1) the portion of the monthly payments derived from Company
contributions which the Participant would have received if the benefits had
been paid as a single life annuity; or
(2) the actual Company-derived amount the Participant would
have received for such month under the payment schedule.
(c) Months Suspended Monthly Payments Calculated. The Benefits
Committee or its representative shall calculate a suspended monthly payment for
each month in which the Participant was re-employed for more than 83 Hours of
Service per month. The Benefits Committee shall consider a Participant who has
not terminated employment before Normal Retirement Age as a re-employed
Participant for each month following the Participant's Normal Retirement Age in
which the Participant has more than 83 Hours of Service; and, shall calculate
suspended monthly payments as if the Participant was receiving a straight life
annuity or, if the Participant is married, a Qualified Joint and Survivor
Annuity since Normal Retirement Age.
(d) Top-Heavy Exception. The Benefits Committee shall not reduce
the Participant's Accrued Benefit under this Section 5.7(d) to the extent the
Accrued Benefit represents the Participant's minimum benefit in the Plan Year
that is determined to be top heavy.
(e) Notification of Participant. The Benefits Committee or its
representative shall notify the Participant by first class mail of any suspended
benefits during the first calendar month for which the Benefits Committee would
calculate a suspended monthly payment. The notice shall include an explanation
of why the Plan is suspending the Participant's benefit, a description and a
copy of the provisions of this Section 5.7(e), a statement that the Participant
may find the applicable Department of Labor regulations at 29 CFR 2530.203-3,
and a description of the appeal procedure under Article 17.
(f) Resumption of Payments. When the re-employed Participant again
has 83 Hours of Service or less monthly, the Benefits Committee shall direct the
Trustee to resume payments to the Participant no later than the first day of the
third month following the month in which the Participant had 83 Hours of Service
or less. The first payment shall include the payments that the Trustee should
have paid since the Participant had less than 83 Hours of Service per month. If
the Benefits Committee treats a Participant who continues in employment after
Normal Retirement Age as a re-employed Participant, when the Participant's
monthly Hours of Service level drops to 83 or less, the Benefits Committee shall
calculate the Participant's normal retirement benefit without regard to the
suspended amounts and shall direct the Trustee to commence distribution in
accordance with Article 5.
ARTICLE 6
DESIGNATION OF BENEFICIARY
6.1 MANNER OF DESIGNATION OF BENEFICIARY. Each Employee becoming a
Participant hereunder may designate in writing, in such form and manner as shall
be prescribed by the Benefits Committee, one or more Beneficiaries and
contingent Beneficiaries of the benefit which may be payable by reason of such
Participant's death. Subject to such rules and regulations as the Benefits
Committee may promulgate, a Participant may from time to time change such
designation of Beneficiary, provided, no change shall be effective until receipt
of the new designation by the Benefits Committee or its representative. The last
effective designation of Beneficiary shall supersede all prior designations. A
designation of Beneficiary shall be effective only if the designated Beneficiary
survives the Participant and any prior designated Beneficiary. Except with
respect to a preretirement death benefit under Section 4.6 which is not payable
as a Qualified Preretirement Survivor Annuity, nothing herein shall authorize or
permit a Participant to designate as Beneficiary of a benefit any Beneficiary
which is not the Participant's Spouse, unless the spouse has consented in the
manner provided in Section 2.50 to a specific Beneficiary.
6.2 DISTRIBUTION IF NO BENEFICIARY DESIGNATED. If a benefit becomes
payable upon the death of a Participant and no Beneficiary has been properly
designated, or if the Beneficiary designated shall have predeceased the
Participant, the Participant shall be deemed to have designated the following
Beneficiaries (if living at the time of the death of the Participant or
designated Beneficiary) in the following order of priority: (a) the spouse of
the Participant, (b) the children, including adopted children, of the
Participant, in equal shares, (b) the natural parents of the Participant, in
equal shares and (c) the estate of the Participant.
ARTICLE 7
FUNDING OF BENEFITS; EXPENSES
7.1 FORFEITURES. Forfeitures arising under the Plan because of a
Termination of Employment before a Participant becomes eligible for a benefit,
or for any other reason, shall be applied to reduce the Company's cost of the
Plan, not to increase the benefits otherwise payable to Participants.
7.2 COMPANY CONTRIBUTIONS. The Company will make contributions based
upon annual valuations made by the Actuary. No contributions shall be made by
any Participant.
7.3 RETURN OF CONTRIBUTIONS.
(a) Contributions Made By Mistake of Fact. In the event a
contribution by the Company, or a portion thereof, is made by reason of a
mistake of fact, the Company may direct the Trustee to return that contribution,
or the portion thereof, provided, the amount must be returned within one year
after the payment of the Contribution to the Trustee.
(b) Contributions Conditioned Upon Qualification of Plan. All
contributions by the Company shall be deemed made conditioned upon initial
qualification of the Plan under section 401 of the Code. If the Commissioner of
Internal Revenue determines that the Plan does not so qualify, the Company shall
direct the Trustee to return to the Company any Company contributions, and to
the Participants any Participant Contributions or Rollover Contributions made
for such Plan Year, provided, the amount must be returned within one year after
the denial of qualification of the Plan, but only if the application for
qualification is made by the time prescribed by law for filing the Company's
federal income tax return for the taxable year in which the Plan is adopted, or
such later date as the Secretary of Treasury may prescribe.
(c) Contributions Conditioned Upon Deductibility. All
contributions by the Company shall be deemed made conditioned upon the
deductibility of the Contribution under section 404 of the Code. To the extent
such deduction is disallowed, the Company may direct the Trustee to return the
disallowed portion (or all, if the entire contribution is disallowed), provided,
the disallowed amount must be returned within one year after the disallowance of
the deduction.
(d) No Return of Earnings. Except as otherwise provided with
respect to the return of contributions by the Company conditioned upon the
initial qualification of the Plan, (i) no earnings on a contribution made by the
Company shall be returned to the Company and losses on the contribution shall
reduce the amount to be returned, and (ii) no return of a contribution made by
the Company allocated to a Participant Account or Rollover Account shall be made
to the extent that the Accounts would be reduced to less than the balance in the
Accounts had the contributions to be returned not been made.
7.4 PAYMENT OF EXPENSES OF PLAN. All necessary expenses that may arise
in connection with the administration of the Plan, including, but not limited
to, the fees of the Trustee and expenses of the Benefits Committee as provided
in Section 10.8, shall be paid by the Company. To the extent these expenses are
not paid by the Company, they shall be paid by the Trustee from the Trust Fund.
Provided, that where the Trustee is a person who receives full-time pay from the
Company, such person shall not receive any compensation from the Trust Fund,
except for reimbursement of expenses properly and actually incurred.
ARTICLE 8
TOP-HEAVY PROVISIONS
8.1 PURPOSE. This Article 7.4 shall be interpreted and administered in a
manner consistent with the provisions of section 416 of the Code and shall be
applicable only if the Plan (and any plan required to be included in any
aggregation group with this Plan) becomes a "top-heavy plan," as defined in
Section 8.3.
8.2 KEY EMPLOYEE. For Plan Years beginning on or after January 1, 2002,
the term "key employee" means any Employee or former Employee (including any
deceased Employee) who at any time during the Plan Year that includes the
determination date was an officer of the Company having annual compensation
greater than $130,000 (as adjusted under section 416(i)(1) of the Code), a 5%
Owner of the Company, or a 1% Owner of the Company having annual compensation of
more than $150,000. For this purpose, annual compensation means compensation
within the meaning of section 415(c)(3) of the Code. The determination of who is
a key employee will be made in accordance with section 416(i)(1) of the Code and
the applicable regulations and other guidance of general applicability issued
thereunder. For Plan Years beginning before January 1, 2002, the term "key
employee" shall mean any Participant, Employee, former Employee, or Beneficiary
who constitutes a key employee within the meaning of section 416(i)(1) of the
Code.
8.3 DETERMINATION DATE. The term "determination date" shall mean, for a
Plan Year, the Anniversary Date of the immediately preceding Plan Year.
Provided, for the first Plan Year of the Plan, the determination date shall be
the last day of such Plan Year.
8.4 DETERMINATION OF TOP-HEAVY STATUS.
(a) Top-Heavy Ratio. For each Plan Year, the Benefits Committee
shall determine if the Plan is top-heavy. The Plan shall be considered top-heavy
only if as of the Determination Date, (i) in the event that the aggregation of
other plans of the Company is either permitted or required, the aggregate of the
account balances and accrued benefits of Key Employees under all plans exceed
60% of the aggregate account balances and accrued benefits of all Participants
in such plans, or (ii) in the event aggregation of other plans of the Company is
neither permitted nor required, the Accrued Benefit of Key Employees under the
Plan exceed 60% of the Accrued Benefits of all Participants in the Plan. For the
purposes of the determination of top-heavy status, the account balances and
accrued benefits of former Key Employees shall not be considered. The account
balances and accrued benefits of a Participant who has not performed services
for the employer maintaining the Plan during the five-year period ending on the
determination date (effective on and after January 1, 2002, the one-year period
ending on the determination date) shall be disregarded. The calculation of the
account balances and accrued benefits for purposes of determination of top-heavy
status shall be made in compliance with Section 416 of the Code.
(b) Group Considered in Determining Top-Heavy Status. The
determination under Section 8.4(a), above, shall be made for the required
aggregation group, or, if applicable, the permissive aggregation group. If the
aggregation group is determined to be top-heavy under Section 8.4(a), above, the
Plan and any other plan required to be aggregated with the Plan shall be
considered top-heavy plans. If the permissive aggregation group is top-heavy,
then only the Plan and the other plans required to be aggregated with the Plan
shall be considered top-heavy.
(c) Consideration of Other Plans. For purposes of this Section
8.3, the required aggregation group includes each qualified plan of the Company
in which at least one Key Employee is a participant, any other qualified plan of
the Company which enables such a plan to meet the requirements of sections
401(a)(4) or 410 of the Code, and any Plan which has been terminated within the
five-year period ending on the determination date of any Plan Year. The
permissive aggregation group shall consist of the required aggregation group of
plans plus any other plan or plans of the Company which, when considered as a
group with the required aggregation group, will continue to satisfy the
requirements of sections 401(a)(4) and 410 of the Code.
(d) Determination of Accruals. Solely for the purpose of
determining if the Plan, or any other plan included in a required aggregation
group of which this Plan is a part, is top-heavy (within the meaning of section
416(g) of the Code) the Accrued Benefit of an Employee other than a Key Employee
shall be determined under (i) the method, if any, that uniformly applies for
accrual purposes under all plans maintained by the Related Companies, or (ii) if
there is no such method, as if such benefit accrued not more rapidly than the
slowest accrual rate permitted under the fractional accrual rate of section
411(b)(1)(C) of the Code.
(e) Distributions During Year Ending on the Determination Date.
The present values of Accrued Benefits and the amounts of account balances of an
Employee as of the determination date shall be increased by the distributions
made with respect to the Employee under the Plan and any plan aggregated with
the Plan under section 416(g)(2) of the Code during the five-year period
(effective January 1, 2002, one-year period) ending on the determination date.
The preceding sentence shall also apply to distributions under a terminated plan
which, had it not been terminated, would have been aggregated with the Plan
under section 416(g)(2)(A)(i) of the Code. Effective January 1, 2002, in the
case of a distribution made for a reason other than the separation from service,
death or Disability, this provision shall be applied by substituting "five-year
period" for "one-year period."
8.5 TOP-HEAVY COMPENSATION. For any Plan Year, the compensation (as
defined in Section 9.1(a)(1)) of each Employee taken into account under the Plan
shall not exceed $150,000 (effective January 1, 2002, $200,000), or such larger
amount as may be determined by the Commissioner of the Internal Revenue Service
in a manner and amount consistent with increases effected under section
401(a)(17)(B) of the Code. Effective for plan limitation years beginning on or
after January 1, 1998, the term "Compensation" shall also include any elective
deferral (as defined in section 402(g)(3) of the Code) and any amount which is
contributed or deferred by the Company at the election of the Employee by reason
of sections 125 of the Code and, effective January 1, 2001, by reason of section
132(f)(4) of the Code.
8.6 TOP-HEAVY VESTING.
(a) Vesting Schedule. For any Plan Year for which the Plan is
determined to be top-heavy, notwithstanding Section 4.5 to the contrary, each
Participant shall be vested in the Participant's Accrued Benefit as determined
by the following schedule:
Vested Percentage
Years of Vesting Service of Accrued Benefit
Less than 2 0%
2, but less than 3 20%
3, but less than 4 40%
4, but less than 5 60%
5, but less than 6 80%
6 or more 100%
(b) Change in Top-Heavy Status. In the event the Plan becomes
top-heavy and then reverts to non-top-heavy status, the schedule provided in
Section 4.5 shall again be in effect provided that the vesting percentage of
Participants who have been credited with three or more Years of Vesting Service
shall not be less than the greater of the vesting percentage determined under
Section 4.5, without regard to Article 7.4, or the vesting percentage determined
under this Section 8.6. Additionally, regardless of Years of Vesting Service, a
Participant who has been credited with vesting under this Section 8.6. shall
continue to be vested in the Accrued Benefit at such percentage until such time
as the schedule provided in Section 4.5 shall increase the Participant's vested
interest in this Accrued Benefit.
8.7 TOP-HEAVY MINIMUM BENEFIT. For each Plan Year for which the Plan is
determined to be top-heavy, the minimum Accrued Benefit of each non-key Employee
who is a Participant who is credited with a Year of Service for such top-heavy
Plan Year shall not be less than 2% of such Participant's average compensation
times Years of Service, such Years of Service not to exceed 10. For the purposes
of this Section 8.6(b), such Participant's average compensation shall mean the
average of the Participant's compensation (as defined in Section 9.1(a)(1)) for
the five consecutive Plan Years which produces the highest average. Average
compensation for purposes of computing the minimum Accrued Benefit shall exclude
compensation for Plan Years prior to January 1, 1984 and Plan Years subsequent
to the last Plan Year in which the Plan is top-heavy. Years of Service for the
purposes of computing the minimum Accrued Benefit shall exclude years when the
Plan was not top-heavy and Plan Years prior to January 1, 1984. If the Plan is a
member of the aggregation group determined to be top-heavy under Section 8.4,
above, the minimum Accrued Benefit for each top-heavy Year of Service shall be
satisfied by the minimum benefit under the Plan, unless another plan in the
aggregation group provided minimum top-heavy benefits.
8.8 TOP-HEAVY BENEFIT ADJUSTMENT. Effective before January 1, 2000, in
the event the Plan becomes top-heavy under Section 8.3 for a Plan Year, the
multiplier of 1.25 in Section 9.1 shall be reduced to 1.0, unless the Plan would
not be top-heavy as defined in Section 8.4 if "90%" were substituted for "60%"
in 8.4 and the minimum Accrued Benefit in Section 8.6(b), above, were modified
such that "3%" were substituted for "2%."
ARTICLE 9
LIMITATIONS ON BENEFITS
9.1 MAXIMUM ANNUAL BENEFIT.
(a) Annual Benefit Limitation. The annual benefit payable to a
Participant in any Plan Year, plus the Participant's annual benefit provided by
all other qualified defined benefit plans maintained by the Company, shall not
exceed the lesser of:
(1) The Actuarial Equivalent of a straight life annuity of
$90,000 (as such amount may be adjusted upward pursuant to section 415(d)
of the Code) or, effective on and after January 1, 2002 for all Employees
participating in the Plan who have one Hour of Service on or after the
first day of the first Plan Year ending after December 31, 2001, the
Actuarial Equivalent of a straight life annuity of $160,000 (as such amount
may be adjusted upward pursuant to section 415(d) of the Code); or
(2) One hundred percent of the Participant's average
compensation for the three consecutive Plan Years that produces the highest
average. A Participant's compensation for the purposes of this Article 9
shall include the earned income, wages, salaries, and fees for professional
services and other amounts received (without regard to whether or not an
amount is paid in cash) for personal services actually rendered in the
course of employment with the Company maintaining the Plan to the extent
that the amounts are includable in gross income (including, but not limited
to commissions paid salesmen, compensation for services on the basis of a
percentage of profits, commissions on insurance premiums, tips, bonuses,
fringe benefits, and reimbursements or other expense allowances under a
nonaccountable plan (as defined in Regulation 1.62-2(c))), and excluding
the following:
(A) Company contributions to a plan of deferred
compensation which are not includable in the employee's or employer
contributions under a simplified employee pension plan to the extent such
contributions are deductible by the employee, or any distributions from a
plan of deferred compensation;
(B) Amounts realized from the exercise of a non-qualified
stock option, or when restricted stock (or property) held by the employee
either becomes freely transferable or is no longer subject to a substantial
risk of forfeiture;
(C) Amounts realized from the sale, exchange or disposition of stock
acquired under a qualified stock option; and
(D) Other amounts which received special tax benefits, or
contributions made by the Company (whether or not under a salary reduction
agreement) towards the purchase of an annuity contract described in section
403(b) of the Code (whether or not the contributions are actually
excludable from the gross income of the employee).
Effective for Plan Years beginning on or after January 1, 1998, the term
"compensation" under this Section 9.1 shall also include any elective deferral
(as defined in section 402(g) of the Code) and any amount which is contributed
or deferred by the Company at the election of the Employee by reason of section
125 or 457 of the Code, and effective January 1, 2001, by reason of section
132(f)(4) of the Code.
(b) Less Than 10 Years of Participation. The limit upon the annual
benefit for a Participant with less than 10 years of participation shall be the
limit described in (a), above, multiplied by a fraction, the numerator of which
is the Participant's years of participation and the denominator of which is 10.
If the Participant has less than 10 Years of Service, the compensation
limitation is reduced by 1/10th for each Year of Service (or part thereof) less
than 10. Effective before January 1, 2000, the adjustments of this Section
9.1(b) shall be applied in the denominator of the defined benefit fraction based
upon Years of Service. Years of Service shall include future years occurring
before the Participant's Normal Retirement Age. Such future years shall include
the year which contains the date the Participant reaches Normal Retirement Age,
only if it can be reasonably anticipated that the Participant will receive a
Year of Service for such year.
(c) Adjustments. The limitation upon the annual benefit of a Participant
shall be adjusted as follows:
(1) Before Social Security Retirement Age But After Age 62. If
the annual benefit of the Participant commences before the Participant's
Social Security Retirement Age, but on or after the Participant attains age
62, the defined benefit dollar limitation as reduced above, if necessary,
shall be determined as follows:
(A) If a Participant's Social Security Retirement Age is
65, the dollar limitation for benefits commencing on or after age 62 is
determined by reducing the defined benefit dollar limitation by 5/9 of 1%
for each month by which benefits commence before the month in which the
Participant attains age 65.
(B) If a Participant's Social Security Retirement Age is
greater than 65, the dollar limitation for benefits commencing on or after
age 62 is determined by reducing the defined benefit dollar limitation by
5/9 of 1% for each of the first 36 months and 5/12 of 1% for each of the
additional months (up to 24 months) by which benefits commence before the
month of the Participant's Social Security Retirement Age.
(2) Before Age 62. If the annual benefit of a Participant
commences prior to the Participant's attainment of age 62, the defined
benefit dollar limitation shall be the actuarial equivalent of an annual
benefit beginning at age 62, as determined above, reduced for each month by
which benefits commence before the month in which the Participant attains
age 62. The annual benefit commencing prior to age 62 shall be determined
using the lesser of the equivalent annual benefit computed using either (A)
the rate specified in Section 2.4, or (B) 5%. Any decrease in the defined
benefit dollar limitation determined in accordance with this Section
9.1(c)(2) shall not reflect the mortality decrement to the extent that
benefits will not be forfeited upon the death of the Participant.
(3) After Social Security Retirement Age. If the annual
benefit of a Participant commences after the Participant's Social Security
Retirement Age, the defined benefit dollar limitation as reduced in (b),
above, if necessary, shall be adjusted so that it is the actuarial
equivalent of an annual benefit of such dollar limitation beginning at the
Participant's Social Security Retirement Age. The annual benefit commencing
after the Participant's Social Security Retirement Age shall be determined
using the lesser of the equivalent annual benefit computed using either (A)
the rate specified in Section 2.4, or (B) 5%.
(d) Minimum Benefits. Notwithstanding Section 9.1(a), (b) and (c),
above, if a Participant has never participated in a qualified defined
contribution plan maintained by the Company, the limitations of this Section 9.1
will be deemed satisfied if the annual benefit of a Participant does not exceed
$1,000 multiplied by the Participant's Years of Service (not to exceed 10).
(e) Actuarial Equivalent. If a benefit is distributed in a form
other than a straight life annuity, the maximum annual benefit determined under
Section 9.1(c) will be adjusted to an Actuarial Equivalent of the Normal Form.
9.2 PARTICIPATION IN OTHER QUALIFIED PLANS.
(a) Further Reduction. Anything in Section 9 to the contrary
notwithstanding, the otherwise permissible annual benefits for any Participant
under the Plan may be further reduced to the extent necessary, as determined by
the Benefits Committee, to conform to section 415 of the Code, which imposes
additional limitations on the benefits payable to Participants who also may be
participating in other tax-qualified pension, profit sharing, savings or stock
bonus plans of the Company or a welfare benefit fund, as defined in section
419(e) of the Code, maintained by the Company or an individual medical account,
as defined in section 415(l)(2) of the Code, which is an annual addition.
(b) Combined Fractions. If a Participant participates or has ever
participated at any time in a defined benefit plan and a defined contribution
plan maintained by the Company or a welfare benefit fund, as defined in section
419(e) of the Code, maintained by the Company or an individual medical account,
as defined in section 415(l)(2) of the Code, which is an annual addition, the
sum of the Participant's defined benefit plan fraction and defined contribution
plan fraction for any Plan Year may not exceed 1.0. For purposes of this
limitation, all defined benefit plans of the Company, whether or not terminated,
are to be treated as one defined benefit plan and all defined contribution plans
of the Company, whether or not terminated, are to be treated as one defined
contribution plan.
(c) Defined Benefit Plan Fraction.
(1) General Rule. The defined benefit plan fraction is a
fraction, the numerator of which is the sum of the Participant's projected
annual benefit under all defined benefit plans (whether or not terminated)
maintained by the Company, and the denominator of which is the lesser of
(i) 1.25 multiplied by the dollar limitation under Section 9.1(a) for such
Plan Year, or (ii) 1.4 multiplied by the Participant's projected average
compensation for the three consecutive Plan Years of the Participant's
projected service that produces the highest average. The projections
computed under Article 9 shall be based on the assumption that a
Participant continues in the employ of the Company until the Participant's
Normal Retirement Age (or current age, if later) and that the Participant's
compensation and social security benefit for the Plan Year remain constant
until the Participant's Normal Retirement Age (or current age, if later).
(2) Special Rule. Notwithstanding the above, if the
Participant was a Participant as of the first day of the first limitation
year beginning after December 31, 1986, in one or more defined benefit
plans maintained by the Company which were in existence on May 6, 1986, the
denomination of the defined benefit fraction will not be less than 1.25
multiplied by the sum of the annual benefits under such plans which the
Participant had accrued as of the close of the last limitation year
beginning before January 1, 1987, disregarding any changes in the terms and
conditions of the plans after May 5, 1986. The preceding sentence applies
only if the defined benefit plans individually and in the aggregate
satisfied the requirements of section 415 of the Code for all limitation
years beginning before January 1, 1987.
(d) Defined Contribution Plan Fraction.
(1) General Rule. The defined contribution plan fraction 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 (whether or not terminated) for the current and all prior Plan
Years, and the denominator of which is the sum of the lesser of the
following amounts determined for such Plan Year and for all prior Plan
Years during which the Participant was employed by the Company: (i) 1.25
multiplied by the dollar limitation under section 415(c)(l)(A) of the Code,
as such amount may be adjusted upward under section 415(d) of the Code for
such Plan Year, or (ii) 1.4 multiplied by the amount which may be taken
into account under section 415(c)(l)(B) of the Code for such Plan Year.
(2) Special Rule. Notwithstanding the above, if the
Participant was a participant as of the first day of the first limitation
year beginning after December 31, 1986, in one or more defined contribution
plans maintained by the Company which were in existence on May 6, 1986, the
numerator of this fraction will be adjusted if the sum of this fraction and
the defined benefit fraction would otherwise exceed 1.0 under the terms of
this Plan. Under the adjustment, an amount equal to the product of (A) the
excess of the sum of the fractions over 1.0 times (B) the denominator of
this fraction, will be permanently subtracted from the numerator of this
fraction. The adjustment is calculated using the fractions as they would be
computed as of the end of the last limitation year beginning before January
1, 1987, and disregarding any changes in the terms and conditions of the
plans made after May 5, 1986, but using the section 415 limitation
applicable to the first limitation year beginning on or after January 1,
1987. The annual addition for any limitation year beginning before January
1, 1987, shall not be recomputed to treat all employee contributions as
annual additions.
(e) Reduction of Allocations. In the event that a Participant's
benefits exceed the limitation contained in this Article 9, the rate of accrual
will be reduced so that the annual benefit will equal the maximum permissible
amount.
(f) Elimination of Certain Limitations. Effective for Plan
limitation years beginning on or after January 1, 2000, the additional
limitations imposed by section 415(e) of the Code, as described above, shall no
longer apply to the Plan with respect to all Employees participating in the Plan
that have one Hour of Service after January 1, 2000. In the case of a Plan
Participant whose projected annual benefit under the Plan is subject to the
limitations imposed by section 415(e) of the Code prior to its repeal and whose
projected annual benefit under the Plan is adjusted to take into account the
repeal of section 415(e) of the Code effective January 1, 2000, such adjustment
shall be taken into account in accordance with the rules of Treas. Regs. ss.
1.401(a)(4)-2(c)(ii) for the Plan Year in which such adjustment is made.
9.3 BENEFITS UPON EARLY TERMINATION OF PLAN.
(a) Limitation on High 25. The annual benefits paid under the Plan
to any one of the 25 highest paid Highly Compensated Employees and Highly
Compensated former employees (as defined in section 414(q) of the Code), shall
not exceed the sum of:
(1) those benefits that would be paid on behalf of such
Participant under a single life annuity that is the Actuarial Equivalent of
the Participant's Accrued Benefit and "other benefits" (as defined below)
under the Plan; and
(2) those payments the Participant is entitled to receive
under a social security supplement.
Provided, the preceding provisions of this Section 9.3(a) shall not apply if:
(A) after payment of all such benefits to a Participant
described above in this Section 9.3(a), the value of Plan assets equals or
exceeds 110% of the value of current liabilities (as defined in section
412(l)(7) of the Code) under the Plan;
(B) the value of all such benefits to a Participant
described above in this Section 9.3(a) is less than one percent of the
value of such current liabilities under the Plan prior to the payment of
all such benefits to such Participant; or
(C) the value of all such benefits to a Participant
described above in this Section 9.3(a) does not exceed $3,500. Effective
January 1, 1998, "$5,000" shall be substituted for "$3,500" in this Section
9.3(a)(2)(C).
For purposes of this Section 9.3(a), "other benefits" shall include any loan 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 Participant and any death
benefits not provided for by insurance on the Participant's life. "Other
benefits" for this purpose shall not include social security supplements.
ARTICLE 10
ORGANIZATION AND RESPONSIBILITIES
OF BENEFITS COMMITTEE
10.1 APPOINTMENT AND TENURE OF BENEFITS COMMITTEE. The Board of Directors
of the Sponsoring Company shall appoint three or more persons (or such other
number as may be determined from time to time by the Board of Directors of the
Sponsoring Company), some or all of whom may be ex officio, to be known as the
Benefits Committee or Committee. The Sponsoring Company will notify the Trustee
of the names of the members of the Benefits Committee and of any changes in
membership that may take place from time to time. All members of the Benefits
Committee shall serve until their resignation or removal by the Board of
Directors of the Sponsoring Company; provided, that an ex officio member shall
serve until the member's resignation or removal from the position from the
appointment to the Benefits Committee is derived. A member of the Benefits
Committee may resign at any time by delivering a written resignation to the
Board of Directors of the Sponsoring Company and to the remaining members of the
Benefits Committee. Vacancies shall be filled in the same manner as the original
appointments. The Board of Directors of the Sponsoring Company may dismiss any
member of the Benefits Committee, including an ex officio member, at any time,
with or without cause. No compensation shall be paid members of the Benefits
Committee from the Trust Fund for their services. If no Benefits Committee is
appointed by the Board of Directors of the Sponsoring Company, the Sponsoring
Company will serve as the Benefits Committee.
10.2 ORGANIZATION AND DECISIONS OF BENEFITS COMMITTEE. Every decision and
action of the Benefits Committee shall be valid if concurred in by a majority of
the members then in office at a meeting or by a unanimous consent in writing
(which may include electronic mail) without a meeting. The Benefits Committee
shall select one of its members as chairperson, appoint a secretary (who need
not be a member of the Benefits Committee) and any other officers deemed
necessary and shall adopt rules governing its procedures not inconsistent
herewith. The Benefits Committee shall keep a permanent record of its meetings
and actions. The Benefits Committee may adopt such bylaws and regulations as it
deems desirable for the conduct of its affairs. No member of the Benefits
Committee who is also a Participant shall vote or act upon any matter relating
solely to himself. The Benefits Committee may authorize one or more of its
members to (a) approve benefit payments, loans, and hardship or other
withdrawals, as applicable, (b) serve as the initial reviewer of claims for
benefits under the Plan, (c) determine the qualified status of domestic
relations orders relating to the Plan, (d) perform other routine acts, and (e)
execute any document on behalf of the Benefits Committee. If such authorization
is given, all persons who receive written notification of such authorization
shall, until contrary written notice is given to such person, accept and rely
upon any document so executed by such member(s) as representing the action of
the Benefits Committee.
10.3 DUTIES OF BENEFITS COMMITTEE. The Benefits Committee, in addition
to the duties otherwise provided for in this Plan, may:
(a) construe and interpret the Plan and related documents and resolve
any ambiguities therein;
(b) decide all questions affecting the eligibility of any Employee to
participate herein;
(c) decide all questions affecting the amount, manner and time of any
Benefit payable hereunder to any Participant or Beneficiary;
(d) ascertain the persons to whom any death or other Benefit shall be
payable under the provisions hereof;
(e) appoint and remove the Trustee and any investment managers of
the Trust Fund, establish investment guidelines for the Trustee and any
investment managers of the Trust Fund, and review the investment performance of
the Trustee and investment managers at least once each year;
(f) authorize and direct all disbursements, including administrative
expenses, by the Trustee from the Trust Fund;
(g) receive, review and keep on file (as it deems convenient and
proper) reports of benefit payments, withdrawals and loans from the Plan and
reports of disbursements of expenses from the Plan directed by the Benefits
Committee;
(h) receive, review and keep on file (as it deems convenient and
proper) reports of the financial condition, and of the receipts and
disbursements, of the Trust Fund;
(i) receive and review any valuation of the Plan's Trust Fund made by
the Actuary;
(j) upon request, furnish the Board of Directors or a Company with
reports on the administration and funding of the Plan;
(k) recommend to the Board of Directors of the Sponsoring Company
a funding policy and method for carrying out the objectives of the Plan which is
consistent with the requirements of the Plan and applicable law, considering the
short and long term financial needs of the Plan;
(l) in absence of direct information to the contrary, rely upon
information provided by a Participant or Beneficiary or information provided by
a Company;
(m) make final and binding determinations of fact in connection
with any questions of fact which may arise under the operation of the Plan;
(n) make such rules and regulations with reference to the
operation of the Plan as it may deem necessary or advisable, provided, that such
rules and regulations shall not be inconsistent with the express terms of the
Plan or ERISA;
(o) prescribe procedures and adopt forms to be used by
Participants and Beneficiaries in filing applications for Benefits and in making
elections under the Plan;
(p) distribute summary plan descriptions, summaries of material
modifications and other information to Participants and affected Beneficiaries
about the Plan;
(q) review the denial of claims under Article 17 and make decisions on
such review;
(r) establish written procedures to determine whether a judgment,
decree or order is a Qualified Domestic Relations Order and administer
distributions under such judgments, decrees or orders which it determines are
Qualified Domestic Relations Orders pursuant to Section 20.9; and
(s) make amendments to the Plan as provided under Section 12.3.
10.4 BENEFITS COMMITTEE DECISIONS FINAL AND BINDING. The decisions of the
Benefits Committee on any matter within its authority shall be made in the sole
discretion of the Benefits Committee and shall be final and binding on all
parties, including without limitation, the Company, Participants and
Beneficiaries.
10.5 POWERS AND AUTHORITY OF BENEFITS COMMITTEE. Subject to the
limitations of the Plan and related documents (including, without limitation,
any trust agreement or insurance policy or contract) and the rights reserved by
the Board of Directors of the Sponsoring Company, the Benefits Committee shall
have the authority to control and manage the operation and administration of the
Plan, with all the powers necessary to enable it to carry out its duties
properly in this respect, including the limited power to amend the Plan in
accordance with the provisions of Section 12.3.
10.6 BENEFITS COMMITTEE DIRECTIONS TO TRUSTEE. The Benefits Committee
shall direct the Trustee in writing to make distributions from the Trust Fund to
Participants, Beneficiaries and alternate payees under Qualified Domestic
Relations Orders who qualify therefor hereunder. Such written direction to the
Trustee shall specify the name, Social Security number and address of the
Participant or Beneficiary, and the amount and frequency of such payments. The
Trustee may request instructions in writing from the Benefits Committee on other
matters and may rely and act thereon.
10.7 EMPLOYMENT OF COUNSEL, ETC. The Benefits Committee may employ such
counsel, accountants, actuaries and other agents as it shall deem necessary or
advisable to advise or assist it in the performance of its duties hereunder, and
the Benefits Committee may rely upon their respective written opinions or
certifications. Such employment, and the actions taken by any such agents, shall
be subject to review and control by the Benefits Committee. Any actions taken by
any such agents shall, when within the scope of their employment, be deemed to
be the actions of the Benefits Committee for all purposes of the Plan.
10.8 PAYMENT OF EXPENSES OF BENEFITS COMMITTEE. The reasonable costs and
expenses incurred by the Benefits Committee in the performance of its duties
hereunder, excluding compensation for services, but including, without
limitation, reasonable fees for legal, accounting and other services rendered,
shall be paid by the Trustee from the Trust Fund to the extent not paid by the
Company.
10.9 BENEFITS COMMITTEE AND TRUSTEE TO BE FURNISHED INFORMATION
CONCERNING EMPLOYEES. The Company shall, from time to time, make available to
the Benefits Committee such information with respect to its Employees, their
dates of employment, their Compensation and other matters as may be necessary or
desirable in connection with the performance by the Benefits Committee of its
duties with respect to the Plan. The Benefits Committee shall, in turn, furnish
to the Trustee such information and such rulings and decisions as the Trustee
may require or may request in connection with the Trustee's performance of its
duties as Trustee. If the Benefits Committee, within 21 days after being
requested to do so, fails to furnish the Trustee such information, rulings or
decisions, then after the expiration of said period, the Trustee may act without
such information, ruling or decision or may demand that the Company give it such
information, ruling or decision.
ARTICLE 11
THE TRUST FUND AND TRUSTEE
11.1 ESTABLISHMENT OF TRUST FUND. The Sponsoring Company has entered into
the Trust with the Trustee for the purpose of establishing a trust to invest and
hold the Contributions, and the income and gains thereon, in order to provide
the funds which will be used to provide benefits under the Plan. The Trust Fund
shall be received, held in trust, and disbursed by the Trustee in accordance
with the provisions of the Plan and the Trust. Notwithstanding the foregoing,
the Sponsoring Company may elect to provide benefits under the Plan by means of
an insurance contract or policy, such as a group annuity contract, issued by an
insurance company qualified to do business in a state.
11.2 NO DIVERSION OF TRUST FUND. No part of the Trust Fund or any
insurance contract or policy purchased to provide benefits under the Plan shall
be used for, or diverted to, purposes other than for the exclusive benefit of
Participants and their Beneficiaries, or for the payment of the expenses of the
Plan and Trust. No person shall have any interest in, or right to, the Trust
Fund or any part thereof, except as specifically provided for in this Plan or
the Trust.
11.3 RESIGNATION OR REMOVAL OF TRUSTEE. The Benefits Committee may remove
the Trustee, and the Trustee may resign, at any time upon written notice
required by the terms of the Trust and, upon such removal or resignation, the
Benefits Committee shall designate and appoint a successor Trustee.
11.4 TRUST PART OF PLAN. The Trust shall be deemed to form a part of the
Plan and all rights of Participants or others under this Plan shall be subject
to the provisions of the Trust.
11.5 TRUSTEE POWERS. The Trustee shall have the power to hold, invest
and reinvest the Trust Funds, all as set forth in the Trust.
11.6 NO GUARANTEE OF LOSSES IN TRUST FUND. No Company, the Benefits
Committee nor the Trustee guarantees the assets of the Trust Fund from loss or
depreciation.
ARTICLE 12
PLAN AMENDMENT, MERGER OR TERMINATION
12.1 RIGHT GENERALLY TO MAKE AMENDMENTS. The Plan may be amended,
modified or altered, in whole or in part, at any time and from time to time. The
procedure for amending, modifying or altering the Plan shall be for the Board of
Directors of the Sponsoring Company or its delegate to approve the amendment,
modification or alteration and for a person or persons authorized by the Board
of Directors of the Sponsoring Company to duly execute an instrument of writing
setting forth the amendment, modification or alteration, provided, that the
duties, powers and liabilities of the Trustee shall not thereby be substantially
modified without the written consent of the Trustee and any Benefit which has
actually accrued and become payable hereunder shall not be affected thereby,
except as provided in Section 12.2. No amendment, modification or alteration
shall be made which shall (a) cause or authorize any part of the Trust Fund to
revert or be refunded to the Company, (b) decrease a Participant's Accrued
Benefit or (c) eliminate an optional form of distribution for any Participant
who has accrued a benefit under the Plan. Should the Sponsoring Company, at any
time, not be in existence as a corporation, this Plan may be amended, modified
or altered by action of a majority of the members of the Benefits Committee then
surviving as such.
12.2 RIGHT TO MAKE AMENDMENTS RELATING TO QUALIFICATION OF PLAN. The
Board of Directors of the Sponsoring Company shall have the unlimited right to
cause the amendment of the Plan in accordance with the procedure set forth in
Section 12.1, at any time, retroactively or otherwise, in such respects and to
such extent as may be necessary to qualify it under existing laws and
regulations so as to permit the full deduction for tax purposes of Company
contributions made hereunder and to meet the requirements of the Code or ERISA,
and, to the extent necessary to accomplish such purpose, may by such amendment
decrease or otherwise affect the rights of Participants or Spouses to benefits
which have actually accrued and become payable hereunder.
12.3 AMENDMENT BY BENEFITS COMMITTEE. The Benefits Committee shall also
have separate limited authority to modify and amend the Plan in immaterial
respects, including immaterial changes required by law. Provided, no
modification or amendment by the Benefits Committee shall (a) significantly
increase any required contributions by the Company to the Plan, (b) change the
classes of persons or entities eligible to participate in the Plan, (c) change
any method of accrual or benefit formula under the Plan, or (d) adversely affect
the tax-favored status of the Plan.
12.4 MERGER OF PLAN OR ASSETS. In the event of any merger or
consolidation of the Plan with, or transfer in whole or in part of the assets
and liabilities of the Plan to another trust fund held under, any other plan or
plans of deferred compensation maintained or to be established for the benefit
of all or some of the Participants of this Plan, the Plan shall be so merged or
consolidated, or the assets of the Plan applicable to such Participants shall be
transferred, only if:
(a) resolutions of the Board of Directors, and of any new or
successor employer of the affected Participants, shall authorize such transfer
of assets; and, in case of the new or successor employer of the affected
Participants, its resolutions shall include an assumption of liabilities with
respect to such Participants' inclusion in the new employer's plan; and
(b) such other plan and trust are qualified under sections 401(a) and
501(a) of the Code; and
(c) each Participant and Beneficiary entitled to benefits would
(if the Plan then terminated) be entitled to receive a benefit immediately after
the merger, consolidation or transfer which is equal to or greater than the
benefit the Participant or Beneficiary would have been entitled to receive if
the Plan had been terminated immediately before the merger, consolidation or
transfer.
12.5 RIGHT TO TERMINATE. In accordance with the procedures set forth in
this Article 12, the Sponsoring Company may terminate the Plan at any time. In
the event of the dissolution of the Sponsoring Company, the Plan shall terminate
and the assets shall be liquidated unless the Plan is continued by a successor
to the Company. Subject to applicable requirements, if any, of ERISA governing
termination of employee pension benefit plans, the Sponsoring Company shall
direct and require the Trustee to liquidate the investments, or the applicable
portion thereof, in accordance with the provisions of this Article 12.
12.6 BOARD OF DIRECTORS' ACTION. The Plan shall terminate upon the
adoption of an appropriate resolution by the Board of Directors of the
Sponsoring Company authorizing the termination of the Plan. Upon the adoption of
such a resolution, a copy thereof shall be delivered to the Trustee and notice
thereof shall be given to Participants. A termination of the Plan as to a
Company shall be effected by the adoption of an appropriate resolution by the
Board of Directors of the Company authorizing its termination of participation
in the Plan, the delivery of a copy thereof to the Sponsoring Company and
Trustee and the giving of written notice of such termination to all
Participants.
12.7 LIQUIDATION OF ASSETS. In the event of termination or partial
termination of the Plan, each Participant shall have a nonforfeitable right to
the Participant's Accrued Benefit to the extent funded (calculated as of the
date of such termination or partial termination) and the Plan assets shall be
allocated among the Participants and Beneficiaries in the following order:
(a) First, in the case of benefits payable under this Plan as an
annuity and only to the extent that benefits have not been fully purchased:
(1) In the case of the benefit of a Participant or Beneficiary
who was receiving a benefit as of the beginning of the three-year period
ending on the termination date of the Plan, to each such benefit, based
upon the provisions of this Plan (as in effect during the five-year period
ending on such date) under which such benefit would be the least.
(2) In the case of a Participant's benefit (other than a
benefit described in (i), above) which would have been paid as of the
beginning of such three-year period if the Participant had retired prior to
the beginning of such three-year period and if the Participant's benefits
had commenced (in the Normal Form) as of the beginning of such period, to
each such benefit, based upon the provisions of this Plan (as in effect
during the five-year period ending on such date) under which such benefit
would be the least.
(b) Second, to all other benefits under the Plan subject to a
guarantee by the Pension Benefit Guaranty Corporation.
(c) Third, to all other nonforfeitable benefits under the Plan not
subject to the Pension Benefit Guaranty Corporation.
(d) Fourth, to all other benefits under this Plan.
(e) Fifth, if, after the above distributions, there remains any
balance, such balance shall be returned to the Company, or reallocated among
Participants to the extent permitted, after all liabilities of the Plan are
satisfied.
ARTICLE 13
RESERVATIONS OF RIGHTS
BY THE COMPANY AND
LIMITATIONS ON RIGHTS OF PARTICIPANTS
13.1 PLAN VOLUNTARY ON PART OF COMPANY. While it is the intention of the
Company that the Plan shall be continued and contributions made in each year,
the Plan is entirely voluntary on the part of the Company. The Company does not
guarantee or promise to pay or cause to be paid any benefit provided by the Plan
and each Participant, Beneficiary or any other person who may claim the right to
any payment or benefit under the Plan shall be entitled to look only to the
Trust Fund for such payment or benefit and shall not have any right, claim or
demand therefor against the Company.
13.2 PLAN NOT CONTRACT OF EMPLOYMENT. This Plan shall not be deemed to
constitute a contract between the Company and Participants or to be a
consideration or inducement for the employment of any Participant or Employee.
Nothing contained in the Plan shall be deemed to give any Participant or
Employee the right to be retained in the service of the Company, nor to
interfere with the right of the Company to discharge any Participant or Employee
at any time, regardless of the effect which such discharge may have upon the
Employee as a Participant in the Plan.
ARTICLE 14
ADDITION AND WITHDRAWAL OF A COMPANY
14.1 ADOPTION OF PLAN BY RELATED COMPANY. The Related Companies that have
adopted the Plan currently are set forth in Schedule I. The Board of Directors
of the Sponsoring Company may designate any Related Company to become a Company
thereafter. Any Related Company so designated may adopt the Plan, and become a
Company hereunder, by executing a Joinder Agreement which is approved by the
Benefits Committee. Such Related Company shall become a Company hereunder as of
an Effective Date provided in the Joinder Agreement, and shall be subject to the
terms and provisions of the Plan, with such variations as shall be set forth in
the Joinder Agreement and approved by the Benefits Committee. A Related Company
may limit its adoption of the Plan to one or more of its groups of employees,
divisions, locations or operations.
14.2 WITHDRAWAL FROM PLAN BY COMPANY.
(a) Procedures for Withdrawal. A Company which wishes to withdraw
from the Plan shall deliver to the Benefits Committee a resolution of its Board
of Directors which authorizes its withdrawal as a Company and which indicates
the reason or reasons for such withdrawal. The Board of Directors may at any
time, in its discretion, determine that a Company (other than the Sponsoring
Company) shall no longer participate in the Plan and may direct that the Company
withdraw from the Plan. Withdrawal may take place only on an Anniversary Date
and notice thereof to the Benefits Committee, or by the Benefits Committee to a
Company in the event withdrawal is directed by the Board of Directors, must be
submitted or received at least six months prior to the date the withdrawal is to
be effective, unless such time requirement is waived in writing by the Benefits
Committee or the Company.
(b) Withdrawal Treated as Termination. If the withdrawal of a
Company is a part of the complete dissolution of the Company's business or the
discontinuance of participation in the Plan without termination of its business
and without the immediate establishment of a new, comparable plan, the
provisions of Section 12.5 shall apply to such Company's withdrawal as if the
withdrawal were a part of the complete termination of the Plan, but the
participation of other Companies hereunder shall not be affected by such
withdrawal of a Company.
(c) Transfer to New Plan. If the withdrawal of a Company is the
result of the establishment of a new, comparable plan for its employees which
will immediately upon withdrawal of the Company cover employees of the Company
who are covered by the Plan, the Benefits Committee, upon being furnished
evidence of the terms of such new plan and that such new plan has been approved
by the Internal Revenue Service as being qualified under the provisions of
section 401 of the Code or an opinion of counsel that such new plan is
qualified, shall determine the Account Balances of the Accounts of the
Participants employed by that Company. The value of such Account Balances, after
reduction for charges and other expenses incurred to process the withdrawal
which are not paid by the Company, shall be transferred to the trustee of the
new plan or to the insurance company which is to hold the funds of the new plan,
whichever is applicable, in such manner as the Benefits Committee shall direct,
but the transfer must be over a period not to exceed one year following the
effective date of the Company's withdrawal. Notwithstanding the foregoing, the
Benefits Committee in its discretion, solely for the benefit and protection of
the Participants employed by the Company, may retain the Account Balances of the
Accounts of such Participants in the Plan. Upon completion of the transfer
provided for herein, the remaining Companies, the Benefits Committee and the
Trustee shall be completely discharged of all responsibility without any
obligation on their part collectively or individually to see the application
thereof.
ARTICLE 15
CHANGE IN EMPLOYMENT
15.1 PARTICIPANT TRANSFER FROM COMPANY TO COMPANY. A Participant who
transfers employment from one Company to another Company shall not be considered
as terminating employment with a Company and shall continue to be a Participant
in the Plan without interruption. A Participant who transfers employment to
another Company shall accrue benefits with respect to the previous Company only
to the extent of the Participant's compensation and service while an Employee of
the previous Company.
15.2 PARTICIPANT TRANSFER FROM COMPANY TO RELATED COMPANY. A Participant
who transfers employment to a Related Company shall not be considered as
terminating participation in the Plan. No further benefits shall accrue on
behalf of such a Participant. When such a Participant's employment is terminated
with the Related Company on or after attaining the Participant's Normal
Retirement Age, death, or Termination of Employment, the Participant's benefit
shall be determined as though such event occurred while the Participant was
employed by a Company.
15.3 EMPLOYEE CREDIT FOR SERVICES WITH RELATED COMPANY. An Employee who
transfers employment from a Related Company to a Company shall receive credit
for service with such Related Company for the purpose of being eligible to
become a Participant, and for the purpose of vesting in the Participant's
benefit under the Plan. A Participant who retransfers employment to a Company
after transferring from a Company to a Related Company shall again become an
active Participant upon the Participant's re-employment by a Company.
ARTICLE 16
LIMITATIONS ON VESTING
AND
ALIENABILITY OF BENEFITS
16.1 PARTICIPANT INTERESTS LIMITED TO BENEFITS ACTUALLY ACCRUED. No
Participant shall have any legal right, title or interest in the Trust Fund, or
any of its assets, except in the event and to the extent that a benefit may
actually accrue to the Participant hereunder, and the same limitations shall be
applicable with respect to benefits upon the death of a Participant which may be
distributable to a surviving Spouse.
16.2 SPENDTHRIFT CLAUSE.
(a) Except in the case of compliance with a Qualified Domestic
Relations Order to the extent required under section 414(p) of the Code, no
Participant or Beneficiary shall have any right or power to anticipate, pledge,
assign, sell, transfer, alienate (by operation of law, legal process or
otherwise) or encumber the Participant or Beneficiary's interest in the Trust
Fund in any manner whatsoever, nor shall such interest in any manner whatsoever
be liable for or subject to the debts, liabilities or obligations of such
Participant or Beneficiary, or for claims against such Participant or
Beneficiary.
(b) Effective for judgments, orders, and decrees issued, and
settlement agreements entered into, on or after August 5, 1997, the provisions
of this Section 16.2 shall not apply to any offset of a Participant's Benefits
provided under the Plan against an amount that the Participant is ordered or
required to pay to the Plan if such offset meets the requirements provided under
section 401(a)(13) of the Code.
ARTICLE 17
BENEFIT CLAIMS PROCEDURE
17.1 CLAIMS FOR BENEFITS. Any claim for Benefits shall be made in writing
to the Benefits Committee or its representative. In the event such a claim to
all or any part of any benefit under this Plan shall be denied, the Benefits
Committee or its representative shall provide to the claimant within 90 days (or
such additional period required by special circumstances, but not to exceed an
additional 90 days, provided written notice of the extension shall be furnished
to the claimant prior to the commencement of the extension) after receipt of
such claim, a written notice setting forth, in a manner calculated to be
understood by the claimant:
(a) the specific reason or reasons for the denial;
(b) specific references to the pertinent Plan provisions on which the
denial is based;
(c) a description of any additional material or information necessary
for the claimant to perfect the claim and an explanation as to why such material
or information is necessary; and
(d) an explanation of the Plan's procedure for review of the denial of a
claim.
17.2 REVIEW OF DENIAL OF CLAIMS. Within 60 days after receipt of the
above material, the claimant may appeal the claim denial to the Benefits
Committee for a full and fair review. Within such 60 days, the claimant or the
claimant's duly authorized representative:
(a) may request a review upon written notice to the Benefits Committee;
(b) may review pertinent documents; and
(c) may submit issues and comments in writing.
17.3 DECISION ON REVIEW OF DENIAL. A decision by the Benefits Committee
will be made not later than 60 days (or such additional period required by
special circumstances, but not to exceed an additional 60 days, provided written
notice of the extension shall be furnished to the claimant prior to the
commencement of the extension) after receipt of a request for review. The
Administrative Committee's decision on review shall be written and shall include
specific reasons for the decision, written in a manner calculated to be
understood by the claimant, with specific references to the pertinent Plan
provisions on which the decision is based.
ARTICLE 18
FIDUCIARY RESPONSIBILITIES
18.1 DUTIES AND OBLIGATIONS OF FIDUCIARIES. All actions by "fiduciaries"
(as that term is defined in section 3(21)(A) of ERISA) shall be in accordance
with the terms of this Plan insofar as such documents are consistent with the
provisions of Title I of ERISA. Each fiduciary shall act solely in the interest
of Participants and Beneficiaries and for the exclusive purpose of providing
benefits and defraying reasonable administrative expenses. Each fiduciary shall
discharge the fiduciary's duties hereunder with the care, skill, prudence and
diligence under the circumstances then prevailing that a prudent man acting in a
like capacity and familiar with such matters would use in the conduct of an
enterprise of a like character and with like aims.
18.2 ALLOCATION OF FIDUCIARY RESPONSIBILITIES.
(a) Sponsoring Company. The Sponsoring Company shall be the named
fiduciary for the following purposes:
(1) For the control and management of the operation and
administration of the Plan, except for those duties herein specifically
allocated to the Benefits Committee, each Company, the Board of Directors
or the Trustee.
(2) For the furnishing to the other fiduciaries hereunder such
information related to the administration of the Plan as they may require.
(b) Board of Directors. The Board of Directors of the Sponsoring Company
shall be the named fiduciary for the following purposes:
(1) For the appointment and removal of the Benefits Committee, as
provided in Section 10.1.
(2) For the designation of a Related Company to become a
Company as provided in Section 14.1.
(c) Board of Directors of Each Company. The Board of Directors of
each Company shall be the named fiduciary for the purposes of terminating the
participation of its Company in the Plan as provided in Article 14.
(d) Trustee. The Trustee shall be the named fiduciary for the
purpose of the management and control of the Trust Fund, and as such shall have
exclusive authority and discretion in the management and control of the Trust
Fund as provided in the Trust.
(e) Benefits Committee. The Benefits Committee shall be the named
fiduciary for the purposes of performing the duties set forth in Section 10.3
and such other specific duties provided for in the Plan.
(f) Separation of Fiduciary Duties. Each fiduciary shall be
responsible only for the specific duties assigned herein and shall not be
directly or indirectly responsible for the duties assigned to another fiduciary.
ARTICLE 19
INDEMNIFICATION OF CERTAIN FIDUCIARIES
19.1 RIGHTS TO INDEMNIFICATION. The Company shall indemnify each
director, officer or employee of the Company who is, or is threatened to be
made, a party to any threatened or pending action or proceeding, whether civil,
criminal, administrative or investigative, including actions by or in the right
of the Company, by reason of the fact that such director, officer or employee is
or was serving at the request of the Company as a "fiduciary" (as defined by
section 3(21)(A) of ERISA) with regard to the Plan, against expenses (including
attorneys' fees), claims, fines, judgments, taxes, causes of action or liability
and amounts paid in settlement, actually and reasonably incurred by such
director, officer or employee in connection with such action or proceeding,
unless such expense, claim, fine, judgment, taxes, cause of action, liability or
amount arose from such person's gross negligence, fraud or willful breach of
such person's fiduciary responsibilities under ERISA, except, that with respect
to an action by or in the right of the Company, indemnification shall be made
only against expenses (including attorneys' fees).
19.2 ADVANCEMENT OF EXPENSES. The Company shall advance all expenses
(including attorneys' fees) incurred by any director, officer or employee
described in Section 19.1 in defending a civil, criminal, administrative or
investigative action, suit or proceeding pending the final disposition of such
action, suit or proceeding unless (a) the Board of Directors, by a majority vote
of a quorum consisting of directors who were not or are not parties to the
action, suit or proceeding concerned or (b) the stockholders determine that
under the circumstances of the individual case the person, by such person's
conduct, is not entitled to indemnification under Section 19.1 because of such
person's gross negligence, fraud or willful breach of such person's fiduciary
responsibilities, upon receipt of an undertaking, with such security as the
Board of Directors or stockholders may reasonably require, by or on behalf of
the director, officer or employee to repay such amounts unless it shall
ultimately be determined that such person is entitled to be indemnified by the
Company as authorized by this Article 19.
19.3 DETERMINATION OF RIGHT TO INDEMNITY. To the extent that any
director, officer or employee has been successful on the merits or otherwise in
the defense of the action, suit or proceeding, or in defense of any claim, issue
or matter therein, referred to in Section 19.1 such person shall be indemnified
against expenses (including attorneys' fees) actually and reasonably incurred by
the person in connection therewith and if the person was advanced expenses as
provided in Section 19.2, the person's undertaking shall be canceled by the
Company. If any action, suit or proceeding shall terminate by judgment or order
adverse to the director, officer or employee, or settlement, conviction or upon
a plea of nolo contendere or its equivalent, the Board of Directors, or the
shareholders, in the same manner provided in Section 19.2 with reference to
advancement of expenses, shall (unless ordered by a court to make
indemnification) make a determination whether indemnification of the director,
officer or employee is not proper in the circumstances because such person has
been guilty of gross negligence, fraud or willful breach of the person's
fiduciary responsibilities and, if it is determined that the person is so
entitled to indemnification, then such person shall be indemnified against
expenses (including attorneys' fees) claims, fines, judgments, taxes, causes of
action or liability and amounts paid in settlement, actually and reasonably
incurred by the person in connection with such action or proceeding and, if such
person was advanced expenses as provided in Section 19.2, the person's
undertaking shall be canceled. The termination of any action or proceeding by
adverse judgment or order, conviction, settlement or plea of nolo contendere or
the equivalent, shall not, of itself, create a presumption that the director,
officer or employee was guilty of gross negligence, fraud or willful breach of
such person's fiduciary responsibilities.
19.4 OTHER RIGHTS. The indemnification provided by this Article 19 shall
not be deemed exclusive of any other rights to which any director, officer or
employee may be entitled, and shall continue as to a person who has ceased to be
a director, officer or employee and shall inure to the benefit of the personal
representative, heirs and legatees of such a person.
19.5 INDEMNIFICATION BY MORE THAN ONE COMPANY. If a director, officer or
employee of the Company is entitled to indemnification by more than one Company
with respect to any one action, suit or proceeding, such person shall be
entitled to be indemnified only once and the Companies shall, in their sole
discretion, decide how to allocate such indemnification among them.
ARTICLE 20
MISCELLANEOUS
20.1 UNCLAIMED BENEFITS. Any benefit payable to or on behalf of a
Participant or Beneficiary which is not claimed shall be maintained in an
uninvested separate account. If the Participant or Beneficiary with respect to
which such separate account has been established cannot be located after
reasonable efforts at the time that the benefit becomes payable, such Benefit
shall be forfeited and applied to the restoration of Forfeitures and, then,
shall be applied in the same manner as Forfeitures for such Plan Year as of the
Anniversary Date of the Plan Year in which the Participant incurs the
Participant or Beneficiary's fifth consecutive Break in Service, or such later
date as the Benefits Committee may decide. If the Participant or the
Participant's Beneficiary subsequently presents a valid claim for the benefit to
the Benefits Committee, the Company shall cause the benefit, equal to the amount
which was forfeited under this Section 20.1, to be restored by causing, if
required, an additional Company contribution to be made to the Plan in the
necessary amount.
20.2 PROTECTED BENEFITS. If a Related Company adopts the Plan and merges
the assets and liabilities of a qualified retirement plan it sponsored prior to
the adoption of the Plan ("prior qualified retirement plan") with the assets and
liabilities of the Plan, and if the adoption of the Plan by such Related
Employer would result in a reduction or elimination of a "section 411(d)(6)
protected benefit" (as defined in Treas. Reg. ss.1.411(d)-6) ("protected
benefit") under the prior qualified retirement plan, the Plan shall be conformed
to the prior qualified retirement plan as appropriate to avoid the reduction or
elimination of the protected benefit. Upon discovery that a protected benefit
under the prior qualified retirement plan would have been reduced or eliminated
by the adoption of the Plan, the Sponsoring Company shall amend the Plan and the
Related Company shall amend its Joinder Agreement to evidence the retention of
the protected benefit.
20.3 NO DIVERSION OF TRUST FUND. In no event shall the Trust Fund or
other assets of the Plan consisting of insurance contracts or policies purchased
to provide benefits under the Plan be used for, or diverted to, purposes other
than the exclusive benefit of the Participants and Beneficiaries, or in the
payment of the expenses of the Trust Fund as set forth herein, except as
provided in Section 7.4.
20.4 CONSTRUCTION. This Plan shall be construed and enforced according to
the laws of the Commonwealth of Kentucky, and all provisions hereunder shall be
administered according to the laws thereof, except to the extent preempted by
ERISA. It is intended that the Plan meet the requirements of ERISA and the Code
and the Plan shall be interpreted and construed, wherever possible, to comply
with the terms of ERISA, the Code, and regulations and rulings issued
thereunder.
20.5 GENDER AND NUMBER. Any words herein used in the masculine or neuter
shall read and be construed in the feminine, masculine or neuter where they
would so apply. Words in the singular shall be read and construed as though used
in the plural in all cases where they would so apply.
20.6 DISCRETIONARY ACTS TO BE NON-DISCRIMINATORY. Any discretionary acts
taken under the Plan by the Benefits Committee, the Sponsoring Company, the
Company or the Trustee shall be uniform in their nature, and shall be applicable
to all Participants and Employees similarly situated, and no discretionary act
shall be taken which is discriminatory under the Code.
20.7 TITLES AND HEADINGS. Titles of Articles and headings to Sections are
inserted for convenience of reference only and, in the event of any conflict,
the text of the Plan, rather than such titles and headings, shall control.
20.8 DISTRIBUTIONS TO INCOMPETENTS OR MINORS. In making any distribution
to or for the benefit of any minor or incompetent Beneficiary, or incompetent
Participant, the Benefits Committee may, but need not, direct the Trustee to
make such distribution to a legal or natural guardian or other relative of such
minor or court appointed committee of any incompetent, or to any adult with whom
such person temporarily or permanently resides; and any such guardian,
committee, relative or other person shall have full authority and discretion to
expend such distribution for the use and benefit of such person; and the receipt
of such guardian, committee, relative or other person shall be a complete
discharge to the Trustee, without any responsibility on its part or on the part
of the Benefits Committee to see to the application thereof.
20.9 QUALIFIED DOMESTIC RELATIONS ORDER. Anything in the Plan to the
contrary notwithstanding, the Trustee shall comply with the direction of a
Qualified Domestic Relations Order. The Benefits Committee or its representative
shall have sole discretion in determining whether a judgment, decree or order
constitutes a Qualified Domestic Relations Order.
20.10 COMPLIANCE WITH THE UNIFORMED SERVICES EMPLOYMENT AND REEMPLOYMENT
RIGHTS ACT OF 1994. Notwithstanding any provision of this Plan to the contrary,
effective as of December 12, 1994, Contributions, Benefits, and service credit
with respect to qualified military service will be provided in accordance with
section 414(u) of the Code.
20.11 APPOINTMENT OF ADMINISTRATOR. The Benefits Committee designated by
the Sponsoring Company shall be the "administrator" for the purposes of ERISA.
20.12 EFFECTIVE DATE. The effective date of the amendment and restatement
of the Plan shall be the first day of the Plan Year commencing on or after
January 1, 1997, unless another effective date is otherwise provided for in a
specific provision, in which case such other effective date shall apply.
IN WITNESS WHEREOF, the Sponsoring Company, by its duly authorized
officer, has caused the Plan to be executed as of this 27th day of February,
2002.
COMMONWEALTH INDUSTRIES, INC.
By:
Donald L. Marsh Jr.
Executive Vice President,
Chief Financial Officer and
Secretary
APPENDIX I
Special Provisions Applicable to Participants
of the
Harvey Aluminum Salaried Employees
Pension Plan (the "Harvey Plan")
1.Minimum Retirement Benefit for Participants in the Harvey Plan. In no
event shall the Normal or Early Retirement Benefit for any Participant who was a
Participant in the Harvey Plan on December 31, 1971, be less than the
Participant's retirement benefit computed in the manner set forth in Article IV,
Section 4.1 of the Harvey Plan reduced by (a) 6.67% for each of the first five
years by which commencement of such retirement benefit precedes the Normal
Retirement Date and (b) 3.33% for each additional year by which the commencement
of such retirement benefit precedes the Normal Retirement Date.
2.Minimum Vested Benefit for Participants in the Harvey Plan. In no event
shall the vested retirement benefit for any Participant who has met the vesting
requirements of the Plan and who was a participant in the Harvey Plan on
December 31, 1971 be less than the Participant's retirement benefit computed in
the manner set forth in Article IV, Section 4.1 of the Harvey Plan reduced by
(a) 6.67% for each of the first five years by which commencement of such
retirement benefit precedes the Normal Retirement Date and (b) 3.33% for each
additional year by which the commencement of such retirement benefit precedes
the Normal Retirement Date.
3.Years of Credited Service for Participants in the Harvey Plan. The Years
of Credited Service of a Participant who was a Participant of the Harvey Plan on
December 31, 1971, shall include any such service prior to the age of 25 but
only to the extent that such service prior to age 25 does not cause the number
of such Participant's full Years and completed months of Credited Service to
exceed 30 years.
4.Cessation of Additional Accruals for Participants in the Harvey Plan. Any
additional accruals resulting from the operation of this Appendix I shall cease
as of December 31, 1993. No provisions of the Harvey Plan will be recognized by
this Plan in calculating the benefits accrued after December 31, 1993 by any
Participant in this Plan.
APPENDIX II
Special Provisions Applicable to Certain Salaried Employees
of the Lewisport Facility
1.Lewisport Early Retirement Incentive Effective as of February 1, 1990.
Salaried Employees located at the Lewisport facility who have attained a minimum
of five Years of Credited Service and are within six months of, or beyond, their
50th birthday on February 1, 1990, may elect, during the month of February 1,
1990, to have five years added to their Years of Credited Service and five years
added to their age in order that they may qualify for an immediate early
retirement benefit.
2.Lewisport Early Retirement Incentive Effective as of July 1, 1991.
Salaried Employees located at the Lewisport facility and at corporate
headquarters who have attained a minimum of five Years of Credited Service and
are within twelve months of, or beyond, their 50th birthday on July 1, 1991, may
elect during the 45 day period of May 3rd through July 17, 1991, to have three
years added to their Years of Credited Service and six years added to their age
in order that they may qualify for an immediate early retirement benefit.
SCHEDULE I
RELATED COMPANIES PARTICIPATING
IN THE PLAN
AS OF JANUARY 1, 2001
Name of Company Employer I.D. Number
Alflex Corporation 95-4812164
Alflex El LCC 56-2140123
Commonwealth Aluminum Concast, Inc. 34-0697844
Commonwealth Aluminum Tube Enterprises, LLC 62-1817895
Commonwealth Aluminum Sales Corporation 95-1398512
Commonwealth Aluminum Lewisport, LLC 61-1377736
Commonwealth Aluminum Metals, LLC 61-1378491
RELATED COMPANIES PARTICIPATING
IN THE PLAN
FROM JANUARY 1, 1997
THROUGH DECEMBER 31, 2000
Name of Company Employer I.D. Number
Alflex Corporation (effective January 1, 1998) 34-1569484
Commonwealth Aluminum Concast, Inc. (effective January 1, 34-0697844
1998)
Commonwealth Aluminum Corporation 95-0816561
Commonwealth Aluminum Lewisport, Inc. 95-0816561
Commonwealth Aluminum Sales Corporation 95-1398512
Receipt of an executed copy of the amended and restated Commonwealth Industries,
Inc. Cash Balance Plan is hereby acknowledged.
NATIONAL CITY BANK OF KENTUCKY
By:
Title:
Exhibit 10.4
------------
COMMONWEALTH INDUSTRIES, INC.
401(k) PLAN
Amended and Restated
Effective January 1, 1997
TABLE OF CONTENTS
Section Page
-vii-
ARTICLE 1
PURPOSE AND APPLICABILITY OF PLAN
1.1 Purpose of Plan..............................................1
1.2 Applicability of Plan........................................1
ARTICLE 2
DEFINITIONS
2.1 Account Balance............................................2
2.2 Accounting Date............................................2
2.3 Accounts...................................................2
2.4 Actual Deferral Percentage.................................2
2.5 Allocable Income...........................................2
2.6 Average Contribution Percentage............................2
2.7 Beneficiary................................................3
2.8 Benefit....................................................3
2.9 Benefits Committee or Committee............................3
2.10 Benefitting.................................................3
2.11 Board of Directors..........................................3
2.12 Break in Service............................................3
2.13 Catch-Up....................................................3
2.14 Catch-Up Account............................................3
2.15 Catch-Up Contributions......................................3
2.16 Code........................................................3
2.17 Company.....................................................4
2.18 Company Account.............................................4
2.19 Company Contributions.......................................4
2.20 Compensation................................................4
2.21 Contributions...............................................5
2.22 Direct Rollover.............................................5
2.23 Directed Account............................................5
2.24 Disability or Disabled......................................6
2.25 Distributee.................................................6
2.26 Effective Date..............................................6
2.27 Elective Deferral...........................................6
2.28 Elective Deferral Account....................................6
2.29 Elective Deferral Contributions.............................6
2.30 Eligible Retirement Plan....................................6
2.31 Eligible Rollover Distribution..............................7
2.32 Employee....................................................7
2.33 Employee Contribution Account...............................8
2.34 Employee Contributions......................................8
2.35 Entry Date..................................................8
2.36 ERISA.......................................................9
2.37 5% Owner....................................................9
2.38 Forfeitures.................................................9
2.39 Highly Compensated Employee.................................9
2.40 Hour of Service.............................................10
2.41 Joinder Agreement...........................................11
2.42 Leased Employee.............................................11
2.43 Matching Account............................................11
2.44 Matching Contributions......................................11
2.45 Normal Retirement Age.......................................12
2.46 1% Owner....................................................12
2.47 Participant.................................................12
2.48 Participant's Company Stock Account..........................12
2.49 Period of Service or Service.................................12
2.50 Period of Severance..........................................12
2.51 Plan........................................................12
2.52 Plan Administrator or Administrator.........................12
2.53 Plan Year...................................................13
2.54 Prior Plan..................................................13
2.55 Qualified Domestic Relations Order..........................13
2.56 Related Company.............................................13
2.57 Required Beginning Date.....................................13
2.58 Rollover Account............................................13
2.59 Rollover Contribution.......................................13
2.60 Severance From Service......................................14
2.61 Sponsoring Company..........................................14
2.62 Supplemental Contributions..................................14
2.63 Trust........................................................14
2.64 Trust Fund..................................................14
2.65 Trustee.....................................................14
2.66 Valuation Date..............................................14
2.67 Year of Service.............................................14
ARTICLE 3
ELIGIBILITY FOR PARTICIPATION
3.1 Date Employees Become Participants...........................15
3.2 Eligibility of Rehired Employees.............................15
3.3 Notice of Participation......................................15
3.4 Elective Deferral Election...................................15
3.5 Catch-Up Contributions.......................................18
3.6 Employee Contributions.......................................18
3.7 Provisions of Plan Binding On Participants...................19
3.8 Change In Employment Status..................................19
3.9 Correction of Inadvertent Error..............................20
ARTICLE 4
ELECTIVE DEFERRAL, SUPPLEMENTAL, EMPLOYEE, CATCH-UP,MATCHING,
AND COMPANY CONTRIBUTIONS
4.1 Amount of Contributions......................................21
4.2 When Contributions Made......................................22
4.3 Limitation on Amount of Contributions........................22
4.4 Payment of Contributions to Trustee..........................22
4.5 Form of Contributions........................................22
4.6 Return of Contributions......................................23
4.7 Payment of Expenses of Plan..................................23
ARTICLE 5
ROLLOVER CONTRIBUTIONS
5.1 Rollover Contributions.......................................24
ARTICLE 6
ACCOUNTS
6.1 Allocation of Contributions and Forfeitures to Accounts......25
6.2 Determination of Account Balances............................26
6.3 Limitations on Elective Deferral Contributions...............27
6.4 Limitations on Matching and Employee Contributions...........28
6.5 Limitations on Annual Additions..............................30
6.6 Responsibility for Accounts..................................35
6.7 Notice to Participants of Account Balances...................35
ARTICLE 7
BENEFITS
7.1 Normal Retirement............................................36
7.2 Retirement After Normal Retirement Age.......................36
7.3 Death........................................................36
7.4 Disability...................................................36
7.5 Severance from Service.......................................36
7.6 Forfeitures..................................................37
7.7 Time of Distribution of Benefits.............................38
7.8 Distributions On and After January 1, 2003....................39
7.9 Distribution of Benefits Before January 1, 2003 but on or
after January 1, 1998........................................40
7.10 Distribution of Benefits Before January 1, 1998.............47
7.11 Rollovers Disregarded for Involuntary Cash-Outs on and
After January 1, 2002.......................................50
7.12 Rollover Election and Rollover Notice.......................50
7.13 Additional Distribution Requirements for Elective
Deferral and Supplemental Accounts..........................50
ARTICLE 8
LOANS AND WITHDRAWALS
8.1 Loans to Participants........................................52
8.2 Actions Upon Default.........................................53
8.3 Hardship Withdrawals from Elective Deferral, Catch-Up
and Rollover Accounts........................................54
8.4 Withdrawals From Employee Contribution Accounts..............55
8.5 In-Service Withdrawals After Age 59-1/2......................55
ARTICLE 9
TOP-HEAVY PROVISIONS
9.1 Purpose......................................................56
9.2 Key Employee.................................................56
9.3 Determination Date...........................................56
9.4 Determination of Top-Heavy Status............................56
9.5 Effect of Top-Heavy Provisions...............................58
ARTICLE 10
DESIGNATION OF BENEFICIARY
10.1 Designation Form; Change of Designation; Survival of
Beneficiary.................................................61
10.2 Distribution If No Beneficiary Designated...................61
ARTICLE 11
ORGANIZATION AND RESPONSIBILITIESOF THE BENEFITS COMMITTEE
11.1 Appointment and Tenure of Benefits Committee................62
11.2 Organization and Decisions of Benefits Committee............62
11.3 Duties of Benefits Committee................................62
11.4 Benefits Committee Decisions Final and Binding..............64
11.5 Powers and Authority of Benefits Committee...................64
11.6 Benefits Committee Directions to Trustee....................64
11.7 Employment of Counsel, Etc..................................64
11.8 Payment of Expenses of Benefits Committee...................64
11.9 Benefits Committee and Trustee to be Furnished Information
Concerning Employees.....................................65
ARTICLE 12
THE TRUST FUND AND TRUSTEE
12.1 Establishment of Trust Fund.................................66
12.2 No Diversion of Trust Fund..................................66
12.3 Removal or Resignation of Trustee...........................66
12.4 Trust Part of Plan..........................................66
12.5 Trustee Powers..............................................66
12.6 No Guarantee of Losses in Trust Fund........................66
12.7 Participant Not to Be Fiduciary.............................66
12.8 Power of Participants To Direct Investment of Accounts......66
ARTICLE 13
AMENDMENTS TO THE PLAN
13.1 Right Generally to Make Amendments..........................69
13.2 Right to Make Amendments Relating to Qualification of Plan..69
13.3 Amendment by Benefits Committee..............................69
ARTICLE 14
RESERVATIONS OF RIGHTSBY THE COMPANY ANDLIMITATIONS ON
RIGHTS OF PARTICIPANTS
14.1 Plan Voluntary on Part of Company...........................70
14.2 Plan Not Contract of Employment.............................70
ARTICLE 15
TERMINATION OF PLAN
15.1 Events Causing Termination of Plan..........................71
15.2 Procedure Upon Termination..................................71
ARTICLE 16
ADDITION AND WITHDRAWAL OF A COMPANY
16.1 Adoption of Plan by Related Company.........................72
16.2 Withdrawal From Plan by Company.............................72
ARTICLE 17
CHANGE IN EMPLOYMENT
17.1 Participant Transfer From Company to Company................74
17.2 Participant Transfer From Company to Related Company........74
17.3 Employee Credit for Services With Related Company...........74
ARTICLE 18
LIMITATIONS ON VESTINGANDALIENABILITY OF BENEFITS
18.1 Participant Interests Limited to Benefits Actually Accrued..75
18.2 Spendthrift Clause..........................................75
ARTICLE 19
BENEFITS CLAIMS PROCEDURE
19.1 Claims for Benefits.........................................76
19.2 Review of Denial of Claims..................................76
19.3 Decision on Review of Denial................................76
ARTICLE 20
FIDUCIARY RESPONSIBILITIES
20.1 Duties and Obligations of Fiduciaries.......................77
20.2 Allocation of Fiduciary Responsibilities....................77
ARTICLE 21
INDEMNIFICATION OF CERTAIN FIDUCIARIES
21.1 Rights to Indemnification...................................79
21.2 Advancement of Expenses.....................................79
21.3 Determination of Right to Indemnity.........................79
21.4 Other Rights................................................80
21.5 Indemnification By More Than One Company....................80
ARTICLE 22
MISCELLANEOUS
22.1 Merger or Consolidation of Plan.............................81
22.2 Unclaimed Benefits..........................................81
22.3 No Diversion of Trust Fund..................................81
22.4 Construction................................................81
22.5 Gender and Number...........................................81
22.6 Discretionary Acts to be Non-Discriminatory...............81
22.7 Titles and Headings.......................................82
22.8 Distributions to Incompetents or Minors...................82
22.9 Qualified Domestic Relations Order........................82
22.10 Compliance with the Uniformed Services Employment and
Reemployment Rights Act of 1994......................82
22.11 Appointment of Administrator...............................82
22.12 Effective Date ............................................82
COMMONWEALTH INDUSTRIES, INC.
401(k) PLAN
WHEREAS, Commonwealth Industries, Inc., formerly known as Commonwealth
Aluminum Corporation, a Delaware corporation with its principal office and place
of business in Louisville, Kentucky ("Sponsoring Company") together with its
affiliate Commonwealth Aluminum Sales Corporation, adopted the Commonwealth
Aluminum Corporation Performance Sharing Plan for Salaried Employees which
became known as the Commonwealth Industries Savings Plan (which was known as the
Commonwealth Industries Savings Plan prior to January 1, 1998 but on and after
August 1, 1997 and was known as the Commonwealth Aluminum Corporation Savings
Plan prior to August 1, 1997) ("Prior Plan"), a profit sharing plan and trust
for the benefit of its eligible employees, which Prior Plan has been amended
from time to time; and
WHEREAS, the assets and liabilities of the Alflex Corporation, A Division
of CasTech Aluminum Group, Inc., 401(k) Retirement Plan and the Barmet Aluminum
Corporation 401(k) Retirement Plan and Trust were merged into the Prior Plan
effective January 1, 1998; and
WHEREAS, the Board of Directors of the Sponsoring Company has authorized
and approved the amendment and restatement of the Prior Plan in the form of the
Commonwealth Industries Savings Plan (which became known as the Commonwealth
Industries, Inc. 401(k) Plan effective January 1, 2001) ("Plan") as set forth
herein, in part to make technical changes to the Plan in order to comply with
changes in law.
NOW, THEREFORE, the Sponsoring Company hereby approves and adopts the Plan,
which shall read as follows:
ARTICLE 1
PURPOSE AND APPLICABILITY OF PLAN
1.1 PURPOSE OF PLAN. The purpose of the Plan shall continue to be to
provide Benefits to Participants upon retirement, Disability, death and
Severance from Service, upon the terms and conditions and subject to the
limitations, contained herein. The Plan is hereby designated as a profit sharing
plan for purposes of sections 401(a) and 401(k) of the Code.
1.2 APPLICABILITY OF PLAN. The provisions of the Plan shall apply only
to persons in the employ of the Company on or after the Effective Date. The
rights and benefits, if any, of persons who were employed by the Company prior
to the Effective Date, but who are not employed on or after the Effective Date,
shall be determined in accordance with the provisions of the Prior Plan in
effect on the date their employment terminated.
-19-
ARTICLE 2
DEFINITIONS
The following words and phrases when used herein shall have the meanings
set forth below, unless a different meaning is plainly required by the context:
2.1 ACCOUNT BALANCE. The fair market value of an Account as of a
Valuation Date.
2.2 ACCOUNTING DATE. The last day of each Plan Year.
2.3 ACCOUNTS. The accounts established and maintained under the Plan
for a Participant are sometimes referred to collectively as Accounts.
2.4 ACTUAL DEFERRAL PERCENTAGE. The average of the ratios (expressed as
a percentage) of the Elective Deferral Contribution made on behalf of each
Participant for the Plan Year to the Participant's Compensation. Actual Deferral
Percentages shall be calculated to the nearest one hundredth of a percent. The
Actual Deferral Percentage of any Participant who is a Highly Compensated
Employee for the Plan Year and who is eligible to have contributions allocated
to the Participant's account under two or more arrangements described in section
401(k) of the Code that are maintained by the Company or any other employer
required to be aggregated with the Company under sections 414(b), (c), (m) or
(o) of the Code, shall be determined as if such elective deferrals were made
under a single arrangement.
2.5 ALLOCABLE INCOME. The allocable income (or loss) for a Plan Year
shall be the amount determined by multiplying the income for the Plan Year
allocable to Elective Deferral Accounts, Matching Accounts, or Employee
Contribution Accounts of a Participant, whichever is applicable, by a fraction.
The numerator of the fraction shall be the amount of excess Elective Deferral
Contributions, Matching Contributions, or Employee Contributions, whichever is
applicable, made on behalf of the Participant for the Plan Year. The denominator
of the fraction shall be the total Elective Deferral Account Balance, Matching
Account Balance, or Employee Contribution Account Balance, whichever is
applicable, of the Participant as of the last Valuation Date of the preceding
Plan Year, plus Elective Deferral Contributions, Matching Contributions, or
Employee Contributions, whichever is applicable, made during the Plan Year.
Allocable Income shall not include allocable income (or loss) for the gap period
between the end of the Plan Year and the date of distribution.
2.6 AVERAGE CONTRIBUTION PERCENTAGE. The average (expressed as a
percentage) of the "contribution percentages" of all Participants who are Highly
Compensated Employees to the contribution percentages of all Participants who
are not Highly Compensated Employees. For the purposes of this Section 2.6,
"contribution percentages" shall mean the ratio (expressed as a percentage) of
the Matching Contributions and Employee Contributions made on behalf of each
Participant for the Plan Year to the Participant's Compensation. Contribution
percentages shall be calculated to the nearest one hundredth of a percent. The
contribution percentage of any Participant who is a Highly Compensated Employee
for the Plan Year and who is eligible to have contributions allocated to the
Participant's accounts under two or more arrangements subject to the rules of
section 401(m) of the Code that are maintained by the Company or any employer
required to be aggregated with the Company under sections 414(b), (c), (m) or
(o) of the Code, shall be determined as if such contributions were made under a
single arrangement.
2.7 BENEFICIARY. The person or entity entitled pursuant to Articles 7
and 10 to receive a Benefit payable hereunder upon or after a Participant's
death.
2.8 BENEFIT. The Account Balances of a Participant's Accounts which are
distributable to the Participant or the Participant's Beneficiary as provided in
Article 7.
2.9 BENEFITS COMMITTEE OR COMMITTEE. The person or persons designated
by the Board of Directors of the Sponsoring Company pursuant to Article 11 as
the Benefits Committee.
2.10 BENEFITTING. A Participant is treated as benefitting under the
Plan for any Plan Year in which the Participant received or is deemed to receive
an allocation in accordance with Treas. Reg.ss.1.410(b)-3(a).
2.11 BOARD OF DIRECTORS. The Board of Directors (or other managing
body) of each Company or, where the reference is to a single Board of Directors,
the Board of Directors of the Sponsoring Company.
2.12 BREAK IN SERVICE. A 12-consecutive month Period of Severance,
beginning on the Employee's Severance from Service date. In the case of an
individual who is absent from Service for maternity or paternity reasons, the
12-consecutive month period beginning on the first anniversary of the first date
of such absence shall not constitute a Break in Service. An absence from Service
for maternity or paternity reasons means an absence (1) by reason of the
pregnancy of the individual, (2) by reason of the birth of a child of the
individual, (3) by reason of the placement of a child with the individual in
connection with the adoption of such child, or (4) for purposes of caring for
such child for a period beginning immediately following such birth or placement.
2.13 CATCH-UP. Effective July 1, 2002, the amount of a Participant's
Compensation for a Plan Year which is deferred pursuant to an election under
Section 3.5.
2.14 CATCH-UP ACCOUNT. Effective July 1, 2002, the separate Account
established and maintained on behalf of a Participant to reflect the
Participant's interest in the Trust Fund attributable to Catch-Up Contributions
on the Participant's behalf.
2.15 CATCH-UP CONTRIBUTIONS. Effective July 1, 2002, the Contributions
of the Company to the Trust Fund pursuant to Section 4.1(d).
2.16 CODE. The Internal Revenue Code of 1986, as it has been and may be
amended from time to time. Reference to any section of the Code shall include
any provision successor thereto.
2.17 COMPANY. The Sponsoring Company and each Related Company who
adopts the Plan pursuant to Section 16.1. The term Company shall also include
any successor employer to the Company, whether by merger, purchase of assets or
otherwise which adopts the Plan. When used with reference to an Employee or
Participant, the term shall mean the Company employing the Employee or
Participant.
2.18 COMPANY ACCOUNT. The separate Account established and maintained
on behalf of a Participant to reflect the Participant's interest in the Trust
Fund attributable to Company Contributions.
2.19 COMPANY CONTRIBUTIONS. Contributions of the Company to the Trust
Fund pursuant to Section 4.1(f).
2.20 COMPENSATION.
(a) General Definition.
(1) On or After January 1, 2002. Effective for Plan Years
beginning on or after January 1, 2002, the base salary or wages for
services rendered which are paid by the Company to or for an Employee for a
Plan Year which are subject to withholding for federal income tax purposes,
plus the amount deferred by such Employee pursuant to an election made
under Section 3.4 and, effective July 1, 2002, Section 3.5, under a
cafeteria plan maintained by the Company and intended to comply with
section 125 of the Code, or under a salary reduction fringe benefit
transportation arrangement maintained by the Company and intended to comply
with section 132(f)(4) of the Code. Compensation shall also include cost of
living adjustments, overtime, shift differentials, discretionary incentive
compensation bonuses, discretionary income bonuses, gain sharing pay,
production-related bonuses, variable pay, other bonuses (except sign-on
bonuses and retention bonuses), commissions, salary continuation payments,
jury duty and witness pay, bereavement pay, vacation pay, and compensation
in lieu of vacation. Compensation shall exclude taxable fringe benefits
including short term and long term disability pay, income imputed to the
Participant such as by reason of the Participant's use of Company-owned or
-furnished property or group term life insurance in excess of $50,000,
allowances for automobiles, country club fees, education, expense and
reimbursements, carpools, relocation, rental assistance, travel and uniform
allotments, severance pay, sign-on bonuses and retention bonuses, Company
Contributions and Matching Contributions under this Plan or Company
contributions under any other defined contribution plan sponsored by the
Company, and amounts allocated for or distributed to or for the Participant
under a nonqualified deferred compensation plan during the Plan Year.
Compensation shall be taken into account only while an Employee is a
Participant in the Plan. Compensation for purposes of determining a
Participant's Elective Deferral Contributions, Employee Contributions,
Matching Contributions and, effective July 1, 2002, Catch-Up Contributions
shall consist of Compensation paid to the Participant during such Plan Year
prior to the Participant's retirement, Disability, death or other Severance
from Service.
(2) Before January 1, 2002. Effective for Plan Years beginning
before January 1, 2002, the base salary or wages for services rendered
which are paid by the Company to or for an Employee for a Plan Year which
are subject to withholding for federal income tax purposes, plus the amount
deferred by such Employee pursuant to an election made under Section 3,
under a cafeteria plan maintained by the Company and intended to comply
with section 125 of the Code or, effective January 1, 2001, under a salary
reduction fringe benefit transportation arrangement maintained by the
Company and intended to comply with section 132(f)(4) of the Code.
Compensation shall also include overtime, shift differential, salary
continuation payments, jury duty and witness pay, bereavement pay, vacation
pay and gain sharing pay. Compensation shall exclude compensation in lieu
of vacation time, any payments for education allowance, Company
Contributions and Matching Contributions under this Plan, or Company
contributions under any other defined contribution plan sponsored by the
Company, discretionary income compensation, supplemental unemployment pay,
imputed income, uniform allotment, country club fees, car allowances or any
payments for car pools, severance pay, and relocation allowance.
Compensation shall be taken into account only while an Employee is a
Participant in the Plan. Compensation for purposes of determining a
Participant's Elective Deferral Contributions, Employee Contributions and
Matching Contributions shall consist of Compensation paid to the
Participant during such Plan Year.
(b) Limitation. Effective on or after January 1, 2002,
Compensation shall not include amounts in excess of $200,000, or such larger
amount as may be determined by the Secretary of Treasury pursuant to section
401(a)(17)(B) of the Code. Effective prior to January 1, 2002, Compensation
shall not include amounts in excess of $160,000, or such larger amount as may be
determined by the Secretary of Treasury pursuant to section 401(a)(17)(B) of the
Code.
(c) Exception to Compensation Definition. Effective January 1,
2001, for purposes of compliance with certain nondiscrimination tests set forth
in sections 401(k), 401(m) and 410(b) of the Code, the Company may use a broader
definition of compensation than the definition given under Section 2.20(a), so
long as such broader definition of compensation satisfies the requirements of
section 414(s) of the Code and related regulations.
2.21 CONTRIBUTIONS. Company Contributions, Matching Contributions,
Employee Contributions, Rollover Contributions, Elective Deferral Contributions,
Supplemental Contributions, and, effective July 1, 2002, Catch-Up Contributions
are sometimes referred to herein collectively as Contributions.
2.22 DIRECT ROLLOVER. A payment by the Plan to the Eligible Retirement
Plan specified by the Distributee.
2.23 DIRECTED ACCOUNT. The separate Account established and maintained
on behalf of a Participant pursuant to Section 12.8.
2.24 DISABILITY OR DISABLED.
(a) On or After January 1, 2001. Effective for disabilities
incurred on or after January 1, 2001, a Participant who is covered by the
Company's long term disability plan and who meets the criteria for a benefit
under such long term disability plan. A determination by the insurer of the long
term disability plan that the Participant meets the criteria for a benefit under
such long term disability plan shall also constitute a determination as to
whether a Participant is Disabled under this Section 2.24(a) for Plan purposes.
(b) Before January 1, 2001. Effective for disabilities incurred
prior to January 1, 2001, a Participant's incapacity to engage in any
substantial gainful activity because of a medically determinable physical or
mental impairment which can be expected to result in death, or to be of long,
continued and indefinite duration. Such determination of Disability shall be
made by the Benefits Committee with the advice of competent medical authority.
All Participants in similar circumstances will be treated alike.
2.25 DISTRIBUTEE. A Distributee includes a Participant, a Participant's
spouse, surviving spouse or former spouse who is the alternate payee under a
Qualified Domestic Relations Order.
2.26 EFFECTIVE DATE. The effective date of the amendment and
restatement of the Prior Plan, which is January 1, 1997, except as otherwise
specifically provided herein. The term shall also mean the effective date of the
Joinder Agreement of a Company which adopts the Plan.
2.27 ELECTIVE DEFERRAL. The amount of a Participant's Compensation for
a Plan Year which is deferred pursuant to an election under Section 3.4.
2.28 ELECTIVE DEFERRAL ACCOUNT. The separate Account established and
maintained on behalf of a Participant to reflect the Participant's interest in
the Trust Fund attributable to Elective Deferral Contributions on the
Participant's behalf.
2.29 ELECTIVE DEFERRAL CONTRIBUTIONS. The contributions of the Company
to the Trust Fund pursuant to Section 4.1(a).
2.30 ELIGIBLE RETIREMENT PLAN. 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 plan 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. Effective for Eligible Rollover Distributions made after December 31,
2001, an Eligible Retirement Plan shall also mean an annuity contract described
in section 403(b) of the Code and an eligible plan under section 457(b) of the
Code which is maintained by a state, political subdivision of s state, or any
agency or instrumentality of a state or political subdivision of a state and
which agrees to separately account for amounts transferred into such plan from
this Plan. The definition of Eligible Retirement Plan shall also apply in the
case of a distribution to a surviving spouse, or to a spouse or former spouse
who is alternate payee under a Qualified Domestic Relation Order.
2.31 ELIGIBLE ROLLOVER DISTRIBUTION. A distribution of all or any
portion of the Account Balance of the Distributee, except that an Eligible
Rollover Distribution does not include:
(a) a 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;
(b) a distribution to the extent such distribution is required under
section 401(a)(9) of the Code;
(c) the portion of any distribution that is not includable in
gross income (determined without regard to the exclusion for net unrealized
appreciation with respect to employer securities);
(d) effective for distributions made after December 31, 1998, a
distribution which is a hardship distribution as defined in section
401(k)(2)(B)(i)(IV) of the Code; or
(e) a distribution that is includable in gross income which, when
combined with all other such distributions to the Distributee during the Plan
Year, is reasonably expected to total less than $200.
However, for distributions made after December 31, 2001, a portion of a
distribution shall not fail to be an Eligible Rollover Distribution merely
because the portion consists of Employee Contributions which are not includable
in gross income. However, such portion may be transferred only to an individual
retirement account or annuity described in section 408(a) or (b) of the Code, or
to a qualified defined contribution plan described in section 401(a) or 403(a)
of the Code that agrees to separately account for amounts so transferred,
including separately accounting for the portion of such distribution which is
includable in gross income and the portion of such distribution which is not so
includable.
2.32 EMPLOYEE. Any person employed by the Company, provided, the term
Employee shall not include (a) any person whose employment becomes the subject
matter of a collective bargaining agreement between employee representatives and
the Company unless such collective bargaining agreement expressly provides that
such person is eligible for participation in the Plan, (b) any person who is a
Leased Employee, (c) any person, whether or not deemed a common-law employee,
who is not a Leased Employee but who provides services to the Company pursuant
to an agreement between the Company and any other person whether for services of
a year or more or for periods of less than one year, or (d) any person
classified by the Company as an independent contractor, whether or not deemed a
common-law employee.
2.33 EMPLOYEE CONTRIBUTION ACCOUNT. The separate Account established
and maintained on behalf of a Participant to reflect the Participant's interest
in the Trust Fund attributable to Employee Contributions.
2.34 EMPLOYEE CONTRIBUTIONS. The Contributions of a Participant made on
an after-tax basis pursuant to Section 3.6.
2.35 ENTRY DATE.
(a) On or After January 1, 2002. Effective January 1, 2002, an
Employee who has fulfilled the eligibility requirements may enroll in the Plan
as soon as administratively practicable after receipt of notice by the Plan
Administrator or its representative regardless of whether such Employee elects
to enroll in the Plan within 30 days of the Employee's date of hire.
(b) On or After January 1, 2000 But Before January 1, 2002.
Effective January 1, 2000, for an Employee who does not elect to enroll in the
Plan within 30 days of the Employee's date of hire, the term Entry Date shall
mean the first day of each calendar quarter in a Plan Year.
(c) On or After January 1, 1998 But Before January 1, 2000.
Effective January 1, 1998, the term Entry Date means either the Effective Date
or the date immediately thereafter when an Employee who has fulfilled the
eligibility requirements commences participation in the Plan, provided such
Employee elects to enroll in the Plan within 30 days of the Employee's date of
hire. For an Employee who does not elect to enroll in the Plan within 30 days of
the Employee's date of hire, the term Entry Date shall mean the first day of
January and the first day of July in a Plan Year.
(d) Before January 1, 1998. Prior to January 1, 1998, the term
Entry Date means either the Effective Date or the date immediately thereafter
when an Employee who has fulfilled the eligibility requirements commences
participation in the Plan. Any Employee who has satisfied the maximum
eligibility requirements permissible under ERISA, shall be eligible to commence
participation in this Plan no later than the earlier of (1) or (2), below, as
applicable, provided that the Employee has not experienced a Severance from
Service.
(1) The first day of the first Plan Year beginning after the
date on which the Employee satisfied such requirements; or
(2) The date six months after the date on which the Employee
satisfied such requirements.
(e) Return to Service. If an Employee is not in the active service
of the Company as of the Employee's initial Entry Date, such Employee's
subsequent Entry Date shall be the date the Employee returns to the active
Service of the Company, provided the Employee still meets the eligibility
requirements. If an Employee does not enroll as a Participant as of the
Employee's initial Entry Date, the Employee's subsequent Entry Date shall be the
applicable Entry Date as specified above when the Employee actually enrolls as a
Participant.
2.36 ERISA. The Employee Retirement Income Security Act of 1974, as it
has been and may be amended from time to time. Reference to any section of ERISA
shall include any provision successor thereto.
2.37 5% OWNER. Any person who owns (or is considered as owning within
the meaning of section 318 of the Code) more than 5% of the outstanding stock of
the Company or stock possessing more than 5% of the total combined voting power
of all stock of the Company; or, if the Company is not a corporation, any person
who owns more than 5% of the capital or profits interest in the Company.
2.38 FORFEITURES. The portion of a Participant's Company Account or
Matching Account which is subject to forfeiture pursuant to Section 7.6 by
reason of the Participant's Severance from Service, and any other Forfeitures
provided for herein.
2.39 HIGHLY COMPENSATED EMPLOYEE.
(a) General Definition. Any Employee who (1) during the Plan Year
or the preceding Plan Year was at any time a 5% Owner or (2) during the
preceding Plan Year, received compensation in excess of $80,000 (as adjusted
pursuant to sections 414(q) and 415(d) of the Code) and was also in the top-paid
group of employees for such preceding Plan Year. For purposes of this Section
2.39(a), "compensation" shall include compensation from the Company and any
employer required to be aggregated with the Company under section 414(b), (c),
(m), or (o) of the Code. The term Highly Compensated Employees includes highly
compensated active employees and highly compensated former employees.
(b) Highly Compensated Former Employee. Any Employee who (1)
separated from service with the Company, or is deemed to have separated from
service, prior to the Plan Year, (2) performs no service for the Company during
the Plan Year, and (3) was a Highly Compensated Employee during either the Plan
Year in which such separation from service occurred or in any Plan Year ending
on or after the Employee's 55th birthday.
(c) Inclusion in Top Paid Group. For purposes of Section 2.39(a),
an Employee shall be considered a member of the "top paid group" for any year if
such Employee is in the group consisting of the top 20% of the employees of the
Company when ranked on the basis of compensation paid during the year, pursuant
to section 414(q)(3) of the Code.
(d) Application of Section 414(q). For purposes of determining
whether an Employee is a Highly Compensated Employee, the provisions of section
414(q) of the Code, and the regulations thereunder, shall apply.
2.40 HOUR OF SERVICE.The following shall constitute Hours of Service
under the Plan:
(a) Hours Paid For Performance of Duties. Each hour for which an
Employee is paid, or entitled to payment, for the performance of duties for the
Company. These hours shall be credited to the Employee for the computation
period or periods in which the duties are performed.
(b) Hours Paid When No Performance of Duties. Each hour for which
an Employee is paid, or entitled to payment, by the Company on account of a
period during which no duties are performed (irrespective of whether the
employment relationship has terminated) due to vacation, holiday, illness,
incapacity (including disability), layoff, jury duty, military duty or leave of
absence. No more than 501 Hours of Service shall be credited under this Section
2.40(b) for any single continuous period (whether or not such period occurs in a
single computation period). Hours under this Section 2.40(b) shall be calculated
and credited pursuant to section 2530.200b-2 of the Department of Labor
Regulations which are incorporated herein by this reference.
(c) Hours Paid For Back Pay. Each hour for which back pay,
irrespective of mitigation of damages, is either awarded or agreed to by the
Company. The same Hours of Service shall not be credited both under Section
2.40(a) or (b), above, as the case may be, and under this Section 2.40(c). These
hours shall be credited to the Employee for the computation period or periods to
which the award or agreement pertains rather than the computation period in
which the award, agreement or payment is made.
(d) Child Related Absences Affecting Break in Service. Effective
for absences in Plan Years beginning after December 31, 1984, in determining
whether a Break in Service has been incurred by a Participant who is absent from
work for any period (1) by reason of pregnancy, (2) by reason of the birth of
the Participant's child, (3) by reason of the placement of a child with the
Participant in connection with the adoption of such child by the Participant or
(4) for purposes of caring for such child for a period beginning immediately
following such birth or placement, Hours of Service shall include each hour
which normally would have been credited to such Participant but for such
absence. If the Plan is unable to determine the number of hours which normally
would have been credited to such Participant but for such absence, eight Hours
of Service for each normal work day of absence shall be credited. No more than
501 Hours of Service shall be credited under this Section 2.40(d). The Hours of
Service credited under this Section 2.40(d) shall be credited only for the Plan
Year in which the absence begins if the Participant would be prevented from
incurring a Break in Service in such Plan Year solely because the period of
absence is treated as Hours of Service, or, in any other case, in the
immediately following Plan Year. A Participant to whom this Section 2.40(d)
applies shall furnish to the Benefits Committee or its representative evidence
that the absence from work is for the reasons set forth in this Section 2.40(d)
and the number of days for which there was an absence.
(e) Determination Made Based On Actual Hours Paid or Entitled to
Payment. Except as provided in Section 2.40(d), Hours of Service shall be
determined on the basis of actual hours for which an Employee is paid or
entitled to payment, provided, when records are not available for tabulating
actual hours worked, an Employee may be credited with 45 hours for each week or
95 hours for each semi-monthly payroll period, whichever is applicable, in which
the Employee is paid, or entitled to be paid, for at least one hour for the
performance of duties for the Company.
(f) Determination of Service. Anything in the Plan to the contrary
notwithstanding, in determining an Employee's service, the Employee shall be
entitled to such credit, if any, as is required by federal law. For purposes of
determining service under the Plan, service for the following shall be treated
as if it were service for the Company:
(1) each Related Company; and
(2) any other predecessor employer within the meaning of, and to the
extent required under, section 414(a) of the Code; and
(3) any entity required to be aggregated with the Company
pursuant to section 414(o) of the Code and regulations promulgated
thereunder.
2.41 JOINDER AGREEMENT. The form prescribed by the Benefits Committee
pursuant to which a Related Company adopts the Plan, as provided in Section
16.1.
2.42 LEASED EMPLOYEE. Any person who provides services to the Company
(other than an employee of the Company) if such services are provided pursuant
to an agreement between the Company and any other person, such person has
performed such services for the Company (or for the Company and related persons
determined in accordance with section 414(n)(6) of the Code) on a substantially
full-time basis for a period of at least one year, and such services are
performed under the primary direction or control of the Company. Provided, that
such Leased Employee shall be treated as an Employee solely for purposes of
demonstrating compliance with certain nondiscrimination tests set forth in
section 414(n)(3) of the Code, unless: (a) such Leased Employee is covered under
a money purchase pension plan providing a non-integrated employer contribution
rate of at least 10% of compensation (as defined in section 415(c)(3) of the
Code, but including amounts contributed pursuant to a salary reduction agreement
which are excludable from the employee's gross income under sections 125,
402(e)(3), 402(h) or 403(b) of the Code), immediate participation and full and
immediate vesting, and (b) not more than 20% of the Company's employees who are
not Highly Compensated Employees are Leased Employees. In determining whether an
individual is a Leased Employee, the provisions of section 414(n) of the Code,
and the regulations thereunder, shall apply.
2.43 MATCHING ACCOUNT. The separate Account established and maintained
on behalf of a Participant to reflect the Participant's interest in the Trust
Fund attributable to Matching Contributions made on the Participant's behalf.
2.44 MATCHING CONTRIBUTIONS. Contributions of the Company to the Trust
Fund pursuant to Section 4.1(e).
2.45 NORMAL RETIREMENT AGE. Effective January 1, 2001, a Participant's
65th birthday. For an Employee who becomes a Participant after the Employee's
65th birthday, the Normal Retirement Age shall be the day the Employee becomes a
Participant. Prior to January 1, 2001, the later of a Participant's 65th
birthday or the fifth anniversary of the date the Employee becomes a
Participant.
2.46 1% OWNER. Any person who owns (or is considered as owning within
the meaning of section 318 of the Code) more than 1% of the outstanding stock of
the Company or stock possessing more than 1% of the total combined voting power
of all stock of the Company; or, if the Company is not a corporation, any person
who owns more than 1% of the capital or profits interest in the Company.
2.47 PARTICIPANT. An eligible Employee who becomes a Participant. The
term shall also include, where appropriate, a former Participant whose service
with the Company has terminated when such person is entitled to a Benefit
hereunder.
2.48 PARTICIPANT'S COMPANY STOCK ACCOUNT. The portion, if any, of a
Participant's Accounts which are invested in shares of the Company's stock. Such
Participant's Company Stock Account shall be credited with dividends paid, if
any. Amounts which are to be invested in the Participant's Company Stock Account
may be invested in any short term account prior to actual investment in the
Participant's Company Stock Account. The Trustee will vote the shares of the
Company's stock invested in the Participant's Company Stock Account in
accordance with any instructions received by the Trustee from the Participant.
2.49 PERIOD OF SERVICE OR SERVICE. The Company-Employee relationship
which begins on the Employee's employment date and continues until the
Employee's Severance from Service date. An Employee's Period of Service shall
include any Period of Severance beginning on the Employee's Severance from
Service date which is less than 12 months.
2.50 PERIOD OF SEVERANCE. A period of time commencing on the
Participant's Severance from Service date and ending on the date such individual
is re-employed by the Company.
2.51 PLAN. Effective January 1, 2001, the Commonwealth Industries, Inc.
401(k) Plan provided for herein, as it may be amended from time to time. Prior
to January 1, 2001, but on and after January 1, 1998, the Plan was known as the
Commonwealth Industries Savings Plan. Prior to January 1, 1998, but on and after
August 1, 1997, the Plan was known as the Commonwealth Industries, Inc. Savings
Plan. Prior to August 1, 1997, the Plan was known as the Commonwealth Aluminum
Corporation Savings Plan.
2.52 PLAN ADMINISTRATOR OR ADMINISTRATOR. The Sponsoring Company or
other person or persons designated by the Board of Directors of the Sponsoring
Company as the Plan Administrator.
2.53 PLAN YEAR. The consecutive 12-month period beginning on the first
day of January in each year and ending on the last day of December.
2.54 PRIOR PLAN. The profit sharing plan and trust of the Company, as
constituted on the day prior to the Effective Date.
2.55 QUALIFIED DOMESTIC RELATIONS ORDER. A "qualified domestic
relations order," as defined in section 414(p) of the Code and section 206(d)(3)
of ERISA.
2.56 RELATED COMPANY. Either (a) a member of a "controlled group of
corporations" (as defined in section 1563(a) of the Code, determined without
regard to sections 1563(a)(4) and (e)(3)(C) of the Code, except that, for the
purposes of Section 6.5, the phrase "more than 50%" shall be substituted for the
phrase "at least 80%" in section 1563(a)(1) of the Code) of which the Company is
a member, (b) an unincorporated trade or business which is under common control
with the Company, as determined under section 414(c) of the Code, (c) a member
of an "affiliated service group" (as defined under section 414(m) of the Code)
of which the Company is a member, (d) any entity required to be aggregated with
the Company under section 414(o) of the Code or (e) any other subsidiary or
affiliate of the Company designated by the Board of Directors to be a Related
Company.
2.57 REQUIRED BEGINNING DATE. Effective for Participants who attain age
70-1/2 before January 1, 1996, the first day of April following the calendar
year in which the Participant attains age 70-1/2. Effective January 1, 1997, the
Required Beginning Date for Participants, including Participants who attain age
70-1/2 during the 1996 calendar year, shall be determined as follows:
(a) Non-5% Owners. The first day of April following the calendar year
in which the later of separation from service or age 70-1/2 occurs.
(b) 5% Owners. For Participants who are 5% Owners at any time
during the Plan Year ending with or within the calendar year in which such
Participant attains age 70-1/2, the first day of April following the calendar
year in which the Participant attains age 70-1/2.
(c) Special Election. For Participants who attain age 70-1/2 on or
after January 1, 1996 but prior to January 1, 1999, the Participant's Required
Beginning Date may be as set forth above for Participants who attain age 70-1/2
before January 1, 1996, pursuant to a written election by the Participant which
is filed with the Plan Administrator or its representative.
2.58 ROLLOVER ACCOUNT. The separate Account established and maintained
on behalf of an Employee to reflect the Employee's interest in the Trust Fund
attributable to the Employee's Rollover Contributions.
2.59 ROLLOVER CONTRIBUTION. A rollover amount or rollover contribution
described in sections 402(c)(4) or 408(d)(3) of the Code, or any other amount
held on behalf of an Employee in a trust (other than the Trust Fund) which is
part of a plan which is qualified under sections 401(a) and 501(a) of the Code
and permits amounts to be transferred to the Trust Fund. Effective January 1,
2002, Rollover Contributions shall include eligible rollover distributions from
a qualified plan described in section 401(a) or 403(a) of the Code, including
after-tax employee contributions, eligible rollover distributions from an
annuity contract described in section 403(b) of the Code, excluding after-tax
employee contributions, and eligible rollover distributions from an eligible
plan under section 457(b) of the Code which is maintained by a state, political
subdivision of a state, or any agency or instrumentality of a state or political
subdivision of a state. Each Rollover Contribution of an Employee shall be
maintained in a separate Rollover Account.
2.60 SEVERANCE FROM SERVICE. A severance of the Company-Employee
relationship which occurs prior to a Participant's Normal Retirement Age for any
reason other than Disability or death.
2.61 SPONSORING COMPANY. Effective August 1, 1997, Commonwealth
Industries, Inc., a Delaware corporation, and any successor employer, whether by
merger, purchase of assets or otherwise, who adopts the Plan. Prior to August 1,
1997, the Sponsoring Company was known as the Commonwealth Aluminum Corporation,
a Delaware corporation, and the Commonwealth Aluminum Sales Corporation, a
Delaware corporation.
2.62 SUPPLEMENTAL CONTRIBUTIONS. The contributions of the Company to
the Trust Fund pursuant to Section 4.1(b). A Participant may not elect to
receive Supplemental Contributions in cash in lieu of contributions to the Plan,
nor shall Supplemental Contributions be available as hardship withdrawals under
Section 8.3.
2.63 TRUST. The Trust Agreement effective January 1, 1994, by and
between Commonwealth Industries, Inc. (then known as Commonwealth Aluminum
Corporation) and CG Trust Company, and as it may be further amended from time to
time.
2.64 TRUST FUND. All cash, securities or other property held by the
Trustee in the Trust on the date hereof and received hereafter by the Trustee as
Contributions and all securities or other property purchased or acquired
therewith or therefrom, together with any increase, accretion or accumulation
thereon, and income therefrom, less distributions, payments or expenditures
therefrom as authorized herein, which is held in the Trust Fund pursuant to the
Plan.
2.65 TRUSTEE. CG Trust Company and any successor Trustee or Trustees
designated in the manner set forth in the Trust, which accepts the Trust Fund.
2.66 VALUATION DATE. Each business day during the Plan Year.
2.67 YEAR OF SERVICE. A Period of Service equaling 12 months. Service
counted in computing Years of Service need not be continuous or consecutive, and
all fractional periods of employment shall be aggregated.
ARTICLE 3
ELIGIBILITY FOR PARTICIPATION
3.1 DATE EMPLOYEES BECOME PARTICIPANTS.
(a) Participants Eligible on Effective Date. Each Employee who was
a Participant in the Prior Plan on the day before the Effective Date shall
continue to be a Participant in the Plan if the Employee is still employed by
the Company on the Effective Date.
(b) Other Employees. Effective January 1, 1998, each Employee
regularly scheduled to work at least 1,000 Hours of Service during the
Employee's first year of employment shall become a Participant as of the Entry
Date coincident with or immediately following the date the Employee first
becomes regularly scheduled to work at least 1,000 Hours of Service during the
Employee's first year of employment; provided, if an Employee is not regularly
scheduled to work 1,000 Hours of Service during the Employee's first year of
employment, such Employee shall become a Participant on the first Entry Date
coincident with or immediately following the end of the Plan Year during which
such Employee actually completes 1,000 Hours of Service. Prior to January 1,
1998, each Employee who is classified as a full-time salaried Employee shall
become a Participant on the Entry Date coincident with or immediately following
the Date the Employee first becomes classified as a full-time salaried Employee.
3.2 ELIGIBILITY OF REHIRED EMPLOYEES. A Participant who incurs a
Severance from Service and again becomes an Employee shall become a Participant
effective as of the date of the Employee's rehire. All other Employees who incur
a Severance from Service and again become an Employee shall become Participants
as provided in Section 3.1. Solely for purposes of this Section 3.2, the phrase
Severance from Service shall include retirement on or after Normal Retirement
Age and termination because of Disability.
3.3 NOTICE OF PARTICIPATION. Each Employee shall be notified when such
Employee becomes eligible to be a Participant and at such time shall be
furnished with (a) a summary of the Plan, (b) a form on which to elect Elective
Deferrals, (c) a form for designating a Beneficiary and (d) a form on which to
select the investment of Accounts under Section 12.8. Notwithstanding the
foregoing, any election, designation or selection described as being made on a
form in this Section 3.3 may be provided by electronic means pursuant to
instructions provided by the Benefits Committee or its representative.
3.4 ELECTIVE DEFERRAL ELECTION.
(a) Amount of Elective Deferral Election.
(1) On or After January 1, 2002. Effective for Plan Years
beginning on or after January 1, 2002, each Participant shall be entitled
to elect, in a whole percentage, that a portion of the Participant's
Compensation earned after such election be deferred and contributed by the
Company to the Plan as an Elective Deferral Contribution, as set forth in
Section 4.1(a). The Elective Deferral Contribution of a Participant who is
a Highly Compensated Employee for the Plan Year shall be limited to the
lesser of (A) $11,000 (or such larger amount as may be determined under
section 402(g) of the Code or by the Secretary of Treasury under sections
402(g) and 415(d) of the Code), or (B) 6% of such Participant's
Compensation for the Plan Year. The Elective Deferral Contribution of a
Participant who is not a Highly Compensated Employee for the Plan Year
shall be limited to the lesser of (I) $11,000 (or such larger amount as may
be determined under section 402(g) of the Code or by the Secretary of
Treasury under sections 402(g) and 415(d) of the Code), or (II) 100% of
such Participant's Compensation for the Plan Year. Effective July 1, 2002,
the dollar limitation imposed by this Section 3.4(a)(1) shall not apply to
Catch-Up Contributions.
(2) Before January 1, 2002. Effective for Plan Years beginning
before January 1, 2002, each Participant shall be entitled to elect, in a
whole percentage, that a portion of the Participant's Compensation earned
after such election be deferred and contributed by the Company to the Plan
as an Elective Deferral Contribution, as set forth in Section 4.1(a). A
Participant's Elective Deferral Contribution for a Plan Year shall not
exceed the lesser of (A) $9,500 (or such larger amount as may be determined
by the Secretary of Treasury pursuant to sections 402(g) and 415(d) of the
Code) or (B) 15% of the Participant's Compensation for the Plan Year.
Effective for the Plan Year beginning January 1, 1997 and ending December
31, 1997, "14%" shall be substituted for "15%" in the preceding sentence.
(b) Manner of Making Elective Deferral Election Upon First
Becoming Eligible. An election under this Section 3.4 shall be made at the time
and in the manner determined by the Benefits Committee. A Participant who first
becomes eligible to participate pursuant to Section 3.1 shall make an Elective
Deferral election on or before the Entry Date on which the Employee becomes a
Participant, as determined by the Benefits Committee or its representative. Such
election shall continue in effect until modified or terminated.
(c) Manner of Initiating, Modifying, Recommencing or Terminating
Elective Deferral Election After Becoming Eligible.
(1) On or After January 1, 2002. Effective January 1, 2002, a
Participant may initiate, modify, recommence or terminate an Elective
Deferral election effective as soon as administratively practicable after
receipt of notice of such initiation, modification, recommencement or
termination by the Plan Administrator or its representative in the manner
designated by the Plan Administrator.
(2) On or after January 1, 2000 But Before January 1, 2002.
Effective January 1, 2000, a Participant may modify or initiate an Elective
Deferral election effective on the first day of the next calendar quarter,
upon at least 15 days prior written notice to the Plan Administrator or its
representative. A Participant may terminate an Elective Deferral election
at any time, upon at least 15 days prior written notice provided to the
Plan Administrator or its representative.
(3) On or After January 1, 1997 But Before January 1, 2000. A
Participant may modify or initiate an Elective Deferral election effective
on the next following January 1 or July 1, upon at least 15 days prior
written notice provided to the Plan Administrator or its representative;
provided with respect to Participants who were employees of CasTech
Aluminum Group, Inc. as of December 31, 1997 may modify or initiate an
Elective Deferral election effective on the first day of the next calendar
quarter, upon at least 15 day prior written notice provided to the Plan
Administrator or its representative. A Participant may terminate an
Elective Deferral election at any time, upon at least 15 days prior written
notice provided to the Plan Administrator or its representative.
(d) Automatic Elective Deferral Election. Notwithstanding anything
in this Section 3.4 to the contrary, effective on or after January 1, 2002 on
the date the Benefits Committee so elects (if the Benefits Committee so elects),
an automatic Elective Deferral in the amount of 3% of Compensation shall be made
on behalf of each Employee who is first employed by a Company on or after the
date elected by the Benefits Committee, beginning with the first payroll period
that commences after the Employee's date of hire (which shall be the Employee's
Entry Date). An Employee on behalf of whom such automatic Elective Deferrals are
made shall become a Participant in the Plan as a result of such automatic
Elective Deferrals. The Employee may file an Elective Deferral election with the
Plan Administrator or its representative not to make Elective Deferrals or to
make Elective Deferrals at a different percentage level at any time during the
period prior to the first payroll date following the Employee's date of hire.
Such alternative Elective Deferral election shall be made in accordance with the
provisions of this Section 3.4. If an automatic Elective Deferral is begun on
behalf of an Employee, such Employee may modify, terminate, or recommence the
Employee's Elective Deferral election in accordance with this Section 3.4.
(e) Excess Elective Deferral Contributions. Anything in Section
3.4(a) to the contrary notwithstanding, Elective Deferral Contributions which
would require the Company to defer more than $9,500 (or such larger amount as
may be determined by the Secretary of Treasury pursuant to sections 402(g) and
415(d) of the Code) on behalf of a Participant in the taxable year of the
Participant shall not be honored and shall be returned to the Participant. In
determining whether such Elective Deferral Contributions exceed the limit
established under sections 402(g) and 415(d) of the Code as in effect on the
first day of the Participant's taxable year, the following deferrals shall be
taken into account:
(1) elective deferrals made by a Participant under any other
qualified cash or deferred arrangement (as defined in section 401(k) of the
Code),
(2) any employer contribution to a simplified employee pension (as
defined in section 408(k) of the Code),
(3) any eligible deferred compensation plan under section 457 of the
Code,
(4) any plan described under section 501(c)(18) of the Code, and
(5) any employer contribution to an annuity contract described
in section 403(b) of the Code under a salary reduction agreement.
The Allocable Income attributable to excess Elective Deferral Contributions for
the taxable year of the Participant shall also be returned to the Participant.
Such excess deferrals shall be returned to the Participant if the Participant
notifies the Plan Administrator or its representative in writing no later than
the March 1 immediately following the close of the Participant's taxable year
for which the excess Elective Deferral Contribution was received by the Plan.
(f) Elective Deferral Contributions in Excess of Deduction Limits.
Elections made under this Section 3.4 shall be in the form of a reduction of
Compensation. Effective for Plan Years beginning before January 1, 2002, in the
event that the Company Contributions, Elective Deferral Contributions, Matching
Contributions and Supplemental Contributions for a Plan Year would in the
aggregate exceed 15% of the total Compensation of all Participants for such Plan
Year because of elections under this Section 3.4, the percentage of Compensation
which each Participant who defers at the highest percentage has elected to defer
shall be reduced so that such Contributions for such Plan Year do not exceed 15%
of the total Compensation of all Participants for such Plan Year.
3.5 CATCH-UP CONTRIBUTIONS. Effective July 1, 2002, each Participant
(a) who is eligible to make Elective Deferral Contributions pursuant to Section
3.4, and (b) who has attained the age of 50 before the close of the Plan Year
shall be eligible to make Catch-Up Contributions in accordance with, and subject
to the limitations of, section 414(v) of the Code. Such Catch-Up Contributions
shall not be taken into account for purposes of the provisions of the Plan
implementing the required limitations of sections 402(g) and 415 of the Code.
The Plan shall not be treated as failing to satisfy the provisions of the Plan
implementing the requirements of sections 401(k)(3), 401(k)(11), 401(k)(12),
410(b) or 416 of the Code, as applicable, by reason of the making of such
Catch-Up Contributions.
3.6 EMPLOYEE CONTRIBUTIONS.
(a) Amount of Employee Contributions. Effective for Plan Years
beginning before January 1, 2002, each Participant may elect to make Employee
Contributions to the Trust Fund for the Participant's Employee Contribution
Account in an amount equal to not less than 1% nor more than 15% of the
Participant's Compensation; provided, the aggregate amount of Employee
Contributions and Elective Deferral Contributions for a Plan Year shall not
exceed 15% of the Participant's Compensation for the Plan Year. Effective for
the Plan Year beginning January 1, 1997 and ending December 31, 1997, "14%"
shall be substituted for "15%" wherever it occurs in the preceding sentence.
(b) Manner of Making Employee Contribution Election Upon First
Becoming Eligible. Effective for Plan Years beginning before January 1, 2002, a
Participant who first becomes eligible to participate pursuant to Section 3.1
shall make an Employee Contribution election on or before the Entry Date on
which the Employee becomes a Participant, as determined by the Benefits
Committee or its representative. Such election shall continue in effect until
modified or terminated, but in all cases shall end not later than December 31,
2001.
(c) Manner of Initiating, Modifying, Recommencing, or Terminating
Employee Contribution Election After Becoming Eligible.
(1) On or After January 1, 2000 But Before January 1, 2002.
Effective January 1, 2000 but before January 1, 2002, a Participant may
modify or initiate an Employee Contribution election effective on the first
day of the next calendar quarter, upon at least 15 days prior written
notice provided to the Plan Administrator or its representative. A
Participant may terminate an Employee Contribution election at any time,
upon at least 15 days prior written notice provided to the Plan
Administrator or its representative.
(2) On or After January 1, 1997 But Before January 1, 2000.
Effective January 1, 1997 but before January 1, 2000, a Participant may
modify or initiate an Employee Contribution election effective on the next
following January 1 or July 1, upon at least 15 days prior written notice
provided to the Plan Administrator or its representative. A Participant may
terminate an Employee Contribution election at any time, upon at least 15
days prior written notice provided to the Plan Administrator or its
representative.
(d) Payment of Employee Contributions. Employee Contributions shall be
deducted from the Participant's Compensation.
(e) Vesting in Employee Contribution Account. A Participant shall at
all times have a nonforfeitable interest in the Participant's Employee
Contribution Account.
(f) Allocations to Employee Contribution Accounts. No
Contributions by the Company or Forfeitures shall be allocated to Employee
Contribution Accounts, however, investment earnings (or losses) of the Trust
Fund shall be allocated to all Employee Contribution Accounts in the same manner
provided for all other Accounts, as set forth in Section 6.2.
3.7 PROVISIONS OF PLAN BINDING ON PARTICIPANTS. Upon becoming a
Participant, a Participant shall be bound then and thereafter by the provisions
of the election forms and designation of Beneficiary form filed by the
Participant and by the terms of the Plan, including all amendments thereto.
3.8 CHANGE IN EMPLOYMENT STATUS.
(a) Cease Status as an Employee. Any Participant whose employment
becomes the subject matter of a collective bargaining agreement between employee
representatives and the Company shall not continue to be a Participant in the
Plan unless such collective bargaining agreement expressly provides that such
person is eligible for continued participation in the Plan. If such collective
bargaining agreement does not provide for continued participation, then during
the period the Participant does not meet the definition of an Employee, but is
still employed by the Company or a Related Company, (a) no further Contributions
shall be made by or on behalf of the Participant, (b) earnings and losses shall
continue to be allocated to the Participant's Accounts as provided in Section
6.2, and (c) Years of Service shall continue to be credited to the Participant.
If the Participant becomes a participant in another defined contribution 401(k)
or other profit sharing plan sponsored by the Company or a Related Company, the
Participant's Account Balances may be transferred to the other defined
contribution plan in a trustee to trustee transfer at the direction of a member
of the Benefits Committee a soon as practicable after participation commence in
the other defined contribution plan and the transfer is approved by an
appropriate fiduciary of the other defined contribution plan.
(b) Commence Status as an Employee. In the event a person employed
by the Company does not meet the definition of an Employee, but later meets the
definition of an Employee, such person shall immediately become a Participant if
that person has met the eligibility requirements of Section 3.1. If such person
has not met the eligibility requirements of Section 3.1, such person shall
become a Participant after satisfying the provisions of Section 3.1. In
determining Years of Service, such person shall be credited with all Years of
Service as an employee, even though such person did not meet the definition of
Employee during some or all of such period. If the Employee formerly
participated in another defined contribution 401(k) or other profit sharing plan
sponsored by the Company or a Related Company and then commenced participation
in the Plan, upon the direction of an appropriate fiduciary of the other defined
contribution plan and approval by a member of the Benefits Committee, the
Participant's account balances under the other defined contribution plan shall
be transferred to the Plan in a trustee to trustee transfer as soon as
practicable after the Employee commences participation in the Plan. Effective
January 1, 2002, any Participant whose account balances under such other defined
contribution plan are transferred to the Plan must make an Elective Deferral
election in accordance with Section 3.4 and an Employee Contribution election in
accordance with Section 3.6 before Elective Deferrals and Employee
Contributions, as applicable, will be contributed on behalf of the Participant.
3.9 CORRECTION OF INADVERTENT ERROR. Anything in the Plan to the
contrary notwithstanding, if a Participant is inadvertently excluded from
participation in any Plan Year, or if the Accounts of any Participant are
inadvertently credited or debited with an incorrect amount for any Plan Year,
the Benefits Committee shall correct such error as soon as is administratively
practicable after the discovery of the error. In the event an error in the
Participant's Account cannot be corrected in any other manner, the Company shall
contribute in the Plan Year in which the error is discovered an amount necessary
to place the Participant's Account in the same position in which it would have
been had the error not been made.
ARTICLE 4
ELECTIVE DEFERRAL, SUPPLEMENTAL, EMPLOYEE, CATCH-UP,
MATCHING, AND COMPANY CONTRIBUTIONS
4.1 AMOUNT OF CONTRIBUTIONS.
(a) Elective Deferral Contributions. The Company shall make an
Elective Deferral Contribution for each Plan Year for each Participant in the
amount of such Participant's Elective Deferral for such Plan Year.
(b) Supplemental Contributions. The Company may make Supplemental
Contributions to the Elective Deferral Accounts of Participants, other than
Highly Compensated Employees, in an amount necessary to meet the requirements of
Section 6.3. A separate accounting of all Supplemental Contributions shall be
made.
(c) Employee Contributions. Effective for Plan Years beginning
before January 1, 2002, the Company shall make an Employee Contribution for each
Plan Year for each Participant in accordance with Section 3.6(d) in the amount
of such Participant's election regarding Employee Contributions unless such
Employee Contributions are paid directly to the Trustee by the Participant.
(d) Catch-Up Contributions. Effective July 1, 2002, the Company
shall make a Catch-Up Contribution for each Plan Year for each Participant in
the amount of such Participant's Catch-Up for such Plan Year.
(e) Matching Contributions.
(1) On or after January 1, 2002. Effective for Plan Years
beginning on or after January 1, 2002, the Company shall make a Matching
Contribution on behalf of each Participant who makes an Elective Deferral
Contribution in an amount equal to 100% of the Participant's Elective
Deferral Contributions, but in no event shall the Matching Contributions on
behalf of a Participant exceed 3% of the Participant's Compensation for the
Plan Year. Matching Contributions shall not be made with respect to a
Participant's Catch-Up Contributions.
(2) Before January 1, 2002. Effective for Plan Years beginning
before January 1, 2002, the Company shall make a Matching Contribution on
behalf of each Participant who makes an Elective Deferral Contribution
and/or Employee Contribution in an amount equal to 100% of the aggregate
amount of the Participant's Elective Deferral Contributions and/or Employee
Contributions, but in no event shall the Matching Contributions on behalf
of a Participant for a month exceed 3% of the Participant's Compensation
for that month. Effective January 1, 2000, Matching Contributions on behalf
of a Participant shall not exceed 3% of the Participant's Compensation for
the Plan Year.
(f) Company Contributions. The Company may make a Company Contribution
from its Net Profits to the Trust Fund for any Plan Year.
4.2 WHEN CONTRIBUTIONS MADE. A Contribution by the Company shall be
deemed made on account of a Plan Year if either (a) the Company designates such
amount in writing to the Trustee as payment on account of such Plan Year, or (b)
the Company claims such amount as a deduction on its federal income tax return
for such Plan Year.
4.3 LIMITATION ON AMOUNT OF CONTRIBUTIONS. In no event shall the
Contributions provided for in Section 4.1 exceed the maximum amount deductible
under section 404(a) of the Code.
4.4 PAYMENT OF CONTRIBUTIONS TO TRUSTEE. Company Contributions,
Matching Contributions, and Supplemental Contributions shall be paid to the
Trustee not later than the time prescribed by law for filing the Company's
federal income tax return (including extensions thereof) for the Plan Year for
which the Contribution is being made. Elective Deferral Contributions and
Employee Contributions shall be paid to the Trustee on the date such Elective
Deferral Contributions and Employee Contributions may first reasonably be
segregated from the assets of the Company, but in no case shall such Elective
Deferral Contributions and Employee Contributions be paid to the Trustee later
than 90 days from the last day of the payroll period with respect to which such
Elective Deferral Contributions and Employee Contributions were made.
Notwithstanding anything in the preceding to the contrary, effective February 3,
1997, Elective Deferral Contributions and Employee Contributions shall be paid
to the Trustee on the date such Elective Deferral Contributions and Employee
Contributions may first reasonably be segregated from the assets of the Company,
but in no case shall such Elective Deferral Contributions and Employee
Contributions be paid to the Trustee later than the 15th business day of the
month following the month in which such Elective Deferral Contribution and
Employee Contribution is received by the Company or in which such Elective
Deferral Contribution and Employee Contribution would otherwise have been
payable to the Participant in cash. Effective July 1, 2002, Catch-Up
Contributions shall be paid to the Trustee on the date such Catch-Up
Contributions may first reasonably be segregated from the assets of the Company,
but in no case shall such Catch-Up Contributions be paid to the Trustee later
than the 15th business day of the month following the month in which such
Catch-Up Contribution would otherwise have been payable to the Participant in
cash.
4.5 FORM OF CONTRIBUTIONS. Contributions by the Company shall be made
to the Trustee in cash or kind, or a combination, as may be determined by the
Company from time to time. The amount of any Contributions made in kind shall be
based on the fair market value of the property at the time the Contributions are
made.
4.6 RETURN OF CONTRIBUTIONS.
(a) Contributions Made By Mistake of Fact. In the event a
Contribution by the Company, or a portion thereof, is made by reason of a
mistake of fact, the Company may direct the Trustee to return that Contribution,
or the portion thereof, provided, the amount must be returned within one year
after the payment of the Contribution to the Trustee.
(b) Contributions Conditioned Upon Qualification of Plan. All
Contributions by the Company shall be deemed made conditioned upon initial
qualification of the Plan under section 401 of the Code. If the Commissioner of
Internal Revenue determines that the Plan does not so qualify, the Company shall
direct the Trustee to return to the Company any Company Contributions, Matching
Contributions and Supplemental Contributions, and to the Participants any
Elective Deferral Contributions, Employee Contributions or Rollover
Contributions made for such Plan Year, provided, the amount must be returned
within one year after the denial of qualification of the Plan, but only if the
application for qualification is made by the time prescribed by law for filing
the Company's federal income tax return for the taxable year in which the Plan
is adopted, or such later date as the Secretary of Treasury may prescribe.
(c) Contributions Conditioned Upon Deductibility. All
Contributions by the Company shall be deemed made conditioned upon the
deductibility of the Contribution under section 404 of the Code. To the extent
such deduction is disallowed, the Company may direct the Trustee to return the
disallowed portion (or all, if the entire Contribution is disallowed), provided,
the disallowed amount must be returned within one year after the disallowance of
the deduction.
(d) No Return of Earnings. Except as otherwise provided with
respect to the return of Contributions by the Company conditioned upon the
initial qualification of the Plan, (1) no earnings on a Contribution made by the
Company shall be returned to the Company and losses on the Contribution shall
reduce the amount to be returned, and (2) no return of a Contribution made by
the Company allocated to a Participant's Accounts shall be made to the extent
that the Accounts would be reduced to less than the balance in the Accounts had
the Contributions to be returned not been made.
4.7 PAYMENT OF EXPENSES OF PLAN. All necessary expenses that may arise
in connection with the administration of the Plan, including, but not limited
to, the fees of the Trustee and expenses of the Benefits Committee as provided
in Section 11.8, shall be paid by the Company, except as provided in Section
12.8 or in the Trust. To the extent these expenses are not paid by the Company,
they shall be paid by the Trustee from the Trust Fund. Provided, that where the
Trustee is a person who receives full-time pay from the Company, such person
shall not receive any compensation from the Trust Fund, except for reimbursement
of expenses properly and actually incurred.
ARTICLE 5
ROLLOVER CONTRIBUTIONS
5.1 ROLLOVER CONTRIBUTIONS.
(a) Request to Make Rollover Contribution. An Employee may make a
written request to the Benefits Committee or its representative that the
Employee be entitled to transfer to the Trust Fund a Rollover Contribution
received by such Employee, or to which such Employee is entitled. All such
requests shall contain information concerning the type of property constituting
the Rollover Contribution and a statement, satisfactory to the Benefits
Committee, that the property constitutes a Rollover Contribution. The Benefits
Committee, in its sole discretion, shall determine whether or not the Employee
shall be entitled to make a Rollover Contribution.
(b) Payment of Rollover Contribution. In the event the Benefits
Committee permits an Employee to make a Rollover Contribution, such amount shall
be transferred by the Employee to the Trustee.
(c) Vesting in Rollover Account. An Employee shall at all times have a
nonforfeitable interest in the Employee's Rollover Account.
(d) Allocations to Rollover Accounts. No Contributions by the
Company or Forfeitures shall be allocated to Rollover Accounts, however,
investment earnings (or losses) of the Trust Fund shall be allocated to all
Rollover Accounts in the same manner provided for all Participants, as set forth
in Section 6.2.
ARTICLE 6
ACCOUNTS
6.1 ALLOCATION OF CONTRIBUTIONS AND FORFEITURES TO ACCOUNTS.
(a) Elective Deferral Contributions. Elective Deferral
Contributions on behalf of a Participant shall be credited to the Elective
Deferral Account of such Participant as soon as administratively practicable
following the date such Elective Deferral Contribution was made.
(b) Catch-Up Contributions. Effective July 1, 2002, Catch-Up
Contributions on behalf of a Participant shall be credited to the Catch-Up
Account of such Participant as soon as administratively practicable following
the date such Catch-Up Contribution was made.
(c) Matching Contributions. Matching Contributions shall be
credited to the Matching Account of each Participant as soon as administratively
practicable following the date for which such Matching Contributions were made.
(d) Company Contributions and Forfeitures. Company Contributions
and Forfeitures, if applicable, for a Plan Year shall be allocated as of each
Accounting Date among those Participants who during such Plan Year either (1)
completed 1,000 or more Hours of Service and were employed on the Accounting
Date, (2) died, (3) became Disabled, or (4) retired at or after their Normal
Retirement Age, in the ratio that each Participant's Compensation for the Plan
Year bears to the total Compensation of all such Participants for the Plan Year.
(e) Supplemental Contributions. Supplemental Contributions for a
Plan Year shall be allocated as of an Accounting Date among Participants who are
not Highly Compensated Employees and who made a Elective Deferral election for
the Plan Year in the ratio that each such Participant's Compensation for the
Plan Year bears to the total Compensation of all such Participants for such Plan
Year.
(f) Employee Contributions. Employee Contributions shall be
credited to the Employee Contribution Account of each Participant on behalf of
whom such Contributions are made as soon as administratively practicable
following the date such Employee Contributions were made. Provided, however, no
Employee Contribution may be made for Plan Years beginning on or after January
1, 2002.
(g) Rollover Contributions. Rollover Contributions shall be
credited to the Rollover Account of each Participant on behalf of whom such
Contributions are made as soon as administratively practicable following the
date such Rollover Contributions were made.
(h) Correcting a Coverage or Participation Failure.
(1) If the Plan would fail to satisfy section 410(b) of the
Code for a Plan Year because an insufficient number of non-excludable
Employees are Benefitting under the Plan for such Plan Year, the Company
may direct that former Employees who would otherwise not have been eligible
for an allocation of Contributions by the Company for such Plan Year in
accordance with Section 6.1 be included as Participants who are eligible
for an allocation for such Plan Year. If the Company so directs, the former
Employees to be included shall be limited to the number necessary to cause
the Plan to satisfy section 410(b) of the Code.
(2) The selection of former Employees for inclusion shall be
as determined by the Company when such determination becomes necessary from
time to time, but shall be in a manner that does not discriminate in favor
of Highly Compensated Employees.
(3) The inclusion of former Employees in the allocation of
Contributions by the Company as set forth in this Section 6.1(h) shall not
be deemed the exclusive method for correcting or preventing the Plan's
failure to satisfy section 410(b) of the Code. Provided, any other method
shall be applied in a manner that does not discriminate in favor of Highly
Compensated Employees.
6.2 DETERMINATION OF ACCOUNT BALANCES. The Trustee shall determine the
fair market value of the Trust Fund and the Benefits Committee shall determine
the Account Balances as follows:
(a) Crediting of Contributions. As of each Accounting Date there
shall be added to each Company Account the Contributions for such Account since
the preceding Accounting Date, provided the Company Contributions shall be
allocated to Company Accounts as of the Accounting Date of the Plan Year for
which such Contribution is made. As of each Accounting Date there shall be added
to each Elective Deferral Account the Supplemental Contributions for such
Account since the preceding Accounting Date, provided the Supplemental
Contributions shall be allocated to Salary Deferral Accounts as of the
Accounting Date of the Plan Year for which such Supplemental Contribution is
made. As of each Valuation Date there shall be added to each Elective Deferral
Account, Employee Contribution Account, Matching Account, Rollover Account and,
effective July 1, 2002, Catch-Up Account, the Contributions for such Account
since the preceding Valuation Date.
(b) Reductions for Benefits and Withdrawals. Each Account shall be
reduced by the amount of Benefits distributed and withdrawals made from such
Account since the preceding Valuation Date.
(c) Directed Account. The earnings (or losses) of each Directed
Account shall be determined separately and credited to the Directed Account, and
all the other adjustments provided herein shall be made to such Directed
Account.
(d) Good Faith Valuation Binding. In determining the value of the
Trust Fund and the Accounts, the Trustee (or other person or entity designated
by the Benefits Committee) and the Benefits Committee shall exercise their best
judgment, and all such determinations of value (in the absence of bad faith)
shall be binding upon all Participants and Beneficiaries.
6.3 LIMITATIONS ON ELECTIVE DEFERRAL CONTRIBUTIONS.
(a) Actual Deferral Percentage Test. The Actual Deferral
Percentage for Highly Compensated Employees shall not exceed the greater of (1)
1.25 times the Actual Deferral Percentage for the current Plan Year of all other
Participants, or (2) the lesser of two percentage points over the Actual
Deferral Percentage for the current Plan Year of all other Participants or 2.0
times the Actual Deferral Percentage for the current Plan Year of all other
Participants. For purposes of determining whether the Plan satisfies the Actual
Deferral Percentage Test, if the Plan satisfies the requirements of sections
401(k), 401(a)(4), or 410(b) of the Code only if aggregated with one or more
other plans with the same plan year and using the same Actual Deferral
Percentage testing method, or if one or more plans with the same plan year and
using the same Actual Deferral Percentage testing method satisfy such Code
sections only if aggregated with this Plan, then this Section 6.3 shall be
applied by determining the actual deferral percentages of Participants as if all
such plans were a single plan.
(b) Limitation of Elective Deferral Contributions. The Company
shall by the end of a Plan Year, in a nondiscriminatory fashion and upon
notifying the Highly Compensated Employees, limit the Elective Deferral
Contributions of Highly Compensated Employees to the extent necessary to ensure
compliance with either of the tests stated in the immediately preceding Section
6.3(a).
(c) Correction of Actual Deferral Percentage Excess. If the Actual
Deferral Percentage test is not met for a Plan Year after all contributions for
the Plan Year have been made, the Company shall determine the amount of Actual
Deferral Percentage excess with respect to Highly Compensated Employees. Solely
to determine the aggregate amount to be distributed, as described below, and not
the amount to be distributed to any individual, the Company shall make this
determination in the following manner. First, the Actual Deferral Percentage of
the Highly Compensated Employee with the highest Actual Deferral Percentage
shall be reduced to the extent necessary to (1) enable the Plan to satisfy the
Actual Deferral Percentage test or (2) cause such employee's Actual Deferral
Percentage to equal the Actual Deferral Percentage of the Highly Compensated
Employee with the next highest Actual Deferral Percentage. Second, this process
is repeated until the Actual Deferral Percentage test is satisfied. The
aggregate amount of Actual Deferral Percentage excess thus determined shall be
distributed by the end of the Plan Year following the Plan Year for which such
Contributions are made. Such aggregate amount of Actual Deferral Percentage
excess shall be distributed first, to the Highly Compensated Employees with the
highest dollar amounts of Elective Deferral Contributions, pro rata and
including Allocable Income thereon, in an amount equal to the lesser of (A) the
aggregate amount of excess contributions for the Plan Year determined according
to the manner described above or (B) the amount necessary to cause the amount of
such Employees' Elective Deferral Contributions to equal the amount of the
Elective Deferral Contributions of the Highly Compensated Employees with the
next highest dollar amount of Elective Deferral Contributions. This process is
repeated until the aggregate amount distributed under this Section 6.3(c) equals
the amount of the Actual Deferral Percentage excess as determined according to
the manner described above. The amount of excess contributions that may be
distributed with respect to a Highly Compensated Employee for a Plan Year shall
be reduced by the amount of excess deferrals previously distributed to the
Highly Compensated Employee for the Highly Compensated Employee's taxable year
ending with or within such Plan Year, and the amount of excess deferrals that
may be distributed with respect to a Highly Compensated Employee for a taxable
year is reduced by any excess contributions previously distributed to the Highly
Compensated Employee for the Plan Year beginning with or within the Highly
Compensated Employee's taxable year. Notwithstanding anything in this Section
6.3(c) to the contrary, the Company may, in its discretion, make a Supplemental
Contribution on behalf of Participants other than Highly Compensated Employees
to the extent necessary to ensure compliance with the Actual Deferral Percentage
test stated in Section 6.3(a). Each eligible Participant shall be 100% vested in
the Participant's Elective Deferral Account, including any Supplemental
Contributions credited thereto, and such Supplemental Contributions shall also
be subject to the same distribution restrictions as apply to a Participant's
Elective Deferral Contributions.
(d) Recognition of Elective Deferrals. A Participant's Elective
Deferral election shall be recognized only to the extent that the Elective
Deferral Contribution does not exceed the amount permitted under this Section
6.3. A Participant's Elective Deferral Contributions which are returned as a
result of the application of this Section 6.3 for a Plan Year shall not be taken
into account in determining the amount of Matching Contributions to be made for
the Participant's benefit for the Plan Year. To the extent Matching
Contributions have already been made with respect to Elective Deferral
Contributions at the time the Elective Deferral Contributions are determined to
be excess contributions, such Matching Contributions attributable to Elective
Deferral Contributions that are distributed to the Participant as excess
contributions shall be distributed to the Participant at the same time as the
Elective Deferral Contributions are returned; provided, that to the extent the
Participant does not have a vested interest in such Matching Contributions, the
Participant shall forfeit such Matching Contributions.
6.4 LIMITATIONS ON MATCHING AND EMPLOYEE CONTRIBUTIONS.
(a) Average Contribution Percentage Test. In no event may the
Average Contribution Percentage for eligible Participants who are Highly
Compensated Employees exceed the greater of (1) 1.25 times the Average
Contribution Percentage for the current Plan Year of all other eligible
Participants, or (2) the lesser of two percentage points over the Average
Contribution Percentage for the current Plan Year of all other eligible
Participants and 2.0 times the Average Contribution Percentage for the current
Plan Year of all other eligible Participants. In the event the Plan satisfies
the requirements of section 401(m), 401(a)(4), or 410(b) of the Code only if
aggregated with one or more plans with the same plan year and using the same
Average Contribution Percentage testing method, or if one or more other plans
with the same plan year and using the same Average Contribution Percentage
testing method satisfy such Code sections only if aggregated with this Plan,
then this Section 6.4 shall be applied by determining the average contribution
percentages as if all such plans were a single plan.
(b) Correction of Average Contribution Percentage Excess. If the
Average Contribution Percentage test is not met for a Plan Year after all
contributions for the Plan Year have been made, the excess of the aggregate
amount of the Matching Contributions and Employee Contributions (and any
Supplemental Contributions or Elective Deferral Contributions taken into account
in computing the Average Contribution Percentages) actually made on behalf of
Highly Compensated Employees for the Plan Year over the maximum amount of such
contributions permitted under section 401(m)(2)(A) of the Code shall be
considered to be excess aggregate contributions. The Company shall determine the
amount of excess aggregate contributions. Solely to determine the aggregate
amount to be distributed and not the amount to be distributed to any individual,
the Company shall make this determination in the following manner. First the
contribution percentage of the Highly Compensated Employee with the highest
Average Contribution Percentage shall be reduced to the extent necessary to (1)
enable the Plan to satisfy the Average Contribution Percentage test or (2) cause
such employee's Average Contribution Percentage to equal the Average
Contribution Percentage of the Highly Compensated Employee with the next highest
Average Contribution Percentage. Second, this process is repeated until the
Average Contribution Percentage test is satisfied. The aggregate amount of
reductions determined in this manner shall be distributed, first, to the Highly
Compensated Employees with the highest dollar amounts of Matching Contributions
and Employee Contributions (and any Supplemental Contributions or Elective
Deferral Contributions taken into account in computing the Average Contribution
Percentages), pro rata and including any Allocable Income thereon, in an amount
equal to the lesser of (A) the total amount of excess aggregate contributions
for the Plan Year or (B) the amount necessary to cause such Employees' Matching
Contributions and Employee Contributions (and any Supplemental Contributions or
Elective Deferral Contributions taken into account in computing the Average
Contribution Percentages) to equal the amount of the Matching Contributions and
Employee Contributions (and any Supplemental Contributions or Elective Deferral
Contributions taken into account in computing the Average Contribution
Percentages) of the Highly Compensated Employees with the next highest dollar
amount of Matching Contributions and Employee Contributions (and any
Supplemental Contributions or Elective Deferral Contributions taken into account
in computing the Average Contribution Percentages). This process is repeated
until the aggregate amount thus distributed equals the amount of excess
aggregate contributions. Distribution of excess aggregate contributions will be
made after the close of the Plan Year to which the contributions relate, but in
any case will be made prior to the close of the Plan Year following the Plan
Year for which the contributions were made. Notwithstanding the foregoing, to
the extent a Participant would receive a distribution of excess aggregate
contributions which relate to Matching Contributions in which the Participant
does not have a vested interest, such portion of the excess aggregate
contributions shall be forfeited.
(c) Recognition of Employee Contributions. A Participant's
Employee Contribution election shall be recognized only to the extent that the
Employee Contribution does not exceed the amount permitted under this Section
6.4. A Participant's Employee Contributions which are returned as a result of
the application of this Section 6.4 for a Plan Year shall not be taken into
account in determining the amount of Matching Contributions to be made for the
Participant's benefit for the Plan Year. To the extent Matching Contributions
have already been made with respect to Employee Contributions at the time the
Employee Contributions are determined to be excess contributions, such Matching
Contributions attributable to Employee Contributions that are distributed to the
Participant as excess contributions shall be distributed to the Participant at
the same time as the Employee Contributions are returned; provided, that to the
extent the Participant does not have a vested interest in such Matching
Contributions, the Participant shall forfeit such Matching Contributions.
(d) Multiple Use Limitation. If the sum of the Actual Deferral
Percentage and Average Contribution Percentage of Highly Compensated Employees
exceeds the sum of (1) 1.25 times the greater of (A) the Actual Deferral
Percentage of Participants other than the Highly Compensated Employees for the
current Plan Year or (B) the Average Contribution Percentage of Participants
other than Highly Compensated Employees under the Plan for the current Plan
Year, and (2) the lesser of (A) 2.0 times or (B) two percentage points plus the
lesser of the Actual Deferral Percentage or Average Contribution Percentage of
Participants other than Highly Compensated Employees for the current Plan Year,
the Average Contribution Percentage of the Highly Compensated Employees will be
reduced (beginning with the Highly Compensated Employees whose Average
Contribution Percentage is the highest) so that the limit is not exceeded.
"Lesser" is substituted for "greater" in (1), above, and "greater" is
substituted for "lesser" after "two percentage points plus the" in (2), above,
if such substitutions would result in a larger amount. If the Company has
elected to use the current year testing method, then, in calculating the amount
under this Section 6.4(d) for a particular Plan Year, the Non-Highly Compensated
Employees' Actual Deferral Percentage and Average Contribution Percentage for
the Plan Year, instead of for the prior Plan Year, is used. The amount by which
the Average Contribution Percentage of each such Highly Compensated Employee is
reduced shall be treated as an amount returned pursuant to (b), above. Anything
in the preceding to the contrary notwithstanding, no impermissible multiple use
shall result if the Actual Deferral Percentage and Average Contribution
Percentage of the Highly Compensated Employees does not exceed 1.25 times the
Actual Deferral Percentage plus the Average Contribution Percentage of all other
Participants.
(e) Elimination of Multiple Use Test Beginning January 1, 2002.
Effective for Plan Years beginning on and after January 1, 2002, the multiple
use test described in Treas. Reg.ss.1.401(m)-2 and Section 6.4(d) shall no
longer apply.
6.5 LIMITATIONS ON ANNUAL ADDITIONS.
(a) Definition of Annual Additions. Any provisions in the Plan to
the contrary notwithstanding, the "annual addition" to any Participant's Company
Account, Matching Account, Employee Contribution Account and Elective Deferral
Account shall not exceed the lesser of (1) $30,000 (or such larger amount as may
be determined by the Secretary of Treasury pursuant to section 415(d) of the
Code) or (2) 25% of the Participant's Compensation. Effective for Plan Years
beginning on or after January 1, 2002, however, the "annual addition" to any
Participant's Company Account, Matching Account, Employee Contribution Account
and Elective Deferral Account shall not exceed the lesser of (A) $40,000 (or
such larger amount as may be determined by the Secretary of Treasury pursuant to
section 415(d) of the Code) or (B) 100% of the Participant's Compensation. The
term "annual addition" shall mean the sum of:
(1) the Participant's share of Company Contributions, Matching
Contributions, Supplemental Contributions, and Elective Deferral Contributions
for the Plan Year,
(2) all Forfeitures allocated to a Participant's Account,
(3) any Employee Contributions for the Plan Year,
(4) any amounts allocated after March 31, 1984 on behalf of
the Participant to an "individual medical account" (as defined in section
415(l)(2) of the Code) which is part of a pension or annuity plan
maintained by the Company, and treated as annual additions to a defined
contribution plan, and amounts derived from contributions paid or accrued
after December 31, 1985, in taxable years ending after such date,
attributable to post-retirement medical benefits allocated to the separate
account of the Participant if the Participant is a "key employee" (as
defined in section 419A(d)(3) of the Code), under a "welfare benefit fund"
(as defined in section 419(e) of the Code) maintained by the Company, and
(5) allocations under a simplified employee pension.
(b) Excess Annual Additions. If as the result of the allocation of
Forfeitures, a reasonable error in estimating a Participant's Compensation, a
reasonable error in determining the amount of elective deferrals under section
402(g)(3) of the Code, or under other limited facts and circumstances which the
Commissioner of Internal Revenue finds justify this method of allocation, the
annual addition for a Participant would exceed the amount provided for in
Section 6.5(a), the excess amount shall be withheld or taken from a
Participant's Accounts in the following order:
(1) the Employee Contributions and earnings thereon, if any,
included in the annual addition shall, to the extent necessary, be returned
to the Participant; then
(2) the Participant's share of Matching Contributions shall be reduced
to the extent necessary; then
(3) the Participant's allocable share of Company Contributions shall be
reduced to the extent necessary; and, finally,
(4) the Elective Deferral Contributions and Supplemental
Contributions and earnings (or net of losses) thereon, if any, included in
the annual addition shall, to the extent necessary, be returned to the
Participant;
(5) provided, Elective Deferral Contributions and Supplemental
Contributions and earnings (or net of losses) thereon, if any, included in
the annual addition may be returned to the Participant prior to the return
of the Participant's share of Matching Contributions and Company
Contributions at the election of the Benefits Committee. If such an
election is made, the Benefits Committee must apply it uniformly to all
Participants in a limitation year.
(c) Disposition of Excessive Annual Additions. Any amounts
withheld or taken from a Participant's Company Account or Matching Account shall
be reallocated to the Company Accounts or Matching Accounts, whichever is
applicable, of all other Participants as of such Accounting Date in the same
ratio that Company Contributions or Matching Contributions for such Plan Year
were allocated to the Company Accounts or Matching Accounts of such other
Participants. If, after making the reallocation provided by the immediately
preceding sentence, there is any amount remaining which cannot be reallocated
because of the limitations on annual additions, such amount shall be maintained
in a suspense account and be allocated in the succeeding Plan Year as though
such amount were a Company Contribution or Matching Contribution in such Plan
Year. In the event of termination of the Plan while such a suspense account is
in existence, the amount in such suspense account shall revert to the Company to
the extent it may not be allocated to any Company Account or Matching Account.
In the event that such a suspense account is in existence for a particularly
limitation year, it will not share in the allocation of investment gains or
losses. All amounts in such suspense account must be allocated and reallocated
to Participant's Accounts before any Company Contribution, Matching
Contribution, or Employee Contribution which would constitute annual additions
may be made to the Plan for that limitation year.
(d) Allocation of Annual Additions When Multiple Plans. If the
Company maintains one or more other "defined contribution plans" or "defined
benefit plans" (as defined in section 414(i) and (j) of the Code, respectively),
the amount of annual additions which may be allocated on behalf of each
Participant under this Plan and under other plans shall not exceed the maximum
permissible amount. For the purpose of determining the maximum permissible
amount, the annual benefit under a defined benefit plan shall be reduced to the
maximum extent necessary; the annual additions under any other defined
contribution plan of the Company shall be reduced to the maximum extent
necessary, commencing with any profit sharing plan, next any profit sharing plan
containing a cash or deferred arrangement and then any money purchase pension
plan; and, finally, the annual additions under this Plan shall be reduced to the
maximum extent necessary.
(e) No Contributions Causing Allocation to Suspense Account.
Notwithstanding the provisions of this Section 6.5, the Company shall not make a
Contribution in an amount that would cause any amount thereof to be allocated to
a suspense account as of the date the Contribution is allocated.
(f) Separate Definition of Compensation. For the purposes of this
Section 6.5, the term "Compensation" shall mean a Participant's earned income,
wages, salaries, and fees for professional services and other amounts received
(without regard to whether or not an amount is paid in cash) for personal
services actually rendered in the course of employment with the Company
maintaining the Plan to the extent that the amounts are includable in gross
income (including, but not limited to commissions paid salesmen, compensation
for services on the basis of a percentage of profits, commissions on insurance
premiums, tips, bonuses, fringe benefits, and reimbursements or other expense
allowances under a nonaccountable plan (as defined in Treas. Reg.ss.1.62-2(c))),
but shall exclude the following:
(1) Company contributions to a plan of deferred compensation
which are not includable in the employee's or employer's contributions
under a simplified employee pension plan to the extent such contributions
are deductible by the employee, or any distributions from a plan of
deferred compensation;
(2) amounts realized from the exercise of a non-qualified
stock option, or when restricted stock (or property) held by the employee
either becomes freely transferable or is no longer subject to a substantial
risk of forfeiture;
(3) amounts realized from the sale, exchange or disposition of stock
acquired under a qualified stock option; and
(4) other amounts which received special tax benefits, or
contributions made by the Company (whether or not under a salary reduction
agreement) towards the purchase of an annuity contract described in section
403(b) of the Code (whether or not the contributions are actually
excludable from the gross income of the employee).
For purposes of applying the limitation of this Section 6.5, Compensation for a
"limitation year" is the Compensation actually paid or made available during
such year. Effective for Plan limitation years beginning on or after January 1,
1998, the term "Compensation" under this Section 6.5 shall also include any
elective deferral (as defined in section 402(g)(3) of the Code) and any amount
which is contributed or deferred by the Company at the election of the Employee
by reason of sections 125 or 457 of the Code, and effective January 1, 2001, by
reason of section 132(f)(4) of the Code.3
(g) Reduction of Annual Additions to Conform to Section 415.
Anything in this Section 6.5 to the contrary notwithstanding, the otherwise
permissible annual additions for any Participant under this Plan may be further
reduced to the extent necessary, as determined by the Benefits Committee, to
conform to section 415 of the Code, which imposes additional limitations on the
benefits payable to Participants who also may be participating in a defined
benefit plan maintained by the Company. If an individual is a Participant at any
time in both a defined benefit plan and a defined contribution plan maintained
by the Company, the sum of the Participant's defined benefit plan fraction and
defined contribution plan fraction for any Plan Year may not exceed 1.0. For
purposes of this Section 6.5(g), such terms shall have the following meaning:
(1) The defined benefit plan fraction is a fraction, the
numerator of which is the sum of the Participant's projected annual benefit
under all defined benefit plans (whether or not terminated) maintained by
the Company, and the denominator of which is the lesser of (A) 1.25
multiplied by the dollar limitation under section 415(b)(1)(A) of the Code
for such Plan Year, or (B) 1.4 multiplied by the Participant's average
compensation for the three consecutive Plan Years that produce the highest
average. Provided, if the Participant was a participant as of the first day
of the "limitation year" beginning after December 31, 1986, in one or more
defined benefit plans maintained by the Company which were in existence on
May 6, 1986, the denominator of this fraction will not be less than 125
percent of the sum of the annual benefits under such plans which the
Participant had accrued as of the end of the last "limitation year"
beginning before January 1, 1987, disregarding any changes in the terms and
conditions of the plan after May 5, 1986. The preceding sentence applies
only if the defined benefit plans individually and in the aggregate
satisfied the requirements of section 415 of the Code for all "limitation
years" beginning before January 1, 1987. The projected annual benefit of a
Participant is the Participant's normal retirement benefit computed under
the Company's defined benefit plan, assuming that the Participant continues
in the employ of the Company until the Participant's Normal Retirement Age
under such plan (or current age, if later), and the Participant's
compensation is the compensation, as defined in such plan, and the Social
Security benefit for the Plan Year remain constant until the Participant's
Normal Retirement Age (or current age, if later).
(2) The defined contribution plan fraction 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
(whether or not terminated) for the current and all prior Plan Years,
(including the annual additions attributable to all welfare benefit funds,
as defined in section 419(e) of the Code, and individual medical accounts,
as defined in section 415(l)(2) of the Code, maintained by the Company),
and the denominator of which is the sum of the lesser of the following
amounts determined for such Plan Year and for all prior Plan Years during
which the Participant was employed by the Company: (A) 1.25 multiplied by
the dollar limitation under section 415(c)(1)(A) of the Code, for such Plan
Years; or (B) 1.4 multiplied by the amount which may be taken into account
under section 415(c)(1)(B) of the Code for such Plan Years. Provided, if
the employee was a participant as of the first day of the "limitation year"
beginning after December 31, 1986, in one or more defined contribution
plans maintained by the Company which were in existence on May 6, 1986, the
numerator of this fraction will be adjusted if the sum of this fraction and
the defined benefit plan fraction would otherwise exceed 1.0 under the
terms of this Plan. Under the adjustment, an amount equal to the product of
(1) the excess of the sum of the fractions over 1.0 times (2) the
denominator of this fraction, will be permanently subtracted from the
numerator of this fraction. The adjustment is calculated using the
fractions as they would be computed as of the end of the last "limitation
year" beginning before January 1, 1987, and disregarding any changes in the
terms and conditions of the plan made after May 5, 1986, but using the
limitations under section 415 of the Code applicable to the first
"limitation year" beginning on or after January 1, 1987.
(h) Further Reduction in Annual Additions. If after reducing the
annual additions to a Participant's Accounts, as provided above, the sum of the
defined benefit plan fraction and the defined contribution plan fraction still
exceed 1.0, the numerator of the defined contribution plan fraction shall be
reduced so that the sum of both fractions shall not exceed 1.0 in any
"limitation year" for such Participant.
(i) Elimination of Certain Limitations. Effective for Plan
limitation years beginning on or after January 1, 2000, the additional
limitations imposed by section 415(e) of the Code, as described above, shall no
longer apply to the Plan with respect to all Employees participating in the Plan
whose Period of Service includes Service after January 1, 2000. In the case of a
Plan Participant whose Benefit under the Plan is subject to the limitations
imposed by section 415(e) of the Code prior to its repeal and whose Benefit
under the Plan is adjusted to take into account the repeal of section 415(e) of
the Code effective January 1, 2000, such adjustment shall be taken into account
in accordance with the rules of Treas. Regs. ss.1.401(a)(4)-2(c)(ii) for the
Plan Year for which such adjustment is made.
6.6 RESPONSIBILITY FOR ACCOUNTS. All Accounts shall be established, and
records concerning all Accounts shall be maintained, by the Company, or some
other person or entity designated by the Company.
6.7 NOTICE TO PARTICIPANTS OF ACCOUNT BALANCES. As soon as practicable
after each Accounting Date the Benefits Committee or its representative shall
give each Participant written notice of the Account Balance of the Participant's
Accounts as of such Accounting Date.
ARTICLE 7
BENEFITS
7.1 NORMAL RETIREMENT. When a Participant retires at or after the
Participant's Normal Retirement Age, the Benefits for such Participant shall
equal the Participant's Account Balances determined after retirement and, if
applicable, as soon as practicable following receipt of the Participant's
distribution request.
7.2 RETIREMENT AFTER NORMAL RETIREMENT AGE. A Participant who remains
in the employ of the Company after attaining Normal Retirement Age shall
continue to be a Participant in the Plan until the date of actual retirement, at
which time the Participant's Benefit shall equal the Participant's Account
Balances determined after retirement and, if applicable, as soon as practicable
following receipt of the Participant's distribution request.
7.3 DEATH. The Benefit distributable to the Participant's Beneficiary
shall equal the Participant's Account Balances determined after the
Participant's death and, if applicable, as soon as practicable following receipt
of the Beneficiary's distribution request.
7.4 DISABILITY. If and when the Benefits Committee shall find a
Participant to be Disabled while still employed by the Company, then the
Participant's Accounts shall be 100% nonforfeitable. The Participant's Benefit
shall equal the Participant's Account Balances as of the Valuation Date
coincident with or immediately following the date the Benefits Committee
determines the Participant became Disabled; provided, if the Participant is
receiving a deferred distribution, the Participant's Benefit shall be determined
as soon as practicable following receipt of the Participant's distribution
request.
7.5 SEVERANCE FROM SERVICE. In the event of the Severance from Service
of a Participant, and at all times other than those set out in Sections 7.1
through 7.4, the Participant's Benefit shall equal the sum of the following:
(a) Nonforfeitable Accounts. The Account Balances of the Participant's
Elective Deferral Account, Employee Contribution Account, Rollover Account, and,
effective July 1, 2002, Catch-Up Account, if applicable.
(b) Nonforfeitable Percentage of Other Accounts. The nonforfeitable
percentage of the Participant's Company Account and Matching Account, determined
as follows:
Nonforfeitable Percentage
of Company and
Years of Service Matching Account Balance
Less than 3 0%
3 or more 100%
Provided, effective before January 1, 1998, the nonforfeitable percentage of the
Participant's Company Account and Matching Account shall be determined as
follows:
Nonforfeitable Percentage
of Company and
Years of Service Matching Account Balance
Less than 5 0%
5 or more 100%
Provided further, all Matching Contributions made under this Plan with respect
to Participants who were employees of CasTech Aluminum Group, Inc. as of
December 31, 1997 shall be nonforfeitable at all times. All Company
Contributions made under a defined contribution plan sponsored by CasTech
Aluminum Group, Inc. as of December 31, 1997 and transferred to this Plan shall
be nonforfeitable at all times.
(c) Valuation of Account Balances. The Account Balances of a
Participant who is entitled to a Benefit upon Severance from Service shall be
determined after Severance from Service; provided, if the Participant is
receiving a deferred distribution, the Participant's Benefit shall be determined
as soon as practicable following receipt of the Participant's distribution
request.
7.6 FORFEITURES.
(a) Time Forfeitures Occur. Any portion of a Participant's Company
or Matching Account in which the Participant does not have a nonforfeitable
interest, upon Severance from Service, shall constitute a Forfeiture at the time
the nonforfeitable portion of the Participant's Company or Matching Account
Balance is distributed, provided, if a Participant has no nonforfeitable
interest in the Participant's Company Account or Matching Account upon Severance
from Service, such Participant shall be deemed to have received a distribution
of zero and the Forfeiture will occur at the time of the Participant's Severance
from Service. If a Participant dies after Severance from Service and if the
Benefits Committee or its representative has notice thereof, then any
forfeitable portion of the Participant's Company or Matching Account shall be
forfeited.
(b) Application of Forfeitures. Forfeitures occurring during a
Plan Year shall first be applied under Section 7.6(c) to the restoration of
Forfeitures and then shall be used to reduce the amount of the Matching
Contributions by the Company for the Plan Year in which the Forfeiture occurs or
to pay expenses of the Plan. Provided, the Company may, in its sole discretion,
decide that Forfeitures will be added to the Company Contribution for such Plan
Year and, subject to Article 6, allocated to Company Accounts as if they were
part of such Company Contribution.
(c) Restorable Forfeiture. If a Participant who received a Benefit
pursuant to Section 7.5 because of Severance from Service again becomes a
Participant in the Plan, and the amount of the Participant's Company Account or
Matching Account in which the Participant did not have a nonforfeitable interest
was forfeited in accordance with Section 7.6(a), the Company shall then make a
Company Contribution (or Forfeitures of other Participants shall be applied for
such Participant) ("Restorable Forfeiture") for such Participant rehired before
incurring five consecutive one-year Breaks in Service.
7.7 TIME OF DISTRIBUTION OF BENEFITS.
(a) Retired, Disabled or Deceased Participant. Benefits payable to
a Participant who retires at or after Normal Retirement Age, or who becomes
Disabled and Benefits payable to a Beneficiary because of the Participant's
death, shall be distributed, or distribution shall commence, as soon as
practicable following a Participant's actual retirement, Disability or death,
subject to the provisions of Sections 7.8, 7.9 or 7.10, as applicable.
(b) Terminated Participant. Benefits payable to a Participant who
incurs a Severance from Service shall be distributed, or distribution shall
commence, as soon as practicable following a Participant's Severance from
Service, subject to the provisions of Sections 7.8, 7.9 or 7.10, as applicable.
(c) Date Benefit Payments Commence. Unless the Participant elects
otherwise, in no event shall the payment of Benefits to a Participant begin
later than the 60th day after the Accounting Date of the Plan Year in which the
latest of the following events occur:
(1) The Participant's Normal Retirement Age or age 65, if earlier.
(2) Ten years after the Participant commenced participation in the
Plan.
(3) The Participant terminates the Participant's service with the
Company.
Notwithstanding the above provisions of this Section 7.7, the failure of a
Participant to consent to a distribution while a Benefit is immediately
distributable shall be deemed to be an election to defer commencement of payment
of any Benefit sufficient to satisfy the above. Provided, however,
notwithstanding the above provisions of this Section 7.7, Benefits shall
commence not later than the Participant's Required Beginning Date.
(d) Payments to Alternate Payees. Anything contained in the
provisions of Sections 7.7(a) through 7.7(c), to the contrary notwithstanding,
benefits payable to an alternate payee pursuant to a Qualified Domestic
Relations Order may be paid prior to the Participant's death, Disability,
Severance from Service or retirement.
7.8 DISTRIBUTIONS ON AND AFTER JANUARY 1, 2003. Effective January 1,
2003, the following provisions shall apply to distributions from the Plan:
(a) Form of Distribution of Benefits.
(1) A Participant's Benefits shall be paid in the form of a
single sum in cash, except as provided under Section 7.8(a)(4). Benefits in
excess of $5,000 (at the time of distribution) shall not be immediately
distributed without the consent of the Participant.
(2) If the Participant's Benefit is to be distributed in
required minimum amounts, the Plan will apply the minimum distribution
requirements of section 401(a)(9) of the Code that were proposed in January
2001, notwithstanding any provision of the Plan to the contrary. This
amendment shall continue in effect until the end of the last calendar year
beginning before the effective date of final regulations under section
401(a)(9) of the Code or such other date as may be specified in guidance
published by the Internal Revenue Service.
(3) The minimum distribution required for the calendar year
immediately preceding the Participant's Required Beginning Date must be
made on or before the Participant's Required Beginning Date. The minimum
distribution required for each calendar year thereafter, including the
calendar year in which the Participant's Required Beginning Date occurs,
must be made on or before December 31 of each year.
(4) A Participant continues to maintain an Account Balance
under the Plan following such Participant's Severance from Service or
retirement at or after Normal Retirement Age may elect to withdraw an
amount which is equal to any whole percentage (not to exceed 100%) from the
Participant's Accounts, at any time, for any reason; provided, such
withdrawals shall be limited to four in any Plan Year. Any Forfeiture
attributable to withdrawals shall be subject to the requirements of
Sections 7.6(b) and 22.2. Such Participant shall also have the authority to
direct the investment of the Participant's vested Account Balance in
accordance with Section 12.8. These provisions shall also apply to
terminated Participants who have previously made an irrevocable election to
defer distributions.
(5) Distributions of Company stock from a Participant's
Company Stock Account shall be limited to the value of the Participant's
Company Stock Account.
(b) Retirement Benefit Cashout.
(1) Distribution of Benefits of $5,000 or Less. In the event
that the present value of a Participant's Benefit does not exceed $5,000
(at the time of distribution) on the date that such distribution becomes
payable, the Benefits Committee shall cause such benefit to be distributed
as a single sum in cash.
(2) Distribution of Benefits in Excess of $5,000. In the event
that the Participant's Benefit exceeds $5,000 (at the time of
distribution), such Benefit will be distributed in a single sum in cash
only with the written consent of the Participant. Provided, the consent of
the Participant shall not be required for distributions necessary to
satisfy section 401(a)(9) of the Code.
(3) Distribution of Benefits Upon Termination of the Plan.
Upon termination of the Plan, the Participant's Account Balance(s) under
the Plan may, without the written consent of the Participant, be
distributed to the Participant. Provided, if the Company or a Related
Company maintains another defined contribution plan (other than an employee
stock ownership plan as defined in section 4975(e)(7) of the Code) then the
Participant's Account Balance(s) under the Plan will, without the written
consent of the Participant, be transferred to the other defined
contribution plan if the Participant does not consent to an immediate
distribution.
(c) Conflicting Provisions. The provisions of this Section 7.8
shall supersede any conflicting provision of the Plan, including, without
limitation, the provisions of Section 7.7 relating to the time of distribution
of Benefits.
7.9 DISTRIBUTION OF BENEFITS BEFORE JANUARY 1, 2003 BUT ON OR AFTER
JANUARY 1, 1998. For distributions made or begun before January 1, 2003 but on
or after January 1, 1998, the following provisions shall apply to distributions
from the Plan:
(a) Form of Distribution of Benefits.
(1) A Participant's Benefits shall be paid in the form of a
qualified joint and survivor annuity unless the Participant makes a
qualified election.
(2) Subject to Sections 7.9(a)(1) and 7.9(b), a Participant or
Beneficiary may request a manner of distribution of the Participant's
Benefit by filing a request with the Benefits Committee or its
representative prior to the Participant's annuity starting date. Benefits
in excess of $3,500 (at the time of distribution or at the time of any
prior distribution) shall not be immediately distributed without the
consent of the Participant and the Participant's spouse. The alternative
forms of distribution are as follows:
(A) a single sum distribution in cash;
(B) substantially equal monthly installments for a fixed
period not to exceed the life expectancy of the Participant or the joint
and last survivor expectancy of the Participant and the Participant's
Beneficiary; or
(C) an immediate or deferred annuity for the life of the
Participant or for the joint lives the Participant and the Participant's
Beneficiary.
(3) A Participant who continues to maintain an Account Balance
under the Plan may elect to withdraw an amount which is equal to any whole
percentage (not to exceed 100%) from the Participant's Accounts, at any
time, for any reason. Any Forfeiture attributable to withdrawals shall be
subject to the requirements of Sections 7.6(b) and 22.2. Such Participant
shall also have the authority to direct the investment of the Participant's
vested Account Balance in accordance with Section 12.8. These provisions
shall also apply to terminated Participants who have previously made an
irrevocable election to defer distributions.
(4) Distributions of Company stock from a Participant's
Company Stock Account shall be limited to the value of the Participant's
Company Stock Account.
(5) If the Participant's Benefit is to be distributed under
Section 7.9(a)(2)(B), then the amount to be distributed each Plan Year must
be at least an amount equal to the quotient obtained by dividing the
Participant's Account Balances by the Participant's life expectancy or the
joint and last survivor expectancy of the Participant and the Participant's
Beneficiary. Such life expectancies shall be computed as of the first day
of the Plan Year by the use of the return multiples contained in
regulations under section 72 of the Code. For purposes of this computation,
the Participant's life expectancy and the life expectancy of a Beneficiary
who is the Participant's spouse shall be recalculated unless the
Participant elects otherwise. Recalculation of life expectancy shall not be
more frequently than annually. The life expectancy of a Beneficiary who is
not the Participant's spouse may not be recalculated. For calendar years
beginning before January 1, 1989, if the Participant's spouse is not the
Beneficiary, the method of distribution selected shall assure that at least
50 percent of the present value of the Participant's Benefit is paid within
the life expectancy of the Participant. For calendar years beginning after
December 31, 1988, the amount distributed each year, beginning with
distributions for the first distribution calendar year, shall not be less
than the quotient obtained by dividing the Participant's Account Balances
by the lesser of (A) the applicable life expectancy of the Participant and
the Participant's Beneficiary, if applicable, or (B) if the Participant's
spouse is not the Beneficiary, the applicable divisor determined from the
table set forth in Proposed Regulations ss.1.401(a)(9)-2, Q&A4. Section (B)
of the preceding sentence shall not apply to distributions made after the
death of the Participant. With respect to distributions under the Plan made
for calendar years beginning on or after January 1, 2001, the Plan will
apply the minimum distribution requirements of Code section 401(a)(9) that
were proposed in January 2001, notwithstanding any provision of the Plan to
the contrary. This amendment shall continue in effect until the end of the
last calendar year beginning before the effective date of final regulations
under Code section 401(a)(9) or such other date as may be specified in
guidance published by the Internal Revenue Service.
(6) If the Participant's Benefit is to be distributed in the
form of an insurance annuity, distributions thereunder shall be made in
accordance with the requirements of section 401(a)(9) of the Code and the
proposed regulations thereunder.
(7) The minimum distribution required for the calendar year
immediately preceding the Participant's Required Beginning Date must be
made on or before the Participant's Required Beginning Date. The minimum
distribution required for each calendar year thereafter, including the
calendar year in which the Participant's Required Beginning Date occurs,
must be made on or before December 31 of each year.
(b) Preretirement Survivor Annuity Provisions. Unless an optional
form of Benefit has been selected within the election period pursuant to a
qualified election, if a Participant dies before the Participant's Benefit has
commenced, then 100% of the Participant's Account Balances shall be distributed
to the surviving spouse in the form of a qualified preretirement survivor
annuity. Payments under the qualified preretirement survivor annuity shall
commence within a reasonable time after the Participant's death, provided, the
surviving spouse may elect a later date for commencement of such benefits under
the qualified preretirement survivor annuity. The remaining portion of such
Participant's Account Balances shall be distributed in a manner otherwise
permitted under this Section 7.9 to such Beneficiary or Beneficiaries as
designated by the Participant.
(c) Other Distribution Requirements Upon Death. Upon the death of a
Participant, the following distribution provisions shall take effect:
(1) If a Participant dies after distribution of the
Participant's Benefit has commenced, the remaining portion of such Benefit
shall continue to be distributed at least as rapidly as under the method of
distribution in effect immediately prior to the Participant's death.
(2) If a Participant dies before distribution of the
Participant's Benefit has commenced, the Participant's entire Benefit shall
be distributed no later than December 31 of the calendar year containing
the fifth anniversary of the Participant's death, except to the extent that
an election is made to receive distributions in accordance with Sections
7.9(c)(2)(A) or 7.9(c)(2)(B):
(A) Distributions may be made in substantially equal
installments over the life or life expectancy of the Beneficiary commencing
no later than December 31 of the calendar year immediately following the
calendar year in which the Participant died. If the Beneficiary is not the
Participant's surviving spouse, distributions will be made as a single sum
in cash, unless the present value of the Participant's Benefit exceeds
$3,500 (at the time of the distribution or at the time of any prior
distribution) and the Beneficiary elects an alternative form of
distribution.
(B) If the Beneficiary is the Participant's surviving
spouse, the date distributions are required to commence in accordance with
Section 7.9(c)(2)(A) shall not be earlier than the later of, December 31 of
the calendar year immediately following the calendar year in which the
Participant died, or December 31 of the calendar year in which the
Participant would have attained age 70-1/2.
(C) If the Participant had not elected the method of
distribution prior to the Participant's death, the Beneficiary must elect
the method of distribution no later than the earlier of (1) December 31 of
the calendar year in which distributions would have commenced under Section
7.9(c)(2) or (2) December 31 of the calendar year which contains the fifth
anniversary of the date of the Participant's death. If the Participant has
no Beneficiary, or if the Beneficiary does not elect a method of
distribution, distribution of the Participant's entire interest in the Plan
must be completed by the December 31 of the calendar year containing the
fifth anniversary of the Participant's death.
(3) For purposes of Section 7.9(c)(2), payments will be
calculated by use of the return multiples specified in Table V of the
regulations under section 72 of the Code. The life expectancy of a
surviving spouse may be recalculated annually, however, in the case of any
other Beneficiary, such life expectancy will be calculated at the time
payment first commences and payments for any 12-consecutive month period
will be based on such life expectancy minus the number of whole years
passed since the distribution first commenced.
(4) If the surviving spouse dies after the Participant, but
before payments to such spouse begin, the provisions of Section 7.9(c)(2)
shall apply as if the surviving spouse were the Participant, except for the
provisions of Section 7.9(c)(2)(B).
(5) For purposes of this Section 7.9(c)(2), any amount paid to
a child or adopted child of the Participant shall be treated as if it had
been paid to the surviving spouse if the amount becomes payable to the
surviving spouse when such child, or adopted child, reaches the age of
majority.
(6) For purposes of this Section 7.9(c)(2), distribution of a
Participant's Benefit is considered to commence on the Participant's
Required Beginning Date, or if Section 7.9(c)(4) applies, the date
distribution is required to commence to the surviving spouse pursuant to
Section 7.9(c)(2)(B). Provided, if distribution in the form of an annuity
has irrevocably commenced prior to the Participant's Required Beginning
Date, the Participant's Benefit is considered to commence on the date
distribution actually commences.
(d) Notice Requirements.
(1) In the case of a qualified joint and survivor annuity, the
Plan Administrator or its representative shall provide each Participant no
less than 30 days and no more than 90 days prior to the Participant's
annuity starting date with a written explanation of:
(A) the terms and conditions of a qualified joint and
survivor annuity, including a general description of the material features,
and an explanation of the relative values of, the optional forms of benefit
available under the Plan;
(B) the Participant's right to make, and the effect of, an
election to waive the qualified joint and survivor annuity form of benefit;
(C) the rights of a Participant's spouse; and
(D) the right to make, and the effect of, a revocation of
a previous election to waive the qualified joint and survivor annuity.
(2) The annuity starting date for a distribution in a form
other than a qualified joint and survivor annuity may be less than 30 days
after receipt of the written explanation described in Section 7.9(d)(1)
provided:
(A) the Participant has been provided with information
that clearly indicates that the Participant has at least 30 days to
consider whether to waive the qualified joint and survivor annuity form of
benefit and elect (with spousal consent) to a form of distribution other
than a qualified joint and survivor annuity form of benefit;
(B) the Participant is permitted to revoke any affirmative
distribution election at least until the annuity starting date or, if
later, at any time prior to the expiration of the 7-day period that begins
the day after the explanation of the qualified joint and survivor annuity
is provided to the Participant; and
(C) the annuity starting date is a date after the date
that the written explanation was provided to the Participant.
(3) In the case of a preretirement survivor annuity, the Plan
Administrator or its representative shall provide each Participant with a
written explanation of the qualified preretirement survivor annuity in such
terms and in such manner as would be comparable to the explanation provided
for meeting the requirements of Section 7.9(d)(1) with respect to a
qualified joint and survivor annuity. Such explanation shall be provided as
follows:
(A) Generally, the Plan Administrator or its
representative shall provide such notice to each Participant within the
period beginning on the first day of the Plan Year in which the Participant
attains age 32 and ending with the close of the Plan Year preceding the
Plan Year in which the Participant attains age 35.
(B) If a Participant enters the Plan after the first day
of the Plan Year in which the Participant attained age 32, the Plan
Administrator or its representative shall provide notice no later than the
close of the second Plan Year succeeding the Plan Year in which the
Participant entered the Plan.
(C) If this Section 7.9 becomes applicable to a
Participant's Benefit not previously subject to the qualified joint and
survivor annuity and qualified preretirement survivor annuity rules, the
Plan Administrator or its representative shall provide notice no later than
the close of the two-year period which begins one year prior to the date
this Section 7.9 becomes applicable to the Benefit and ends one year after
the Benefit becomes subject to this Section 7.9.
(D) If a Participant separates from service prior to age
35, the Plan Administrator or its representative shall provide notice no
later than the close of the two-year period which begins one year prior to
the separation and ends one year after the separation. If such Participant
thereafter returns to employment with the Company, the Plan Administrator
or its representative shall provide notice as required by Sections
7.9(d)(3)(A) through 7.9(d)(3)(C) with respect to such Participant.
(e) Retirement Benefit Cashout.
(1) Distribution of Benefits of $3,500 or Less. In the event
that the present value of a Participant's qualified joint and survivor
annuity or a surviving spouse's survivor annuity or the qualified
preretirement survivor annuity does not exceed $3,500 (at the time of the
distribution or at the time of any prior distribution) (effective January
1, 2002, $5,000 (at the time of the distribution))on the date that such
annuity becomes payable, the Benefits Committee shall cause such benefit to
be distributed in a single cash sum notwithstanding the qualified joint and
survivor annuity or preretirement survivor annuity provisions of Sections
7.9(a)(1) and 7.9(b), or the election by the Participant under Section
7.9(a)(1). Provided, if a Participant has begun to receive distributions
pursuant to an optional form of benefit under which at least one scheduled
periodic distribution is still payable, and if the present value of the
Participant's nonforfeitable accrued Benefit exceeded $3,500 (effective
January 1, 2002, $5,000) at the time of the first distribution under that
optional form of benefit, then the present value of the Participant's
nonforfeitable accrued Benefit may not be distributed without consent.
(2) Distribution of Benefits in Excess of $3,500. In the event
that the qualified joint and survivor annuity or the qualified
preretirement survivor annuity exceed $3,500 (at the time of the
distribution or at the time of any prior distribution) (effective January
1, 2002, $5,000 (at the time of the distribution)), such benefit may be
distributed in a single sum only with the written consent of the
Participant and, effective before January 1, 2003, the Participant's
spouse, or if the Participant has died, the Participant's surviving spouse,
pursuant to a qualified election during the election period in which the
notice requirements of Section 7.9(d) have been met. The Plan Administrator
or its representative shall notify the Participant and the Participant's
spouse in the manner set forth in Section 7.9(d) of the right to defer any
distribution until the Participant's Benefit is no longer "immediately
distributable." Notwithstanding the preceding, only the written consent of
the Participant is necessary if the Benefit is distributed in the form of a
qualified joint and survivor annuity while the Benefit is "immediately
distributable." Provided, neither the consent of the Participant nor the
Participant's spouse shall be required for distributions necessary to
satisfy section 401(a)(9) or section 415 of the Code.
(3) Distribution of Benefits Upon Termination of Plan. Upon
termination of the Plan, if the Plan does not offer an annuity form of
distribution (purchased from a commercial carrier), the Participant's
Account Balance(s) under the Plan may, without the written consent of the
Participant, or the Participant's spouse, be distributed to the
Participant. Provided, if the Company or a Related Company maintains
another defined contribution plan (other than an employee stock ownership
plan as defined in section 4975(e)(7) of the Code) then the Participant's
Account Balance(s) under the Plan will, without the written consent of the
Participant or the Participant's spouse, be transferred to the other
defined contribution plan if the Participant does not consent to an
immediate distribution.
(4) Definition of Immediately Distributable. For purposes of
this Section 7.9(e), a Benefit is "immediately distributable," if any part
of a Participant's Account Balance(s) could be distributed to the
Participant or the Participant's surviving spouse before the Participant
attains, or would have attained, the later of Normal Retirement Age or age
62.
(5) Determination of Present Value of Annuities. For purposes
of determining the present value of a Participant's qualified joint and
survivor annuity and qualified preretirement survivor annuity, the
Participant's nonforfeitable Account Balance(s) attributable to Company
Contributions, Employee Contributions, Matching Contributions, Supplemental
Contributions, and Elective Deferral Contributions shall be included.
(f) Special Definitions for Section 7.9.
(1) Annuity Starting Date. The first day of the first period for which
an amount is paid as an annuity or any other form.
(2) Election Period.
(A) In the case of an election to waive the qualified
joint and survivor annuity form of benefit, the 90-day period ending on the
annuity starting date.
(B) In the case of an election to waive the qualified
preretirement survivor annuity, the period which begins on the first day of
the Plan Year in which the Participant attains age 35 and ends on the date
of the Participant's death.
(C) In the case of a Participant who is separated from
service, the election period under (B), above, with respect to the portion
of the Participant's Account Balances accumulated before the date of such
separation from service, shall not begin later than such date.
(D) A Participant who will not attain age 35 by the close
of a current Plan Year and who receives a written explanation under Section
7.9(d), may make a special qualified election to waive the qualified
preretirement survivor annuity which will remain in effect until the first
day of the Plan Year in which the Participant will attain age 35. Qualified
preretirement survivor annuity coverage will be automatically reinstated as
of the first day of the Plan Year in which the Participant attains age 35,
and any new waiver must meet the requirements of a qualified election in
Section 7.9(f)(3).
(3) Qualified Election. A waiver of a qualified joint and
survivor annuity or a qualified preretirement survivor annuity. The waiver
must be in writing and must be consented to by the Participant's spouse.
The spouse's consent to a waiver must be witnessed by a Plan representative
or Notary Public and such consent shall be effective only as to a specified
alternate Beneficiary, including a class of Beneficiaries or any contingent
Beneficiaries, which may not be changed without the consent of the
Participant's spouse. Additionally, any waiver of the qualified joint and
survivor annuity shall not be effective unless the waiver specifies a form
of payment, which may not be changed without spousal consent.
Notwithstanding this consent requirement, if the Participant establishes to
the satisfaction of a Plan representative that such written consent may not
be obtained because there is no spouse or the spouse cannot be located, a
waiver will be deemed a qualified election. Any consent necessary under
this provision will be valid only with respect to the spouse who signs the
consent, or in the event of a deemed qualified election, the designated
spouse. A revocation of a prior waiver may be made by a Participant without
the consent of the Participant's spouse at any time before the commencement
of the distribution of the Participant's Benefits. The number of
revocations of the waiver of the qualified joint and survivor annuity or
qualified preretirement survivor annuity shall not be limited. No consent
obtained under this provision shall be valid unless the Participant has
received the appropriate notice, as provided in Section 7.9(d).
(4) Qualified Joint and Survivor Annuity. An immediate annuity
which may be purchased from the Participant's nonforfeitable Account
Balances as of the Participant's annuity starting date which provides a
periodic (monthly, quarterly or annual) payment for the life of the
Participant with, in the case of a Participant with a surviving spouse, a
survivor annuity for the life of the Participant's spouse which is not less
than 50% and not more than 100% of the amount of the annuity payment which
was payable during the joint lives of the Participant and the Participant's
spouse. Such term also includes any distribution in a form having the
effect of an annuity described in the immediately preceding sentence. If no
election to the contrary has been made by the Participant, the survivor
annuity percentage shall be 50%.
(5) Qualified Preretirement Survivor Annuity. An annuity for
the life of the surviving spouse which may be provided by the percentage
specified in Section 7.9(b) of the Participant's Account Balances as of the
date of the Participant's death. Such term shall also include any
distribution in a form having the effect of an annuity described in the
immediately preceding sentence.
(6) Spouse. The term "spouse" shall mean the individual to
whom the Participant is legally married on the date of the Participant's
death.
(g) Conflicting Provisions. The provisions of this Section 7.9
shall supersede any conflicting provision of the Plan, including, without
limitation, the provisions of Section 7.7 relating to the time of distribution
of Benefits.
7.10 DISTRIBUTION OF BENEFITS BEFORE JANUARY 1, 1998. Prior to January
1, 1998, the following provisions shall apply to distributions from the Plan:
(a) Form of Distribution of Benefits.
(1) A Participant's Benefit shall be paid in the form of a
single sum in cash and, if the Participant has a Participant Company Stock
Account, in Company stock.
(2) Distributions of Company stock from a Participant's
Company Stock Account shall be limited to the value of the Participant's
Company Stock Account.
(3) If the minimum distribution rules apply to a Participant
who has reached the Participant's Required Beginning Date, then the amount
to be distributed each Plan Year must be at least an amount equal to the
quotient obtained by dividing the Participant's Account Balance by the
Participant's life expectancy or the joint and last survivor expectancy of
the Participant and the Participant's Beneficiary. Such life expectancies
shall be computed as of the first day of the Plan Year by the use of the
return multiples contained in regulations under section 72 of the Code. For
purposes of this computation, the Participant's life expectancy shall be
recalculated unless the Participant elects otherwise. Recalculation of life
expectancy shall not be more frequently than annually. The life expectancy
of a Beneficiary who is not the Participant's spouse may not be
recalculated. If the Participant's spouse is not the Beneficiary, the
method of distribution selected shall assure that at least 50 percent of
the present value of the Participant's Benefit is paid within the life
expectancy of the Participant. The amount distributed each year, commencing
with the calendar year in which the Participant attains age 70-1/2, shall
not be less than the quotient obtained by dividing the Participant's
Account Balances by the lesser of (A) the applicable life expectancy of the
Participant and the Participant's Beneficiary, if applicable, or (B) if the
Participant's spouse is not the Beneficiary, the applicable divisor
determined from the table set forth in Proposed Regulations
ss.1.401(a)(9)-2, Q&A4. Section (B) of the preceding sentence shall not
apply to distributions made after the death of the Participant.
(4) The minimum distribution required for the calendar year
immediately preceding the Participant's Required Beginning Date must be
made on or before the Participant's Required Beginning Date. The minimum
distribution required for each calendar year thereafter, including the
calendar year in which the Participant's Required Beginning Date occurs,
must be made on or before December 31, of each year.
(b) Other Distribution Requirements Upon Death. Upon the death of a
Participant, the following distribution provisions shall take effect:
(1) If a Participant dies after distribution of the
Participant's Benefit has commenced, the remaining portion of such Benefit
shall continue to be distributed at least as rapidly as under the method of
distribution in effect immediately prior to the Participant's death.
(2) If a Participant dies before distribution of the
Participant's Benefit has commenced, the Participant's entire Benefit shall
be distributed no later than December 31 of the calendar year containing
the fifth anniversary of the Participant's death, except to the extent that
an election is made to receive distributions in accordance with Sections
7.10(b)(2)(A) or 7.10(b)(2)(B):
(A) Distributions may be made in substantially equal
installments over the life or life expectancy of the Beneficiary commencing
no later than December 31 of the calendar year immediately following the
calendar year in which the Participant died.
(B) If the Beneficiary is the Participant's surviving
spouse, the date distributions are required to commence in accordance with
Section 7.10(b)(2)(A) shall not be earlier than the later of, December 31
of the calendar year immediately following the calendar year in which the
Participant died, or December 31 of the calendar year in which the
Participant would have attained age 70-1/2.
(C) If the Participant had not elected the method of
distribution prior to the Participant's death, the Beneficiary must elect
the method of distribution no later than the earlier of (1) December 31 of
the calendar year in which distributions would have commenced under Section
7.10(b)(2) or (2) December 31 of the calendar year which contains the fifth
anniversary of the date of the Participant's death. If the Participant has
no Beneficiary, or if the Beneficiary does not elect a method of
distribution, distribution of the Participant's entire interest in the Plan
must be completed by the December 31 of the calendar year containing the
fifth anniversary of the Participant's death.
(3) For purposes of Section 7.10(b)(2), payments will be
calculated by use of the return multiples specified in Table V of the
regulations under section 72 of the Code. The life expectancy of a
surviving spouse may be recalculated annually, however, in the case of any
other Beneficiary, such life expectancy will be calculated at the time
payment first commences and payments for any 12-consecutive month period
will be based on such life expectancy minus the number of whole years
passed since the distribution first commenced.
(4) If the surviving spouse dies after the Participant, but
before payments to such spouse begin, the provisions of Section 7.10(b)(2)
shall apply as if the surviving spouse were the Participant, except for the
provisions of Section 7.10(b)(2)(B).
(5) For purposes of this Section 7.10(b), any amount paid to a
child or adopted child of the Participant shall be treated as if it had
been paid to the surviving spouse if the amount becomes payable to the
surviving spouse when such child, or adopted child, reaches the age of
majority.
(6) For purposes of this Section 7.10(b), distribution of a
Participant's Benefit is considered to commence on the Participant's
Required Beginning Date, or if Section 7.10(b)(4) applies, the date
distribution is required to commence to the surviving spouse pursuant to
Section 7.10(b)(2)(B).
(c) Retirement Benefit Cashout.
(1) Distribution of Benefits of $3,500 or Less. In the event
that the present value of a Participant's Benefit does not exceed $3,500
(at the time of the distribution or at the time of any prior distribution)
on the date that such Benefit becomes payable, the Benefits Committee shall
cause such benefit to be distributed in a single cash sum.
(2) Distribution of Benefits in Excess of $3,500. In the even
that the Participant's Benefit exceeds $3,500 (at the time of the
distribution or at the time of any prior distribution), such Benefit may be
distributed in a single sum only with the written consent of the
Participant. Provided, the consent of the Participant shall not be required
for distributions necessary to satisfy section 401(a)(9) or section 415 of
the Code.
(3) Distribution of Benefits Upon Termination of the Plan.
Upon termination of the Plan, the Participant's Account Balance(s) under
the Plan may, without the written consent of the Participant, be
distributed to the Participant. Provided, if the Company maintains another
defined contribution plan (other than an employee stock ownership plan as
defined in section 4975(e)(7) of the Code) then the Participant's Account
Balance(s) under the Plan will, without the written consent of the
Participant, be transferred to the other defined contribution plan if the
Participant does not consent to an immediate distribution.
(d) Conflicting Provisions. The provisions of this Section 7.10
shall supersede any conflicting provisions of the Plan, including, without
limitation, the provisions of Section 7.7 relating to the time of distribution
of Benefits.
7.11 ROLLOVERS DISREGARDED FOR INVOLUNTARY CASH-OUTS ON AND AFTER
JANUARY 1, 2002. Effective on and after January 1, 2002, for purposes of
Sections 7.8(a)(1), 7.8(b)(1), 7.8(b)(2), 7.9(e)(1) and 7.9(e)(2), which provide
for the involuntary distribution of vested Benefits of $5,000 or less, the value
of a Participant's nonforfeitable Account Balances shall be determined without
regard to that portion of the Account Balances that is attributable to Rollover
Contributions (and earnings allocable thereto) within the meaning of sections
402(c), 403(a)(4), 403(b)(8), 408(d)(3)(A)(ii) and 457(e)(16) of the Code.
7.12 ROLLOVER ELECTION AND ROLLOVER NOTICE.
(a) Election to Make Direct Rollover. Notwithstanding any
provision of the Plan to the contrary that would otherwise limit a Distributee's
election under this Section 7.12, a Distributee may elect, at the time and in
the manner prescribed by the Benefits Committee, to have any portion of an
Eligible Rollover Distribution paid directly to an Eligible Retirement Plan in a
Direct Rollover.
(b) Recipients to Be Provided With Explanation of Rollovers.
Within a reasonable period of time before making any distribution from the Plan
which is an Eligible Rollover Distribution, the recipient shall be provided a
written explanation of the provisions under which such distributions will not be
subject to federal income tax if transferred to an Eligible Retirement Plan
within 60 days after the date on which the recipient received the distribution.
7.13 ADDITIONAL DISTRIBUTION REQUIREMENTS FOR ELECTIVE DEFERRAL AND
SUPPLEMENTAL ACCOUNTS. Elective Deferral and Supplemental Accounts, including
any Allocable Income thereon, are not distributable to a Participant or a
Participant's Beneficiary, in accordance with such Participant's or
Beneficiary's election, earlier than upon Severance from Service, death, or
Disability. Such amounts may also be distributed upon any of the following:
(a) termination of the Plan without the establishment of another
defined contribution plan, other than an employee stock ownership plan (as
defined in section 4975(e)(7) of the Code), a simplified employee pension plan
(as defined in section 408(k) of the Code) or a SIMPLE IRA plan (as defined in
section 408(p) of the Code);
(b) only upon a declaration of the Board of Directors with respect
to a transaction, the disposition by a corporation to an unrelated corporation
of substantially all of the assets (within the meaning of section 409(d)(2) of
the Code) used in a trade or business of such corporation, if such corporation
continues to maintain the Plan after the disposition, but only with respect to
employees who continue employment with the corporation acquiring such assets;
(c) only upon a declaration of the Board of Directors with respect
to a transaction, the disposition by a corporation to an unrelated entity of
such corporation's interest in a subsidiary (within the meaning of section
409(d)(3) of the Code), if such corporation continues to maintain the Plan, but
only with respect to employees who continue employment with such subsidiary;
(d) the attainment of age 59-1/2; and
(e) with respect to a Participant's Elective Deferral Account, the
hardship of the Participant as described in Section 8.3, provided, that no
hardship withdrawal under Section 8.3 shall be allowed with respect to a
Participant's Supplemental Accounts.
All distributions that may be made pursuant to one or more of the foregoing
distributable events are subject to the consent requirements of Section 7.9. In
addition, distributions that are triggered by any of the events enumerated under
Sections 7.13(a) through 7.13(c) must be made in a lump sum.
ARTICLE 8
LOANS AND WITHDRAWALS
8.1 LOANS TO PARTICIPANTS. Upon the application of a Participant, the
Benefits Committee or its representative, in its sole discretion and by
consistently applying uniform rules and procedures (which are hereby
incorporated by reference), may direct the Trustee to make a loan or loans to
such Participant from the Participant's Elective Deferral Account, Rollover
Account, effective July 1, 2002, Catch-Up Account, and, to the extent vested,
Company Account and Matching Account upon the following terms and conditions:
(a) Definition of Participant. For purposes of making loans under
this Section 8.1, the term Participant shall include only persons who are in the
employ of the Company or otherwise are "parties in interest" as defined in
section 3(14) of ERISA.
(b) Availability of Loans. Loans shall be made available to all
Participants on a reasonably equivalent basis and shall not be made available to
Highly Compensated Employees in an amount greater than the amount made available
to other Participants. Notwithstanding the foregoing, effective January 1, 2002,
loans shall not be made available to Participants who are on a leave of absence
without pay, a leave of absence on account of short term disability or a leave
of absence on account of long term disability.
(c) Limitation on Aggregate Amount of Loans. The aggregate of the
loans to a Participant shall not exceed at any time the lesser of 50% of the
amount the Participant would be entitled to under Section 7.5 if the Participant
incurred a Severance from Service, or $50,000 reduced by the excess, if any, of
the highest outstanding balance of loans during the one-year period ending on
the date before the day the loan is made over the outstanding balances of loans
made under Company sponsored qualified plans on the date such loan is made. For
purposes of this limitation, all loans from all plans maintained by the Company
or a Related Company are aggregated.
(d) Investments from Accounts; Interest Rate. All such loans shall
be considered investments made from the Accounts of the Participant to whom the
loan is made. Interest shall be charged on such loans at a reasonable rate based
on commercial standards in the lending industry.
(e) Repayment of Loans; Security For Loans. Effective January 1,
2002, all such loans shall be repaid by the Participant by payroll deduction;
provided, additional payments may also be made by the Participant outside of
payroll deduction by check delivered directly to the Trustee. Loans shall be
repaid when determined by the Benefits Committee or its representative,
provided, under no circumstances shall the term of a loan be longer than five
years unless the proceeds of the loan are used to acquire a dwelling unit, which
within a reasonable period will be used (determined at the time the loan is
made) as a principal residence of the Participant, in which case the term of
such loan shall be determined by the Benefits Committee or its representative.
Repayment of all loans shall be in substantially equal payments of principal and
interest, made at least quarterly. The Benefits Committee or its representative
shall not approve any loan to any Participant from the Plan unless such
Participant (1) executes a promissory note for such loan, and (2) secures
payment of principal and interest on such promissory note by an assignment of up
to 100% of the Participant's nonforfeitable interest in the Participant's
Account Balances. Effective January 1, 2002, "50%" shall be substituted for
"100%" in the preceding sentence. For loans made on or after January 1, 1998 but
before January 1, 2002, such assignment shall be consented to in writing by the
Participant's spouse in the manner set forth in Section 7.9(f)(3), which consent
shall be obtained no earlier than the 90-day period that ends on the date the
loan is to be secured. Such consent shall be binding on a subsequent spouse,
unless the Participant's Account Balance is used for renegotiation, extension,
renewal, or other revision of the loan. Effective January 1, 2003, such spousal
consent shall no longer be required to obtain a loan under this Section 8.1.
(f) Suspension of Loan Repayments. Repayment of a loan may be
suspended at the discretion of the Benefits Committee or its representative for
a period of no more than one year during such time as a Participant is on a
leave of absence, either without pay or at a rate of pay (after income and
employment tax withholding) that is less than the amount of the installment
payments required under the terms of the loan. However, upon resumption of
payments after the leave ends (or, if earlier, after the first year of the
leave), the loan must be reamortized so that the outstanding balance of the loan
will be repaid by the latest date permitted under the original repayment
schedule for such loan, and the installments due after the leave ends (or, if
earlier, after the first year of the leave) must not be less than those required
under the terms of the original loan. Further, loan repayments may also be
suspended, and the loan repayment period extended, at the discretion of the
Benefits Committee or its representative as permitted for military service under
Section 22.10 of the Plan and section 414(u) of the Code.
(g) Assignments Deemed Loans. An assignment or pledge of any
portion of a Participant's interest in the Plan, and a loan, pledge, or
assignment with respect to any insurance contract purchased under the Plan, will
be treated as a loan under this Section 8.1.
8.2 ACTIONS UPON DEFAULT. At the direction of the Participant, the
Company shall make periodic deductions from the Participant's Compensation in
order to pay the promissory note as soon as reasonably possible and shall
forward all such payments to the Trustee. In the event a Participant defaults in
payment of the Participant's promissory note, the Trustee shall take such legal
action to collect the unpaid portion of the Participant's promissory note as it
deems feasible and, if such action is unsuccessful or not taken, the Trustee
shall deduct the unpaid principal and interest due on the promissory note from
the Benefit due the Participant. In the event that the Participant's Benefit is
less than the unpaid principal and interest due on the Participant's promissory
note, the Participant shall be liable to the Trust for the difference.
Notwithstanding the preceding to the contrary, in the event of default,
foreclosure on a promissory note and attachment of security shall not occur
until a distributable event occurs under the Plan. In the event a Participant
experiences a Severance from Service or otherwise terminates employment prior to
repayment of the promissory note, such loan must be repaid prior to or
coincident with any distribution of the Participant's Account Balance.
8.3 HARDSHIP WITHDRAWALS FROM ELECTIVE DEFERRAL, CATCH-UP AND ROLLOVER
ACCOUNTS.
(a) Reasons for Hardship Withdrawal. The Benefits Committee or its
representative may permit a Participant to make a withdrawal of funds from the
Participant's Elective Deferral Account and, effective January 1, 2001, from the
Participant's Rollover Account and, effective July 1, 2002, from the
Participant's Catch-Up Account, which are needed because of (1) medical expenses
described in section 213(d) of the Code incurred by the Participant, the
Participant's spouse or any dependents of the Participant (as defined in section
152 of the Code); (2) costs directly related to the purchase (excluding mortgage
payments) of the principal residence of the Participant; (3) payments for
tuition and related educational expenses for the next 12 months of
post-secondary education for the Participant, the Participant's spouse, children
or dependents; (4) the need to prevent the eviction of the Participant from the
Participant's principal residence or foreclosure on the mortgage of the
Participant's principal residence; (5) death of a family member; (6) injury,
illness or layoff of Participant or Participant's family member; or (7) under
other circumstances as the Commissioner of the Internal Revenue may deem
appropriate. For hardship withdrawals on account of Subsections (5) and (6),
above, the Participant must show that such distribution is on account of the
Participant's immediate and heavy financial need, in addition to satisfying any
other requirements set forth in this Section 8.3.
(b) Hardship Withdrawal Deemed Necessary. A distribution will be deemed
necessary to satisfy an immediate and heavy financial need if the following
requirements are met:
(1) Limitation on Amount Distributed. The distribution is not
in excess of the actual amount of the immediate and heavy financial need of
the Participant, including any amount necessary to pay any federal, state
or local income taxes or penalties reasonably anticipated to result from
the distribution pursuant to this Section 8.3.
(2) Suspension from Making Contributions. Such Participant
shall be suspended for a period of 12 months (effective on and after
January 1, 2002, for a period of 6 months) after the receipt of such
hardship distribution from making a Elective Deferral election or any other
Employee derived contribution under any other plan maintained by a Company.
Effective solely before January 1, 2002, such Participant shall not be
allowed to make a Elective Deferral election (for the calendar year
following the calendar year of the hardship distribution) in excess of the
applicable limit under section 402(g) of the Code for the next taxable
year, less the amount of such Participant's Elective Deferral Contributions
for the taxable year of the hardship distribution.
(3) All Available Distributions Obtained. The Participant has obtained
all distributions possible under the Plan or under any other plans maintained by
the Company.
(4) All Available Loans Obtained. The Participant has obtained all
loans available under this Plan and all loans under any plans maintained by the
Company.
(c) Request for Hardship Withdrawal. All applications for
withdrawals because of hardship shall be in writing on a form provided by the
Benefits Committee and shall contain such information regarding the request as
the Benefits Committee may reasonably request. If the Benefits Committee or its
representative determines that the withdrawal is justified, it may permit the
Participant to withdraw such amount as the Benefits Committee or its
representative, in its sole discretion, determines is necessary to alleviate the
hardship, provided, in no event shall any permitted withdrawal exceed the
Participant's Elective Deferral Contributions (plus income credited on Elective
Deferral Contributions as of December 31, 1988), effective January 1, 2001, the
Participant's Rollover Account and, effective July 1, 2002, the Participant's
Catch-Up Account, less prior withdrawals, if any. Any withdrawal made pursuant
to this Section 8.3 shall be made in a manner consistent with Sections 7.8, 7.9
or 7.10, as applicable.
(d) Approval of Hardship Withdrawal. All decisions of the Benefits
Committee or its representative with respect to whether or not a hardship
withdrawal is justified or the amount necessary to alleviate the hardship shall
be final and conclusive on all persons.
8.4 WITHDRAWALS FROM EMPLOYEE CONTRIBUTION ACCOUNTS. A Participant may
from time to time, but in no case more than once every 12-consecutive months, on
a form furnished by the Benefits Committee, make a withdrawal of all or any
portion of the Account Balance of the Participant's Employee Contribution
Account. If the Participant has effected a loan pursuant to the provisions of
Section 8.1, the amount that may be withdrawn hereunder shall be reduced by the
outstanding balance of such loan. Any withdrawal made pursuant to this Section
8.4 shall be made in a manner consistent with Sections 7.8, 7.9 or 7.10, as
applicable.
8.5 IN-SERVICE WITHDRAWALS AFTER AGE 59-1/2. A Participant who is an
Employee and who has attained age 59-1/2 may withdraw all or a portion of the
amount then credited to such Participant's Elective Deferral Account. Effective
January 1, 1998, a Participant who is an Employee and who has attained age
59-1/2 may elect to withdraw all or a portion of the vested amount then credited
to any of such Participant's Accounts. In the event that such withdrawal is
made, the Participant shall continue to be eligible to participate in the Plan
on the same basis as any other eligible Employee. Any withdrawal made pursuant
to this Section 8.5 shall be made in a manner consistent with Sections 7.8, 7.9
or 7.10, as applicable.
ARTICLE 9
TOP-HEAVY PROVISIONS
9.1 PURPOSE. This Article 9 shall be interpreted and administered in a
manner consistent with the provisions of section 416 of the Code and shall be
applicable only if the Plan (and any plan required to be included in any
aggregation group with this Plan) becomes a "top-heavy plan," as defined in
Section 9.4.
9.2 KEY EMPLOYEE. For Plan Years beginning on or after January 1, 2002,
the term "key employee" shall mean any Employee or former Employee (including
any deceased Employee) who at any time during the Plan Year that includes the
determination date was an officer of the Company having annual compensation
greater than $130,000 (as adjusted under section 416(i)(1) of the Code), a 5%
Owner of the Company, or a 1% Owner of the Company having annual compensation of
more than $150,000. For purposes of this Section 9.2, "annual compensation"
shall mean compensation within the meaning of section 415(c)(3) of the Code. The
determination of who is a key employee will be made in accordance with section
416(i)(1) of the Code and the applicable regulations and other guidance of
general applicability issued thereunder. For Plan Years beginning before January
1, 2002, the term "key employee" shall mean any Participant, Employee, former
Employee or Beneficiary who constitutes a key employee within the meaning of
section 416(i)(1) of the Code.
9.3 DETERMINATION DATE. The term "determination date" shall mean, for a
Plan Year, the Accounting Date of the immediately preceding Plan Year. Provided,
for the first Plan Year of the Plan, the determination date shall be the last
day of such Plan Year.
9.4 DETERMINATION OF TOP-HEAVY STATUS.
(a) Top-Heavy Ratio.
(1) For each Plan Year, the Benefits Committee shall determine
if the Plan is top-heavy. The Plan shall be considered top-heavy only if as
of the determination date, (A) in the event that the aggregation of other
plans of the Company is either permitted or required, the aggregate of the
account balances and accrued benefits of key employees under all plans
exceed 60% of the aggregate account balances and accrued benefits of all
Participants in such plans, or (B) in the event aggregation of other plans
of the Company is neither permitted nor required, the aggregate account
balances of Participants in the Plan who are key employees exceed 60% of
the aggregate account balances of all Participants in the Plan. For the
purposes of the determination of top-heavy status, the account balances and
accrued benefits of former key employees and the account balances and
accrued benefits of a Participant who has not performed services for the
Company during the five-year period ending on the determination date shall
be disregarded. Effective for Plan Years beginning on or after January 1,
2002, for the purposes of the determination of top-heavy status, the
account balances and accrued benefits of former key employees and the
account balances and accrued benefits of a Participant who has not
performed services for the Company during the one-year period ending on the
determination date shall be disregarded. The accrued benefit of a
Participant who is not a key employee shall be determined under the method,
if any, that uniformly applies for accrual purposes under all defined
benefit plans maintained by the Company, or if there is no such method, as
if such benefit accrued not more rapidly than the slowest accrual rate
permitted under the fractional rule of section 411(b)(1)(C) of the Code.
The calculation of the account balances and accrued benefits for purposes
of the determination of top-heavy status shall be made in compliance with
section 416 of the Code.
(2) If the Company maintains one or more defined contribution
plans (including any simplified employee pension plan) and the Company
maintains or has maintained one or more defined benefit plans which during
the five-year period ending on the determination date has or has had any
accrued benefits, the top-heavy ratio is a fraction, the numerator of which
is the sum of account balances under the defined contribution plans for all
key employees, determined in accordance with (1), above, and the present
value of accrued benefits under the defined benefit plans for all key
employees, and the denominator of which is the sum of the account balances
under the defined contribution plans for all Participants as of the
determination date and the present value of accrued benefits under the
defined benefit plans for all Participants, all determined in accordance
with section 416 of the Code and regulations thereunder. Both the numerator
and denominator of the top-heavy ratio are increased for any distribution
of an Account Balance or an accrued benefit made in the five-year period as
of the determination date. Effective for Plan Years beginning on or after
January 1, 2002, both the numerator and denominator of the top-heavy ratio
are increased for any distribution of an Account Balance or an accrued
benefit made in the one-year period as of the determination date, but in
the case of a distribution made for a reason other than separation from
service, death or Disability, this sentence shall be applied by
substituting "five-year period" for "one-year period."
(3) For purposes of Sections 9.4(a)(1) and 9.4(a)(2), the
value of Account Balances and the present value of accrued benefits will be
determined as of the most recent Valuation Date that falls within or ends
with the 12-month period ending on the determination date, except as
provided in section 416 of the Code and the regulations thereunder for the
first and second plan years of a defined benefit plan. The Account Balances
and accrued benefits of a Participant (A) who is not a key employee but who
was a key employee in a prior year, or (B) who has not been credited with
Service with any Company maintaining the Plan at any time during the
five-year period ending on the determination date, will be disregarded. The
calculation of the top-heavy ratio, and the extent to which distributions,
rollovers, and transfers are taken into account will be made in accordance
with section 416 of the Code and the regulations thereunder. When
aggregating plans, the value of Account Balances and accrued benefits will
be calculated with reference to the determination dates that fall within
the same calendar year.
(b) Group Considered in Determining Top-Heavy Status. The
determination under Section 9.4(a) shall be made for the required aggregation
group, or, if applicable, the permissive aggregation group. If the aggregation
group is determined to be top-heavy under Section 9.4(a) the Plan and any other
plan required to be aggregated with the Plan shall be considered top-heavy
plans. If the permissive aggregation group is top-heavy, then only the Plan and
the other plans required to be aggregated with the Plan shall be considered
top-heavy.
(c) Consideration of Other Plans. For purposes of this Section
9.4, the required aggregation group includes each qualified plan of the Company
maintained during the preceding five years (whether or not terminated) in which
at least one key employee is a participant and any other qualified plan of the
Company which enables such a plan to meet the requirements of sections 401(a)(4)
or 410 of the Code. The permissive aggregation group shall consist of the
required aggregation group of plans plus any other plan or plans of the Company
which, when considered as a group with the required aggregation group, will
continue to satisfy the requirements of sections 401(a)(4) and 410 of the Code.
9.5 EFFECT OF TOP-HEAVY PROVISIONS. The following provisions apply for
any Plan Year for which the Plan is determined to be top-heavy:
(a) Limitation on Compensation. For purposes of this Section 9.5,
the term "Compensation" shall have the meaning set forth in Section 6.5(f). The
annual Compensation of each Employee taken into account under the Plan shall not
exceed $150,000 (effective January 1, 2002, $200,000), or such larger amount as
may be determined under section 401(a)(17)(B) of the Code.
(b) Minimum Contribution.
(1) Amount of Minimum Contribution. Each Participant who is
not a key employee shall receive a minimum Company Contribution under this
Plan (or any other defined contribution of the Company, determined without
regard to any Social Security contribution,) in the amount of the lesser
of:
(A) 3% of such Participant's Compensation; or
(B) the percentage at which Contributions by the Company
are made under the Plan for the Plan Year for the key employee for whom
such percentage is the highest for the year.
(2) Matching Contributions. Matching Contributions shall be
taken into account for purposes of satisfying the minimum Contribution
requirements of section 416(c)(2) of the Code and the Plan. The preceding
sentence shall apply with respect to Matching Contributions under the Plan.
Matching Contributions that are used to satisfy the minimum Contribution
requirements shall be treated as Matching Contributions for purposes of the
actual contribution percentage test and other requirements of section
401(m) of the Code.
(3) Eligibility for Minimum Contribution. A minimum Company
Contribution shall be made under the Plan for each Participant who is not a
key employee and who is employed on the Accounting Date of such Plan Year
(regardless of whether or not such Participant has been credited with 1,000
Hours of Service during such Plan Year).
(4) Minimum Contribution in Other Plans. The provisions of
this Section 9.5(b) shall not apply to any Participant to the extent the
Participant is covered under any other plan or plans maintained by the
Company, which plan or plans provide that the minimum allocation or benefit
provisions pursuant to section 416 of the Code will be met in the other
plan or plans. To the extent a Participant is covered by a defined benefit
plan maintained by the Company, which defined benefit plan provides that
the minimum allocation or benefit provisions of section 416 of the Code
will be satisfied in this Plan, Section 9.5(b)(1)(A) shall be modified by
substituting "5%" in lieu of "3%."
(c) Vesting Schedule.
(1) Alternate Vesting Schedule. The vesting schedule provided in
Section 7.5 shall be replaced by the following schedule in the event this
schedule provides more rapid vesting:
Nonforfeitable Percentage
of Company and
Years of Service Matching Account Balance
Less than 3 0%
3 or more 100%
(2) Resumption of Regular Vesting Schedule. In the event that
the Plan becomes top-heavy and then reverts to non-top heavy status, the
schedule provided in Section 7.5 shall again take effect provided that the
nonforfeitable percentage of Participants who have been credited with three
or more Years of Service shall not be less than the greater of the vesting
percentage determined under Section 7.5, without regard to Article 9 or
Section 9.5(c)(1). Additionally, regardless of Years of Service, a
Participant who has been credited with a nonforfeitable interest under
Section 9.5(c)(1), shall continue to be nonforfeitable in the Participant's
Company Account and Matching Account at such percentage until such time as
the schedule provided in Section 7.5 shall increase the Participant's
nonforfeitable interest in such Account Balance.
(d) Reduction of Multiplier. Effective for Plan Years beginning
before January 1, 2000, in the event the Plan is deemed to be top-heavy for the
Plan Year, then the multiplier of 1.25 in Section 6.5(g) shall be reduced to
1.0, unless:
(1) the Plan would not be top-heavy if "90%" were substituted for
"60%," and
(2) the minimum Company Contribution provided in Section
9.5(b), as required by section 416(c)(2) of the Code, is modified by
substituting "4%" in lieu of "3%" pursuant to section 416(h)(2)(A) (ii)(II)
of the Code, and
(3) in the case of a Participant who is also a participant in
a defined benefit plan maintained by the Company, "3%" shall be substituted
for "2%," and 20% shall be increased by 1 percentage point for each year
(but not more than 10 percentage points) for which such defined benefit
plan was taken into account in accordance with section 416(h)(2)(A)(ii)(I)
of the Code with respect to the minimum benefit requirements of section
416(h) of the Code for such defined benefit plan. Provided, "7-1/2%" shall
be substituted in lieu of "5%" in Section 9.5(b)(4), applicable.
ARTICLE 10
DESIGNATION OF BENEFICIARY
10.1 DESIGNATION FORM; CHANGE OF DESIGNATION; SURVIVAL OF BENEFICIARY.
Each Employee becoming a Participant hereunder shall designate in writing, in
such form and manner as shall be prescribed by the Benefits Committee, one or
more Beneficiaries and contingent Beneficiaries of the Benefit which may be
payable by reason of such Participant's death. Subject to such rules and
regulations as the Benefits Committee may promulgate, a Participant may from
time to time change such designation of Beneficiary or contingent Beneficiary,
provided, no change shall be effective until receipt of the new designation by
the Plan Administrator or its representative. The last effective designation of
Beneficiary or contingent Beneficiary shall supersede all prior designations. A
designation of Beneficiary shall be effective only if the designated Beneficiary
survives the Participant and any prior designated Beneficiary. Notwithstanding
anything in the preceding to the contrary, the spouse of a Participant shall be
deemed such Participant's Beneficiary for purposes of this Article 10 and such
spouse shall be entitled to the Participant's entire vested Account Balances as
of the date of the Participant's death; provided, that such Participant may
designate a Beneficiary other than such spouse if (a) such spouse consent in a
writing witnessed by a Plan representative or acknowledged before a Notary
Public and (b) such consent acknowledges the effect of such consent.
10.2 DISTRIBUTION IF NO BENEFICIARY DESIGNATED. If a Benefit becomes
payable upon the death of a Participant and no Beneficiary has been properly
designated, or if the Beneficiary designated shall have predeceased the
Participant, the Participant shall be deemed to have designated the following
Beneficiaries (if living at the time of the death of the Participant or
designated Beneficiary) in the following order of priority: (a) the spouse of
the Participant, (b) the children, including adopted children, of the
Participant, in equal shares, and (c) the estate of the Participant.
ARTICLE 11
ORGANIZATION AND RESPONSIBILITIES
OF THE BENEFITS COMMITTEE
11.1 APPOINTMENT AND TENURE OF BENEFITS COMMITTEE. The Board of
Directors shall appoint three or more persons (or such other number as may be
determined from time to time by the Board of Directors of the Sponsoring
Company), some or all of whom may be ex officio, to be known as the Benefits
Committee or Committee. The Sponsoring Company will notify the Trustee of the
names of the members of the Benefits Committee and of any changes in membership
that may take place from time to time. All members of the Benefits Committee
shall serve until their resignation or removal by the Board of Directors of the
Sponsoring Company; provided, that an ex officio member shall serve until the
member's resignation or removal from the position from the appointment to the
Benefits Committee is derived. A member of the Benefits Committee may resign at
any time by delivering a written resignation to the Board of Directors of the
Sponsoring Company and to the remaining members of the Benefits Committee.
Vacancies shall be filled in the same manner as the original appointments. The
Board of Directors of the Sponsoring Company may dismiss any member of the
Benefits Committee, including an ex officio member, at any time, with or without
cause. No compensation shall be paid members of the Benefits Committee from the
Trust Fund for their services. If no Benefits Committee is appointed by the
Board of Directors of the Sponsoring Company, the Sponsoring Company will serve
as the Benefits Committee.
11.2 ORGANIZATION AND DECISIONS OF BENEFITS COMMITTEE. Every decision
and action of the Benefits Committee shall be valid if concurred in by a
majority of the members then in office at a meeting or by a unanimous consent in
writing (which may include electronic mail) without a meeting. The Benefits
Committee shall select one of its members as chairperson, appoint a secretary
(who need not be a member of the Benefits Committee) and any other officers
deemed necessary and shall adopt rules governing its procedures not inconsistent
herewith. The Benefits Committee shall keep a permanent record of its meetings
and actions. The Benefits Committee may adopt such bylaws and regulations as it
deems desirable for the conduct of its affairs. No member of the Benefits
Committee who is also a Participant shall vote or act upon any matter relating
solely to the member. The Benefits Committee may authorize one or more of its
members to (a) approve benefit payments, loans, and hardship or other
withdrawals, as applicable, (b) serve as the initial reviewer of claims for
benefits under the Plan, (c) determine the qualified status of domestic
relations orders relating to the Plan, (d) perform other routine acts, and (e)
execute any document on behalf of the Benefits Committee. If such authorization
is given, all persons who receive written notification of such authorization
shall, until contrary written notice is given to such person, accept and rely
upon any document so executed by such member(s) as representing the action of
the Benefits Committee.
11.3 DUTIES OF BENEFITS COMMITTEE. The Benefits Committee, in addition
to the duties otherwise provided for in this Plan, may:
(a) construe and interpret the Plan and related documents and resolve
any ambiguities therein;
(b) decide all questions affecting the eligibility of any Employee to
participate herein;
(c) decide all questions affecting the amount, manner and time of any
Benefit payable hereunder to any Participant or Beneficiary;
(d) ascertain the persons to whom any death or other Benefit shall be
payable under the provisions hereof;
(e) appoint and remove the Trustee and any investment managers of
the Trust Fund, establish investment guidelines for the Trustee and any
investment managers of the Trust Fund, and review the investment performance of
the Trustee and investment managers at least once each year;
(f) authorize and direct all disbursements, including administrative
expenses, by the Trustee from the Trust Fund;
(g) receive, review and keep on file (as it deems convenient and
proper) reports of benefit payments, withdrawals and loans from the Plan and
reports of disbursements of expenses from the Plan directed by the Benefits
Committee;
(h) receive, review and keep on file (as it deems convenient and
proper) reports of the financial condition, and of the receipts and
disbursements, of the Trust Fund;
(i) receive and review any statement of accounts of the Plan made by
the record keeper;
(j) upon request, furnish the Board of Directors or a Company with
reports on the administration and funding of the Plan;
(k) recommend to the Board of Directors of the Sponsoring Company
a funding policy and method for carrying out the objectives of the Plan which is
consistent with the requirements of the Plan and applicable law, considering the
short and long term financial needs of the Plan;
(l) in absence of direct information to the contrary, rely upon
information provided by a Participant or Beneficiary or information provided by
a Company;
(m) make final and binding determinations of fact in connection
with any questions of fact which may arise under the operation of the Plan;
(n) make such rules and regulations with reference to the
operation of the Plan as it may deem necessary or advisable, provided, that such
rules and regulations shall not be inconsistent with the express terms of the
Plan or ERISA;
(o) prescribe procedures and adopt forms to be used by
Participants and Beneficiaries in filing applications for Benefits and in making
elections under the Plan;
(p) review the denial of claims under Article 19 and make decisions on
such review;
(q) distribute summary plan descriptions, summaries of material
modifications and other information to Participants and affected Beneficiaries
about the Plan;
(r) establish written procedures to determine whether a judgment,
decree or order is a Qualified Domestic Relations Order and administer
distributions under such judgments, decrees or orders which it determines are
Qualified Domestic Relations Orders pursuant to Section 22.9; and
(s) make amendments to the Plan as provided under Section 13.3.
11.4 BENEFITS COMMITTEE DECISIONS FINAL AND BINDING. The decisions of
the Benefits Committee on any matter within its authority shall be made in the
sole discretion of the Benefits Committee and shall be final and binding on all
parties, including without limitation, the Company, Participants and
Beneficiaries.
11.5 POWERS AND AUTHORITY OF BENEFITS COMMITTEE.Subject to the
limitations of the Plan and related documents (including, without limitation,
any trust agreement or insurance policy or contract) and the rights reserved by
the Board of Directors of the Sponsoring Company, the Benefits Committee shall
have the authority to control and manage the operation and administration of the
Plan, with all the powers necessary to enable it to carry out its duties
properly in this respect, including the limited power to amend the Plan in
accordance with the provisions of Section 13.3.
11.6 BENEFITS COMMITTEE DIRECTIONS TO TRUSTEE. The Benefits Committee
shall direct the Trustee in writing to make distributions from the Trust Fund to
Participants, Beneficiaries and alternate payees under Qualified Domestic
Relations Orders who qualify therefor hereunder. Such written direction to the
Trustee shall specify the name, Social Security number and address of the
Participant or Beneficiary, and the amount and frequency of such payments. The
Trustee may request instructions in writing from the Benefits Committee on other
matters and may rely and act thereon.
11.7 EMPLOYMENT OF COUNSEL, ETC. The Benefits Committee may employ such
counsel, accountants, and other agents as it shall deem necessary or advisable
to advise or assist it in the performance of its duties hereunder, and the
Benefits Committee may rely upon their respective written opinions or
certifications. Such employment, and the actions taken by any such agents, shall
be subject to review and control by the Benefits Committee. Any actions taken by
any such agents shall, when within the scope of their employment, be deemed to
be actions of the Benefits Committee for all purposes of the Plan.
11.8 PAYMENT OF EXPENSES OF BENEFITS COMMITTEE. The reasonable costs
and expenses incurred by the Benefits Committee in the performance of its duties
hereunder, excluding compensation for services, but including, without
limitation, reasonable fees for legal, accounting and other services rendered,
shall be paid by the Trustee from the Trust Fund to the extent not paid by the
Company.
11.9 BENEFITS COMMITTEE AND TRUSTEE TO BE FURNISHED INFORMATION
CONCERNING EMPLOYEES. The Company shall, from time to time, make available to
the Benefits Committee such information with respect to its Employees, their
dates of employment, their Compensation and other matters as may be necessary or
desirable in connection with the performance by the Benefits Committee of its
duties with respect to the Plan. The Benefits Committee shall, in turn, furnish
to the Trustee such information and such rulings and decisions as the Trustee
may require or may request in connection with the Trustee's performance of its
duties as Trustee. If the Benefits Committee, within 21 days after being
requested to do so, fails to furnish the Trustee such information, rulings or
decisions, then after the expiration of said period, the Trustee may act without
such information, ruling or decision or may demand that the Company give it such
information, ruling or decision.
ARTICLE 12
THE TRUST FUND AND TRUSTEE
12.1 ESTABLISHMENT OF TRUST FUND. The Sponsoring Company has entered
into the Trust with the Trustee for the purpose of establishing a trust to
invest and hold the Contributions, and the income and gains thereon, in order to
provide the funds which will be used to provide Benefits under the Plan. The
Trust Fund shall be received, held in trust, and disbursed by the Trustee in
accordance with the provisions of the Plan and the Trust.
12.2 NO DIVERSION OF TRUST FUND. No part of the Trust Fund shall be
used for, or diverted for purposes other than for, the exclusive benefit of
Participants and their Beneficiaries, or for payment of the expenses of the Plan
and Trust. No person shall have any interest in, or right to, the Trust Fund or
any part thereof, except as specifically provided for in this Plan or the Trust.
12.3 REMOVAL OR RESIGNATION OF TRUSTEE. The Sponsoring Company may
remove the Trustee, and the Trustee may resign, at any time upon written notice
required by the terms of the Trust and, upon such removal or resignation, the
Sponsoring Company shall designate and appoint a successor Trustee.
12.4 TRUST PART OF PLAN. The Trust shall be deemed to form a part of
the Plan and all rights of Participants or others under this Plan shall be
subject to the provisions of the Trust.
12.5 TRUSTEE POWERS. The Trustee shall have the power to hold, invest
and reinvest the Trust Funds, all as set forth in the Trust.
12.6 NO GUARANTEE OF LOSSES IN TRUST FUND. No Company, the Benefits
Committee nor the Trustee guarantees the assets of the Trust Fund from loss or
depreciation.
12.7 PARTICIPANT NOT TO BE FIDUCIARY. A Participant who elects
investment of such Participant's Directed Account in accordance with Section
12.8, below, shall not be deemed to be a fiduciary by reason of the
Participant's exercise of control over the investment of the Participant's
Account, and neither the Trustee nor any other person who is otherwise a
fiduciary shall be liable for any loss, or by reason of any breach, which
results from such Participant's exercise of control.
12.8 POWER OF PARTICIPANTS TO DIRECT INVESTMENT OF ACCOUNTS.
(a) Election To Invest Accounts. Until such time as the Benefits
Committee shall determine otherwise, Participants shall direct the investment of
their Accounts, and such Accounts shall be placed in a Directed Account in the
name of each Participant. The Plan is intended to be an "ERISA section 404(c)
plan" with respect to such a Directed Account. The Benefits Committee shall be
the fiduciary identified to furnish the information required by the regulations
under section 404(c) of ERISA. A Participant's direction of investment of the
Participant's Accounts shall be in writing on a form prescribed by the Benefits
Committee. Such investment direction shall remain in effect until changed by the
Participant pursuant to a subsequent allocation given in accordance with the
procedure established by the Benefits Committee. A Participant may change the
investment directions by delivery of another form to the Plan Administrator or
its representative, and such change in investment direction shall be effective
in accordance with the procedures as to frequency or manner of giving investment
directions established by the Benefits Committee, subject to the limitations
imposed under (c), below, of this Section 12.8. The Benefits Committee shall
forward a copy of any investment direction form of a Participant to the Trustee.
If a Participant fails or refuses to complete an investment direction form, the
Participant's Accounts shall be invested in the Trust Fund at the discretion of
the Benefits Committee.
(b) Expenses of Directed Accounts. Unusual and extraordinary expenses
of Directed Accounts, such as brokerage fees, commissions, additional Trustee
fees, etc., shall be charged against the Directed Account.
(c) Investment Options For Directed Accounts. Participants shall
direct the investment of their Directed Account in investment alternatives
specified by the Benefits Committee, so long as the designated percentage for
each investment alternative is a whole number, and the sum of the percentages
allocated is 100%. Such investment alternatives shall be selected by the
Benefits Committee in its discretion in such a way as to provide Participants
with a broad range of investment alternatives as described in the regulations
under section 404(c) of ERISA. As it may deem necessary or desirable, the
Benefits Committee also may modify an investment alternative as well as the
frequency or the manner of giving investment directions. Subject to the
foregoing, the Benefits Committee shall specify the investment alternatives
available to Participants such that Participants may at all times choose from at
least three investment alternatives (1) each of which is diversified, (2) each
of which has materially different risk and return characteristics, (3) which in
the aggregate enable the Participant by choosing among them to achieve a
portfolio with aggregate risk and return characteristics at any point within the
range normally appropriate for the Participant, and (4) each of which when
combined with investments in the three alternatives tends to minimize through
diversification the overall risk of the investments in a Participant's Directed
Accounts. Notwithstanding any other restriction as to the frequency of giving
investment directions imposed by the Benefits Committee, Participants shall be
able to give investment directions at least once in each calendar quarter with
respect to the three investment alternatives described above. With respect to
any other investment alternative, any restriction on the frequency of giving
investment directions shall comply with the requirements of the regulations
under section 404(c) of ERISA.
(d) Investment Direction Continues After Death or Other Severance
from Service. If a Participant (or the Participant's Beneficiary) does not
receive a distribution of Benefits under the Plan once the Participant (or
Beneficiary) is eligible to receive such distribution, the last investment
direction given by the Participant (or Beneficiary) will remain in effect until
changed by the Participant (or Beneficiary) pursuant to this Section 12.8.
(e) Investment Directions May Be Transmitted Electronically. A
Participant (or a Beneficiary in the case of the Participant's death) may give
investment direction by electronic means pursuant to instructions provided by
the Benefits Committee or its representative.
ARTICLE 13
AMENDMENTS TO THE PLAN
13.1 RIGHT GENERALLY TO MAKE AMENDMENTS. The Plan may be amended,
modified or altered, in whole or in part, at any time and from time to time. The
procedure for amending, modifying or altering the Plan shall be for the Board of
Directors or its delegate to approve or ratify the amendment, modification or
alteration and for a person or persons authorized by the Board of Directors or
its delegate to duly execute an instrument of writing setting forth the
amendment, modification or alteration, provided, that the duties, powers and
liabilities of the Trustee shall not thereby be substantially modified without
the written consent of the Trustee and any Benefit which has actually accrued
and become payable hereunder shall not be affected thereby, except as provided
in Section 13.2. No amendment, modification or alteration shall be made which
shall (a) cause or authorize any part of the Trust Fund to revert or be refunded
to the Company, or (b) decrease any Participant's Account Balances or (c)
eliminate an optional form of distribution. In the event an amendment shall
alter the nonforfeitable schedule under Section 7.5, or if the Plan is deemed
amended by an automatic change to or from a top-heavy vesting schedule pursuant
to Section 9.5(c), the nonforfeitable percentage of Participants who have been
credited with three or more Years of Service shall not be less than the greater
of their nonforfeitable percentage under the prior nonforfeitable schedule or
the amended nonforfeitable schedule. Should the Sponsoring Company, at any time,
not be in existence as a corporation, the Plan may be amended, modified or
altered by action of a majority of the members of the Benefits Committee then
surviving as such.
13.2 RIGHT TO MAKE AMENDMENTS RELATING TO QUALIFICATION OF PLAN. The
Board of Directors or its delegate shall have the unlimited right to approve or
ratify the amendment of the Plan in accordance with the procedure set forth in
Section 13.1, at any time, retroactively or otherwise, in such respects and to
such extent as may be necessary to qualify it under existing laws and
regulations so as to permit the full deduction for tax purposes of Company
Contributions made hereunder and to meet the requirements of the Code or ERISA
and, to the extent necessary to accomplish such purpose, may by such amendment
decrease or otherwise affect the rights of Participants or Beneficiaries to
Benefits which have actually accrued and become payable hereunder.
13.3 AMENDMENT BY BENEFITS COMMITTEE. The Benefits Committee shall also
have separate limited authority to modify and amend the Plan in immaterial
respects, including immaterial changes required by law. Provided, no
modification or amendment by the Benefits Committee shall (a) significantly
increase any required contributions by the Company to the Plan, (b) change the
classes of persons or entities eligible to participate in the Plan, (c) change
any method of accrual or benefit formula under the Plan, or (d) adversely affect
the tax-favored status of the Plan.
ARTICLE 14
RESERVATIONS OF RIGHTS
BY THE COMPANY AND
LIMITATIONS ON RIGHTS OF PARTICIPANTS
14.1 PLAN VOLUNTARY ON PART OF COMPANY. While it is the intention of
the Company that the Plan shall be continued and Contributions made in each
year, the Plan is entirely voluntary on the part of the Company. The Company
does not guarantee or promise to pay or cause to be paid any Benefit provided by
the Plan and each Participant, Beneficiary or any other person who may claim the
right to any payment or Benefit under the Plan shall be entitled to look only to
the Trust Fund for such payment or Benefit and shall not have any right, claim
or demand therefor against the Company.
14.2 PLAN NOT CONTRACT OF EMPLOYMENT. This Plan shall not be deemed to
constitute a contract between the Company and Participants or to be a
consideration or inducement for the employment of any Participant or Employee.
Nothing contained in the Plan shall be deemed to give any Participant or
Employee the right to be retained in the service of the Company, nor to
interfere with the right of the Company to discharge any Participant or Employee
at any time, regardless of the effect which such discharge may have upon the
Employee as a Participant in the Plan.
ARTICLE 15
TERMINATION OF PLAN
15.1 EVENTS CAUSING TERMINATION OF PLAN. Upon the occurrence of any one
or more of the following events, the Plan, subject to the procedures contained
in Section 15.2, shall be terminated:
(a) Dissolution. The dissolution of the Company.
(b) Discontinuance of Contributions. The complete discontinuance of
Contributions by the Company to the Plan.
(c) Board of Directors' Action. The adoption of an appropriate
resolution by the Board of Directors of the Sponsoring Company authorizing the
termination of the Plan. Upon the adoption of such a resolution, a copy thereof
shall be delivered to the Trustee and notice thereof shall be given to
Participants. A termination of the Plan as to a Company shall be effected by the
adoption of an appropriate resolution by the Board of Directors of the Company
authorizing its termination of participation in the Plan, the delivery of a copy
thereof to the Sponsoring Company and Trustee and the giving of written notice
of such termination to all Participants.
(d) Other Termination. Any other termination or partial termination of
the Plan pursuant to section 411(d) of the Code.
15.2 PROCEDURE UPON TERMINATION. Should any of the events listed in
Section 15.1 occur, the Company Accounts and Matching Accounts of each
Participant (or, in the case of a partial termination, the Company Accounts and
Matching Accounts of the Participants affected) at that time, shall become
nonforfeitable, but the Plan and the Trust Fund shall be continued until such
time as all Accounts have been fully distributed, at which time the Plan and the
Trust Fund shall terminate. Until such time as the Company determines that the
Trust Fund shall be terminated, the Trustee shall distribute the Accounts as the
Benefits Committee directs. Upon determination by the Company that the Trust
Fund shall terminate, the Trustee shall forthwith proceed to liquidate the
assets of the Trust Fund, using the proceeds thereof as follows:
(a) Payment of Expenses. First, to pay any due and accrued
expenses and liabilities of the Trust Fund and any expenses involved in the
termination of the Plan and the Trust Fund, to the extent not paid by the
Company.
(b) Distributions to Participants. Second, to distribute to the
Participants as soon as administratively practicable the amount of their
Benefits in the Trust Fund. Provided, no distributions of Elective Deferral
Accounts shall be made at a time not otherwise permitted under the Plan.
ARTICLE 16
ADDITION AND WITHDRAWAL OF A COMPANY
16.1 ADOPTION OF PLAN BY RELATED COMPANY. The Related Companies which
have currently adopted the Plan are set forth at Schedule I. The Board of
Directors may designate any Related Company to become a Company thereafter. Any
Related Company so designated may adopt the Plan, and become a Company
hereunder, by executing a Joinder Agreement which is approved by the Benefits
Committee. Such Related Company shall become a Company hereunder as of an
Effective Date provided in the Joinder Agreement, and shall be subject to the
terms and provisions of the Plan, with such variations as shall be set forth in
the Joinder Agreement and approved by the Benefits Committee. A Related Company
may limit its adoption of the Plan to one or more of its groups of employees,
divisions, locations or operations.
16.2 WITHDRAWAL FROM PLAN BY COMPANY.
(a) Procedures for Withdrawal. A Company which wishes to withdraw
from the Plan shall deliver to the Benefits Committee a resolution of its Board
of Directors which authorizes its withdrawal as a Company and which indicates
the reason or reasons for such withdrawal. The Board of Directors may at any
time, in its discretion, determine that a Company (other than the Sponsoring
Company) shall no longer participate in the Plan and may direct that the Company
withdraw from the Plan. Withdrawal may take place only on a Valuation Date and
notice thereof to the Benefits Committee, or by the Benefits Committee to a
Company in the event withdrawal is directed by the Board of Directors, must be
submitted or received at least six months prior to the date the withdrawal is to
be effective, unless such time requirement is waived in writing by the Benefits
Committee or the Company.
(b) Withdrawal Treated as Termination. If the withdrawal of a
Company is a part of the complete dissolution of the Company's business or the
discontinuance of participation in the Plan without termination of its business
and without the immediate establishment of a new, comparable plan, the
provisions of Article 15 shall apply to such Company's withdrawal as if the
withdrawal were a part of the complete termination of the Plan, but the
participation of other Companies hereunder shall not be affected by such
withdrawal of a Company.
(c) Transfer to New Plan. If the withdrawal of a Company is the
result of the establishment of a new, comparable plan for its employees which
will immediately upon withdrawal of the Company cover employees of the Company
who are covered by the Plan, the Benefits Committee, upon being furnished
evidence of the terms of such new plan and that such new plan has been approved
by the Internal Revenue Service as being qualified under the provisions of
section 401 of the Code or an opinion of counsel that such new plan is
qualified, shall determine the Account Balances of the Accounts of the
Participants employed by that Company. The value of such Account Balances, after
reduction for charges and other expenses incurred to process the withdrawal
which are not paid by the Company, shall be transferred to the trustee of the
new plan or to the insurance company which is to hold the funds of the new plan,
whichever is applicable, in such manner as the Benefits Committee shall direct,
but the transfer must be over a period not to exceed one year following the
effective date of the Company's withdrawal. Notwithstanding the foregoing, the
Benefits Committee in its discretion, solely for the benefit and protection of
the Participants employed by the Company, may retain the Account Balances of the
Accounts of such Participants in the Plan. Upon completion of the transfer
provided for herein, the remaining Companies, the Benefits Committee and the
Trustee shall be completely discharged of all responsibility without any
obligation on their part collectively or individually to see the application
thereof.
ARTICLE 17
CHANGE IN EMPLOYMENT
17.1 PARTICIPANT TRANSFER FROM COMPANY TO COMPANY. A Participant who
transfers employment from one Company to another Company shall not be considered
as terminating employment with a Company and shall continue to be a Participant
in this Plan without interruption. A Participant who transfers employment to
another Company shall only share in the Company Contributions of the
Participant's previous Company to the extent of the Participant's Compensation
while an Employee of that Company.
17.2 PARTICIPANT TRANSFER FROM COMPANY TO RELATED COMPANY. A
Participant who transfers employment to a Related Company shall not be
considered as terminating participation in the Plan. No further Contributions
shall be made by or on behalf of such a Participant and investment earnings (or
losses) of the Trust Fund shall be allocated to the Participant's Accounts in
the manner provided for in Section 6.2. When such a Participant's employment is
terminated with the Related Company on or after attaining Normal Retirement Age,
death, Disability or Severance from Service, the Participant's Benefit shall be
determined as though such event occurred while the Participant was employed by
the Company.
17.3 EMPLOYEE CREDIT FOR SERVICES WITH RELATED COMPANY. An Employee who
transfers employment from a Related Company to a Company shall receive credit
for the Employee's Hours of Service with such Related Company for the purpose of
being eligible to become a Participant, and for the purpose of vesting in the
Participant's Benefit under the Plan. A Participant who retransfers employment
to a Company after transferring from a Company to a Related Company shall again
become an active Participant upon the Participant's reemployment by a Company.
ARTICLE 18
LIMITATIONS ON VESTING
AND
ALIENABILITY OF BENEFITS
18.1 PARTICIPANT INTERESTS LIMITED TO BENEFITS ACTUALLY ACCRUED. No
Participant shall have any legal right, title or interest in the Trust Fund, or
any of its assets, except in the event and to the extent that a Benefit may
actually accrue to such Participant hereunder, and the same limitations shall be
applicable with respect to Benefits upon the death of a Participant which may be
distributable to a Beneficiary.
18.2 SPENDTHRIFT CLAUSE. Except as provided in Sections 18.2(a) and
18.2(b), no Participant or Beneficiary shall have any right or power to
anticipate, pledge, assign, sell, transfer, alienate (by operation of law, legal
process or otherwise) or encumber the interest of such Participant or
Beneficiary in the Trust Fund in any manner whatsoever, nor shall such interest
in any manner whatsoever be liable for or subject to the debts, liabilities or
obligations of such Participant or Beneficiary, or for claims against such
Participant or Beneficiary.
(a) Qualified Domestic Relations Order. A Participant's Benefit may be
assigned to an alternate payee pursuant to a Qualified Domestic Relations Order,
subject to the provisions of Section 11.3(r).
(b) Offset of Benefits. Effective for judgments, orders, and
decrees issued, and settlement agreements entered into, on or after August 5,
1997, a Participant's Benefits may be offset against an amount that the
Participant is ordered or required to pay to the Plan if such offset meets the
requirements provided under section 401(a)(13) of the Code.
ARTICLE 19
BENEFITS CLAIMS PROCEDURE
19.1 CLAIMS FOR BENEFITS. Any claim for Benefits shall be made in
writing to the Benefits Committee or its representative. In the event such a
claim to all or any part of any Benefit under this Plan shall be denied, the
Benefits Committee or its representative shall provide to the claimant, within
90 days (or such additional period required by special circumstances, but not to
exceed an additional 90 days, provided written notice of the extension shall be
furnished to the claimant prior to the commencement of the extension) after
receipt of such claim, a written notice setting forth, in a manner calculated to
be understood by the claimant:
(a) The specific reason or reasons for the denial.
(b) Specific references to the pertinent Plan provisions on which the
denial is based.
(c) A description of any additional material or information
necessary for the claimant to perfect the claim and an explanation as to why
such material or information is necessary.
(d) An explanation of the Plan's procedure for review of the denial of
a claim.
19.2 REVIEW OF DENIAL OF CLAIMS. Within 60 days after receipt of the
above material, the claimant may appeal the claim denial to the Benefits
Committee for a full and fair review. Within such 60 days, the claimant or the
claimant's duly authorized representative:
(a) May request a review upon written notice to the Benefits Committee.
(b) May review pertinent documents.
(c) May submit issues and comments in writing.
19.3 DECISION ON REVIEW OF DENIAL. A decision by the Benefits Committee
will be made not later than 60 days (or such additional period required by
special circumstances, but not to exceed an additional 60 days, provided,
written notice of the extension shall be furnished to the claimant prior to the
commencement of the extension) after receipt of a request for review. The
Benefits Committee's decision on review shall be written and shall include
specific reasons for the decision, written in a manner calculated to be
understood by the claimant, with specific references to the pertinent Plan
provisions on which the decision is based.
ARTICLE 20
FIDUCIARY RESPONSIBILITIES
20.1 DUTIES AND OBLIGATIONS OF FIDUCIARIES. All actions by
"fiduciaries" (as that term is defined in section 3(21)(A) of ERISA) shall be in
accordance with the terms of this Plan insofar as such documents are consistent
with the provisions of Title I of ERISA. Each fiduciary shall act solely in the
interest of Participants and Beneficiaries and for the exclusive purpose of
providing benefits and defraying reasonable administrative expenses. Each
fiduciary shall discharge the fiduciary's duties hereunder with the care, skill,
prudence and diligence under the circumstances then prevailing that a prudent
man acting in a like capacity and familiar with such matters would use in the
conduct of an enterprise of a like character and with like aims.
20.2 ALLOCATION OF FIDUCIARY RESPONSIBILITIES.
(a) Sponsoring Company. The Sponsoring Company shall be the "named
fiduciary" (as defined in section 402(a) of ERISA) for the following purposes:
(1) For the control and management of the operation and
administration of the Plan, except for those duties herein specifically
allocated to the Benefits Committee, the Plan Administrator, each Company,
the Board of Directors or the Trustee.
(2) For the furnishing to the other fiduciaries hereunder such
information related to the administration of the Plan as they may require.
(3) For the control and management of the Trust Fund to the
extent set forth in the Trust Agreement.
(b) Board of Directors of the Sponsoring Company. The Board of
Directors of the Sponsoring Company shall be the named fiduciary for the
following purposes:
(1) For the appointment and removal of the Benefits Committee, as
provided in Section 11.1.
(2) For the designation of a Related Company to become a
Company as provided in Section 16.1.
(c) Board of Directors of Each Company. Each Board of Directors shall
be the named fiduciary for the purposes of terminating the participation of its
Company in the Plan as provided in Article 15.
(d) Trustee. The Trustee shall be a named fiduciary to the extent set
forth in the Trust Agreement.
(e) Benefits Committee. The Benefits Committee shall be the named
fiduciary for the purposes of performing the duties set forth in Section 11.3
and such other specific duties provided for in the Plan.
(f) Separation of Fiduciary Duties. Each fiduciary shall be
responsible only for the specific duties assigned herein and shall not be
directly or indirectly responsible for the duties assigned to another fiduciary.
ARTICLE 21
INDEMNIFICATION OF CERTAIN FIDUCIARIES
21.1 RIGHTS TO INDEMNIFICATION. The Company shall indemnify each
director, officer or employee of the Company who is, or is threatened to be
made, a party to any threatened or pending action or proceeding, whether civil,
criminal, administrative or investigative, including actions by or in the right
of the Company, by reason of the fact that such director, officer or employee is
or was serving at the request of the Company as a "fiduciary" (as defined by
section 3(21)(A) of ERISA) with regard to the Plan, against expenses (including
attorneys' fees), claims, fines, judgments, taxes, causes of action or liability
and amounts paid in settlement, actually and reasonably incurred by such person
in connection with such action or proceeding, unless such expense, claim, fine,
judgment, taxes, cause of action, liability or amount arose from the person's
gross negligence, fraud or willful breach of the person's fiduciary
responsibilities under ERISA, except, that with respect to an action by or in
the right of the Company, indemnification shall be made only against expenses
(including attorneys' fees).
21.2 ADVANCEMENT OF EXPENSES. The Company shall advance all expenses
(including attorneys' fees) incurred by any director, officer or employee
described in Section 21.1 in defending a civil, criminal, administrative or
investigative action, suit or proceeding pending the final disposition of such
action, suit or proceeding unless (a) the Board of Directors, by a majority vote
of a quorum consisting of directors who were not or are not parties to the
action, suit or proceeding concerned or (b) the stockholders determine that,
under the circumstances of the individual case, the person by such person's
conduct is not entitled to indemnification under Section 21.1 because of the
person's gross negligence, fraud or willful breach of such person's fiduciary
responsibilities, upon receipt of an undertaking, with such security as the
Board of Directors or stockholders may reasonably require, by or on behalf of
the director, officer or employee to repay such amounts unless it shall
ultimately be determined that the person is entitled to be indemnified by the
Company as authorized by this Article 21.
21.3 DETERMINATION OF RIGHT TO INDEMNITY. To the extent that any
director, officer or employee has been successful on the merits or otherwise in
the defense of the action, suit or proceeding, or in defense of any claim, issue
or matter therein, referred to in Section 21.1 such person shall be indemnified
against expenses (including attorneys' fees) actually and reasonably incurred by
such person in connection therewith and if such person was advanced expenses as
provided in Section 21.2, the undertaking of such person shall be canceled by
the Company. If any action, suit or proceeding shall terminate by judgment or
order adverse to the director, officer or employee, or settlement, conviction or
upon a plea of nolo contendere or its equivalent, the Board of Directors, or the
shareholders, in the same manner provided in Section 21.2 with reference to
advancement of expenses, shall (unless ordered by a court to make
indemnification) make a determination whether indemnification of the director,
officer or employee is not proper in the circumstances because such person has
been guilty of gross negligence, fraud or willful breach of such person's
fiduciary responsibilities and, if it is determined that the person is so
entitled to indemnification, then such person shall be indemnified against
expenses (including attorneys' fees) claims, fines, judgments, taxes, causes of
action or liability and amounts paid in settlement, actually and reasonably
incurred by such person in connection with such action or proceeding and, if
such person was advanced expenses as provided in Section 21.2, the undertaking
of such person shall be canceled. The termination of any action or proceeding by
adverse judgment or order, conviction, settlement or plea of nolo contendere or
the equivalent, shall not, of itself, create a presumption that the director,
officer or employee was guilty of gross negligence, fraud or willful breach of
the fiduciary responsibilities of the director, officer or employee.
21.4 OTHER RIGHTS. The indemnification provided by this Article 21
shall not be deemed exclusive of any other rights to which any director, officer
or employee may be entitled, and shall continue as to a person who has ceased to
be a director, officer or employee and shall inure to the benefit of the
personal representative, heirs and legatees of such a person.
21.5 INDEMNIFICATION BY MORE THAN ONE COMPANY. If a director, officer
or employee of the Company is entitled to indemnification by more than one
Company with respect to any one action, suit or proceeding, such person shall be
indemnified only once and the Companies shall, in their sole discretion, decide
how to allocate such indemnification among them.
ARTICLE 22
MISCELLANEOUS
22.1 MERGER OR CONSOLIDATION OF PLAN. In the case of any merger or
consolidation of the Plan with, or transfer of Plan assets or liabilities to,
any other "plan" (as defined in section 3(3) of ERISA), provision shall be made
so that each Participant in the Plan on the date of such merger, consolidation
or transfer will receive a benefit immediately after the merger, consolidation
or transfer from the other plan if such other plan would then be terminated
which is equal to or greater than the Benefit the Participant would have been
entitled to receive immediately prior to the merger, consolidation or transfer
under the Plan if the Plan had then been terminated.
22.2 UNCLAIMED BENEFITS. Any Benefit payable to or on behalf of a
Participant or Beneficiary which is not claimed shall be maintained in an
uninvested separate account. If the Participant or Beneficiary with respect to
which such separate account has been established cannot be located after
reasonable efforts at the time that the Benefit becomes payable, such Benefit
shall be forfeited and applied to the restoration of Forfeitures and, then,
shall be applied in the same manner as Forfeitures for such Plan Year as of the
Accounting Date of the Plan Year in which the Participant incurs the
Participant's fifth consecutive Break in Service, or such later date as the
Benefits Committee may decide. If the Participant or the Participant's
Beneficiary subsequently presents a valid claim for the Benefit to the Benefits
Committee or its representative, the Company shall cause the Benefit, equal to
the amount which was forfeited under this Section 22.2, to be restored by
causing an additional Company Contribution to be made to the Plan in the
necessary amount.
22.3 NO DIVERSION OF TRUST FUND. In no event shall the Trust Fund be
used for, or diverted to, purposes other than the exclusive benefit of the
Participants and Beneficiaries, or in the payment of the expenses of the Trust
Fund as set forth herein, except as provided in Section 4.6.
22.4 CONSTRUCTION. This Plan shall be construed and enforced according
to the laws of the Commonwealth of Kentucky, and all provisions hereunder shall
be administered according to the laws thereof, except to the extent preempted by
ERISA. It is intended that the Plan meet the requirements of ERISA and the Code
and the Plan shall be interpreted and construed, wherever possible, to comply
with the terms of ERISA, the Code, and regulations and rulings issued
thereunder.
22.5 GENDER AND NUMBER. Any words herein used in the masculine or
neuter shall read and be construed in the feminine, masculine or neuter where
they would so apply. Words in the singular shall be read and construed as though
used in the plural in all cases where they would so apply.
22.6 DISCRETIONARY ACTS TO BE NON-DISCRIMINATORY. Any discretionary
acts taken under the Plan by the Benefits Committee, the Plan Administrator, the
Sponsoring Company, the Company or the Trustee shall be uniform in their nature,
and shall be applicable to all Participants and Employees similarly situated,
and no discretionary act shall be taken which is discriminatory under the Code.
22.7 TITLES AND HEADINGS. Titles of Articles and headings to Sections
are inserted for convenience of reference only and, in the event of any
conflict, the text of the Plan, rather than such titles and headings, shall
control.
22.8 DISTRIBUTIONS TO INCOMPETENTS OR MINORS. In making any
distribution to or for the benefit of any minor or incompetent Beneficiary, or
incompetent Participant, the Benefits Committee may, but need not, direct the
Trustee to make such distribution to a legal or natural guardian or other
relative of such minor or court appointed committee of any incompetent, or to
any adult with whom such person temporarily or permanently resides; and any such
guardian, committee, relative or other person shall have full authority and
discretion to expend such distribution for the use and benefit of such person;
and the receipt of such guardian, committee, relative or other person shall be a
complete discharge to the Trustee, without any responsibility on its part or on
the part of the Benefits Committee to see to the application thereof.
22.9 QUALIFIED DOMESTIC RELATIONS ORDER. The Benefits Committee or its
representative shall have sole discretion in determining whether a judgment,
decree or order constitutes a Qualified Domestic Relations Order.
22.10 COMPLIANCE WITH THE UNIFORMED SERVICES EMPLOYMENT AND
REEMPLOYMENT RIGHTS ACT OF 1994. Notwithstanding any provision of this Plan to
the contrary, effective as of December 12, 1994, Contributions, Benefits, and
service credit with respect to qualified military service will be provided in
accordance with section 414(u) of the Code. Loan repayments may be suspended
under this Plan at the discretion of the Benefits Committee or its
representative as permitted under Section 8.1(f) and section 414(u)(4) of the
Code.
22.11 APPOINTMENT OF ADMINISTRATOR. The Benefits Committee designated
by the Sponsoring Company shall be the "administrator" for the purposes of
ERISA.
22.12 EFFECTIVE DATE. The effective date of the amendment and
restatement of the Plan shall be the first day of the Plan Year commencing on or
after January 1, 1997, unless another effective date is otherwise provided for
in a specific provision, in which case such other effective date shall apply.
IN WITNESS WHEREOF, the Sponsoring Company, by its duly authorized
officer, has caused the Plan to be executed as of this 27th day of February,
2002.
COMMONWEALTH INDUSTRIES, INC.
By:
Donald L. Marsh Jr.
Executive Vice President,
Chief Financial Officer and
Secretary
SCHEDULE I
RELATED COMPANIES PARTICIPATING
IN THE PLAN
AS OF JANUARY 1, 2000
Name of Company Employer I.D. Number
Alflex Corporation 95-4812164
Alflex E1 LLC 56-2140123
Commonwealth Aluminum Concast, Inc. 34-0697844
Commonwealth Aluminum Tube Enterprises, LLC 62-1817895
Commonwealth Aluminum Sales Corporation 95-1398512
Commonwealth Aluminum Lewisport, LLC 61-1377736
Commonwealth Aluminum Metals, LLC 61-1378491
RELATED COMPANIES PARTICIPATING
IN THE PLAN
FROM JANUARY 1, 1997
THROUGH DECEMBER 31, 2000
Name of Company Employer I.D. Number
Alflex Corporation (effective January 1, 1998) 34-1569484
Commonwealth Aluminum Concast, Inc. (effective January 1, 34-0697844
1998)
Commonwealth Aluminum Corporation 95-0816561
Commonwealth Aluminum Lewisport, Inc. 95-0816561
Commonwealth Aluminum Sales Corporation 95-1398512
Receipt of an executed copy of the amended and
restated Commonwealth Industries, Inc. 401(k) Plan
is hereby acknowledged
CG TRUST COMPANY
By:
Title:
LOU:595598.5