EXHIBIT 10.2
TPC FINANCE CORP.
EMPLOYEE STOCK OWNERSHIP PLAN
to be renamed
TEXAS PETROCHEMICALS CORPORATION
EMPLOYEE STOCK OWNERSHIP PLAN
TABLE OF CONTENTS
Page Number
ARTICLE I
DEFINITIONS................................2
ARTICLE II
ADMINISTRATION..............................12
2.1 ASSIGNMENT AND DESIGNATION OF ADMINISTRATIVE AUTHORITY................12
2.2 ALLOCATION AND DELEGATION OF RESPONSIBILITIES.........................12
2.3 POWERS AND DUTIES OF THE ADMINISTRATOR................................13
2.4 RECORDS AND REPORTS...................................................14
2.5 AUDIT.................................................................14
2.6 APPOINTMENT OF ADVISORS...............................................15
2.7 INFORMATION FROM EMPLOYER.............................................15
2.8 PAYMENT OF EXPENSES...................................................15
2.9 ACTIONS BY ADMINISTRATOR..............................................15
2.10 CLAIMS PROCEDURE......................................................16
2.11 CLAIMS REVIEW PROCEDURE...............................................16
ARTICLE III
ELIGIBILITY..............................17
3.1 CONDITIONS OF ELIGIBILITY.............................................17
3.2 EFFECT OF PARTICIPATION UPON THE ACCEPTANCE OF ANY
BENEFITS UNDER THIS PLAN..............................................17
3.3 DETERMINATION OF ELIGIBILITY..........................................17
3.4 TERMINATION OF ELIGIBILITY............................................17
3.5 OMISSION OF ELIGIBLE EMPLOYEE.........................................17
3.6 INCLUSION OF INELIGIBLE EMPLOYEE......................................18
ARTICLE IV
CONTRIBUTION AND ALLOCATION.......................19
4.1 EMPLOYER'S CONTRIBUTION...............................................19
4.2 TIME OF PAYMENT OF EMPLOYER'S CONTRIBUTION............................19
4.3 ALLOCATION OF CONTRIBUTION, FORFEITURES AND EARNINGS..................19
4.4 MAXIMUM ANNUAL ADDITIONS..............................................23
4.5 ADJUSTMENT FOR EXCESSIVE ANNUAL ADDITIONS.............................27
4.6 DIRECTED INVESTMENT ACCOUNT...........................................28
4.7 SUSPENSE ACCOUNT......................................................29
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ARTICLE V
FUNDING AND INVESTMENT POLICY......................30
5.1 INVESTMENT POLICY.....................................................30
5.2 APPLICATION OF CASH...................................................30
5.3 TRANSACTIONS INVOLVING COMPANY STOCK..................................30
5.4 LOANS TO THE TRUST....................................................31
ARTICLE VI
VALUATIONS................................33
6.1 VALUATION OF THE TRUST FUND...........................................33
6.2 METHOD OF VALUATION...................................................33
ARTICLE VII
DETERMINATION AND DISTRIBUTION OF BENEFITS................34
7.1 BENEFITS UPON RETIREMENT..............................................34
7.2 BENEFITS UPON DEATH...................................................34
7.3 BENEFITS UPON DISABILITY..............................................35
7.4 BENEFITS UPON TERMINATION.............................................35
7.5 DISTRIBUTION OF BENEFITS..............................................37
7.6 HOW PLAN BENEFITS WILL BE DISTRIBUTED.................................40
7.7 DISTRIBUTION FOR MINOR BENEFICIARY....................................42
7.8 LOCATION OF PARTICIPANT OR BENEFICIARY UNKNOWN........................42
7.9 RIGHT OF FIRST REFUSAL................................................42
7.10 STOCK CERTIFICATE LEGEND..............................................43
7.11 PUT OPTION............................................................44
7.12 NONTERMINABLE PROTECTIONS AND RIGHTS..................................45
7.13 LIMITATIONS ON BENEFITS AND DISTRIBUTIONS.............................45
7.14 PAYMENT OF DISTRIBUTION DIRECTLY TO ELIGIBLE RETIREMENT
PLAN..................................................................46
ARTICLE VIII
TRUSTEE.................................47
8.1 BASIC RESPONSIBILITIES OF THE TRUSTEE.................................47
8.2 VOTING COMPANY STOCK..................................................47
ARTICLE IX
AMENDMENT, TERMINATIONS, AND MERGERS...................49
9.1 AMENDMENT.............................................................49
9.2 TERMINATION...........................................................49
9.3 MERGER OR CONSOLIDATION...............................................50
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ARTICLE X
MISCELLANEOUS..............................51
10.1 PARTICIPANT'S RIGHTS..................................................51
10.2 ALIENATION............................................................51
10.3 CONSTRUCTION OF PLAN..................................................51
10.4 GENDER AND NUMBER.....................................................51
10.5 LEGAL ACTION..........................................................52
10.6 PROHIBITION AGAINST DIVERSION OF FUNDS................................52
10.7 BONDING...............................................................52
10.8 RECEIPT AND RELEASE FOR PAYMENTS......................................52
10.9 ACTION BY THE EMPLOYER................................................53
10.10 NAMED FIDUCIARIES AND ALLOCATION OF RESPONSIBILITY....................53
10.11 HEADINGS..............................................................53
10.12 APPROVAL BY INTERNAL REVENUE SERVICE..................................53
10.13 UNIFORMITY............................................................54
10.14 SECURITIES AND EXCHANGE COMMISSION APPROVAL...........................54
10.15 INDEMNIFICATION.......................................................54
10.16 CONTROLLING LAW.......................................................54
ARTICLE XI
PARTICIPATING EMPLOYERS.........................55
11.1 ADOPTION BY OTHER EMPLOYERS...........................................55
11.2 REQUIREMENTS OF PARTICIPATING EMPLOYERS...............................55
11.3 DESIGNATION OF AGENT..................................................56
11.4 EMPLOYEE TRANSFERS....................................................56
11.5 PARTICIPATING EMPLOYER'S CONTRIBUTION.................................56
11.6 AMENDMENT.............................................................56
11.7 DISCONTINUANCE OF PARTICIPATION.......................................56
11.8 ADMINISTRATOR'S AUTHORITY.............................................57
11.9 PARTICIPATING EMPLOYER CONTRIBUTION FOR AFFILIATE.....................57
ARTICLE XII
TOP-HEAVY STATUS.............................58
12.1 ARTICLE CONTROLS......................................................58
12.2 DEFINITIONS...........................................................58
12.3 TOP-HEAVY STATUS......................................................59
12.4 TERMINATION OF TOP-HEAVY STATUS.......................................60
12.5 EFFECT OF ARTICLE.....................................................60
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TPC FINANCE CORP.
EMPLOYEE STOCK OWNERSHIP PLAN
to be renamed
TEXAS PETROCHEMICALS CORPORATION
EMPLOYEE STOCK OWNERSHIP PLAN
W I T N E S S E T H:
WHEREAS, TPC Finance Corp. (the "Employer") desires to establish an
Employee Stock Ownership Plan so as to enable its eligible employees to acquire
a proprietary interest in capital stock of the Employer; and
WHEREAS, the Employer desires to recognize the contributions employees
will make to its successful operation and to reward such contribution by means
of an Employee Stock Ownership Plan for those employees who shall qualify as
Participants hereunder; and
WHEREAS, contributions to the Plan will be made by the Employer and such
contributions made to the trust will be invested primarily in the capital stock
of the Employer (or a corporation which is a member of the same controlled
group); and
WHEREAS, effective July 1, 1996 (hereinafter called the "Effective Date"),
the Employer establishes this Employee Stock Ownership Plan ("ESOP") (which plan
is hereinafter called the "Plan") for the exclusive benefit of the Participants
and their Beneficiaries, which is intended to qualify as an ESOP; and
WHEREAS, it is anticipated that soon after the Effective Date, TPC Holding
Corp. will purchase all outstanding capital stock of Texas Olefins Company and
its subsidiaries, including Texas Petrochemicals Corporation (the
"Acquisition"), and that concurrently with the consummation of the closing of
the Acquisition, the Employer and Texas Olefins Company will merge with Texas
Petrochemicals Corporation (the "Merger") and the surviving entity will be named
Texas Petrochemicals Corporation; and
WHEREAS, upon the completion of the Merger, the Plan shall be renamed the
Texas Petrochemicals Corporation Employee Stock Ownership Plan.
NOW THEREFORE, as of the Effective Date, the Employer hereby establishes
this ESOP for the exclusive benefit of its participants and their beneficiaries
under the following terms:
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ARTICLE I
DEFINITIONS
1.1 "ACT" means the Employee Retirement Income Security Act of 1974, as it
may be amended from time to time.
1.2 "ACQUISITION DATE" means the date on which TPC Holding Corp. acquires
all of the outstanding capital stock of Texas Olefins Company and its
subsidiaries, including Texas Petrochemicals Corporation.
1.3 "ADMINISTRATOR" means the person designated by the Employer pursuant
to Section 2.1 to administer the Plan on behalf of the Employer.
1.4 "AFFILIATED EMPLOYER" means the Employer and any Corporation which is
a member of a controlled group of corporations (as defined in Code Section
414(b)) which include the Employer; any trade or business (whether or not
incorporated) which is under common control (as defined in Code Section 414(c))
with the Employer; any organization (whether or not incorporated) which is a
member of an affiliated service group (as defined in Code Section 414(m)) which
includes the Employer; and any other entity required to be aggregated with the
Employer pursuant to Regulations under Code Section 414(o).
1.5 "ANNIVERSARY DATE" means June 30.
1.6 "BENEFICIARY" means the person to whom the share of a deceased
Participant's total account is payable, subject to the restrictions of Sections
7.2 and 7.6.
1.7 "BENEFIT COMMENCEMENT DATE" means with respect to each Participant or
Beneficiary, the date such Participant's or Beneficiary's benefit is paid to him
from the Trust Fund.
1.8 "CODE" means the Internal Revenue Code of 1986, as amended or replaced
from time to time.
1.9 "COMPANY STOCK" means common stock issued by the Employer (or by a
corporation which is a member of the controlled group of corporations of which
the Employer is a member) which is readily tradeable on an established
securities market. If there is no common stock which meets the foregoing
requirement, the term "Common Stock" means common stock issued by the Employer
(or by a corporation which is a member of the same controlled group) having a
combination of voting power and dividend rights equal to or in excess of: (A)
that class of common stock of the Employer (or of any other such corporation)
having the greatest voting power, and (B) that class of stock of the Employer
(or of any other such corporation) having the greatest dividend rights.
Preferred Stock shall be deemed to be "Company Stock" if such stock is
convertible at any time into stock which constitutes "Company Stock" hereunder
and if such conversion is at a conversion price which (as of the date of the
acquisition by the Trust) is reasonable.
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1.10 "COMPANY STOCK ACCOUNT" means the account of a Participant which is
credited with the shares of Company Stock purchased and paid for by the Trust
Fund or contributed to the Trust Fund.
1.11 "COMPENSATION" with respect to any Participant means such
Participant's "415 Compensation" paid during a Plan Year. The amount of
Compensation with respect to any Participant shall include Compensation for the
entire twelve month period ending on the last day of such Plan Year, except that
Compensation shall be recognized only for that portion of the Plan Year during
which an Employee was a Participant in the Plan. Amounts contributed pursuant to
a salary reduction agreement that are not includable in the gross income of the
Participant under Code Sections 125, 402(e)(3), 402(h), 403(b) or 457, and
Employee contributions described in Code Section 414(h)(2) that are treated as
Employer contributions shall also be considered as Compensation. Compensation
shall not include tuition assistance, special awards or any amounts received or
to be received under the TPC Cash Bonus Plan or the TPC Bonus and Profit Sharing
Plan.
In addition to other applicable limitations set forth in the Plan, and
notwithstanding any other provision of the Plan to the contrary, the annual
Compensation of each Employee taken into account under the Plan shall not exceed
the "OBRA '93 Annual Compensation Limit." The "OBRA '93 Annual Compensation
Limit" is $150,000, as adjusted for increases in the cost of living in
accordance with Code Section 401(a)(17)(B). The cost of living adjustment in
effect for a calendar year applies to any period, not exceeding 12 months, over
which Compensation is determined ("Determination Period") beginning in such
calendar year. If a Determination Period consists of fewer than 12 months, the
"OBRA '93 Annual Compensation Limit" will be multiplied by a fraction, the
numerator of which is the number of months in the Determination Period, and the
denominator of which is 12.
Any reference in this Plan to the limitation under Code Section 401(a)(17)
shall mean the "OBRA '93 Annual Compensation Limit" set forth in this Section.
If Compensation for any prior Determination Period is taken into account
in determining a Participant's benefits accruing in the current Plan Year, the
Compensation for that prior Determination Period is subject to the "OBRA '93
Annual Compensation Limit" in effect for that prior Determination Period. For
this purpose, for Determination Periods beginning before the first day of the
first Plan Year beginning on or after January 1, 1994, the "OBRA '93 Annual
Compensation Limit" is $150,000.
For a Participant's initial year of participation, Compensation shall be
recognized for the entire Plan Year.
1.12 "CURRENT OBLIGATIONS" means Trust obligations arising from extension
of credit to the Trust and payable in cash within (1) year from the date an
Employer contribution is due. Trust obligations shall include the liability for
payment of taxes imposed by Code Section 2001 which liability is incurred
pursuant to Code Section 2210(b).
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1.13 "EFFECTIVE DATE" means July 1, 1996.
1.14 "ELIGIBLE EMPLOYEE" means any Employee who is not a Leased Employee
and who has satisfied the provisions of Section 3.1.
Employees whose employment is governed by the terms of a collective
bargaining agreement between Employee representatives (within the meaning of
Code Section 7701(a)(46)) and the Employer under which retirement benefits were
the subject of good faith bargaining between the parties, unless such agreement
expressly provides for such coverage in this Plan, will not be eligible to
participate in this Plan.
1.15 "EMPLOYEE" means any person who is employed by the Employer, but
excludes any person who is employed as an independent contractor. Employee shall
include Leased Employees.
1.16 "EMPLOYER" means TPC Finance Corp. and any Participating Employer (as
defined in Section 11.1) which shall adopt this Plan; and any successor which
shall maintain this Plan, including, but not limited to, Texas Petrochemicals
Corporation after the consummation of the Merger.
1.17 "EMPLOYER CONTRIBUTIONS" means the Employer's contributions to the
Plan pursuant to Section 4.1(a).
1.18 "ESOP" means an employee stock ownership plan that meets the
requirements of Code Section 4975(e)(7) and Regulation 54.4975-11. This Plan is
intended to be an ESOP.
1.19 "EXEMPT LOAN" means a loan made to the Plan by a disqualified person
or a loan to the Plan which is guaranteed by a disqualified person and which
satisfies the requirements of Section 2550.408b-3 of the Department of Labor
Regulations, Section 54.4975-7(b) of the Treasury regulations and Section 5.4
hereof.
1.20 "FAMILY MEMBER" means an individual described in Code Section
414(q)(6)(B).
1.21 "FIDUCIARY" means any person who (a) exercises any discretionary
authority or discretionary control respecting management of the Plan or
exercises any authority or control respecting management or disposition of its
assets, (b) renders investment advice for a fee or other compensation, direct or
indirect, with respect to any monies or other property of the Plan or has any
authority or responsibility to do so, or (c) has any discretionary authority or
discretionary responsibility in the administration of the Plan.
1.22 "FISCAL YEAR" means the Employer's accounting year of 12 months
commencing on July 1 of each year and ending the following June 30.
1.23 "FORFEITURE" means that portion of a Participant's Account that is
not Vested in accordance with the provisions of Section 7.4, on account of the
Participant's termination of employment before full vesting.
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1.24 "FORMER PARTICIPANT" means a person who has been a Participant, but
who has ceased to be a Participant for any reason. For purposes of Section 1.28,
a "Former Participant" shall be treated as a Highly Compensated Participant if
such "Former Participant" was a Highly Compensated Participant when he separated
from service with the Employer or was a Highly Compensated Participant at any
time after attaining age 55.
1.25 "415 COMPENSATION" means compensation as defined in Section 4.4(e).
1.26 "HIGHLY COMPENSATED EMPLOYEE" means any Employee or former Employee
who is a highly compensated employee as defined in Code Section 414(q) and the
Regulations thereunder. Generally, any Employee or former Employee is considered
a Highly Compensated Employee if such Employee or former Employee performed
services for the Employer during the "determination year" and is one or more of
the following groups:
(a) Employees who at any time during the "determination year" or
"look-back year" were "five percent owners" as defined in Section 1.30(c).
(b) Employees who received "415 Compensation" during the "look-back
year" from the Employer in excess of $75,000. In determining whether an
individual has "415 Compensation" of more than $75,000, "415 Compensation"
from each employer required to be aggregated under Code Sections 414(b),
(c), (m) and (o) shall be taken into account.
(c) Employees who received "415 Compensation" during the "look-back
year" from the Employer in excess of $50,000 and were in the top-paid
group of Employees for the Plan Year. An Employee is in the top-paid group
of Employees for any Plan Year if such Employee is in the group consisting
of the top twenty (20%) percent of the Employees when ranked on the basis
of "415 Compensation" paid during the Plan Year. In determining whether an
individual has "415 Compensation" of more than $50,000, "415 Compensation"
from each employer required to be aggregated under Code Section 414(b),
(c), (m) and (o) shall be taken into account.
(d) Employees who during the "look-back year" were officers as
defined in Section 1.30(a) and received "415 Compensation" during the
"look-back year" from the Employer greater than 50 percent of the limit in
effect under Code Section 415(b)(1)(A) for any such Plan Year. The number
of officers shall be limited to the lesser of (i) 50 employees; or (ii)
the greater of 3 employees or 10 percent of all employees. For the purpose
of determining the number of officers, the following Employees shall be
excluded:
(1) Employees with less than six (6) months of service;
(2) Employees who normally work less than 17 1/2 hours per
week;
(3) Employees who normally work less than six (6) months
during a year; and
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(4) Employees who have not yet attained age 21.
However, such Employees shall still be considered for the purpose of
identifying the particular Employees who are officers. If the Employer
does not have at least one officer whose annual "415 Compensation" is in
excess of 50 percent of the Code Section 415(b)(1)(A) limit, then the
highest paid officer of the Employer will be treated as a Highly
Compensated Employee.
(e) Employees who are in the group consisting of the 100 Employees
paid the greatest "415 Compensation" during the "determination year" and
are also described in (b), (c) or (d) above when these paragraphs are
modified to substitute "determination year" for "look-back year."
The "look-back year" shall be the calendar year ending with or within the
Plan Year for which testing is being performed, and the "determination year" (if
applicable) shall be the period of time, if any, that extends beyond the
"look-back year" and ends on the last day of the Plan Year for which testing is
being performed (the "lag period"). If the "lag period" is less than twelve
months long, the threshold amounts specified in (b), (c), and (d) above shall be
prorated based upon the number of months in the "lag period."
For purposes of this Section, the determination of "415 Compensation"
shall be based only on "415 Compensation" which is actually paid and shall be
made by including amounts which are contributed by the Employer pursuant to a
salary reduction agreement and which are not includible in the gross income of
the Participant under Code Sections 125, 402(e)(3), 402(h), 403(b) or 457, and
Employee contributions described in Code Section 414(h)(2) that are treated as
Employer contributions. Additionally, the dollar threshold amounts specified in
(b) and (c) above shall be adjusted at such time and in such manner as is
provided in Regulations. In the case of such an adjustment, the dollar limits
which shall be applied are those for the calendar year in which the
"determination year" or "look-back year" begins.
In determining who is a Highly Compensated Employee, Employees who are
non-resident aliens and who received no earned income (within the meaning of
Code Section 911(d)(2)) from the Employer constituting United States source
income within the meaning of Code Section 861(a)(3) shall not be treated as
Employees. Additionally, all Affiliated Employers shall be taken into account as
a single employer and Leased Employees within the meaning of Code Sections
414(n)(2) and 414(o)(2) shall be considered Employees unless such Leased
Employees are covered by a plan described in Code Section 414(n)(5) and are not
covered in any qualified plan maintained by the Employer. The exclusion of
Leased Employees for this purpose shall be applied on a uniform and consistent
basis for all of the Employer's retirement plans
1.27 "HIGHLY COMPENSATED PARTICIPANT" means any Highly Compensated
Employee who is eligible to participate in the Plan.
1.28 "HOUR OF SERVICE" means (1) each hour for which an Employee is
directly or indirectly compensated or entitled to compensation by the Employer
for the performance of duties during the
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applicable computation period; (2) each hour for which an Employee is directly
or indirectly compensated or entitled to compensation by the Employer
(irrespective of whether the employment relationship has terminated) for reasons
other than performance of duties (such as vacation, holidays, sickness, jury
duty, disability, lay-off, military duty, or leave of absence) during the
applicable computation period; and (3) each hour for which back pay is awarded
or agreed to by the Employer without regard to mitigation of damages.
Notwithstanding the above, (i) no more than 501 Hours of Service are
required to be credited to an Employee on account of any single continuous
period during which the Employee performs no duties (whether or not such period
occurs in a single computation period); (ii) an hour for which an Employee is
directly or indirectly paid, or entitled to payment, on account of a period
during which no duties are performed is not required to be credited to the
Employee if such payment is made or due under a plan maintained solely for the
purpose of complying with applicable worker's compensation, or unemployment
compensation or disability insurance laws; and (iii) Hours of Service are not
required to be credited for a payment which solely reimburses an Employee for
medical or medically related expenses incurred by the Employee.
For purposes of this Section, a payment shall be deemed to be made by or
due from the Employer regardless of whether such payment is made by or due from
the Employer directly, or indirectly through, among others, a trust fund, or
insurer, to which the Employer contributes or pays premiums and regardless of
whether contributions made or due to the trust fund, insurer, or other entity
are for the benefit of particular Employees or are on behalf of a group of
Employees in the aggregate.
An Hour of Service must be counted for the purpose of determining a Year
of Service, a year of participation for purposes of accrued benefits, a 1-Year
Break in Service, and employment commencement date (or reemployment commencement
date). The provisions of Department of Labor regulations 2530.200b-2(b) and (c)
are incorporated herein by reference.
1.29 "INVESTMENT MANAGER" means an entity that (a) has the power to
manage, acquire, or dispose of Plan assets and (b) acknowledges fiduciary
responsibility to the Plan in writing. Such entity must be a person, firm, or
corporation registered as an investment adviser under the Investment Advisers
Act of 1940, a bank, or an insurance company.
1.30 "KEY EMPLOYEE" means an Employee as defined in Code Section 416(i)
and the Regulations thereunder. Generally, any Employee or Former Employee (as
well as each of his Beneficiaries) is considered a Key Employee if he, at any
time during the Plan Year or any of the preceding four (4) Plan Years, has been
included in one of the following categories:
(a) an officer of the Employer (as that term is defined within the
meaning of the Regulations under Code Section 416) having annual "415
Compensation" greater than 50 percent of the amount in effect under Code
Section 415(b)(1)(A) for any such Plan Year;
(b) one of the ten Employees having annual "415 Compensation" from
the Employer for a Plan Year greater than the dollar limitation in effect
under Code Section
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415(c)(1)(A) for the calendar year in which such Plan Year ends and owning
(or considered as owning within the meaning of Code Section 318) both more
than one-half percent interest and the largest interests in the Employer;
(c) a "five percent owner" of the Employer. "Five percent owner"
means any person who owns (or is considered as owning within the meaning
of Code Section 318) more than five percent (5%) of the outstanding stock
of the Employer or stock possessing more than five percent (5%) of the
total combined voting power of all stock of the Employer, or, in the case
of an unincorporated business, any person who owns more than five percent
(5%) of the capital or profits interest in the Employer. In determining
percentage ownership here under, Employers that would otherwise be
aggregated under Code Sections 414(b), (c), (m) and (o) shall be treated
as separate employers; or
(d) a "one percent owner" of the Employer having an annual "415
Compensation" from the Employer of more than $150,000. "One percent owner"
means any person who owns (or is considered as owning within the meaning
of Code Section 318) more than one percent (1%) of the outstanding stock
of the Employer or stock possessing more than one percent (1%) of the
total combined voting power of all stock of the Employer, or, in the case
of an unincorporated business, any person who owns more than one percent
(1%) of the capital or profits interest in the Employer. In determining
percentage ownership hereunder, Employers that would otherwise be
aggregated under Code Sections 414(b), (c), (m) and (o) shall be treated
as separate Employers. However, in determining whether an individual has
"415 Compensation" of more than $150,000, "415 Compensation" from each
employer required to be aggregated under Code Sections 414(b), (c), (m)
and (o) shall be taken into account.
For purposes of this Section, the determination of "415 Compensation"
shall be based only on "415 Compensation" which is actually paid and shall be
made by including amounts which are contributed by the Employer pursuant to a
salary reduction agreement and which are not includible in the gross income of
the Participant under Code Sections 125, 402(e)(3), 402(h), 403(b) or 457, and
Employee contributions described in Code Section 414(h)(2) that are treated as
Employer contributions.
1.31 "LATE RETIREMENT DATE" means the first day of the month coinciding
with or next following a Participant's actual retirement date after having
reached his Normal Retirement Date.
1.32 "LEASED EMPLOYEE" means any Employee who would be within the meaning
of Code Section 414(n)(2) unless such Leased Employee is covered by a plan
described in Code Section 414(n)(5) and such Leased Employee does not constitute
more than 20% of the recipient's nonhighly compensated work force.
1.33 "MERGER" means the consummation of the merger of Texas Olefins
Company and TPC Finance Corp. with Texas Petrochemicals Corporation.
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1.34 "NON-HIGHLY COMPENSATED EMPLOYEE" means any Employee or former
Employee who is not a Highly Compensated Employee nor a Family Member.
1.35 "NON-HIGHLY COMPENSATED PARTICIPANT" means any Participant or Former
Participant who is neither a Highly Compensated Participant nor a Family Member.
1.36 "NON-KEY EMPLOYEE" means any Employee or former Employee (and his
Beneficiaries) who is not a Key Employee.
1.37 "NORMAL RETIREMENT DATE" means the first day of the month coinciding
with or next following the Participant's Normal Retirement Age (65th birthday).
A Participant shall become fully Vested in his Participant's Account upon
attaining his Normal Retirement Age.
1.38 "1-YEAR BREAK IN SERVICE" means the applicable computation period of
12 consecutive months during which an Employee fails to complete more than 500
Hours of Service. Further, solely for the purpose of determining whether a
Participant has incurred a 1-Year Break in Service, Hours of Service shall be
recognized for "authorized leaves of absence" and "maternity and paternity
leaves of absence."
An Employee shall not be deemed to have incurred a 1-Year Break in Service
if he completes an Hour of Service within 12 months following the last day of
the month during which his employment terminated.
"Authorized leave of absence" means an unpaid, temporary cessation from
active employment with the Employer pursuant to an established nondiscriminatory
policy, whether occasioned by illness, military service, or any other reason.
A "maternity or paternity leave of absence" means an absence from work for
any period by reason of the Employee's pregnancy, birth of the Employee's child,
placement of a child with the Employee in connection with the adoption of such
child, or any absence for the purpose of caring for such child for a period
immediately following such birth or placement. For this purpose, Hours of
Service shall be credited for the computation period in which the absence from
work begins, only if credit therefore is necessary to prevent the Employees from
incurring a 1-Year Break in Service, or, in any other case, in the immediately
following computation period.
1.39 "OTHER INVESTMENTS ACCOUNT" means the account of a Participant which
is credited with his share of the net gain (or loss) of the Plan, Forfeitures
and Employer Contributions in other than Company Stock and which is debited with
payments made to pay for Company Stock. No Company Stock shall be allocated to
or held in the Other Investments Account.
1.40 "PARTICIPANT" means any Eligible Employee who participants in the
Plan pursuant to Section 3.1.
1.41 "PARTICIPANT'S ACCOUNTS" means the accounts established and
maintained by the Administrator for each Participant with respect to his total
interest in the Plan and Trust resulting
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from Employer Contributions, which shall include but not be limited to the
Company Stock Account, the Other Investment Account and the Directed Investment
Account.
1.42 "PLAN" means this instrument, including all amendments thereto.
1.43 "PLAN YEAR" means the Plan's accounting year of twelve (12) months
commencing on July 1of each year and ending the following June 30.
1.44 "REGULATION" means the Income Tax Regulations as promulgated by the
Secretary of the Treasury or his delegate, and as amended from time to time.
1.45 "RETIRED PARTICIPANT" means a person who has been a Participant, but
who has become entitled to retirement benefits under the Plan.
1.46 "TERMINATED PARTICIPANT" means a person who has been a Participant,
but whose employment has been terminated other than by death, Total and
Permanent Disability or retirement.
1.47 "TOP HEAVY PLAN" means a plan described in Article XII.
1.48 "TOP HEAVY PLAN YEAR" means a Plan Year during which the Plan is a
Top Heavy Plan.
1.49 "TOTAL AND PERMANENT DISABILITY" means the complete inability to work
in any position for which the Employee is reasonably fit by education, training
or experience, which condition continues for an extended period of time.
1.50 "TRUST" means the trust established under the Trust Agreement to hold
and invest contributions made under the Plan and from which the Plan benefits
will be distributed.
1.51 "TRUST AGREEMENT" means the agreement entered into between the
Employer and the Trustee establishing a trust to hold and invest contributions
made under the Plan and from which benefits will be distributed.
1.52 "TRUST FUND" means the assets of the Plan and Trust as the same shall
exist from time to time.
1.53 "TRUSTEE" means the person or entity named as trustee herein or in
any separate trust forming a part of this Plan, and any successors.
1.54 "UNALLOCATED COMPANY STOCK SUSPENSE ACCOUNT" means an account
containing Company Stock acquired with the proceeds of an Exempt Loan and which
has not been released from such account and allocated to the Participants'
Company Stock Accounts.
1.55 "VALUATION DATE" means the last day of the Plan Year or any other
date as determined by the Administrator.
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1.56 "VESTED" means the portion of a Participant's Account that is
nonforfeitable.
1.57 "YEAR OF SERVICE" means the computation period of twelve (12)
consecutive months, herein set forth, during which an Employee has at least
1,000 Hours of Service.
(a) for purposes of determining an Employee's eligibility to
participate in the Plan, the computation period shall be the twelve
consecutive month period beginning on the date the Employee first performs
an Hour of Service for the Employer.
(b) for purposes of determining a Participant's vested percentage
under Section 7.4, the computation period shall be the Plan Year.
Notwithstanding the foregoing, for any short Plan Year, the determination
of whether an Employee has completed a Year of Service shall be made in
accordance with Department of Labor regulation 2530.203-2(c). No service
with the Employer prior to the Effective Date shall be recognized for the
purpose of calculating a Participant's vested percentage under Section
7.4.
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ARTICLE II
ADMINISTRATION
2.1 ASSIGNMENT AND DESIGNATION OF ADMINISTRATIVE AUTHORITY
(a) The Employer shall appoint one or more Administrators. Any
person, including, but not limited to, the Employees of the Employer,
shall be eligible to serve as an Administrator. Any person so appointed
shall signify his acceptance by filing written acceptance with the
Employer. An Administrator may resign by delivering his written
resignation to the Employer or be removed by the Employer by delivery of
written notice of removal, to take effect at a date specified therein, or
upon delivery to the Administrator if no date is specified.
(b) The Employer, upon the resignation or removal of an
Administrator, shall promptly designate in writing a successor to this
position. If the Employer does not appoint an Administrator, the Employer
will function as the Administrator.
(c) The Employer shall be empowered to appoint and remove the
Administrator from time to time as it deems necessary for the proper
administration of the Plan to assure that the Plan is being operated for
the exclusive benefit of the Participants and their Beneficiaries in
accordance with the terms of the Plan, the Code, and the Act.
(d) The Employer shall periodically review the performance of any
the Administrator or other person to whom duties have been delegated or
allocated by it under the provisions of this Plan or pursuant to
procedures established hereunder. This requirement may be satisfied by
formal periodic review by the Employer or by a qualified person
specifically designated by the Employer, through day-to-day conduct and
evaluation, or through any other appropriate method.
(e) The Employer will furnish Plan Fiduciaries and Participants with
notices and information statements when voting rights must be exercised
pursuant to Section 8.2.
2.2 ALLOCATION AND DELEGATION OF RESPONSIBILITIES
If more than one person is appointed as Administrator, the Employer may
designate the responsibilities of each Administrator as may be specified by the
Employer and accepted in writing by each Administrator. In the event that no
such delegation is made by the Employer, the Ad ministrators may allocate the
responsibilities among themselves, in which event the Administrators shall
notify the Employer and the Trustee in writing of such action and specify the
responsibilities of each Administrator. The Trustee thereafter shall accept and
rely upon any documents executed by the appropriate Administrator until such
time as the Employer or the Administrators file with the Trustee a written
revocation of such designation.
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2.3 POWERS AND DUTIES OF THE ADMINISTRATOR
The primary responsibility of the Administrator is to administer the Plan
for the exclusive benefit of the Participants and their Beneficiaries, subject
to the specific terms of the Plan. The Administrator shall administer the Plan
in accordance with its terms and shall have the power to determine all questions
arising in connection with the administration, interpretation, and application
of the Plan. Any such determination by the Administrator shall be conclusive and
binding upon all persons. The Administrator may establish procedures, correct
any defect, supply any information, or reconcile any inconsistency in such
manner and to such extent as shall be deemed necessary or advisable to carry out
the purpose of the Plan; provided, however, that any procedure, discretionary
act, interpretation or construction shall be done in a nondiscriminatory manner
based upon uniform principles consistently applied and shall be consistent with
the intent that the Plan shall continue to be deemed a qualified plan under the
terms of Code Section 401(a), and shall comply with the terms of the Act and all
regulations issued pursuant thereto. The Administrator shall have all powers
necessary or appropriate to accomplish his duties under this Plan.
The Administrator shall be charged with the duties of the general
administration of the Plan, including, but not limited to, the following:
(a) to determine all questions relating to the eligibility of
Employees to participate or remain a Participant hereunder;
(b) to compute, certify, and direct the Trustee with respect to the
amount and the kind of benefits to which any Participant shall be entitled
hereunder;
(c) to authorize and direct the Trustee with respect to all
disbursements from the Trust;
(d) to maintain all necessary records for the administration of the
Plan;
(e) to interpret the provisions of the Plan and to make and publish
such rules for regulation of the Plan as are consistent with the terms
hereof;
(f) to determine the size and type of any contract to be purchased
from any insurer, and to designate the insurer from which such contract
shall be purchased;
(g) to compute and certify to the Employer from time to time the
sums of money necessary or desirable to be contributed to the Trust Fund;
(h) to establish a "funding policy and method", i.e., it shall
consult with the Employer, and it shall determine whether the Plan has a
short range need for liquidity (e.g., to pay benefits) or whether
liquidity is a long range goal and investment growth (and stability of
same) is a more current need, or shall appoint a qualified person to do
so. Such "funding policy and method" shall be consistent with the
objectives of this Plan and with the requirements of Title I of the Act;
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(i) to establish and communicate to Participants a procedure and
method to insure that each Participant will vote Company Stock allocated
to such Participant's Company Stock Account pursuant to Section 8.2;
(j) to enter into a written agreement with regard to the payment of
federal estate tax pursuant to Code Section 2210(b);
(k) to assist any Participant regarding his rights, benefits, or
elections available under the Plan.
2.4 RECORDS AND REPORTS
The Administrator shall keep a record of all actions taken and shall keep
all other books of account, records, and other data that may be necessary for
proper administration of the Plan and shall be responsible for supplying all
information and reports to the Internal Revenue Service, Department of Labor,
Participants, Beneficiaries and others as required by law.
2.5 AUDIT
(a) If an audit of the Plan's records shall be required by the Act
and the regulations thereunder for any Plan Year, the Administrator shall
appoint an independent qualified public accountant for that purpose. Such
accountant shall, after an audit of the books and records of the Plan in
accordance with generally accepted auditing standards, within a reasonable
period after the close of the Plan Year, furnish to the Administrator and
the Trustee a report of his audit setting forth his opinion as to whether
each of the following statements, schedules or lists, or any others that
are required by Section 103 of the Act or the Secretary of Labor to be
filed with the Plan's annual report, are presented fairly and in
conformity with generally accepted accounting principles applied
consistently:
(1) statement of the assets and liabilities of the Plan;
(2) statement of changes in net assets available to the
Plan;
(3) statement of receipts and disbursements, a schedule of all
assets held for investment purposes, a schedule of all loans or
fixed income obligations in default at the close of the Plan Year;
(4) a list of all leases in default or uncollectible during
the Plan Year;
(5) the most recent annual statement of assets and liabilities
of any bank common or collective trust fund in which Plan assets are
invested or such information regarding separate accounts or trusts
with a bank or insurance company as the Administrator deems
necessary; and
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(6) a schedule of each transaction or series of transactions
involving an amount in excess of five percent (5%) of Plan assets.
All auditing and accounting fees shall be an expense of and may, at
the election of the Administrator, be paid from the Trust Fund.
(b) If some or all of the information necessary to enable the
Administrator to comply with Section 103 of the Act is maintained by a
bank, insurance company, or similar institution, regulated and supervised
and subject to periodic examination by a state or federal agency, it shall
transmit and certify the accuracy of that information to the Administrator
as provided in Section 103(b) of the Act within one hundred twenty (120)
days after the end of the Plan Year or such other date as may be
prescribed under regulations of the Secretary of Labor.
2.6 APPOINTMENT OF ADVISORS
The Administrator may appoint counsel, specialists, advisors, and other
persons as the Administrator deems necessary or desirable in connection with the
administration of this Plan.
2.7 INFORMATION FROM EMPLOYER
To enable the Administrator to perform his functions, the Employer shall
supply full and timely information to the Administrator on all matters relating
to the Compensation of all Participants, their Hours of Service, their Years of
Service, their retirement, death, disability, or termination of employment, and
such other pertinent facts as the Administrator may require; and the
Administrator shall advise the Trustee of such of the foregoing facts as may be
pertinent to the Trustee's duties under the Plan. The Administrator may rely
upon such information as is supplied by the Employer and shall have no duty or
responsibility to verify such information.
2.8 PAYMENT OF EXPENSES
All expenses of administration may be paid out of the Trust Fund unless
paid by the Employer. Such expenses shall include any expenses incident to the
functioning of the Administrator, including, but not limited to, fees of
accountants, counsel, the Trustee and other specialists and their agents, and
other costs of administering the Plan and/or the Trust. Until paid, the expenses
shall constitute a liability of the Trust Fund. However, the Employer may
reimburse the Trust Fund for any administration expense incurred. Any
administration expense paid to the Trust Fund as a reimbursement shall not be
considered an Employer contribution.
2.9 ACTIONS BY ADMINISTRATOR
The Administrator shall hold meetings upon such notice and at such time
and places 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 Administrator duly appointed shall constitute a quorum for the transaction
of business. All resolutions or other actions taken by the Administrator at any
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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
Administrators.
2.10 CLAIMS PROCEDURE
Claims for benefits under the Plan may be filed with the Administrator on
forms supplied by the Employer. Written notice of the disposition of a claim
shall be furnished to the claimant within 90 days after the application is
filed. In the event the claim is denied, the reasons for the denial shall be
specifically set forth in the notice in language calculated to be understood by
the claimant, pertinent provisions of the Plan shall be cited, and, where
appropriate, an explanation as to how the claimant can perfect the claim will be
provided. In addition, the claimant shall be furnished with an explanation of
the Plan's claims review procedure.
2.11 CLAIMS REVIEW PROCEDURE
Any Employee, Former Employee, or Beneficiary of either, who has been
denied a benefit by a decision of the Administrator pursuant to Section 2.10
shall be entitled to request the Administrator to give further consideration to
his claim by filing with the Administrator (on a form which may be obtained from
the Administrator) a request for a hearing. Such request, together with a
written statement of the reasons why the claimant believes his claim should be
allowed, shall be filed with the Administrator no later than 60 days after
receipt of the written notification provided for in Section 2.10. The
Administrator shall then conduct a hearing within the next 60 days, at which the
claimant may be represented by an attorney or any other representative of his
choosing and at which the claimant shall have an opportunity to submit written
and oral evidence and arguments in support of his claim. At the hearing (or
prior thereto upon 5 business days written notice to the Administrator) the
claimant or his representative shall have an opportunity to review all documents
in the possession of the Administrator which are pertinent to the claim at issue
and its disallowance. Either the claimant or the Administrator may cause a court
reporter to attend the hearing and record the proceedings. In such event, a
complete written transcript of the proceedings shall be furnished to both
parties by the court reporter. The full expense of any such court reporter and
such transcripts shall be borne by the party causing the court reporter to
attend the hearing. A final decision as to the allowance of the claim shall be
made by the Administrator within 60 days of receipt of the appeal (unless there
has been an extension of 60 days due to special circumstances, provided the
delay and the special circumstances occasioning it are communicated to the
claimant within the 60 day period). Such communication shall be written in a
manner calculated to be understood by the claimant and shall include specific
reasons for the decision and specific references to the pertinent Plan
provisions on which the decision is based.
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ARTICLE III
ELIGIBILITY
3.1 CONDITIONS OF ELIGIBILITY
Any Eligible Employee who performs an Hour of Service on the Acquisition
Date and has attained the age of twenty one (21) years shall participate in the
Plan commencing on the Acquisition Date. Any Eligible Employee who begins
employment with the Employer on or after the Acquisition Date and prior to
October 1, 1996 and has attained the age of twenty one (21) years shall
participate in the Plan commencing on such Eligible Employee's first day of
employment with the Employer. All other Eligible Employees shall become
Participants as of the January 1 or July 1 coincident with or next following
their completion of one (1) Year of Service or their attaining the age of twenty
one (21) years, whichever is later.
3.2 EFFECT OF PARTICIPATION UPON THE ACCEPTANCE OF ANY BENEFITS
UNDER THIS PLAN
An Eligible Employee shall automatically be bound by the terms and
conditions of the Plan and all amendments hereto.
3.3 DETERMINATION OF ELIGIBILITY
The Administrator shall determine the eligibility of each Employee for
participation in the Plan based upon information furnished by the Employer. Such
determination shall be conclusive and binding upon all persons, as long as the
same is made pursuant to the Plan and the Act. Such determination shall be
subject to review as provided for in Section 2.8 and 2.9.
3.4 TERMINATION OF ELIGIBILITY
In the event a Participant shall go from a classification of an Eligible
Employee to a noneligible Employee, such Former Participant shall continue to
vest in his interest in the Plan for each Year of Service completed while a
noneligible Employee, until such time as his Participant's Account shall be
forfeited or distributed pursuant to the terms of the Plan. Additionally, his
interest in the Plan shall continue to share in the earnings of the Trust Fund.
3.5 OMISSION OF ELIGIBLE EMPLOYEE
If, in any Fiscal Year, any Employee who should be included as a
Participant in the Plan is erroneously omitted and discovery of such omission is
not made until after a contribution by his Employer for the year has been made,
the Employer shall make a subsequent contribution with respect to the omitted
Employee in the amount which the Employer would have contributed with respect to
him had he not been omitted. Such contribution shall be made regardless of
whether or not it is deductible in whole or in part in any taxable year under
applicable provisions of the Code.
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3.6 INCLUSION OF INELIGIBLE EMPLOYEE
If, in any Fiscal Year, any person who should not have been included as a
Participant in the Plan is erroneously included and discovery of such incorrect
inclusion is not made until after a contribution for the year has been made, the
Employer shall not be entitled to recover the contribution made with respect to
the ineligible person regardless of whether or not a deduction is allowable with
respect to such contribution. In such event, the amount contributed with respect
to the ineligible person shall constitute a Forfeiture for the Fiscal Year in
which the discovery is made.
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ARTICLE IV
CONTRIBUTION AND ALLOCATION
4.1 EMPLOYER'S CONTRIBUTION
(a) For each Plan Year, the Employer shall contribute to the Plan an
amount as may be determined by its Board of Directors or its delegatees.
(b) The Employer Contribution for any Plan Year shall not exceed the
maximum amount allowable as a deduction to the Employer under the
provisions of Code Section 404.
(c) However, to the extent necessary to provide the top heavy
minimum allocations, the Employer shall make a contribution even if it
exceeds the amount which is deductible under Code Section 404.
4.2 TIME OF PAYMENT OF EMPLOYER'S CONTRIBUTION
Employer Contributions will be paid in cash, Company Stock or other
property as the Employer's Board of Directors or its delegatees may from time to
time determine. Company Stock and other property will be valued at their then
fair market value. The Employer Contribution will be paid to the Plan on or
before the date required to make such contribution a deduction on the Employer's
federal income tax return for the year.
Notwithstanding the above, to the extent that the Plan has Current
Obligations, the Employer Contribution will be paid to the Plan in cash.
4.3 ALLOCATION OF CONTRIBUTION, FORFEITURES AND EARNINGS
(a) The Administrator shall establish and maintain an account in the
name of each Participant to which the Administrator shall credit as of
each Anniversary Date all amounts allocated to each such Participant as
set forth herein. However, the Administrator may separately account for
that portion of each Participant's Account attributable to Top Heavy Plan
Years.
(b) The Employer shall provide the Administrator with all
information required by the Administrator to make a proper allocation of
the Employer Contribution for each Plan Year. Within 45 days after the
date of receipt by the Administrator for such information, the
Administrator shall, with respect to the Employer Contribution pursuant to
4.1(a), allocate such Contribution to each Participant's Account in the
same proportion that each such Participant's Compensation for the year
bears to the total Compensation of all Participants for such year.
A Participant who is not an Employee on the last day of the Plan
Year shall not share in the Employer Contribution for that year, unless
required pursuant to Section 4.3(i) or
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4.3(n). A Participant who performs less than a Year of Service shall not
share in the Employer Contribution for that year, unless required pursuant
to Section 4.3(i) or 4.3(n).
(c) The Company Stock Account of each Participant shall be credited
as of each Anniversary Date with Forfeitures of Company Stock and his
allocable share of Company Stock (including fractional shares) purchased
and paid for by the Plan or contributed in kind by the Employer. Stock
dividends on Company Stock held in his Company Stock Account shall be
credited to his Company Stock Account when paid. Cash dividends on Company
Stock held in his Company Stock Account shall be used to repay an Exempt
Loan, so long as one exists and may then, in the sole discretion of the
Administrator, be credited to his Participants Other Investments Account.
Company Stock acquired by the Plan with the proceeds of an Exempt
Loan shall only be allocated to each Participant's Company Stock Account
upon release from the Unallocated Company Stock Suspense Account as
provided in Section 4.3(g) herein. Company Stock acquired with the
proceeds of an Exempt Loan shall be an asset of the Trust Fund and
maintained in the Unallocated Company Stock Suspense Account.
Company Stock received by the Trust during a Plan Year with respect
to a contribution by the Employer for the preceding Plan Year shall be
allocated to the accounts of Participants as of the Anniversary Date at
the end of such preceding Plan Year.
(d) As of each Anniversary Date or as of the Valuation Date, before
allocation of Employer Contributions and Forfeitures, any earnings or
losses (net appreciation or net depreciation) of the Trust Fund shall be
allocated in the same proportion that each Participant's and Former
Participant's Other Investment Accounts (other than each Participant's
Company Stock Account) bear to the total of all Participants' and Former
Participants' Other Investment Accounts (other than participants' Company
Stock Accounts) as of such date. Cash dividends on Company Stock allocated
to each Participant's or Former Participant's Other Investment Accounts
after the first month of the Plan Year shall not share in any earnings or
losses of the Trust Fund for such year. Earnings or losses include the
increase (or decrease) in the fair market value of assets of the Trust
Fund (other than Company Stock in the participants' Company Stock
Accounts) since the preceding Anniversary Date.
Earnings or losses do not include the interest paid under any
installment contract for the purchase of Company Stock by the Trust Fund
or on any loan used by the Trust Fund to purchase Company Stock, nor does
it include income received by the Trust Fund with respect to Company Stock
acquired with the proceeds of an Exempt Loan to the extent such income is
used to repay the loan; all income received by the Trust Fund from Company
Stock acquired with the proceeds of an Exempt Loan shall be used to repay
such loan.
(e) The Administrator shall establish accounting procedures for the
purpose of making the allocations, valuations and adjustments to
Participants' Accounts provided for in this Section. Should the
Administrator determine that the strict application of its
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accounting procedures shall not result in an equitable and
nondiscriminatory allocation among the Participants' Accounts, it may
modify its procedures for the purpose of achieving an equitable and
nondiscriminatory allocation in accordance with the general concepts of
the Plan and the provisions of this Section, provided, however, that such
adjustments to achieve equity shall not reduce the Vested portion of a
Participant's Account.
(f) Separate accounts shall be maintained for all inactive
Participants who have a Vested interest in the Plan. Such separate
accounts shall not require a segregation of the Plan assets and no
Participant shall acquire any right to or interest in any specific asset
of the Trust as a result of the allocations provided for in the Plan. All
allocations shall be made as of the Anniversary Date referred to in this
Section.
(g) All Company Stock acquired by the Plan with the proceeds of an
Exempt Loan must be added to and maintained in the Unallocated Company
Stock Suspense Account. Such Company Stock shall be released and withdrawn
from that account as if all Company Stock in that account were encumbered.
For each Plan Year during the duration of the loan, the number of shares
of Company Stock released shall equal the number of encumbered shares held
immediately before release for the current Plan Year multiplied by a
fraction, the numerator of which is the amount of principal paid for the
Plan Year and the denominator of which is the sum of the numerator plus
the principal to be paid for all future Plan Years. As of each Anniversary
Date, the Plan must consistently allocate to each Participant's Account
pursuant to Section 4.3(b), non-monetary units (shares and fractional
shares of Company Stock) representing each Participant's interest in
assets withdrawn from the Unallocated Company Stock Suspense Account.
Income earned with respect to Company Stock in the Unallocated Company
Stock Suspense Account shall be used to repay the Exempt Loan or used to
purchase such Company Stock. Any income which is not so used must be
allocated as income of the Plan.
(h) As of each Anniversary Date any amounts which became Forfeitures
since the last Anniversary Date shall first be made available to reinstate
previously forfeited account balances of Former Participants, if any. The
remaining Forfeitures, if any, shall be allocated among the Participants'
Accounts in the same proportion that each such Participant's Compensation
for the year bears to the total Compensation of all Participants for the
year. In the event the allocation of Forfeitures provided herein shall
cause the "annual addition" (as defined in Section 4.4) to any
Participant's Account to exceed the amount allowable by the Code, the
excess shall be reallocated in accordance with Section 4.5. However, a
Participant who performs less than a Year of Service during any Plan Year
or who does not perform an Hour of Service on the last day of any Plan
Year shall not share in the Plan Forfeitures for that year, unless
required pursuant to Section 4.3(i).
(i) Minimum Allocations Required for Top Heavy Plan Years:
Notwithstanding the foregoing, for any Top Heavy Plan Year, the sum of the
Employer Contributions and Forfeitures allocated to the Participant's
Account for each Non-Key Employee shall be equal to at least three percent
(3%) of such Non-Key Employee's "415 Compensation" (reduced by
contributions and forfeitures, if any, allocated to each Non-Key Employee
in any defined
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contribution plan included with this plan in a Required Aggregation
Group). However, if (i) the sum of the Employer Contributions and
Forfeitures allocated to the Participant's Account of each Key Employee
for such Top Heavy Plan Year is less than three percent (3%) of each Key
Employee's "415 Compensation" and (ii) this Plan is not required to be
included in an Aggregation Group to enable a defined benefit plan to meet
the requirements of Code Section 401(a)(4) of 410, the sum of the Employer
Contributions and Forfeitures allocated to the Participant's Account of
each Non-Key Employee shall be equal to the largest percentage allocated
to the Participant's Account of any Key Employee.
Except, however, no such minimum allocation shall be required in
this Plan for any Non-Key Employee who participates in another defined
contribution plan subject to Code Section 412 providing such benefits
included with this Plan in a Required Aggregation Group.
(j) For purposes of the minimum allocations set forth above the
percentage allocated to the Participant's Account of any Key Employee
shall be equal to the ratio of the sum of the Employer Contributions and
Forfeitures allocated on behalf of such Key Employee divided by the "415
Compensation" for such Key Employee.
(k) For any Top Heavy Plan Year, the minimum allocations set forth
above shall be allocated to the Participant's Account of all Non-Key
Employees who are Participants and who are employed by the Employer on the
last day of the Plan Year, including Non-Key Employees who have (1) failed
to complete a Year of Service; (2) declined to make mandatory
contributions (if required) or elective deferrals to the Plan; and (3)
been excluded from participation because of their level of Compensation.
(l) In lieu of the above, in any Plan Year in which a Non-Key
Employee is a Participant in both this Plan and a defined benefit pension
plan included in a Required Aggregation Group which is top heavy, the
Employer shall not be required to provide such Non-Key Employee with both
the full separate defined benefit plan minimum benefit and the full
separate defined contribution plan minimum allocation.
Therefore, for any Plan Year when the Plan is a Top Heavy Plan,
Non-Key Employees who are participating in this Plan and a defined benefit
plan maintained by the Employer shall receive a minimum monthly accrued
benefit in the defined benefit plan equal to the product of (1)
one-twelfth (1/12th) of "415 Compensation" averaged over a five (5)
consecutive "limitation years" (or actual "limitation years" if less)
which produce the highest average and (2) the lesser of (i) two percent
(2%) multiplied by Years of Service when the plan is top heavy or (ii)
twenty percent (20%).
(m) For the purposes of this Section, "415 Compensation" shall be as
defined in Section 4.4(e), and shall be limited to $150,000 in all Plan
Years (unless adjusted in such manner as permitted under Code Section
401(a)(17).
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(n) Notwithstanding anything herein to the contrary, Participants
terminating for reasons of death, Total and Permanent Disability or
retirement shall share in the allocations of contributions and Forfeitures
provided for in this Section regardless of whether they completed a Year
of Service during the Plan Year.
(o) If a Former Participant is reemployed after five (5) consecutive
1-Year Breaks in Service, then separate accounts shall be maintained as
follows:
(1) one account for nonforfeitable benefits attributable to
pre-break
service; and
(2) one account representing his status in the Plan
attributable to post-
break service.
4.4 MAXIMUM ANNUAL ADDITIONS
(a) Notwithstanding the foregoing, the maximum "annual additions"
credited to a Participant's accounts for any "limitation year" shall equal
the lesser of: (1) $30,000 (or, if greater, one-fourth of the dollar
limitation in effect under Code Section 415(b)(1)(A)) or (2) twenty-five
percent (25%) of the Participant's "415 Compensation" for such "limitation
year".
(b) For purposes of applying the limitations of Code Section 415,
"annual additions" means the sum credited to a Participant's accounts for
any "limitation year" of (1) Employer Contributions, (2) Employee
contributions, (3) Forfeitures, (4) amounts allocated, after March 31,
1984, to an individual medical account, as defined in Code Section
415(l)(2) which is part of a pension or annuity plan maintained by the
Employer and (5) amounts derived from contributions paid or accrued after
December 31, 1985, in taxable years ending after such date, which are
attributable to post-retirement medical benefits allocated to the separate
account of a key employee (as defined in Code Section 419A(d)(3)) under a
welfare benefit plan (as defined in Code Section 419(e)) maintained by the
Employer. Except, however, the "415 Compensation" percentage limitation
referred to in paragraph (a)(2) above shall not apply to: (1) any
contribution for medical benefits (within the meaning of Code Section
419A(f)(2)) after separation from service which is otherwise treated as an
"annual addition", or (2) any amount otherwise treated as an "annual
addition" under Code Section 415(l)(1).
(c) For purposes of applying the limitations of Code Section 415,
the transfer of funds from one qualified plan to another is not an "annual
addition." In addition, the following are not Employee contributions for
the purposes of Section 4.4(b)(2): (1) rollover contributions (as defined
in Code Sections 402(a)(5), 403(a)(4), 403(b)(8) and 408(d)(3)); (2)
repayments of loans made to a Participant from the Plan; (3) repayments of
distributions received by an Employee pursuant to Code Section
411(a)(7)(B) (cash-outs); (4) repayments of distributions received by an
Employee pursuant to Code Section 411(a)(3)(D) (mandatory
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contributions); and (5) Employee contributions to a simplified employee
pension excludable from gross income under Code Section 408(k)(6).
(d) If no more than one-third of the Employer Contributions to this
Plan for a Plan Year which are deductible under Code Section 404(a)(9) are
allocated to Highly Compensated Employees, the limitations of paragraph
(a) shall not apply to:
(1) Forfeitures of Company Stock which were acquired with
the proceeds of an Exempt Loan, or
(2) Employer Contributions to this Plan which are deductible
under Code Section 404(a)(9)(B) and charged against the
Participant's accounts.
(e) For purposes of applying the limitations of Code Section 415,
"415 Compensation" shall include the Participant's wages, salaries, fees
for professional services, and other amounts received for personal
services actually rendered in the course of employment with an Employer
maintaining the Plan (including, but not limited to, commissions paid
salesmen, compensation for services on the basis of a percentage of
profits, commissions on insurance premiums, tips, bonuses, fringe
benefits, and reimbursements or other expense allowances under a
nonaccountable plan (as described in Regulation 1.62-2(c)) for a Plan
Year.
"415 Compensation" shall exclude (1)(A) contributions made by the
Employer to a plan of deferred compensation to the extent that, before the
application of the Code Section 415 limitations to the Plan, the
contributions are not includable in the gross income of the Employee for
the taxable year in which contributed, (B) Employer contributions made on
behalf of an Employee to a simplified employee pension plan described in
Code Section 408(k) to the extent such contributions are excludable from
the Employee's gross income, (C) any distributions from a plan of deferred
compensation, including the TPC Cash Bonus Plan and the TPC Bonus and
Profit Sharing Plan; (2) amounts realized from the exercise of a
non-qualified stock option or when restricted stock (or property) held by
an Employee either becomes freely transferable or is no longer subject to
a substantial risk of forfeiture; (3) amounts realized from the sale,
exchange, or other disposition of stock acquired under a qualified stock
option; and (4) other amounts that receive special tax benefits, such as
premiums for group term life insurance (but only to the extent that the
premiums are not in cludable in the gross income of the Employee), or
contributions made by the Employer (whether or not under a salary
reduction agreement) towards the purchase of any annuity contract
described in Code Section 403(b) (whether or not the contributions are
excludable from the gross income of the Employee). "415 Compensation"
shall be limited to $150,000 (unless adjusted in the same manner as
permitted under Code Section 415(d)).
(f) For purposes of applying the limitations of Code Section 415,
the "limitation year" shall be the Plan Year.
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(g) The dollar limitation under Code Section 415(b)(1)(A) stated in
paragraph (a)(1) above shall be adjusted annually as provided in Code
Section 415(d) pursuant to the Regulations. The adjusted limitation is
effective as of January 1st of each calendar year and is applicable to
"limitation years" ending with or within that calendar year.
(h) For the purpose of this Section, all qualified defined benefit
plans (whether terminated or not) ever maintained by the Employer shall be
treated as one defined benefit plan, and all qualified defined
contribution plans (whether terminated or not) ever maintained by the
Employer shall be treated as one defined contribution plan.
(i) For the purpose of this Section, if the Employer is a member of
a controlled group of corporations, trades or businesses under common
control (as defined by Code Section 1563(a) or Code Section 414(b) and (c)
as modified by Code Section 415(h)), is a member of an affiliated service
group (as defined by Code Section 414(m)), or is a member of a group of
entities required to be aggregated pursuant to Regulations under Code
Section 414(o), all Employees of such Employers shall be considered to be
employed by a single Employer.
(j) For the purpose of this Section, if this Plan is a Code Section
413(c) plan, all Employers of a Participant who maintain this Plan will be
considered to be a single Employer.
(k) (1) If a Participant participates in more than one defined
contribution plan maintained by the Employer which have different
Anniversary Dates, the maximum "annual additions" under this Plan
shall equal the maximum "annual additions" for the "limitation year"
minus any "annual additions" previously credited to such
Participant's accounts during the "limitation year."
(2) If a Participant participates in both a defined
contribution plan subject to Code Section 412 and a defined
contribution plan not subject to Code Section 412 maintained by the
Employer which have the same Anniversary Date, "annual additions"
will be credited to the Participant's accounts under the defined
contribution plan subject to Code Section 412 prior to crediting
"annual additions" to the Participant's accounts under the defined
contribution plan not subject to Code Section 412.
(3) If a Participant participates in more than one defined
contribution plan not subject to Code Section 412 maintained by the
Employer which have the same Anniversary Date, the maximum "annual
additions" under this Plan shall equal the product of (A) the
maximum "annual additions" for the "limitation year" minus any
"annual additions" previously credited under subparagraphs (1) or
(2) above, multiplied by (B) a fraction (i) the numerator of which
is the "annual additions" which would be credited to such
Participant's accounts under this Plan without regard to the
limitations of Code Section 415 and (ii) the denominator of which is
such "annual additions" for all plans described in this
subparagraph.
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(l) If an Employee is (or has been) a Participant in one or more
defined benefit plans and one or more defined contribution plans
maintained by the Employer, the sum of the defined benefit plan fraction
and the defined contribution plan fraction for any "limitation year" may
not exceed 1.0.
(m) The defined benefit plan fraction for any "limitation year" is a
fraction, the numerator of which is the sum of the Participant's projected
annual benefits under all the defined benefit plans (whether or not
terminated) maintained by the Employer, and the denominator of which is
the lesser of 125 percent of the dollar limitation determined for the
"limitation year" under Code Sections 415(b) and (d) or 140 percent of the
highest average compensation, including any adjustments under Code Section
415(b).
Notwithstanding the above, if the Participant was a Participant as
of the first day of the first "limitation year" beginning after December
31, 1986, in one or more defined benefit plans maintained by the Employer
which were in existence on May 6, 1986, the denominator of this fraction
will not be less than 125 percent of the sum of the annual benefits under
such plans which the Participant had accrued as of the close of the last
"limitation year" beginning before January 1, 1987, disregarding any
changes in the terms and conditions of the plan after May 5, 1986. The
preceding sentence applies only if the defined benefit plans individually
and in the aggregate satisfied the requirements of Code Section 415 for
all "limitation years" beginning before January 1, 1987.
(n) The defined contribution plan fraction for any "limitation year"
is a fraction, the numerator of which is the sum of the annual additions
to the Participant's Account under all the defined contribution plans
(whether or not terminated) maintained by the Employer for the current and
all prior "limitation years" (including the annual additions attributable
to the Participant's nondeductible Employee contributions to all defined
benefit plans, whether or not terminated, maintained by the Employer, and
the annual additions attributable to all welfare benefit funds, as defined
in Code Section 419(e), and individual medical accounts, as defined in
Code Section 415(l)(2), maintained by the Employer), and the denominator
of which is the sum of the maximum aggregate amounts for the current and
all prior "limitation years" of service with the Employer (regardless of
whether a defined contribution plan was maintained by the Employer). The
maximum aggregate amount in any "limitation year" is the lesser of 125
percent of the dollar limitation determined under Code Sections 415(b) and
(d) in effect under Code Section 415(c)(1)(A) or 35 percent of the
Participant's Compensation for such year.
If the Employee was a Participant as of the end of the first day of
the first "limitation year" beginning after December 31, 1986, in one or
more defined contribution plans maintained by the Employer which were in
existence on May 6, 1986, the numerator of this fraction will be adjusted
if the sum of this fraction and the defined benefit fraction would
otherwise exceed 1.0 under the terms of this Plan. Under the adjustment,
an amount equal to the product of (1) the excess of the sum of the
fractions over 1.0 times (2) the denominator of this fraction, will be
permanently subtracted from the numerator of this fraction. The adjustment
is calculated using the fractions as they would be computed as of the end
of the
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last "limitation year" beginning before January 1, 1987, and disregarding
any changes in the terms and conditions of the Plan made after May 5,
1986, but using the Code Section 415 limitation applicable to the first
"limitation year" beginning on or after January 1, 1987. The annual
addition for any "limitation year" beginning before January 1, 1987 shall
not be recomputed to treat all Employee contributions as annual additions.
(o) Notwithstanding the foregoing, for any "limitation year" in
which the Plan is a Top Heavy Plan, 100 percent shall be substituted for
125 percent in paragraph (l) and (m) unless the extra minimum allocation
is being provided pursuant to Section 4.3(i). However, for any "limitation
year" in which the Plan is a Super Top Heavy Plan, 100 percent shall be
substituted for 125 percent in any event.
(p) If the sum of the defined benefit plan fraction and the defined
contribution plan fraction shall exceed 1.0 in any "limitation year" for
any Participant in this Plan, the Administrator shall limit, to the extent
necessary, the "annual additions" to such Participant's accounts for such
"limitation year." If, after limiting the "annual additions" to such
Participant's accounts for the "limitation year," the sum of the defined
benefit plan fraction and the defined contribution plan fraction still
exceed 1.0, the Administrator shall then adjust the numerator of the
defined benefit plan fraction so that the sum of both fractions shall not
exceed 1.0 in any "limitation year" for such Participant.
(q) Notwithstanding anything contained in this Section to the
contrary, the limitations, adjustments and other requirements prescribed
in this Section shall at all times comply with the provisions of Code
Section 415 and the Regulations thereunder, the terms of which are
specifically incorporated herein by reference.
4.5 ADJUSTMENT FOR EXCESSIVE ANNUAL ADDITIONS
(a) If, as a result of the allocation of Forfeitures a reasonable
error in estimating a Participant's Compensation or other facts and
circumstances to which Regulation 1.415-6(b)(6) shall be applicable, the
"annual additions" under this Plan would cause the maximum "annual
additions" to be exceeded for any Participant, the Administrator shall (1)
hold any "excess amount" remaining after the return of any voluntary
Employee contributions in a "Section 415 suspense account" (2) allocate
and reallocate the "Section 415 suspense account" in the next "limitation
year" (and succeeding "limitation years" if necessary) to all Participants
in the Plan before any Employer or Employee contributions which would
constitute "annual additions" are made to the Plan for such "limitation
year" or (3) reduce Employer Contributions to the Plan for such
"limitation year" by the amount of the "Section 415 suspense account"
allocated and reallocated during such "limitation year".
(b) For purposes of this Article, "excess amount" for any
Participant for a "limitation year" shall mean the excess, if any, of (1)
the "annual additions" which would be credited to his account under the
terms of the Plan without regard to the limitations of Code Section 415
over (2) the maximum "annual additions" determined pursuant to Section
415.
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(c) For purposes of this Section, "Section 415 suspense account"
shall mean an unallocated account equal to the sum of "excess amounts" for
all Participants in the Plan during the "limitation year". The "Section
415 suspense account" shall not share in any earnings or losses of the
Trust Fund.
(d) The Plan may not distribute "excess amounts" to Participants
or Former Participants.
4.6 DIRECTED INVESTMENT ACCOUNT
(a) Each "Qualified Participant" may elect within ninety (90) days
after the close of each Plan Year during the "Qualified Election Period"
to direct the Administrator in writing as to the investment of at least 25
percent of the Participant's Company Stock Account (to the extent such
portion exceeds the amount to which a prior election under this
subparagraph applies). In the case of the election year in which the
Participant can make his last election, the preceding sentence shall be
applied by substituting "50 percent" for "25 percent". If the "Qualified
Participant" elects to direct the Administrator as to the investment of
his Company Stock Account, such direction shall be effective no later than
180 days after the close of the Plan Year to which such direction applies.
In lieu of directing the Administrator as to the investment of his Company
Stock Account, the "Qualified Participant" may elect a distribution in
cash or Company Stock of the portion of his Company Stock Account covered
by the election within ninety (90) days after the last day of the period
during which the election can be made. Any such distribution of Company
Stock shall be subject to Section 7.11.
(b) For the purposes of this Section the following definitions
shall apply:
(1) "Qualified Participant" means any Participant or Former
Participant who has completed ten (10) Years of Service as a
Participant and has attained age 55.
(2) "Qualified Election Period" means the five (5) Plan Year
period beginning with the Plan Year after the Plan Year in which the
Participant attains age 55 (or, if later, beginning with the Plan
Year after the first Plan Year in which the Participant first became
a "Qualified Participant").
(c) A separate Directed Investment Account shall be established for
each Participant who has directed an investment. Transfers between the
Participant's regular account and his Directed Investment Account shall be
charged and credited as the case may be to each account. The Directed
Investment Account shall not share in Trust Fund earnings, but it shall be
charged or credited as appropriate with the net earnings, gains, losses
and expenses as well as any appreciation or depreciation in market value
during each Plan Year attributable to such account. To the extent so
directed, the Administrators are relieved of their fiduciary
responsibilities as provided in Section 404 of the Act.
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(d) Each Qualified Participant may direct the Administrator to
separate and keep separate all or a portion of his share of his Company
Stock Account; and further each Qualified Participant is authorized and
empowered, in his sole and absolute discretion, to give directions to the
Administrator in such form as the Administrator may require concerning the
investment of the Participant's Directed Investment Account, which
directions must be followed by the Administrator. The Administrator shall
be under any duty to question any such direction of the Participant or to
review any securities or other property, real or personal, or to make any
suggestions to the Participant in connection therewith, and the Trustee
shall comply as promptly as practicable with directions given by the
Qualified Participant hereunder. Any such direction may be of a continuing
nature or otherwise and may be revoked by the Participant at any time in
such form as the Administrator may require. The Administrator shall not be
responsible or liable for any loss or expense which may arise from or
result from compliance with any directions from the Participant nor shall
the Administrator be responsible for, or liable for any loss or expense
which may result from the Administrator's refusal or failure to comply
with any directions from the Participant. Any costs and expenses related
to compliance with the Qualified Participant's directions shall be borne
by the Participant's Directed Investment Account.
4.7 SUSPENSE ACCOUNT
All Employer Contributions, Forfeitures and net income (or net loss) of
the Trust Fund shall be held in a suspense account until allocated to the
applicable Participants' Accounts.
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ARTICLE V
FUNDING AND INVESTMENT POLICY
5.1 INVESTMENT POLICY
(a) The Plan is designed to invest primarily in Company Stock.
(b) With due regard to subparagraph (a) above, the Administrator may
direct the Trustee to invest funds under the Plan in other property as
described in the Trust Agreement or direct the Trustee to hold such funds
in cash or cash equivalents.
(c) The Plan may not obligate itself to acquire Company Stock from a
particular holder thereof at an indefinite time determined upon the
happening of an event such as the death of the holder.
(d) The Plan may not obligate itself to acquire Company Stock under
a put option binding upon the Plan. However, at the time a put option is
exercised, the Plan may be given an option to assume the rights and
obligations of the Employer under a put option binding upon the Employer.
(e) All purchases or sales of Company Stock and the price of such
purchases or sales shall be made as the Administrator instructs the
Trustee. All purchases of Company Stock shall be made at a price which, in
the judgment of the Administrator, does not exceed the fair market value
thereof. All sales of Company Stock shall be made at a price which, in the
judgment of the Administrator, is not less than the fair market value
thereof. The valuation rules set forth in Article VI shall be applicable.
5.2 APPLICATION OF CASH
Employer Contributions received by the Trust Fund shall first be applied
to pay any Current Obligations of the Trust Fund.
5.3 TRANSACTIONS INVOLVING COMPANY STOCK
(a) No portion of the Trust Fund attributable to (or allocable in
lieu of) Company Stock acquired by the Plan in a sale to which Code
Section 1042 or Code Section 2057 applies may accrue or be allocated
directly or indirectly under any plan maintained by the Employer meeting
the requirements of Code Section 401(a):
(1) during the "Nonallocation Period", for the benefit of;
(i)any taxpayer who makes an election under Code Section
1042(a) with respect to Company Stock or any decedent if the
executor of the estate of the decedent makes a qualified sale
to which Code Section 2057 applies,
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(ii)any individual who is related to the taxpayer or the
decedent (within the meaning of Code Section 267(b)), or
(2) for the benefit of any other person who owns
(after application of Code Section 318(a)) more than 25 percent of;
(i)any class of outstanding stock of the Employer which
issued such Company Stock, or
(ii)the total value of any class of outstanding stock of
the Employer.
(b) Except, however, subparagraph (a)(1)(ii) above shall not apply
to lineal descendants of the taxpayer, provided that, the aggregate amount
allocated to the benefit of all such lineal descendants during the
"Nonallocation Period" does not exceed more than five (5) percent of the
Company Stock (or amounts allocated in lieu thereof) held by the Plan
which are attributable to a sale to the Plan by any person related to such
descendants (within the meaning of Code Section 267(c)(4)) in a
transaction to which Code Section 1042 applied.
(c) A person shall be treated as failing to meet the stock ownership
limitation under paragraph (a)(2) above if such person fails such
limitation:
(1) at any time during the one (1) year period ending on the
date of sale of Company Stock to the Plan, or
(2) on the date as of which Company Stock is allocated to
Participants in the Plan.
(d) For purposes of this Section, "Nonallocation Period" means the
ten (10) year period beginning on the later of:
(1) the date of the sale of the Company Stock, or
(2) the date of the Plan allocation attributable to the final
payment of the Exempt Loan incurred in connection with such sale.
5.4 LOANS TO THE TRUST
(a) The Plan may, but only upon the direction of the Administrator,
borrow money for any lawful purpose, provided, the proceeds of an Exempt
Loan are used within a reasonable time after receipt only for any or all
of the following purposes:
(1) To acquire Company Stock.
(2) To repay such loan.
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(3) To repay a prior Exempt Loan.
(b) All loans to the Trust which are made or guaranteed by a
disqualified person must satisfy all requirements applicable to Exempt
Loans including but not limited to the following:
(1) The loan must be at a reasonable rate of interest;
(2) Any collateral pledged to the creditor by the Plan shall
consist only of the Company Stock purchased with the borrower funds;
(3) Under the terms of the loan, any pledge of Company Stock
shall provide for the release of shares so pledged on a pro-rata
basis pursuant to Section 4.3(g);
(4) Under the terms of the loan, the creditor shall have no
recourse against the Plan except with respect to such collateral,
earnings attributable to such collateral, Employer Contributions
(other than contributions of Company Stock) that are made to meet
Current Obligations and earnings attributable to such contributions;
(5) The loan must be for a specific term and may not be
payable at the demand of any person, except in the cause of a
default.
(6) In the event of default upon an Exempt Loan, the value of
the Trust Fund transferred in satisfaction of the Exempt Loan shall
not exceed the amount of default. If the lender is a disqualified
person, an Exempt Loan shall provide for a transfer of Trust Funds
upon default only upon and to the extent of the failure of the Plan
to meet the payment schedule of the Exempt Loan;
(7) Exempt Loan payments during a Plan Year must not exceed an
amount equal to: (A) the sum, over all Plan Years, of all Employer
Contributions made by the Employer to the Plan with respect to such
Exempt Loan and earnings on such Employer Contributions, less (B)
the sum of the Exempt Loan payments in all preceding Plan Years. A
separate accounting shall be maintained for such Employer
Contributions and earnings until the Exempt Loan is repaid.
(c) The term "disqualified person" means a person who is a
Fiduciary, a person providing services to the Plan, an Employer, any of
whose Employees are covered by the Plan, an employee organization any of
whose members are covered by the Plan, an owner, direct or indirect, of
50% or more of the total combined voting power of all classes of voting
stock, or an officer, director, 10% or more shareholder, or a Highly
Compensated Employee.
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ARTICLE VI
VALUATIONS
6.1 VALUATION OF THE TRUST FUND
The Administrator shall direct the Trustee, as of each Anniversary Date,
and at such other date or dates deemed necessary by the Administrator, herein
called "valuation date", to determine the net worth of the assets comprising the
Trust Fund, other than Company Stock, as it exists on the "valuation date" prior
to taking into consideration any contribution to be allocated for that Plan
Year. In determining such net worth, the Trustee shall value the assets
comprising the Trust Fund, other than Company Stock, at their fair market value
as of the "valuation date" and shall deduct all expenses for which the Trustee
has not yet obtained reimbursement from the Employer or the Trust Fund. The
Administrator shall have the duty of determining the fair market value of
Company Stock.
6.2 METHOD OF VALUATION
Valuations must be made in good faith and based on all relevant factors
for determining the fair market value of securities. In the case of a
transaction between a Plan and a disqualified person, value must be determined
as of the date of the transaction. For all other Plan purposes, value must be
determined as of the most recent valuation date under the Plan. An independent
appraisal will not in itself be a good faith determination of value in the case
of a transaction between the Plan and a disqualified person. However, in other
cases, a determination of fair market value based on at least an annual
appraisal independently arrived at by a person who customarily makes such
appraisals and who is independent of any party to the transaction will be deemed
to be a good faith determination of value. Company Stock not readily tradeable
on an established securities market shall be valued by an independent appraiser
appointed by the Administrator meeting requirements similar to the requirements
of the Regulations prescribed under Code Section 170(a)(1).
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ARTICLE VII
DETERMINATION AND DISTRIBUTION OF BENEFITS
7.1 BENEFITS UPON RETIREMENT
A Participant who terminates his employment on or after his Normal
Retirement Date shall be distributed a benefit in accordance with Section 7.5
equal in value to the balance in the Participant's Accounts as of his Benefit
Commencement Date, such balance to be determined as of the Valuation Date
immediately preceding the Participant's Benefit Commencement Date.
7.2 BENEFITS UPON DEATH
(a) Upon the death of a Participant before his Normal Retirement
Date or other termination of his employment, the Participant's Beneficiary
shall be distributed a benefit in accordance with Section 7.5 equal in
value to the balance in the Participant's Accounts as of the Benefit
Commencement Date to the Beneficiary, such balance to be determined as of
the Valuation Date immediately preceding such Benefit Commencement Date.
(b) The Administrator may require such proper proof of death and
such evidence of the right of any person to receive payment of the value
of the account of a deceased Participant as the Administrator may deem
desirable. The Administrator's determination of death and of the right of
any person to receive payment shall be conclusive.
(c) The Beneficiary of the death benefit payable pursuant to this
Section shall be the Participant's spouse; provided, however, the
Participant may designate a Beneficiary other than his spouse if:
(1) the spouse has waived her right to be the Participant's
Beneficiary, or
(2) the Participant has no spouse, or
(3) the spouse cannot be located.
In such event, the designation of a Beneficiary shall be made on a
form satisfactory to the Administrator. A Participant may at any time
revoke his designation of a Beneficiary or change his Beneficiary by
filing written notice of such revocation or change with the Administrator.
However, the Participant's spouse must again consent in writing to any
such change or revocation unless the original consent acknowledged that
the spouse had the right to limit consent only to a specific Beneficiary
and that the spouse voluntarily elected to relinquish such right. In the
event no valid designation of Beneficiary exists at the time of the
Participant's death, the death benefit shall be payable to his estate.
(d) Any consent by the Participant's spouse to waive any rights to
the death benefit must be in writing, must acknowledge the effect of such
waiver, and be witnessed by
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a Plan representative or a notary public. Further, the spouse's consent
must be irrevocable and must acknowledge the specific nonspouse
Beneficiary.
7.3 BENEFITS UPON DISABILITY
In the event a Participant's employment is terminated due to a Total and
Permanent Disability prior to his Normal Retirement Date or other termination of
his employment, such Participant shall be distributed a benefit in accordance
with Section 7.5 equal in value to the balance in the Participant's Accounts as
of his Benefit Commencement Date, such balance to be determined as of the
Valuation Date immediately preceding his Benefit Commencement Date.
7.4 BENEFITS UPON TERMINATION
(a) Each Participant whose employment is terminated for any reason
other than Total and Permanent Disability, retirement or death shall be
distributed a benefit in accordance with Section 7.5 equal in value to the
sum of his Vested interest in the balance of his Participant's Accounts as
of his Benefit Commencement Date, such balance to be determined as of the
Valuation Date immediately preceding his Benefit Commencement Date.
(b) For purposes of this Section, a Participant's Vested interest in
Participant's Accounts shall be determined by such Participant's years of
Vesting Service in accordance with the following schedule:
YEARS OF VESTING SERVICE VESTED INTEREST
Less than 1 year 0%
1 year 20%
2 years 40%
3 years 60%
4 years 80%
5 years 100%
If a portion of a Participant's Account is forfeited, Company Stock
allocated to the Participant's Company Stock Account must be forfeited
only after the Participant's Other Investments Account has been depleted.
If interest in more than one class of Company Stock has been allocated to
a Participant's Account, the Participant must be treated as forfeiting the
same proportion of each such class.
(c) The computation of a Participant's nonforfeitable percentage of
his interest in the Plan shall not be reduced as the result of any direct
or indirect amendment to this Article. In the event that the Plan is
amended to change or modify any vesting schedule, a Participant with a
least three (3) Years of Service as of the expiration date of the election
period may elect to have his nonforfeitable percentage computed under the
Plan without regard to such amendment. If a Participant fails to make such
election, then such Participant
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shall be subject to the new vesting schedule. The Participant's election
period shall commence on the adoption date of the amendment and shall end
60 days after the latest of:
(1) the adoption date of the amendment,
(2) the effective date of the amendment, or
(3) the date the Participant receives written notice of the
amendment from the Employer or Administrator.
(d) Paragraph (b) above not withstanding, a Participant shall have a
100% Vested interest in his Participant's Accounts upon attainment of his
Normal Retirement Date.
(e) (1) If any Former Participant shall be reemployed by the
Employer before a 1-Year Break in Service occurs, he shall continue
to participate in the Plan in the same manner as if such termination
had not occurred.
(2) If any Former Participant shall be reemployed by the
Employer before five (5) consecutive 1-Year Breaks in Service, and
such Former Participant had received a distribution of his entire
Vested interest prior to his reemployment, his forfeited account
shall be reinstated only if he repays the full amount distributed to
him before the earlier of five (5) years after the first date on
which the Participant is subsequently reemployed by the Employer or
the close of the first period of 5 consecutive 1-Year Breaks in
Service commencing after the distribution. In the event the Former
Participant does repay the full amount distributed to him, the
undistributed portion of the Participant's Account must be restored
in full, unadjusted by any gains or losses occurring subsequent to
the Anniversary Date or other valuation date preceding his
termination.
(3) If any Former Participant is reemployed after a 1-Year
Break in Service has occurred, Years of Service shall include Years
of Service prior to his 1-Year Break in Service subject to the
following rules:
(i) If a Former Participant has a 1-Year Break in
Service, his pre- break and post-break service shall be used
for computing Years of Service for eligibility and for vesting
purposes only after he has been employed for one (1) Year of
Service following the date of his reemployment with the
Employer;
(ii) Any Former Participant who under the Plan does not
have a nonforfeitable right to any interest in the Plan
resulting from Employer Contributions shall lose credits
otherwise allowable under (i) above if his consecutive 1-Year
Breaks in Service equal or exceed the greater of (A) five (5)
or (B) the aggregate number of his pre-break Years of Service;
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(iii) After five (5) consecutive 1-Year Breaks in
Service, a Former Participant's Vested Account balance
attributable to pre-break service shall not be increased as a
result of post-break service;
(iv) If a Former Participant who has not had his Years
of Service before a 1-Year Break in Service disregarded
pursuant to (ii) above completes one (1) Year of Service for
eligibility purposes following his reemployment with the
Employer, he shall participate in the Plan retroactively from
his date of reemployment;
(v) If a Former Participant who has not had his Years of
Service before a 1-Year Break in Service disregarded pursuant
to (ii) above completes one (1) Year of Service for
eligibility purposes following his reemployment with the
Employer (a 1-Year Break in Service previously occurred, but
employment had not terminated), he shall participate in the
Plan retroactively from his reemployment commencement date.
7.5 DISTRIBUTION OF BENEFITS
(a) Except as provided in paragraph (c) below, payment of
Participant's benefit hereunder shall be made as soon as administratively
feasible after the Valuation Date coincident or next succeeding the date
the Participant or his Beneficiary becomes entitled to a benefit pursuant
to Sections 7.1, 7.2, 7.3 or 7.4.
(b) The Administrator, pursuant to the election of the Participant
(or if no election has been made prior to the Participant's death, by his
Beneficiary), shall direct the Trustee to distribute to a Participant or
his Beneficiary any amount to which he is entitled under the Plan in one
or more of the following methods:
(1) One lump-sum payment;
(2) Payments over a period certain in monthly, quarterly,
semiannual, or annual installments. The period over which such
payment is to be made shall not extend beyond the earlier of the
Participant's life expectancy (or the life expectancy of the
Participant and his designated Beneficiary) or the limited
distribution period provided for in Section 7.5(c).
(c) Notwithstanding the above, the Administrator may, unless the
Participant elects (with the consent of the Participant's spouse) in
writing a longer distribution period, distribute to a Participant or his
Beneficiary Company Stock in substantially equal monthly, quarterly,
semiannual, or annual installments over a period not longer than five (5)
years. In the case of a Participant with an account balance in the Plan in
excess of $500,000, the five (5) year period shall be extended one (1)
additional year (but not more than five (5) addi tional years) for each
$100,000 or fraction thereof by which such balance exceeds $500,000. The
dollar limits shall be adjusted at the same time and in the same manner as
provided in
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Code Section 415(d). Notwithstanding the above, the Administrator may,
unless Participant elects (with the consent of the Participant's spouse) a
later distribution date, commence distribution of the Participant's
Company Stock Account balance not later than one year after the close of
the Plan Year (i) in which the Participant separates from service on
account of retirement, Total and Permanent Disability or death, or (ii)
which is the fifth Plan Year following the Plan Year in which the
Participant otherwise separates from service; provided, however, any
Company Stock allocated to a Participant's Company Stock Account purchased
by means of an Exempt Loan may not be distributed until after such Exempt
Loan is repaid in full.
(d) Any distribution to a Participant who has a benefit which
exceeds, or has ever exceeded, $3,500 at the time of any prior
distribution shall require such Participant's consent if such distribution
commences prior to the later of his Normal Retirement Age or age 62.
With regard to this required consent:
(1) The Participant must be informed of his right to defer
receipt of the distribution. If a Participant fails to consent, it
shall be deemed an election to defer the commencement of payment of
any benefit. However, any election to defer the receipt of benefits
shall not apply with respect to distributions which are required
under Section 7.5(h).
(2) Notice of the rights specified under this paragraph shall
be provided no less than 30 days and no more than 90 days before the
first day on which all events have occurred which entitle the
Participant to such benefit.
(3) Written consent of the Participant to the distribution
must not be made before the Participant receives the notice and must
not be made more than 90 days before the first day on which all
events have occurred which entitle the Participant to such benefit.
(4) No consent shall be valid if a significant detriment is
imposed under the Plan on any Participant who does not consent to
the distribution.
If the value of a Participant's benefit does not exceed $3,500 and
has never exceeded $3,500 at the time of any prior distribution, the
Administrator may direct the Trustee to cause the entire benefit to be
paid to such Participant without regard to Participant's election or the
consent of the spouse.
(e) Notwithstanding anything herein to the contrary, cash dividends
on shares of Company Stock allocated to Participants' Accounts may be paid
to Participants or their Beneficiaries, as determined in the sole
discretion of the Administrator, within 90 days after the close of the
Plan Year in which the dividend is paid.
(f) Except as limited by Sections 7.5 and 7.6, whenever the Trustee
is to make a distribution or to commence a series of payments on or before
an Anniversary Date, the
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distribution or series of payments may be made or begun on such date or as
soon thereafter as is practicable, but in no event later than 180 days
after the Anniversary Date. Except, however, unless a Former Participant
elects in writing to defer the receipt of benefits (such election may not
result in a death benefit that is more than incidental), the payment of
benefits shall begin not later than the 60th day after the close of the
Plan Year in which the latest of the following events occurs:
(1) the date on which the Participant attains the Normal
Retirement Age specified herein,
(2) the 10th anniversary of the year in which the
Participant commenced participation in the Plan, or
(3) the date the Participant terminates his service with
the Employer.
(g) Any part of a Participant's benefit which is retained in the
Plan after the Anniversary Date on which his participation ends will
continue to be treated as a Company Stock Account or as an Other
Investments Account as provided in Article IV. However, neither account
will be credited with any further Employer Contributions or Forfeitures.
(h) Notwithstanding any provision in the Plan to the contrary, the
distribution of a Participant's benefits shall be made in accordance with
the following requirements and shall otherwise comply with Code Section
401(a)(9) and the Regulations thereunder (inclu ding Regulation Section
1.401(a)(9)-2), the provisions of which are incorporated herein by
reference:
(1) A Participant's benefits shall be distributed to him not
later than April 1st of the calendar year following the later of (i)
the calendar year in which the Participant attains age 70 1/2 or
(ii) the calendar year in which the Participant retires, provided,
however, that this clause (ii) shall not apply in the case of a
Participant who is a "five (5) percent owner" at any time during the
five (5) Plan Year period ending in the calendar year in which he
attains age 70 1/2 or, in the case of a Participant who becomes a
"five (5) percent owner" during any subsequent Plan Year, clause
(ii) shall no longer apply and the required beginning date shall be
the April 1st of the calendar year following the calendar year in
which such subsequent Plan Year ends. Alternatively, distributions
to a Participant must begin no later than the applicable April 1st
as determined under the preceding sentence and must be made over a
period certain measured by the life expectancy of the Participant
(or the life expectancies of the Participant and his designated
Beneficiary) in accordance with Regulations. Notwithstanding the
foregoing, clause (ii) above shall not apply to any Participant
unless the Participant had attained age 70 1/2 before January 1,
1988 and was not a "five (5) percent owner" at any time during the
Plan Year ending with or within the calendar year in which the
Participant attained age 66 1/2 or any subsequent Plan Year.
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(2) Distributions to a Participant and his Beneficiaries shall
only be made in accordance with the incidental death benefit
requirements of Code Section 401(a)(9)(G) and the Regulations
thereunder.
(i) For purposes of this Section, the life expectancy of a
Participant and a Participant's spouse may, at the election of the
Participant or the Participant's spouse, be redetermined in accordance
with Regulations. The election, once made, shall be irrevocable. If no
election is made by the time distributions must commence, then the life
expectancy of the Participant and the Participant's spouse shall not be
subject to recalculation. Life expectancy and joint and last survivor
expectancy shall be computed using the return multiples in Tables V and VI
of Regulation 1.72-9.
7.6 HOW PLAN BENEFITS WILL BE DISTRIBUTED
(a) Distribution of a Participant's benefit may be made in cash or
Company Stock or both, provided, however, that if a Participant or
Beneficiary so demands, such benefit shall be distributed only in the form
of Company Stock. Prior to making a distribution of benefits, the
Administrator shall advise the Participant or his Beneficiary, in writing,
of the right to demand that benefits be distributed solely in Company
Stock. If the Participant or his Beneficiary fails to make such demand in
writing within 90 days after receipt of such written notice, the
Administrator shall direct the Trustee to make such distribution in such
form as the Administrator, in his sole discretion, shall determine.
Any distributions of cash hereunder shall be equal to Company Stock
held in the Participant's Company Stock Account on the Anniversary Date
subsequent to the event triggering a distribution, valued at the fair
market price per share of Company Stock as determined in accordance with
Article VI as of the Anniversary Date immediately prior to the
distribution. For purposes of this Section, an "event triggering a
distribution" shall include but not be limited to retirement, death,
disability, termination of service and the election to commence receiving
benefits hereunder pursuant to Section 7.5.
(b) If a Participant or Beneficiary demands that benefits be
distributed solely in Company Stock, distribution of a Participant's
benefit will be made entirely in whole shares or other units of Company
Stock. Any balance in a Participant's Other Investments Account will be
applied to acquire for distribution the maximum number of whole shares or
other units of Company Stock at the then fair market value. Any fractional
unit value unexpended will be distributed in cash. If Company Stock is not
available for purchase by the Trustee, then the Trustee shall hold such
balance until Company Stock is acquired and then make such distribution,
subject to Sections 7.5.
(c) The Trustee will make distribution from the Trust only on
instructions from the Administrator.
(d) Notwithstanding anything contained herein to the contrary, if
the Employer's charter or by-laws restrict ownership of substantially all
shares of Company Stock to
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Employees and the Trust Fund, as described in Code Section 409(h)(2), the
Administrator, in his sole discretion, may distribute a Participant's
Account entirely in cash without granting the Participant the right to
demand distribution in shares of Company Stock or distribute entirely in
Company Stock subject to a requirement that such Company Stock may be
resold to the Employer pursuant to Section 7.11.
(e) Except as otherwise provided herein, Company Stock distributed
by the Trustee may be restricted as to sale or transfer by the by-laws or
articles of incorporation of the Employer, provided restrictions are
applicable to all Company Stock of the same class. If a Participant is
required to offer the sale of his Company Stock to the Employer before
offering to sell his Company Stock to a third party, in no event may the
Employer pay a price less than that offered to the distributee by another
potential buyer making a bona fide offer and in no event shall the Trustee
pay a price less than the fair market value of the Company Stock.
(f) Except as otherwise provided in this Article, a Participant is
not entitled to any payment, withdrawal or distribution under the Plan
during his participation. If any such partial distribution is made, the
Participant's benefit when computed will be reduced by the amount of any
such advance.
(g) If Company Stock acquired with the proceeds of an Exempt Loan
(described in Section 5.4 hereof) is available for distribution and
consists of more than one class, a Participant or his Beneficiary must
receive substantially the same proportion of each such class.
(h) Notwithstanding any provision in the Plan to the contrary,
distributions upon the death of a Participant shall be made in accordance
with the following requirements and shall otherwise comply with Code
Section 401(a)(9) and the Regulations thereunder. If it is determined,
pursuant to Regulations, that the distribution of a Participant's interest
has begun and the Participant dies before his entire interest has been
distributed to him, the remaining portion of such interest shall be
distributed at least as rapidly as under the method of distribution
selected pursuant to Section 7.5 as of his date of death. If a Participant
dies before he has begun to receive any distributions of his interest
under the Plan or before distributions are deemed to have begun pursuant
to Regulations, then his death benefit shall be distributed to his
Beneficiaries by December 31st of the calendar year in which the fifth
anniversary of his date of death occurs.
However, in the event that the Participant's spouse (determined as
of the date of the Participant's death) is his Beneficiary, then in lieu
of the preceding rules, distributions must be made over a period not
extending beyond the life expectancy of the spouse and must commence on or
before the later of (1) December 31st of the calendar year immediately
following the calendar year in which the Participant died; or (2) December
31st of the calendar year in which the Participant would have attained 70
1/2. If the surviving spouse dies before distributions to such spouse
begin, then the 5-year distribution requirement of this section shall
apply as if the spouse was the Participant.
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(i) For purposes of this Section, the life expectancy of a
Participant and a Par ticipant's spouse may, at the election of the
Participant or the Participant's spouse, be redetermined in accordance
with Regulations. The election, once made, shall be irrevocable. If no
election is made by the time distributions must commence, then the life
expectancy of the Participant and the Participant's spouse shall not be
subject to recalculation. Life expectancy and joint and last survivor
expectancy shall be computed using the return multiples in Tables V and VI
of Regulation 1.72-9.
7.7 DISTRIBUTION FOR MINOR BENEFICIARY
In the event a distribution is to be made to a minor, then the
Administrator may direct that such distribution be paid to the legal guardian,
or if none, to a parent of such Beneficiary, or to the custodian for such
Beneficiary under the Uniform Gift to Minors Act or Gift to Minors act, if such
is permitted by the laws of the state in which said Beneficiary resides. Such a
payment to the legal guardian, custodian or parent of a minor Beneficiary shall
fully discharge the Trustee, Employer, and Plan from further liability on
account thereof.
7.8 LOCATION OF PARTICIPANT OR BENEFICIARY UNKNOWN
In the event that all, or any portion, of the distribution payable to a
Participant or his Beneficiary hereunder shall, at the expiration of five (5)
years after it shall become payable, remain unpaid solely by reason of the
inability of the Administrator, after sending a registered letter, return
receipt requested, to the last known address, and after further diligent effort,
to ascertain the whereabouts of such Participant or his Beneficiary, the amount
so distributable shall be treated as a Forfeiture pursuant to the Plan. In the
event a Participant or Beneficiary is located subsequent to his benefit being
reallocated, such benefit shall be restored.
7.9 RIGHT OF FIRST REFUSAL
(a) If any Participant, his Beneficiary or any other person to whom
shares of Company Stock are distributed from the Plan (the "Selling
Participant") shall, at any time, desire to sell some or all of such
shares (the "Offered Shares") to a third party (the "Third Party"), the
Selling Participant shall give written notice of such desire to the
Administrator and the Employer, which notice shall contain the number of
shares offered for sale, the proposed terms of the sale and the names and
addresses of both the Selling Participant and Third Party. Both the Trust
Fund and the Employer shall each have the right of first refusal for a
period of fourteen (14) days from the date the Selling Participant gives
such written notice to the Employer and the Administrator (such fourteen
(14) day period to run concurrently against the Trust Fund and the
Employer) to acquire the Offered Shares. As between the Trust Fund and the
Employer, the Trust Fund shall have priority to acquire the shares
pursuant to the right of first refusal. The selling price and terms shall
be the same as offered by the Third Party.
(b) If the Trust Fund and the Employer do not exercise their right
of first refusal within the required fourteen (14) day period provided
above, the Selling Participant shall
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have the right, at any time following the expiration of such fourteen (14)
day period, to dispose of the Offered Shares to the third Party' provided,
however, that (i) no disposition shall be made to the Third Party on terms
more favorable to the Third Party than those set forth in the written
notice delivered by the Selling Participant above, and (ii) if such
disposition shall not be made to a third party on the terms offered to the
Employer and the Trust Fund, the offered Shares shall again be subject to
the right of first refusal set forth above.
(c) The closing pursuant to the exercise of the right of first
refusal under Section 7.9(a) above shall take place at such place agreed
upon between the Administrator and the Selling Participant, but not later
than ten (10) days after the Employer or the Trust Fund shall have
notified the Selling Participant of the exercise of the right of first
refusal. At such closing, the Selling Participant shall deliver
certificates representing the Offered Shares duly endorsed in blank for
transfer, or with stock powers attached duly executed in blank with all
required transfer tax stamps attached or provided for, and the Employer or
the Trust Fund shall deliver the purchase price, or an appropriate portion
thereof, to the Selling Participant.
(d) Except as provided in this Paragraph (d), no Company Stock
acquired with the proceeds of an Exempt Loan complying with the
requirements of Section 5.4 hereof shall be subject to a right of first
refusal. Company Stock, which is acquired with the proceeds of an Exempt
Loan which is distributed to a Participant or Beneficiary shall be subject
to the right of first refusal, provided for in Paragraph (a) of this
Section only so long as the Company Stock is not publicly traded. The term
"publicly traded" refers to a securities exchange registered under section
6 of the Securities Exchange Act of 1934 (15 U.S.C. 78f) or that is quoted
on a system sponsored by a national securities association registered
under Section 15A(b) of the Securities Exchange Act (15 U.S.C. 780). In
addition, in the case of Company Stock which was acquired with the
proceeds of a loan described in Section 5.4, the selling price and other
terms under the right must not be less favorable to the seller than the
greater of the value of the security determined under Regulation
54.4975-11(d)(5), or the purchase price and other terms offered by a buyer
(other than the Employer or the Trust Fund), making a good faith offer to
purchase the security. The right of first refusal must lapse no later than
fourteen (14) days after the security holder gives notice to the holder of
the right that an offer by a third party to purchase the security has been
made. The right of first refusal shall comply with the provisions of
Paragraphs (a), (b) and (c) of this Section, except to the extent those
provisions may conflict with the provisions of this paragraph.
7.10 STOCK CERTIFICATE LEGEND
Certificates for shares distributed pursuant to the Plan shall contain the
following legend:
"The shares represented by this certificate are transferable only upon
compliance with the terms of the TPC FINANCE CORP. EMPLOYEE STOCK
OWNERSHIP PLAN (to be renamed TEXAS PETROCHEMICALS CORPORATION EMPLOYEE
STOCK
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OWNERSHIP PLAN) originally effective as of July 1, 1996, a copy of said
Plan being on file in the office of the Company."
7.11 PUT OPTION
(a) If Company Stock which was not acquired with the proceeds of an
Exempt Loan is distributed to a Participant and such Company Stock is not
readily tradeable on an established securities market, a Participant has a
right to require the Employer to repurchase the Company Stock distributed
to such Participant under a fair valuation formula. Such Stock shall be
subject to the provisions of Section 7.11(c).
(b) Company Stock which is acquired with the proceeds of an Exempt
Loan and which is not publicly traded when distributed, or if it is
subject to a trading limitation when distributed, must be subject to a put
option. For purposes of this paragraph, a "trading limitation" on a
Company Stock is a restriction under any Federal or State securities law
or any regulation thereunder, or an agreement (not prohibited by Section
7.12) affecting the Company Stock which would make the Company Stock not
as freely tradeable as stock not subject to such restriction.
(c) The put option must be exercisable only by a Participant, by the
Participant's donees, or by a person (including an estate or its
distributee) to whom the Company Stock passes by reason of a Participant's
death. (Under this paragraph Participant or Former Participant means a
Participant or Former Participant and the beneficiaries of the Participant
or Former Participant under the Plan.) The put option must permit a
Participant to put the Company Stock to the Employer. Under no
circumstances may the put option bind the Plan. However, it shall grant
the Plan an option to assume the rights and obligations of the Employer at
the time that the put option is exercised. If it is known at the time a
loan is made that Federal or state law will be violated by the Employer's
honoring such put option, the put option must permit the Company Stock to
be put, in a manner consistent with such law, to a third party (E.G., an
affiliate of the Employer or a shareholder other than the Plan) that has
substantial net worth at the time the loan is made and whose net worth is
reasonably expected to remain substantial.
The put option shall commence as of the day following the date the
Company Stock is distributed to the former Participant and end 60 days
thereafter and if not exercised within such 60-day period, an additional
60-day option shall commence one year after the date the stock was
distributed to the Former Participant (or such other 60-day period as
provided in regulations promulgated by the Secretary of the Treasury).
However, in the case of Company Stock that is publicly traded without
restrictions when distributed but ceases to be so traded within either of
the 60-day periods described herein after distribution, the Employer must
notify each holder of such Company Stock in writing on or before the tenth
day after the date the Company Stock ceases to be so traded that for the
remainder of the applicable 60-day period the Company Stock is subject to
the put option. The number of days between the tenth day and the date on
which notice is actually given, if later than the tenth day, must be added
to the duration of the put option. The notice must inform distributees of
the terms
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of the put options that they are to hold. The terms must satisfy the
requirements of this paragraph.
The put option is exercised by the holder notifying the Employer in
writing that the put option is being exercised; the notice shall state the
name and address of the holder and the number of shares to be sold. The
period during which a put option is exercisable does not include any time
when a distributee is unable to exercise it because the party bound by the
put option is prohibited from honoring it by applicable Federal or state
law. The price at which a put option must be exercisable is the value of
the Company Stock determined in accordance with Section 6.2. Payment under
the put option involving a "Total Distribution" shall be paid in
substantially equal monthly, quarterly, semiannual or annual installments
over a period certain beginning not later than thirty (30) days after the
exercise of the put option and not extending beyond (5) years. The
deferral of payment is reasonable if adequate security and a reasonable
interest rate on the unpaid amounts are provided. The amount to be paid
under the put option involving installment distributions must be paid not
later than thirty (30) days after the exercise of the put option. Payment
under a put option must not be restricted by the provisions of a loan or
any other arrangement, including the terms of the employer's articles of
incorporation, unless so required by applicable state law.
For purposes of this Section, "Total Distribution" means a
distribution to a Participant or Former Participant within one taxable
year of the entire Vested Participant's Account.
(d) An arrangement involving the Plan that creates a put option must
not provide for the issuance of put options other than as provided under
this Section. The Plan (and the Trust Fund) must not otherwise obligate
itself to acquire Company Stock from a particular holder thereof at an
indefinite time determined upon the happening of an event such as the
death of the holder.
7.12 NONTERMINABLE PROTECTIONS AND RIGHTS
No Company Stock, except as provided in Section 7.9(d) and Section
7.11(b), acquired with the proceeds of a loan described in Section 5.4 hereof
may be subject to a put, call, or other option, or buy-sell or similar
arrangement when held by and when distributed from the Trust Fund, whether or
not the Plan is then an ESOP. The protections and rights granted in this Section
are nonterminable, and such protections and rights shall continue to exist under
the terms of this Plan so long as any Company Stock acquired with the proceeds
of a loan described in Section 5.4 hereof is held by the Trust Fund or by a
Participant or other person for whose benefit such protections and rights have
been created, and neither the repayment of such loan nor the failure of the Plan
to be an ESOP, nor an amendment of the Plan shall cause a termination of said
protections and rights.
7.13 LIMITATIONS ON BENEFITS AND DISTRIBUTIONS
All rights and benefits, including elections, provided to a Participant in
this plan shall be subject to the rights afforded to any "alternate payee" under
a "qualified domestic relations order." Furthermore, a distribution to an
"alternate payee" shall be permitted if such distribution is
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authorized by a "qualified domestic relations order," even if the affected
Participant has not separated from service and has not reached the "earliest
retirement age" under the Plan. For purposes of this Section, "alternate payee,"
"qualified domestic relations order" and "earliest retirement age" shall have
the meaning set forth under Code Section 414(p).
7.14 PAYMENT OF DISTRIBUTION DIRECTLY TO ELIGIBLE RETIREMENT
PLAN
(a) 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
Administrator, to have any portion of an Eligible Rollover Distribution
paid directly to an Eligible Retirement Plan specified by the Distributee
in a Direct Rollover.
(b) For purposes of this Section the following definitions shall
apply:
(1) "Eligible Rollover Distribution": An Eligible Rollover
Distribution is any distribution of all or any portion of the
balance to the credit of the Distributee, except that an Eligible
Rollover Distribution does not include: any distribution that is one
of a series of substantially equal periodic payments (not less
frequently than annually) made for the life (or life expectancy) of
the Distributee or the joint lives (or joint life expectancies) of
the Distributee and the Distributee's designated Beneficiary, or for
a specified period of ten years or more; any distribution to the
extent such distribution is required under Section 401(a)(9) of the
Code; and the portion of any distribution that is not includible in
gross income (determined without regard to the exclusion for net
unrealized appreciation with respect to employer securities).
(2) "Eligible Retirement Plan": An Eligible Retirement Plan is
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 trust described in Section 401(a) of the Code,
that accepts the Distributee's Eligible Rollover Distribution.
However, in the case of an Eligible Rollover Distribution to the
surviving spouse, an Eligible Retirement Plan is an individual
retirement account or individual retirement annuity.
(3) "Distributee": A Distributee includes an Employee or
former Employee. In addition, the Employee's or former Employee's
surviving spouse and the Employee's or former Employee's spouse or
former spouse who is the alternate payee under a qualified domestic
relations order, as defined in Section 414(p) of the Code, are
Distributees with regard to the interest of the spouse or former
spouse.
(4) "Direct Rollover": A Direct Rollover is a payment by the
Plan to the Eligible Retirement Plan specified by the Distributee.
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ARTICLE VIII
TRUSTEE
8.1 BASIC RESPONSIBILITIES OF THE TRUSTEE
The Trustee shall have the following categories of responsibilities:
(a) With respect to Company Stock, the Company Stock Account, or
an Exempt Loan, except as directed solely by the Administrator,
(1) the Trustee shall not sell, acquire or dispose of
Company Stock or
(2) enter into any Exempt Loan.
Upon direction of the Administrator, up to one hundred percent
(100%) of the Trust Fund may be invested in Company Stock.
(b) With respect to the Other Investments Account and Directed
Investment Account, the Trustee shall invest such Participant's Accounts
as directed by the Administrator.
(c) At the direction of the Administrator, the Trustee shall pay
benefits required under the Plan to be paid to Participants, or, in the
event of their death, to their Beneficiaries.
(d) The Trustee shall maintain records of receipts and
disbursements, and furnish to the Employer and/or Administrator for each
Plan Year a written annual report according to Section 3.2 of this Trust
Agreement.
(e) If there shall be more than one Trustee, they shall act by a
majority of their number, but may authorize one or more of them to sign
papers on their behalf.
8.2 VOTING COMPANY STOCK
The Trustee shall vote all Company Stock held by it as part of the Plan
assets at such time and in such manner as the Administrator shall direct.
Provided, however, that if any agreement entered into by the Trustee, upon the
direction of the Administrator, provides for voting of any shares of Company
Stock pledged as security for any obligation of the Plan, then such shares of
Company Stock shall be voted in accordance with such agreement. If the
Administrator fails or refuses to give the Trustee timely instructions as to how
to vote any Company Stock held by the Trustee and which the Administrator
otherwise has the right to vote, the Trustee shall not vote such Company Stock
and shall consider the Administrator's failure or refusal to give timely
instructions as an exercise of the Administrator's rights and a directive to the
Trustee not to vote said Company Stock. The Trustee shall not vote Company Stock
when a Participant or Beneficiary, pursuant to this Section, fails to exercise a
right to vote Company Stock.
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Notwithstanding the foregoing, if the Employer has a registration-type
class of securities, each Participant or Beneficiary shall be entitled, in lieu
of the Administrator, to direct the Trustee as to the manner in which the
Company Stock allocated to the Company Stock Account of such Participant or
Beneficiary is to be voted. If the Employer does not have a registration-type
class of securities, each Participant or Beneficiary in the Plan shall be
entitled, in lieu of the Administrator, to direct the Trustee as to the manner
in which voting rights on shares of Company Stock which are allocated to the
Company Stock Account of such Participant or Beneficiary are to be exercised
with respect to any corporate matter which involves the voting of such shares
with respect to the approval or disapproval of any corporate merger or
consolidation, recapitalization, reclassification, liquidation, dissolution,
sale of substantially all assets of a trade or business, or such similar
transaction as prescribed in Regulations. For purposes of this Section the term
"registration-type class of securities" means" (A) a class of securities
required to be registered under Section 12 of the Securities Exchange Act of
1934; and (B) a class of securities which would be required to be so registered
except for the exemption from registration provided in subsection (g)(2)(H) of
such Section 12.
The Trustee shall notify each Participant or Beneficiary of each tender or
exchange offer and utilize its best efforts to distribute or cause to be
distributed to such Participant or Beneficiary in a timely manner all
information received by the Trustee as a recordholder of shares of Company Stock
in connection with any such tender or exchange offer. Each Participant or
Beneficiary shall have the right from time to time with respect to the shares of
Company stock allocated to his account, to instruct the Trustee in writing as to
the manner in which to respond to any tender or exchange offer which shall be
pending or which may be made in the future for all shares of Company Stock or
any portion thereof. A Participant's or Beneficiary's instructions shall remain
in force until superseded in writing by the Participant or Beneficiary. The
Trustee shall tender or exchange such shares of Company Stock as and to the
extent so instructed. Unless and until shares of Company Stock are tendered or
exchanged, the individual instructions received by the Trustee from Participant
or Beneficiaries shall be held in strict confidence by the Trustee and shall not
be divulged or released to any person, including, but not limited to officers or
Employees of the Employer, or of any other Participating Employer; provided,
however, that the Trustee shall advise the Employer, at any time upon request,
of the total number of shares not subject to instructions to tender or exchange.
The Trustee shall not make recommendations to Participants or Beneficiaries on
whether to instruct the Trustee to tender or exchange.
The Trustee shall not vote, sell, convey or transfer any allocated shares
of Company Stock for which no directions are timely received from Participants
or Beneficiaries pursuant to the immediately preceding paragraph, and shares of
Company Stock held by the Trustee which are not allocated to Participants'
Company Stock Accounts shall be voted by the Trustee only in the manner directed
by the Administrator.
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ARTICLE IX
AMENDMENT, TERMINATIONS, AND MERGERS
9.1 AMENDMENT
The Employer shall have the right at any time to amend the Plan. However,
no such amendment shall authorize or permit any part of the Trust Fund (other
than such part as is required to pay taxes and administration expenses) to be
used for or diverted to purposes other than for the exclusive benefit of the
Participants or their Beneficiaries or estates; no such amendment shall cause
any reduction in the amount credited to the account of any Participant or cause
or permit any portion of the Trust Fund to revert to or become the property of
the Employer; and no such amendment which affects the rights, duties or
responsibilities of the Trustee and Administrator may be made without the
Trustee's and Administrator's written consent. The Trustee shall not be required
to execute any such amendment unless the Trust provisions contained herein are
as part of the Plan and the amendment affects the duties of the Trustee
hereunder.
In addition, no such amendment shall have the effect of terminating the
protections and rights set forth in Section 7.12, unless such termination shall
then be permitted under the applicable provisions of the Code and Regulations;
such a termination is currently expressly prohibited by Regulation
54.4975-11(a)(3)(ii).
For the purposes of this Section, a Plan amendment which has the effect of
(1) eliminating or reducing an early retirement benefit or a retirement-type
subsidy, (2) eliminating an optional form of benefit (as provided in
Regulations) or (3) restricting, directly or indirectly, the benefit provided to
any Participant prior to the amendment shall be treated as reducing the amount
credited to the account of a Participant except that an amendment described in
clause (2) above (other than an amendment having an effect described in clause
(1) above) shall not be treated as reducing the amount credited to the account
of a Participant to the extent so provided in Regulations. Any Plan amendment
which modifies distribution options in a nondiscriminatory manner shall not be
treated as reducing the amount credited to the account of a Participant.
9.2 TERMINATION
The Employer shall have the right at any time to terminate the Plan by
delivering to the Trustee and Administrator written notice of such termination.
A complete discontinuance of the Employer Contributions to the Plan shall be
deemed to constitute a termination. Upon any termination (full or partial) or
complete discontinuance of contributions, all amounts credited to the affected
Participants' Accounts shall become 100% Vested and shall not thereafter be
subject to forfeiture and all unallocated amounts shall be allocated to the
accounts of all Participants in accordance with the provisions hereof. Upon such
termination of the Plan, the Employer, by written notice to the Trustee and
Administrator, may direct either:
(a) complete distribution of the assets in the Trust Fund to the
Participants, in cash or in kind, in a manner consistent with the
requirements of Sections 7.5 and 7.6; or
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(b) continuation of the Trust created by this agreement and the
distribution of benefits at such time and in such manner as though the
Plan had not been terminated.
9.3 MERGER OR CONSOLIDATION
This Plan may be merged or consolidated with, or its assets and/or
liabilities maybe transferred to any other Plan and Trust only if the benefits
which would be received by a Participant of this Plan, in the event of a
termination of the Plan immediately after such transfer, merger or
consolidation, are at least equal to the benefits the Participant would have
received if the Plan had terminated immediately before the transfer, merger or
consolidation.
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ARTICLE X
MISCELLANEOUS
10.1 PARTICIPANT'S RIGHTS
This Plan shall not be deemed to constitute a contract between the
Employer and any participant or to be a consideration or an inducement for the
employment of any Participant or Employee. Nothing contained in this Plan shall
be deemed to give any Participant or Employee the right to be retained in the
service of the Employer or to interfere with the right of the Employer to
discharge any Participant or Employee at any time regardless of the effect which
such discharge shall have upon him as a Participant of this Plan.
10.2 ALIENATION
(a) Subject to the exceptions provided below, no benefit which shall
be payable out of the Trust Fund to any person (including a Participant or
his Beneficiary) shall be subject in any manner to anticipation,
alienation, sale, transfer, assignment, pledge, encumbrance, or charge,
and any attempt to anticipate, alienate, sell, transfer, assign, pledge,
encumber, or charge the same shall be void; and no such benefit shall be
in any manner be liable for, or subject to, the debts, contracts,
liabilities, engagements, or torts of any such person, nor shall it be
subject to attachment or legal process for or against such person, and the
same shall not be recognized by the Trustee, except to such extent as may
be required by law.
(b) This provision shall not apply to a "qualified domestic
relations order" defined in Code Section 414(p), and those other domestic
relations orders permitted to be so treated by the Administrator under the
provisions of the Retirement Equity Act of 1984. The Administrator shall
establish a written procedure to determine the qualified status of
domestic relations orders and to administer distributions under such
qualified orders. Further, to the extent provided under a "qualified
domestic relations order", a Former spouse of a Participant shall be
treated as the spouse or surviving spouse for all purposes under the Plan.
10.3 CONSTRUCTION OF PLAN
This Plan shall be construed and enforced according to the Act and the
laws of the State of Delaware, other than its laws respecting choice of law, to
the extent not preempted by the Act.
10.4 GENDER AND NUMBER
Wherever any words are used herein in the masculine, feminine or neuter
gender, they shall be construed as though they were also used in another gender
in all cases where they would so apply, and whenever any words are used herein
in the singular or plural form, they shall be construed as though they were also
used in the other form in all cases where they would so apply.
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10.5 LEGAL ACTION
In the event any claim, suit, or proceeding is brought regarding the Trust
and/or Plan established hereunder to which the Trustee or the Administrator may
be a party, and such claim suit, or proceeding is resolved in favor of the
Trustee or Administrator, they shall be entitled to be reimbursed from the Trust
Fund for any and all costs, attorney's fees, and other expenses pertaining
thereto incurred by them for which they shall have become liable.
10.6 PROHIBITION AGAINST DIVERSION OF FUNDS
(a) Except as provided below and otherwise specifically permitted by
law, it shall be impossible by operation of the Plan or of the Trust, by
termination of either, by power or revocation or amendment, by the
happening of any contingency, by collateral arrangement or by any other
means, for any part of the corpus or income of any trust fund maintained
pursuant to the Plan or any funds contributed thereto to be used for, or
diverted to, purposes other than the exclusive benefit of Participants,
Retired Participants, or their Beneficiaries.
(b) In the event the Employer shall make an excessive contribution
under a mistake of fact pursuant to Section 403(c)(2)(A) of the Act, the
Employer may demand repayment of such excessive contribution at any time
within one (1) year following the time of payment and the Trustees shall
return such amount to the Employer within the one (1) year period.
Earnings of the Plan attributable to the excess contributions may not be
returned to the Employer but any losses attributable thereto must reduce
the amount so returned.
10.7 BONDING
Every Fiduciary, except a bank or an insurance company, unless exempted by
the Act and regulations thereunder, shall be bonded in an amount not less than
10% of the amount of the funds such Fiduciary handles; provided, however, that
the minimum bond shall be $1,000 and the maximum bond, $500,000. The amount of
funds handled shall be determined at the beginning of each Plan Year by the
amount of funds handled by such person, group, or class to be covered and their
predecessors, if any, during the preceding Plan Year, or if there is no
preceding Plan Year, then by the amount of the funds to be handled during the
then current year. The bond shall provide protection to the Plan against any
loss by reason of acts of fraud or dishonesty by the Fiduciary alone or in
connivance with others. The surety shall be a corporate surety company (as such
term is used in Section 412(a)(2) of the Act), and the bond shall be in a form
approved by the Secretary of Labor. Notwithstanding anything in the Plan to the
contrary, the cost of such bonds shall be an expense of and may, at the election
of the Administrator, be paid from the Trust Fund or by the Employer.
10.8 RECEIPT AND RELEASE FOR PAYMENTS
Any payment to any Participant, his legal representative, Beneficiary, or
to any guardian or committee appointed for such Participant or Beneficiary in
accordance with the provisions of the Plan, shall, to the extent thereof, be in
full satisfaction of all claims hereunder against the Trustee and the Employer,
either of whom may require such Participant, legal representative, Beneficiary,
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guardian or committee, as a condition precedent to such payment, to execute a
receipt and release thereof in such form as shall be determined by the Trustee
or Employer.
10.9 ACTION BY THE EMPLOYER
Whenever the Employer under the terms of the Plan is permitted or required
to do or perform any act or matter or thing, it shall be done and performed by a
person duly authorized by its legally constituted authority.
10.10 NAMED FIDUCIARIES AND ALLOCATION OF RESPONSIBILITY
The "named Fiduciaries" of this Plan are the Employer and the
Administrator. The named Fiduciaries shall have only those specific powers,
duties, responsibilities, and obligations as are specifically given them under
the Plan. In general, the Employer shall have the sole responsibility for making
the contributions provided for under Section 4.1; and shall have the sole
authority to appoint and remove the Trustee and the Administrator; to formulate
the Plan's "funding policy and method"; and to amend or terminate, in whole or
in part, the Plan. The Administrator shall have the sole responsibility for the
administration of the Plan, which responsibility is specifically described in
the Plan, including the acquisition, holding and/or disposition of Company Stock
and the entering into any Exempt Loans. The Administrator shall also have the
sole responsibility of management of the assets of the Other Investments Account
and Directed Investment Account held under the Trust, except those assets in
such accounts, the management of which has been assigned to an Investment
Manager, who shall be solely responsible for the management of the assets
assigned to it, all as specifically provided in the Plan.
10.11 HEADINGS
The headings and subheadings of this Plan have been inserted for
convenience of reference and are to be ignored in any construction of the
provisions hereof.
10.12 APPROVAL BY INTERNAL REVENUE SERVICE
(a) Notwithstanding anything herein to the contrary, contributions
to this Plan are conditioned upon the initial qualification of the Plan
under Code Section 401. If the Plan receives an adverse determination with
respect to its initial qualification, then the Plan may return such
contributions to the Employer within one year after such determination,
provided the application for the determination is made by the time
prescribed by law for filing the Employer's return for the taxable year in
which the Plan was adopted, or such later date as the Secretary of the
Treasury may prescribe.
(b) Notwithstanding any provisions to the contrary, except Sections
3.6 and 4.3(d), any contribution by the Employer to the Trust Fund is
conditioned upon the deductibility of the contribution by the Employer
under the Code and, to the extent any such deduction is disallowed, the
Employer may, within one (1) year following the disallowance of the
deduction, demand repayment of such disallowed contribution and the
trustee shall
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return such contribution within one (1) year following the disallowance of
the deduction, demand repayment of such disallowed contribution and the
Trustee shall return such contribution within one (1) year following the
disallowance. Earnings of the Plan attributable to the excess contribution
may not be returned to the Employer, but any losses attributable thereto
must reduce the amount so returned.
10.13 UNIFORMITY
All provisions of this Plan shall be interpreted and applied in a uniform,
nondiscriminatory manner.
10.14 SECURITIES AND EXCHANGE COMMISSION APPROVAL
The Company may request an interpretative letter from the Securities and
Exchange Commission stating that the transfer of Company Stock contemplated
hereunder does not involve transactions requiring a registration of such Company
Stock under the Securities Act of 1933. In the event that a favorable
interpretative letter is not obtained, the Employer reserves the right to amend
the Plan and Trust retroactively to their Effective Dates in order to obtain a
favorable interpretative letter or to terminate the Plan.
10.15 INDEMNIFICATION
Neither the Employer, any of its officers or directors, nor the
Administrator shall be personally liable for any action or inaction with respect
to any duty or responsibility imposed upon such person by the terms of the Plan,
unless such action or inaction is judicially determined to be a breach of that
person's fiduciary responsibility with respect to the Plan under any applicable
law. The Employer may indemnify or purchase insurance to underwrite indemnity
for the Administrator and/or the Employer's board of directors against any
personal liability or expense except for their own gross negligence.
10.16 CONTROLLING LAW
All legal questions pertaining to the Plan, all construction and all
Regulations shall be determined in accordance with the laws of the State of
Delaware and the United States. All contributions shall be deemed to have been
made under such laws. Notwithstanding anything in this Agreement to the
contrary, the effective dates provided for herein for the application of any
Code Section to this Plan shall be extended in accordance with any act of
Congress or any effective Regulation, Ruling or other measure of like import.
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ARTICLE XI
PARTICIPATING EMPLOYERS
11.1 ADOPTION BY OTHER EMPLOYERS
Notwithstanding anything herein to the contrary, with the consent of the
Employer and Trustee, any other corporation or entity, whether an affiliate or
subsidiary or not, may adopt this Plan and all of the provisions hereof, and
participate herein and be known as a Participating Employer, by a properly
executed document evidencing said intent and will of such Participating
Employer.
11.2 REQUIREMENTS OF PARTICIPATING EMPLOYERS
(a) Each such Participating Employer shall be required to use the
same Trustee as provided in this Plan.
(b) The Trustee, unless directed otherwise by the Administrator,
shall commingle and hold as one Trust Fund all contributions made by
Participating Employers.
(c) The transfer of any Participant from or to an Employer
participating in this Plan, whether he be an Employee of the Employer or a
Participating Employer, shall not affect such Participant's rights under
the Plan, and all amounts credited to such Participant's Account as well
as his accumulated service time with the transferor or predecessor, and
his length of participation in the Plan, shall continue to his credit.
(d) All rights and values forfeited by termination of employment
shall inure only to the benefit of the Employee-Participants of the
Participating Employer by which the forfeiting Participant was employed,
except if the Forfeiture is for an Employee whose Employer is a member of
an affiliated or controlled group, then said Forfeiture shall be
allocated, based on Compensation to all Participant Accounts of
Participating Employers who are members of the affiliated or controlled
group. Should an Employee of one ("First") Employer be transferred to an
associated ("Second") Employer (the Employer, an affiliate or subsidiary),
such transfer shall not cause his Account balance (generated while an
Employee of "First" Employer) in any manner or by any amount to be
forfeited. Such Employee's Participant Account balance for all purposes of
the Plan, including length of service, shall be considered as though he
had always been employed by the "Second" Employer and as such had received
contributions, forfeitures, earnings of losses, and appre ciation or
depreciation in value of assets totaling amount so transferred.
(e) Any expenses of the Trust which are to be paid by the Employer
or borne by the Trust Fund shall be paid by each Participating Employer in
the same proportion that the total amount standing to the credit of all
Participants employed by such Employer bears to the total standing to the
credit of all Participants.
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11.3 DESIGNATION OF AGENT
Each Participating Employer shall be deemed to be a part of this Plan;
provided, however, that with respect to all of its relations with the Trustee
and Administrator for the purpose of this Plan, each Participating Employer
shall be deemed to have designated irrevocably the Employer as its agent. Unless
the context of the Plan clearly indicates the contrary, the word "Employer"
shall be deemed to include each Participating Employer as related to its
adoption of the Plan.
11.4 EMPLOYEE TRANSFERS
It is anticipated that an Employee may be transferred between
Participating Employers, and in the event of any such transfer, the Employee
involved shall carry with him his accumulated service and eligibility. No such
transfer shall effect a termination of employment hereunder, and the
Participating Employer to which the Employee is transferred shall thereupon
become obligated hereunder with respect to such Employee in the same manner as
was the Participating Employer from whom the Employee was transferred.
11.5 PARTICIPATING EMPLOYER'S CONTRIBUTION
Any contribution or Forfeiture subject to allocation during each Plan Year
shall be allocated among all Participants of all Participating Employers in
accordance with the provisions of this Plan. On the basis of the information
furnished by the Administrator, the Trustee shall keep separate books and
records concerning the affairs of each Participating Employer hereunder and as
to the accounts and credits of the Employees of each Participating Employer. The
Trustee may, but need not, register Contracts so as to evidence that a
particular Participating Employer is the interested Employer hereunder, but in
the event of an Employee transfer from one Participating Employer to another,
the employing Employer shall immediately notify the Trustee thereof.
11.6 AMENDMENT
Amendment of this Plan by the Employer at any time when there shall be a
Participating Employer hereunder shall only be by the written action of each and
every Participating Employer and with the consent of the Trustee where such
consent is necessary in accordance with the terms of this Plan.
11.7 DISCONTINUANCE OF PARTICIPATION
Any Participating Employer shall be permitted to discontinue or revoke its
participation in the Plan. At the time of any such discontinuance or revocation,
satisfactory evidence thereof and of any applicable conditions imposed shall be
delivered to the Trustee. The Trustee shall thereafter transfer, deliver and
assign Trust Fund assets allocable to the Participants of such Participating
Employer or to such new Trustee as shall have been designated by such
Participating Employer, in the event that it has established a separate pension
plan for its Employees. If no successor is designated, the Trustee shall retain
such assets for the Employees of said Participating Employer pursuant to the
provisions of Article VII hereof. In no such event shall any part of the corpus
or
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income of the Trust as it relates to such Participating Employer be used for or
diverted for purposes other than for the exclusive benefit of the Employees of
such Participating Employer.
11.8 ADMINISTRATOR'S AUTHORITY
The Administrator shall have authority to make any and all necessary rules
or regulations, binding upon all Participating Employers and all Participants,
to effectuate the purpose of this Article.
11.9 PARTICIPATING EMPLOYER CONTRIBUTION FOR AFFILIATE
If any Participating Employer is prevented in whole or in part from making
a contribution to the Trust Fund which it would otherwise have made under the
Plan by reason of having no current or accumulated earnings or profits, or
because such earnings or profits are less than the contribution which it would
otherwise have made, then, pursuant to Code Section 404(a)(3)(B), so much of the
contribution which such Participating Employer was so prevented from making may
be made, for the benefit of the participating employees of such Participating
Employer, by the other Participating Employers who are members of the same
affiliated group within the meaning of Code Section 1504 to the extent of their
current or accumulated earnings or profits, except that such contribution by
each such other Participating Employer shall be limited to the proportion of its
total current and accumulated earnings or profits remaining after adjustment for
its contribution to the Plan made without regard to this paragraph which the
total prevented contribution bears to the total current and accumulated earnings
or profits of all the Participating Employers remaining after adjustment for all
contributions made to the Plan without regard to this paragraph.
A Participating Employer on behalf of whose employees a contribution is
made under this paragraph shall not reimburse the contributing Participating
Employers.
This Agreement may be executed in two or more counterparts which together
shall constitute a single agreement.
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ARTICLE XII
TOP-HEAVY STATUS
12.1 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 Code Section 416.
12.2 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 an Affiliated Employer
(excluding employee contributions which 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 an Affiliated Employer), 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 which is attributable to employee
contributions which 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 an Affiliated Employer,
to proportional subsidies or to ancillary benefits) of an individual under
a qualified defined benefit plan maintained by the Employer or an
Affiliated Employer 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 or an Affiliated Employer, 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 Affiliated Employer consisting of (1) each plan in
which a Key Employee participates and each other plan which enables a plan
in which a Key Employee participates to meet the requirements of sections
401(a)(4) or 410 of the Code, or (2) each
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plan in which a Key Employee participates, each other plan which enables a
plan in which a Key Employee participates to meet the requirements of
sections 401(a)(4) or 410 of the Code and any other plan which the
Employer elects to include as a part of such group; provided, however,
that the Employer may not elect to include a plan in such group if its
inclusion would cause the group to fail to meet the requirements of
sections 401(a)(4) or 410 of the Code.
(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 including 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: Compensation within the meaning of section
415(c)(3) of the Code, as limited by section 401(a)(17) of the Code for
Plan Years beginning after December 31, 1988.
(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.
12.3 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 Participants who are Key Employees exceeds 60% of the sum of
Account Balances of all Participants 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
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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 at any time during the
five-year period ending on the applicable Determination Date shall not be
considered.
12.4 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 to no longer be top-heavy.
12.5 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.
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IN WITNESS WHEREOF, this Plan has been executed this ___ day of
___________, 1996 effective as of the day and year first above written.
"EMPLOYER"
TPC FINANCE CORP.
By:
Name:
Title:
EXECUTION PAGE TO THE
TPC FINANCE CORP.
EMPLOYEE STOCK OWNERSHIP PLAN
to be renamed
TEXAS PETROCHEMICALS CORPORATION
EMPLOYEE STOCK OWNERSHIP PLAN
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