1
Exhibit 10-H
WASHINGTON NATURAL GAS COMPANY
DEFERRED COMPENSATION PLAN
(AMENDED AND RESTATED SEPTEMBER 1, 1995)
2
TABLE OF CONTENTS
Purpose . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE 1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE 2 Selection, Enrollment, Eligibility . . . . . . . . . . . . . . . . . . . . . . . . 7
2.1 Selection by Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.2 Enrollment Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.3 Eligibility; Commencement of Participation . . . . . . . . . . . . . . . . . 7
ARTICLE 3 Deferral Commitments/Interest Crediting . . . . . . . . . . . . . . . . . . . . . 7
3.1 Minimum Deferral . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.2 Maximum Deferral . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.3 Election to Defer: Effect of Election Form . . . . . . . . . . . . . . . . . 8
3.4 Withholding of Deferral Amounts . . . . . . . . . . . . . . . . . . . . . . 8
3.5 Interest Crediting Prior to Distribution . . . . . . . . . . . . . . . . . . 8
3.6 Installment Distributions . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.7 FICA and Other Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
ARTICLE 4 Short-Term Payout: Unforeseeable Financial Emergencies; Withdrawal
Election . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
4.1 Short Term Payout . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
4.2 Withdrawal Payout/Suspensions for Unforeseeable Financial
Emergencies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
4.3 Withdrawal Election . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
ARTICLE 5 Retirement Benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
5.1 Retirement Benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
5.2 Payment of Retirement Benefits . . . . . . . . . . . . . . . . . . . . . . . 11
5.3 Death Prior to Completion of Retirement Benefits . . . . . . . . . . . . . . 11
ARTICLE 6 Pre-Retirement Survivor Benefit . . . . . . . . . . . . . . . . . . . . . . . . . 12
6.1 Pre-Retirement Survivor Benefit . . . . . . . . . . . . . . . . . . . . . . 12
6.2 Payment of Pre-Retirement Survivor Benefits . . . . . . . . . . . . . . . . 12
6.3 Restriction in the Event of Suicide or Falsely Provided Information . . . . 12
ARTICLE 7 Termination Benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
7.1 Termination Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
7.2 Payment of Termination Benefit . . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE 8 Disability Waiver and Benefit . . . . . . . . . . . . . . . . . . . . . . . . . . 13
8.1 Disability Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
8.2 Disability Benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
i
3
ARTICLE 9 Beneficiary Designation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
9.1 Beneficiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
9.2 Beneficiary Designation; Change; Spousal Consent . . . . . . . . . . . . . 14
9.3 Receipt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
9.4 No Beneficiary Designation . . . . . . . . . . . . . . . . . . . . . . . . 14
9.5 Doubt as to Beneficiary . . . . . . . . . . . . . . . . . . . . . . . . . 15
9.6 Discharge of Obligations . . . . . . . . . . . . . . . . . . . . . . . . . 15
ARTICLE 10 Leave of Absence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
10.1 Paid Leave of Absence . . . . . . . . . . . . . . . . . . . . . . . . . . 15
10.2 Unpaid Leave of Absence . . . . . . . . . . . . . . . . . . . . . . . . . 15
ARTICLE 11 Termination, Amendment or Modification . . . . . . . . . . . . . . . . . . . . 15
11.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
11.2 Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
11.3 Interest Rate in the Event of a Change in Control and Interest . . . . . . 16
11.4 Effect of Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
ARTICLE 12 Administration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
12.1 Committee Duties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
12.2 Agents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
12.3 Binding Effect of Decisions . . . . . . . . . . . . . . . . . . . . . . . 17
12.4 Indemnity of Committee . . . . . . . . . . . . . . . . . . . . . . . . . . 17
12.5 Employer Information . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
ARTICLE 13 Other Benefits and Agreements . . . . . . . . . . . . . . . . . . . . . . . . . 18
13.1 Coordination with Other Benefits . . . . . . . . . . . . . . . . . . . . . 18
ARTICLE 14 Claims Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
14.1 Presentation of Claim . . . . . . . . . . . . . . . . . . . . . . . . . . 18
14.2 Notification of Decision . . . . . . . . . . . . . . . . . . . . . . . . . 18
14.3 Review of a Denied Claim . . . . . . . . . . . . . . . . . . . . . . . . . 19
14.4 Decision on Review . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
14.5 Legal Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
ARTICLE 15 Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
15.1 Establishment of the Trust . . . . . . . . . . . . . . . . . . . . . . . . 19
15.2 Interrelationship of the Plan and the Trust . . . . . . . . . . . . . . . 20
ARTICLE 16 Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
16.1 Unsecured General Creditor . . . . . . . . . . . . . . . . . . . . . . . . 20
16.2 Employer's Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
16.3 Nonassignability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
16.4 Not a Contract of Employment . . . . . . . . . . . . . . . . . . . . . . . 21
16.5 Furnishing Information . . . . . . . . . . . . . . . . . . . . . . . . . . 21
ii
4
16.6 Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
16.7 Captions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
16.8 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . 21
16.9 Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
16.10 Successors . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
16.11 Spouse's Interest . . . . . . . . . . . . . . . . . . . . . . . . 22
16.12 Validity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
16.13 Incompetent . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
16.14 Court Order . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
16.15 Distribution in the Event of Taxation . . . . . . . . . . . . . . 22
16.16 Taxes and Withholding . . . . . . . . . . . . . . . . . . . . . . 23
16.17 Enforcement of Rights After Change in Control . . . . . . . . . . 23
iii
5
WASHINGTON NATURAL GAS COMPANY
DEFERRED COMPENSATION PLAN
Amended and Restated September 1, 1995
Purpose
This Plan, as amended and restated effective September 1, 1995, is a
continuation of an existing plan known as the Washington Energy Company Deferred
Compensation Plan for Non-Employee Directors. The purpose of this Plan is to
provide specified benefits to a select group of management, highly compensated
Employees and Directors who contribute materially to the continued growth,
development and future business success of Washington Natural Gas Company, a
Washington corporation, and its subsidiaries and affiliates, if any, that
sponsor this Plan. This Plan shall be unfunded for tax purposes and for purposes
of Title I of ERISA.
ARTICLE 1
Definitions
For purposes hereof, unless otherwise clearly apparent from the
context, the following phrases or terms shall have the following indicated
meanings:
1.1 "Account Balance" shall mean the sum of (i) the Deferral
Amount, plus (ii) interest credited in accordance with all the
applicable interest crediting provisions of this Plan, less
(iii) all distributions. This account shall be a bookkeeping
entry only and shall be utilized solely as a device for the
measurement and determination of the amounts to be paid to a
Participant pursuant to this Plan.
1.2 "Annual Bonus" shall mean any compensation, in addition to Base
Annual Salary, paid annually to a Participant as an Employee
under any Employer's annual bonus and incentive plans.
1.3 "Annual Deferral Amount" shall mean that portion of a
Participant's Base Annual Salary, Annual Bonus and/or Directors
Fees that a Participant elects to have and is deferred, in
accordance with Article 3, for any one Plan Year. In the event
of a Participant's Retirement, Disability (if deferrals cease
in accordance with Section 8.1), death or a Termination of
Employment prior to the end of a Plan Year, such year's Annual
Deferral Amount shall be the actual amount withheld prior to
such event.
1.4 "Base Annual Salary" shall mean the annual compensation,
excluding bonuses, commissions, overtime, relocation expenses,
incentive payments, nonmonetary
1
6
awards, directors fees and other fees, and including automobile
allowances, paid to a Participant for employment services
rendered to any Employer, before reduction for compensation
deferred pursuant to all qualified, nonqualified and Code
Section 125 plans of any Employer.
1.5 "Beneficiary" shall mean one or more persons, trusts, estates
or other entities, designated in accordance with Article 9,
that are entitled to receive benefits under this Plan upon the
death of a Participant.
1.6 "Beneficiary Designation Form" shall mean the form established
from time to time by the Committee that a Participant
completes, signs and returns to the Committee to designate one
or more Beneficiaries.
1.7 "Board" shall mean the board of directors of the Company.
1.8 "Bonus Rate" shall mean, for a Plan Year, an interest rate, if
any, determined by the Committee, in its sole discretion, which
rate shall be determined and announced before the commencement
of the Plan Year for the which the rate applies. This rate may
be zero for any Plan Year.
1.9 "Change in Control" shall mean the first to occur of any of the
following events:
(a) Any "person" (as that term is used in Section 13 and
14(d)(2) of the Securities Exchange Act of 1934
("Exchange Act")) becomes the beneficial owner (as
that term is used in Section 13(d) of the Exchange
Act), directly or indirectly, of 50% or more of the
Company's capital stock entitled to vote in the
election of directors;
(b) During any period of not more than two consecutive
years, not including any period prior to the adoption
of this Plan, individuals who at the beginning of such
period constitute the board of directors of the
Company, and any new director (other than a director
designated by a person who has entered into an
agreement with the Company to effect a transaction
described in clause (a), (c), (d) or (e) of this
Section 1.9) whose election by the board of directors
or nomination for election by the Company's
stockholders was approved by a vote of at least
three-fourths (3/4ths) of the directors then still in
office who either were directors at the beginning of
the period or whose election or nomination for
election was previously so approved, cease for any
reason to constitute at least a majority thereof;
(c) The shareholders of the Company approve any
consolidation or merger of the Company, other than a
consolidation or merger of the Company in which the
holders of the common stock of the Company immediately
2
7
prior to the consolidation or merger hold more than
50% of the common stock of the surviving corporation
immediately after the consolidation or merger;
(d) The shareholders of the Company approve any plan or
proposal for the liquidation or dissolution of the
Company, or a sale of substantially all of the assets
of the Company; or
(e) Substantially all of the assets of the Company are
sold or otherwise transferred to parties that are not
within a "controlled group of corporations" (as
defined in Code Section 1563) in which the Company is
a member.
1.10 "Claimant" shall have the meaning set forth in Section 14.1.
1.11 "Code" shall mean the Internal Revenue Code of 1986, as may be
amended from time to time.
1.12 "Committee" shall mean the committee described in Article 12.
1.13 "Company" shall mean Washington Natural Gas Company, a
Washington corporation.
1.14 "Crediting Rate" shall mean, for each Plan Year, an interest
rate determined and announced by the Committee before the Plan
Year for which it is to be used that is equal to the Moody's
Rate. The Moody's Rate for a Plan Year shall be an interest
rate that (i) is published in Moody's Bond Record under the
heading of "Moody's Corporate Bond Yield Averages -- Av. Corp,"
and (ii) is equal to the average corporate bond yield most
recently published prior to the Plan Year for which the rate is
to be used.
1.15 "Deferral Amount" shall mean the sum of all of a Participant's
Annual Deferral Amounts.
1.16 "Deduction Limitation" shall mean the following described
limitation on the annual benefit that may be distributed
pursuant to the provisions of this Plan. Except as otherwise
provided, this limitation shall be applied to all distributions
under this Plan. If an Employer determines in good faith prior
to a Change in Control that there is a reasonable likelihood
that any compensation paid to a Participant for a taxable year
of the Employer would not be deductible by the Employer solely
by reason of the limitation under Code Section 162(m), then to
the extent deemed necessary by the Employer to ensure that the
entire amount of any distribution to the Participant pursuant
to this Plan prior to the Change in Control is deductible, the
Employer may defer all or any portion of a distribution under
this Plan. Any amounts deferred
3
8
pursuant to this limitation shall continue to be credited with
interest in accordance with Section 3.5 below. The amounts so
deferred and interest thereon shall be distributed to the
Participant or his or her Beneficiary (in the event of the
Participant's death) at the earliest possible date, as
determined by the Employer in good faith, on which the
deductibility of compensation paid or payable to the
Participant for the taxable year of the Employer during which
the distribution is made will not be limited by Section 162(m),
or if earlier, the effective date of a Change in Control.
1.17 "Director" shall mean any member of the board of directors of
any Employer.
1.18 "Directors Fees" shall mean the annual fees paid by any
Employer, including retainer fees and meetings fees, as
compensation for serving on the board of directors.
1.19 "Disability" shall mean a period of disability during which a
Participant qualifies for benefits under the Participant's
Employer's long-term disability plan, or, if a Participant does
not participate in such a plan, a period of disability during
which the Participant would have qualified for benefits under
such a plan had the Participant been a participant in such a
plan, as determined in the sole discretion of the Committee. If
the Participant's Employer does not sponsor such a plan or
discontinues to sponsor such a plan, Disability shall be
determined by the Committee in its sole discretion.
1.20 "Disability Benefit" shall mean the benefit set forth in
Article 8.
1.21 "Election Form" shall mean the form established from time to
time by the Committee that a Participant completes, signs and
returns to the Committee to make an election under the Plan.
1.22 "Employee" shall mean a person who is an employee of any
Employer.
1.23 "Employer(s)" shall mean the Company and/or any of its
subsidiaries and affiliates that have been selected by the
Board to participate in the Plan.
1.24 "ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as may be amended from time to time.
1.25 "Participant" shall mean any Employee or Director (i) who is
selected to participate in the Plan, (ii) who elects to
participate in the Plan, (iii) who signs a Plan Agreement, an
Election Form and a Beneficiary Designation Form, (iv) whose
signed Plan Agreement, Election Form and Beneficiary
Designation Form are accepted by the Committee, (v) who
commences participation in the Plan, and (vi) whose Plan
Agreement has not terminated.
4
9
1.26 "Plan" shall mean the Company's Deferred Compensation Plan,
which shall be evidenced by this instrument and by each Plan
Agreement, as may be amended from time to time.
1.27 "Plan Agreement" shall mean a written agreement, as may be
amended from time to time, which is entered into by and between
an Employer and a Participant. Each Plan Agreement executed by
a Participant shall provide for the entire benefit to which
such Participant is entitled to under the Plan, and the Plan
Agreement bearing the latest date of acceptance by the
Committee shall govern such entitlement.
1.28 "Plan Year" shall, for the first Plan Year for Participants
other than Directors, begin on September 1, 1995, and end on
December 31, 1995. For each Plan Year thereafter, the Plan Year
shall begin on January 1 of each year and continue through
December 31.
1.29 "Preferred Rate" shall mean, for each Plan Year, an interest
rate that is the sum of the Crediting Rate and the Bonus Rate
for that Plan Year.
1.30 "Pre-Retirement Survivor Benefit" shall mean the benefit set
forth in Article 6.
1.31 "Retirement", "Retires" or "Retired" shall mean, with respect
to an Employee, severance from employment from all Employers
for any reason other than a leave of absence, death or
Disability on or after the earlier of the attainment of (a) age
sixty-five (65) or (b) age fifty-five with ten (10) Years of
Service; and shall mean, with respect to a Director who is not
an Employee, severance of his or her directorships with all
Employers. If a Participant is both an Employee and a Director,
Retirement shall not occur until he or she Retires as both an
Employee and a Director, which Retirement shall be deemed to be
a Retirement as a Director; provided, however, that such a
Participant may elect, prior to Retirement and in accordance
with the policies and procedures established by the Committee,
to Retire for purposes of this Plan at the time he or she
Retires as an Employee, which Retirement shall be deemed to be
a Retirement as an Employee.
1.32 "Retirement Benefit" shall mean the benefit set forth in
Article 5.
1.33 "Short-Term Payout" shall mean the payout set forth in Section
4.1.
1.34 "Termination Benefit" shall mean the benefit set forth in
Article 7.
1.35 "Termination of Employment" shall mean the ceasing of
employment with all Employers, or service as a Director of all
Employers, voluntarily or involuntarily, for any reason other
than Retirement, Disability, death or an authorized leave of
absence. If a Participant is both an Employee and a
5
10
Director, a Termination of Employment shall occur only upon the
termination of the last position held; provided, however, that
such a Participant may elect, in accordance with the policies
and procedures established by the Committee, to be treated for
purposes of this Plan as having experienced a Termination of
Employment at the time he or she ceases employment with an
Employer as an Employee.
1.36 "Trust" shall mean the trust established pursuant to that
certain Master Trust Agreement, dated as of September 1, 1995,
between the Company and the trustee named therein, as amended
from time to time.
1.37 "Unforeseeable Financial Emergency" shall mean an unanticipated
emergency that is caused by an event beyond the control of the
Participant that would result in severe financial hardship to
the Participant resulting from (i) a sudden and unexpected
illness or accident of the Participant or a dependent of the
Participant, (ii) a loss of the Participant's property due to
casualty, or (iii) such other extraordinary and unforeseeable
circumstances arising as a result of events beyond the control
of the Participant, all as determined in the sole discretion of
the Committee.
1.38 "Years of Plan Participation" shall mean the total number of
full Plan Years a Participant has been a Participant in the
Plan prior to his or her Termination of Employment (determined
without regard to whether deferral elections are made under
this Plan). For purposes of a Participant's first Plan Year of
participation only, any partial Plan Year of participation
shall be treated as a full Plan Year.
1.39 "Years of Service" shall mean the total number of full years in
which a Participant has been employed by one or more Employers.
For purposes of this definition, a year of employment shall be
a 365 day period (or 366 day period in the case of a leap year)
that, for the first year of employment, commences on the
Employee's date of hiring and that, for any subsequent year,
commences on an anniversary of that hiring date. Any partial
year of employment shall not be counted.
ARTICLE 2
Selection, Enrollment, Eligibility
2.1 Selection by Committee. Participation in the Plan shall be
limited to a select group of management, highly compensated
Employees and Directors of the Employers. From that group, the
Committee shall select, in its sole discretion, Employees and
Directors to participate in the Plan.
2.2 Enrollment Requirements. As a condition to participation, each
selected Employee or Director shall complete, execute and
return to the Committee
6
11
within 30 days of selection a Plan Agreement, an Election Form
and a Beneficiary Designation Form. In addition, the Committee
shall establish from time to time such other enrollment
requirements as it determines in its sole discretion are
necessary.
2.3 Eligibility; Commencement of Participation. Provided an
Employee or Director selected to participate in the Plan has
met all enrollment requirements set forth in this Plan and
required by the Committee, including returning all required
documents to the Committee within 30 days of selection, that
Employee or Director shall commence participation in the Plan
on the first day of the month following the month in which the
employee or Director completes all enrollment requirements. If
an Employee or a Director fails to meet all such requirements
within the required 30 day period, that Employee or the
Director shall not be eligible to participate in the Plan until
the first day of the Plan Year following the delivery to and
acceptance by the Committee of the required documents.
ARTICLE 3
Deferral Commitments/Interest Crediting
3.1 Minimum Deferral.
(a) Minimum. For each Plan Year, a Participant may
elect to defer Base Annual Salary, Annual Bonus and/or
Directors Fees in the following minimum amounts for
each deferral elected:
Minimum
Deferral Amount
-------- -------
Base Annual Salary and Annual Bonus $2,000
Directors Fees $ 0
For the first (short) Plan Year September 1, 1995 to
December 31, 1995, a minimum of $600 of Base Annual
Salary and Annual Bonus must be elected to be
deferred. If no election is made, the amount deferred
shall be zero.
(b) Short Plan Year. If a Participant first
becomes a Participant after the first day of a Plan
Year, the minimum Base Annual Salary deferral shall be
an amount equal to the minimum set forth above,
multiplied by a fraction, the numerator of which is
the number of complete months remaining in the Plan
Year and the denominator of which is 12.
7
12
3.2 Maximum Deferral. For each Plan Year, a Participant may elect
to defer Base Annual Salary, Annual Bonus and/or Directors Fees
up to the following maximum percentages for each deferral
elected:
Maximum
Deferral Amount
-------- --------
Base Annual Salary 100%
Annual Bonus 100%
Directors Fees 100%
3.3 Election to Defer: Effect of Election Form. In
connection with a Participant's commencement of participation
in the Plan, the Participant shall make a deferral election by
timely delivering to the Committee (in accordance with Section
2.3 above) a completed and signed Election Form, which election
and form must be accepted by the Committee for a valid election
to exist. For each succeeding Plan Year, a new Election Form
must be delivered to the Committee, in accordance with its
rules and procedures, before the end of the Plan Year preceding
the Plan Year for which the election is made. If no Election
Form is timely delivered for a Plan Year, no Annual Deferral
Amount shall be withheld for that Plan Year.
3.4 Withholding of Deferral Amounts. For each Plan Year,
the Base Annual Salary portion of the Annual Deferral Amount
shall be withheld each payroll period in equal amounts from the
Participant's Base Annual Salary. The Annual Bonus and/or
Directors Fees portion of the Annual Deferral Amount shall be
withheld at the time the Annual Bonus or Directors Fees are or
otherwise would be paid to the Participant.
3.5 Interest Crediting Prior to Distribution. Prior to any
distribution of benefits under Articles 4, 5, 6, 7 or 8,
interest shall be credited and compounded annually on a
Participant's Account Balance as though the Annual Deferral
Amount for that Plan Year was withheld at the beginning of the
Plan Year or, in the case of the first year of Plan
participation, was withheld on the date that the Participant
commenced participation in the Plan. The rate of interest for
crediting shall be the Preferred Rate, except as otherwise
provided in this Plan. In the event of Retirement, Disability,
death or Termination of Employment prior to the end of a Plan
Year, the basis for that year's interest crediting will be a
fraction of the full year's interest, based on the number of
full months that the Participant was employed with the Employer
during the Plan Year prior to the occurrence of such event. If
a distribution is made under this Plan, for purposes of
crediting interest, the Account Balance shall be reduced as of
the first day of the month in which the distribution is made.
8
13
3.6 Installment Distributions. In the event a benefit is paid in
installments under Articles 5, 6 or 8, installment payment
amounts shall be determined in the following manner:
(a) Interest Rate. The interest rate to be used to
calculate installment payment amounts shall be a fixed
interest rate that is determined by averaging the
Preferred Rates for the Plan Year in which installment
payments commence and the four (4) preceding Plan
Years. If a Participant has completed fewer than five
(5) Plan Years, this average shall be determined using
the Preferred Rates for the Plan Years during which
the Participant participated in the Plan.
(b) "Deemed" Installment Payments. For purposes of
calculating installment payment amounts only (and
notwithstanding the fact that installment payments
shall actually be paid monthly), installment payments
for each 12 month period, starting with the date that
the Participant became eligible to receive a benefit
under this Plan (the "Eligibility Date") and
continuing thereafter for each additional 12 month
period until the Participant's Account Balance is paid
in full, shall be deemed to have been paid in one sum
as of the first day of each such 12 month period. (The
result of this is that interest crediting shall be
made on an annual basis after taking into account the
"deemed" annual installment payment for the 12 month
period.)
(c) Amortization. Based on the interest rate
determined in accordance with Section 3.6(a) above and
the "deemed" form of installment payments determined
in accordance with Section 3.6(b) above, the
Participant's Account Balance shall be amortized in
equal annual installment payments over the term of the
specified payment period (starting as of the
Eligibility Date and stated in years rather than
months).
(d) Monthly Payments. The annual installment
payment determined in Section 3.6(c) above shall be
divided by 12, and the resulting number shall be the
monthly installment payment that is to be paid each
month during the specified monthly installment payment
period in accordance with the other terms and
conditions of this Plan.
3.7 FICA and Other Taxes. For each Plan Year in which an
Annual Deferral Amount is being withheld, the Participant's
Employer(s) shall ratably withhold from that portion of the
Participant's Base Annual Salary that is not being deferred,
the Participant's share of FICA and other employment taxes. If
necessary, the Committee shall reduce the Annual Deferral
Amount in order to comply with this Section 3.7.
ARTICLE 4
9
14
Short-Term Payout: Unforeseeable Financial Emergencies; Withdrawal Election
4.1 Short Term Payout. Subject to the Deduction Limitation,
in connection with each election to defer an Annual Deferral
Amount, a Participant may elect to receive a future "Short-Term
Payout" from the Plan with respect to that Annual Deferral
Amount. The Short-Term Payout shall be a lump sum payment in an
amount that is equal to the Annual Deferral Amount plus
interest credited in the manner provided in Section 3.5 above
on that amount, but using the applicable interest rate set
forth in Section 7.1 below. Subject to the other terms and
conditions of this Plan, each Short-Term payout elected shall
be paid within 60 days of the first day of the Plan Year that
is 5 years after the first day of the Plan Year in which the
Annual Deferral Amount is actually deferred.
4.2 Withdrawal Payout/Suspensions for Unforeseeable Financial
Emergencies. If the Participant experiences an
Unforeseeable Financial Emergency, the Participant may petition
the Committee to (i) suspend any deferrals required to be made
by a Participant and/or (ii) receive a partial or full payout
from the Plan. The payout shall not exceed the lesser of the
Participant's Account Balance, calculated as if such
Participant were receiving a Termination Benefit, or the amount
reasonably needed to satisfy the Unforeseeable Financial
Emergency. If, subject to the sole discretion of the Committee,
the petition for a suspension and/or payout is approved,
suspension shall take effect upon the date of approval and any
payout shall be made within 60 days of the date of approval.
The payment of any amount under this Section 4.2 shall not be
subject to the Deduction Limitation.
4.3 Withdrawal Election. A Participant may elect, at any time, to
withdraw all of his or her Account Balance less a 10%
withdrawal penalty (the net amount shall be referred to as the
"Withdrawal Amount). No partial withdrawals of that balance
shall be allowed. The Participant shall make this election by
giving the Committee advance written notice of the election in
a form determined from time to time by the Committee. The
penalty shall be equal to 10% of the Participant's Account
Balance determined immediately prior to the withdrawal. The
Participant shall be paid the Withdrawal Amount within 60 days
of his or her election. Once the Withdrawal Amount is paid, the
Participant's participation in the Plan shall terminate and the
Participant shall not be eligible to participate in the Plan in
the future. The payment of this Withdrawal Amount shall not be
subject to the Deduction Limitation.
ARTICLE 5
Retirement Benefit
5.1 Retirement Benefit. Subject to the Deduction Limitation, a
Participant who Retires shall receive, as a Retirement Benefit,
his or her Account Balance.
10
15
5.2 Payment of Retirement Benefits. A Participant, in
connection with his or her commencement of participation in the
Plan, shall elect on an Election Form to receive the Retirement
Benefit in a lump sum or in equal monthly payments (the latter
determined in accordance with Section 3.6 above) over a period
of 60, 120 or 180 months. The Participant may change his or her
election to an allowable alternative payout period by
submitting a new Election Form to the Committee, provided that
any such Election Form is submitted at least 3 years prior to
the Participant's Retirement and is accepted by the Committee
in its sole discretion. The Election Form most recently
accepted by the Committee shall govern the payout of the
Retirement Benefit. The lump sum payment shall be made, or
installment payments shall commence, no later than 60 days
after the date the Participant Retires.
5.3 Death Prior to Completion of Retirement Benefits. If a
Participant dies after Retirement but before the Retirement
Benefit is paid in full, the Participant's unpaid Retirement
Benefit payments shall continue and shall be paid to the
Participant's Beneficiary (a) over the remaining number of
months and in the same amounts as that benefit would have been
paid to the Participant had the Participant survived, or (b) in
a lump sum, if requested by the Beneficiary and allowed in the
sole discretion of the Committee, that is equal to the
Participant's unpaid remaining Account Balance.
11
16
ARTICLE 6
Pre-Retirement Survivor Benefit
6.1 Pre-Retirement Survivor Benefit. Subject to the Deduction
Limitation, and except as provided in Section 6.3 below, if a
Participant dies before he or she Retires, experiences a
Termination of Employment or suffers a Disability, the
Participant's Beneficiary shall receive a Pre-Retirement
Survivor Benefit equal to the Participant's Account Balance.
6.2 Payment of Pre-Retirement Survivor Benefits. A Participant, in
connection with his or her commencement of participation in the
Plan, shall elect on an Election Form whether the
Pre-Retirement Survivor Benefit shall be received by his or her
Beneficiary in a lump sum or in equal monthly payments (the
latter determined in accordance with Section 3.6 above) over a
period of 60, 120 or 180 months. The Participant may change
this election to an allowable alternative payout period by
submitting a new Election Form to the Committee, which form
must be accepted by the Committee in its sole discretion. The
Election Form most recently accepted by the Committee prior to
the Participant's death shall govern the payout of the
Participant's Pre-Retirement Survivor Benefit. Despite the
foregoing, if the Participant's Account Balance at the time of
his or her death is less than $25,000, payment of the
Pre-Retirement Survivor Benefit may be made, in the sole
discretion of the Committee, in a lump sum or in installment
payments that do not exceed five years in duration. The lump
sum payment shall be made, or installment payments shall
commence, no later than 60 days after the date the Committee is
provided with proof that is satisfactory to the Committee of
the Participant's death.
6.3 Restriction in the Event of Suicide or Falsely Provided
Information. In the event of a Participant's suicide within 2
years after the Participant first becomes a Participant, or in
the event the Participant's death is determined to be from a
bodily or mental cause or causes, the information about which
was withheld, knowingly concealed, or falsely provided by the
Participant if requested to furnish evidence of good health,
the Pre-Retirement Survivor Benefit shall be equal to the sum
of the Participant's Annual Deferral Amounts, without interest,
all determined as of his or her date of death.
ARTICLE 7
Termination Benefit
7.1 Termination Benefits. Subject to the Deduction Limitation, if a
Participant experiences a Termination of Employment prior to
his or her Retirement, death or Disability, the Participant
shall receive a Termination Benefit, which shall be equal to
the Participant's Account Balance, with interest credited in
12
17
the manner provided in Section 3.5 above, but using the
applicable interest rate set forth in the following schedule:
COMPLETION OF YEARS OF PLAN PARTICIPATION APPLICABLE RATE
Less than five years Crediting Rate
Five or more years Preferred Rate
Notwithstanding the foregoing, if a Participant experiences a
Termination of Employment before completing five (5) Years of
Plan Participation as a result, in the judgment of the
Committee, of an reorganization of his or her Employer, the
applicable interest rate shall be the Preferred Rate.
7.2 Payment of Termination Benefit. The Termination Benefit shall
be paid in a lump sum within 60 days of the Termination of
Employment.
ARTICLE 8
Disability Waiver and Benefit
8.1 Disability Waiver.
(a) Eligibility. By participating in the Plan, all
Participants are eligible for this waiver.
(b) Waiver of Deferral; Credit for Plan Year of
Disability. A Participant who is determined by the
Committee to be suffering from a Disability shall be
excused from fulfilling that portion of the Annual
Deferral Amount commitment that would otherwise have
been withheld from a Participant's Base Annual Salary,
Annual Bonus and/or Directors Fees for the Plan Year
during which the Participant first suffers a
Disability. During the period of Disability, the
Participant shall not be allowed to make any
additional deferral elections.
(c) Return to Work. If a Participant returns to employment
or service as a Director with an Employer after a
Disability ceases, the Participant may elect to defer
an Annual Deferral Amount for the Plan Year following
his or her return to employment or service and for
every Plan Year thereafter while a Participant in the
Plan; provided such deferral elections are otherwise
allowed and an Election Form is delivered to and
accepted by the Committee for each such election in
accordance with Section 3.3 above.
13
18
8.2 Disability Benefit. A Participant suffering a Disability shall,
for benefit purposes under this Plan, continue to be considered
to be employed or in the service of an Employer as a Director
and shall be eligible for the benefits provided for in Articles
4, 5, 6 or 7 in accordance with the provisions of those
Articles. Notwithstanding the above, the Committee shall have
the right, in its sole and absolute discretion and for purposes
of this Plan only, to terminate a Participant's employment or
service as a Director at any time after such Participant is
determined to be permanently disabled (i) under the Participant
Employer's long-term disability plan (or would have been
determined to be permanently disabled had he or she
participated in that plan), or (ii) if such a plan does not
exit, by the Committee in its sole discretion.
ARTICLE 9
Beneficiary Designation
9.1 Beneficiary. Each Participant shall have the right, at any
time, to designate his or her Beneficiary(ies) (both primary as
well as contingent) to receive any benefits payable under the
Plan to a beneficiary upon the death of a Participant. The
Beneficiary designated under this Plan may be the same as or
different from the Beneficiary designation under any other plan
of an Employer in which the Participant participates.
9.2 Beneficiary Designation; Change; Spousal Consent. A Participant
shall designate his or her Beneficiary by completing and
signing the Beneficiary Designation Form, and returning it to
the Committee or its designated agent. A Participant shall have
the right to change a Beneficiary by completing, signing and
otherwise complying with the terms of the Beneficiary
Designation Form and the Committee's rules and procedures, as
in effect from time to time. If the Participant names someone
other than his or her spouse as a Beneficiary, a spousal
consent, in the form designated by the Committee, must be
signed by that Participant's spouse and returned to the
Committee. Upon the receipt by the Committee of a new
Beneficiary Designation Form, all Beneficiary designations
previously filed shall be cancelled. The Committee shall be
entitled to rely on the last Beneficiary Designation Form filed
by the Participant prior to his or her death.
9.3 Receipt. No designation or change in designation of a
Beneficiary shall be effective until received by the Committee
or its designated agent.
9.4 No Beneficiary Designation. If a Participant fails to designate
a Beneficiary as provided in Sections 9.1, 9.2 and 9.3 above
or, if all designated Beneficiaries predecease the Participant
or die prior to complete distribution of the Participant's
benefits, then the Participant's designated Beneficiary shall
be deemed to be his or her surviving spouse. If the Participant
has no surviving spouse, the benefits remaining under the Plan
to be paid to a Beneficiary shall
14
19
be payable to the executor or personal representative of the
Participant's estate.
9.5 Doubt as to Beneficiary. If the Committee has any doubt as to
the proper Beneficiary to receive payments pursuant to this
Plan, the Committee shall have the right, exercisable in its
discretion, to cause the Participant's Employer to withhold
such payments until this matter is resolved to the Committee's
satisfaction.
9.6 Discharge of Obligations. The payment of benefits under the
Plan to a Beneficiary shall fully and completely discharge all
Employers and the Committee from all further obligations under
this Plan with respect to the Participant, and that
Participant's Plan Agreement shall terminate upon such full
payment of benefits.
ARTICLE 10
Leave of Absence
10.1 Paid Leave of Absence. If a Participant is authorized by the
Participant's Employer for any reason to take a paid leave of
absence from the employment of the Employer, the Participant
shall continue to be considered employed by the Employer and
the Annual Deferral Amount shall continue to be withheld during
such paid leave of absence in accordance with Section 3.3.
10.2 Unpaid Leave of Absence. If a Participant is authorized by the
Participant's Employer for any reason to take an unpaid leave
of absence from the employment of the Employer, the Participant
shall continue to be considered employed by the Employer and
the Participant shall be excused from making deferrals until
the earlier of the date the leave of absence expires or the
Participant returns to a paid employment status. Upon such
expiration or return, deferrals shall resume for the remaining
portion of the Plan Year in which the expiration or return
occurs, based on the deferral election, if any, made for that
Plan Year. If no election was made for that Plan Year, no
deferral shall be withheld.
ARTICLE 11
Termination, Amendment or Modification
11.1 Termination. Any Employer reserves the right to terminate the
Plan at any time with respect to its participating Employees
and Directors by the action of its board of directors. Upon the
termination of the Plan, all Plan Agreements of a Participant
shall terminate and his or her Account Balance, determined as
if he or she had experienced a Termination of Employment on the
date of Plan termination or, if Plan termination occurs after
the date upon which the Participant was eligible to Retire, the
Participant had Retired on the date of
15
20
Plan termination, shall be paid to the Participant as follows.
Prior to a Change in Control, an Employer shall have the right,
in its sole discretion, and notwithstanding any elections made
by the Participant, to pay such benefits in a lump sum or in
monthly installments for up to 15 years, with interest credited
during the installment period as provided in Section 3.6. After
a Change in Control, the Employer shall be required to pay such
benefits in a lump sum. The termination of the Plan shall not
adversely affect any Participant or Beneficiary who has become
entitled to the payment of any benefits under the Plan as of
the date of termination; provided however, that the Employer
shall have the right to accelerate installment payments by
paying the present value equivalent of such payments, using the
Crediting Rate for the Plan Year in which the termination
occurs as the discount rate, in a lump sum or pursuant to a
different payment schedule.
11.2 Amendment. Any Employer may, at any time, amend or modify the
Plan in whole or in part with respect to that Employer by the
action of its board of directors; provided, however, that no
amendment or modification shall be effective to decrease or
restrict the value of a Participant's Account Balance in
existence at the time the amendment or modification is made,
calculated as if the Participant had experienced a Termination
of Employment as of the effective date of the amendment or
modification, or, if the amendment or modification occurs after
the date upon which the Participant was eligible to Retire, the
Participant had Retired as of the effective date of the
amendment or modification. The amendment or modification of the
Plan shall not affect any Participant or Beneficiary who has
become entitled to the payment of benefits under the Plan as of
the date of the amendment or modification; provided, however,
that the Employer shall have the right to accelerate
installment payments by paying the present value equivalent of
such payments, using the Crediting Rate for the Plan Year of
the amendment or modification as the discount rate, in a lump
sum or pursuant to a different payment schedule.
11.3 Interest Rate in the Event of a Change in Control and Interest.
If a Change in Control occurs, the applicable interest rate to
be used in determining a Participant's benefit in connection
with a Termination of Employment after the Change in Control,
or a Plan termination, amendment or modification under Sections
11.1 and 11.2, shall be the Preferred Rate. However, the
Crediting Rate for the applicable Plan Year, and not the
Preferred Rate, shall be used as the discount rate for
determining present value.
11.4 Effect of Payment. The full payment of the applicable benefit
under Articles 5, 6, 7 or 8 of the Plan shall completely
discharge all obligations to a Participant and his or her
designated Beneficiaries under this Plan and the Participant's
Plan Agreement shall terminate.
16
21
ARTICLE 12
Administration
12.1 Committee Duties. This Plan shall be administered by a
Committee which shall consist of the Board, or such committee
as the Board shall appoint. Members of the Committee may be
Participants under this Plan. The Committee shall also have the
discretion and authority to (i) make, amend, interpret, and
enforce all appropriate rules and regulations for the
administration of this Plan and (ii) decide or resolve any and
all questions including interpretations of this Plan, as may
arise in connection with the Plan.
12.2 Agents. In the administration of this Plan, the Committee may,
from time to time, employ agents and delegate to them such
administrative duties as it sees fit (including acting through
a duly appointed representative) and may from time to time
consult with counsel who may be counsel to any Employer.
12.3 Binding Effect of Decisions. The decision or action of the
Committee with respect to any question arising out of or in
connection with the administration, interpretation and
application of the Plan and the rules and regulations
promulgated hereunder shall be final and conclusive and binding
upon all persons having any interest in the Plan.
12.4 Indemnity of Committee. All Employers shall indemnify and hold
harmless the members of the Committee against any and all
claims, losses, damages, expenses or liabilities arising from
any action or failure to act with respect to this Plan, except
in the case of willful misconduct by the Committee or any of
its members.
12.5 Employer Information. To enable the Committee to perform its
functions, each Employer shall supply full and timely
information to the Committee on all matters relating to the
compensation of its Participants, the date and circumstances of
the Retirement, Disability, death or Termination of Employment
of its Participants, and such other pertinent information as
the Committee may reasonably require.
17
22
ARTICLE 13
Other Benefits and Agreements
13.1 Coordination with Other Benefits. The benefits provided for a
Participant and Participant's Beneficiary under the Plan are in
addition to any other benefits available to such Participant
under any other plan or program for employees of the
Participant's Employer. The Plan shall supplement and shall not
supersede, modify or amend any other such plan or program
except as may otherwise be expressly provided.
ARTICLE 14
Claims Procedures
14.1 Presentation of Claim. Any Participant or Beneficiary of a
deceased Participant (such Participant or Beneficiary being
referred to below as a "Claimant) may deliver to the Committee
a written claim for a determination with respect to the amounts
distributable to such Claimant from the Plan. If such a claim
relates to the contents of a notice received by the Claimant,
the claim must be made within 60 days after such notice was
received by the Claimant. The claim must state with
particularity the determination desired by the Claimant. All
other claims must be made within 180 days of the date on which
the event that caused the claim to arise occurred. The claim
must state with particularity the determination desired by the
Claimant.
14.2 Notification of Decision. The Committee shall consider a
Claimant's claim within a reasonable time, and shall notify the
Claimant in writing:
(a) that the Claimant's requested determination has been
made, and that the claim has been allowed in full; or
(b) that the Committee has reached a conclusion contrary,
in whole or in part, to the Claimant's requested
determination, and such notice must set forth in a
manner calculated to be understood by the Claimant:
(i) the specific reason(s) for the denial of the
claim, or any part of it;
(ii) specific reference(s) to pertinent provisions
of the Plan upon which such denial was based;
(iii) a description of any additional material or
information necessary for the Claimant to
perfect the claim, and an explanation of why
such material or information is necessary;
and
18
23
(iv) an explanation of the claim review procedure
set forth in Section 14.3 below.
14.3 Review of a Denied Claim. Within 60 days after receiving a
notice from the Committee that a claim has been denied, in
whole or in part, a Claimant (or the Claimant's duly authorized
representative) may file with the Committee a written request
for a review of the denial of the claim. Thereafter, but not
later than 30 days after the review procedure began, the
Claimant (or the Claimant's duly authorized representative):
(a) may review pertinent documents;
(b) may submit written comments or other documents; and/or
(c) may request a hearing, which the Committee, in its
sole discretion, may grant.
14.4 Decision on Review. The Committee shall render its decision on
review promptly, and not later than 60 days after the filing of
a written request for review of the denial, unless a hearing is
held or other special circumstances require additional time, in
which case the Committee's decision must be rendered within 120
days after such date. Such decision must be written in a manner
calculated to be understood by the Claimant, and it must
contain:
(a) specific reasons for the decision;
(b) specific reference(s) to the pertinent Plan provisions
upon which the decision was based; and
(c) such other matters as the Committee deems relevant.
14.5 Legal Action. A Claimant's compliance with the foregoing
provisions of this Article 14 is a mandatory prerequisite to a
Claimant's right to commence any legal action with respect to
any claim for benefits under this Plan.
ARTICLE 15
Trust
15.1 Establishment of the Trust. The Company shall establish the
Trust, and the Employers shall at least annually transfer over
to the Trust such assets as the Employers determine, in their
sole discretion, are necessary to provide for their respective
future liabilities created with respect to the Annual Deferral
Amounts and interest credits for that year.
19
24
15.2 Interrelationship of the Plan and the Trust. The provisions of
the Plan and the Plan Agreement shall govern the rights of a
Participant to receive distributions pursuant to the Plan. The
provisions of the Trust shall govern the rights of the
Employers, Participants and the creditors of the Employers to
the assets transferred to the Trust. Each Employer shall at all
times remain liable to carry out its obligations under the
Plan. Each Employer's obligations under the Plan may be
satisfied with Trust assets distributed pursuant to the terms
of the Trust, and any such distribution shall reduce the
Employer's obligations under this Agreement.
ARTICLE 16
Miscellaneous
16.1 Unsecured General Creditor. Participants and their
Beneficiaries, heirs, successors and assigns shall have no
legal or equitable rights, interests or claims in any property
or assets of an Employer. Any and all of an Employer's assets
shall be, and remain, the general, unpledged unrestricted
assets of the Employer. An Employer's obligation under the Plan
shall be merely that of an unfunded and unsecured promise to
pay money in the future.
16.2 Employer's Liability. An Employer's liability for the payment
of benefits shall be defined only by the Plan and the Plan
Agreement as entered into between the Employer and a
Participant. An Employer shall have no obligation to a
Participant under the Plan except as expressly provided in the
Plan and his or her Plan Agreement.
16.3 Nonassignability. Neither a Participant nor any other person
shall have any right to commute, sell, assign, transfer,
pledge, anticipate, mortgage or otherwise encumber, transfer,
hypothecate or convey in advance of actual receipt, the
amounts, if any, payable hereunder, or any part thereof, which
are, and all rights to which are expressly declared to be,
unassignable and non-transferable, except that the foregoing
shall not apply to any family support obligations set forth in
a court order. No part of the amounts payable shall, prior to
actual payment, be subject to seizure or sequestration for the
payment of any debts, judgments, alimony or separate
maintenance owed by a Participant or any other person, nor be
transferable by operation of law in the event of a
Participant's or any other person's bankruptcy or insolvency.
16.4 Not a Contract of Employment. The terms and conditions of this
Plan shall not be deemed to constitute a contract of employment
between any Employer and the Participant. Such employment is
hereby acknowledged to be an "at will" employment relationship
that can be terminated at any time for any reason, or no
reason, with or without cause, and with or without notice,
unless expressly provided in a written employment agreement.
Nothing in this Plan shall be deemed to give a Participant the
right to be retained in the service of
20
25
any Employer, either as an Employee or a Director, or to
interfere with the right of any Employer to discipline or
discharge the Participant at any time.
16.5 Furnishing Information. A Participant or his or her Beneficiary
will cooperate with the Committee by furnishing any and all
information requested by the Committee and take such other
actions as may be requested in order to facilitate the
administration of the Plan and the payments of benefits
hereunder, including but not limited to taking such physical
examinations as the Committee may deem necessary.
16.6 Terms. Whenever any words are used herein in the singular or in
the plural, they shall be construed as though they were used in
the plural or the singular, as the case may be, in all cases
where they would so apply.
16.7 Captions. The captions of the articles, sections and paragraphs
of this Plan are for convenience only and shall not control or
affect the meaning or construction of any of its provisions.
16.8 Governing Law. Subject to ERISA, the provisions of this Plan
shall be construed and interpreted according to the internal
laws of the State of Washington without regard to its conflicts
of laws principles.
16.9 Notice. Any notice or filing required or permitted to be given
to the Committee under this Plan shall be sufficient if in
writing and hand-delivered, or sent by registered or certified
mail, to the address below:
815 Mercer Street
P.O. Box 1869
Seattle, Washington 98111
Such notice shall be deemed given as of the date of delivery
or, if delivery is made by mail, as of the date shown on the
postmark on the receipt for registration or certification.
Any notice or filing required or permitted to be given to a
Participant under this Plan shall be sufficient if in writing
and hand-delivered, or sent by mail, to the last known address
of the Participant.
16.10 Successors. The provisions of this Plan shall bind and
inure to the benefit of the Participant's Employer and its
successors and assigns and the Participant and the
Participant's designated Beneficiaries.
21
26
16.11 Spouse's Interest. The interest in the benefits hereunder of a
spouse of a Participant who has predeceased the Participant
shall automatically pass to the Participant and shall not be
transferable by such spouse in any manner, including but not
limited to such spouse's will, nor shall such interest pass
under the laws of intestate succession.
16.12 Validity. In case any provision of this Plan shall be illegal
or invalid for any reason, said illegality or invalidly shall
not affect the remaining parts hereof, but this Plan shall be
construed and enforced as if such illegal or invalid provision
had never been inserted herein.
16.13 Incompetent. If the Committee determines in its discretion that
a benefit under this Plan is to be paid to a minor, a person
declared incompetent or to a person incapable of handling the
disposition of that person's property, the Committee may direct
payment of such benefit to the guardian, legal representative
or person having the care and custody of such minor,
incompetent or incapable person. The Committee may require
proof of minority, incompetency, incapacity or guardianship, as
it may deem appropriate prior to distribution of the benefit.
Any payment of a benefit shall be a payment for the account of
the Participant and the Participant's Beneficiary, as the case
may be, and shall be a complete discharge of any liability
under the Plan for such payment amount.
16.14 Court Order. The Committee is authorized to make any payments
directed by court order in any action in which the Plan or the
Committee has been named as a party.
16.15 Distribution in the Event of Taxation.
(a) General. If, for any reason, all or any portion of a
Participant's benefit under this Plan becomes taxable
to the Participant prior to receipt, a Participant may
petition the Committee for a distribution of that
portion of his or her benefit that has become taxable.
Upon the grant of such a petition, which grant shall
not be unreasonably withheld, a Participant's Employer
shall distribute to the Participant immediately
available funds in an amount equal to the taxable
portion of his or her benefit (which amount shall not
exceed a Participant's unpaid Account Balance under
the Plan). If the petition is granted, the tax
liability distribution shall be made within 90 days of
the date when the Participant's petition is granted.
Such a distribution shall affect and reduce the
benefits to be paid under this Plan.
(b) Trust. If the Trust terminates in accordance with
Section 3.6(e) of the Trust and benefits are
distributed from the Trust to a Participant in
22
27
accordance with that Section, the Participant's
benefits under this Plan shall be reduced to the
extent of such distributions.
16.16 Taxes and Withholding. The Participant's Employer(s), or the
trustee of the Trust in accordance with the terms of the Trust,
may withhold from any distribution under this Plan any and all
employment and income taxes that are required to be withheld
under applicable law.
16.17 Enforcement of Rights After Change in Control. The
Company is aware that upon the occurrence of a Change in
Control, the Board (which might then be composed of new
members) or a shareholder of the Company or of any successor
corporation, might then cause or attempt to cause the Company
or such successor to refuse to comply with its obligations
under the Plan and might cause or attempt to cause the Company
to institute, or may institute, litigation seeking to deny
Participants the benefits intended under the Plan. In these
circumstances, the purpose of the Plan could be frustrated.
Accordingly, if, following a Change in Control, the Company
fails to comply with any of its obligations under the Plan or
any agreement thereunder or, if the Company or any other person
takes any action to declare the Plan void or unenforceable or
institutes any litigation or other legal action designed to
deny, diminish or to recover from any Participant the benefits
intended to be provided, then such Participant may retain
counsel of his or her choice to represent such Participant in
connection with the initiation or defense of any litigation or
other legal action, whether by or against the Company or any
director, officer, shareholder or other person affiliated with
the Company or any successor thereto in any jurisdiction. In
any litigation or other legal action, the prevailing party
shall be entitled to recover reasonable attorney's fees and
costs.
IN WITNESS WHEREOF, the Company has signed this Plan document
as of September 1, 1995.
Washington Natural Gas Company
By:
----------------------
Title:
----------------------
23