EXHIBIT 10.51
BAKER HUGHES INCORPORATED PENSION PLAN
(Effective as of January 1, 2002)
i
EXHIBIT 10.51
BAKER HUGHES INCORPORATED PENSION PLAN
(Effective as of January 1, 2002)
TABLE OF CONTENTS
PAGE
----
ARTICLE I DEFINITIONS ................................................................................... 1
1.1 Accrued Benefit.................................................................................. 1
1.2 Actuarial Equivalent ............................................................................ 1
1.3 Actuary ......................................................................................... 1
1.4 Affiliate ....................................................................................... 1
1.5 Annuity Starting Date............................................................................ 1
1.6 Beneficiary ..................................................................................... 2
1.7 Cash Balance Account............................................................................. 2
1.8 Code ............................................................................................ 2
1.9 Committee ....................................................................................... 2
1.10 Company ......................................................................................... 2
1.11 Compensation..................................................................................... 2
1.12 Contribution Credit.............................................................................. 2
1.13 Death Benefit.................................................................................... 2
1.14 Directors ....................................................................................... 2
1.15 Early Retirement Date ........................................................................... 2
1.16 Effective Date................................................................................... 2
1.17 Eligible Employee ............................................................................... 2
1.18 Employee......................................................................................... 3
1.19 Employer ........................................................................................ 3
1.20 Employment Date.................................................................................. 3
1.21 ERISA ........................................................................................... 3
1.22 Interest Credit.................................................................................. 3
1.23 Interest Rate.................................................................................... 3
1.24 Investment Manager .............................................................................. 3
1.25 Hour of Service ................................................................................. 3
1.26 Leased Employee ................................................................................. 3
1.27 Member .......................................................................................... 3
1.28 Normal Retirement Date........................................................................... 4
1.29 Normal Retirement Pension........................................................................ 4
1.30 Period of Severance.............................................................................. 4
1.31 Plan............................................................................................. 4
1.32 Plan Year........................................................................................ 4
1.33 Postponed Retirement Date ....................................................................... 4
1.34 Pre-Retirement Survivor Annuity.................................................................. 4
1.35 Qualified Joint and Survivor Annuity............................................................. 4
1.36 Qualified Military Service....................................................................... 4
1.37 Quarter.......................................................................................... 4
1.38 Reemployment Date ............................................................................... 4
1.39 Required Beginning Date ......................................................................... 4
1.40 Retirement Date.................................................................................. 4
1.41 Service.......................................................................................... 4
1.42 Severance from Service Date ..................................................................... 4
1.43 Single Life Annuity ............................................................................. 4
1.44 Spouse .......................................................................................... 5
1.45 Transferred Member............................................................................... 5
1.46 Trust ........................................................................................... 5
1.47 Trustee.......................................................................................... 5
1.48 Trust Agreement.................................................................................. 5
1.49 Trust Fund ...................................................................................... 5
1.50 Vesting Service.................................................................................. 5
EXHIBIT 10.51
ARTICLE II PARTICIPATION................................................................................. 5
2.1 Participation by Eligible Employees ............................................................. 5
2.2 Cessation of Active Participation ............................................................... 5
ARTICLE III SERVICE ..................................................................................... 5
3.1 Service Defined ................................................................................. 5
3.2 Leave for Qualified Military Service............................................................. 6
ARTICLE IV BREAK IN SERVICE ............................................................................. 6
4.1 Break In Service ................................................................................ 6
4.2 Effect of Reemployment Prior to Break In Service ................................................ 6
ARTICLE V VESTING SERVICE ............................................................................... 6
5.1 Vesting ......................................................................................... 6
5.2 Vesting Service.................................................................................. 6
ARTICLE VI NON-COVERED EMPLOYMENT ....................................................................... 7
ARTICLE VII CASH BALANCE ACCOUNT ........................................................................ 7
7.1 Initial Cash Balance Account .................................................................... 7
7.2 Contribution Credits ............................................................................ 7
7.3 Interest Credit ................................................................................. 8
7.4 Cash Balance Account Upon Reemployment........................................................... 8
ARTICLE VIII REQUIREMENTS FOR RETIREMENT BENEFITS........................................................ 9
8.1 Retirement Benefit............................................................................... 9
8.2 Retirement Benefits Following an Authorized Leave of Absence .................................... 9
ARTICLE IX DEATH BENEFITS ............................................................................... 9
9.1 Death Benefit of a Member Who Dies During Service ............................................... 9
9.2 Death Benefit of a Member Who Dies After His Severance of Service Date .......................... 10
9.3 Pre-Retirement Survivor Annuity ................................................................. 10
9.4 Effect on Optional Form Election ................................................................ 10
9.5 No Death Benefits After Commencement of Benefits ................................................ 10
ARTICLE X BENEFICIARIES ................................................................................. 10
0.1 Designation of Beneficiary ...................................................................... 10
0.2 Spouse as Beneficiary ........................................................................... 11
RTICLE XI PAYMENT OF PENSION ............................................................................ 11
1.1 Payment of Accrued Benefit ...................................................................... 11
1.2 Normal Form of Payment .......................................................................... 12
1.3 Election to Waive Qualified Joint and Survivor Annuity .......................................... 12
11.4 Optional Form of Payment ........................................................................ 13
11.5 Payment of Small Benefits ....................................................................... 13
11.6 Direct Rollovers ................................................................................ 13
ARTICLE XII CLAIM PROCEDURES ............................................................................ 14
12.1 Presenting Claims for Benefits .................................................................. 14
12.2 Claims Review Procedure ......................................................................... 15
12.3 Disputed Benefits ............................................................................... 15
ARTICLE XIII PLAN ADMINISTRATION ........................................................................ 16
13.1 Appointment of Committee ........................................................................ 16
13.2 Records of the Committee ........................................................................ 16
13.3 Committee Action ................................................................................ 16
13.4 Committee Disqualification ...................................................................... 16
13.5 Committee Compensation, Expenses and Adviser .................................................... 16
EXHIBIT 10.51
13.6 Committee Liability ............................................................................. 16
13.7 Committee Determinations ........................................................................ 16
13.8 Information From Employer ....................................................................... 17
13.9 General Powers of the Committee ................................................................. 17
13.10 Uniform Administration .......................................................................... 18
13.11 Reporting Responsibilities ...................................................................... 18
13.12 Disclosure Responsibilities ..................................................................... 18
13.13 Allocation of Responsibilities Among Fiduciaries ................................................ 18
13.14 Annual Audit .................................................................................... 18
ARTICLE XIV CONTRIBUTIONS TO THE PLAN ................................................................... 19
14.1 Member Contributions ............................................................................ 19
14.2 Employer Contributions .......................................................................... 19
14.3 Discontinuance or Suspension of Contributions ................................................... 19
14.4 Forfeitures Credited Against Employer's Contributions ........................................... 19
14.5 Single Plan ..................................................................................... 19
ARTICLE XV AMENDMENT OF THE PLAN......................................................................... 20
15.1 Right to Amend Reserved ......................................................................... 20
15.2 Limitations on Right to Amend ................................................................... 20
15.3 Form of Amendment ............................................................................... 20
15.4 Merger of Plan with Another Pension Plan ........................................................ 20
ARTICLE XVI THE TRUSTEE AND THE TRUST FUND............................................................... 21
16.1 Trust Agreement.................................................................................. 21
16.2 Benefits Paid Solely From Trust Fund ............................................................ 21
16.3 Trust Fund Applicable Only to Payment of Benefits ............................................... 21
16.4 Accounting by Trustee ........................................................................... 21
16.5 Authorization to Protect Trustee................................................................. 21
16.6 Exemption From Bond ............................................................................. 21
ARTICLE XVII TERMINATION OF THE PLAN .................................................................... 22
17.1 Right to Terminate Reserved ..................................................................... 22
17.2 Continuance With Successor Employer ............................................................. 22
17.3 Liquidation of Trust Fund ....................................................................... 23
17.4 Partial Termination.............................................................................. 24
17.5 Distribution of Trust Fund....................................................................... 24
17.6 Residual Amounts ................................................................................ 25
17.7 Limitations Imposed by Treasury Regulations Upon Early Termination of Plan....................... 25
ARTICLE XVIII ADOPTING EMPLOYERS ........................................................................ 27
18.1 Designation of Other Employers .................................................................. 27
18.2 Single Plan...................................................................................... 27
ARTICLE XIX MISCELLANEOUS ............................................................................... 27
19.1 Plan Not an Employment Contract.................................................................. 27
19.2 Controlling Law ................................................................................. 28
19.3 Invalidity of Particular Provisions ............................................................. 28
19.4 Non-Alienation of Benefits ...................................................................... 28
19.5 Copy Available to Members ....................................................................... 28
19.6 Evidence Furnished Conclusive ................................................................... 28
19.7 Unclaimed Benefits .............................................................................. 28
19.8 Name and Address Changes ........................................................................ 28
19.9 Payments in Satisfaction of Claims of Members ................................................... 28
19.10 Headings for Convenience Only.................................................................... 29
19.11 Payments to Minors and Incompetents ............................................................. 29
19.12 Member Information .............................................................................. 29
EXHIBIT 10.51
ARTICLE XX TOP-HEAVY PLAN REQUIREMENTS................................................................... 29
20.1 General Rule..................................................................................... 29
20.2 Vesting Provisions............................................................................... 29
20.3 Minimum Benefit Provisions....................................................................... 30
20.4 Limitation on Compensation ...................................................................... 30
20.5 Coordination With Other Plans ................................................................... 30
20.6 Distributions to Certain Key Employees .......................................................... 30
20.7 Determination of Top-Heavy Status................................................................ 30
ARTICLE XXI LIMITATION ON BENEFITS....................................................................... 33
21.1 Single Defined Benefit Plan ..................................................................... 33
21.2 Two or More Defined Benefit Plans................................................................ 34
21.3 Definitions ..................................................................................... 34
EXHIBIT 10.51
BAKER HUGHES INCORPORATED PENSION PLAN
(Effective as of January 1, 2002)
ARTICLE I
DEFINITIONS
Where the following words and phrases appear in this Plan,
they shall have the respective meanings set forth below, unless their context
clearly indicates to the contrary:
1.1 Accrued Benefit: As of any given date after the Effective
Date, the monthly amount of retirement income that would be payable in the form
of a Single Life Annuity under this Plan that is the Actuarial Equivalent of the
Member's Cash Balance Account on the Member's Normal Retirement Date (or first
of the month following the Member's Severance from Service Date, if later).
1.2 Actuarial Equivalent: For any specified annuity or benefit,
means another annuity or benefit commencing at a different date or payable in a
different form than the specified annuity or benefit, but which has the same
present value as the specified annuity or benefit, when measured using the
following mortality and interest assumptions:
(a) For all purposes under the Plan, except as otherwise
provided in subsection (b) of this Section:
(i) An interest rate of 7% per annum, compounded
annually; and
(ii) The "applicable mortality table" prescribed
under Code Section 417(e)(3)(A)(ii)(I), as set forth in
Revenue Ruling 2001-62.
(b) For purposes of Article VII, with respect to
determining a Member's Normal Retirement Pension, for purposes of
Article XI, with respect to calculating an Accrued Benefit as a
lump-sum payment, including the payment of small benefits under Section
11.5, and for purposes of Article XXI, with respect to adjusting any
benefit or limitation under Section 415(b)(2)(B), (C) or (D) of the
Code:
(i) The Interest Rate for the Plan Year in which
occurs the Annuity Starting Date for the distribution;
provided, however, that for purposes of determining a Member's
Normal Retirement Pension, an interest rate of 2.6% per annum,
compounded annually, shall apply if such rate is higher than
the foregoing Interest Rate; and
(ii) The "applicable mortality table" prescribed
under Code Section 417(e)(3)(A)(ii)(I) as set forth in Revenue
Ruling 2001-62.
1.3 Actuary: The actuary or firm of actuaries that has been
appointed by the Company to make the actuarial computations required under the
Plan.
1.4 Affiliate: A corporation or other trade or business which,
together with an Employer, is "under common control" within the meaning of
Section 414(b) or (c), as modified by Section 415(h) of the Code; any
organization (whether or not incorporated) which is a member of an "affiliated
service group" (within the meaning of Section 414(m) of the Code) which includes
the Employer; and any other entity required to be aggregated with the Employer
pursuant to regulations under Section 414(o) of the Code.
1
EXHIBIT 10.51
1.5 Annuity Starting Date: The first day of the month coincident
with or next following the Member's attainment of his Normal Retirement Date or,
if later, the first day of the month next following the payroll check date
immediately following the date of his termination of employment, subject to
Section 11.1. Notwithstanding anything herein to the contrary, a Member who has
terminated his employment may request, in accordance with the then established
procedures of the Committee, a later commencement date for payment of his
Accrued Benefit, subject to Section 11.1, in which event the Annuity Starting
Date shall be the first day of the month requested.
1.6 Beneficiary: The contingent annuitant or joint pensioner
designated pursuant to Article X to receive optional pension benefits under
Article XI hereof or the person or persons designated under Article X to receive
a Death Benefit under Article IX.
1.7 Cash Balance Account: The notional account maintained on
behalf of a Member to reflect the Member's Contribution Credits and Interest
Credits made on his behalf as described in Article VII.
1.8 Code: The Internal Revenue Code of 1986, as amended.
1.9 Committee: The Administrative Committee appointed to
administer the Plan as provided in Article XIII.
1.10 Company: Baker Hughes Incorporated or its successor.
1.11 Compensation: The total of all wages, salaries, fees for
professional service and other amounts received in cash or in kind by a Member
for services actually rendered or labor performed for the Employer while a
Member and an Employee to the extent such amounts are includible in gross
income, (A) excluding (i) reimbursements and other expense allowances; (ii) cash
and noncash fringe benefits; (iii) moving expenses; (iv) Employer contributions
to or payments from this or any other deferred compensation program, whether
such program is qualified under Section 401(a) of the Code or nonqualified; (v)
welfare benefits; (vi) amounts realized from the receipt or exercise of a stock
option that is not an incentive stock option within the meaning of Section 422
of the Code; (vii) amounts realized at the time property described in Section 83
of the Code is freely transferable or no longer subject to a substantial risk of
forfeiture; (viii) amounts realized as a result of an election described in
Section 83(b) of the Code; (ix) any amount realized as a result of a
disqualifying disposition within the meaning of Section 421 (a) of the Code; and
(x) any other amounts that receive special tax benefits under the Code but are
not hereinafter included, but (B) including (i) elective contributions made on a
Member's behalf by the Employer that are not includable in income under Section
125, Section 132(f)(4), Section 402(e)(3), Section 402(h), or Section 403(b) of
the Code; (ii) compensation deferred under an eligible deferred compensation
plan within the meaning of Section 457(b) of the Code; and (iii) employee
contributions described in Section 414(h) of the Code that are picked up by the
employing unit and are treated as employer contributions. The foregoing
notwithstanding, the Compensation of any Member taken into account for purposes
of the Plan shall be limited to $200,000 for any Plan Year, with such amount
adjusted automatically to reflect (x) any amendments to Section 401(a)(17) of
the Code and (y) any cost-of-living increases pursuant to Section 401(a)(17)(B)
of the Code; and shall not include any Compensation paid during a payroll period
commencing after the payroll period during which occurs the Member's Severance
from Service Date.
1.12 Contribution Credit: The amount credited to each Member's Cash
Balance Account pursuant to Section 7.2.
1.13 Death Benefit: The benefit defined in Section 9.1 hereof.
1.14 Directors: The Board of Directors of the Company.
1.15 Early Retirement Date: The first day of the month next
following the termination of Service by a Member after he has completed five
years of Vesting Service and has attained age 55.
1.16 Effective Date: Except where otherwise specifically provided,
January 1, 2002.
EXHIBIT 10.51
1.17 Eligible Employee: Each Employee other than:
(A) an Employee whose terms and conditions of employment are
governed by a collective bargaining agreement, unless such
agreement provides for his coverage under the Plan;
(B) an Employee who is a Leased Employee or who is designated,
compensated, or otherwise classified or treated by the
Employer as a Leased Employee;
(C) an Employee who is an independent contractor or lease employee
or who is designated, compensated, or otherwise classified or
treated by the Employer as a an independent contractor or
lease employee;
(D) an Employee who is neither a U.S. citizen nor a U.S. Permanent
Resident (for purposes of the Plan, an individual is not a
U.S. Permanent Resident unless and until he has been issued a
Alien Registration Receipt Card (Form I-551) (referred to as a
"green card") by the United States Immigration and
Naturalization Service); or
(E) an Employee (i) who is a U.S. citizen or U.S. Permanent
Resident, (ii) whose employment is based outside of the United
States, and (iii) who does not have W-2 earnings from a U.S.
dollar-based payroll system.
1.18 Employee: Each (A) individual employed by the Employer and (B)
Leased Employee.
1.19 Employer: The Company and any Affiliate or any other entity
that has been designated by the Committee as a participating Employer under this
Plan pursuant to the provisions of Article XVIII.
1.20 Employment Date: The date on which an Employee first performs
an Hour of Service.
1.21 ERISA: Public Law No. 93-406, the Employee Retirement Income
Security Act of 1974, as amended from time to time.
1.22 Interest Credit: The interest credit to each Member's Cash
Balance Account pursuant to Section 7.3.
1.23 Interest Rate: The Interest Rate for a Plan Year shall be the
average annual interest rate on 30-year Treasury securities (or such other
"applicable interest rate" prescribed under Code Section 417(e)(3)(A)(ii)(II)
and the regulations promulgated thereunder) as posted for the month of November
preceding the first day of the Plan Year.
1.24 Investment Manager: The Investment Manager appointed under the
Trust Agreement, as such term is defined by Section 3(38) of ERISA.
1.25 Hour of Service: Each hour for which an Employee is directly
paid, or entitled to payment, by the Employer or an Affiliate for the
performance of duties.
1.26 Leased Employee: Each individual who is not an employee of the
Employer or an Affiliate but who performs services for the Employer or an
Affiliate pursuant to an agreement (oral or written) between the Employer or an
Affiliate and any leasing organization, provided that such person has performed
such services for the Employer or an Affiliate or for related persons (within
the meaning of Section 144(a)(3) of the Code) on a substantially full-time basis
for a period of at least one year and such services are performed under primary
direction or control by the Employer or an Affiliate. The term "Leased Employee"
shall also include any individual who is deemed to be an employee of the
Employer under Section 414(o) of the Code. Notwithstanding the preceding
sentences, the term "Leased Employee" shall not include any individual who is
deemed to be an employee of the Employer or an Affiliate under Section 414(n)(5)
of the Code.
EXHIBIT 10.51
1.27 Member: Any Eligible Employee who has become, and continues to
be, a participant in the Plan in accordance with Article II. A Member shall
continue to be a Member as long as he has an undistributed beneficial interest
in the Plan. If upon a Break In Service, as provided under Article IV, a
Member's vested Accrued Benefit is zero, he shall be deemed to have received an
immediate lump-sum payment of his vested Accrued Benefit as of the date of such
Break In Service.
1.28 Normal Retirement Date: The first day of the month coincident
with or next following the Member's attainment of age 65.
1.29 Normal Retirement Pension: The Accrued Benefit to which a
Member is entitled pursuant to Article VII.
1.30 Period of Severance: Each period of time commencing on an
Employee's Severance from Service Date and ending on a Reemployment Date.
1.31 Plan: Baker Hughes Incorporated Pension Plan, established
effective January 1, 2002, as thereafter amended from time to time.
1.32 Plan Year: The 12-month period commencing on January 1 and
ending on December 31 of each calendar year.
1.33 Postponed Retirement Date: The first day of the month next
following the Member's termination of Service after his Normal Retirement Date.
1.34 Pre-Retirement Survivor Annuity: A survivor annuity for the
life of the surviving Spouse of a Member, as defined in Code Section 417(c)(1).
1.35 Qualified Joint and Survivor Annuity: An annuity providing
equal monthly payments for the lifetime of the Member, based on the joint lives
of the Member and his Spouse, with a survivor annuity providing equal monthly
payments to the Member's Spouse equal to fifty percent (50%) of the amount of
the monthly payment payable to the Member during his lifetime.
1.36 Qualified Military Service: Any service in the uniformed
services (as defined in Chapter 43 of Title 38 of the United States Code or its
successor) by an Employee who is entitled to reemployment rights under such
chapter with respect to such service.
1.37 Quarter: As applicable, the three-month calendar quarter
commencing on January 1, April 1, July 1 or October 1 of each year.
1.38 Reemployment Date: The first date on which an Employee
performs an Hour of Service following a Severance from Service Date.
1.39 Required Beginning Date: The April 1st following the calendar
year in which the Member attains age 70 1/2.
1.40 Retirement Date: The applicable of a Member's Early Retirement
Date, Normal Retirement Date or Postponed Retirement Date, whichever is his
actual retirement date.
1.41 Service: An Employee's or a Member's period of employment with
an Employer or Affiliate, as determined in accordance with Article III.
1.42 Severance from Service Date: The date on which an Employee's
Service terminates, as determined in accordance with Article III.
EXHIBIT 10.51
1.43 Single Life Annuity: An annuity providing equal monthly
payments for the lifetime of the Member with no survivor benefits.
1.44 Spouse: The person legally married to a Member at the date of
the earlier of his death or the commencement date of his benefits under the Plan
and for at least one year immediately prior thereto. A Member's marital status
will be determined under the laws of the State (within the meaning of Section
3(10) of ERISA) in which he is domiciled, or if he is domiciled outside the
United States, under the laws of the State of Texas.
1.45 Transferred Member: A Member during any period of time in
which he is or was employed by an Affiliate or is employed by an Employer in an
employment classification not covered by this Plan.
1.46 Trust: The trust(s) established under the Trust Agreement(s)
to hold and invest contributions made under the Plan and income thereon, and
from which the Plan benefits are distributed.
1.47 Trustee: The Northern Trust Company or any successor Trustee
or Trustees under the Trust Agreement.
1.48 Trust Agreement: The Trust Agreement between the Company and
the Trustee described in Article XVI hereof, established for the purpose of
funding benefits under the Plan, as amended from time to time.
1.49 Trust Fund: The assets held by the Trustee under the Trust
Agreement for the benefit of the Members of this Plan, together with all income,
profits and increments thereon.
1.50 Vesting Service: The period of a Member's Service considered
in determining his eligibility for benefits under the Plan, in accordance with
Article V.
Words used in this Plan and in the Trust Agreement in the
singular shall include the plural and in the plural the singular, and the gender
of words used shall be construed to include whichever gender may be appropriate
under any particular circumstances.
ARTICLE II
PARTICIPATION Participation by Eligible Employees. Each Employee who, as of
January 1, 2002, is an (a) Eligible Employee and (b) age 21 or older shall
become a Member of the Plan as of the Effective Date. Each Employee who is an
Eligible Employee, but does not become a Member pursuant to the foregoing
sentence, shall become a Member of the Plan on the later of the date on which
such Employee (a) became an Eligible Employee or (b) attains age 21.
2.2 Cessation of Active Participation. Notwithstanding
the provisions of Section 2.1, a Member who ceases to be an Eligible Employee
but remains an Employee shall continue to be a Member but, on and after the date
he ceases to be an Eligible Employee, he shall no longer be entitled to receive
Contribution Credits unless and until he shall again become an Eligible
Employee.
ARTICLE III
SERVICE
3.1 Service Defined: For purposes of the Plan, the term "Service"
shall mean all years, months and days of active employment as an Employee,
Member or a Transferred Member commencing on the later of January 1, 2002 or an
Employee's Employment Date or Reemployment Date, if applicable, and ending on a
Severance of Service Date. Notwithstanding the foregoing, a period during which
an individual is absent from Service (a) by reason of pregnancy of the Employee
or Member; (b) by reason of the birth of a child of the Employee or Member; (c)
by reason of a placement of a child with the Employee or Member in connection
with the adoption of such child by the Employee or Member; or (d) for purposes
of caring for such child for a period beginning immediately following such birth
or placement shall not constitute a period of Service between the first and
second anniversary of the first date of such absence. An Employee's or Member's
Service shall also include any period required to be included as Service by
federal law other than ERISA or the Code, but only under the
EXHIBIT 10.51
conditions and to the extent so required by such federal law. In addition, the
Committee, in its discretion, may credit an individual with Service based on
employment with an entity other than the Employer, but only if and when such
individual becomes eligible to participate in the Plan under Article II and only
if such crediting of Service (i) has a legitimate business reason, (ii) does not
by design or operation discriminate significantly in favor of "highly
compensated employees" (as defined in Code Section 414(q)), and (iii) is applied
to all similarly situated Employees eligible to participate in the Plan under
Article II. Furthermore, in the event that the Plan constitutes a plan of a
predecessor employer within the meaning of Section 414(a) of the Code, service
for such predecessor employer shall be treated as Service to the extent required
by Section 414(a) of the Code. All periods of Service shall be aggregated so
that a one-year period of Service shall be completed as of the date an Employee
or Member completes 365 days of Service.
3.2 Leave for Qualified Military Service: Notwithstanding any
provision of this Plan to the contrary, contributions, benefits and service
credit with respect to Qualified Military Service will be provided in accordance
with Section 414(u) of the Code.
ARTICLE IV
BREAK IN SERVICE
4.1 Break In Service: A one-year Break In Service shall occur upon
the expiration of the 12 consecutive month period next following an Employee's
or Member's Severance from Service Date, unless such Employee or Member is
sooner reemployed by an Employer or an Affiliate.
4.2 Effect of Reemployment Prior to Break In Service(a) In the
event an Employee or Member terminates his Service (at a time other
than an authorized leave of absence) and subsequently resumes his
Service, if his Reemployment Date is within 12 months of his Severance
from Service Date, such Period of Severance shall be treated as a
period of Service for purposes of Vesting Service.
(b) In the event an Employee or Member terminates his
Service during an authorized leave of absence and subsequently resumes
his Service, if his Reemployment Date is within 12 months of the
beginning of such leave of absence, such Period of Severance shall be
treated as a period of Service for purposes of Vesting Service.
ARTICLE V
VESTING SERVICE
5.1 Vesting. A Member shall vest (and thus have a nonforfeitable
interest) in his Accrued Benefit based on his years of Vesting Service in
accordance with the following schedule:
Years of Vesting Service Vested Interest
- ------------------------ ---------------
Less than 5 years 0%
5 years or more 100%
The foregoing to the contrary notwithstanding, a Member shall be fully and 100%
vested in his Accrued Benefit if (a) his Severance from Service Date is on or
after his Early Retirement Date or the date he attains age 65 or (b) his
Services terminates due to his death.
5.2 Vesting Service A Member's eligibility for certain benefits
under the Plan shall be conditioned on his period of Vesting Service.
Subject to the Break In Service provisions of Article IV hereof and the
remaining subsections of this Section, a Member's Vesting Service shall
be earned for each day of Service, whether or not the periods of
Service are completed consecutively.
EXHIBIT 10.51
(b) Subsection (a) above notwithstanding, with respect to
an Employee who, as of January 1, 2002, is (i) a Member and (ii) age 55
or older, such Member's Vesting Service for purpose of the Plan shall
include all of his periods of employment with an Employer or Affiliate
prior to January 1, 2002 which would constitute Service determined
under the terms of the Plan if applied to such periods of employment.
(c) In the case of an individual who terminates
employment at a time when he has a 0% vested interest in his Accrued
Benefits and who then incurs a Period of Severance that equals or
exceeds five years, such individual's period of Service completed
before such Period of Severance shall be forfeited and completely
disregarded in determining his years of Vesting Service.
ARTICLE VI
NON-COVERED EMPLOYMENT
Certain Intra-Company Transfers: In the event that a Member is
transferred from an employment classification with an Employer that is covered
by this Plan (a) to an employment classification with the same Employer or with
another Employer that is not covered by this Plan or (b) to employment with an
Affiliate that is not an Employer, such Member shall retain all the benefits
accrued to him under this Plan prior to the date of transfer and shall retain
such benefits until his subsequent retirement or other termination of employment
with an Employer or any Affiliate. Such Member shall also continue to accrue
Vesting Service for all periods of employment with an Employer or an Affiliate
while he is not covered by this Plan.
In the event that an employee is transferred (i) from an
employment classification with an Employer that is not covered by this Plan to
an employment classification with the same Employer or another Employer that is
covered by this Plan or (ii) from employment with an Affiliate to an employment
classification with an Employer that is covered by this Plan, such employee
shall retain his credited service and all benefits accrued to him under a
retirement plan, if any, covering his employment prior to the date of the
transfer; provided, however, that for purposes of this Plan such employment
prior to the date of transfer shall be considered only for the purposes of
determining (a) his eligibility to participate (if applicable) in this Plan and
(b) his vested interest under this Plan. After the date of such transfer, such
employee shall accrue the benefits specified under this Plan provided he is
otherwise eligible therefor. It is intended by this Article VI to credit an
Employee or Member with Service for eligibility purposes, if applicable, and
with Vesting Service for vesting purposes during all periods of employment while
in a Transferred Member status and all such Service and such Vesting Service
shall be determined as though such employment while in a Transferred Member
status were employment by an Employer covered by this Plan.
ARTICLE VII
CASH BALANCE ACCOUNT
7.1 Initial Cash Balance Account. A Cash Balance Account shall be
established on behalf of each Member upon such individual initially becoming a
Member. The initial balance in such Member's Cash Balance Account shall be zero.
Once established, a Member's Cash Balance Account shall receive Contribution
Credits and Interest Credits in accordance with Sections 7.2, 7.3 and 7.4.
7.2 Contribution Credits Each Member who is an Eligible Employee
shall receive a Contribution Credit to his Cash Balance Account as of
the last day of each Quarter equal to the product of (i) the Member's
Contribution Credit Rate and (ii) his Compensation for such Quarter.
For purposes of this Section, a Member's Contribution Credit Rate shall
be determined pursuant to the following schedule:
Age of Member
As of Last Day of Quarter Contribution Credit Rate
- ------------------------- ------------------------
Under 35 2.0%
EXHIBIT 10.51
35 through 39 2.5%
40 through 44 3.0%
45 through 49 3.5%
50 and Older 4.0%
(b) If a Member's Severance from Service Date occurs
during the Quarter, the Contribution Credit made to such Member's Cash
Balance Account for such Quarter that shall be equal to the product of
(i) the Member's Contribution Credit Rate for such Quarter and (ii) his
Compensation for the period beginning on the first day of such Quarter
and ending on the last day of his employment. Such Contribution Credit
shall be credited to the Member's Cash Balance Account as of the last
day of the payroll period during which occurs his Severance from
Service Date.
7.3 Interest Credit Each Member's Cash Balance Account shall be
credited as of the last day of each Quarter beginning on or after
January 1, 2002, with an Interest Credit equal to (i) the Quantity (as
defined herein) multiplied by (ii) the balance in the Member's Cash
Balance Account as of the last day of the Quarter, prior to the
allocation of the Contribution Credit for such Member for such
corresponding period. For purposes of this subsection (a), "Quantity"
shall be equal to one plus the Interest Rate, as of the credit date,
raised to the one-fourth power, minus one.
(b) If a Member commences receipt of his Accrued Benefit
during the Quarter, a prorated Interest Credit (as described in
subsection (a) above) shall be made to such Member's Cash Balance
Account as of the end of the month preceding such Member's Annuity
Starting Date based on the number of whole months in the period from
the beginning of the Quarter to the day preceding such Member's Annuity
Starting Date.
(c) A Member's Cash Balance Account shall be credited
with Interest Credits in accordance with subsection (a), regardless of
whether he is receiving Contribution Credits, for so long as he does
not take a distribution of, or commence payment of, his Accred Benefit.
No Interest Credits shall be made after a Member has been paid, or
commenced payment of, his Accrued Benefit in accordance with Article
XI.
7.4 Cash Balance Account Upon Reemployment(a) If a Member
terminates employment with all Employers and Affiliates, does not take
a distribution of his Accrued Benefit and is subsequently reemployed as
an Eligible Employee, such Member (i) shall receive Interest Credits in
his Cash Balance Account during his absence and (ii) upon his
Reemployment Date, shall be eligible to receive prospective
Contribution Credits and Interest Credits in his existing Cash Balance
Account from and after his Reemployment Date in accordance with this
Article VII. If such Member is not an Eligible Employee upon his
Reemployment Date, then such Member (i) shall receive Interest Credits
in his Cash Balance Account during his absence and (ii) Interest
Credits in his existing Cash Balance Account from and after his
Reemployment Date (but no future Contribution Credits unless and until
he is again an Eligible Employee).
(b) If a Member terminates employment with all Employers
and Affiliates, takes his Accrued Benefit in a single, lump-sum
distribution, and is subsequently reemployed as an Eligible Employee,
except as provided in subsection (c) below, such Member shall not have
his Cash Balance Account restored upon his Reemployment Date. A new
Cash Balance Account shall be established for the Member with a zero
balance as of his Reemployment Date and Contribution Credits and
Interest Credits shall be made prospectively to such account in
accordance with this Article VII.
(c) If a Member terminates employment with all Employers
and Affiliates, receives a deemed distribution pursuant to Section
11.5(b), and is subsequently reemployed by an Employer or an Affiliate,
if such Member's Period of Severance prior to his Reemployment Date is
less than five years, then such Member's Cash Balance Account shall
restored upon his Reemployment Date in the amount deemed distributed.
If such Member is reemployed as an
EXHIBIT 10.51
Eligible Employee, he shall be eligible to receive prospective
Contribution Credits and Interest Credits in his restored Cash Balance
Account from and after his Reemployment Date, in accordance with this
Article VII. If such Member is not an Eligible Employee upon his
Reemployment Date, then he shall be eligible to receive prospective
Interest Credits in his restored Cash Balance Account from and after
his Reemployment Date (but no future Contribution Credits unless and
until he is again an Eligible Employee).
(d) If a Member terminates employment with all Employers
and Affiliates, commences taking his Accrued Benefit in an annuity form
of payments, and is subsequently reemployed as an Eligible Employee,
such Member's annuity payments shall not be suspended and his prior
Cash Balance Account shall be disregarded as of his Reemployment Date.
A new Cash Balance Account shall be established for the Member with a
zero balance as of his Reemployment Date and Contribution Credits and
Interest Credits shall be made prospectively to such account in
accordance with this Article VII.
ARTICLE VIII
REQUIREMENTS FOR RETIREMENT BENEFITS
8.1 Retirement Benefit: A Member who terminates his employment
after satisfying the vesting requirements in Section 5.1 shall be eligible to
receive his Accrued Benefit (as described in Article VII) on or after his Early
Retirement Date or Normal Retirement Date commencing on his Annuity Starting
Date payable in accordance with the provisions of Article XI.
8.2 Retirement Benefits Following an Authorized Leave of Absence:
A Member who has been on an authorized leave of absence shall be eligible to
receive his Accrued Benefit, after satisfying the vesting requirements in
Section 5.1 on or after his Early Retirement Date or Normal Retirement Date,
following the Member's Severance from Service Date, as determined pursuant to
Article III.
ARTICLE IX
DEATH BENEFITS
9.1 Death Benefit of a Member Who Dies During Service: The
Beneficiary of each Member who dies during Service shall be entitled to a Death
Benefit equal to the Actuarial Equivalent of the Member's Cash Balance Account
payable as follows:
(a) If the Member's Beneficiary is his Spouse, the Death
Benefit shall be payable to such Spouse in the form of an immediate
Single Life Annuity, in accordance with Section 9.3, that is the
Actuarial Equivalent of the balance of the Member's Cash Balance
Account as of the end of the month immediately preceding the
commencement of such benefits, and commencing upon the Spouse's
election to commence receipt of benefits under this Section. The Spouse
may instead elect to receive the entire benefit in a single, lump-sum
payment equal to the balance of the Member's Cash Balance Account as of
the end of the month immediately preceding the commencement of such
benefit. A Spouse's election to receive the entire benefit in a
lump-sum payment must be made prior to the commencement of payment in
annuity form and must be made in accordance with the requirements for
election of an optional form of benefit applicable to an unmarried
Member as set forth in Section 11.3.
If the Member's Beneficiary is his Spouse and payment
of the Death Benefit is deferred, the Member's Cash Balance Account
shall continue to be credited with Interest Credits until the last day
of the Quarter immediately preceding the date as of which payment of
the Death Benefit is made or commences, plus a prorated Interest Credit
based on the number of whole months in the period from the beginning of
the Quarter in which the payment of the Death Benefit
EXHIBIT 10.51
is made or commences through the last day of the month immediately
preceding the date on which payment is made or commences.
(b) If the Member's Beneficiary is not his Spouse, then
the Death Benefit shall be payable in a single, lump sum equal to the
balance of the Member's Cash Balance Account as of the end of the month
immediately preceding the commencement of such benefit as soon as
reasonably practicable, but in no event later than five years, after
the Member's date of death.
(c) Notwithstanding any provision herein to the contrary,
if the Actuarial Equivalent present value of a Death Benefit payable on
behalf of a Member does not exceed $5,000, then such Death Benefit
shall be paid to the Spouse or other Beneficiary, as applicable, in a
single, lump sum distribution equal to the balance of the Member's Cash
Balance Account as of the end of the month immediately preceding the
commencement of such benefit as soon as administratively practicable
after the Member's date of death.
9.2 Death Benefit of a Member Who Dies After His Severance of
Service Date: The Beneficiary of a Member who (a) after he terminated Service,
and (b) had not yet commenced payment of his Accrued Benefit shall be entitled
to a Death Benefit equal to the balance in the Member's Cash Balance Account as
of the end of the month immediately preceding the Member's death. Subject to
Section 9.3, a Death Benefit under this Section shall normally be payable to a
Beneficiary in a single, lump sum distribution as soon as practicable after the
Member's death; provided, however, that if the Beneficiary is the Member's
Spouse, then the foregoing Death Benefit shall be paid in the form of a
Pre-Retirement Survivor Annuity payable as of the date of the Member's death,
unless the Spouse elects, as provided in Section 11.2, to received such benefit
as a single, lump sum distribution. Such benefit shall commence as soon as
practicable after the death of the Member.
9.3 Pre-Retirement Survivor Annuity: Notwithstanding anything
herein to the contrary, the benefit payable to a Beneficiary who is a Spouse
under this Article IX must be paid in the form of a Single Life Annuity over the
Spouse's lifetime that is a Pre-Retirement Survivor Annuity, unless the Spouse
elected otherwise in accordance with Sections 9.1 to receive the benefit in the
form of a single, lump sum distribution. The Member must inform the Plan as to
any change in his marital status and until so informed the Plan shall be
entitled to rely on the Member's assertion of marital status as originally
established.
9.4 Effect on Optional Form Election: Any Member who dies prior to
his Annuity Starting Date shall be entitled only to a Death Benefit pursuant to
this Article IX, regardless of whether such Member elected an optional form of
benefit pursuant to the provisions of Section 11.2.
9.5 No Death Benefits After Commencement of Benefits: No Death
Benefit shall be payable under this Article IX with respect to a Member who has
commenced payment of his Accrued Benefit.
ARTICLE X
BENEFICIARIES
10.1 Designation of Beneficiary: Unless otherwise provided below,
each Member may designate a contingent annuitant or joint pensioner
("Beneficiary") to receive the remaining guaranteed payments or survivor pension
under an optional Pension elected pursuant to Section 11.4 or to receive any
Death Benefit payable under Article IX. Such designation must be in writing and
filed with the Committee, in the form and manner prescribed by the Committee.
The Member may change or cancel any such optional pension election at the times
and subject to uniform rules established by the Committee.
The Beneficiary shall be the Beneficiary or Beneficiaries
designated by the Member in a written designation filed with the Committee, or
if not so designated, the Beneficiary designated under this Section shall be the
Member's Spouse, if any. If no such designation shall have been so filed, or if
no designated Beneficiary survives the Member or if a designated Beneficiary
cannot be located by the Committee, using reasonable diligence, within six
months of the death of the Member, then such remaining Pension or Death Benefit,
as applicable, shall be payable to the duly appointed and serving personal
representative of the Member's estate, but only if that personal
EXHIBIT 10.51
representative can provide the Committee with what the Committee reasonably
determines is satisfactory documentary proof of that appointment and of the
personal representative's identity (collectively, "Documentary Proof"); if,
within six months of the Member's death, there is no duly appointed and serving
personal representative of the Member's estate who has provided the Committee
with Documentary Proof, then such remaining Pension or Death Benefit, as
applicable, shall be payable to the Member's heirs at law, determined in
accordance with the laws of intestate succession of the state in which the
Member was domiciled at the time of the Member's death, provided that such heirs
provide the Committee with what the Committee reasonably determines is
satisfactory Documentary Proof of information the Committee believes it needs to
make distributions to such heirs, including, but not limited to, the numbers,
names, addresses, social security numbers, and birth dates of such heirs. No
designation of any Beneficiary shall be effective unless in writing and received
by the Member's Employer and in no event shall it be effective as of the date
prior to such receipt. If married, a Member's Spouse will automatically be
designated as his Beneficiary. The former Spouse of a Member shall be treated as
a surviving Spouse to the extent provided under a qualified domestic relations
order as described in Section 414(p) of the Code.
Each Member shall have the right at any time to designate and
to rescind or change any designation of a contingent Beneficiary or
Beneficiaries to receive benefits in the event of his death and the death
(predeceasing the death of the Member) of the primary Beneficiary. Any such
designation, change or rescission of designation, shall be made in such form and
manner as prescribed by the Committee, including, but not limited to, in writing
or by electronic means. A contingent Beneficiary or Beneficiaries shall be
entitled to receive any unpaid Death Benefit (whether payable in a lump sum or
in installments for a guaranteed period) only if no primary Beneficiary is alive
or legally entitled to receive it on the date of payment of the benefit or any
installment thereof. The estate, assignee or appointee of either a primary or a
contingent Beneficiary shall have no interest in or right to receive any Death
Benefit payment not actually made before such Beneficiary's death.
The provisions of this Article X shall have no application to
the designation of or change in designation of a joint pensioner by a Member
electing a joint and survivor option, which shall be governed solely by the
provisions of Article XI hereof. If the Committee shall be in doubt as to the
right of any Beneficiary designated by a deceased Member to receive any unpaid
death benefit, the Committee may direct the Trustee to pay the amount in
question to the estate of such Member, in which event the Trustee, the Employer,
the Committee and any other person in any manner connected with the Plan shall
have no further liability in respect to the amount so paid.
10.2 Spouse as Beneficiary: Notwithstanding anything herein to the
contrary, if a Member who is eligible for a Death Benefit under Article IX has a
Spouse at the time of his death, then such Member's Beneficiary shall be his
Spouse and no designation, with or without Spousal consent, of any other
Beneficiary shall be valid.
ARTICLE XI
PAYMENT OF PENSION
11.1 Payment of Accrued Benefit: Anything to the contrary
notwithstanding, a Member's Accrued Benefit under this Plan shall be payable
pursuant to the following requirements:
(a) Commencement of Accrued Benefit: A Member who
terminates his employment with all Employers and Affiliates and who has
a vested right to an Accrued Benefit under the Plan may elect to
commence payment of his Accrued Benefit as of his Early Retirement Date
or his Normal Retirement Date. The distribution of his Accrued Benefit
shall begin no later than the 60th day after the latest of the close of
the year in which (i) the Member attains age 65 or (ii) the Member
terminates Service. Notwithstanding any provision in the Plan to the
contrary, if a Member's Accrued Benefit has not commenced by the end of
the Plan Year during which occurs his Normal Retirement Date, such
Member's Accrued Benefit shall not be actuarially increased to reflect
the delay in commencement in his Accrued Benefit after his Normal
Retirement Date, in accordance with Section 203(a)(3) of ERISA and Code
Section 411(b)(1)(H), and the applicable regulations.
EXHIBIT 10.51
(b) Deferred Commencement of Accrued Benefit: Each
Member's Accrued Benefit shall be distributed to him not later than the
Member's Required Beginning Date. The distribution of a Member's
Accrued Benefit pursuant to this subsection (b) shall be made in
accordance with the requirements of Code Section 401(a)(9), including
the incidental death benefit requirements of Code Section 401(a)(9)(G),
and the Treasury Regulations thereunder (including Proposed Regulation
Section 1.401(a)(9)-2), with such Member's Accrued Benefit reduced by
the Actuarial Equivalent value of the payments received by him.
11.2 Normal Form of Payment: The normal forms of payment of a
Member's Accrued Benefit are as follows:
(a) Single Life Annuity: For an unmarried Member, his
vested Accrued Benefit shall be payable monthly on the first day of
each calendar month in the form of a Single Life Annuity that is the
Actuarial Equivalent of his Accrued Benefit commencing with the
Member's Annuity Starting Date and closing with the payment due on the
first day of the month of the Member's death, unless he is eligible for
and duly elects an optional form of payment, as provided in Section
11.4 below.
(b) Qualified Joint and Survivor Annuity. For a Member
who has a Spouse as of his Annuity Starting Date, his vested Accrued
Benefit shall be payable in the form of a Qualified Joint and Survivor
Annuity that is the Actuarial Equivalent of his Single Life Annuity
otherwise payable to such Member as of his Annuity Starting Date. The
Qualified Joint and Survivor Annuity shall be payable unless the Member
shall have theretofore elected in writing, with the written consent of
his Spouse, not to receive such Qualified Joint and Survivor Annuity
after having received a written explanation of the terms and conditions
of the Qualified Joint and Survivor Annuity and the effect of an
election not to receive such Qualified Joint and Survivor Annuity, but
to receive his Accrued Benefit in the form of Single Life Annuity or
other optional form of payment as provided in Section 11.4 hereunder.
(c) No amount attributable to the Qualified Joint and
Survivor Annuity shall be payable, however, if a Member entitled to his
Accrued Benefit shall die after he has made his election to commence
his benefit under the Plan but before his Annuity Starting Date.
11.3 Election to Waive Qualified Joint and Survivor Annuity. A
written explanation of the terms and conditions of the Qualified Joint and
Survivor Annuity and the effect of refusing it will be furnished to a Member no
less than 30 days and no more than 90 days prior to the date when he would first
become eligible to commence receiving an Accrued Benefit hereunder. The Member
may request additional information regarding the Qualified Joint and Survivor
Annuity within 60 days of the furnishing of such explanation to him. A written
reply will be made within 30 days of his request. During an election period
beginning 90 days prior to the Annuity Starting Date, the Member may, with the
written consent of his Spouse, elect in writing to the Committee not to receive
the Qualified Joint and Survivor Annuity, in which case the normal form of
payment described in Section 11.2(a) shall be applicable unless the Member
elects payment in one of the optional forms under Section 11.4. Throughout the
election period, the Member may file written revocations or written elections
with the Committee. The written explanation described above may be provided
after an Annuity Starting Date. The 90-day applicable election period to waive
the Qualified Joint and Survivor Annuity shall not end before the 30th day after
the date on which such explanation is provided. A Member may elect (with any
applicable Spousal consent) to waive any requirement that the written
explanation be provided at least 30 days before his Annuity Starting Date (or
waive the 30-day requirement as provided above) if the distribution commences
more than seven (7) days after such explanation is provided.
(a) A married Member who elects not to receive the
Qualified Joint and Survivor Annuity must obtain the consent of his
Spouse to elect payment in one of the optional forms of payment
provided in Section 11.4. A Spouse's consent shall not be effective
unless: (i) the Member's Spouse consents in writing to the election;
(ii) the election designates a specific alternate Beneficiary
(including any class of Beneficiaries or any contingent Beneficiaries)
and a form of benefit which may not be changed without spousal consent
(or the Spouse expressly
EXHIBIT 10.51
permits designations by the Member without any further spousal
consent); (iii) the Spouse's consent acknowledges the effect of the
election; and (iv) the Spouse's consent is witnessed by a Plan
representative or notary public. If it is established to the
satisfaction of a Plan representative that such written consent may not
be obtained because there is no Spouse or the Spouse cannot be located,
a waiver will be deemed a qualified election. Any consent by a Spouse
under this Section (or establishment that the consent of the Spouse
cannot be obtained) shall be effective only with respect to such
Spouse. A consent that permits designations by the Member without any
requirement of further consent by the Spouse must acknowledge that the
Spouse has the right to limit consent to a specific beneficiary, and a
specific form of benefit where applicable, and that the Spouse
voluntarily elects to relinquish either or both of such rights. A
revocation of a prior waiver may be made by a Member without the
consent of the Spouse at any time prior to the commencement of
benefits. The number of revocations shall not be limited. For purposes
of this Section, the Spouse or surviving Spouse of the Member shall be
deemed the recipient under the Qualified Joint and Survivor Option,
provided that a former Spouse will be treated as the Spouse or
surviving Spouse to the extent provided under a qualified domestic
relations order as described in Section 414(p) of the Code.
11.4 Optional Form of Payment(a) In lieu of his normal form of
payment pursuant to Section 11.2, a Member who has terminated his
Service may, in accordance with the requirements of Section 11.3, elect
to have his vested Accrued Benefit paid in one of the following
optional forms of payment, each of which shall be the Actuarial
Equivalent of the normal form of payment otherwise payable to such
Member:
(i) Option 1: A single, lump-sum payment equal
to the Actuarial Equivalent of the Member's Accrued Benefit
payable at the time of the Member's Annuity Starting Date.
(ii) Option 2: A Single Life Annuity as described
in Section 11.2(a) (in the case of a married Member only with
the consent of his Spouse).
(b) Upon the commencement of benefits to a Member who has
made a valid election of an optional benefit hereunder, the form of
optional benefit and any Beneficiary designation shall become
irrevocable except to the extent otherwise required pursuant to Section
11.2(b).
(c) Any optional forms of benefit, which are "Section
411(d)(6) protected benefits," as described in Treasury Regulation
Section 1.411(d)-4, shall continue to be optional forms of benefits
for Members to whom the optional forms apply notwithstanding any
subsequent amendment of the Plan purporting to revise or delete such
optional form of benefit and notwithstanding any contrary provision of
subsection (a) of this Section 11.4.
11.5 Payment of Small Benefits(a) Notwithstanding any provision
herein, if at the time of the Member's Severance from Service Date the
Actuarial Equivalent present value of a Member's Accrued Benefit does
not exceed $5,000, then such benefit shall be paid to the Member in a
single, lump sum distribution as soon as administratively practicable
after the Member's termination of Service. If the Actuarial Equivalent
present value of an Alternate Payee's amounts assigned pursuant to a
qualified domestic relations order, as defined in Code Section 414(q)
("QDRO"), does not exceed $5,000, then such benefit shall be paid as
soon as administratively practicable without the Member's or the
Alternate Payee's consent. Any Member or Alternate Payee entitled to a
distribution in accordance with this subsection shall be entitled to
elect to have such benefit paid as a direct transfer in accordance with
Code Section 401(a)(31) and pursuant to the procedures then established
by the Committee.
EXHIBIT 10.51
(b) For purposes of this Section 11.5, if at the time of
the Member's Severance from Service Date, his vested interest in his
Accrued Benefit is 0%, then such Member shall be deemed to have
received a total distribution of all of his vested Accrued Benefit.
11.6 Direct Rollovers: Notwithstanding any provision of the Plan to
the contrary that would otherwise limit a Distributee's election under this
Section, a Distributee may elect, at the time and in the manner prescribed by
the Committee, to have any portion of an Eligible Rollover Distribution paid
directly to an Eligible Retirement Plan specified by the Distributee in a Direct
Rollover. For the purposes of this Section the following definitions shall
apply:
(a) "Eligible Rollover Distribution" shall mean any
distribution of all or any portion of the balance to the credit of the
Distributee, except that an Eligible Rollover Distribution does not
include: any distribution that is one of a series of substantially
equal periodic payments (not less frequently than annually) made for
the life (or life expectancy) of the Distributee or the joint lives (or
joint life expectancies) of the Distributee and the Distributee's
designated beneficiary, or for a specific period of 10 years or more;
any distribution to the extent such distribution is required under
Section 401(a)(9) of the Code; any hardship withdrawal described in
Section 401(k)(2)(B)(i)(IV) of the Code; and the portion of any
distribution that is not includable in gross income (determined without
regard to the exclusion for net unrealized appreciation with respect to
employer securities).
(b) "Eligible Retirement Plan" shall mean an individual
retirement account described in Section 408(a) of the Code, an
individual retirement annuity described in Section 408(b) of the Code,
an annuity plan described in Section 403(a) of the Code, an eligible
deferred compensation plan described in Section 457(b) of the Code
which is maintained by an eligible employer described in Section
457(e)(1)(A) of the Code, an annuity contract described in Section
403(b) of the Code, or a qualified trust described in Section 401(a) of
the Code, that accepts the Distributee's Eligible Rollover
Distribution.
(c) "Distributee" shall mean a Member or former Member of
the Plan. In addition, the Member's or former Member's surviving spouse
and the Member's or former Member's spouse or former spouse who is the
alternate payee under a qualified domestic relations order, as defined
in Section 414(p) of the Code, are Distributees with regard to the
interest of the spouse or former spouse.
(d) "Direct Rollover" shall mean a payment by the Plan to
the Eligible Retirement Plan specified by the Distributee.
ARTICLE XII
CLAIM PROCEDURES
12.1 Presenting Claims for Benefits: Any Member or any other person
claiming under a deceased Member, such as the Spouse or Beneficiary, or an
authorized representative (designated in the manner required by the Committee)
of such Member, Spouse or Beneficiary (collectively, the "Claimant"), may submit
written claim to the Committee for the payment of any benefit asserted to be due
him under the Plan, which shall set forth the nature of the claim and such other
information as the Committee may reasonably request. Upon the receipt of any
claim for benefits required by this Section, the Committee shall determine
whether or not the Claimant is entitled to a benefit hereunder and, if so, the
amount thereof, and shall notify the Claimant of its findings, in accordance
with the Department of Labor regulations 29 C.F.R. Section 2560.503-1.
The Committee shall notify the Claimant of its benefits
determination within a reasonable time, not to exceed 90 days, after receipt of
the claim, unless the Committee determines that special circumstances require an
extension of time, not to exceed 90 days from the end of the initial 90-day
period, for processing the claim. If such an extension of time is required,
written notice of the extension shall be furnished to the Claimant prior to the
end of the initial 90-day period indicating the special circumstances requiring
an extension of time and the date by
EXHIBIT 10.51
which the Committee expects to render its final decision. The initial 90-day
period shall commence at the time the claim is filed with the Committee,
regardless of whether or not all information necessary for the Committee to make
its determination accompanies the filing. If an extension of the 90-day period
is required due to the Claimant's failure to submit such necessary information,
such period shall be tolled from the date on which the extension notice is sent
to the Claimant until the date the Claimant provides such additional
information.
The Committee shall provide the Claimant with written or
electronic notice of its decision to deny a claim, in whole or in part, and such
notice shall set forth, in a manner calculated to be understood by the Claimant:
(a) the specific reason or reasons for the denial;
(b) specific reference to the pertinent Plan provisions
on which the denial is based;
(c) 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
(d) a description of the claims review procedure set
forth in Section 12.2 hereof and the applicable time limits, including
the Claimant's right to bring a civil action under Section 502(a) of
ERISA following a denial on review.
If written or electronic notice of a denial is not furnished, and if the claim
is not granted, within the period of time set forth above, the claim shall be
deemed denied for purposes of proceeding to the review procedures described in
Section 12.2.
12.2 Claims Review Procedure: If the Committee denies the benefits
claim filed by a Claimant under Section 12.1, either in whole or in part, such
Claimant shall have the right, to be exercised by written application filed with
the Committee within 60 days after receipt of notice of the denial of his claim
or, if no such notice has been given, within 60 days after the claim is deemed
denied under Section 12.1, to request a review of his claim and entitlement to
the benefit applied for and the denial of such benefits. The Claimant may submit
written comments, documents, records and other information relating to his claim
for benefits. Upon request, and free of charge, the Claimant shall be provided
reasonable access to, and copies of, all documents, records and other
information relevant to his claim for benefits. The Committee shall reconsider
the claim in light of all such comments, documents and other information
submitted by the Claimant, without regard to whether such information had been
submitted or considered in the initial review process under Section 12.1. If
deemed necessary by the Committee, in its sole discretion, the Committee may
hold a formal hearing on the benefits claim.
The Committee shall conduct a full and fair review of the
claim and provide the Claimant with written or electronic notice of its final
determination within a reasonable time, not to exceed 60 days, after receipt of
the Claimant's application for review, unless the Committee determines that
special circumstances require an extension of time, not to exceed 60 days from
the end of the initial 60-day period, to review the claim (such as the need to
hold a formal hearing). If such an extension of time is required, written notice
of the extension shall be furnished to the Claimant prior to the end of the
initial 60-day period indicating the special circumstances requiring such an
extension and the date by which the Committee expects to render its decision.
The initial 60-day period shall commence at the time the application for review
is filed with the Committee, regardless of whether or not all information
necessary for the Committee to make its determination accompanies the filing. If
an extension of the 60-day period is required due to the Claimant's failure to
submit such necessary information, such period shall be tolled from the date on
which the extension notice is sent to the Claimant until the date the Claimant
provides such additional information.
If the Committee denies the claim on review, either in whole
or in part, the notice of final determination shall set forth, in a manner
calculated to be understood by the Claimant, the specific reasons for the denial
and specific references to the pertinent provisions of the Plan upon which the
denial is based, the Claimant's right to receive upon request, free of charge,
reasonable access to, and copies of, all relevant documents, records and other
information to his claim and the Claimant's right to bring a civil action under
Section 502(a) of ERISA. If the
EXHIBIT 10.51
decision on review is not furnished within the time period set forth above, the
claim shall be deemed denied on review. Benefits under this Plan will only be
paid if the Committee decides in its discretion that the Claimant is entitled to
them.
12.3 Disputed Benefits: If any dispute shall arise between a
Claimant and the Committee after the review of a claim for benefits, or in the
event any dispute shall develop as to the person to whom the payment of any
benefit under the Plan shall be made, the Trustee may withhold the payment of
all or any part of the benefits payable hereunder to the Claimant until such
dispute has been resolved by a court of competent jurisdiction or settled by the
parties involved.
ARTICLE XIII
PLAN ADMINISTRATION
13.1 Appointment of Committee: The Directors shall appoint an
Administrative Committee (the "Committee") of not less than three persons, each
of whom may or may not be a Member of the Plan and each of whom shall serve at
the pleasure of the Directors. Any person so appointed shall signify his
acceptance by filing written acceptance with the Directors and with the
Secretary of the Committee. Each member of the Committee shall serve for such
term as the Directors may designate or until his death, resignation or removal
by the Directors. The Directors shall promptly appoint successors to fill any
vacancies in the Committee.
13.2 Records of the Committee: The Committee shall keep appropriate
records of its proceedings and the administration of the Plan. The Committee
shall make available to Members and their Beneficiaries for examination, during
business hours, such records of the Plan as pertain to the examining person and
such documents relating to the Plan as are required by ERISA.
13.3 Committee Action: The Committee may act through the
concurrence of a majority of its members expressed either at a meeting of the
Committee, or in writing without a meeting. Any member of the Committee, or the
Secretary or Assistant Secretary of the Committee (who need not be members of
the Committee), may execute on behalf of the Committee any certificate or other
written instrument evidencing or carrying out any action approved by the
Committee. The Committee may delegate any of its rights, powers and duties to
any one or more of its members or to an agent. The Chairman of the Committee
shall be agent of the Plan and the Committee for the service of legal process at
the principal office of the Company in Houston, Texas.
13.4 Committee Disqualification: A member of the Committee who may
be a Member of the Plan shall not vote on any question relating specifically to
himself.
13.5 Committee Compensation, Expenses and Adviser: The members of
the Committee shall serve without bond, unless otherwise required by law, and
without compensation for their services as such. The Committee may select, and
authorize the Trustee to compensate suitably, such attorneys, agents, actuaries
and representatives as it may deem necessary or advisable to the performance of
its duties. All expenses of the Committee that shall arise in connection with
the administration of the Plan shall be paid by the Company or by the Trustee
out of the Trust Fund.
13.6 Committee Liability: Except to the extent that such liability
is created by ERISA, no member of the Committee shall be liable for any act or
omission of any other member of the Committee, nor for any act or omission on
his own part except for his own gross negligence or willful misconduct, nor for
the exercise of any power or discretion in the performance of any duty assumed
by him hereunder. The Company shall indemnify and hold harmless each member of
the Committee from any and all claims, losses, damages, expenses (including
counsel fees approved by the Committee), and liabilities (including any amounts
paid in settlement with the Committee's approval but excluding any excise tax
assessed against any member or members of the Committee pursuant to the
provisions of Code Section 4975) arising from any act or omission of such member
in connection with duties and responsibilities under the Plan, except when the
same is judicially determined to be due to the gross negligence or willful
misconduct of such member.
EXHIBIT 10.51
13.7 Committee Determinations: The Committee, on behalf of the
Members and their Beneficiaries, shall enforce this Plan in accordance with its
terms and shall have all powers necessary for the accomplishment of that
purpose, including, but not by way of limitation, the following powers:
(a) To employ such agents and assistants, such counsel
(who may be of counsel to the Company) and such clerical, medical,
accounting, and investment services as the Committee may require in
carrying out the provisions of the Plan;
(b) To authorize one or more of their number, or any
agent, to make any payment, or to execute or deliver any instrument, on
behalf of the Committee, except that all requisitions for funds from,
and requests, directions, notifications, certifications, and
instructions to, the Trustee or to the Company shall be signed either
by a member of the Committee or by the Secretary or Assistant Secretary
of the Committee;
(c) To determine from the records of the Company the
considered Compensation, Service and other pertinent facts regarding
Employees and Members for the purposes of the Plan;
(d) To construe and interpret the Plan, decide all
questions of eligibility and determine the amount, manner and time of
payment of any benefits hereunder;
(e) To prescribe forms and procedures to be followed by
Employees for participation in the Plan, by Members or Beneficiaries
filing applications for benefits, and for other occurrences in the
administration of the Plan;
(f) To prepare and distribute, in such manner as the
Committee determines to be appropriate, information explaining the
Plan;
(g) To furnish the Company, Employers and the Members,
upon request, such annual reports with respect to the administration of
the Plan as are reasonable and appropriate;
(h) To certify to the Trustee the amount and kind of
benefits payable to the Members and their Beneficiaries;
(i) To authorize all disbursements by the Trustee from
the Trust Fund by a written authorization signed either by a member of
the Committee or by the Secretary or Assistant Secretary of the
Committee; provided, however, that disbursements for ordinary expenses
incurred in the administration of the Trust Fund and disbursements to
Members need not be authorized by the Committee;
(j) To interpret and construe all terms, provisions,
conditions and limitations of this Plan and to reconcile any
inconsistency or supply any omitted detail that may appear in this Plan
in such manner and to such extent, consistent with the general terms of
this Plan, as the Committee shall deem necessary and proper to
effectuate the Plan for the greatest benefit of all parties interested
in the Plan;
(k) To make and enforce such rules and regulations for
the administration of the Plan as are not inconsistent with the terms
set forth herein; and
(l) To furnish the Actuary with all such information as
the Actuary may require from time to time for the purpose of making
actuarial computations as to the Plan.
13.8 Information From Employer: To enable the Committee to perform
its functions, each Employer shall supply full and timely information to the
Committee of all matters relating to the dates of employment of its Employees
for purposes of determining eligibility of Employees to participate hereunder,
their retirement, death or other cause of termination of employment, and such
other pertinent facts as the Committee may require; and the
EXHIBIT 10.51
Committee shall advise the Trustee of such of the foregoing facts as may be
pertinent to the Trustee's administration of the Trust Fund.
13.9 General Powers of the Committee: In addition to all other
powers herein granted, and in general consistent with the provisions hereof, the
Committee shall have all other rights and powers reasonably necessary to
supervise and control the administration of this Plan. The determination of any
fact by the Committee and the construction placed by the Committee upon the
provisions of this Plan shall be binding upon all of the Members under the Plan,
their Beneficiaries and the Employers.
13.10 Uniform Administration: Whenever in the administration of the
Plan, any action is required by an Employer or the Committee, including, but not
by way of limitation, action with respect to eligibility of Employees,
contributions and benefits, such action shall be uniform in nature as applied to
all persons similarly situated, and no action shall be taken which will
discriminate in favor of Members who are officers or shareholders of an
Employer, highly compensated Employees, or persons whose principal duties
consist of supervising the work of others.
13.11 Reporting Responsibilities: As Administrator of the Plan under
ERISA, the Committee shall file or cause to be filed with the appropriate office
of the Internal Revenue Service, the Department of Labor or the Pension Benefit
Guaranty Corporation all reports, returns, notices and other information
required under ERISA, including, but not limited to, the summary plan
description, annual reports and amendments thereof.
13.12 Disclosure Responsibilities: The Committee shall make
available to each Member and Beneficiary such records, documents and other data
as may be required under ERISA, and Members or Beneficiaries shall have the
right to examine such records at reasonable times during business hours. Nothing
contained in this Plan shall give any Member or Beneficiary the right to examine
any data or records reflecting the compensation paid to any other Member or
Beneficiary, except as may be required under ERISA.
13.13 Allocation of Responsibilities Among Fiduciaries: The
Employers, the Committee, as designated pursuant to the terms of the Plan, the
Trustee and any other person designated as a Fiduciary with respect to the Plan
or the Trust Agreement (hereinafter collectively the "Fiduciaries") shall have
only those specific powers, duties, responsibilities and obligations as are
specifically given them under this Plan and/or the Trust Agreement. In general,
the Employers shall have the sole responsibility for making the contributions
provided for under Section 14.2. The Company shall have the sole authority to
appoint and remove the Trustee and the members of the Committee, respectively,
and to amend or terminate, in whole or in part, this Plan. Each other Employer
may amend or terminate this Plan with respect to its Employees to the extent
provided in Articles XVII and XVIII. The Committee shall have the sole
responsibility to administer the Plan and to establish and carry out the funding
policy and method of the Plan, which responsibilities are more specifically
described in this Plan and the Trust Agreement. The Committee shall have the
sole authority to appoint and remove any Investment Manager which may be
provided for under the Trust Agreement. The Trustee shall have the sole
responsibility for the administration of the Trust Fund and shall have exclusive
authority and discretion to manage and control the assets held under the Trust
Fund except to the extent that the authority to manage, acquire and dispose of
the assets of the Trust Fund is delegated to an Investment Manager, all as
specifically provided in the Trust Agreement. Each Fiduciary shall warrant that
any directions given, information furnished, or action taken by it shall be in
accordance with the provisions of the Plan or the Trust Agreement, as the case
may be, authorizing or providing for such direction, information or action.
Furthermore, each Fiduciary may rely upon any such direction, information or
action or another Fiduciary as being proper under this Plan or the Trust
Agreement, and is not required under this Plan or the Trust Agreement to inquire
into the propriety of any such direction, information or action. It is intended
under this Plan and the Trust Agreement that each Fiduciary shall be responsible
for the proper exercise of its own powers, duties, responsibilities and
obligations under this Plan and the Trust Agreement 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.
13.14 Annual Audit: The Committee shall engage, on behalf of all
Members, an independent Certified Public Accountant who shall conduct an annual
examination of any financial statements of the Plan and Trust Agreement and of
other books and records of the Plan and Trust Agreement as the Certified Public
Accountant may deem necessary to enable him to form and provide a written
opinion as to whether the financial statements and related schedules required to
be filed with the Internal Revenue Service or Department of Labor and furnished
to
EXHIBIT 10.51
each Member are presented fairly and in conformity with generally accepted
accounting principles applied on a basis consistent with that of the preceding
Plan Year. If, however, the statements required to be submitted as part of the
reports to the Internal Revenue Service or Department of Labor are prepared by a
bank or similar institution or insurance carrier regulated and supervised and
subject to periodic examination by a state or federal agency and if such
statements are certified by the preparer as accurate and if such statements are,
in fact, made a part of the annual report to the Internal Revenue Service or
Department of Labor and no such audit is required by ERISA, then the audit
required by the foregoing provisions of this Section shall be optional with the
Committee.
ARTICLE XIV
CONTRIBUTIONS TO THE PLAN
14.1 Member Contributions: Members are neither required nor
permitted to make contributions under the Plan.
14.2 Employer Contributions: Each Employer shall contribute to the
Plan every year such amount as shall be actuarially determined to be sufficient
to fund the liability of the Plan. The amount of such contribution shall be
determined annually by the Committee following actuarial determination. The
Committee shall, prior to the fixing of the amount of contributions by the
respective Employers, cause such actuarial determination to be made by the
Actuary appointed by it but the fixing of the amount of contributions by the
Employers shall be made by the Committee after considering the recommendation of
such Actuary. In no event shall such annual contributions be less than the
minimum amount required by the minimum funding standard of ERISA. The provisions
of this Section 14.2 and Section 13.13 shall be deemed to be the procedure for
establishing and carrying on the funding policy and method of the Plan.
Contributions to the Trust Fund by any Employer shall be used
to pay benefits or to pay expenses of the Plan and Trust Fund; provided,
however, that upon the Employer's request, a contribution which was made by a
mistake of fact, or conditioned upon initial qualification of the Plan and Trust
Fund under Sections 401(a) and 501(a) of the Code, or upon the deductibility of
the contribution under Section 404 of said Code, shall be returned to the
Employer within one year after the payment of the contribution, the denial of
initial qualification or the disallowance of the deduction (to the extent
disallowed), whichever is applicable. Earnings attributable to any such excess
contribution may not be withdrawn, but losses attributable thereto must reduce
the amount to be returned. Except to the extent that an Employer expressly
states to the contrary in a writing to the Trustee at the time of making the
contribution to the Trust Fund, each contribution shall be presumed to have been
conditioned upon its deductibility.
14.3 Discontinuance or Suspension of Contributions: Upon a complete
discontinuance of contributions by formal action of the board of directors of
any Employer, the Plan shall be terminated as to such Employer as of the
effective date of such discontinuance in accordance with Article XVII. If for
any year an Employer fails to make a contribution to the Trust Fund in
accordance with Section 14.2, and such failure constitutes a suspension of
contributions which either affects benefits to be paid or made available
hereunder or causes the unfunded past service cost at any time to exceed the
unfunded past service cost as of the effective date of the suspension of
contributions (plus any additional past service costs thereafter added by
amendment), then in either of such events, the Employer and the Trustee shall
each notify the appropriate District Director of Internal Revenue regarding such
suspension. During any such period of suspension, all other provisions of the
Plan shall continue in full force and effect, other than the provisions required
for contributions to the Trust Fund in accordance with Section 14.2. Upon
termination of the Plan or upon complete discontinuance of contributions by an
Employer, the right of each Member of the Employer to his accrued benefits to
the date of such termination or discontinuance, to the extent then funded, shall
be nonforfeitable, and the Employer shall promptly notify the appropriate
District Director of Internal Revenue and the Pension Benefit Guaranty
Corporation of such event.
14.4 Forfeitures Credited Against Employer's Contributions: All
credits arising as a result of more favorable interest, mortality, turnover, or
other experience than has been assumed in the actuarial determination of cost
requirements, and all forfeitures by Members or Beneficiaries of Members arising
from any source whatsoever, shall be applied against the Employer's
contributions to be made pursuant to Section 14.2 hereof in subsequent years
EXHIBIT 10.51
in accordance with a method of funding approved by the U.S. Treasury Department,
and shall not be applied to increase the benefits that any Member or the
Beneficiary of any Member would otherwise receive under the Plan.
14.5 Single Plan: The portion of the cost of providing the benefits
under this Plan shall be borne by each Employer for its own Members on an
equitable basis as determined by the Committee. Separate accounting may be
maintained for the purposes of cost allocation but not for the purposes of
providing benefits under the Plan, it being understood that, on an ongoing
basis, all of the Plan assets are available to pay benefits to all Members who
are covered by the Plan and their Spouses or Beneficiaries, regardless of which
Employer employed the Member.
ARTICLE XV
AMENDMENT OF THE PLAN
15.1 Right to Amend Reserved: Except as otherwise provided in
Section 15.2, (a) the Company shall have the right to amend or modify this Plan
and the Trust Agreement (with the consent of the Trustee, if required) at any
time and from time to time to the extent that it may deem advisable and (b) the
Committee shall have the right to amend or modify this Plan and the Trust
Agreement (with the consent of the Trustee, if required) to modify the
administrative provisions of the Plan and for any changes required by applicable
law or by the Internal Revenue Service to maintain the qualified status of the
Plan and related Trust at any time and from time to time to the extent that it
may deem advisable.
15.2 Limitations on Right to Amend: No amendment of this Plan or
the Trust Agreement shall in any way impair or diminish the rights of Members,
retired Members, their Spouses or Beneficiaries and the contributions made by
the Employers and the Members prior to the date of such amendment, and no
amendment shall, at any time prior to the satisfaction of all liabilities with
respect to Members, retired Members, their Spouses and Beneficiaries under this
Plan, have the effect of diverting any part of the income or corpus of the Trust
Fund for purposes other than the exclusive benefit of such Members, retired
Members, Spouses and Beneficiaries.
No amendment shall directly or indirectly reduce a Member's
nonforfeitable vested percentage in his Accrued Benefit under this Plan, unless
each Member having not less than three years of Service is permitted to elect to
have his nonforfeitable vested percentage in his Accrued Benefit computed under
the Plan without regard to the amendment. Such election shall be available
during an election period, which shall begin on such date the amendment is
adopted, and shall end on the latest of (a) the date 60 days after such
amendment is adopted, (b) the date 60 days after such amendment is effective or
(c) the date 60 days after such Member is issued notice of the amendment by the
Committee or the Employer. If this Plan is amended and an effect of such
amendment is to increase current liability (as defined in Code Section
401(a)(29)(E)) under the Plan for a Plan Year, and the funded current liability
percentage of the Plan for the Plan Year in which the amendment takes effect is
less than 60%, including the amount of the unfunded current liability under the
Plan attributable to the amendment, the amendment shall not take effect until
the Employer (or any member of a controlled group which includes the Employer)
provides security to the Plan. The form and amount of such security shall
satisfy the requirements of Code Section 401(a)(29)(B) and (C). Such security
may be released provided the requirements of Code Section 401(a)(29)(D) are
satisfied.
Notwithstanding anything herein to the contrary, however, the
Plan or the Trust Agreement may be amended in such manner as may be required at
any time to make it conform to the requirements of the Code, as amended from
time to time, or of any United States statutes with respect to employees'
trusts, or of any amendment thereto, or of any regulations or rulings issued
pursuant thereto, and no such amendment shall be considered prejudicial to any
then existing rights of any Member or his Beneficiary under the Plan. The
duties, responsibilities, and liabilities of the Trustee may not be increased
without its written consent.
15.3 Form of Amendment: Any such amendment or modification shall be
set out in an instrument in writing duly authorized by the Directors or the
Committee, as the case may be, and executed by an appropriate officer of the
Company or member of the Committee.
EXHIBIT 10.51
15.4 Merger of Plan with Another Pension Plan: In the event of any
merger or consolidation of the Plan with, or transfer in whole or in part of the
assets and liabilities of the Trust Fund to another trust fund held under any
other plan of deferred compensation maintained or to be established for the
benefit of all or some of the Members of this Plan, the assets of the Trust Fund
applicable to such Members shall be transferred to the other trust fund only if:
(a) Each Member would (if either this Plan or the other
plan then terminated) receive a benefit immediately after the merger,
consolidation or transfer which is equal to or greater than the benefit
he would have been entitled to receive immediately before the merger,
consolidation or transfer (if this Plan had then terminated);
(b) Resolutions of the Board of Directors of the Employer
under this Plan, and of any new or successor employer of the affected
Members, shall authorize such transfer of assets; and in the case of a
new or successor employer of the affected Members, its resolutions
shall include an assumption of liabilities with respect to such
Members' inclusion in the new employer's plan; and
(c) Such other plan and trust are qualified under
Sections 401(a) and 501(a) of the Code.
ARTICLE XVI
THE TRUSTEE AND THE TRUST FUND
16.1 Trust Agreement: The Trust Agreement shall mean the Baker
Hughes Incorporated Retirement Plan Master Trust Agreement, between the Company
and the Trustee, for the benefit of this Plan; and the provisions of which are
herein incorporated by reference as fully as if set out herein; and the assets
held under said Trust Agreement on behalf of this Plan shall constitute the
Trust Fund.
16.2 Benefits Paid Solely From Trust Fund: All benefits provided
under the Plan shall be paid out of the Trust Fund. The Employers shall not be
responsible or liable in any manner for payment of any such benefits, and all
Members shall look solely to the Trust Fund and to the adequacy thereof for the
payment of any such benefits of any nature or kind which may at any time be
payable hereunder.
16.3 Trust Fund Applicable Only to Payment of Benefits: The Trust
Fund shall be used and applied only to provide the benefits of the Plan in
accordance with the provisions thereof. No part of the corpus or income of the
Trust Fund will be used for, or diverted to, purposes other than for the
exclusive benefit of Members, retired Members and their Beneficiaries, or for
the payment of reasonable expenses of the Plan, except as provided in Section
17.5.
16.4 Accounting by Trustee: The Trustee shall keep proper accounts
of all investments, receipts, disbursements and other transactions effected by
it hereunder, and all accounts, books and records relating thereto shall be open
for inspection at all reasonable times by the Committee or by any other person
designated by the Company, but nothing herein contained shall be construed to
require the Trustee to maintain any record of the interests of the individual
Members in the Trust Fund. As of the close of each year (or more often, if
requested by the Company), the Trustee shall prepare and furnish to the
Employers and the Actuary an annual valuation of the Trust Fund, containing a
detailed statement of investments reflecting cost and market values, and a
statement of receipts and disbursements of the Trust Fund and other transactions
effected by it during such year.
16.5 Authorization to Protect Trustee: Any action by the Company or
other Employer pursuant to any of the provisions of this Plan shall be evidenced
by a resolution of its board of directors certified to the Trustee over the
signature of its secretary or assistant secretary under its corporate seal or by
written instrument executed by any person authorized by said board of directors
to take such action.
16.6 Exemption From Bond: The Trustee shall not be required to give
bond or other security for the faithful performance of its duties hereunder
unless otherwise required by law.
EXHIBIT 10.51
ARTICLE XVII
TERMINATION OF THE PLAN
17.1 Right to Terminate Reserved: The Plan has been established in
confidence that it will continue in effect indefinitely. However, due to the
uncertainties under which all business activity operates, the Company (and any
other Employer adopting the Plan in accordance with Article XVIII) must and
herewith does reserve the right to terminate the Plan on its own behalf, in
whole or in part, at any time. A termination of the Plan shall be evidenced by a
written instrument executed by the appropriate Employer on the order of its
board of directors and filed with the Committee and the Trustee. Termination of
the Plan shall be effective upon the date specified in such instrument
(hereinafter referred to as the "termination date"), but such termination shall
not vest in the terminating Employer any right, title, or interest in or to the
funds held hereunder nor shall it in any way deter the other participating
Employers from continuing the Plan for the benefit of their employees.
If the Plan is terminated by an Employer with respect to all
its Members, no further contribution shall be made to the Trust Fund by the
terminating Employer, no employees of the terminating Employer shall become
Members of the Plan after the termination date, and no further payments of
benefits with respect to Members employed by such terminating Employer
(including for all purposes of this Article, former Members and their
Beneficiaries) shall thereafter be made except in distribution of assets of the
Trust Fund as provided in Section 17.3. In the case of such termination, the
provisions of this Article shall apply only to Members employed by the
terminating Employer.
If the Plan is partially terminated only as to the designated
group of employees of a participating Employer, the Trust Fund shall be
allocated between the group of Members as to whom the Plan is terminated and the
remaining group of Members upon the basis of the funded actuarial requirements
of the Plan with respect to such groups, and the provisions of this Article
shall apply only to the group of Members employed by the Employer as to whom the
Plan is terminated and the part of the Trust Fund so allocated to such group.
The assets of such part of the Trust Fund shall be distributed as provided in
Section 17.3, however, only if the participating Employer does not direct such
part to be transferred to another fund or trust for the benefit of the group as
to whom the Plan is terminated, including but not limited to, a fund or trust
under another pension plan of the participating Employer or of another business
organization; provided, however, that no such transfer shall be made in
violation of Sections 15.4, 17.3 and 17.6.
Any termination (other than a partial termination or an
involuntary termination pursuant to ERISA Section 4042) must satisfy the
requirements and follow the procedures outlined in ERISA Section 4041 for a
"standard termination" or a "distress termination" as more fully described
therein. Upon a complete or partial termination of the Plan, each affected
Member's Accrued Benefit, based on his Service, Vesting Service and Compensation
prior to the date of such termination, shall become fully vested and
nonforfeitable to the extent then funded. In the event that the Plan is
partially terminated, the following provisions of this Article XVII shall apply
only to that part of the Plan so terminated. Any distribution made upon
termination of the Plan shall be subject to the distribution limitations
otherwise applicable under the Plan, specifically including the consent
provisions of Section 11.3.
17.2 Continuance With Successor Employer: Upon an Employer's
liquidation, bankruptcy, insolvency, sale, consolidation or merger to or with
another organization that is not an Employer hereunder, in which such Employer
is not the surviving company, all obligations of that Employer hereunder and
under the Trust Agreement which had not theretofore been funded shall terminate
automatically, and the Trust Fund assets attributable to such Employer shall be
held or distributed as herein provided, unless, with the approval of the
Company, the successor to that Employer assumes the duties and responsibilities
of such Employer, by adopting this Plan and the Trust Agreement, or by
establishment of a separate plan and trust to which the assets of the Trust Fund
held on behalf of the Employees of such Employer shall be transferred with the
consent and agreement of that Employer. Upon the consolidation or merger of two
or more of the Employers under this Plan with each other, the surviving Employer
or organization shall automatically succeed to all the rights and duties under
the Plan and Trust Agreement of the Employers involved and their equitable
shares of the Trust Fund shall be merged and thereafter allocable to the
surviving Employer or organization for its employees and their beneficiaries.
Notwithstanding the above provisions of this Section 17.2, to the contrary, not
less than 30 days prior to any such merger, consolidation or transfer of Trust
EXHIBIT 10.51
Fund assets, the Committee shall file with the Commissioner of Internal Revenue
the actuarial statement of valuation required by Code Section 6058(b) evidencing
compliance with the requirements of Code Section 401(a)(12) and Section 15.4 of
the Plan.
17.3 Liquidation of Trust Fund: Upon a full termination of the Plan
with respect to any Employer, a separation of the Trust Fund with respect to the
affected Members of such Employer shall be made as of the termination date in
accordance with the procedures set forth in Section 18.3. Thereafter, each
affected Member's Accrued Benefit based on his Service, Vesting Service, and
Compensation prior to the date of termination, to the extent then funded and
payable under the following provisions, shall become fully vested and the assets
of the Trust Fund attributable to Members of such terminated Employer shall be
allocated, after provision is made for the expenses of liquidating the Trust
Fund, among the Members receiving or holding the following benefits in the
following order:
(a) First, to benefits payable on the termination date:
(i) In the case of the benefit of a Member or
Beneficiary which was in pay status as of the beginning of the
three-year period ending on the termination date of the Plan,
to each such benefit, based on the provisions of the Plan (as
in effect during the five-year period ending on such date)
under which such benefit would be the least; and
(ii) In the case of a retired Member's, a
disabled Member's or a Beneficiary's benefit (other than a
benefit described in clause (i) above) which would have been
in pay status as of the beginning of such three-year period if
the Member had retired prior to the beginning of the
three-year period and if his benefits had commenced (in the
normal form of pension under the Plan) as of the beginning of
such period, to each such benefit based on the provisions of
the Plan (as in effect during the five-year period ending on
such date) under which such benefit would be the least.
For purposes of clause (i) of this subsection (a), the lowest benefit
in pay status during a three-year period shall be considered the
benefit in pay status for such period.
(b) Second:
(i) To all other benefits (if any) of
individuals under the Plan guaranteed under Title IV - Plan
Termination Insurance - of ERISA (determined without regard to
Section 4022(b)(5) thereof); and
(ii) To the additional benefits (if any) which
would be determined under clause (i) immediately above if
Section 4022(b)(6) of ERISA did not apply.
For purposes of this subsection (b), Section 4021 of ERISA shall be
applied without regard to subsection (c) thereof.
(c) Third, to all other nonforfeitable benefits under the
Plan.
(d) Fourth, to all other benefits under the Plan.
If the assets available for allocation under subsection (a) or (b)
above are insufficient to satisfy in full the benefits of all
individuals which are described in such subsection, the assets shall be
allocated pro rata among individuals on the basis of the present value
(as of the termination date) of their respective benefits described in
such subsection. If the assets available for allocation
EXHIBIT 10.51
under subsection (c) or (d) above are not sufficient to satisfy in full
the benefits or individuals described in such subsection, then:
(1) If this paragraph applies, except
as provided in subsection (B) below, the assets shall
be allocated to the benefits of individuals described
in subsection (c) on the basis of the benefits of
individuals which would have been described in such
subsection (c) under the Plan as in effect at the
beginning of the five-year period ending on the date
of Plan termination; and
(2) If the assets available for
allocation under subsection (A) are sufficient to
satisfy in full the benefits described in such
subsection (without regard to this subsection), then
for purposes of subsection (A), benefits of
individuals described in such subsection shall be
determined on the basis of the Plan as amended by the
most recent Plan amendment effective during such
five-year period under which the assets available for
allocation are sufficient to satisfy in full the
benefits of individuals described in subsection (A)
and any assets remaining to be allocated under such
subsection shall be allocated under subsection (A) on
the basis of the Plan as amended by the next
succeeding Plan amendment effective during such
period.
17.4 Partial Termination: Upon termination of the Plan with respect
to a group of Members which constitutes a partial termination of the Plan, the
Employer shall cause the proportionate interest of the Members affected by such
partial termination to be determined. The determination of such proportionate
interest shall be done in an equitable manner, considering the remaining Members
as well as the Members affected by the termination, and on the basis of the
contributions made by the Employer, the provisions of this Article XVII and
other appropriate considerations. After such proportionate interest has been
determined, the assets of the Trust Fund shall be allocated and segregated
according to such proportionate interest. The assets of the Trust Fund so
allocated and segregated shall be used to pay benefits to or on behalf of
Members in accordance with this Article XVII.
17.5 Distribution of Trust Fund: Any distribution after full
termination of the Plan may be made in whole or in part, to the extent that no
discrimination in value results, in cash, securities, or other assets in kind,
or in annuity contracts, as the Committee, in its discretion, acting under the
advice of the Actuary, shall determine. The benefits as apportioned pursuant to
Section 17.3 above may be provided:
(a) By the continuation of the Trust Fund for the payment
of all or such of the benefits as are within the limits prescribed by
the Committee and acceptable by the Trustee;
(b) Through the purchase of annuities from one or more
insurance companies with the amount of the benefit equal to the Accrued
Benefit equal to the Actuarial Equivalent (determined by use of the
interest rate used by the Pension Benefit Guaranty Corporation for
determining the present value of a lump-sum distribution on plan
termination) of each Member's benefit;
(c) By distribution in a single sum of the Actuarial
Equivalent (determined by use of the interest rate used by the Pension
Benefit Guaranty Corporation for determining the present value of a
lump-sum distribution on plan termination) of each Member's Accrued
Benefit; or
(d) By any combination of (a), (b) and (c).
EXHIBIT 10.51
In making such distributions, any and all determinations, divisions, appraisals,
apportionments and allotments so made shall be final and conclusive and shall
not be subject to question by any person. Any annuity contract distributed by
the Trustee to a Member under subsection (b) above or under any other provision
of this Plan shall bear on the face thereof a designation "Not Transferable,"
and such annuity contract shall expressly provide 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. Notwithstanding the foregoing, the Employer shall
promptly advise the appropriate District Director of Internal Revenue and the
Pension Benefit Guaranty Corporation of the termination and shall direct the
Trustee to delay the final distribution to Members until said District Director
shall advise in writing that such termination does not adversely affect the
previously qualified status of the Plan or the exemption from tax of the Trust
Agreement under Section 401(a) or 501(a) of the Code and the Pension Benefit
Guaranty Corporation has approved the proposed termination distribution or made
any appropriate requirements concerning same. Any distribution due to the
termination of the Plan will be made in accordance with the requirements of Code
Sections 401(a)(11), 411(d)(6) and 417.
17.6 Residual Amounts: In no event shall any Employer receive any
amounts from the Trust Fund except that upon termination of the Plan, and
notwithstanding any other provision of the Plan, an Employer shall receive such
amounts, if any, as may remain in the Trust Fund because of erroneous actuarial
computation as defined in Treasury Regulations.
17.7 Limitations Imposed by Treasury Regulations Upon Early
Termination of Plan: In the event the Plan is terminated by any Employer for any
reason during the first 10 years after the original effective date of the Plan
("Original Effective Date"), and if full current costs had not been met with
respect to any Employer at the end of the first 10 years, until said full
current costs are met, then notwithstanding any provision in this Plan to the
contrary, the benefits provided by the Employer's contributions for the Members
whose anticipated annual retirement benefit at Normal Retirement Date exceeds
$1,500 and who on the Original Effective Date were among the 25 highest paid
Employees of the Employer will be subject to the conditions set forth in the
following provisions:
(a) The benefit payable to a Member described in this
Section or his Beneficiary shall not exceed the greater of the
following:
(i) those benefits purchasable by the greater of
(A) $20,000, or (B) an amount equal to 20% of the first
$50,000 of the Member's annual Compensation multiplied by the
number of years from the Original Effective Date to the
earlier of (1) the date of termination of the Plan, (2) the
date the benefit of the Member becomes payable or (3) the date
of a failure on the part of the Employer to meet the full
current costs of the Plan; or
(ii) if a Member is a "substantial owner" (as
defined in Section 4022(b)(5)(A) of ERISA), the present value
of the benefit guaranteed for "substantial owners" under
Section 4022 of ERISA; or
(iii) if the Member is not a "substantial owner,"
the present value of the maximum benefit provided in Section
4022(b)(3)(B) of ERISA, determined on the date the Plan
terminates or on the date benefits commence, whichever is
earlier, and in accordance with regulations of the Pension
Benefit Guaranty Corporation.
(b) If the Plan is terminated or the full current costs
thereof have not been met at any time within 10 years after the
Original Effective Date, the benefits which any of the Members
described in this Section may receive from the Employer's contribution
shall not exceed the benefits set forth in this Section 17.7. If at the
end of the first 10 years the full current costs are not met, the
restrictions will continue to apply until the full current costs are
funded for the first time.
EXHIBIT 10.51
(c) If a Member described in this Section leaves the
employ of the Employer or withdraws from participation in the Plan when
the full current costs have been met, the benefits which he may receive
from the Employer contributions shall not at any time within the first
10 years after the Original Effective Date exceed the benefits set
forth in this Section 17.7.
(d) These conditions shall not restrict the full payment
of any survivor's benefits on behalf of a Member who dies while in the
Plan and the full current costs have been met.
(e) These conditions shall not restrict the current
payment of full retirement benefits called for by the Plan for any
retired Member while the Plan is in full effect and its full current
costs have been met, provided an agreement, adequately secured,
guarantees the repayment of any part of the distribution that is or may
become restricted.
(f) If the benefits of, or with respect to, any Member
shall have been suspended or limited in accordance with the limitations
of this Section 17.7 because the full current costs of the Plan shall
not then have been met, and if such full current costs shall thereafter
be met, then the full amount of the benefits payable to such Member
shall be resumed and the parts of such benefits which have been
suspended shall then be paid in full.
(g) Notwithstanding anything in this Section 17.7, if on
the termination of the Plan within the first 10 years after the
Original Effective Date, the funds, contracts, or other property under
the Plan are more than sufficient to provide pensions for Members and
their Beneficiaries including full benefits for all Members other than
such of the 25 highest paid Employees as are still in the service of
the Employer and also including Accrued Benefits as limited by this
Section for such 25 highest paid Employees, then any excess of such
funds, contracts, and property shall be used to provide Accrued
Benefits for the 25 highest paid Employees in excess of such
limitations of this Section up to the benefits to which such Employees
would be entitled under this Plan without such limitations.
(h) In the event that Congress should provide by statute,
or the Treasury Department or the Internal Revenue Service should
provide by regulation or ruling, that the limitations provided for in
this Section 17.7 are no longer necessary in order to meet the
requirements for a qualified pension plan under the Code as then in
effect, the limitations in this Section 17.7 shall become void and
shall no longer apply without the necessity of amendment to this Plan.
(i) In the event a lump-sum distribution is made to an
Employee subject to the above restrictions in an amount in excess of
that amount otherwise permitted under this Section 17.7, an agreement
shall be made, with adequate security guaranteeing repayment of any
amount of the distribution that is restricted. Adequate security shall
mean property having a fair market value of at least 125% of the amount
which would be repayable if the Plan had terminated on the date of
distribution of such lump sum. If the fair market value of the property
falls below 110% of the amount which would then be repayable if the
Plan were then to terminate, the distributee shall deposit additional
property to bring the value of the property to 125% of such amount.
Notwithstanding the foregoing, the following provisions are applicable in the
event of an early plan termination rather than the foregoing provisions of this
Section 17.7. In the event of an early plan termination, the benefit of any
highly compensated active or former Employee is limited to a benefit that is
nondiscriminatory under Section 401(a)(4). In the event of early plan
termination, benefits distributed to any of the 25 most highly compensated
active and highly compensated former Employees with the greatest Compensation in
the current or any prior year are restricted such that the annual payments are
no greater than an amount equal to the payment that would be made on behalf of
the Employee under a straight life annuity that is the actuarial equivalent of
the sum of the Employee's Accrued Benefit, the Employee's other benefits under
the Plan (other than a social security supplement, within the meaning of
Treasury Regulations Section 1.411(a)-7(c)(4)(ii)), and the amount the Employee
is entitled to receive under a social security supplement.
EXHIBIT 10.51
The preceding paragraph shall not apply if: (i) after payment
of the benefit to an Employee described in the preceding paragraph, the value of
Plan assets equals or exceeds 110% of the value of current liabilities, as
defined in Section 412(l)(7) of the Code, (ii) the value of the benefits for an
Employee described above is less than 1% of the value of current liabilities
before distribution, or (iii) the value of the benefits payable under the Plan
to an Employee described above does not exceed $5,000.
For purposes of this Section, benefit includes loans in excess
of the amount set forth in Section 72(p)(2)(A) of the Code, any periodic income,
any withdrawal values payable to a living Employee, and any death benefits not
provided for by insurance on the Employee's life.
ARTICLE XVIII
ADOPTING EMPLOYERS
18.1 Designation of Other Employers(a) The Directors may designate
by written instrument any entity or organization eligible by law to
participate in the Plan and the Trust as an Employer. Such written
instrument shall specify the effective date of such designated
participation, may incorporate specific provisions relating to the
operation of the Plan that apply to the designated Employer only and
shall become, as to such designated Employer and its Employees, a part
of the Plan.
(b) Each designated Employer shall be conclusively
presumed to have consented to its designation and to have agreed to be
bound by the terms of the Plan and any and all amendments thereto upon
its submission of information to the Committee required by the terms of
or with respect to the Plan or upon making a contribution to the Trust
Fund pursuant to the terms of the Plan; provided, however, that the
terms of the Plan may be modified so as to increase the obligations of
an Employer only with the consent of such Employer, which consent shall
be conclusively presumed to have been given by such Employer upon its
submission of any information to the Committee required by the terms of
or with respect to the Plan or upon making a contribution to the Trust
Fund pursuant to the terms of the Plan following notice of such
modification.
(c) The provisions of the Plan shall apply separately and
equally to each Employer and its Employees in the same manner as is
expressly provided for the Company and its Employees, except that the
power to appoint or otherwise affect the Committee or the Trustee and
the power to amend or terminate the Plan and Trust Agreement shall be
exercised by the Company, the Directors, or the Committee, as
applicable, alone.
(d) Transfer of employment among Employers shall not be
considered a termination of employment hereunder, and Service with one
shall be considered as Service with all others.
(e) The above notwithstanding, any action that may be
taken by the Directors pursuant to this Section may also be taken by
the Committee.
18.2 Single Plan: For purposes of the Code and the Act, the Plan as
adopted by the Employers shall constitute a single plan rather than a separate
plan of each Employer. All assets in the Trust Fund shall be available to pay
benefits to all Members and their beneficiaries.
ARTICLE XIX
MISCELLANEOUS
19.1 Plan Not an Employment Contract: The adoption and maintenance
of the Plan shall not be deemed to constitute a contract between an Employer and
any Member, and shall not be deemed to be consideration for, inducement to, or a
condition of employment of any person. Nothing herein contained shall be
construed to give any Member the right to be retained in the employment of an
Employer or to interfere with the right of an Employer to terminate the
employment of any Member at any time.
EXHIBIT 10.51
19.2 Controlling Law: Subject to the provisions of ERISA, as the
same may be amended from time to time, which may be applicable and provide to
the contrary, this Plan shall be construed, regulated and administered under the
laws of the State of Texas.
19.3 Invalidity of Particular Provisions: In the event any
provision of this Plan shall be held illegal or invalid for any reason, said
illegality or invalidity shall not affect the remaining provisions of this Plan
but shall be fully severable, and this Plan shall be construed and enforced as
if said illegal or invalid provisions had never been inserted herein.
19.4 Non-Alienation of Benefits: Except as otherwise provided below
and with respect to certain judgments and settlements pursuant to Section
401(a)(13) of the Code, benefits payable under this Plan shall not be subject in
any manner to anticipation, alienation, sale, transfer, assignment, pledge,
encumbrance, charge, garnishment, execution or levy of any kind, either
voluntary or involuntary. The preceding sentence shall also apply to the
creation, assignment or recognition of a right to any benefit payable with
respect to a Member pursuant to a domestic relations order unless such order is
determined by the Committee to be a qualified domestic relations order, as
defined in Section 414(p) of the Code. If the Committee receives a qualified
domestic relations order with respect to a Member, the amount assigned to the
Member's former spouse may be immediately distributed, to the extent permitted
by law, from the vested portion of the benefit payable to the Member.
19.5 Copy Available to Members: A copy of this Plan and Trust
Agreement and of any and all future amendments thereto shall be available to
Members and their Beneficiaries for inspection at all reasonable times. In
addition thereto, the Company shall print and distribute to all Employees a
pamphlet setting forth the terms of the Plan or a summary of the principal
provisions thereof.
19.6 Evidence Furnished Conclusive: Each Employer, the Committee
and any person or persons involved in the administration of the Plan shall be
entitled to rely upon any certification, statement, or representation made or
evidence furnished by an Employee, Member or Beneficiary with respect to his
age, or other facts required to be determined under any of the provisions of the
Plan, and shall not be liable on account of the payment of any monies or the
doing of any act or failure to act in reliance thereon. Any such certification,
statement, representation, or evidence, upon being duly made or furnished, shall
be conclusively binding upon such Employee, Member or Beneficiary but not upon
an Employer, the Committee, or any other person or persons involved in the
administration of the Plan. Nothing herein contained shall be construed to
prevent any of such parties from contesting any such certification, statement,
representation, or evidence or to relieve the Employee, Member, or Beneficiary
from the duty of submitting satisfactory proof of his age or such other fact.
19.7 Unclaimed Benefits: If at, after, or during the time when a
benefit hereunder is payable to any Member, Beneficiary or other distributee,
the Committee, upon request of the Trustee, or at its own instance, shall mail
by registered or certified mail to such Member, Beneficiary or distributee at
his last known address a written demand for his then address or for satisfactory
evidence of his continued life, or both, and if such Member, Beneficiary or
distributee shall fail to furnish the same to the Committee within two years
from the mailing of such demand, then the Committee may, in its sole discretion,
determine that such Member, Beneficiary or other distributee has forfeited his
right to such benefit and may declare such benefit, or any unpaid portion
thereof, terminated as if the death of the distributee (with no surviving
Beneficiary) had occurred on the date of the last payment made thereon or on the
date such Member, Beneficiary or distributee first became entitled to receive
benefit payments, whichever is later; provided, however, that such forfeited
benefits shall be reinstated if a claim for the same is made by the Member,
Beneficiary or other distributee at any time thereafter.
19.8 Name and Address Changes: Each Member and each Beneficiary of
a deceased Member shall at all times be responsible for notifying the Committee
of any change in his name or address. If any check in payment of a benefit
hereunder (which was mailed to the last address of the payee as shown on the
Committee's records) is returned unclaimed, further payments shall be
discontinued until the Committee directs otherwise.
19.9 Payments in Satisfaction of Claims of Members: Any payment or
distribution to any Member or his legal representative or Beneficiary in
accordance with the provisions of this Plan shall be in full satisfaction of all
claims under the Plan against the Trust Fund, the Committee, the Trustee and the
Employer.
EXHIBIT 10.51
19.10 Headings for Convenience Only: The headings and subheadings in
this Plan are inserted for convenience and reference only and are not to be used
in construing this Plan or any provision herein.
19.11 Payments to Minors and Incompetents: If the Committee
determines that any person to whom a payment is due hereunder is a minor or is
incompetent by reason of physical or mental disability, the Committee shall have
power to cause the payments becoming due to such person to be made to the
guardian of the minor or the guardian of the estate of the incompetent, or to
the County Clerk as allowed for under law without the Committee or the Trustee
being responsible to see to the application of such payment. Payments made
pursuant to such power shall operate as a complete discharge of the Committee,
the Trustee, the Employer and any Affiliate.
19.12 Member Information: All persons entitled to benefits under the
Plan must furnish to the Committee or the Trustee such documents, evidence, or
information as the Committee or the Trustee considers necessary or desirable for
the purpose of administering the Plan or Trust, or to protect the Committee or
the Trustee; and it shall be a condition of the Plan that each such person must
furnish promptly true and complete data, evidence, or information and sign such
documents as the Committee or the Trustee may require before any benefits become
payable under the Plan. In the event that any data so furnished is found by the
Committee, the Trustee or the Company to be incorrect, or if the Committee, the
Trustee or the Company subsequently discovers any other error in the
determination of the original benefit amount payable, any overpayments made to
the Member or Beneficiary must be repaid to the Trust by such Member or
Beneficiary in a timely manner, and any underpayments shall be adjusted for on
an actuarial basis and paid to the Member or Beneficiary.
ARTICLE XX
TOP-HEAVY PLAN REQUIREMENTS
20.1 General Rule: For any Plan Year for which this Plan is a
Top-Heavy Plan, as defined in Section 20.7, any other provisions of this Plan to
the contrary notwithstanding, this Plan shall be subject to the provisions of
this Article XX.
20.2 Vesting Provisions: Each Member who has completed an Hour of
Service after the Plan becomes top heavy and while the Plan is top heavy and who
has completed the Service specified in the following table shall be vested in
his Accrued Benefit under this Plan at least as rapidly as is provided in the
following schedule; except that the vesting provision set forth in Section 5.1
shall be used at any time in which it provides for more rapid vesting:
Years of Service Vested Percentage
- ---------------- -----------------
Less than 2 years 0%
2 but less than 3 years 20%
3 but less than 4 years 40%
4 but less than 5 years 60%
5 years or more 100%
If an account becomes vested by reason of the application of the preceding
schedule, it may not thereafter be forfeited by reason of re-employment after
retirement pursuant to a suspension of benefits provision, by reason of
withdrawal of any mandatory employee contributions to which employer
contributions were keyed, or for any other reason. If the Plan subsequently
ceases to be top heavy, the preceding schedule shall continue to apply with
respect to any Member who had at least three years of service (as defined in
Treasury Regulation Section 1.411(a)-8T(b)(3)) as of the close of the last year
that the Plan was top heavy, except that each Member whose nonforfeitable
percentage of his Accrued Benefit derived from employer contributions is
determined under such amended schedule, and who has completed at least three
years of service with the employer, may elect, during the election period, to
have the nonforfeitable percentage of his Accrued Benefit derived from employer
contributions determined without regard to such amendment if his nonforfeitable
percentage under the Plan as amended is, at any time, less than such percentage
determined without regard to such amendment. For all other Members, the
nonforfeitable percentage of their Accrued Benefit prior to the date the Plan
ceased to be top heavy shall not be reduced, but future increases in the
nonforfeitable percentage shall be made only in accordance with Section 5.1.
EXHIBIT 10.51
20.3 Minimum Benefit Provisions: Each Member who is a Non-Key
Employee, as defined in Section 20.8, shall be entitled to an Accrued Benefit in
the form of a single-life annuity (with no ancillary benefits) beginning at his
Normal Retirement Date, that shall not be less than his average annual Member's
Compensation, within the meaning of Code Section 415, for years in the Testing
Period multiplied by the lesser of: (a) 2% multiplied by the number of years of
Top-Heavy Service or (b) 20%. A Non-Key Employee may not fail to receive a
minimum benefit because of a failure to receive a specified amount of
Compensation or a failure to make mandatory employee or elective contributions.
"Testing Period" means, with respect to a Member, the period
of consecutive years of Top-Heavy Service, not exceeding five, during which the
Member had the greatest aggregate compensation, within the meaning of Code
Section 415, from the Company. "Top-Heavy Service" means his Service credited
under Article III. Top-Heavy Service shall not include any Service before July
1, 1984 or any Service that begins after the close of the last Plan Year in
which the Plan was a Top-Heavy Plan. Years before and after such excluded
periods shall be considered consecutive for purposes of determining the Testing
Period.
20.4 Limitation on Compensation: A Member's annual Compensation
taken into account under this Article XX for purposes of computing benefits
under this Plan for any Plan Year shall not be in excess of $200,000. Such
amount shall be adjusted automatically for each Plan Year to the amount
prescribed by the Secretary of the Treasury or his delegate pursuant to
regulations for the calendar year in which such Plan Year commences.
20.5 Coordination With Other Plans: In the event that another
defined contribution or defined benefit plan maintained by a Considered Company
provides contributions or benefits on behalf of Members in this Plan, such other
plan shall be treated as a part of this Plan pursuant to applicable principles
prescribed by Treasury Regulations or applicable IRS rulings (such as Revenue
Ruling 81-202 or any successor ruling) to determine whether this Plan satisfies
the requirements of Sections 20.2, 20.3 and 20.4 and to avoid inappropriate
omissions or inappropriate duplication of minimum contributions. Such
determination shall be made upon the advice of counsel by the Committee. In the
event a Member is covered by a defined benefit plan which is top-heavy pursuant
to Section 416 of the Code, a comparability analysis (as prescribed by Revenue
Ruling 81-202 or any successor ruling) shall be performed in order to establish
that the plans are providing benefits at least equal to the defined benefit
minimum.
20.6 Distributions to Certain Key Employees: Notwithstanding any
other provision of this Plan to the contrary, the entire interest in this Plan
of each Member who is a 5% owner (as described in Section 416(i)(A) of the Code
determined with respect to the Plan Year ending in the calendar year in which
such individual attains age 70 1/2) shall be distributed to such Member not
later than the first day of April following the calendar year in which such
individual attains age 70 1/2.
20.7 Determination of Top-Heavy Status: The Plan shall be a
Top-Heavy Plan for any Plan Year if, as of the Determination Date, the present
value of the cumulative Accrued Benefits under the Plan determined as of the
Valuation Date for Members (including former Members) who are Key Employees
exceeds 60% of the present value of the cumulative accrued benefits under the
Plan for all Members (including former Members) or, if this Plan is required to
be in an Aggregation Group, any such Plan Year in which such Group is a
Top-Heavy Group.
In determining Top-Heavy status, if an individual has not
performed one Hour of Service for any Considered Company at any time during the
one-year period ending on the Determination Date, any Accrued Benefit for such
individual and the aggregate accounts of such individual shall not be taken into
account. The Accrued Benefit of any employee (other than a Key Employee) shall
be determined under (a) the method, if any, that uniformly applies for accrual
purposes under all plans maintained by the Aggregation Group or (b) if there is
no such method, as if such benefit accrued not more rapidly than the slowest
accrual rate permitted under the fractional accrual rate of Code Section
411(b)(1)(C).
For purposes of this Section, the capitalized words have the
following meanings:
(a) "Aggregation Group" means the group of plans, if any,
that includes both the group of plans that is required to be aggregated
and the group of plans that is permitted to be
EXHIBIT 10.51
aggregated. The group of plans that is required to be aggregated (the
"required aggregation group") includes:
(i) Each plan of a Considered Company in which a
Key Employee is a member, including collectively bargained
plans; and
(ii) Each other plan, including collectively
bargained plans, of a Considered Company which enables a plan
in which a Key Employee is a member to meet the requirements
of either Code Section 401(a)(4) or 410.
The group of plans that is permitted to be aggregated (the "permissive
aggregation group") includes the required aggregation group and any
plan that is not part of the required aggregation group that the
Committee certifies as constituting a plan within the permissive
aggregation group. Such plans may be added to the permissive
aggregation group only if, after the addition, the aggregation group as
a whole continues to meet the requirements of both Code Sections
401(a)(4) and 410.
(b) "Considered Company" means the Company, other
Employer or an Affiliate.
(c) "Determination Date" means for any Plan Year the last
day of the immediately preceding Plan Year or in the case of the first
Plan Year of the Plan, Determination Date means the last day of such
Plan Year.
(d) "Key Employee" as defined in Code Section 416(i)(1)
means any Employee or former Employee who at any time during the Plan
Year containing the Determination Date is (1) an officer of the
Employer having annual compensation greater than $130,000 (as adjusted
under Code Section 416(i)(1) for Plan years beginning after December
31, 2001); (2) a 5% owner of the Employer; or (3) a 1% owner of the
Employer who has annual compensation of more than $150,000. For
purposes of this subsection (d), "annual compensation" means
compensation within the meaning of Code Section 415(c)(3). For purposes
of determining 5% and 1% owners, (a) an "owner" means (i) if the
employer is a corporation, any person who owns (or is considered as
owning under Code Section 318) more than 5% or 1%, respectively, of the
corporation's outstanding stock or stock possessing more than 5% or 1%,
respectively, of the total combined voting power of all stock of the
corporation, or (ii) if the employer is not a corporation, any person
who owns more than 5% or 1%, respectively, of the capital or profits
interest of the employer; and (b) neither the aggregation rules nor the
rules of subsections (b), (c) and (m) of Code Section 414 apply.
Beneficiaries of an Employee acquire the character of the Employee who
performed service for the Employer. Also, inherited benefits will
retain the character of the benefits of the Employee who performed
services for the Employer.
(e) A "Non-Key Employee" means any Employee (and any
Beneficiary of an Employee) who is not a Key Employee.
(f) "Top-Heavy Group" means the Aggregation Group, if as
of the applicable Determination Date, the sum of the present value of
the cumulative Accrued Benefits for Key Employees under all defined
benefit plans included in the Aggregation Group plus the aggregate of
the accounts of Key Employees under all defined contribution plans
included in the Aggregation Group exceeds 60% of the sum of the present
value of the cumulative Accrued Benefits for all employees, excluding
former Key Employees as provided in paragraph (i) below, under all such
defined benefit plans plus the aggregate accounts for all employees,
excluding former Key Employees as provided in paragraph (i) below,
under all such defined contribution plans. In determining Top-Heavy
status, if an individual has not performed one Hour of Service for any
Considered Company at any time during the one-year period ending on the
Determination Date, any Accrued Benefit for such individual and the
aggregate accounts of such individual shall not be taken into account.
If the Aggregation Group that is a Top-Heavy Group is a permissive
EXHIBIT 10.51
aggregation group, only those plans that are part of the required
aggregation group will be treated as Top-Heavy Plans. If the
Aggregation Group is not a Top-Heavy Group, no plan within such group
will be a Top-Heavy Plan.
In determining whether this Plan constitutes a Top-Heavy Plan, the
Committee (or its agent) will make the following adjustments in
connection therewith:
(i) When more than one plan is aggregated, the
Committee shall determine separately for each plan as of each
plan's Determination Date the present value of the Accrued
Benefits (for this purpose using the actuarial assumptions set
forth in the applicable plan, and if such assumptions are not
set forth in the applicable plan, using the assumptions set
forth in this Plan) or account balance. The results shall then
be aggregated by adding the results of each plan as of the
Determination Dates for such plans that fall within the same
calendar year.
(ii) In determining the present value of the
cumulative Accrued Benefit (for this purpose using the
actuarial assumptions set forth in Section 1.2 hereof) or the
amount of the account of any employee, such present value or
account will include the amount in dollar value of the
aggregate distributions made to such employee under the
applicable plan during the one-year period ending on the
Determination Date unless reflected in the value of the
Accrued Benefit or account balance as of the most recent
Valuation Date. The amounts will include distributions to
employees which represented the entire amount credited to
their accounts under the applicable plan.
(iii) Further, in making such determination, such
present value or such account shall include any rollover
contribution (or similar transfer) as follows:
(A) If the rollover contribution (or
similar transfer) is initiated by the employee and
made to or from a plan maintained by a Considered
Company, the plan providing the distribution shall
include such distribution in the present value or
such account; the plan accepting the distribution
shall not include such distribution in the present
value or such account unless the plan accepted it
before December 31, 1983; and
(B) If the rollover contribution (or
similar transfer) is not initiated by the employee or
made from a plan maintained by a Considered Company,
the plan accepting the distribution shall include
such distribution in the present value or such
account, whether the plan accepted the distribution
before or after December 31, 1983; the plan making
the distribution shall not include the distribution
in the present value or such account.
(iv) Further, in making such determination, in
any case where an individual is a Non-Key Employee with respect to an
applicable plan but was a Key Employee with respect to such plan for
any prior Plan Year, any Accrued Benefit and any account of such
employee shall be altogether disregarded.
(g) "Valuation Date" means for purposes of determining
the present value of an Accrued Benefit as of the Determination Date,
the date determined as of the most recent valuation date which is
within a 12-month period ending on the Determination Date. For the
first plan year of a plan, the Accrued Benefit for a current employee
shall be determined either as if the individual (i) terminated service
as of the Determination Date or (ii) terminated service as of the
Valuation Date, but taking into account the estimated Accrued Benefit
as of the Determination Date. The Valuation Date shall be determined in
accordance with the principles set forth in Q&A. T-25 of Treasury
Regulations Section 1.416-1.
EXHIBIT 10.51
(h) For purposes of this Article, "Compensation" shall
have the meaning given to it in Section 21.3(d) of the Plan.
ARTICLE XXI
LIMITATION ON BENEFITS
Notwithstanding any provision of this Plan to the contrary,
the total Annual Benefit received by an Employee shall be subject to the
following limitations:
21.1 Single Defined Benefit Plan:The annual normal retirement
benefit of any Employee under this Plan cannot exceed the lesser of $160,000
(increased annually for Limitation Years in accordance with Section 415(d) of
the Code to reflect cost-of-living adjustments) (the "Dollar Limitation") or
100% of such Employee's Average Compensation ("Percentage Limitation"). For
purposes of determining whether an Employee's benefits exceed these limitations,
the following rules shall apply:
(a) Adjustment for Certain Other Forms of Benefit. If the
normal form of benefit is other than a Single Life Annuity, such form
must be adjusted actuarially to the equivalent of a Single Life
Annuity; provided, however, that, subsection (d) of this Section
notwithstanding, for a form of benefit subject to the adjustment
required under Code Section 415(b)(2), the interest rate used to make
such adjustment shall not be less than the "applicable interest rate"
as defined in Code Section 417(e)(3) and the mortality table shall be
that prescribed in Revenue Ruling 2001-62. This Single Life Annuity
cannot exceed the maximum Dollar Limitation or Percentage Limitation
outlined above. No adjustment is required for the following: qualified
joint and survivor annuity benefits, pre-retirement disability
benefits, pre-retirement death benefits and post-retirement medical
benefits.
(b) Adjustment To Dollar Limitation If Benefit Commences
Before Age 62. If benefit distributions commence before a Member
attains age 62, the Dollar Limitation shall be reduced, in accordance
with regulations prescribed by the Secretary of the Treasury, so that
it is the Actuarial Equivalent of the Dollar Limitation beginning at
age 62. For purposes of this adjustment, the Actuarial Equivalent shall
be based on subsection (b) of Section 1.2 of this Plan and subject to
subsection (d) of this Section.
(c) Adjustment To Dollar Limitation If Benefit Commences
After Age 65.If benefit distributions commence after a Member reaches
age 65, the Dollar Limitation shall be increased, in accordance with
regulations prescribed by the Secretary of the Treasury, so that it is
the Actuarial Equivalent of the Dollar Limitation beginning at age 65.
For purposes of this adjustment, the Actuarial Equivalent shall be
based on subsection (b) of Section 1.2 of this Plan and subject to
subsection (d) of this Section.
(d) Interest Assumption.The interest rate used for
adjusting the maximum limitations above shall be:
(i) For benefits commencing before age 62 and
for forms of benefit other than straight life annuity, the
greater of:
(1) 5%; or
(2) the rate used to determine the
Actuarial Equivalent under subsection (b) of Section
1.2 of this Plan.
(ii) For benefits commencing after age 65, the
lesser of:
(1) 5%; or
EXHIBIT 10.51
(2) the rate used to determine the
Actuarial Equivalent under subsection (b) of Section
1.2 of this Plan.
(e) Reduction For Service Less Than 10 Years.In the case
of an Employee who has less than 10 years of participation in a defined
benefit plan of the Employer, the benefits shall not exceed the limit
set forth in Article XXI above multiplied by a fraction, the numerator
of which is the number of years (or part thereof) of participation in a
defined benefit plan of the Employer and the denominator of which is
10.
(f) Adjustment For Small Benefits. In the case of an
Employee whose Annual Benefit is not in excess of $10,000, the benefits
payable with respect to such Employee under this Plan shall be deemed
not to exceed the limitations of this Section if:
(i) The Annual Benefits payable with respect to
such Employee under this Plan and all other defined benefit
plans of the Employer do not exceed $10,000 for the Plan Year
or for any prior Plan Year; and
(ii) The Employer has not at any time maintained
a defined contribution plan in which the Employee
participated.
(g) Protected Accrued Benefit.In the case of an
individual who was a participant in one or more defined benefit plans
of the Employer as of the first day of the first Limitation Year
beginning after December 31, 1986, the application of the limitation of
this Article XXI shall not cause the maximum permissible amount for
such individual under all such defined benefit plans to be less than
the individual's current Accrued Benefit. The preceding sentence
applies only if such defined benefit plans met the requirements of Code
Section 415 for all Limitation Years beginning before January 1, 1987.
21.2 Two or More Defined Benefit PlansIf the Employer maintains one
or more defined benefit plans in addition to this Plan, the sum of the normal
retirement benefits of all plans will be treated as a single benefit for the
purposes of applying the limitations in Article XXI. If these benefits exceed,
in the aggregate, the limitations in Article XXI, the annual normal retirement
benefit under this Plan shall be reduced (but not below zero) until the sum of
the annual benefits of the remaining plans satisfy the limitations.
21.3 Definitions
(a) Employer: The Company and any other Employer that
adopts this Plan. In the case of a group of employers which constitutes
a controlled group of corporations (as defined in Code Section 414(b)
as modified by Code Section 415(h)) or which constitutes trades and
businesses (whether or not incorporated) which are under common control
(as defined in Code Section 414(c) as modified by Code Section 415(h))
or an affiliated service group (as defined in Code Section 414(m)), all
such employers shall be considered a single Employer for purposes of
applying the limitations of this Section.
(b) Excess Amount: The excess of the Employee's Annual
Additions for the Limitation Year over the Maximum Permissible Amount.
(c) Limitation Year: A 12 consecutive month period ending
on December 31.
(d) Compensation: For purposes of determining compliance
with the limitations of Code Section 415, Compensation shall mean an
Employee's earned income, wages, salaries, fees for professional
services and other amounts received for personal services actually
rendered in the course of employment with an Employer maintaining the
Plan, including, but not limited to, commissions paid to salesmen,
compensation for services based on a percentage of profits, commissions
on insurance premiums, tips and bonuses, and excluding the following:
EXHIBIT 10.51
(i) Employer contributions to a plan of deferred
compensation to the extent contributions are not included in
gross income of the Employee for the taxable year in which
contributed, or on behalf of an Employee to a simplified
employee pension plan to the extent such contributions are
deductible under Code Section 219(b)(2), and any distributions
from a plan of deferred compensation whether or not includable
in the gross income of the Employee when distributed (however,
any amounts received by an Employee pursuant to an unfunded
nonqualified plan may be considered as Compensation in the
year such amounts are included in the gross income of the
Employee);
(ii) amounts realized from the exercise of a
nonqualified stock option, or when restricted stock (or
property) held by an Employee becomes freely transferable or
is no longer subject to a substantial risk of forfeiture;
(iii) amounts realized from the sale, exchange or
other disposition of stock acquired under a qualified stock
option; and
(iv) other amounts which receive special tax
benefits, or contributions made by an Employer (whether or not
under a salary reduction agreement) towards the purchase of an
annuity contract described under Code Section 403(b) (whether
or not the contributions are excludable from the gross income
of the Employee).
For purposes of applying the limitations in this Article, amounts
included as Compensation are those actually paid or made available to
an Employee within the Limitation Year. Compensation shall be limited
to $200,000 (unless adjusted in the same manner as permitted under Code
Section 415(d)). Notwithstanding anything to the contrary in the
definition, Compensation shall include any and all items which may be
includable in Compensation under Section 415(c)(3) of the Code,
including (i) any elective deferrals (as defined in Code Section
402(g)(3)) and (ii) any amounts which are contributed or deferred by
the Employer at the election of the Member or Employee and which are
not includable with the gross income of the Member or Employee by
reason of Code Section 125, 457 or 132(f)(4).
(e) Average Compensation: The average Compensation during
an Employee's high three years of service, which period is the three
consecutive calendar years (or, the actual number of consecutive years
of employment for those Employees who are employed for less than three
consecutive years with the Employer) during which the Employee had the
greatest aggregate Compensation from the Employer.
(f) Annual Benefit: A benefit payable annually in the
form of a straight life annuity (with no ancillary benefits) under a
plan to which Employees do not contribute and under which no rollover
contributions are made.
EXHIBIT 10.51
FIRST AMENDMENT TO
BAKER HUGHES INCORPORATED PENSION PLAN
THIS AGREEMENT by Baker Hughes Incorporated, a Delaware corporation
(the "Company"),
W I T N E S S E T H:
WHEREAS, the Company maintains the Baker Hughes Incorporated Pension
Plan (the "Plan");
WHEREAS, the Company desires to amend the Plan to comply with new legal
requirements;
NOW, THEREFORE, the Company agrees as follows:
AMENDMENT OF THE PLAN
Effective January 1, 2002, except to the extent that a different
effective date is specified, the Plan is amended as specified below.
1. DEFINITIONS. The following new definitions shall be added to Article I
of the Plan in alphabetical order, the definitions in Article I shall be
renumbered as appropriate and any references to the numbered definitions shall
be revised accordingly, except that the definition of "Spouse" shall be replaced
in its entirety with the definition included in this amendment:
Distribution Calendar Year: A calendar year for which a minimum
distribution is required to be made to a Member or former Member under
section 401(a)(9) of the Code and Department of Treasury Regulations
thereunder. If a Member's or former Member's Required Beginning Date is
April 1 of the calendar year following the calendar year in which he
attains age 70 1/2, his first Distribution Calendar Year is the
calendar year in which he attains age 70 1/2. If a Member's or former
Member's Required Beginning Date is April 1 of the calendar year
following the calendar year in which a Member's Termination of
Employment occurs, his first Distribution Calendar Year is the calendar
year in which his Termination of Employment occurs.
Final Section 401(a)(9) Regulations: The final Department of Treasury
Regulations issued under section 401(a)(9) of the Code which were
published in the Federal Register on April 17, 2002.
Five Percent Owner: An Employee who is a five percent owner as defined
in section 416(i) of the Code.
Qualified Domestic Relations Order: A domestic relations order which
the Plan Administrator has determined constitutes a qualified domestic
relations order within the meaning of section 414(p) of the Code.
Section 401(a)(9) Beneficiary: An individual who is a Member's or
former Member's Beneficiary on the date of the Member's or former
Member's death and (unless the Beneficiary dies after the date of the
Member's or former Member's death and before September 30 of the
following calendar year without disclaiming benefits under the Plan)
who remains a Beneficiary as of September 30 of the calendar year
following the calendar year of the Member's or former Member's death.
If the Member's or former Member's Beneficiary is a trust, an
individual beneficiary of the trust may be a Section 401(a)(9)
Beneficiary of the Member or former Member if the requirements of
Department of Treasury Regulation section 1.401(a)(9)-4 are satisfied.
Spouse: The person to whom the Member or former Member is married under
applicable local law. In addition, to the extent provided in a
Qualified Domestic Relations Order, a surviving former spouse of a
Member or former Member will be treated as the Spouse of the Member or
former Member, and to the
EXHIBIT 10.51
same extent any current spouse of the Member or former Member will not
be treated as a Spouse of the Member or former Member. For purposes of
Section 11.7, a former Spouse to whom all or a portion of a Member's or
former Member's Plan benefit is payable under a Qualified Domestic
Order shall, to that extent, be treated as a Spouse or surviving Spouse
regardless of whether the Qualified Domestic Relations Order
specifically provides that the former Spouse is to be treated as the
Spouse for purposes of sections 401(a)(11) and 417 of the Code.
Termination of Employment: An individual's termination of employment
with an Employer without commencing or continuing employment with any
other Employer.
Totally Disabled: A Member or former Member shall be considered
"Totally Disabled" if he becomes eligible to receive benefits under the
Company's long-term disability plan.
2. SECTION 5.1. The last sentence of Section 5.1 is amended to provide as
follows:
"The foregoing to the contrary notwithstanding, a Member or former
Member shall have a 100% nonforfeitable interest in his Accrued Benefit
if (a) his Severance From Service Date is on or after his Early
Retirement Date or the date he attains age 65 or (b) his Service
terminates due to his death or his becoming Totally Disabled."
3. SECTION 11.1. Paragraph (b) of Section 11.1 shall be deleted and
Section 11.1 shall be amended to read in its entirety as follows:
"11.1 Payment of Accrued Benefit: Anything to the contrary
notwithstanding, a Member's Accrued Benefit under this Plan shall be
payable in accordance with the provisions of this Section. A Member who
terminates his employment with all Employers and Affiliates and who has
a vested right to an Accrued Benefit under the Plan may elect to
commence payment of his Accrued Benefit as of his Early Retirement Date
or his Normal Retirement Date. The distribution of his Accrued Benefit
shall begin no later than the 60th day after the latest of the close of
the year in which (i) the Member attains age 65 or (ii) the Member
terminates Service. Notwithstanding any provision in the Plan to the
contrary, if a Member's Accrued Benefit has not commenced by the end of
the Plan Year during which occurs his Normal Retirement Date, such
Member's Accrued Benefit shall not be actuarially increased to reflect
the delay in commencement in his Accrued Benefit after his Normal
Retirement Date, in accordance with Section 203(a)(3) of ERISA and Code
Section 411(b)(1)(H), and the applicable Department of Treasury
Regulations."
4. SECTION 11.6. Paragraphs (a) and (b) of Section 11.6 shall be amended
in their entirety to provide as follows:
"(a) "Eligible Retirement Plan" shall mean (1) an individual retirement
account described in section 408(a) of the Code, (2) an individual
retirement annuity described in section 408(b) of the Code (other than
an endowment contract), (3) an annuity plan described in section 403(a)
of the Code, (4) a qualified plan described in section 401(a) of the
Code that is a defined contribution plan that accepts the Distributee's
Eligible Rollover Distribution, (5) an eligible deferred compensation
plan described in section 457(b) of the Code that is maintained by an
eligible employer described in section 457(e)(1)(A) of the Code but
only if the plan agrees to separately account for amounts rolled into
such plan, or (6) an annuity contract described in section 403(b) of
the Code.
(b) "Eligible Rollover Distribution" shall mean any distribution of all
or any portion of the balance to the credit of the Distributee, except
that an Eligible Rollover Distribution does not include: (1) any
distribution that is one of a series of substantially equal periodic
payments (not less frequently than annually) made for the life (or life
expectancy) of the Distributee or the joint lives (or joint life
EXHIBIT 10.51
expectancies) of the Distributee and the Distributee's Beneficiary, or
for a specified period of ten years or more; (2) any distribution to
the extent the distribution is required under section 401(a)(9) of the
Code; (3) the portion of any distribution that is not includable in
gross income (determined without regard to the exclusion for net
unrealized appreciation with respect to employer securities) unless,
the Eligible Retirement Plan to which the distribution is transferred
(A) agrees to separately account for amounts so transferred, including
separately accounting for the portion of such distribution which is not
includable in gross income or (B) is an individual retirement account
described in section 408(a) of the Code or an individual retirement
annuity described in section 408(b) of the Code (other than an
endowment contract)."
5. ARTICLE XI. Article XI of the Plan shall be amended by adding the
following new Section 11.7:
"11.7 Required Distributions and Distribution Deadlines.
Notwithstanding any other provision of the Plan, all benefits payable
under the Plan shall be distributed, or commence to be distributed, in
compliance with the following provisions:
(a) Required Distributions for Certain Persons Who
are 70 1/2 or Older. A Member's or former Member's entire
nonforfeitable interest in his Plan benefit must be
distributed to him in a single sum no later than his Required
Beginning Date, or must be distributed, beginning not later
than his Required Beginning Date, over the life of the Member
or former Member, or the joint lives of the Member or former
Member and his Section 401(a)(9) Beneficiary, or over a period
not extending beyond the life expectancy of the Member or
former Member or the joint and last survivor expectancy of the
Member or former Member and his Section 401(a)(9) Beneficiary.
The distribution required to be made on or before the Member's
or former Member's Required Beginning Date shall be the
distribution required for his first Distribution Calendar
Year. The minimum required distribution for other Distribution
Calendar Years, including the required minimum distribution
for the Distribution Calendar Year in which the Member's or
former Member's Required Beginning Date occurs must be made on
or before December 31st of that Distribution Calendar Year. In
the case of a benefit payable in a form other than a single
sum or an annuity purchased from an insurance company, the
amount that must be distributed for a Distribution Calendar
Year is an amount equal to the payment that is required for
one payment interval as specified in paragraphs (b), (c) and
(d) of this Section 11.7.
(b) Amount Required to be Distributed by Required
Beginning Date in the Case of Annuity Payments From the Plan.
The amount that must be distributed on or before the Member's
or former Member's Required Beginning Date (or, if the Member
or former Member dies before his Required Beginning Date, the
date distributions are required to begin under Section
11.7(e)) is the payment that is required for one payment
interval. The second payment need not be made until the end of
the next payment interval even if that payment interval ends
in the next calendar year. Payment intervals are the periods
for which payments are received (for example, bi-monthly,
monthly, semi-annually, or annually). All of the Member's or
former Member's benefit accruals as of the last day of the
first Distribution Calendar Year will be included in the
calculation of the amount of the annuity payments for payment
intervals ending on or after the Member's or former Member's
Required Beginning Date.
Any additional benefits accruing to the Member or
former Member in a calendar year after the first Distribution
Calendar Year will be distributed beginning with the first
payment interval ending in the calendar year immediately
following the calendar year in which such amount accrues.
(c) Requirements For Annuity Distributions That
Commence During Member's Lifetime.
(1) Joint Life Annuities Where the Section
401(a)(9) Beneficiary Is Not the Member's or former
Member's Spouse. If the Member's or the former
Member's interest
EXHIBIT 10.51
is being distributed in the form of a joint and
survivor annuity for the joint lives of the Member or
former Member and a nonspouse Section 401(a)(9)
Beneficiary, annuity payments to be made on or after
the Member's or former Member's Required Beginning
Date to the Section 401(a)(9) Beneficiary after the
Member's or former Member's death must not at any
time exceed the applicable percentage of the annuity
payment for such period that would have been payable
to the Member or former Member using the table set
forth in Q&A 2 of section 1.401(a)(9)-6T of the
Department of Treasury Regulations. If the form of
distribution combines a joint and survivor annuity
for the joint lives of the Member or the former
Member and a nonspouse Beneficiary and a period
certain annuity, the requirement in the preceding
sentence will apply to annuity payments to be made to
the Section 401(a)(9) Beneficiary after the
expiration of the period certain.
(2) Period Certain Annuities. Unless the
Member's or former Member's Spouse is the sole
Section 401(a)(9) Beneficiary and the form of
distribution is a period certain and no life annuity,
the period certain for an annuity distribution
commencing during the Member's or former Member's
lifetime may not exceed the applicable distribution
period for the Member or former Member under the
Uniform Lifetime Table set forth in section
1.401(a)(9)-9 of the Department of Treasury
Regulations for the calendar year that contains the
Annuity Starting Date. If the Annuity Starting Date
precedes the year in which the Member or former
Member reaches age 70, the Applicable Distribution
Period for the Member or former Member is the
distribution period for age 70 under the Uniform
Lifetime Table set forth in section 1.401(a)(9)-9 of
the Department of Treasury Regulations plus the
excess of 70 over the age of the Member or former
Member as of the Member's or former Member's birthday
in the year that contains the Annuity Starting Date.
If the Member's or former Member's Spouse is the
Member's or former Member's sole Section 401(a)(9)
Beneficiary and the form of distribution is a period
certain and no life annuity, the period certain may
not exceed the longer of the Member's or the former
Member's applicable distribution period, as
determined hereunder, or the joint life and last
survivor expectancy of the Member or former Member
and the Member's or former Member's Spouse as
determined under the Joint and Last Survivor Table
set forth in section 1.401(a)(9)-9 of the Department
of Treasury Regulations, using the Member's or former
Member's and Spouse's attained ages as of the
Member's or former Member's and Spouse's birthdays in
the calendar year that contains the Annuity Starting
Date.
(d) Requirements For Minimum Distributions Where
Member Dies Before Date Distributions Begin.
(1) Member or former Member Survived by
Section 401(a)(9) Beneficiary. If the Member or
former Member dies before the date distribution of
his interest begins and there is a Section 401(a)(9)
Beneficiary, the Member's or former Member's entire
nonforfeitable interest will be distributed,
beginning no later than the time described in Section
11.7(e), over the life of the Section 401(a)(9)
Beneficiary or over a period certain not exceeding:
(A) unless the Annuity Starting
Date is before the first Distribution
Calendar Year -
(i) if the Section
401(a)(9) Beneficiary is not the
Member's or former Member's Spouse,
the life expectancy of the Section
401(a)(9) Beneficiary determined
using the Section 401(a)(9)
Beneficiary's age as of the Section
401(a)(9) Beneficiary's birthday in
the calendar year immediately
following the calendar year of the
Member's or former Member's death.
In subsequent calendar years, the
distribution period is reduced by
one for each calendar year that has
EXHIBIT 10.51
elapsed after the calendar year
immediately following the Member's
for former Member's death.
(ii) if the sole Section
401(a)(9) Beneficiary is the
Member's or former Member's Spouse,
such Spouse's life expectancy using
such Spouse's birthday for each
Distribution Calendar Year after
the calendar year of the Member's
or former Member's death up through
the calendar year of such Spouse's
death. For calendar years after the
calendar year of such Spouse's
death, the applicable distribution
period is the life expectancy of
such Spouse using the age of such
Spouse as of such Spouse's birthday
in the calendar year of such
Spouse's death, reduced by one for
each calendar year that has elapsed
after the calendar year of such
Spouse's death.
(B) if the Annuity Starting Date is
before the first Distribution Calendar Year,
the life expectancy of the Section 401(a)(9)
Beneficiary determined using the Section
401(a)(9) Beneficiary's age as of the
Section 401(a)(9) Beneficiary's birthday in
the calendar year that contains the Annuity
Starting Date.
(2) No Section 401(a)(9) Beneficiary. If the
Member or former Member dies before the date
distributions begin and there is no Section 401(a)(9)
Beneficiary as of September 30th of the year
following the year of the Member's or former Member's
death, distribution of the Member's or former
Member's entire nonforfeitable interest in his Plan
benefit will be completed by December 31st of the
calendar year containing the fifth anniversary of the
Member's or former Member's death.
(3) Death of Surviving Spouse Before
Distributions to Surviving Spouse Begin. If the
Member or former Member dies before the date
distribution of his or her nonforfeitable interest in
his Plan benefit begins, the Member's or former
Member's surviving Spouse is the Member's or former
Member's sole Section 401(a)(9) Beneficiary, and the
surviving Spouse dies before distributions to the
surviving Spouse begin, this paragraph (d) will apply
as if the surviving Spouse were the Member or former
Member, except that the time by which distributions
must begin will be determined without regard to
Section 11.7(e)(1).
(e) Distribution Deadline for Death Benefit When
Member or Former Member Dies Before His Distributions Begin.
If a Member or former Member dies before the date distribution
of his nonforfeitable interest in his Plan benefit begins, his
entire nonforfeitable interest in his Plan benefit will be
distributed, or begin to be distributed, to his Section
401(a)(9) Beneficiary no later than as follows:
(1) If the Member's or former Member's
surviving Spouse is the Member's or former Member's
sole Section 401(a)(9) Beneficiary, then
distributions to the surviving Spouse will begin by
December 31st of the calendar year immediately
following the calendar year in which the Member or
former Member died, or by December 31st of the
calendar year in which the Member or former Member
would have attained age 70 1/2 , if later.
(2) If the Member's or former Member's
surviving Spouse is not the Member's or former
Member's sole Section 401(a)(9) Beneficiary and the
payment of Plan death benefits to the Section
401(a)(9) Beneficiary will not be in the form of a
single sum or a commercial annuity, then
distributions to the Section 401(a)(9) Beneficiary
will begin by December 31st of the calendar year
immediately following the calendar year in which the
Member or former Member died.
EXHIBIT 10.51
(3) If the Member's or former Member's
surviving Spouse is the Member's or former Member's
sole Section 401(a)(9) Beneficiary, and the payment
of a Plan death benefit to the Section 401(a)(9)
Beneficiary will be in the form of a single sum, then
the Member's or former Member's entire nonforfeitable
interest in his Plan benefit will be distributed by
December 31st of the calendar year containing the
fifth anniversary of the Member's or former Member's
death.
(4) If there is no Section 401(a)(9)
Beneficiary as of September 30 of the calendar year
following the calendar year of the Member's or former
Member's death, then the Member's or former Member's
entire nonforfeitable interest in his Plan benefit
will be distributed by December 31st of the calendar
year containing the fifth anniversary of the Member's
or former Member's death.
(5) If the Member's or former Member's
surviving Spouse is the Member's or former Member's
sole Section 401(a)(9) Beneficiary and the surviving
Spouse dies after the Member or former Member but
before distributions to the surviving Spouse begin,
this Section 11.7(e), other than Section 11.7(e)(1),
will apply as if the surviving Spouse were the
Member.
For purposes of this Section 11.7(e) and Section
11.7(d), distributions are considered to begin on the Member's
or former Member's Required Beginning Date (or, if Section
11.7(e)(4) applies, the date distributions are required to
begin to the surviving Spouse under Section 11.7(e)(1)). If
annuity payments irrevocably commence to the Member or former
Member before the Member's or former Member's Required
Beginning Date (or to the Member's or former Member's
surviving Spouse before the date distributions are required to
begin to the surviving Spouse under Section 11.7(e)(1)), the
date distributions are considered to begin is the date
distributions actually commence.
(f) Distribution of Death Benefit When Member or
Former Member Dies On or After His Required Beginning Date. If
a Member or former Member dies on or after his Required
Beginning Date, his Plan benefit must be distributed to his
Section 401(a)(9) Beneficiary at least as rapidly as the
method of payment of minimum required distributions being used
as of the date of his death.
(g) Limitations on Death Benefits. Benefits payable
under the Plan shall not be provided in any form that would
cause a Member's death benefit to be more than incidental. Any
distribution required to satisfy the incidental benefit
requirement shall be considered a required distribution for
purposes of section 401(a)(9) of the Code.
(h) General Annuity Requirements. If the Member's or
former Member's nonforfeitable interest in his Plan benefit is
paid in the form of annuity distributions under the Plan,
payments under the annuity will satisfy the following
requirements:
(1) the annuity distributions will be paid
in periodic payments made at intervals not longer
than one year;
(2) the distribution period will be over a
life (or lives) or over a period certain not longer
than the period described in Section 11.7(c) or
11.7(d);
(3) once payments have begun over a period
certain, the period certain will not be changed even
if the period certain is shorter than the maximum
permitted;
(4) payments will either be nonincreasing or
increase only as follows:
EXHIBIT 10.51
(A) by an annual percentage
increase that does not exceed the annual
percentage increase in a cost-of-living
index that is based on prices of all items
and issued by the U. S. Department of
Labor's Bureau of Labor Statistics;
(B) to the extent of the reduction
in the amount of the Member's or former
Member's payments to provide for a survivor
benefit upon death, but only if the Section
401(a)(9) Beneficiary whose life was being
used to determine the distribution period
described in Section 11.7(c) dies or is no
longer the Member's or former Member's
Beneficiary pursuant to a Qualified Domestic
Relations Order;
(C) to provide cash refunds of
employee contributions upon the Member's or
former Member's death; or
(D) to pay increased benefits that
result from a Plan amendment.
(i) Requirements in the Case of a Commercial Annuity.
If a Member's or former Member's nonforfeitable interest in
his Plan benefit is distributed in the form of an annuity
purchased from an insurance company, distributions under the
annuity contract will be made in accordance with the
requirements of section 401(a)(9) of the Code and Department
of Treasury Regulations.
(j) Compliance with Section 401(a)(9). All
distributions under the Plan will be made in accordance with
the requirements of section 401(a)(9) of the Code and all
Department of Treasury Regulations promulgated thereunder,
including, effective January 1, 2002 until January 1, 2003,
Department of Treasury Regulations that were proposed in
January of 2001 but not including Department of Treasury
Regulations that were proposed prior to January of 2001; and
including, effective January 1, 2003, the Final Section
401(a)(9) Regulations, including sections 1.401(a)(9)-1
through 1.401(a)(9)-9 of the Final Section 401(a)(9)
Regulations. The provisions of the Plan reflecting section
401(a)(9) of the Code override any distribution options in the
Plan inconsistent with section 401(a)(9) of the Code."
6. ARTICLE XIX. Effective January 1, 2003, Article XIX of the Plan is
hereby amended by adding the following new Section 19.13:
"19.13 Arbitration. Any controversy arising out of or relating
to the Plan, including without limitation, any and all disputes, claims
(whether in tort, contract, statutory or otherwise) or disagreements
concerning the interpretation or application of the provisions of the
Plan, the Company's employment of the Member, or former Member, and the
termination of that employment, shall be resolved by arbitration in
accordance with the Employee Benefit Plan Claims Arbitration Rules of
the American Arbitration Association (the "AAA") then in effect. No
arbitration proceeding relating to the Plan may be initiated by either
the Company or the Member, or former Member, unless the claims review
and appeals procedures specified in Article XII have been exhausted.
Within ten (10) business days of the initiation of an arbitration
hereunder, the Company and the Member, or former Member, will each
separately designate an arbitrator, and within twenty (20) business
days of selection, the appointed arbitrators will appoint a neutral
arbitrator from the panel of AAA National Panel of Employee Benefit
Plan Claims Arbitrators. The arbitrators shall issue their written
decision (including a statement of finding of facts) within thirty (30)
days from the date of the close of the arbitration hearing. The
decision of the arbitrators selected hereunder will be final and
binding on both parties. This arbitration provision is expressly made
pursuant to and shall be governed by the Federal Arbitration Act, 9
U.S.C. Sections 1-16 (or replacement or successor statute). Pursuant to
Section 9 of the Federal Arbitration Act, the Company and any Member
agrees that any Member agrees that any judgment of the United States
District Court for the District in which the headquarters of the
Company is located at the time of initiation of an arbitration
hereunder shall be entered upon the award made pursuant to the
arbitration. Nothing in this Section 19.13 shall be construed to, in
any
way, limit the scope and effect of Article XIII. In any arbitration
proceeding full effect shall be given to the rights, powers, and
authorities of the Plan Administrator under Article XIII."
7. SECTION 20.3. The definition of "Testing Period" in Section 20.3 of the
Plan is amended by adding the following sentence immediately prior to the last
sentence: "Also, any Service shall be disregarded to the extent that such
Service occurs during a Plan Year when the Plan benefits (within the meaning of
section 410(b) of the Code) no Key Employee or former Key Employee."
8. SECTION 20.7. The definition of "Key Employee" in Section 20.7 of the
Plan is amended to read in its entirety as follows:
"(d) "Key Employee" means an Employee or former Employee
(including a deceased Employee) who at any time during the Plan Year is
(1) an officer of any Affiliate having Compensation greater than
$130,000.00 (as adjusted by the Secretary of Treasury from time to time
for increases in the cost of living), (2) a Five Percent Owner of any
Affiliate treated separately, or (3) a one percent owner of any
Affiliate (within the meaning of Section 416(i) of the Code), treated
separately, having Compensation greater than $150,000.00. For this
purpose, no more than fifty (50) employees or, if lesser, the greater
of three (3) employees or ten percent (10%) of the employees shall be
treated as officers.
For purposes of determining the number of officers taken into
account, the following employees shall be excluded: (1) employees who
have not completed six (6) months of Service, (2) employees who
normally work less than seventeen and one-half (17-1/2) hours per week,
(3) employees who normally work not more than six (6) months during any
year, (4) employees who have not attained the age of twenty-one (21),
and (5) except to the extent provided in Department of Treasury
Regulations, employees who are included in a unit of employees covered
by an agreement which the Secretary of Labor finds to be a collective
bargaining agreement between employee representatives and an Affiliate.
Section 416(i) of the Code shall be used to determine percentage of
ownership.
The determination of who is a Key Employee will be made in
accordance with section 416(i) of the Code and applicable Department of
Treasury Regulations."
9. SECTION 20.7(f). Paragraph (f) of Section 20.7 is amended by
renumbering clauses (iii) and (iv) as clauses (v) and (vi); deleting the
existing clause (ii); and adding the following new clauses (ii), (iii) and (iv):
"(ii) In determining the present value of the accumulated
accrued benefits for any Employee or the amount in the account of any
Employee, the value or amount shall be increased by all distributions
made to or for the benefit of the Employee under the Plan on account of
his Separation From Service and during the one-year period ending on
the Determination Date.
(iii) In determining the present value of the accumulated
accrued benefits for any Employee or the amount in the account of any
Employee, the value or amount shall be increased by all distributions
made to or for the benefit of the Employee under the Plan other than on
account of his Separation From Service and during the five-year period
ending on the Determination Date.
(iv) Notwithstanding any other provision of the Plan, benefits
shall not be taken into account in determining the top-heavy ratio for
any Employee who has not performed services for an Affiliate during the
last one-year period ending upon the Determination Date.
IN WITNESS WHEREOF, the Company has caused this Agreement to
be executed on this 31st day of December, 2002.
BAKER HUGHES INCORPORATED
By /S/ JAMES R. WILHITE
---------------------------------
Name: James R. Wilhite
Title: Director, Compensation,
Benefits & Corporate
Human Resources