Pension Equalization Plan - Pittston Co.
THE PITTSTON COMPANY
PENSION EQUALIZATION PLAN
Introduction
In August 1985 the Board of Directors of The
Pittston Company (the "Company") adopted a Pension
Equalization Plan (the "Equalization Plan") to assure that
the aggregate pension benefits provided to employees covered
by the Pension-Retirement Plan of The Pittston Company and
Its Subsidiaries (which Plan, as now in effect and as
hereafter amended, is hereinafter referred to as the
"Pension Plan") would not be reduced as a result of
limitations imposed under Section 415 of the Internal
Revenue Code of 1986, as amended (the "Code"). At its
meeting in July 1989, the Board determined that the
Equalization Plan should be amended so as to provide, among
other things, for the payment thereunder of additional
amounts equal to the benefits that would have been payable
under the Pension Plan in the absence of the then applicable
annual limit on compensation under Section 401(a)(17) of the
Code. Pursuant to the authority under the Equalization
Plan, on July 7, 1994 the Pension Committee further amended
the Equalization Plan (i) to reflect the lower annual limit
imposed by the 1993 amendment of such Section 401(a)(17),
and (ii) to assure that such aggregate pension benefits will
not be adversely affected by deferrals made pursuant to the
Key Employees Deferred Compensation Program as originally
approved by the shareholders of the Company on May 1, 1992,
or as amended with shareholder approval effective as of
July 1, 1994 (the "Deferral Program"). In view of the
recommendation of the Pension Committee that the
Equalization Plan be further amended so as to provide
additional assurance to Participants and their beneficiaries
that benefits under the Equalization Plan will be paid to
them in the event of a Change in Control as hereinafter
defined, the Board has further amended the Equalization Plan
so as to read in its entirety as follows:
1. Definitions. As used herein:
"Benefit Limitations" means the limitations,
if any, on benefits payable to or in respect of an
employee under the Pension Plan (i) pursuant to
Section 415 or Section 401(a)(17) of the Code and
any regulations promulgated with respect thereto
or (ii) resulting from any exclusion from Basic
Earnings (as defined in the Pension Plan)
attributable to the deferral, pursuant to the
Deferral Program, by such employee of Cash
Incentive Payments (as defined in the Deferral
Program) or Salary (as defined in the Deferral
Program) otherwise payable currently.
"Participant" means any employee referred to
in Section 2 hereof.
"Participating Company" means the Company and
any subsidiary of the Company which is a
"Participating Company" under the Pension Plan,
unless the Board shall determine that such
subsidiary shall not be a Participating Company
hereunder.
Except as herein otherwise provided, terms defined
in the Pension Plan are used herein with the meanings
ascribed to them in said Plan.
2. Coverage. The Equalization Plan shall apply
to or in respect of each employee of any Participating
Company whose benefits under the Pension Plan are limited by
the Benefit Limitations.
3. Benefits. Supplementing the benefits
provided by the Pension Plan and subject to all terms and
conditions thereof not inconsistent herewith, each Partici-
pant and his beneficiary or beneficiaries shall be paid
under the Equalization Plan such additional amounts as are
equal to the benefits that would have been payable under the
Pension Plan in the absence of the Benefit Limitations
applicable to such Participant.
Benefits payable to any person under this Section
3 shall be payable at the same time and in the same manner
as the benefits payable to such person under the Pension
Plan. Unless the Pension Committee otherwise determines
upon request of a Participant, the beneficiary or
beneficiaries of such Participant under the Pension Plan
shall also be his beneficiary or beneficiaries under the
Equalization Plan.
The obligations of any Participating Company under
the Equalization Plan shall not be funded in any manner for
purposes of the Code or ERISA. Actions taken in conformity
with Section 8 hereof shall not constitute funding for such
purposes.
4. Administration. The Equalization Plan shall
be administered by the Pension Committee and the
Administrative Committee (subject to such directions as the
Pension Committee may determine to be appropriate) sub-
stantially in accordance with the comparable procedures and
rules applicable to the Committee which administers
corresponding provisions of the Pension Plan, including
establishing and maintaining a claims procedure (similar to
the claims procedure under the Pension Plan) pursuant to
which any Participant or beneficiary under the Equalization
Plan whose claim for benefits under the Equalization Plan
has been denied shall be given (i) notice in writing of such
denial, including the reasons therefor, and (ii) a
reasonable opportunity to have a full review of such denial.
Notwithstanding any other provision of the Equalization Plan
the Pension Committee shall have full authority (i) in its
sole discretion to determine the amounts payable under the
Equalization Plan and the time of any such payments so as to
conform with the intent as well as the terms of the
Equalization Plan, (ii) to construe any of the provisions of
the Equalization Plan and (iii) to adopt rules and regu-
lations for the implementation of such provisions.
5. Amendment and Termination. The Equalization
Plan may at any time be amended or terminated by the Board
or the Pension Committee, provided that no such amendment or
termination of the Equalization Plan shall adversely affect
the benefits accrued or payable hereunder or under any trust
agreement referred to in Section 8 hereof on account of any
Participant (or any beneficiary) in respect of service
rendered prior to such amendment or termination.
6. Assignability. No right to payment or any
other interest under the Equalization Plan shall be assign-
able or subject to attachment, execution or levy of any
kind.
7. No Employment Rights. Nothing in the
Equalization Plan shall be construed as giving any
Participant the right to be retained in the service of any
Participating Company or as interfering with the right of
any such Company to discharge any Participant at any time
without regard to the effect which such discharge shall have
upon his rights or potential rights, if any, under the
Equalization Plan.
8. Change in Control. The provisions of this
Section 8 shall be controlling, anything in the other
provisions of the Equalization Plan to the contrary
notwithstanding.
(a) In the event that a Change in Control
(as hereinafter defined in paragraph (b) of this
Section 8) shall occur or the Board shall in its
discretion determine that a Change in Control is
anticipated within 90 days from the date of such
determination, the Company shall forthwith take such
action as shall be necessary or appropriate to activate
the trust agreement dated as of September 16, 1994
between the Company and The Chase Manhattan Bank
(National Association), as trustee, by the payment in
cash to the trustee under such trust agreement of the
aggregate amount which A. Foster Higgins & Co. Inc. (or
another nationally recognized firm of actuaries
selected by the Board) shall determine, on the basis of
mortality and other assumptions at the time applicable
under the Pension Plan, to be required to provide all
projected benefit obligations to Participants and their
beneficiaries under the Equalization Plan as of the
date the Change in Control occurs or as of the date of
such determination, as the case may be. All expenses
and income and other taxes in connection with the
establishment and operation of such trust shall be paid
by the Company.
(b) A Change in Control shall be deemed
to occur if either (i) any person, or any two or
more persons acting as a group, and all affiliates
of such person or persons, shall own beneficially
more than 20% of the total voting power in the
election of directors of the Company of shares of
all classes of Common Stock of the Company
outstanding (exclusive of shares held by any
corporation of which shares representing at least
50% of the ordinary voting power are owned,
directly or indirectly by the Company) pursuant to
a tender offer, exchange offer or series of
purchases or other acquisitions, or any
combination of those transactions, or (ii) there
shall be a change in the composition of the Board
at any time within two years after any tender
offer, exchange offer, merger, consolidation,
share exchange, sale of assets or contested
election, or any combination of those transactions
(a "Transaction"), so that (i) the persons who
were directors of the Company immediately before
the first such Transaction cease to constitute a
majority of the board of directors of the
corporation which shall thereafter be in control
of the companies or other entities that were
parties to or otherwise involved in such first
Transaction, or (ii) the number of persons who
shall thereafter be directors of such corporation
shall be fewer than two-thirds of the number of
directors of the Company immediately prior to such
first Transaction. A Change in Control shall be
deemed to take place upon the first to occur of
the events specified in the foregoing clauses (i)
and (ii).
(c) In addition to all other rights under
applicable law, any individual who shall be a
Participant or beneficiary at the date on which a
Change in Control shall occur or be anticipated as
provided in paragraph (b) above shall from and after
that date have the right to bring an action, either
individually or on behalf of all Participants and
beneficiaries, to enforce the provisions of this
Section 8 by seeking injunctive relief and/or damages,
and the Company shall be obligated to pay or reimburse
each such Participant or beneficiary who shall prevail,
in whole or in substantial part, for all reasonable
expenses, including attorney's fees, in connection with
such action.
(d) The foregoing provisions of this
Section 8 shall be construed liberally to the end
that accrued benefits under the Equalization Plan
shall be assured to the fullest extent
practicable; provided, however, that nothing in
the Equalization Plan shall be construed in a
manner that would subject any Participant or
beneficiary to current taxation on establishment
of the trust.
(e) Nothing in this Section 8 shall of
itself be deemed to increase the amount of any
accrued benefits to which any Participant or
beneficiary shall have become entitled under the
Equalization Plan. The establishment and
activation of the trust agreement referred to in
paragraph (a) of this Section 8 shall not be
deemed to relieve the Company of its obligations
under the Equalization Plan to Participants and
beneficiaries except pro tanto to the extent that
amounts in respect thereof are paid under such
trust agreement to such Participants and
beneficiaries.
9. Agreements with Participants. The Company
shall enter into an agreement with each Participant
incorporating the provisions of the Equalization Plan and
containing such other provisions, consistent with the
Equalization Plan, as may be mutually acceptable.
10. Successors. The Equalization Plan shall
inure to the benefit of and be binding upon the Company and
its successors (including, without limitation, each person
or group referred to in the definition of Change of Control
and each affiliate of such person or group). Each such
successor shall be obligated to enter into an agreement with
each Participant, in form and substance satisfactory to such
Participant, by which such successor shall expressly assume
and agree to perform its obligations under the Equalization
Plan in the same manner and to the same extent as the
Company would be required to perform if no succession had
taken place. The Company shall cause each such successor to
comply with its obligations to enter into such agreement.
11. Governing Law. This Equalization Plan and
all actions taken hereunder shall be governed by and
construed in accordance with the laws of the Commonwealth of
Virginia.
As amended September 16, 1994
Effective as of May 1, 1992