SEAGULL THRIFT PLAN
As Amended and Restated
Effective September 1, 1996
SEAGULL THRIFT PLAN
THIS AGREEMENT AND DECLARATION OF TRUST is by and between SEAGULL
ENERGY CORPORATION, a Texas corporation, hereinafter referred to as the
"Company," and TEXAS COMMERCE BANK NATIONAL ASSOCIATION, Houston, Texas, a
national banking association, hereinafter referred to as "Trustee."
W I T N E S S E T H :
WHEREAS, the Company has heretofore adopted the SEAGULL THRIFT PLAN,
hereinafter referred to as the "Plan," for the benefit of its employees; and
WHEREAS, the Company has heretofore entered into a trust agreement
with the Trustee establishing a trust to hold and invest contributions made
under the Plan and from which benefits have been distributed under the Plan;
WHEREAS, the Company desires to restate the Plan and to amend the Plan
in several respects, intending thereby to provide an uninterrupted and
continuing program of benefits;
NOW THEREFORE, the Plan and the trust agreement are hereby restated in
their entirety as follows with no interruption in time, effective as of
September 1, 1996, except as otherwise indicated herein:
(i)
TABLE OF CONTENTS
Article I Definitions and Construction ................ I-1
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Article II Participation................................ II-1
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Article III Contributions................................ III-1
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Article IV Allocations.................................. IV-1
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Article V Investment Funds............................. V-1
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Article VI Retirement Benefits.......................... VI-1
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Article VII Disability Benefits.......................... VII-1
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Article VIII Severance Benefits and Determination
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of Vested Interest........................... VIII-1
Article IX Death Benefits............................... IX-1
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Article X Time and Form of Payment of Benefits......... X-1
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Article XI In-Service Withdrawals....................... XI-1
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Article XII Loans........................................ XII-1
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Article XIII Administration of the Plan................... XIII-1
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Article XIV Trustee and Administration of Trust Fund..... XIV-1
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Article XV Fiduciary Provisions......................... XV-1
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Article XVI Amendments................................... XVI-1
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Article XVII Discontinuance of Contributions,
Termination, Partial Termination,
and Merger or Consolidation.................. XVII-1
Article XVIII Participating Employers...................... XVIII-1
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Article XIX Miscellaneous Provisions .................... XIX-1
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Article XX Top-Heavy Status............................. XX-1
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(ii)
I. Definitions and Construction
1.1 Definitions. Where the following words and phrases appear in the
Plan, they shall have the respective meanings set forth below, unless their
context clearly indicates to the contrary.
(1) Account(s): A Member's Cash or Deferred Account, Employer Contribution
Contribution Account, Member Contribution Account, and/or Rollover
Contribution Account, including the amounts credited thereto.
(2) Act: The Employee Retirement Income Security Act of 1974, as amended.
(3) Benefit Commencement Date: With respect to each Member or beneficiary,
the date such Member's or beneficiary's benefit is paid to him from the
Trust Fund.
(4) Cash or Deferred Account: An individual account for each Member, which
is credited with the Cash or Deferred Contributions made by the
Employer on such Member's behalf and the Employer Safe Harbor
Contributions, if any, made on such Member's behalf pursuant to Section
3.4 to satisfy the restrictions set forth in Section 3.1(e) and which
is credited with (or debited for) such account's allocation of net
income (or net loss) and changes in value of the Trust Fund.
(5) Cash or Deferred Contributions: Contributions made to the Plan by the
Employer on a Member's behalf in accordance with the Member's elections
to defer Compensation under the Plan's qualified cash or deferred
arrangement as described in Section 3.1.
(6) Code: The Internal Revenue Code of 1986, as amended.
(7) Committee: The administrative committee appointed by the Directors to
administer the Plan.
(8) Company: Seagull Energy Corporation.
(9) Company Stock: The common stock of Seagull Energy Corporation.
(10) Compensation: The total of all wages, salaries, fees for professional
service and other amounts received in cash or in kind by a Member for
services actually rendered or labor performed for the Employer while a
Member to the extent such amounts are includable in gross income,
subject to the following adjustments and limitations:
(A) The following shall be excluded:
(i) bonuses and incentive or other supplemental pay;
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(ii) reimbursements and other expense allowances;
(iii) cash and noncash fringe benefits;
(iv) moving expenses;
(v) Employer contributions to or payments from this or
any other deferred compensation program, whether
such program is qualified under section 401(a) of
the Code or nonqualified;
(vi) welfare benefits;
(vii) amounts realized from the receipt or exercise of a
stock option that is not an incentive stock option
within the meaning of section 422 of the Code;
(viii) amounts realized at the time property described in
section 83 of the Code is freely transferable
or no longer subject to a substantial risk of
forfeiture;
(ix) amounts realized as a result of an election
described in section 83(b) of the Code;
(x) any amount realized as a result of a disqualifying
disposition within the meaning of section 421(a)
of the Code; and
(xi) any other amounts that receive special tax
benefits under the Code but are not hereinafter
included.
(B) The following shall be included:
(i) elective contributions made on a Member's behalf
by the Employer that are not includable in income
under section 125, section 402(e)(3), section
402(h), or section 403(b) of the Code;
(ii) compensation deferred under an eligible deferred
compensation plan within the meaning of section
457(b) of the Code; and
(iii) employee contributions described in section 414(h)
of the Code that are picked up by the employing
unit and are treated as employer contributions.
(C) The Compensation of any Member taken into account for purposes
of the Plan shall be limited to $150,000 for any Plan Year
with such limitation to be:
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(i) adjusted automatically to reflect any amendments
to section 401(a)(17) of the Code and any cost-of-
living increases authorized by section 401(a)(17)
of the Code;
(ii) prorated for a Plan Year of less than twelve
months and to the extent otherwise required by
applicable law; and
(iii) in the case of a Member who is either a five-
percent owner of the Employer (within the meaning
of section 416(i)(1)(A)(iii) of the Code) or is
one of the ten most Highly Compensated Employees
for the Plan Year and who has a spouse and/or
lineal descendants who are under the age of
nineteen as of the end of a Plan Year who receive
Compensation during such Plan Year, prorated and
allocated among such Member, his spouse, and/or
lineal descendants under the age of nineteen based
on the Compensation for such Plan Year of each
such individual.
(11) Controlled Entity: Each corporation that is a member of a controlled
group of corporations, within the meaning of section 1563(a)
(determined without regard to sections 1563(a)(4) and 1563(e)(3)(C)) of
the Code, of which the Employer is a member, each trade or business
(whether or not incorporated) with which the Employer is under common
control, and each member of an affiliated service group, within the
meaning of section 414(m) of the Code, of which the Employer is a
member.
(12) Direct Rollover: A payment by the Plan to an Eligible Retirement Plan
designated by a Distributee.
(13) Directors: The Board of Directors of the Company.
(14) Distributee: Each (A) Member entitled to an Eligible Rollover
Distribution, (B) Member's surviving spouse with respect to the
interest of such surviving spouse in an Eligible Rollover Distribution,
and (C) former spouse of a Member who is an alternate payee under a
qualified domestic relations order, as defined in section 414(p) of the
Code, with regard to the interest of such former spouse in an Eligible
Rollover Distribution.
(15) Effective Date: September 1, 1996, as to this restatement of the Plan,
except (A) as otherwise indicated in specific provisions of the Plan
and (B) that provisions hereof affecting the duties of the Trustee
shall be effective as of the date of execution of this restatement of
the Plan by the Trustee. The original effective date of the Plan was
January 1, 1973.
(16) Eligible Employee: Each Employee other than (A) an Employee whose terms
and conditions of employment are governed by a collective bargaining
agreement, unless such agreement provides for his coverage under the
Plan, (B) a nonresident alien who receives no earned income from the
Employer that constitutes income from sources within the United States,
(C) an Employee who is a Leased Employee, (D) an Employee who is
employed at the ENSTAR Natural Gas Company division of the Company and
(E) an Employee who is
I-3
employed by the Alaska Pipeline Company. Notwithstanding any provision
of the Plan to the contrary, no individual who is designated,
compensated, or otherwise classified or treated by the Employer as an
independent contractor shall be eligible to become a Member of the
Plan.
(17) Eligible Retirement Plan: (A) With respect to a Distributee other than
a surviving spouse, an individual retirement account described in
section 408(a) of the Code, an individual retirement annuity described
in section 408(b) of the Code, an annuity plan described in section
403(a) of the Code, or a qualified plan described in section 401(a) of
the Code, which under its provisions accepts such Distributee's
Eligible Rollover Distribution and (B) with respect to a Distributee
who is a surviving spouse, an individual retirement account described
in section 408(a) of the Code or an individual retirement annuity
described in section 408(b) of the Code.
(18) Eligible Rollover Distribution: Any distribution of all or any portion
of the Accounts of a Distributee other than (A) a distribution that is
one of a series of substantially equal periodic payments (not less
frequently than annually) made for the life (or life expectancy) of the
Distributee or the joint lives (or joint life expectancies) of the
Distributee and the Distributee's designated beneficiary or for a
specified period of ten years or more, (B) a distribution to the extent
such distribution is required under section 401(a)(9) of the Code, (C)
the portion of a distribution that is not includable in gross income
(determined without regard to the exclusion for net unrealized
appreciation with respect to employer securities), (D) a loan treated
as a distribution under section 72(p) of the Code and not excepted by
section 72(p)(2), (E) a loan in default that is a deemed distribution,
(F) any corrective distribution provided in Sections 3.7 and 4.5(b),
and (G) any other distribution so designated by the Internal Revenue
Service in revenue rulings, notices, and other guidance of general
applicability.
(19) Employee: Each (A) individual employed by the Employer and (B) Leased
Employee.
(20) Employer: The Company and each entity that has adopted the Plan
pursuant to the provisions of Article XVIII.
(21) Employer Contribution Account: An individual account for each Member,
which is credited with the sum of (A) the Employer Matching
Contributions made on such Member's behalf, (B) the Employer
Discretionary Contributions, if any, made on such Member's behalf
pursuant to Section 3.3, and (C) the Employer Safe Harbor
Contributions, if any, made on such Member's behalf pursuant to Section
3.4 to satisfy the restrictions set forth in Section 3.5 and which is
credited with (or debited for) such account's allocation of net income
(or net loss) and changes in value of the Trust Fund.
(22) Employer Contributions: The total of Employer Matching Contributions,
Employer Discretionary Contributions, and Employer Safe Harbor
Contributions.
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(23) Employer Discretionary Contributions: Contributions made to the Plan
by the Employer pursuant to Section 3.3.
(24) Employer Matching Contributions: Contributions made to the Plan by the
Employer pursuant to Section 3.2.
(25) Employer Safe Harbor Contributions: Contributions made to the Plan by
the Employer pursuant to Section 3.4.
(26) Employment Commencement Date: The date on which an individual first
performs an Hour of Service.
(27) Highly Compensated Employee: Each Employee who performs services
during the Plan Year for which the determination of who is highly
compensated is being made (the "Determination Year") and who:
(A) is a five-percent owner of the Employer (within the meaning of
section 416(i)(1)(A)(iii) of the Code) at any time during the
Determination Year or the twelve-month period immediately
preceding the Determination Year (the "LookBack Year"); or
(B) receives compensation (within the meaning of section 415(c)(3)
of the Code, including elective or salary reduction
contributions to a cafeteria plan, cash or deferred
arrangement, or tax-sheltered annuity; "compensation" for
purposes of this Paragraph) in excess of $75,000 (with such
amount to be adjusted automatically to reflect any
cost-of-living adjustments authorized by section 414(q)(1) of
the Code) during the Look-Back Year; or
(C) receives compensation in excess of $50,000 (with such amount
to be adjusted automatically to reflect any cost-of-living
adjustments authorized by section 414(q)(1) of the Code)
during the Look-Back Year and is a member of the top 20% of
Employees for the Look-Back Year (other than Employees
described in section 414(q)(8) of the Code) ranked on the
basis of compensation received during the year; or
(D) is an officer (within the meaning of section 416(i) of the
Code) during the Look-Back Year and receives compensation in
the Look-Back Year greater than 50% of the amount in effect
under section 415(b)(1)(A) of the Code for the calendar year
in which the Look-Back Year begins; or
(E) is described in clauses (B), (C), or (D) above (after
modifying such clauses to substitute the Determination Year
for the Look-Back Year) and is one of the 100 Employees who
receives the most compensation from the Employer or a
Controlled Entity during the Determination Year.
I-5
For purposes of the preceding sentence, (i) no more than 50 Employees
(or, if lesser, the greater of three Employees or 10% of the Employees)
shall be treated as officers, (ii) if no officer has compensation in
excess of 50% of the amount in effect under section 415(b)(1)(A) of the
Code, then the highest-paid officer shall be deemed to be a Highly
Compensated Employee, (iii) all employers aggregated with the Employer
under section 414(b), (c), (m), or (o) of the Code shall be treated as
a single employer, (iv) a former Employee who had a separation year
(generally, the Determination Year such Employee separates from
service) prior to the Determination Year and who was an active Highly
Compensated Employee for either such separation year or any
Determination Year ending on or after such Employee's fifty-fifth
birthday shall be deemed to be a Highly Compensated Employee, and (v)
the Committee may elect, in accordance with the provisions of
applicable Treasury regulations, rulings and notices, to make the
Look-Back Year calculation for a Determination Year on the basis of the
calendar year ending with or within the applicable Determination Year
(or, in the case of a Determination Year that is shorter than twelve
months, the calendar year ending with or within the twelve-month period
ending with the end of the applicable Determination Year). Further, if
any individual is a member of the family of a five-percent owner or of
a Highly Compensated Employee in the group consisting of the ten Highly
Compensated Employees paid the greatest compensation during the year,
then such individual shall not be considered a separate employee and
any compensation paid to such individual (and any applicable
contribution or benefit on behalf of such individual) shall be treated
as if it were paid to (or on behalf of) the five-percent owner or
Highly Compensated Employee. For purposes of the preceding sentence,
the term "family" means, with respect to any active or former Employee,
such Employee's spouse and lineal ascendants and descendants and the
spouses of such lineal ascendants and descendants. To the extent that
the provisions of this Paragraph are inconsistent or conflict with the
definition of a "highly compensated employee" set forth in section
414(q) of the Code and the Treasury regulations thereunder, the
relevant terms and provisions of section 414(q) of the Code and the
Treasury regulations thereunder shall govern and control.
(28) Hour of Service: Each hour for which an individual is directly or
indirectly paid, or entitled to payment, by the Employer or a
Controlled Entity for the performance of duties or for reasons other
than the performance of duties; provided, however, that no more than
501 Hours of Service shall be credited to an individual on account of
any continuous period during which he performs no duties. Such Hours of
Service shall be credited to the individual for the computation period
in which such duties were performed or in which occurred the period
during which no duties were performed. An Hour of Service also includes
each hour, not credited above, for which back pay, irrespective of
mitigation of damages, has been either awarded or agreed to by the
Employer or a Controlled Entity. These Hours of Service shall be
credited to the individual for the computation period to which the
award or agreement pertains rather than the computation period in which
the award, agreement, or payment is made. Solely for purposes of
determining whether a OneYear Break-in-Service has occurred, an Hour of
Service is also each normal work hour, not otherwise credited above,
during which an individual is absent from work by reason of the
individual's pregnancy, the birth of a child of the individual, the
placement of a child with the individual in connection with the
adoption of such child by the individual, or for
I-6
purposes of caring for such child for the period immediately following
such birth or placement. The Committee may in its discretion require,
as a condition to the crediting of Hours of Service under this
provision, that the individual furnish appropriate and timely
information to the Committee establishing the reason for any such
absence. Such Hours of Service shall be credited to the individual for
the computation period in which the absence from work begins if such
crediting is necessary to prevent the occurrence of a One-Year
Break-in-Service in such computation period; otherwise such Hours of
Service shall be credited to the individual in the next following
computation period. The number of Hours of Service to be credited to an
individual for any computation period shall be governed by 29 CFR
ss.ss. 2530.200b-2(b) and (c). Hours of Service shall also include any
hours required to be credited by federal law other than the Act or the
Code, but only under the conditions and to the extent so required by
such federal law.
(29) Investment Fund: A portion of the Trust Fund that is invested in a
specified manner as described in Section 5.1.
(30) Leased Employee: Each person who is not an employee of the Employer or
a Controlled Entity but who performs services for the Employer or a
Controlled Entity pursuant to an agreement (oral or written) between
the Employer or a Controlled Entity and any leasing organization,
provided that such person has performed such services for the Employer
or a Controlled Entity or for related persons (within the meaning of
section 144(a)(3) of the Code) on a substantially full-time basis for a
period of at least one year and such services are of a type
historically performed by the Employer's or Controlled Entity's
employees in the Employer's or Controlled Entity's field of business.
(31) Member: Each individual who (A) has met the eligibility requirements
for participation in the Plan pursuant to Article II or (B) has made a
Rollover Contribution in accordance with Section 3.8, but only to the
extent provided in Section 3.8.
(32) Member Contribution Account: An individual account for each Member
which is credited with his Member contributions made prior to January
1, 1987 and which is credited with (or debited for) such account's
allocation of net income (or net loss) and changes in value of the
Trust Fund.
(33) Normal Retirement Date: The date a Member attains the age of sixty-
five.
(34) One-Year Break-in-Service: Any Plan Year during which an individual has
no more than 500 Hours of Service.
(35) Plan: The Seagull Thrift Plan, as amended from time to time.
(36) Plan Year: The twelve-consecutive month period commencing January 1 of
each year.
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(37) Rollover Contribution Account: An individual account for an Eligible
Employee, which is credited with the Rollover Contributions of such
Employee and which is credited with (or debited for) such account's
allocation of net income (or net loss) and changes in value of the
Trust Fund.
(38) Rollover Contributions: Contributions made by an Eligible Employee
pursuant to Section 3.8.
(39) Trust: The trust established herein to hold and invest contributions
made under the Plan, and income thereon, and from which the Plan
benefits are distributed.
(40) Trust Fund: The funds and properties held pursuant to the provisions
hereof for the use and benefit of the Members, together with all
income, profits, and increments thereto.
(41) Trustee: The trustee or trustees qualified and acting hereunder at any
time.
(42) Valuation Dates: Each and every business day of the Plan Year.
(43) Vested Interest: The portion of a Member's Accounts which, pursuant to
the Plan, is nonforfeitable.
(44) Vesting Service: The measure of service used in determining a Member's
Vested Interest as determined pursuant to Section 8.4.
(45) Voting Fiduciary: The independent fiduciary, if any, appointed by the
Committee pursuant to the provisions of Section 13.7 to receive voting
directions from the Members and vote Company Stock in accordance with
the provisions of Section 5.3.
1.2 Number and Gender. Wherever appropriate herein, words used in the
singular shall be considered to include the plural and words used in the plural
shall be considered to include the singular. The masculine gender, where
appearing in the Plan, shall be deemed to include the feminine gender.
1.3 Headings. The headings of Articles and Sections herein are
included solely for convenience, and if there is any conflict between such
headings and the text of the Plan, the text shall control.
1.4 Construction. It is intended that the Plan be qualified within the
meaning of section 401(a) of the Code and that the Trust be tax exempt under
section 501(a) of the Code, and all provisions herein shall be construed in
accordance with such intent.
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II. Participation
2.1 Eligibility. Each Eligible Employee shall become a Member upon the
first day of the month coincident with or next following the date on which such
Eligible Employee completes an Hour of Service. Notwithstanding the foregoing:
(a) An Eligible Employee who was a Member of the Plan on the
day prior to the Effective Date shall remain a Member of this
restatement thereof as of the Effective Date;
(b) An Eligible Employee who was a Member of the Plan, or who
was eligible to become a Member of the Plan, prior to a termination of
employment shall become a Member immediately upon his reemployment as
an Eligible Employee;
(c) An Employee who has completed an Hour of Service but who
has not become a Member of the Plan because he was not an Eligible
Employee shall become a Member of the Plan immediately upon becoming an
Eligible Employee as a result of a change in his employment status;
(d) An Eligible Employee who had met the requirements of this
Section to become a Member of the Plan but who terminated employment
prior to the date upon which he would have become a Member shall become
a Member immediately upon his reemployment; and
(e) A Member who ceases to be an Eligible Employee but remains
an Employee shall continue to be a Member but, on and after the date he
ceases to be an Eligible Employee, he shall no longer be entitled to
defer Compensation hereunder or share in allocations of Employer
Contributions unless and until he shall again become an Eligible
Employee.
II-1
III. Contributions
3.1 Cash or Deferred Contributions.
(a) A Member may elect to defer an integral percentage of from 1% to
14% (or, with respect to a Member who is a Highly Compensated Employee, such
lesser percentage as may be prescribed from time to time by the Committee) of
his Compensation for a Plan Year by having the Employer contribute the amount so
deferred to the Plan. Compensation for a Plan Year not so deferred by such
election shall be received by such Member in cash. A Member's election to defer
an amount of his Compensation pursuant to this Section shall be made by
executing a Compensation reduction agreement pursuant to which the Member
authorizes the Employer to reduce his Compensation in the elected amount and the
Employer, in consideration thereof, agrees to contribute an equal amount to the
Plan. The reduction in a Member's Compensation for a Plan Year pursuant to his
election under a Compensation reduction agreement shall be effected by
Compensation reductions as of each payroll period within such Plan Year
following the effective date of such agreement. The amount of Compensation
elected to be deferred by a Member for a Plan Year pursuant to this Section
shall become a part of the Employer's Cash or Deferred Contributions for such
Plan Year.
(b) A Member's Compensation reduction agreement shall remain in force
and effect for all periods following the date of its execution until modified or
terminated or until such Member terminates his employment. A Member who has
elected to defer a portion of his Compensation may change his deferral election
percentage (within the percentage limits set forth in Paragraph (a) above),
effective as of the first day of any month in accordance with the procedures
prescribed by the Committee.
(c) A Member may cancel his Compensation reduction agreement,
effective as of the first day of any month in accordance with the procedures
prescribed by the Committee. A Member who so cancels his Compensation reduction
agreement may resume Compensation deferrals, effective as of the first day of
any month that is at least six months after such cancellation in accordance with
the procedures prescribed by the Committee.
(d) In restriction of the Members' elections provided in Paragraphs
(a), (b), and (c) above, the Cash or Deferred Contributions and the elective
deferrals (within the meaning of section 402(g)(3) of the Code) under all other
plans, contracts, and arrangements of the Employer on behalf of any Member for
any calendar year shall not exceed $7,000 (with such amount to be adjusted
automatically to reflect any cost-of-living adjustments authorized by section
402(g)(5) of the Code).
(e) In further restriction of the Members' elections provided in
Paragraphs (a), (b), and (c) above, it is specifically provided that one of the
"actual deferral percentage" tests set forth in section 401(k)(3) of the Code
and the Treasury regulations thereunder must be met in each Plan Year. If
multiple use of the alternative limitation (within the meaning of section
401(m)(9) of the Code and Treasury regulation ss. 1.401(m)-2(b)) occurs during
III-1
a Plan Year, such multiple use shall be corrected in accordance with the
provisions of Treasury regulation ss. 1.401(m)-2(c); provided, however, that
if such multiple use is not eliminated by making Employer Safe Harbor
Contributions, then the "actual contribution percentages" of all Highly
Compensated Employees participating in the Plan shall be reduced, and the
excess contributions distributed, in accordance with the provisions of
Section 3.8(c) and applicable Treasury regulations, so that there is no such
multiple use.
(f) If the restrictions set forth in Paragraph (d) or (e) above would
not otherwise be met for any Plan Year, the Compensation deferral elections made
pursuant to Paragraphs (a), (b), and (c) above of Members who are Highly
Compensated Employees may be reduced by the Committee on a temporary and
prospective basis in such manner as the Committee shall determine.
(g) As soon as administratively feasible following the end of each
month, the Employer shall contribute to the Trust, as Cash or Deferred
Contributions with respect to each Member, an amount equal to the amount of
Compensation elected to be deferred, pursuant to Paragraphs (a) and (b) above
(as adjusted pursuant to Paragraph (f) above), by such Member during such month.
Such contributions, as well as the contributions made pursuant to Sections 3.2,
3.3, and 3.4, shall be made without regard to current or accumulated profits of
the Employer. Notwithstanding the foregoing, the Plan is intended to qualify as
a profit sharing plan for purposes of sections 401(a), 402, 412, and 417 of the
Code.
3.2 Employer Matching Contributions. For each calendar month, the
Employer shall contribute to the Trust, as Employer Matching Contributions on
behalf of each Member who has completed one Year of Service, as defined below,
as of the first day of such month, an amount that equals 100% of the Cash or
Deferred Contributions that were made pursuant to Section 3.1 on behalf of each
of the Members during such month and that were not in excess of 6% of each such
Member's Compensation for such month. For purposes of this Section, an Employee
shall be credited with one Year of Service upon the completion of any twelve
month period commencing with his Commencement Date or any anniversary thereof
during which twelve month period such Employee is credited with 1,000 Hours of
Service. An Employee who completed one Year of Service prior to a termination of
his employment (regardless of whether such Employee had elected to defer
compensation pursuant to Section 3.1) shall continue to be credited with one
Year of Service upon his reemployment with the Employer.
3.3 Employer Discretionary Contributions. For each Plan Year, the
Employer may contribute to the Trust, as an Employer Discretionary Contribution,
an additional amount as determined in its discretion.
3.4 Employer Safe Harbor Contributions. In addition to the Employer
Matching Contributions made pursuant to Section 3.2 and the Employer
Discretionary Contribution made pursuant to Section 3.3, for each Plan Year, the
Employer, in its discretion, may contribute to the Trust as a "safe harbor
contribution" for such Plan Year the amounts necessary to cause the Plan to
satisfy the restrictions set forth in Section 3.1(e) (with respect to certain
restrictions on Cash or Deferred Contributions) and Section 3.5 (with respect to
certain restrictions on Employer Matching Contributions). Amounts contributed in
order to satisfy the restrictions set forth in Section 3.1(e)
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shall be considered "qualified matching contributions" (within the meaning of
Treasury regulation ss. 1.401(k)-1(g)(13)) for purposes of such Section, and
amounts contributed in order to satisfy the restrictions set forth in Section
3.5 shall be considered Employer Matching Contributions for purposes of such
Section. Any amounts contributed pursuant to this Paragraph shall be allocated
in accordance with the provisions of Sections 4.2(d) and (e).
3.5 Restrictions on Employer Contributions. In restriction of the
Employer Contribu tions hereunder, it is specifically provided that one of the
"actual contribution percentage" tests set forth in section 401(m) of the Code
and the Treasury regulations thereunder must be met in each Plan Year. The
Committee may elect, in accordance with applicable Treasury regulations, to
treat Cash or Deferred Contributions to the Plan as Employer Matching
Contributions for purposes of meeting this requirement.
3.6 Return of Contributions. Anything to the contrary herein
notwithstanding, the Employer's contributions to the Plan are contingent upon
the deductibility of such contributions under section 404 of the Code. To the
extent that a deduction for contributions is disallowed, such contributions
shall, upon the written demand of the Employer, be returned to the Employer by
the Trustee within one year after the date of disallowance, reduced by any net
losses of the Trust Fund attributable thereto but not increased by any net
earnings of the Trust Fund attributable thereto. Moreover, if Employer
contributions are made under a mistake of fact, such contributions shall, upon
the written demand of the Employer, be returned to the Employer by the Trustee
within one year after the payment thereof, reduced by any net losses of the
Trust Fund attributable thereto but not increased by any net earnings of the
Trust Fund attributable thereto.
3.7 Disposition of Excess Deferrals and Excess Contributions.
(a) Anything to the contrary herein notwithstanding, any Cash or
Deferred Contributions to the Plan for a calendar year on behalf of a Member in
excess of the limitations set forth in Section 3.1(d) and any "excess deferrals"
from other plans allocated to the Plan by such Member no later than March 1 of
the next following calendar year within the meaning of, and pursuant to the
provisions of, section 402(g)(2) of the Code, shall be distributed to such
Member not later than April 15 of the next following calendar year.
(b) Anything to the contrary herein notwithstanding, if, for any Plan
Year, the aggregate Cash or Deferred Contributions made by the Employer on
behalf of Highly Compensated Employees exceeds the maximum amount of Cash or
Deferred Contributions permitted on behalf of such Highly Compensated Employees
pursuant to Section 3.1(e) (determined by reducing Cash or Deferred
Contributions on behalf of Highly Compensated Employees in order of the "actual
deferral percentages" (as that term is defined in section 401(k)(3)(B) of the
Code and the Treasury regulations thereunder) beginning with the highest of such
percentages), such excess shall be distributed to the Highly Compensated
Employees on whose behalf such excess was contributed before the end of the next
following Plan Year. For purposes of this Paragraph, the determination and
correction of excess Cash or Deferred Contributions of a Member whose actual
deferral percentage is determined under the family aggregation rules of sections
401(k) and 414(q) of the Code shall be made in accordance with the provisions
of such sections and the Treasury regulations thereunder.
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(c) Anything to the contrary herein notwithstanding, if, for any Plan
Year, the aggregate Employer Contributions allocated to the Accounts of Highly
Compensated Employees exceeds the maximum amount of such Employer Contributions
permitted on behalf of such Highly Compensated Employees pursuant to Section 3.5
(determined by reducing Employer Contributions made on behalf of Highly
Compensated Employees in order of the "contribution percentages" (as that term
is defined in section 401(m)(3) of the Code and Treasury regulations thereunder)
beginning with the highest of such percentages), such excess shall be
distributed to the Highly Compensated Employees on whose behalf such excess
contributions were made (or, if such excess contributions are forfeitable, they
shall be forfeited) before the end of the next following Plan Year. For purposes
of this Paragraph, the determination and correction of excess Employer
Contributions allocated to the Account of a Member whose contribution percentage
is determined under the family aggregation rules of sections 401(m) and 414(q)
of the Code shall be made in accordance with the provisions of such sections and
the Treasury regulations thereunder. Employer Contributions shall be forfeited
pursuant to this Paragraph only if distribution of all vested Employer
Contributions is insufficient to meet the requirements of this Paragraph. If
vested Employer Contributions are distributed to a Member and nonvested Employer
Contributions remain credited to such Member's Accounts, such nonvested Employer
Contributions shall vest at the same rate as if such distribution had not been
made.
(d) In coordinating the disposition of excess deferrals and excess
contributions pursuant to this Section, such excess deferrals and excess
contributions shall be disposed of in the following order:
(1) First, Cash or Deferred Contributions which
constitute excess deferrals described in Paragraph (a) above that are
not considered in determining the amount of Employer Matching
Contributions pursuant to Section 3.2 shall be distributed;
(2) Next, excess Cash or Deferred Contributions which
constitute excess deferrals described in Paragraph (a) above that are
considered in determining the amount of Employer Matching Contributions
pursuant to Section 3.2 shall be distributed, and the Employer Matching
Contributions with respect to such Cash or Deferred Contributions shall
be forfeited;
(3) Next, excess Cash or Deferred Contributions
described in Paragraph (b) above that are not considered in determining
the amount of Employer Matching Contributions pursuant to Section 3.2
shall be distributed;
(4) Next, excess Cash or Deferred Contributions
described in Paragraph (b) above that are considered in determining the
amount of Employer Matching Contributions pursuant to Section 3.2 shall
be distributed, and the Employer Matching Contributions with respect to
such Cash or Deferred Contributions shall be forfeited; and
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(5) Finally, excess Employer Contributions described
in Paragraph (c) above shall be distributed (or, if forfeitable,
forfeited).
(e) Any distribution or forfeiture of excess deferrals or excess
contributions pursuant to the provisions of this Section shall be adjusted for
income or loss allocated thereto in the manner determined by the Committee in
accordance with any method permissible under applicable Treasury regulations.
Any forfeiture pursuant to the provisions of this Section shall be considered to
have occurred on the date which is 2 1/2 months after the end of the Plan Year.
3.8 Rollover Contributions.
(a) Qualified Rollover Contributions may be made to the Plan by any
Eligible Employee of amounts received by such Eligible Employee from an
individual retirement account or annuity or from an employees' trust described
in section 401(a) of the Code, which is exempt from tax under section 501(a) of
the Code, but only if any such Rollover Contribution is made pursuant to and in
accordance with applicable provisions of the Code and Treasury regulations
promulgated thereunder. A Rollover Contribution of amounts that are "eligible
rollover distributions" within the meaning of section 402(f)(2)(A) of the Code
may be made to the Plan irrespective of whether such eligible rollover
distribution was paid to the Eligible Employee or paid to the Plan as a "direct"
Rollover Contribution. A direct Rollover Contribution to the Plan may be
effectuated only by wire transfer directed to the Trustee or by issuance of a
check made payable to the Trustee, which is negotiable only by the Trustee and
which identifies the Eligible Employee for whose benefit the Rollover
Contribution is being made. Any Eligible Employee desiring to effect a Rollover
Contribution to the Plan must execute and file with the Committee the form
prescribed by the Committee for such purpose. The Committee may require as a
condition to accepting any Rollover Contribution that such Eligible Employee
furnish any evidence that the Committee in its discretion deems satisfactory to
establish that the proposed Rollover Contribution is in fact eligible for
rollover to the Plan and is made pursuant to and in accordance with applicable
provisions of the Code and Treasury regulations. All Rollover Contributions to
the Plan must be made in cash. A Rollover Contribution shall be credited to the
Rollover Contribution Account of the Eligible Employee for whose benefit such
Rollover Contribution is being made when received by the Trustee.
(b) An Eligible Employee who has made a Rollover Contribution in
accordance with this Section, but who has not otherwise become a Member of the
Plan in accordance with Article II, shall become a Member coincident with such
Rollover Contribution; provided, however, that such Member shall not have a
right to defer Compensation or have Employer Contributions made on his behalf
until he has otherwise satisfied the requirements imposed by Article II.
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IV. Allocations
4.1 Suspended Amounts. All contributions, forfeitures, and the net
income (or net loss) of the Trust Fund shall be held in suspense until allocated
to the Accounts of the Members as provided herein.
4.2 Allocation of Contributions.
(a) Cash or Deferred Contributions made by the Employer on a Member's
behalf for each month pursuant to Section 3.1 shall be allocated to such
Member's Cash or Deferred Account as of the last day of such month; provided,
however, that for purposes of Section 4.4, such contributions shall be allocated
to the Cash or Deferred Account of such Member when received by the Trustee.
(b) The 100% Employer Matching Contributions for each month pursuant
to Section 3.2(a) shall be allocated as of the last day of such month to the
Employer Contribution Accounts of the Members for whom such contributions were
made; provided, however, that for purposes of Section 4.4, such contributions
shall be allocated to the Employer Contribution Accounts of such Members when
received by the Trustee.
(c) The Employer Discretionary Contribution, if any, made pursuant to
Section 3.3 for a Plan Year shall be allocated as of the last day of such Plan
Year to the Employer Contribution Accounts of the Members (regardless of whether
such Member elected to have Cash or Deferred Contributions made to the Plan on
his behalf during such Plan Year) who had completed one Year of Service (as
defined in Section 3.2) as of the last day of such Plan Year and who (1) were
Eligible Employees on such last day of such Plan Year or (2) terminated
employment during such Plan Year on or after Normal Retirement Date or by reason
of total and permanent disability (as defined in Section 7.2) or death;
provided, however, that for purposes of Section 4.4, such contributions shall be
allocated to the Employer Contribution Accounts of such Members when received by
the Trustee. The allocation to each such eligible Member's Employer Contribution
Account shall be that portion of such Employer Discretionary Contribution which
is in the same proportion that such Member's Compensation for such Plan Year
bears to the total of all such Members' Compensation for such Plan Year.
(d) The Employer Safe Harbor Contribution, if any, made pursuant to
Section 3.4 for a Plan Year in order to satisfy the restrictions set forth in
Section 3.1(e) shall be allocated as of the last day of such Plan Year to the
Cash or Deferred Accounts of Members who (1) received an allocation of Cash or
Deferred Contributions for such Plan Year and (2) were not Highly Compensated
Employees for such Plan Year (each such Member individually referred to as an
"Eligible Member" for purposes of this Paragraph); provided, however, that for
purposes of Section 4.4, such contributions shall be allocated to the Cash or
Deferred Accounts of such Eligible Members when received by the Trustee. Such
allocation shall be made, first, to the Cash or Deferred Account of the Eligible
Member who received the least amount of Compensation for such Plan Year until
IV-1
the limitation set forth in Section 4.5 has been reached as to such Eligible
Member, then to the Cash or Deferred Account of the Eligible Member who
received the next smallest amount of Compensation for such Plan Year until the
limitation set forth in Section 4.5 has been reached as to such Eligible
Member, and continuing in such manner until the Employer Safe Harbor
Contribution for such Plan Year has been completely allocated or the limitation
set forth in Section 4.5 has been reached as to all Eligible Members. Any
remaining Employer Safe Harbor Contribution for such Plan Year shall be
allocated among the Cash or Deferred Accounts of all Members who were Eligible
Employees during such Plan Year, with the allocation to each such Member's Cash
or Deferred Account being the portion of such remaining Employer Safe Harbor
Contribution which is in the same proportion that such Member's Compensation for
such Plan Year bears to the total of all such Members' Compensation for such
Plan Year.
(e) The Employer Safe Harbor Contribution, if any, made pursuant to
Section 3.4 for a Plan Year in order to satisfy the restrictions set forth in
Section 3.5 shall be allocated as of the last day of such Plan Year to the
Employer Contribution Accounts of Members who (1) received an allocation of
Employer Matching Contributions for such Plan Year and (2) were not Highly
Compensated Employees for such Plan Year (each such Member individually referred
to as an "Eligible Member" for purposes of this Paragraph); provided, however,
that for purposes of Section 4.4, such contributions shall be allocated to the
Employer Contribution Accounts of such Eligible Members when received by the
Trustee. Such allocation shall be made, first, to the Employer Contribution
Account of the Eligible Member who received the least amount of Compensation for
such Plan Year until the limitation set forth in Section 4.5 has been reached as
to such Eligible Member, then to the Employer Contribution Account of the
Eligible Member who received the next smallest amount of Compensation for such
Plan Year until the limitation set forth in Section 4.5 has been reached as to
such Eligible Member, and continuing in such manner until the Employer Safe
Harbor Contribution for such Plan Year has been completely allocated or the
limitation set forth in Section 4.5 has been reached as to all Eligible Members.
Any remaining Employer Safe Harbor Contribution for such Plan Year shall be
allocated among the Employer Contribution Accounts of all Members who were
Eligible Employees during such Plan Year, with the allocation to each such
Member's Employer Contribution Account being the portion of such remaining
Employer Safe Harbor Contribution which is in the same proportion that such
Member's Compensation for such Plan Year bears to the total of all such Members'
Compensation for such Plan Year.
(f) If an Employer Safe Harbor Contribution is made in order to
satisfy the restrictions set forth in both Section 3.1(e) and Section 3.4 for
the same Plan Year, the Employer Safe Harbor Contribution made in order to
satisfy the restrictions set forth in Section 3.1(e) shall be allocated pursuant
to Paragraph (d) above prior to allocating the Employer Safe Harbor Contribution
made in order to satisfy the restrictions set forth in Section 3.4. In
determining the application of the limitations set forth in Section 4.5 to the
allocations of Employer Safe Harbor Contributions, all Annual Additions (as such
term is defined in Section 4.5) to a Member's Accounts other than Employer Safe
Harbor Contributions shall be considered allocated prior to Employer Safe Harbor
Contributions.
IV-2
4.3 Application of Forfeitures. Any amounts that are forfeited under
any provision hereof during a Plan Year shall be applied to reduce Employer
Matching Contributions next coming due.
4.4 Valuation of Accounts. All amounts contributed to the Trust Fund
shall be invested at the time of their receipt by the Trustee, and the balance
of each Account shall reflect the result of daily pricing of the assets in which
such Account is invested from the time of receipt by the Trustee until the time
of distribution.
4.5 Limitations and Corrections.
(a) For purposes of this Section, the following terms and phrases
shall have these respective meanings:
(1) "Annual Additions" of a Member for any Limitation
Year shall mean the total of (A) the Employer Contributions, Cash or
Deferred Contributions, and forfeitures, if any, allocated to such
Member's Accounts for such year, (B) Member's contributions, if any,
(excluding any Rollover Contributions) for such year, and (C) amounts
referred to in sections 415(l)(1) and 419A(d)(2) of the Code.
(2) "Limitation Year" shall mean the Plan Year.
(3) "Maximum Annual Additions" of a Member for any
Limitation Year shall mean the lesser of (A) $30,000 (or, if greater,
one-fourth of the defined benefit dollar limitation in effect under
section 415(b)(1)(A) of the Code for such Limitation Year) or (B) 25%
of such Member's compensation, within the meaning of section 415(c)(3)
of the Code and applicable Treasury regulations thereunder, during such
year except that the limitation in this Clause (B) shall not apply to
any contribution for medical benefits (within the meaning of section
419A(f)(2) of the Code) after separation from service with the Employer
or a Controlled Entity which is otherwise treated as an Annual Addition
or to any amount otherwise treated as an Annual Addition under section
415(l)(1) of the Code.
(b) Contrary Plan provisions notwithstanding, in no event shall the
Annual Additions credited to a Member's Accounts for any Limitation Year exceed
the Maximum Annual Additions for such Member for such year. If as a result of a
reasonable error in estimating a Member's compensation, a reasonable error in
determining the amount of elective deferrals (within the meaning of section
402(g)(3) of the Code) that may be made with respect to any individual under the
limits of section 415 of the Code, or because of other limited facts and
circumstances, the Annual Additions that would be credited to a Member's
Accounts for a Limitation Year would nonetheless exceed the Maximum Annual
Additions for such Member for such year, the excess Annual Additions which, but
for this Section, would have been allocated to such Member's Accounts shall be
disposed of as follows:
(1) First, any such excess Annual Additions in the
form of Cash or Deferred Contributions on behalf of such Member that
would not have been considered in determining the amount of Employer
IV-3
Contributions allocated to such Member's Accounts pursuant to Section
4.2 shall be distributed to such Member, adjusted for income or loss
allocated thereto;
(2) Next, any such excess Annual Additions in the
form of Cash or Deferred Contributions on behalf of such Member that
would have been considered in determining the amount of Employer
Contributions allocated to such Member's Accounts pursuant to Section
4.2 shall be distributed to such Member, adjusted for income or loss
allocated thereto, and the Employer Contributions that would have been
allocated to such Member's Accounts based upon such distributed Cash or
Deferred Contributions shall, to the extent such amounts would have
otherwise been allocated to such Member's Accounts, be allocated to a
suspense account and shall be held there until used to reduce future
Employer Matching Contributions in the same manner as a forfeiture;
(3) Finally, any such excess Annual Additions in the
form of Employer Discretionary Contributions shall, to the extent such
amounts would otherwise have been allocated to such Member's Accounts,
be allocated to a suspense account and shall be held therein until used
to reduce future Employer Matching Contributions in the same manner as
a forfeiture.
(c) Pending their application to reduce future Employer Matching
Contributions, excess amounts described in Paragraphs (b)(2) and (b)(3) above
shall be invested in a principal-safe asset.
(d) For purposes of determining whether the Annual Additions under
this Plan exceed the limitations herein provided, all defined contribution plans
of the Employer are to be treated as one defined contribution plan. In addition,
all defined contribution plans of Controlled Entities shall be aggregated for
this purpose. For purposes of this Section only, a "Controlled Entity" (other
than an affiliated service group member within the meaning of section 414(m) of
the Code) shall be determined by application of a more than 50% control standard
in lieu of an 80% control standard. If the Annual Additions credited to a
Member's Accounts for any Limitation Year under this Plan plus the additions
credited on his behalf under other defined contribution plans required to be
aggregated pursuant to this Paragraph would exceed the Maximum Annual Additions
for such Member for such Limitation Year, the Annual Additions under this Plan
shall be reduced to the extent possible prior to any reductions of additions
under such other plan or plans.
(e) In the case of a Member who also participated in a defined benefit
plan of the Employer or a Controlled Entity (as defined in Paragraph (d) above),
the Employer shall reduce the Annual Additions credited to the Accounts of such
Member under this Plan pursuant to the provisions of Paragraph (b) to the extent
necessary to prevent the limitation set forth in section 415(e) of the Code from
being exceeded. Notwithstanding the foregoing, the provisions of this Paragraph
shall apply only if such defined benefit plan does not provide for a reduction
of benefits thereunder to ensure that the limitation set forth in section 415(e)
of the Code is not exceeded.
IV-4
(f) If the limitations set forth in this Section would not otherwise
be met for any Limitation Year, the Compensation deferral elections pursuant to
Section 3.1 of affected Members may be reduced by the Committee on a temporary
and prospective basis in such manner as the Committee shall determine.
IV-5
V. Investment Funds
5.1 Investment of Accounts.
(a) Each Member shall designate, in accordance with the
procedures established from time to time by the Committee, the manner in which
the amounts allocated to each of his Accounts shall be invested from among the
Investment Funds made available from time to time by the Committee. With respect
to each of a Member's Accounts, such Member may designate one of such Investment
Funds for all the amounts allocated to such Account or he may split the
investment of the amounts allocated to such Account between such Investment
Funds in such increments as the Committee may prescribe. If a Member fails to
make a designation, then his Accounts shall be invested in the Investment Fund
or Funds designated by the Committee from time to time in a uniform and
nondiscriminatory manner.
(b) A Member may change his investment designation for future
contributions to be allocated to any one or all of his Accounts. Any such change
shall be made in accordance with the procedures established by the Committee,
and the frequency of such changes may be limited by the Committee.
(c) A Member may elect to convert his investment designation
with respect to the amounts already allocated to one or more of his Accounts.
Any such conversion shall be made in accordance with the procedures established
by the Committee, and the frequency of such conversions may be limited by the
Committee.
5.2 Restriction of Acquisition of Company Stock. Notwithstanding any
other provision hereof, it is specifically provided that the Trustee shall not
purchase Company Stock or other Company securities during any period in which
such purchase is, in the opinion of counsel for the Company or the Committee,
restricted by any law or regulation applicable thereto. During such period,
amounts that would otherwise be invested in Company Stock or other Company
securities pursuant to an investment designation shall be invested in such other
assets as the Trustee may in its discretion determine, or the Trustee may hold
such amounts uninvested for a reasonable period pending the purchase of such
stock or securities.
5.3 Voting of Company Stock and Other Rights.
(a) To the extent permitted by section 404(a) of the Act, at
each annual meeting and special meeting of the shareholders of the Company, a
Member or beneficiary may direct the voting of the number of whole shares of
Company Stock attributable to his pro rata interest in the Company Stock fund as
of the Valuation Date coinciding with or, if none, next preceding the record
date for such meeting. The Committee shall forward or cause to be forwarded to
each such Member or beneficiary copies of pertinent proxy solicitation material
provided by the Company together with a request for such Member's or
beneficiary's confidential instructions as to the manner in which such shares
are to be voted. The Committee or the Voting Fiduciary if one has been appointed
shall direct the Trustee to vote such shares in accordance with such
V-1
instructions and, to the extent permitted by section 404(a) of the Act, shall
also direct the Trustee as to the manner in which to vote any shares of Company
Stock at any such meeting for which the Committee has not received, or is not
subject to receiving, such voting instructions.
(b) To the extent permitted by section 404(a) of the Act, if a
"cash tender offer" or "exchange offer" for shares of Company Stock is made, the
shares of Company Stock attributable to a Member's Accounts shall be tendered or
exchanged by the Trustee pursuant to such "cash tender offer" or "exchange
offer" only in accordance with the written instructions and directions of such
Member to the Trustee to so tender or exchange. If written instructions or
directions are not timely received from a Member whose Accounts are invested in
Company Stock, such Member's pro rata interest in the shares of Company Stock
held in the Company Stock fund shall not be tendered or exchanged pursuant to
such "cash tender offer" or "exchange offer" except as required by section
404(c) of the Act. For purposes of this Paragraph, the term "cash tender offer"
shall include a tender offer for, or request or invitation for tenders of,
shares of Company Stock in exchange for cash, as made to the Plan or to holders
of shares of Company Stock generally; the term "exchange offer" shall include a
tender offer for, or request or invitation for tenders of, any shares of Company
Stock in exchange for any consideration other than for all cash, as made to the
Plan or to holders of shares of Company Stock generally. If a "cash tender
offer" or "exchange offer" for shares of Company Stock is made, the Trustee
shall use its best efforts to take those steps reasonably necessary to furnish
information to, and allow decision by, each Member whose Accounts are invested
in Company Stock with respect to such "cash tender offer" or "exchange offer" in
substantially the same manner as would be available to holders of Company Stock
generally, and, in that connection, the Trustee shall:
(1) inform each such Member as to the existence of such "cash
tender offer" or "exchange offer;"
(2) transmit to each such Member as soon as practicable such
written information, explanation and other materials relative to such
"cash tender offer" or "exchange offer" as are made available by the
Company or by the persons or entities making such "cash tender offer"
or "exchange offer" to the holders of shares of Company Stock
generally;
(3) request detailed written instructions and directions from
each such Member as to whether to tender or exchange each such Member's
pro rata interest in the shares of Company Stock held in the Company
Stock fund and, if so instructed and directed, as to the time and
manner of such tender or exchange, and such instructions and directions
of the individual Members shall be given to the election judge or the
Trustee and shall be kept confidential from the Company; and
(4) use its best efforts to effect on a confidential and
nondiscriminatory basis the tender or exchange of Company Stock held
under the Plan with respect to such "cash tender offer" or "exchange
offer" solely in accordance with written instructions and directions
received from such Members.
V-2
5.4 Stock Rights, Stock Splits, and Stock Dividends. Except as provided
in Section 5.3, no Member or beneficiary shall have any right to request,
direct, or demand that the Committee or the Trustee exercise in his behalf
rights or privileges to acquire, convert, or exchange Company Stock or other
securities. The Trustee, in its discretion, may exercise or sell any such rights
or privileges. Company Stock received by the Trustee by reason of a stock split,
stock dividend, or recapitalization shall be appropriately allocated to the
Accounts of each affected Member or beneficiary in accordance with Section 4.4.
V-3
VI. Retirement Benefits
6.1 Retirement Benefits. A Member who terminates his employment on or
after his Normal Retirement Date shall be entitled to a retirement benefit,
payable at the time and in the form provided in Article X, equal in value to the
sum of:
(a) The amount in his Accounts as of the Valuation Date next
preceding his Benefit Commencement Date; and
(b) If the Valuation Date next preceding such Member's Benefit
Commencement Date occurs prior to the close of the Plan Year during
which his termination of employment occurred, the amount of such
Member's allocation of Cash or Deferred Contributions, Employer
Contributions, and Employer Safe Harbor Contributions for such Plan
Year.
VI-1
VII. Disability Benefits
7.1 Disability Benefits. In the event a Member's employment is
terminated due to total and permanent disability, as determined pursuant to
Section 7.2, such Member shall be entitled to a disability benefit, payable at
the time and in the form provided in Article X, equal in value to the sum of:
(a) The amount in his Accounts as of the Valuation Date next
preceding his Benefit Commencement Date; and
(b) If the Valuation Date next preceding such Member's Benefit
Commencement Date occurs prior to the close of the Plan Year during
which such disability was determined, the amount of such Member's
allocation of Cash or Deferred Contributions, Employer Contributions,
and Employer Safe Harbor Contributions for such Plan Year.
7.2 Total and Permanent Disability Determined. A Member's employment
shall be considered terminated due to total and permanent disability if the
Committee determines, based on a written medical opinion (unless waived by the
Committee as unnecessary), that such Member is permanently incapable of
performing his job for physical or mental reasons.
VII-1
VIII. Severance Benefits and Determination of Vested Interest
8.1 No Benefits Unless Herein Set Forth. Except as set forth in this
Article, upon termination of employment of a Member prior to his Normal
Retirement Date for any reason other than total and permanent disability or
death, such Member shall acquire no right to any benefit from the Plan or the
Trust Fund.
8.2 Severance Benefit. Each Member whose employment is terminated
prior to his Normal Retirement Date for any reason other than total and
permanent disability or death shall be entitled to a severance benefit, payable
at the time and in the form provided in Article X, equal in value to the sum of:
(a) His Vested Interest in the amount in his Accounts as of
the Valuation Date next preceding his Benefit Commencement Date; and
(b) If the Valuation Date next preceding such Member's Benefit
Commencement Date occurs prior to the close of the Plan Year during
which his termination of employment occurred, the amount of such
Member's Vested Interest in his allocation of Cash or Deferred
Contributions, Employer Matching Contributions, and Employer Safe
Harbor Contributions for such Plan Year.
8.3 Determination of Vested Interest.
(a) A Member shall have a 100% Vested Interest in his Cash or
Deferred Account, Member Contribution Account, and Rollover Contribution Account
at all times.
(b) A Member's Vested Interest in his Employer Contribution
Account shall be determined by such Member's years of Vesting Service in
accordance with the following schedule:
Years of Vesting Service Vested Interest
Less than 2 years 0%
2 years 25%
3 years 40%
4 years 55%
5 years 70%
6 years 85%
7 years or more 100%
(c) Paragraph (b) above notwithstanding, a Member shall have a
100% Vested Interest in his Employer Contribution Account upon attainment of his
Normal Retirement Date while employed by the Employer or a Controlled Entity.
VIII-1
(d) Paragraph (b) above notwithstanding, if a Member shall
cease to be employed by reason of a reduction in force, as hereinafter
described, such Member shall then have a 100% Vested Interest in his Employer
Contribution Account. The employment of a Member shall be considered as having
been terminated because of a "reduction in force" if such termination is the
result of a work force reduction, geographic consolidation, or segment
disposition.
8.4 Vesting Service.
(a) For the period preceding the Effective Date, subject to
the provisions of Paragraphs (c) and (d) below, an individual shall be credited
with Vesting Service in an amount equal to all service credited to him for
vesting purposes under the Plan as it existed on the day prior to the Effective
Date.
(b) For the Plan Year beginning with the Effective Date and
all Plan Years thereafter, subject to the provisions of Paragraphs (c) and (d)
below, 1,000 or more Hours of Service during any Plan Year shall constitute one
year of Vesting Service.
(c) In the case of an individual who terminates employment at
a time when he does not have any Vested Interest in his Employer Contribution
Account and who then incurs a number of consecutive One-Year Breaks-in-Service
that equals or exceeds the greater of five years or his aggregate number of
years of Vesting Service completed before such One-Year Breaks-in- Service, such
individual's years of Vesting Service completed before such One-Year
Breaks-inService shall be disregarded in determining his years of Vesting
Service.
(d) In the case of a Member who incurs five consecutive
One-Year Breaks-inService, such Member's years of Vesting Service completed
after such One-Year Breaks-in-Service shall be disregarded in determining such
Member's Vested Interest in any Plan benefits derived from Employer
Contributions on his behalf prior to such One-Year Breaks-in-Service.
8.5 Forfeitures.
(a) With respect to a Member who terminates employment with
the Employer with a Vested Interest in his Employer Contribution Account that is
less than 100% and either is not entitled to a distribution from the Plan or
receives a distribution from the Plan of the balance of his Vested Interest in
his Accounts in the form of a lump sum distribution by the close of the second
Plan Year following the Plan Year in which his employment is terminated, the
forfeitable amount credited to the terminated Member's Employer Contribution
Account as of the Valuation Date next preceding his Benefit Commencement Date
shall become a forfeiture as of his Benefit Commencement Date (or as of his date
of termination of employment if no amount is payable from the Trust Fund on
behalf of such Member with such Member being considered to have received a
distribution of zero dollars on his date of termination of employment).
(b) In the event that an amount credited to a terminated
Member's Employer Contribution Account becomes a forfeiture pursuant to
Paragraph (a) above, the terminated Member shall, upon subsequent reemployment
with the Employer prior to incurring five consecutive OneYear Breaks-in-Service,
have the forfeited amount restored to such Member's Employer Contribution
Account, unadjusted by any subsequent gains or losses of the Trust Fund;
provided, however, that such restoration shall be made only if such Member
repays in cash an amount equal to the amount so distributed to him pursuant to
Paragraph (a) above within five years from the date the Member is reemployed;
provided, further, that such Member's repayment of amounts distributed to him
from his Cash or Deferred Account shall be limited to the portion thereof that
was attributable to contributions with respect to which the Employer made
Employer Matching Contributions. A reemployed Member who was not entitled to a
distribution from the Plan on his date of termination of employment shall be
considered to have repaid a distribution of zero dollars on the date of his
reemployment. Any such restoration shall be made as of the Valuation Date
coincident with or next succeeding the date of repayment. Notwithstanding
anything to the contrary in the Plan, forfeited amounts to be restored by the
Employer pursuant to this Paragraph shall be charged against and deducted from
forfeitures for the Plan Year in which such amounts are restored that would
otherwise be available to reduce Employer Matching Contributions. If such
forfeitures otherwise available are not sufficient to provide such restoration,
the portion of such restoration not provided by forfeitures shall be charged
against and deducted from Employer Contributions otherwise available for
allocation to other Members in accordance with Section 4.2(c), and any
additional amount needed to restore such forfeited amounts shall be a minimum
required Employer Contribution (without regard to current or accumulated
earnings and profits).
(c) With respect to a Member whose Vested Interest in his
Employer Contribution Account is less than 100% and who receives a termination
distribution from his Employer Contribution Account other than a lump sum
distribution by the close of the second Plan Year following the Plan Year in
which his employment is terminated, any amount remaining in his Employer
Contribution Account shall continue to be maintained as a separate account. At
any relevant time, such Member's nonforfeitable portion of his separate account
shall be determined in accordance with the following formula:
X=P(AB + D) - D
For purposes of applying the formula: X is the nonforfeitable portion of such
separate account at the relevant time; P is the Member's Vested Interest in his
Employer Contribution Account at the relevant time; AB is the balance of such
separate account at the relevant time; and D is the amount of the distribution.
For all other purposes of the Plan, a Member's separate account shall be treated
as an Employer Contribution Account. Upon his incurring five consecutive
One-Year Breaks-inService, the forfeitable portion of a terminated Member's
separate account and Employer Contribution Account shall be forfeited as of the
end of the Plan Year during which the terminated Member incurred his fifth such
consecutive One-Year Break-in-Service.
(d) With respect to a Member who terminates employment with
the Employer with a Vested Interest in his Employer Contribution Account greater
than 0% but less than 100% and who is not otherwise subject to the forfeiture
provisions of Paragraph (a) or Paragraph (c) above, the forfeitable portion of
his Employer Contribution Account shall be forfeited as of the end of the Plan
Year during which the terminated Member incurs his fifth consecutive One-Year
Break-inService or, if earlier, the date of the terminated Member's death.
VIII-2
(e) Any forfeitures occurring pursuant to Paragraphs (a), (c),
or (d) above shall be applied to reduce Employer Matching Contributions next
coming due. Prior to such application, forfeited amounts shall be invested in a
principal-safe asset.
(f) Distributions of benefits described in this Section shall
be subject to the time of payment requirements of Section 10.1.
VIII-3
IX. Death Benefits
9.1 Death Benefits. Upon the death of a Member while an Employee, the
Member's designated beneficiary shall be entitled to a death benefit payable at
the time and in the form provided in Article X, equal in value to the sum of:
(a) The amount in his Accounts as of the Valuation Date next
preceding his Benefit Commencement Date; and
(b) If the Valuation Date next preceding such Member's Benefit
Commencement Date occurs prior to the close of the Plan Year during
which his death occurred, the amount of such Member's allocation of
Cash or Deferred Contributions, Employer Contributions, and Employer
Safe Harbor Contributions for such Plan Year.
9.2 Designation of Beneficiaries.
(a) Each Member shall have the right to designate the
beneficiary or beneficiaries to receive payment of his benefit in the event of
his death. Each such designation shall be made by executing the beneficiary
designation form prescribed by the Committee and filing such form with the
Committee. Any such designation may be changed at any time by such Member by
execution of a new designation in accordance with this Section. Notwithstanding
the foregoing, if a Member who is married on the date of his death designates an
individual or entity other than his surviving spouse as his beneficiary, such
designation shall not be effective unless (1) such spouse has consented thereto
in writing and such consent (A) acknowledges the effect of such specific
designation, (B) either consents to the specific designated beneficiary (which
designation may not subsequently be changed by the Member without spousal
consent) or expressly permits such designation by the Member without the
requirement of further consent by the spouse, and (C) is witnessed by a Plan
representative (other than the Member) or a notary public or (2) the consent of
such spouse cannot be obtained because such spouse cannot be located or because
of other circumstances described by applicable Treasury regulations. Any such
consent by such surviving spouse shall be irrevocable.
(b) If no beneficiary designation is on file with the
Committee at the time of the death of the Member or if such designation is not
effective for any reason as determined by the Committee, the designated
beneficiary or beneficiaries to receive such death benefit shall be as follows:
(1) If a Member leaves a surviving spouse, his death
benefit shall be paid to such surviving spouse;
(2) If a Member leaves no surviving spouse, his death
benefit shall be paid to such Member's executor or administrator or to
his heirs at law if there is no administration of such Member's estate.
IX-1
X. Time and Form of Payment of Benefits
10.1 Time of Payment.
(a) Subject to the provisions of the remaining Paragraphs of
this Section, a Member's Benefit Commencement Date shall be as soon as
administratively feasible after the Valuation Date coincident with or next
succeeding the date the Member or his beneficiary becomes entitled to a benefit
pursuant to Article VI, VII, VIII, or IX.
(b) Unless (1) the Member has attained age sixty-five or died,
(2) the Member consents to a distribution pursuant to Paragraph (a) within the
ninety-day period ending on the date payment of his benefit hereunder is to
commence pursuant to Paragraph (a), or (3) the Member's Vested Interest in his
Accounts is not in excess of $3,500, the Member's Benefit Commencement Date
shall be deferred to the date which is as soon as administratively feasible
after the Valuation Date coincident with or next succeeding the earlier of the
date the Member attains age sixty-five or the Member's date of death, or such
earlier Valuation Date as the Member may elect by written notice to the
Committee prior to such Valuation Date. No less than thirty days (unless such
thirty-day period is waived by an affirmative election in accordance with
applicable Treasury regulations) and no more than ninety days before his Benefit
Commencement Date, the Committee shall inform the Member of his right to defer
his Benefit Commencement Date and shall describe the Member's Direct Rollover
election rights pursuant to Section 10.5 below.
(c) A Member's Benefit Commencement Date shall in no event be
later than the sixtieth day following the close of the Plan Year during which
such Member attains, or would have attained, his Normal Retirement Date or, if
later, terminates his employment with the Employer or a Controlled Entity.
(d) A Member's Benefit Commencement Date shall be in
compliance with the provisions of section 401(a)(9) of the Code and applicable
Treasury regulations thereunder and shall in no event be later than:
(1) April 1 of the calendar year following the
calendar year in which such Member attains the age of seventy and one-
half; and
(2) In the case of a benefit payable pursuant to
Article IX, the last day of the five-year period following the death of
such Member.
The preceding provisions of this Section notwithstanding, a Member may not elect
to defer the receipt of his benefit hereunder to the extent that such deferral
creates a death benefit that is more than incidental within the meaning of
section 401(a)(9)(G) of the Code and applicable Treasury regulations thereunder.
X-1
(e) Subject to the provisions of Paragraphs (c) and (d) above,
a Member's Benefit Commencement Date shall not occur before the expiration of
the latest to end of the following periods:
(1) A period during which the Member is employed by
the Employer or any Controlled Entity; or
(2) A period during which the Member is employed by a
purchaser of assets from the Employer or a Controlled Entity if such
Member transfers to employment with such purchaser in connection with
such purchase. Notwithstanding the foregoing, in the event of a segment
disposition by the Employer, the limitation of this Paragraph (e)(2)
shall not apply to a Member who transfers to the employment of the
purchaser of such segment if such segment disposition satisfies the
requirements of section 401(k)(10) of the Code.
(f) Paragraphs (a), (b), and (c) above notwithstanding, a
Member whose Vested Interest in his Accounts is $3,500 or more may elect to
defer his Benefit Commencement Date beyond the date specified in such
Paragraphs, subject to the provisions of Paragraph (d), by submitting to the
Committee a written statement, signed by the Member, which describes the benefit
and designates the date on which the payment of such benefit shall commence.
10.2 Form of Payment.
(a) Subject to the provisions of Paragraph (b) below, a
Member's benefit shall be provided from the balance of such Member's Accounts
under the Plan and shall be paid in one lump sum on the Member's Benefit
Commencement Date. The Member's benefit shall be paid to the Member unless the
Member has died prior to his Benefit Commencement Date, in which case the
Member's benefit shall be paid to his beneficiary designated in accordance with
the provisions of Section 9.2.
(b) Benefits shall be paid (or transferred pursuant to Section
10.3) in cash except that a Member (or his designated beneficiary or legal
representative in the case of a deceased Member) may elect to have the portion
of his Accounts invested in Company Stock distributed (or transferred pursuant
to Section 10.3) in full shares of Company Stock to the extent of such Member's
pro rata portion of the shares of Company Stock held in the Company Stock fund,
with any balance of the Member's interest in the Company Stock fund (including
fractional shares) to be paid or transferred in cash.
10.3 Direct Rollover Election. Notwithstanding any provision of the
Plan to the contrary that would otherwise limit a Distributee's election under
this Section, a Distributee may elect, at the time and in the manner prescribed
by the Committee, to have all or any portion of an Eligible Rollover
Distribution (other than any portion attributable to the offset of an
outstanding loan balance of such Member pursuant to the Plan's loan procedure)
paid directly to an Eligible Retirement Plan specified by the Distributee in a
Direct Rollover. The preceding sentence notwithstanding, a Distributee may elect
a Direct Rollover pursuant to this Section only if such Distributee's Eligible
X-2
Rollover Distributions during the Plan Year are reasonably expected to total
$200 or more. Furthermore, if less than 100% of the Member's Eligible Rollover
Distribution is to be a Direct Rollover, the amount of the Direct Rollover must
be $500 or more. Prior to any Direct Rollover pursuant to this Section, the
Committee may require the Distributee to furnish the Committee with a statement
from the plan, account, or annuity to which the benefit is to be transferred
verifying that such plan, account, or annuity is, or is intended to be, an
Eligible Retirement Plan.
10.4 Unclaimed Benefits. In the case of a benefit payable on behalf of
a Member, if the Committee is unable to locate the Member or beneficiary to whom
such benefit is payable, upon the Committee's determination thereof, such
benefit shall be forfeited, held in a suspense account, and applied to reduce
Employer Matching Contributions next coming due. Prior to such application,
forfeited amounts shall be invested in a principal-safe asset. Notwithstanding
the foregoing, if subsequent to any such forfeiture the Member or beneficiary to
whom such benefit is payable makes a valid claim for such benefit, such
forfeited benefit shall be restored to the Plan in the manner provided in
Section 8.5(b).
10.5 Claims Review. In any case in which a claim for Plan benefits of
a Member or beneficiary is denied or modified, the Committee shall furnish
written notice to the claimant within ninety days (or within 180 days if
additional information requested by the Committee necessitates an extension of
the ninety-day period), which notice shall:
(a) State the specific reason or reasons for the denial or
modification;
(b) Provide specific reference to pertinent Plan provisions
on which the denial or modification is based;
(c) Provide a description of any additional material or
information necessary for the Member, his beneficiary, or
representative to perfect the claim and an explanation of why such
material or information is necessary; and
(d) Explain the Plan's claim review procedure as contained
herein.
In the event a claim for Plan benefits is denied or modified, if the Member, his
beneficiary, or a representative of such Member or beneficiary desires to have
such denial or modification reviewed, he must, within sixty days following
receipt of the notice of such denial or modification, submit a written request
for review by the Committee of its initial decision. In connection with such
request, the Member, his beneficiary, or the representative of such Member or
beneficiary may review any pertinent documents upon which such denial or
modification was based and may submit issues and comments in writing. Within
sixty days following such request for review the Committee shall, after
providing a full and fair review, render its final decision in writing to the
Member, his beneficiary or the representative of such Member or beneficiary
stating specific reasons for such decision and making specific references to
pertinent Plan provisions upon which the decision is based. If special
circumstances require an extension of such sixty-day period, the Committee's
decision shall be rendered as soon as possible, but not later than 120 days
after receipt of the request for review. If an extension of time for review is
required, written notice of the extension shall be furnished to the Member,
X-3
beneficiary, or the representative of such Member or beneficiary prior to the
commencement of the extension period.
X-4
XI. In-Service Withdrawals
11.1 In-Service Withdrawals.
(a) A Member may withdraw an amount that is not less than 25%
nor more than 100% of the then value of his Member Contribution Account.
(b) A Member who has attained age fifty-nine and one-half may
withdraw from his Cash or Deferred Account an amount not less than 25% nor more
than 100% of the then value of such Account. Only one such withdrawal may be
made in any twenty-four month period.
(c) A Member who has a financial hardship, as determined by
the Committee, and who has made all available withdrawals pursuant to the
Paragraphs above and pursuant to the provisions of any other plans of the
Employer and any Controlled Entities of which he is a member and who has
obtained all available loans pursuant to Article XII and pursuant to the
provisions of any other plans of the Employer and any Controlled Entities of
which he is a member may withdraw from his Rollover Contribution Account and his
Cash or Deferred Account amounts not to exceed the lesser of (1) such Member's
Vested Interest in such Accounts or (2) the amount determined by the Committee
as being available for withdrawal pursuant to this Paragraph. Such withdrawal
shall come, first, from the Member's Rollover Contribution Account and then from
his Cash or Deferred Account. For purposes of this Paragraph, financial hardship
shall mean the immediate and heavy financial needs of the Member. A withdrawal
based upon financial hardship pursuant to this Paragraph shall not exceed the
amount required to meet the immediate financial need created by the hardship and
not reasonably available from other resources of the Member. The amount required
to meet the immediate financial need may include any amounts necessary to pay
any federal, state, or local income taxes or penalties reasonably anticipated to
result from the distribution. The determination of the existence of a Member's
financial hardship and the amount required to be distributed to meet the need
created by the hardship shall be made by the Committee. The decision of the
Committee shall be final and binding, provided that all Members similarly
situated shall be treated in a uniform and nondiscriminatory manner. A
withdrawal shall be deemed to be made on account of an immediate and heavy
financial need of a Member if the withdrawal is for:
(1) Expenses for medical care described in section
213(d) of the Code previously incurred by the Member, the Member's
spouse, or any dependents of the Member (as defined in section 152 of
the Code) or necessary for those persons to obtain medical care
described in section 213(d) of the Code and not reimbursed or
reimbursable by insurance;
(2) Costs directly related to the purchase of a
principal residence of the Member (excluding mortgage payments);
(3) Payment of tuition and related educational fees,
and room and board expenses, for the next twelve months of
post-secondary education for the Member or the Member's spouse,
children, or dependents (as defined in section 152 of the Code);
XI-1
(4) Payments necessary to prevent the eviction of the
Member from his principal residence or foreclosure on the mortgage of
the Member's principal residence; or
(5) Such other financial needs that the Commissioner
of Internal Revenue may deem to be immediate and heavy financial needs
through the publication of revenue rulings, notices, and other
documents of general applicability.
The above notwithstanding, (1) withdrawals under this Paragraph from a Member's
Cash or Deferred Account shall be limited to the sum of the Member's Cash or
Deferred Contributions to the Plan, plus income allocable thereto and credited
to the Member's Cash or Deferred Account as of the Valuation Date coincident
with or next preceding December 31, 1988, less any previous withdrawals of such
amounts, and (2) amounts allocated to a Member's Cash or Deferred Account
pursuant to the provisions of Section 4.2(d) and Employer Matching Contributions
used to satisfy the restrictions set forth in Section 3.1(e) shall not be
subject to withdrawal. A Member who makes a withdrawal from his Cash or Deferred
Account under this Paragraph may not make elective contributions or employee
contributions to the Plan or any other qualified or nonqualified plan of the
Employer or any Controlled Entity for a period of twelve months following the
date of such withdrawal. Further, such Member may not make elective
contributions under the Plan or any other plan maintained by the Employer or any
Controlled Entity for such Member's taxable year immediately following the
taxable year of the withdrawal in excess of the applicable limit set forth in
Section 3.1(d) for such next taxable year less the amount of such Member's
elective contributions for the taxable year of the withdrawal.
11.2 Restriction on In-Service Withdrawals.
(a) All withdrawals pursuant to this Article shall be made
only as of the first day of any month by executing and filing with the Committee
the form prescribed by the Committee at least ten days prior to the proposed
date of withdrawal.
(b) Notwithstanding the provisions of this Article, no
withdrawal shall be made from an Account to the extent such Account has been
pledged to secure a loan under Article XII.
(c) If a Member's Account from which a withdrawal is made is
invested in more than one Investment Fund, the withdrawal shall be made pro rata
from each Investment Fund in which such Account is invested.
(d) All withdrawals under this Article shall be paid in cash.
(e) Any withdrawal hereunder shall be subject to the Director
Rollover election described in Section 10.3.
(f) This Article shall not be applicable to a Member following
termination of employment and the amounts in such Member's Accounts shall be
distributable in accordance with the provisions of Article X.
XI-2
XII. Loans
12.1 Eligibility for Loan. Upon application by (1) any Member who is
an Employee or (2) any Member no longer employed by the Employer, a beneficiary
of a deceased Member or an alternate payee under a qualified domestic relations
order, as defined in section 414(p)(8) of the Code, who retains an Account
balance under the Plan and who is a party-in-interest, as that term is defined
in section 3(14) of the Act, as to the Plan (an individual who is eligible to
apply for a loan under this Article being hereinafter referred to as a "Member"
for purposes of this Article), the Committee may in its discretion direct the
Trustee to make a loan or loans to such Member. Such loans shall be made
pursuant to the provisions of the Committee's written loan procedure, which
procedure is hereby incorporated by reference as a part of the Plan.
12.2 Maximum Loan.
(a) A loan to a Member may not exceed 50% of the then value of
such Member's Vested Interest in his Accounts.
(b) Paragraph (a) above to the contrary notwithstanding, the
amount of a loan made to a Member under this Article shall not exceed an amount
equal to the difference between:
(1) The lesser of $50,000 (reduced by the excess, if
any, of (A) the highest outstanding balance of loans from the Plan
during the one-year period ending on the day before the date on which
the loan is made over (B) the outstanding balance of loans from the
Plan on the date on which the loan is made) or one-half of the present
value of the Member's total nonforfeitable accrued benefit under all
qualified plans of the Employer or a Controlled Entity; minus
(2) The total outstanding loan balance of the Member
under all other loans from all qualified plans of the Employer or a
Controlled Entity.
XII-1
XIII. Administration of the Plan
13.1 Appointment of Committee. The general administration of the Plan
shall be vested in the Committee which shall be appointed by the Directors and
shall consist of one or more persons. Any individual, whether or not an
Employee, is eligible to become a member of the Committee. Each member of the
Committee shall, before entering upon the performance of his duties, qualify by
signing a consent to serve as a member of the Committee under and pursuant to
the Plan and by filing such consent with the records of the Committee. For
purposes of the Act, the Committee shall be the Plan "administrator" and shall
be the "named fiduciary" with respect to the general administration of the Plan
(except as to the investment of the assets of the Trust Fund).
13.2 Term, Vacancies, Resignation, and Removal. Each member of the
Committee shall serve until he resigns, dies, or is removed by the Directors. At
any time during his term of office, a member of the Committee may resign by
giving written notice to the Directors and the Committee, such resignation to
become effective upon the appointment of a substitute member or, if earlier, the
lapse of thirty days after such notice is given as herein provided. At any time
during his term of office, and for any reason, a member of the Committee may be
removed by the Directors with or without cause, and the Directors may in their
discretion fill any vacancy that may result therefrom. Any member of the
Committee who is an Employee shall automatically cease to be a member of the
Committee as of the date he ceases to be employed by the Employer or a
Controlled Entity.
13.3 Officers, Records, and Procedures. The Committee may select
officers and may appoint a secretary who need not be a member of the Committee.
The Committee shall keep appropriate records of its proceedings and the
administration of the Plan and shall make available for examination during
business hours to any Member or beneficiary such records as pertain to that
individual's interest in the Plan. The Committee shall designate the person or
persons who shall be authorized to sign for the Committee and, upon such
designation, the signature of such person or persons shall bind the Committee.
13.4 Meetings. The Committee shall hold meetings upon such notice and
at such time and place as it may from time to time determine. Notice to a member
shall not be required if waived in writing by that member. A majority of the
members of the Committee duly appointed shall constitute a quorum for the
transaction of business. All resolutions or other actions taken by the Committee
at any meeting where a quorum is present shall be by vote of a majority of those
present at such meeting and entitled to vote. Resolutions may be adopted or
other action taken without a meeting upon written consent signed by all of the
members of the Committee.
13.5 Self-Interest of Members. No member of the Committee shall have
any right to vote or decide upon any matter relating solely to himself under the
Plan or to vote in any case in which his individual right to claim any benefit
under the Plan is particularly involved. In any case in which a Committee member
is so disqualified to act and the remaining members cannot agree, the Directors
shall appoint a temporary substitute member to exercise all the powers of the
disqualified member concerning the matter in which he is disqualified.
XIII-1
13.6 Compensation and Bonding. The members of the Committee shall not
receive compensation with respect to their services for the Committee. To the
extent required by the Act or other applicable law, or required by the Company,
members of the Committee shall furnish bond or security for the performance of
their duties hereunder.
13.7 Committee Powers and Duties. The Committee shall supervise the
administration and enforcement of the Plan according to the terms and provisions
hereof and shall have all powers necessary to accomplish these purposes,
including, but not by way of limitation, the right, power, authority, and duty:
(a) To make rules, regulations, and bylaws for the
administration of the Plan that are not inconsistent with the terms and
provisions hereof, provided such rules, regulation, and bylaws are
evidenced in writing and copies thereof are delivered to the Trustee
and to the Company, and to enforce the terms of the Plan and the rules
and regulations promulgated thereunder by the Committee;
(b) To construe in its discretion all terms, provisions,
conditions, and limitations of the Plan. In all cases, the construction
necessary for the Plan to qualify under the applicable provisions of
the Code shall control;
(c) To correct any defect or to supply any omission or to
reconcile any inconsistency that may appear in the Plan in such manner
and to such extent as it shall deem in its discretion expedient to
effectuate the purposes of the Plan;
(d) To employ and compensate such accountants, attorneys,
investment advisors, and other agents, employees, and independent
contractors as the Committee may deem necessary or advisable for the
proper and efficient administration of the Plan;
(e) To determine in its discretion all questions relating to
eligibility;
(f) To make a determination in its discretion as to the right
of any person to a benefit under the Plan and to prescribe procedures
to be followed by distributees in obtaining benefits hereunder;
(g) To prepare, file, and distribute, in such manner as the
Committee determines to be appropriate, such information and material
as is required by the reporting and disclosure requirements of the Act;
(h) To furnish the Employer any information necessary for the
preparation of such Employer's tax return or other information that the
Committee determines in its discretion is necessary for a legitimate
purpose;
(i) To require and obtain from the Employer and the Members
any information or data that the Committee determines is necessary for
the proper administration of the Plan;
XIII-2
(j) To instruct the Trustee as to the loans to Members
pursuant to the provisions of Article XII;
(k) To instruct the Trustee as to the management,
investment, and reinvestment of the Trust Fund;
(l) To appoint investment managers pursuant to Section
15.5;
(m) To receive and review reports from the Trustee and
the investment managers as to the financial condition of the Trust
Fund, including its receipts and disbursements;
(n) To review periodically the Plan's short-term and
long-term investment needs and goals and to communicate such needs and
goals to the Trustee and any investment manager as frequently as the
Committee, in its discretion, deems necessary for the proper
administration of the Plan and Trust; and
(o) To establish or designate Investment Funds as
investment options as provided in Article V.
(p) To vote any shares of Company Stock or mutual funds
held in the Trust Fund, provided, however, that the Committee shall
follow the directions of the Members pursuant to Section 5.3(a) in
voting Company Stock, and further provided, that the Committee may
appoint a Voting Fiduciary to vote Company Stock in accordance
with the directions from the Members.
13.8 Employer to Supply Information. The Employer shall supply full
and timely information to the Committee, including, but not limited to,
information relating to each Member's Compensation, age, retirement, death, or
other cause of termination of employment and such other pertinent facts as the
Committee may require. The Employer shall advise the Trustee of such of the
foregoing facts as are deemed necessary for the Trustee to carry out the
Trustee's duties under the Plan. When making a determination in connection with
the Plan, the Committee shall be entitled to rely upon the aforesaid information
furnished by the Employer.
13.9 Indemnification. The Company shall indemnify and hold harmless
each member of the Committee against any and all expenses and liabilities
arising out of his administrative functions or fiduciary responsibilities,
including any expenses and liabilities that are caused by or result from an act
or omission constituting the negligence of such member in the performance of
such functions or responsibilities, but excluding expenses and liabilities that
are caused by or result from such member's own gross negligence or willful
misconduct. Expenses against which such member shall be indemnified hereunder
shall include, without limitation, the amounts of any settlement or judgment,
costs, counsel fees, and related charges reasonably incurred in connection with
a claim asserted or a proceeding brought or settlement thereof.
XIII-3
XIV. Trustee and Administration of Trust Fund
14.1 Appointment, Resignation, Removal, and Replacement of Trustee.
(a) The Trustee shall be appointed, removed, and replaced by
and in the sole discretion of the Directors. The Trustee shall be the "named
fiduciary" with respect to investment of the Trust Fund's assets.
(b) Any Trustee may resign at any time by giving at least
thirty days' written notice of such resignation to the Directors. Any Trustee
may be removed, with or without cause, by the Directors on written notice of
such removal to such Trustee. The Directors may appoint a successor Trustee by
written designation, a copy of which shall be delivered to the Committee and the
former Trustee. If there would be no other Trustee then acting, the actual
appointment and qualification of a successor Trustee to whom the Trust Fund may
be transferred are conditions which must be fulfilled before the resignation or
removal of a Trustee shall become effective. The Directors may by resolution
increase or decrease the number of Trustees at any time acting hereunder.
14.2 Acceptance of Fund. The Trustee accepts the Trust Fund hereunder
and agrees to accept and retain, manage, administer and hold the Trust Fund in
accordance with the terms and provisions of this Plan. The Trustee shall receive
any securities or other properties that are tendered to the Trustee pursuant to
the Plan that are acceptable to the Trustee.
14.3 Committee Discharging Duty. The Trustee may assume that the
Committee is discharging its duties under the Plan until and unless the Trustee
is notified to the contrary in writing by any person known to be a member of the
Committee or by the Employer. Upon receipt of such notice, the Trustee may, if
the Trustee so desires, apply to a court of competent jurisdiction for guidance
with respect to the disposition of the Trust Fund.
14.4 Taxes. If, pursuant to the provisions of any law now or hereafter
enacted, any tax shall be imposed upon the Trustee with respect to the assets or
income of the Trust Fund, the Trustee (without the necessity of any direction or
approval by the Committee) may pay such tax from the Trust Fund, provided such
payment is not otherwise prohibited by law. The Trustee, however, shall not be
obligated to pay any such tax as long as the validity thereof is contested in
good faith. In determining whether or not to pay any such tax, the Trustee may
obtain the advice of counsel (including, but not limited to, counsel for the
Employer or the Committee).
14.5 Powers of the Trustee. The Committee shall direct the Trustee in
the management, investment, and reinvestment of the Trust Fund. Subject to the
limitation of the preceding sentence and to any limitations stated elsewhere
herein, in addition to the authority, rights, privileges, powers, and duties
elsewhere herein vested in the Trustee and those now or hereafter conferred by
law, the Trustee shall also have the following authority, rights, privileges,
powers, and duties:
XIV-1
(a) To hold, manage, control, collect, and use the Trust Fund
in accordance with the terms of this instrument;
(b) To sell (for cash or on credit, or both), exchange, or
otherwise dispose of, the whole or any part of the Trust Fund, at
public or private sale; to lease (including, but not limited to, oil,
gas, or mineral leases), rent, mortgage (including purchase money
mortgages), pledge, or otherwise encumber the whole or any part of the
Trust Fund; and to loan or borrow money in any manner, including by
joint and several obligations, all upon such terms, regardless of the
duration of the Trust, as the Trustee may deem advisable (provided that
neither the Employer nor any Member may borrow from the Trust Fund
except as otherwise permitted herein);
(c) To invest or reinvest the Trust Fund in property of any
description whatsoever (including, but not limited to, any common or
preferred stocks, open-end or closed-end mutual funds (including mutual
funds established and maintained as collective investment funds for
trust accounts by the Trustee or its affiliate), put and call options
traded on a national exchange, United States retirement plan bonds,
corporate bonds, debentures, convertible debentures, commercial paper,
U.S. Treasury Bills, U.S. Treasury notes and other direct or indirect
obligations of the United States Government or its agencies, improved
or unimproved real estate situated in the United States, limited
partnerships, insurance contracts of any type, mortgages, notes,
including or not limited to master notes, or other property of any
kind, real, or personal or mixed, whether tangible or intangible or
productive of income, to buy or sell options on common stock on a
nationally recognized exchange with or without holding the underlying
common stock, to buy and sell commodities, commodity options and
contracts for the future delivery of commodities, commodity options and
contracts for the future delivery of commodities, and to make any other
investments deemed appropriate);
(d) To make or hold investments of any part of the Trust Fund
in common or undivided interest with other persons or entities,
including an undivided interest in any property in which any Trustee,
individually or otherwise, may hold an undivided interest; to buy from
or sell to any person or entity to the extent not otherwise prohibited
herein;
(e) To make commingled, collective, or common investments and
to invest and reinvest all or any portion of the Trust Fund
collectively with funds of other pension and profit sharing trusts
exempt from tax under section 501(a) of the Code by reason of
qualifying under section 401(a) of said Code, including, without
limitation, power to invest collectively with such other funds through
the medium of one or more of the common, collective, or commingled
trust funds, which has been or may hereafter be established and
maintained by the Trustee or its affiliates. To the extent of the
interest of the Trust Fund in any such collective trust, the agreement
or declaration of trust establishing such collective trust shall be
deemed to be adopted and made a part of the Plan and Trust as if set
forth in full herein.
(f) To deposit or invest all or a part of the Trust Fund in
savings accounts, certificates of deposit, or other deposits that
bear a reasonable rate of interest in a bank or similar financial
institution, including the commercial department of the Trustee,
XIV-2
if such bank or other institution is supervised by any agency of a
state or the federal government.
(g) To employ and compensate such attorneys, counsel, brokers,
banks, investment advisors, or other agents, employees, or independent
contractors and to delegate to them such of the duties, rights, and
powers of the Trustee as may be deemed advisable in handling and
administering the Plan;
(h) To partition any property or interest held as a part of
the Trust Fund and, in any and all such partitions, to pay or receive
such money or property as may be necessary or advisable to equalize
differences and to evaluate any property belonging to the Trust Fund;
(i) To institute, join in, maintain, defend, compromise,
submit to arbitration, or settle any litigation, claim, obligation, or
controversy with respect to any matter affecting the Trust Fund,
regardless of the manner in which such matter may have arisen, all in
the name of the Trustee and without the joinder of any Member; and
(j) To hold uninvested for a reasonable period of time any
moneys received by it until the same shall be invested or disbursed
pursuant to the provisions of the Plan.
(k) To invest any of the funds of the Trust into the AVESTA
Trust, or any other open-end, diversified, management investment
company and that offers collective investment funds for retirement
accounts as to which Texas Commerce Bank National Association or any
affiliated bank serves as a trustee.
The Trustee is also authorized to exercise all the rights, powers, options, and
privileges now or hereafter granted to, provided for, or vested in trustees
under the Texas Trust Code, except as such may conflict with the terms of this
instrument or applicable law. As far as possible, no subsequent legislation or
regulation shall be in limitation of the rights, powers, or privileges granted
the Trustee hereunder or set forth in the Texas Trust Code as it exists at the
time of the execution hereof. Generally, the Trustee shall have, hold, manage,
control, use, invest and reinvest, disburse, and dispose of the Trust Fund under
all circumstances to the same extent as if the Trustee were the owner thereof in
fee simple, subject only to such limitations as are contained herein and such
applicable laws as cannot be waived. This instrument shall always be construed
in favor of the validity of any act or omission by or of the Trustee.
Notwithstanding the foregoing, the Trustee may not invest the Trust Fund assets
in any Company security that is not a "qualifying Company security" or in any
Company real property that is not "qualifying Company real property." The
Trustee may, however, acquire "qualifying Company securities" or "qualifying
Company real property" as an investment, provided that any such acquisition or
investment will not result in the Trust Fund's holding more than 100% of the
then fair market value of the assets of the Trust Fund in "qualifying Company
securities" and "qualifying Company real property." The term "qualifying Company
securities" means stock or marketable obligations of the Company or an
affiliate. The term "qualifying Company real property" means parcels of real
property leased to the Company or an affiliate if a substantial number of the
XIV-3
parcels are dispersed geographically and if each such parcel is suitable for,
or adaptable to, more than one use.
14.6 Compensation, Expenses, and Bond of Trustee. Unless prohibited by
Section 14.10, the Trustee shall receive such compensation for services as
Trustee hereunder as may be agreed upon from time to time by the Company and the
Trustee. The Trustee shall be reimbursed for all reasonable expenses incurred
while acting as Trustee as provided in Section 14.10. No bond or other security
shall be required of the Trustee unless otherwise required by law or by the
Company.
14.7 Reliance. The Trustee shall be fully protected in relying upon a
resolution of the Directors as to the membership of the Committee as it then
exists and in continuing to rely upon such resolution until a subsequent
resolution is filed with the Trustee by the Directors. The Trustee may accept as
true all papers, certificates, statements, and representations of fact that are
presented to the Trustee by the Committee without investigation, questioning, or
verification if the Trustee believes same to be true and authentic, and the
Trustee may rely solely on the written advice of the Committee with respect to
any question of fact.
14.8 Accounting. As soon as practicable after the end of each Plan
Year, the Trustee shall render a written accounting of the administration of the
Trust Fund showing all receipts and disbursements during the year and the then
value of the assets of the Trust Fund. This accounting shall be transmitted to
the Committee and to the Company.
14.9 Judicial Protection. The Trustee may seek judicial protection by
any action or proceeding deemed necessary to settle the accounts of the Trustee
or may obtain a judicial determination or a declaratory judgment as to a
question of construction of the Plan. The Trustee must join as parties defendant
in any such action only the Committee and the Company, although the Trustee may
join other parties if the Trustee deems it advisable to do so.
14.10 Payment of Expenses. All expenses incident to the administration
of the Plan and Trust, including but not limited to, legal, accounting, Trustee
fees, expenses of the Committee, and the cost of furnishing any bond or security
required of the Committee shall be paid by the Trustee from the Trust Fund, and,
until paid, shall constitute a claim against the Trust Fund which is paramount
to the claims of Members and beneficiaries; provided, however, that (a) the
obligation of the Trustee to pay such expenses from the Trust Fund shall cease
to exist to the extent such expenses are paid by the Employer and (b) in the
event the Trustee's compensation is to be paid, pursuant to this Section, from
the Trust Fund, any individual serving as Trustee who already receives full-time
pay from an employer or an association of employers whose employees are
participants in the Plan, or from an employee organization whose members are
participants in the Plan, shall not receive any additional compensation for
serving as Trustee. This Section shall be deemed to be a part of any contract to
provide for expenses of Plan and Trust administration, whether or not the
signatory to such contract is, as a matter of convenience, the Employer.
14.11 Trust Fund Property. All income, profits, recoveries,
contributions, forfeitures, and any and all moneys, securities, and properties
of any kind at any time received or held by the Trustee hereunder shall be held
XIV-4
for investment purposes as a commingled Trust Fund. The Committee shall
maintain Accounts in the name of each Member, but the maintenance of an
Account designated as the Account of a Member shall not mean that such Member
shall have a greater or lesser interest than that due him by operation of the
Plan and shall not be considered as segregating any funds or property from any
other funds or property contained in the commingled fund. No Member shall have
any title to any specific asset in the Trust Fund.
14.12 Distributions from Members' Accounts. Distributions from a
Member's Accounts shall be made by the Trustee only if, when, and in the amount
and manner directed by the Committee. Any distribution made to a Member or for
his benefit shall be debited to such Member's Account or Accounts. All
distributions hereunder shall be made in cash except as otherwise specifically
provided herein.
14.13 Payments Solely from Trust Fund. All benefits payable under the
Plan shall be paid or provided for solely from the Trust Fund, and neither the
Employer nor the Trustee assumes any liability or responsibility for the
adequacy thereof. The Committee or the Trustee may require execution and
delivery of such instruments as are deemed necessary to assure proper payment of
any benefits.
14.14 No Benefits to the Employer. No part of the corpus or income of
the Trust Fund shall be used for any purpose other than the exclusive purpose of
providing benefits for the Members and their beneficiaries and of defraying
reasonable expenses of administering the Plan. Anything to the contrary herein
notwithstanding, the Plan shall not be construed to vest any rights in the
Employer other than those specifically given hereunder.
XIV-5
XV. Fiduciary Provisions
15.1 Article Controls. This Article shall control over any contrary,
inconsistent or ambiguous provisions contained in the Plan.
15.2 General Allocation of Fiduciary Duties. Each fiduciary with
respect to the Plan shall have only those specific powers, duties,
responsibilities and obligations as are specifically given him under the Plan.
The Directors shall have the sole authority to appoint and remove the Trustee
and members of the Committee. Except as otherwise specifically provided herein,
the Committee shall have the sole responsibility for the administration of the
Plan, which responsibility is specifically described herein. Except as otherwise
specifically provided herein, the Trustee shall have the sole responsibility for
the administration, investment, and management of the assets held under the
Plan. However, because the Committee, as a co-fiduciary, has chosen to exercise
its power given hereunder to direct the Trustee in the management, investment,
and reinvestment of the Trust Fund, the Trustee shall be subject to all proper
directions of the Committee that are made in accordance with the terms of the
Plan and the Act. It is intended under the Plan that each fiduciary shall be
responsible for the proper exercise of his own powers, duties, responsibilities,
and obligations hereunder and shall not be responsible for any act or failure to
act of another fiduciary except to the extent provided by law or as specifically
provided herein.
15.3 Fiduciary Duty. Each fiduciary under the Plan, including, but not
limited to, the Committee and the Trustee as "named fiduciaries," shall
discharge his duties and responsibilities with respect to the Plan:
(a) Solely in the interest of the Members, for the exclusive
purpose of providing benefits to Members and their beneficiaries and of
defraying reasonable expenses of administering the Plan;
(b) With the care, skill, prudence, and diligence under the
circumstances then prevailing that a prudent man acting in a like
capacity and familiar with such matters would use in the conduct of an
enterprise of a like character and with like aims;
(c) By diversifying the investments of the Plan so as to
minimize the risk of large losses, unless under the circumstances it is
prudent not to do so; and
(d) In accordance with the documents and instruments governing
the Plan insofar as such documents and instruments are consistent with
applicable law.
No fiduciary shall cause the Plan or Trust Fund to enter into a "prohibited
transaction" as provided in section 4975 of the Code or section 406 of the Act.
15.4 Delegation and Allocation of Fiduciary Duties. The Committee may
appoint subcommittees, individuals or any other agents as it deems advisable and
may delegate to any of such appointees any or all of the powers and duties of
XV-1
the Committee. Such appointment and delegation must be in writing, specifying
the powers or duties being delegated, and must be accepted in writing by the
delegatee. Upon such appointment, delegation and acceptance, the delegating
Committee members shall have no liability for the acts or omissions of any such
delegatee, as long as the delegating Committee members do not violate any
fiduciary responsibility in making or continuing such delegation.
15.5 Investment Manager. The Committee may, in its sole discretion,
appoint an "investment manager," with power to manage, acquire or dispose of any
asset of the Plan and to direct the Trustee in this regard, so long as:
(a) The investment manager is (1) registered as an investment
adviser under the Investment Advisers Act of 1940, (2) a bank, as
defined in the Investment Advisers Act of 1940, or (3) an insurance
company qualified to do business under the laws of more than one state;
and
(b) Such investment manager acknowledges in writing that he is
a fiduciary with respect to the Plan.
Upon such appointment, the Committee shall not be liable for the acts of the
investment manager, as long as the Committee members do not violate any
fiduciary responsibility in making or continuing such appointment. The Trustee
shall follow the directions of such investment manager and shall not be liable
for the acts or omissions of such investment manager. The investment manager may
be removed by the Committee at any time and within its sole discretion.
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XVI. Amendments
16.1 Right to Amend. Subject to Section 16.2 and any other limitations
contained in the Act or the Code, the Directors may from time to time amend, in
whole or in part, any or all of the provisions of the Plan on behalf of the
Company and all Employers. Specifically, but not by way of limitation, the
Directors may make any amendment necessary to acquire and maintain a qualified
status for the Plan under the Code, whether or not retroactive.
16.2 Limitation on Amendments. No amendment of the Plan shall be made
that would vest in the Employer, directly or indirectly, any interest in or
control of the Trust Fund. No amendment shall be made that would vary the Plan's
exclusive purpose of providing benefits to Members and their beneficiaries and
of defraying reasonable expenses of administering the Plan or that would permit
the diversion of any part of the Trust Fund from that exclusive purpose. No
amendment shall be made that would reduce any then nonforfeitable interest of a
Member. No amendment shall increase the duties or responsibilities of the
Trustee unless the Trustee consents thereto in writing.
XVI-1
XVII. Discontinuance of Contributions, Termination,
Partial Termination, and Merger or Consolidation
17.1 Right to Discontinue Contributions, Terminate, or Partially
Terminate. The Employer has established the Plan with the bona fide intention
and expectation that from year to year it will be able to, and will deem it
advisable to, make its contributions as herein provided. However, the Directors
realize that circumstances not now foreseen, or circumstances beyond its
control, may make it either impossible or inadvisable for the Employer to
continue to make its contributions to the Plan. Therefore, the Directors shall
have the power to discontinue contributions to the Plan, terminate the Plan, or
partially terminate the Plan at any time hereafter. Each member of the Committee
and the Trustee shall be notified of such discontinuance, termination, or
partial termination.
17.2 Procedure in the Event of Discontinuance of Contribution,
Termination, or Partial Termination.
(a) If the Plan is amended so as to permanently discontinue
Employer contributions, or if Employer contributions are in fact permanently
discontinued, the Vested Interest of each affected Member shall be 100%,
effective as of the date of discontinuance. In case of such discontinuance, the
Committee shall remain in existence and all other provisions of the Plan that
are necessary, in the opinion of the Committee, for equitable operation of the
Plan shall remain in force.
(b) If the Plan is terminated or partially terminated, the
Vested Interest of each affected Member shall be 100%, effective as of the
termination date or partial termination date, as applicable. Unless the Plan is
otherwise amended prior to dissolution of the Company, the Plan shall terminate
as of the date of dissolution of the Company.
(c) Upon discontinuance, termination, or partial termination,
any previously unallocated contributions, forfeitures, and net income (or net
loss) shall be allocated among the Accounts of the Members on such date of
discontinuance, termination, or partial termination according to the provisions
of Article IV, as if such date of discontinuance, termination, or partial
termination were a Valuation Date. Thereafter, the net income (or net loss)
shall continue to be allocated to the Accounts of the Members until the balances
of the Accounts are distributed. In the event of termination, the date of the
final distribution shall be treated as a Valuation Date.
(d) In the case of a termination or partial termination of the
Plan, and in the absence of a Plan amendment to the contrary, the Trustee shall
pay the balance of the Accounts of a Member for whom the Plan is so terminated,
or who is affected by such partial termination, to such Member, subject to the
time of payment, form of payment, and consent provisions of Article X.
17.3 Merger, Consolidation, or Transfer. This Plan and Trust Fund may
not merge or consolidate with, or transfer its assets or liabilities to, any
other plan, unless immediately thereafter each Member would, in the event such
XVII-1
other plan terminated, be entitled to a benefit which is equal to or greater
than the benefit to which he would have been entitled if the Plan were
terminated immediately before the merger, consolidation, or transfer.
XVII-2
XVIII. Participating Employers
18.1 Adoption by Other Employers. It is contemplated that other
corporations, associations, partnerships, or proprietorships may adopt this Plan
and thereby become Employers. By appropriate action of its Board of Directors or
noncorporate counterpart, any such entity, whether or not presently existing,
may become, upon approval of the Directors, a party hereto. The provisions of
the Plan shall apply separately and equally to each Employer and its Employees
in the same manner as is expressly provided for the Company and its Employees,
except that the power to appoint or otherwise affect the Committee or the
Trustee and the power to amend or terminate the Plan shall be exercised by the
Directors alone. Nevertheless, any Employer may, with the consent of the
Directors, incorporate in its adoption agreement or in an amendment document
specific provisions relating to the operation of the Plan, and such provisions
shall become a part of the Plan as to such Employer only. Transfer of employment
among Employers shall not be considered a termination of employment hereunder,
and an Hour of Service with one Employer shall be considered as an Hour of
Service with all others. Any Employer may, by appropriate action of its Board of
Directors or noncorporate counterpart, terminate its participation in the Plan.
Moreover, the Directors may, in their discretion, terminate an Employer's Plan
participation at any time.
18.2 Single Plan. For purposes of the Code and the Act, the Plan as
adopted by the Employers shall constitute a single plan rather than a separate
plan of each Employer. All assets in the Trust Fund shall be available to pay
benefits to all Members and their beneficiaries.
XVIII-1
XIX. Miscellaneous Provisions
19.1 Not Contract of Employment. The adoption and maintenance of the
Plan shall not be deemed to be a contract between the Employer and any person or
to be consideration for the employment of any person. Nothing herein contained
shall be deemed to give any person the right to be retained in the employ of the
Employer or to restrict the right of the Employer to discharge any person at any
time nor shall the Plan be deemed to give the Employer the right to require any
person to remain in the employ of the Employer or to restrict any person's right
to terminate his employment at any time.
19.2 Alienation of Interest Forbidden. Except as otherwise provided
with respect to "qualified domestic relations orders" pursuant to section 206(d)
of the Act and sections 401(a)(13) and 414(p) of the Code and except as
otherwise provided under other applicable law, no right or interest of any kind
in any benefit shall be transferable or assignable by any Member or any
beneficiary or be subject to anticipation, adjustment, alienation, encumbrance,
garnishment, attachment, execution, or levy of any kind. Plan provisions to the
contrary notwithstanding, the Committee shall comply with the terms and
provisions of any "qualified domestic relations order," including an order that
requires distributions to an alternate payee prior to a Member's "earliest
retirement age" as such term is defined in section 206(d)(3)(E)(ii) of the Act
and section 414(p)(4)(B) of the Code, and shall establish appropriate procedures
to effect the same.
19.3 Payments to Minors and Incompetents. If a Member or beneficiary
entitled to receive a benefit under the Plan is a minor or is determined by the
Committee in its discretion to be incompetent or is adjudged by a court of
competent jurisdiction to be legally incapable of giving valid receipt and
discharge for a benefit provided under the Plan, the Committee may pay such
benefit to the duly appointed guardian or conservator of such Member or
beneficiary for the account of such Member or beneficiary. If no guardian or
conservator has been appointed for such Member or beneficiary, the Committee may
pay such benefit to any third party who is determined by the Committee, in its
sole discretion, to be authorized to receive such benefit for the account of
such Member or beneficiary. Such payment shall operate as a full discharge of
all liabilities and obligations of the Committee, the Trustee, the Employer, and
any fiduciary of the Plan with respect to such benefit.
19.4 Member's Address. It shall be the affirmative duty of each Member
to inform the Committee of, and to keep on file with the Committee, his current
mailing address and the current mailing address of his designated beneficiary.
If a Member fails to keep the Committee informed of his current mailing address
and the current mailing address of his designated beneficiary, neither the
Committee, the Trustee, the Employer, nor any fiduciary under the Plan shall be
responsible for any late or lost payment of a benefit or for failure of any
notice to be provided timely under the terms of the Plan.
19.5 Severability. If any provision of this Plan shall be held illegal
or invalid for any reason, said illegality or invalidity shall not affect the
remaining provisions hereof; instead, each provision shall be fully severable
XIX-1
and the Plan shall be construed and enforced as if said illegal or invalid
provision had never been included herein.
19.6 Jurisdiction. The situs of the Plan and the Trust hereby created
is Texas. All provisions of the Plan shall be construed in accordance with the
laws of Texas except to the extent preempted by federal law.
XIX-2
XX. Top-Heavy Status
20.1 Article Controls. Any Plan provisions to the contrary
notwithstanding, the provisions of this Article shall control to the extent
required to cause the Plan to comply with the requirements imposed under section
416 of the Code.
20.2 Definitions. For purposes of this Article, the following terms
and phrases shall have these respective meanings:
(a) Account Balance: As of any Valuation Date, the aggregate
amount credited to an individual's account or accounts under a
qualified defined contribution plan maintained by the Employer or a
Controlled Entity (excluding employee contributions that were
deductible within the meaning of section 219 of the Code and rollover
or transfer contributions made after December 31, 1983, by or on behalf
of such individual to such plan from another qualified plan sponsored
by an entity other than the Employer or a Controlled Entity), increased
by (1) the aggregate distributions made to such individual from such
plan during a five-year period ending on the Determination Date and (2)
the amount of any contributions due as of the Determination Date
immediately following such Valuation Date.
(b) Accrued Benefit: As of any Valuation Date, the present
value (computed on the basis of the Assumptions) of the cumulative
accrued benefit (excluding the portion thereof that is attributable to
employee contributions that were deductible pursuant to section 219 of
the Code, to rollover or transfer contributions made after December 31,
1983, by or on behalf of such individual to such plan from another
qualified plan sponsored by an entity other than the Employer or a
Controlled Entity, to proportional subsidies or to ancillary benefits)
of an individual under a qualified defined benefit plan maintained by
the Employer or a Controlled Entity increased by (1) the aggregate
distributions made to such individual from such plan during a five-year
period ending on the Determination Date and (2) the estimated benefit
accrued by such individual between such Valuation Date and the
Determination Date immediately following such Valuation Date. Solely
for the purpose of determining top-heavy status, the Accrued Benefit of
an individual shall be determined under (1) the method, if any, that
uniformly applies for accrual purposes under all qualified defined
benefit plans maintained by the Employer and the Controlled Entities or
(2) if there is no such method, as if such benefit accrued not more
rapidly than under the slowest accrual rate permitted under section
411(b)(1)(C) of the Code.
(c) Aggregation Group: The group of qualified plans maintained
by the Employer and each Controlled Entity consisting of (1) each plan
in which a Key Employee participates and each other plan that enables a
plan in which a Key Employee participates to meet the requirements of
section 401(a)(4) or 410 of the Code or (2) each plan in which a Key
Employee participates, each other plan that enables a plan in which a
Key Employee participates to meet the requirements of section 401(a)(4)
or 410 of the Code and any other plan that the Employer elects to
include as a part of such group; provided, however, that the Employer
XX-1
may elect to include a plan in such group only if the group will
continue to meet the requirements of sections 401(a)(4) and 410 of the
Code with such plan being taken into account.
(d) Assumptions: The interest rate and mortality assumptions
specified for top-heavy status determination purposes in any defined
benefit plan included in the Aggregation Group which includes the Plan.
(e) Determination Date: For the first Plan Year of any plan,
the last day of such Plan Year and for each subsequent Plan Year of
such plan, the last day of the preceding Plan Year.
(f) Key Employee: A "key employee" as defined in section 416
(i) of the Code and the Treasury regulations thereunder.
(g) Plan Year: With respect to any plan, the annual accounting
period used by such plan for annual reporting purposes.
(h) Remuneration: The total of all amounts paid by the
Employer to or for the benefit of a Member for services rendered or
labor performed for the Employer, which are required to be reported on
the Member's federal income tax withholding statement or statements
(Form W-2 or its subsequent equivalent) for the calendar year ending
with the Plan Year, limited to $150,000 for any Plan Year with such
limitation to be (1) adjusted automatically to reflect any amendments
to section 401(a)(17) of the Code and any cost-of-living increases
authorized by section 401(a)(17) of the Code, (2) prorated for a Plan
Year of less than twelve months and to the extent otherwise required by
applicable law and (3) in the case of a Member who is either a
five-percent owner of the Employer (within the meaning of section
416(i)(1)(A)(iii) of the Code) or is one of the ten most Highly
Compensated Employees for the Plan Year and who has a spouse and/or
lineal descendants who are under the age of nineteen as of the end of a
Plan Year who receive Remuneration during such Plan Year, prorated and
allocated among such Member, his spouse, and/or lineal descendants
under the age of nineteen based on the Remuneration for such Plan Year
of each such individual.
(i) Valuation Date: With respect to any Plan Year of any
defined contribution plan, the most recent date within the twelve-month
period ending on a Determination Date as of which the trust fund
established under such plan was valued and the net income (or loss)
thereof allocated to participants' accounts. With respect to any Plan
Year of any defined benefit plan, the most recent date within a
twelve-month period ending on a Determination Date as of which the plan
assets were valued for purposes of computing plan costs for purposes of
the requirements imposed under section 412 of the Code.
XX-2
20.3 Top-Heavy Status.
(a) The Plan shall be deemed to be top-heavy for a Plan Year
if, as of the Determination Date for such Plan Year, (1) the sum of Account
Balances of Members who are Key Employees exceeds 60% of the sum of Account
Balances of all Members unless an Aggregation Group including the Plan is not
top-heavy or (2) an Aggregation Group including the Plan is top-heavy. An
Aggregation Group shall be deemed to be top-heavy as of a Determination Date if
the sum (computed in accordance with section 416(g)(2)(B) of the Code and the
Treasury regulations promulgated thereunder) of (1) the Account Balances of Key
Employees under all defined contribution plans included in the Aggregation Group
and (2) the Accrued Benefits of Key Employees under all defined benefit plans
included in the Aggregation Group exceeds 60% of the sum of the Account Balances
and the Accrued Benefits of all individuals under such plans. Notwithstanding
the foregoing, the Account Balances and Accrued Benefits of individuals who are
not Key Employees in any Plan Year but who were Key Employees in any prior Plan
Year shall not be considered in determining the top-heavy status of the Plan for
such Plan Year. Further, notwithstanding the foregoing, the Account Balances and
Accrued Benefits of individuals who have not performed services for the Employer
or any Controlled Entity at any time during the five-year period ending on the
applicable Determination Date shall not be considered.
(b) If the Plan is determined to be top-heavy for a Plan Year,
the Vested Interest in the Employer Contribution Account of each Member who is
credited with an Hour of Service during such Plan Year shall be determined in
accordance with the following schedule:
Years of
Vesting Service Vested Interest
Less than 2 years 0%
2 years 25%
3 years 40%
4 years 60%
5 years 80%
6 years or more 100%
(c) If the Plan is determined to be top-heavy for a Plan Year,
the Employer shall contribute to the Plan for such Plan Year on behalf of each
Member who is not a Key Employee and who has not terminated his employment as of
the last day of such Plan Year an amount equal to:
(1) The lesser of (A) 3% of such Member's
Remuneration for such Plan Year or (B) a percent of such Member's
Remuneration for such Plan Year equal to the greatest percent
determined by dividing for each Key Employee the amounts allocated to
such Key Employee's Cash or Deferred Account and Employer Contribution
Account for such Plan Year by such Key Employee's Remuneration; reduced
by
(2) The amount of Employer Discretionary
Contributions allocated to such Member's Accounts for such Plan Year.
XX-3
The minimum contribution required to be made for a Plan Year pursuant to this
Paragraph for a Member employed on the last day of such Plan Year shall be made
regardless of whether such Member is otherwise ineligible to receive an
allocation of the Employer's contributions for such Plan Year. Notwithstanding
the foregoing, if the Plan is deemed to be top-heavy for a Plan Year, the
Employer's contribution for such Plan Year pursuant to this Paragraph shall be
increased by substituting "4%" in lieu of "3%" in Clause (1) hereof to the
extent that the Directors determine to so increase such contribution to comply
with the provisions of section 416(h)(2) of the Code. Notwithstanding the
foregoing, no contribution shall be made pursuant to this Paragraph for a Plan
Year with respect to a Member who is a participant in another defined
contribution plan sponsored by the Employer or a Controlled Entity if such
Member receives under such other defined contribution plan (for the plan year of
such plan ending with or within the Plan Year of the Plan) a contribution which
is equal to or greater than the minimum contribution required by section
416(c)(2) of the Code. Notwithstanding the foregoing, no contribution shall be
made pursuant to this Paragraph for a Plan Year with respect to a Member who is
a participant in a defined benefit plan sponsored by the Employer or a
Controlled Entity if such Member accrues under such defined benefit plan (for
the plan year of such plan ending with or within the Plan Year of this Plan) a
benefit that is at least equal to the benefit described in section 416(c)(1) of
the Code. If the preceding sentence is not applicable, the requirements of this
Paragraph shall be met by providing a minimum benefit under such defined benefit
plan which, when considered with the benefit provided under the Plan as an
offset, is at least equal to the benefit described in section 416(c)(1) of the
Code.
20.4 Termination of Top-Heavy Status. If the Plan has been deemed to
be top-heavy for one or more Plan Years and thereafter ceases to be top-heavy,
the provisions of this Article shall cease to apply to the Plan effective as of
the Determination Date on which it is determined no longer to be top-heavy.
Notwithstanding the foregoing, the Vested Interest of each Member as of such
Determination Date shall not be reduced and, with respect to each Member who has
three or more years of Vesting Service on such Determination Date, the Vested
Interest of each such Member shall continue to be determined in accordance with
the schedule set forth in Section 20.3(b).
20.5 Effect of Article. Notwithstanding anything contained herein to
the contrary, the provisions of this Article shall automatically become
inoperative and of no effect to the extent not required by the Code or the Act.
XX-4
EXECUTED this 18th day of July, 1996.
SEAGULL ENERGY CORPORATION
By: /s/ STEVE THORINGTON
TEXAS COMMERCE BANK NATIONAL
ASSOCIATION, Trustee
By: /s/ MICHAEL W. JERDING