ARTICLE 10

Employer Withdrawal Liability

 

Section  10.01.            General.

 

(a)            An Employer that withdraws from the Plan after April 28, 1980, in either a complete or partial withdrawal, will owe and pay withdrawal liability to the Plan, as determined under this Article and ERISA, as amended by the Multiemployer Pension Plan Amendments Act of 1980.

 

(b)            For purposes of this Article, all corporations, trades or businesses that are under common control, as defined in regulations of the Pension Benefit Guaranty Corporation (PBGC) are considered a single employer (although the Trustees are authorized to adopt such other definition of ‘single employer’ permitted or allowed by such PBGC regulations), and the entity resulting from a change in business form described in Section 4218 (1) of ERISA is considered to be the original Employer.

 

Section  10.02.             Complete Withdrawal Defined. 

 

(a)            A complete withdrawal occurs if:

 

(1)            the Employer permanently ceases to have an obligation to contribute under the Plan, and

 

(2)                 the Employer

 

(A)             continues to perform work in the jurisdiction of the Plan of the type for which contributions were previously required, or

 

(B)            resumes such work within five (5) years after the date on which the obligation to contribute under the Plan ceased, and does not renew the obligation at the time of the resumption, provided that such period will be three (3) years in the case of a mass withdrawal as defined by Section 4041(a)(2) or ERISA.

 

(b)            For this purpose, an Employer's obligation to contribute is not considered to have ceased solely because:

 

(1)            the Employer is not, at the particular time, engaged in activity for which it has a contractual obligation to contribute, or

 

(2)            the Employer temporarily suspends contributions during a labor dispute involving its employees.

 

(c)            The date of a complete withdrawal is the date the Employer's obligation to contribute ceased.

 

Section 10.03.            Amount of Liability for Complete Withdrawal.

 

(a)            The amount of an Employer's liability for a complete withdrawal will be its initial liability amount, reduced in accordance with subsection (h) of this subsection.  The amount will be determined as of the end of the Calendar Year preceding the date of the Employer's withdrawal.

 

(b)            Initial Liability Amounts.

 

The initial liability amount is:

 

(1)            In the case of the Employer that was obligated to contribute for any part of the Calendar Year ended December 31, 1979 and for any part of the period from April 29, 1980 through December 31, 1980, the sum of –

 

(A)            its proportional share of the balance of the Plan's unfunded vested liability as of December 31, 1979, plus

 

(B)            the sum of its proportional shares of the balances of the changes in the Plan's unfunded vested liability and of the reallocated liability amounts for each Calendar Year that ended after December 31, 1979 and before the date of the Employer's withdrawal.

 

(2)            In the case of an Employer that was first obligated to contribute after December 31, 1979, the sum of its proportional share in the Plan's unfunded vested liability and of the reallocated amounts for each Calendar Year that ended after December 31, 1979 and before the date of the Employer's withdrawal.

 

(c)            Unfunded Vested Liability Defined.

 

(1)            For purposes of this Article, the term "vested benefit" means a benefit for which a Participant has satisfied the conditions for entitlement under this Plan (other than submission of a formal application, retirement or completion of a required waiting period) whether or not the benefit may subsequently be reduced or suspended by a Plan amendment, an occurrence of any condition or operation of law, and whether or not the benefit is considered "vested" or "non-forfeitable" for any other purpose under the Plan.

 

(2)            The Plan's liability for vested benefits as of a particular date is the actuarial value of the vested benefits under this Plan, as of that date.  Actuarial value will be determined on the basis of methods and assumptions approved by the Trustees for purposes of this Article, upon recommendation of the Plan's enrolled actuary.

 

(3)            The unfunded vested liability will be the amount, not less than zero, determined by subtracting the value of the Plan's assets from the Plan's liability for vested benefits.  The Plan's assets are to be valued on the basis of rules adopted for this purpose by the Trustees upon recommendation of the Plan's enrolled actuary.

 

(d)            The balance of the Plan's unfunded liability as of December 31, 1979, is the amount determined as of December 31, 1979, reduced by five percent (5%) of such amount for each succeeding complete Calendar Year.

 

(e)            Annual Change in Unfunded Vested Liability.   

 

(1)            The change in the Plan's unfunded vested liability for a Calendar Year is the amount (which may be less than zero) determined by subtracting the unfunded vested liability as of the end of the Calendar Year from the sum of:

 

(A)            the balance (as of the end of the Calendar Year) of the unfunded vested liability as of December 31, 1979, plus

 

(B)            the sum of the balances (as of the end of the Calendar Year) of the changes in the unfunded vested liability for each Calendar Year that ended after December 31, 1979, and before the Calendar Year for which the change is determined.

 

(2)            The balance of the change in the Plan's unfunded vested liability for a Calendar Year is the change in the Plan's unfunded vested liability for that year reduced by five percent (5%) of such amount for each succeeding complete Calendar Year.

 

(f)            Reallocated Liability Amount.   

 

For each Calendar Year ended after December 31, 1979, the reallocated liability amount is:

 

(1)            any amount of unfunded vested liability that the Trustees determine in the Calendar Year to be uncollectible for reasons arising out of cases or proceedings under Title 11, United States Code, or similar proceedings;

 

(2)            any amount of unfunded vested liability that the Trustees determine in the Calendar Year will not be assessed as a result of the limitations on liability described in Sections 4209, 4219(c)(1)(b) or 4225 of ERISA against an Employer to whom a notice of liability under Section 4219 of ERISA has been sent; and

 

(3)            any amount that the Trustees determine to be uncollectible or unassessable in the Calendar Year for other reasons under standards not inconsistent with such regulations as may be prescribed by the Pension Benefit Guaranty Corporation. 

 

The balance of the reallocated liability amount for a Calendar Year is the reallocated liability amount for that year reduced by five percent (5%) of such amount for each succeeding complete Calendar Year.

 

(g)            Apportionments of Unfunded Liability to Employer that Has Withdrawn.  

 

(1)            An Employer's proportional share of the balance of the Plan's unfunded vested liability as of December 31, 1979 will be determined by multiplying the balance of the Plan's unfunded vested liability as of that date by a fraction: 

 

(A)            the numerator of which is the total contributions that the Employer was obligated to make to the Plan pursuant to the Terminated Agreement(s) for the five (5) Calendar Years ended on December 31, 1979; and

 

(B)            the denominator of which is the total of Employer contributions reported in the audited financial statements of the Plan for the five (5) Calendar Years ended December 31, 1979 less any contributions otherwise included in that total made by any substantial Employer that was not obligated to contribute to the Plan in the period from April 29, 1980 to December 31, 1980, or had withdrawn from the Plan before April 29, 1980.

 

(2)            An Employer's proportional share of the change in the unfunded vested liabilities and of the reallocated liability amount for a Calendar Year ending after December 31, 1979 will be determined by multiplying each of those amounts, if any, as determined for a Calendar  Year by a fraction:

 

(A)            the numerator of which is the total contributions that the Employer was obligated to make to the Plan pursuant to the Terminated Agreement(s) for the Calendar Year in which the change or reallocation arose and the four (4) preceding Calendar Years ("Apportionment Base Period");

 

(B)            the denominator of which is the total adjusted Employer contributions to the Plan with respect to the Apportionment Base Period, determined as follows: 

 

(i)            The total contributions will be the Employer contributions accrued in each of the Calendar Years in the Apportionment Base Period if received by the Plan within three (3) months after the end of the Calendar Year, plus any contributions accrued earlier but not included, for purposes of this denominator, as contributions with respect to any earlier Calendar Year.

 

(ii)            Notwithstanding subparagraph (i), with respect to any Calendar Year ended on or before December 31, 1979, the total Employer contributions will be the total reported in the Plan's audited financial statement for that Calendar Year reduced by the amount of any Employer contributions included, consistent with these provisions, in any previous annual total.

 

 (iii)            The total adjusted Employer contributions will be the total Employer contributions with respect to the Apportionment Base Period, determined under subparagraphs (i) and (ii), reduced by any contributions otherwise included in the total that were made by a substantial Employer that was not obligated to contribute to the Plan in the Calendar Year in which the change to reallocation arose, and by any other Employer to which a notice of withdrawal liability was sent by the Plan within the Apportionment Base Period. 

 

(3)            For purposes of the denominators of the fractions described in paragraphs (1) and (2), "substantial employer" means –

 

(A)            an Employer that contributed in any one Calendar Year of the relevant period, at lease one percent of total Employer contributions to the Plan in the period, as determined for purposes of the relevant denominator, or, if lower, $250,000.00; and

 

(B)            any other Employer that was a member of an Employer association, a group of Employers covered by a single collective bargaining agreement or a group of Employers covered by agreements with a single labor organization, if the contributions of substantially all members of the group ceased in a single Calendar  Year and the group's aggregate contributions to the Plan in any one Calendar  Year of the relevant period totaled at least one percent of total Employer contributions to the Plan in the period, as determined for purposes of the relevant denominator, or, if lower, $250,000.00.

 

(4)            Notwithstanding paragraphs (1) and (2), the numerator of the fractions described in those subparagraphs will not include contributions that the Employer was obligated to make under a collective bargaining agreement for which there was a permanent cessation of the obligation to contribute before April 29, 1980, if and to the extent that the Employer demonstrates that its total contribution obligation included contributions properly allocable to such a collective bargaining agreement.

 

(h)            Limitations on the Amount of Withdrawal Liability.

 

(1)            Deductible.  

 

For the initial liability amount, deduct the lesser of:

 

(A)            100,000.00 or

 

(B)            3/4 of 1 percent of the Plan's unfunded vested liability as of the end of the Calendar Year preceding the Employers withdrawal

 

less the excess of the initial amount over $150,000.00.            

 

(2)            The amount of initial liability remaining after application of paragraph (1) will be reduced to the extent applicable, in accordance with Section 4219(c)(1)(B) of ERISA.

 

(3)            The amount of initial liability remaining after application for paragraph (2) will be reduced in accordance with Section 4225 of ERISA if, and to the extent that, the Employer demonstrates that additional limitations under that section apply.

 

Section  10.04.            Satisfaction of Withdrawal Liability.  

 

(a)            Withdrawal liability is payable in installments, in accordance with Section 10.05(c).  The total amount due in each twelve (12) month period beginning on the date of the first installment will be the product of:

 

(1)            the highest rate at which the Employer was obligated to contribute to the Plan in the Calendar Year in which the withdrawal occurred and in the preceding nine (9) Calendar Years, multiplied by

 

(2)            the average number of hours per year for which the Employer was obligated to contribute to the Plan for the three (3) consecutive Calendar Years, within the ten (10) consecutive Calendar Years ending before the Year in which the withdrawal occurred, during which the Employer's contribution base was the highest, except that the number of installment payments due in the final year will be reduced to assure that the total payments will not exceed the Employer's total amortized withdrawal liability.

 

(b)            If, in connection with the Employer's withdrawal, the Plan transfers benefit liabilities to another plan to which the Employer will contribute, the Employer's withdrawal liability should be reduced in an amount equal to the value of the unfunded vested benefits that are transferred, determined as to the end of the Calendar Year preceding the withdrawal on the same basis as the determination of the Plan's unfunded vested liability under Section 10.03.

 

Section  10.05.             Notice and Collection of Withdrawal Liability.

 

(a)            Notice of withdrawal liability, reconsideration, determination of the amortization period and of the maximum years of payments will be as provided in Section 4219 of ERISA and in this Section.

 

(b)            Arbitration.

 

A dispute between an Employer and the Plan concerning a determination of withdrawal liability will be submitted to arbitration as provided in Section 4221 of ERISA to be conducted in accordance with rules adopted by the Trustees not inconsistent with regulations of the Pension Benefit Guaranty Corporation.  No issue concerning the computation of withdrawal liability may be submitted for arbitration unless the matter has been reviewed by the Plan in accordance with Section 4219(b)(2) of ERISA and any Plan rules adopted thereunder.

 

(c)            Schedule of Payment.

 

(1)            Withdrawal liability will be paid in equal quarterly installments.  Notwithstanding the pendency of any review, arbitration or other proceedings, payment will begin on the first day of the month that begins at least thirty (30) days after the notice of, and demand for, payment is sent to the Employer.  Interest will accrue on any late payment from the date the payment was due until the date paid, at the rate described in subsection (d)(2), below.

 

(2)            If, following review, arbitration or other proceedings, the amount of the Employer's withdrawal liability is determined to be different from the amount set forth in notice and demand, adjustment will be made by reducing or increasing the total number of installment payments due.  If the Employer has paid more than the amount finally determined to be its withdrawal liability, the Plan will refund the excess, with interest, at the rate used to determine the amortization period under subsection (a).

 

(d)            Default.                        

 

(1)            An Employer is in default on its withdrawal liability if any installment is not paid when due, the Plan has notified the Employer of its failure to pay the liability on the date it was due, and the Employer has failed to pay the past-due installment within sixty (60) days after receipt of the late payment notice.

 

(2)            Interest will be charged on any amount in default from the date the payment was due to the date it is paid at an annual rate equal to the prime rate charged by the Chase Manhattan Bank on the first day of the calendar quarter preceding the due date of the payment.  For each succeeding twelve (12) month period that any amount in default remains unpaid, interest will be charged on the unpaid balance (including accrued interest) at the prime rate in effect on the anniversary date of the date as of which the initial interest rate was determined.

 

(3)            In the case of a default on withdrawal liability, the Plan may require immediate payment on some or all installments that would otherwise be due in the future. 

 

(4)            In addition to the event described in paragraph (1), an Employer is in default if such Employer files a petition under the Bankruptcy Code or any similar proceeding under state law, or enters into a composition with creditors, or a bulk sale, insolvency or dissolution of a partnership or corporation.

 

 (e)            In any suit by the Trustees to collect withdrawal liability, including a suit to enforce an arbitrator's award and a claim asserted by the Trustees in an action brought by an Employer or other party, if judgment is awarded in favor of the Plan, the Employer will pay to the Plan, in addition to the unpaid liability and interest thereon as determined under subsection (d)(2), liquidated damages equal to the greater of –

 

(1)            the amount of interest charged on the unpaid balance, or

 

(2)            20 percent of the unpaid amount awarded.

 

The Employer will also pay attorneys' fees and all costs incurred in the action, as awarded by the court.  Nothing in this subsection will be construed as a waiver or limitation of the Plan's rights to any other legal or equitable relief.

 

(f)            Prepayment.

 

An Employer may prepay all or part of its withdrawal liability, plus accrued interest, if any, without penalty. 

 

(g)            Other Terms and Conditions.

 

The Trustees may require that an Employer post a bond, or provide the Plan other security for payment of its withdrawal liability, if:

 

(1)            the Employer's payment schedule would extend for longer than eighteen (18) months;

 

(2)            the Employer is the subject of a petition under the Bankruptcy Code, or similar proceedings under state or other federal laws; or

 

(3)            a substantial portion of the Employer's assets are sold, distributed or transferred.

 

Section  10.06.            Partial Withdrawal Defined.  

 

(a)            A partial withdrawal occurs on the last day of the Calendar Year in which the Employer's work mix within the craft and area jurisdiction of a collective bargaining agreement under which it is obligated to contribute to the Plan shifts, with the result that no more than an insubstantial portion of such work remains covered under the Plan.

 

(b)            Partial withdrawal will be determined on the basis of the Employer's work mix within a period of three (3) consecutive Calendar Years ("Test Period") compared to its work mix within the five (5) Calendar Years ("Base Period") preceding the Test Period.  A partial withdrawal will be deemed to have occurred if, in any Calendar Year beginning after April 29, 1982, the Hours of work on the basis of which the Employer has been obligated to contribute to the Plan under the collective bargaining agreement are, for each of the three (3) years in the Test Period --  

 

(1)            less than thirty (30) percent of what they had been, on average, in the two (2) Base Period years in which such Hours had been highest, and  

 

(2)            less than thirty (30) percent of the total work level (as measured by man-hours) of the Employer of the type that is within the craft and area jurisdiction of the collective bargaining agreement under which the Employer is obligated to contribute to the Plan.

 

The Employer's covered Hours and total work level for any Calendar Year ended by December 31, 1978 will be deemed to be not greater than its covered Hours and total work level for the Year ended December 31, 1979.

 

(c)            In additional to the foregoing, partial withdrawal by an Employer on the last day of a Calendar Year occurs if, for any Calendar Year beginning after April 29, 1982:

 

(1)            the Employer permanently ceases to have an obligation to contribute under one or more, but fewer than all collective bargaining agreements under which the Employer has been obligated to contribute to the Plan, but continues to perform work in the jurisdiction of the collective bargaining agreement of the type for which contributions were previously required or transfer such work to another location, or

 

(2)            the Employer permanently ceases to have an obligation to contribute under the Plan with respect to work performed at one or more, but fewer than all of its facilities, but continues to perform work at the facility of the type for which the obligation to contribute ceased, provided, however, that the cessation of obligation under a collective bargaining agreement under this subsection (c) will not be considered to have occurred solely because one agreement that requires contributions to the Plan has been substituted for or replaced by another such agreement.

 

Section  10.07.             Partial Withdrawal - Amount.

 

(a)            Total Amount.  

 

The amount of an Employer's liability for a partial withdrawal will be its liability calculated under Section  10.03 as if the Employer had withdrawn completely on the last day of the first year of the Test Period, multiplied by a fraction that is one (1) minus a fraction –

 

(1)            the numerator of which is the total Hours for which the Employer was obligated to contribute for the Calendar Year following the Test Period, and

 

(2)            the denominator of which is the average of the annual total Hours for which the Employer was obligated to contribute for each year in the Base Period.

 

(b)            Annual Amount.

 

The total amount due in a twelve (12) month period, with respect to a partial withdrawal, will be the amount determined as if for a complete withdrawal multiplied by the fraction described in subsection (a).

 

Section  10.08.            Liability Adjustments and Abatements.

 

(a)            Successive Withdrawals.

 

If, after a partial withdrawal, an Employer again incurs liability for a complete or partial withdrawal, the liability incurred as a result of the later withdrawal(s) will be adjusted to the extent necessary to avoid duplication of liability.

 

(b)            Abatement.

 

All or part of an Employer's partial withdrawal liability under 10.06(b) above may be abated to the extent and/or as provided in Section 4208 of ERISA and under such regulations of the PBGC as may allow for the elimination or reduction of an Employer's partial withdrawal liability.

 

Section  10.09.            Mass Withdrawal.

 

Notwithstanding any other provisions of this Article, if all or substantially all contributing Employers withdraw from the Plan pursuant to an agreement or arrangement, as determined under ERISA Sections 4209 and 4219(c)(1)(D), the withdrawal liability of each such Employer will be adjusted in accordance with those ERISA sections.

 

Section  10.10.            Notice to Employers.

 

(a)            Any notice that must be given to an Employer under this Article or under Subtitle E of Title IV of ERISA will be effective if given to the specific member of a commonly controlled group that has or has had the obligation to contribute under the Plan.

 

(b)            Notice will also be given to any other member of the controlled group that the Employer identifies and designates to receive notices hereunder, in accordance with a procedure adopted by the Trustees.

 

Section  10.11.            Non-Construction Contributions. 

 

(a)            Sections 10.02, 10.06 and 10.07 of this Article do not apply to an Employer that is not a construction contributor.  For this purpose, an Employer is a construction contributor if substantially all the Employees, with respect to whom the Employer has an obligation to contribute under the Plan, perform work in the building and construction industry.

 

(b)            In the case of an Employer that is not a construction contributor, whether a withdrawal or partial withdrawal has occurred, the liability and payments for a partial withdrawal will be determined in accordance with the applicable provisions of Sections 4203, 4205, 4208 and 4219 of ERISA.

 

Section  10.12.            Reciprocal Transfers.

 

Notwithstanding any other provisions, Employer contributions transferred to another pension plan, pursuant to a reciprocal agreement between this Plan and such other plan, for the purpose of crediting the employee's work within the jurisdiction of this Plan toward his or her benefit accrual under such other plan, will not be considered contributions to this Plan for the purpose of determining the total or annual amount of withdrawal liability.  Any amounts retained by the Plan as the administrative expense for handling such transferred contributions will also be disregarded.  However, if the Plan's records do not reveal which contributions by a withdrawn Employer are to be so disregarded, they will be disregarded only if the Employer provides the necessary data for the Trustees to make that determination.  Contributions transferred to the Plan pursuant to such a reciprocal agreement will also be disregarded in any determination of withdrawal liability.