-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, H6/8YXef2q5iNLWhZhR/SODN6SEjbzcpyu9hedL//XHUC4MQ5xjHVQZmGV75mTCw 3VnH5QOm4mNU6+HX9O54gw== 0000025885-96-000006.txt : 19960318 0000025885-96-000006.hdr.sgml : 19960318 ACCESSION NUMBER: 0000025885-96-000006 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 10 CONFORMED PERIOD OF REPORT: 19951231 FILED AS OF DATE: 19960315 SROS: AMEX FILER: COMPANY DATA: COMPANY CONFORMED NAME: CROWN CENTRAL PETROLEUM CORP /MD/ CENTRAL INDEX KEY: 0000025885 STANDARD INDUSTRIAL CLASSIFICATION: PETROLEUM REFINING [2911] IRS NUMBER: 520550682 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-01059 FILM NUMBER: 96535130 BUSINESS ADDRESS: STREET 1: ONE N CHARLES CITY: BALTIMORE STATE: MD ZIP: 21201 BUSINESS PHONE: 4015397400 FORMER COMPANY: FORMER CONFORMED NAME: UNITED CENTRAL OIL CORP DATE OF NAME CHANGE: 19680923 10-K 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K FORM 10-K FORM 10-K (Mark One) [X]ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED] For the fiscal year ended December 31, 1995 December 31, 1995 December 31, 1995 OR [ ]TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED] For the transition period from ___________ to ____________ Commission File Number 1-1059 CROWN CENTRAL PETROLEUM CORPORATION CROWN CENTRAL PETROLEUM CORPORATION CROWN CENTRAL PETROLEUM CORPORATION (Exact name of registrant as specified in its charter) MARYLAND MARYLAND MARYLAND 52-0550682 52-0550682 52-0550682 (State or other jurisdiction of (I.R.S. Employer incorporation or organization Identification Number) ONE NORTH CHARLES STREET ONE NORTH CHARLES STREET ONE NORTH CHARLES STREET BALTIMORE, MARYLAND BALTIMORE, MARYLAND BALTIMORE, MARYLAND 21201 21201 21201 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (410) 539-7400 2 Securities registered pursuant to Section 12(b) of the Securities registered pursuant to Section 12(b) of the Securities registered pursuant to Section 12(b) of the Act: Act: Act: Name of Each Exchange Name of Each Exchange Name of Each Exchange Title of Each Class Title of Each Class Title of Each Class on which Registered on which Registered on which Registered Class A Common Stock - $5 Par Value American Stock Exchange Class B Common Stock - $5 Par Value American Stock Exchange Securities registered pursuant to Section 12(g) of the Securities registered pursuant to Section 12(g) of the Securities registered pursuant to Section 12(g) of the Act: None Act: None Act: None Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [X] Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days. YES ___ X NO ___ The aggregate market value of the voting stock held by nonaffiliates as of December 31, 1995 was $96,954,000. The number of shares outstanding at January 31, 1996 of the registrant's $5 par value Class A and Class B Common Stock was 4,817,392 shares and 5,135,558 shares, respectively. DOCUMENTS INCORPORATED BY REFERENCE Portions of the Proxy Statement for the Annual Meeting of Stockholders on April 25, 1996 are incorporated by reference into Items 10 through 13, Part III. Crown Central Petroleum Corporation Crown Central Petroleum Corporation Crown Central Petroleum Corporation and subsidiaries and subsidiaries and subsidiaries Table of Contents Table of Contents Table of Contents Page Page Page PART I PART I PART I Item 1 Business............................................ l Item 2 Properties.......................................... 3 Item 3 Legal Proceedings................................... 8 Item 4 Submission of Matters to a Vote of Security Holders.................................... 8 3 PART II PART II PART II Item 5 Market for the Registrant's Common Equity and Related Stockholder Matters.............. 9 Item 6 Selected Financial Data............................. 10 Item 7 Management's Discussion and Analysis of Financial Condition and Results of Operations................................................... 11 Item 8 Financial Statements and Supplementary Data ..................................................18 Item 9 Changes in and Disagreements with Auditors on Accounting and Financial Disclosure................. 35 PART III PART III PART III Item 10 Directors and Executive Officers of the Registrant................................................... 37 Item 11 Executive Compensation.............................. 37 Item 12 Security Ownership of Certain Beneficial Owners and Management.................... 37 Item 13 Certain Relationships and Related Transactions................................................. 37 PART IV PART IV PART IV Item 14 Exhibits, Financial Statement Schedules and Reports on Form 8-K............................. 37 PART I PART I PART I Item 1. BUSINESS Item 1. BUSINESS Item 1. BUSINESS General Crown Central Petroleum Corporation and subsidiaries (the Company), which traces its origins to 1917, is one of the largest independent refiners and marketers of petroleum products in the United States. The Company owns and operates two high-conversion refineries with a combined capacity of 152,000 barrels per day of crude oil - a 100,000 barrel per day facility located in Pasadena, Texas, near Houston (the Pasadena refinery) and a 52,000 barrel per day facility located in Tyler, Texas (the Tyler refinery, and 4 together with the Pasadena refinery, the refineries). The Company is also a leading independent marketer of refined petroleum products and merchandise through a network of 348 gasoline stations and convenience stores located in the Mid-Atlantic and Southeastern United States. In support of these businesses, the Company operates 16 product terminals located on three major product pipelines along the Gulf Coast and the Eastern Seaboard and in the Central United States. The refineries are strategically located and have direct access to crude oil supplies from major and independent producers and trading companies, thus enabling the Company to select a crude oil mix to optimize refining margins and minimize transportation costs. The Pasadena refinery's Gulf Coast location provides access to tankers, barges and pipelines for the delivery of foreign and domestic crude oil and other feedstocks. The Tyler refinery benefits from its location in East Texas due to its ability to purchase high quality crude oil directly from nearby suppliers at a favorable cost and its status as the only supplier of a full range of refined petroleum products in its local market area. The refineries are operated to generate a product mix of over 85% higher margin fuels, primarily transportation fuels such as gasoline, highway diesel and jet fuel as well as home heating oil. During the past five years, the Company has invested over $84 million for environmental compliance, upgrading, expansion and process improvements at its two refineries. As a result of these expenditures, the Pasadena refinery has one of the highest rates of conversion to higher margin fuels, according to a recent industry study. The Tyler refinery enjoys essentially the same product yield characteristics as the Pasadena refinery. The Company is the largest independent retail marketer in its core retail market areas within Maryland, Virginia and North Carolina. In the Company's primary retail marketing region of Baltimore, Maryland, the Company is the leading independent gasoline retailer, with a 1995 market share of approximately 12%. In addition to its leading market position in Baltimore, the Company has a geographic concentration of retail locations in high growth areas such as Charlotte and Raleigh, North Carolina and Atlanta, Georgia. Over the past several years, the Company has rationalized and refocused its retail operations, resulting in significant improvements in average unit performance and positioning these operations for growth from a profitable base. For the year ended December 31, 1995, average merchandise sales per unit increased 11.6% on a same store basis when compared with 1994. The Company has made substantial investments of approximately $25 5 million at its retail locations pursuant to environmental requirements from 1989 to 1995 and believes that over 58% of its retail units are currently in full or substantial compliance with the 1998 underground storage tank environmental standards. Sales values of the principal classes of products sold by the Company during the last three years are included in Management's Discussion and Analysis of Financial Condition and Results of Operations on page 11 of this report. At December 31, 1995, the Company employed 3,009 employees. The total number of employees increased approximately 1% from year-end 1994. -1- Regulation Like other companies in the petroleum refining and marketing industries, the Company's operations are subject to extensive regulation and the Company has responsibility for the investigation and cleanup of contamination resulting from past operations. Current compliance activities relate to air emissions limitations, waste water and storm water discharges and solid and hazardous waste management activities. In connection with certain of these compliance activities and for other reasons, the Company is engaged in various investigations and, where necessary, remediation of soils and ground water relating to past spills, discharges and other releases of petroleum, petroleum products and wastes. The Company's environmental activities are different with respect to each of its principal business activities: refining, terminal operations and retail marketing. The Company is not currently aware of any information that would suggest that the costs related to the air, water or solid waste compliance and clean-up matters discussed herein will have a material adverse effect on the Company. The Company anticipates that substantial capital investments will be required in order to comply with federal, state and local provisions. A more detailed discussion of environmental matters is included in Note A and Note I of Notes to Consolidated Financial Statements on pages 23 and 31 of this report, and in Management's Discussion and Analysis of Financial Condition and Results of Operations on pages 11 through 16 of this report. Competitive Conditions 6 Oil industry refining and marketing is highly competitive. Many of the Company's principle competitors are integrated multinational oil companies that are substantially larger and better known than the Company. Because of their diversity, integration of operations, larger capitalization and greater resources, these major oil companies may be better able to withstand volatile market conditions, compete on the basis of price and more readily obtain crude oil in times of shortages. The principle competitive factors affecting the Company's refining operations are crude oil and other feedstock costs, refinery efficiency, refinery product mix and product distribution and transportation costs. Certain of the Company's larger competitors have refineries which are larger and more complex and, as a result, could have lower per barrel costs or higher margins per barrel of throughput. The Company has no crude oil reserves and is not engaged in exploration. The majority of the Company's total crude oil purchases are transacted on the spot market. The Company selectively enters into forward hedging and option contracts to minimize price fluctuations for a portion of its crude oil and refined products. As such, the Company believes that it will be able to obtain adequate crude oil and other feedstocks at generally competitive prices for the foreseeable future. The principle competitive factors affecting the Company's retail marketing operations are locations of stores, product price and quality, appearance and cleanliness of stores and brand identification. Competition from large integrated oil companies, as well as from convenience stores which sell motor fuel, is expected to continue. The principle competitive factors affecting the Company's wholesale marketing business are product price and quality, reliability and availability of supply and location of distribution points. The Company maintains business interruption insurance to protect itself against losses resulting from shutdowns to refinery operations for periods in excess of 25 days or $5 million resulting from fire, explosions and certain other insured casualties. -2- Item 2. PROPERTIES Item 2. PROPERTIES Item 2. PROPERTIES Refining Operation Refining Operation Refining Operation Overview Overview Overview 7 The Company owns and operates two strategically located, high conversion refineries with a combined capacity of 152,000 barrels of crude oil per day--a 100,000 barrel per day facility located in Pasadena, Texas, near Houston, and a 52,000 barrel per day facility located in Tyler, Texas. Both refineries are operated to generate a product mix of over 85% higher margin fuels, primarily transportation fuels such as gasoline, highway diesel and jet fuel, as well as home heating oil. When operating to maximize the production of light products, the product mix at both of the Refineries is approximately 55% gasoline, 33% distillates (such as diesel, home heating oil, jet fuel, and kerosene), 6% petrochemical feedstocks and 6% slurry oil and petroleum coke. The Pasadena refinery and Tyler refinery averaged production of 105,375 barrels per day and 49,440 barrels per day, respectively, during 1995. While both refineries primarily run sweet (low sulphur content) crude oil, they can process up to 20% % % of sour (high sulphur content) crude oil in their mix. The Company's access to extensive pipeline networks provides it with the ability to acquire crude oil directly from major integrated and independent domestic producers, foreign producers, or trading companies, and to transport this crude to the refineries at a competitive cost. The Pasadena refinery has docking facilities which provide direct access to tankers and barges for the delivery of crude oil and other feedstocks. The Company also has agreements with terminal operators for the storage and handling of the crude oil it receives from large ocean-going vessels and which the Company transports to the refineries by pipeline. The Tyler refinery benefits from its location in East Texas since the Company can purchase high quality crude oil at favorable prices directly from nearby producers. In addition, the Tyler Refinery is the only supplier of a full range of petroleum products in its local market area. See "-- Supply, Transportation and Wholesale Marketing." Over the past several years, the Company has made significant capital investments to upgrade its refining facilities and improve operational efficiency. The Company has also recently completed several programs which have resulted in increased profitability at the refinery level. The Company began a maintenance expense reduction program at the Pasadena Refinery in 1992. This program is designed to reduce routine maintenance expenditures by increasing project reliability, reducing the use of outside contractors, decreasing the overall amount of overtime 8 expenditures and realigning maintenance personnel responsibilities. The result of this program has been to reduce average maintenance expenditures from $1.6 million per month in 1991 to approximately $1 million per month in 1995. The Company has also initiated a gain sharing program with its employees at the Tyler Refinery under which savings realized are shared with the employees on a quarterly basis. Pasadena Refinery Pasadena Refinery Pasadena Refinery The Pasadena refinery is located on approximately 174 acres in Pasadena, Texas and was the first refinery built on the Houston Ship Channel. The refinery has been substantially modernized since 1969 and today has a rated crude capacity of 100,000 barrels per day. During the past five years, the Company has invested approximately $106 million in major upgrades and maintenance projects. The Company's refining strategy includes several initiatives to enhance productivity. For example, the Company has completed an extensive plant-wide distributed control system at the Pasadena refinery which is designed to improve product yields, make more efficient use of personnel and optimize process operations. The distributed control system uses technology that is fast, accurate and provides increased information to both operators and supervisors. -3- The Pasadena refinery has a crude unit with a 100,000 barrels per day atmospheric column and a 38,000 barrels per day vacuum tower. Major downstream units consist of a 52,000 barrels per day fluid catalytic cracking unit, a 12,000 barrels per day delayed coking unit, two alkylation units with a combined capacity of 10,000 barrels per day of alkylate production, and two reformers with a combined capacity of 36,000 barrels per day. Other units include two depropanizer units that can produce 5,500 barrels per day of refinery grade propylene, a liquefied petroleum gas unit that removes approximately 1,000 barrels per day of liquids from the refinery fuel system and a methyl tertiary butyl ether ("MTBE") unit which can produce approximately 1,500 barrels per day of MTBE for gasoline blending. In 1994, the Company abandoned its plans to construct a hydrodesulphurization unit at its Pasadena Refinery. See "Management's Discussion and Analysis of Financial Condition - Results of Operations". 9 The Clean Air Act mandates that after January 1, 1995 only reformulated gasoline ("RFG") may be sold in certain ozone non-attainment areas, including some metropolitan areas where the Company sells gasoline. Using production from its MTBE unit, the Pasadena refinery can currently produce 12,000 barrels per day of winter grade RFG. With additional purchases of MTBE, ethanol or other oxygenates, all of the Pasadena refinery's current gasoline production could meet winter grade RFG standards. The Company is in the process of constructing a reformate splitter at its Pasadena refinery at a cost of $3.5 million which will enable it to make 12,000 barrels per day of summer grade RFG using its own MTBE, and up to 100% of its Pasadena refinery gasoline production as summer grade RFG with the purchase of additional oxygenates. This project is expected to be completed in 1996 and will enable the Company to satisfy all of its retail RFG requirements. In 1995, the Pasadena refinery operated at approximately 88% of rated crude unit capacity with production yielding approximately 60% gasoline and 28% distillates. Of the total gasoline production, approximately 19% was premium octane grades. In addition, the Pasadena refinery produced and sold by-products including propylene, propane, slurry oil, petroleum coke and sulphur. The Company owns and operates storage facilities located on approximately 130 acres near its Pasadena refinery which, together with tanks on the refinery site, provide the Company with a storage capacity of approximately 6.2 million barrels (2.8 million barrels for crude oil and 3.4 million barrels for refined petroleum products and intermediate stocks). The Pasadena refinery's refined petroleum products are delivered to both wholesale and retail customers. Approximately one-half of the gasoline and distillate production is sold wholesale into the Gulf Coast spot market and one-half is shipped by the Company on the Colonial and Plantation pipelines for sale in East Coast wholesale and retail markets. The Company's retail gasoline requirements represent approximately 52% of the Pasadena refinery's total gasoline production capability. Tyler Refinery Tyler Refinery Tyler Refinery The Tyler refinery is located on approximately 100 of the 529 acres owned by the Company in Tyler, Texas and has a rated crude capacity of 52,000 barrels per day. This refinery, which was acquired from Texas Eastern Corporation in the fourth 10 quarter of 1989, had been substantially modernized between 1977 and 1980. The Tyler refinery's location provides access to nearby high quality East Texas crude oil which accounts for approximately 95% of its crude supply. This crude oil is transported to the refinery on the McMurrey and Scurlock pipeline systems. The Company owns the McMurrey system and has a long-term contract for use of the Scurlock system with Scurlock Permian Pipe Line Corporation. The Company also has the ability to ship crude oil to the Tyler refinery by pipeline from the Gulf Coast and does so when market conditions are favorable. Storage capacity at the Tyler refinery exceeds 2.7 millions barrels (1.2 million barrels for crude oil and 1.5 million barrels for refined petroleum products and intermediate stocks), including tankage along the Company's pipeline system. The Tyler refinery has a crude unit with a 52,000 barrels per day atmospheric column and a 16,000 barrels per day vacuum tower. The other major process units at the Tyler refinery include an 18,000 barrels per day fluid catalytic cracking unit, a 6,000 barrels per day delayed coking unit, a 20,000 barrels per day naphtha hydrotreating unit, a 12,000 barrels per day distillate hydrotreating unit, two reforming units with a combined capacity of 16,000 barrels per day, a 5,000 barrels per day isomerization unit, and an alkylation unit with a capacity of 4,700 barrels per day. The hydrotreating units were significantly modified in 1993 enabling this plant to produce 12,000 barrels per day of distillate which meets the Clean Air Act's .05% sulphur requirements for highway diesel. -4- In 1995, the Tyler refinery operated at approximately 90% of rated crude unit capacity, with production yielding approximately 56% gasoline and approximately 34% distillates. Of the total gasoline production, approximately 32% was premium octane grades. In addition, the refinery produced and sold by-products including propylene, propane, slurry oil, petroleum coke and sulphur. The Tyler refinery is the principal supplier of refined petroleum products in the East Texas market with approximately 60% of production sold at the refinery's truck terminal. The remaining production is shipped via the Texas Eastern Products Pipeline for sale either from the Company's terminals or from other terminals along the pipeline. Deliveries under term exchange agreements account for the majority of the truck terminal sales. 11 Retail Operations Retail Operations Retail Operations Overview The Company traces its retail marketing history to the early 1930's when it operated a retail network of 30 service stations in the Houston, Texas area. It began retail operations on the East Coast in 1943. The Company has been recognized as an innovative industry leader and, in the early 1960's, pioneered the multi-pump retailing concept which has since become an industry standard in the marketing of gasoline. In 1983 the Company significantly expanded its retail presence with the acquisition of 642 Fast Fare and Zippy Mart convenience stores located in the Southeastern United States. In 1986 the Company purchased an additional 50 gasoline stations, expanding the Company's presence in the Baltimore/Washington, D.C. region, and in 1991, the Company acquired 48 additional units in Virginia which doubled its presence in that state. Additionally, in 1995, the Company acquired 13 retail units in North Carolina and 2 retail units in Georgia. Beginning in 1989, the Company conducted a facility by facility review of its retail units. As a result, the Company disposed of non- strategic, marginal or unprofitable units as well as certain units which would have required significant capital improvements to comply with environmental regulations. During this period, the Company rebuilt and added individual units to increase its market share in strategic core markets. Since 1990, the Company has eliminated 440 retail units and added 62 retail units. During the same period, the Company closed a number of district offices and divisional headquarters. The Company believes it has substantially completed its retail unit rationalization program. As of December 31, 1995, the Company had 348 retail locations. Of these 348 units (234 owned and 114 leased), the Company directly operated 244 and the remainder were operated by independent dealers. The Company conducts its operations in Maryland through an independent dealer network as a result of legislation which prohibits refiners from operating gasoline stations in Maryland. The Company believes that the high proportion of Company-operated units enables it to respond quickly and uniformly to changing market conditions. While most of the Company's units are located in or around major metropolitan areas, its sites are generally not situated on major interstate highways or inter-city thoroughfares. These off- highway locations primarily serve local customers and, as a result, the Company's retail marketing 12 unit volumes are not as highly seasonal or dependent on seasonal vacation traffic as locations operating on major traffic arteries. The Company is the largest independent retail marketer of gasoline in its core retail market areas within Maryland, Virginia and North Carolina. In the Company's primary retail marketing area of Baltimore, Maryland, the Company is the leading independent gasoline retailer, with a 1995 market share of approximately 12%. In addition to its leading market position in Baltimore, the Company has a geographic concentration of retail locations in high growth areas such as Raleigh and Charlotte, North Carolina and Atlanta, Georgia. The Company's three highest volume core markets are Baltimore, the suburban areas of Maryland and Virginia surrounding Washington, D.C., and the greater Norfolk, Virginia area. -5- Retail Unit Operations Retail Unit Operations Retail Unit Operations The Company conducts its retail marketing operations through three basic store formats: convenience stores, mini-marts and gasoline stations. At December 31, 1995, the Company had 81 convenience stores, 130 mini-marts and _ 137 gasoline stations. The Company's convenience stores operate primarily under the names Fast Fare and Zippy Mart. These units generally contain 1,500 to 2,800 square feet of retail space and typically provide gasoline and a variety of convenience store merchandise such as tobacco products, beer, wine, soft drinks, snacks, dairy products and baked goods. The Company's mini-marts generally contain up to 800 square feet of retail space and typically sell gasoline and much of the same merchandise as at the Company's convenience stores. The Company has installed lighted canopies at most of its locations which extend over the multi-pump fuel islands and the store itself, providing added security and protection from the elements for customers and employees. The Company's gasoline stations generally contain up to 100 square feet of retail space in an island kiosk and typically offer gasoline and a limited amount of merchandise such as tobacco products, candies, snacks and soft drinks. The Company's units are brightly decorated with its trademark signage to create a consistent appearance and encourage customer recognition and patronage. The Company believes that consistency 13 of brand image is important to the successful operation and expansion of its retail marketing system. In all aspects of its retail marketing operations the Company emphasizes quality, value, cleanliness and friendly and efficient customer service. The Company has conducted customer surveys which indicate strong consumer preference for units which are well-lighted and safe. In response to such customer preferences, the Company has initiated a system-wide lighting upgrade and safety enhancement program which includes the installation of improved lighting as well as the installation of its proprietary Coronet Security System, an interactive audio and video monitoring system, at over 180 of its units. While the Company derives approximately 75% of its retail revenue from the sale of gasoline, it also provides a variety of merchandise and other services designed to meet the non-fuel needs of its customers. Sales of these additional products are an important source of revenue, contribute to increased profitability and serve to increase customer traffic. The Company believes that its existing retail sites present significant additional profit opportunities based upon their strategic locations in high traffic areas. The Company also offers ancillary services such as compressed air service, car washes, vacuums, and automated teller machines, and management continues to evaluate the addition of new ancillary services such as the marketing of fast food from major branded chains. Dealer Operations Dealer Operations Dealer Operations The Company maintains 104 dealer-operated units, 103 of which are located in Maryland. Under the Maryland Divorcement Law, refiners are prohibited from operating gasoline stations. The Maryland units are operated under a Branded Service Station Lease and Dealer Agreement (the "Dealer Agreement"), generally with a term of three years. Pursuant to the Dealer Agreement, a dealer leases the facility from the Company and purchases and resells Crown-branded motor fuel and related products. Dealers also purchase and resell merchandise from independent third parties. The Dealer Agreement sets forth certain operating standards; however, the Company does not control the independent dealer's personnel, pricing policies or other aspects of the independent dealer's business. The Company believes that its relationship with its dealers has been very favorable as evidenced by a low rate of dealer turnover. The Company realizes little direct benefit from the sale of merchandise or ancillary services at 14 the dealer operated units, and the revenue from these sales is not reflected in the Company's Consolidated Financial Statements. However, to the extent that the availability of merchandise and ancillary services increases customer traffic and gasoline sales at its units, the Company benefits from higher gasoline sales volumes. -6- Supply, Transportation and Wholesale Marketing Supply, Transportation and Wholesale Marketing Supply, Transportation and Wholesale Marketing Supply Supply Supply The Company's refineries, terminals and retail outlets are strategically located in close proximity to a variety of supply and distribution channels. As a result, the Company has the flexibility to acquire available domestic and foreign crude oil economically, and also the ability to distribute its products cost effectively to its own system and to other domestic wholesale markets. Purchases of crude oil and feedstocks are determined by quality, price and general market conditions. Transportation Transportation Transportation Most of the domestic crude oil processed by the Company at its Pasadena refinery is transported by pipeline. The Company's purchases of Alaskan and foreign crude oil are transported primarily by tankers under spot charters which are arranged by either the seller or the Company. The Company is not currently obligated under any time-charter contracts. The Company has an approximate 5% interest in the Rancho Pipeline and generally receives between 20,000 and 25,000 barrels per day of crude through this system. Foreign crudes (principally from the North Sea, West Africa and South America) account for approximately 35% of total crude supply and are delivered by tanker. Most of the crude for the Tyler refinery is gathered from local East Texas fields and delivered by two pipeline systems, one of which is owned by the Company. Foreign crude also can be delivered to the Tyler refinery by pipeline from the Gulf Coast. Terminals Terminals Terminals The Company operates 11 product terminals located along the Colonial and Plantation pipelines from the Pasadena refinery to Elizabeth, New Jersey and, in addition to the terminal at the Tyler refinery, operates four product terminals located 15 along the Texas Eastern Products Pipeline system. These terminals have a combined storage capacity of 2.7 million barrels. The Company's distribution network is augmented by agreements with other terminal operators also located along these pipelines. In addition to serving the Company's retail requirements, these terminals supply products to other refiner/marketers, jobbers and independent distributors. Wholesale Marketing Wholesale Marketing Wholesale Marketing Approximately 16% of the gasoline produced by the Company's Pasadena refinery is transported by pipeline for sale at wholesale through Company and other terminals in the Mid-Atlantic and Southeastern United States. Heating oil is also regularly sold at wholesale through these same terminals. Gasoline, heating oil, diesel fuel and other refined products are also sold at wholesale in the Gulf Coast market. The Company has entered into long-term product exchange agreements for approximately one-third of its Tyler refinery production with two major oil companies headquartered in the United States. These agreements provide for the delivery of refined products at the Company's terminals in exchange for delivery by these companies of a similar amount of refined products to the Company. The terms of these agreements extend through March 1998 and December 1999, respectively, and require the exchange of 8,400 barrels per day and 9,800 barrels per day, respectively. These exchange agreements provide the Company with the ability to broaden its geographic distribution, supply markets not connected to the refined products pipeline systems and reduce transportation costs. -7- Item 3. LEGAL PROCEEDINGS Item 3. LEGAL PROCEEDINGS Item 3. LEGAL PROCEEDINGS The Company is involved in various matters of litigation, the ultimate determination of which, in the opinion of management, will not have a material adverse effect on the Company. The Company's legal proceedings are further discussed in Note I of Notes to Consolidated Financial Statements on page 31 of this report. In October 1994, the Texas Natural Resource Conservation Commission (`` TNRCC'') issued a Notice of Violation (`` NOV'') with respect to certain alleged violations at the reformer unit at the Pasadena refinery, which the Company had self- 16 reported earlier that year. The Company and the TNRCC staff are currently working to resolve the issues raised by the NOV. The Company recently reached agreement with the Environmental Protection Agency to settle charges set forth in an Administrative Complaint regarding alleged exceedances of the Pasadena refinery's Clean Water Act permit. Under the settlement, the Company has agreed to pay a penalty of $100,100. The settlement covers all violations of the permit that have occurred within a five-year period. The Pasadena refinery and many of the Company's other facilities are involved in a number of other environmental enforcement actions or are subject to agreements, orders or permits that require remedial activities. Environmental expenditures, including these matters, are discussed in the Liquidity and Capital Resources section of Management's Discussion and Analysis of Financial Conditions and Results of Operations on pages 14 through 16 of this report, and in Note I of Notes to Consolidated Financial Statements on page 31 of this report. These enforcement actions and remedial activities, in the opinion of management, are not expected to have a material adverse effect on the Company. In addition, the Company has been named by the EPA and by several state environmental agencies as a potentially responsible party at various federal and state Superfund sites. The Company's exposure in these matters has either been resolved or is __ de _______ minimis and is not expected to have a material adverse effect on the Company. The foregoing environmental proceedings are not of material importance to Crown's accounts and are described in compliance with SEC rules requiring disclosure of such proceedings although not material. The Company's collective bargaining agreement with the Oil Chemical & Atomic Workers Union (`` OCAW'') covering employees at the Pasadena refinery expired on February 1, 1996. Following a number of incidents apparently intended to disrupt normal operations at the refinery and also as a result of the unsatisfactory status of the negotiations, on February 5 the Company implemented a lock-out of employees in the collective bargaining unit at the Pasadena facility. OCAW subsequently filed unfair labor practice charges with the National Labor Relations Board (`` NLRB''). The Company believes the charges are unfounded and has filed answers to the charges with the NLRB. 17 Item 4. SUBMISSION OF MATTERS TO A VOTE OF Item 4. SUBMISSION OF MATTERS TO A VOTE OF Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS SECURITY HOLDERS SECURITY HOLDERS No matters were submitted to a vote of security holders during the last three months of the fiscal year covered by this report. -8- PART II PART II PART II Item 5.MARKET FOR REGISTRANT'S COMMON EQUITY AND Item 5.MARKET FOR REGISTRANT'S COMMON EQUITY AND Item 5.MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS RELATED STOCKHOLDER MATTERS RELATED STOCKHOLDER MATTERS The Company's common stock is listed on the American Stock Exchange under the ticker symbols CNP A and CNP B.
Common Stock Market Prices and Cash Dividends Common Stock Market Prices and Cash Dividends Common Stock Market Prices and Cash Dividends ___________ __________ _____________ 1995 _____________ 1994 Sales Price Sales Price ______ Low __ __ ______ Low _____ High _ _____ High _ CLASS A COMMON STOCK CLASS A COMMON STOCK CLASS A COMMON STOCK First Quarter ...... $15 $11 $14 $21 1/8 7/8 3/8 7/8 Second Quarter 17 7/8 ..... 13 7/8 24 1/4 17 Third Quarter 16 7/8 ...... 15 1/8 19 1/2 17 1/8 Fourth Quarter ..... 16 1/4 13 5/8 18 3/8 12 3/8 Yearly 17 7/8 ..... 11 7/8 24 1/4 12 3/8 CLASS B COMMON STOCK CLASS B COMMON STOCK CLASS B COMMON STOCK First Quarter ...... $14 $11 $13 $20 5/8 5/8 1/8 5/8 Second Quarter ..... 17 3/4 13 3/8 23 1/8 15 3/8 Third Quarter ...... 16 3/4 14 7/8 18 16 1/8 Fourth Quarter ..... 16 11 5/8 16 5/8 11 5/8 18 Yearly..... 17 3/4 11 5/8 23 1/8 11 5/8 The payment of cash dividends is dependent upon future earnings, capital requirements, overall financial condition and restrictions as described in Note C of Notes to Consolidated Financial Statements on page 26 of this report. There were no cash dividends declared on common stock in 1995 or 1994. The approximate number of shareholders of the Company's common stock, based on the number of record holders on December 31, 1995 was: Class A Common Stock ..... 689 Class B Common Stock ..... 845 Transfer Agent & Registrar Transfer Agent & Registrar Transfer Agent & Registrar The First National Bank of Boston Boston, Massachusetts
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Item 6. Item 6. Item 6. SELECTED FINANCIAL DATA SELECTED FINANCIAL DATA SELECTED FINANCIAL DATA The selected consolidated financial data for the Company set forth below for the five years ended December 31, 1995 should be read in conjunction with the Consolidated Financial Statements. _______ 1995 ___ __ __ _______ 1991 _ ______ 1994 ______ 1993 _____ 1992 _ (Thousands of dollars except per share amounts) Sales and operating $1,864,6 $1,699, $1,747, $1,795, $1,857, .............. revenues 39 168 411 259 711 (Loss) before extraordinary item and cumulative effect of changes in accounting (67,367) (35,406 (4,300) (13,278 ) (6,026 principles............ ) ) Extraordinary item.... (3,257) Cumulative effect of changes in accounting principles 7,772 Net (loss)............ (70,624 (35,406 ) (4,300) ) (5,506 ) (6,026 19 ) Total assets.......... 583,214 704,076 656,178 675,337 687,816 Long-term debt........ 128,506 96,632 65,579 61,220 88,646 Per Share Data: Per Share Data: Per Share Data: (Loss) before extraordinary item and cumulative effect of changes in accounting (6.95 (3.63 ) ) (.44 ) (1.35) ) (.61 principles............ Net (loss)............ (7.28 (3.63 ) ) (.44 ) ) (.56 ) (.61 Cash Dividends Cash Dividends Cash Dividends Declared: Declared: Declared: Class A Common........ .20 .80 Class B Common........ .20 .80 The extraordinary loss in 1995, which was recorded in the first quarter, resulted from the early retirement of the remaining principle balance of the Company's 10.42% Senior Notes with the proceeds from the sale of $125 million of Unsecured Senior Notes due February 1, 2005. The net loss in 1995 was unfavorably impacted by a pre-tax write- down of certain refinery assets of $80.5 million in the fourth quarter relating to the adoption of Statement of Financial Accounting Standards No. 121 `` Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of . '' The net loss in 1994 was unfavorably impacted by a pre-tax write- down of $16.8 million in the third quarter relating to the abandonment of plans to construct a hydrodesulphurization unit at the Pasadena refinery.
-10- Item 7. Item 7. Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF MANAGEMENT'S DISCUSSION AND ANALYSIS OF MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF FINANCIAL CONDITION AND RESULTS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OPERATIONS OPERATIONS General General General Purchases of crude oil supply are typically made pursuant to relatively short-term, renewable contracts with numerous foreign and domestic major and independent oil producers, generally containing market-responsive pricing provisions. The Company has instituted programs designed to manage profit margins by minimizing the Company's 20 exposure to the risks of price volatility related to the acquisition, conversion and sale of crude oil and refined petroleum products. These programs include hedging activities such as the purchase and sale of futures and options contracts to mitigate the effect of fluctuations in the prices of crude oil and refined products. While the Company's net sales and operating revenues fluctuate significantly with movements in industry crude oil prices, such prices do not have a direct relationship to net earnings, which are subject to the impact of the Company's LIFO method of accounting discussed below. The effect of changes in crude oil prices on the Company's operating results is determined more by the rate at which the prices of refined products adjust to reflect such changes. The following table estimates the sensitivity of the Company's income before taxes to price changes which impact its refining and retail margins based on a representative production rate for the Refineries and a representative amount of total gasoline sold at the Company's retail units:
____________________ Earnings Sensitivity ____________________ Earnings Sensitivity ____________________ Earnings Sensitivity ________ Change ________ Change ________ Change _____________ Annual Impact _____________ Annual Impact _____________ Annual Impact Refining margin ....$0.10/bbl$ 5.7 million Retail margin ......$0.01/gal$ 5.2 million
The Company conducts environmental assessments and remediation efforts at multiple locations, including operating facilities and previously owned or operated facilities. The Company accrues environmental and clean-up related costs of a non- capital nature when it is both probable that a liability has been incurred and the amount can be reasonably estimated. Accruals for losses from environmental remediation obligations generally are recognized no later than completion of the remedial feasibility study. Estimated costs, which are based upon experience and assessments, are recorded at undiscounted amounts without considering the impact of inflation, and are adjusted periodically as additional or new information is available. Expenditures for equipment necessary for environmental issues relating to ongoing operations are capitalized. The Company's crude oil, refined products and convenience store merchandise and gasoline inventories are valued at the lower of cost (based on the last-in, first-out or LIFO method of accounting) or market, with the exception of crude 21 oil inventory held for resale which is valued at the lower of cost (based on the first-in first-out or FIFO method of accounting) or market. Under the LIFO method, the effects of price increases and decreases in crude oil and other feedstocks are charged directly to the cost of refined products sold in the period that such price changes occur. In periods of rising prices, the LIFO method may cause reported operating income to be lower than would otherwise result from the use of the FIFO method. Conversely, in periods of falling prices the LIFO method may cause reported operating income to be higher than would otherwise result from the use of the FIFO method. In addition, the Company's use of the LIFO method may understate the value of inventories on the Company's consolidated balance sheet as compared to the value of inventories under the FIFO method. -11- Results of Operations Results of Operations Results of Operations The Company's Sales and operating revenues increased 9.7% in 1995 compared to a 2.8% decrease in 1994. The Company's Sales and operating revenues and Costs and operating expenses include all Federal and State excise and other similar taxes which totaled $413.3 million, $380.6 million and $296.2 million in 1995, 1994 and 1993, respectively. The 1994 increase in excise taxes was due primarily to the inclusion of more products in the taxable base that were exempt from excise taxes in prior years. The 1995 increase in sales and operating revenues was due to a 5.8% increase in the average unit selling price of petroleum products and a 4.5% increase in petroleum product sales volumes. Additionally, there was an 8.6% increase in excise taxes and a $4.4 million or 5% increase in merchandise sales. The 1994 decrease was primarily attributable to a 5.7% decrease in petroleum product sales volumes resulting from planned reductions in operating runs due to deteriorating refinery gross margins in the third quarter of 1994 and a maintenance turnaround at the Pasadena refinery in the fourth quarter of 1994. Additionally, there was a 4.8% decrease in the average unit selling price of petroleum products. These decreases were partially offset by an increase in excise taxes as previously mentioned and a $5.8 million or 6.5% increase in merchandise sales. As previously mentioned, merchandise sales increased $4.4 million or 5% for the year ended December 31, 1995 compared to the same period in 1994, while merchandise gross profit increased $2.3 million or 11.5% for the year ended December 22 31, 1995 compared to the same period in 1994. Merchandise gross margin (merchandise gross profit as a percent of merchandise sales) increased from 23.3% to 24.7% for the years ended December 31, 1994 and 1995, respectively. These aggregate increases occurred despite a slight reduction in the number of operating units during the period, and are attributable to the Company's merchandise pricing program designed to increase per unit customer traffic and overall merchandise sales and gasoline volumes. A key element of the program includes the reduction of prices on certain items such as tobacco products and beverages. As a result of the strategy, aggregate merchandise gross profit, on a same store basis, increased 20.9% in 1995 as compared to 1994. Same store average monthly gasoline volumes and merchandise sales increased approximately 7% and 12%, respectively, in 1995 as compared to 1994. Gasoline sales accounted for 57.8% of total 1995 revenues (excluding excise taxes), while distillates and merchandise sales represented 24.2% and 6.8%, respectively. This compares to a dollar mix from sales of 55.2% gasoline, 28.6% distillates and 7.2% merchandise in 1994; and 56.4% gasoline, 30.4% distillates and 6.0% merchandise in 1993. The following table depicts the sales values of the principal classes of products sold by the Company, which individually contributed more than ten percent of consolidated sales and operating revenues (excluding excise taxes) during the last three years:
Sales of Principal Products Sales of Principal Products Sales of Principal Products millions of dollars ________ 1995 _______ 1994 _______ 1993 Gasoline $839.4 $728.6 $817.6 No. 2 Fuel & Diesel 335.7 296.6 369.7
Costs and operating expenses increased 9.5% in 1995, after decreasing .2% in 1994. The 1995 increase was attributable to an increase in the average cost per barrel consumed of crude oil and feedstocks of $1.62 or 9.54%. Additionally, there were increases in volumes sold and in excise taxes as previously discussed. The 1994 decrease was due primarily to a decrease in volumes sold and to a decrease in the average cost per barrel consumed of crude oil and feedstocks of $1.21 or 9.54%. 23 These decreases were partially offset by increases in excise taxes. The results of operations were affected by the Company's use of the last-in, first-out (LIFO) method to value inventory which results in a better matching of current revenues and costs. The impact of LIFO was to decrease the Company's gross margins in 1995 and 1994 by $.12 per barrel ($6.7 million) and $.35 per barrel ($19.0 million), respectively, and to increase the Company's gross margins in 1993 by $.48 per barrel ($27.7 million). The 1995 LIFO impact is net of a $3 million gross margin increase resulting from a liquidation of LIFO inventory base year dollars. -12- The Company has instituted programs designed to manage refining profit margins by minimizing the Company's exposure to the risks of price volatility related to the acquisition, conversion and sale of crude oil and refined petroleum products. These programs include hedging activities such as the purchase and sale of futures and option contracts to offset the effects of fluctuations in the prices of crude oil and refined products. Such hedging activities are subject to specific policies and guidelines established by the Company and are reviewed by the Margin Management Committee composed of senior management and chaired by the Company's Chief Executive Officer. The Company's policy is to manage its crude oil acquisition, refining, and product sales on a daily basis to achieve, at a minimum, prevailing margins available to comparable Gulf Coast refiners and, where appropriate, to pursue forward hedging opportunities which lock in attractive returns. The number of barrels of crude oil and refined products covered by such hedging activities varies from time to time within certain limits established by the Margin Management Committee. The Company's hedging activities are intended to reduce volatility and provide an acceptable profit margin on a portion of production, however, the use of such a program can limit the Company's ability to participate in an improvement in related product profit margins. Total refinery production was: 154,800 barrels per day (bpd) in 1995, yielding 90,700 bpd of gasoline (58.6%) and 46,200 bpd of distillates (29.8%); 147,700 barrels per day (bpd) in 1994, yielding 79,800 bpd of gasoline (54.0%) and 48,200 bpd of distillates (32.6%); and 158,400 bpd in 1993, yielding 86,300 bpd of gasoline (54.5%) and 51,700 bpd of distillates (32.6%). Due to deteriorating 24 refinery gross margins which occurred during the third quarter of 1994, the Company reduced operating runs at its Pasadena refinery. Additionally, in 1994, overall refinery production was reduced by the fourth quarter's maintenance turnaround of the Pasadena refinery's Fluid Catalytic Cracking Unit (FCCU) and related units. The FCCU is the primary gasoline facility. The turnaround was initially scheduled to be performed in the first quarter of 1995 but was performed in 1994 due to depressed refinery gross margins. Refinery production was slightly impacted in 1993 by a scheduled maintenance turnaround in the second quarter at the Tyler refinery. Due to poor refining margins late in the fourth quarter of 1993, the Company announced that it had reduced runs at its Pasadena refinery by 20%. The Company's finished product requirements in excess of its refinery yields and existing inventory levels are acquired through its exchange agreements or outright purchases. Selling and administrative expenses decreased 2.3% in 1995 after decreasing 7.6% in 1994. The 1995 decrease was primarily due to decreased corporate level administrative costs as a result of certain cost cutting programs initiated by the Company. The 1994 decrease resulted primarily from decreased store level and marketing administrative costs associated with the sale or closing throughout 1993 and in early 1994 of retail marketing units which were either not profitable or did not fit with the Company's strategic direction, and cost reductions related to the company's administrative functions. The 1993 decrease is also attributable to reduced costs associated with the closing of retail units, and the consolidation of certain marketing field operations. At December 31, 1995, the Company operated 267 retail gasoline facilities and 81 convenience stores compared to 258 retail gasoline facilities and 99 convenience stores at December 31, 1994 and 249 retail gasoline facilities and 127 convenience stores at December 31, 1993. Selling and administrative expenses in 1994 include $.5 million in reorganization costs, while reorganization and office closure costs of $.7 million are included in 1993. Operating costs and expenses in 1995, 1994 and 1993 include $3.2 million, $1.9 million and $6.3 million, respectively, related to environmental matters and $3.7 million, $3.0 million and $2.4 million, respectively, related to retail units that have been closed. Operating costs and expenses in 1995, 1994 and 1993 also include $.1 million, $1.6 million and $1.8 million, respectively, of accrued non-environmental casualty related costs. 25 Depreciation and amortization decreased 14.1% in 1995. The 1995 decreases were primarily the result of decreases in refinery turnaround amortization due to a $10.4 million decrease in the total underlying value of the Pasadena Refinery FCCU turnaround being amortized in 1995 compared to the total underlying value of the FCCU turnaround that was being amortized in 1994. Depreciation and amortization in 1994 was comparable to 1993. The implementation of 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 121), effective October 1, 1995, decreased 1995 depreciation and amortization by $1.9 million. -13- The loss from Write-downs of property, plant and equipment of $80.5 million in 1995 is due to the initial adoption of SFAS 121 effective October 1, 1995. While all of the Company's long-lived assets are subject to the provisions of SFAS 121, circumstances indicated the carrying amount of assets used in the operation of the Tyler refinery would not be recoverable. As such, a write-down to estimated fair value was recorded. The estimated fair value of these assets was determined by an independent appraisal. There were no indications of possible impairment relating to the remainder of the Company's long-lived assets. The loss of $16.8 million from Write-downs of property, plant and equipment in 1994 resulted from the abandonment of a project to construct a hydrodesulphurization unit at the Pasadena refinery. The loss of $2.3 million from Sales and abandonments in 1993 relates primarily to the write-down of the Sulphur Unit at the Pasadena refinery. Interest and other income in 1995 increased $3.8 million compared to 1994. The 1995 increase was primarily the result of increases in income of $2.3 million from the Company's wholly-owned insurance subsidiaries. Additionally, interest income increased $1.4 million due to an increase in the average daily cash invested of $9.5 million and to an increase in the average daily rate on cash invested of 196 basis points. Interest and other income in 1994 was comparable to 1993. Interest expense increased $6.9 million in 1995 compared to 1994 and $.6 million in 1994 compared to 1993. The 1995 increase was due primarily to an increase in the average daily cash borrowed of $59.4 million . At December 31, 1995, there were 26 additional outstanding borrowings of $31.9 million compared to December 31, 1994. The additional outstanding borrowings are due to the sale of $125 million of Unsecured 10.875% Senior Notes in January 1995 net of the repayment of the outstanding balance of the unsecured 10.42% Senior Notes and Unsecured Credit Agreement outstanding on December 31, 1994. The 1994 increase includes $.4 million related to the Purchase Money Lien (Money Lien). There was no interest expense related to the Money Lien in 1993. As previously discussed, in January 1995, the Company retired the remaining outstanding principal balance of the unsecured 10.42% Senior Notes (including a prepayment premium of $3.4 million) with the proceeds from the sale of $125 million of Unsecured 10 875% Senior Notes due February 1, 2005 which resulted in a net extraordinary loss in the first quarter of 1995 of $3.3 million (after reduction for the income benefit of $2 million). Liquidity and Capital Resources Liquidity and Capital Resources Liquidity and Capital Resources The Company's cash and cash equivalents were $12.8 million lower at year-end 1995 than at year-end 1994. The decrease was attributable to $37.4 million of net cash outflows from investment activities which were partially offset by cash inflows from financing activities and cash provided by operating activities of $20.4 million and $4.2 million, respectively. Net cash outflows from investment activities in 1995 consisted principally of capital expenditures of $41 million (which includes $18.4 million for refinery operations and $20.6 million related to the marketing area) and $3 million of refinery deferred turnaround costs. The total outflows from investment activities were partially offset by an increase in cash of $6.8 million resulting from the consolidation of the Company's wholly-owned insurance subsidiaries. Prior to 1995, these wholly-owned insurance subsidiaries were accounted for under the equity method, and, as such, the cash held by these subsidiaries was not included in the consolidated cash balance. Proceeds from the sale of property, plant and equipment of $6.4 million also offset total outflows from investing activities. Net cash provided by financing activities in 1995 relates to $20 million in net proceeds received from debt and credit agreement borrowings due primarily to the issuance in January 1995 of $125 million of 10.875% Unsecured Senior Notes net of amounts used to repay outstanding balances relating to the unsecured 10.42% Senior Notes 27 (including a prepayment premium) and Unsecured Credit Agreement borrowings. -14- The positive $4.2 million cash generated from operating activities in 1995 includes $3.4 million relating to working capital, resulting primarily from net decreases in accounts receivable and recoverable income taxes as well as increases in accrued liabilities. Partially offsetting these working capital inflows were net decreases in crude oil and refined products payables and increases in the value of crude oil and finished products inventories. The timing of collection of the Company's receivables is impacted by the specific type of sale and associated terms. Bulk sales of finished products are typically sold in 25,000 barrel increments with three day payment terms. Rack sales at the Company's product terminals are sold by truckload (approximately 8,000 gallons) with seven to ten day payment terms. While the Company's overall sales are aligned to its refining capability, receivables can vary between periods depending upon the specific type of sale and associated payment terms for sales near the end of a reporting period. Cash provided by operating activities was also impacted by cash outflows of $4.1 million of capitalized loan expenses related to the issuance of the Company's Unsecured 10.875% Senior Notes in January 1995 and to the new Unsecured Credit Agreement arranged in September 1995. The ratio of current assets to current liabilities was 1.22:1 at December 31, 1995 and 1994. If FIFO values had been used for all inventories, assuming an incremental effective income tax rate of 38.5%, the ratio of current assets to current liabilities would have been 1.35:1 at December 31, 1995 and 1.32:1 at December 31, 1994. Like other petroleum refiners and marketers, the Company's operations are subject to extensive and rapidly changing federal and state environmental regulations governing air emissions, waste water discharges, and solid and hazardous waste management activities. The Company's policy is to accrue environmental and clean-up related costs of a non-capital nature when it is both probable that a liability has been incurred and that the amount can be reasonably estimated. While it is often extremely difficult to reasonably quantify future environmental related expenditures, the Company anticipates that a substantial capital investment will be required over the next several years to comply with existing regulations. The Company believes that cash provided from its operating activities, together with other available sources 28 of liquidity, including the remaining proceeds of the $125 million of Unsecured 10.875% Senior Notes and borrowings under the Credit Facility, will be sufficient to fund these costs. The Company had recorded a liability of approximately $16.1 million as of December 31, 1995 to cover the estimated costs of compliance with environmental regulations which are not anticipated to be of a capital nature. The liability of $16.1 million includes accruals for issues extending past 1997. Environmental liabilities are subject to considerable uncertainties which affect the Company's ability to estimate its ultimate cost of remediation efforts. These uncertainties include the exact nature and extent of the contamination at each site, the extent of required cleanup efforts, varying costs of alternative remediation strategies, changes in environmental remediation requirements, the number and financial strength of other potentially responsible parties at multi- party sites, and the identification of new environmental sites. As a result, charges to income for environmental liabilities could have a material effect on results of operations in a particular quarter or year as assessments and remediation efforts proceed or as new claims arise. However, management is not aware of any matters which would be expected to have a material adverse effect on the Company. During the years 1996-1998, the Company estimates environmental expenditures at the Pasadena and Tyler refineries, of at least $6.9 million and $13.5 million, respectively. Of these expenditures, it is anticipated that $4.4 million for Pasadena and $8.1 million for Tyler will be of a capital nature, while $2.5 million and $5.4 million, respectively, will be related to previously accrued non-capital remediation efforts. At the Company's marketing facilities, capital expenditures relating to environmental improvements are planned totaling approximately $25.5 million through 1998. As discussed in Note C of Notes to Consolidated Financial Statements on page 26 of this report, effective September 25, 1995, the Company entered into a new two year Revolving Credit Facility. Management believes the new agreement will adequately provide anticipated working capital requirements as well as support future growth opportunities. As a result of a strong balance sheet and overall favorable credit relationships, the Company has been able to maintain open lines of credit with its major suppliers. Under the Revolving Credit Agreement (Credit Agreement), the Company had outstanding as of December 31, 1995, irrevocable standby letters of credit in the principal amount of $28.7 million for purposes in 29 the ordinary course of business. At December 31, 1995, the Company was in compliance with all covenants and provisions of the Credit Agreement. Meeting the covenants imposed by the Credit Agreement is dependent, among other things, upon the level of future earnings. The Company reasonably expects to continue to be in compliance with the covenants imposed by the Credit Agreement over the next twelve months. -15- At the Company's option, up to $37.5 million of the Unsecured 10.875% Senior Notes (Notes) may be redeemed at 110.875% of the principal amount at any time prior to February 1, 1998. After such date, they may not be redeemed until February 1, 2000 when they are redeemable at 105.438% of the principal amount, and thereafter at an annually declining premium over par until February 1, 2003 when they are redeemable at par. The Notes were issued under an Indenture which includes certain restrictions and limitations customary with senior indebtedness of this type including, but not limited to, the payment of dividends and the repurchase of capital stock. There are no sinking fund requirements on the Notes. Also as discussed in Note C of Notes to Consolidated Financial Statements, in the fourth quarter of 1995, the Company terminated all outstanding interest rate swap agreements which had effectively converted $47.5 million of its fixed rate debt to variable interest rate debt. At December 31, 1995, the Company has recorded a deferred gain of $1.4 million which will be amortized into income over the remaining terms of the original swap agreements which range from 1996 to 1998. The Company may utilize interest rate swaps in the future to manage the cost of funds. The Purchase Money Lien (Money Lien) discussed in Note C of Notes to Consolidated Financial Statements on page 26 of this report, is secured by certain service station and terminal equipment and office furnishings having a cost basis of $6.5 million. The effective rate for the Money Lien is 6.65%. Ninety percent of the principal is payable in 60 equal monthly installments which commenced in February 1994 with a balloon payment of 10% of the principal payable in January 1999. As a result of Crown's strategy of obtaining a greater balance between gasoline production and retail marketing, 15 Conoco units were purchased in August 1995, 13 in North Carolina and 2 in Georgia. The high growth area of Greensboro, N.C. represents the largest concentration of these with 30 9 additional locations bringing our presence in the state of North Carolina to 74 units. In January 1995, the Company retired the remaining outstanding principal balance of the unsecured 10.42% Senior Notes (including a prepayment premium of $3.4 million) with the proceeds from the sale of $125 million of Unsecured 10.875% Senior Notes due February 1, 2005 which resulted in a net extraordinary loss in the first quarter of 1995 of $3.3 million. The Company's management is involved in a continual process of evaluating growth opportunities in its core business as well as its capital resource alternatives. Total capital expenditures and deferred turnaround costs in 1996 are projected to approximate $66.6 million. The capital expenditures relate primarily to planned enhancements at the Company's refineries, retail unit improvements and to company-wide environmental requirements. The Company believes that cash provided from its operating activities, together with other available sources of liquidity, including the remaining proceeds of the $125 million of Unsecured 10.875% Senior Notes (Notes) and the Unsecured Credit Agreement, will be sufficient over the next several years to make required payments of principal and interest on its debt, including interest payments due on the Notes, permit anticipated capital expenditures and fund the Company's working capital requirements. Any major acquisition would likely require a combination of additional debt and equity. The Company places its temporary cash investments in high credit quality financial instruments which are in accordance with the covenants of the Company's financing agreements. These securities mature within ninety days, and, therefore, bear minimal risk. The Company has not experienced any losses on its investments. The Company faces intense competition in all of the business areas in which it operates. Many of the Company's competitors are substantially larger and therefore, the Company's earnings can be affected by the marketing and pricing policies of its competitors, as well as changes in raw material costs. Merchandise sales and operating revenues from the Company's convenience stores are seasonal in nature, generally producing higher sales and net income in the summer months than at other times of the year. Gasoline sales, both at the Crown multi-pumps and convenience stores, are also somewhat seasonal in nature and, therefore, related revenues may vary during the year. The seasonality does not, however, negatively impact 31 the Company's overall ability to sell its refined products. -16- The Company maintains business interruption insurance to protect itself against losses resulting from shutdowns to refinery operations from fire, explosions and certain other insured casualties. Business interruption coverage begins for such losses at the greater of $5 million or shutdowns for periods in excess of 25 days. The Company has disclosed in Note I of Notes to Consolidated Financial Statements on page 31 of this report, various contingencies which involve litigation, environmental liabilities and examinations by the Internal Revenue Service. Depending on the occurrence, amount and timing of an unfavorable resolution of these contingencies, the outcome of which cannot reasonably be determined at this time, it is possible that the Company's future results of operations and cash flows could be materially affected in a particular quarter or year. However, the Company has concluded, after consultation with counsel, that there is no reasonable basis to believe that the ultimate resolution of any of these contingencies will have a material adverse effect on the Company. Additionally, as discussed in Item 3. Legal Proceedings on page 8 of this report, the Company's collective bargaining agreement at its Pasadena refinery expired on February 1, 1996, and on February 5, 1996, the Company invoked a lock- out of employees in the collective bargaining unit. The Company has been operating the Pasadena refinery without interruption since the lock-out with management and supervisory personnel and intends to continue full operations until an agreement is reached with the collective bargaining unit. Effects of Inflation and Changing Prices Effects of Inflation and Changing Prices Effects of Inflation and Changing Prices The Company's Consolidated Financial Statements are prepared on the historical cost method of accounting and, as a result, do not reflect changes in the dollar's purchasing power. In the capital intensive industry in which the Company operates, the replacement costs for its properties would generally far exceed their historical costs. As a result, depreciation would be greater if it were based on current replacement costs. However, since the replacement facilities would reflect technological improvements and changes in business strategies, such facilities would be expected to be more productive and versatile than existing facilities, thereby increasing profits and 32 mitigating increased depreciation and operating costs. In recent years, crude oil and refined petroleum product prices have been flat to falling which has resulted in a net reduction in working capital requirements. If the prices increase in the future, the Company will expect a related increase in working capital needs. -17- Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
CONSOLIDATED BALANCE SHEETS CONSOLIDATED BALANCE SHEETS CONSOLIDATED BALANCE SHEETS Crown Central Petroleum Corporation and Subsidiaries (Thousands of dollars) December 31 _____ _____ ________ 1995 ________ 1994 Assets Assets Assets Current Assets Current Assets Current Assets Cash and cash equivalents ........ $ 42,045 $ 54,868 Accounts receivable, less allowance for doubtful accounts (1995--$1,531; 105,799 128,984 1994--$1,908)...................... Recoverable income taxes ......... 4,137 16,075 Inventories ...................... 96,025 94,933 Other current assets ............. ____ ____ _____ 2,595 _____ 1,264 Total Current Assets Total Current Assets Total Current Assets ............ 250,601 296,124 Investments and Deferred Charges Investments and Deferred Charges Investments and Deferred Charges... 30,633 40,125 Property, Plant and Equipment Property, Plant and Equipment Property, Plant and Equipment ............................. Land 45,856 43,862 Petroleum refineries ............. 364,806 449,197 Marketing facilities ............. 189,272 183,638 Pipelines and other equipment .... ___ ___ 33 ______ 24,404 ______ 22,507 624,338 699,204 Less allowance for depreciation . _ _ _______ 322,358 _______ 331,377 Net Property, Plant and Net Property, Plant and Net Property, Plant and 301,980 367,827 Equipment Equipment Equipment.......................... ________ ________ ______ ______ ________ $583,214 ________ $704,076 ________ ________ See notes to consolidated financial statements
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CONSOLIDATED BALANCE SHEETS CONSOLIDATED BALANCE SHEETS CONSOLIDATED BALANCE SHEETS Crown Central Petroleum Corporation and Subsidiaries (Thousands of dollars) December 31 Liabilities and Stockholders' Equity Liabilities and Stockholders' Equity Liabilities and Stockholders' Equity _________ 1995 _________ 1994 Current Liabilities Current Liabilities Current Liabilities Accounts payable: Crude oil and refined products $112,036 .. $150,877 Other ........................... 24,287 29,988 Accrued liabilities ............... 66,788 51,500 Current portion of long-term debt _____ . ___ _____ 1,559 ______ 10,062 Total Current Liabilities Total Current Liabilities Total Current Liabilities ......... 204,670 242,427 Long-Term Debt Long-Term Debt Long-Term Debt...................... 128,506 96,632 Deferred Income Taxes Deferred Income Taxes Deferred Income Taxes............... 27,995 73,402 34 Other Deferred Liabilities Other Deferred Liabilities Other Deferred Liabilities.......... 32,548 31,154 Common Stockholders' Equity Common Stockholders' Equity Common Stockholders' Equity Class A Common Stock--par value $5 per share: Authorized--7,500,000 shares; issued and outstanding shares-- 4,817,392 in 1995 and 1994 ........ 24,087 24,087 Class B Common Stock--par value $5 per share: Authorized--7,500,000 shares; issued and outstanding shares-- 5,135,558 in 1995 and 4,985,706 in 25,678 24,929 ................................ 1994 Additional paid-in capital ........ 92,249 90,549 Unearned restricted stock ......... (3,733) ) (1,266 Retained Earnings ................. __________ 51,214 __ _______ 122,162 Total Common Stockholders' Equity Total Common Stockholders' Equity Total Common Stockholders' Equity 189,495 . 260,461 _________ _________ _____ _____ ________ $583,214 ________ $704,076 ________ ________ See notes to consolidated financial statements
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CONSOLIDATED STATEMENTS OF OPERATIONS CONSOLIDATED STATEMENTS OF OPERATIONS CONSOLIDATED STATEMENTS OF OPERATIONS Crown Central Petroleum Corporation and Subsidiaries (thousands of dollars, except per share amounts) Year Ended December 31 ______ ______ ______ ________ 1995 ________ 1994 ________ 1993 _ Revenues Revenues Revenues Sales and operating revenues 35 (including excise taxes of 1995--$413,290; 1994--$380,610, $1,864,63 $1,699,16 $1,747,41 1993--$296,228)........................ 9 8 1 Operating Costs and Expenses Operating Costs and Expenses Operating Costs and Expenses Costs and operating expenses ......... 1,753,886 1,602,104 1,604,696 Selling and administrative expenses .. 82,792 84,754 91,714 Depreciation and amortization ........ 36,640 42,644 41,873 Sales, abandonments and write-down of property, plant and equipment: Write-down of property, plant 80,524 16,841 and equipment ........................ Sales and abandonments of ________ _______ ______ property, plant and equipment ........ ) _____ (311 ) ______ (840 _______ 2,331 _ _ _ _________ 1,953,531 _________ 1,745,503 _________ 1,740,614 Operating (Loss) Income Operating (Loss) Income Operating (Loss) Income................ ) (88,892 (46,335 6,797 ) Interest and other income ............ 5,351 1,502 1,461 Interest expense ..................... _____ ______ _____ ) _______ (14,948 ) _ ______ (8,003 ________ (7,451) (Loss) Income Before Income Taxes and (Loss) Income Before Income Taxes and (Loss) Income Before Income Taxes and ) (98,489 (52,836 807 ) Extraordinary Item Extraordinary Item Extraordinary Item..................... Income Tax (Benefit) Expense Income Tax (Benefit) Expense Income Tax (Benefit) Expense........... _____ ____ ____ ) _______ (31,122 ) _______ (17,430 _________ 5,107 (Loss) Before Extraordinary Item (Loss) Before Extraordinary Item (Loss) Before Extraordinary Item....... ) (67,367 (35,406 (4,300 ) ) Extraordinary (Loss) from Early Extraordinary (Loss) from Early Extraordinary (Loss) from Early Extinguishment Extinguishment Extinguishment of Debt (net of income tax benefit of of Debt (net of income tax benefit of of Debt (net of income tax benefit of ________ ( ________ ________ $2,039) $2,039) $2,039)................................ _____ 3,257__ ) ________ ________ Net (Loss) Net (Loss) Net (Loss)............................. ____ $ ___ $ ______ $ ____ ___ ______ _______ (70,624) ) _______ (35,406 _ ______ (4,300 ) _______ _______ _______ Net (Loss) Per Share: Net (Loss) Per Share: Net (Loss) Per Share: (Loss) Before Extraordinary Item (Loss) Before Extraordinary Item (Loss) Before Extraordinary Item....... $ $ $ ) (6.95 (3.63 ) (.44) Extraordinary (Loss) from Early Extraordinary (Loss) from Early Extraordinary (Loss) from Early 36 Extinguishment of Debt Extinguishment of Debt Extinguishment of Debt ............... ________ ________ ________ ) _______ (.33 ________ ________ Net (Loss) Per Share Net (Loss) Per Share Net (Loss) Per Share................... ________ $ _______ $ ________ $ ________ _______ ________ _____ (7.28 ) __ ) __ _____ (3.63 __ _____ (.44 ) _______ _______ _______ See notes to consolidated financial statements
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CONSOLIDATED STATEMENTS OF CHANGES IN COMMON STOCKHOLDERS' EQUITY CONSOLIDATED STATEMENTS OF CHANGES IN COMMON STOCKHOLDERS' EQUITY CONSOLIDATED STATEMENTS OF CHANGES IN COMMON STOCKHOLDERS' EQUITY Crown Central Petroleum Corporation and Subsidiaries (thousands of dollars, except per share amounts) Class A Class BAdditional Unearned _____________________ Common Stock ________________ Common Stock ____ ____ Paid-In Restricted Retained ___________ Shares ______ Amount ___________ Shares ______ Amount _ _________ Capital ___________ Stock ________ Earnings ___________ Total Balance at January 1, 1993 Balance at January 1, 1993 Balance at January 1, 1993 4,817,392 5,015,206 $24,087 $25,076 $91,870 $162,241 $303,274 Net (loss) for 1993 (4,300 (4,300) ) Adjustment to record minimum pension liability, net of deferred income tax benefit of $335 ________________ _____________ ________________ ______ _____ _____________ ___________ (621 ) ___________ (621 ) Balance at December 31, 1993 Balance at December 31, 1993 Balance at December 31, 1993 4,817,39224,0875,015,206 25,076 91,870 157,320 298,353 Net (loss) for 1994 (35,406 ) (35,406 ) 37 Adjustment to minimum pension liability recorded in 1993, net of deferred income tax benefit of $133 248 248 Purchases of Common Stock (135,000 (2,059 ) (675 ) ) (2,734 ) Stock registered to participants of stock incentive plans 105,500 528 $(1,810 1,282 ) Market value adjustments to Unearned Restricted Stock _________________ ______________ __________ ______ ____________ __ _________ (544 _________ 544 ) _ _______________ ______________ Balance at December 31, 1994 Balance at December 31, 1994 Balance at December 31, 1994 4,817,392 4,985,706 24,087 24,929 90,549 (1,266 122,162 ) 260,461 Net (loss) for 1995 ) (70,624 (70,624 ) Adjustment to minimum pension liability recorded in 1993, net of deferred income tax benefit of $174 (324) (324 ) Stock registered to participants of stock incentive plans 149,800 749 (2,022 1,273 ) Market value adjustments to Unearned Restricted Stock 445 ) (445 Other ________________ _____________ ______________ 52 ______ ______ ___________ (18 ____________ ) _______________ _____________ (18 ) Balance at December 31, 1995 Balance at December 31, 1995 Balance at December 31, 1995 _________ 4,817,392_______ $24,087_________ 5,135,558 _______ $25,678 _______ $92,249 _________ _______ _________ _______ _______ _______ $(3,733 )_________ $ 51,214 ________ $189,495 _______ _________ ________ See notes to consolidated financial statements
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CONSOLIDATED STATEMENTS OF CASH FLOWS CONSOLIDATED STATEMENTS OF CASH FLOWS CONSOLIDATED STATEMENTS OF CASH FLOWS Crown Central Petroleum Corporation and Subsidiaries (thousands of dollars) 38 Year Ended December 31 _______ 1995 _______ 1994 _______ 1993 __ _ _ Cash Flows From Operating Cash Flows From Operating Cash Flows From Operating Activities Activities Activities Net (loss)......................... $ $ $ (70,624 (35,406 ) (4,300 ) ) Reconciling items from net (loss) to net cash provided by operating activities: Depreciation and amortization 36,640 .... 42,644 41,873 loss on sales of property, (Gain) plant and equipment ................... (311 (840 ) 2,331 ) Write-down from implementation of 80,524 SFAS No. 121 Write-down of Pasadena Refinery 16,841 HDS equipment...................... Equity (earnings) loss in (2,369) (651 880 ) unconsolidated subsidiaries........ Deferred income taxes ............ (25,986 (2,303 ) (4,202 ) ) Other deferred items ............. 1,880 830 412 Extraordinary loss ............... 3,257 Changes in assets and liabilities Accounts receivable .............. 23,185 (37,571 21,507 ) Inventories ...................... (1,0 (8,122 ) 92 (13,357 ) ) Other current assets ............. (1,331 (502 ) 641 ) Crude oil and refined products (38,841 46,711 ) (30,250) ............................ payable Other accounts payable ........... (5,701 9,488 ) 2,713 Accrued liabilities .............. 15,288 1,355 1,623 Income taxes payable ............ (3,264) 3,264 Recoverable and deferred income (6,245 (21,721 ) ) 6,856 taxes.............................. Deferred financing costs ......... _____ _______ _______ ______ (4,102 _______ ) _______ Net Cash Provided by Operating Net Cash Provided by Operating Net Cash Provided by Operating ______ ______ ____ Activities Activities Activities......................... _____ 4,172 _____ 8,602 ______ 28,878 Cash Flows From Investment Cash Flows From Investment Cash Flows From Investment Activities Activities Activities Capital expenditures ............. (41,010) (34,359) (40,860) Proceeds from sales of property, 6,359 4,868 5,515 plant and equipment................ Investment in subsidiaries ....... 6,778 (101) ) (4 Deferred turnaround maintenance _____ ___ _____ and other.......................... 39 ______ (9,545) _______ (13,390 ______ (4,678 ) ) Net Cash (Used in) Investment Net Cash (Used in) Investment Net Cash (Used in) Investment ___ ___ ___ Activities Activities Activities......................... _______ (37,418 _______ (42,982 ) _______ (40,027 ) ) Cash Flows From Financing Cash Flows From Financing Cash Flows From Financing Activities Activities Activities Proceeds from debt and credit 142,711 64,220 5,472 agreement borrowings............... Repayments of debt and credit (122,755 (24,199 (376 ) ) agreement borrowings............... ) Proceeds from interest rate swap 2,403 terminations....................... Net (issuances) repayments of 467 167 ) (60 long-term notes receivable......... Purchases of common stock ........ _______ _____ _______ _______ ______ (2,734 _______ ) _ Net Cash Provided by Financing Net Cash Provided by Financing Net Cash Provided by Financing _____ ____ _____ Activities Activities Activities ....................... ______ 20,423 ______ 37,227 _______ 7,666 Net (Decrease) Increase in Cash Net (Decrease) Increase in Cash Net (Decrease) Increase in Cash (12,823 2,84 ) (3,483 7 ) and Cash Equivalents and Cash Equivalents and Cash Equivalents............... Cash and Cash Equivalents at Cash and Cash Equivalents at Cash and Cash Equivalents at _____ ____ ____ Beginning of Year Beginning of Year Beginning of Year.................. ______ 54,868 ______ 52,021 ______ 55,504 Cash and Cash Equivalents at End of Cash and Cash Equivalents at End of Cash and Cash Equivalents at End of ____ $ ___ $ ___ $ Year Year Year ____ ___ ___ ______ 42,045 ______ 54,868 ______ 52,021 ______ ______ ______ Supplemental Disclosures of Cash Supplemental Disclosures of Cash Supplemental Disclosures of Cash Flow Information Flow Information Flow Information Cash paid during the year for: Interest (net of amount $ $ $ capitalized)....................... 19,670 6,608 4,249 Income taxes .................... 9,490 6,124 4,329 See notes to consolidated financial statements
-22- 40 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Crown Central Petroleum Corporation and Subsidiaries Note A--Description of Business and Summary of Note A--Description of Business and Summary of Note A--Description of Business and Summary of Accounting Policies Accounting Policies Accounting Policies _______________________ Description of Business: Crown Central Petroleum Corporation and subsidiaries (the Company) operates primarily in one business segment as an independent refiner and marketer of petroleum products, including petrochemical feedstocks. The Company operates two refineries, one located near Houston, Texas with a rated capacity of 100,000 barrels per day of crude oil and another in Tyler, Texas with a rated capacity of 52,000 barrels per day of crude oil. Its principal business is the wholesale and retail sale of its products through 15 product terminals located on three major product pipelines along the Gulf Coast and the Eastern Seaboard and in the Central United States and through a network of 348 gasoline stations, convenience stores and mini-marts located in the Mid-Atlantic and Southeastern United States. Crude oil and refined products are the Company's principle raw materials and finished goods, respectively. The price of crude oil and refined products are subject to worldwide market forces of supply and demand. Prices can be volatile and fluctuations influence the Company's financial results. Employment at the Company's Pasadena and Tyler refineries represent approximately 12% and 8%, respectively, of the Company's total employment at December 31, 1995. Additionally, approximately 69% of the Pasadena refinery employees and approximately 66% of the Tyler refinery employees are subject to collective bargaining agreements. The Company's collective bargaining agreement with the Oil Chemical & Atomic Workers Union covering employees at the Pasadena refinery expired on February 1, 1996. Negotiations for a new agreement are currently under way. Locot Corporation, a wholly-owned subsidiary of the Company, is the parent company of La Gloria Oil and Gas Company (La Gloria) which operates the Tyler refinery, a pipeline gathering system in Texas and product terminals located along the Texas Eastern Pipeline system. 41 F Z Corporation, a wholly-owned subsidiary of the Company, is the parent company of two convenience store chains operating in six states, retailing both merchandise and gasoline. The following summarizes the significant accounting policies and practices followed by the Company: ___________________________ Principles of Consolidation: The consolidated financial statements include the accounts of Crown Central Petroleum Corporation and all significant majority-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated. The Company's investment in T. B. and Company, Inc. (Formerly Tongue, Brooks and Company, Inc.) and Tiara Insurance Company, two wholly-owned insurance subsidiaries, which prior to 1995 had been accounted for using the equity method, are now fully consolidated. The impact of consolidating these subsidiaries was not material. ________________ Use of Estimates: The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. _________________________ Cash and Cash Equivalents: Cash in excess of daily requirements is invested in marketable securities with maturities of three months or less. Such investments are deemed to be cash equivalents for purposes of the statements of cash flows. ___________________ Accounts Receivable: The majority of the Company's accounts receivable relate to sales of petroleum products to third parties operating in the petroleum industry. ___________ Inventories: The Company's crude oil, refined products, and convenience store merchandise and gasoline inventories are valued at the lower of cost (last-in, first-out) or market with the exception of crude oil inventory held for resale which is valued at the lower of cost (first-in, first-out) or market. Materials and supplies inventories are valued at cost. Incomplete exchanges of crude oil and refined products due the Company or owing to other companies are reflected in the inventory accounts. 42 -23- _____________________________ Property, Plant and Equipment: Property, plant and equipment is carried at cost. Costs assigned to property, plant and equipment of acquired businesses are based on estimated fair value at the date of acquisition. Depreciation and amortization of plant and equipment are primarily provided using the straight-line method over estimated useful lives. Construction in progress is recorded in property, plant and equipment. Expenditures which materially increase values, change capacities or extend useful lives are capitalized in property, plant and equipment. Routine maintenance, repairs and replacement costs are charged against current operations. At intervals of two or more years, the Company conducts a complete shutdown and inspection of significant units (turnaround) at its refineries to perform necessary repairs and replacements. Costs associated with these turnarounds are deferred and amortized over the period until the next planned turnaround, which generally ranges from 24 to 48 months. Upon sale or retirement, the costs and related accumulated depreciation or amortization are eliminated from the respective accounts and any resulting gain or loss is included in income. In March 1995, the Financial Accounting Standards Board issued 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 121). SFAS 121 requires that long-lived assets and certain identifiable intangibles, including goodwill, to be held and used by an entity, be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset(s) may not be recoverable. The Company has chosen to adopt SFAS 121 effective October 1, 1995. The decline in operating margins and continuing operating losses were indicators of potential impairment at the Company's Tyler refinery. The estimated undiscounted cash flows anticipated from operating this refinery indicated that a write- down to fair market value was required under SFAS 121. This write-down from the initial adoption of SFAS 121 resulted in a charge to income before income taxes of $80.5 million which is included in the Statement of Operations as Write-downs of property, plant and equipment. The estimated fair 43 value of these assets was determined by an independent appraisal. ___________________ Environmental Costs: The Company conducts environmental assessments and remediation efforts at multiple locations, including operating facilities, and previously owned or operated facilities. Estimated closure and post-closure costs for active, refinery and finished product terminal facilities are not recognized until a decision for closure is made. Estimated closure and post-closure costs for active and operated retail marketing facilities and costs of environmental matters related to ongoing refinery, terminal and retail marketing operations are recognized as follows. Expenditures for equipment necessary for environmental issues relating to ongoing operations are capitalized. The Company accrues environmental and clean-up related costs of a non-capital nature when it is both probable that a liability has been incurred and that the amount can be reasonably estimated. Accruals for losses from environmental remediation obligations generally are recognized no later than completion of the remediation feasibility study. Estimated costs, which are based upon experience and assessments, are recorded at undiscounted amounts without considering the impact of inflation, and are adjusted periodically as additional or new information is available. ____________________________ Sales and Operating Revenues: Sales and operating revenues and Costs and operating expenses include excise and other similar taxes. Resales of crude oil are recorded net of the related crude oil cost (first-in, first-out) in sales and operating revenues. _______________________ Interest Capitalization: Interest costs incurred during the construction and preoperating stages of significant construction or development projects is capitalized and subsequently amortized by charges to earnings over the useful lives of the related assets. ________________________ Amortization of Goodwill: The excess purchase price of acquisitions of businesses over the estimated fair value of assets acquired is being amortized on a straight-line basis over 20 years. ____________________________________________ Financial Instruments and Hedging Activities - The Company periodically enters into interest rate swap agreements to effectively manage the cost of 44 borrowings. All interest rate swaps are only subject to market risk as interest rates fluctuate. For interest rate swaps designated to the Company's long-term debt and accounted for as a hedge, the net amounts payable or receivable from periodic settlements under outstanding interest rate swaps are included in interest expense. Realized gains and losses from terminated interest rate swaps are deferred and amortized into interest expense over the shorter of the term of the underlying debt or the remaining term of the original swap agreement. Settlement of interest rate swaps involves the receipt or payment of cash on a periodic basis during the duration of the contract, or upon the Company's termination of the contract, for the differential of the interest rates swapped over the term of the contract. -24- Other instruments are used to minimize the exposure of the Company's refining margins to crude oil and refined product price fluctuations. Hedging strategies used to minimize this exposure include fixing a future margin between crude oil and certain finished products and also hedging fixed price purchase and sales commitments of crude oil and refined products. Futures, forwards and exchange traded options entered into with commodities brokers and other integrated oil and gas companies are utilized to execute the Company's strategies. These instruments generally allow for settlement at the end of their term in either cash or product. Net realized gains and losses from these hedging strategies are recognized in costs and operating expenses when the associated refined products are sold. Unrealized gains and losses represent the difference between the market price of refined products and the price of the derivative financial instrument, inclusive of refining costs. Individual transaction unrealized gains and losses are deferred in inventory and other current assets and liabilities to the extent that the associated refined products have not been sold. A hedging strategy position generating an overall net unrealized loss is recognized in costs and operating expenses. While the Company's hedging activities are intended to reduce volatility while providing an acceptable profit margin on a portion of production, the use of such a program can limit the Company's ability to participate in an improvement in related refined product profit margins. 45 ___________ Credit Risk - The Company is potentially subjected to concentrations of credit risk with accounts receivable, interest rate swaps, and futures, forwards and exchange traded options for crude oil and finished products. Because the Company has a large and diverse customer base with no single customer accounting for a significant percentage of accounts receivable, there was no material concentration of credit risk in these accounts at December 31, 1995. The Company evaluates the credit worthiness of the counterparties to interest rate swaps, and futures, forwards and exchange traded options and considers non- performance credit risk to be remote. The amount of exposure with such counterparties is generally limited to unrealized gains on outstanding contracts. ________________________ Stock Based Compensation - In October 1995, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 123 `` Accounting for Stock-Based Compensation,'' (SFAS 123). The new standard establishes a fair value based method of accounting for stock-based compensation plans. Although SFAS 123 encourages entities to adopt the fair value based method in place of the provisions of Accounting Principles Board Opinion No. 25 (APBO 25), it does not require adoption of the fair value method. Entities electing to continue applying the provisions of APBO 25 will be required to disclose, for each year for which an income statement is presented, the proforma net income and proforma earnings per share as if the fair value based accounting method prescribed by this Statement No. 123 had been used to account for stock-based compensation cost. The accounting provisions of SFAS 123, if elected, are effective for transactions entered into after December 15, 1995. The disclosure requirements of this Statement are effective for fiscal years beginning after December 15, 1995. The Company's current intention is to continue to account for stock- based compensation transactions in accordance with the provisions of APBO 25. Note B--Inventories Note B--Inventories Note B--Inventories
Inventories consist of the following: December 31 _______ 1995 _______ 1994 46 (thousands of dollars) ............................ Crude oil $ 58,047 $ 53,359 Refined products..................... __ __ ______ 77,342 ______ 74,299 Total inventories at FIFO 135,389 127,658 (approximates current cost).......... LIFO allowance....................... _ _ ) _______ (52,301 ) _______ (45,125 Total crude oil and refined products __ __ ______ 83,088 ______ 82,533 Merchandise inventory at FIFO 6,453 7,150 (approximates current cost).......... LIFO allowance....................... __ ___ ) ______ (1,674 ) ______ (2,110 Total merchandise .................. ___ ____ _____ 4,779 _____ 5,040 Materials and supplies inventory at ___ ____ ................................ FIFO . _____ 8,158 _____ 7,360 Total Inven Total Inven Total Inven .................... tory tory tory ________ $ 96,025 __ $ ________ __ ______ 94,933 ______
As a result of a reduction in LIFO inventories, which were carried at lower costs prevailing in prior years, the net loss for 1995 decreased by approximately $3 million ($.31 per share). -25-
Note C--Long-Term Debt and Credit Arrangements Note C--Long-Term Debt and Credit Arrangements Note C--Long-Term Debt and Credit Arrangements Long-term debt consists of the following: 47 December 31 ________ 1995 ________ 1994 (thousands of dollars) Unsecured 10.875% Senior Notes $ .. 124,716 Unsecured 10.42% Senior Notes... $ 60,000 Unsecured Credit Agreement...... 35,000 Purchase Money Lien............. 4,492 5,579 Other obligations............... ________ ______ _____ 856 _____ 6,115 130,064 106,694 Less current portion............ _______ ____ _____ 1,558 ______ 10,062 Long-Term Debt Long-Term Debt Long-Term Debt ................ __ $ ___ $ __ ___ _______ 128,506 ______ 96,632 _______ ______
The aggregate maturities of long-term debt through 2000 are as follows (in thousands): 1996 - $1,297; 1997 - $1,369; 1998 - $1,455; 1999 - $763; 2000 - $72. On January 24, 1995, the Company completed the sale of $125 million of unsecured 10.875% Senior Notes due February 1, 2005 priced at 99.75% (Notes). Approximately $55 million of the net proceeds from the sale was used to retire the Company's outstanding 10.42% Senior Notes, including a prepayment premium of $3.4 million, and $8 million was used to reduce amounts outstanding under the Company's unsecured bank lines. The remaining portion of the outstanding 10.42% Senior Notes had been paid on January 3, 1995 as part of the regularly scheduled debt service. The Notes were issued under an Indenture which includes certain restrictions and limitations customary with senior indebtedness of this type including, but not limited to, the payment of dividends and the repurchase of capital 48 stock. The retirement of the Company's outstanding 10.42% Senior Notes resulted in a net extraordinary loss in the first quarter of 1995 of $3.3 million. Effective as of September 25, 1995, the Company entered into a two year Unsecured Revolving Credit Agreement (Agreement) with NationsBank of Texas, N.A., as administrative agent and letter of credit agent, and The First National Bank of Boston and Texas Commerce Bank National Association, as agents. Additionally, there are six other participant banks. Under the Agreement, the banks have committed a maximum of $130 million to the Company for cash borrowings and letters of credit. The Agreement allows for interest on outstanding borrowings to be computed under one of three methods based on the Base Rate, the London Interbank Offered Rate, or the Certificates of Deposit Rate (all as defined). The Agreement limits indebtedness (as defined) and cash dividends and requires the maintenance of various covenants including, but not limited to, minimum consolidated tangible net worth, minimum working capital and minimum FIFO net income or (loss) (all as defined). The Company intends to use the Agreement for general corporate and working capital purposes. This Agreement replaces the Revolving Credit Facility dated as of May 10, 1993, as amended. As of December 31, 1995, the Company had outstanding irrevocable standby letters of credit in the principal amount of $28.7 million. Unused commitments under the terms of the Credit Agreement totaling $101.3 million were available for future borrowings and issuance of letters of credit at December 31, 1995. The Company pays an annual commitment fee on the unused portion of the credit line. The Purchase Money Lien is secured by certain service station equipment and office furnishings having a cost basis of $6.5 million. The effective rate for the Money Lien is 6.65%. Ninety percent of the principal is repayable in 60 monthly installments with a balloon payment of 10% of the principal payable in January 1999.
The following interest costs were charged to pre-tax income: Year Ended December 31 _______ 1995 ______ 1994 _______ 1993 (thousands of dollars) Total interest costs incurred.... $ 15,234 $ 8,288 $ 7,712 49 Less: Capitalized interest....... _______ _____ _____ ___ 286 ___ 285 ___ 261 Interest Expense Interest Expense Interest Expense ________ $ 14,948 _______ $ 8,003 _______ $ 7,451 ________ _______ _______
-26- Note D--Crude Oil and Refined Product Hedging Note D--Crude Oil and Refined Product Hedging Note D--Crude Oil and Refined Product Hedging Activities and Other Derivative Financial Activities and Other Derivative Financial Activities and Other Derivative Financial Instruments Instruments Instruments The net deferred loss from crude oil and refined product hedging strategies at December 31, 1995 was $1.6 million. Included in these hedging strategies are contracts maturing from January 1996 to October 1996. The amount of estimated crude requirements and estimated finished product sales hedged at December 31, 1995 was not material. In the fourth quarter of 1995, the Company terminated all outstanding interest rate swap agreements which effectively converted $47.5 million of its fixed rate debt to variable interest rate debt. At December 31, 1995, the Company has recorded a deferred gain of $1.4 million which will be amortized into income over the remaining terms of the original swap agreements ranging from 1996 to 1998. As a result of its interest rate swap program, the Company's effective interest rate on the Notes for 1995 was reduced from approximately 11.7% % % to approximately 10.5% per annum. The Company may utilize interest rate swaps in the future to further manage the cost of funds. Note E--Income Taxes Note E--Income Taxes Note E--Income Taxes
Significant components of the Company's deferred tax liabilities and assets are as follows: _______ 1995 _______ 1994 (thousands of dollars) Deferred tax liabilities: Depreciation and amortization ..... $ (57,660 $ 50 ) (56,715) Difference between book and tax basis of property, plant and equipment ... 0 ) (28,880 ............................. Other __ ___ _______ (22,264) ) _______ (18,748 Total deferred tax liabilities (79,924 .. ) ) (104,343 Deferred tax assets: Postretirement and pension 5,919 5,804 obligations......................... Environmental, litigation and other 9,552 11,542 ............................ accruals Construction and inventory cost not 8,156 4,006 currently deductible................ Benefit of future NOL utilization . 10,659 0 ............................. Other ___ _____ ______ 17,643 _____ 9,589 Total deferred tax assets ....... ___ ___ ______ 51,929 ______ 30,941 Net deferred tax liabilities _________ $ (27,995 .... _________ $ (73,402 _________ _________ ______ ______ ______ _ ) ______ _ )
No valuation allowance is considered necessary for the above deferred tax assets. The company has tax credit carryforwards of $390,000 which expire in the years 2004 through 2009, along with net operating loss carryforwards of $36.2 million which expire in the year 2010. Recoverable income taxes includes an income tax receivable for the anticipated refund from the current use of net operating losses and the estimated benefit from net operating loss carryforwards that will be used in 1996. -27-
Significant components of the income tax (benefit) provision for the years ended December 31 follows. 51 _______ 1995 _______ 1994 _______ 1993 (thousands of dollars) Current: ..................... Federal $ $ $ ) (5,372 (14,541 5,278 ) ....................... State _______ _______ ____ ___ 236 ) ____ (586 _____ 1,779 Total Current ............. (5,136 (15,127 ) 7,057 ) Deferred: ..................... Federal (25,178 (2,188 ) (3,642 ) ) ....................... State ______ _______ ______ ) __ ____ (808 ) ____ (115 ) ____ (560 Total Deferred ............ (25,986 (2,303 ) (4,202 ) ) Federal tax rate increase..... _______ _______ ____ ______ _______ _____ 2,252 Income Tax (Benefit) Expense Income Tax (Benefit) Expense Income Tax (Benefit) Expense _ $ _ $ ___ $ _ _ ___ _______ (31,122 _______ (17,430 ) _____ 5,107 ) _______ _______ _____
Current state tax provision includes franchise taxes of $750,000, $1,000,000 and $1,275,000 for the years 1995, 1994 and 1993, respectively.
The following is a reconciliation of the statutory federal income tax rate to the actual effective income tax rate for the years ended December 31: ______ 1995 _______ 1994 _______ 1993 _ (thousands of dollars) Income tax (benefit) expense calculated at the statutory federal income tax $ $ $ ............................ rate (34,472 (18,492) 282 52 ) Amortization of goodwill and 2,726 330 330 purchase adjustment............. State taxes (net of federal (572 (700 ) ) 798 ........................ benefit) Federal tax rate increase....... 2,252 ........................... Other _____ _____ ________ 1,445 _____ 1,196 _____ 1,432 Income Tax Expense (Benefit) Income Tax Expense (Benefit) Income Tax Expense (Benefit) _ $ .. _ $ _______ $ 5,107 _ _ _______ _______ (31,122 _______ (17,430) _______ _______ )
Note F--Capital Stock and Net Income Per Common Note F--Capital Stock and Net Income Per Common Note F--Capital Stock and Net Income Per Common Share Share Share Class A Common stockholders are entitled to one vote per share and have the right to elect all directors other than those to be elected by other classes of stock. Class B Common stockholders are entitled to one-tenth vote per share and have the right to elect two directors. Net (loss) per share for 1995 and 1994 is based upon the weighted average of common shares outstanding of 9,697,611 and 9,742,598, respectively, in each year. Net (loss) per share for 1993 is based upon the 9,832,598 common shares outstanding. The average outstanding and equivalent shares excludes 255,300 and 105,500 shares of Performance Vested Restricted Stock (PVRS) shares registered to participants in the 1994 Long-Term Incentive Plan (Plan) at December 31, 1995 and 1994, respectively. The PVRS shares registered in participants names are being held by the Company subject to the attainment of certain performance related goals and are not considered outstanding for net income (loss) per share calculations until the shares are released to the Plan participants. Note G--Long-Term Incentive Plan Note G--Long-Term Incentive Plan Note G--Long-Term Incentive Plan Under the terms of the 1994 Long-term Incentive Plan (Plan), the Company may distribute to selected employees restricted shares of the Company's Class B Common Stock and options to purchase Class B Common Stock. Up to 1.1 million shares of Class B Common Stock may be distributed under the Plan. The balance sheet caption 53 "Unearned restricted stock" is charged for the market value of restricted shares at their grant date and changes in the market value of shares outstanding until the vesting date, and is shown as a reduction of stockholders' equity. The impact is further reflected within Class B Common Stock and Additional paid-in-capital. -28- Performance Vested Restricted Stock (PVRS) awards are subject to the attainment of performance goals and certain restrictions including the receipt of dividends and transfers of ownership. As of December 31, 1995, 255,300 shares of PVRS have been registered in participants names and are being held by the Company subject to the attainment of the related performance goals. Under the 1994 Long-term Incentive Plan, non- qualified stock options are granted to participants at a price not less than 100% of the fair market value of the stock on the date of grant. The exercise period is ten years with the options vesting one-third per year over three years after a one-year waiting period. As of December 31, 1995, grants of non-qualified stock options have been awarded to participants to purchase 505,000 shares of the Company's Class B Common Stock. Under the terms of the 1995 Management Stock Option Plan, the Company may award to participants non-qualified stock options to purchase shares of the Company's Class B Common Stock at a price equal to 100% of the fair market value of the stock at the date of grant. Up to 500,000 shares of Class B Common Stock may be distributed under the Plan. The exercise period is ten years with the options vesting one-third per year over three years after a one-year waiting period. As of December 31, 1995, grants of non-qualified stock options have been awarded to participants to purchase 461,760 shares of the Company's Class B Common Stock. Shares of Class B Common Stock available for issuance under options or awards amounted to 377,940 at December 31, 1995.
Detail of the Company's stock options are as follows: Common Price Range 54 ____ ________ per ________ Shares _________ share _ _____________________________ 1994 Long-Term Incentive Plan Granted - 1994................. 109,800 $16.25 - $16.88 Canceled - 1994................ _____ $16.88 ____ (950 ) Outstanding - December 31, 108,850 $16.25 - ............................. 1994 $16.88 Granted - 1995 ................. _______ 396,150 $12.81 - $13.75 Outstanding - December 31, _______ 505,000 $12.81 - ............................. 1995 $16.88 _______ Shares Exercisable at December ________ 36,283 $16.25 - ......................... 31, 1995 $16.88 ________ _________________________________ 1995 Management Stock Option Plan Granted - 1995................. _______ 461,760 $13.75 - $16.06 Outstanding - December 31, 461,760 $13.75 - 1995............................. $16.06 Total outstanding - December _______ 966,760 $12.81 - 31, 1995......................... $16.88 _______
Note H--Employee Benefit Obligations Note H--Employee Benefit Obligations Note H--Employee Benefit Obligations The Company has a defined benefit pension plan covering the majority of full-time employees. The Company also has several defined benefit plans covering only certain senior executives. Plan benefits are generally based on years of service and employees' average compensation. The Company's policy is to fund the pension plans in amounts which comply with contribution limits imposed by law. Plan assets consist principally of fixed income securities and stocks.
Net periodic pension costs consisted of the following components: 55 Year Ended December 31 1995 1994 1993 (thousands of dollars) Service cost - benefit earned $ $ $ during the year.................. 4,015 4,666 4,002 Interest cost on projected 322 7, 6,566 6,326 benefit obligations.............. Actual loss (return) on plan (22,346 1,455 (11,738 ........................... assets ) ) Total amortization and deferral __ .. __ ____ ______ 15,086 ______ (8,733 _____ 5,324 ) Net periodic pension costs .... ___ $ __ $ ___ $ ___ __ ___ _____ 4,077 _____ 3,954 _____ 3,914 _____ _____ _____
-29-
Assumptions used in the accounting for the defined benefit plans as of December 31 were: 1995 1994 1993 Weighted average discount rates 7.25% .. 8.75% 7.25% Rates of increase in compensation 4.00% 4.00% 4.00% levels........................... Expected long-term rate of return 9.75% 9.50% 9.50% on assets........................
The following table sets forth the funded status of the plans in which assets exceed accumulated benefits: December 31 _______ 1995 _______ 1994 (thousands of dollars) 56 Actuarial present value of benefit obligations: Vested benefit obligation ...... __ $ ________ $ 65,073 ______ 84,992 Accumulated benefit obligation __ $ . ________ $ 67,350 ______ 87,889 Projected benefit obligation $107,022 ... $ 80,164 Plan assets at fair value........ __ __ ______ 93,494 ______ 76,090 Projected benefit obligation (in (13,528) (4,074) excess of) plan assets........... Unrecognized net loss............ 12,934 5,644 Prior service (benefit) not yet recognized in net periodic pension cost (1,162 ... (1,141 ) ) Unrecognized net (asset) at beginning of year, net of __ __ amortization..................... ______ (1,960 ______ (2,228 ) ) Net pension liability............ ________ $ (3,716 ________ $ (1,799 ________ ________ ) )
The following table sets forth the funded status of the plans in which accumulated benefits exceed assets: December 31 _______ 1995 _______ 1994 (thousands of dollars) Actuarial present value of benefit obligations: Vested benefit obligation ...... _______ $ 5,891 _______ $ 5,163 Accumulated benefit obligation _______ $ 5,891 . _______ $ 5,163 Projected benefit obligation ... $ 6,056 $ 5,189 Plan assets at fair value........ _______ _______ 57 ___ 0 ___ 0 Projected benefit obligation (in (6,056 (5,189 ) ) excess of) plan assets........... Unrecognized net loss............ 1,307 812 Prior service (benefit) not yet recognized in net periodic pension cost (70 ... (212 ) ) Unrecognized net obligation at beginning of year, net of 1,376 1,605 amortization..................... Adjustment required to recognize __ __ minimum liability................ ______ (2,448 ______ (2,179 ) ) Net pension liability............ ________ $ (5,891 ________ $ (5,163 ________ ________ ) )
In addition to the defined benefit pension plan, the Company provides certain health care and life insurance benefits for eligible employees who retire from active service. The postretirement health care plan is contributory, with retiree contributions consisting of copayment of premiums and other cost sharing features such as deductibles and coinsurance. Beginning in 1998, the Company will "cap" the amount of premiums that it will contribute to the medical plans. Should costs exceed this cap, retiree premiums would increase to cover the additional cost. -30-
The following table sets forth the accrued cost of the Company's postretirement benefit plans recognized in the Company's Balance Sheet: December 31 ______ 1995 ______ 1994 (thousands of dollars) Accumulated postretirement benefit obligation (APBO): Retirees ......................... $ $ 6,671 5,496 Fully eligible active plan 1,884 1,280 58 participants........................ Other active plan participants 3,384 .... 1,752 Unrecognized net (loss)/gain (3,657 ...... 363 ) Unrecognized prior service cost __ ... _____ _____ 1,275 ___ 668 Accrued postretirement benefit cost _ $ _ $ _ _ _____ 9,557 _____ 9,559 _____ _____
The weighted average discount rate used in determining the APBO was 7.25% and 8.75% in 1995 and 1994, respectively.
Net periodic postretirement benefit cost include the following components: December 31 1995 1994 1993 (thousands of dollars) Service cost......................... $ 184 $ 193 $ 161 Interest cost on accumulated 680 815 765 postretirement benefit obligation.... Total amortization and deferral...... ______ (72 ____ _____ ) ___ (29) ____ Net periodic postretirement benefit _____ $ 927 ______ $ 844 ______ $ 926 cost................................. _____ ______ ______
The Company's policy is to fund postretirement costs other than pensions on a pay-as-you-go basis as in prior years. An 11% increase in the cost of medical care was assumed for 1995. This medical trend rate is assumed to decrease 1% annually to 9% in 1997, and decrease to 0% thereafter as a result of the 59 expense cap in 1998. The medical trend rate assumption affects the amounts reported. For example, a 1% increase in the medical trend rate would increase the APBO by $378,000, and the net periodic cost by $78,000 for 1995. Note I--Litigation and Contingencies Note I--Litigation and Contingencies Note I--Litigation and Contingencies The Company has been named as a defendant in various matters of litigation, some of which are for substantial amounts, and involve alleged personal injury and property damage from prolonged exposure to petroleum, petroleum related products and substances used at its refinery or in the petroleum refining process. The Company is a co- defendant with numerous other defendants in a number of these suits. The Company is vigorously defending these actions, however, the process of resolving these matters could take several years. The liability, if any, associated with these cases was either accrued in accordance with generally accepted accounting principles or was not determinable at December 31, 1995. The Company has consulted with counsel with respect to each such proceeding or large claim which is pending or threatened. While litigation can contain a high degree of uncertainty and the risk of an unfavorable outcome, in the opinion of management, there is no reasonable basis to believe that the eventual outcome of any such matter or group of related matters will have a material adverse effect on the Company. The Company has received a Revenue Agent's Report relative to an examination by the Internal Revenue Service of tax returns for fiscal years 1988 and 1989. A written protest has been filed requesting an appellate conference. The Company does not expect the resolution of this matter to have a material adverse effect on the Company. -31- Like other petroleum refiners and marketers, the Company's operations are subject to extensive and rapidly changing federal and state environmental regulations governing air emissions, waste water discharges, and solid and hazardous waste management activities. The Company's policy is to accrue environmental and clean-up related costs of a non-capital nature when it is both probable that a liability has been incurred and that the amount can be reasonably estimated. While it is often extremely difficult to reasonably quantify future environmental related expenditures, the Company anticipates that a substantial capital investment will be required over the next several years to 60 comply with existing regulations. The Company had recorded a liability of approximately $16.1 million as of December 31, 1995 relative to the estimated costs of a non-capital nature related to compliance with environmental regulations. This liability is anticipated to be expended over the next five years and is included in the balance sheet as a noncurrent liability. No amounts have been accrued as receivables for potential reimbursement or recoveries to offset this liability. Included in costs and operating expenses in the statement of operations for the years ended December 31, 1995, 1994 and 1993 were costs related to environmental remediation in the amount of $3.2 million, $1.9 million and $6.3 million, respectively. Environmental liabilities are subject to considerable uncertainties which affect the Company's ability to estimate its ultimate cost of remediation efforts. These uncertainties include the exact nature and extent of the contamination at each site, the extent of required cleanup efforts, varying costs of alternative remediation strategies, changes in environmental remediation requirements, the number and strength of other potentially responsible parties at multi-party sites, and the identification of new environmental sites. It is possible that the ultimate cost, which cannot be determined at this time, could exceed the Company's recorded liability. As a result, charges to income for environmental liabilities could have a material effect on the results of operations in a particular quarter or year as assessments and remediation efforts proceed or as new claims arise. However, management is not aware of any matters which would be expected to have a material adverse effect on the Company. Note J--Noncancellable Lease Commitments Note J--Noncancellable Lease Commitments Note J--Noncancellable Lease Commitments The Company has noncancellable operating lease commitments for refinery, computer, office and other equipment, transportation equipment, an airplane, service station and convenience store properties, and office space. Lease terms range from three to ten years for refinery, computer, office and other equipment and four to eight years for transportation equipment. The airplane lease commenced in 1992 and has a term of seven years. The majority of service station properties have lease terms of 20 years. The average lease term for convenience stores is approximately 13 years. The Corporate Headquarters office lease has a ten year term beginning in 1993. Certain of these leases have renewal provisions. 61
Future minimum rental payments under noncancellable operating lease agreements as of December 31, 1995 are as follows (in thousands): ..................... 1996 $ 10,425 ..................... 1997 9,613 ..................... 1998 9,334 ..................... 1999 9,557 ..................... 2000 8,270 After 2000 .............. ___ ______ 37,339 Total Minimum Rental __ $ Payments ................. __ ______ 84,538 ______
Rental expense for the years ended December 31, 1995, 1994 and 1993 was $12,955,000, $13,658,000 and $14,620,000, respectively. -32- Note K--Investments and Deferred Charges Note K--Investments and Deferred Charges Note K--Investments and Deferred Charges
Investments and deferred charges consist of the following: December 31 _______ 1995 _______ 1994 (thousands of dollars) Deferred turnarounds .............. $ $ 15,874 10,603 System development costs .......... 6,908 1,081 Loan expense ...................... 3,700 572 Long-term notes receivable ........ 2,563 3,029 Goodwill .......................... 2,243 9,970 Intangible pension asset .......... 1,376 1,605 Investments in subsidiaries ....... 1,185 5,745 Deferred financing costs .......... 838 918 62 Other ............................. ____ ____ _____ 1,217 _____ 1,331 Investments and Deferred Charges Investments and Deferred Charges Investments and Deferred Charges ________ $ 30,633 ________ $ 40,125 ________
Accumulated amortization of goodwill was $4,395,000, and $6,888,000 at December 31, 1995 and 1994, respectively. Note L--Fair Value of Financial Instruments Note L--Fair Value of Financial Instruments Note L--Fair Value of Financial Instruments The Company considers cash and cash equivalents, accounts receivable, investments in subsidiaries, long-term notes receivable, accounts payable, long-term debt and interest rate swap agreements to be its financial instruments. The carrying amount reported in the balance sheet for cash and cash equivalents, accounts receivable and accounts payable, represent their fair values. The fair value of the Company's long-term notes receivable at December 31, 1995 was estimated using a discounted cash flow analysis, based on the assumed interest rates for similar types of arrangements. The approximate fair value of the Company's Long-term Debt at December 31, 1995 was estimated using a discounted cash flow analysis, based on the Company's assumed incremental borrowing rates for similar types of borrowing arrangements. The fair value of its investments in subsidiaries is considered to be their carrying amount since these investments do not have quoted market prices.
The following summarizes the carrying amounts and related approximate fair values as of December 31, 1995 of the Company's financial instruments whose carrying amounts do not equal its fair value: Carrying Approxim ___ ate _______ Fair _______ Amount _______ Value _ (thousands of dollars) 63 Assets Long-Term Notes Receivable ... $ $ 2,563 2,294 Liabilities Long-Term Debt ............... 128,506 128,181
-33- REPORT OF INDEPENDENT AUDITORS REPORT OF INDEPENDENT AUDITORS REPORT OF INDEPENDENT AUDITORS To the Stockholders Crown Central Petroleum Corporation We have audited the accompanying consolidated balance sheets of Crown Central Petroleum Corporation and subsidiaries as of December 31, 1995 and 1994, and the related consolidated statements of operations, changes in common stockholders' equity, and cash flows for each of the three years in the period ended December 31, 1995. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material ment. An audit includes examining, on a misstate test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Crown Central Petroleum Corporation and subsidiaries at December 31, 1995 and 1994, and the consolidated results of their operations and their cash flows for each of the three years in the period ended December 31, 1995, in 64 conformity with generally accepted accounting principles. As discussed in Note A to the consolidated financial statements, in the fourth quarter of 1995, the Company changed its method of accounting for impairment of long-lived assets in accordance with the adoption of SFAS No. 121. /s/---Ernst & Young LLP Baltimore, Maryland February 29, 1996 -34-
UNAUDITED UNAUDITED UNAUDITED QUARTERLY RESULTS OF OPERATIONS QUARTERLY RESULTS OF OPERATIONS QUARTERLY RESULTS OF OPERATIONS Crown Central Petroleum Corporation and Subsidiaries (thousands of dollars, except per share amounts) First Third Second Fourth _ _ _ _ _________ Yearly ______ Quarte ______ Quarte ______ Quarte ______ Quarte _ __ r __ r __ r __ r 1995 1995 1995 Sales and operating $445,4 $474,7 $483,3 $461,1 $1,864,63 ............... revenues 24 37 12 66 9 Gross profit...........23,260 33,232 42,638 11,623 110,753 (Loss) income before extraordinary item (6,918 ... 7,030 (67,78 304 (67,367) ) 3 ) Net (loss) income .....(10,17 7,030 (67,78 304 (70,624) ) 5 3 ) (Loss) income per share before extraordinary item... (.71 .72 (6.99 .03 (6.95) ) ) Net (loss) income per (1.04 .72 (6.99 .03 (7.28) share.................. ) ) 1994 1994 1994 Sales and operating $393,5 $468,2 $453,4 $383,8 $1,699,16 revenues...............86 23 75 84 8 Gross profit...........50,171 19,279 11,278 16,336 97,064 65 Net income (loss)......8,660 (26,60 (7,286 (10,17 (35,406) ) 8 2 ) ) Net income (loss) per .88 (2.71 (.74 (1.06 (3.63) .................. share ) ) )
Gross profit is defined as sales and operating revenues less costs and operating expenses (including applicable property and other operating taxes). Per share amounts are based upon the actual number of common shares outstanding each quarter. The net loss in the fourth quarter of 1995 was unfavorably impacted by a pre-tax write-down of $80.5 million relating to the implementation of Statement of Financial Accounting Standard No. 121 Accounting for the Impairment of Long-Lived `` assets and for Long-Lived Assets to be Disposed . '' Of The net loss in the third quarter of 1994 was unfavorably impacted by a pre-tax write-down of $16.8 million relating to the abandonment of plans to construct a hydrodesulphurization unit at the Pasadena refinery. Item 9. CHANGES IN AND DISAGREEMENTS WITH Item 9. CHANGES IN AND DISAGREEMENTS WITH Item 9. CHANGES IN AND DISAGREEMENTS WITH AUDITORS ON AUDITORS ON AUDITORS ON ACCOUNTING AND FINANCIAL DISCLOSURE ACCOUNTING AND FINANCIAL DISCLOSURE ACCOUNTING AND FINANCIAL DISCLOSURE The Company has not filed a Form 8-K within the last twenty-four (24) months reporting a change of independent auditors or any disagreement with the independent auditors. -35- PART III PART III PART III Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT REGISTRANT REGISTRANT Following is a list of Crown Central Petroleum Corporation's executive officers, their ages and their positions and offices as of March 1, 1996: Henry A. Rosenberg, Jr. (66) Henry A. Rosenberg, Jr. (66) Henry A. Rosenberg, Jr. (66) Director since 1955, Chairman of the Board and Chief Executive Officer since May 1975 and also President since March 1, 1996. Also a director of Signet Banking Corporation and USF&G Corporation. Phillip W. Taff (54) Phillip W. Taff (54) Phillip W. Taff (54) 66 Senior Vice President - Finance and Chief Financial Officer since June 1994. Director of the Company from 1992 until his employment by the Company. Executive Vice President, Chief Financial Officer and Chief Administrative Officer of Greyhound Lines, Inc. from April 1993 to May 1994. Senior Vice President and Chief Financial Officer of American Trading and Production Company from May 1991 to April 1993. Executive Vice President of PHH Corporation and President of PHH Fleet America from April 1987 to April 1991. Edward L. Rosenberg (40) Edward L. Rosenberg (40) Edward L. Rosenberg (40) Senior Vice President - Administration - Corporate Development and Long Range Planning since June 1994; Senior Vice President - Finance and Administration from December 1991 to June 1994; Vice President - Supply & Transportation from October 1990 to December 1991. Edward L. Rosenberg is the son of Henry A. Rosenberg, Jr., and the brother of Frank B. Rosenberg. John E. Wheeler, Jr. (43) John E. Wheeler, Jr. (43) John E. Wheeler, Jr. (43) Senior Vice President - Treasurer and Controller since June 1994; Vice President - Treasurer and Controller from December 1991 to June 1994; Vice President - Controller from March 1984 to December 1991. George R. Sutherland, Jr. (51) George R. Sutherland, Jr. (51) George R. Sutherland, Jr. (51) Senior Vice President - Supply and Transportation since July 1995; Vice President - Supply and Transportation from July 1992 to June 1995. Senior Vice President - Trading of Pacific Resources, Inc. from 1989 until employment by the Company. Randall M. Trembly (49) Randall M. Trembly (49) Randall M. Trembly (49) Senior Vice President - Refining since July 1995; Vice President - Refining from December 1991 to June 1995; Vice President-Treasurer from October 1987 to December 1991. Thomas L. Owsley (55) Thomas L. Owsley (55) Thomas L. Owsley (55) Vice President - Legal since April 1983. Paul J. Ebner (38) Paul J. Ebner (38) Paul J. Ebner (38) Vice President - Marketing Support Services since December 1991; General Manager - Marketing Support Services from November 1988 to December 1991. J. Michael Mims (46) J. Michael Mims (46) J. Michael Mims (46) Vice President - Human Resources since June 1992. Vice President - Internal Auditing and Consulting Services from December 1991 to June 1992; Director of Internal Auditing from September 1983 to December 1991. Frank B. Rosenberg (37) Frank B. Rosenberg (37) Frank B. Rosenberg (37) 67 Vice President - Marketing since January 1993; Southern Marketing Division Manager from January 1992 to January 1993; Vice President - Wholesale Marketing - La Gloria Oil and Gas Company from October 1990 to January 1992. Frank B. Rosenberg is the son of Henry A. Rosenberg, Jr. and the brother of Edward L. Rosenberg. Dennis W. Marple (47) Dennis W. Marple (47) Dennis W. Marple (47) Vice President - Wholesale Sales and Terminals since January 1996. General Manager - Wholesale Sales from February 1, 1995 to December 31, 1995. Vice President - Supply, Trading and Transportation from October 1, 1989 to January 1, 1995. Dolores B. Rawlings (58) Dolores B. Rawlings (58) Dolores B. Rawlings (58) Secretary since November 1990. -36- There have been no events under any bankruptcy act, no criminal proceedings and no judgments or injunctions material to the evaluation of the ability and integrity of any Director or Executive Officer during the past five years. The information required in this Item 10 regarding Directors of the Company and all persons nominated or chosen to become directors is hereby incorporated by reference to the definitive Proxy Statement which will be filed with the Commission pursuant to Regulation 14A on or about March 15, 1996. Item 11. EXECUTIVE COMPENSATION Item 11. EXECUTIVE COMPENSATION Item 11. EXECUTIVE COMPENSATION The information required in this Item 11 regarding executive compensation is hereby incorporated by reference to the definitive Proxy Statement which will be filed with the Commission pursuant to Regulation 14A on or about March 15, 1996. Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT OWNERS AND MANAGEMENT OWNERS AND MANAGEMENT The information required in this Item 12 regarding security ownership of certain beneficial owners and management is hereby incorporated by reference to the definitive Proxy Statement which will be filed with the Commission pursuant to Regulation 14A on or about March 15, 1996. Item 13. CERTAIN RELATIONSHIPS AND RELATED Item 13. CERTAIN RELATIONSHIPS AND RELATED Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS TRANSACTIONS TRANSACTIONS 68 The information required in this Item 13 regarding certain relationships and related transactions is hereby incorporated by reference to the definitive Proxy Statement which will be filed with the Commission pursuant to Regulation 14A on or about March 15, 1996. PART IV PART IV PART IV Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS AND REPORTS AND REPORTS ON FORM 8-K ON FORM 8-K ON FORM 8-K (a) (1) LIST OF FINANCIAL STATEMENTS LIST OF FINANCIAL STATEMENTS LIST OF FINANCIAL STATEMENTS The following Consolidated Financial Statements of Crown Central Petroleum Corporation and subsidiaries, are included in Item 8 on pages 18 through 33 of this report: oConsolidated Statements of Operations -- Years ended December 31, 1995, 1994 and 1993 oConsolidated Balance Sheets -- December 31, 1995 and 1994 oConsolidated Statements of Changes in Common Stockholders' Equity -- Years ended December 31, 1995, 1994 and 1993 oConsolidated Statements of Cash Flows -- Years ended December 31, 1995, 1994 and 1993 oNotes to Consolidated Financial Statements -- December 31, 1995 (a) (2) LIST OF FINANCIAL STATEMENT SCHEDULES LIST OF FINANCIAL STATEMENT SCHEDULES LIST OF FINANCIAL STATEMENT SCHEDULES The schedules for which provision is made in the applicable accounting regulation of the Securities and Exchange Commission are not required under the related instructions or are inapplicable, and therefore have been omitted. -37- (a) (3) and (c) LIST OF EXHIBITS LIST OF EXHIBITS LIST OF EXHIBITS EXHIBIT EXHIBIT EXHIBIT NUMBER NUMBER NUMBER 3 3 3 Articles of Incorporation and Byla Articles of Incorporation and Byla Articles of Incorporation and Bylaws ws ws (a) Agreement of Consolidation as amended through August 28, 1988 (Articles of Incorporation) was previously filed with the Registrant's 69 Form 10-K for the year ended December 31, 1992, herein incorporated by reference. (b) Bylaws of Crown Central Petroleum Corporation as amended and restated at February 29, 1996. 4 4 4 Instruments Defining the Rights of Security Instruments Defining the Rights of Security Instruments Defining the Rights of Security Holders, Including Indentures Holders, Including Indentures Holders, Including Indentures (a) Credit Agreement dated as of September 25, 1995 between the Registrant and various banks was previously filed with the Registrant's Form 10-Q for the quarter ended September 30, 1995 as Exhibit 4(a), herein incorporated by reference. (b) Amendment effective as of December 31, 1995 to the Credit Agreement dated as of September 25, 1995. (c) Form of Indenture for the Registrant's 10 7/8% Senior Notes due 2005 filed on January 17, 1995 as Exhibit 4.1 of Amendment No. 3 to Registration Statement on Form S-3, Registration No. 33-56429, herein incorporated by reference. 10 10 10 Material Contracts Material Contracts Material Contracts (a) Crown Central Petroleum Retirement Plan effective as of July 1, 1993, was previously filed with the Registrant's Form 10-K for the year ended December 31, 1993 as Exhibit 10(a), herein incorporated by reference. (b) Supplemental Retirement Income Plan for Senior Executives - As amended through October 27, 1983 and all subsequent amendments through May 30, 1991 were previously filed with the Registrant's Form 10-K for the year ended December 31, 1992 as Exhibit 10 (a) (3), herein incorporated by reference. (c) Employee Savings Plan as amemded and restated effective January 1, 1987. (d) Directors' Deferred Compensation Plan adopted on August 25, 1983 was previously filed with the Registrant's Form 10-Q for the quarter ended September 30, 1983 as Exhibit 19(b), herein incorporated by reference. (e) The Long-Term Performance Reward Plan as in effect for the ninth performance cycle (1993/1994/1995) was previously filed with the Registrant's Form 10-Q for the quarter 70 ended March 31, 1993, as Exhibit 19(a), herein incorporated by reference. (f) The 1994 Long-Term Incentive Plan was previously filed as an exhibit to the Registrant's Proxy Statement dated March 24, 1994, herein incorporated by reference. -38- (g) The 1995 Annual Incentive Plan was previously filed with the Registrant's Form 10-Q for the quarter ended March 31, 1995, as Exhibit 19(a), herein incorporated by reference. (h) The 1995 Management Stock Option Plan filed on April 28, 1995 as Exhibit 4 of Registration Statement on Form S-8, Registration No. 33-58927, herein incorporated by reference. (i) Advisory and Consultancy Agreement dated October 28, 1993 between Jack Africk, Director and Crown Central Petroleum Corporation was previously filed with the Registrant's Form 10-Q for the quarter ended September 30, 1994 as Exhibit 99, herein incorporated by reference. (j) The Employment Agreement between Charles L. Dunlap, President and Crown Central Petroleum Corporation, dated October 29, 1991 was previously filed with the Registrant's Form 10-Q for the quarter ended September 30, 1991 as Exhibit 19(a), herein incorporated by reference. (k) Employees Supplementary Savings Plan filed on February 27, 1995 as Exhibit 4 of Registration Statement on Form S-8, Registration No. 33-57847, herein incorporated by reference. 11 11 11 Statement re: Computation of Earnings Per Statement re: Computation of Earnings Per Statement re: Computation of Earnings Per Share Share Share Exhibit 11 is included on page 40 of this report. 13 13 13 Annual Report to Security Holders, Form 10-Q Annual Report to Security Holders, Form 10-Q Annual Report to Security Holders, Form 10-Q or Quarterly Report to Security Holders or Quarterly Report to Security Holders or Quarterly Report to Security Holders Annual Report Exhibits: (a) Shareholders' Letter dated February 29, 1996. (b) Financial Summary, Operating Summary and Key Financial Statistics. (c) Directors and Officers of the Company 71 Corporate Information (d) Supplement to the Annual - Operating (e) Results and Operating Statistics Subsidiaries of the Registrant Subsidiaries of the Registrant Subsidiaries of the Registrant 21 21 21 Exhibit 21 is included on page 41 of this report. Consent of Independent Auditors Consent of Independent Auditors Consent of Independent Auditors 23 23 23 Exhibit 23 is included on page 42 of this report. Power of Attorney Power of Attorney Power of Attorney 24 24 24 Exhibit 24 is included on page 43 of this report. Financial Data Schedule Financial Data Schedule Financial Data Schedule 27 27 27 Form 11-K will be filed under cover of Form Form 11-K will be filed under cover of Form Form 11-K will be filed under cover of Form 99 99 99 10-KA by June 28, 1996. 10-KA by June 28, 1996. 10-KA by June 28, 1996. REPORTS ON FORM 8-K REPORTS ON FORM 8-K REPORTS ON FORM 8-K (b) (b) (b) There were no reports filed on Form 8-K for the three months ended December 31, 1995. Certain exhibits listed on pages 38 and : NOTE NOTE NOTE 39 of this report and filed with the Securities and Exchange Commission, have been omitted. Copies of such exhibits may be obtained from the Company upon written request, for a prepaid fee of 25 cents per page. -39-
EXHIBIT 11 EXHIBIT 11 EXHIBIT 11 CROWN CENTRAL PETROLEUM CORPORATION AND SUBSIDIARIES COMPUTATION OF EARNINGS PER SHARE COMPUTATION OF EARNINGS PER SHARE COMPUTATION OF EARNINGS PER SHARE (thousands of dollars except per share amounts) _____________________________ Year Ended December 31 _______ 1995 ______ 1994 ______ 1993 72 Primary and Fully Diluted Primary and Fully Diluted Primary and Fully Diluted Earnings Per Share Earnings Per Share Earnings Per Share Net (loss) applicable to __ $ ___ $ _____ $ common shares __ ___ _____ ) _______ (70,624 _______ (35,406) ______ (4,300 _ ) _ _______ _______ ________ Shares outstanding as reported at December 31, 1994, 1993 and 1992, 9,803,098 9,832,598 9,832,598 respectively Restricted shares held by the Company at December 31 (105,500) Weighted average effect of 52 shares of common stock issued in October 1995 13 Weighted average effect of 135,000 shares of common stock purchased in ________ ____ May 1994 ________ _______ (90,000) Weighted average number of common shares outstanding, as adjusted at _ _ December 31 _ _ _________ 9,697,611 _________ 9,742,598 _________ 9,832,598 _________ _________ _________ Net (loss) per common share ________ $ ________ $ ________ $ ________ ________ ________ _____ (7.28 ) __ _____ (3.63 ) _____ (.44 ) _____ _______ _____
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EXHIBIT 21 EXHIBIT 21 EXHIBIT 21 73 SUBSIDIARIES SUBSIDIARIES SUBSIDIARIES 1. Subsidiaries as of December 31, 1995, which are consolidated Subsidiaries as of December 31, 1995, which are consolidated Subsidiaries as of December 31, 1995, which are consolidated in the financial statements of the Registrant; each in the financial statements of the Registrant; each in the financial statements of the Registrant; each subsidiary is 100% owned and doing business under its own subsidiary is 100% owned and doing business under its own subsidiary is 100% owned and doing business under its own name. name. name. Nation or State Nation or State Nation or State Subsidiary Subsidiary Subsidiary of Incorporation of Incorporation of Incorporation Continental American Corporation Delaware Coronet Security Systems, Inc. Delaware Coronet Software, Inc. Delaware Crown Central Holding Corporation Maryland Crown Central International (U.K.), United Kingdom Limited Crown Central Pipe Line Company Texas Crown Gold, Inc. Maryland The Crown Oil and Gas Company Maryland Crown-Rancho Pipe Line Corporation Texas Crown Stations, Inc. Maryland Crowncen International N.V. Netherlands Antilles Fast Fare, Inc. Delaware F Z Corporation Maryland Health Plan Administrators, Inc. Maryland La Gloria Oil and Gas Company Delaware Locot, Inc. Maryland McMurrey Pipe Line Company Texas Tiara Insurance Company Vermont Tiara Properties, Inc. Maryland T. B. & Company, Inc. Maryland
-41- EXHIBIT 23 EXHIBIT 23 EXHIBIT 23 CONSENT OF INDEPENDENT AUDITORS CONSENT OF INDEPENDENT AUDITORS CONSENT OF INDEPENDENT AUDITORS We consent to the incorporation by reference in the Registration Statement (Form S-8 No. 33- 74 53457) pertaining to the 1994 Long Term Incentive Plan and Employees Savings Plan and the Registration Statement (Form S-8 No. 33-57847) pertaining to the Employees Supplemental Savings Plan of Crown Central Petroleum Corporation and Subsidiaries of our report dated February 29, 1996, with respect to the consolidated financial statements of Crown Central Petroleum Corporation and Subsidiaries included in the Annual Report (Form 10-K) for the year ended December 31, 1995. ERNST & YOUNG LLP Baltimore, Maryland March 15, 1996 -42-
EXHIBIT 24 EXHIBIT 24 EXHIBIT 24 POWER OF ATTORNEY POWER OF ATTORNEY POWER OF ATTORNEY We, the undersigned officers and directors of Crown Central Petroleum Corporation hereby severally constitute Henry A. Rosenberg, Jr., Phillip W. Taff, John E. Wheeler, Jr. and Thomas L. Owsley, and each of them singly, our true and lawful attorneys with full power to them and each of them to sign for us in our names and in the capacities indicated below this Report on Form 10-K for the fiscal year ended December 31, 1995 pursuant to the requirements of Section 13 or 15(d) of the Securities and Exchange Act of 1934 and all amendments thereto. _________ Signature _________ Signature _________ Signature _____ Title _____ Title _____ Title ____ Date ____ Date ____ Date /s/---Henry A. Rosenberg, Jr. Chairman of the Board, President 3/11/96 Henry A. Rosenberg, Jr. and Chief Executive Officer (Principal Executive Officer) /s/---Jack Africk Director 3/11/96 Jack Africk 75 /s/---George L. Bunting, Jr. Director 3/11/96 George L. Bunting, Jr. /s/---Michael F. DaceyDirector 3/11/96 Michael F. Dacey /s/---Robert M. Freeman Director 3/11/96 Robert M. Freeman /s/---Thomas M. Gibbons Director 3/11/96 Thomas M. Gibbons /s/---Patricia A. Goldman Director 3/11/96 Patricia A. Goldman /s/---Peter J. Holzer Director 3/11/96 Peter J. Holzer /s/---William L. Jews Director 3/11/96 William L. Jews /s/---Rev. Harold E. Ridley, Jr., S.J. Director 3/11/96 Reverend Harold E. Ridley, Jr., S.J. /s/---Phillip W. Taff Senior Vice President - Finance and3/11/96 Phillip W. Taff Chief Financial Officer (Principal Financial Officer) /s/---John E Wheeler, Jr. Senior Vice President - Treasurer and Controller 3/11/96 John E. Wheeler, Jr. (Principal Accounting Officer)
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SIGNATURES SIGNATURES SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. CROWN CENTRAL PETROLEUM CROWN CENTRAL PETROLEUM CROWN CENTRAL PETROLEUM CORPORATION CORPORATION CORPORATION 76 By ____________________________ * __________________________________ Henry A. Rosenberg, Jr. Chairman of the Boa rd, President and Chief Executive Officer By ____________________________ * ____________________________________ Phillip W. Taff Senior Vice President - Finance and Chief Financial Officer By ___________________________ /s/---John E. Wheeler, Jr. ____________________________ John E. Wheeler, Jr. Senior Vice President - Treasurer and Controller Date: March 15, 1996
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below on March 15, 1996 by the following persons on behalf of the registrant and in the capacities indicated: _________________________________________________________________ * ___ ______________________________ * _________________________________ Jack Africk, Director Patricia A. Goldman, Director _________________________________________________________________ * ___ ______________________________ * _________________________________ George L. Bunting, Jr., Director Peter J. Holzer, Director _________________________________________________________________ * ___ ______________________________ * _________________________________ Michael F. Dacey, Director William L. Jews, Director 77 _________________________________________________________________ * ___ ______________________________ * _________________________________ Robert M. Freeman, Director Rev. Harold E. Ridley, Jr., S.J., Director _________________________________________________________________ * ___ ______________________________ * _________________________________ Thomas M. Gibbons, Director Henry A. Rosenberg, Jr., Director Chairman of the Board, President and Chief Executive Officer *By Power of Attorney (John E. Wheeler, Jr.) -44-
EX-3.B 2 Crown Central Petroleum Corporation Crown Central Petroleum Corporation Crown Central Petroleum Corporation Bylaws Bylaws Bylaws Adopted February 29, 1996
Table of Contents Article I ____________ Stockholders 78 Section 1.1 Meetings of Stockholders 1 Section 1.2 Annual Meeting 1 Section 1.3 Special Meeting Called by Corporation 2 Section 1.4 Special Meeting Called by Stockholders 2 Section 1.5 Record Date 3 Section 1.6 Quorum 3 Section 1.7 Proxies 4 Section 1.8 Ballot Vote 4 Section 1.9 Inspection of Books 4 Article II ___________________ Stock and Dividends Section 2.1 Certificates of Stock 4 Section 2.2 Transfers of Stock 4 Section 2.3 Registered Stockholders 4 Section 2.4 Lost Certificates 4 Section 2.5 Dividends 5 Article III _________ Directors Section 3.1 Board of Directors 5 Section 3.2 Number of Directors 5 Section 3.3 Eligibility; Nomination Procedures 5 Section 3.4 Vacancies 6 Section 3.5 Place and Time of Meeting 6 Section 3.6 Annual Meeting 6 Section 3.7 Calling of Meeting 6 Section 3.8 Notice of Meeting. 6 Section 3.9 Quorum 7 Section 3.10 Compensation of Directors 7 Article IV ______________________________ Executive and Other Committees Section 4.1 Executive Committee 7 Section 4.2 Other Committees 7 Section 4.3 Procedures Applicable to Committees 7
Page (i)
Article V ________ Officers Section 5.1 Appointment and Removal of Officers 8 Section 5.2 Chairman of the Board 8 Section 5.3 Vice Chairman of the Board 8 Section 5.4 President 9 Section 5.5 Vice Presidents 9 79 Section 5.6 Secretary 9 Section 5.7 Treasurer 9 Section 5.8 Controller 10 Section 5.9 Assistant Officers 10 Section 5.10 Vacancies 10 Section 5.11 Duties of Officers May Be Delegated 10 Article VI ___________________________________ Indemnity of Directors and Officers Section 6.1 Indemnity 10 Section 6.2 Advancement of Expenses 11 Section 6.3 Services in Other Capacities 11 Section 6.4 Rights not Exclusive 11 Article VII ______________________________ Certain Administrative Matters Section 7.1 Checks 12 Section 7.2 Fiscal Year 12 Section 7.3 Annual Statements 12 Section 7.4 Amendment to Bylaws 12 Section 7.5 Offices 12 Section 7.6 Seal 12
Page (ii) Crown Central Petroleum Corporation Crown Central Petroleum Corporation Crown Central Petroleum Corporation Bylaws Bylaws Bylaws Article I Article I Article I ____________ Stockholders ____________ Stockholders ____________ Stockholders Section 1.1 Section 1.1 Section 1.1 ________ Meetings ________ Meetings ________ Meetings ________________ of Stockholders. ________________ of Stockholders. ________________ of Stockholders. All meetings of the stockholders shall be at the office of the Corporation in Baltimore, Maryland, or at such other place within the United States as the Board of Directors may designate. Section 1.2 Section 1.2 Section 1.2____ ____ ____ ______ Annual ______ Annual ______ Annual ________ Meeting. ________ Meeting. ________ Meeting. (a) The annual meeting of stockholders shall be held at two o'clock p.m. on a business day during the 80 thirty (30) day period commencing on the fourth Thursday of April. At each annual meeting of stockholders, only such business shall be conducted as is proper to consider and has been brought before the meeting (i) pursuant to the Corporation's notice of the meeting, (ii) by or at the direction of the Board of Directors, or (iii) by a stockholder who is a stockholder of record of a class of shares entitled to vote on the business such stockholder is proposing both at the time of the giving of the stockholder's notice hereinafter described in this Section 1.2 and on the record date for such annual meeting, and who complies with the notice procedures set forth in this Section 1.2. Written notice of each annual meeting shall be given to each stockholder by leaving the same with the stockholder, or at the stockholder's residence or usual place of business, or by mailing it postage prepaid and addressed to the stockholder at his or her address as it appears upon the books of the Corporation, at least ten days prior to the meeting. (b) In order to bring before an annual meeting of stockholders any business which may properly be considered, a stockholder who meets the requirements set forth in the preceding paragraph must give the Corporation timely written notice which complies with Section 1.2(c) of these bylaws. To be timely, a stockholder's notice must be given, by certified United States mail, with postage thereon prepaid and with return receipt requested, addressed to the Secretary at the principal office of the Corporation. Any such notice 81 must be received at the Corporation's principal office not less than 120 calendar days in advance of the anniversary of the date on which the Corporation's proxy statement was released to its stockholders in connection with the previous year's annual meeting of stockholders, unless the date of the meeting to which such notice relates has been changed by more than 30 days from the date contemplated at the time of the previous year's proxy statement, in which case any such notice must be received not less than 60 days before the date established for the meeting. -1- (c) Each such stockholder's notice shall set forth as to each matter the stockholder proposes to bring before the annual meeting: (i) the name and address, as they appear on the Corporation's stock transfer books, of the stockholder proposing business; (ii) the class and number of shares of stock of the Corporation beneficially owned by such stockholder; (iii) a representation that such stockholder is a stockholder of record at the time of the giving of the notice and intends to appear in person or by proxy at the meeting to present the business specified in the notice; (iv) a brief description of the business desired to be brought before the meeting, including the complete text of any resolutions to be presented and the reasons for wanting to conduct such business; and (v) any interest which the stockholder may have in such business. (d) The Secretary or Assistant Secretary shall 82 deliver each stockholder's notice that has been timely received to the Chairman and to the President for review. (e) Notwithstanding the foregoing provisions of this Section 1.2, a stockholder seeking to have a proposal included in the Corporation's proxy statement for an annual meeting of stockholders shall comply with the requirements of Regulation 14A under the Securities Exchange Act of 1934, as amended from time to time, or with any successor regulation. Section 1.3 Section 1.3 Section 1.3____ ____ ____ _______ Special _______ Special _______ Special ______________________________ Meeting Called by Corporation. ______________________________ Meeting Called by Corporation. ______________________________ Meeting Called by Corporation. At any time in the interval between regular meetings, special meetings of the stockholders may be called by the Chairman of the Board, the Vice Chairman of the Board, the President, or by a majority of the Board of Directors, stating the place, day, and hour of such special meeting, and the business proposed to be transacted thereat. Such notice shall be given to each stockholder entitled to vote thereat by leaving the same with the stockholder, or at the stockholder's residence or usual place of business, or by mailing it postage prepaid and addressed to the stockholder at his or her address as it appears upon the books of the Corporation. No business shall be transacted at such meetings except for the business set forth in the notice. Section 1.4 Section 1.4 Section 1.4____ ____ ____ _______ Special _______ Special _______ Special _________________ Meeting Called by _________________ Meeting Called by _________________ Meeting Called by _____________ Stockholders. _____________ Stockholders. _____________ Stockholders. 83 (a) A special meeting may also be called by stockholders entitled to cast twenty-five percent (25%) of all votes entitled to be cast at the meeting, upon the request in writing signed by such stockholders and delivered to the Chairman of the Board, the Vice Chairman of the Board, the President, or the Secretary. Such request shall set forth: (i) the names and addresses, as they appear on the Corporation's stock transfer books, of the stockholders making the request; (ii) the class and number of shares of stock of the Corporation beneficially owned by such stockholders; (iii) a representation that such stockholders are stockholders of record at the record date for determining whether the requisite number of stockholders have signed and delivered the written request demanding a special meeting of stockholders and a representation as to the date on which the first such stockholder signed such request; (iv) a representation that each such stockholder intends to appear in person or by proxy at the meeting to present the business specified in the notice; (v) as to each matter or business the requesting stockholders propose to bring before the special meeting, a brief description of the matter or business including the complete text of any resolutions to be presented and the reasons for wanting to conduct such business; and (iv) any interest which any of the requesting stockholders may have in such business. (b) The record date for determining whether the requisite number of stockholders have signed and delivered the written request demanding a special meeting of 84 stockholders is the date the first such stockholder signs such request. -2- (c) A special meeting may not be called to consider any matter which is substantially the same as a matter voted on at any special meeting of the stockholders held during the preceding twelve (12) months, unless the meeting is requested by stockholders entitled to cast a majority of all of the votes entitled to be cast at the meeting. The twelve month period shall be determined from the date of the previous special meeting to the date of the stockholder request. (d) The Secretary or Assistant Secretary shall inform the stockholders who make the request of the reasonably estimated cost of preparing and mailing a notice of the meeting, and only upon payment of these costs to the Corporation, notify each stockholder entitled to notice of the meeting. If the officer of the Corporation to whom such request in writing shall have been delivered pursuant to Section 1.4(a) shall fail to issue a call for such meeting within ten (10) business days after payment to the Corporation of the reasonably estimated cost of preparing and mailing a notice of the meeting, then the stockholders who made the request may do so by giving fifteen (15) business days' notice of the time, place and object of the meeting by advertisement inserted in a daily newspaper of general circulation in the City of Baltimore, Maryland. (e) Only business within the purpose or purposes 85 described in the notice for a special meeting of stockholders may be conducted at the meeting. Section 1.5 Section 1.5 Section 1.5____ ____ ____ ______ Record ______ Record ______ Record _____ Date. _____ Date. _____ Date. (a) The Board of Directors shall fix, in advance, a record date to make a determination of stockholders for an annual meeting, or for any special meeting, such date to be not more than ninety (90) nor less than ten (10) days before the meeting or action requiring a determination of stockholders. If no such record date is set the record date shall be the close of business on the day before the date on which the first notice is given. (b) When a determination of stockholders entitled to notice of or to vote at any meeting of stockholders has been made, such determination shall be effective for any adjournment of the meeting unless the Board of Directors fixes a new record date, which it shall do if the meeting is adjourned to a date more than ninety (90) days after the date fixed for the original meeting. Section 1.6 Section 1.6 Section 1.6____ ____ ____ _______ Quorum. _______ Quorum. _______ Quorum. The presence in person or by proxy of stockholders entitled to cast a majority of all votes entitled to be cast at the meeting shall be requisite and shall constitute a quorum for the transaction of business at all meetings of the stockholders except as otherwise provided by law or by the charter. If at any annual or special meeting of stockholders a quorum shall fail to attend, a majority in interest attending in person or by proxy shall have power 86 to adjourn the meeting from time to time without notice other than announcement at the meeting until the requisite amount of voting stock shall be present. At any such adjourned meeting, at which the requisite amount of voting stock shall be present in person or by proxy, any business may be transacted which might have been transacted at the meeting originally called, had the same been held at the time so called. -3- Section 1.7 Section 1.7 Section 1.7 ___ ___ ___ ________ Proxies. ________ Proxies. ________ Proxies. At any meeting stockholders may vote either in person or by proxy. Such proxy shall be in writing and dated, but no proxy which is dated more than three (3) months before the meeting at which it is offered shall be accepted unless such proxy shall, on its face, name a longer period for which it is to remain in force. Section 1.8 Section 1.8 Section 1.8____ ____ ____ _______ Vote by _______ Vote by _______ Vote by _______ Ballot. _______ Ballot. _______ Ballot. The vote for Directors, and, upon demand of any stockholder, the vote upon any question before the meeting, shall be by ballot. Section 1.9 Section 1.9 Section 1.9 ___ ___ ___ __________ Inspection __________ Inspection __________ Inspection _________ of Books. _________ of Books. _________ of Books. Except as otherwise provided by statute the Board of Directors shall determine from time to time whether, and if allowed, when and under what conditions and regulations the accounts and books of the Corporation or any of them shall be open to inspection of the stockholders, and the stockholders' rights in this respect are and shall be 87 restricted and limited accordingly. Article II Article II Article II ___________________ Stock and Dividends ___________________ Stock and Dividends ___________________ Stock and Dividends Section 2.1 Section 2.1 Section 2.1 _____ _____ _____ ______________________ Certificates of Stock. ______________________ Certificates of Stock. ______________________ Certificates of Stock. Each stockholder shall be entitled to a certificate of stock of the Corporation which shall be signed by the Chairman of the Board, President or a Vice President and by the Secretary or an Assistant Secretary, or the Treasurer or an Assistant Treasurer of the Corporation, and sealed with its seal; which shall exhibit the holder's name and certify the number of shares owned by the stockholder. A certificate shall be deemed to be so signed and sealed whether the signatures be manual or facsimile signatures and whether the seal be a facsimile seal or any other form of seal. Each certificate shall be counter- signed by the transfer agent and registered by the Registrar duly appointed by the Board of Directors of the Corporation, the Board of Directors being hereby given the power and authority to appoint one or more Transfer Agents and one or more Registrars. Section 2.2 Section 2.2 Section 2.2 ___ ___ ___ _________ Transfers _________ Transfers _________ Transfers _________ of Stock. _________ of Stock. _________ of Stock. Transfers of stock shall be made on the books of the Corporation only by the person named in the certificate, or by his or her attorney, lawfully constituted in writing, upon surrender and cancellation of certificates for a like number of share. 88 Section 2.3 Section 2.3 Section 2.3____ ____ ____ __________ Registered __________ Registered __________ Registered _____________ Stockholders. _____________ Stockholders. _____________ Stockholders. The Corporation shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends and to vote as such owner, and for any other purpose, and shall not be bound to recognize any equitable or other claim to or interest in such shares on the part of any other person, whether or not it shall have express or other notice thereof, save as expressly provided for by the laws of Maryland. Section 2.4 Section 2.4 Section 2.4 ___ ___ ___ ____ Lost ____ Lost ____ Lost _____________ Certificates. _____________ Certificates. _____________ Certificates. Any person claiming a certificate of stock to be lost, stolen, destroyed, or mutilated shall make an affidavit or affirmation to that fact and advertise the same in such manner as the Board of Directors may require, and shall, if the Directors so require, give the Corporation a bond of indemnity in form and with one or more sureties satisfactory to the Board in at least double the value of the stock represented by said certificate, whereupon a new certificate may be issued of the same tenor and for the same number of shares as the one alleged to be lost, stolen, destroyed or mutilated. -4- Section 2.5 Section 2.5 Section 2.5____ ____ ____ __________ Dividends. __________ Dividends. __________ Dividends. Dividends upon the capital stock of the Corporation when earned may be declared by the Board of Directors at any regular or special meeting. The Board of Directors shall 89 have power from time to time to fix and determine and to vary the amount of working capital of the Corporation, and to direct and determine the use and disposition of any surplus or net profits; and the amount of the surplus and the net profits of the Corporation to be reserved before the payment of any dividend shall rest wholly in the discretion of the Board of Directors. Article III Article III Article III _________ Directors _________ Directors _________ Directors Section 3.1 Section 3.1 Section 3.1 ___ ___ ___ ________ Board of ________ Board of ________ Board of __________ Directors. __________ Directors. __________ Directors. The business and affairs of this Corporation shall be managed under the direction of the Board of Directors, and all of the powers of the Corporation, except such as are by law, or by the charter, or by these bylaws conferred upon or reserved to the stockholders may be exercised by the Board of Directors. Section 3.2 Section 3.2 Section 3.2____ ____ ____ _________ Number of _________ Number of _________ Number of __________ Directors. __________ Directors. __________ Directors. The Board of Directors shall consist of ten (10) persons which number from time to time may be increased to not greater than twenty or decreased to not less than three by vote of a majority of the entire Board of Directors. Each Director shall hold office until his or her death, resignation, or removal or until his or her successor is elected and qualified. Section 3.3 Section 3.3 Section 3.3 _____ _____ _____ _______________________ Eligibility; Nomination _______________________ Eligibility; Nomination _______________________ Eligibility; Nomination ___________ Procedures. ___________ Procedures. ___________ Procedures. (a) No person shall be eligible for election as a 90 Director at a meeting of stockholders unless nominated (i) by the Board of Directors or (ii) by a stockholder who is a stockholder of record of a class of shares entitled to vote for the election of Directors, both at the time of the giving of the stockholder's notice described in this Section 3.3 and on the record date for the meeting at which Directors will be elected, and who complies with the notice procedures set forth in this Section 3.3. (b) In order to nominate any persons, a stockholder who meets the requirements set forth in the preceding paragraph must give the Corporation timely written notice. To be timely, a stockholder's notice must be given either by personal delivery to the Secretary at the principal office of the Corporation or by first class United States mail, with postage thereon prepaid, addressed to the Secretary at the principal office of the Corporation. Any such notice must be received, in the case of an annual meeting of stockholders, on or after January 1st and before February 1st of the year in which the meeting will be held if the meeting is to be an annual meeting held within the period specified for the annual meeting by Section 1.2, unless the annual meeting has not been held within such period, in which case any such notice must be received not less than sixty (60) days before the date established for the annual meeting. In the case of a special meeting of stockholders, any such notice must be received not later than the close of business on the tenth (10th) day following the day on which notice of the special meeting of stockholders called for the purpose of electing Directors 91 is first given to stockholders. -5- 92 (c) Each such stockholder's notice shall set forth the following: (i) as to the stockholder giving the notice, (1) the name and address of such stockholder as they appear on the Corporation's stock transfer books, (2) the class and number of shares of stock of the Corporation beneficially owned by such stockholder, (3) a representation that such stockholder is a stockholder of record at the time of giving the notice and intends to appear in person or by proxy at the meeting to nominate the person or persons specified in the notice, and (4) a description of all arrangements or understandings, if any, between such stockholder and each nominee and any other person or persons (naming such person or persons) pursuant to which the nomination or nominations are to be made; and (ii) as to each person whom the stockholder wishes to nominate for election as a Director, (1) the name, age, business address and residence address of such person, (2) the principal occupation or employment of such person, (3) the class and number of shares of stock of the Corporation which are beneficially owned by such person, and (4) all other information that is required to be disclosed about nominees for election as Directors in solicitations of proxies for the election of Directors under the rules and regulations of the Securities and Exchange Commission. In addition, each such notice shall be accompanied by the written consent of each proposed nominee to serve as a Director if elected and such consent shall contain a statement from the proposed nominee to the effect that the information about the nominee contained in the notice is correct. 93 Section 3.4 Section 3.4 Section 3.4 ___ ___ ___ __________ Vacancies. __________ Vacancies. __________ Vacancies. Whenever there is a vacancy on the Board of Directors (other than a vacancy resulting from the removal of a Director by vote of the stockholders which vacancy is immediately thereafter filled by the stockholders), then the vacancy shall be filled by a majority of the remaining Directors elected by the stockholders of the class or series entitled to fill such vacancy or by the sole remaining Director elected by that class or series if there is only one such Director. Section 3.5 Section 3.5 Section 3.5____ ____ ____ _________ Place and _________ Place and _________ Place and _______________ Time of Meeting _______________ Time of Meeting _______________ Time of Meeting Meetings of the Board of Directors may be held within, or without the State of Maryland, as the Board may from time to time determine. The time and place of meetings may be fixed by the party or parties making the call. Section 3.6 Section 3.6 Section 3.6____ ____ ____ ______ Annual ______ Annual ______ Annual ________ Meeting. ________ Meeting. ________ Meeting. The Board of Directors shall meet for the purpose of organization and the transaction of other business immediately following the annual meeting of stockholders at which the Board was elected. Such meeting shall be held at the principal office of the Corporation in the State of Maryland, or at such other place within the United States as the Board of Directors may have designated for the immediately preceding annual meeting of stockholders, or as may be designated by the consent in writing of all of the Directors. No notice of such meeting shall be necessary. 94 Section 3.7 Section 3.7 Section 3.7____ ____ ____ __________ Calling of __________ Calling of __________ Calling of _______ Meeting _______ Meeting _______ Meeting Meetings of the Board of Directors may be called by the Chairman of the Board, the Vice Chairman of the Board, the President, or a majority of the Board. At least twenty-four (24) hours' notice shall be given of all meetings of the Board; with the consent of the majority of the Directors, a shorter notice may be given. Section 3.8 Section 3.8 Section 3.8____ ____ ____ _________ Notice of _________ Notice of _________ Notice of ________ Meeting. ________ Meeting. ________ Meeting. Notices of all meetings of Directors may be left at their usual places of business, or may be sent by mail or electronic means, and such notices by mail or electronic means shall be deemed to have been given when sent or mailed at Baltimore. -6- Section 3.9 Section 3.9 Section 3.9____ ____ ____ _______ Quorum. _______ Quorum. _______ Quorum. At all meetings of the Board, a majority of the entire Board of Directors shall be necessary and sufficient to constitute a quorum for the transaction of business, except that a lesser number may adjourn any meeting from time to time. Section 3.10 Section 3.10 Section 3.10 _____ _____ _____ _______________ Compensation of _______________ Compensation of _______________ Compensation of __________ Directors. __________ Directors. __________ Directors. (a) By resolution of the Board all Directors, other than salaried officers of the Corporation or a subsidiary of the Corporation, may be allowed a fixed sum and expenses of attendance, if any, for attendance at each meeting of the Board and in 95 addition may be allowed for their services as Directors such annual or other compensation as may be fixed by resolution of the Board from time to time. The preceding provisions shall not be construed to preclude any Directors, including salaried officers, from serving the Corporation in any other capacity, including service as a member of a standing or special committee, and receiving compensation therefor or to preclude reimbursement of salaried officers who are Directors for expenses of attendance at meetings of the Board. (b) For their services as members of special and standing committees, Directors may be allowed such annual or other compensation as may be fixed by resolution of the Board of Directors from time to time. Article IV Article IV Article IV ______________________________ Executive and Other Committees ______________________________ Executive and Other Committees ______________________________ Executive and Other Committees Section 4.1 Section 4.1 Section 4.1____ ____ ____ _________ Executive _________ Executive _________ Executive __________ Committee. __________ Committee. __________ Committee. There may be an executive committee of three or more Directors designated by resolution passed by a majority of the whole Board. Said committee may meet at stated times, or on notice to all by any of their own number. During the intervals between meetings of the Board, such committee shall advise with and aid the officers of the Corporation in all matters concerning its interests and the management of its business, and generally perform such duties and exercise such powers as may be directed or delegated by the Board of Directors from time to time. To such Committee may be delegated any or all of the powers of the Board of 96 Directors in the management of the business and affairs of the Corporation while the Board is not in session, excepting such powers as the Board of Directors by statute may not delegate. Section 4.2 Section 4.2 Section 4.2 ___ ___ ___ _____ Other _____ Other _____ Other ___________ Committees. ___________ Committees. ___________ Committees. There may be such other standing and special committees as may be established from time to time by resolution passed by a majority of the whole Board of Directors. Such committees shall be composed of such Directors as may be designated by the Board of Directors and shall perform such duties and exercise such powers as may be directed by the Board of Directors. Section 4.3 Section 4.3 Section 4.3____ ____ ____ __________ Procedures __________ Procedures __________ Procedures _________________________ Applicable to Committees. _________________________ Applicable to Committees. _________________________ Applicable to Committees. The provisions of these bylaws which govern meetings, notice and waiver of notice, and quorum and voting requirements of the Board shall apply to committees of Directors and their members as well. Vacancies in the membership of any committee shall be filled by the Board of Directors at any meeting thereof. In the absence of a member or members of a committee, the members thereof present at any meeting (whether or not they constitute a quorum) may appoint a member or members of the Board of Directors to act in the place or places of such absent member or members. Committees shall keep regular minutes of their proceedings, and report the same to the Board when required. -7- Article V Article V Article V 97 ________ Officers ________ Officers ________ Officers Section 5.1 Section 5.1 Section 5.1 _____ _____ _____ _______________________ Appointment and Removal _______________________ Appointment and Removal _______________________ Appointment and Removal ____________ of Officers. ____________ of Officers. ____________ of Officers. (a) The officers of the Corporation shall be chosen by the Board of Directors at its first meeting after each annual meeting of stockholders; and shall consist of a Chairman of the Board of Directors, a President, one or more Vice Presidents, a Secretary, a Treasurer, a Controller, an Assistant Secretary, an Assistant Treasurer, and whenever deemed advisable by the Board of Directors, a Vice Chairman of the Board and one or more additional Vice Presidents (including, without limitation, one or more Executive, Group, and Senior Vice Presidents), Assistant Vice Presidents, Assistant Secretaries, or Assistant Treasurers. Any two of the offices hereinbefore mentioned except those of President and Vice President, may be held by the same person. (b) The Board may appoint such other officers and agents as it shall deem necessary, who shall hold their offices for such terms, and shall exercise such powers and perform such duties as shall be determined from time to time by the Board. The salaries of all officers of the Corporation shall be fixed by the Board of Directors or by any committee or superior officer upon whom such power may be conferred from time to time by the Board of Directors. (c) The officers of the Corporation shall hold office until their successors are chosen and qualified. 98 (d) Any officer or employee of the Corporation may be removed at any time with or without cause, by the affirmative vote of a majority of the whole Board of Directors, or by any committee or superior officer upon whom such power of removal may be conferred by the Board of Directors, and such action shall be conclusive on the officer or employee so removed. Section 5.2 Section 5.2 Section 5.2____ ____ ____ ________ Chairman ________ Chairman ________ Chairman _____________ of the Board. _____________ of the Board. _____________ of the Board. The Chairman of the Board shall be the chief executive officer of the Corporation. The Chairman of the Board shall preside at all meetings of the stockholders and Directors and shall exercise, subject to control of the Board of Directors, such general supervision over the affairs of the Corporation and its employees as may be appropriate to carry out the policies of the Corporation. The Chairman of the Board shall have such other functions as may be determined by the Board of Directors. 99 Section 5.3 Section 5.3 Section 5.3____ ____ ____ ____ Vice ____ Vice ____ Vice ______________________ Chairman of the Board. ______________________ Chairman of the Board. ______________________ Chairman of the Board. The Vice Chairman of the Board, if elected, shall be the chief administrative officer of the Corporation, and, subject to control of the Board of Directors and the general supervision of the Chairman of the Board, shall, in cooperation with the President, be responsible for the administration of the Corporation's activities. The Vice Chairman of the Board shall preside at all meetings of the stockholders and Directors at which the Chairman of the Board is not present. The Vice Chairman of the Board shall have such other functions as may be determined by the Board of Directors. -8- Section 5.4 Section 5.4 Section 5.4____ ____ ____ __________ President. __________ President. __________ President. The President shall be the chief operating officer of the Corporation and, subject to control of the Board of Directors and the general supervision of the Chairman of the Board, shall have general and active management of the Corporation's operations. The President shall have all of the powers and perform all of the duties of the Chairman of the Board in case of his or her absence or inability to act, or if a Chairman of the Board has not been elected, other than presiding at meetings of the stockholders and Directors at which the Vice Chairman of the Board, if elected, shall preside. The President shall also have all of the powers and perform all of the duties of the Vice Chairman of the Board in case of his or her absence or inability to act, or if a Vice 100 Chairman of the Board is not elected, other than such powers and duties as the Chairman of the Board shall either elect to exercise and perform or to delegate to another officer. The President shall perform such other duties as may be determined by the Board of Directors. Section 5.5 Section 5.5 Section 5.5____ ____ ____ ____ Vice ____ Vice ____ Vice ___________ Presidents. ___________ Presidents. ___________ Presidents. The Vice Presidents shall perform such duties as the Chairman of the Board, Vice Chairman of the Board, President, or Board of Directors shall from time to time prescribe. In the order of seniority prescribed, the most senior Vice President shall, in the absence or inability of the President to act, perform the duties and exercise the powers of the President. The order of seniority of Vice Presidents shall be prescribed from time to time by the Board of Directors or, in the absence of prescription by the Board of Directors, by the Chairman of the Board. Section 5.6 Section 5.6 Section 5.6____ ____ ____ __________ Secretary. __________ Secretary. __________ Secretary. The Secretary shall attend all sessions of the Board and all meetings of the stockholders and record all votes and the minutes of all proceedings in a book to be kept for that purpose; and shall perform like duties for the standing committees when required. The Secretary shall give, or cause to be given, notice of all meetings of the stockholders and of the Board of Directors; shall have custody of the seal of the Corporation and whenever authorized by the Board shall affix the seal to any instrument requiring the same; and shall perform such other duties and have custody of 101 such other books and papers as may from time to time be prescribed by the Board of Directors, the Chairman of the Board, the Vice Chairman of the Board, or the President. Section 5.7 Section 5.7 Section 5.7____ ____ ____ __________ Treasurer. __________ Treasurer. __________ Treasurer. The Treasurer shall be the chief financial officer of the Corporation, unless the Board of Directors shall designate a Vice President as such officer, and have the custody of the corporate funds and securities and shall deposit all moneys and other valuable effects in the name and to the credit of the Corporation in such depositories as may be authorized by the Board of Directors. The Treasurer shall disburse the funds of the Corporation as may be ordered by the Board, taking proper vouchers for such disbursements, and shall render to the Chairman of the Board, the Vice Chairman of the Board, the President and the Board of Directors, whenever they may respectively require it, an account of all his or her transactions as Treasurer and of the financial condition of the Corporation. The Treasurer shall give the Corporation a bond if required by the Board of Directors in the sum, and with one or more sureties satisfactory to the Board, for the faithful performance of the duties of his or her office, and for the restoration to the Corporation in case of his or her death, resignation, retirement, or removal from office, of all books, papers, vouchers, moneys, and other property of whatever kind in his or her possession or under his or her control belonging to the Corporation. If a Controller has not been elected, the Treasurer shall also have all of the powers and perform all of the duties of that office. The Treasurer shall perform 102 such other duties as the Chairman of the Board, Vice Chairman of the Board, President, or Board of Directors may from time to time prescribe. -9- Section 5.8 Section 5.8 Section 5.8 _____ _____ _____ ___________ Controller. ___________ Controller. ___________ Controller. The Controller shall be the chief accounting officer of the Corporation. The Controller shall see that adequate and correct records of all assets, liabilities and transactions of the Corporation and its subsidiaries are maintained; that efficient procedures and systems are installed and followed; that adequate audits are currently and regularly made; and, in conjunction with other officers, that measures and procedures are initiated and followed whereby the business of the Corporation and its subsidiaries shall be conducted with maximum effi- ciency and economy. The Controller shall perform such other duties as may be assigned to him or her from time to time by the Chairman of the Board, Vice Chairman of the Board, President, or Board of Directors. Section 5.9 Section 5.9 Section 5.9____ ____ ____ _________ Assistant _________ Assistant _________ Assistant _________ Officers. _________ Officers. _________ Officers. Each Assistant Vice President, each Assistant Secretary, and each Assistant Treasurer shall have the usual powers and duties pertaining to his or her office, together with such other powers and duties as may be assigned to him or her by the Chairman of the Board, Vice Chairman of the Board, President, or the Board of Directors. 103 Section 5.10 Section 5.10 Section 5.10___ ___ ___ __________ Vacancies. __________ Vacancies. __________ Vacancies. If the office of any officer or agent becomes vacant by reason of death, resignation, retirement, disqualification, removal from office, or otherwise, the Directors then in office, although less than a quorum, by a majority vote, may choose a successor or successors, who shall hold office for the unexpired term in respect of which said vacancy occurred. Section 5.11 Section 5.11 Section 5.11___ ___ ___ _________ Duties of _________ Duties of _________ Duties of __________________________ Officers May Be Delegated. __________________________ Officers May Be Delegated. __________________________ Officers May Be Delegated. In case of the absence of any Officer of the Corporation, or for any other reason that the Board of Directors may deem sufficient, the Board may delegate, for the time being, the powers or duties, or any of them of such officer to any other officer, or to any Director, providing a majority of the entire Board concur therein. Article VI Article VI Article VI 104 __________________________ Indemnity of Directors and __________________________ Indemnity of Directors and __________________________ Indemnity of Directors and ________ Officers ________ Officers ________ Officers 105 Section 6.1` Section 6.1` Section 6.1`___ ___ ___ __________ Indemnity. __________ Indemnity. __________ Indemnity. Each person who is now, or who shall hereafter become, a Director, officer, employee or agent of the Corporation, whether or not serving in one or more of such capacities at the time indemnification is sought or paid, and who is made a party defendant to any proceeding by reason of service in any one or more of such capacities shall be indemnified in the manner and to the maximum extent authorized by law against judgments, penalties, fines, settlements (approved by the Corporation) and reasonable expenses actually incurred in connection with such proceeding unless it is proved that the act or omission of such person was material to the cause of action adjudicated in the proceeding or, in the case of a settlement, to be adjudicated in the proceeding, and that (a) such act or omission (i) was committed in bad faith or (ii) was the result of active and deliberate dishonesty or (b) such person actually received an improper personal benefit in money, property or services or (c) in the case of any criminal proceeding, such person had reasonable cause to believe the act or omission was unlawful. Such indemnification shall not be made unless authorized for a specific proceeding after a determination in accordance with Maryland law that the Director, officer, employee or agent has met the standard of conduct set forth in this paragraph. Additionally, any such person who was not a Director or officer of the Corporation at the time of the commission of the act or the omission to act which is a subject of such proceeding may be indemnified to such further extent, if any, consistent with law, as may be provided 106 in any contract between the Corporation and such person and may be indemnified, but shall not be entitled to be indemnified, to such further extent, if any, consistent with law, as may be authorized, prospectively or retroactively, by the Board of Directors, the Chairman of the Board, the President or any other officer to whom such authority is delegated by the Board of Directors, the Chairman of the Board or the President. -10- Section 6.2 Section 6.2 Section 6.2 _____ _____ _____ ________________________ Advancement of Expenses. ________________________ Advancement of Expenses. ________________________ Advancement of Expenses. Payment or reimbursement in advance of the final disposition of any proceeding described in Section 6.1 of reasonable expenses incurred by any such person in defending such proceeding may be authorized by the Board of Directors or in the case of any such person who is not a Director, by the Chairman of the Board, the President or any other officer to whom such authority is delegated by the Board of Directors, the Chairman of the Board or the President; provided, however, that the Corporation shall have received: (a) a written affirmation by such person of such person's good faith belief that the standard of conduct necessary for indemnification by the Corporation as authorized by law has been met; and (b) a written undertaking by or on behalf of such person to repay all amounts so paid or reimbursed if it shall ultimately be determined that such standard of conduct has not been met. 107 Nothing contained in this Section 6.2 shall be construed to require the Corporation to pay or reimburse any expenses incurred by any such person prior to the ultimate disposi- tion of such proceeding or to require the Corporation to pay or reimburse subsequent to the ultimate disposition of such proceeding any expenses incurred by any such person, except as provided in Section 6.1. Section 6.3 Section 6.3 Section 6.3____ ____ ____ ________ Services ________ Services ________ Services ____________________ in Other Capacities. ____________________ in Other Capacities. ____________________ in Other Capacities. Service in the capacity of a Director, officer, employee or agent of the Corporation shall include service at the request of the Corporation as a director, officer, partner, trustee, fiduciary, employee or agent of any other corporation or of any partnership, joint venture, trust, other enter- prise, or employee benefit plan. Any approval of any settlement may be made by the Board of Directors or, in the case of a settlement by any such person who is not a Director, by the Chairman of the Board, the President or any other officer to whom such authority is delegated by the Board of Directors, the Chairman of the Board or the President. Except where reimbursement of expenses is ordered by a court, all determinations as to the reasonableness of any expenses shall be made by the persons authorizing reimbursement or payment thereof. Section 6.4 Section 6.4 Section 6.4 ___ ___ ___ __________ Rights not __________ Rights not __________ Rights not __________ Exclusive. __________ Exclusive. __________ Exclusive. The preceding rights to indemnification shall not be exclusive of and shall be in addition to any other rights to which such person would be entitled as a 108 matter of law in the absence of the preceding provisions. -11- Article VII Article VII Article VII ______________________________ Certain Administrative Matters ______________________________ Certain Administrative Matters ______________________________ Certain Administrative Matters Section 7.1 Section 7.1 Section 7.1____ ____ ____ _______ Checks. _______ Checks. _______ Checks. All checks or demands for money or notes of the Corporation shall be signed by such officer or officers as the Board of Directors may from time to time designate. Section 7.2 Section 7.2 Section 7.2____ ____ ____ ______ Fiscal ______ Fiscal ______ Fiscal _____ Year. _____ Year. _____ Year. The fiscal year shall begin the first day of January of each year. Section 7.3 Section 7.3 Section 7.3 ___ ___ ___ ______ Annual ______ Annual ______ Annual ___________ Statements. ___________ Statements. ___________ Statements. The Chairman of the Board or such other officer or officers of the Corporation as he or she may direct, shall annually prepare a full and true statement of the affairs of the Corporation, which shall be submitted at the annual meeting of the stockholders and filed within 20 days thereafter at the principal office of the Corporation in Baltimore, State of Maryland. Section 7.4 Section 7.4 Section 7.4 ___ ___ ___ _________ Amendment _________ Amendment _________ Amendment __________ to Bylaws. __________ to Bylaws. __________ to Bylaws. Any and all provisions of these bylaws may be altered, amended, or repealed and new bylaws be adopted only by the stockholders at a duly constituted meeting or by the vote of a majority of the entire Board of Directors at any meeting of the Board of Directors. 109 Section 7.5 Section 7.5 Section 7.5____ ____ ____ ________ Offices. ________ Offices. ________ Offices. The Principal office of the Corporation shall be in the City of Baltimore, State of Maryland. The Corporation may also have a place of business in such other places as the Board of Directors may from time to time appoint or the business of the Corporation may require. Section 7.6 Section 7.6 Section 7.6 ___ ___ ___ _____ Seal. _____ Seal. _____ Seal. The corporate seal shall have inscribed thereon the name of the Corporation, the year of its organization, and the words, `` Corporate Seal, Maryland.'' -12- EX-4.B. 3 FIRST AMENDMENT TO CREDIT AGREEMENT THIS FIRST AMENDMENT TO CREDIT AGREEMENT (herein called this "Amendment") is made by and among Crown Central Petroleum Corporation, a Maryland corporation (the "Company"), The First National Bank of Boston and Texas Commerce Bank National Association, as agents for the Banks ("Agents"), NationsBank of Texas, N.A., as administrative agent and as letter of credit agent for the Banks (in such respective capacities, "Administrative Agent" and "Letter of Credit Agent"), and each of the banks that is a signatory to the Original Agreement (the "Banks")(the Administrative Agent, the Letter of Credit Agent, the Agents, and the Banks are collectively referred to herein as the "Bank Parties"). 110 RECITALS 1. The Company and the Bank Parties have entered into that certain Credit Agreement dated as of September 25, 1995 (the "Original Agreement") for the purpose and consideration therein expressed. 2. The Company and the Bank Parties desire to amend the Original Agreement as expressly set forth herein. NOW, THEREFORE, in consideration of the premises and the mutual covenants and agreements contained herein and in the Original Agreement and in consideration of the credit which may hereafter be extended by the Banks to the Company, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: ARTICLE I. __________________________ Definitions and References Section 1.1. ________________ Terms Defined in ______________________ the Original Agreement. Unless the context otherwise requires or unless otherwise expressly defined herein, the terms defined in the Original Agreement shall have the same meanings whenever used in this Amendment. Section 1.2. _____________ Other Defined _____ Terms. Unless the context otherwise requires, the following terms when used in this Amendment shall have the meanings assigned to them in this Section 1.2. "Amendment" shall mean this First Amendment to Credit Agreement. -1- 111 "Credit Agreement" shall mean the Original Agreement as amended hereby. ARTICLE II. ________________________________ Amendments to Original Agreement Section 2.1. ______________ New Definition. The following definition of "FAS 121 Writedown" is hereby added to Section 1.1 of the Original Agreement: "_________________ FAS 121 Writedown" shall mean the recognition by the Company of Consolidated Non- Cash Charges in the amount of $55,000,000 as reflected in the Company's 1995 year-end financial statements for an impairment loss in accordance with Statement of Financial Accounting Standards No. 121 - "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of". Section 2.2. _____________ Amendments to _____________ Defined Terms. The definition of "Adjusted Net Income (Loss)" in Section 1.1 of the Original Agreement is hereby amended to include the following subsection (a1) which is to be added immediately after subsection (a) and before subsection (b): (a1) Consolidated Non- Cash Charges of $55,000,000 recognized pursuant to the FAS 121 Writedown, Subsections (g) and (h) of the definition of "Cumulative Adjusted Liquidity Capacity" in Section 1.1 of the Original Agreement are hereby amended in their entirety to read as follows: 112 (g) increases (decreases) during such Determination Period in Deferred Liabilities, excluding decreases of $13,800,000, plus (minus) (h) increases (decreases) in Consolidated Funded Debt during such Determination Period, but only up to the level at which the CFD/Capital Ratio equals 40% (provided, however, that in no event will increases in Consolidated Funded Debt be added in determining Cumulative Adjusted Liquidity Capacity unless FIFO Tangible Net Worth exceeds $243,000,000 at such Determination Date), minus Section 2.3. ________________ Covenants of the _______ Company. Section 8.14(c)(iii) of the Original Agreement is hereby amended in its entirety to read as follows: (iii) FIFO Net Worth must exceed $231,000,000 immediately after such sale, without giving effect to any gain recognized upon such sale; and -2- Section 8.19 of the Original Agreement is hereby amended in its entirety to read as follows: 8.19 _________________ FIFO Tangible Net _____ Worth. The Company shall 113 cause FIFO Tangible Net Worth to be at least $185,000,000 at the end of each calendar month. Section 8.20 of the Original Agreement is hereby amended in its entirety to read as follows: 8.20 _________________ CFD/Capital Ratio. The Company shall cause the CFD/Capital Ratio to be less than .475 to 1.0 at the end of each calendar month. Section 8.23 of the Original Agreement is hereby amended in its entirety to read as follows: 8.23 ___________________ Short-Term FIFO Net _____________ Income (Loss). The Company shall cause FIFO Net Income (Loss) to be greater than: (i) ($20,000,000) (i.e., either to be positive or, if a loss, not to be a loss of more than $20,000,000) for the first three short-term measurement periods commencing on July 1, 1995 (of one month, two months and three months, respectively); (ii) ($20,000,000) less ($400,000) for each month in such short-term measurement period for each of the next successive twelve short-term measurement periods; and (iii) ($15,200,000) for each short-term measurement period thereafter. As used in this Section 8.23, "short-term measurement period" means any period of twelve consecutive calendar months, provided that until June 30, 1996, a short- term measurement period shall be any period (from one to eleven months in length) beginning on July 1, 1995 and ending on the last day of a calendar month prior to June 30, 1996. Section 8.24 of the Original Agreement is hereby amended in its entirety to read as follows: 114 8.24 _________________ Mid-Term FIFO Net _____________ Income (Loss). The Company shall cause FIFO Net Income (Loss) to be greater than: (i) ($30,000,000) (i.e., either to be positive or, if a loss, not to be a loss of more than $30,000,000) for the first three mid-term measurement periods commencing on July 1, 1995 (of one month, two months and three months, respectively); (ii) ($30,000,000) less ($200,000) for each month in such mid-term measurement period for each of the next successive twenty four mid- term measurement periods; and (iii) ($25,200,000) for each mid-term measurement period thereafter. As used in this Section 8.24, "mid-term measurement period" means any period of twenty-four consecutive calendar months, provided that until June 30, 1997, a mid-term measurement period shall be any period (from one to twenty-three months in length) beginning on July 1, 1995 and ending on the last day of a calendar month prior to June 30, 1997. -3- ARTICLE III. ___________________________ Conditions of Effectiveness Section 3.1. ______________ Effective Date. This Amendment shall become effective when, and only when, (i) Administrative Agent shall have received, at Administrative Agent's office, a counterpart of this Amendment executed and delivered by the Company, the Administrative Agent, the Letter of Credit Agent and the Majority Banks and (ii) Administrative Agent shall have additionally received such 115 supporting documents as Administrative Agent may reasonably request. Upon satisfaction of such conditions, this Amendment shall be deemed to take effect as of October 1, 1995. ARTICLE IV. ______________________________ Representations and Warranties Section 4.1. _______________ Representations _____________________________ and Warranties of the Company. In order to induce each Bank to enter into this Amendment, the Company represents and warrants to each Bank that: (a) The representations and warranties contained in Section 7 of the Original Agreement (excluding Section 7.16) are true and correct (except as disclosed in the letter dated February 14, 1996 from the Company to the Banks) and no Default or Event of Default exists at and as of February 1, 1996, in each case after giving effect to the amendments herein made. (b) The Company is duly authorized to execute and deliver this Amendment and is and will continue to be duly authorized to borrow monies and to perform its obligations under the Credit Agreement. The Company has duly taken all corporate action necessary to authorize the execution and delivery of this Amendment and to authorize the performance of the obligations of the Company hereunder. (c) The execution and delivery by the Company of this Amendment, the performance by the Company of its obligations hereunder and the consummation of the transactions contemplated hereby do not and will not conflict with any provision of law, statute, rule or regulation or of the articles 116 or certificate of incorporation and bylaws of the Company, or of any material agreement, judgment, license, order or permit applicable to or binding upon the Company, or result in the creation of any lien, charge or encumbrance upon any assets or properties of the Company. Except for those which have been obtained, no consent, approval, authorization or order of any court or governmental authority or third party is required in connection with the execution and delivery by the Company of this Amendment or to consummate the transactions contemplated hereby. -4- (d) When duly executed and delivered, each of this Amendment and the Credit Agreement will be a legal and binding obligation of the Company, enforceable in accordance with its terms, except as limited by bankruptcy, insolvency or similar laws of general application relating to the enforcement of creditors' rights and by equitable principles of general application. 117 ARTICLE V. _____________ Miscellaneous Section 5.1. _______________ Ratification of __________ Agreements. The Original Agreement as hereby amended is hereby ratified and confirmed in all respects. Any reference to the Credit Agreement in any Loan Document shall be deemed to be a reference to the Original Agreement as hereby amended. The execution, delivery and effectiveness of this Amendment shall not, except as expressly provided herein, operate as a waiver of any right, power or remedy of the Banks under the Credit Agreement, the Notes, or any other Loan Document nor constitute a waiver of any provision of the Credit Agreement, the Notes or any other Loan Document. Section 5.2. ___________ Survival of __________ Agreements. All representations, warranties, covenants and agreements of the Company herein shall survive the execution and delivery of this Amendment and the performance hereof, including without limitation the making or granting of the Loans, and shall further survive until all of the Obligations are paid in full. All statements and agreements contained in any certificate or instrument delivered by the Company hereunder or under the Credit Agreement to any Bank shall be deemed to constitute representations and warranties by, and/or agreements and covenants of, the Company under this Amendment and under the Credit Agreement. Section 5.3. ______________ Loan Documents. This Amendment is a Loan Document, and all provisions in the Credit Agreement pertaining to Loan Documents apply hereto. 118 Section 5.4. _____________ Governing Law. This Amendment shall be governed by and construed in accordance the laws of the State of New York and any applicable laws of the United States of America in all respects, including construction, validity and performance. Section 5.5. ____________ Counterparts. This Amendment may be separately executed in counterparts and by the different parties hereto in separate counterparts, each of which when so executed shall be deemed to constitute one and the same Amendment. -5- IN WITNESS WHEREOF, this Amendment is executed by the parties hereto. This Amendment shall be dated as of February 1, 1996 for purposes of reference but shall, as provided in Section 3.1 above, take effect as of October 1, 1995. CROWN CENTRAL PETROLEUM CORPORATION By: /s/---Phillip W. Taff Name: Phillip W. Taff Title: Senior Vice President and Chief Financial Officer NATIONSBANK OF TEXAS, N.A., as Administrative Agent, Letter of Credit Agent and a Bank By: /s/---William D. Clift William D. Clift Senior Vice President THE FIRST NATIONAL BANK OF BOSTON, as an Agent and a Bank 119 By: /s/---Michael Kane Name: Michael Kane Title: Managing Director TEXAS COMMERCE BANK NATIONAL ASSOCIATION, as an Agent and a Bank By: /s/---D. G. Mills Name: D. G. Mills Title: Vice President FIRST NATIONAL BANK OF MARYLAND, as a Bank By: /s/---Kellie M. Mathews Name: Kellie M. Mathews Title: Vice President -6- SIGNET BANK/MARYLAND, as a Bank By: /s/---Janice E. Godwin Name: Janice E. Godwin Title: Vice President THE BANK OF NOVA SCOTIA, as a Bank By: /s/---John W. Campbell Name: John W. Campbell Title: Unit Head DEN NORSKE BANK AS, as a Bank By: /s/---Byron L. Cooley Name: Byron L. Cooley Title: First Vice President By: /s/---William V. Moyer Name: William V. Moyer Title: Vice President SOCIETE GENERALE,as a Bank 120 By: /s/---Gordon Saint-Denis Name: Gordon Saint-Denis Title: Vice President THE YASUDA TRUST AND BANKING COMPANY, LIMITED, New York Branch, as a Bank By: /s/--- Yutaka Fujiwara Name: Yutaka Fujiwara Title: Joint General Manager -7- EX-10.C 4 EXHIBIT 10.c CROWN CENTRAL PETROLEUM CORPORATION ______________________ EMPLOYEES SAVINGS PLAN _________________ TABLE OF CONTENTS Article I - Definitions Article II - Eligibility of Employees to Participate Article III- Contributions Article IV - Limitation on Annual Additions Article V - Investments Article VI-Vesting of Interest of Participants in Employer Contributions Article VII- In-Service Distributions 121 Article VIII - Loans to Participants Article IX - Distributions upon Death Article X - Distributions upon Separation from Service Article XI - Distributions upon Retirement or Disability Article XII- Distributions Commencing on Required Beginning Date Article XIII - Distributions under Qualified Domestic Relations Order Article XIV - Top Heavy Rules Article XV - Administration Article XVI- Indemnification Article XVII - Concerning the Trustee Article XVIII - Concerning the Participating Companies Article XIX- Exclusive Benefit, Amendment, Termination Article XX - Appendices Article XXI- Eligible Rollover Distributions Article XXII - Miscellaneous Appendices CROWN CENTRAL PETROLEUM CORPORATION EMPLOYEES SAVINGS PLAN AMENDED AND RESTATED AS OF JANUARY 1, 1987 THIS AMENDMENT AND RESTATEMENT of the CROWN CENTRAL PETROLEUM CORPORATION EMPLOYEES SAVINGS PLAN (the "Plan"), by CROWN CENTRAL PETROLEUM CORPORATION, a Maryland 122 corporation, hereinafter called the "Company". W I T N E S S E T H: WHEREAS, the Company and the Participating Companies have heretofore established the Crown Central Petroleum Corporation Employees Savings Plan; and WHEREAS, the Company reserved the right to modify the Plan at any time and from time to time; and WHEREAS, the Company now wishes to amend and restate the Plan in order to bring it into compliance with the Tax Reform Act of 1986 and subsequent legislation through the date of execution hereof; NOW, THEREFORE, the said Plan is amended and restated in its entirety, effective January 1, 1987, except for provisions stating later effective dates, to provide as follows: _________ ARTICLE I ___________ DEFINITIONS The following definitions will apply to this Plan, unless a different meaning is required by the context. 1.1 _______ ACCOUNT means the separate accounts maintained on the books and records of the Plan to reflect each Participant's interest under the Plan. Accounts shall be maintained for each Participant, as appropriate, of one or more of the following types: (a) _________________ Employer Matching _____________________ Contributions Account - That portion of a Participant's interest in the Plan which is attributable to Employer Matching 123 Contributions made on his behalf in accordance with Section 3.2. (b) _______________ Participant Pre____ -Tax _____________________ Contributions Account - That portion of a Participant's interest in the Plan which is attributable to Participant Pre-Tax Contributions made by him in accordance with Section 3.1. (c) _________________ Participant After____ -Tax _____________________ Contributions Account - That portion of a Participant's interest in the Plan which is attributable to Participant After-Tax Contributions made by him pursuant to Section 3.1. 1.2 _____________________ ANNUITY STARTING DATE shall mean the first day of the month following the date an Insurer receives from the Administrator written notice of a distribution as shall be required by the Insurer, or if later, the first day of the month specified by the Participant or Beneficiary for the commencement of benefit payments. "_______ Insurer" means a legal reserve life insurance company organized or operated under the laws of any one of the United States of America and duly licensed in the State of Maryland which has entered into a group annuity contract for the purpose of funding this Plan in whole or in part. 1.3 ___________ BENEFICIARY means (i) the surviving spouse, if any, of the Participant, or (ii) if there is no surviving spouse, or if the Participant and surviving spouse have executed a qualified election (as defined below), the person or persons designated in writing by the Participant, or (iii) if there is no surviving spouse and no person living on the date of the Participant's death who is designated in writing by the 124 Participant, the Participant's descendants per stirpes, or (iv) if there are no persons described above living on the date of the Participant's death, the Participant's estate. A "qualified election" is a written designation by a Participant of a beneficiary(ies) other than the Participant's spouse which includes the written consent of the spouse to the payment of the Participant's Accounts to the beneficiary(ies) designated in the election (which may not be changed without spousal consent) or which includes the written consent of the spouse which expressly permits beneficiary designations by the Participant without any requirement of further consent by the spouse. The spouse's consent must acknowledge the effect of the written designation and consent, and the spouse's signature must be notarized or witnessed by a Plan representative. If the consent of the spouse permits beneficiary designations without further consent by the spouse, the consent must acknowledge and expressly relinquish the right to limit the consent to the designation of a specific beneficiary. A spouse may not revoke his or her written consent. A qualified election is not required if it is established to the satisfaction of the Plan Administrator that there is no spouse or that the spouse cannot be located. If the spouse is legally incompetent to give consent, the spouse's legal guardian, even if the guardian is the Participant, may give consent. Also, if the Participant is legally separated or the Participant has been abandoned (within the meaning of local law) and the Participant has a court order to such effect, or if such other circumstances exist as are specified under applicable Internal Revenue Service regulations, a qualified election is not required unless a qualified domestic relations order (as 125 defined in Code Section 414(p)) provides otherwise. 1.4 ________________ BREAK IN SERVICE means a calendar year during which an Employee (i) terminates or continues an earlier termination of employment and (ii) does not complete at least five hundred and one (501) Hours of Service. 1.5 ____ CODE means the Internal Revenue Code of 1986, as amended. 1.6 _______ COMPANY means Crown Central Petroleum Corporation, a Maryland corporation. 1.7 ____________ COMPENSATION means the base salary or base wages regularly paid to a Participant by a Participating Company or Companies on a periodic basis; provided, however, that if the Participant has made an election(s) to reduce his base salary or base wages in accordance with Sections 125 and/or 401(k) of the Code, "Compensation" shall mean the base salary or base wages that would have been regularly paid to the Participant by a Participating Company on a periodic basis but for such election(s). "Base salary" means the regular salary, excluding overtime, bonuses, premium pay and other allowances, paid to a salaried Participant. "Base wages" means the amount determined by multiplying the "base rate of pay" of an hourly-paid Participant by his paid hours per week (to a maximum of 40) for a Participating Company. "Base rate of pay" means the hourly wage rate paid to the Participant by a Participating Company for non-overtime work, exclusive of bonuses, premium pay, living and other allowances, or, if the Participant has been assigned to two or more job classifications at different wage rates, the arithmetical average of 126 the hourly wage rates of all job classifications to which the Participant has been assigned. In the case of either salaried or hourly-paid Participants who are employed by two or more Participating Companies, base salary or base wages means the sum of the base salaries or base wages paid to him by such Participating Companies. Any reference in this Plan to Compensation is a reference to the definition in this Section 1.7 unless the Plan reference specifies a modification to this definition. The Plan Administrator will take into account only Compensation actually paid for the relevant period. (A) Limitations on Compensation. (1) Compensation Dollar Limitation. For any Plan Year beginning after December 31, 1988, and before January 1, 1994, the Plan Administrator must take into account only the first $200,000 (or beginning January 1, 1990, such larger amount as the Commissioner of Internal Revenue may prescribe) of any Participant's Compensation. For any Plan Year beginning prior to January 1, 1989, this $200,000 limitation (but not the family aggregation requirement set forth hereinbelow) applies only if the Plan is top heavy for such Plan Year. For any Plan Year beginning on or after January 1, 1994, the Plan Administrator must take into account only the first $150,000 (as adjusted by the Commissioner of Internal Revenue for increases in the cost of living in accordance with Code Section 401(a)(17)(B) of any Participant's Compensation. (2) Application of Limitation to Certain Family Members. The Compensation dollar limitation applies to the combined Compensation of the Employee and of any family member aggregated 127 with the Employee under Section 3.3(c)(iii) who is either (i) the Employee's spouse; or (ii) the Employee's lineal descendant under the age of 19 as the close of the year. If, for a Plan Year, the combined Compensation of the Employee and such family members who are Participants entitled to an allocation for that Plan Year exceeds the applicable limitation, "Compensation" for each such Participant, for purposes of the contribution and allocation provisions of Article III, means his Adjusted Compensation. Adjusted Compensation is the amount which bears the same ratio to the applicable limitation as the affected Participant's Compensation (without regard to the applicable limitation) bears to the combined Compensation of all the affected Participants in the family unit. (B) Nondiscrimination. For purposes of determining whether the Plan discriminates in favor of Highly Compensated Employees, Compensation means Compensation as defined in this Section. 1.8 _____________ CONTRIBUTIONS means amounts paid into the Trust Fund by the Participating Companies or Participants. 1.9 _________________ ELIGIBLE EMPLOYEE means an Employee who has satisfied the eligibility requirements of Article II whether or not such Employee elects to participate in the Savings Plan. 1.10 ________ EMPLOYEE means any employee of the Employer. 1.11 ________ EMPLOYER for purposes of determining who may contribute to the Plan and whose Employees may be Participants means the Company and any other Participating Company which adopts this Plan for the benefit of some or all of its Employees. 128 The term "Employer" refers to all Employers collectively, as if they were one, unless the context clearly indicates that any Employer is referred to separately. 1.12 _________________ EMPLOYER MATCHING _____________ CONTRIBUTIONS means the Employer contributions provided pursuant to Section 3.2. 1.13 __________ ENTRY DATE means the first of each month following the date on which an Employee first satisfies the eligibility requirements of the Plan. 1.14 _____ ERISA means the Employee Retirement Income Security Act of 1974 and the regulations thereunder, as amended from time to time. 1.15 _______________ HOUR OF SERVICE means: (a) Each Hour of Service for which the Employer, either directly or indirectly, pays an Employee, or for which the Employee is entitled to payment, for the performance of duties. The Administrator credits Hours of Service under this paragraph (a) to the Employee for the computation period in which the Employee performs the duties, irrespective of when paid; (b) Each Hour of Service for back pay, irrespective of mitigation of damages, to which the Employer has agreed or for which the Employee has received an award. The Administrator credits Hours of Service under this paragraph (b) to the Employee for the computation period(s) to which the award or the agreement pertains rather than for the computation period in which the award, agreement or payment is made; and 129 (c) Each Hour of Service for which the Employer, either directly or indirectly, pays an Employee, or for which the Employee is entitled to payment (irrespective of whether the employment relationship is terminated), for reasons other than for the performance of duties during a computation period, such as leave of absence, vacation, holiday, sick leave, illness, incapacity (including disability), layoff, jury duty or military duty. The Administrator will credit no more than 501 Hours of Service under this paragraph (c) to an Employee on account of any single continuous period during which the Employee does not perform any duties (whether or not such period occurs during a single computation period). The Administrator credits Hours of Service under this paragraph (c) in accordance with the rules of paragraphs (b) and (c) of Labor Reg. Section 2530.200b-2, which the Plan, by this reference, specifically incorporates in full within this paragraph (c). The Administrator will not credit an Hour of Service under more than one of the above paragraphs. A computation period for purposes of this Section 1.15 is the calendar year, Year of Service period, Break in Service period or other period, as determined under the Plan provision for which the Administrator is measuring an Employee's Hours of Service. The Administrator will resolve any ambiguity with respect to the crediting of an Hour of Service in favor of the Employee. (A) Method of Crediting Hours of Service. The Administrator will credit every Employee with Hours of Service on the basis of weeks of employment. In this regard, the Administrator will credit an Employee with 45 Hours of Service for each week for which the Administrator would credit the Employee with at least one Hour of 130 Service under the preceding provisions of this Section 1.15. (B) Maternity/Paternity Leave. Solely for purposes of determining whether an Employee incurs a Break in Service under any provision of this Plan, the Administrator must credit Hours of Service during an Employee's unpaid absence period due to maternity or paternity leave. The Administrator considers an Employee on maternity or paternity leave if the Employee's absence is due to the Employee's pregnancy, the birth of the Employee's child, the placement with the Employee of an adopted child, or the care of the Employee's child immediately following the child's birth or placement. The Administrator credits Hours of Service under this paragraph on the basis of the number of Hours of Service the Employee would receive if he were paid during the absence period or, if the Administrator cannot determine the number of Hours of Service the Employee would receive, on the basis of 8 hours per day during the absence period. The Administrator will credit only the number (not exceeding 501) of Hours of Service necessary to prevent an Employee's incurring a Break in Service. The Administrator credits all Hours of Service described in this paragraph to the computation period in which the absence period begins or, if the Employee does not need these Hours of Service to prevent a Break in Service in the computation period in which his absence period begins, the Administrator credits these Hours of Service to the immediately following computation period. 1.16 _______________ LEASED EMPLOYEE. The Plan treats a Leased Employee as an Employee of the Employer. A Leased Employee is an individual (who otherwise is not an Employee of the Employer) who, pursuant to 131 a leasing agreement between the Employer and any other person, has performed services for the Employer (or for the Employer and any persons related to the Employer within the meaning of Code Section 414(a)(3)) on a substantially full time basis for at least one year and who performs services historically performed by employees in the Employer's business field. If a Leased Employee is treated as an Employee by reason of this Section 1.16, "Compensation" includes Compensation from the leasing organization which is attributable to services performed for the Employer. (A) Safe Harbor Plan Exception. The Plan does not treat a Leased Employee as an Employee if the leasing organization covers the employee in a safe harbor plan and, prior to application of this safe harbor plan exception, 20% or less of the Employer's Employees (other than Highly Compensated Employees) are Leased Employees. A safe harbor plan is a money purchase pension plan providing immediate participation, full and immediate vesting, and a nonintegrated contribution formula equal to at least 10% of the employee's compensation without regard to employment by the leasing organization on a specified date. The safe harbor plan must determine the 10% contribution on the basis of compensation as defined in Code Section 415(c)(3) plus elective contributions (as defined in Section 4.1(b)). (B) Other Requirements. The Administrator must apply this Section 1.16 in a manner consistent with Code Section 414(n) and 414(o) and the regulations issued under those Code sections. The Administrator will reduce a Leased Employee's allocation of Employer contributions under this Plan by the Leased Employee's allocation under the leasing organization's 132 plan, but only to the extent that allocation is attributable to the Leased Employee's service provided to the Employer. 1.17 _____________________ NORMAL RETIREMENT AGE means age sixty-five (65). 1.18 ___________ PARTICIPANT means any Employee who shall have acquired either a forfeitable or nonforfeitable interest in the Trust Fund pursuant to the provisions of this Plan. 1.19 _________________ PARTICIPANT AFTER____ -TAX _____________ CONTRIBUTIONS mean contributions made by a Participant to the Plan which do not reduce the Participant's Compensation for Federal Income Tax purposes. 1.20 _______________ PARTICIPANT PRE____ -TAX _____________ CONTRIBUTIONS means contributions made by the Employer on behalf of a Participant to this Plan, resulting from an election by such Participant to reduce his Compensation for Federal Income Tax purposes by a designated percentage. 1.21 _____________________ PARTICIPATING COMPANY means the Company and any corporation of which 50% or more of the outstanding stock entitled to vote is owned by the Company or by any corporation of which 50% or more of the outstanding stock entitled to vote is owned by a corporation first mentioned above, which elects to participate in this Plan pursuant to Article XVIII. 1.22 ____________ PENSION PLAN means the Crown Central Petroleum Corporation Pension Trust Agreement and/or the Crown Central Petroleum Corporation Retirement Income Plan. 133 1.23 ____ PLAN means this Crown Central Petroleum Corporation Employees Savings Plan and any amendments thereto. 1.24 _____________________ PLAN ADMINISTRATOR OR _____________ ADMINISTRATOR means Crown Central Petroleum Corporation, and any successor by merger, purchase or otherwise. 1.25 _________ PLAN YEAR through January 31, 1988 means the calendar year, thereafter means the period beginning January 1, 1989 and ending December 30, 1989, the 12-month periods beginning December 31, 1989 and ending December 30, 1990, and beginning December 31, 1990 and ending December 30, 1991, the short year consisting of December 31, 1991, and thereafter means the 12-month period beginning January 1 and ending December 31. 1.26 _____________ RELATED GROUP. A related group is a controlled group of corporations (as defined in Code Section 414(b)), trades or businesses (whether or not incorporated) which are under common control (as defined in Code Section 414(c)) or an affiliated service group (as defined in Code Section 414(m) or in Code Section 414(o)). If the Employer is a member of a related group, the term "Employer" includes the related group members for purposes of crediting Hours of Service, determining Years of Service and Breaks in Service under Articles II and VI, applying the limitations on allocations in Sections 4.1 and 4.2, applying the top heavy rules and the minimum allocation requirements of Article XIV, the definitions of Employee, Highly Compensated Employee, Compensation and Leased Employee, and for any other purpose required by the applicable Code section or 134 by a Plan provision. However, only a Participating Company may contribute to this Plan and only an Employee employed by a Participating Company is eligible to participate in this Plan. For Plan allocation purposes, "Compensation" does not include Compensation received from a related employer which is not participating in this Plan. 1.27 __________ RETIREMENT means a separation from service upon or after (i) Early, Normal or Deferred Retirement under the Pension Plan or (ii) attainment of Normal Retirement Age under this Plan. 1.28 ________________ TOTAL DISABILITY means inability, due to sickness or accidental bodily injury, to engage in any occupation or perform any work for compensation or profit for which the person is reasonably fitted by training, education or experience. 1.29 _____ TRUST means the Trust Fund established pursuant to this Plan out of which the benefits payable under this Plan shall be paid. 1.30 _______ TRUSTEE means Signet Bank/Maryland through December 31, 1991, and from and after January 1, 1992, means T. Rowe Price Trust Company, a Maryland limited trust company, or any successor in office who in writing accepts the position of Trustee. 1.31 _______________ YEAR OF SERVICE has the following meanings: (a) _______________ For Eligibility ________ Purposes. A Year of Service means a twelve (12) consecutive month period, measured from the Employee's employment commencement 135 date, in which the Employee is credited with one thousand (1,000) Hours of Service; provided, however, that for an Employee who is credited with less than one thousand (1,000) Hours of Service during such period, a Year of Service means a Plan Year in which such Employee is credited with one thousand (1,000) Hours of Service, starting with the Plan Year which begins during the Employee's first twelve (12) months of employment. (b) ____________________ For Vesting Purposes. A Year of Service means a Plan Year during which an Employee is credited with at least one thousand (1,000) Hours of Service. __________ ARTICLE II ___________________________ ELIGIBILITY OF EMPLOYEES TO ___________ PARTICIPATE 2.1 __________________ ELIGIBLE EMPLOYEES. Effective with respect to any Employee who has at least one (1) Hour of Service on or after January 1, 1989, (except effective on or after February 1, 1988 as to those certified collective bargaining unit Participants covered by the amendment to this Plan dated March 31, 1988), every Employee of a Participating Company who has attained age 21 and has completed a Year of Service as defined in Section 1.31(a), shall be eligible to participate in this Plan provided that if the Employee is a member of a certified collective bargaining unit, he shall be eligible to participate in this Plan only if the collective bargaining agency for such unit has either accepted the terms and conditions of this Plan or has consented to the solicitation of applications for participation from members of such collective bargaining unit. 136 2.2 ____________________ ELIGIBILITY UPON RE- __________ EMPLOYMENT. If an Employee should terminate employment and subsequently be re-employed by the Employer, the following rules shall determine when he shall again become eligible to participate in the Plan: (a) If he had not yet met the service requirement of Section 2.1 prior to such termination, his re-employment date shall be treated as his employment commencement date, and the provisions of Section 2.1 shall apply. (b) If he had met the service requirement of Section 2.1, then: (i) If his prior service is disregarded under the Break in Service rule specified in Section 6.2(b), such prior service shall be disregarded for purposes of determining his eligibility to again participate, his re- employment date shall be treated as his employment commencement date and the provisions of Section 2.1 shall apply; (ii) If his prior service is not disregarded under the Break in Service rule specified in Section 6.2(b), he shall be deemed to have met the service requirement of Section 2.1 as of the first day of the month next following his re- employment. ___________ ARTICLE III _____________ CONTRIBUTIONS 3.1 _______________________ PARTICIPANT PRE-TAX AND _____________________ PARTICIPANT AFTER-TAX _____________ CONTRIBUTIONS. (a) Subject to the limitations prescribed by this Article and Article IV, each 137 Participant may elect through payroll deduction to make either or both Participant Pre-Tax and/or Participant After-Tax Contributions to the Plan. The Participant's election must be made on a form prescribed by the Plan Administrator. The election, as to the aggregate of Pre-Tax and After-Tax Contributions, may be for any whole percentage not greater than 12% of the Participant's Compensation and shall indicate what portion, if any, shall be allocated as a Participant Pre-Tax Contribution and what portion, if any, shall be allocated as a Participant After- Tax Contribution. (b) The Employer shall remit Participant Contributions to the Trustee as soon as practicable but not later than thirty (30) days after they are withheld from payroll. That portion indicated by the Participant as being a Participant Pre-Tax Contribution will be credited to his Participant Pre-Tax Contribution Account, and that portion indicated as being a Participant After-Tax Contribution will be credited to his Participant After- Tax Contribution Account. Effective January 1, 1992, a Participant may change the total (including suspending allotments by reducing such total to 0%) and/or the Pre-Tax/After Tax make-up of his election no more than two times per Plan Year, effective as of the next January 1 or July 1; to the end and intent that any such change (including suspension) shall remain in effect for at least six months. A change may only be made on a form prescribed by and delivered to the Plan Administrator at least thirty (30) days before the election is to become effective. 3.2 _________________ EMPLOYER MATCHING _____________ CONTRIBUTIONS. 138 Promptly following the payment of the last payroll paid by it in any month, each Participating Company shall contribute to the Trust Fund an amount equal to fifty percent (50%) of the Matchable Portion of the Participant Pre-Tax Contributions and Participant After-Tax Contributions made by the Participants in its employ during that month, or, in the case of Participants employed by more than one Participating Company, the amount of the Matchable Portion of said Contributions which is apportioned to each Participating Company, less any applicable credits. Such contribution is hereinafter referred to as the "Employer Matching Contribution". Matchable Portion means (i) in the case of vested Participants, up to eight percent (8%) of Compensation allocated to Participant Pre-Tax and Participant After-Tax Contributions pursuant to Section 3.1 and (ii) in the case of non- vested Participants, up to seven percent (7%) of such Compensation. 3.3 _________________ SPECIAL RULES FOR _________________________________ PARTICIPANT PRE-TAX CONTRIBUTIONS. (a) _______________ Annual Elective ___________________ Deferral Limitation. A Participant's Elective Deferrals (Pre-Tax Contributions to this Plan or any other plan covering the Participant) for a calendar year beginning after December 31, 1986 may not exceed the Code Section 402(g) limitation. The Code Section 402(g) limitation is the greater of $7,000 or the adjusted amount determined by the Secretary of the Treasury. If the Employer determines a Participant's elective deferrals under this Plan for a calendar year would exceed the Code Section 402(g) limitation for the calendar year, the Employer shall not permit any additional Participant Pre-Tax Contributions 139 with respect to that Participant for the remainder of that calendar year, paying in cash to the Participant any amounts which would cause the Participant Pre- Tax Contributions to exceed the Code Section 402(g) limitation. If the Administrator determines a Participant's elective deferrals have exceeded the Code Section 402(g) limitation, the Administrator shall direct the Trustee to distribute to the Participant in cash the amount in excess of the limitation (the "Excess Deferral") as adjusted for income or loss allocable thereto. The determination of such allocable income or loss shall be made in a manner similar to the allocable income or loss determination described in Section 3.4 for Excess Contributions, except the numerator of the allocation fraction will be the amount of the Participant's Excess Deferral, and the denominator will be the Participant's accrued benefit attributable to his Elective Deferrals. If the Administrator distributes the Excess Deferral by April 15, it may make the distribution irrespective of any other provision under this Plan or under the Code. If a Participant participates in another plan under which he makes elective deferrals pursuant to a Code Section 401(k) arrangement, elective deferrals under a simplified employee pension, or salary reduction contributions to a tax-sheltered annuity, irrespective of whether the Employer maintains the other plan, the Participant may provide the Administrator a written claim for excess deferrals made for a calendar year. The Participant must submit the claim no later than the March 1 following the close of the particular calendar year and the claim shall certify under oath the amount of the Participant's Pre-Tax Contributions under this Plan 140 which are excess deferrals. If the Administrator receives a timely claim, he shall distribute to the Employee the excess deferral, as adjusted for allocable income or loss, which the Employee has assigned to this Plan in accordance with the distribution procedure described in the immediately preceding paragraph. (b) ________________ Average Deferral _______________ Percentage Test. For each Plan Year, the Participant Pre-Tax Contributions shall satisfy one of the following average deferral percentage ("ADP") tests: (i) The ADP for the Highly Compensated Group shall not exceed 1.25 times the ADP for the Nonhighly Compensated Group; or (ii) The ADP for the Highly Compensated Group shall not exceed the ADP for the Nonhighly Compensated Group by more than two (2) percentage points (or the lesser percentage permitted by the multiple use limitation in Section 3.7) and the ADP for the Highly Compensated Group shall be not more than twice the ADP for the Nonhighly Compensated Group. For purposes of applying the ADP test in Plan Years beginning on or after January 1, 1992, during which this Plan covers both employees who are included in a unit of employees covered by a collective bargaining agreement and employees who are not, this Plan shall be treated as consisting of two separate cash or deferred arrangements (one for each such group of employees). (c) ___________ Definitions. For purposes of applying the ADP test, the following definitions apply: (i) "Highly Compensated Group" shall mean the Eligible Employees who are Highly Compensated Employees for the Plan Year. (ii) "Eligible Employee" shall mean a Participant who elects to make Employee Pre-Tax 141 Contributions or who is eligible to make the same, irrespective of whether he actually does so. (iii) "Highly Compensated Employee" shall mean an Eligible Employee who, during the Plan Year or during the preceding 12-month period: (1) is a more than five percent (5%) owner of his Employer (applying the constructive ownership rules of Code Section 318, and applying the principles of Code Section 318 for an unincorporated entity); (2) has Compensation in excess of $75,000 (or a greater amount, as determined by the Commissioner of Internal Revenue); (3) has Compensation in excess of $50,000 (or a greater amount, as determined by the Commissioner of Internal Revenue) and is part of the top-paid 20% group of employees (based on Compensation for the relevant Plan Year); (4) has Compensation in excess of 50% of the dollar amount prescribed in Code Section 415(b)(1)(A) (relating to defined benefit plans) and is an officer of the Employer. If the Employee satisfies the definition in clause (2), (3) or (4) in the Plan Year but not during the preceding 12-month period and does not satisfy clause (1) in either period, the Employee is a Highly Compensated Employee only if he is one of the 100 most highly compensated Employees for the Plan Year. The number of officers taken into account under clause (4) will not exceed the greater of 3 or 10% of the total number (after application of the Code Section 414(q) exclusions) of Employees, but no more than 50 officers. If no Employee satisfies the Compensation requirement in clause (4) for the relevant year, the Administrator will treat the highest paid 142 officer as satisfying clause (4) for that year. For purposes of this Section 3.3(c)(iii), "Compensation" means Compensation as defined in Section 4.1(b), except no exclusions from Compensation apply other than the exclusions described in paragraphs (i), (ii), (iii) and (iv) of Section 4.1(b), and Compensation must include: (i) elective deferrals under a Code Section 401(k) arrangement or under a Simplified Employee Pension maintained by the Employer; and (ii) amounts paid by the Employer which are not currently includible in the Employee's gross income because of Code Section 125 (cafeteria plans) or 403(b) (tax- sheltered annuities). The Plan Administrator must make the determination of who is a Highly Compensated Employee, including the determinations of the number and identity of the top paid 20% group, the top 100 paid Employees, the number of officers includible in clause (4) and the relevant Compensation, consistent with Code Section 414(q) and regulations issued under that Code section. For purposes of applying any nondiscrimination test required under the Plan or under the Code, in a manner consistent with applicable Treasury regulations, the Plan Administrator will treat a Highly Compensated Employee and all his family members (a spouse, a lineal ascendant or descendant, or a spouse of a lineal ascendant or descendant) as a single Highly Compensated Employee, but only if the Highly Compensated Employee is a more than 5% owner or is one of the 10 Highly Compensated Employees with the greatest Compensation for the Plan Year. This aggregation rule applies to a family member even if that family member is a Highly Compensated Employee without family aggregation. The term "Highly Compensated Employee" also includes any former 143 Employee who separated from Service (or has a deemed Separation from Service, as determined under Treasury regulations) prior to the Plan Year, performs no Service for the Employer during the Plan Year, and was a Highly Compensated Employee either for the separation year or any Plan Year ending on or after his 55th birthday. If the former Employee's Separation from Service occurred prior to January 1, 1987, he is a Highly Compensated Employee only if he satisfied clause (1) of this Section 3.3(c)(iii) or received Compensation in excess of $50,000 during (1) the year of his separation from Service (or the prior year); or (2) any year ending after his 54th birthday. (iv) "Nonhighly Compensated Group" shall mean the Eligible Employees who are Nonhighly Compensated Employees for the Plan Year. The Nonhighly Compensated Employees are the Eligible Employees who are not Highly Compensated Employees and are not family members treated as Highly Compensated Employees under paragraph (iii). (v) The "ADP" for a group is the average of the separate Actual Deferral Ratios ("ADR") calculated for each Eligible Employee who is a member of that group. An Eligible Employee's ADR for a Plan Year is the ratio of the Participant Pre-Tax Contributions allocated to his account for the Plan Year to his Compensation for that portion of the Plan Year during which he was an Eligible Employee. For aggregated family members treated as a single Highly Compensated Employee under paragraph (c), the ADR of the family unit is the ADR determined by combining the Employee Pre-Tax Contributions and Compensation of all aggregated family members. A Nonhighly Compensated Employee's ADR shall not include Employee Pre-Tax Contributions made to this Plan or to any other Plan 144 maintained by the Employer, to the extent such Employee Pre-Tax Contributions exceed the Code Section 402(g) limitation. A Highly Compensated Employee's ADR shall include elective deferrals under any other Code Section 401(k) arrangement maintained by the Employer (unless elective deferrals are to an ESOP), but a Nonhighly Compensated Employee's ADP shall not include elective deferrals under another Code Section 401(k) arrangement maintained by the Employer unless the Employer treats the Code Section 401(k) arrangement under this Plan and the other Code Section 401(k) arrangement as a unit for coverage or discrimination purposes. 3.4 ___________________ ADP TEST CORRECTION. (a) If the Administrator determines the Plan fails to satisfy the ADP test for a Plan Year, it may recharacterize pursuant to Section 3.4(b) or direct the Trustee to distribute the Excess Contributions (defined hereinbelow), as adjusted for allocable income or loss, no later than the last day of the succeeding Plan Year. However, the Employer will incur an excise tax equal to ten percent (10%) of the amount of excess contributions for a Plan Year not recharacterized or distributed to the appropriate Highly Compensated Employees by 2-1/2 months following the close of that Plan Year. The Excess Contributions are the amount of Employee Pre-Tax Contributions made by the Highly Compensated Employees which causes the Plan to fail to satisfy the ADP test. The Administrator shall direct the Trustee to distribute to each Highly Compensated Employee his respective share of the Excess Contributions. The Administrator shall determine the respective shares of Excess Contributions by starting with the Highly Compensated Employee(s) at the next highest ADR level 145 (including the ADR of the Highly Compensated Employees who has the greatest ADR(s), reducing his ADR to the next highest ADR, then, if necessary, reducing the ADR of the Highly Compensated Employee(s) whose ADR(s) the Administrator already has reduced), and continuing in this manner until the ADP for the Highly Compensated Group satisfies the ADP test. If the Highly Compensated Employee is part of an aggregated family group, the Administrator, in accordance with the applicable Treasury Regulations, will determine each family member's allocable share of the Excess Contributions assigned to the family unit. Excess Contributions shall be adjusted for any income or loss allocable thereto up to the date of distribution. The income or loss allocable to Excess Contributions up to the date of distribution is the sum of: (i) the income or loss allocable to the Highly Compensated Employee's Pre-Tax Account for the Plan Year multiplied by a fraction, the numerator of which is such Employee's Excess Contributions for the year and the denominator of which is the Employee's account balance attributable to Participant Pre-Tax Contributions as of the last day of the Plan Year without regard to any income or loss occurring during such Plan Year; plus (ii) ten percent of the amount determined under (i) multiplied by the number of whole calendar months between the end of the Plan Year and the date of distribution, counting the month of distribution as a whole calendar month if, but only if, distribution occurs after the 15th day of such month. (b) Recharacterization. The Employer may treat Excess Contributions as an amount distributed to the Participant and 146 then recontributed by the Participant to the Plan as a Participant After-Tax Contribution. An amount may not be recharacterized with respect to a Highly Compensated Employee to the extent that such amount, in combination with other Participant After-Tax Contributions made by that Employee, would exceed any stated limit under the Plan. Recharacterization must occur no later than two and one- half months after the last day of the Plan Year in which such Excess Contributions arose and is deemed to occur on the date on which the last of those Highly Compensated Employees with Excess Contributions to be recharacterized is informed in writing of the amount recharacterized and the consequences thereof. Recharacterized amounts are includible in the Participant's gross income on the earliest dates any elective contributions made on behalf of the Participant during the Plan Year would have been received by the Participant had he originally elected to receive the amounts in cash. 3.5 __________________________ SPECIAL RULES FOR EMPLOYEE ___________________________ AFTER-TAX CONTRIBUTIONS AND _______________________________ EMPLOYER MATCHING CONTRIBUTIONS. (a) ____________________ Average Contribution _______________ Percentage Test. The Plan shall satisfy one of the following average contribution percentage ("ACP") tests, with respect to Employee After-Tax Contributions and Employer Matching Contributions: (i) The ACP for the Highly Compensated Group shall not exceed 1.25 times the ACP for the Nonhighly Compensated Group; or (ii) The ACP for the Highly Compensated Group shall not exceed the ACP for the Nonhighly 147 Compensated Group by more than two (2) percentage points (or the lesser percentage permitted by the multiple use limitation in Section 3.7), and the ACP for the Highly Compensated Group shall not be more than twice the ACP for the Nonhighly Compensated Group. For purposes of applying the ACP test in Plan Years beginning on or after January 1, 1992, during which this Plan covers both employees who are included in a unit of employees covered by a collective bargaining agreement and employees who are not, this Plan shall be treated as consisting of two separate cash or deferred arrangements (one for each such group of employees). (b) ___________ Definitions. For purposes of applying the ACP test, the following definitions apply: (i) "Highly Compensated Group" shall mean the Eligible Employees who are Highly Compensated Employees (as defined in Section 3.3(c)(iii)) for the Plan Year. (ii) "Eligible Employee" shall mean a Participant who is eligible to receive an allocation of Company Matching Contributions (or would be eligible if he made the type of contributions necessary to receive such an allocation), and a Participant who is eligible to make Participant After-Tax Contributions, irrespective of whether he actually makes such Contributions for the Plan Year. (iii) "Nonhighly Compensated Group" shall have the same meaning as in Section 3.3(c)(iv). (iv) The "ACP" for a group is the average of the Actual Contribution Ratios (ACR) calculated for each Eligible Employee who is a member of that group. An Eligible Employee's ACR for a Plan Year is the ratio of the sum of the Participant After- Tax Contributions and Employer Matching Contributions (such sum being hereinafter referred to as "Aggregate Contributions") allocated to his account for the 148 Plan Year to his Compensation for that portion of the Plan Year during which he was an Eligible Employee. For aggregated family members treated as a single Highly Compensated Employee under Section 3.3(c)(iii), the ACR of the family unit is the ACR determined by combining the Aggregate Contributions and Compensation of all aggregated family members. A Highly Compensated Employee's ACR shall include any Aggregate Contributions made on his behalf to any other plan maintained by the Employer (unless the other plan is an ESOP). A Nonhighly Compensated Employee's ACR shall not include Aggregate Contributions made on his behalf to another plan unless the Employer treats this Plan and the other plan as a unit for coverage or discrimination purposes under the Code. The Administrator may (in a manner consistent with Treasury regulations) determine the ACRs of the Eligible Employees by taking into account Employee Pre-Tax Contributions made to this Plan, but only to the extent they are not used in calculating the ADP test under Section 3.3. The Administrator may not include Employee Pre-Tax Contributions in the ACP test, unless the Code Section 401(k) arrangement under this Plan satisfies the ADP test both with and without such contributions. For Plan Years beginning after December 31, 1988, the Administrator may not include in the ACP test any Aggregate Contributions or elective deferrals under another plan unless that plan has the same Plan Year as this Plan. (v) "Aggregate Contributions" are Participant After-Tax Contributions and Employer Matching Contributions. "Excess Aggregate Contributions" are the amount of the Aggregate Contributions allocated on behalf of the Highly Compensated 149 Employees which causes the Plan to fail to satisfy the ACP test. 3.6 ___________________ ACP TEST CORRECTION. The Administrator first shall determine whether the Highly Compensated Employees have made Participant Pre-Tax Contributions which are Excess Deferrals under Section 3.3 or Excess Contributions under Section 3.4 before it determines Excess Aggregate Contributions for the Plan Year. If the Administrator determines the Plan fails to satisfy the ACP test for a Plan Year, it shall direct the Trustee to distribute the Excess Aggregate Contributions, as adjusted for allocable income or loss, no later than the last day of the succeeding Plan Year. However, the Employer will incur an excise tax equal to ten percent (10%) of the amount of Excess Aggregate Contributions for a Plan Year not distributed to the appropriate Highly Compensated Employees by 2- 1/2 months following the close of that Plan Year. The Administrator shall direct the Trustee to distribute to each Highly Compensated Employee his respective amount of the Excess Aggregate Contributions. The Administrator shall determine the respective amounts of Excess Aggregate Contributions by starting with the Highly Compensated Employee(s) who has the greatest ACR, reducing his ACR to the next highest ACR then, if necessary, reducing the ACR of the Highly Compensated Employee(s) at the next highest ACR level (including the ACR of the Highly Compensated Employee(s) whose ACR the Administrator already has reduced), and continuing in this manner until the ACP for the Highly Compensated Group satisfies the ACP test. If the Highly Compensated Employee is part of an aggregated family group, the Administrator, in accordance with the applicable Treasury 150 regulations, will determine each aggregated family member's allocable share of the Excess Aggregate Contributions assigned to the family member unit. The Administrator shall treat a Highly Compensated Employee's Excess Aggregate Contributions in the following priority: (1) first as attributable to his unmatched Employee After-Tax Contributions, if any; (2) then on a prorata basis to matched Employee After- Tax Contributions, and to the Matching Contributions allocated on the basis of those Employee After-Tax Contributions. To the extent the Highly Compensated Employee's Excess Aggregate Contributions are attributable to Company Matching Contributions, and he is not one hundred percent (100%) vested in his accrued benefit attributable to Employer Matching Contributions, the Administrator shall distribute only the vested portion of his Excess Aggregate Contributions, as adjusted for allocable income or loss, and forfeit the nonvested portion. The vested portion of the Highly Compensated Employee's Excess Aggregate Contributions attributable to Company Matching Contributions is the total amount of such Excess Aggregate Contributions (as adjusted for allocable income or loss) multiplied by his vested percentage (determined as of the last day of the Plan Year for which the Participating Company made the matching contribution). The Administrator shall allocate any forfeited Excess Aggregate Contributions to reduce Employer Matching Contributions for the Plan Year following the Plan Year during which the excess occurred. The Administrator shall determine the amount of income or loss allocable to the Highly Compensated Employee's Excess Aggregate Contributions in a manner similar to the allocable income or loss determination 151 described in Section 3.4(a) for Excess Contributions, except the Administrator shall make the determination with reference to the income or loss allocable to the Highly Compensated Employee's Excess Aggregate Contributions. 3.7 _______________________ MULTIPLE USE LIMITATION. For Plan Years beginning after December 31, 1988, if at least one Highly Compensated Employee is included in the ADP test under Section 3.3 and the ACP test under Section 3.5, the sum of the Highly Compensated Group's ADP and ACP may not exceed the multiple use limitation. The multiple use limitation is the sum of (i) and (ii): (i) 125% of the greater of: (a) the ADP of the Nonhighly Compensated Group; or (b) the ACP of the Nonhighly Compensated Group. (ii) 2% plus the lesser of (i)(a) or (i)(b), but no more than twice the lesser of (i)(a) or (i)(b). The Administrator, in lieu of determining the multiple use limitation as the sum of (i) and (ii), may elect to determine such limitation as the sum of (iii) and (iv): (iii) 125% of the lesser of (a) the ADP of the Nonhighly Compensated Group or (b) the ACP of the Nonhighly Compensated Group. (iv) 2% plus the greater of (iii)(a) or (iii)(b), but no more than twice the greater of (iii)(a) or (iii)(b). The Administrator shall determine whether the Plan satisfies the multiple use limitation after applying the ADP test under Section 3.3 and the ACP test under Section 3.5 and making any corrective distributions required by those Sections. If the Administrator determines the Plan has failed to satisfy the multiple use limitation, the 152 Administrator shall correct the failure by treating the excess amount as Excess Aggregate Contributions. This Section 3.7 does not apply unless, prior to the application of the multiple use limitation, the ADR and the ACR of the Highly Compensated Group each exceeds 125% of the respective percentages for the Nonhighly Compensated Group. __________ ARTICLE IV ______________________________ LIMITATION ON ANNUAL ADDITIONS 4.1 ___________ DEFINITIONS. For purposes of Article IV, the following terms mean: (a) "Annual Addition" - The sum of the following amounts allocated on behalf of a Participant for a Limitation Year; (i) all Employer Matching Contributions; and (ii) all Participant Pre-Tax and After-Tax Contributions. Except to the extent provided in Treasury regulations, Annual Additions include excess contributions described in Code Section 401(k), excess aggregate contributions described in Code Section 401(m) and excess deferrals described in Code Section 401(g), irrespective of whether the Plan distributes or forfeits such excess amounts. Annual Additions also include Excess Amounts reapplied to reduce Employer contributions under Section 4.2. Amounts allocated after March 31, 1984, to an individual medical account (as defined in Code Section 415(l)(2)) included as part of a defined benefit plan maintained by the Employer are Annual Additions. Furthermore, Annual Additions include contributions paid or accrued after December 31, 1985, for taxable years ending after December 31, 1985, attributable to 153 post-retirement medical benefits allocated to the separate account of a key employee (as defined in Code Section 419A(d)(3)) under a welfare benefit fund (as defined in Code Section 419(e)) maintained by the Employer, but only for purposes of the dollar limitation applicable to the Maximum Permissible Amount. (b) "Compensation" means (subject to the limitation specified in Section 1.7(A)) the Participant's wages, salaries, fees for professional service and other amounts received for personal services actually rendered in the course of employment with the Employer maintaining the Plan (including, but not limited to, commissions paid salesmen, compensation for services on the basis of a percentage of profits, commissions on insurance premiums, tips and bonuses). Compensation does not include elective contributions made by the Employer on the Employee's behalf. "Elective contributions" are amounts excludable from the Employee's gross income under Code Section 125, 402(a)(8), 402(h) or 403(b), and contributed by the Employer, at the Employee's election, to a Code Section 401(k) arrangement, a Simplified Employee Pension, cafeteria plan or tax-sheltered annuity. A Compensation payment includes Compensation paid by the Employer to an Employee through another person under the common paymaster provisions of Code Section 3121(s) and 3306(p). The term "Compensation" also does not include: (i) Employer contributions (other than "elective contributions") to a Plan of deferred compensation to the extent the contributions 154 are not included in the gross income of Employee for the taxable year in which contributed, on behalf of an Employee to a Simplified Employee Pension Plan to the extent such contributions are excludable from the Employee's gross income, and any distributions from a plan of deferred compensation, regardless of whether such amounts are includible in the gross income of the Employee when distributed. (ii) Amounts realized from the exercise of a non- qualified stock option, or when restricted stock (or property) held by an Employee either becomes freely transferable or is no longer subject to a substantial risk of forfeiture. (iii) Amounts realized from the sale, exchange or other disposition of stock acquired under a stock option described in Part II, Subchapter D, Chapter 1 of the Code. (iv) Other amounts which receive special tax benefits, such as premiums for group term life insurance (but only to the extent that the premiums are not includible in the gross income of the Employee), or contributions made by an Employer (whether or not under a salary reduction agreement) towards the purchase of an annuity contract described in Code Section 403(b) (whether or not the contributions are excludable from the gross income of the Employee), other than 155 "elective contributions". (c) "Maximum Permissible Amount" - The lesser of (i) $30,000 (or, if greater, one- fourth of the defined benefit dollar limitation under Code Section 415(b)(1)(A)), or (ii) 25% of the Participant's Compensation for the Limitation Year. If there is a short Limitation Year because of a change in Limitation Year, the Plan Administrator will multiply the $30,000 (or adjusted) limitation by the following fraction: _____________________________ Number of months in the short _______________ Limitation Year 12 (d) "Employer" - The Employer that adopts this Plan and any Related Employers described in Section 1.26. Solely for purposes of applying the limitations of Section 4.2 and this Section, the Plan Administrator will determine Related Employers described in Section 1.26 by modifying Code Section 414(b) and (c) in accordance with Code Section 415(h). (e) "Excess Amount" - The Excess of the Participant's Annual Additions for the Limitation Year over the Maximum Permissible Amount. (f) "Limitation Year" - The Plan Year. If the Employer amends the Limitation Year to a different 12 consecutive month period, the new Limitation Year must begin on a date within the Limitation Year for which the Employer makes the amendment, creating a short Limitation Year. (g) "Defined contribution plan" - A retirement plan which provides for an individual account for each participant and for benefits based solely on the amount contributed to the participant's account, and any income, expenses, gains and 156 losses, and any forfeitures of accounts of other participants which the plan may allocate to such participant's account. The Plan Administrator must treat all defined contribution plans maintained by the Employer (whether or not terminated) as a single plan. Solely for purposes of the limitations of this Article, the Plan Administrator will treat employee contributions made to a defined benefit plan maintained by the Employer as a separate defined contribution plan. The Plan Administrator also will treat as a defined contribution plan an individual medical account (as defined in Code Section 415(l)(2)) included as part of a defined benefit plan maintained by the Employer and, for taxable years ending after December 31, 1985, a welfare benefit fund under Code Section 419(e) maintained by the Employer to the extent there are post- retirement medical benefits allocated to the separate account of a key employee (as defined in Code Section 419A(d)(3)). (h) "Defined benefit plan" - A retirement plan which does not provide for individual accounts for Employer contributions. The Plan Administrator must treat all defined benefit plans maintained by the Employer (whether or not terminated) as a single plan. (i) "Defined benefit plan fraction" - shall mean, for each Limitation Year, the following: Projected annual benefit of the Participant under all qualified ________________________________ defined benefit plans maintained _______________ by the Employer The lesser of (i) 125% (subject to the "100% limitation" in paragraph (k)) of the dollar limitation in effect under Code Section 415(b)(1) (A) for the Limitation Year, or (ii) 140% of the Participant's average Compensation for his high 3 consecutive Years of Service 157 To determine the denominator of this fraction, the Plan Administrator will make any adjustment required under Code Section 415(b) and will determine a Year of Service as a Plan Year in which the Employee completed at least 1,000 Hours of Service. The "projected annual benefit" is the annual retirement benefit (adjusted to an actuarially equivalent straight life annuity if the plan expresses such benefit in a form other than a straight life annuity or qualified joint and survivor annuity) of the Participant under the terms of the defined benefit plan on the assumptions he continues employment until his normal retirement age (or current age, if later) as stated in the defined benefit plan, his compensation continues at the same rate as in effect in the Limitation Year under consideration until the date of his normal retirement age and all other relevant factors used to determine benefits under the defined benefit plan remain constant as of the current Limitation Year for all future Limitation Years. _______________________ Current Accrued Benefit. If the Participant accrued benefits in one or more defined benefit plans maintained by the Employer which were in existence on May 5, 1986, the dollar limitation used in the denominator of this fraction will not be less than the Participant's Current Accrued Benefit. A Participant's Current Accrued Benefit is the sum of the annual benefits under such defined benefit plans which the Participant had accrued as of the end of the 1986 Limitation Year (the last Limitation Year beginning before January 1, 1987), determined 158 without regard to any change in the terms or conditions of the Plan made after May 5, 1986, and without regard to any cost of living adjustment occurring after May 5, 1986. This Current Accrued Benefit rule applies only if the defined benefit plans individually and in the aggregate satisfied the requirements of Code Section 415 as in effect at the end of the 1986 Limitation Year. (j) "Defined contribution plan fraction" - shall mean, for each Limitation Year, the following: The sum, as of the close of the Limitation Year, of the Annual Additions to the Participant's Account under all defined ________________________________ contribution plans maintained by ____________ the Employer The sum of the lesser of the following amounts determined for the Limitation Year and for each prior Year of Service with the Employer: (i) 125% (subject to the "100% limitation" in paragraph (k)) of the dollar limitation in effect under Code Section 415(c)(1)(A) for the Limitation Year (determined without regard to the special dollar limitations for employee stock ownership plans), or (ii) 35% of the Participant's Compensation for the Limitation Year For purposes of determining the defined contribution plan fraction, the Plan Administrator will not recompute Annual Additions in Limitation Years beginning prior to January 1, 1987, to treat all Employee contributions as Annual Additions. If the Plan satisfied Code Section 415 for Limitation Years beginning prior to January 1, 1987, the Plan Administrator will redetermine the defined contribution plan fraction and the defined benefit plan fraction as of the end of the 1986 Limitation 159 Year, in accordance with this Section 4.1. If the sum of the redetermined fractions exceeds 1.0, the Plan Administrator will subtract permanently from the numerator of the defined contribution plan fraction an amount equal to the product of (1) the excess of the sum of the fractions over 1.0, times (2) the denominator of the defined contribution plan fraction. In making the adjustment, the Plan Administrator must disregard any accrued benefit under the defined benefit plan which is in excess of the Current Accrued Benefit. This Plan continues any transitional rules applicable to the determination of the defined contribution plan fraction under the Employer's Plan as of the end of the 1986 Limitation Year. (k) "100% limitation". If the 100% limitation applies, the Plan Administrator must determine the denominator of the defined benefit plan fraction and the denominator of the defined contribution plan fraction by substituting 100% for 125%. The 100% limitation applies only if: (i) the Plan's top heavy ratio exceeds 90%; or (ii) the Plan's top heavy ratio is greater than 60%, and the Employer does not provide extra minimum benefits which satisfy Code Section 416(h)(2). 4.2 __________________________ LIMITATIONS ON ALLOCATIONS _________________________ TO PARTICIPANTS' ACCOUNTS. The amount of Annual Addition which the Plan Administrator may allocate under this Plan on a Participant's behalf for a Limitation Year may not exceed the Maximum Permissible Amount. (A) Estimation of Compensation. Prior to the determination of the Participant's actual Compensation for a Limitation Year, the Plan Administrator may determine the Maximum Permissible 160 Amount on the basis of the Participant's estimated annual Compensation for such Limitation Year. The Plan Administrator must make this determination on a reasonable and uniform basis for all Participants similarly situated. The Plan Administrator must reduce any Employer contributions based on estimated annual Compensation by any Excess Amount carried over from prior years. As soon as is administratively feasible after the end of the Limitation Year, the Plan Administrator will determine the Maximum Permissible Amount for such Limitation Year on the basis of the Participant's actual Compensation for such Limitation Year. (B) Disposition of Excess Amount. If, due to a reasonable error in estimating a Participant's Annual Compensation, a reasonable error in determining the amount of Participant Pre-Tax Contributions that may be made with respect to any individual under the limits of Code Section 415, or under other limited facts and circumstances that the Commissioner of Internal Revenue finds justify the availability of the rules set forth in this Paragraph (B), there is an Excess Amount with respect to a Participant for a Limitation Year, the Plan Administrator will dispose of such Excess Amount as follows: (1) The Plan Administrator will return to the Participant his After-Tax Contributions to the extent the return would reduce the Excess Amount but would not reduce the Matchable Portion as defined in Section 3.2. (2) If, after the application of subparagraph (1), an Excess Amount still 161 exists, and the Plan covers the Participant at the end of the Limitation Year, then the Plan Administrator will use the Excess Amount to reduce future Employer contributions under the Plan for the next Limitation Year and for each succeeding Limitation Year, as is necessary, for the Participant. The Participant may elect to limit his Compensation for allocation purposes to the extent necessary to reduce his allocation for the Limitation Year to the Maximum Permissible Amount and eliminate the Excess Amount. (3) If, after the application of subparagraph (1), an Excess Amount still exists, and the Plan does not cover the Participant at the end of the Limitation Year, then the Plan Administrator will hold the Excess Amount unallocated in a suspense account. The Plan Administrator will apply the suspense account to reduce Employer Contributions for all remaining Participants in the next Limitation Year, and in each succeeding Limitation Year if necessary. Neither the Employer nor any Employee may contribute to the Plan for any Limitation Year in which the Plan is unable to allocate fully a suspense account maintained pursuant to this paragraph (3). (4) Notwithstanding subparagraphs (1), (2) and (3) of this Paragraph (B), the Plan Administrator may return Participant Pre-Tax Contributions or Participant After-Tax Contributions to the extent the return would reduce an Excess Amount. (C) Defined Benefit Plan Limitation. If the Participant presently participates, or has ever participated under a defined 162 benefit plan maintained by the Employer, then the sum of the defined benefit plan fraction and the defined contribution plan fraction for the Participant for that Limitation Year must not exceed 1.0. To the extent necessary to satisfy this limitation, the Employer will reduce the Participant's projected annual benefit under the defined benefit plan under which the Participant participates. _________ ARTICLE V ___________ INVESTMENTS 5.1 _________________ INVESTMENT OF NEW _____________ CONTRIBUTIONS. (a) Upon enrollment in the Plan and thereafter from time to time pursuant to this Article, a Participant on and after January 1, 1992 may select one or more of the following options for investment by the Trustee of his ensuing Participant After-Tax Contributions, Participant Pre- Tax Contributions and Employer Matching Contributions made with respect thereto: (i) Class A Common Stock of the Company (Class B Common Stock after June 30, 1994) which shall be purchased in the open market. (ii) One or more Money Market Investment Funds, one or more Bond Investment Funds and one or more Equity Investment Funds which shall be maintained under this Plan through one or more "regulated investment companies" as defined in Section 851 of the Code and/or through bank common 163 trust funds and/or through one or more group annuity contracts with one or more Insurers. (1) The Money Market Investment Fund(s) shall be invested in shares of one or more regulated investment companies which invest in debt instruments with an average maturity of one year or less and seek to maintain a constant share price but do not guarantee the same or a minimum or fixed rate of return on deposits made thereto. (2) The Bond Investment Fund(s) shall be invested in shares of one or more regulated investment companies which invest principally in longer term debt-type securities and which do not guarantee the preservation of principal or a minimum or fixed rate of return on deposits made thereto. (3) The Equity Investment Fund(s) shall be invested in shares of one or more regulated investment companies which invest principally in equity-type securities and which do not guarantee the 164 preservation of principal or a minimum or fixed rate of return on deposits made thereto. (b) Each such selection of an investment option shall specify a percentage, which shall be determined by the Plan Administrator, to be applied to such investment option and shall be considered a continuing direction until changed by direction of the Participant. (c)U.S. Savings Bonds are a frozen investment option under the Plan into which no new investments are allowed. At its maturity, each U.S. Savings Bond in a Participant's Account will be liquidated. The proceeds of liquidation shall be invested in the other investment options available under the Plan as if the proceeds were a Participant Contribution. If the Participant has not made a selection of investment options for Participant Contributions, the proceeds shall be invested in the Money Market Investment Fund. (d) Pursuant to procedures adopted by the Plan Administrator and uniformly applied, Participants may effect their selection of investment options by instructions to a plan fiduciary who will be identified at all times and in like manner may change their selection with respect to subsequent contributions at least once in each calendar quarter. 5.2 _____________________ CHANGE OF INVESTMENTS. (a) Pursuant to procedures adopted by the Plan Administrator and uniformly applied, but subject to the further conditions in this Section 5.2 prescribed, Participants may direct through a plan fiduciary who shall be 165 identified at all times, the sale or redemption of investments in their accounts and the reinvestment of the proceeds of such sale or redemption at least once in each calendar quarter, except as otherwise required in order to make a permitted withdrawal in cash; provided, however, that any election made by a Participant who is an officer or director of the Company to sell Class A or Class B Common Stock of the Company as well as any election made by such a Participant to purchase Class A or Class B Common Stock of the Company with the proceeds of a sale or redemption of other investments in such Participant's Accounts (i) may not be made within less than six months before or after any other election by such Participant to sell or purchase Class A or Class B Common Stock of the Company and (ii) may only be made during the period in each calendar quarter which begins on the third business day following the release of quarterly or annual statements of sales and earnings of the Company and ends on the twelfth business day following such date. (b) The following provisions apply to the disposition of certain investments which, in the case of shares of Class B Common Stock of the Company, were acquired in Participant After-Tax Contributions Accounts by reason of a dividend paid in such shares on January 9, 1980, to the holders Class A Common Stock of the Company and were acquired in Participant Pre-Tax Contributions Accounts by reason of an elected transfer in kind from the accounts of such Participants in the Crown Central Petroleum Corporation Tax Credit Employees Stock Ownership Plan following its termination as of December 31, 1987, and, in the case of United States Savings Bonds and investments in the Guaranteed Fixed Income Investment 166 Fund through group annuity contracts with Insurers, were acquired through investment options which from and after November 1, 1991 are not available investment options for ongoing contributions: (i) Prior to July 1, 1994, a direction to sell Class B Common Stock of the Company in a Participant's Accounts must cover all, and not less than all, of such stock, except that less than all of such stock may be sold to comply with a withdrawal request. (ii) A direction to redeem United States Savings Bonds in a Participant's Accounts shall be subject to any applicable holding period restrictions on such redemption imposed by Federal regulatory authorities. (iii) A redemption of an investment of a Participant's Accounts in the Guaranteed Fixed Income Investment Fund through a group annuity contract with an Insurer shall be made by deducting the appropriate amount from the Investment Year Accounts for such Participant on a last- in/first-out basis. If the Insurer shall so require, cash resulting from any such redemption prior to the Maturity Date of the group annuity contract redeemed may not be invested in a Money Market Investment Fund until a period of at least six (6) months shall have elapsed from the date of such redemption. 167 (c) From and after November 1, 1991, unless otherwise directed by the Participant, ongoing contributions theretofore designated for investment in United States Savings Bonds or in the Guaranteed Fixed Income Fund through group annuity contracts with Insurers will be invested in a Money Market Investment Fund selected by the Plan Administrator which invests primarily in U.S. Treasury securities. 5.3 ____________________ INVESTMENT OF INCOME ________ RECEIVED. Income received in an Account shall be reinvested in the same investment medium which produced such income except as follows: (a) Unless otherwise directed by the Participant, the entire amount received by the Trustee (i) in exchange for any United States Government Bonds surrendered at maturity or (ii) from expiration of a group annuity contract with an Insurer, shall be invested in a Money Market Investment Fund selected by the Plan Administrator which invests primarily in U.S. Treasury securities. (b) Prior to July 1, 1994, income received from investments in Class B Common Stock of the Company shall be invested in full and fractional shares of Class A Common Stock of the Company. After June 30, 1994, income received from investments in Class A Common Stock of the Company shall be invested in full and fractional shares of Class B Common Stock of the Company. 5.4 _____________________ INVESTMENT OF CASH IN ______________________ DEFAULT OF PARTICIPANT ____________ INSTRUCTIONS. All cash received from any source by the Trustee, and credited to the Account(s) of any Participant without direction 168 by the Participant for investment thereof, shall be invested in a Money Market Investment Fund. 5.5 _______________________ VOTING OF COMPANY STOCK. (a) Each Participant may direct the Trustee, or a third party selected by the Administrator, as to the manner in which whole shares of common stock of the Company in his Accounts are to be voted on any issue as to which such shares are entitled to be voted. Fractional shares are not entitled to vote. (b) Any shares of common stock of the Company in the Accounts of a Participant for which clear and timely instructions of the Participant are not received shall be voted in the same proportion as such shares for which such instructions are received. 5.6 _________ VALUATION. United States Savings Bonds held in Accounts will be valued current at cost. All other investments will be valued at market value as of the close of each business day. __________ ARTICLE VI ______________________ VESTING OF INTEREST OF ________________________ PARTICIPANTS IN EMPLOYER _____________ CONTRIBUTIONS 6.1 _______ VESTING. (a) A Participant is fully vested at all times in his Participant Pre-Tax Contributions Account and his Participant After- Tax Contributions Account. (b) Effective with respect to any Participant who has at least one (1) Hour of Service on or after January 1, 1989, a Participant will have a vested interest in his Employer Matching 169 Contributions Account in accordance with the following schedule: ________________________ YEARS OF SERVICE VESTING __________ PERCENTAGE Less than 5 0% 5 or more 100% Although the Company reserves the right to amend the vesting schedule at any time, the Company shall not amend the vesting schedule (and no such amendment shall be effective) if the amendment would reduce the nonforfeitable percentage of any Participant's accrued benefit derived from Employer contributions (determined as of the later of the date the Company adopts the amendment, or the date the amendment becomes effective) to a percentage less than the nonforfeitable percentage computed under the Plan without regard to such amendment. Effective with respect to any Participant who has at least one (1) Hour of Service on or after January 1, 1989, if the Company shall amend the vesting schedule, each Participant having at least three (3) Years of Service (as defined in Section 1.31(b) and without reference to Section 6.2) with a Participating Company may elect to have the percentage of his nonforfeitable accrued benefit computed under the Plan without regard to the amendment. The Administrator, as soon as practicable, shall forward a true copy of any amendment to the vesting schedule to each Participant, together with an explanation of the effect of the amendment, the appropriate form upon which a Participant so entitled under the provisions of this Paragraph may make an election to remain under the vesting schedule provided under the Plan prior to the amendment 170 and notice of the time within which such Participant must make an election to remain under the prior vesting schedule. The Participant must file his election in writing with the Administrator within sixty (60) days after his receipt of a copy of the amendment changing the vesting schedule. Notwithstanding the provisions of this Paragraph, no election need be provided for any Participant whose nonforfeitable percentage under the Plan, as amended, at any time cannot be less than such percentage determined without regard to such amendment. (c) A Participant who is involuntarily laid off by the Employer for a period in excess of 365 days, due to lack of work, and meets the Notice Requirements of this paragraph, will become 100% vested in his Employer Matching Contributions Account. Notice Requirements shall mean filing a notice with the Plan Administrator, in a form prescribed by the Plan Administrator, within 30 days after the first day of the lay off, which states the Participant's agreement to defer receipt of Plan benefits until after the 365-day period has elapsed without his being called back to work with the Employer. (d) A Participant will have a fully vested interest in his Employer Matching Contributions Account in the event of his termination of employment as a result of Death, Total Disability, or upon and after attainment of his Normal Retirement Age (if employed by the Employer on or after that date). The interests of affected Participants in their Employer Matching Contributions Accounts shall become fully vested upon the complete or partial termination of the Plan. Upon a complete discontinuance of contributions to the Plan by a Participating Company, such interests shall become fully vested in the proportion that the 171 contributions of such Participating Company credited to such Accounts bear to the contributions of all Participating Companies credited to such Accounts. 6.2 __________________________ SERVICE CREDIT: BREAKS IN _______ SERVICE. For purposes of determining Years of Service under Section 6.1, the Plan takes into account all Years of Service an Employee completes with the Employer, except: (a) In the case of a Participant who has incurred a Forfeiture Break in Service, Years of Service completed by such Participant following such Break shall be disregarded for purposes of determining his vested interest in the portion of his Employer Matching Contributions Account that accrued before such Break. A Participant incurs a Forfeiture Break in Service when he incurs five (5) Consecutive Breaks in Service. (b) In the case of a Participant who has a 0% vested interest in his Employer Matching Contributions Account at the commencement of a Break in Service, his Years of Service completed prior to such Break in Service shall not be taken into account for the purpose of determining his vested interest in the portion of his Employer Matching Contributions Account that may accrue upon his reemployment and participation in this Plan following such Break in Service if the number of his consecutive one-year Breaks in Service shall have equalled or exceeded the greater of (i) five (5) or (ii) his number of Years of Service preceding such Break in Service. Furthermore, the aggregate number of Years of Service before a Break in Service does not include any Years of Service not required to be taken 172 into account under this exception by reason of any prior Break in Service. ___________ ARTICLE VII ________________________ IN-SERVICE DISTRIBUTIONS 7.1 ________________ WITHDRAWALS FROM _____________________ PARTICIPANT AFTER-TAX ______________________ CONTRIBUTIONS ACCOUNTS. (a) ______________ Withdrawals by ______________________ Nonvested Participants. While employed by the Employer, a Participant who is 0% vested in his Employer Matching Contributions Account may withdraw all (but not less than all) of the value of his After-Tax Contributions Account reduced by the aggregate value of United States Savings bonds credited thereto but increased by the excess of (i) the aggregate value of United States Savings Bonds credited both to his After-Tax Contributions Account and his Employer Matching Contributions Account over (ii) the amount of Employer Matching Contributions applied to the acquisition of such Bonds. Thereupon, the entire then value of his Employer Matching Contributions Account shall be forfeited. Such withdrawal may be made in cash and/or in kind, subject to the provisions of Section 7.5. Any accrued benefit forfeited under this provision shall be restored upon repayment by the Participant of the full amount of such withdrawal provided such repayment is made within 5 years after the date of the withdrawal. 173 (b) _____________________ Withdrawals by Vested ____________ Participants. While employed by the Employer, a Participant who is fully vested in his Employer Matching Contributions Account may withdraw a portion or all of his After-Tax Contributions Account, in cash and/or in kind subject to the provisions of Section 7.5; provided that no more than one such withdrawal may be made in each calendar year and such withdrawal must be for a minimum amount or value of at least One Thousand Dollars ($1,000.00). 7.2 ______________________ WITHDRAWALS FROM FULLY ________________________ VESTED EMPLOYER MATCHING ______________________ CONTRIBUTIONS ACCOUNTS. While employed by the Employer, a Participant who is fully vested in his Employer Matching Contributions Account and who at the same time is withdrawing the full value of his After-Tax Contributions Account, may withdraw a portion of his Employer Matching Contributions Account up to all of such Account save and except for Employer Matching Contributions which have been allotted thereto during the 24 months preceding such withdrawal. Such withdrawal may be in cash and/or in kind, subject to the provisions of Section 7.5. 7.3 ____________________ HARDSHIP WITHDRAWALS. (a) While employed by the Employer, a Participant who has not attained age 59-1/2 may apply for a hardship distribution in cash from that portion of his vested Employer Matching Contributions Account which otherwise may not be withdrawn under Section 7.2, and thereafter from his Pre-Tax Contributions Account, by filing a written application for the same with the Administrator stating the amount requested, the reason(s) for the 174 request and furnishing such written representation and evidence in support thereof as the further provisions of this Plan and the Administrator may require. Such application may be approved by the Administrator only if (i) by reason of a prior or concurrent withdrawal the Participant has fully utilized his withdrawal rights under Sections 7.1 and 7.2, (ii) the amount requested does not include any portion of his Pre-Tax Contributions Account derived from earnings credited to such Account after December 31, 1988, and (iii) the reason for the request is a "deemed hardship" as hereinafter defined. Furthermore, such application will be so approved only to the extent necessary, as hereinafter defined, to alleviate such hardship. (b) Except to the extent the Internal Revenue Service shall expand such list by means of a published ruling or notice of general applicability, a "deemed hardship" shall consist only of an immediate and heavy financial need to pay for one or more of the following: (i) Unreimbursed medical expenses of the Participant, the Participant's spouse or any of his dependents. (ii) Purchase of a principal residence for the Participant. (iii) Payment of tuition and related educational fees for the next 12 months of post-secondary education for the Participant, his spouse, children and dependents. (iv) Payments needed to prevent eviction of the Participant from his principal residence or foreclosure on a mortgage on his principal residence. (c) In determining the amount of distribution which is necessary to alleviate a deemed hardship, the Administrator, provided it acts reasonably under the circumstances, may rely upon 175 the Participant's representation that the need cannot be relieved: (i) Through reimbursement or compensation by insurance or otherwise, or (ii) By reasonable liquidation of the Participant's assets (which shall be deemed to include those assets of the Participant's spouse and minor children that are reasonably available to the Participant) to the extent such liquidation would not itself cause an immediate and heavy financial need, or (iii) By cessation of Participant pre-tax and after-tax contributions under this Plan, or (iv) By other distributions or nontaxable (at the time of the loan) loans from this Plan or from any plan maintained for the Participant's benefit by any employer, or (v) By borrowing from commercial sources on reasonable commercial terms. 7.4 ____________________________ WITHDRAWALS FROM PARTICIPANT _____________________________ PRE-TAX CONTRIBUTION ACCOUNTS ________________ AFTER AGE 59-1/2. While employed by the Employer, a Participant who shall have fully utilized his withdrawal rights under Sections 7.1 and 7.2 may, from and after the attainment of age 59-1/2, withdraw a portion or all of his Participant Pre-Tax Contributions Account, in cash and/or in kind subject to the provisions of Section 7.5; provided that no more than one such withdrawal may be made in each calendar year and such withdrawal must be for a minimum amount or value of at least One Thousand Dollars ($1,000.00). 7.5 ______________ CONDITIONS AND ________________________________ RESTRICTIONS UPON WITHDRAWALS IN ____ KIND. 176 (a) ______________________ Officers and Directors. Participants who are officers or directors of the Company and who withdraw Class A or Class B Common Stock of the Company under this Article, must either (i) cease further purchases in the Plan of Class A Common Stock of the Company (or of any other equity security of the Company which may be offered for acquisition under this Plan) for six (6) months or (ii) enter into a written agreement with the Company to hold such withdrawn stock for at least six (6) months prior to disposition thereof. (b) ________________ All Participants. (i) An investment of a Participant's Accounts in the Guaranteed Fixed Income Investment Fund through a group annuity contract with an Insurer (to which Contributions are permitted under this Plan until October 31, 1991) may be redeemed in cash but not in kind. (ii) If and to the extent Funds described in Section 5.1(a)(ii) are maintained through bank common trust funds and/or through one or more group annuity contracts with one or more Insurers, investments therein may be redeemed in cash but not in kind. ____________ ARTICLE VIII _____________________ LOANS TO PARTICIPANTS 8.1 _______________ PERMITTED LOANS - A "party in interest" as defined in Section 3(14) of ERISA may borrow from his Pre-Tax, After-Tax and Employer Matching Contribution Accounts (to the extent vested) upon the conditions and limitations hereinafter prescribed. Each loan shall be for such term, between a minimum of one (1) year, and a maximum of five (5) years, as the borrower shall elect. No loan shall be permitted while any prior 177 loan balance is outstanding, or until at least thirty (30) days after the full repayment thereof, nor shall any loan be permitted within twelve (12) months after a default, as hereinafter defined, shall have occurred with respect to a prior loan. The maximum principal amount of loan permitted for any participant shall be the lesser of: (i) Fifty Thousand Dollars ($50,000.00) reduced by any prior loan principal repayments made by the borrower to this Plan within the 1-year period ending on the day before the loan is made; or (ii) 50% of the sum of the values of the nonforfeitable portions of the Participant's Accounts. The minimum initial principal amount of any loan shall be One Thousand Dollars ($1,000.00). 8.2 ___________ LOAN POLICY. The Administrator shall set forth, in a separate written document which this Section 8.2 incorporates as part of this Plan, a loan policy consistent with the provisions of this Article under which: (a) Loans shall be made available to all parties in interest on a reasonably equivalent basis. (b) Loans shall not be made available to Highly Compensated Employees (as defined in Code Section 414(q)) in an amount greater than the amount made available to other Employees. (c) Loans shall be adequately secured and bear a reasonable interest rate. (d) Each loan shall be evidenced by a promissory note of the borrower which shall require that repayment (principal and interest) be amortized in level payments coincident with the dates upon which the borrower's Compensation is or most recently was being paid at the time the loan was made and shall provide for acceleration of maturity on the earliest date upon which the 178 borrower shall cease to be a "party in interest" as defined in Section 3(14) of ERISA. Prepayment in whole, but not in part, shall be permitted on any installment payment date on or after One (1) year from the date of the loan. Except to the extent specified in this Article, the separate written document setting forth the loan policy must include the following: (1) the identity of the person or persons authorized to administer the loan program; (2) the procedure for applying for a loan; (3) the basis upon which loans will be approved or denied; (4) limitations (if any) on the types and amounts of loans offered; (5) the procedure under the program for determining a reasonable rate of interest; (6) the types of collateral which may secure a loan; and (7) the events constituting default and the steps that will be taken to preserve plan assets in the event of such default. 8.3 _______ DEFAULT. In the event an installment is not paid within thirty (30) days after it is due, or in the event the entire outstanding balance is not paid within thirty (30) days after the earliest date upon which the borrower shall cease to be a "party in interest" as defined in Section 3(14) of ERISA, the loan shall be deemed in default and the entire unpaid balance of principal shall thereupon become due and payable. The Administrator shall have the right to reduce the borrower's vested account balances to repay the same; provided, however, that the borrower's Participant Pre-Tax Contributions Account may not be so reduced until a distribution from such Account is otherwise permitted 179 under the terms of this Plan and under the Code. 8.4 ______________ OFFSET AGAINST _____________ DISTRIBUTIONS. To the extent a borrower's nonforfeitable accrued benefit becomes payable under the terms of the Plan to him or his Beneficiary while a loan is outstanding, the loan shall thereupon become due and payable and the Trustee is and shall be authorized to deduct the unpaid balance of the loan from and up to the amount of such benefit payable to or in respect of the borrower. __________ ARTICLE IX ________________________ DISTRIBUTIONS UPON DEATH 9.1 _______ GENERAL. In the event of the death of a Participant prior to his severance from service, a distribution of the entire value of the deceased Participant's After-Tax Contributions Account, Pre-Tax Contributions Account and Employer Matching Contributions Account shall be made to such Participant's Beneficiary as hereinafter provided. In the event of a Participant's death subsequent to his severance from service, a distribution of the entire value of the deceased Participant's After-Tax Contributions Account, Pre-Tax Contributions Account and Employer Matching Contributions Account shall be made to such Participant's Beneficiary except to the extent such value has been used to purchase an annuity and the Participant's death occurs subsequent to his Annuity Starting Date, in which case any death benefit payable under such annuity 180 shall be paid in accordance with the terms thereof. 9.2 _________________ METHOD OF PAYMENT. Payment of any death benefits not payable in accordance with the terms of an annuity purchased by the Participant shall be made in a lump sum, as an immediate or deferred annuity purchased under a group annuity contract with an Insurer, as a combination of such methods of payment or by payment in monthly, quarterly or annual installments over a fixed period of time. The method of payment shall be chosen by the Beneficiary. 9.3 ____________________ MINIMUM DISTRIBUTION ______________________________ REQUIREMENTS FOR BENEFICIARIES. The method of distribution to the Participant's Beneficiary must satisfy Code Section 401(a)(9) and the applicable Treasury regulations. If the Participant's death occurs after his Required Beginning Date or, if earlier, the date the Participant commences an irrevocable annuity pursuant to Section 11.2, the method of payment to the Beneficiary must provide for completion of payment over a period which does not exceed the payment period which had commenced for the Participant. If the Participant's death occurs prior to his Required Beginning Date, and the Participant had not commenced an irrevocable annuity, the method of payment to the Beneficiary must provide for completion of payment to the Beneficiary over a period not exceeding: (i) 5 years after the date of the Participant's death; or (ii) if the Beneficiary is a designated Beneficiary, the designated Beneficiary's life expectancy. The Plan Administrator may not direct payment of the Participant's nonforfeitable accrued benefit over a period described in clause (ii) unless the Trustee will commence payment to the designated Beneficiary no later than the 181 December 31 following the close of the calendar year in which the Participant's death occurred or, if later, and the designated Beneficiary is the Participant's surviving spouse, December 31 of the calendar year in which the Participant would have attained age 70-1/2. If the Trustee will make distribution in accordance with clause (ii), the minimum distribution for a calendar year equals the Participant's nonforfeitable accrued benefit as of the latest valuation date preceding the beginning of the calendar year divided by the designated Beneficiary's life expectancy. The Plan Administrator must use the unisex life expectancy multiples under Treas. Reg. Section 1.72-9 for purposes of applying this paragraph. The Plan Administrator, only upon the written request of the Participant or of the Participant's surviving spouse, will recalculate the life expectancy of the Participant's surviving spouse not more frequently than annually, but may not recalculate the life expectancy of a nonspouse designated Beneficiary after the Trustee commences payment to the designated Beneficiary. The Plan Administrator will apply this paragraph by treating any amount paid to the Participant's child, which becomes payable to the Participant's surviving spouse upon the child's attaining the age of majority, as paid to the Participant's surviving spouse. Upon the Beneficiary's written request, the Plan Administrator must direct the Trustee to accelerate payment of all, or any portion, of the Participant's unpaid Accrued Benefit, as soon as administratively practicable following the effective date of that request unless the Participant shall have precluded such Beneficiary's discretion in his Beneficiary designation. 182 9.4 ____________________ ADMINISTRATIVE FORMS. All Beneficiary designations, elections and spousal consents made in accordance with this Article must be made in writing on forms prescribed by the Plan Administrator and shall become effective when submitted to the Plan Administrator. _________ ARTICLE X __________________________________ DISTRIBUTIONS UPON SEPARATION FROM _______ SERVICE 10.1 Following a Participant's separation from the service of his Employer, other than by reason of Total Disability, death or Retirement, his vested interest in his Employer Matching Contributions Account shall be determined in accordance with Article VI hereof and shall be distributed along with the balances in his Participant Pre-Tax Contributions Account and Participant After-Tax Contributions Account as provided in this Article X. At the time such distribution is made, the Participant's unvested interest in his Employer Matching Contributions Account shall be forfeited, subject to reinstatement as provided in Section 10.4. 10.2 The distribution prescribed by Section 10.1 shall be a lump sum distribution (a "cash out distribution") of the entire value of the distributee's Participant After-Tax Contributions Account, his Participant Pre-Tax Contributions Account and his vested interest in his Employer Matching Contributions Account. If the value of the vested portion of all of the Participant's 183 Accounts exceeds $3,500, a cashout distribution may not be made prior to his Normal Retirement Age unless no earlier than 90 days, but not later than 30 days (unless the 30 day minimum is waived as hereinafter provided) before the distribution is made he shall have received a benefit notice explaining his right to receive distribution in cash and/or in kind and his right to defer distribution until he attains Normal Retirement Age, and after receipt of such notice he shall have consented thereto in writing. If such value does not exceed $3,500 (at the time of distribution), the Participant's consent is not required, and the Plan Administrator (following expiration of the 60-day period hereinafter specified) will direct the Trustee to distribute such value in a lump sum, in cash and/or in kind except that a distribution in kind shall be subject to the provisions of Section 7.5 and shall be made only if written application for the same is filed with the Plan Administrator within sixty (60) days after the Participant's separation from service. If a distribution is one to which Sections 401(a)(11) and 417 of the Internal Revenue Code do not apply, such distribution may commence less than 30 days after the notice required under Section 1.411(a)-11(c) of the Income Tax Regulations is given, provided that: (1) The Plan Administrator clearly informs the Participant that the Participant has a right to a period of at least 30 days after receiving the notice to consider the decision of whether or not to elect a distribution (and, if applicable, a particular distribution option), and (2) The Participant, after receiving the notice affirmatively elects a distribution. 10.3 If a Participant's written consent is required pursuant to Section 10.2 and the 184 Participant fails to provide such consent, the Plan Administrator shall direct the Insurer or Trustee to defer the distribution prescribed by Section 10.1 until the earlier of receipt of written consent from the Participant or his Normal Retirement Age, at which time distribution may be made partly or wholly in kind (subject to Section 7.5) if the Participant shall so direct with such written consent, and otherwise shall be made wholly in cash and not later than the 60th day after the Participant's Normal Retirement Age. 10.4 A Participant who is re- employed by a Participating Company after receiving a cash-out distribution of his Accounts under the Plan shall have the right to reinstate his interest in his Accounts to the same dollar amount as the dollar amount thereof on the valuation date immediately preceding the date of the cash-out distribution by repaying to the Trustee in cash within five (5) years after his reemployment commencement date the entire value of such cash-out distribution unless: (a) the Participant's Employer Contributions Account was one hundred percent (100%) vested at the time of the cash-out distribution; or (b) the Participant incurred a Forfeiture Break In Service. This condition shall apply even if the Participant makes repayment within the Plan Year in which he incurs the Forfeiture Break in Service. To the extent Participant forfeitures are insufficient to provide for a reinstatement required hereunder, the Employer shall contribute to the Trust Fund, without regard to any requirement or condition of Article III, the additional amount necessary to enable the Plan Administrator to make the required reinstatement. 185 10.5 Amounts forfeited by Participants in accordance with any provision of the Plan shall be used to reinstate Participant forfeitures pursuant to Section 10.4, offset subsequent Employer Contributions under the Plan or shall be distributed in accordance with the provisions hereinafter made concerning termination of this Plan. 10.6 If a Participant or Beneficiary who is entitled to a distribution cannot be located, then the Participant's or Beneficiary's vested interest in his Accounts shall be forfeited after the Plan Administrator has made reasonable efforts to locate the Participant. The Plan Administrator will be deemed to have made reasonable efforts to locate the Participant (or, in the case of a deceased Participant, his Beneficiary) after having made two successive certified or similar mailings to the last address on file with the Plan Administrator. The Participant's vested Account shall be forfeited as of the last day of the Plan Year in which occurs the close of the 12 consecutive calendar month period following the last of the two successive mailings. If the Participant or his Beneficiary makes a written claim for the vested interest after it has been forfeited, the Employer shall cause the vested interest to be reinstated in the Participant's Account. The Account shall be reinstated from forfeitures and, if forfeitures are insufficient, from a special contribution by the Employer. The value of the Account that is reinstated shall be the value as of the date of forfeiture and shall not be adjusted for any income or loss after the date of forfeiture. __________ ARTICLE XI 186 ________________________________ DISTRIBUTIONS UPON RETIREMENT OR __________ DISABILITY 11.1 A Participant shall be entitled to a distribution of the entire value of his Participant After-Tax Contributions Account, his Participant Pre-Tax Contributions Account, and his Employer Matching Contributions Account on or after the date of his Total Disability or Retirement. No earlier than 90 days, but not later than 30 days (unless the 30 day minimum is waived as hereinafter provided), before distribution is made or commenced, the Plan Administrator must provide to the Participant a benefit notice explaining the optional forms of benefit under the Plan and the Participant's right to defer distribution until his Required Beginning Date as defined in Article XII. Such distribution will be made or commenced not later than the 60th day after the close of the Plan Year in which the later of the following occurs: (a) the Participant attains Normal Retirement Age; or (b) the Participant has a separation from service with his Employer; unless the Participant elects a further deferral until no later than his Required Beginning Date as defined in Article XII. During the period of any such further deferral, the Participant may make a total withdrawal, or partial withdrawals; provided that no more than one partial withdrawal may be made in each calendar year and such withdrawal must be for a minimum amount or value of at least One Thousand Dollars ($1,000.00). If a distribution is one to which Sections 401(a)(11) and 417 of the Internal Revenue Code do not apply, such distribution may commence less than 30 days after the notice required under Section 1.411(a)-11(c) of the Income Tax Regulations is given, 187 provided that: (1) The Plan Administrator clearly informs the Participant that the Participant has a right to a period of at least 30 days after receiving the notice to consider the decision of whether or not to elect a distribution (and, if applicable, a particular distribution option), and (2) The Participant, after receiving the notice, affirmatively elects a distribution. 11.2 At the election of the Participant, distribution shall be made in a lump sum in cash and/or in kind (subject to Section 7.5), by cash payment in annual installments over a fixed reasonable period of time not exceeding the life expectancy of the Participant, or the joint life and last survivor expectancy of the Participant and his Beneficiary, as an immediate or deferred annuity purchased under any group annuity contract then in effect under this Plan with an Insurer, or as a combination of such methods of payment, provided that any method of payment selected must meet the minimum distribution requirements specified in Article XII. If a group annuity contract with an Insurer is then in effect for the purpose of funding this Plan in whole or in part, the 30 days minimum period for notice under Section 11.1 may not be waived and not earlier than 90 days nor later than 30 days before the Participant's Annuity Starting Date, the Plan Administrator shall furnish to each Participant entitled to a distribution pursuant to Section 11.1, written descriptions of the annuities available under such contract (which shall include a Qualified Joint and Survivor Annuity). If a Participant is married and elects 188 to have such distribution made in whole or in part through the purchase of an annuity, the annuity must be paid as a Qualified Joint and Survivor Annuity, unless the Participant executes a waiver election. Except as hereinafter provided in the case of a blanket spousal consent, a married Participant's waiver election is not valid unless (a) the Participant's spouse (to whom the survivor annuity would be payable under a Qualified Joint and Survivor Annuity), after the Participant has received the written explanation described in this Section 11.2, has consented in writing to the waiver election, the spouse's consent acknowledges the effect of the election, and a notary public or the Plan Administrator (or his representative) witnesses the spouse's consent, (b) the spouse consents to the alternate form of payment designated by the Participant or to any change in that designated form of payment, and (c) unless the spouse is the Participant's sole primary Beneficiary, the spouse consents to the Participant's Beneficiary designation or to any change in the Participant's Beneficiary designation. The spouse's consent to a waiver of the Qualified Joint and Survivor Annuity is irrevocable, unless the Participant revokes the waiver election. Notwithstanding the aforegoing, a spouse may execute a blanket consent to any form of payment designation or to any Beneficiary designation made by the Participant, if the spouse acknowledges the right to limit that consent to a specific designation but, in writing, waives that right. The consent requirements of this Section 11.2 apply to a former spouse of the Participant, to the extent required under a qualified domestic relations order. 189 The Plan Administrator will accept as valid a waiver election which does not satisfy the spousal consent requirements if the Plan Administrator establishes the Participant does not have a spouse, the Plan Administrator is not able to locate the Participant's spouse, the Participant is legally separated or has been abandoned (within the meaning of State law) and the Participant has a court order to that effect, or other circumstances exist under which the Secretary of the Treasury will excuse the consent requirement. If the Participant's spouse is legally incompetent to give consent, the spouse's legal guardian (even if the guardian is the Participant) may give consent. If a Participant is not married and elects to have distribution made in whole or in part through the purchase of an annuity, he will receive an annuity which will terminate upon his death, unless his election to have distribution made through the purchase of an annuity contains a contrary direction. Any such contrary direction must comply with the requirements of Code Section 401(a)(9) and the applicable Treasury regulations. Any revocation of an annuity election made by a married Participant shall require his spouse's consent. 11.3 All elections and revocations of elections and consents to revocations and elections made in accordance with this Article must be made in writing on forms prescribed by and submitted to the Plan Administrator. ___________ ARTICLE XII ___________________________ DISTRIBUTIONS COMMENCING ON _______________________ REQUIRED BEGINNING DATE 190 12.1 _______________________ REQUIRED BEGINNING DATE. If any distribution commencement date described under Articles X or XI, either by Plan provision or by Participant election (or non- election) is later than the Participant's Required Beginning Date, the Plan Administrator shall direct that minimum distributions, determined pursuant to Section 12.2, be made to the Participant commencing on his Required Beginning Date. A Participant's Required Beginning Date is the April 1 following the close of the calendar year in which the Participant attains age seventy and one-half (70-1/2). However, if the Participant, prior to incurring a separation from service with his Employer, attained 70-1/2 by January 1, 1988, and, for the five Plan Year period ending on the calendar year in which he attained age 70-1/2 and for all subsequent years, the Participant was not a more than 5% owner of the Employer, the Required Beginning Date is the April 1 following the close of the calendar year in which the Participant becomes a more than 5% owner of the Employer. Furthermore, if a Participant who was not a more than 5% owner of the Employer, attained age 70-1/2 during 1988 and did not incur a separation from service prior to January 1, 1989, his Required Beginning Date is April 1, 1990. On the last business day of December in each calendar year commencing with the December of the same year in which occurs the Participant's Required Beginning Date, the Plan Administrator shall direct that a minimum distribution determined pursuant to Section 12.2 be made to the Participant to the extent the Participant shall not have withdrawn such amount during such calendar year. If the Participant receives distribution in the form 191 of a nontransferable annuity contract, the distribution satisfies Section 12.2 if the contract complies with the requirements of Code Section 401(a)(9) and the applicable Treasury regulations thereunder. 12.2 ____________________ MINIMUM DISTRIBUTION _____________________________ REQUIREMENTS FOR PARTICIPANTS. The minimum distribution required by Section 12.1 for a calendar year equals the sum of the Participant's vested interests in all of his Accounts (i.e. his Nonforfeitable Accrued Benefit) as of the latest valuation date preceding the beginning of the calendar year, divided by the Participant's life expectancy or, if applicable, the joint and last survivor expectancy of the Participant and his designated Beneficiary (as determined under Article IX, subject to the requirements of the Code Section 401(a)(9) regulations). The Plan Administrator will increase the Participant's Nonforfeitable Accrued Benefit, as determined on the relevant valuation date, for contributions allocated after the valuation date and by December 31 of the valuation calendar year, and will decrease the valuation by distributions made after the valuation date and by December 31 of the valuation calendar year. For purposes of this valuation, the Plan Administrator will treat any portion of the minimum distribution for the first distribution calendar year made after the close of that year as a distribution occurring in that first distribution calendar year. In computing a minimum distribution, the Plan Administrator shall use the unisex life expectancy multiples under Treas. Reg. Section 1.72-9. Only upon the written request of the Participant on or before the Participant's Required Beginning 192 Date shall the Plan Administrator determine the minimum distribution for subsequent calendar years by redetermining the applicable life expectancy. Even upon such request, the Plan Administrator may not redetermine the joint life and last survivor expectancy of the Participant and a nonspouse designated Beneficiary in a manner which takes into account any adjustment to a life expectancy other than that of the Participant. If the Participant's spouse is not his designated Beneficiary, the Plan Administrator shall not direct distribution under this Article, nor shall the Participant elect distribution, under a method of payment which provides more than incidental benefits to the Beneficiary. For Plan Years beginning after December 31, 1988, the Plan must satisfy the minimum distribution incidental benefit ("MDIB") requirement in the Treasury regulations issued under Code Section 401(a)(9) for distributions made on or after the Participant's Required Beginning Date and before the Participant's death. To satisfy the MDIB requirement, the Plan Administrator will compute the minimum distribution required by this Section 12.2 by substituting the applicable MDIB divisor for the applicable life expectancy factor, if the MDIB divisor is a lesser number. Following the Participant's death, the Plan Administrator will compute the minimum distribution required by this Section 12.2 solely on the basis of the applicable life expectancy factor and will disregard the MDIB factor. For Plan Years beginning prior to January 1, 1989, the Plan satisfies the incidental benefits requirement if the distributions to the Participant satisfied the MDIB requirement or if the present value of the retirement benefits payable solely to the Participant 193 is greater than 50% of the present value of the total benefits payable to the Participant and his Beneficiaries. The Plan Administrator shall determine whether benefits to the Beneficiary are incidental as of the date of commencement of payment of the retirement benefits to the Participant, or as of any date the Plan Administrator redetermines the payment period to the Participant. 12.3 ________________________ SOURCE OF DISTRIBUTIONS. Distributions under this Article XII shall be applied pro rata against the Participant's Accounts. ____________ ARTICLE XIII _____________________________ DISTRIBUTIONS UNDER QUALIFIED _________________________ DOMESTIC RELATIONS ORDERS 13.1 ______________________ TRUSTEE RESPONSIBILITY. Nothing contained in this Plan shall prevent the Trustee, in accordance with the direction of the Administrator, from complying with the provisions of a qualified domestic relations order (as defined in Code Section 414(p)). 13.2 __________ PROCEDURES. The Administrator shall establish reasonable procedures to determine the qualified status of a domestic relations order. Upon receiving a domestic relations order, the Administrator promptly shall notify the Participant and any alternate payee named in the order, in writing, of the receipt of the order and the Plan's procedures for determining the qualified status of the order. Within a reasonable period of time after receiving the domestic relations order, the Administrator 194 shall determine the qualified status of the order and shall notify the Participant and each alternate payee, in writing, of its determination. The Administrator shall provide notice under this paragraph by mailing to the individual's address specified in the domestic relations order, or in a manner consistent with Department of Labor regulations. The Administrator may treat as qualified any domestic relations order entered prior to January 1, 1985, irrespective of whether it satisfies all the requirements described in Code Section 414(p). 13.3 ___________________ SEGREGATED ACCOUNTS. If any portion of the Participant's Accounts is payable during the period the Administrator is making its determination of the qualified status of the domestic relations order, the Administrator shall direct the Trustee to segregate the amounts payable in a separate account and to invest the segregated account solely in fixed income investments. If the Administrator determines the order is a qualified domestic relations order within eighteen (18) months of receiving the order, the Administrator shall direct the Trustee to distribute the segregated account in accordance with the order. If the Administrator does not make its determination of the qualified status of the order within eighteen (18) months after receiving the order, the Administrator shall direct the Trustee to distribute the segregated account in a manner the Administrator deems the Plan would distribute if the order did not exist. The order shall apply prospectively if the Administrator later determines the order is a qualified domestic relations order. 195 13.4 ________________________ SEPARATE DISTRIBUTION TO _________________ ALTERNATE PAYEES. The Administrator shall direct the Trustee to make any payments or distributions required under this Article by separate benefit checks or other separate distribution to the alternate payee(s). 13.5 ________________________ DISTRIBUTION NOT TREATED _____________ AS WITHDRAWAL. A distribution to an alternate payee pursuant to a qualified domestic relations order shall not be treated for purposes of this Plan as a withdrawal by the Participant from whose Account(s) such distribution is made. Moreover, this Plan specifically permits distribution to an alternate payee under a Qualified Domestic Relations Order at any time to the extent of a Participant's nonforfeitable accrued benefit. ___________ ARTICLE XIV _______________ TOP HEAVY RULES 14.1 If this Plan is top heavy in any Plan Year beginning after December 31, 1983, each Participant who is a Non-Key Employee and is employed by the Employer on the Determination Date of the Plan Year without regard to Hours of Service completed during the Plan Year, shall, if he or she is a Participant in the Employer's Pension Plan, have an accrued benefit under the Employer's Pension Plan at the end of the top heavy Plan Year, derived from Employer Contributions, which, when expressed as a straight life annuity (with no ancillary benefits) commencing on the first day of the month following the 196 Participant's Normal Retirement Date, is not less than two percent (2%) of his or her average Compensation for years in the testing period provided by Code Section 416(c)(1) multiplied by the number of Years of Service determined under paragraphs (4), (5) and (6) of Code Section 411(a) (not to exceed ten (10)) earned as a Non-Key Employee Participant in top heavy Plan Years. Any such Participant who is not a Participant in the Employer's Pension Plan shall for such Plan Year receive under this Plan a guaranteed minimum contribution prescribed hereinbelow for Non-Key Employees. If the contribution rate for the Key Employee with the highest contribution rate is less than three percent (3%) of such Participant's Compensation, the guaranteed minimum contribution for Non-Key Employees shall equal the highest contribution rate received by a Key Employee. To determine the contribution rate, the Plan Administrator shall consider all qualified top heavy defined contribution plans maintained by the Employer as a single plan. Notwithstanding the preceding provisions of this Section 14.1, if a defined benefit plan maintained by the Employer which benefits one or more Key Employees depends on this Plan to satisfy the anti-discrimination rules of Code Section 401(a)(4) or the coverage rules of Code Section 410 (or another plan benefiting one or more Key Employees so depends on such defined benefit plan), the guaranteed minimum contribution for a Non-Key Employee is three percent (3%) of his Compensation regardless of the contribution rate for the Key Employees. For purposes of this Section 14.1, the term "Participant" includes any Employee otherwise eligible to participate in this Plan but who is not a Participant because of his failure to make 197 elective deferrals under a Code Section 401(k) arrangement or because of his failure to make mandatory employee contributions. For purposes of this Section 14.1, "Compensation" means Compensation as defined in Section 4.1(b). For purposes of this Section 14.1, a Participant's contribution rate is the sum of Employer Matching Contributions plus Participant Pre-Tax Contributions allocated to the Participant's Account for the Plan Year divided by his Compensation for the entire Plan Year. However, for purposes of satisfying a Participant's top heavy minimum allocation in Plan Years beginning after December 31, 1988, a Participant's contribution rate does not include any elective contributions necessary to satisfy the nondiscrimination requirements of Code Section 401(k) or of Code Section 401(m). To determine a Participant's contribution rate, the Plan Administrator must treat all qualified top heavy defined contribution plans maintained by the Employer (or any related Employer described in Section 1.26) as a single plan. 14.2 If the contribution rate for the Plan Year with respect to a Non-Key Employee who is required by Section 14.1 to receive a guaranteed minimum contribution under the Plan is less than the minimum contribution, the Employer will increase its contribution for such Employee to the extent necessary for his contribution rate for the Plan Year to equal the guaranteed minimum contribution. The Plan Administrator shall allocate the additional contribution to the Employer Matching Contributions Account of the Non-Key Employee for whom the Employer makes the contribution. 14.3 If this Plan is the only qualified plan maintained by the Employer, the Plan is top heavy for a Plan Year if the top heavy 198 ratio as of the Determination Date exceeds sixty percent (60%). The top heavy ratio is a fraction, the numerator of which is the sum of the amounts standing in the Accounts of all Key Employees as of the Determination Date and the denominator of which is the similar sum determined for all Employees. The Plan Administrator must include in the top heavy ratio, as part of the numerator, any contribution not made as of the Determination Date but includible under Code Section 416 and the applicable Treasury regulations, and distributions made within the Determination Period. The Plan Administrator shall calculate the top heavy ratio by disregarding the Accounts and distributions, if any, of the Accounts of any Non-Key Employee who was formerly a Key Employee, and by disregarding the Accounts (including distributions, if any, of the Accounts) of an individual who has not received credit for at least one Hour of Service with the Employer during the Determination Period. The Plan Administrator shall calculate the top heavy ratio, including the extent to which it must take into account distributions, rollovers and transfers, in accordance with Code Section 416 and the regulations under that section. If the Employer maintains other qualified plans, or maintained another such plan which now is terminated, this Plan is top heavy only if it is part of the Required Aggregation Group, and the top heavy ratio for both the Required Aggregation Group and the Permissive Aggregation Group, if any, exceeds sixty percent (60%). The Plan Administrator will calculate the top heavy ratio in the same manner as required by the first paragraph of this Section 14.3, taking into account all plans within the Aggregation Group. To the extent the Plan Administrator must take into 199 account distributions to a Participant, the Plan Administrator shall include distributions from a terminated plan which would have been part of the Required Aggregation Group if it were in existence on the Determination Date. The Plan Administrator shall calculate the present value of accrued benefits and other amounts the Plan Administrator must take into account under defined benefit plans included within the group, in accordance with the terms of those plans, Code Section 416 and the regulations under that section. If an aggregated plan does not have a valuation date coinciding with the Determination Date, the Plan Administrator shall value the accrued benefits in the aggregated plan as of the most recent valuation date falling within the twelve-month period ending on the Determination Date except as Code Section 416 and applicable Treasury regulations require for the first and second year of a defined benefit plan. The Plan Administrator shall calculate the top heavy ratio with reference to the Determination Dates that fall within the same calendar year. 14.4 If, during any Limitation Year, this Plan is top heavy, the Plan Administrator shall apply the limitations of Article IV to a Participant by substituting 1.0 for 1.25 each place it appears in Section 4.1. This Section 14.4 shall not apply if: (a) The contribution rate for a Non-Key Employee who participates only in the defined contribution plan(s) would satisfy Section 14.1 if the Plan Administrator substituted four percent (4%) for three percent (3%); (b) A Non-Key Employee who participates in the top heavy defined benefit plan(s) receives an extra minimum contribution or benefit which satisfies Code Section 416(h)(2); and 200 (c) The top heavy ratio does not exceed ninety percent (90%). 14.5 Effective for the first Plan Year for which the Plan is top heavy and then in all subsequent Plan Years, a Participant's vested interest in his Employer Matching Contributions Account shall be determined in accordance with the following schedule: ________________________ YEARS OF SERVICE VESTING __________ PERCENTAGE Less then 20% 2 20% 3 40% 4 60% 5 80% 6 or more 100% The above top heavy vesting schedule will apply to Participants who earn at least one (1) Hour of Service after such schedule becomes effective. Nonetheless, such shift to the above top heavy vesting schedule is a vesting schedule amendment within the meaning of Section 6.1(b). 14.6 For purposes of applying the provisions of this Article XIV: (a) "Key Employee" shall mean, as of any Determination Date, any Employee or former Employee (or Beneficiary of such Employee) who, for any Plan Year in the Determination Period: (i) has Compensation in excess of 50% of the dollar amount prescribed in Code Section 415(b) (1) (A) (relating to defined benefit plans) and is an officer of the Employer; (ii) has Compensation in excess of the dollar amount prescribed in Code Section 415(c) (1) (A) (relating to defined contribution plans) and is one of the Employees owning 201 the ten largest interests in the Employer; (iii) is a more than 5% owner of the Employer; or (iv) is a more than 1% owner of the Employer and has Compensation of more than $150,000. The constructive ownership rules of Code Section 318 (or the principles of that section, in the case of an unincorporated Employer) will apply to determine ownership in the Employer. The number of officers taken into account under clause (i) will not exceed the greater of 3 or 10% of the total number (after application of the Code Section 414(q) exclusions) of Employees, but no more than 50 officers. The Plan Administrator will make the determination of who is a Key Employee in accordance with Code Section 416(i) and the regulations under that Code section. (b) "Non-Key Employee" is an Employee who does not meet the definition of Key Employee. (c) "Compensation" means Compensation as determined under Section 3.3(c)(iii) for purposes of identifying Highly Compensated Employees. (d) "Required Aggregation Group" means: (1) Each qualified plan of the Employer in which at least one (1) Key Employee participates during the Determination Period; and (2) Any other qualified plan of the Employer which enables a plan described in (1) to meet the requirements of Code Section 401(a)(4) or 410. (e) "Permissive Aggregation Group" is the Required Aggregation Group plus any other qualified plans maintained by the Employer, but only if such group would satisfy in the aggregate the requirements of Code Section 401(a)(4) and 410. The Plan Administrator shall determine the Permissive Aggregation Group. (f) "Employer" shall mean all the members of a controlled group of corporations [as defined 202 in Code Section 414(b)], of a commonly controlled group of trades or businesses (whether or not incorporated) [as defined in Code Section 414(c)], or of an affiliated service group [as defined in Code Section 414(m)], of which the Employer is a part. However, the Plan Administrator shall not aggregate ownership interests in more than one member of a related group to determine whether an individual is a Key Employee because of his ownership interest in the Employer. (g) "Determination Date" for any Plan Year is the last day of the preceding Plan Year. The "Determination Period" is the 5- year period ending on the Determination Date. __________ ARTICLE XV ______________ ADMINISTRATION 15.1 __________________ PLAN ADMINISTRATOR. (a) The Plan Administrator shall have the responsibility for administering the Plan and carrying out its provisions. The Plan Administrator may delegate any or all of its duties, powers, and responsibilities with respect to the Plan, to an administrative committee (designated the Plan Administrative Committee), which shall consist of not fewer than three persons and which shall be appointed by the Plan Administrator. Any member of the Plan Administrative Committee may be removed and new members may be appointed by the Plan Administrator at any time. (b) Any person appointed to be a member of the Plan Administrative Committee shall give his acceptance in writing to the Plan Administrator. Any 203 member of the Plan Administrative Committee may resign by delivering his written resignation to the Plan Administrator, and such resignation shall become effective upon such delivery or upon any date specified therein. (c) The Plan Administrative Committee may delegate any or all of its duties, powers, and responsibilities to one or more individuals or subcommittees, whose members may or may not be members of the Plan Administrative Committee. 15.2 ________________ Responsibilities. The Plan Administrator shall have the responsibility to construe and interpret the provisions of the Plan and all parts thereof, to construe any ambiguity or supply any omission or reconcile any inconsistencies in such manner and to such extent as it deems proper, and to determine all questions with respect to the individual rights of Participants and their beneficiaries and legal representatives under the Plan, including, but not by way of limitation, all issues with respect to eligibility, compensation, base rate of pay, base pay, contributions, vesting and credited service. The interpretation or construction placed upon any term or provision of the Savings Plan and any action taken by the Administrator, the Trustee, a Participating Company or a Participant in good faith pursuant thereto shall be final and conclusive upon all parties hereto, the Participating Companies, the Trustee at the time, the Participants and all other persons concerned. 15.3 _____________________ RULES AND REGULATIONS. The Administrator shall from time to time enact such rules and regulations and prescribe such forms as it may deem proper and necessary to facilitate the carrying out of the Plan. 204 Whenever the Administrator shall have prescribed a form for any action to be taken by a Participant, or his beneficiaries or legal representatives, such as, but not limited to, apply for participation, selecting, changing or terminating investment options, directions for sale, increasing or decreasing his Pre-Tax or After- Tax Contributions, terminating participation, requesting withdrawal, and nominating, changing or revoking beneficiaries, such action shall not be effective unless taken by executing and filing with the Administrator the proper form in the number of copies required by the Administrator. 15.4 ______________________ RIGHTS OF PARTICIPANTS _________________ AND BENEFICIARIES. Any Participant or any beneficiary receiving benefits under the Plan may examine copies of the Plan description, latest annual report and this Plan and the Trust Agreement. The Administrator will maintain all of such items in its office for examination during reasonable business hours and in such additional place or places as the Administrator may designate from time to time in order to comply with applicable law. Upon the written request of a Participant or a beneficiary receiving benefits under the Savings Plan, the Administrator shall furnish him a copy of any item listed in this paragraph, for which the Administrator may impose a reasonable charge. 15.5 ________________ CLAIMS PROCEDURE. (a) If any person makes a claim regarding the amount of any distribution or its method of payment, such person shall present the reason for the claim in writing to the Plan Administrator. The Plan Administrator, in its discretion, may request a meeting to clarify any matters that it deems pertinent. A claimant who is denied a claim will, within 90 205 days of the Plan Administrator's receipt of the claim, be given notice by the Plan Administrator that describes: (i)The specific reason or reasons for the denial; (ii)The specific reference to the Plan provisions on which the denial is based; (iii)A list of additional material or information (if any) that is necessary for the claimant to perfect the claim, with an explanation of why the additional information is needed; (iv) in explanation of the Plan's claim review procedure; and (v) An explanation that the claimant may request a review of his claim denial by the Plan Administrator by filing a written request with the Plan Administrator not more than 60 days after receiving written notice of the denial and that the claimant, or his representative, before such review, may review pertinent documents and submit issues and comments in writing. The 90-day period may be extended to 180 days if special circumstances require such an extension and the claimant is notified of the extension within 90 days of the Plan Administrator's receipt of the claim. (b) If a review of the initial denial is requested and the claim is again denied, the Plan Administrator shall again give written notice within 60 days of its decision to deny the claim to the claimant setting forth items (i) and (ii) above. However, the 60-day period may be extended to 120 days if special circumstances require such an extension and the claimant is notified of the extension within 60 days of the Plan Administrator's receipt of the request for review. All final interpretations, determinations and decisions of the Plan 206 Administrator with respect to any matter hereunder shall be conclusive and binding upon the Employer, Participants, Employees, and all other persons claiming interest under the Plan, except as otherwise provided by ERISA. ___________ ARTICLE XVI _______________ INDEMNIFICATION 16.1 The Company agrees to indemnify and save harmless all persons acting from time to time as the Administrator from and against any and all loss resulting from liability to which the Administrator may be subjected by reason of any act or conduct (except willful misconduct or gross negligence) in its official capacities in the administration of this Plan including all expenses reasonably incurred in its defense, in case the Company fails to provide such defense. The indemnification provisions of this Section 16.1 shall not relieve the Administrator from any liability which it may have to anyone other than the Company for breach of a fiduciary duty. Nothing herein stated shall preclude the following: (a) This Savings Plan from purchasing insurance for its fiduciaries or for itself to cover liabilities or losses occurring by reason of the act or omission of a fiduciary if such insurance permits recourse by the insurer against the fiduciary in the case of a breach of a fiduciary obligation by such fiduciary; (b) A fiduciary from purchasing insurance to cover liability from and for his own account; and (c) The Company from purchasing insurance to cover potential 207 liability of one or more persons who serve in a fiduciary capacity with regard to this Savings Plan. ____________ ARTICLE XVII ______________________ CONCERNING THE TRUSTEE 17.1 _________________ PURPOSES OF TRUST. The Company has entered into a separate Trust Agreement for the purposes of enabling the Trustee to receive contributions from Participating Companies and Participants, invest those contributions pursuant to this Plan and make distributions in accordance with this Plan or in accordance with instructions of the Plan Administrator pursuant to this Plan. _____________ ARTICLE XVIII ____________________________ CONCERNING THE PARTICIPATING _________ COMPANIES 18.1 Any corporation, fifty percent (50%) or more of the stock of which outstanding and entitled to vote is owned by one or more Participating Companies, may elect to participate in the Plan by filing an instrument in writing with the Company and the Trustee electing to participate in and to accept the terms and provisions of this Plan and the Trust Agreement. Whenever there shall be a Participating Company other than the Company, the Company shall be the agent of all Participating Companies for all purposes of this Plan except withdrawal from or termination of participation, other than a termination of this Plan in its entirety. Any Participating Company may withdraw from or 208 terminate participation by filing a written notice of withdrawal or termination with the Trustee and the Company. 18.2 None of the Participating Companies shall be obliged to pay any contribution payable by another Participating Company, but the Participating Companies shall have the right, if they so agree from time to time, to pay any such contribution of a Participating Company. ___________ ARTICLE XIX _____________________________ EXCLUSIVE BENEFIT, AMENDMENT, ___________ TERMINATION 19.1 _________________ EXCLUSIVE BENEFIT. Except as provided under Article X, no Employer has any beneficial interest in any asset of the Trust and no part of any asset in the Trust may ever revert to or be repaid to an Employer, either directly or indirectly; nor, prior to the satisfaction of all liabilities with respect to the Participants and their Beneficiaries under the Plan, may any part of the corpus or income of the Trust, or any asset of the Trust, be (at any time) used for, or diverted to, purposes other than the exclusive benefit of the Participants or their Beneficiaries. 19.2 ____________________ AMENDMENT BY COMPANY. In order to facilitate administration, the Company shall be the agent for all other Employers for purposes of amending this Plan from time to time (subject to the right of each Employer party to a Schedule hereto to modify, amend or change any provision of this Plan insofar 209 as applicable to Employees included in such Schedule) and for all other purposes except withdrawing from or otherwise terminating participation under this Plan as an Employer. The Company, by action of its Board of Directors, shall have the right at any time to amend, in whole or in part, any of the provisions of this Plan, including the right to make such amendments effective retroactively, if necessary, to bring the Plan into compliance with the requirements of the Code, ERISA and the regulations promulgated under each. No amendment shall make it possible for Plan assets to be used for, or diverted to, purposes other than the exclusive benefit of Participants and former Participants and their Beneficiaries. _______________________ Code Section 411(d) (6) __________________ Protected Benefits. An amendment (including the adoption of this Plan as a restatement of an existing plan) may not decrease a Participant's accrued benefit, except to the extent permitted under Code Section 412(c)(8), and may not reduce or eliminate Code Section 411(d)(6) protected benefits determined immediately prior to the adoption date (or, if later, the effective date) of the amendment. An amendment reduces or eliminates Code Section 411(d)(6) protected benefits if the amendment has the effect of either (i) eliminating or reducing an early retirement benefit or a retirement-type subsidy (as defined in Treasury regulations), or (ii) except as provided by Treasury regulations, eliminating an optional form of benefit. The Plan Administrator must disregard an amendment to the extent application of the amendment would fail to satisfy this paragraph. If the Plan Administrator must disregard an amendment because the 210 amendment would violate clause (i) or clause (ii), the Plan Administrator must maintain a schedule of the early retirement option or other optional forms of benefit the Plan must continue for the affected Participants. 19.3 ______________ DISCONTINUANCE. Each Employer has the right, at any time, to suspend or discontinue its contributions under the Plan, and as to its participation to terminate, at any time, this Plan and the Trust. The Plan will terminate as to such Employer upon the first to occur of the following: (a) The date terminated by action of the Employer; (b) The dissolution or merger of the Employer, unless the successor makes provision to continue the Plan, in which event the successor must substitute itself as the Employer under this Plan. Any termination of the Plan resulting from this paragraph (b) is not effective until compliance with any applicable notice requirements under ERISA. 19.4 ________________________ MERGER, CONSOLIDATION OR ________ TRANSFER. The Trustee may not consent to or be a party to, any merger or consolidation with another plan, or to a transfer of assets or liabilities to another plan, unless immediately after the merger, consolidation or transfer, the surviving Plan provides each Participant a benefit equal to or greater than the benefit each Participant would have received had the Plan terminated immediately before the merger or consolidation or transfer. 19.5 ___________ TERMINATION. If the Plan is terminated or partially 211 terminated by an Employer, any forfeitures which shall have occurred in accordance with Article X hereof prior to the termination or partial termination of the Plan, which shall not have been used to offset Employer Contributions or to reinstate Participant forfeitures in accordance with Section 10.5, shall be distributed pro-rata to the affected Participants in the same proportion that the sum of the Participant After-Tax Contributions Account, Participant Pre-Tax Contributions Account and Employer Matching Contributions Account balances of each such Participant bears to the sum of such account balances of all Participants. If the Plan is terminated or partially terminated by an Employer, the entire value of each affected Participant's After-Tax Contributions Account, Participant Pre-Tax Contributions Account and Employer Matching Contributions Account as of the Valuation Date coincident with or immediately following the effective date of the termination or partial termination, plus any distribution to which such Participant is entitled pursuant to this Section 19.5, shall, at the election of the Participant, be distributed to the Participant in a lump sum, as an immediate or deferred annuity purchased under a group annuity contract with an Insurer, or as a combination of such methods of payment, as soon as practicable after such Valuation Date. _______________________________ Distribution Restrictions Under ___________________ Code Section 401(k). The portion of the Participant's Nonforfeitable Accrued Benefit attributable to elective contributions under a Code Section 401(k) arrangement (or to amounts treated under the Code Section 401(k) arrangement as elective contributions) is not 212 distributable on account of Plan termination, as described in this Section 19.5, unless: (a) the Participant otherwise is entitled under the Plan to a distribution of that portion of his Nonforfeitable Accrued Benefit; or (b) the Plan termination occurs without the establishment of a successor plan. A distribution made after March 31, 1988, pursuant to clause (b), must be part of a lump sum distribution to the Participant of his nonforfeitable accrued benefit. __________ ARTICLE XX __________ APPENDICES 20.1 One or more appendices may be executed and attached hereto by a Participating Company and shall include each employee of such Participating Company (i) who is a member of a particular certified collective bargaining unit, the collective bargaining agency for which has either accepted the terms and conditions of this Plan, or has consented to the solicitation of applications for participation from members of such collective bargaining unit, and (ii) who is eligible for participation in this Plan. Each such appendix shall include a statement of which of the Participating Companies is a party thereto and a description of the employee group includible within such appendix and may, in addition, contain provisions adding to, modifying, amending or changing any provision of this Agreement, insofar as applicable to employees included in such appendix, but nothing contained in any appendix shall be of effect except with respect to so much of the employment of such employees as may come within such appendix. 213 ___________ ARTICLE XXI _______________________________ ELIGIBLE ROLLOVER DISTRIBUTIONS 21.1 ____________ APPLICATIONS. This Article applies to distributions made on or after January 1, 1993. Notwithstanding any provision of the Plan to the contrary that would otherwise limit a distributee's election under this Article, a distributee may elect, at the time and in the manner prescribed by the Plan Administrator, to have any portion of an eligible rollover distribution paid directly to an eligible retirement plan specified by the distributee in a direct rollover. 21.2 ___________ DEFINITIONS. (a) "Eligible rollover distribution." An eligible rollover distribution is any distribution of all or any portion of the balance to the credit of the distributee, except that an eligible rollover distribution does not include: any distribution that is one of a series of substantially equal periodic payments (not less frequently than annually) made for the life (or life expectancy) of the distributee or the joint lives (or joint life expectancies) of the distributee and the distributee's designated beneficiary, or for a specified period of ten years or more; any distribution to the extent such distribution is required under Code Section 401(a)(9); and the portion of any distribution that is not includible in gross income (determined without regard to the exclusion of net unrealized appreciation with respect to employer securities). (b) "Eligible retirement plan." An eligible retirement 214 plan is an individual retirement account described in Code Section 408(a), an individual retirement annuity described in Code Section 408(b), an annuity plan described in Code Section 403(a), or a qualified trust described in Code Section 401(a), that accepts the distributee's eligible rollover distribution. However, in the case of an eligible rollover distribution to the surviving spouse, an eligible retirement plan is an individual retirement account or individual retirement annuity. (c) "Distributee." 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, as defined in Code Section 414(p), are distributees with regard to the interest of the spouse or former spouse. (d) "Direct rollover." A direct rollover is a payment by the Plan to the eligible retirement plan specified by the distributee. ____________ ARTICLE XXII _____________ MISCELLANEOUS 22.1 ____________________ RIGHT OF EMPLOYER TO _________________ DISMISS EMPLOYEES. Neither the action of the Company in establishing this Plan and the Trust nor of any other Participating Company in electing to participate therein nor any action taken by any Participating Company under the provisions hereof, nor any provision of this Plan or of the Trust shall be 215 construed as giving to any employee of any Participating Company the right to be retained in its employ or any right to any payment whatsoever except to the extent of the benefits provided for by this Plan to be paid from the Trust. 22.2 _____________ GOVERNING LAW. This Agreement shall be administered and construed according to the laws of the State of Maryland. 22.3 _______________ TEXT TO CONTROL. The headings of Articles and Sections are included solely for convenience of reference, and, if there be any conflict between such headings and the text of this Plan, the text shall control. 22.4 ______ GENDER. Masculine pronouns shall refer to both males and females. IN WITNESS WHEREOF, Crown Central Petroleum Corporation has caused this Amended and Restated Plan to be executed on its behalf and pursuant to the authority conferred upon it by the Plan, on behalf of all Participating Companies, by its duly authorized officers and its corporate seal to be hereunto affixed this ______ day of ______________________ , 1991. ATTEST:CROWN CENTRAL PETROLEUM CORPORATION On Behalf of Itself, and on Behalf of all Participating Companies _____________________ By:___________________________ CROWN CENTRAL PETROLEUM CORPORATION EMPLOYEES SAVINGS PLAN 216 APPENDIX I Article I - Statement of Participating Companies Parties to this Appendix 1.1 Crown Central Petroleum Corporation, hereinafter referred to as "the Employer" is the only party to this Appendix. Article II - Definition of Employee Group 2.1 Each employee of the Employer who is a member of the Oil, Chemical and Atomic Workers International Union, certified collective bargaining unit Local No. 4-227, and who is eligible for membership in the Savings Plan, is included within this Appendix. Article III - Additional Provisions 3.1 The only provisions adding to, modifying, amending or changing any provision of the Savings Plan are the following special provisions: FIRST: A Participant on unpaid leave of absence from the Employer to work for the international union ("Union Leave of Absence"), in excess of thirty (30) days may elect to make contributions to his Participant After-Tax Contributions Account (and receive Employer Matching Contributions with respect thereto) during such leave of absence by filing written notice with the Administrator within thirty (30) days after his leave of absence begins and paying to the Company, on or before the tenth (10th) day of 217 each month commencing with the month following the month in which such notice is given, an amount equal to the Participant's Contribution (based on the classification which he occupied at the time his leave of absence began) which he would have made, whether Pre-- Tax or After-Tax, during the preceding month (or, in the case of the first such payment with respect to such leave of absence, since the start of such leave of absence) if he had not been on leave of absence. SECOND: Section 14.1 of the Plan shall apply to a Participant included within this Appendix who is on Union Leave of Absence in excess of thirty (30) days and who has elected to make contributions to his Participant After- Tax Contributions Account, irrespective of whether such Participant is employed by the Employer on the Determination Date of the Plan Year. 3.2 In the event of any conflict between the provisions of the Savings Plan and the provisions of this Appendix, the provisions of this Appendix shall be controlling only with respect to Participants properly included in this Appendix and only with respect to so much of the employment of any such Participant as comes within this Appendix. IN WITNESS WHEREOF, the Employer has caused this Appendix to be executed by its duly authorized officer and its corporate seal to be hereunto 218 affixed this ____ day of _______________, 1992. ATTEST: CROWN CENTRAL PETROLEUM CORPORATION _____________________ By_____________________________ ___________ CROWN CENTRAL PETROLEUM CORPORATION EMPLOYEES SAVINGS PLAN APPENDIX II Article I - Statement of Participating Companies Parties to this Appendix 1.1 LaGloria Oil and Gas Company, hereinafter referred to as "the Employer" is the only party to this Appendix. Article II - Definition of Employee Group 2.1 Each employee of the Employer who is a member of the collective bargaining unit of OCAW Local 4-202, consisting of production and maintenance employees employed at Tyler Texas, and who is eligible for membership in the Savings Plan, is included within this Appendix. Article III - Additional Provisions 3.1 The only provisions adding to, modifying, amending or changing any provision of the Savings Plan are the following special provisions: FIRST: The definitions of "base wages" and "base rate of pay" in Section 1.7 are modified as follows: 219 Participants included within this Appendix are hourly paid and are scheduled to work 36 hours every other week and 48 hours per week during the intervening weeks. Effective commencing with the pay period beginning March 5, 1990, "base wages", in the case of such Participants, shall mean the amount determined by multiplying the Participant's scheduled hours during a scheduled 36 hour work week by his Straight Time Factored Rate of Pay and by multiplying the first 40 of his scheduled hours during a scheduled 48 hour work week by his Straight Time Factored Rate of Pay and the next 8 hours by his Overtime Factored Rate of Pay. "Straight Time Factored Rate of Pay" means base wages multiplied by a factor of .97727, and "Overtime Factored Rate of Pay" means 1-1/2 times Straight Time Factored Rate of Pay. Notwithstanding the foregoing, base wages with respect to paid vacation time and paid sick leave shall be calculated at the straight time base rate of pay. 3.2 In the event of any conflict between the provisions of the Savings Plan and the provisions of this Appendix, the provisions of this Appendix shall be controlling only with respect to Participants properly included in this Appendix and only with respect to so much of the employment of any such Participant as comes within this Appendix. 220 IN WITNESS WHEREOF, the Employer has caused this Appendix to be executed by its duly authorized officer and its corporate seal to be hereunto affixed this ____ day of _______________, 1992. ATTEST: LaGLORIA OIL AND GAS COMPANY __________________________ By________________________________ EX-13.A 5 EXHIBIT 13.a CROWN CENTRAL PETROLEUM CORPORATION L L LETTER TO THE ETTER TO THE ETTER TO THE S S SHAREHOLDERS HAREHOLDERS HAREHOLDERS To the Shareholders: To the Shareholders: To the Shareholders: Crown's results for 1995 reflect improved operating income despite continued industry weaknesses in Gulf Coast refining margins. Earnings before interest, taxes, depreciation, amortization, abandonments (including the impact of the initial adoption of SFAS No. 121 in 1995), and before LIFO accounting provisions (collectively referred to as EBITDAAL) amounted to $34.7 million in 1995 compared to $31.3 million in 1994, an increase of 11%. Several positive factors contributed to this improved operating performance. Crown's aggressive cost-reduction program throughout the Company resulted in nearly $15 million of savings. In addition, our retail performance was strong throughout the year, with volumes up in all categories of stores. While total average gasoline margins, on a cents per gallon basis, were slightly less than 1994, both merchandise revenue and gross margins were up substantially. Although net income was not positive in 1995, strong performance in key finance, administrative, and operating areas helped minimize negative results. The capital expenditures made during 221 1995 were prudent investments in the Company's future that promote efficiencies and competitiveness. Projects such as the new automated Distributed Control System (DCS) for the Pasadena refinery and the purchase of additional retail outlets contributed to improved operating results in 1995 and will continue to benefit the Company for many years to come. Including one-time, non-cash write-downs, the Company reported a net loss before extraordinary items of $67.4 million ($6.87 per share) in 1995 compared to a net loss of $35.4 million ($3.63 per share) in 1994. Crown's 1994 earnings reflect a write-down of certain refinery projects related to a $16.8 million pre-tax charge to earnings for hydro-desulphurization equipment which had been purchased for the Pasadena refinery. The 1995 results include a one-time non-cash write-down of certain Company refinery assets in accordance with SFAS No.121, which relates to the accounting for the impairment of long-lived assets. The write- down, amounting to $80.5 million dollars on a pre- tax basis, will improve future earnings results and related returns on both equity and capital employed, while permitting improved comparisons with other independent refiners and marketers. Additionally, the Company took an extraordinary $3.3 million after-tax charge in January of 1995 related to early retirement of senior long-term notes when the Company completed the $125 million public debt offering. The resulting net loss for 1995 was $70.6 million ($7.20 per share) compared to a net loss in 1994 of $35.4 million ($3.63 per share). While the SFAS No.121 impact was taken entirely in the fourth quarter, the quarter's operating results showed a slight improvement over 1994. The EBITDAAL loss amounted to $4.6 million in the fourth quarter of 1995 before the one-time non- cash write-down of $80.5 million related to SFAS No.121 as described above. This compares to an EBITDAAL loss of $4.9 million in the fourth quarter of 1994 which benefited from exceptionally strong retail margins. Fourth quarter retail margins averaged 18 cents per gallon in 1994 compared to a more typical 12 cents per gallon in 1995. (Photograph of Henry A. Rosenberg, Jr. Chairman of the Board, President and Chief Executive Officer) (Photograph's Caption: Henry A. Rosenberg, Jr. Chairman of the Board and President) Overall results for the fourth quarter of 1995, including charges relating to the one-time non- cash SFAS No.121 write-down, amounted to a net 222 loss of $67.8 million compared to a net loss of $10.2 million for the fourth quarter of 1994. Both the annual and fourth quarter results for 1995 include substantial increases in net interest expense due to the issuance of additional debt. This increase amounted to $12.1 million in 1995 compared to $6.6 million in 1994 with the fourth quarter net interest expense amounted to $3.2 million in 1995 compared to $1.8 million in 1994. Crown's cash position at year-end remained strong at $43 million. Further improvements in inventory management resulted in a reduction in inventory quantities, which in turn reduced the 1995 net loss by $3.0 million ($.30 per share). ________ Refining ________ Refining ________ Refining Crown's refineries performed well from an operations perspective in 1995. Depressed margins on the Gulf Coast due in large part to the unseasonably warm winter of 1994/1995, were responsible for disappointing financial results. Results would have been even more disappointing had not the cash operating costs per barrel at Pasadena been reduced to $1.66 during the year, a 13% decline from 1994's $1.92. This significant improvement is the result of cost cutting programs, process improvements and higher throughput. The past several years have been difficult, but there is reason to be confident about the future of the petroleum industry. (1) Demand growth will remain relatively strong due to continued modest economic expansion and due to a less fuel efficient fleet of vehicles as new car sales of luxury and recreational-oriented vehicles outpace overall new car sales. (2) Annual capacity expansion for upgraded fuels will be lower as new capital for refineries has dropped sharply on a per barrel basis since 1990 following the completion of a number of refining projects that were required to meet the Clean Air Act. (3) The 1998 California Air Resources Board standards will create additional strong demands for alkylates, some of which will have to be supplied by Gulf Coast refineries. (4) The `` greening'' of Europe will positively impact domestic gasoline producers by reducing cost advantages European producers have realized in recent years. As a result, it can be expected that future refining margins have the possibility of again reaching levels that more adequately compensate refiners for their employed capital. Keeping our refineries efficient and up-to-date with current technology are strategies that will be key to future successes. As an example, a new 223 refinery-wide distributed control system, DCS, which is now fully commissioned at our Pasadena facility, has provided new and valuable technology for optimizing process unit operations by maximizing throughputs and improving yields of desirable more profitable products. Process improvements were made during the turnaround in the fourth quarter of 1994 to the fluid catalytic cracking (FCC) unit at Pasadena. As a result, there was an 18% increase of the more profitable products such as propane/propylene mix and less production of lower valued products such as slurry. Gasoline yields also showed favorable gains at the FCC unit. The continuous catalyst regeneration reformer at Pasadena was modified during a turnaround in 1995, and the capacity was increased by 18% to 26,000 barrels per day. Favorable industry trends, as cited above, combined with Crown's continuing investments in productivity, should result in improved financial results over the next several years. _________ Marketing _________ Marketing _________ Marketing Crown marketing continued to produce excellent results for the year. Merchandise sales at comparable stores were 12.3% higher and gasoline sales showed gains of 6.6% over 1994 despite national demand for gasoline growing at only a 1.5% to 2% rate. Gross merchandise margins, as a percent of revenues, were up 9% from 22.7% to 24.7%. Gasoline margins per gallon were slightly lower in 1995, compared to 1994, principally due to the exceptionally strong gasoline margins experienced during the last quarter of 1994. Gasoline margins per gallon experienced during the fourth quarter of 1995 were more in line with historical seasonal trends. During the year, eighteen units were added to our system. Fifteen of these were acquired as existing units which were located in current Crown high growth market areas and were easily assimilated into our infrastructure. These units are projected to produce a 4% yearly volume increase or 20.5 million gallons and this is expected to provide additional economies of scale. The remaining three units were new sites constructed in Maryland. These new stores are nearly doubling the gallonage sold compared to the existing Maryland stations' average. This gives us confidence that Crown's `` new build program'' is based upon a sound foundation and that it will assist us in our pursuit of our strategic goal of improving the balance between our refining 224 capacity for gasoline production and our retail volume. In keeping with recent market trends to provide the consumer with more convenience, Crown installed four Taco Bells in existing stores. These are franchises owned by Crown and operated in company-managed stores. A Subway restaurant was constructed in one of our Maryland stations and the Crown dealer is operating as the Subway franchisee. On a net basis, Crown ended 1995 with 8 fewer stores due to the closing of low performing units. Aside from expected attrition, normal for any retail operation, the Company's downsizing program which began four years ago is essentially complete. --- --- --- --- --- --- --- --- --- --- --- --- --- Two major financial agreements were concluded during the year, one of which was mentioned earlier. In January, the Company closed an oversubscribed public offering of $125 million senior notes, the proceeds of which were used to retire existing debt with non-amortizing ten-year notes. A second, in September, was a $130 million revolving credit to provide working capital and letter of credit capacity. In part, as a result of these financial activities, there has been increased interest in Crown from the investment research community and industry publications. Gasoline Marketing, an industry trade journal, featured Crown's Tyler refinery in their very positive cover story in the October/November 1995 issue. As of this announcement, Crown management is in a lockout situation at the Pasadena refinery with the Oil, Chemical, & Atomic Workers Union. Talks to resolve the issues are underway and the Company is hopeful of an early settlement. Refining operations continue uninterrupted with supervisors and salaried employees, some drawn from other areas of the Company. Charles L. Dunlap, President and C.O.O., resigned his position to pursue other investment and business opportunities effective February 29, 1996. Crown is grateful for his leadership and the many contributions made during his service. We are pleased to announce that the Reverend Harold E. Ridley, Jr., S.J., President of Loyola College in Maryland, joined our Board of Directors in December 1995. Mr. Malcolm McNair retired from the Board after many years of dedicated service. His wise counsel and seasoned judgment will be 225 greatly missed. Also, during the year, Randall M. Trembly and George R. Sutherland, Jr., were promoted to the position of Senior Vice President. Management has reviewed the industry and carefully analyzed each segment of our businesses in relation to the level of return that shareholders expect to be receiving on their capital. Models and strategies for the future have been developed for managing improvement throughout all of Crown's operations. Crown looks forward to continued progress in the year ahead. The support and confidence of all Crown shareholders and employees during this difficult period for our industry is greatly appreciated. Sincerely, Henry A. Rosenberg, Jr. Henry A. Rosenberg, Jr. Chairman of the Board and President March 1, 1996 EX-13.B 6 EXHIBIT 13.b CROWN CENTRAL PETROLEUM CORPORATION AND SUBSIDIARIES Year in Review
Thousand of dollars, except per share amounts1995 1994 1993 ---------------------------------------- ----- Financial Summary ------------------------- Sales and operating revenues $1,864,639 $1,699,168 $1,747,411 (Loss) income before income taxes and extraordinary (loss) (98,489) (52,836) 807 Net (loss) (70,624) (35,406) (4,300) Net (loss) per share (7.20) (3.63) (.44) EBITDAAL (1) 34,702 31,331 23,377 Cash flow from operating activities4,172 8,602 28,878 Total capital expenditures 41,010 34,359 40,860 Common stockholders' Equity 189,495 260,461 298,353 226
In thousands 1995 1994 1993 ------------- ------------- ------ ------- Operating Summary ------------------------- Barrels per day processed 154 148 158 Gasoline barrels produced per day 91 80 86 Distillate barrels produced per day 46 48 52 Gasoline barrels sold per day 92 84 91
1995 1994 1993 ----------- ------------- ------ -------- Key Financial Statistics ------------------------- Working capital (in millions) $45.9 $ 53.7 $ 51.8 Working capital ratio 1.22:1 1.22 : 1 1.29 : 1 Liquid assets as a percentage of current liabilities (2) 72.2% 75.8% 80.1% Long term debt as a percentage of total capitalization (3) 40.7% 29.1% 18.3% Equity ratio (4) 32.5% 37.0% 45.5% Return on average shareholders' equity(31.4% )(12.7% )(1.4% ) Gross profit margin 5.9% 5.7% 8.2% (1) EBITDAAL is defined as operating inncome (loss) before interest and taxxes (EBIT), excluding depreciation and amortization (DA), excluding gain (loss) on sales and abandonments of property, plant and equipment (A), and excluding the impact on operating income (loss) of accounting for inventory under the LIFO method compared with the FIFO method (L). (2) Liquid assets defined as cash, cash equivalents and trade accounts receivable. (3) Total capitalization defined as long-term debt and common stockholders' equity. (4) Common stockholders' equity divided by total assets.
EX-13.C 7 EXHIBIT 13.c Crown Central Petroleum Corporation Directors and Officers Board of Directors Jack Africk # Retired Vice Chairman UST Inc. George L. Bunting, Jr. # President and CEO Bunting Management Group Michael F. Dacey # President The Evolution Consulting Group, Inc. Robert M. Freeman # Chairman of the Board and Chief Executive Officer Signet Banking corporation Thomas M. Gibbons + Retired Chairman of the Board The Chesapeake and Potomac Telephone Companies (part of Bell Atlantic Corporation) Patricia A. Goldman + Retirement Senior Vice President Corporate Communications USAir Peter J. Holzer + Executive Vice President The Chase Manhattan Bank N.A. William L. Jews + President and Chief Executive Officer Blue Cross and Blue Shield of Maryland Rev. Harold E. Ridley, Jr., S.J. President Loyola College in Maryland Henry A. Rosenberg, Jr. Chairman of the Board, President and Chief Executive Officer of the Corporation + Members of Executive Compensation and Bonus Committee 228 # Members of Audit Committee Executive Committee Jack Africk Thomas M. Gibbons Henry A. Rosenberg, Jr. Officers Henry A. Rosenberg, Jr. Chairman of the Board, President and Chief Executive Officer Phillip W. Taff Senior Vice President - Finance and Chief Financial Officer Edward L. Rosenberg Senior Vice President - Administration, Corporate Development and Long Range Planning John E. Wheeler, Jr. Senior Vice President - Treasurer and Controller Randall M. Trembly Senior Vice President - Refining George R. Sutherland, Jr. Senior Vice President - Supply and Transportation Thomas L. Owsley Vice President - Legal Frank B. Rosenberg Vice President - Marketing J. Michael Mims Vice President - Human Resources Paul J. Ebner Vice President - Marketing Support Services Dennis W. Marple Vice President - Wholesale Sales and Terminals Delores B. Rawlings Secretary William A. Wolters Assistant Secretary Peter G. Wolfhagan Assistant Secretary 229 Phillip F. Hodges Assistant Secretary Andrew Lapayowker Assistant Secretary Stephen A. Noll Assistant Treasurer David J. Shade Assistant Treasurer Kim M. Melton Assistant Treasurer Coronet Security Systems, Inc. Edward L. Rosenberg Chairman of the Board Fast Fare, Inc. Frank B. Rosenberg President LaGloria Oil & Gas Company Henry A. Rosenberg, Jr. President Transfer Agent and Registrar The First National Bank of Boston c/o Equiserve, L. P. P. O. Box 644 Boston, Massachussetts 02102 800-736-3001 EX-13.D 8 CORPORATE INFORMATION EXHIBIT 13.d Crown Central Petroleum Corporation is one of the largest independent refiners and marketers of petroleum products in the United States. The Company operates two high-conversion refineries in Texas with a combined capacity of 152,000 barrels per day. Crown markets its refined products at 348 retail gasoline stations and convenience stores in seven Mid-Atlantic and Southeastern states. Crown's wholesale operations extend from its Texas refineries into the Southeastern, Mid-Atlantic and Midwestern regions of the United States. 230 By concentrating on its core business and maintaining a strong financial position, Crown is able to offer quality products to its customers and long-term value to its shareholders. EX-13.E 9
Crown Central Petroleum Corporation and Subsidiaries Operating Results Twelve Months Ended December 31 Dollars in thousands, exxcept per share data 1995 1994 ------------ ------------- Sales and operating revenues $1,864,639 $1,699,168 SFAS 121 Implementation (1) (80,524) (Loss) before income taxes (2) (98,489) (52,836) (Loss) before extraordinary item (67,367) (35,406) (Loss) from extraordinary item (3) (3,257) ---- Net (loss) (70,624) (35,406) (Loss) per share before extraordinary item (6.95) (3.63) (Loss) per share from extraordinary item (.33) ---- Net (loss) per share (7.28) (3.63) Weighted average shares used in the computation of (loss) per share 9,697,611 9,742,598 ------------------------------------------------------------------------ --------------------- (1) During the fourth quarter of 1995, the Company implemented Statement of Financial Accounting Standard No. 121 `` Accounting for the Impairment of Long-Lived Assets and Long-Lived assets to be Disposed Of'' which resulted in a write-down of $80.5 million related to certain refinery assets. (2) Includdes the impact of implementation of SFAS 121. 231 (3) During the first quarter of 1995, the Company incurred an extraordinary loss as a result of the early retirement of its outstanding 10.42% Senior Notes (Notes). The outstanding Notes were retired on January 24, 1995 from the proceeds received from the sale of $125 million of Unsecured 10.875% Senior Notes due February 1, 2005.
Crown Central Petroleum Corporation and Subsidiaries Operating Statistics Twelve Months Ended December 31 1995 1994 ------------ ---------- ________ REFINING Production (BPD - M) 155 148 Production (MMbbl) 56.5 53.9 Gross Margin ($/bbl) 2.12 2.37 Gross Profit ($MM) 119.7 127.8 Operating Cost ($/bbl) 2.26 2.52 Operating Cost ($MM) 127.7 136.1 Net Refining Profit ($MM) (8.0) (8.3) ______ RETAIL Number Stores 348 357 Volume (pmps - Mgal) 123 113 Volume (MMgal) 516 486 Gasoline Gross Margin ($/gal) 0.13 0.13 Gasoline Gross Profit ($MM) 65.0 63.7 232 Merchandise Sales (pmps - $M) 22.0 20.4 Merchandise Sales ($MM) 91.8 87.5 Merchandise Gross Margin (%) 28.8 27.4 Merchandise Gross Margin ($MM) 26.5 24.0 Retail Gross Profit ($MM) 91.5 87.7 Retail Operating Costs (pmps - $M) 17.2 17.1 Retail Net Profit ($MM) 19.5 14.2 Wholesale / Other ($MM) (13.1) (23.1) HDS Write-down ($MM) (16.8) SFAS No. 121 Implementation ($MM) (80.5) Corporate Overhead ($MM) (16.3) (18.8) Income Tax (Expense) Benefit ($MM) 31.1 17.4 (Loss) from Extraordinary Item ($MM) (3.3) Total Net (Loss) ($MM) (70.6) (35.4) Depreciation and Amortization ($MM) 36.6 42.6 Net Interest Expense ($MM) 12.1 6.6 Other Income ($MM) 2.5 0.1 LIFO Provision ($MM) 6.7 19.0 Loss (Gain) on Sales and Abandonments of P,P & E ($MM) 80.2 16.0 EBITDAAL ($MM) 34.7 31.3 Capital Expenditures ($MM) 41.0 34.4 ------------------------------------------------------------------------ ------------ BPD = Barrels per day bbl = barrel or barrels as applicable gal = gallon or gallons as applicable pmps = per month per store M = in thousands MM = in millions
EX-27 10 WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
5 DEC-31-1995 DEC-31-1995 12-MOS
FINANCIAL DATA SCHEDULE Crown Central Petroleum Corporation and Subsidiaries (Thousands of dollars, except per share amounts) December 31 1995 ----------------- (Unaudited) 5,163 36,882 107,330 1,531 96,025 250,601 624,338 322,358 583,214 204,670 128,506 0 0 49,765 139,730 583,214 1,864,639 1,864,639 1,753,886 1,753,886 199,249 396 14,948 (98,489) (31,122) (67,367) 0 (3,257) 0 (70,624) (7.28) (7.28)
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