1
EXHIBIT 10.B.1
PLUM CREEK
SUPPLEMENTAL BENEFITS PLAN
ADOPTED
EFFECTIVE
JANUARY 1, 1993
2
TABLE OF CONTENTS
Page
----
PREAMBLE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION I -- DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.1 Beneficiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.2 Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.3 Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.4 Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.5 Deferred Compensation Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.6 Participant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.7 Pension Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.8 Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.9 RSP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.10 Surviving Spouse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
SECTION 2 -- BENEFITS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.1 Plan Administrator . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 3 -- PARTICIPANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.1 Participants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 4 -- BENEFITS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
4.1 Supplemental Pension Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
4.2 Supplemental Thrift Plan Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . 7
4.3 Other Supplemental Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
4.4 Time and Manner of Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 5 -- GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
5.1 Unfunded Obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
5.2 Discretionary Investment by Company . . . . . . . . . . . . . . . . . . . . . . . . . 9
5.3 Incapacity of Participant, Surviving Spouse
or Beneficiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
5.4 Nonassignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
5.5 No Right to Continued Employment . . . . . . . . . . . . . . . . . . . . . . . . . . 10
5.6 Withholding Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
5.7 Termination and Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
5.8 ERISA Exemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
5.9 Applicable Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
5.10 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3
Table of Contents
(continued)
Page
----
SIGNATURE PAGE . . . . . . . . . . . . . . . . . . . . . . . . . 12
APPENDIX A . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
APPENDIX B . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
APPENDIX C . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
4
PREAMBLE
THIS SUPPLEMENTAL RETIREMENT PLAN (hereinafter referred to as the
"Plan" and known as the Plum Creek Supplemental Benefits Plan) is adopted
effective January 1, 1993 by Plum Creek Timber Company, L.P. (hereinafter
"Company").
WHEREAS, the purpose of the Plan is to attract and retain exceptional
executives by providing retirement benefits to selected officers and key
salaried employees of outstanding competence.
NOW, THEREFORE, the Company does hereby adopt the Plan as set forth in
the following pages, effective January 1, 1993.
1
5
SECTION 1
DEFINITIONS
For purposes of this Plan, the following terms shall have the meanings
indicated:
1.1 Beneficiary
"Beneficiary" means the individual(s) designated by a
Participant to receive benefits from this Plan in the event of
his or her death. If no designated Beneficiary survives the
Participant, the Beneficiary shall be the person or persons in
the first of the following classes who survive the
Participant:
(a) spouse at date of death,
(b) descendants, per stirpes,
(c) parents,
(d) brothers and sisters,
(e) estate.
1.2 Board
"Board" means the Board of Directors of PC Advisory Corp. I,
the general partner of PC Advisory Partners I, L.P., which
serves as the general partner of Plum Creek Management
Company, L.P., which serves as the general partner of the
Company.
1.3 Code
"Code" means the Internal Revenue Code of 1986, as amended.
1.4 Company
"Company" means Plum Creek Timber Company, L.P., a Delaware
limited partnership.
1.5 Deferred Compensation Plans
"Deferred Compensation Plans" means the Plum Creek Management
Company Key Employee Salary and Incentive Compensation
Deferral Plan and such additional deferred compensation plans
as may be designated by the Company from time to time.
1.6 Participant
"Participant" means each individual who participates in the
Plan in accordance with Section 3.
2
6
1.7 Pension Plan
"Pension Plan" means the Burlington Resources Inc. Pension
Plan as in effect on December 31, 1992, a copy of which is
attached in Appendix B.
1.8 Plan
"Plan" means the Plum Creek Supplemental Benefits Plan either
in its present form or as amended from time to time.
1.9 RSP
"RSP" means the Burlington Resources Inc. Retirement Savings
Plan, as in effect on December 31, 1992, a copy of which is
attached in Appendix C.
1.10 Surviving Spouse
"Surviving Spouse" means the person to whom surviving spouse
death benefits are to be paid pursuant to the terms of the
Pension Plan.
1.11 Thrift Plan
"Thrift Plan" means the Plum Creek Thrift and Profit Sharing
Plan.
1.12 Plan Administrator
"Plan Administrator" shall be the Vice President, Human
Resources of the Company.
3
7
SECTION 2
ADMINISTRATION
2.1 Plan Administrator
This Plan shall be administered by the Plan Administrator of
the Company. Subject to approval by the Board, the Plan
Administrator shall have discretion and authority to interpret
the Plan, prescribe, amend and rescind rules relating to it,
and take all other action necessary for its administration,
which actions shall be final and binding upon all
Participants.
4
8
SECTION 3
PARTICIPANTS
3.1 Participants
The President and Vice Presidents of the Company who were
participants in the Burlington Resources Inc. Supplemental
Benefits Plan on December 31, 1992 shall be Participants in
this Plan.
The Board of Directors shall determine and designate any other
officers and key salaried employees of the Company who are
eligible to become Participants and receive benefits under the
Plan. Each Participant must be a selected management or highly
compensated employee, or entitled to qualified plan benefits
in excess of the Code Section 415 limitations on benefits. A
Participant who is not a select management or highly
compensated employee shall be eligible only for the benefits
described in Sections 4.1(a)(1) and 4.2(a)(1). Individuals
who are Participants shall be listed in Appendix A.
5
9
SECTION 4
BENEFITS
4.1 Supplemental Pension Benefits
Upon the termination of employment of a Participant, the
Company shall pay or cause to be paid to such Participant (or
his or her Surviving Spouse in the case of his or her death)
supplemental pension benefits under this Plan which equals the
amount described in (a) less the amount described in (b).
Supplemental pension benefits under this Section 4 shall be
vested and nonforfeitable to the same extent that the related
benefits under the Pension Plan would be vested and
nonforfeitable.
(a) Pension Plan Amount
The amount which the Participant would have been
entitled to receive under the Pension Plan as in
effect on December 31, 1992 if the Participant had
continued participation in the Pension Plan and had
the Pension Plan's benefit formula been applied:
(1) without regard to the limitations of Section
415 of the Code (including, without
limitation, the maximum benefit payable under
Section 415(b)(1), the actuarial reduction
for early retirement of Section 415(b)(2)(C),
the reduction for limited service or
participation of Section 415(b)(5) and the
combined limits of Section 415(e)),
(2) by including in the Participant's
compensation during the period for which the
Pension Plan benefits are computed, to the
extent not already done so under the Pension
Plan, any amount that has not been taken into
account due to the limitations of Section
401(a)(17) of the Code ($235,840 for plan
years beginning in 1993) or due to a
reduction of compensation that has occurred
pursuant to an election of the Participant
under Section 125 or Section 401(k) of the
Code or under the Deferred Compensation
Plans, and
(3) by taking into account any service granted to
the Participant and any benefit formula
adjustments required by an employment
contract.
(b) Offset Amount
The amount specified for each Participant listed in
Appendix A increased annually from 12/31/92 to the
December 31st immediately preceding the date of
termination of employment by the immediate PBGC
interest rate in effect on January 1 of each year.
6
10
(c) Determination of Lump Sum Supplemental Pension
Benefit Payments
For purposes of determining the amount described in
Section 4.1(a), the amount of a lump sum payment of
supplemental pension benefits to a Participant (or
his or her Surviving Spouse in the event of the
Participant's termination of employment on account of
death) shall be determined by calculating the benefit
according to the terms of the Pension Plan as a whole
life annuity, then calculating the present value of
such benefit, using the actuarial assumptions
specified in the Pension Plan for determining
benefits of equivalent value except, in lieu of the
Pension Benefit Guaranty Corporation ("PBGC") rates
for calculating lump sums specified in the Pension
Plan, the interest rate shall be the immediate PBGC
rate in effect on January 1 of the year in which the
lump sum payment becomes distributable.
The amount of a lump sum payment of supplemental
pension benefits to a Participant's Surviving Spouse
shall be determined as if the Participant had
terminated his or her employment on the date of
death. Pre-retirement death benefit provisions under
the Pension Plan shall not apply.
4.2 Supplemental Thrift Plan Benefits
Upon the termination of employment of a Participant, the
Company shall pay or cause to be paid to such Participant (or
his or her Beneficiary in the case of his or her death)
supplemental Thrift Plan benefits determined by calculating
the amount described in (a) less the amount described in (b).
(a) The Company shall periodically determine the amount
of any additional employer-matching contributions
that would have been credited to a Participant's
account under the RSP if he or she was an employee of
Burlington Resources Inc. and contributed at the
maximum employee contribution rate offered under the
RSP without regard to:
(1) the maximum dollar limit under Code Section
415(c)(1)(A) on RSP annual additions ($30,000
for plan years beginning in 1993);
(2) the maximum limit under Code Section
401(a)(17) on the compensation taken into
account under the RSP ($235,840 for plan
years beginning in 1993); and
(3) any further reductions in the compensation
which would have been taken into account
under the RSP as a result of any deferrals of
compensation elected by the Participant
pursuant to Section 125 or Section 401(k) of
the Code or under the Deferred Compensation
Plans.
(b) The Company matching contribution to the Thrift Plan
on behalf of the Participant for the same period of
time for which the amount in (a) is determined.
7
11
From time to time, as determined by the Board of Directors,
the Company shall allocate amounts equal to such additional
employer-matching contributions to a ledger account (the
"Memorandum Account") for the Participant as of the time or
times that such amounts would have been contributed to the RSP
if permitted thereunder. Interest will be credited to the
balance in each Participant's Memorandum Account on a
semi-monthly basis or at such other intervals as may be
determined by the Board of Directors. From time to time the
Board of Directors shall determine the rate to be used in
crediting such interest and in so doing may take into account
the earnings, losses, appreciation or depreciation
attributable to any discretionary investment made pursuant to
Section 5.2, and any other factors it deems appropriate.
Supplemental Thrift Plan benefits under this Section 4.2 shall
be vested and nonforfeitable to the same extent that the
related benefits under the Thrift Plan are vested and
nonforfeitable.
4.3 Other Supplemental Benefits
Upon the termination of employment of a Participant, the
Company shall pay or cause to be paid to such Participant (or
his or her Beneficiary in the case of his or her death) other
supplemental benefits, if any, as determined by the Board and
contained in the Participant's employment contract or other
agreement with the Company. Other supplemental benefits under
this Section 4.3 shall be vested and nonforfeitable to the
extent provided in the applicable employment contract or
agreement.
4.4 Time and Manner Of Payment
The payment of any supplemental pension benefits owed to a
Participant (or his or her Surviving Spouse) pursuant to
Section 4.1 shall be made in a lump sum, as determined under
Section 4.1(c), as soon as practicable after the Participant's
termination of employment with the Company. The payment of any
supplemental RSP benefits pursuant to Section 4.2 owed to a
Participant (or his or her Beneficiary) shall likewise be made
in a lump sum as soon as practicable after the Participant's
termination of employment with the Company and shall be in an
amount equal to the Participant's Memorandum Account balance
at the time of payment. The payment of any other supplemental
benefits pursuant to an employment contract under Section 4.3
shall be made as provided in the employment contract. Such
payment shall constitute a complete discharge of all
obligations to the Participant and his or her Surviving Spouse
or Beneficiary under the Plan.
8
12
SECTION 5
GENERAL PROVISIONS
5.1 Unfunded Obligation
The supplemental benefits to be paid to Participants and/or
their Surviving Spouses and Beneficiaries pursuant to this
Plan are unfunded obligations of the Company, and shall, until
actual payment, continue to be part of the general funds of
the Company. The Company is not required to segregate any
monies from its general funds, or to create any trusts, or to
make any special deposits with respect to these obligations.
Title to and beneficial ownership of any investments including
trust investments which the Company may make to fulfill these
obligations shall at all times remain in the Company. Any
investments and the creation or maintenance of any trust or
memorandum accounts shall not create or constitute a trust or
a fiduciary relationship between the Plan Administrator or the
Company and a Participant, or otherwise create any vested or
beneficial interest in any Participant or his or her Surviving
Spouse or Beneficiary or his or her creditors in any assets of
the Company whatsoever. The Participants and their Surviving
Spouses and Beneficiaries shall have no claim against the
Company for any changes in the value of any assets which may
be invested or reinvested by the Company with respect to this
Plan.
5.2 Discretionary Investment by Company
The Plan Administrator, after consulting with the actuary
employed by the Company in conjunction with the Pension Plan,
may from time to time direct the investment by the Company of
an amount sufficient to meet all or such portion of the
supplemental pension benefits to be paid under this Plan as
the Plan Administrator, in its sole discretion, shall
determine. The Plan Administrator may in its sole discretion
determine that all or some portion of the amount to be
invested shall be paid into one or more grantor trusts to be
established by the Company of which it shall be the
beneficiary, and to the assets of which it shall become
entitled as and to the extent that Participants (or their
Surviving Spouses or Beneficiaries in the case of their
deaths) receive benefits under this Plan. The Plan
Administrator may designate an investment advisor to direct
investments and reinvestments of the funds, including
investments of any grantor trusts hereunder.
5.3 Incapacity of Participant, Surviving Spouse or Beneficiary
If the Plan Administrator finds that any Participant,
Surviving Spouse or Beneficiary to whom a payment is payable
under the Plan is unable to care for his or her affairs
because of illness or accident or is under a legal disability,
any payment due (unless a prior claim therefor shall have been
made by a duly appointed legal representative) at the
discretion of the Plan Administrator may be paid to the
spouse, child, parent or brother or sister of such
Participant, Surviving Spouse or Beneficiary, or to any person
whom the Plan Administrator has determined has incurred
expense for such Participant, Surviving
9
13
Spouse or Beneficiary. Any such payment shall be a complete
discharge of the obligations of the Company under the
provisions of the Plan.
5.4 Nonassignment
The right of a Participant or his or her Surviving Spouse or
Beneficiary to the payment of any amounts under the Plan may
not be assigned, transferred, pledged or encumbered nor shall
such right or other interests be subject to attachment,
garnishment, execution or other legal process.
5.5 No Right to Continued Employment
Nothing in the Plan shall be construed to confer upon any
Participant any right to continued employment with the Company
or a subsidiary nor interfere in any way with the right of the
Company or a subsidiary to terminate the employment of such
Participant at any time without assigning any reason therefor.
5.6 Withholding Taxes
Appropriate payroll taxes shall be withheld from cash payments
made to Participants pursuant to this Plan.
5.7 Termination and Amendment
The Board may from time to time amend, suspend, or terminate
the Plan, in whole or in part, and if the Plan is suspended or
terminated, the Board may reinstate any or all of its
provisions. The Plan Administrator may amend the Plan provided
that it may not suspend or terminate the Plan, substantially
increase the administrative cost of the Plan or increase the
obligations of the Company, or expand the classification of
employees who are eligible to participate in the Plan. No
amendment, suspension or termination may, however, impair the
right of a Participant or his or her Surviving Spouse or
Beneficiary to receive the supplemental benefits accrued prior
to the effective date of such amendment, suspension or
termination.
If the Plan is terminated, Participants, Surviving Spouses and
Beneficiaries who have accrued benefits under the Plan as of
the date of termination will receive payment of such benefits
at the times specified in the Plan.
5.8 ERISA Exemption
The portion of this Plan providing benefits in excess of the
limitations of Section 415 of the Code is intended to qualify
for exemption from the Employee Retirement Income Security Act
of 1974 ("ERISA") as an unfunded excess benefit plan under
Sections 3(36) and 4(b)(5) of ERISA. The portion of this Plan
providing benefits in excess of the limitation of Section
401(a)(17) of the Code and other supplemental benefits is
intended to qualify for exemption from Parts II, III and IV of
ERISA as a plan maintained primarily for the purpose of
providing deferred compensation for a select group of
10
14
management or highly compensated employees under Sections
201(2), 301(a)(3) and 401(a)(1) of ERISA.
5.9 Applicable Law
The Plan shall be construed and governed in accordance with
the laws of the State of Washington.
5.10 Indemnification
The Company agrees, to the extent permitted by law, to
indemnify and hold the Plan Administrator harmless from and
against any liability that the Plan Administrator may incur in
the administration of the Plan (including attorneys' fees and
expenses), unless arising from the Plan Administrator's own
gross negligence, willful misconduct, or willful breach of the
provisions of its obligations under this Plan.
11
15
The Plum Creek Supplemental Benefits Plan is adopted by Plum Creek Timber
Company, L.P.
IN WITNESS WHEREOF, the Company has caused this Plan to be executed on this 8th
day of June, 1993.
For PLUM CREEK TIMBER COMPANY, L.P.
By PLUM CREEK MANAGEMENT COMPANY,
L.P., General Partner
/s/ SUSANNA N. DUKE /s/ KEITH SLETTEN
- ------------------------ ------------------------------
Witness Authorized Officer
Vice President Human Resources
------------------------------
Title
(CORPORATE SEAL)
12
16
APPENDIX A
TO THE
PLUM CREEK SUPPLEMENTAL BENEFITS PLAN
Pursuant to Section 3.1 Participants, the following individuals are
Participants in the Plan commencing on the date specified, and each individual
shall remain a Participant until his or her entire benefit under the Plan is
distributed. The offset amount for each Participant pursuant to Section 4.1(b)
is shown below.
Offset Amount Pursuant to
Name Section 4.1 (b) Commencement Date
------------------ ------------------------- -----------------
1. Charles P. Grenier $ 85,822.88 01/01/93
2. Richard R. Holley $ 103,817.95 01/01/93
3. James A. Kraft $ 63,620.87 01/01/93
4. Robert E. Manne $ 121,427.55 01/01/93
5. Keith B. Sletten $ 269,104.59 01/01/93
6. David D. Leland $3,517,430.10 01/01/93
ACKNOWLEDGED AND APPROVED:
By: /s/ Keith Sletten
----------------------------------
Title: Vice President Human Resources
------------------------------
Date: June 8, 1993
-------------------------------
13
17
APPENDIX B
TO THE
PLUM CREEK SUPPLEMENTAL BENEFITS PLAN
BURLINGTON RESOURCES INC. PENSION PLAN
AS OF DECEMBER 31, 1992
14
18
BURLINGTON RESOURCES INC.
PENSION PLAN
ADOPTED
EFFECTIVE JANUARY 1, 1989
19
TABLE OF CONTENTS
Page
----
PREAMBLE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1 - DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.01 Accrued Benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.02 Active Participant . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.03 Actuarially Equivalent . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.04 Adoption Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.05 Affiliated Companies . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.06 Authorized Leave of Absence . . . . . . . . . . . . . . . . . . . . . . 3
1.07 Basic Monthly Compensation . . . . . . . . . . . . . . . . . . . . . . . 3
1.08 Beneficiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.09 Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.10 Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.11 Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.12 Credited Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.13 Deferred Retirement Benefit . . . . . . . . . . . . . . . . . . . . . . 5
1.14 Deferred Retirement Date . . . . . . . . . . . . . . . . . . . . . . . . 5
1.15 Disabled . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.16 Early Retirement Benefit . . . . . . . . . . . . . . . . . . . . . . . . 5
1.17 Early Retirement Date . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.18 Earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.19 Effective Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
20
Table of Contents
(continued)
Page
-----
1.20 Eligible Employee . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.21 Employee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.22 Employer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.23 Employment Commencement Date . . . . . . . . . . . . . . . . . . . . . . . 7
1.24 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.25 Final Average Monthly Earnings . . . . . . . . . . . . . . . . . . . . . . 7
1.26 Hour of Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.27 Integration Level . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
1.28 Normal Retirement Benefit . . . . . . . . . . . . . . . . . . . . . . . . 8
1.29 Normal Retirement Date . . . . . . . . . . . . . . . . . . . . . . . . . . 8
1.30 Participant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
1.31 Pension Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
1.32 Pension Starting Date . . . . . . . . . . . . . . . . . . . . . . . . . . 9
1.33 Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
1.34 Plan Administrator . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
1.35 Plan Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
1.36 Predecessor Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
1.37 Primary Social Security Benefit . . . . . . . . . . . . . . . . . . . . . 9
1.38 Retirement Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
1.39 Social Security Covered Compensation . . . . . . . . . . . . . . . . . . . 10
1.40 Social Security Retirement Age . . . . . . . . . . . . . . . . . . . . . . 10
1.41 Trust or Trust Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
21
Table of Contents
(continued)
Page
----
1.42 Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
1.43 Vested Termination Benefit . . . . . . . . . . . . . . . . . . . . . . . 11
1.44 Vested Termination Date . . . . . . . . . . . . . . . . . . . . . . . . . 11
1.45 Year of Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
1.46 Additional Definitions in Plan . . . . . . . . . . . . . . . . . . . . . 11
SECTION 2 - PARTICIPATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
2.01 Eligibility for Participation . . . . . . . . . . . . . . . . . . . . . . 13
2.02 Reemployment After Termination . . . . . . . . . . . . . . . . . . . . . 13
2.03 Change of Employment Status . . . . . . . . . . . . . . . . . . . . . . . 13
2.04 Leased Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 3 - RETIREMENT DATES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.01 Normal Retirement Date . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.02 Early Retirement Date . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.03 Deferred Retirement Date . . . . . . . . . . . . . . . . . . . . . . . . 14
3.04 Vested Termination Date . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 4 - RETIREMENT BENEFITS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
4.01 Accrued Benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
4.02 Normal Retirement Benefit . . . . . . . . . . . . . . . . . . . . . . . 16
4.03 Early Retirement Benefit . . . . . . . . . . . . . . . . . . . . . . . . 16
4.04 Deferred Retirement Benefit . . . . . . . . . . . . . . . . . . . . . . 17
4.05 Vested Termination Benefit . . . . . . . . . . . . . . . . . . . . . . . 17
4.06 Reemployment After Retirement . . . . . . . . . . . . . . . . . . . . . 17
22
Table of Contents
(continued)
Page
----
4.07 Benefits For Terminated Participants . . . . . . . . . . . . . . . . . . 18
SECTION 5 - FORMS OF PAYMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.01 Forms of Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.02 Automatic Form of Benefit . . . . . . . . . . . . . . . . . . . . . . . 21
5.03 Limitation on Forms of Payment . . . . . . . . . . . . . . . . . . . . . 22
5.04 Explanation of Forms of Payment . . . . . . . . . . . . . . . . . . . . 22
SECTION 6 - DEATH BENEFITS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
6.01 Pre-Retirement Spouse's Death Benefit . . . . . . . . . . . . . . . . . . 23
6.02 Post Retirement Spouse's Death Benefit . . . . . . . . . . . . . . . . . 26
SECTION 7 - VESTING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
7.01 Vesting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
7.02 Termination Prior to Vesting . . . . . . . . . . . . . . . . . . . . . . 27
7.03 Forfeitures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 8 - LIMITATIONS ON BENEFITS . . . . . . . . . . . . . . . . . . . . . . . . . . 28
8.01 Limitation on Benefits . . . . . . . . . . . . . . . . . . . . . . . . . 28
8.02 Maximum Annual Benefit Payable Under the Plan . . . . . . . . . . . . . 30
8.03 Additional Limitation Relating to Defined Contribution Plans . . . . . . 32
SECTION 9 - TOP HEAVY PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
9.01 Scope . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
9.02 Top Heavy Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
9.03 Minimum Benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
9.04 Benefit Limitation . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
23
Table of Contents
(continued)
Page
----
9.05 Vesting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 10 - ADMINISTRATION OF THE PLAN . . . . . . . . . . . . . . . . . . . . . . . . . 39
10.01 Plan Administrator . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
10.02 The Pension Committee . . . . . . . . . . . . . . . . . . . . . . . . . 39
10.03 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
10.04 Bonding and Insurance . . . . . . . . . . . . . . . . . . . . . . . . . 42
10.05 Commencement of Benefits . . . . . . . . . . . . . . . . . . . . . . . . 43
10.06 Appeal Procedure . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
10.07 Plan Administration - Miscellaneous . . . . . . . . . . . . . . . . . . . 45
10.08 Domestic Relations Orders . . . . . . . . . . . . . . . . . . . . . . . 48
10.09 Plan Qualification . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
10.10 Deductible Contribution . . . . . . . . . . . . . . . . . . . . . . . . 49
10.11 Payment of Benefits Through Purchase of Annuity Contract . . . . . . . . 49
SECTION 11 - PARTICIPATION BY OTHER EMPLOYERS . . . . . . . . . . . . . . . . . . . . . . 51
11.01 Adoption of Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
11.02 Prior Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
11.03 Withdrawal from Participation . . . . . . . . . . . . . . . . . . . . . . 51
11.04 Company As Agent For Employers . . . . . . . . . . . . . . . . . . . . . 51
SECTION 12 - AMENDMENT AND TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . 52
12.01 Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
12.02 Amendment - Consolidation or Merger . . . . . . . . . . . . . . . . . . 52
12.03 Termination of the Plan . . . . . . . . . . . . . . . . . . . . . . . . 52
24
Table of Contents
(continued)
Page
----
12.04 Effect of Withdrawal from Plan . . . . . . . . . . . . . . . . . . . . . 53
12.05 Allocation of the Trust on Termination of Plan . . . . . . . . . . . . . 53
SECTION 13 - FUNDING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
13.01 Contributions to the Trust . . . . . . . . . . . . . . . . . . . . . . . 54
13.02 Trust for Exclusive Benefit of Participants . . . . . . . . . . . . . . 54
13.03 Disposition of Credits and Forfeitures . . . . . . . . . . . . . . . . . 54
13.04 Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
13.05 Investment Manager . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
SIGNATURE PAGE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
APPENDIX I . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
25
PREAMBLE
THIS RETIREMENT PLAN (hereinafter referred to as the "Plan" and known as
the Burlington Resources Inc. Pension Plan) is adopted effective January 1,
1989 by Burlington Resources Inc. (hereinafter "Company").
WHEREAS, the purpose of the Plan is to provide retirement benefits to
employees who become covered under the plan, and
WHEREAS, effective January 1, 1989 the Burlington Northern Inc. Pension
Plan shall spin off assets and liabilities to form this Plan; and
WHEREAS, this Plan is intended to provide identical benefits on the
effective date to those provided under the predecessor Burlington Northern Inc.
Pension Plan on December 31, 1988; and
WHEREAS, the Plan shall be maintained for the exclusive benefit of covered
employees, and is intended to comply with the Internal Revenue Code of 1986, as
amended, the Employee Retirement Income Security Act of 1974, as amended, and
other applicable law;
NOW, THEREFORE, effective January 1, 1989, the Company does hereby adopt
the Plan as set forth in the following pages.
1
26
SECTION 1
DEFINITIONS
The following terms when used herein shall have the following meaning, unless a
different meaning is plainly required by the context. Capitalized terms are
used throughout the Plan text for terms defined by this and other sections.
1.01 Accrued Benefit
"Accrued Benefit" means on any date, the benefit determined under the
formula specified in Section 4.01, as of such date.
Notwithstanding the foregoing, a Participant's Accrued Benefit shall
not be less than his or her Accrued Benefit on December 31, 1988 under
the terms of the Burlington Northern Inc. Pension Plan in effect on
such date.
1.02 Active Participant
"Active Participant" means a Participant who currently qualifies as an
Eligible Employee.
1.03 Actuarially Equivalent
"Actuarially Equivalent" and similar terms (for purposes other than
determining contributions to the Trust) means that the present value
of two payments or series of payments shall be of equal value when
computed at an 8% rate of interest and on the basis of the male
mortality rates under the 1983 Group Annuity Mortality Table,
provided; however, the interest rate and mortality table described
below shall be used to calculate lump sum benefits if they result in a
larger lump sum benefit.
Lump sum benefits shall be calculated based on the 1984 Unisex Pension
Mortality Table set forward one year, and the interest rate shall be
the Pension Benefit Guaranty Corporation interest rate for immediate
or deferred annuities from a single employer plan in effect on
January 1 of the Plan Year which contains the Pension Starting Date.
1.04 Adoption Agreement
"Adoption Agreement" means the agreement executed by each Employer
pursuant to Section 11.01 whereby such Employer adopts the Plan.
2
27
1.05 Affiliated Companies
"Affiliated Companies" means:
(a) the Employer,
(b) any other corporation which is a member of a controlled group
of corporations which includes the Employer (as defined in
Section 414(b) of the Code),
(c) any other trade or business under common control with the
Employer (as defined in Section 414(c) of the Code), or
(d) any other member of an affiliated service group which includes
the Employer (as defined in Section 414(m) of the Code).
For purposes of the limitation on benefits in Sections 8.02 and 8.03,
the determination of whether an entity is an Affiliated Company will
be made by modifying Sections 414(b) and (c) of the Code as specified
in Section 415(h) of the Code.
1.06 Authorized Leave of Absence
"Authorized Leave of Absence" means any absence authorized by an
Employer under the Employer's standard personnel practices, provided,
that the Participant returns to active employment within the period
specified in such Authorized Leave of Absence, or is specifically not
required by the Employer to return to work after such Authorized Leave
of Absence terminates.
1.07 Basic Monthly Compensation
"Basic Monthly Compensation" means a Participant's monthly salary, or
total monthly pay during the last full month of Credited Service with
respect to a Participant paid on an hourly basis, including average
monthly overtime over the last twelve full months of Credited Service
and pre-tax employee contributions to a qualified retirement plan or
welfare benefit plan, but excluding non-deferred bonuses paid or
accrued and the other extraordinary items which are not considered
Earnings.
3
28
1.08 Beneficiary
"Beneficiary" means the person or persons designated to be the
Beneficiary by the Participant in writing to the Pension Committee. In
the event a married Participant designates someone other than his or
her spouse as Beneficiary, such initial designation or subsequent
change shall be invalid unless the spouse consents in a writing which
names the designated Beneficiary and is notarized, or witnessed by a
Plan representative. If no designated Beneficiary survives the
Participant, the Pension Committee may direct that payment of
benefits which may be due may be made to the Participant's estate.
1.09 Code
"Code" means the Internal Revenue Code of 1986, as amended and
including all regulations promulgated pursuant thereto.
1.10 Company
"Company" means Burlington Resources Inc., a Delaware corporation.
1.11 Compensation
"Compensation" for any tax year has the meaning set forth in Section
415(c)(3) of the Code.
1.12 Credited Service
"Credited Service" means:
(a) with respect to an individual who becomes a Participant on
January 1, 1989, the Participant's Credited Service under the
Predecessor Plan as of December 31, 1988, and
(b) all Plan Years commencing on and after January 1, 1989 during
which an Employee completes 1,000 or more Hours of Service for
an Employer, and
(c) with respect to the Plan Years in which service commences and
terminates, the fraction of a Plan Year which is equal to the
Hours of Service for an Employer during such Plan Year divided
by 2,280, and
(d) any period of time immediately following a period during which
the Employee is an Active Participant, during which the
Participant:
4
29
(i) is Disabled,
(ii) is on Authorized Leave of Absence, or
(iii) is laid off due to a reduction of force for a period
not exceeding twelve consecutive months.
1.13 Deferred Retirement Benefit
"Deferred Retirement Benefit" has the meaning set forth in Section
4.04.
1.14 Deferred Retirement Date
"Deferred Retirement Date" has the meaning set forth in Section 3.03.
1.15 Disabled
"Disabled" means a Participant who has not attained age 65 and who
is entitled to benefits under the Employer-sponsored long or short
term disability plan.
1.16 Early Retirement Benefit
"Early Retirement Benefit" has the meaning set forth in Section 4.03.
1.17 Early Retirement Date
"Early Retirement Date" has the meaning set forth in Section 3.02.
1.18 Earnings
"Earnings" for each Plan Year means the total earnings, including
overtime payments for each full month earned by an Employee from an
Employer, including nondeferred cash incentive bonuses paid or accrued
and salary reduction amounts contributed by an Employer on behalf of
the employee to a qualified retirement plan or welfare benefit plan;
but excluding payments under non-qualified deferred compensation
plans, stock option, stock bonus, capital income and phantom stock
plans and all other commissions and extra or added compensation or
benefits of any kind or nature.
Notwithstanding the foregoing, annual Earnings in excess of $200,000
shall be disregarded; provided, however, that this $200,000 limit
shall be automatically adjusted to the maximum permissible dollar
limitation permitted by the Commissioner of the Internal Revenue
Service. In determining Earnings of a
5
30
Participant for purposes of this limitation, the family aggregation
rules of Section 414(q)(6) of the Code shall apply, except in applying
such rules, the term "family" shall include only the spouse of the
Participant and any lineal descendants of the Participant who have not
attained age 19 before the close of the year. If as a result of the
application of such rules the adjusted $200,000 limitation is
exceeded, then the limitation shall be prorated among the affected
individuals in proportion to each such individual's Earnings as
determined under this Section 1.18 prior to the application of this
limitation.
1.19 Effective Date
"Effective Date" means January 1, 1989, or with respect to any
Employer specified in appendices to this Plan, the date such Employer
adopted the Plan.
1.20 Eligible Employee
"Eligible Employee" means any Employee, except any leased employee and
any Employee who is covered under a collective bargaining agreement
where retirement benefits were the subject of good faith bargaining
which does not provide for retirement benefits under this Plan.
Notwithstanding the foregoing, an Employee whose employment commenced
after the first day of the calendar month following his or her 60th
birthday and before January 1, 1988 shall not be considered an
Eligible Employee earlier than January 1, 1988.
1.21 Employee
"Employee" means any person who is employed by an Employer as a common
law employee determined from appropriate personnel records of the
Employer and any leased employee within the meaning of Code Section
414(n)(2); provided, however, if leased employees constitute twenty
percent (20%) or less of all Employer's non-highly compensated work
force, the term "Employee" shall not include a leased employee who is
covered by a plan maintained by the leasing organization which meets
the requirements of Code Section 414(n)(5).
1.22 Employer
"Employer" means Burlington Resources Inc., a Delaware corporation. The
term "Employer" shall also include other companies as provided from
time to time in appendices to this Plan.
6
31
1.23 Employment Commencement Date
"Employment Commencement Date" means the date on which an Employee
first completes an Hour of Service for the Employer or an Affiliated
Company during the current period of employment,
1.24 ERISA
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, including all regulations thereunder.
1.25 Final Average Monthly Earnings
"Final Average Monthly Earnings" means the highest average monthly
Earnings received by the Participant during any 60 consecutive month
period within the last ten years prior to termination. In the event
the Participant has been employed for less than 60 consecutive months,
the computation period shall be based upon (1) the most recent 60
months of employment (whether or not consecutive), or (2) the total
period of employment, whichever is less.
If a Participant is Disabled or is on an Authorized Leave of Absence,
such Participant shall be deemed to receive monthly Earnings during
the period he or she is Disabled or on Authorized Leave of Absence
equal to his or her Earnings for the last calendar month immediately
prior to such Disability or Authorized Leave of Absence.
Notwithstanding the foregoing, an individual who was hired after age
60 and before January 1, 1988 shall be deemed an Active Participant
for purposes of determining Final Average Monthly Earnings for all
periods he or she would have been an Active Participant under the
Predecessor Plan but for the prior exclusion from participation of
employees who were hired after age 60.
1.26 Hour of Service
"Hour of Service" means each hour for which an employee is paid or
entitled to payment by the Employer or any Affiliated Company on
account of:
(a) Performance of duties;
(b) A period of time during which no duties are performed
(irrespective of whether the employment relationship has
terminated) due to vacation, holiday, illness, incapacity
(including disability), layoff, jury duty, military duty, or
Authorized Leave of Absence. Hours under this paragraph shall
be
7
32
calculated and credited pursuant to 29 CFR 2530.200b-2(b) and
(c), which are incorporated herein by this reference; and
(c) An award of back pay, irrespective of mitigation of damages,
agreed to by the Employer or any Affiliated Company. However,
hours credited under (a) or (b) above shall not also be
credited under this subsection (c).
An employee shall be credited with 190 Hours of Service for each month
in which he or she has at least one Hour of Service.
1.27 Integration Level
"Integration Level" means one thirty-sixth of the Social Security Wage
Base (ie., the maximum earnings subject to Social Security taxes) in
the year of termination; provided that the Integration Level
multiplied by twelve shall not exceed Social Security Covered
Compensation.
1.28 Normal Retirement Benefit
"Normal Retirement Benefit" has the meaning set forth in Section 4.02.
1.29 Normal Retirement Date
"Normal Retirement Date" has the meaning set forth in Section 3.01.
1.30 Participant
"Participant" means any Eligible Employee who qualifies for
participation pursuant to Section 2.01 or 2.02. A vested Participant
shall cease to be a Participant when his or her benefit payments from
the plan are completed.
1.31 Pension Committee
"Pension Committee" means the Committee as from time to time
constituted and appointed by the Chief Executive Officer of the
Company to administer the Plan.
1.32 Pension Starting Date
"Pension Starting Date" means (i) the first day of the month for which
a Plan benefit is payable as an annuity, or (ii) in the case of a Plan
benefit not payable in the form of an annuity, the first day on which
all events have occurred which entitle the Participant to such
benefit.
8
33
1.33 Plan
"Plan" means the Burlington Resources Inc. Pension Plan either in its
previous or present form or as amended from time to time.
1.34 Plan Administrator
"Plan Administrator" means the person or entity designated in Section
10 to administer the Plan.
1.35 Plan Year
"Plan Year" means the twelve month period commencing each January 1
and ending each December 31 from and after the Effective Date.
1.36 Predecessor Plan
"Predecessor Plan" initially means the Burlington Northern Inc.
Pension Plan and its predecessor plans, including, without limitation,
the Employees Retirement Income Plan of The El Paso Company and
Affiliated Companies. In the event the Plan recognizes service under
other predecessor plans, the term "Predecessor Plan" shall also
include other plans as provided from time to time in appendices to
this Plan.
1.37 Primary Social Security Benefit
"Primary Social Security Benefit" means the Participants estimated
monthly old age benefit at age 65 from Social Security based on the
Social Security Act provisions in effect on January 1 preceding the
termination date. If the Participant terminates prior to attaining
Early Retirement Age, the Primary Social Security Benefit shall be
calculated on the assumption that his or her earnings remain constant
until age 65. The Primary Social Security Benefit for a Participant
who terminates after attaining Early Retirement Age shall be
determined based on earnings at termination and shall not be adjusted
for any difference between the Primary Social Security Benefit
determined under this provision and the actual primary Social
Security benefit to which he or she ultimately becomes entitled.
Earnings prior to termination may be determined by projecting earnings
backward at 6% per year. A Participant shall be given the opportunity
to provide an actual earnings history in the form specified by the
Pension Committee which will be used in the calculation of the Primary
Social Security Benefit in lieu of the above approximation. However,
the Participant must supply such actual earnings history within one
year after termination. Periods of compensation under the Railroad
9
34
Retirement Act shall be treated as periods of compensation under the
Social Security Act.
1.38 Retirement Date
The Retirement Date for a Participant shall be one of the dates
specified in Sections 3.01, 3.02 or 3.03, on which benefits are to
commence.
1.39 Social Security Covered Compensation
"Social Security Covered Compensation" means the Participant's average
(without indexing) annual Social Security Wage Base (ie. the maximum
earnings for any employee subject to Social Security taxes) for each
calendar year during the 35-year period ending with the calendar year
in which the Participant attains (or will attain) his or her Social
Security Retirement Age.
A Participant's Social Security Covered Compensation shall be adjusted
for each Plan Year. In determining a Participant's Social Security
Covered Compensation for a Plan Year, the Social Security Wage Base
for the current Plan Year and any subsequent Plan Year shall be
assumed to be the same as the Social Security Wage Base in effect as
of the beginning of the Plan Year for which the determination is being
made. A Participant's Social Security Covered Compensation for a Plan
Year after the 35-year period described above is the Participant's
Social Security Covered Compensation for the Plan Year during which
the Participant attained Social Security Retirement Age. A
Participant's Social Security Covered Compensation for a calendar year
before the 35-year period is the Social Security Wage Base in effect
as of the beginning of the Plan Year.
1.40 Social Security Retirement Age
"Social Security Retirement Age" means the following ages depending on
the Participant's year of birth: age 65 for Participants born prior to
1938, age 66 for Participants born after 1937 but prior to 1955, and
age 67 for Participants born after 1954.
1.41 Trust or Trust Fund
"Trust" or "Trust Fund" means the trust fund into which shall be paid
all contributions and from which all benefits shall be paid under this
Plan.
10
35
1.42 Trustee
"Trustee" means the trustee or trustees who receive, hold, invest, and
disburse the assets of the Trust in accordance with the terms and
provisions set forth in a trust agreement.
1.43 Vested Termination Benefit
"Vested Termination Benefit" has the meaning set forth in Section 4.05.
1.44 Vested Termination Date
"Vested Termination Date" has the meaning set forth in Section 3.04.
1.45 Year of Service
"Year of Service" means each January 1 to December 31 period in which
an employee has 1,000 or more Hours of Service. An employee's Years of
Service shall also include all periods of Credited Service pursuant to
Section 1.12(d) which are not otherwise included pursuant to this
Section 1.45.
Where the Employer maintains the plan of a predecessor employer,
service for such predecessor employer will be treated as service for
the Employer, to the extent required by the Code.
Notwithstanding the foregoing, in no event shall a Participant's Years
of Service on the Effective Date be less than his or her Years of
Service on December 31, 1988 under the Burlington Northern Inc.
Pension Plan.
1.46 Additional Definitions in Plan
The following terms are defined in the following sections of the Plan:
Section
-------
Aggregate Account 9.02(e)
Aggregation Group 9.02(h)
Determination Date 9.02(c)
Joint and Survivor Annuity 5.01(b)
Key Employee 9.02(g)
Lump Sum 5.01(c)
Present Value of Accrued Benefits 9.02(f)
Single Life Annuity 5.01(a)
11
36
Section
-------
Super Top Heavy 9.02(b)
Top Heavy 9.02(a)
Valuation Date (for Top Heavy) 9.02(d)
12
37
SECTION 2
PARTICIPATION
2.01 Eligibility for Participation
Each Eligible Employee shall become a Participant under this Plan on
the later of the Effective Date and the first day of the month coinciding with
or next following completion of a twelve consecutive month period within which
the Employee has at least 1,000 Hours of Service. The twelve-month period used
for this determination shall start on the Employee's Employment Commencement
Date and January firsts thereafter.
2.02 Reemployment After Termination
Upon the reemployment of a terminated former Active Participant as an
Eligible Employee, he or she shall immediately become an Active Participant.
An employee who terminates prior to becoming a Participant and is later
reemployed shall become a Participant upon satisfying the requirements of
Section 2.01. In the event 1,000 Hours of Service were earned during a twelve
month period described in Section 2.01 prior to termination, such service shall
be restored upon reemployment.
2.03 Change of Employment Status
If a person who is not a Participant becomes an Eligible Employee
because of a change in employment status, such person shall become a
Participant immediately as of the date of such change if he or she has
satisfied the service requirement of Section 2.01; otherwise, the Eligible
Employee shall become a Participant as of the first day of the month coinciding
with or following satisfaction of such service requirement.
2.04 Leased Employees
Notwithstanding any Plan provision to the contrary, for purposes of
applying the qualified plan requirements set forth in Section 414(n)(3) of the
Code, the term "Employees" shall have the meaning set forth in Plan Section
1.21 herein. However, a leased Employee shall not be eligible to become a
Participant in this Plan.
13
38
SECTION 3
RETIREMENT DATES
3.01 Normal Retirement Date
The Normal Retirement Date for a Participant shall be the first day of
the month coinciding with or next following the attainment of age 65. A
Participant who terminates prior to retirement with a vested Accrued Benefit
shall commence receiving his or her benefit at the Normal Retirement Date,
unless such Participant qualifies for and elects to receive benefits at an
Early Retirement Date.
A Participant shall retire on his or her Normal Retirement Date if:
(a) during the two-year period immediately preceding the Normal
Retirement Date such Participant was employed in a bona fide
executive or high policy making position, and
(b) the aggregate amount of his or her Accrued Benefit together
with any other non-forfeitable retirement benefit from a
pension, profit sharing, deferred compensation plan or any
combination of such plans derived from Employer contributions
is Actuarially Equivalent to at least $44,000 per year
commencing at Normal Retirement Date, payable in the form of a
single life annuity.
3.02 Early Retirement Date
Each Participant who satisfies the early retirement requirements of
his or her Employer's Adoption Agreement may elect, in writing, an Early
Retirement Date. Such Early Retirement Date shall be before the Normal
Retirement Date and after termination on the first day of any month coinciding
with or following the date the early retirement requirements are met.
3.03 Deferred Retirement Date
The Deferred Retirement Date for a Participant who continues working
after the Normal Retirement Date shall be the first day of the month coinciding
with or next following his or her termination date; provided, however, the
Deferred Retirement Date for a Participant shall not be later than April 1
following the calendar year in which he or she attains age 70-1/2, regardless
of whether he or she remains in service after that date.
14
39
3.04 Vested Termination Date
In lieu of a retirement benefit, a Participant who is vested and
terminates prior to retirement may elect in writing upon termination of
employment, to receive the Vested Termination Benefit on a Vested Termination
Date, which shall be the first day of the month following the month in which
termination of employment occurs.
15
40
SECTION 4
RETIREMENT BENEFITS
4.01 Accrued Benefit
The Accrued Benefit for any Participant shall be determined in
accordance with the Adoption Agreement of such Participant's Employer, and the
provisions of this Section 4.01. The Accrued Benefit shall be reduced by the
Actuarial Equivalent of any prior distribution from the Plan. The Accrued
Benefit is payable in the form of a single life annuity commencing at Normal
Retirement Date.
Notwithstanding any other contrary provision of the Plan, the Accrued
Benefit at any time during 1989 for a Participant who is not a highly
compensated employee described in Section 414(q)(1)(A) or (B) of the Code,
shall not be less than his or her Accrued Benefit would have been at such time
if the Accrued Benefit had been determined under the terms of the Burlington
Northern Inc. Pension Plan in effect on December 31, 1988.
Also notwithstanding any Plan provision to the contrary, the Accrued
Benefit for a Participant who is a highly compensated employee described in
Section 414(q)(1)(A) or (B) of the Code, shall be the greater of his or her
Accrued Benefit under the Burlington Northern Inc. Pension Plan as of December
31, 1988, and the Accrued Benefit determined under the terms of this Plan;
provided that such Participant shall not receive a distribution after December
31, 1988 of a benefit that exceeds the benefit he or she had accrued as of
December 31, 1988 under such Predecessor Plan until the date this Plan is
adopted.
4.02 Normal Retirement Benefit
A Participant's monthly Normal Retirement Benefit shall equal his or
her vested Accrued Benefit as of the date of termination, and then adjusted for
form of payment.
4.03 Early Retirement Benefit
The monthly Early Retirement Benefit for a Participant who terminates
on or after his or her earliest Early Retirement Date shall be determined in
accordance with the Adoption Agreement of such Participant's Employer.
16
41
4.04 Deferred Retirement Benefit
A Participant's monthly Deferred Retirement Benefit shall equal his or
her vested Accrued Benefit as of the date of termination, and then adjusted for
form of payment. Service and Earnings beyond Normal Retirement Date shall be
taken into consideration. In no event shall the benefit provided under this
paragraph be less than the retirement benefit to which the Participant would
have been entitled if he or she had actually retired on the Normal Retirement
Date.
In the event a Participant continues working after the date benefits
are required to commence following age 70-1/2 pursuant to Section 10.05, the
Deferred Retirement Benefit shall be recalculated and adjusted annually.
4.05 Vested Termination Benefit
The monthly Vested Termination Benefit shall equal the Participant's
vested Accrued Benefit pursuant to Section 4.01(a)(2) as of the date of
termination, then adjusted for form of payment. In the event the Participant
will receive an annuity form of payment, such benefit shall be reduced by 1/180
for each of the first 60 months by which the Vested Termination Date precedes
the Normal Retirement Date, and reduced by 1/360 for each of the next 60 months
by which the Vested Termination Date precedes the Normal Retirement Date, and
reduced Actuarially thereafter.
4.06 Reemployment After Retirement
Upon reemployment, a retired Participant shall resume accruing
benefits under the Plan. A Participant shall cease to receive retirement
benefits during any month during which the Participant works on 8 or more days
(or works during 8 or more separate work shifts) and which is before the date
benefits are required to be paid following age 70-1/2 pursuant to Section
10.05. In the event such a Participant is reemployed and works on less than 8
days (and works less than 8 separate work shifts) in any month, he or she shall
continue receiving retirement benefits during such month. At the Participant's
subsequent retirement, benefits payable shall be based on his or her total
Credited Service and Earnings at the time of subsequent retirement, and shall
be reduced by the Actuarially Equivalent value of benefits previously received
by the Participant. In no event shall the benefit upon subsequent retirement,
prior to any reduction for previously received benefits, be less than the
initial retirement benefit.
17
42
4.07 Benefits For Terminated Participants
Benefits under the Plan shall be determined and paid in accordance
with the provisions of the Plan in effect on the most recent date of a
termination of employment.
18
43
SECTION 5
FORMS OF PAYMENT
5.01 Forms of Payment
The following forms of benefit payments are available under this Plan:
(a) Single Life Annuity:
A single life annuity shall be payable monthly from the
Retirement Date or Vested Termination Date through the first
of the month preceding death. The amount of the monthly
benefit shall equal the monthly Normal, Early or Deferred
Retirement Benefit or Vested Termination Benefit, whichever
applies.
(b) Joint and Survivor Annuity:
A reduced joint and survivor annuity shall be payable monthly
to a Participant from the Retirement Date or Vested
Termination Date through the first of the month preceding
death. Following the Participant's death, a benefit equal to
25%, 50%, 75% or 100% of the reduced mount payable to the
Participant shall be payable for life to the Participant's
spouse, if living at the time of the Participant's death. A
Participant who elects a Normal, Early or Deferred Retirement
Benefit may elect which percentage shall be payable to the
spouse. A Participant who elects a Vested Termination Benefit
may not elect a 25%, 75% or 100% joint and survivor annuity.
If the spouse dies after the Participant's benefit begins, the
Participant's payments will be in the same reduced amount as is
otherwise payable under the joint and survivor annuity. If the
spouse dies prior to the date as of which the Participant's
benefit begins, any election of a form of benefit under this
Section 5.01(b) shall be automatically canceled. If the
Participant dies prior to the date as of which his or her
benefit is to begin, the spouse shall not be entitled to
receive any payments under this Section 5.01(b). However, a
spouse joint annuitant may be entitled to a benefit under
Section 6.01.
(i) The 25% joint and survivor annuity shall be equal to
the Participant's benefit payable in the form of a
single life annuity multiplied by the following
factor (not to exceed 1):
19
44
FACTOR = .93 - .0025 x (AGE DIFFERENCE) where
AGE DIFFERENCE is the Participant's age less
the spouse's age (computed to the birthdate
anniversary nearest the Retirement Date or
Vested Termination Date, whichever applies).
(ii) The 50% joint and survivor annuity shall be equal to
the Participant's benefit payable in the form of a
single life annuity multiplied by the following
factor (not to exceed 1):
FACTOR = .87 - .005 x (AGE DIFFERENCE) where
AGE DIFFERENCE is the Participant's age less
the spouse's age (computed to the birthdate
anniversary nearest the Retirement Date or
Vested Termination Date, whichever applies).
(iii) The 75% joint and survivor annuity shall be equal to
the Participant's benefit payable in the form of a
single life annuity multiplied by the following
factor (not to exceed 1):
FACTOR = .82 - .006 x (AGE DIFFERENCE) where
AGE DIFFERENCE is the Participant's age less
the spouse's age (computed to the birthdate
anniversary nearest the Retirement Date or
Vested Termination Date, whichever applies).
(iv) The 100% joint and survivor annuity shall be equal to
the Participant's benefit payable in the form of a
single life annuity multiplied by the following
factor (not to exceed 1):
FACTOR = .79 - .0075 x (AGE DIFFERENCE) where
AGE DIFFERENCE is the Participant's age less
the spouse's age (computed to the birthdate
anniversary nearest the Retirement Date or
Vested Termination Date, whichever applies).
(c) Lump Sum:
A lump sum distribution shall be a single sum payment,
Actuarially Equivalent to the Participant's Early, Normal or
Deferred Retirement Benefit, or Vested Termination Benefit,
whichever applies and shall represent the Participant's entire
interest in the Plan.
A Participant in the Plan on January 1, 1989 may elect a lump
sum form of payment of any amount if he or she elects to
receive a Vested Termination Benefit. Such a Participant may
elect a lump sum form of payment if the amount is $25,000 or
less if he or she elects to receive a Normal, Early or
Deferred Retirement Benefit.
20
45
An Eligible Employee who becomes a Participant after January
1, 1989 may elect a lump sum form of payment if he or she
elects to receive a Vested Termination Benefit or a Normal,
Early or Deferred Retirement Benefit, provided, a lump sum may
only be elected if the amount is $25,000 or less.
5.02 Automatic Form of Benefit
Unless a Participant elects otherwise, benefits shall be paid as
provided below:
(a) Married Participants
The qualified joint and survivor annuity under this Plan with
respect to a married Participant shall be the 50% joint and
survivor annuity. Any Participant who is married on his or
her Retirement Date or Vested Termination Date, whichever
applies, shall automatically be deemed to have elected the 50%
joint and survivor annuity option, effective as of such date,
with his or her spouse as the joint annuitant.
A Participant may reject the statutory 50% joint and survivor
annuity option, by filing a written notice with the Pension
Committee within 90 days prior to his or her Pension Starting
Date. Such initial notice, or any subsequent change, must
specify the forms of payment elected and acknowledge the
effect of the election, and must be signed by the
Participant's spouse. The spouse's signature must be
notarized, or witnessed by a Plan representative. In the event
the statutory 50% joint and survivor annuity option is
rejected and another form is not elected, benefits shall be
paid in the form of a single life annuity.
A married Participant may file a rejection notice or revoke
any such notice at anytime during the ninety-day period
immediately preceding the Pension Starting Date.
(b) Single Participants
The qualified joint and survivor annuity under the Plan with
respect to an unmarried Participant shall be the single life
annuity. Any unmarried Participant shall receive his or her
Retirement or Vested Termination Benefits in the form of a
single life annuity.
An unmarried Participant may reject the single life annuity
option by filing a written notice with the Pension Committee
with ninety days prior to his or her Pension Starting Date. An
unmarried Participant may file a rejection notice or revoke
any such notice at any time during the ninety-day period
immediately preceding the Pension Starting Date.
21
46
5.03 Limitation on Forms of Payment
A Participant may not elect a joint annuitant other than his or her
spouse. A Participant must elect a form of payment under which payments will be
completed within the Participant's and Beneficiary's life times or within their
life expectancies.
5.04 Explanation of Forms of Payment
The Pension Committee shall furnish each Participant with a written
explanation in non-technical language of the terms and conditions of the forms
of payment within a reasonable period (but not more than ninety days) prior to
the Participant's Pension Starting Date.
22
47
SECTION 6
DEATH BENEFITS
6.01 Pre-Retirement Spouse's Death Benefit
In the event an Eligible Employee or a Participant dies before
commencing to receive Retirement or Vested Termination Benefits under the Plan,
his or her spouse may receive a pre-retirement death benefit. The amount of the
spouse's benefit and time of commencement is described below. The spouse of a
Participant who has started to receive benefits is not entitled to this death
benefit.
(a) Death While Employed
If an Eligible Employee dies while in the employ of an
Employer, such Employee's surviving spouse shall receive a
monthly benefit. The monthly benefit shall commence on the
later of:
(i) the first day of the month following death, or
(ii) the Participant's Normal Retirement Date, determined
as if he or she had survived, or the first day of any
earlier month elected by the surviving spouse which
is on or after the Participant's death.
The amount of such monthly benefit shall be equal to 50% of
the Accrued Benefit determined for such Eligible Employee,
(iii) if death occurs on or after Normal Retirement Date,
as if he or she had retired on the day immediately
prior to his or her death, or
(iv) if death occurs before Normal Retirement Date, based
on the assumption that such Eligible Employee died on
his or her Normal Retirement Date, completed 30 years
of Credited Service and that his or her Basic Monthly
Compensation at death continued until Normal
Retirement Date, provided that such Basic Monthly
Compensation shall be increased by the average mount
of non-deferred cash bonus actually earned by such
Eligible Employee during the five calendar years
preceding his or her death.
23
48
The monthly benefit described in this subparagraph (a) shall
continue to be paid to such surviving spouse until the earlier
of such spouse's death or remarriage provided, however, that
had the Participant been vested prior to death, the spouse
shall receive a monthly benefit after remarriage equal to the
amount payable to the surviving spouse under a 50% joint and
survivor annuity form of payment as if the Participant had
commenced receiving Retirement or Vested Termination Benefit
payments as of the date spouse benefits commence.
At the death of a spouse entitled to benefits under this
subparagraph (a), provided such spouse did not remarry, a lump
sum payment shall be made to his or her estate in the event
dependent children of the Eligible Employee survive such
spouse. The lump sum payment shall be Actuarially Equivalent
to the payment of the monthly amount described above which was
payable to the spouse commencing on the first day of the month
following the spouse's death and continuing through the first
day of the month preceding the youngest child's eighteenth
birthday.
If at the Eligible Employee's death there is no surviving
spouse, a lump sum payment shall be paid to or on behalf of the
Eligible Employee's dependent children, to be used for the
benefit of such children as the person providing the care and
support for such children shall deem appropriate. The lump sum
payment shall be Actuarially Equivalent to the payment of the
monthly benefit described in the first paragraph of this
subsection (a) commencing on the first day of the month
following the Participant's death and continuing through the
first day of the month preceding the youngest child's
eighteenth birthday.
If an Eligible Employee should die before becoming a
Participant, he or she shall be treated as having become a
Participant on the day he or she became an Eligible
Employee.
Notwithstanding the foregoing, in no event shall the
Actuarially Equivalent value of the spouse benefit payable
under this subsection 6.01(a) be less than the Actuarially
Equivalent value of the pre-retirement survivor annuity
benefit required pursuant to Code Section 417.
(b) Death Following Termination Prior to Early Retirement Date
If the Participant dies after becoming vested and terminating
employment, and prior to becoming eligible to elect an Early
Retirement Date, such Participant's surviving spouse shall
receive a monthly benefit provided they were married
throughout the one year period ending on the date of death.
The monthly benefit shall commence on the later of:
24
49
(i) the first of the month following death, or
(ii) the Participant's Normal Retirement Date, determined
as if he or she had survived, or the first day of any
earlier month elected by the surviving spouse which
is on or after the Participant's earliest Early
Retirement Date,
and continue through the first of the month preceding the
spouse's death.
The benefit shall equal the amount payable to the surviving
spouse under a 50% joint and survivor annuity form of payment
as if the Participant had commenced receiving a Vested
Termination Benefit as of the date spouse benefits commence.
The spouse of a Participant in the Plan on January 1, 1989 may
elect to receive a lump sum form of payment of any amount in
lieu of the monthly benefit described above. The spouse of a
Participant who became a Participant after January 1, 1989 may
elect to receive a lump sum form of payment if the mount is
$25,000 or less, in lieu of the monthly benefit described
above. Such election must be in writing and prior to the
actual commencement of monthly benefits. A lump sum benefit is
only payable on the first of the month following the
Participant's date of death, or as soon thereafter as
administratively feasible. The lump sum benefit shall be
Actuarially Equivalent to the monthly benefit described above.
(c) Death Following Termination, Following Early Retirement Date
If the Participant dies after becoming vested and terminating
employment, and after his or her Normal Retirement Date, or
after he or she becomes eligible to elect an Early Retirement
Date, such Participant's surviving spouse shall receive a
monthly benefit provided they were married throughout the one
year period ending on the date of death. The monthly benefit
shall commence on the later of:
(i) the first day of the month following death, or
(ii) the Participant's Normal Retirement Date, determined
as if he or she had survived, or the first day of any
earlier month elected by the surviving spouse which
is on or after the Participant's death,
and continue through the first of the month preceding the
spouse's death.
25
50
The benefit shall equal the amount payable to the surviving
spouse under a 50% joint and survivor annuity form of payment
as if the Participant had commenced receiving Retirement
Benefit payments as of the date spouse benefits commence.
The surviving spouse may elect to receive a lump sum form of
payment in lieu of the monthly benefit described above,
provided the Actuarial Equivalent of the benefit provided
under this subparagraph (c) and the benefit payable under
Section 6.02, if any, does not exceed $25,000. In the event
the surviving spouse elects a lump sum payment, any benefit
payable under Section 6.02 shall also be paid as a lump sum.
Such election must be in writing and prior to the date monthly
benefits would otherwise commence. A lump sum benefit is only
payable on the first of the month following the Participant's
date of death, or as soon thereafter as administratively
feasible. The lump sum benefit shall be Actuarially Equivalent
to the monthly benefit described above.
6.02 Post-Retirement Spouse's Death Benefit
Upon the death of a Participant who was a Participant in the
Burlington Northern Inc. Pension Plan on December 31, 1983 and who terminated
on or after his or her earliest Retirement Date, and had Credited Service prior
to January 1, 1984, the Participant's surviving spouse, if the Participant was
married to such spouse throughout the one-year period ending on the Retirement
Date, shall receive a monthly benefit commencing on the first day of the month
following the date of the Participant's death, and continuing through the first
day of the month preceding the spouse's death. The amount of such monthly
benefit shall be equal to .5% (1/2 percent) of such Participant's "limited
compensation" multiplied by the number of his or her years of Credited Service
as of January 1, 1984. For purposes of this Section 6.02, "limited
compensation" means 90% of the Participant's Basic Monthly Compensation as of
December 31, 1983 increased by the average amount of non-deferred cash bonus
paid or accrued to such Participant from 1979 through 1983.
26
51
SECTION 7
VESTING
7.01 Vesting
Each Participant shall have a vested, nonforfeitable right to his or
her Accrued Benefit multiplied by the appropriate vesting percentage in
accordance with the following table:
Years of Service Percent Vested
---------------- --------------
Less than 5 0%
5 100%
In addition, each Participant shall have a 100% nonforfeitable right
to his or her Accrued Benefit on death, or the date he or she attains age 65,
provided he or she is an Employee on such date. An employee who terminates with
0% vested shall be deemed "nonvested".
7.02 Termination Prior to Vesting
For vesting and Accrued Benefit purposes, all Years of Service and
Credited Service before and after a break-in-service shall be aggregated.
Notwithstanding the foregoing, in the event service is forfeited under
the terms of a Predecessor Plan and the individual later becomes a Participant
in this Plan, such forfeited service shall remain forfeited.
7.03 Forfeitures
Any forfeitures arising under this Plan shall be used only to offset
future Employer contributions and shall not affect any Participant's Accrued
Benefit.
27
52
SECTION 8
LIMITATIONS ON BENEFITS
8.01 Limitation on Benefits
To prevent discrimination in favor of highly-compensated Participants
upon early termination of the Plan, the following limitations govern allocation
of Trust assets.
(a) General Rule
During the first ten years after any "Commencement Date" (as
defined below) or if later, until the full current costs of
the plan are first met, the benefits provided by the
Employer's contributions to employees in the "Restricted
Group" (as defined below) are subject to the limitations set
forth in paragraph (c) below.
(b) Definitions
For the purposes of these limitations:
(1) Commencement Date means the Effective Date, or the
effective date of any subsequent amendment of the
Plan which substantially increases the extent of
possible discrimination as to contributions and
benefits actually payable in the event of subsequent
discontinuance of contributions or Plan termination;
(2) the Restricted Group consists of the twenty-five
highest-paid employees as of any Commencement Date,
including any employees who are not Participants but
may later become Participants, whose annual
retirement benefit provided by the Employer's
contributions can be anticipated to exceed $1,500.
(c) Limitation
Subject to the conditions set forth in paragraphs (a) and (b)
above, the amount of Employer contributions (or funds
attributable thereto) that may be applied for the benefit of
any Participant in the Restricted Group shall not exceed the
greater of:
(1) Employer contributions (or funds attributable
thereto) which would have been applied to provide
retirement benefits for the Participant under the
Plan if the Plan as in effect on the day preceding
the Commencement Date had been continued without
change;
28
53
(2) $20,000;
(3) the sum of (i) the Employer's contributions (or funds
attributable thereto) which would have been applied
to provide retirement benefits for the employee if
the Plan had been terminated on the day before the
Commencement Date, plus (ii) 20% of the first $50,000
of the Participant's average annual compensation
during the last five years multiplied by the number
of years since the Commencement Date for which the
full current costs have been met; or
(4) (i) if the Participant is a substantial owner (as
defined in Section 4022(b)(5) of ERISA), a dollar
amount equal to the present value of the benefit
guaranteed for the Participant under Section 4022 of
ERISA or, if the Plan has not terminated, the present
value of the benefit that would be guaranteed if the
Plan had terminated on the date the benefit
commences, or (ii) if the Participant is not a
substantial owner, a dollar mount equal to the
present value of the maximum benefit described in
Section 4022(b)(3)(B) of ERISA (determined on the
date the Plan terminates or the date benefits
commence, whichever is earlier).
For purposes of subparagraph (4), the present value of any
benefit shall be determined in accordance with regulations of
the Pension Benefit Guaranty Corporation, and for purposes of
clause (ii), without regard to any other limitations in
Section 4022 of ERISA.
(d) Limitations Not Effective
The limitations contained in this Section 8.01 shall not
restrict the current payment of benefits in a form of payment
that does not provide more rapid payments than a single life
annuity, while the Plan is in full effect and the full current
costs are met. Further, the limitations shall not restrict the
payment of a lump sum benefit or other form of payment more
rapid than a single life annuity, to a Participant in the
Restricted Group provided the Participant agrees to repay
benefits received in the event the full current costs are not
met or the Plan terminates early. Such Participant must agree
to repay amounts paid to him or her to the extent they exceed
the greater of the amount he or she would have received if the
restrictions under this Section 8.01 had been applied, or the
amount he or she would have received under a single life
annuity form of payment. The agreement to repay must be
secured by deposit in escrow of property having a market value
of 125% of the amount subject to repayment, and the value of
the escrow shall be maintained at not less than 110% of such
amount.
29
54
(e) Excess Funds
Any funds not allocated to a Participant as a result of this
Section shall be used proportionately to provide additional
benefits for all other Participants.
8.02 Maximum Annual Benefit Payable Under the Plan
For purposes of this Section 8.02, the Employer and any affiliated
Companies shall be considered a single employer, to the extent required by the
Code.
(a) Primary Rule
Notwithstanding any other Plan provision to the contrary, the
annual Employer provided benefit payable to or on behalf of a
Participant under the Plan (after any adjustments required
under the Plan to reflect commencement of benefits other than
at Normal Retirement Date, an optional form of payment or
death benefit coverage) shall not exceed the lesser of:
(1) $90,000 adjusted in accordance with this Section
8.02) or, if greater, the Participant's current
Accrued Benefit on December 31, 1982 under the
Burlington Northern Inc. Pension Plan; or
(2) the Participant's average annual Compensation from
the Employer for the consecutive calendar years (not
in excess of three such years) during which he or she
was an active Participant in the Plan and for which
such average is highest.
(b) Cost-of-Living Adjustment
The $90,000 limit prescribed above shall be automatically
adjusted for cost-of-living increases, to the maximum
permissible dollar limitation determined by the Commissioner
of the Internal Revenue Service. The dollar amount applicable
in computing the benefit payable to any Participant shall be
the dollar amount in effect for the calendar year in which the
benefit commences. For 1989, the limit is $98,064.
30
55
(c) Adjustment for Early or Late Retirement
For purposes of Sections 8.02 and 8.03, if the Participant's
benefit commences before the Social Security Retirement Age,
the limit prescribed in Section 8.02(a)(1) shall be
Actuarially reduced to reflect such early commencement. If the
Participant's benefit commences after the Social Security
Retirement Age, the limit prescribed in Section 8.02(a)(1)
shall be Actuarially increased for purposes of Sections 8.02
and 8.03 to reflect such late commencement.
(d) Annual Benefit
Notwithstanding the foregoing, if the benefit to be paid to a
Participant under the Plan is not in the form of an "Annual
Benefit" as described below, the benefit considered to be
payable to a Participant under the Plan for purposes of
Sections 8.02 and 8.03 shall be Actuarially adjusted to the
extent required under Section 415(b)(2) of the Code. For
purposes of the foregoing, "Annual Benefit" means the benefit
payable annually in the form of a straight life annuity
without ancillary benefits or in the statutory 50% joint and
survivor annuity option.
(e) Interest Rate
Any Actuarial adjustments under this Section 8.02 shall be
based on the Actuarial Equivalent factors applicable for
comparable purposes under the Plan on the applicable date,
except that the interest rate shall be 5%.
(f) Special Provisions Regarding Participants With Fewer Than Ten
Years of Participation or Service
In the case of any Participant who Participates in the Plan
for fewer than ten years, the maximum dollar benefit otherwise
applicable under Section 8.02(a)(1) shall be multiplied by a
fraction whose numerator is the Participant's years of
participation in the Plan (including fractions thereof, but
not less than one) and whose denominator is ten.
In the case of any Participant who was employed by the
Employer for fewer than ten years, the maximum benefit
otherwise applicable under Sections 8.02(a)(2) and 8.03 shall
be multiplied by a fraction whose numerator is the
Participant's years of employment with the Employer (including
fractions thereof, but not less than one) and whose
denominator is ten.
31
56
(g) Aggregation With Other Defined Benefit Plans
If a Participant also participates in any other defined
benefit pension plan maintained by the Employer, the
provisions of Sections 8.02 and 8.03 shall be applied on an
aggregate basis to the benefits payable under this Plan and
each such other plan. Any reduction in the aggregate benefits
payable under this Plan and any such other plan due to the
application of this Section shall be made on a pro rata basis.
8.03 Additional Limitation Relating to Defined Contribution Plans
(a) Primary Rule
For Participants who participate in this Plan and a defined
contribution plan maintained by the Employer, the sum of (1)
and (2) below for any calendar year may not exceed 1.0, as
determined by the Pension Committee.
(1) The defined benefit plan fraction for any year is
equal to the quotient of (i) divided by (ii) below
expressed as a fraction:
(i) The projected annual benefit (determined by
projecting service, but not Earnings, to
normal retirement age) of the Participant
under the Plan determined as of the close of
the year.
(ii) The lesser of: (a) 1.25 multiplied by the
dollar limitation determined under Section
8.02 (a)(1) in effect for such year, or (b)
1.4 multiplied by the limitation determined
under Section 8.02 (a)(2) (generally, 100%
of the Participant's average annual
Compensation).
(2) The defined contribution plan fraction for any year
is equal to the quotient of (i) divided by (ii) below
expressed as a fraction:
(i) The sum of the "annual additions" to the
Participant's accounts for the current year,
as of the close of the year, and for all
prior years.
(ii) The sum of the lesser of the following
amounts for such year and for each prior year
of service with the Employer (regardless of
whether a plan was in existence during those
years): (a) 1.25 multiplied by the dollar
limitation in effect for defined contribution
plans under Section 415 of the Code for such
year, or (b) 1.4 multiplied by 25% of a
Participant's Compensation for such year.
32
57
(b) Remedy
If such sum exceeds 1.0, the benefit under this defined
benefit Plan shall be reduced to the extent necessary to
satisfy the limitation of this section.
33
58
SECTION 9
TOP HEAVY PROVISIONS
9.01 Scope
Notwithstanding any Plan provision to the contrary, for any Plan Year
in which the Plan is Top Heavy within the meaning of Section 416(g) of the
Code, the provisions of this Section 9 shall govern to the extent they conflict
with or specify additional requirements to the Plan provisions governing Plan
Years which are not Top Heavy.
9.02 Top Heavy Status
(a) Top Heavy
This Plan shall be "Top Heavy" if, as of the Determination
Date, (1) the sum of the Aggregate Accounts of Key Employees,
or (2) the Present Value of Accrued Benefits of Key Employees
under this Plan and any plan of an Aggregation Group, exceeds
60% of the Aggregate Accounts or the Present Value of Accrued
Benefits of all Participants under this Plan and any plan of
an Aggregation Group.
The Present Value of Accrued Benefits and/or Aggregate Account
balance of a Participant who was previously a Key Employee but
is no longer a Key Employee (or his or her Beneficiary), shall
not be taken into account for purposes of determining Top
Heavy status. Further, a Participant's Present Value of
Accrued Benefits and/or Aggregate Account balance shall not be
taken into account if he or she has not performed services for
the Affiliated Companies during the five year period ending
on the Determination Date.
(b) Super Top Heavy
This Plan shall be "Super Top Heavy" if, as of the
Determination Date, (1) the sum of the Aggregate Accounts of
Key Employees, or (2) the Present Value of Accrued Benefits of
Key Employees under this Plan and any plan of an Aggregation
Group, exceeds 90% of the Aggregate Accounts or the Present
Value of Accrued Benefits of all Participants under this Plan
and any plan of an Aggregation Group.
(c) Determination Date
Whether the Plan is Top Heavy for any Plan Year shall be
determined as of the Determination Date. "Determination Date"
means (a) the last day
34
59
of the preceding Plan Year, or (b) in the case of the first
Plan Year, the last day of such Plan Year.
(d) Valuation Date
"Valuation Date" means, for purposes of determining Top
Heaviness, the Determination Date.
(e) Aggregate Account
"Aggregate Account" means, with respect to a Participant, his
or her adjusted account balance in a defined contribution
plan, as determined under the top heavy provisions of such
plan.
(f) Present Value of Accrued Benefits
"Present Value of Accrued Benefits" means the sum of:
(i) the Actuarial Equivalent present value of the accrued
normal retirement benefit under the Plan as of the
Valuation Date, and
(ii) distributions prior to the Valuation Date, made
during the Plan Year that contains the Determination
Date and the four preceding Plan Years.
(g) Key Employee
"Key Employee" means an employee or former employee (and his
or her Beneficiaries) who, at any time during the Plan Year
containing the Determination Date or any of the four preceding
Plan Years, is included in one of the following categories as
within the meaning of Section 416(i) of the Code and
regulations thereunder.
(i) an officer of the Employer whose annual aggregate
Compensation from Affiliated Companies exceeds 50% of
the dollar limitation under Section 415(b)(1)(A) of
the Code (for 1989, this amount is $49,032), provided
that no more than 50 employees shall be considered
officers, or if less, the greater of 10% of the
employees or 3,
(ii) one of the ten employees owning the largest interest
in the Employer who owns more than a 0.5% interest of
the Employer, and whose annual aggregate Compensation
from the Affiliated Companies exceeds the dollar
limitation under Section 415(c)(1)(A) of the Code
(for 1989, this amount is $30,000),
35
60
(iii) an employee who owns more than 5% of the Employer, or
(iv) an employee who owns more than 1% of the Employer
with annual aggregate Compensation from the
Affiliated Companies that exceeds $150,000.
(h) Aggregation Group
"Aggregation Group" means the group of plans that must be
considered as a single plan for purposes of determining
whether the plans within the group are Top Heavy (Required
Aggregation Group), or the group of plans that may be
aggregated for purposes of Top Heavy testing (Permissive
Aggregation Group). The Determination Date for each plan must
fall within the same calendar year in order to aggregate the
plans.
(i) The Required Aggregation Group includes each plan of
the Affiliated Companies in which a Key Employee is a
participant in the Plan Year containing the
Determination Date or any of the four preceding Plan
Years, and each other plan of the Affiliated
Companies which, during this period, enables any plan
in which a Key Employee participates to meet the
minimum participation standards or non-discriminatory
contribution requirements of Code Sections 401(a)(4)
and 410.
(ii) A Permissive Aggregation Group may include any plan
sponsored by an Affiliated Company provided the group
as a whole continues to satisfy the minimum
participation standards and non-discriminatory
contribution requirements of Code Sections 401(a)(4)
or 410.
Each plan belonging to a Required Aggregation Group shall be
deemed Top Heavy, or non-Top Heavy in accordance with the
group's status. In a Permissive Aggregation Group that is
determined Top Heavy only those plans that are required to be
aggregated shall be Top Heavy. In a Permissive Aggregation
Group that is not Top Heavy, no plan in the group shall be Top
Heavy.
9.03 Minimum Benefit
(a) General Rule
For any Top Heavy Plan Year, a non-Key Employee who completes
a Year of Service shall have an Accrued Benefit at least equal
to the minimum benefit described herein. The minimum Accrued
Benefit at any point in time equals the lesser of:
(i) two percent multiplied by Top Heavy Years of Service,
or
36
61
(ii) twenty percent,
multiplied by such Participant's "Average Compensation".
"Average Compensation" means a Participant's average
Compensation for the five consecutive years when such
Participant had the highest aggregate Compensation from the
Employer. However, Compensation received for non-Top Heavy
Plan Years shall be disregarded. The benefit described herein
is expressed as an annual benefit in the form of a single life
annuity (with no ancillary benefits), commencing at normal
retirement age.
A non-Key Employee shall not be denied this minimum benefit
because he or she was not employed on a specified date, failed
to make any mandatory employee contributions, or failed to
earn a specified amount of Compensation.
(b) Special Two Plan Rule
Where this Plan and a defined contribution plan belong to an
Aggregation Group that is determined Top Heavy, the minimum
benefit required under (a) above for any non-Key Participant
who also participates in the defined contribution plan shall
be reduced by the minimum contribution and forfeiture
allocated to the non-Key Participant's accounts pursuant to the
defined contribution plan's top heavy provisions. Such offset
shall be in accordance with the safe harbor rules of Treasury
Regulation 1.416-1(m-12).
9.04 Benefit Limitation
For any Top Heavy Plan Year in which the Employer does not make the
extra minimum allocation provided below, 1.0 shall replace the 1.25 factor
found in the denominators of the defined benefit and defined contribution plan
fractions for purposes of calculating the combined limitation on benefits under
a defined benefit and defined contribution plan pursuant to Section 415(e) of
the Code [see Section 8.03].
If this Plan is Top Heavy, but is not Super Top Heavy, the above
referenced fractions shall remain unchanged provided the Employer provides an
extra minimum Accrued Benefit for each non-Key Employee. The extra benefit (in
addition to the minimum benefit set forth in Section 9.03) shall equal the
lesser of:
(i) one percent multiplied by Top Heavy Years of Service, or
(ii) ten percent,
multiplied by such Participant's "Average Compensation", as defined in Section
9.03.
37
62
9.05 Vesting
(a) Top Heavy Schedule.
For any Top Heavy Plan Year, each Participant who completes an
Hour of Service in such Year shall become vested and have a
nonforfeitable right to retirement benefits he or she has
earned under the Plan in accordance with the following table:
Years of Service Vesting Percentage
---------------- ------------------
Less than 2 0%
2 20%
3 40%
4 60%
5 or More 100%
Provided, however, that a Participant's vesting percentage
shall not be less than the percentage determined under the
table in Section 7.01.
(b) Return to Non-Top Heavy Status
If the Plan becomes Top Heavy and ceases to be Top Heavy in
any subsequent Plan Year, the vesting schedule shall
automatically revert to the vesting schedule in effect before
the Plan became Top Heavy. Such reversion shall be treated as
a Plan amendment pursuant to the terms of the Plan, and shall
not cause a reduction of any Participant's nonforfeitable
interest in the Plan on the date of such amendment.
A Participant with three or more Years of Service as of the
end of the election period, may elect to remain covered by the
Top Heavy 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:
(i) the adoption date of the amendment,
(ii) the effective date of the amendment, or
(iii) the date the Participant receive written notice of
the amendment from the Pension Committee.
38
63
SECTION 10
ADMINISTRATION OF THE PLAN
10.01 Plan Administrator
Each Employer, and the members of the Pension Committee, and the
Senior Vice President-Finance and the Senior Vice President-Human Resources and
Administration of the Company (or officers holding the equivalent positions)
shall be deemed fiduciaries. Each fiduciary shall have only those specific
powers, duties, responsibilities and obligations provided to them under the
Plan or the Trust, as follows:
(a) The Company shall have the sole authority to appoint and
remove the Trustee and the investment manager.
(b) The Company shall be the Plan Administrator. The Pension
Committee acting on behalf of the Company shall have the sole
authority to and responsibility for the administration of the
Plan as specified in the Plan and the Trust, including the
discretionary authority to interpret the provisions of the
Plan and the facts and circumstances of claims for benefits.
The Senior Vice President-Human Resources and Administration
(or the officer holding the equivalent position) shall have
the responsibility of implementing the administration of the
Plan as the Pension Committee shall direct.
(c) The Trustee shall have the responsibility for administration
of the Trust and management of the assets held under the Trust
as provided therein.
Each fiduciary may rely upon any such direction, information
or action of another fiduciary as being proper under the Plan
or the Trust, and is not required to inquire into the
propriety of any such direction, information or action. Each
fiduciary may designate any person, partnership or
corporation, to carry out any of its responsibilities under the
Plan or the Trust. Any such designation shall be reduced to
writing, and such writing shall be kept with the records of
such fiduciary. No fiduciary guarantees the Trust Fund in any
manner against investment loss or depreciation in asset value.
10.02 The Pension Committee
(a) General
The Chief Executive Officer of the Company shall appoint a
committee consisting of three or more members which shall be
known as the Pension Committee. The Pension Committee shall be
responsible for carrying out the Company's duties as Plan
Administrator and, except for duties specifically
39
64
vested in the Trustee, for the administration of the
provisions of the Plan. The Chief Executive Officer of the
Company shall have the right at any time, with or without
cause, to remove any member or members of the Pension
Committee. A member of the Pension Committee may resign,
effective upon delivery of a written resignation to the Chief
Executive Officer of the Company.
Upon the resignation, removal or failure or inability for any
reason of any member of the Pension Committee to act
hereunder, the Chief Executive Officer of the Company shall
appoint a successor member if the failure to do so would cause
the Pension Committee to consist of less than three members.
All successor members of the Pension Committee shall have all
the rights, privileges and duties of their predecessors, but
shall not be held accountable for the acts of their
predecessors.
(b) Notice to Trustee of Committee Members
Promptly after the appointment of the original members, and
any successor member of the Pension Committee, the Trustee
shall be notified as to the names of the persons appointed as
members or successor members of the Pension Committee by
delivery to the Trustee of a certified copy of the
appointment.
(c) Procedures
The Pension Committee may act at a meeting, or by writing
without a meeting, by a vote or written assent of a majority
of its members. The Pension Committee shall elect a chairman
and a secretary. The secretary may, but need not be, a member
of the Pension Committee. The chairman shall be the Plan's
agent for service of legal process, and shall forward all
necessary communication to the Trustee. The chairman may sign
all reports required by law on behalf of all members of the
Pension Committee.
The Pension Committee shall keep a record of all of its
proceedings and shall keep or cause to be kept all books of
account, records and other data as may be necessary or
advisable in its judgement for the administration of the Plan,
including records relating to each Participant's service
accrued benefits, notifications to Participants and annual
reports to the Internal Revenue Service, the Department of
Labor and the Pension Benefit Guaranty Corporation.
The Pension Committee may adopt such additional rules and
procedures as it deems desirable for the conduct of its
affairs and the administration of the Plan, provided that any
such rules and procedures shall be consistent with the
provisions of the Plan and ERISA.
40
65
(d) Decisions Affecting a Member
Each member of the Pension Committee shall be an employee of
one of the Employers. Such status shall not disqualify the
Committee member from taking any action hereunder or render
him or her accountable for any distribution or other material
advantage received by him or her under the Plan, provided that
no member of the Pension Committee who is a Participant shall
take part in any action of the Pension Committee or any matter
involving solely his or her rights under the Plan.
(e) Allocation and Delegation of Responsibilities
The members of the Pension Committee may allocate their
responsibilities among themselves and may designate any
person, partnership or corporation to carry out any of their
responsibilities. Any such allocation or designation shall be
reduced to writing and such writing shall be kept with the
records of the Pension Committee.
The Pension Committee may employ such counsel (who may be
counsel for any Employer) and agents and may obtain for such
administrative, clerical, medical, legal, audit, actuarial, and
other services as it may require in carrying out the
provisions of the Plan.
(f) Plan Interpretation and Records
The Pension Committee shall have the duty and authority to
interpret and construe the Plan in regard to all questions of
eligibility, the status and rights of Participants and
surviving spouses under the Plan, and the manner, time and
amount of payment of any distributions under the Plan. Each
Employer shall, from time to time, upon request of the Pension
Committee, furnish to the Pension Committee and certify
thereto as correct such data and information as the Pension
Committee shall require in the performance of its duties.
(g) Exclusive Benefit
The members of the Pension Committee, and each of them, shall
discharge their duties with respect to the Plan (i) solely in
the interest of the Participants and their surviving spouses,
and (ii) for the exclusive purposes of providing benefits to
Participants and their surviving spouses and of defraying
reasonable expenses of administering the Plan.
41
66
(h) No Compensation
No member of the Pension Committee shall receive any
compensation or fee for his or her services on the Pension
Committee, but the Employers shall reimburse the Pension
Committee members for any necessary expenditures incurred in
the discharge of their duties as Pension Committee members.
(i) Reliance on Information
The members of the Pension Committee and the Employers and
their officers and directors shall be entitled to rely on all
tables, valuations, certificates and reports made by its
accountants and upon all opinions given by legal counsel
employed by them. The members of the Pension Committee and the
Employers and their officers and directors, shall be fully
protected in respect of any action taken or suffered by them
in good faith in reliance upon any such actuary, accountants
or counsel, and all action so taken or suffered shall be
conclusive upon all Participants and Beneficiaries under the
Plan.
(j) Indemnification
To the extent permitted by law, the Employers hereby jointly
and severally indemnify the members of the Pension Committee,
and each of them, from the effects and consequences of their
acts, omissions and conduct in their official capacity, except
to the extent that such effects and consequences shall result
from their own willful misconduct.
10.03 Expenses
All costs and expenses incurred in administering the Plan and the
Trust Fund, including without limitation the expenses of the Pension Committee,
the fees of the actuary, the fees of counsel and any agents for the Pension
Committee, the fees and expenses of the Trustee, the fees of counsel for the
Trustee and other administrative expenses shall be paid by the Trustee from the
Trust Fund to the extent such expenses are not paid by the Employers. The
Pension Committee, in its sole discretion, after considering the nature of a
particular expense, shall determine the portion of such expense which is to be
borne by a particular Employer.
10.04 Bonding and Insurance
To the extent required by law, every Pension Committee member, every
fiduciary of the Plan and every person handling Plan funds shall be bonded. The
Pension Committee shall take such steps as are necessary to assure compliance
with applicable bonding requirements. The Pension Committee may apply for and
obtain fiduciary liability insurance insuring the Plan against damages by
reason of breach of fiduciary responsibility
42
67
at the Plan's expense and insuring each fiduciary against liability to the
extent permissible by law at the Employer's expense.
10.05 Commencement of Benefits
(a) Conditions of Payment
Benefit payments under the Plan shall not be payable prior to
the fulfillment of the following conditions:
(1) The Pension Committee has been furnished with such
applications, proofs of birth or death, address, form
of benefit election, spouse consent if required and
other information the Pension Committee deems
necessary;
(2) The Participant has terminated employment with the
Employer, reached age 70-1/2 or died; and
(3) The Participant or Beneficiary is eligible to receive
benefits under the Plan as determined by the Pension
Committee.
The Pension Committee may rely upon all such information so
furnished it, including the Participant's current mailing
address.
(b) Commencement of Payment
Unless a Participant elects otherwise, the payment of benefits
shall commence no later than 60 days after the end of the Plan
Year in which the latest of the following occurs:
(1) the date the Participant reaches Normal Retirement
Date,
(2) the tenth anniversary of the year in which the
Participant commenced participation in the Plan, or
(3) the Participant terminates employment with the
Employer;
provided that payments shall not commence later than the April
1 following the calendar year in which the Participant reaches
age 70-1/2.
In no event shall payments commence prior to the Participant's
Normal Retirement Date if the Participant's Accrued Benefit
exceeds $3,500 without the written consent of the Participant
and the spouse. Spouse consent must acknowledge the effect of
such election and be notarized or witnessed by a Plan
representative.
43
68
If the information required in Section 10.05(a) above is not
available prior to such date, the amount of payment will not be
ascertainable. In such event, the commencement of payment
shall be delayed until no more than 60 days after the date the
amount of such payment is ascertainable.
The Pension Committee shall direct the Trustee to make all
payments under the Plan.
10.06 Appeal Procedure
(a) Submission of Claim
A claim for benefit payment shall be considered filed when an
application form is submitted to the Pension Committee.
(b) Notice of Denial
Any time a claim for benefits is wholly or partially denied,
the Participant or Beneficiary (hereinafter "Claimant") shall
be given written notice of such action within 90 days after
the claim is filed, unless special circumstances require an
extension of time for proceeding. If there is an extension,
the Claimant shall be notified of the extension and the reason
for the extension within the initial 90 day period. The
extension shall not exceed 180 days after the claim is filed.
Such notice will indicate the reason for denial, the pertinent
provisions of the Plan on which the denial is based, an
explanation of the claims appeal procedure set forth herein,
and a description of any additional material or information
necessary to perfect the claim and an explanation of why such
material or information is necessary.
(c) Right to Request Review
Any person who has had a claim for benefits denied by the
Pension Committee, who disputes the amount of benefit payment
determined by the Pension Committee, or is otherwise adversely
affected by action of the Pension Committee, shall have the
right to request review by the Pension Committee. Such request
must be in writing, and must be made within 60 days after such
person is advised of the Pension Committee's action. If
written request for review is not made within such 60-day
period, the Claimant shall forfeit his or her right to review.
The Claimant or a duly authorized representative of the
Claimant may review all pertinent documents and submit issues
and comments in writing.
44
69
(d) Review of Claim
The Pension Committee shall then review the claim. It may hold
a hearing if it deems it necessary and shall issue a written
decision reaffirming, modifying or setting aside its former
action within 60 days after receipt of the written request for
review, or 120 days if special circumstances, such as a
hearing, require an extension. The Claimant shall be notified
in writing of any such extension within 60 days following the
request for review. A copy of the decision shall be furnished
to the Claimant. The decision shall set forth its reasons and
pertinent Plan provisions on which it is based. The decision
shall be final and binding upon the Claimant and the Pension
Committee and all other persons involved.
10.07 Plan Administration - Miscellaneous
(a) Limitations on Assignments
Benefits under the Plan may not be assigned, sold,
transferred, or encumbered, in whole or in part, either
directly or by operation of law or otherwise, and any attempt
to do so shall be void. The interest of a Participant in
benefits under the Plan shall not be subject to debts or
liabilities of any kind and shall not be subject to
attachment, garnishment or other legal process, except as
provided in Section 10.08 relating to Domestic Relations
Orders, or otherwise permitted by law.
(b) Masculine and Feminine, Singular and Plural
Whenever used herein, words in one gender shall include the
opposite gender, the singular shall include the plural and the
plural shall include the singular whenever the context shall
plainly so require.
(c) Small Benefits
In cases where the Actuarially Equivalent present value of a
vested or payable benefit is less than or equal to the maximum
permissible amount under the Code which may be distributed
without the consent of a Participant or his or her spouse (in
1989, the amount is $3,500), the Pension Committee shall
direct such present value be paid in a lump sum distribution
as soon as practical following termination and prior to the
Pension Starting Date.
(d) No Additional Rights
No person shall have any rights in or to the Trust, or any
part thereof, or under the Plan, except as, and only to the
extent, expressly provided for in
45
70
the Plan. Neither the establishment of the Plan, the granting
of a retirement benefit nor any action of the Employer or the
Pension Committee shall be held or construed to confer upon
any person any right to be continued as an employee, or, upon
dismissal, any right or interest in the Trust other than as
herein provided. The Employer expressly reserves the right to
discharge any employee at any time.
(e) Governing Law
This Plan shall be construed in accordance with applicable
federal law and the laws of the State of Washington, wherein
venue shall lie for any dispute arising hereunder.
(f) Disclosure to Participants
Each Participant shall be advised of the general provisions of
the Plan and, upon written request addressed to the Pension
Committee, shall be furnished any information requested
regarding the Participant's status, rights and privileges
under the Plan as may be required by law.
(g) Income Tax Withholding Requirements
Any retirement benefit payment made under the Plan shall be
subject to any applicable income tax withholding requirements.
For this purpose, the Pension Committee shall provide the
Trustee with any information the Trustee needs to satisfy such
withholding obligations and with any other information that
may be required under the Code.
(h) Severability
If any provision of this Plan shall be held illegal or invalid
for any reason, such determination shall not affect the
remaining provisions of this Plan which shall be construed as
if said illegal or invalid provision had never been included.
(i) Facility of Payment
Whenever, in the Pension Committee's opinion, a person
entitled to receive any benefit payment is under a legal
disability or is incapacitated in any way so as to be unable
to manage his or her affairs, the Pension Committee may direct
the Trustee to make payments to such person or to his or her
guardian or other legal representative, or in the absence of a
guardian or legal representative, to a custodian for such
person under a Uniform Gifts to Minors Act or to any relative
of such person by blood or marriage, for such person's
benefit. Any payment made in good faith pursuant to this
46
71
provision shall fully discharge the Employer and the Plan of
any liability to the extent of such payment.
(j) Correction Of Errors
Any Employer contribution to the Trust made under a mistake of
fact (or investment proceeds of such contribution if a lesser
amount) shall be returned to the Employer within one year after
payment of the contribution.
In the event an incorrect amount is paid to a Participant or
Beneficiary, any remaining payments may be adjusted to correct
the error. The Pension Committee may take such other action it
deems necessary and equitable to correct any such error.
(k) Responsibility to Advise Pension Committee of Current Address
Each person entitled to receive a payment under the Plan shall
file with the Pension Committee in writing his or her complete
mailing address and each change therein. A check or
communication mailed to any person at the address on file with
the Pension Committee shall be deemed to have been received by
such person for all purposes of the Plan, and no member of the
Pension Committee, the Employers or the Trustee shall be
obligated to search for or ascertain the location of any
person. If the Pension Committee doubts whether payments are
being received by the person entitled thereto, it shall, by
registered mail addressed to the person concerned at the last
address known to the Pension Committee, notify such person
that all future Pension payments will be withheld until such
person submits to the Pension Committee evidence that he or
she is still living and the proper mailing address.
(l) Notices to Participants and Surviving Spouses
All notices, reports and statements given, made, delivered or
transmitted to a Participant or surviving spouse shall be
deemed to have been duly given, made or transmitted when
mailed by first class mail with postage prepaid and addressed
to such Participant or spouse at the address last appearing on
the records of the Pension Committee. A Participant or
surviving spouse may record any change of address from time to
time by written notice filed with the Pension Committee.
(m) Notices to Employers or Pension Committee
Written directions, notices and other communications from
Participants or surviving spouses to the Employers or the
Pension Committee shall be deemed to have been duly given,
made or transmitted either when delivered
47
72
to such location as shall be specified upon the forms
prescribed by the Pension Committee for the giving of such
directions, notices and other communications or when mailed by
first class mail with postage prepaid and addressed to the
addressee at the address specified on such forms.
10.08 Domestic Relations Orders
Notwithstanding any Plan provisions to the contrary, benefits under
the Plan may be paid to someone other than the Participant, Beneficiary or
joint annuitant, pursuant to a Qualified Domestic Relations Order, in
accordance with Section 414(p) of the Coda. A Qualified Domestic Relations
Order is a judgment, decree, or order ("Order") including approval of a
property settlement agreement) that:
(a) relates to the provision of child support, alimony payments or
marital property rights to a spouse, former spouse, child or
other dependent of a Participant;
(b) is made pursuant to a state domestic relations law (including
a community property law);
(c) creates or recognizes the existence of an alternate payee's
right to, or assigns to an alternate payee the right to,
receive all or a portion of the benefits payable to a
Participant under the Plan;
(d) specifies the name and last known address of the Participant
and each alternate payee;
(e) specifies the amount or method of determining the amount of
benefit payable to an alternate payee;
(f) specifies the number of payments or period during which
payments are to be made;
(g) names each plan to which the order applies;
(h) does not require any form, type or amount of benefit not
otherwise provided under the Plan;
(i) does not conflict with a prior Domestic Relations Order that
meets the requirements of this section.
Payments to an alternate payee pursuant to a Qualified Domestic
Relations Order may commence on the date the Participant attains age 50 as if
the Participant retired on such date, regardless of whether the Participant
continues working after that date.
48
73
The Pension Committee shall determine whether an order meets the
requirements of this section within a reasonable period after receiving an
order. The Pension Committee shall notify the Participant and any alternate
payee that an order has been received and with respect to benefits which are in
pay status shall establish a separate account under the Plan for any alternate
payee pending determination that an order meets the requirements of this
section. If within eighteen months after such a separate account is
established, the order has not been determined to be a qualified Order, the
amount in the separate account shall be distributed to the individual who would
have been entitled to such amount if there had been no order.
10.09 Plan Qualification
Any modification or amendment of the Plan may be made retroactive, as
necessary or appropriate, to establish and maintain a "qualified plan" pursuant
to Section 401 of the Code, and ERISA and regulations thereunder and the exempt
status of the Trust under Section 501 of the Code.
Notwithstanding anything herein to the contrary, this Plan shall be
contingent upon a favorable Internal Revenue Service ruling that the Plan, with
respect to each Employer, is qualified under Section 401(a) of the Code and
exempt from income taxation under Section 501(a) of the Code. In the event the
Plan is not initially recognized as a "qualified plan", or the assets of the
Plan are not initially exempt under Section 501 of the Code with respect to an
Employer and the Plan is not amended retroactively for any reason to correct the
defaults, then the Employer may terminate its participation in the Plan and
direct the Trustee to pay and deliver to such Employer within one year the
portion of the Trust Fund applicable to Participants employed by such Employer,
determined by the Company. In the event all Employers terminate participation
under this section, all amounts contributed by the Employer to the Plan, plus
investment earnings, less expenses paid, shall be returned within one year.
10.10 Deductible Contribution
Notwithstanding anything herein to the contrary, any contribution by
the Employer to the Trust 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 year following a final
determination of the disallowance, demand repayment of such disallowed
contribution and the Trustee shall return such contribution less any losses
attributable thereto within one year following the disallowance.
10.11 Payment of Benefits Through Purchase of Annuity Contract
In lieu of paying benefits directly from the Trust to a Participant or
a Beneficiary, the Trustee may purchase, with Trust assets, an individual
annuity contract from an insurance company which, as far as possible, provides
benefits equal to (or Actuarially Equivalent to) those provided in the Plan for
such Participant or Beneficiary, but provides
49
74
no optional form of retirement income or benefit which would not be permitted
under the Plan, whereupon the liability of the Trust and of the Plan will cease
and terminate with respect to such benefits that are so purchased and for which
the premiums are duly paid. Such an individual annuity contract may be
purchased by the Trustee on a single-premium basis or on the basis of annual
premiums payable over a period of years and may be purchased at any time on or
after the Participant's Vested Termination Date, Retirement Date or death to
provide the benefits due under the Plan to the Participant or a Beneficiary on
or after the date of such purchase.
Any annuity contract distributed by the Trustee to a Participant or
Beneficiary under the provisions of the Plan shall bear on the face thereof the
designation "NOT TRANSFERABLE", and such contract shall contain a provision to
the effect that the contract may not be sold, assigned, discounted or pledged
as collateral for a loan or as security for the performance of an obligation or
for any other purpose to any person other than the issuer thereof.
50
75
SECTION 11
PARTICIPATION BY OTHER EMPLOYERS
11.01 Adoption Of Plan
With the consent of the Company, any corporation which is a current
member or a former member of the affiliated group (as defined in Section 1504
of the Code) of which the Company is the common parent corporation or a
successor company thereto may become a participating Employer under the Plan by
(a) taking such action as shall be necessary to adopt the Plan, (b) filing with
the Pension Committee a duly certified copy of the Adoption Agreement in form
specified by the Company as adopted by such corporation, (c) becoming a party
to the trust agreement establishing the Trust Fund, and (d) executing and
delivering such instruments and taking such other action as may be necessary or
desirable to put the Plan into effect with respect to such corporation. The
Adoption Agreement shall specify the terms under which each such corporation
shall participate in the Plan, including the amount of benefits to be provided
to the employees of such corporation. Such Adoption Agreement shall also
contain any modifications of the terms of this Plan as may be desired by such
corporation and agreed to by the Company.
11.02 Prior Service
Unless otherwise specified in an Adoption Agreement, periods of
service credited under a retirement plan of an Employer, or service with an
Employer which did not maintain a retirement plan; prior to the time such
Employer becomes a participating Employer shall not be considered in
determining a Participant's Years of Service and Credited Service.
11.03 Withdrawal from Participation
Any Employer may withdraw from participation in the Plan at any time
by filing with the Pension Committee a duly certified copy of a resolution of
its board of directors to that effect and giving notice of its intended
withdrawal to the Pension Committee, the other Employers and the Trustees prior
to the effective date of withdrawal.
11.04 Company As Agent For Employers
Each corporation which shall become a participating Employer pursuant
to Section 11.01 shall be deemed to have appointed the Company its agent to
exercise on its behalf all of the powers and authorities hereby conferred upon
the Company by the terms of the Plan, including, but not by way of limitation,
the power to amend and terminate the Plan. The authority of the Company to act
as such agent shall continue until such Employer shall withdraw from the Plan.
Notwithstanding the foregoing, the Company shall not have the authority to
amend the adoption agreement executed by another Employer.
51
76
SECTION 12
AMENDMENT AND TERMINATION
12.01 Amendment
The Plan may at any time and from time to time be amended or modified,
without further approval of the Board of Directors of the Company, by written
instrument which is approved by the Senior Vice President-Human Resources and
Administration and which is duly adopted by the Compensation and Nominating
Committee of the Board of Directors of the Company.
Each Employer may at any time and from time to time amend or modify
its Adoption Agreement with the consent of the Company by written instrument
duly executed by such Employer. Any such amendment or modification shall become
effective on such date as the Company or the Employer, as the case may be, shall
determine and may apply to Participants in the Plan at the time thereof as well
as to future Participants.
Any amendments made pursuant to this section shall be subject to any
advance notice or other requirements of ERISA.
12.02 Amendment - Consolidation or Merger
In the event the Plan's assets and liabilities are merged into,
transferred to or otherwise consolidated with any other retirement plan, then
such must be accomplished so as to ensure that each Participant would (if the
other retirement plan then terminated) receive a benefit immediately after the
merger, transfer or consolidation, which is equal to or greater than the
benefit the Participant would have been entitled to receive immediately before
the merger, transfer or consolidation (as if the Plan had then terminated).
This provision shall not be construed as limiting the powers of the Company to
appoint a successor Trustee.
12.03 Termination of the Plan
The termination of the Plan shall not cause or permit any part of the
Trust to be diverted to purposes other than for the exclusive benefit of the
Participants, or cause or permit any portion of the Trust to revert to or
become the property of an Employer at any time prior to the satisfaction of all
liabilities with respect to the Participants.
Upon termination of this Plan, the Pension Committee shall continue to
act for the purpose of complying with the preceding paragraph and shall have
all power necessary or convenient to the winding up and dissolution of the Plan
as herein provided. While so acting, the Pension Committee shall be in the same
status and position with respect to other persons as if the Plan remained in
existence.
52
77
12.04 Effect of Withdrawal from Plan
If an Employer shall withdraw from or terminate participation in the
Plan under Section 11.03, the Company shall, subject to Section 12.05,
determine the manner by which the benefits of Participants who are employees
(or former employees) of such Employer shall be provided.
12.05 Allocation of the Trust on Termination of Plan
In the event of a complete Plan termination, the right of each
Participant to benefits accrued to the date of such termination that would be
vested under the provisions of the Plan in the absence of such termination
shall continue to be vested and non-forfeitable; and the right of each
Participant to any other benefits accrued to the date of termination shall be
fully vested and non-forfeitable to the extent then funded under the priority
rules set forth in Section 4044 of ERISA. In any event, a Participant or a
Beneficiary shall have recourse only against Plan assets for the payment of
benefits thereunder, subject to any applicable guarantee provisions of Title IV
of ERISA. The Pension Committee shall direct the Trustee to allocate Trust
assets to those affected Participants to the extent and in the order of
preference set forth in Section 4044 of ERISA. Upon Plan termination, each
Participant shall elect a form of payment pursuant to Section 5 and benefits
shall be distributed by purchase of nontransferable annuity contracts or lump
sum payments in accordance with the Participants election; provided, however,
that small benefits shall be distributed pursuant to Section 10.07(c). If Trust
assets as of the date of Plan termination exceed the amounts required under the
priority rules set forth in Section 4044 of ERISA, such excess shall, after all
liabilities of the Plan have been satisfied, revert to the Employer to the
extent permitted by applicable law.
If at any time the Plan is terminated with respect to any group of
Participants under such circumstances as to constitute a partial Plan
termination within the meaning of Section 411(d)(3) of the Code, each affected
Participant's right to benefits that have accrued to the date of partial
termination that would be vested under the provisions of the Plan in the
absence of such termination shall continue to be so vested; and the right of
each affected Participant to any other benefits accrued to the date of such
termination shall be vested to the extent assets would be allocable to such
benefits under the priority rules set forth in Section 4044 of ERISA in the
event of a complete Plan termination. In any event, affected Participants shall
have recourse only against Plan assets for payment of benefits thereunder,
subject to any applicable guarantee provisions of Title IV of ERISA. Subject to
the foregoing, the vested benefits of such Participants shall be payable as
though such termination had not occurred; provided, however, that the Pension
Committee, in its discretion, subject to any necessary governmental approval,
may direct that the amounts held in the Trust that are allocable to the
Participants as to whom such termination occurred be segregated by the Trustee
as a separate plan. The assets thus allocated to such separate plan shall be
applied for the benefit of such Participants in the manner described in the
preceding paragraph.
53
78
SECTION 13
FUNDING
13.01 Contributions to the Trust
As a part of this Plan the Company shall maintain one or more Trusts.
From time to time, the Employers shall make such contributions to the Trust as
it determines, with the advice of its actuary, are required to maintain the
Plan on a sound actuarial basis.
Employees shall not be required or permitted to make contributions.
The Pension Committee shall, with the approval of the board of
directors of the Company, establish a funding policy and method consistent with
the objectives of the Plan and ERISA and shall communicate such policy and
method, and any changes in such policy and method, to the Trustee.
13.02 Trust for Exclusive Benefit of Participants
The Plan and Trust are for the exclusive benefit of Participants.
Except as provided in Sections 10.07(j) (Correction of Errors), 10.08 (Domestic
Relations Orders) and 10.10 (Deductible Contribution), no portion of the Trust
shall be diverted to purposes other than this or revert to or become the
property of the Employer at any time prior to the satisfaction of all
liabilities with respect to the Participants.
13.03 Disposition of Credits and Forfeitures
In no event shall any credits or forfeitures which may arise under the
Plan be used to increase benefits under the Plan.
13.04 Trustee
As a part of this Plan, the Company has entered into an agreement with
a Trustee. The Company has the power and duty to appoint the Trustee and it
shall have the power to remove the Trustee and appoint successors at any time.
As a condition to exercising its power to remove any Trustee hereunder, the
Company must first enter into an agreement with a successor Trustee. The
Pension Committee may delegate the authority to direct the investment of all or
a portion of the Trust Fund to the Trustee.
Each Trustee shall hold all monies and other property received by it
and invest and reinvest the same, together with the income therefrom, on behalf
of the Participants collectively in accordance with the provisions of the Trust
agreement. Each Trustee shall make distributions from the Trust Fund at such
time or times to such person or persons and in such amounts as the Pension
Committee shall direct in accordance with the Plan.
54
79
13.05 Investment Manager
The Company has the power to appoint, remove or change from time to
time an Investment Manager to direct the investment of all or a portion of the
Trust held by the Trustee. For purposes of this section "Investment Manager"
shall mean any fiduciary (other than the Trustee) who:
(a) has the power to manage, acquire, or dispose of any asset of
the Plan;
(b) is either
(1) registered as an investment advisor under the
Investment Advisors Act of 1940, or
(2) is a bank, or
(3) is an insurance company qualified under the laws of
more than one state to perform the services described
in subparagraph (a); and
(c) has acknowledged in writing that he, she or it is a fiduciary
with respect to the Plan.
55
80
The Burlington Resources Inc. Pension Plan is adopted by Burlington Resources
Inc.
IN WITNESS WHEREOF, Burlington Resources Inc. has caused this Plan to be duly
executed on this 19th day of December, 1989.
FOR BURLINGTON RESOURCES INC.
/s/ RJ FRENCH /s/ AR BOYCE
- ---------------------------------- -------------------------------------
Witness Authorized Officer
Sr. Vice President
-------------------------------------
Title
(CORPORATE SEAL)
56
81
APPENDIX I
Burlington Resources Inc. Pension Plan
"Employer" is defined in Section 1.22 shall also include the following
employers during the specified time periods.
Employer Beginning Ending
-------- --------- -------
1. El Paso Natural Gas Company 1/1/89
2. Glacier Park Company 1/1/89
3. BR Services Inc. 1/1/89
4. Meridian Minerals Company 1/1/89
5. Meridian Oil, Inc. 1/1/89
6. Plum Creek Timber Company, Inc. 1/1/89 6/07/89
7. Plum Creek Timber Company, L.P. 6/8/89
8. Plum Creek Management Company 6/8/89
9. Plum Creek Manufacturing, Inc. 6/8/89
Acknowledged and Accepted
By: /s/ RJ FRENCH
-------------------------------------------
Title: Director Benefits
---------------------------------------
Date: 12-19-89
---------------------------------------
57
82
FIRST AMENDMENT
TO THE
BURLINGTON RESOURCES INC.
PENSION PLAN
The Burlington Resources Inc. Pension Plan ("Plan"), as adopted effective
January 1, 1989, is amended as follows pursuant to Section 12.01 of the Plan,
effective January 1, 1991, except as otherwise specified:
1. Effective January 1, 1989, Section 1.12 Credited Service,
subparagraphs (b) and (c), shall be replaced in their entirety by the
following:
(b) all Plan Years commencing on and after January 1, 1989 during
which an Eligible Employee completes 1,000 or more Hours of
Service for an Employer, and
(c) with respect to the Plan Years in which service as an Eligible
Employee commences and terminates, the fraction of a Plan Year
which is equal to the number of months during which the
Participant has at least one Hour of Service for an Employer
during the Plan Year divided by 12, and
2. Section 1.18 Earnings shall be amended by replacing the first
paragraph in its entirety with the following:
"Earnings" for each Plan Year means the total earnings, including
overtime payments for each full month earned by an Employee from an
Employer, including nondeferred cash incentive bonuses paid or accrued
and salary reduction amounts contributed by an Employer on behalf of
the employee to a qualified retirement plan or welfare benefit plan;
but excluding payments under non-qualified deferred compensation
plans, stock option, stock bonus, capital income and phantom stock
plans, Christmas bonuses and all other commissions and extra or added
compensation or benefits of any kind or nature.
3. Section 1.20 Eligible Employee shall be amended by replacing the first
sentence in its entirety with the following:
"Eligible Employee" means any Employee who is employed on a regular,
full-time basis, who is regularly scheduled to work at least 32 hours
per week, except any leased employee and any Employee who is covered
under a collective bargaining agreement where retirement benefits were
the subject of good faith bargaining which does not provide for
retirement benefits under this Plan.
4. Section 3.01 Normal Retirement Date shall be amended by inserting the
following clause at the end of the last sentence:
"or Vested Termination Date".
83
5. Section 3.04 Vested Termination Date shall be replaced in its entirety
by the following:
A Participant who is vested and terminates prior to a Retirement Date
may elect in writing upon termination of employment, to receive the
Vested Termination Benefit on a Vested Termination Date, which shall
be the first day of the month following the month in which termination
of employment occurs, or the first day of any month following
attainment of age 55 and before the Normal Retirement Date. Such
individual shall not be entitled to a retirement benefit,
6. Section 4.06 Reemployment After Retirement shall be replaced in its
entirety by the following:
Upon reemployment, a retired Participant shall resume accruing benefits
under the Plan. A Participant shall cease to receive retirement
benefits during any month in which the Participant completes at least
40 Hours of Service and which is before the date benefits are required
to be paid following age 70-1/2 pursuant to section 10.05. In the
event such a Participant is reemployed and completes less than 40
Hours of Service in any month, he or she shall continue receiving
retirement benefits during such month. At the Participant's subsequent
retirement, benefits payable shall be based on his or her total
Credited Service and Earnings at the time of subsequent retirement,
and shall be reduced by the Actuarially Equivalent value of benefits
previously received by the Participant. In no event shall the benefit
upon subsequent retirement, prior to any reduction for previously
received benefits be less than the initial retirement benefit.
7. Section 5.01 Forms of Payment shall be amended by deleting the phrase
". . . (completed to the birthdate anniversary nearest the Retirement
Date or Vested Termination Date, whichever applies). . ." in
subparagraphs (b)(i) and (b)(iv).
IN WITNESS WHEREOF, Burlington Resources Inc. has caused this first amendment
to be duly executed in this 1st day of January 1990.
FOR BURLINGTON RESOURCES INC
By: A. R. BOYCE
----------------------------------
R. J. FRENCH Its: Sr. V.P. Hum. Res. & Admin.
- ------------------------------------ ---------------------------------
Witness
(CORPORATE SEAL)
84
SECOND AMENDMENT TO THE
BURLINGTON RESOURCES INC.
PENSION PLAN
The Burlington Resources Inc. Plan ("Plan"), as adopted effective January 1,
1989, is amended as follows pursuant to Section 12.01 of the Plan, effective
January 1, 1992:
1. Section 11.03 Withdrawal From Participation shall be amended by
inserting the following paragraph immediately following the first
paragraph:
In the event an Employer ceases to be an Affiliated Company,
the Company, in its sole discretion, may terminate that Employer's
participation in the Plan. In this circumstance, an Employer shall not
be entitled to notice prior to the effective date of withdrawal of
participation in the Plan.
2. Section 11.04 Company as Agent for Employers shall be replaced in its
entirety by the following:
Each corporation which shall become a participating Employer
pursuant to Section 11.01 shall be deemed to have appointed the
Company its agent to exercise on its behalf all of the powers and
authorities hereby conferred upon the Company by the terms of the
Plan, including, but not by way of limitation, the power to amend and
terminate the Plan. The authority of the Company to act as such agent
shall continue until such Employer withdraws from the Plan in
accordance with Section 11.03.
IN WITNESS WHEREOF, Burlington Resources Inc. has caused this second amendment
to be duly executed on this 1st day of December 1992.
FOR BURLINGTON RESOURCES INC.
By: /s/ Harold E. Hanschild
-----------------------------------
M.A. Salin VP Human Resources
- ------------------------------------ Title: -------------------------------
Witness
(CORPORATE SEAL)
Prepared for Review by Legal Counsel
85
APPENDIX 1
Burlington Resources Inc. Pension Plan
"Employer" as defined in Section 1.22 shall also include the following
employers during the specified time periods.
Employer Beginning Ending
-------- --------- ------
1. El Paso Natural Gas Company 1/1/89 7/1/92
2. Glacier Park Company 1/1/89 10/31/92
3. BR Services Inc. 1/1/89
4. Meridian Minerals Company 1/1/89
5. Meridian Oil, Inc. 1/1/89
6. Plum Creek Timber Company, Inc. 1/1/89 6/7/89
7. Plum Creek Timber Company, L.P. 6/8/89 3/30/90
8. Plum Creek Management Company 6/8/89 12/31/92
9. Plum Creek Manufacturing, Inc. 6/8/89 3/30/90
Acknowledged and Accepted:
By: /s/ Harold E. Hanschild
------------------------------
Title: VP Human Resources
---------------------------
Date: 4/20/93
----------------------------
53
86
APPENDIX C
TO THE
PLUM CREEK SUPPLEMENTAL BENEFITS PLAN
BURLINGTON RESOURCES INC. RETIREMENT SAVINGS PLAN
AS OF DECEMBER 31, 1992
15
87
BURLINGTON RESOURCES INC.
RETIREMENT SAVINGS PLAN
(Effective as of January 1, 1990)
88
BURLINGTON RESOURCES INC. RETIREMENT SAVINGS PLAN
(Effective as of January 1, 1990)
TABLE OF CONTENTS
Article Section Page
- ------- ------- ----
1 Restatement and Renaming of the Plan
------------------------------------
1.1 Restatement and Renaming of the Plan 1
1.2 Applicability 1
1.3 Purpose of the Plan 2
2 Definitions
-----------
2.1 General Definitions 3
2.2 Gender and Number 18
3 Participation and Service
-------------------------
3.1 Date of Participation 19
3.2 Duration 19
3.3 Transfers to Participation 20
3.4 Inactive Participant 20
4 Contributions Elected by Participants
-------------------------------------
4.1 Basic Contributions 21
4.2 Elections 24
4.3 Election Changes 24
4.4 Suspension of Basic Contributions 25
4.5 Compensation Reduction 26
4.6 Supplemental Contributions 26
4.7 Changes in Supplemental Contributions 27
4.8 Suspension of Supplemental Contributions 27
4.9 Transfer and Crediting of Basic and
Supplemental Contributions 27
4.10 Flex Contributions 28
4.11 Restrictions on Basic Contributions and
Flex Contributions 28
5 Company Matching Contributions and Rollovers
--------------------------------------------
5.1 Company Matching Contributions 32
5.2 Restrictions on Company Matching
Contributions 33
5.3 Deductibility Limitation 36
5.4 Transfer of Company Matching Contributions 36
5.5 Crediting of Company Matching
Contributions 36
5.6 Rollovers 36
-i-
89
BURLINGTON RESOURCES INC. RETIREMENT SAVINGS PLAN
(Effective as of January 1, 1990)
TABLE OF CONTENTS
Article Section Page
- ------- ------- ----
6 Maximum Contributions and Benefit Limitations
---------------------------------------------
6.1 Limitation on Annual Additions 40
6.2 Other Defined Contribution Plans 40
6.3 Defined Benefit Plans 41
6.4 Adjustment of Allocations 41
6.5 Limitation of Certain Annual Compensation
to $200,000 42
7 Benefits
--------
7.1 Vesting 43
7.2 Distributions Upon Separation from
Service (Excluding Death) 44
7.3 Distributions Upon Death or Divorce 45
7.4 Form of Payments 46
7.5 Timing of Payments 48
7.6 Withdrawals 49
7.7 Hardship Withdrawals 50
7.8 Loans to Participants and Beneficiaries 53
7.9 Debiting of Investment Funds 57
7.10 Missing Persons 57
7.11 Requirement for Consent to
Certain Distributions 59
8 Investment Elections
--------------------
8.1 Investment of Contributions 59
8.2 Investment Transfers 59
8.3 Investment Elections 60
8.4 Transfer of Assets 60
8.5 Voting Company Stock 60
8.6 Tender Offers 61
9 Accounts and Records of the Plan
--------------------------------
9.1 Accounts and Records 64
9.2 Investment Funds 65
9.3 Valuation Adjustments 65
10 Financing
---------
10.1 Financing 67
10.2 Employer Contributions 67
10.3 Non-Reversion 68
10.4 Transaction Involving Employer Securities 68
-ii-
90
BURLINGTON RESOURCES INC. RETIREMENT SAVINGS PLAN
(Effective as of January 1, 1990)
TABLE OF CONTENTS
Article Section Page
- ------- ------- ----
11 Administration
--------------
11.1 Named Fiduciaries 70
11.2 Committee 71
11.3 Organization of Committee 71
11.4 Procedures 72
11.5 Committee's Powers and Duties 72
11.6 Committee's Decisions Conclusive 73
11.7 Indemnity 74
11.8 Claims Procedure 74
12 Plan Amendment, Termination, Merger,
and Adoption by Affiliates
------------------------------------
12.1 Amendment and Termination 77
12.2 Distribution on Termination 77
12.3 Corporate Reorganization 78
12.4 Plan Merger or Transfer 78
12.5 Affiliate Participation 79
12.6 Action Binding on Participating
Affiliates 79
12.7 Termination of Participation of
Affiliate 80
13 Top-Heavy Provisions
--------------------
13.1 Application 81
13.2 Key Employees 81
13.3 Top-Heavy Group 83
13.4 Additional Rules 84
13.5 Code Section 415(h) Adjustment 85
13.6 Minimum Contributions 85
14 Miscellaneous Provisions
------------------------
14.1 Employment Rights 86
14.2 No Examination or Accounting 86
14.3 Investment Risk 86
14.4 Non-Alienation 86
14.5 Incompetency 88
14.6 Severability 89
14.7 Service of Legal Process 89
14.8 Headings of Articles and Sections 89
14.9 Applicable Law 89
-iii-
91
BURLINGTON RESOURCES INC.
RETIREMENT SAVINGS PLAN
(Effective as of January 1, 1990)
Article 1. Restatement and Renaming of the Plan
1.1 Restatement and Renaming of the Plan. Effective January 1,
1990, The El Paso Company amends and restates the Employees Savings Plan of The
El Paso Company and Affiliated Companies as provided herein. This amended and
restated plan is a continuation of the plan originally established effective as
of January 1, 1961, and is hereby renamed the Burlington Resources Inc.
Retirement Savings Plan (the "Plan"). Upon such amendment and restatement, The
El Paso Company cedes the sponsorship of the renamed Plan to its parent
company, Burlington Resources Inc., and Burlington Resources Inc. (the
"Company") accepts such sponsorship and adopts the Plan as its own. In
addition, effective as of January 1, 1990, the Company hereby merges its
Burlington Resources Inc. Thrift and Profit Sharing Plan into this Plan, which
shall continue as the survivor of such merger. The Plan covers Employees of
Burlington Resources Inc. and selected Affiliates, including subsidiaries of
The El Paso Company which were participating in the Plan immediately prior to
this restatement.
1.2 Applicability. Except as otherwise provided, the Plan
provisions set forth herein are applicable only to Employees in the employ of
the Company or its Affiliates on or after January 1, 1990. With respect to any
Employee who has had a balance transferred directly to this Plan from the
Burlington Resources Inc. Thrift and Profit Sharing Plan, this Plan shall, to
the full extent legally required, be treated as a continuation of the plan from
which the balance was transferred and shall include all the Employee's years of
participation in such plan
-1-
92
prior to the Employee's participation in this Plan and shall preserve all
legally protected, valuable rights of the Employee with respect to the
transferred balance in accordance with Code sections 414(1) and 411(d)(6), as
well as any other applicable laws.
1.3 Purpose of the Plan. This Plan is intended to encourage and
assist Eligible Employees in adopting a regular program of saving to provide
additional security for their retirement. For tax purposes, the Plan is
intended to qualify as a profit sharing plan with a qualified cash or deferred
arrangement and nondiscriminatory matching contributions. In accordance with
Code section 401(a)(27), this determination shall be made for Basic
Contributions and Flex Contributions that are provided on a before-tax basis
without regard to whether the Company and its Affiliates have current or
accumulated profits. However, Company Matching Contributions shall be
conditioned on the availability of current and/or accumulated profits.
-2-
93
Article 2. Definitions
2.1 General Definitions. Whenever used in the Plan, the following
terms shall have the respective meanings set forth below unless otherwise
expressly provided herein:
(a) "Affiliate" means a corporation or other employer which, at
the time for which the determination is made, is controlled
by, or under common control with, the Company, within the
meaning of sections 414 and 1563 of the Code. The
determination of control shall be made without reference to
paragraphs (a)(4) and (e)(3)(C) of section 1563, and solely
for the purpose of applying the limitations of Article 6 and
section 13.5 of this Plan and for the purpose of allowing a
related corporation or other employer to adopt the Plan with
the Company's permission under an arrangement resulting in
treatment of the Plan as a multiple employer plan described in
Code section 413(c), the phrase "more than 50 percent" shall
be substituted for the phrase "at least 80 percent" each place
it appears in section 1563(a)(1). In addition, to the extent
that the context may so require, "Affiliate" shall mean a
member of an affiliated service group (within the meaning of
Code section 414(m)) of which the Company or an Affiliate is a
member, any leasing organization (as defined in Code section
414(n)) to the extent its employees constitute Leased
Employees with respect to the Company or any Affiliate, and
any other entity required to be aggregated with the Company in
accordance with section 414(o) of the Code.
(b) "Alternate Payee" means a spouse, former spouse, child or
other dependent of a Participant who is recognized by a
Qualified Domestic Relations Order as having a right to
receive all, or a portion of, the benefits payable under the
Plan with respect to a Participant.
-3-
94
(c) "Annual Addition" means with respect to any Participant, the
sum of the following items for a Plan Year (which is also the
limitation year): (i) all employer and Employee contributions
(including as employer contributions both before-tax Basic
Contributions and Flex Contributions elected by the
Participant) and all forfeitures allocated to the Participant
under this and any other qualified defined contribution plan
maintained by the Company or an Affiliate, and (ii) any
contributions allocated to any individual medical account
under a qualified defined benefit plan or a welfare benefit
fund to the extent required by Code section 415(1) or
419A(d)(2). The Annual Additions resulting from contributions
to the Plan shall be determined on a cash basis as of the time
of the contribution, except that contributions made after the
end of the prior Plan Year and treated as attributable to
such prior year for purposes of deductions and percentage
testing under sections 4.11 and 5.2 shall be treated as Annual
Additions for such prior year.
(d) "Basic Contributions" means contributions made by the Employer
or Employee under section 4.1 at the election of the Employee
and any similar amounts transferred from another plan.
(e) "Beneficiary" means the person or persons (who may be named
contingently or successively) designated by a Participant (or
the Beneficiary of a deceased Participant) to receive his
Account in the event of his death. Each designation shall be
in the form prescribed by the Committee, shall be effective
only when filed in writing as prescribed by the Committee, and
shall revoke all prior designations by the same Participant.
The designation by a married Participant of someone other than
his spouse as a Beneficiary shall be invalid unless
-4-
95
the spouse consents in writing to such designation, the
consent acknowledges the effect of such designation and is
notarized or is witnessed by a Plan representative, and the
Beneficiary designation complies in all other respects with
the requirements of Code sections 401(a)(11)(B)(iii)(I) and
417(a)(2). However, no consent shall be required if it is
established to the satisfaction of the Plan representative
that such consent cannot be obtained because there is no
spouse or because the spouse cannot be located. If there is no
surviving spouse and if no other Beneficiary is designated,
then the Beneficiary shall be the Participant's estate. If a
designation is ineffective in whole or in part, all or such
part of the Participant's Account as has not been distributed,
shall be payable to the Participant's surviving spouse, or if
the deceased Participant has no surviving spouse, to his
estate. If a designated Beneficiary is receiving payments and
does not survive to receive all payments due hereunder, the
remaining payments shall be made to his Beneficiary or, if
there is none, to his estate.
(f) "Board of Directors" means the Board of Directors of the
Company.
(g) "Change Date" means the first day of any month as of which a
Participant is allowed to make an election that changes his
level of contributions or his investments under the Plan in
accordance with the terms and limitations specified below and
elsewhere in the Plan. A Change Date may be used by a
Participant to begin, stop, increase, or decrease the amount
of Basic Contributions
-5-
96
or Supplemental Contributions to his Account under the Plan,
or to change the before-tax or after-tax nature of Basic
Contributions, or to direct the way that amounts in his
Account are to be invested, or to make any number of the
foregoing choices on any Change Date, provided that the
Participant may not make any such choices on a Change Date
that is less than three months after the last Change Date on
which he elected to make one or more of the foregoing choices,
unless the particular choice on such early Change Date is
specifically authorized by a Plan provision that makes an
exception to this three-month rule. January 1, 1990, and any
initial date on which a new Participant or a rehired
Participant first makes an election are two such specifically
authorized exceptions. All choices that are implemented on
behalf of a Participant on a Change Date are subject to the
completion of such forms and the satisfaction of such other
reasonable procedural requirements, with such reasonable
advance notice, as may be specified in the Plan or prescribed
by the Committee.
(h) "Code" means the Internal Revenue Code of 1986, as amended
from time to time. Where reference is made to an incorrect or
outdated Code section, the reference shall be reformed to
indicate a proper Code section that is consistent with the
context and the intended meaning.
(i) "Committee" means the Thrift and Profit Sharing Committee
appointed by the Chief Executive Officer to administer the
Plan as described in section 11.2 hereof.
(j) "Company" means Burlington Resources Inc.
(k) "Company Matching Contributions" means the matching
contributions made by an Employer under section 5.1 on behalf
of a Participant, conditioned on the making of
-6-
97
certain Basic Contributions, as described in Articles 4 and 5,
and includes any similar amounts transferred from an Other
Plan.
(l) "Compensation" means, with respect to a Participant for a
period considered under the Plan, the Participant's full
salary and wages from an Employer (including all payments of
salary, wages, short-term disability or sick pay continuation
of salary and wages, spot bonuses and annual performance
bonuses, commissions, shift differentials, and overtime
compensation) plus his before-tax Basic Contributions under
this Plan, but excluding all amounts described in the next
following sentence, and provided, in addition, that Flex
Contributions shall also be treated as Compensation hereunder,
but only if and to the extent that a Participant elects to
have unmatched Flex Contributions made on his behalf under the
Plan and then only for the purpose of making such Flex
Contributions. All of the following items shall be excluded in
determining a Participant's Compensation: (i) gifts and other
non-bonus payments of like character, (ii) reimbursement for
expenses or allowances therefor, including automobile
allowances and moving allowances, (iii) any amount contributed
by the Employer to any pension plan or plan of deferred
compensation other than this Plan, (iv) any amount contributed
by the Employer to this Plan other than before-tax
contributions elected by the Participant, (v) any amount paid
by an Employer or a separate funding vehicle under a long-term
disability plan, (vi) termination payments, (vii) income
attributable to the exercise of options or lapse of
restrictions on Company stock, (viii) any other special or
extraordinary forms of remuneration, whether or not paid
pursuant to an incentive compensation plan and (ix)
-7-
98
any amount paid by the Employer for other fringe benefits,
such as health and welfare, hospitalization, group life
insurance benefits, or perquisites.
(m) "Disability" means a total and presumably permanent incapacity
resulting from personal injury or sickness whether or not
resulting from employment with the Employer, which in the
opinion of the Committee, after reviewing any medical evidence
and requiring any reasonable medical examination the Committee
considers necessary, will prevent a Participant or inactive
Participant from performing the principal duties of his
occupation and from engaging in any employment or occupation
for remuneration or profit for which he is or may reasonably
become qualified by training, education or experience. The
Committee may rely upon the adjudication of such Participant's
or inactive Participant's total and permanent disability by
the Social Security Administration, or such other evidence as
the Committee, in its discretion, deems appropriate.
(n) "Effective Date" means, unless otherwise expressly provided,
January 1, 1990.
(o) "Eligible Employee" means any Employee employed by an Employer
other than an Employee, if there is any, who is (i) a member
of a unit covered by a collective bargaining agreement under
which retirement benefits were the subject of good faith
bargaining and no provision was made for including such
Employee in the Plan, (ii) a nonresident alien who receives no
earned income from an Employer which constitutes income from
sources within the United States, or (iii) a Leased Employee.
(p) "Employee" means any person who is employed as a common law
employee by the Company or an Affiliate, as determined from
appropriate personnel records, and shall also
-8-
99
include any Leased Employee to the extent required under Code
section 414(n) and Code section 401(a), 410, 411, 415 or 416.
(q) "Employer" means either the Company or any Affiliate which,
with the approval of the Company, elects to become a party to
the Plan by adopting the Plan for the benefit of some or all
of its Eligible Employees.
(r) "ERISA" means the Employee Retirement Income Security Act of
1974, as mended from time to time.
(s) "Flex Contribution" means an amount transferred from the Code
section 125 FlexPlan of Burlington Resources Inc. on a before-
tax basis at a Participant's election and credited to his
Basic Account.
(t) "Highly Compensated Employee" means an Employee described in
Code section 414(q) and generally includes any Employee who,
during the current Plan Year or immediately preceding Plan
Year:
(1) was at any time a 5-percent owner (as defined in
subsection 13.2(b) of the Plan);
(2) received compensation in excess of $75,000, as
adjusted by reference to Code section 414(q);
(3) received compensation in excess of $50,000, as
adjusted by reference to Code section 414(q), and was
in the group of Employees consisting of the top 20
percent of all active Employees when ranked on the
basis of compensation paid for the Plan Year; or
(4) was at any time an officer and received compensation
in excess of $45,000, as adjusted by reference to
Code section 415(b)(1)(A), for the Plan Year;
provided that for this purpose no more than 50
Employees or, if lesser, the greater of 3 Employees
or 10 percent of all Employees shall be considered
officers and, if no officer has
-9-
100
compensation exceeding $45,000, as adjusted, the
officer with the highest compensation shall be
treated as a Highly Compensated Employee under this
subparagraph.
For purposes of this subsection, "compensation" means Section
415 Compensation for the Plan Year plus any Code section
401(k) deferrals (including before-tax Basic Contributions and
Flex Contributions under this Plan) and any Code section 125
salary reduction amounts under a plan maintained by the
Company or an Affiliate for the Plan Year.
For the Plan Year for which the determination is being made, a
person, who during the preceding Plan Year, was not an
Employee described in subparagraphs (2), (3) or (4) shall not
be treated as so described during the current Plan Year,
unless he is among the group of 100 Employees receiving the
highest compensation. In determining the group of Employees
consisting of the top 20 percent of all active Employees under
subparagraph (3), Employees who are nonresident aliens
receiving no U.S. source income from the Company or an
Affiliate and, except as prohibited by Treasury regulations,
Employees who are covered by a collective bargaining agreement
shall be disregarded. A former Employee shall be treated as a
Highly Compensated Employee if he was a Highly Compensated
Employee when he incurred a Separation from Service or at any
time after attaining age 55. If an Employee is a family member
of a 5-percent owner or a Highly Compensated Employee among
the group of 10 Employees receiving the highest compensation
for the Plan Year, then such Employee shall not be considered
a separate Employee under this subsection and any
-10-
101
compensation paid to him shall be treated as having been paid
to the Highly Compensated Employee. For this purpose, "family
member" means the Employee's spouse and lineal ascendants or
descendants and the spouses of such lineal ascendants or
descendants.
(u) "Investment Fund" means any of the following funds of the
Trust Fund, all of which may hold a reasonable amount of cash
and liquid assets in addition to the assets described below,
but may not include direct holdings by the Trustee of
securities of an Employer except as specifically authorized in
the case of the Company Stock Fund, and each of which may make
appropriate investments either directly, or indirectly by
means of securities of a regulated investment company or trust
or interests in an insurance company's pooled account or a
common trust fund or collective investment fund of a bank or
similar financial institution with a similar investment
purpose, in accordance with the description of the fund:
(1) A "Company Stock Fund" which shall be invested
primarily in shares of the common stock of the
Company.
(2) An "Equity Fund" which shall be invested primarily in
such common stocks and other equity securities, as
described in the Trust, as the Trustee, acting in
accordance with the provisions of the Trust and
instructions from the Committee or an investment
manager designated by the Committee, deems advisable.
(3) An "Income Fund" which shall be invested primarily in
such interest bearing deposits of banks and similar
financial institutions, securities, guaranteed
investment contracts of insurance companies, and
other similar investment vehicles, as described
-11-
102
in the Trust, as the Trustee, acting in accordance
with the provisions of the Trust and instructions
from the Committee or an investment manager
designated by the Committee, deems advisable.
(4) An "International Equity Fund" which shall be
invested primarily in such common stocks and other
equity securities of major companies headquartered
outside the United States, as described in the Trust,
as the Trustee, acting in accordance with the
provisions of the Trust and instructions from the
Committee or an investment manager designated by the
Committee, deems advisable.
(5) An "Over-the-Counter Equity Fund" which shall be
invested primarily in such common stocks and other
equity securities of smaller, often newer companies
in the United States, as described in the Trust, as
the Trustee, acting in accordance with the provisions
of the Trust and instructions from the Committee or
an investment manager designated by the Committee,
deems advisable.
(6) A "Real Estate Fund" which shall be invested in such
real estate and such real estate-related investments,
as described in the Trust, as the Trustee, acting in
accordance with the provisions of the Trust and
instructions from the Committee or an investment
manager designated by the Committee, deems advisable.
(7) A "Loan Fund" which shall be invested individually
for each borrowing Participant in any loans that such
Participant has under the Plan.
(8) "Additional Funds" which may be established from time
to time by the Committee and which shall be invested
in such appropriate investments, as described in the
Trust, as the Trustee, acting in
-12-
103
accordance with the provisions of the Trust and
instructions from the Committee or an investment
manager designated by the Committee, deems advisable.
(v) "Leased Employee" means a person who is not a common law
employee but who performs services for the Company or an
Affiliate pursuant to an agreement with a leasing organization
(within the meaning of Code section 414(n)(2)) if such person
has performed the services on substantially a full-time basis
for a period of at least one year, the services are of a type
historically performed by Employees, and the person is
required to be treated as an Employee pursuant to Code section
414(n), but only for the period and the purposes to which such
requirements apply.
(w) "Other Plan" means the Burlington Resources Inc. Thrift and
Profit Sharing Plan and any similar defined contribution plan
if it is maintained by an Affiliate and is designated by the
Committee as an Other Plan for purposes of section 3.3 or
section 12.4, provided that such plan is qualified under Code
section 401(a) and does not provide a life annuity form of
benefit.
(x) "Participant's Account or Account" means the separate account
maintained for each Participant which represents his total
proportionate interest in the Trust Fund as of any Valuation
Date and which consists of the sum of his Basic Account, his
Company Match Account, his IRA Account, his Supplemental
Account, his Rollover Account and his ESOP Rollover Account
(together with any additional Accounts that the Committee may
establish from time to time and including any subaccount that
may be maintained under an existing Account), as described
further below and in section 12.4 with respect to amounts
attributable to certain balances transferred
-13-
104
directly to this Plan from similar accounts in an Other Plan.
(1) "Basic Account" means the Account maintained for each
Participant under each Investment Fund in which all
or part of the Participant's Basic Contributions and
any Flex Contributions have been invested and
adjusted from time to time as provided in section
9.3.
(2) "Company Match Account" means the Account maintained
for each Participant under each Investment Fund in
which all or part of the Company Matching
Contributions conditioned on certain Basic
Contributions have been invested and adjusted from
time to time as provided in section 9.3. This Account
includes the former subaccount I relating to the
value of contributions for periods before 1985 and
having a December 31, 1989 grandfathered value
(excluding any subsequent earnings and investment
gains or losses thereon) that continues to be
available for withdrawals under section 7.6. This
Account also includes the former subaccount II
relating to the value of contributions for periods
after 1984.
(3) "Rollover Account" means the Account described in
section 5.6 maintained for each Participant under
each Investment Fund in which all or part of the
Participant's rollover contributions have been
invested and adjusted from time to time as provided
in section 9.3.
(4) "Supplemental Account" means the Account maintained
for each Participant under each Investment Fund in
which all or part of the Supplemental Contributions
which have been made by the Participant have been
-14-
105
invested and adjusted from time to time as provided
in section 9.3.
(5) "IRA Account" means, with respect to amounts
attributable to certain balances transferred to this
Plan from an Other Plan, the Account maintained for
each Participant under each Investment Fund in which
all or part of the deductible contributions made by
the Participant, as permitted under the terms of the
Other Plan and Code section 219 prior to January 1,
1987, have been invested and adjusted from time to
time as provided in section 9.3.
(6) "ESOP Rollover Account" means the Account described
in subsection 5.6(f).
(y) "Participant" means any Eligible Employee who has met the
requirements to become a Participant as set forth in section
3.1 hereof, and shall include, where appropriate to the
context, any former Participant described in section 3.2 and
any inactive Participant described in section 3.4.
(z) "Pay" means all remuneration for service performed for the
Company or an Affiliate which is currently includible in gross
income and generally reportable on Form W-2, which
remuneration shall, except as prohibited by applicable law and
regulations, be the same as Section 415 Compensation. In
addition, except as prohibited by Treasury regulations, the
Company may elect to include as Pay all before-tax Basic
Contributions, Flex Contributions, and other Code section
401(k) elective deferrals and all Code section 125 salary
reduction amounts, if any, under a plan maintained by the
Company or an Affiliate, provided that such treatment and the
-15-
106
determination of Pay in general shall be applied on a
consistent basis in accordance with Code section 414(s) and
the regulations thereunder.
(aa) "Plan Year" means the calendar year.
(bb) "Qualified Domestic Relations Order" means a judgment, decree
or order (including approval of a property settlement
agreement) pursuant to a state domestic relations law
(including a community property law) that provides benefits to
an Alternate Payee in accordance with Code section 414(p) and
subsections 7.3(b) and 11.5(o) and section 14.4 of this Plan
and the procedures established thereunder.
(cc) "Qualified Nonelective Contributions" means any contributions
described in Code section 401(m)(4)(C).
(dd) "Section 415 Compensation" means, generally, an Employee's
taxable W-2 earnings, with such modifications as may be
required to conform to the definition of "participant's
compensation" in Code section 415(c)(3) and the regulation
thereunder, and, to the extent consistent with such
authorities, shall be construed as an Employee's wages,
salaries, commissions, professional fees and other amounts
received for personal services rendered in the course of
employment with the Company and Affiliates: (1) including
amounts received through accident or health insurance (but
only to the extent includible in gross income), disability
payments (whether or not excludable from gross income), earned
income from sources outside the United States (whether or not
excludable or deductible from gross income), amounts paid or
reimbursed for nondeductible moving expenses, the value of
nonqualified stock options to the extent includible in gross
income in the taxable year in which granted, and amounts
includible in gross income upon making the election described
in Code section
-16-
107
83(b); but (2) excluding Company or Affiliate contributions to
a deferred compensation plan (to the extent excludable from
gross income when contributed), distributions from a qualified
plan, amounts realized on the exercise of nonqualified stock
options or when restricted property either becomes
transferable or is no longer subject to a substantial risk of
forfeitures, amounts realized on the disposition of stock
acquired under a qualified or incentive stock option, and
other amounts which receive special tax benefits.
(ee) "Separation from Service" means any termination of the
employment relationship between an Employee and the Company or
Affiliate for any reason including death, resignation,
discharge, retirement or Disability. A Separation from Service
shall not occur upon a Participant's transfer to a position
where he continues to be an Employee but is no longer an
Eligible Employee (whether by reason of becoming a member of a
labor union or otherwise), nor shall a Separation from Service
occur as a result of a leave of absence authorized by the
Employer or Affiliate if the Employee returns to employment
upon expiration of such leave. Except as otherwise agreed by
the parties to the transaction, a disposition of the stock or
other ownership interest in a subsidiary or a disposition of
substantially all the assets used in a trade or business of an
Employer shall be treated as a Separation from Service for the
purpose of making lump sum distributions to the Employees who
continue to work in essentially the same business and
employment position following the disposition, provided that
the date of such disposition is treated as a permissible
distribution event under Code sections 401(k)(2)(B)(i)(II) and
401(k)(10).
-17-
108
(ff) "Supplemental Contributions" means the after-tax contributions
made by a Participant under section 4.6 and any similar
amounts transferred from an Other Plan.
(gg) "Trust" or "Trust Agreement" means any agreement in the nature
of a trust established to form a part of the Plan to receive,
hold, invest, and dispose of the Trust Fund.
(hh) "Trust Fund" means the assets of every kind and description
held under any Trust Agreement forming a part of the Plan.
(ii) "Trustee" means the corporation, or persons acting as trustee
under any Trust Agreement at any time of reference.
(jj) "Valuation Date" means the last day of each month and such
other dates as may be declared by the Committee.
2.2 Gender and Number. Except when otherwise indicated by the
context, any masculine or feminine terminology herein shall also include the
opposite gender, and the definition of any term herein in the singular or
plural shall also include the opposite number.
-18-
109
Article 3. Participation and Service
3.1 Date of Participation. Each person who is an Eligible Employee
and was a participant in this Plan or an Other Plan on December 31, 1989, shall
become a Participant on January 1, 1990. Except as provided in section 3.3 with
regard to transfers, each Employee who is not at the time a Participant and who
is or becomes an Eligible Employee on or after January 1, 1990, shall become a
Participant in the Plan on the first day of the month coincident with or next
following the date he first completes an hour of service as an Eligible
Employee. For this purpose, the term "hour of service" shall mean any hour for
which an Employee is paid or entitled to payment for services rendered to an
Employer or an Affiliate.
3.2 Duration. An Employee who becomes a Participant shall remain a
Participant until he has a Separation from Service, and thereafter shall be a
former Participant for as long as he is entitled to receive any benefits
hereunder.
A Participant who has a Separation from Service and is subsequently reemployed
as an Eligible Employee shall become a Participant as of the date of his
reemployment, and shall be eligible to elect to make Basic Contributions or
Supplemental Contributions beginning with the first day of the month coincident
with or next following his reemployment date.
A Participant who is transferred from one Employer to another Employer and
continues to perform services as an Eligible Employee shall remain a
Participant on the same basis as immediately prior to the transfer, except as
he may be affected by special provisions of his Employer's adoption agreement
relating to this Plan.
-19-
110
3.3 Transfers to Participation. An Employee other than a
Participant who is transferred by or from an Employer or Affiliate into
employment that causes him to be an Eligible Employee shall become a
Participant pursuant to section 3.1 on the first day of the month coincident
with or next following his date of transfer, except that he shall become a
Participant and make elections hereunder as of the date of his transfer if he
was a participant in an Other Plan immediately prior to his transfer.
3.4 Inactive Participant. Any Participant who transfers to an
employment status with the Company or an Affiliate in which he is no longer an
Eligible Employee shall become an inactive Participant. An inactive Participant
shall not be eligible to make Basic Contributions or Supplemental Contributions
based on Compensation earned after the date of his transfer during the period
he is an Employee. If a Participant becomes an inactive Participant, his
Account shall continue to be held under the Plan until he becomes entitled to a
distribution under the provisions of Article 7. An inactive Participant shall
have the right to receive a loan or make a withdrawal under the provisions of
sections 7.6, 7.7, or 7.8, and to exercise voting and investment election
rights under Article 8.
-20-
111
Article 4. Contributions Elected by Participants
4.1 Basic Contributions
(a) On or after the Effective Date, each Participant may
elect to have his Employer contribute to the Plan on
his behalf an amount equal to any whole percentage
from two percent to eight percent of his Compensation
from such Employer during the period in which the
election is in effect. Such amount shall be
contributed as a Basic Contribution that is made on a
before-tax basis in lieu of current cash payment of
the percentage of Compensation that the Participant
elected to defer. Such election shall be made in
accordance with the rules set forth in this Article 4
and such other consistent rules of an administrative
nature as the Committee may prescribe. No before-tax
Basic Contributions may be elected under this
subsection 4.1(a) for any period during which the
Participant has in effect an election to make
after-tax contributions pursuant to subsection 4.1(d)
below.
(b) The Committee shall adopt reasonable procedures to
assist a Participant in fulfilling his responsibility
of ensuring that the before-tax Basic Contributions
and Flex Contributions made on his behalf under this
Plan, together with any elective deferrals under
other qualified plans of the Company and its
Affiliates, for the Participant's taxable year do not
exceed $7,000 (or such other amount as may be
prescribed under Code section 402(g)(5)), less any
other elective deferrals of the Participant under
other plans of other employers. The Participant will
be treated as having a calendar taxable year and as
having no elective
-21-
112
deferrals other than Basic Contributions and Flex
Contributions and elective deferrals under other
qualified plans of the Company and its Affiliates,
unless the Participant notifies the Committee
differently, in writing, before his initial election
of Basic Contributions for the Plan Year. For
purposes of this subsection, "elective deferrals"
include:
(i) employer contributions to a Code section
401(k) qualified cash or deferred arrangement
to the extent excluded from the Participant's
gross income for the taxable year pursuant to
Code section 402(a)(8);
(ii) employer contributions to a simplified
employee pension to the extent excluded from
the Participant's gross income for the
taxable year under Code section 402(h)(1)(b),
and
(iii) employer contributions to purchase an annuity
contract under Code section 403(b) under a
salary reduction agreement.
If the Participant notifies the Committee in writing
no later than March 1 following his taxable year of
the amount of any excess before-tax Basic
Contributions and Flex Contributions that exist under
this subsection for such taxable year, after the
application of the limitations specified under
subsection 4.1(c), the Plan may, but need not,
distribute such excess (and any income and investment
gain or loss allocable to such excess) to him no
later than April 15 following such taxable year and,
if so distributed, such excess shall not be included
as an Annual Addition for the Participant
-22-
113
for the immediately preceding Plan Year. The Pay of
the Participant for the Plan Year of the excess
before-tax Basic Contributions and Flex Contributions
shall be increased by the excess amount that is
distributed under this subsection. The distribution
described in this subsection may be made
notwithstanding any other Plan provision. The
Committee shall adopt reasonable procedures for
coordinating distributions of excess before-tax Basic
Contributions and Flex Contributions under this
section and section 4.11, in accordance with any
applicable legal requirements.
(c) In furtherance of the limitation set forth in
subsection 4.1(b) above, a Participant's before-tax
Basic Contributions and Flex Contributions under this
Plan and his Code section 401(k) elective deferrals
under other qualified plans of the Company and its
Affiliates in each Plan Year shall be restricted,
based on the chronological order in which such
elective deferrals are contributed, so as not to
exceed the $7,000 or other applicable annual limit
specified pursuant to subsection 4.1(b). If a
Participant's election to have before-tax Basic
Contributions or Flex Contributions made on his
behalf causes him to reach the point at which the
total of such contributions under the Plan for the
year equals such annual limit, then all further Basic
Contributions of the Participant in excess of such
limit for such year shall be restricted so as not to
exceed the maximum percentage that is eligible for
Company Matching Contributions under Article 5 and
shall be made and accounted for on an after-tax
basis, and all further Flex Contributions elected by
the
-23-
114
Participant shall be paid to the Participant in cash
rather than contributed to the Plan.
(d) In lieu of electing to make any Basic Contributions
on a before-tax basis as provided in subsection
4.1(a), a Participant may elect to make after-tax
Basic Contributions of a similar amount and subject
to similar rules. After-tax Basic Contributions that
are made pursuant to the foregoing sentence or to
subsection 4.1(c) shall be eligible for Company
Matching Contributions under section 5.1 to the same
extent as if they had been before-tax Basic
Contributions, and they shall also be treated as such
for all other purposes of the Plan except those
directly related to their tax character.
4.2 Elections. Each Participant (or Employee expected to become a
Participant by the time that the election will take effect) shall make the
elections described in section 4.1 by completing an election form which will be
made available to Participants by the Committee prior to the Change Date on
which it is to be effective. The Participant shall return the election form in
accordance with such reasonable notice requirements and other rules as the
Committee may specify so that the form may be processed as of the next Change
Date as of which the Participant wishes to have the Employer make Basic
Contributions on his behalf. Except as otherwise provided herein, all elections
shall be irrevocable for each month beginning on or after the effective date of
the election.
4.3 Election Changes. Elections made in accordance with section
4.2 shall remain in effect until a new election to begin, stop, increase, or
decrease the Participant's Basic Contributions is filed, in accordance with
such reasonable notice requirements and other rules as the Committee may
specify, prior
-24-
115
to the Change Date for which the Participant desires the change to become
effective. Any new election so filed shall become effective on the specified
Change Date and shall remain in effect until changed under the rules of this
section.
If a Participant has less than 5 Years of Employment and is making Basic
Contributions of 4 percent or 5 percent of Compensation under this Plan as of
December 31, 1989, such Participant's election of Basic Contributions shall
automatically be increased to 6 percent of Compensation as of January 1, 1990,
unless the Participant files a new election and specifies a different level of
Basic Contributions commencing as of such date. If a Participant has at least
10 Years of Employment and is making Basic Contributions of 6 percent or 7
percent of Compensation under the Burlington Resources Inc. Thrift and Profit
Sharing Plan as of December 31, 1989, such Participant's election of Basic
Contributions under this Plan shall automatically be increased to 8 percent of
Compensation as of January 1, 1990, unless the Participant files a new election
and specifies a different level of Basic Contributions commencing as of such
date. On or after January 1, 1990, the Committee may in its discretion provide
for rules and procedures pursuant to which the percentage of Compensation being
contributed as Basic Contributions will increase automatically from 6 percent
or 7 percent to 8 percent of Compensation (without becoming subject to rules
limiting the frequency of Change Dates) as of the beginning of any month in
which occurs a change that increases the level of matchable Basic Contributions
for which the Participant is eligible to 8 percent of Compensation.
4.4 Suspension of Basic Contributions. A Participant may suspend
his Basic Contributions under the Plan by filing a written notice in accordance
with such reasonable notice requirements and other rules as the Committee may
specify. The
-25-
116
suspension shall become effective as of the specified Change Date following the
filing of such written notice.
Such Participant shall be eligible to resume Basic Contributions under the Plan
by filing a new election form with the Committee in accordance with section 4.2
prior to the next available Change Date on which he desires his election to
become effective. A Participant shall not be permitted to make up suspended
Basic Contributions.
4.5 Compensation Reduction. Except as otherwise provided in
subsections 4.1(c) and 4.1(d) with respect to after-tax Basic Contributions,
each Participant who makes an election to have the Employer contribute a
percentage of his Compensation as Basic Contributions under this Plan shall, by
the act of making such election, agree to have his Compensation reduced by an
equivalent percentage for so long as the election remains in effect.
4.6 Supplemental Contributions. A Participant may elect to make
after-tax Supplemental Contributions as of any Change Date by filing the
appropriate form prior to the proposed date of commencement of such
contributions in accordance with such reasonable notice requirements and other
rules as the Committee may specify, including any requirement relating to the
Participant's written consent to the payroll deduction of Supplemental
Contributions. Such Supplemental Contributions may be elected only if the
Participant has in effect at the time an election to make Basic Contributions
in an amount greater than or equal to the maximum percentage of Compensation (6
percent or 8 percent as applicable) for which the Participant is eligible to
receive a Company Matching Contribution. Such Supplemental Contributions shall,
upon satisfaction of the conditions for making such contributions, be in any
whole percentage between one percent and five percent of the Participant's
Compensation as he shall elect
-26-
117
to contribute on an after-tax basis with respect to Compensation from the
Employer during the period in which the election is in effect. In no event
shall a Supplemental Contribution be matched by a Company Matching Contribution
on behalf of the Participant.
4.7 Changes in Supplemental Contributions. A Participant may
change the percentage of his Supplemental Contributions as of any Change Date
by filing a form indicating the changed percentage in accordance with the
election procedures of section 4.6 and subject to the conditions in such
section and section 4.8 for continued eligibility to make Supplemental
Contributions.
4.8 Suspension of Supplemental Contributions. A Participant may
elect to suspend his Supplemental Contributions effective as of any Change Date
by filing the appropriate form in accordance with such reasonable notice
requirements and other rules as the Committee may specify. A Participant may
thereafter elect to have his Supplemental Contributions resumed, at the same or
a changed rate permitted under section 4.6, effective as of the next available
Change Date. In addition, a Participant's Supplemental Contributions will be
automatically suspended during any period in which he is permitted to elect the
required level of Basic Contributions specified in section 4.6 and has chosen
not to do so. A Participant shall not be permitted to make up suspended
Supplemental Contributions.
4.9 Transfer and Crediting of Basic and Supplemental
Contributions. Each Participant's Basic Contributions and Supplemental
Contributions shall be transferred to the Trust Fund not later than 30 days
after the end of the month in which a corresponding amount would have been paid
to the Participant in the absence of his election of such contributions. Basic
Contributions shall be allocated to the Participant's Basic Account, and
Supplemental Contributions shall be allocated to the
-27-
118
Participant's Supplemental Account, as of the last day of the month for which
they are made.
4.10 Flex Contributions. Once each year in accordance with rules
established by the Committee that are consistent with the rules of the
Employer's Code section 125 cafeteria plan covering the Participant, the
Participant may elect to have his Employer transfer to the Trust Fund, as a
Flex Contribution made on a before-tax basis on his behalf, all or a portion of
the amounts available for such transfer under such cafeteria plan. The Flex
Contribution shall be transferred to the Trust when the amounts subject to this
election are made available and shall then be credited immediately to the
Participant's Basic Account. In no event shall a Flex Contribution be matched
by a Company Matching Contribution on behalf of the Participant.
4.11 Restrictions on Basic Contributions and Flex Contributions. In
conjunction with Participant elections of Basic Contributions and at such other
times throughout the Plan Year as the Committee may determine, the Committee
shall require testing of the elections of before-tax Basic Contributions and
Flex Contributions by Participants (and any other Employer contributions that
the Company elects to include in the testing under the conditions specified
below) to assure that the average deferral percentage for the Plan Year of
Participants who are Highly Compensated Employees will not exceed the greater
of:
(a) 1.25 times the average deferral percentage for the Plan Year
of all other Participants who are non-Highly Compensated
Employees, or
(b) the lesser of (i) 2 percentage points more than, or (ii) 2
times the average deferral percentage for the Plan Year of all
other Participants who are non-Highly Compensated Employees.
-28-
119
For purposes of this section, the term "average deferral percentage" for each
group of Participants for any period shall be the average of the percentages,
calculated separately for each Participant in such group, of the aggregate
amount of Pay that each Participant elects to have contributed to the Plan for
the period as before-tax Basic Contributions or Flex Contributions, provided
that, if the Company so elects in accordance with rules prescribed by the
Secretary of the Treasury, Qualified Nonelective Contributions and Code section
401(m) matching contributions (including Company Matching Contributions under
this Plan) that meet the withdrawal and vesting requirements of Code sections
401(k)(2)(B) and (C) shall be added to before-tax Basic Contributions and Flex
Contributions in computing each Participant's average deferral percentage.
Except as provided in Treasury Regulations, excess before-tax Basic
Contributions and Flex Contributions under subsection 4.1(b) shall be treated
as an amount elected under section 4.2 and contributed to the Plan, whether or
not such excess contribution is distributed.
Advance testing done under this section shall be based on a Participant's
annual rate of Pay in effect at the time of the test, and corrections to be
made to reduce the amount in excess of the maximum permissible deferral
percentage shall be made from Pay to be earned for the remainder of the Plan
Year. Final Plan Year compliance with the restrictions of this section shall be
based on the Participant's actual Pay and before-tax contributions for the
Plan Year.
The adjustments in this paragraph shall be made if, at the end of the Plan
Year, the percentage of before-tax Basic Contributions and Flex Contributions
elected by Highly Compensated Employees (and any other Employer contributions
that are included in the testing at the Company's election) would (if not
distributed) cause the average deferral percentage of such Participants to
-29-
120
exceed the maximum deferral percentage permitted for the Plan Year under this
section. In such a case, before the end of the following Plan Year, the excess
amount of such contributions (and income and investment gain or loss
attributable thereto) for the Highly Compensated Employees shall be distributed
to such Participants in the order of their average deferral percentages,
beginning with the Highly Compensated Employees with the highest average
deferral percentage until the limitations of this section are met. Except as
otherwise required by applicable regulations, any amount distributed under this
paragraph to a Highly Compensated Employee shall be included in that Employee's
taxable wages for the Plan Year for which the contribution was made. The
distribution described in this section may be made notwithstanding any other
Plan provision. The Committee shall adopt reasonable procedures for
coordinating distributions of excess contributions under this section and
subsection 4.1(b).
Moreover, notwithstanding the foregoing rules, the Committee shall take steps
to ensure that this section 4.11 is interpreted and administered so as to
comply with applicable legal requirements for the determination of what amounts
constitute excess Code section 401(k) elective deferrals and for the return of
such excess amounts and any income and investment gain or loss attributable
thereto. If two or more plans which include Code section 401(k) cash or
deferred arrangements are considered as one plan for purposes of Code section
401(a)(4) or 410(b), the cash or deferred arrangements included in such plans
shall be treated as one arrangement for purposes of this section 4.11. If any
Highly Compensated Employee is a participant under two or more cash or deferred
arrangements of an Employer or Affiliate, all such cash or deferred
arrangements shall be treated as one such arrangement for purposes of
determining the actual deferral percentage with respect to such Employee.
Moreover, no benefits other than Code section 401(m) matching contributions
shall be conditioned on a
-30-
121
Participant's election of before-tax Basic Contributions or Flex Contributions
under this Plan.
All determinations under this section 4.11 shall comply with Code section
401(k) and the regulations thereunder. In the event of any conflict, the rules
of such Code section and regulations shall control.
-31-
122
Article 5. Company Matching Contributions and Rollovers
5.1 Company Matching Contributions.
(a) Subject to section 5.2 and the other limitations under this
Plan, the Employer shall make Company Matching Contributions
in an amount equal to 100 percent of the Basic Contributions
made on behalf of each Participant who has such Basic
Contributions allocated to his Account, as determined under
the table below in accordance with the Participant's actual
level of Basic Contributions and his Years of Employment
during the month to which the contributions relate. Any
increase that occurs in a Participant's Years of Employment
during a month shall be given effect as of the beginning of
that month. Such Company Matching Contributions shall be
allocated to the Company Match Account of the Participants for
whom matchable Basic Contributions are made, at the times and
as of the monthly Valuation Dates applicable to such Basic
Contributions.
Maximum Level of Basic
Contributions to be Matched
Participant's (Expressed as a Percentage
Years of Employment of Compensation)
------------------- ---------------------------
Up to 10 years 6 percent
10 or more years 8 percent
For this purpose, "Years of Employment" mean the sum of the
number of years and any fraction of a year (counting each
completed calendar month as 1/12th of a year) of employment
with the Company or an Affiliate, as determined from
appropriate personnel records, and subject to the limitation
that Years of Employment for periods prior to January 1, 1990,
shall be determined
-32 -
123
under any applicable provisions of the Plan as in effect at
the time.
(b) Notwithstanding subsection 5.1(a), Company Matching
Contributions may be made only if and to the extent that the
Company and its Affiliates have current and/or accumulated
profits, as determined in accordance with the Company's
accounting records prior to taxes and contributions to this
Plan that are treated for tax purposes as made by an Employer.
5.2 Restrictions on Company Matching Contributions. At such times
throughout the Plan Year as the Committee may determine, the Committee shall
require testing to assure that the contribution percentage for the Plan Year of
Participants who are Highly Compensated Employees will not exceed the greater
of:
(a) 1.25 times the contribution percentage for the Plan Year of
all other Participants who are non-Highly Compensated
Employees, or
(b) the lesser of (i) 2 percentage points more than, or (ii) 2
times the contribution percentage for the Plan Year of all
other Participants who are non-Highly Compensated Employees.
For purposes of this section, the term "contribution percentage" for each group
of Participants shall be the average of the ratios, calculated separately for
each Participant in such group, of the aggregate amount of Company Matching
Contributions, after-tax Basic Contributions, and Supplemental Contributions
made by or on behalf of the Participant for the Plan Year to that Participant's
Pay for the Plan Year. To the extent permitted by Treasury Regulations, the
Company may elect, in computing contribution percentages, to treat Qualified
Nonelective Contributions and Code section 401(k) elective deferrals (including
before-tax
-33-
124
Basic Contributions and Flex Contributions) for the Plan Year as Company
Matching Contributions.
Advance testing under this section shall be based on a Participant's level of
Basic Contributions and Supplemental Contributions and his annual rate of Pay
in effect at the time of the test, and corrections to be made to reduce the
amount in excess of the maximum permissible contribution percentage shall be
from Company Matching Contributions and Supplemental Contributions to be made
for the remainder of the Plan Year. Final Plan Year compliance with the
restrictions of this section shall be based on the Participant's actual
contributions and Pay for the Plan Year.
The adjustments in this paragraph shall be made if, at the end of the Plan
Year, the contribution percentage of Highly Compensated Employees exceeds the
maximum contribution percentage permitted for the Plan Year under this section.
In such a case, before the end of the following Plan Year
(1) the excess Supplemental Contributions (and income and
investment gain or loss attributable thereto) for Highly
Compensated Employees shall be distributed to such
Participants,
(2) The excess after-tax Basic Contributions and the related
Company Matching Contributions (and the income and investment
gain or loss attributable thereto) for Highly Compensated
Employees shall be distributed to such Participants, and
(3) the remaining excess Company Matching Contributions (and
income and investment gain or loss attributable thereto) for
Highly Compensated Employees shall be distributed to such
Participants, in the order of their contribution percentages
beginning with the Highly Compensated Employee with the
highest contribution percentage until the limitations of this
section are met. Except as otherwise
-34-
125
required by applicable regulations, any amount distributed
under this paragraph to a Highly Compensated Employee (other
than a return of his after-tax Basic Contributions or
Supplemental Contributions) shall be included in that
Employee's taxable wages for the Plan Year for which the
contribution was made. The distribution described in this
section may be made notwithstanding any other Plan provision.
In the event that this Plan satisfies the requirements of section 410(b) of the
Code only if aggregated with one or more other plans, or if one or more other
plans satisfy the requirements of section 410(b) of the Code only if aggregated
with this Plan, then this section 5.2 shall be applied by determining the
contribution percentages of eligible Participants as if all such plans were a
single plan. If a Highly Compensated Employee participates in two or more plans
of an Employer or Affiliate to which such contributions are made, all such
contributions shall be aggregated for purposes of this section. Any Employee
required to be taken into consideration under Code section 401(m)(5) shall be
treated as an eligible Employee in accordance with such Code section for
purposes of the application of this section 5.2. Moreover, the determination of
excess contributions under this section 5.2 shall be made after first
determining the excess deferrals (within the meaning of Code section 402(g))
pursuant to subsection 4.1(b) of this Plan and then determining the excess Code
section 401(k) deferrals pursuant to section 4.11 of this Plan.
All determinations under this section 5.2 shall comply with Code section 401(m)
and the regulations thereunder, including any such regulations as may be
necessary to prevent the multiple use of the alternative percentage limitations
in Code sections 401(k)(3)(A)(ii)(II) and 401(m)(2)(A)(ii) with respect to any
Highly Compensated Employee and also including regulations
-35-
126
permitting appropriate aggregation of plans and contributions. In the event of
any conflict, the rules of such Code sections and regulations shall control.
5.3 Deductibility Limitation. The dollar amount of Company
Matching Contributions shall be limited to the amount deductible under section
404 of the Code for the taxable year in which such amounts accrue or are paid,
including by means of carryover deductions.
5.4 Transfer of Company Matching Contributions. The Company
Matching Contributions under subsection 5.1 hereof shall be transferred to the
Trust Fund together with the Basic Contributions to which they relate in
accordance with the timing rules of section 4.9.
5.5 Crediting of Company Matching Contributions. The Company
Matching Contributions described in section 5.1 shall be credited to the
Company Match Account of the Participants on whose behalf they are made
according to the amount of their matched Basic Contributions (those not in
excess of the applicable percentage of Compensation specified in section 5.1)
for the period. The crediting shall occur as of the last day of the month to
which the Company Matching Contributions relate.
5.6 Rollovers. Amounts which an Eligible Employee has received
from any other qualified employee benefit plan may, subject to the Committee's
approval and in accordance with uniform, nondiscriminatory procedures designed
to protect the qualification and the integrity of the administrative design of
the Plan, be transferred by the Eligible Employee to this Plan in cash and/or
common stock of the Company (or a former parent of the Company), provided the
following conditions are satisfied:
-36-
127
(a) Amounts that have previously been distributed to the Eligible
Employee from another qualified plan and rolled over to this
Plan shall be fully vested and shall be credited to the
Eligible Employee's Rollover Account.
(b) The amounts tendered to the Committee must have previously
been received by the Eligible Employee as a qualified total
distribution described in Code section 402(a)(5) ant must be
transferred following a distribution from:
(1) A plan qualified under Code section 401(a); or
(2) A rollover or conduit individual retirement account
or annuity which has received a rollover contribution
described in Code section 408(d)(3) (determined
without regard to section 408(d)(3)(D) thereof);
(c) The amounts tendered must not include nondeductible employee
contributions to a qualified plan by an Eligible Employee or
amounts attributable to:
(1) Contributions to an individual retirement account or
annuity that are deductible under Code section 219,
(2) Accumulated deductible employee contributions
described in Code section 72(o)(5)(B), or
(3) A partial distribution described in Code section
402(a)(5)(D) .
(d) The transfer to this Plan of amounts described in paragraph
(b) will only be accepted if the Eligible Employee presents to
the Committee the Internal Revenue Service Form 1099, or
equivalent, and the original and any other distribution
checks, a copy thereof, or such other evidence as the
Committee may require to ensure that they verify the nature of
the amount and ensure that its receipt will not adversely
affect the qualified status of this Plan.
(e) Amounts must be received by the Committee not later than 60
days after a distribution was received by the Eligible
Employee.
-37-
128
(f) Previous rollovers of amounts received on account of
termination of a tax credit employee stock ownership plan of a
former parent of the Company or an Affiliate shall be retained
in this Plan and are subject to the rules below in addition to
the other specified requirements for rollovers,
(1) while held in this Plan, such amounts and the related
earnings must be held in a separate ESOP Rollover
Account and must be invested in the Company Stock
Fund and remain so invested, without regard to the
otherwise applicable provisions for Investment Fund
changes, until withdrawn or otherwise distributed in
accordance with the terms of the Plan, provided,
however, that this requirement to invest in the
Company Stock Fund shall not apply to the extent that
any such amounts and related earnings have been
transferred to the Loan Fund and continue to secure
an outstanding loan to the Eligible Employee, and
(2) following receipt by this Plan, such amounts and the
related earnings may be used as security for a loan
and in determining the available loan amount pursuant
to section 7.8(c) and may be withdrawn on account of
hardship, but not for other reasons, provided,
however, that the ESOP Rollover Account shall be the
last Account that is made available for loans or
hardship withdrawals.
(g) An Eligible Employee who makes a rollover when he is not
otherwise a Participant shall be treated as a Participant for
purposes of implementing Plan provisions related to rollovers.
Upon approval by the Committee, rollover amounts shall be transmitted to the
Trustee, to be invested, except as provided in paragraph (f) above, in such
Investment Funds as the Eligible
-38-
129
Employee may select in accordance with the rules provided in Article 8.
-39-
130
Article 6. Maximum Contributions and
Benefit Limitations
6.1 Limitation on Annual Additions. Notwithstanding anything to
the contrary contained in this Plan, the total Annual Additions under this Plan
to a Participant's Account for any Plan Year, which shall be the limitation
year for purposes of Code section 415, shall not exceed the lesser of:
(a) $30,000 or such adjusted amount as may be prescribed under
Code section 415(d), or
(b) 25 percent of the Participant's Section 415 Compensation for
the limitation year.
6.2 Other Defined Contribution Plans. If the Company or an
Affiliate maintains or maintained any other defined contribution plan, as
defined in Code section 414(i), for its Employees, some or all of whom are
Participants of this Plan, then the limitation of section 6.1 shall apply to
employer contributions, forfeitures, and Employee contributions credited to the
Participant under all such plans.
If a Participant receives allocations under this Plan and another defined
contribution plan, then any reductions necessary to make allocations for the
Participant under all such plans comply with the limit of section 6.1 shall
first be made under such other plan, except that the reductions shall be made
first under this Plan if the Participant is covered under this Plan at a time
during the Plan Year when he has ceased to be covered under such other plan and
is no longer eligible to receive further allocations of Annual Additions for
the year under such other plan.
Any reductions under this Plan for such a Participant which are necessary to
comply with the above limitations shall be made prospectively to prevent the
occurrence of excess contributions and
-40-
131
other Annual Additions to the Participant's Account for the limitation year.
Such reductions shall be made in the following order of priority with respect
to the listed contributions to the extent that they are still available for
such prospective reduction: first, by reducing the Participant's Flex
Contributions, second, by reducing his Supplemental Contributions, third, by
reducing his unmatched Basic Contributions, and, finally, by reducing his other
Basic Contributions and his Company Matching Contributions proportionally. If
such prospective reductions are not sufficient to satisfy applicable limits,
the Committee may require a return of Supplemental Contributions to the
Participant in accordance with Income Tax Regulation section 1.415-6(a)(6)(iv).
6.3 Defined Benefit Plans. If a Participant in this Plan is or was
also a Participant in a defined benefit plan, as defined in section 414(j) of
the Code, maintained by the Company or any Affiliate, then in addition to the
limitations contained in section 6.1 of this Plan, the projected benefit of the
Participant under the defined benefit plan shall be limited to the extent
necessary to comply with the limitation set forth in Code section 415(e).
6.4 Adjustment of Allocations. If an allocation to a Participant's
Account would exceed the limits described in this Article, and the excess is a
result of an allocation of forfeitures, a reasonable error in estimating a
Participant's Section 415 Compensation, or other appropriate circumstances
recognized by the Commissioner of Internal Revenue, then, except in the case of
a return of Supplemental Contributions pursuant to section 6.2, any amount
which cannot be allocated shall be held in a suspense account and shall be
allocated to the applicable Account of such Participant as of the last day of
the first calendar month in which such an allocation is permissible.
-41-
132
6.5 Limitation of Certain Annual Compensation to $200,000.
Compensation, Pay, and any other elements of remuneration considered under the
Plan shall be limited as necessary to comply with the requirement of Code
section 401(a)(17) (and related Code sections and regulations) that the annual
compensation (within the meaning of such Code sections and regulations) of each
Employee taken into account under the Plan for any year shall not exceed
$200,000 (or such adjusted amount as may be prescribed by the Secretary of the
Treasury in connection with the adjustments prescribed under Code section
415(d)).
-42-
133
Article 7. Benefits
7.1 Vesting. The interest of a Participant in his Participant's
Account shall be fully vested in him at all times. For all purposes of the
Plan, a vested interest means an interest that is nonforfeitable in the sense
that it constitutes a claim that is unconditional and legally enforceable
against the Plan. No benefit or interest which has become nonforfeitable under
the provisions of this Plan shall be subject to becoming forfeitable, or being
divested, by reason of subsequent events or conduct of the Participant. Being
vested does not mean that a Participant's Account balance is guaranteed against
investment risk or that a Participant has a right to receive his benefit.
Benefits under the Plan shall be paid only in accordance with the Plan
provisions related to distributions. Participants shall not be considered to
have a vested right to amounts allocated under a mistake of fact or under any
other circumstances causing them to be subject to a possible reversion to the
Employer pursuant to section 10.3.
Any balances in a Participant's Company Match Account which have been forfeited
following the Participant's Separation from Service prior to January 1, 1986,
in accordance with the provisions of a prior version of this Plan shall be
subject to reinstatement as follows. If the Participant returns to employment
with the Company or an Affiliate before he has five consecutive "one-year
breaks in service," he may repay to the Plan in cash, provided he makes such
repayment prior to the later of the end of a period of five consecutive
"one-year breaks in service" or the fifth anniversary of his resumption of
employment with the Company or an Affiliate as an Employee, the full value of
the amount distributed to him (excluding amounts attributable to his IRA
Account) upon his previous Separation from Service. Amounts attributable to the
Participant's IRA Account may not be repaid to the Plan. Upon such repayment,
the amount previously forfeited by the Participant shall
-43-
134
be credited to his Company Match Account, and the amount repaid by the
Participant shall be treated as previously taxed amounts and credited to the
same Accounts and in the same amounts determined by the original distribution
to the Participant. All such amounts shall be fully vested and nonforfeitable,
as provided in the first paragraph of this section 7.1. The amount repaid to
the Plan is not eligible for a Company Matching Contribution pursuant to
section 7.1. The restoration of the amount previously forfeited by the
Participant, shall be provided by the Company by means of a special
contribution to the Plan. For purposes of this paragraph, a "one-year break in
service" means a one-year period, measured from the Participant's date of
employment as an Employee (or from any anniversary of such date) during which
the Participant is not credited with at least one hour of service on account of
an hour for which he is paid or entitled to payment in accordance with
Department of Labor Regulations, 29 CFR section 2530.200b-2, or on account of
the rules of Code section 410(a)(5)(E)) relating to maternity or paternity
leaves.
7.2 Distributions Upon Separation from Service (Excluding Death).
Every Participant (or inactive Participant) who incurs a Separation from
Service for any reason other than death, shall have the value of his
Participant's Account, distributed to him as soon as practicable after his
Separation from Service (subject to his right to defer distribution in the
event that his Account balance exceeds $3,500). When the Participant has
elected a deferred distribution, the Committee may periodically deduct from the
Participant's Account an amount to be determined from time to time to reimburse
the Plan for the cost of administering such Account. A Participant or inactive
Participant who is absent from employment due to illness, injury or physical or
mental incapacity, shall not be treated as having incurred a Separation from
Service, for purposes of this section 7.2, until such time as the Committee
makes a determination that the Participant or inactive Participant
-44-
135
has incurred a Disability. Unless a Participant is subsequently rehired as an
Eligible Employee, no Employer contributions shall be allocated to such
Participant's Account with respect to Plan Years subsequent to the Plan Year in
which his Separation from Service occurred.
7.3 Distributions Upon Death or Divorce.
(a) Upon the death of a Participant, the Committee shall direct
the Trustee to pay the Participant's entire Account balance to
his Beneficiary, as identified in accordance with subsection
2.1(e).
(1) If a distribution to the Participant has commenced
prior to his death in accordance with section 7.2,
the remainder of his Participant's Account will be
distributed to his Beneficiary under the method of
distribution in effect prior to his death, unless the
Beneficiary elects to accelerate the payments and
receive the remaining balance in a lump sum instead.
(2) If distribution to the Participant had not commenced
at the time of his death, the entire balance of the
Participant's Account will be distributed to his
Beneficiary in a lump sum as soon as practicable and
in any event not later than one year after the
Participant's death.
(b) Benefits under the Plan may be paid to an Alternate Payee,
rather than to the Participant or his designated Beneficiary,
in the manner provided by an order that is determined by the
Committee to be a Qualified Domestic Relations Order.
-45-
136
7.4 Form of Payments.
(a) Distribution of benefits payments to Participants who do not
elect a deferred distribution of benefits pursuant to sections
7.2 and 7.11 shall be in a lump sum cash payment (except to
the extent that the Participant elects to receive common stock
of the Company, as provided below) to be made as soon as
practicable following the event giving rise to the
distribution.
Distribution of benefits to Participants who qualify for a
deferred distribution shall, as elected by the Participant, be
(i) in a lump sum distribution as soon as practicable after
the Valuation Date which is coincident with or immediately
following the Participant's Separation from Service or after
any deferred Valuation Date falling within the time limits for
benefit payouts under the Plan that the Participant may
select, or (ii) in substantially equal installments, payable
either quarterly or annually, following Separation from
Service over a period specified by the Participant that ends
on or before the April 1 of the year following the year in
which the Participant attains age 70-1/2. If a Participant has
elected a deferred lump sum or installments and later wishes
to change the form of payment, the Participant may elect
either an immediate lump sum of his remaining Account balance
or installment payments that begin as soon as administratively
possible.
(b) Notwithstanding any other provision of this section 7.4, when
any distribution is to be made from the Company Stock Fund,
the value of the Participant's interest in the Company Stock
Fund shall be distributed in cash, unless the Participant (or
his Beneficiary) elects instead to
-46-
137
receive whole shares of the common stock of the Company plus
cash in lieu of any fractional share. In the case of a
distribution of common stock of the Company, the number of
shares available to be distributed, in whole or in part, by
the Trustee are the number of shares credited to the
Participant's Account as of the Valuation Date for the
distribution.
If common stock of the Company is distributed from the Plan at
a time when it is not readily tradeable on an established
securities market, then, if and to the extent required by Code
section 401(a)(23), the Plan shall provide the Participant
with a put option that complies with the requirements of
section 409(h) of the Code. Such put option shall provide that
if the Participant exercises the put option, the Employer, or
the Plan if the Plan so elects, shall repurchase the such
stock as follows:
(1) If the distribution constitutes a total distribution,
payment of the fair market value of Participant's
Account balance shall be made in five substantially
equal annual payments. The first installment shall be
paid not later than 30 days after the Participant
exercises the put option. The Plan will pay a
reasonable rate of interest and provide adequate
security on amounts not paid after 30 days.
(2) If the distribution does not constitute a total
distribution, the Plan shall pay the Participant, not
later than 30 days after the Participant exercises
the put option, an amount equal to the fair market
value of the common stock of the Company being
repurchased.
For purposes of this subsection 7.4(b), "total distribution" shall mean a
distribution to a Participant or a Participant's
-47-
138
Beneficiary, within one taxable year of such recipient, of the entire balance
to the credit of the Participant.
7.5 Timing of Payments. Payments on account of an event described
in section 7.2 or 7.3 shall commence as soon as practicable after such event,
or after the deferred distribution date (not later than April 1 of the year
after the year in which the Participant attains age 70-1/2) that the
Participant elects in accordance with the terms of the Plan. The precise timing
of any distribution is subject to normal processing delays and any other
administrative exigencies or special circumstances affecting the distribution
and cannot, therefore, be guaranteed. However, distributions will normally be
paid within approximately 45 days after the end of the month following the
later to occur of (i) the Participant's Separation from Service or other
distribution event, or (ii) receipt of any properly completed election form
that is necessary to process the distribution. No interest or investment gains
or losses will be allocated for the processing period with respect to an amount
that is distributed.
In addition, the timing of all payments under the Plan shall conform to the
outside limits specified in Code sections 401(a)(9) and 401(a)(14) and all
other applicable Code provisions. For this purpose, the entire value of the
Account of a Participant who, at the time, has already had a Separation from
Service and has not been rehired as an Employee shall be distributed by the
April 1 of the year following the year in which the Participant attains age
70-1/2. Moreover, unless the Participant otherwise elects in accordance with
the Plan, the payment of his benefits must begin no later than the 60th day
after the close of the Plan Year in which occurs the latest of (i) the
Participant's attainment of age 65, (ii) the 10th anniversary of the year in
which the Participant commenced participation in the Plan, or (iii) the
Participant's Separation from Service. Further, if a Participant who has not
had
-48-
139
a Separation from Service continues in employment beyond the April 1 of the
year following the year of his attainment of age 70-1/2, his benefits shall
commence and minimum required payments shall be made to him during his
continued employment to the extent necessary to comply with Code section
401(a)(9) and related regulations. When any Participant has a Separation from
Service after having begun to receive benefit payments during employment on
account of this rule related to required payouts, his entire remaining Account
balance shall be paid out as soon as administratively feasible following such
separation.
7.6 Withdrawals. A Participant who is still an Employee may
withdraw any amount up to the value of the Participant's Supplemental Account,
his IRA Account, and the grandfathered December 31, 1989 value in his Company
Match Account that corresponds to the former subaccount I under the prior
version of such Account. The withdrawal may be made as of the last day of the
month following compliance with such reasonable advance notice requirements and
other rules as the Committee may specify. To make a withdrawal of all or part
of the grandfathered December 31, 1989 value of the former subaccount I that is
now included in the Company Match Account, the Participant must also withdraw
the entire remaining balance in his Supplemental Account. A withdrawal under
this section may be made for any reason upon written request to the Committee
specifying the form of distribution, the amount to be withdrawn, and the
Account (or Accounts, and the priority thereof) from which the withdrawal is to
be paid. The amount to be withdrawn from each specified Account shall be
limited as set forth above and also shall not exceed the Participant's balance
in such Account. Withdrawals shall be paid in cash.
In the case of a withdrawal elected in accordance with this section, the
Committee shall direct the Trustee to pay the Participant or inactive
Participant the amount so requested and the
-49-
140
amount so withdrawn shall be debited, on a pro rata basis, from each of the
Investment Funds in which the Participant's Account is invested. In addition,
for any Participant who was subject to a suspension of Company Matching
Contributions as of December 31, 1989, due to a recent withdrawal under this
section that did not comply with the hardship standards of section 7.7, such
suspension shall be lifted and Company Matching Contributions shall recommence
as of January 1, 1990, for any matchable Basic Contributions being made by the
Participant as of such date.
7.7 Hardship Withdrawals.
(a) Any Participant or inactive Participant shall be permitted to
make a cash withdrawal, in any whole percentage increment or
dollar amount, of up to 100% of the unwithdrawn amount in his
Basic Account (excluding any earnings arising after 1988 on
before-tax Basic Contributions, Flex Contributions, and other
similar Code section 401(k) deferrals that may have been
transferred directly to this Plan from an Other Plan), his
Supplemental Account, his Company Match Account, his Rollover
Account, and his ESOP Rollover Account by making application
therefor which demonstrates to the satisfaction of the
Committee that the Participant is confronted by a financial
hardship.
(b) The Committee shall establish a hierarchy among the Accounts
available for a hardship withdrawal under section 7.7(a) and
shall use it to determine the order in which funds are
considered to be withdrawn when less than a total withdrawal
occurs.
(c) Application for withdrawals shall be made on such forms as the
Committee prescribes and may be made at any time, effective
upon the last day of the month following satisfaction of the
advance notice requirement specified by the Committee.
Distribution of withdrawals shall be made in a
-50-
141
lump sum as soon as is administratively possible following
such date. Withdrawal distributions shall be based on the
value of a Participant's Account as of the Valuation Date
immediately preceding, or coinciding with, the effective date
of the withdrawal.
(d) For purposes of this section 7.7 "financial hardship" means an
immediate and heavy financial need occurring in the personal
affairs of the Participant (including a need that is
reasonably foreseeable or voluntarily incurred by the
Participant), as determined by the Committee based on all
relevant facts and circumstances, taking into consideration
that the need to pay the funeral expenses of a family member
would generally constitute an immediate and heavy financial
need and the need to purchase a boat or television set
generally would not. In any event, the following distributions
shall be deemed to be made on account of an immediate and
heavy financial need:
(1) Payment of medical expenses (described in Code
section 213(d)) incurred by the Participant, the
Participant's spouse, or dependents (as defined in
Code section 152).
(2) Purchase, excluding mortgage payments, of a principal
residence for the Participant.
(3) Payment of tuition for the next semester or quarter
of post-secondary education for the Participant, the
Participant's spouse, children, or dependents.
(4) Payment to prevent the eviction of the Participant
from his principal residence or the foreclosure of
the mortgage on the Participant's principal
residence.
(5) Such other deemed financial needs as published from
time to time by the Commissioner of Internal Revenue.
(e) A hardship distribution may not exceed the amount necessary to
meet the immediate and heavy financial need
-51-
142
created by the hardship and not capable of being satisfied
from other resources reasonably available to the Participant,
generally including assets held by his spouse or minor
children, but not including assets held for a child under an
irrevocable trust or under the Uniform Gift to Minors Act. The
Committee shall consider all relevant facts and circumstances
and shall generally treat the requested distribution as
necessary to meet the financial need upon receipt of a written
representation that in the Participant's opinion his financial
need cannot reasonably be relieved:
(1) through reimbursement or compensation by insurance or
otherwise,
(2) by reasonable liquidation of the Participant's
assets, to the extent that such liquidation itself is
feasible and does not itself cause an immediate and
heavy financial need,
(3) by suspension of the Participant's before-tax Basic
Contributions and Flex Contributions and his other
contributions under the Plan, or
(4) by other distributions or nontaxable loans (including
withdrawals and loans under sections 7.6 and 7.8 of
this Plan) from plans maintained by the Employer or
any other employer or by borrowing from commercial
sources on reasonable commercial terms.
(f) The Committee may, without further investigation, accept the
written statement of the Participant as to the foregoing
matters unless it has reason to believe the statement is in
error. In addition, hardship withdrawals shall be further
limited to prevent the distribution of earnings arising after
1988 on before-tax Basic Contributions and Flex Contributions,
and also to prevent the distribution of Company Matching
Contributions and the earnings thereon to the extent necessary
to satisfy the
-52-
143
withdrawal restrictions of Code section 401(k)(2)(B) in the
event that such Company Matching Contributions are used to
satisfy the average deferral percentage test of section 4.11.
(g) The foregoing notwithstanding, the Committee shall not approve
a hardship withdrawal for any reason unless such hardship
withdrawal complies with any applicable Treasury regulations.
7.8 Loans to Participants and Beneficiaries. The Committee, in its
sole discretion and upon proper written application, may permit the Plan to
make a loan to an eligible Participant or Beneficiary, provided that all loans
shall comply with such rules and regulations as the Committee may establish for
making Plan loans consistent with the following terms and conditions:
(a) Loans shall be made available on a nondiscriminatory and
reasonably equivalent basis to all Participants and
Beneficiaries who are actively employed by the Company or an
Affiliate or are otherwise "parties in interest" for purposes
of ERISA section 3(14). Subsequent references to a Participant
in this section shall be deemed to include a Beneficiary who
is eligible for a loan. Loans may be processed as of the first
day of any month.
(b) To receive a loan from the Plan, a Participant and his spouse
must sign a promissory note in the proper amount on a form
prescribed by the Committee and authorize payroll deductions
for payment of interest and principal in accordance with
procedures adopted by the Committee. To secure repayment of
the loan, the Participant and the Participant's spouse, if
any, shall, within the 90 day period before the loan is made,
consent to any distribution resulting from a setoff of the
loan against the Participant's Account under subsection (i).
However, except as otherwise specified by applicable law, the
-53-
144
consent of the Participant's spouse shall not be required if
it is established to the satisfaction of a Plan representative
that such consent cannot be obtained because there is no
spouse or because the spouse cannot be located.
(c) The amount of the loan shall not be less than $1,000 nor more
than 50 percent of the first $100,000 of the vested balance in
the Participant's Account (excluding any IRA Account balance).
The 50 percent limitation shall be reduced by the highest
outstanding balance of loans to the Participant from the Plan
during the 1-year period ending on the day before the date on
which the loan is made.
If such Participant is also covered under another qualified
plan maintained by the Company or an Affiliate, the above
limitations shall be applied as though all such qualified
plans are one plan. In no event may a Participant have more
than 2 loans from this Plan outstanding at any time nor may a
Participant obtain more than 1 loan from the Plan in any
period of 12 consecutive months.
(d) The Committee shall establish a hierarchy among the Accounts
listed in subsection 2.1(x) (other than the IRA Account) to be
used in determining the order in which funds are considered to
be withdrawn from a Participant's Account when a loan is made
and the order in which funds are considered to be restored to
such Account when loan repayments are received. Alternative
hierarchies may be offered to provide the Participant a choice
between (i) preserving his possible right to a tax deduction
for payments of loan interest and (ii) abandoning this right
in favor of making additional Account balances available for
borrowing. The Account hierarchy or hierarchies shall be
disclosed in the loan forms and agreed to by the
-54-
145
Participant, who shall remain solely responsible for his
personal tax situation, there being no guarantee of interest
deductibility or of specific tax treatment of any sort for
Participants or their Beneficiaries with respect to particular
transactions under the Plan.
(e) The loan repayment period shall be 1, 2, 3, 4, or 5 years as
elected by the Participant. In no event, however, shall the
loan repayment period end later than the end of the second
month following the month in which the Participant ceases to
be a party in interest for purposes of section 3(14) of ERISA.
(f) Each loan shall bear an interest rate equal to one percentage
point above the prime rate, as shown in the Money Rates
published in The Wall Street Journal on the first business day
of the month immediately prior to the quarter in which the
loan is approved; provided, however, that such interest rate
shall be reduced, if necessary, so as not to violate any
applicable usury law then in effect. The interest rate so
determined shall be fixed for the term of the loan.
(g) The Committee shall establish a Loan Fund representing the
Participant's individual investment of amounts that have been
withdrawn from his various Accounts and lent to him against
the security of such Accounts. Each repayment of principal on
the loan received by the Trustee from the Participant shall
reduce the Participant's investment in his Loan Fund and such
repayment of principal together with each payment of loan
interest shall increase pro rata the amount invested in each
other Investment Fund in accordance with the Participant's
investment elections at the time of such repayment, subject to
any Investment Fund restrictions.
(h) Except as otherwise provided below, repayment in equal
semimonthly installments of interest and principal shall
-55-
146
be accomplished through regular payroll deductions. The
obligation to make repayments of principal and interest shall
be suspended during the period not to exceed one year that the
Participant is on an authorized leave of absence without pay
(including a layoff that has not yet resulted in a Separation
from Service). If the unpaid leave continues thereafter, the
Participant shall be required to recommence repayments, on a
monthly basis by check, until he returns to pay status and
resumes regular repayments by means of payroll deductions. To
satisfy legal requirements, the Committee may specify rules
for redetermining the amount, timing, or manner of repayments
following a period of suspension due to unpaid leave; but such
redeterminations shall not be made for other reasons. The
obligation to make repayments shall continue during a paid
leave of absence or a transfer to a paid status as an Employee
who is no longer an Eligible Employee. Where it is not
feasible in such a case to continue processing the loan
repayments as payroll deductions under a payroll system that
currently covers the Participant, the repayments shall be made
by the Participant by check on a monthly basis. A Participant
shall be entitled at any time to prepay, without penalty, the
total accrued interest and outstanding principal amount of the
loan by direct payment. No other prepayments outside the
regular payment schedule shall be permitted.
(i) If a Participant (i) incurs a Separation from Service and
either receives an immediate distribution of his remaining
interest in the Plan or does not pay the total accrued
interest and outstanding principal amount of the loan within
60 days or (ii) is in default for 90 days on any required loan
payment prior to his repayment of the total principal and
interest on an outstanding loan under the Plan, the
Participant's note shall be canceled and the
-56-
147
principal deemed distributed by the Trust Fund to him or, if
applicable, his Beneficiary. This paragraph shall not apply,
however, as long as a Participant, notwithstanding his
Separation from Service, continues to be a party in interest
under section 3(14) of ERISA and therefore has a legal right
to continue his loan during such time as he is not in default
on his regular loan payments. In this case, the regular loan
payments may be made by check or other means suitable to the
Committee once the Participant ceases to be covered by a
payroll of the Company or an Affiliate.
(j) The Company and the Trustee may make suitable arrangements,
consistent with the requirements of the Code and ERISA, for
holding the Participant's note under an agency, subtrust, or
other arrangement that provides adequate safeguards while
simplifying the handling of the loan and eliminating the need
to transfer the actual note to the Trustee.
(k) The foregoing provisions of this section notwithstanding, the
Committee reserves the right to stop granting loans to
Participants at any time.
7.9 Debiting of Investment Funds. If a Participant makes less than
a total withdrawal of his Participant's Account or obtains a Plan loan under
Article 7 of the Plan and has his Participant's Account invested in more than
one Investment Fund, a portion of the amount withdrawn from his Participant's
Account shall be debited from each such Investment Fund in the proportion which
the current dollar balance of the Participant in such Fund bears to the value
of his Participant's Account.
7.10 Missing Persons. If the Company or the Committee shall be
unable, within two years after the Participant's distribution becomes due from
the Trust Fund to a Participant, inactive
-57-
148
Participant or Beneficiary, to make payment because the identity or whereabouts
of such person cannot be ascertained, the Committee (a) shall be deemed to have
elected to continue the Participant's interest in his Participant's Account (in
which event the Committee shall not have the power to change the Participant's
investment elections in effect when the distribution became due) until such
time as (b) the Committee (i) pays such benefit pursuant to state escheat laws
or (ii) directs that such Participant's interest in his Participant's Account
and all further benefits with respect to such person be discontinued and all
liability for the payment thereof terminated; provided, however, that in the
event of the subsequent reappearance of the Participant, inactive Participant
or Beneficiary, the benefit due such person (adjusted upward or downward in the
manner provided in section 9.3 as if the Participant's Account had not been
terminated) shall be paid in a single sum unless such discontinued interest was
paid pursuant to state escheat laws. The amount of any discontinued interest
shall be applied to reduce Company Matching Contributions under section 5.1,
and reinstatement of a benefit shall be accomplished by the making of a special
Employer Contribution in an appropriate amount to restore to the Trust the
Participant's distribution.
7.11 Requirement for Consent to Certain Distributions.
Notwithstanding any other provision regarding the Plan distributions, the Plan
may not immediately distribute the balance of a Participant's Account that
exceeds $3,500 without the written consent of the Participant. Where the
Participant does not consent to a distribution that is subject to the foregoing
requirement, this section shall be interpreted and administered so as to comply
with Code section 411(a)(11) by delaying any distribution that might otherwise
be required under the Plan to the extent necessary to comply with said Code
section.
-58-
149
Article 8. Investment Elections
8.1 Investment of Contributions. Each Participant may elect to
have all or any whole percentage of the total amount of his Accounts (excluding
the ESOP Rollover Account or any other specialized Account to the extent that
it is subject to particular investment restrictions) invested in any one or
more of the available Investment Funds. If a Participant does not make an
election in accordance with procedures approved by the Committee within the
election period provided for that purpose, the balances in his Participant's
Account shall be invested in the Income Fund.
8.2 Investment Transfers. As of any Change Date, each Participant
may change the Investment Funds in which the balances in his Participant's
Account are invested by electing, in increments of any whole percentage of the
Account total, to have the assets in a particular Investment Fund transferred
within a reasonable time after the election to any one or more of the other
Investment Funds. As of any other date that the Committee may designate as a
special election date for unusual reasons (such as the introduction of a new
Investment Fund, the transfer of a Participant entitled to make a special
election under section 3.3, or the investment of a rollover contribution
received pursuant to section 5.6), each Participant shall be allowed to make a
special election, without regard to the normal limits on the frequency of
investment elections, in order to make a similar change in his choice of
Investment Funds and have such assets and his Account balances transferred
accordingly to other Investment Funds. The election may apply to the investment
of amounts previously allocated to his Participant's Account or to future
contributions, or both. As of January 1, 1990, any Participant who had
previously been investing different types of future contributions in different
ways under prior rules of the Plan will have all his future contributions
invested in the same way as indicated by his most
-59-
150
recent election for the investment of his Basic Contributions, unless he makes
a new investment election applicable to all of his future contributions under
the Plan.
8.3 Investment Elections. Each Participant may make the election
described in section 8.1 by filing an election form with the Committee upon
becoming a Participant. The elections described in sections 8.1 and 8.2 may be
changed, together or separately, on any permissible Change Date, to be
effective as of the Valuation Date next following receipt of such reasonable,
advance written notice thereof as may be required by the Committee. Each
investment election shall be within the independent control of the Participant
who makes it. Neither the Trustee, the Employer, nor anyone else other than the
Participant shall be liable for any loss that may result from the exercise of
such control by the Participant.
8.4 Transfer of Assets. The Committee shall see that appropriate
agreements and procedures exist to require the Trustee to transfer the
appropriate amounts of money or other property to and from the appropriate
Investment Funds in order to carry out the aggregate transfer transactions
after the Committee has caused the necessary entries to be made in the
Participants' Accounts and in the Investment Funds and has reconciled
offsetting transfer elections, in accordance with the elections of Participants
and accounting and investment rules approved by the Committee.
8.5 Voting Company Stock. Each Participant who has common stock of
the Company allocated to his Participant's Account shall be entitled to
instruct the Trustee regarding the voting of the number of such shares
allocated to the Account at all stockholders meetings of the Company,
determined on the last practicable day prior to such stockholders meeting. If
clear and timely instructions have not been received from the Participant, or
if
-60-
151
shares of the Company's common stock have not yet been allocated to the
Accounts of Participants, the Trustee shall vote such shares in the same
proportion as are voted the shares for which clear and timely voting
instructions have been received from Participants, unless the Trustee
determines in the exercise of its fiduciary responsibility that it must vote
such shares in a different manner to protect the interest of Participants and
Beneficiaries. As agreed by the Company and the Trustee, the Company or the
Trustee will send, or cause to be sent, to each Participant who has common
stock of the Company allocated to his Participant's Account a voting
instruction form and the same proxy solicitation material as is sent to
stockholders generally.
8.6 Tender Offers. Notwithstanding any other provisions of the
Plan to the contrary:
(a) If any person shall make a tender offer to acquire (by
purchase or exchange) common stock of the Company, including
shares of such common stock that are held in the Trust, the
Trustee shall act as follows:
(1) The Trustee shall ensure that the materials made
available to shareholders generally in connection
with the tender offer are provided to each
Participant who has shares of common stock of the
Company allocated to his Participant's Account, and
the response of the Trustee as to whether to accept
or reject the tender offer with respect to the full
and fractional shares of such common stock that are
so allocated shall be made in accordance with the
instructions of the Participant given to the Trustee
on forms provided for that purpose.
-61-
152
(2) Notwithstanding paragraph (1) above, if the Trustee
in its sole discretion determines that under the
circumstances of a particular tender offer there is
not sufficient time to pass the decision through to
Participants in the manner anticipated in paragraph
(1), or if the Trustee fails to receive clear and
timely instructions from a Participant in a case
where instructions have been sought by the Trustee as
provided in paragraph (1), the Trustee shall in its
sole discretion determine whether to accept or reject
the tender offer (in whole or in part) with respect
to the affected full and fractional shares of common
stock of the Company that are allocated to the
Accounts of Participants.
(3) With respect to full and fractional shares of common
stock of the Company that have been acquired by the
Plan and are not yet allocated (including any such
common stock held in a suspense account because it
cannot be allocated currently due to the Code section
415 limits), the Trustee shall in its sole discretion
determine whether to accept the tender offer (in
whole or in part).
(b) If any tender offer is accepted (in whole or in part pursuant
to subsection (a), the Trustee shall have the power to
transfer common stock of the Company in order to effect such
acceptance.
(c) For purposes of this section 'tender offer' shall mean any
offer to acquire common stock of the Company which is subject
to either section 13(e) or 14(d) of the Securities Exchange
Act of 1934 and which under applicable rules and regulations
is required to be the subject of a filing with the Securities
and Exchange Commission on either Schedule 13E-4 or Schedule
14D-9.
-62-
153
(d) The foregoing notwithstanding, nothing herein shall serve to
modify the related rules of the Trust Agreement or to expand
the duties of the Trustee unless and until the Trustee gives
its consent in the manner provided in the Trust Agreement.
-63-
154
Article 9. Accounts and Records of the Plan
9.1 Accounts and Records. The accounts and records of the Plan
shall be maintained at the direction of the Committee and shall accurately
disclose the status of the Accounts of each Participant or his Beneficiary in
the Plan. Such accounts and records may be kept in dollars or in units or both,
as determined in accordance with generally acceptable principles of trust
accounting approved by the Committee. The information maintained shall be
sufficient to determine the number of shares of Company Stock that are
allocated to the Participant's Account as of any Valuation Date and the tax
status of distributions with respect to matters such as the determination of
net unrealized appreciation on shares of the Company's common stock that are
distributed and the determination of the Code section 72 contract and the
Participant's investment in such contract for purposes of any withdrawal or
other distributions from the Plan.
Each Account of a Participant shall be assigned a share of each Investment Fund
in which the Participant's Account is invested in the proportion which the
balance of each such Account bears to the total Participant's Account. The
Committee shall cause records to be maintained relative to a Participant's
Account so that there may be determined as of any Valuation Date the current
value of his Accounts in the Trust Fund and the adjustments from the previous
Valuation Date that have produced such current value. Any portion of a
Participant's Account that is invested in the Loan Fund in order to secure the
outstanding balance of a loan to the Participant is subject to a possible
setoff and deemed distribution for tax purposes, as described in subsection
7.8(i), and is therefore not available for actual payments to a Participant.
-64 -
155
Each Participant shall be advised from time to time, at least once each Plan
Year, as to the status of his Participant's Account and the portions thereof
attributable to each Account existing thereunder in accordance with section
2.1(x).
9.2 Investment Funds. The Trust Fund shall consist of the
Investment Funds, and each Participant who has any interest in an Investment
Fund shall have an undivided proportionate interest. In order to implement and
carryout investment objectives and policies established by the Committee, the
Committee shall have the right from time to time to establish additional
Investment Funds and to close Investment Funds and to transfer the assets to
other Investment Funds pursuant to new investment elections by the
Participants.
9.3 Valuation Adjustments. As of each Valuation Date, the
recordkeeper, in accordance with accounting principles approved by the
Committee, shall credit the Accounts of Participants and Beneficiaries with
contributions made during the accounting period and debit such Accounts with
withdrawals and distributions for such period, and shall also adjust the net
credit balances of such Accounts in the respective Investment Funds of the
Trust Fund, upward or downward, pro rata (using reasonable assumptions about
the availability of current period contributions, withdrawals, and
distributions for purposes of sharing in current period earnings and investment
gains or losses), so that such net credit balances will equal the net worth of
each Investment Fund of the Trust Fund as of that Valuation Date. The net worth
of an Investment Fund shall be determined by the Trustee and reported to the
recordkeeper under procedures approved by the Committee, by subtracting from
the fair market value of assets held in such Investment Fund any expenses,
withdrawals, distributions and transfers chargeable to that Investment Fund
which have been incurred but not yet paid. All determinations made by the
Trustee with respect to fair market
-65-
156
values and net worth shall be made in accordance with generally accepted
principles of trust accounting, and the accounting based thereon in accordance
with procedures approved by the Committee, shall be conclusive and binding upon
all persons having an interest under the Plan.
-66-
157
Article 10. Financing
10.1 Financing. The Company shall maintain a Trust Fund to finance
the benefits under the Plan, by entering into one or more Trust Agreements or
insurance contracts approved by the Company, or by causing insurance contracts
to be held under a Trust Agreement. Any Trust Agreement is designated as and
shall constitute a part of this Plan, and all rights which may accrue to any
person under this Plan shall be subject to all the terms and provisions of such
Trust Agreement. The Company may modify any Trust Agreement or insurance
contract from time to time to accomplish the purpose of the Plan and may
replace any insurance company or appoint a successor Trustee or Trustees. By
entering into such Trust Agreements or insurance contracts, the Company shall
vest in the Trustee, or in one or more investment managers appointed under the
terms of the Trust Agreement from time to time by action of the Committee,
responsibility for the management and control of the Trust Fund. In the event
the Committee appoints any such investment manager, the Trustee shall not be
liable for the acts or omissions of the investment manager or have any
responsibility to invest or otherwise manage any portion of the Trust Fund
subject to the management and control of the investment manager. The Company
from time to time shall establish a funding policy which is consistent with the
objectives of the Plan and shall communicate it to the Trustee and each
investment manager so that they may coordinate investment policies with such
funding policy. Nothing in this section 10.1 shall eliminate the
responsibility of Participants for the results of investment elections that are
within their control, as provided in section 8.2.
10.2 Employer Contributions. Each Employer shall make such
contributions to the Trust Fund as are required by this Plan, subject to the
right of the Company to discontinue the Plan.
-67-
158
10.3 Non-Reversion. Anything in this Plan to the contrary
notwithstanding, it shall be impossible at any time for the contributions of
the Employer or any part of the Trust Fund to revert to the Employer or
Affiliate or to be used for or diverted to any purpose other than the exclusive
benefit of Participants or their Beneficiaries, except that:
(a) If all or any part of a contribution is made by the Employer
by a mistake of fact, upon written request to the Committee,
such contribution or such portion and any increment thereon
shall be returned to the Employer within one year after the
date of payment.
(b) If all or any part of an Employer's Company Matching
Contributions under the Plan is disallowed as a deduction for
federal income tax purposes, then to the extent such
contribution is disallowed, the contribution and any increment
thereon shall be returned to the Employer within one year
after such disallowance.
(c) If all or any part of an Employer's contribution would give
rise to an excise tax under Code section 4972(b), a correcting
distribution with respect to such contribution shall be made
to the Employer to the extent permitted by said Code section
in order to avoid payment of an excise tax on excess
contributions.
(d) Any Basic Contributions or Flex Contributions that are
returned to an Employer pursuant to this section 10.3 shall be
paid over by the Employer to the Participant on whose behalf
they were made (or to his Beneficiary).
10.4 Transactions Involving Employer Securities. In any transaction
with a party in interest, as defined in section 3(14) of ERISA, involving the
acquisition or sale of Employer securities by the Plan, the Plan shall pay no
commission and the terms of the
-68-
159
acquisition or sale shall be such that the Plan receives no less than adequate
consideration, as determined under section 3(18) of ERISA, or otherwise
satisfies the requirements of section 408(e) of ERISA.
-69-
160
Article 11. Administration
11.1 Named Fiduciaries. The fiduciaries named in this section shall
have only those specific powers, duties, responsibilities and obligations as
are specifically given them under this Plan or the Trust. The Employer shall
have the sole responsibility for making the contributions specified in Articles
4 and 5 (other than the contributions made by Employees on an after-tax basis).
The Company shall have the sole authority to appoint and remove the Trustee and
to amend or terminate, in whole or in part, this Plan or the Trust. The
Company, acting directly or through the Committee, shall have the sole
responsibility for the administration of this Plan, which responsibility is
specifically described in this Plan and the Trust Agreement. The Senior Vice
President-Human Resources and Administration of the Company, or the officer
holding a position of comparable responsibilities, shall have the
responsibility of implementing the Plan as the Committee shall direct. The
Trustee shall have the sole responsibility for the administration of the Trust
and the management of the assets held under the Trust, all as specifically
provided in the Trust Agreement. A fiduciary may rely upon any direction,
information or action of another fiduciary as being proper under this Plan or
the Trust, and is not required under this Plan or the Trust to inquire into the
propriety of any such direction, information or action. It is intended under
this Plan and the Trust that each fiduciary shall be responsible for the proper
exercise of his or its own powers, duties, responsibilities and obligations
under this Plan and the Trust and shall not be responsible for any act or
failure to act of another fiduciary. No fiduciary guarantees the Trust Fund in
any manner against investment loss or depreciation in asset value. Any party
may serve in more than one fiduciary capacity with respect to the Plan or
Trust.
-70-
161
11.2 Committee. Responsibility for the general administration of
the Plan and for carrying out the provisions hereof shall be placed in a
Committee of three or more members, each of whom shall be an Employee of an
Employer and each of whom shall be appointed by the Chief Executive Officer of
the Company and serve at the pleasure of the latter. Any member of the
Committee may resign by notice in writing filed with the Secretary of the
Committee, such resignation to become effective no earlier than the date of
such written notice.
All usual and reasonable expenses of the Committee will be paid by the Company.
Members of the Committee shall not receive compensation with respect to their
services for the Committee.
11.3 Organization of Committee. The Committee shall elect a
Chairman and a Secretary. The Secretary need not be one of the members of the
Committee. The Committee shall issue directions to the Trustee concerning all
benefits which are to be paid from the Trust Fund pursuant to the provisions of
the Plan. The Committee may authorize one or more of its number, or any agent,
to direct any payment on behalf of the Committee (including instructions to the
Trustee as to the application or disbursement of the Trust fund) and may
appoint agents and clerks, and retain such professional services, including
legal, medical, accounting, and actuarial specialists, as may be required in
carrying out the provisions of the Plan.
The Committee shall hold meetings upon notice, at such place or places, and at
such time or times, as they may determine. A majority of the members of the
Committee at the time in office shall constitute a quorum for the transaction
of business. All resolutions or actions taken by the Committee at a meeting
shall be by vote of the majority of the Committee present. Action by the
Committee may be taken without a formal meeting by the
-71-
162
written authorization of all of the members thereof. A Committee member shall
be disqualified from acting upon any matter affecting only himself.
11.4 Procedures. The Committee shall adopt administrative rules as
it deems desirable and shall keep all such books of accounts, records and other
data as may be necessary for the proper administration of the Plan. The
Committee shall keep a record of all actions and forward all necessary
communications to the Trustee, Company or Employer, Participants, inactive
Participants, Beneficiaries, Alternate Payees, providers of services to the
Plan, and other interested parties, as the case may be.
11.5 Committee's Powers and Duties. The Committee shall have such
powers and duties as may be necessary to discharge its functions hereunder,
including but not limited to, the following:
(a) To construe and interpret the Plan, to decide all questions of
eligibility and determine the amount, manner and time of
payment of any benefits hereunder;
(b) To make a determination as to the right of any person to a
benefit;
(c) To obtain from the Employer and from Employees such
information as shall be necessary for the proper
administration of the Plan and, when appropriate, to furnish
such information promptly to the Trustees or other persons
entitled thereto;
(d) To prepare and distribute, in such manner as the Committee
determines to be appropriate, information explaining the Plan;
(e) To furnish the Employer, upon request, such reports with
respect to the administration of the Plan as are reasonable
and appropriate;
(f) To establish and maintain such accounts in the name of the
Employer and of each Participant as are necessary;
-72-
163
(g) To instruct the Trustee with respect to the payment of
benefits hereunder;
(h) To provide for any required bonding of fiduciaries and other
persons who may from time to time handle Plan assets;
(i) To prepare and file any reports required by the Code, ERISA,
the Securities Act of 1933, the Securities Exchange Act of
1934, or any other applicable law;
(j) To engage an independent public accountant to conduct such
examinations and to render such opinions as may be required by
the ERISA;
(k) To allocate contributions and Trust Fund earnings and
investment gains or losses to the Accounts of Participants;
(l) To establish a funding policy and method consistent with the
objectives of the Plan and the requirements of ERISA;
(m) To correct any errors and remedy any defects in the
administration of this Plan, including, if necessary, by
requiring any Employer to make a Qualified Nonelective
Contribution that prevents discrimination under Code section
401(k) or 401(m) without materially increasing the cost of the
Plan;
(n) To establish reasonable claims procedures in accordance with
the terms of this Plan and ERISA; and
(o) To establish procedures for identifying and complying with
Qualified Domestic Relations Orders.
11.6 Committee's Decisions Conclusive. The Committee shall exercise
its power hereunder in a uniform and nondiscriminatory manner. Any and all
disputes with respect to the Plan which may arise involving Participants or
their Beneficiaries shall be referred to the Committee and its decision shall
be final, conclusive and binding. Furthermore, if any question arises as to the
-73-
164
meaning, interpretation or application of any provision hereof, the decision of
the Committee with respect thereto shall be final.
11.7 Indemnity. The Company shall indemnify each member of the
Committee (which, for purposes of this section, includes any Employee to whom
the Committee has delegated fiduciary duties) against any and all claims,
losses, damages, expenses, including counsel fees, incurred by the Committee
and any liability, including any amounts paid in settlement with the Company's
approval, arising from the member's or the Committee's action or failure to
act, except when the same is judicially determined to be attributable to the
gross negligence or willful misconduct of such member. The right of indemnity
described in the preceding sentence shall be conditioned upon (i) the timely
receipt of notice by the Employer of any claim asserted against the Committee
member, which notice, in the event of a lawsuit shall be given within 10 days
after receipt by the Committee member, which notice, in the event of a lawsuit
shall be given within 10 days after receipt by the Committee member of the
complaint, and (ii) the receipt by the Company of an offer from the Committee
member of an opportunity to participate in the settlement or defense of such
claim.
11.8 Claims Procedure.
(a) Claims for Benefits. Inquiries about benefits under the Plan
may be made to appropriate Human Resources personnel of the
Company and their designated field representatives. Formal
claims for benefits shall be made in writing to the Chairman
of the Committee. Written inquiries to Human Resources
personnel and field representatives that cannot be resolved
within a reasonable time will be treated as formal claims and
forwarded to the Chairman of the Committee, in which case the
claimant shall be advised of this action and of the claims
procedure under the Plan.
-74-
165
(b) Notice of Denial of Claim. If a claim for benefits is wholly
or partially denied, the Chairman of the Committee shall
within a reasonable period of time, but no later than 90 days
after receipt of the claim, notify the claimant of the denial
of benefits. If special circumstances justify extending the
period up to an additional 90 days, the claimant shall be
given written notice of this extension within the initial
90-day period and such notice shall set forth the special
circumstances and the date a decision is expected. A notice of
denial
(1) shall be written in a manner calculated to be
understood by the claimant; and
(2) shall contain (i) the specific reasons for denial of
the claim, (ii) specific reference to the Plan
provisions on which the denial is based, (iii) a
description of any additional material or information
necessary for the claimant to perfect the claim,
along with an explanation why such material or
information is necessary, and (iv) an explanation of
the Plan's claim review procedures.
(c) Request for Review of Denial of Claim. Within 60 days of the
receipt by the claimant of the written denial of his claim or,
if the claim has not been granted within a reasonable period
of time (which shall not be less than the 90 days described in
subsection (b)), the claimant may file a written request with
the full Committee that it conduct a full review of the denial
of the claim, including a hearing if deemed necessary by the
full Committee. In connection with the claimant's appeal, the
claimant may review pertinent documents and may submit issues
and comments in writing.
(d) Decision of Review of Denial of Claim. The full Committee
shall deliver to the claimant a written decision on the claim
promptly, but not later than 60 days
-75-
166
after the receipt of the claimant's request for such review,
unless special circumstances exist which justify extending
this period up to an additional 60 days. If the period is
extended, the claimant shall be given written notice of this
extension during the initial 60-day period. The decision on
review of the denial of the claim
(1) shall be written in a manner calculated to be
understood by the claimant;
(2) shall include specific reasons for the decision; and
(3) shall contain specific references to the Plan
provisions on which the decision is based.
All decisions made under the procedure set out in this section shall be final,
binding, and conclusive.
-76-
167
Article 12. Plan Amendment, Termination, Merger, and
Adoption by Affiliates
12.1 Amendment and Termination. The Company expects the Plan to be
permanent and continue indefinitely, but since future conditions affecting the
Company cannot be anticipated or foreseen, the Company must necessarily and
does hereby reserve the right to amend, modify or terminate the Plan for itself
and all other Employers at any time by action of the Compensation and
Nominating Committee of the Board of Directors. In addition, the Senior Vice
President-Human Resources and Administration of the Company may approve any
modifications or amendments to the Plan that are necessary or appropriate to
meet the requirements of ERISA, the Code, or any other law as now in effect or
as hereafter amended, and the Chief Executive Officer of the Company (or the
Senior Vice President-Human Resources and Administration if acting pursuant to
authority delegated by the Chief Executive Officer) may approve any
modification or amendment which does not significantly increase benefit costs.
No amendment of the Plan shall cause any part of the Trust Fund to be used for,
or diverted to, purposes other than for the exclusive benefit of the
Participants or their beneficiaries covered by the Plan. Retroactive Plan
amendments may not decrease the accrued benefits of any Participant determined
as of effective date of the amendment applies or, if later, as of the time the
amendment was adopted; provided, however, that retroactive amendments to
preserve the qualification of the Plan shall be permitted to the full extent
permitted by the Internal Revenue Service or section 1140 of the Tax Reform Act
of 1986 or any other applicable laws.
12.2 Distribution on Termination. Upon termination of the Plan in
whole or in part, or upon complete discontinuance of contributions to the Plan
by the Employers, the value of the proportionate interest in the Trust Fund of
each Participant
-77-
168
affected by such termination having an interest in the Trust Fund shall be
determined as of the date of such termination or discontinuance. The Accounts
of such Participants shall continue to be fully vested and nonforfeitable, and
thereafter distribution shall be made to such Participants as directed by the
Committee in accordance with the Plan and applicable law.
Upon the partial termination of the Plan, the Committee may in its sole
discretion determine the timing of a distribution of the balance of the
affected Participants' Accounts in accordance with the provisions of the Plan
and applicable law.
12.3 Corporate Reorganization. The bankruptcy, dissolution, merger,
consolidation or reorganization of the Company or any other Employer, or the
sale of all or substantially all of the assets or stock of the Company or any
other Employer, shall not automatically terminate the Plan, unless a Plan
termination is otherwise required under this Article 12 and no provision is
made for continuation of the Plan.
12.4 Plan Merger or Transfer. In the event of and effective as of
the date of merger or consolidation with, or transfer of assets and liabilities
of the Plan to or from any other employee benefit plan, each Participant in
this Plan will (if the Plan had then terminated) receive a benefit immediately
after the merger, consolidation or transfer which is not less than the benefit
the Participant would have been entitled to receive immediately before the
merger, consolidation or transfer of assets (if this Plan had then terminated).
As of January 1, 1990, the Plan shall receive a direct transfer of assets from
the Burlington Resources Inc. Thrift and Profit Sharing Plan. The Plan shall
be treated as a continuation of such Other Plan with respect to the transferred
balances and with respect to
-78-
169
the affected Participants, (that is, those Participants who were participants
in such Other Plan on December 31, 1989). The actual transfer of assets shall
take place as soon as administratively practicable after January 1, 1990,
subject to the prior satisfaction of applicable legal requirements, including
the furnishing by both plans of any necessary advance notices to the Internal
Revenue Service. Following such transfer, each affected Participant's years of
participation in such Other Plan shall be carried over to this Plan, and his
transferred balance shall continue to be fully vested and shall continue to be
subject to the legally required protections under Code sections 414(1) and
411(d)(6), and other applicable laws that preserve certain rights of a
Participant with respect to such a balance. In the future the Committee may
authorize a direct transfer to this Plan from an Other Plan that it has
designated, subject to the satisfaction of requirements similar to those
applicable to the Burlington Resources Inc. Thrift and Profit Sharing Plan, as
described above and elsewhere in this Plan.
12.5 Affiliate Participation. Subject to the approval of the
Company, any Affiliate desiring to become an Employer may elect to become a
party to the Plan by adopting the Plan for the benefit of any specified group
of its Employees, with such modification of the terms of the Plan with respect
to such Employees as the Company may approve, effective as of the date
specified in such adoption, by filing with the Company an adoption agreement or
such other or additional instruments evidencing the adoption as the Company may
require.
12.6 Action Binding on Participating Affiliates. As long as the
Company is a party to the Plan and the Trust Agreement, it shall be empowered
to act thereunder for any Employer in all matters respecting the Committee and
the Trustee and the designation of Affiliates and any action taken by the
Company with respect
-79-
170
thereto shall automatically include and be binding upon any Employer which is a
party to the Plan.
12.7 Termination of Participation of Affiliate. The Company
reserves the right, in its sole discretion and at any time, to terminate the
participation in this Plan of any or all Employers. Such termination shall be
effective immediately upon notice of such termination from the Company to the
Trustee and the Employer being terminated. In event of such termination, this
Plan shall not terminate, but the portion of the Plan attributable to the
Affiliate shall become a separate Plan, and the Company shall inform the
Trustee of the portion of the Trust Fund that is then attributable to the
participation of such terminated Affiliate. Such portion shall as soon
thereafter as is administratively feasible be set apart by the Trustee as a
separate Trust which shall be a part of the separate Plan of such terminated
Affiliate.
Any Affiliate may withdraw from the Plan and Trust and end its status as an
Employer hereunder, by action of its Board of Directors, after obtaining
approval of the Company.
Thereafter, the administration, control, and operation of the Plan with respect
to such terminated Affiliate shall be on a separate basis in accordance with
the terms hereof, or as such terms may be amended by appropriate action of such
terminated Affiliate in accordance with the provisions of Article 12.
-80-
171
Article 13. Top-Heavy Provisions
13.1 Application. The provisions of this Article 13 shall be
interpreted and administered in accordance with the requirements of Code
section 416. If as of the Determination Date in any Plan Year
(a) the sum of the Account balances of Employees who are "Key
Employees" for such Plan Year exceeds 60% of the sum of the
Account balances of all Employees and their Beneficiaries; or
(b) the Plan is part of a Top-Heavy Group;
then the following provisions under this Article 13 shall apply for such Plan
Year. The foregoing notwithstanding, the provisions of this Article 13 shall
not apply to the Plan in any Plan Year during which it is part of an
Aggregation Group (as defined in section 13.3), whether or not it is top-heavy
as a single plan, unless the Aggregation Group of which it is a part is
top-heavy in such Plan Year.
The "Determination Date" is the date for determining the applicability of this
Article 13 is:
(i) for the first Plan Year, the last day of the Plan Year; and
(ii) for any other Plan Year, the last day of the preceding Plan
Year.
13.2 Key Employees.
(a) A "non-Key Employee" means any Participant who is not a Key
Employee (as hereafter defined), but who is an Employee on the
last day of the Plan Year. For purposes of this Article 13,
the term "Key Employee" means any Employee or former Employee
(and the Beneficiary of such an Employee) who at any time
during the Plan Year
-81-
172
in which a determination of top-heaviness is made or any of
the four preceding Plan Years is:
(1) an officer of the Company or an Affiliate whose
Section 415 Compensation during the relevant Plan
Year exceeded 50% of the dollar limitation in effect
under Code section 415(b)(1)(A); provided that no
more than 50 Employees shall be treated as officers;
(2) one of the 10 Employees having Section 415
Compensation for the relevant Plan Year in excess of
the dollar limitation in effect under Code section
415(c)(1)(A) and owning (or considered as owning
within the meaning of Code section 318) the largest
interests in the Company or an Affiliate; provided,
however, that if 2 Employees have the same interest
in the Company or an Affiliate, then the Employee
with the greater Section 415 Compensation shall be
treated as having the larger interest;
(3) a 5-percent owner of the Company or an Affiliate; or
(4) a 1-percent owner of the Company or an Affiliate
having annual Section 415 Compensation of more than
$150,000.
(b) An Employee is considered a "5-percent owner" if the Employee
owns (or is considered as owning within the meaning of Code
section 318, as modified by Code section 416(i)(1)(B)) more
than 5 percent of the outstanding stock of the Company or an
Affiliate or stock possessing 5 percent of the total combined
voting power of all of the stock of the Company or an
Affiliate. For purposes of this paragraph, "stock" shall also
mean the appropriate ownership interest of
-82-
173
an Affiliate which is not a corporation. The same rules apply
to determine whether an Employee is a 1-percent owner.
(c) If an Employee who has not terminated his employment ceases
to be a Key Employee, such Employee's Account balance or
accrued benefit shall be disregarded under the top-heavy plan
computation for any Plan Year following the last Plan Year
for which he was treated as a Key Employee. The Account
balance or accrued benefit of any Employee or former
Employee, who has not performed any services for the Company
or any Affiliate at any time during the 5-year period ending
on the Determination Date, will not be taken into account to
determine whether the Plan or Aggregation Group is top-heavy.
13.3 Top-Heavy Group. For purposes of determining whether the Plan
is a part of a Top-Heavy Group, the following rules shall apply:
(a) Aggregation Group. The Aggregation Group shall include any
plan maintained by the Company or an Affiliate which covers a
Key Employee and any other plan which enables a plan covering
a Key Employee to meet the requirements of Code section
401(a)(4) or 410.
(b) Top-Heavy Group. An Aggregation Group is a Top-Heavy Group if
the sum of the account balances of Key Employees under all
defined contribution plans included in the group and the
present value of the accumulated accrued benefits for Key
Employees under all defined benefit plans in the group exceeds
60% of a similar sum determined for all Employees and their
Beneficiaries under all such plans in the group. The present
value of accrued benefits under defined benefit plans and the
account balances under defined contribution plans shall
-83-
174
be determined separately as of each plan's determination date.
For purposes of determining whether an Aggregation Group is a
Top-Heavy Group, the present value of accrued benefits under
all defined benefit plans in the Aggregation Group shall be
determined using a single set of actuarial assumptions, as
defined in such defined benefit plans. The determination of
whether the Aggregation Group is a Top-Heavy Group shall be
made using each plan's results as of that plan's determination
date which falls within the calendar year. In any Plan Year,
in testing for top-heaviness under this Article 13, the
Company may, in its discretion, take into account accumulated
accrued benefits and account balances in any other plan
maintained by it or an Affiliate, so long as such expanded
Aggregation Group continues to meet the requirements of Code
sections 401(a)(4) and 410.
13.4 Additional Rules. In determining the present value of the
accrued benefits under a defined benefit plan and the sum of the account
balances under a defined contribution plan, Company contributions and voluntary
Employee contributions shall be taken into account and any rollover
contribution or similar transaction initiated by the Employee, which results in
a transfer to this Plan, shall not be taken into account. The present value of
the accrued benefits in a defined benefit plan and the account balance in a
defined contribution plan shall include any amount distributed to an Employee
or Beneficiary within the five-year period ending on that plan's determination
date.
The present value of any Employee's accrued benefit under any defined benefit
plan as of any determination date shall be calculated (i) as of the most recent
Actuarial Valuation Date which is within a 12-month period ending on the
Determination Date,
-84-
175
(ii) as if his employment terminated as of such valuation date, and (iii)
without regard to the automatic preretirement survivor annuity benefit or any
other nonproportional subsidy. The term "Actuarial Valuation Date" shall mean
the valuation date used for computing plan costs for minimum funding.
13.5 Code Section 415(h) Adjustment. If the Plan is determined to
be top-heavy in any Plan Year, then the combined limits of Code section 415(e)
and section 6.3 of the Plan shall be applied in accordance with Code section
416(h)(1) by substituting "1.0" for "1.25" in computing the defined benefit
fraction and the defined contribution fraction under Plan section 6.3 and
paragraphs 2(B) and 3(B) of Code section 415(e).
13.6 Minimum Contributions. If this Plan is determined to be
top-heavy in any Plan Year under the provisions of section 13.1 or 13.3, then
the aggregate contributions to be made by the Employer on behalf of each
non-Key Employee for the Plan Year (excluding any contributions under sections
4.1, and 5.1, to the extent required in applicable regulations) shall not be
less than 3 percent of the Participant's Section 415 Compensation for such year
(or such lesser percentage as represents the maximum percentage of Section 415
Compensation contributed on behalf of a Key Employee for the Plan Year), as
determined under section 416(c) of the Code.
-85-
176
Article 14. Miscellaneous Provisions
14.1 Employment Rights. Neither anything contained in this Plan nor
any modification of the same or act done in pursuance hereof shall be construed
as giving any person any legal or equitable right against the Committee, the
Employer, the Company, the Trustee or the Trust Fund, unless specifically
provided herein, or as giving any person a right to be retained in the employ
of the Employer. All Participants shall remain subject to assignment,
reassignment, promotion, transfer, layoff, reduction, suspension and discharge
to the same extent as if this Plan had never been established.
14.2 No Examination or Accounting. Neither this Plan nor any action
taken thereunder shall be construed as giving any person the right to an
accounting or to examine the books or affairs of an Employer.
14.3 Investment Risk. The Participants and their Beneficiaries
shall assume all risks in connection with any decreases in the value of any
assets or funds which may be invested or reinvested in the Trust Fund which
supports this Plan.
14.4 Non-Alienation. Except as permitted under the Plan in
accordance with Code section 401(a)(13) and ERISA section 206(d) with respect
to matters such as loans to Participants and assignments to Alternate Payees
under Qualified Domestic Relations Orders, no benefit payable at any time under
the Plan shall be subject to the debts or liabilities of a Participant or his
spouse or Beneficiary, and any attempt to alienate, sell, transfer, assign,
pledge or otherwise encumber any such benefit, whether presently or thereafter
payable, shall be void. Subject to the foregoing exception, no benefit under
the Plan shall be
-86-
177
subject in any manner to alienation, sale, transfer, assignment, pledge,
attachment, garnishment or encumbrance of any kind. In accordance with
procedures consistent with Code section 414(p) that are established by the
Committee (including procedures requiring prompt notification of the affected
Participant and each Alternate Payee of the Plan's receipt of a domestic
relations order and its procedures for determining the qualified status of such
order), judicial orders for purposes of enforcing family support obligations or
pertaining to domestic relations (which orders do not alter the amount, timing
or form of benefit other than to have it commence at the earliest legally
permissible date) shall be honored by the Plan if the Committee determines that
they constitute Qualified Domestic Relations Orders. Except as may otherwise be
required by regulations of the Secretary of Labor, such orders may not require
a retroactive transfer of all or part of a Participant's Account to or for the
benefit of an Alternate Payee without permitting an appropriate adjustment for
earnings and investment gains or losses that have occurred in the interim, nor
shall such orders require the Plan to provide loans, self-directed investment
elections, or other rights to Alternate Payees that are not available to
Beneficiaries generally. In furtherance of this purpose, the investment
restrictions of subsection 5.6(f) shall continue to apply to any portion of a
Participant's ESOP Rollover Account that is retained under the Trust after
having been transferred to an Alternate Payee. To the full extent permitted by
Code section 414(p)(10) and by the terms of a Qualified Domestic Relations
Order, amounts assigned to an Alternate Payee may be paid as soon as possible
in a lump sum, notwithstanding the age, financial hardship, employment status,
or other factors affecting the ability of the Participant to make a withdrawal
or otherwise receive a distribution of balances to his credit under the Plan.
-87-
178
In cases where such full and prompt payment of amounts assigned to an Alternate
Payee will not be made, the assigned amounts will be transferred within a
reasonable time to the Income Fund and, pending payment, shall be maintained in
a separate Account, for the benefit of the Alternate Payee.
14.5 Incompetency. Every person receiving or claiming benefits
under the Plan shall be conclusively presumed to be mentally competent and of
age until the date on which the Committee receives a written notice, in a form
and manner acceptable to the Committee, that such person is incompetent or a
minor, for whom a guardian or other person legally vested with the care of his
person or estate has been appointed; provided, however, that if the Committee
shall find that any person to whom a benefit is payable under the Plan is
unable to care for his affairs because of incompetency, or is a minor, any
payment due (unless a prior claim therefor shall have been made by a duly
appointed legal representative) may be paid to the spouse, a child, a parent or
a brother or sister, or to any person or institution deemed by the Committee to
have incurred expense for such person otherwise entitled to payment. To the
extent permitted by law, any such payment so made shall be a complete discharge
of liability therefor under the Plan.
In the event a guardian of the estate of any person receiving or claiming
benefits under the Plan shall be appointed by a court of competent
jurisdiction, benefit payments may be made to such guardian provided that
proper proof of appointment and continuing qualification is furnished in a form
and manner acceptable to the Committee. To the extent permitted by law, any
such payment so made shall be a complete discharge of any liability therefor
under the Plan.
-88-
179
14.6 Severability. In the event any provision of this Plan shall be
held illegal or invalid for any reason, such illegality or invalidity shall not
affect the remaining parts of this Plan, and it shall be construed and enforced
as if such illegal or invalid provision had never been inserted herein.
14.7 Service of Legal Process. The Committee is hereby designated
agent of the Plan for the purpose of receiving service of summons, subpoena or
other legal process.
14.8 Headings of Articles and Sections. The headings of Articles
and sections are included solely for convenience of reference, and if there is
any conflict between such headings and the text of the Plan, the text shall
control.
14.9 Applicable Law. The Plan and all rights hereunder shall be
governed, construed and administered in accordance with the laws of the State
of Washington with the exception that any Trust Agreement which may constitute
a part of the Plan shall be construed and enforced in all respects under and by
the laws of the State in which the Trustee thereunder is located.
-89-
180
IN WITNESS WHEREOF, The El Paso Company and the Company have caused
the Plan to be executed effective as of January 1, 1990.
THE EL PASO COMPANY
By Thomas E. Ricks
-------------------------------
Title Vice President & Controller
----------------------------
Date Signed 12/22/89
----------------------
ATTEST:
By Donald J. Masters, Jr.
-------------------------------
Title Secretary
----------------------------
BURLINGTON RESOURCES INC.
By A. R. Boyce
-------------------------------
Title SUP HUM. RES. & ADMIN.
----------------------------
Date Signed 12/22/89
-----------------------------
ATTEST:
By Leslie S. Leland
-------------------------------
Title Corporate Secretary
----------------------------
-90-
181
IN WITNESS WHEREOF, The El Paso Company and the Company have caused
the Plan to be executed effective as of January 1, 1990.
THE EL PASO COMPANY
By Thomas E. Ricks
-------------------------------
Title Vice President & Controller
----------------------------
Date Signed 12/22/89
----------------------
ATTEST:
By Donald J. Masters, Jr.
-------------------------------
Title Secretary
----------------------------
BURLINGTON RESOURCES INC.
By A. R. Boyce
-------------------------------
Title SUP HUM. RES. & ADMIN.
----------------------------
Date Signed 12/22/89
----------------------
ATTEST:
By Leslie S. Leland
-------------------------------
Title Corporate Secretary
----------------------------
182
AMENDMENT
BURLINGTON RESOURCES INC. RETIREMENT SAVINGS PLAN
AND
PREDECESSOR PLANS
This amendment applies to the Burlington Resources Inc. Retirement Savings Plan
("RSP") and to the predecessor plans described in RSP section 1.1; namely, the
Employees Savings Plan of The El Paso Company and Affiliated Companies ("El
Paso Predecessor Plan") and the Burlington Resources Inc. Thrift and Profit
Sharing Plan ("BR Predecessor Plan"). Collectively, the RSP, El Paso
Predecessor Plan, and BR Predecessor Plan are referred to herein as the
"Plans." Except as otherwise provided herein for specific provisions, all
provisions of this amendment are effective as of January 1, 1990, with respect
to RSP and as of January 1, 1989, with respect to the El Paso Predecessor Plan
and the BR Predecessor Plan.
1. Section 2.1(1) of each of the Plans is hereby amended by adding the
following at the end thereof:
As required by section 6.5 and by sections 4.11 and 5.2 as revised
pursuant to this Amendment, Compensation shall be determined after
application of the dollar limit of Code section 401(a)(17) and the
family aggregation rules of Code section 414(q)(6) in cases governed
by those Code sections. For this purpose, for years beginning after
December 31, 1988, the annual Compensation of each Participant taken
into account under the Plan for any year shall not exceed $200,000.
This limitation shall be adjusted by the Plan as permitted by the
Secretary of the Treasury at the same time and in the same manner as
under section 415(d) of the Code, except that the dollar increase in
effect on January 1 of any calendar year is effective for years
beginning in such calendar year and the first adjustment to the
$200,000 limitation is effected on January 1, 1990. If the Plan
determines Compensation on a period of time that contains fewer than
12 calendar months, then the annual Compensation limit is an amount
equal to the annual Compensation limit for the calendar year in which
the Compensation period begins multiplied by the ratio obtained by
dividing the number of full months in the period by 12.
-1-
183
In determining the Compensation of a Participant for purposes of this
limitation, the rules of section 414(q)(6) of the Code shall apply,
except in applying such rules, the term "family" shall include only
the spouse of the Participant and any lineal descendants of the
Participant who have not attained age 19 before the close of the year.
If, as a result of the application of such rules the adjusted $200,000
limitation is exceeded, then the limitation shall be prorated among
the affected individuals in proportion to each such individual's
Compensation as determined under this section prior to the application
of this limitation. The rules regarding permitted disparity and the
use of Compensation for a prior Plan Year do not apply to this Plan
because it does not provide for any permitted disparity or any use of
Compensation for a prior Plan Year in determining an Employee's
contributions or benefits.
2. Section 2.1(z) of the RSP and the BR Predecessor Plan and section
2.1(aa) of the El Paso Predecessor Plan are each amended by adding the
following at the end thereof:
As required by section 6.5 and by sections 4.11 and 5.2 as revised
pursuant to this Amendment, Pay shall be determined after the
application of the dollar limit of Code section 401(a)(17) and the
family aggregation rules of Code section 414(a)(6) in cases governed
by those Code sections. For this purpose, for years beginning after
December 31, 1988, the annual Pay of each Participant taken into
account under the Plan for any year shall not exceed $200,000. This
limitation shall be adjusted by the Plan as permitted by the Secretary
of the Treasury at the same time and in the same manner as under
section 415(d) of the Code, except that the dollar increase in effect
on January 1 of any calendar year is effective for years beginning in
such calendar year and the first adjustment to the $200,000 limitation
is effected on January 1, 1990. If the Plan determines Pay on a period
of time that contains fewer than 12 calendar months, then the annual
Pay limit is an amount equal to the annual Pay limit for the calendar
year in which the Pay period begins multiplied by the ratio obtained
by dividing the number of full months in the period by 12.
In determining the Pay of a Participant for purposes of this
limitation, the rules of section 414(q)(6) of the Code shall apply,
except in applying such rules, the term "family" shall include only
the spouse of the Participant and any lineal descendants of the
Participant who have not attained age 19 before the close of the year.
If, as a result of the application of such rules the adjusted $200,000
limitation is exceeded, then the limitation shall be prorated among
the affected individuals in proportion to each such individual's Pay
as determined under this section prior to the application of this
limitation. The rules regarding permitted disparity and
-2-
184
the use of Pay for a prior Plan Year do not apply to this Plan because
it does not provide for any permitted disparity or any use of Pay for
a prior Plan Year in determining an Employee's contributions or
benefits.
3. Section 2.1(dd) of each of the Plans is hereby amended to read as
follows:
(dd) "Section 415 Compensation" means, generally, an Employee's
taxable W-2 earnings for income tax purposes under Code
section 3401(a), with such modifications as may be required to
conform to the definition of "participant's compensation" in
Code section 415(c)(3) and the regulation thereunder, and, to
the extent consistent with such authorities, shall be
construed as an Employee's wages, salaries, commissions,
professional fees and other amounts received for personal
services rendered in the course of employment with the Company
and Affiliates: (1) including amounts received through
accident or health insurance (but only to the extent
includible in gross income), disability payments (whether or
not excludable from gross income), earned income from sources
outside the United States (whether or not excludable or
deductible from gross income), amounts paid or reimbursed for
nondeductible moving expenses, the value of nonqualified stock
options to the extent includible in gross income in the
taxable year in which granted, and amounts includible in gross
income upon making the election described in Code section
83(b); but (2) excluding Company or Affiliate contributions to
a deferred compensation plan (to the extent excludable from
gross income when contributed), distributions from a qualified
plan, amounts realized on the exercise of nonqualified stock
options or when restricted property either becomes
transferable or is no longer subject to a substantial risk of
forfeitures, amounts realized on the disposition of stock
acquired under a qualified or incentive stock option, and
other amounts which receive special tax benefits.
4. Section 4.11 of each of the Plans is hereby amended to read as
follows:
4.11 Restrictions on Basic Contributions and Flex
Contributions. In conjunction with Participant elections of Basic
Contributions and at such other times throughout the Plan Year as the
Committee may determine, the Committee shall require testing of the
elections of before-tax Basic Contributions and Flex Contributions by
Participants (and any other Employer con-
-3-
185
tributions that the Company elects to include in the testing under the
conditions specified below) to assure that the average deferral
percentage for the Plan Year of Participants who are Highly
Compensated Employees will not exceed the greater of:
(a) 1.25 times the average deferral percentage for the
Plan Year of all other Participants who are
non-Highly Compensated Employees, or
(b) the lesser of (i) 2 percentage points more than, or
(ii) 2 times the average deferral percentage for the
Plan Year of all other Participants who are
non-Highly Compensated Employees.
For purposes of this section, the term "average deferral percentage"
for each group of Participants for any period shall be the average of
the percentages, calculated separately for each Participant in such
group, of the aggregate amount of Pay that each Participant elects to
have contributed to the Plan for the period as before-tax Basic
Contributions or Flex Contributions, provided that, if the Company so
elects in accordance with rules prescribed by the Secretary of the
Treasury, Qualified Nonelective Contributions and Code section 401(m)
matching contributions (including Company Matching Contributions under
this Plan) that meet the withdrawal and vesting requirements of Code
sections 401(k)(2)(B) and (C) shall be added to before-tax Basic
Contributions and Flex Contributions in computing each Participant's
average deferral percentage. Except as provided in Treasury
Regulations, excess before-tax Basic Contributions and Flex
Contributions under subsection 4.1(b) shall be treated as an amount
elected under section 4.2 and contributed to the Plan, whether or not
such excess contribution is distributed.
Advance testing done under this section shall be based on a
Participant's annual rate of Pay in effect at the time of the test,
and corrections to be made to reduce the amount in excess of the
maximum permissible deferral percentage shall be made from Pay to be
earned for the remainder of the Plan Year. Final Plan Year compliance
with the restrictions of this section shall be based on the
Participant's actual Pay and before-tax contributions for the Plan
Year.
The adjustments in this paragraph shall be made if, at the end of the
Plan Year, the percentage of before-tax Basic Contributions and Flex
Contributions elected by Highly Compensated Employees (and any other
Employer contributions that are included in the testing at the
Company's election) would (if not distributed) cause the average
deferral percentage of such Participants to exceed the maximum
deferral percentage permitted for the Plan Year under this section. In
such a case, before the end of the following Plan Year, the excess
amount of such contributions (and the income and investment gain or
loss attributable thereto) for the Highly Compensated Employees shall
be distributed to such Participants in the order of their average
deferral percentages, beginning with the Highly Compensated Employees
with the highest average deferral
-4-
186
percentage until the limitations of this section are met. For this
purpose, the income and investment gain or loss attributable to the
excess contribution being distributed shall be determined under the
Plan's normal method of accounting for the period following such
contribution and continuing until the end of the Plan Year in which
such contribution was made, excluding any subsequent period in the
following Plan Year prior to the distribution of the excess amount.
Except as otherwise required by applicable regulations, any amount
distributed under this paragraph to a Highly Compensated Employee
shall be included in that Employee's taxable wages for the Plan Year
for which the contribution was made. The distribution described in
this section may be made notwithstanding any other Plan provision.
The Committee shall adopt reasonable procedures for coordinating
distributions of excess contributions under this section and
subsection 4.1(b).
Moreover, notwithstanding the foregoing rules, the Committee shall
take steps to ensure that this section 4.11 is interpreted and
administered so as to comply with applicable legal requirements for
the determination of what amounts constitute excess Code section
401(k) elective deferrals and for the return of such excess amounts
and any income and investment gain or loss attributable thereto. If
two or more plans which include Code section 401(k) cash or deferred
arrangements are considered as one plan for purposes of Code section
401(a)(4) or 410(b), the cash or deferred arrangements included in
such plans shall be treated as one arrangement for purposes of this
section 4.11. If any Highly Compensated Employee is a participant
under two or more cash or deferred arrangements of an Employer or
Affiliate, all such cash or deferred arrangements shall be treated as
one such arrangement for purposes of determining the actual deferral
percentage with respect to such Employee. Moreover, no benefits other
than Code section 401(m) matching contributions shall be conditioned
on a Participant's election of before-tax Basic Contributions or Flex
Contributions under this Plan.
If a Participant is an eligible Highly Compensated Employee who is
subject to the family aggregation rules of Code section 414(q)(6)
because he is a 5 percent owner or is one of the 10 most highly
compensated Employees, the combined average deferral percentage for
the family group (which is treated as one Highly Compensated Employee)
must be determined by combining the Code section 401(k) elective
contributions, Pay, and amounts treated as Code section 401(k)
elective contributions of all the eligible family members. The Code
section 401(k) elective contributions, Pay, and amounts treated as
Code section 401(k) elective contributions of all family members are
disregarded for purposes of determining the average deferral
percentage for the group of non-Highly Compensated Employees. If an
Employee is required to be aggregated as a member of more than one
family group in the Plan, all eligible Employees who are members of
those family groups that include that Employee are aggregated as one
family group.
-5-
187
The determination and correction of excess contributions of a Highly
Compensated Employee whose average deferral percentage is determined
under the family aggregation rules of the preceding paragraph is
accomplished by reducing the average deferral percentage as required
under the "leveling" method described previously in this section and
allocating the excess contributions for the family group among the
family members in proportion to the elective contribution of each
family member that is combined to determine the average deferral
percentage.
All determinations under this section 4.11 shall comply with Code
section 401(k) and the regulations thereunder. In the event of any
conflict, the rules of such Code section and regulations shall
control.
5. Section 5.2 of each of the Plans is hereby amended to read as follows:
5.2 Restrictions on Company Matching Contributions. At
such times throughout the Plan Year as the Committee may determine,
the Committee shall require testing to assure that the contribution
percentage for the Plan Year of Participants who are Highly
Compensated Employees will not exceed the greater of:
(a) 1.25 times the contribution percentage for the Plan
Year of all other Participants who are non-Highly
Compensated Employees, or
(b) the lesser of (i) 2 percentage points more than, or
(ii) 2 times the contribution percentage for the Plan
Year of all other Participants who are non-Highly
Compensated Employees.
For purposes of this section, the term "contribution percentage" for
each group of Participants shall be the average of the ratios,
calculated separately for each Participant in such group, of the
aggregate amount of Company Matching Contributions, after-tax Basic
Contributions, and Supplemental Contributions made by or on behalf of
the Participant for the Plan Year to that Participant's Pay for the
Plan Year. To the extent permitted by Treasury Regulations, the
Company may elect, in computing contribution percentages, to treat
Qualified Nonelective Contributions and Code section 401(k) elective
deferrals (including before-tax Basic Contributions and Flex
Contributions) for the Plan Year as Company Matching Contributions.
Advance testing under this section shall be based on a Participant's
level of Basic Contributions and Supplemental Contributions and his
annual rate of Pay in effect at the time of the test, and corrections
to be made to reduce the amount in excess of the maximum permissible
contribution percentage shall
-6-
188
be from Company Matching Contributions and Supplemental Contributions
to be made for the remainder of the Plan Year. Final Plan Year
compliance with the restrictions of this section shall be based on the
Participant's actual contributions and Pay for the Plan Year.
The adjustments in this paragraph shall be made if, at the end of the
Plan Year, the contribution percentage of Highly Compensated Employees
exceeds the maximum contribution percentage permitted for the Plan
Year under this section. In such a case, before the end of the
following Plan Year
(1) the excess Supplemental Contributions (and
income and investment gain or loss
attributable thereto) for Highly Compensated
Employees shall be distributed to such
Participants,
(2) The excess after-tax Basic Contributions and
the related Company Matching Contributions
(and the income and investment gain or loss
attributable thereto) for Highly Compensated
Employees shall be distributed to such
Participants, and
(3) the remaining excess Company Matching
Contributions (and income and investment gain
or loss attributable thereto) for Highly
Compensated Employees shall be distributed to
such Participants, in the order of their
contribution percentages beginning with the
Highly Compensated Employee with the highest
contribution percentage until the limitations
of this section are met.
(4) For purposes of the foregoing, the income and
investment gain or loss attributable to the
excess contribution being distributed shall
be determined under the Plan's normal method
of accounting for the period following such
contribution and continuing until the end of
the Plan Year in which such contribution was
made, excluding any subsequent period in the
following Plan Year prior to the distribution
of the excess amount. Except as otherwise
required by applicable regulations, any
amount distributed under this paragraph to a
Highly Compensated Employee (other than a
return of his after-tax Basic Contributions
or Supplemental Contributions) shall be
included in that Employee's taxable wages for
the Plan Year for which the contribution was
made. The distribution described in this
section may be made notwithstanding any other
Plan provision.
In the event that this Plan satisfies the requirements of section
410(b) of the Code only if aggregated with one or more other plans, or
if one or more other plans satisfy the requirements of section 410(b)
of the Code only if aggregated
-7-
189
with this Plan, then this section 5.2 shall be applied by determining
the contribution percentages of eligible Participants as if all such
plans were a single plan. If a Highly Compensated Employee
participates in two or more plans of an Employer or Affiliate to which
such contributions are made, all such contributions shall be
aggregated for purposes of this section. Any Employee required to be
taken into consideration under Code section 401(m)(5) shall be treated
as an eligible Employee in accordance with such Code section for
purposes of the application of this section 5.2. Moreover, the
determination of excess contributions under this section 5.2 shall be
made after first determining the excess deferrals (within the meaning
of Code section 402(g)) pursuant to subsection 4.1(b) of this Plan and
then determining the excess Code section 401(k) deferrals pursuant to
section 4.11 of this Plan. In addition, the treatment of family
members who are subject to the aggregation rules of Code section
414(q)(6) shall follow the procedures set forth in section 4.11,
except that such procedures shall be applied under this section by
substituting the contributions subject to this section 5.2 and section
401(m) of the Code in lieu of the contributions subject to section
4.11 of the Plan and section 401(k) of the Code.
All determinations under this section 5.2 shall comply with Code
section 401(m) and the regulations thereunder, including any such
regulations as may be necessary to prevent the multiple use of the
alternative percentage limitations in Code sections
401(k)(3)(A)(ii)(II) and 401(m)(2)(A)(ii) with respect to any Highly
Compensated Employee and also including regulations permitting
appropriate aggregation of plans and contributions. In the event of
any conflict, the rules of such Code sections and regulations shall
control.
6. Sections 7.7(d) and 7.7(e) of the RSP are hereby amended to read as
follows, effective as of January 1, 1992:
(d) For purposes of this section 7.7 "financial hardship" means an
immediate and heavy financial need occurring in the personal
affairs of the Participant (including a need that is
reasonably foreseeable or voluntarily incurred by the
Participant), as determined by the Committee based on all
relevant facts and circumstances, taking into consideration
that the need to pay the funeral expenses of a family member
would generally constitute an immediate and heavy financial
need and the need to purchase a boat or television set
generally would not. In any event, distributions for the
following reasons shall be deemed to be made on account of an
immediate and heavy financial need:
(1) To pay medical expenses (described in Code section
213(d)) previously incurred by the Participant, the
Participant's spouse, or dependents (as defined in
-8-
190
Code section 152), or to provide funds necessary for
these persons to obtain medical care (described in
Code section 213(d)).
(2) To pay costs, excluding mortgage payments, directly
related to the purchase of a principal residence for
the Participant.
(3) To pay tuition and related educational fees for the
next 12 months of post-secondary education for the
Participant, the Participant's spouse, children, or
dependents.
(4) To make a payment necessary to prevent the eviction
of the Participant from his principal residence or
the foreclosure of the mortgage on the Participant's
principal residence.
(5) To satisfy such other deemed financial needs as may
be published from time to time by the Commissioner of
Internal Revenue.
(e) A hardship distribution may not exceed the amount necessary to
meet the immediate and heavy financial need created by the
hardship and not capable of being satisfied from other
resources reasonably available to the Participant, generally
including assets held by his spouse or minor children, but not
including assets held for a child under an irrevocable trust
or under the Uniform Gift to Minors Act. If the Participant so
requests and agrees to have taxes withheld from the
distribution, the foregoing amount shall include an additional
amount considered necessary to pay any taxes or penalties that
are imposed by the federal government or by a state that
requires a tax withholding election for the distribution and
that are reasonably anticipated to result from the
distribution. The Committee shall consider all relevant facts
and circumstances and shall generally treat the requested
distribution as necessary to meet the financial need upon
receipt of a written representation that in the Participant's
opinion his financial need cannot reasonably be relieved:
(1) through reimbursement or compensation by insurance or
otherwise,
(2) by reasonable liquidation of the Participant's
assets, to the extent that such liquidation itself is
feasible and does not itself cause an immediate and
heavy financial need,
(3) by suspension of the Participant's before-tax Basic
Contributions and Flex Contributions and his other
contributions under the Plan, or
(4) by other distributions or nontaxable loans (including
withdrawals and loans under sections 7.6 and 7.8 of
this Plan) from plans maintained by the Employer or
any other employer or by borrowing from commercial
sources on reasonable commercial terms.
For purposes of this paragraph, a need cannot reasonably be relieved
by one of the actions listed above if the effect would be to increase
the amount of the need. For example, the need to
-9-
191
purchase a principal residence cannot reasonably be relieved by a Plan
loan if the loan would disqualify the Employee from obtaining other
necessary financing.
7. Section 7.8(c) of each of the Plans is hereby amended to read
as follows:
(c) The amount of the loan shall not be less than $1,000 nor more
than 50 percent of the first $100,000 of the vested balance in
the Participant's Account (excluding any IRA Account balance).
The 50 percent limitation shall be reduced by the highest
outstanding balance of loans to the Participant from the Plan
during the 1-year period ending on the day before the date on
which the loan is made.
If such Participant is also covered under another qualified
plan maintained by the Company or an Affiliate, the above
limitations shall be applied as though all such qualified
plans are one plan. A Participant shall not be allowed to have
more than two loans from this Plan outstanding at any time or
to obtain more than one loan from the Plan in any period of 12
consecutive months, provided, however, that these restrictions
shall not apply if a Participant, for valid reasons such as a
prior suspension of loan repayments during a period of unpaid
leave, needs an additional loan that will be used in part to
repay a loan that would otherwise extend beyond its original
term of five years.
8. Section 7.8(i) of each of the Plans is hereby amended to read
as follows:
(i) If a Participant (i) incurs a Separation from Service and
either receives an immediate distribution of his remaining
interest in the Plan or does not pay the total accrued
interest and outstanding principal amount of the loan within
60 days, or (ii) is in default for 90 days on any required
loan payment prior to his repayment of the total principal and
interest on an outstanding loan under the Plan and a permitted
distribution event for the amount to be treated as a
distribution has occurred under the rules for profit sharing
plans or under Code section 401(k)(2)(B), the Participant's
note shall be canceled and the principal deemed distributed by
the Trust Fund to him or, if applicable, his Beneficiary, and
a corresponding reduction shall be made to the Account from
which the deemed distribution is made. This paragraph shall
not apply, however, as long as a Participant, notwithstanding
his Separation from Service, continues to be a party in
interest under section 3(14) of ERISA and therefore has a
legal right
-10-
192
to continue his loan during such time as he is not in default
on his regular loan payments. In this case, the regular loan
payments may be made by check or other means suitable to the
Committee once the Participant ceases to be covered by a
payroll of the Company or an Affiliate.
9. Section 7.11 of each of the Plans is hereby amended to read as follows:
7.11 Requirement for Consent to Certain Distributions.
Notwithstanding any other provision regarding the Plan distributions,
the Plan may not immediately distribute the balance of a Participant's
Account that exceeds or has ever exceeded $3,500 without the written
consent of the Participant. Where the Participant does not consent to
a distribution that is subject to the foregoing requirement, this
section shall be interpreted and administered so as to comply with
Code section 411(a)(11) by delaying any distribution that might
otherwise be required under the Plan to the extent necessary to comply
with said Code section.
10. Section 8.5 of each of the Plans is hereby amended to read as follows:
8.5 Voting Company Stock. Each Participant and
Beneficiary who has common stock of the Company allocated to his
Account shall be entitled to instruct the Trustee regarding the voting
of the number of such shares allocated to the Account at all
stockholders meetings of the Company, determined on the last
practicable day prior to such stockholders meeting. If clear and
timely instructions have not been received from the Participant or
Beneficiary, or if shares of the Company's common stock have not yet
been allocated to the Accounts of Participants and Beneficiaries, the
Trustee shall vote such shares in the same proportion as are voted the
shares for which clear and timely voting instructions have been
received from Participants and Beneficiaries, unless the Trustee
determines in the exercise of its fiduciary responsibility that it
must vote such shares in a different manner to protect the interest of
Participants and Beneficiaries. As agreed by the Company and the
Trustee, the Company or the Trustee will send, or cause to be sent, to
each Participant and Beneficiary who has common stock of the Company
allocated to his Account a voting instruction form and the same proxy
solicitation material as is sent to stockholders generally.
-11-
193
11. Except as amended above, the terms of the Plans as in effect prior to
this amendment shall continue unchanged.
Adopted, effective as indicated above, pursuant to section 12.1 of each of the
Plans.
By A. R. Boyce
---------------------------
Senior Vice President - Human Resources and Administration
Burlington Resources Inc.
Date Signed 12/13/91
--------
ATTEST:
By Leslie S. Leland
-------------------------------
Title Corporate Secretary
----------------------------
-12-
194
AMENDMENT ONE
BURLINGTON RESOURCES INC.
RETIREMENT SAVINGS PLAN
(As adopted effective as of January 1, 1990)
1. Subsection 7.8(b) is hereby amended to read as follows, effective for
loans granted on or after January 15, 1990:
"(b) To receive a loan from the Plan, a Participant must
sign a promissory note in the proper amount on a form
prescribed by the Committee and authorize payroll
deductions for payment of interest and principal in
accordance with procedures adopted by the Committee.
To secure repayment of the loan, the Participant
shall, within the 90 day period before the loan is
made, consent to any distribution resulting from a
setoff of the loan against the Participant's Account
under subsection (i)."
2. Except as amended above, the terms of the Plan as in effect prior to
this amendment shall continue unchanged.
Adopted, effective as indicated above, pursuant to section 12.1 of the Plan.
BURLINGTON RESOURCES INC.
By A. R. Boyce
---------------------------------
Title SVP--Human Resources & Admin.
------------------------------
Date Signed 8/23/90
------------------------
ATTEST:
By Leslie S. Leland
-------------------------------
Title Corporate Secretary
----------------------------