AMENDMENT NUMBER ONE
TO
AVONDALE INDUSTRIES, INC.
401(K) SAVINGS PLAN
WHEREAS, Avondale Industries, Inc., ("Employer") is the
sponsor of the Avondale Industries, Inc. 401(k) Savings Plan (the
"Plan") which was adopted effective January 1, 1996;
WHEREAS, the Plan can be amended by the Employer.
WHEREAS, it is desirable to amend the Plan as required or
allowed by the Family and Medical Leave Act of 1993, the
Uniformed Services Employment and Reemployment Rights Act of
1994, and the Small Business Job Protection Act of 1996; to
clarify the employees who are eligible to participate; to
change "Year of Service" from an elapsed time method to an
Hours of Service method; and to make further clarifications:
NOW, THEREFORE, as authorized by Section 13.1, the Plan is
hereby amended, effective as of the date executed, unless
stated otherwise, as follows:
I.
The family aggregation rules under Code Sections 401(a)(17)
and 414(q)(6) are hereby deleted for all Plan Years
beginning after 1996. This applies to the last two
sentences of the last paragraph of Section 1.9,
Compensation, and the sixth paragraph of Section 1.23,
Highly Compensated Employee. These provisions continue to
apply for Plan Years beginning prior to January 1, 1997.
II.
Article I, Section 1.9, Compensation is amended, effective
January 1, 1996, to add the following paragraph at the end,
to read as follows:
The Compensation of a Returning Veteran
for a prior year in which a makeup
contribution is required under the Uniformed
Services Employment and Reemployment Rights
Act shall be (a) the pay the Returning
Veteran would have received if not in the
Uniformed Services (including wage increases
and bonuses) or (b) if it is not "reasonably
certain" what the pay rate during the
Uniformed Services would have been, the
Returning Veteran's average earnings during
the twelve months (or shorter period, if
applicable) prior to the Service in the
Uniformed Services.
III.
Article I, Section 1.9(b) is amended, effective January 1,
1997, to add the following sentence at the end:
Beginning in Plan Year 1997, the
reference to an Employee's Section 415
Compensation includes any amount an Employee
contributes to a qualified plan under Section
401(k) or Section 125 of the Code.
IV.
Article I, Section 1.12 is amended and restated to read as
follows:
1.12 An Eligible Employee shall mean any
Employee of a Participating Employer;
provided, however, that an Eligible Employee
shall not include: (a) any Employee who is
included in a unit of employees covered by a
negotiated collective bargaining agreement
which does not provide for his participation
in this Plan; (b) any Employee who is
providing services pursuant to an oral or
written contract or leasing arrangement with
an unrelated employer, including any Employee
who under a Participating Employer's standard
personnel practices, is deemed a
subcontractor or a leased employee; (c) any
Employee who is a Leased Employee; (d) any
Employee who, under a Participating
Employer's standard personnel practices, is
deemed an independent contractor (without
regard to such person's status for Federal
income tax purposes and without regard to any
subsequent determination that such person is
a common law employee) and (e) any Employee
who, under a Participating Employer's
standard personnel practices, is deemed a
contractor, jobber, or a consultant. All
determinations shall be made in the sole
discretion of the Participating Employer in a
uniform non-discriminatory manner.
V.
Article I, Section 1.13, Employee, is amended and restated
to read as follows:
1.13 Employee shall mean any person who
is employed by a Participating Employer or
Non-Participating Employer as a common law
employee receiving remuneration subject to
withholding for purposes of the Federal
Insurance Contribution Act (except that
Leased Employees as described in Section
414(n)(2) of the Code shall be considered
Employees solely for purposes of determining
whether the requirements of Section 414(n)(3)
of the Code are satisfied). A director of
the Company is not eligible for participation
in the Plan unless he is also an Employee.
VI.
Article I is amended to add Section 1.20A, effective with
respect to each Employee as of the first Employment Year
beginning on or after January 1, 1997, to read as follows:
1.20A Employment Year shall mean the
twelve consecutive month period of employment
commencing on the date the Employee performs
his first Hour of Service for the Employer
and each anniversary thereof.
VII.
Article I, Section 1.23, Highly Compensated Employee, is
amended, effective January 1, 1997, to add the following
paragraph at the end, to read as follows:
Highly Compensated Employee, as
determined for any Plan Year after the Plan
Year ending December 31, 1996, means any
Employee who (a) was a 5% owner (as defined
at Section 416(i)(1)(B)(i) of the Code) at
any time during the current year or the
previous year or (b) received Compensation in
excess of $80,000 (as adjusted after 1997
under Code Section 414(q)(1)) in the
preceding Plan Year and was one of the
highest-paid 20% of Employees.
VIII.
Article I, Section 1.24, Hour of Service, is amended to add
a new paragraph (d), effective January 1, 1996, to read as
follows:
(d) If an Employee is absent from his
or her employment with the Employer
for any period on account of
(i) Parental Absence, or (ii) any
period of leave recognized under
the Family and Medical Leave Act of
1993 such Employee shall be
credited with sufficient Hours of
Service (not in excess of 501 in
any Plan Year) so that a Break in
Service does not occur in either
the Employment Year in which such
absence begins (if credit is
required to preclude a Break in
Service in such year) or in the
immediately following Employment
Year (if no credit was awarded in
the preceding year). If a
Returning Veteran was absent from
his or her employment with the
Employer on account of Service in
the Uniformed Services, the
Returning Veteran shall be credited
with sufficient Hours of Service so
that a Break in Service does not
occur. For purposes of computing
Hours of Service credited under
this paragraph (d), an Employee
shall be credited with (i) Hours of
Service which would otherwise be
credited to such Employee without
regard to the absence, or (ii) 8
Hours of Service for each day of
the absence. The Committee, in its
sole discretion, may require
(i) evidence that the absence is on
account of a reason enumerated in
this paragraph (d), and
(ii) evidence as to the duration of
the absence.
IX.
Article I, Section 1.24(b), Hour of Service, is amended,
effective January 1, 1996 to delete the phrase "military service"
and to restate the second to the last paragraph, to read as
follows:
To the extent not credited above, Hours of
Service will also be credited, for vesting
purposes, based on the customary work week of
the Employee for periods of Service in the
Uniformed Services (as required by applicable
law).
X.
Article I is amended to add Section 1.24A, to read in its
entirety as follows:
1.24A A Leased Employee shall mean any
person (excluding a person who is a common
law employee of the Participating Employer or
Non-Participating Employer) who, pursuant to
an agreement between a Participating Employer
(or an Affiliated Company) and any other
person ("leasing organization") has performed
services for the Participating Employer (or
an Affiliated 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: for Plan Years after 1996, such
services are performed under the primary
direction or control of a Participating
Employer (or an Affiliated Employer); for
Plan Years prior to 1997, such services are
of the type historically performed, in the
business field of the Participating Employer
(or an Affiliated Employer) by employees.
A person is considered to have performed
services on a "substantially full-time basis"
for a period of at least one year if:
(a) during any consecutive 12-month period
such person has performed at least 1,500
Hours of Service for the Employer or
(b) during any consecutive 12-month period
such person performed services for the
Employer for a number of Hours of Service at
least equal to 75% of the average number of
hours that are customarily performed by an
employee of the Employer in the particular
position.
Such a person will not be a Leased
Employee if the person (a) is covered by a
money purchase pension plan providing (i) a
nonintegrated employer contribution rate of
at least 10% of such person's W-2 wages, (ii)
immediate participation, and (iii) full and
immediate vesting, and (b) provided, the
Leased Employee, determined without regard to
whether such person is a participant in the
above described money purchase plan, do not
constitute more than 20 percent of the
recipient's nonhighly compensated workforce.
In the event that any Leased Employee
subsequently becomes an Eligible Employee,
then unless the Plan is otherwise excluded by
applicable Treasury Regulations from the
requirements of Code Section 414(n), the
total period that such former Leased Employee
provided services to the Participating
Employer shall be treated under the Plan, for
participation eligibility and vesting
purposes as though he had been an Employee of
the Participating Employer or Non-
Participating Employer.
XI.
Article I, Section 1.29, One Year Break in Service or Break
in Service, is amended, effective with respect to each Employee
as of his first Employment Year beginning on or after January 1,
1997, to read as follows:
One Year Break in Service or Break in
Service shall mean an Employment Year in
which a Participant has 500 or less Hours of
Service.
XII.
Article I, Section 1.31, Participant, is amended and
restated to read as follows:
Participant shall mean (a) any Eligible
Employee who satisfies the participation
requirements set forth in Article II, and
(b) any former Employee on whose behalf an
Account continues to be maintained in the
Plan pursuant to Article II. An Eligible
Employee remains a Participant as long as he
has an Account balance, as provided in
Section 2.2.
In the event the Plan fails to pass the
coverage requirements of Section 410(b) of
the Code for a Plan Year, certain Employees
will be given "Eligible Employee" status in a
number necessary to satisfy the coverage
requirements of Section 410(b) of the Code.
"Eligible Employee" status will be given to
certain Employees beginning first with the
Employee who has both satisfied the
participation requirements of Article II and
has the most recent original employment date
and continuing in descending original
employment date order, to the extent
necessary for the Plan to pass the coverage
requirements of Section 410(b) of the Code.
If two or more Employees have satisfied the
participation requirements of Article II and
have the same original employment date,
Employees will be given "Eligible Employee"
status determined in alphabetical order of
the Employees' last names until the coverage
requirements are met. Coverage under this
paragraph only applies to the year in
question.
XIII.
Article I is amended to add the following Section 1.34A,
effective January 1, 1996, to read in its entirety as follows:
Section 1.34A Returning Veteran means a
reemployed Employee who gave notice to the
Company of his impending service in the
Uniformed Services, (unless such notice was
precluded by military necessity or was
otherwise impossible or unreasonable), and
the cumulative length of absence from the
Company by reason of Service in the Uniformed
Services does not exceed five years.
XIV.
Article I, is amended to add a new Section 1.34B, Required
Beginning Date to read in its entirety as follows:
1.34B Required Beginning Date shall
mean, effective January 1, 1997, for anyone
other than a 5% owner (as defined in Code
Section 416(i)(1)(B)(i)) April 1st of the
calendar year following the later of (a) the
calendar year in which the employee attains
age 70 1/2, or (b) the calendar year in which
the Employee terminates employment with the
Employer. For Plan Years beginning prior to
January 1, 1997, Required Beginning Date
shall mean April 1st of the calendar year
following the calendar year in which a
Participant attains age 70 1/2.
XV.
Article I is amended to add the following Section 1.34C,
effective January 1, 1996, to read in its entirety as follows:
Section 1.34C Service in the Uniformed
Services means the performance of duty on a
voluntary or involuntary basis in a
"Uniformed Service" and includes: active
duty, active duty for training, initial
active duty for training, inactive duty
training, full-time National Guard duty, and
a period for which a person is absent from a
position of employment for the purpose of an
examination to determine the fitness of the
person to perform any such duty. The
"Uniformed Services" include the Armed
Forces, the Army National Guard, and the Air
National Guard when engaged in active duty
for training, inactive duty training, or
full-time National Guard duty; the
commissioned corps of the Public Health
Service; and any other category of persons
designated by the President of the United
States in time of war or emergency.
XVI.
Article I, Section 1.36, Service Termination Date is deleted
effective with respect to each Employee as of his first
Employment Year beginning on or after January 1, 1997.
XVII.
All references to Service Termination Date throughout the
Plan are changed to termination of employment with the Employer.
XVIII.
Article I, Section 1.42, Year of Service, is amended to read
as follows:
1.42 Year of Service shall mean any
Employment Year beginning on or after January
1, 1997 in which an Employee completes 1000
Hours of Service with the Employer. An
Employee's Years of Service include all
periods counted as the Employee's Years of
Service earned prior to 1997 under Plan
provisions then in effect.
All the Employee's Years of Service with
the Employer shall be taken into account
including service prior to the year the
Employee meets the definition of Eligible
Employee, for purposes of satisfying the
Plan's eligibility requirements and for
calculating a Participant's Vested Interest
in his Employer Contribution Account unless
such periods of service are disregarded
pursuant to Section 2.3 of the Plan.
XIX.
The phrase "Service Termination Date" in Article II, Section
2.3 is replaced with "terminated employment."
XX.
Article III, Section 3.4, Dollar Limitation, is amended,
effective January 1, 1996, to add the following paragraph at the
end:
However, a Returning Veteran is allowed
to make the Employee Deferrals that he or she
could have made if employed during the period
of Service in the Uniformed Services. The
makeup Employee Deferrals can be made over a
period of years equal to three times the
period of Uniformed Service, not to exceed
five years. The makeup Employee Deferrals
cannot exceed the amount that the Returning
Veteran could have contributed during his
Service in the Uniformed Services, and shall
be deemed to apply to the earliest period of
such service first.
XXI.
Article III, Section 3.6, Non-Discrimination Rules,
paragraph (d) Special Rules in Connection with ADP Testing, is
amended, effective January 1, 1996 to add the following
subparagraph:
(vii)Makeup Employee Deferrals made by a
Returning Veteran shall not be subject
to the ADP test.
XXII.
Article IV, Section 4.1, Matching Contribution, is amended,
effective October 13, 1996, to add the following paragraph at the
end:
If a Returning Veteran makes makeup
Employee Deferrals described in Section 3.4,
the Company will make the Matching
Contributions, if any, that would have been
made to the account of the Returning Veteran
if he or she had made the Employee Deferrals
in the years to which they apply. The
Returning Veteran will not be eligible for
(i) an allocation of earnings before such
contributions are made, or (ii) forfeitures
allocated during the period of military
service. The allocation of Matching
Contributions will be made no later than the
time allowed under the Internal Revenue
Service's interpretation of the Act.
XXIII.
Article IV, Section 4.2, Forfeitures, is amended and
restated to read as follows:
4.2 Forfeitures. After a forfeiture
occurs, the forfeiture shall be applied to
reduce matching contributions, determined by
the Board of Directors pursuant to Section
4.1, until the forfeitures are used up.
Until applied in this way, the forfeitures
are held in the Trust and will continue to
share in the allocation of earnings.
XXIV.
Article IV, Section 4.5, Discrimination Test - Matching
Contributions, paragraph (d) Special Rules, is amended, effective
January 1, 1996, to add a new subparagraph, to read as follows:
(vi) Makeup Matching Contributions to a
Returning Veteran are not subject to the
ACP test.
XXV.
The last sentence of Article V, Section 5.2, Allocation of
Employer Discretionary Contributions, is deleted.
XXVI.
Article V, Section 5.2, Allocation of Employer Discretionary
Contributions, is amended, effective January 1, 1996, to add the
following at the end of the first paragraph, to read as follows:
The Returning Veteran who is entitled to
an allocation under the Uniformed Services
Employment and Reemployment Rights Act (the
"Act") shall receive an allocation of the
employer contribution that he or she would
have received if he or she had been employed.
The Returning Veteran will not be eligible
for (i) an allocation of earnings before such
contributions are made, or (ii) forfeitures
allocated during the period of military
service. The allocation will be made no
later than the time allowed under the
Internal Revenue Service's interpretation of
the Act.
27.
Article VI, Section 6.4(a), Forfeitures, is amended and
restated to read as follows:
(a) The non-vested portion of a
Participant's Accounts shall be
forfeited at the end of the Plan
Year in which he incurs 5
consecutive One Year Breaks in
Service, and shall be reallocated
among the Accounts of Active
Participants as provided in Section
4.2.
28.
The last sentence of Article VI, Section 6.6(c)(i) is hereby
deleted.
29.
Article VII, Section 7.3, Annual Additions, is amended,
effective January 1, 1996, to add the following sentence at the
end of the first paragraph:
Makeup contributions by and for
Returning Veterans will be subject to this
limitation with respect to the year to which
the contributions relate, not in the year in
which the contributions are made.
30.
Article X, Section 10.1 is amended and restated, effective
January 1, 1997, to read as follows:
10.1 Time of Payment. A Participant
shall be eligible to receive a distribution
of his Vested Interest when he has terminated
employment.
Such a Participant shall be entitled to
receive his Vested Interest at any time that
he elects, provided that payment cannot be
made sooner than 30 days following his date
of termination and no later than the later of
the Participant's Normal Retirement Age or
his date of termination of employment. A
distribution is based upon the value of the
Participant's Vested Interest as of the
Valuation Date coincident with or immediately
preceding the date of distribution.
The foregoing notwithstanding:
a. If the value of a Participant's Vested
Interest is less than $3,500, the Vested
Interest will be distributed as soon as
administratively practicable following
the termination date;
b. If the value of a Participant's Vested
Interest is greater than $3,500, the
Participant must consent to the
distribution;
c. A Participant's Vested Interest shall be
distributed no later than the
Participant's Required Beginning Date.
In no event shall a distribution occur while
a participant remains in the employ of an
Employer, except in the event of a withdrawal
by reason of Financial Hardship or after age
59 1/2, as described in Sections 11.1 and
11.2, below.
The distribution rules that apply to an
"alternate payee" pursuant to a "qualified
domestic relations order" are stated in
Section 9.4 herein.
31.
Article XI, Section 11.3, Loans to Participants, is amended,
effective January 1, 1996, to add a new paragraph (l) to read as
follows:
(l) Any loan repayment suspension for a
Participant will not be taken into
account for purposes of Code sections
taxing unpaid loans for any part of any
period during which such Participant is
in the Service in the Uniformed
Services, will not be considered in
testing for discriminatory benefits or
treated as a "prohibited transaction"
between the Plan and Participant.
IN WITNESS WHEREOF, Avondale Industries, Inc. has caused
this amendment to be executed in multiple originals by its
officers thereunto duly authorized and its corporate seal to be
hereunto affixed, as of the 31st day of December, 1996.
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WITNESS: AVONDALE INDUSTRIES, INC
/s/ JOY T. RINALDI BY: /s/ THOMAS M. KITCHEN
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Thomas M. Kitchen, Secretary
/s/ JACKIE H. WALKER
--------------------
ATTEST
BL HICKS
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(Corporate Seal)
ACKNOWLEDGMENT
STATE OF LOUISIANA
PARISH OF JEFFERSON
BEFORE ME, the undersigned Notary Public, personally came
and appeared Thomas M. Kitchen, who being by me sworn did
depose and state that he signed the foregoing Amendment
Number One to the Avondale Industries,Inc. 401(k) Savings
Plan as a free act and deed on behalf of Avondale Industries,
Inc. for the purposes therein set forth.
WITNESS:
/s/ JOY T. RINALDI /s/ THOMAS M. KITCHEN
------------------ ---------------------
Thomas M. Kitchen
/s/ JACKIE H. WALKER
--------------------
SWORN TO AND SUBSCRIBED
BEFORE ME THIS 31st DAY
----
OF DECEMBER, 1996.
/s/ A. BLOMKALNS
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NOTARY PUBLIC