1
EXHIBIT 10.7
APACHE CORPORATION
RETIREMENT/401(k) SAVINGS PLAN
Amended and Restated
Effective January 1, 1995
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Table of Contents
Page
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ARTICLE I Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Account Owner . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.3 Affiliated Entity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.4 Alternate Payee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.5 Annual Addition. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.6 Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.7 Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.8 Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.9 Company Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.10 Company Mandatory Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.11 Company Matching Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.12 Company Stock. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.13 Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.14 Covered Employee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.15 Determination Date. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.16 Determination Year. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.17 Disability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.18 Domestic Relations Order . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.19 Employee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.20 Employment Commencement Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.21 ERISA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.22 Family Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.23 Family Member. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.24 Five-Percent Owner . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.25 Former Amoco Employee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.26 Highly Compensated Employee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.27 Hour of Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.28 Key Employee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.29 Lapse in Apache Employment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.30 Limitation Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.31 Non-Highly Compensated Employee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.32 Non-Key Employee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.33 Normal Retirement Age. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.34 Normal Retirement Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.35 Participant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.36 Participant Before-Tax Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.37 Period of Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.38 Plan Year. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.39 Qualified Domestic Relations Order ("QDRO"). . . . . . . . . . . . . . . . . . . . . . . . . . . 8
1.40 Qualified Non-Elective Contributions ("QNECs") . . . . . . . . . . . . . . . . . . . . . . . . . 8
1.41 Qualified Matching Contributions ("QMACs") . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
1.42 Reemployment Commencement Date. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
1.43 Required Beginning Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
1.44 Spouse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
1.45 Taxable Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
1.46 Termination from Service Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
1.47 Top-Paid Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
1.48 Transferred Participant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
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1.49 Valuation Date. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
1.50 Year of Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
ARTICLE II PARTICIPATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.1 Participation - Required Service. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.2 Reemployment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.3 Enrollment - Procedure. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
ARTICLE III CONTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.1 Company Contributions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.2 Participant Contributions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.3 Return of Contributions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.4 Limitation on Annual Additions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.5 Contribution Limits for Highly Compensated Employees (ADP Test). . . . . . . . . . . . . . . . . . 14
3.6 Contribution Limits for Highly Compensated Employees (ACP Test). . . . . . . . . . . . . . . . . . 15
3.7 Contribution Limits for Highly Compensated Employees (Multiple Use). . . . . . . . . . . . . . . . 16
3.8 QNECs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
3.9 QMACs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
ARTICLE IV INTERESTS IN THE TRUST FUND . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
4.1 Participants' Accounts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
4.2 Valuation of Trust Fund. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
4.3 Allocation of Increase or Decrease in Net Worth. . . . . . . . . . . . . . . . . . . . . . . . . . 18
4.4 Allocation of Company Mandatory Contributions. . . . . . . . . . . . . . . . . . . . . . . . . . . 18
ARTICLE V AMOUNT OF BENEFITS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.1 Vesting Schedule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.2 Forfeitures. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.3 Restoration of Forfeitures. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
5.4 Method of Forfeiture Restoration. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
5.5 Allocation of Forfeitures. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
5.6 Credits for Pre-Lapse Service. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
5.7 Transfers - Portability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
5.8 Reemployment - Separate Account. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
5.9 Transfer of Participants to Natural Gas Clearinghouse. . . . . . . . . . . . . . . . . . . . . . . 21
ARTICLE VI DISTRIBUTION OF BENEFITS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.1 Beneficiaries. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.2 Consent. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.3 Distributable Amount. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
6.4 Manner of Distribution. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
6.5 Time of Distribution. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
6.6 Direct Rollover Election. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
ARTICLE VII WITHDRAWALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
7.1 In-Service Withdrawals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
7.2 Loans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
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ARTICLE VIII ALLOCATION OF RESPONSIBILITIES - NAMED FIDUCIARIES . . . . . . . . . . . . . . . . . . . . . 28
8.1 No Joint Fiduciary Responsibilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
8.2 The Company. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
8.3 The Trustee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
8.4 The Committee - Plan Administrator. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
8.5 Committee to Construe Plan. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
8.6 Organization of Committee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
8.7 Interested Committee Members. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
8.8 Agent for Process. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
8.9 Indemnification of Committee Members . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
8.10 Conclusiveness of Action. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
8.11 Payment of Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
ARTICLE IX TRUST AGREEMENT - INVESTMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
9.1 Trust Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
9.2 Expenses of Trust. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
9.3 Investments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
ARTICLE X TERMINATION AND AMENDMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
10.1 Termination of Plan or Discontinuance of Contributions . . . . . . . . . . . . . . . . . . . . . . 31
10.2 Allocations upon Termination or Discontinuance of Company Contributions . . . . . . . . . . . . . . 31
10.3 Procedure Upon Termination of Plan or Discontinuance of Contributions . . . . . . . . . . . . . . . 32
10.4 Amendment by Apache . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
ARTICLE XI PLAN ADOPTION BY AFFILIATED ENTITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
11.1 Adoption of Plan. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
11.2 Agent of Affiliated Entity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
11.3 Disaffiliation and Withdrawal from Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
11.4 Effect of Disaffiliation or Withdrawal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
11.5 Distribution Upon Disaffiliation or Withdrawal . . . . . . . . . . . . . . . . . . . . . . . . . . 34
ARTICLE XII TOP-HEAVY PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
12.1 Application of Top-Heavy Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
12.2 Determination of Top-Heavy Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
12.3 Special Vesting Rule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
12.4 Special Minimum Contribution. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
12.5 Change in Top-Heavy Status. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
ARTICLE XIII MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
13.1 RIGHT TO DISMISS EMPLOYEES - NO EMPLOYMENT CONTRACT . . . . . . . . . . . . . . . . . . . . . . . . 36
13.2 Claims Procedure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
13.3 Source of Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
13.4 Exclusive Benefit of Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
13.5 Forms of Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
13.6 Failure of Any Other Entity to Qualify . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
13.7 Notice of Adoption of the Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
13.8 Plan Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
13.9 Inalienability of Benefits - Domestic Relations Orders . . . . . . . . . . . . . . . . . . . . . . 37
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13.10 Payments Due Minors or Incapacitated Individuals. . . . . . . . . . . . . . . . . . . . . . . . 39
13.11 Uniformity of Application. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
13.12 Disposition of Unclaimed Payments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
13.13 Applicable Law. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
ARTICLE XIV MATTERS AFFECTING COMPANY STOCK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
14.1 Voting, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
14.2 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
14.3 Retention/Sale of Company Stock and Other Securities. . . . . . . . . . . . . . . . . . . . . . . 40
14.4 Tender Offers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
14.5 Stock Rights. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
14.6 Other Rights Appurtenant to the Company Stock . . . . . . . . . . . . . . . . . . . . . . . . . . 41
14.7 Information to Trustee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
14.8 Information to Account Owners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
14.9 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
14.10 Former Account Owners. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
14.11 No Recommendations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
14.12 Trustee to Follow Instructions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
14.13 Confidentiality. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
14.14 Investment of Proceeds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
14.15 Independent Fiduciary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
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APACHE CORPORATION
RETIREMENT/401(k) SAVINGS PLAN
PREAMBLE
Apache Corporation, a Delaware corporation ("Apache"), effective
January 1, 1989, amended and restated a profit sharing plan (the "Plan") to
permit before-tax employee contributions via a cash or deferred arrangement
that is qualified under Code section 401(k). The Plan is hereby renamed the
Apache Corporation Retirement/401(k) Savings Plan. The Plan is hereby amended
and restated as set forth below, effective January 1, 1995.
Any Participant (as defined herein) in the Plan who is credited with
at least one Hour of Service (as defined herein) after December 31, 1994 shall
be subject to the provisions of this Plan as so amended and restated. Any
Participant in the Plan who is not credited with an Hour of Service after
January 1, 1995 shall continue to be governed by the provisions of the Plan as
in effect immediately prior to January 1, 1995.
Each Appendix to this Plan is a part of the Plan document. It is
intended that an Appendix will be used to (1) describe which business entities
are actively participating in the Plan, (2) describe any special participation,
eligibility, vesting or other provisions that apply to the employees of a
business entity, (3) describe any special provisions that apply to Participants
affected by a designated corporation transaction, and (4) describe any special
distribution rules that apply to directly transferred benefits from other
plans.
ARTICLE I
DEFINITIONS
The following words and phrases shall have the meaning set forth below:
1.1 "Account Owner " means a Participant who has an Account
balance, an Alternate Payee who has an Account balance, or a beneficiary who
has obtained an interest in the Account(s) of the previous Account Owner
because of the previous Account Owner's death.
1.2 "Accounts" means the various Participant accounts established
pursuant to section 4.1.
1.3 "Affiliated Entity" means:
(a) for all sections of the Plan except those listed in
subsection (b), an corporation or other entity, now or hereafter formed, that
is or shall become affiliated with Apache, either directly or indirectly,
through stock ownership or control, and which is (i) included in the controlled
group of corporations (within the meaning of Code section 1563(a) without
regard to Code section 1563(a)(4) and Code section 1563(e)(3)(C)) in which
Apache is also included; (ii) included in the group of entities (whether or not
incorporated) under common control (within the meaning of the Code section
414(c)) in which Apache is also included; (iii) included in an affiliated
service group (within the meaning of Code section 414(m)) in which Apache is
also included; (iv) required to be aggregated with Apache by Code section
414(o); or (v) affiliated with Apache through stock ownership or as otherwise
determined by Apache.
(b) for purposes of determining Annual Additions under
section 1.4, limiting Annual Additions to a Participant's Account(s) under
section 3.4, and construing the defined terms as they are used in sections 1.4
and 3.4 (such as " Compensation" and "Employee"), the term "Affiliated Entity"
means any Affiliated Entity as determined in paragraphs
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(a)(iii) and (a)(iv), and any entity that would be an Affiliated Entity under
paragraph (a)(i) or (a)(ii) if the phrase "more than 50%" were substituted for
the phrase "at least 80%" each place it occurs in Code section 1653(a)(1).
1.4 "Alternate Payee" means a Participant's Spouse, former
spouse, child, or other dependent who is recognized by a QDRO as having a right
to receive all, or a portion of, the benefits payable under this Plan with
respect to such Participant.
1.5 "Annual Addition" means the allocations to a Participant's
Account(s) for any Limitation Year, as described in detail below.
(a) Annual Additions shall include: (i) Company
Contributions (except as provided in paragraphs (b)(iii) and (b)(iv)) to this
Plan and Company contributions to any other defined contribution plan
maintained by the Company or any Affiliated Entity, including Company Matching
Contributions forfeited to satisfy the ACP test of section 3.6, (ii) after-tax
contributions to any other defined contribution plan maintained by the Company
or an Affiliated Entity; (iii) Participant Before-Tax Contributions to this
Plan and similar contributions to any other defined contribution plan
maintained by the Company or an Affiliated Entity, including any such
contributions distributed to satisfy the ADP test of section 3.5; (iv)
forfeitures allocated to a Participant's Account(s) in this Plan and any other
defined contribution plan maintained by the Company or any Affiliated Entity
(except as provided in paragraphs (b)(iii) and (b)(vii) below); (v) all amounts
paid or accrued after December 31, 1985 in Taxable Years ending after December
31, 1985, to a welfare benefit fund as defined in Code section 419(e) and
allocated to the separate account (under the welfare benefit fund) of a Key
Employee to provide post-retirement medical benefits; and (vi) contributions
allocated on the Participant's behalf to any individual medical account as
defined in Code section 415(l)(2).
(b) Annual Additions shall not include: (i) rollover
contributions made pursuant to Code section 402(a)(5), 403(a)(4), 403(b)(8),
405(d)(3), 408(d)(3), or 409(b)(3)(C) to any defined contribution plan
maintained by the Company or an Affiliated Entity; (ii) repayments of loans
made to a Participant from a qualified plan maintained by the Company or any
Affiliated Entity; (iii) repayments of forfeitures for rehired Participants, as
described in Code sections 411(a)(7)(B) and 411(a)(3)(D); (iv) direct transfers
of employee contributions from one qualified plan to any qualified defined
contribution plan maintained by the Company or any Affiliated Entity; (v)
deductible employee contributions within the meaning of Code section 72(o)(5);
(vi) employee contributions to a simplified employee pension, if the
contributions are deductible under Code section 219(a); or (vii) repayments of
forfeitures of missing individuals pursuant to section 13.12.
1.6 "Code" means the Internal Revenue Code of 1986, as amended
from time to time, and the regulations and rulings in effect thereunder from
time to time.
1.7 "Committee" means the administrative committee provided for in
section 8.4.
1.8 "Company" means Apache, an successor thereto, and any other
Affiliated Entity that adopts the Plan pursuant to Article XI. Each Company is
listed in Appendix A.
1.9 "Company Contributions" means all contributions to the Plan
made by the Company pursuant to section 3.1 for the Plan Year.
1.10 "Company Mandatory Contributions" means all contributions to
the Plan made by the Company pursuant to subsection 3.1(b) for the Plan Year.
1.11 "Company Matching Contributions" means all contributions to
the Plan made by the Company pursuant to subsection 3.1(b) for the Plan Year.
1.12 "Company Stock" means shares of the $1.25 par value common
stock of Apache.
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1.13 "Compensation" means:
(a) Code Section 415 Compensation. For purposes of
determining the limitation on Annual Additions under section 3.4 of the minimum
contribution under section 12.4 when the Plan is top-heavy, Compensation shall
mean those amounts reported as "wages, tips, other compensation" on Form W-2
by the Company or an Affiliated Entity. For purposes of section 3.4,
Compensation shall be measured over a Limitation Year. For purposes of section
12.4, Compensation shall be measured over the portion of a Plan Year (i) after
the employee has satisfied an eligibility requirement of section 2.1 and (ii)
while the Employee is a Covered Employee.
(b) Code Section 414(q) Compensation. For purposes of
identifying Highly Compensated Employees and Key Employees under sections 1.26,
1.28 and 1.47, Compensation shall mean those amounts reported as "wages, tips,
other compensation" on Form W-2 by the Company or an Affiliated Entity;
Compensation shall also include elective contributions that are not includable
in the Employee's income pursuant to Code sections 125, 402(h), or 403(b). For
purposes of identifying Highly Compensated Employees, Compensation shall be
measured over a Determination Year. Compensation shall include only amounts
paid to the Employee, and shall not include any additional amounts accrued by
the Employee.
(c) Code Section 414(s) Compensation. For purposes of
the ADP, ACP, and multiple use tests under sections 3.5, 3.6, and 3.7, and for
purposes of allocating QNECs under subsection 3.8(b), Compensation shall mean
any definition of compensation for a Plan Year, as selected by the Committee,
that satisfies the requirements of Code section 414(s) and the regulations
promulgated thereunder. The definition of Compensation used in one Plan Year
may differ from the definition used in another Plan Year.
(d) Benefit Compensation. For purposes of determining
and allocating Company Mandatory Contributions under subsection 3.1(a) and
section 4.4, Compensation shall generally mean regular compensation paid by the
Company.
(i) Specifically, Compensation shall include:
(A) regular salary or wages,
(B) overtime pay,
(C) bonuses,
(D) salary reductions pursuant to
this Plan,
(E) salary reductions that are
excludable from an Employee's
gross income pursuant to Code
section 125, and
(F) amounts contributed as salary
deferrals to the Company's
Nonqualified Retirement/Savings Plan.
(ii) Compensation shall exclude:
(A) commissions,
(B) severance pay,
(C) moving expenses,
(D) any gross-up of moving expenses to
account for increased income taxes,
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(E) foreign service premiums paid as an
inducement to work outside of the
United States,
(F) credits or benefits under this Plan,
(G) other contingent compensation,
(H) contributions to any other fringe
benefit plan (including, but not
limited to, overriding royalty
payments or any other
exploration-related payments), and
(I) bonuses paid as an inducement to
enter the employment of the Company.
Compensation shall be measured over that portion of a Plan Year while the
Employee is a Covered Employee. Compensation shall include only amounts paid
to the Employee during the Plan Year, and shall not include any amounts accrued
by but not paid to the Employee during the Plan Year.
(e) Deferral Compensation. For purposes of determining
Participant Before-Tax Contributions under section 3.2 and for purposes of
determining and allocating Company Matching Contributions under subsection
3.1(b), Compensation shall mean Compensation as defined in subsection (d), with
the following modification. Compensation shall be measured over each pay
period (i) after the Employee has satisfied the eligibility requirements of
subsection 2.1(a) and (ii) while the Employee is a Covered Employee.
(f) Limit on Compensation. For purposes of calculating
the minimum contribution required in top-heavy years under subsection (a), for
all purposes of subsections (c) and (d), and for purposes of determining the
maximum allocation of Company Matching Contributions under subsection (e), the
Compensation taken into account for the appropriate time period shall not
exceed the dollar limit specified in Code section 401(a)(17) in effect for the
calendar year in which the time period begins.
1.14 "Covered Employee" means any employee of the Company except
for:
(a) a leased employee within the meaning of Code section
414(n)(2);
(b) a non-resident alien;
(c) An Employee included in a unit of Employees covered
by a collective bargaining agreement, unless the collective bargaining
agreement specifically provides for such Employee's participation in the Plan;
and
(d) An Employee who has worked for less than six
consecutive months and whose job is classified as "temporary."
1.15 "Determination Date" means, with respect to each Plan Year,
the last day of the preceding Plan Year; provided however, that in the case of
the first Plan Year of the Plan, the Determination Date shall be the last day
of the first Plan Year.
1.16 "Determination Year" means the Plan Year.
1.17 "Disability" means a disability due to sickness or injury
which renders an Employee incapable of performing any services for the Company
or an Affiliated Entity for which the Employee is qualified by education,
training, or experience. Evidence of disability satisfactory to Apache shall
be required.
1.18 "Domestic Relations Order" means any judgment, decree, or
order (including approval of a property settlement agreement) issued by a court
of competent jurisdiction that relates to the provisions of child support,
alimony or
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maintenance payments, or marital property rights to a Spouse, former spouse,
child, or other dependent of the Participant and is made pursuant to a state
domestic relations law (including a community property law).
1.19 "Employee" means each individual who performs services for
the Company or an Affiliated Entity and whose wages are subject to withholding
by the Company or an Affiliated Entity. The term "Employee" shall include
only individuals currently performing services for the Company or an Affiliated
Entity, and shall exclude former Employees who are still being paid by the
Company or an Affiliated Entity (whether through the payroll system, through
overriding royalty payments, through exploration-related payments, or
otherwise). The term "Employee" shall also include leased employees within the
meaning of Code section 414(n)(2); however, if leased employees constitute 20%
or less of the Non-Highly Compensated Employees of the Company and any
Affiliated Entities, the term "Employee" shall not include any leased employee
covered by a qualified plan described in Code section 414(n)(5)(B) that is
maintained by the leased employee's employer.
1.20 "Employment Commencement Date" means the date on which an
Employee first performs an Hour of Service.
1.21 "ERISA" means the Employee Retirement Income Security Act of
1974, as amended, and the regulations and rulings in effect thereunder from
time to time.
1.22 "Family Group" means:
(a) for purposes of subsections 1.23(a) and 1.23(e), a
Five-Percent Owner or one of the ten most highly paid Highly Compensated
Employees of the Company or an Affiliated Entity, such Employee's Spouse, and
such Employee's descendants under the age of 19; and
(b) for purposes of subsections 1.23(b) , 1.23(c), and
1.23(d), a Five-Percent Owner or one of the ten most highly paid Highly
Compensated Employees of the Company or an Affiliated Entity, and such
Employee's Spouse, lineal ascendants, descendants, and the spouses of any such
lineal ascendants or descendants.
1.23 "Family Member" means an Employee who is a member of a Family
Group. An Employee who is a member of a Family Group described in subsection
1.22(a) during any day of a Plan Year shall be considered a Family Member for
the entire Plan Year. An Employee who is a member of a Family Group described
in subsection 1.22(b) during any day of a Determination Year shall be
considered a Family Member for the entire Determination Year. The special
rules relating to Family Members are described below.
(a) The Compensation of the Family Members in one Family
Group is aggregated, and the combined Compensation of such Family Members is
limited to the dollar limit specified in Code section 401(a)(17) for the
purposes described in subsection 1.13(f).
(b) The term "Highly Compensated Employee" shall include
the Highly Compensated Employee (as determined in Section 1.26) and, if the
Highly Compensated Employee is a Five-Percent Owner or one of the ten most
highly paid Highly Compensated Employees of the Company or any Affiliated
Entity, the term shall also include any Family Member within the same Family
Group. The Employees who are among the ten most highly paid Highly Compensated
Employees, the Employees who are among the 100 most highly paid Employees, and
the Employees who are members of the Top-Paid Group, shall be determined
before the aggregation rule of the preceding sentence is applied.
(c) The limitations of section 3.4 and 3.2(b) shall apply
separately to each Family Member.
(d) For purposes of the ADP, ACP, and multiple use tests
of sections 3.5, 3.6, and 3.7, if two or more Family Groups contain the same
Family Member who is a Covered Employee and who has satisfied the requirements
of section 2.1, all Family Members in those Family Groups are treated as one
Highly Compensated Employee. The Compensation of all Family Members included
in the Highly Compensated Employee shall be aggregated, and the total
Compensation shall be limited to the dollar limit specified in Code section
401(a)(17). One actual deferral percentage and
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one actual contribution percentage shall be calculated for such Highly
Compensated Employee. Any return of Participant Before-Tax Contributions or
forfeiture of Company Matching Contributions that is required by section 3.6 or
3.7 for the Highly Compensated Employee shall be apportioned, to the extent
possible, among the Account(s) of each Family Member in proportion to each
Family Member's Company Matching Contributions. Any return of Participant
Before-Tax Contributions that is required by section 3.5 for the Highly
Compensated Employee shall be apportioned among the Account(s) of each Family
Member in proportion to each Family Member's Participant Before-Tax
Contributions.
(e) If two or more Family Members of one Family Group are
entitled to an allocation of Company Mandatory Contributions under section 4.4,
the Compensation of the Family Members is aggregated and limited to the dollar
limit specified in Code section 401(a)(17), and the allocation of the Family
Group is based on aggregated Compensation. Each Family Member shall receive a
share of the Family Group's allocation in proportion to his or her
Compensation.
1.24 "Five-Percent Owner" means:
(a) With respect to a corporation, any individual who
owns (either directly or indirectly according to the rules of Code section 318)
more than 5% of the value of the outstanding stock of the corporation or stock
processing more than 5% of the total combined voting power of all stock of the
corporation.
(b) With respect to a non-corporate entity, any
individual who owns (either directly or indirectly according to rules similar
to those of Code section 318) more than 5% of the capital or profits interest
in the entity.
An individual shall be a Five-Percent Owner for a particular year if such
individual is a Five-Percent Owner at any time during such year.
1.25 "Former Amoco Employee" means an Employee who was formerly
employed by Amoco Production Company or its subsidiaries and who became an
Employee of the Company pursuant to the provisions of that certain Stock
Purchase Agreement effective June 30, 1991, between Amoco Production Company,
Apache, and others.
1.26 "Highly Compensated Employee" means:
(a) Any Employee who performs service for the Company or
an Affiliated Entity during the Determination Year and who, during the
Determination Year: (i) received Compensation from the Company and Affiliated
Entities in excess of the dollar limit in effect under Code section
414(q)(1)(B); (ii) received Compensation from the Company and Affiliated
Entities in excess of the dollar limit in effect under Code section
414(q)(1)(C) and was a member of the Top-Paid Group; and (iii) was an officer
of the Company or an Affiliated Entity and received Compensation greater than
50% of the dollar limit in effect under Code section 415(b)(1)(A).
(b) A Five-Percent Owner during the Determination Year.
(c) If no officer has Compensation in excess of 50% of
the limit described in paragraph (a)(iii) above, the highest paid officer for
that year shall be treated as a Highly Compensated Employee.
(d) For purposes of determining Highly Compensated
Employees under paragraph (a)(iii), the number of officers shall be limited to
50 (or, if lesser, the greater of three or 10% of all Employees, excluding
those Employees who may be excluded in determining the Top-Paid Group).
(e) Notwithstanding the above, if the Company and
Affiliated Entities maintained significant business activities in at least two
significantly separate geographic areas during the Determination Year, Apache
may elect, in its sole discretion, to identify Highly Compensated Employees
using the simplified method described in Code section 414(q)(12). Under this
method, Highly Compensated Employees are identified using the method described
in subsections (a) through (d) above, with the following modifications: (i)
the "dollar limit in effect under Code section
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414(q)(1)(B)" in paragraph (a)(i) is replaced by the "dollar limit in effect
under Code section 414(q)(1)(C)"; and (ii) paragraph (a)(ii) is deleted.
1.27 "Hour of Service" means each hour for which an Employee is
paid or entitled to payment by the Company or an Affiliated Entity for the
performance of duties for the Company or an Affiliated Entity during the
applicable computation period. Hours of Service shall be credited to the
Employee for the computation period or periods in which the duties are
performed, regardless of when the Employee is paid for those duties.
1.28 "Key Employee" means an individual described in Code section
416(i) and the regulations promulgated thereunder.
1.29 "Lapse in Apache Employment" means the period commencing on
the Termination from Service Date and ending on the Reemployment Commencement
Date. A Participant shall incur a one-year Lapse in Apache Employment if the
Participant does not perform an Hour of Service in the 12-month period
beginning on any anniversary of his or her Termination from Service Date.
1.30 "Limitation Year" means the calendar year for purposes of Code
section 415.
1.31 "Non-Highly Compensated Employee" means an Employee of the
Company or an Affiliated Entity who is neither a Highly Compensated Employee
nor a Family Member.
1.32 "Non-Key Employee" means an Employee who is not a Key Employee.
1.33 "Normal Retirement Age" means age 65.
1.34 "Normal Retirement Date" means the first of the month
immediately following Normal Retirement Age.
1.35 "Participant" means any individual with an Account balance
under the Plan except beneficiaries and Alternate Payees. The term
"Participant" shall also include any Covered Employee who has satisfied the
eligibility requirements of section 2.1, but who does not yet have an account
balance.
1.36 "Participant Before-Tax Contributions" means contributions
made to the Plan by the Company, at the election of the Participant, in lieu of
cash, pursuant to section 3.2, that are excludable from the Participant's
income under Code sections 401(k) and 402(e)(3).
1.37 "Period of Service" means a period commencing on an Employee's
Employment Commencement Date or Reemployment Commencement Date, whichever is
applicable, and ending on his or her Termination from Service Date. A Period
of Service shall also include the period between an Employee's Termination from
Service Date and his or her Reemployment Commencement Date if the Employee does
not incur a one-year Lapse in Apache Employment between such dates; however,
the period between the first and second anniversaries of an Employee's absence
from work because of parental leave (as explained in paragraph 1.46(b)(i))
shall not be included in the Employee's Period of Service. A Period of Service
for a Former Amoco Employee shall also include any periods of employment with
Amoco Production Company or its subsidiaries. Periods of Service shall not
include any period following a Participant's Termination from Service Date
solely because of a severance payment of payments made to an individual with
respect to his or her termination of employment.
1.38 "Plan Year" means the 12-month period on which the records of
the Plan are kept, which shall be the calendar year.
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1.39 "Qualified Domestic Relations Order ("QDRO") " means a
Domestic Relations Order that creates or recognizes the existence of an
Alternate Payee's right to, or assigns to an Alternate Payee the right to,
receive all or a portion of the benefits payable with respect to a Participant
under the Plan and with respect to which the requirements of Code section
414(p) and ERISA section 206(d)(3) are met.
1.40 "Qualified Non-Elective Contributions ("QNECs") " means any
contribution to the Plan made by the Company, or any portion of the forfeitures
designated as QNECs under section 5.5, that satisfies the requirements of
section 3.8.
1.41 "Qualified Matching Contributions ("QMACs") " means that
portion of Company Matching Contributions so designated by the Company, or any
portion of the forfeitures designated as QMACs under section 5.5, that satisfy
the requirements of section 3.9.
1.42 "Reemployment Commencement Date" means the first date
following a Lapse in Apache Employment on which the Employee performs an Hour
of Service.
1.43 "Required Beginning Date" means:
(a) for a Participant who attains age 70-1/2 after
December 31, 1987, April 1 of the calendar year following the calendar year in
which the Participant attains age 70-1/2;
(b) for a Participant who attains age 70-1/2 before
January 1, 1988, and is not a "five-percent owner" (as defined below), April 1
of the calendar year following the later of (i) the calendar year in which the
Participant attains age 70-1/2, or (ii) the calendar year in which the
Participant retires;
(c) for a Participant who attains age 70-1/2 during
calendar year 1988 and is not a "five-percent owner" (as defined below), April
1, 1990; and
(d) for a Participant who attains age 70-1/2 before
January 1, 1988, and is a "five-percent owner" (as defined below), April 1 of
the calendar year following the later of (i) the calendar year in which the
Participant attains age 70-1/2, or (ii) earlier of (A) the calendar year with
or within which ends the Plan Year in which the Participant becomes a
"five-percent owner," or (B) the calendar year in which the Participant
retires.
For purposes of this section only, a "five-percent owner" means any individual
who is a Five-Percent Owner at any time subsequent to the Plan Year ending
within the calendar year in which such individual attains age 65-1/2.
1.44 "Spouse" means the individual to whom a Participant is
lawfully married according to the laws of the state of the Participant's
domicile on one of the following dates: the date of the Participant's death,
the date any election is filed pursuant to Article VI, or the date the
Participant's benefits commence, as applicable.
1.45 "Taxable Year" means the accounting period of Apache for
federal income tax purposes.
1.46 "Termination from Service Date" means the earlier of the
following dates:
(a) the last day an Employee performs services for the
Company or an Affiliated Entity if the Employee quits (except as provided in
paragraph (b)(iii)), is discharged, retires, or dies; or
(b) the first anniversary of the day a former Employee is
absent from the Company or Affiliated Entity for any reason other than
resignation, discharge, retirement, or death (such as vacation, holiday,
sickness, disability, leave of absence, or temporary lay- off), with the
following exceptions:
(i) If the former Employee is absent from the
Company or Affiliated Entity because of parental leave (which includes
only the pregnancy of the former Employee, the birth of the
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former Employee's child, the placement of a child with the former
Employee in connection with adoption of such child by the former
Employee, or the caring for such child immediately following birth or
placement) on the first anniversary of the day the former Employee was
first absent, the Termination from Service Date shall be the second
anniversary of his or her absence, no Termination from Service Date
shall occur.
(ii) If the former Employee is absent from the
Company or Affiliated Entity for more than one year because of an
approved leave of absence (either with or without pay) for any reason
(including, but not limited to, jury duty and military duty) and the
former Employee returns to work at or prior to the expiration of his
or her leave of absence, no Termination from Service Date shall occur.
(iii) If a former Employee is absent from the
Company or an Affiliated Entity because of a Disability incurred while
employed by the Company or an Affiliated Entity, a Termination from
Service Date shall not occur until the later of the first anniversary
of his or her absence or the date he or she recovers from the
Disability, regardless of whether the former Employee quits during the
Disability.
1.47 "Top-Paid Group" means the top 20% of Employees ranked on the
basis of Compensation received during the Determination Year. For purposes of
determining the number of Employees in the Top-Paid Group, the following
Employees may be excluded:
(a) any Employee who has not completed six months of
service before the end of the applicable year;
(b) any Employee who normally works less than 17-1/2
hours per week, as defined in the regulations under Code section 414(q);
(c) any Employee who normally works less than six months
during the applicable year, as defined in the regulations under Code section
414(q);
(d) any Employee who has not attained age 21 before the
end of the applicable year; and
(e) any Employee who is a non-resident alien and who
receives no earned income (within the meaning of Code section 911(d)(2)) from
the Company or any Affiliated Entity that constitutes income from sources
within the United States (within the meaning of Code section 861(a)(3)) during
the applicable year.
Notwithstanding the foregoing, Apache may elect, on a consistent and uniform
basis, to modify the permissible exclusions set forth above by substituting any
shorter period of service or lower age. Apache may elect to include all
Employees in determining the Top-Paid Group.
1.48 "Transferred Participant" means a Participant whose employment
is transferred from the Company to Natural Gas Clearinghouse ("NGC"), a
Colorado general partnership, pursuant to the terms of the Employee Benefits
Agreement, effective April 1, 1990, between Apache and NGC.
1.49 "Valuation Date" means the last day of each Plan Year and any
other dates as specified in section 4.2 as of which the assets of the Trust
Fund are valued at fair market value and as of which the increase or decrease
in the net worth of the Trust Fund is allocated among the Participants'
Accounts.
1.50 "Year of Service" means all Periods of Service (measured in
months) required to be taken into account under section 1.37, divided by 12.
Fractional Years of Service are not taken into account.
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ARTICLE II
PARTICIPATION
2.1 Participation - Required Service.
(a) Participant Before-Tax Contributions. A Covered Employee
(which only includes Employees of the Company) who is a Participant in the Plan
on December 31, 1994, and who is a Covered Employee on January 1, 1995, shall
continue to participate on January 1, 1995. Each other Covered Employee (which
only includes Employees of the Company) shall be eligible to begin to make
Participant Before-Tax Contributions as of the first day of the first pay
period following the later of : (i) 90 days of employment with the Company or
an Affiliated Entity; or (ii) the date the Employee become a Covered Employee.
(b) Company Mandatory Contributions. Each Covered Employee shall
be eligible to participate in the Plan with respect to the 6% Company Mandatory
Contribution provided by section 3.1 on the day the Employee first becomes a
Covered Employee.
2.2 Reemployment.
(a) Termination without Vesting. If a Participant terminates
employment before having any vested interest in his or her Company
Contributions Account under section 5.1 and is thereafter reemployed by the
Company or an Affiliated Entity, (i) the Employee shall be treated as a new
Employee for participation purposes if the Employee incurred a one-year Lapse
in Apache Employment before rehire, and (ii) if the Employee did not incur a
one-year Lapse in Apache Employment before rehire, the Employee shall be
eligible to again participate in the Plan under section 2.1 as if he or she has
been employed by the Company, but not as a Covered Employee, during the break
in employment.
(b) Termination with Vesting. If the case of any Participant who
terminates employment with a vested interest in his or her Company
Contributions Account under section 5.1, (i) he or she shall be eligible to
receive Company Mandatory Contributions as of the later of his or her
Reemployment Commencement Date or the date he or she again becomes a Covered
Employee, and (ii) he or she shall be eligible to make Participant Before-Tax
Contributions as of the first day of the first pay period following the later
of his or her Reemployment Commencement Date or the date he or she again became
a Covered Employee.
2.3 Enrollment - Procedure.
Notwithstanding sections 2.1 and 2.2, a Covered Employee shall not be
eligible to participate in the Plan until after completing the enrollment
procedures specified by the Committee. Such enrollment procedures may, for
example, require the Covered Employee to complete and sign an enrollment form
or to complete a voice-response telephone enrollment. The Covered Employee
shall provide the initial investment direction, the address and date of birth
of the Employee, and the name, address, and date of birth of each beneficiary
of the Employee, the initial rate of the Participant Before-Tax Contributions,
and any other information requested by the Committee. An election to make
Participant Before-Tax Contributions shall not be effective until after the
Covered Employee has properly completed the enrollment procedures. The
Committee may require that the enrollment procedure be completed a certain
number of days prior to the date that a Covered Employee actually begins to
participate.
ARTICLE III
CONTRIBUTIONS
The only contributions that can be made to the Plan are Company
Contributions pursuant to section 3.1, Participant Contributions pursuant to
section 3.2, contributions pursuant to subsection 5.3(b), and loan repayments.
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3.1 Company Contributions.
(a) Company Mandatory Contributions. For each Plan Year, the
Company shall contribute to the Trust Fund no less than 6% of the Compensation
of those Participants eligible to share in an allocation of Company Mandatory
Contributions pursuant to section 4.4. The Company may elect to treat any
portion of forfeitures occurring during the Plan Year as Company Mandatory
Contributions, pursuant to section 5.5. Company Mandatory Contributions shall
be allocated to Company Contributions Accounts.
(b) Company Matching Contributions. As of the last day of each
pay period, the Committee shall allocate Company Matching Contributions
(including such forfeitures occurring during the pay period that are treated as
Company Matching Contributions pursuant to section 5.5) to each Participant who
made Participant Before-Tax Contributions during the pay period as follows.
The Company Matching Contribution allocated to a Participant shall equal a
"matching percentage" multiplied by that portion of the Participant Before-Tax
Contributions for the pay period that do not exceed 6% of the Participant's
Compensation for the pay period. The matching percentage equals 100% unless
one or more of the following conditions applies, in which case the matching
percentage equals 50%.
(i) The Participant is younger than age 59-1/2 on the
first day of the pay period and the Participant has, in the six months
preceding the pay period, sold Company Stock from any of his or her
Accounts (other than sales of Company Stock necessary to fund the
Participant's loan or to pay any fees charged to his or her Accounts).
(ii) The Participant has elected to invest any portion of
the pay period's Company Matching Contribution in an investment option
other than Company Stock. The matching percentage is 50% only to the
extent that this condition applies.
(iii) The Participant has elected to invest any portion of
the pay period's Participant Before-Tax Contribution in an investment
other than Company Stock. The matching percentage is 50% only to the
extent that this conditions applies. The matching percentage shall be
applied first to the Participant Before-Tax Contributions that are
invested in Company Stock. For example, if paragraphs (i) and (ii) do
not apply, and if a Participant contributes 10% of Compensation as a
Participant Before-Tax Contribution in the pay period and he or she
elects to invest half the contribution in Company Stock and half in
another investment option, then the Participant's allocation of
Company Matching Contributions for the pay period will equal 100% of
5% of the pay period's Compensation plus 50% of 1% of the pay period's
Compensation, for a total match of 5-1/2% of the pay period's
Compensation; the remaining Participant Before-Tax Contribution (of 4%
of the Participant's Compensation for the pay period) will not be
matched.
Company Matching Contributions in a Plan Year shall accrue only on
Participant Before-Tax Contributions up to 6% of the Code section 401(a)(17)
limit for that Plan Year. Any Company Matching Contributions allocated during
the Plan Year in which they were accrued shall be allocated on a temporary
basis only; the allocation shall become final after the Committee verifies that
the allocation complies with the terms of the Plan, including the limits of
Code section 401(a)(17). Any reduction in the allocation to comply with Code
section 401(a)(17), adjusted to reflect investment experience, shall be used to
pay those expenses of the Plan that are properly payable from the Trust Fund or
to reduce future Company Contributions to the Plan.
(c) Miscellaneous Contributions.
(i) The Company may make additional contributions to the
Plan to restore amounts forfeited from the Company Contributions
Accounts of certain rehired Participants, pursuant to section 5.4.
This additional contribution shall be required only when the
forfeitures occurring during the Plan Year are insufficient to restore
such forfeited amounts, as described in section 5.5. This
contribution shall be allocated to the Participant's Company
Contributions Account.
(ii) The Company may make additional contributions to the
Plan to satisfy the minimum contribution required by section 12.4.
The Company may elect to use any portion of forfeitures
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occurring during the Plan Year for this purpose, pursuant to section
5.5. For Non-Highly Compensated Employees, this contribution shall be
allocated to Participant Before-Tax Contributions Accounts; for Highly
Compensated Employees, this contribution shall be allocated to Company
Contributions Accounts.
(iii) The Company may make additional contributions to the
Plan to restore the forfeited benefit of any missing individual,
pursuant to section 13.12. This additional contribution shall be
required only when the forfeitures occurring during the Plan Year are
insufficient to restore such forfeited amounts, as described in
section 5.5.
(iv) The Company may make QNECs to the Plan to enable the
Plan to satisfy the ADP, ACP, and multiple use tests of sections 3.5,
3.6, and 3.7. The Company may elect to treat any portion of
forfeitures occurring during the Plan Year as QNECs, pursuant to
section 5.5. QNECs shall be allocated to Participant Before-Tax
Contribution Accounts.
(d) Contributions Contingent on Deductibility. The Company
Contributions for a Plan Year (excluding forfeitures), when combined with
Participant Before-Tax Contributions for the Plan Year, shall not exceed the
amount allowable as a deduction for the Taxable Year ending with or within the
Plan Year pursuant to Code section 404. The amount allowable as a deduction
under Code section 404 shall include carry forwards of unused deductions for
prior Taxable Years. If the Code section 404 deduction limit would be exceeded
for any Plan Year, the Plan contributions shall be reduced, in the following
order, until the Plan contributions equal the Code section 404 deduction limit:
first, the Company Matching Contributions for those Highly Compensated
Employees who are eligible to participate in the Company's Nonqualified
Retirement/Savings Plan; second, the Participant Before-Tax Contributions for
those Highly Compensated Employees who are eligible to participate in the
Company's Nonqualified Retirement/Savings Plan; third, the Company Mandatory
Contributions for those Highly Compensated Employees who are eligible to
participate in the Company's Nonqualified Retirement/Savings Plan. Company
Contributions other than QNECs shall be paid to the Trustee no later than the
due date (including any extensions) for filing the Company's federal income tax
return for such year; QNECs paid to the Trustee no later than the due date
(including any extensions) for filing the Company's federal income tax return
for such year shall be deductible in such year; QNECs shall be paid to the
Trustee within two and one-half months after the close of the Plan Year if
possible, and in no event later than 12 months after the close of the Plan
Year. Company Contributions may be made without regard to current or
accumulated earnings and profits; nevertheless, this Plan is intended to
qualify as a "profit sharing plan" as defined in Code section 401(a). The
appropriate contribution of the Company to the Trust Fund may be paid by the
Company in the form of Company Stock, cash, other assets of any character, or
in any combination of the foregoing, as determined by the Company.
3.2 Participant Contributions.
A Participant may elect to defer the receipt of a portion of his or
her Compensation during the Plan Year and contribute such amount to the Plan as
Participant Before-Tax Contributions. Participant Before--Tax Contributions
may be made in whole percentages (up to a maximum of 10%) of Compensation
received in a pay period. The Company shall pay the amount deducted from the
Participant's Compensation to the Trustee promptly after the deduction is made.
(a) Participant After-Tax Contributions. Participants cannot
make after-tax contributions to the Plan.
(b) Participant Before-Tax Contributions. Participant Before-Tax
Contributions shall be allocated to Participant Before-Tax Contributions
Accounts. The sum of Participant Before-Tax Contributions to this Plan and
similar contributions to any other plan containing a qualified cash or deferred
arrangement that is maintained by the Company or an Affiliated Entity shall not
exceed the dollar limit in effect under Code section 402(g)(1) in any calendar
year. The Company shall inform the Committee if such limit has been exceeded;
the excess amount (less any amount already returned pursuant to section 3.5 or
3.7) shall be returned to the Participant as soon as administratively possible,
and in no event later than April 15 of the succeeding calendar year. If the
sum of the Participant Before-Tax Contributions, similar contributions to any
qualified plan maintained by an Affiliated Entity, and any similar
contributions to a qualified plan maintained by an unrelated entity exceed the
dollar limit in effect under Code section 402(g)(1) in a calendar year, and
the Participant is an Employee on the last day of the Plan Year and informs the
Committee of the amount of the excess allocated to this Plan, then the excess
(less any amount already returned pursuant to section 3.4, 3.5, or 3.7) shall
be
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returned to the Participant as soon as administratively practicable, and in no
event later than April 15 of the succeeding calendar year. The amount returned
shall be adjusted to reflect the net increase or decrease in the net worth of
the Participant's Before-Tax Contributions Account attributable to such amount
for the Plan Year. The Committee may use any reasonable method to allocate
this adjustment. Company Matching Contributions attributable to amounts
returned under this paragraph shall be forfeited. Unmatched Participant
Before-Tax Contributions shall be returned first.
(c) Participant Elections. Participant Before-Tax Contributions
shall be made according to rules prescribed by the Committee, and may only be
made after the Company has received written authorization from a Participant to
deduct such contributions from his or her Compensation. Such authorization
shall remain in effect until revoked or changed by the Participant. The
Participant may change his or her authorization as of the first day of any
calendar quarter by filing an election no later than the first day of the
quarter. In addition, a Participant may reduce his or her Participant
Before-Tax Contribution rate to 0% at any time by filing an election no later
than the first day of the pay period in which such suspension will occur. A
Participant who has elected to reduce his or her Participant Before-Tax
Contribution rate to 0% may not make Participant Before-Tax Contributions for
at least three months. To be effective, any authorization, change of
authorization, or notice of revocation must be filed with the Committee
according to such restrictions and requirements as the Committee prescribes.
The Committee shall establish procedures for Participants to change their
contribution elections, which procedures shall be in writing and communicated
to Participants. The Committee shall have the authority to change such
procedures at any time and from time to time and shall have the authority to
designate additional dates as of which a Participant may change his or her rate
of Participant Before-Tax Contributions.
3.3 Return of Contributions.
Upon request of the Company, the Trustee shall return:
(a) To the Company, any Company Contribution made under a mistake
of fact. The amount that shall be returned shall not exceed the excess of the
amount contributed (reduced to reflect any decrease in the net worth of the
appropriate Accounts attributable thereto) over the amount that would have been
contributed without the mistake of fact. Appropriate reductions shall be made
in the Accounts of Participants to reflect the return of any contributions
previously credited to such Accounts. If the Company so requests, any
contribution made under a mistake of fact shall be returned to the Company
within one year after the date of payment.
(b) To the Company, any Company Contribution or Participant
Before-Tax Contribution that is not deductible under Code section 404. The
Company shall pay any returned Participant Before-Tax Contribution to the
appropriate Participant or the Company's Nonqualified Retirement/Savings Plan,
as appropriate, as soon as administratively practicable, subject to any
withholding. All contributions under the Plan are expressly conditioned upon
their deductibility for federal income tax purposes. The amount that shall be
returned shall be the excess of the amount contributed (reduced to reflect any
decreased in the net worth of the appropriate Accounts attributable thereto)
over the amount that would have been contributed if there had not been a
mistake in determining the deduction. Appropriate reductions shall be made in
the Accounts of Participants to reflect the return of any contributions
previously credited to such Accounts. Any contribution conditioned on its
deductibility shall be returned within one year after it is disallowed as a
deduction.
(c) A contribution shall be returned under this section only to
the extent that its return will not reduce the Account(s) of a Participant to
an amount less than the balance that would have been credited to the
Participant's Account(s) had the contribution not been made.
3.4 Limitation on Annual Additions.
(a) The Annual Additions to a Participant's Account(s) in this
Plan and any other defined contribution plan maintained by the Company or an
Affiliated Entity for any Limitation Year shall not exceed in the aggregate the
lesser of (i) 25% of such Employee's Compensation or (ii) the greater of
$30,000 or one-quarter of the dollar limit in effect under Code section
415(b)(1)(A).
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(b) If, as a result of a reasonable error in estimating
Compensation, or as a result of the allocation of forfeitures, or as a result
of other facts and circumstances as provided in the regulations under Code
section 415, the Annual Additions to a Participant's Account(s) would, but for
this subsection, exceed the foregoing limits, the Annual Additions shall be
reduced, to the extent necessary, in the following order: unmatched Participant
Before-Tax Contributions, then matched Participant Before-Tax Contributions and
the corresponding Company Matching Contributions, and then Company Mandatory
Contributions. The Company shall pay any reduction in Participant Before-Tax
Contributions to the Participant as soon as administratively practicable,
subject to any withholding, or, if such Participant is a participant in the
Company's Nonqualified Retirement/Savings Plan, then the amount of any such
reduction shall be transferred to the trustee of such plan on behalf of such
Participant. The amount of any reduction of Company Contributions shall be
placed in a suspense account in the Trust Fund and used to reduce Company
Contributions to the Plan. The following rules shall apply to such suspense
account: (i) no further Company Contributions may be made if the allocation
thereof would be precluded by Code section 415; (ii) any increase or decrease
in the net value of the Trust Fund attributable to the suspense account shall
not be allocated to the suspense account, but shall be allocated to the
Accounts; and (iii) all amounts held in the suspense account shall be allocated
as of each succeeding allocation date on which forfeitures may be allocated
pursuant to section 5.5 (and may be allocated more frequently if the Committee
so directs), until the suspense account is exhausted.
3.5 Contribution Limits for Highly Compensated Employees (ADP Test).
(a) Limits on Contributions. Notwithstanding any provision in
this Plan to the contrary, the actual deferral percentage ("ADP") test of Code
section 401(k)(3) shall be satisfied. Code section 401(k) and the regulations
issued thereunder are hereby incorporated by reference to the extent permitted
by such regulations.
(b) Permissible Variations of the ADP Test. To the extent
permitted by the regulations under Code sections 401(m) and 401(k), Participant
Before-Tax Contributions, QMACs, and QNECs may be used to satisfy the ACP test
of section 3.6 if they are not used to satisfy the ADP test.
(c) Advanced Limitation on Participant Before-Tax Contributions or
Company Matching Contributions. The Committee may limit the Participant
Before-Tax Contributions of any Highly Compensated Employee (or any Employee
expected to be a Highly Compensated Employee) at any time during the Plan Year
(with the result that his or her share of Company Matching Contributions may be
limited). This limitation may be made, if practicable, whenever the Committee
believes that the limits of this section or sections 3.4, 3.6 or 3.7 will not
be satisfied for the Plan Year.
(d) Corrections to Satisfy Test. If the Committee believes that
the ADP test will not be satisfied for the Plan Year, the Committee may
recommend to the Company and the Company may designate any portion of its
Company Matching Contributions as QMACs before such contributions are made to
the Plan, pursuant to section 3.9. If the ADP test is not satisfied for the
Plan Year, the Committee shall decide which one or more of the following
methods shall be employed to satisfy the ADP test:
(i) The Committee may recommend to the Company and the
Company may make QNECs to the Plan, pursuant to section 3.8, within
two and one-half months after the close of the Plan Year if possible,
and in no event later than 12 months after the close of the Plan Year.
(ii) Participant Before-Tax Contributions of Highly
Compensated Employees may be returned to the Highly Compensated
Employee, without the consent of either the Highly Compensated
Employee or his or her Spouse, subject to the rules of subsection
(e). Any such return shall be made within two and one-half months
after the close of the Plan Year if possible, and in no event later
than 12 months after the close of the Plan Year. Company Matching
Contributions attributable to such returned amounts shall be paid to
the Participant. Unmatched Participant Before-Tax Contributions shall
be returned first.
(iii) In a top-heavy Plan Year, the QMACs of a Non-Key
Employee who is a Highly Compensated Employee may be treated as
Company Discretionary Contributions to the extent necessary to
satisfy the minimum contribution requirement of section 12.4.
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(e) Determining Amounts Returned. If the ADP test is not
satisfied and the Committee elects to return contributions pursuant to
paragraph (d)(ii) above, the following procedure shall be applied to determine
the amounts returned. The Highly Compensated Employee(s) with the highest
actual deferral ration (as defined in the regulations under Code section
401(k)) shall have an amount returned until his or her actual deferral ratio is
reduced to the greater of (i) the actual deferral ratio that causes the ADP
test to be satisfied or (ii) the actual deferral ratio of the Highly
Compensated Employee with the next highest actual deferral ratio. The process
described in the preceding sentence shall continue until the ADP test is
satisfied. The amounts returned shall be reduced by any previous amounts
returned. The amount returned shall be adjusted to reflect any increase or
decrease in the net worth of the Accounts attributable to such contributions
for the Plan Year. The Committee may use any reasonable method to calculate
this adjustment.
(f) Coordination with Top-Heavy Provisions. Any QMACs used to
satisfy the minimum contribution requirement for Non-Key Employees under
section 12.4 shall not be a part of the ADP test.
3.6 Contribution Limits for Highly Compensated Employees (ACP Test).
(a) Limits on Contributions. Notwithstanding any provision in
this Plan to the contrary, the actual contribution percentage ("ACP") test of
Code section 401(m)(2) shall be satisfied. Code section 401(m) and the
regulations issued thereunder are hereby incorporated by reference to the
extent permitted by such regulations.
(b) Permissible Variations of the ACP Test. To the extent
permitted by the regulations under Code sections 401(m) and 401(k), Participant
Before-Tax Contributions, QMACs and QNECs may be used to satisfy this test if
not used to satisfy the ADP test of section 3.5.
(c) Corrections to Satisfy Test. If the ACP test is not
satisfied, the Committee shall decide which one or more of the following
methods shall be employed to satisfy the ACP test:
(i) The Committee may recommend the Company and the
Company may make QNECs to the Plan, pursuant to section 3.8, within
two and one-half months after the close of the Plan Year if possible,
and in no event later than 12 months after the close of the Plan Year.
(ii) The non-vested Company Matching Contributions
allocated to Highly Compensated Employees as of any date during the
Plan Year may be forfeited as of the last day of the Plan Year,
subject to the rules of subsection (d). For this purpose, the vested
percentage is determined as of the last day of the Plan Year; the
vested percentage of any QMAC is the vested percentage that would have
applied to such contribution if it had not been designated as a QMAC.
Any such forfeiture shall be made as soon as practicable, within two
and one-half months after the close of the Plan Year if possible, and
in no event later than 12 months after the close of the Plan Year.
(iii) In a top-heavy Plan Year, the Company Matching
Contributions of any Non-Key Employee who is a Highly Compensated
Employee may be treated as Company Discretionary Contributions to the
extent necessary to satisfy the minimum contribution requirement of
section 12.4.
(iv) Those vested Company Matching Contributions and those
Participant Before-Tax Contributions that are taken into account for
this ACP test for any Highly Compensated Employee may be returned to
such Highly Compensated Employee, without the consent of either the
Highly Compensated Employee or his or her Spouse, subject to the rules
of subsection (d). Any such return of Participant Before-Tax
Contributions or vested Company Matching Contributions shall be made
within two and one-half months after the close of the Plan Year if
possible, and in no event later than 12 months after the close of the
Plan Year.
(d) Determining Amount Forfeited. If the ACP test is not
satisfied and the Committee elects to forfeit certain Company Matching
Contributions pursuant to paragraph (d)(ii) above, the following procedure
shall be applied to determine the amount forfeited. The Highly Compensated
Employee(s) with the highest actual contribution ratio (as defined in the
regulations under Code section 401(m)) shall have an amount forfeited until his
or her actual contribution ratio is reduced to the greater of (i) the actual
contribution ratio that causes the ACP test to be satisfied or (ii) the actual
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contribution ratio of the Highly Compensated Employee with the next highest
actual contribution ratio. The process described in the preceding sentence
shall continue until the ACP test is satisfied. The process shall apply to
only those Highly Compensated Employees who are not 100% vested in their
Company Contributions Accounts. The amounts forfeited shall be reduced by any
amounts previously returned or forfeited. The amounts forfeited shall be
adjusted to reflect any increase or decrease in the net worth of the Accounts
attributable to such contributions for the Plan Year. The Committee may use
any reasonable method to calculate this adjustment.
(e) Coordination with Top-Heavy Provisions. Any Company Matching
Contributions used to satisfy the minimum contribution requirement for Non-Key
Employees under section 12.4 shall not be a part of this ACP test.
3.7 Contribution Limits for Highly Compensated Employees (Multiple Use).
(a) Limits on Contributions. Notwithstanding any provision in
this Plan to the contrary, the multiple use test described in the regulations
under Code section 401(m) shall be satisfied. Code section 401(m) and the
regulations issued thereunder are hereby incorporated by reference to the
extent permitted by such regulations.
(b) Corrections to Satisfy Multiple Use Test. If the multiple use
test is not satisfied, the Company shall cause the contributions to the
Accounts of the Highly Compensated Employees to be adjusted using one or more
of the methods described in subsections 3.5(d) and 3.6(c). The Company shall
apply such methods to all Highly Compensated Employees. The Company may also
use any other correction method permitted in the regulations under Code section
401(m). Any Company Matching Contributions used to satisfy the minimum
contribution requirement for Non-Key Employees under section 12.4 shall not be
a part of this multiple use test.
3.8 QNECs.
QNECs shall satisfy all of the following requirements:
(a) QNECs shall be made within two and one-half months after the
close of the Plan Year to which they apply, if possible, and in no event later
than 12 months after the close of such Plan Year.
(b) As of the last day of each Plan Year, the Committee shall
allocate the QNECs for such Plan Year (including such forfeitures occurring
during such Plan Year that are treated as QNECs pursuant to section 5.5).
These amounts shall be allocated to the Participant Before-Tax Contributions
Accounts of those Non-Highly Compensated Employees who made Participant
Before-Tax Contributions or received an allocation of Company Mandatory
Contributions or performed one or more Hours of Service as a Covered Employee
during such Plan Year after satisfying the eligibility requirements of section
2.1, as follows:
(i) QNECs shall be allocated to the Participant
Before-Tax Contributions Account of the Non-Highly Compensated
Employee(s) with the least Compensation, until either the QNECs are
exhausted or the limit of section 3.4 is reached for such Non-Highly
Compensated Employee(s).
(ii) Any remaining QNECs shall be allocated to the
Participant Before-Tax Contributions Account of the Non-Highly
Compensated Employee(s) with the next lowest Compensation, until
either the QNECs are exhausted or the limit of section 3.4 is reached
for such Non-Highly Compensated Employee(s).
(iii) The procedure in paragraph (ii) shall be repeated
until all QNECs have been allocated.
(c) QNECs shall be treated as a Company Mandatory Contribution for
purposes of calculating the percentages of Compensation for Key Employees and
Non-Key Employees of section 12.4.
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3.9 QMACs.
QMACs shall satisfy the following requirements:
(a) The Company may designate all or any portion of any
Participant's allocation of Company Matching Contributions as Qualified
Matching Contributions. Such designation shall be made before such
contributions are made to the Trust Fund.
(b) QMACs shall be allocated to Participant Before-Tax
Contributions Accounts.
ARTICLE IV
INTERESTS IN THE TRUST FUND
4.1 Participants' Accounts.
The Committee shall establish and maintain separate Accounts in the
name of each Participant, but the maintenance of such Accounts shall not
require any segregation of assets of the Trust Fund. Each Account shall
contain the contributions specified below and the increase or decrease in the
net worth of the Trust Fund attributable to such contributions.
(a) Participant Before-Tax Contributions Account. A Participant
Before-Tax Contributions Account shall be established for each Participant who
makes Participant Before-Tax Contributions, or who receives an allocation of
QNECs or QMACs. The Committee may elect to establish subaccounts for the
different types of contributions allocated to this Account.
(b) Company Contributions Account. A Company Contributions
Account shall be established for each Participant who receives an allocation of
Company Mandatory Contributions or an allocation of Company Matching
Contributions that are not designated as QMACs. The Committee may elect to
establish subaccounts for the different types of contributions allocated to
this Account.
4.2 Valuation of Trust Fund.
(a) General. The Trustee shall value the assets of the Trust Fund
at least annually as of the last day of the Plan Year, and as of any other
dates determined by the Committee, at their current fair market value and
determine the net worth of the Trust Fund. In addition, the Committee may
direct the Trustee to have a special valuation of the assets of the Trust Fund
when the Committee determines, in its sole discretion, that such valuation is
necessary or appropriate or in the event of unusual market fluctuations of such
assets. Such special valuation shall not include any contributions made by
Participants since the preceding Valuation Date, any Company Contributions for
the current Plan Year, or any unallocated forfeitures. The Trustee shall
allocate the expenses of the Trust Fund occurring since the preceding Valuation
Date, pursuant to section 9.2, and then determine the increase or decrease in
the net worth of the Trust Fund that has occurred since the preceding Valuation
Date. The Trustee shall determine the share of the increase of decrease that
is attributable to the non-separately accounted for portion of the Trust Fund
and to any amount separately accounted for, as described in subsections (b) and
(c).
(b) Mandatory Separate Accounting. The Trustee shall separately
account for (i) any individually directed investments permitted under section
9.3, and (ii) amounts subject to a Domestic Relations Order, to provide a more
equitable allocation of any increase or decrease in the net worth of the
Accounts.
(c) Permissible Separate Accounting. The Trustee may separately
account for the following amounts to provide a more equitable allocation of any
increase or decrease in the net worth of the Trust Fund:
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(i) the distributable amount of a Participant, pursuant
to section 6.6, including any amount distributable to an Alternate
Payee or to a beneficiary of a deceased Participant; and
(ii) Company Matching Contributions made since the
preceding Valuation Date;
(iii) Participant Before-Tax Contributions that were
received by the Trustee since the preceding Valuation Date;
(iv) Company Matching Contributions and Participant
Before-Tax Contributions of Highly Compensated Employees that may need
to be distributed or forfeited to satisfy the ADP, ACP, and multiple
use tests of sections 3.5, 3.6, and 3.7;
(v) Any other amounts for which separate accounting will
provide a more equitable allocation of the increase or decrease in the
net worth of the Trust Fund.
4.3 Allocation of Increase or Decrease in Net Worth.
(a) The Committee shall, as of each Valuation Date, allocate the
increase or decrease in the net worth of the Trust Fund that has occurred since
the preceding Valuation Date between the non-separately accounted for portion
of the Trust Fund and the amounts separately accounted for that are identified
in subsections 4.2(b) and 4.2(c).
(b) The increase or decrease attributable to the non-separately
accounted for portion of the Trust Fund shall be allocated among the
appropriate Accounts in the ratio that the dollar value of each such Account
bore to the aggregate dollar value of all such Accounts on the preceding
Valuation Date after all allocations and credits made as of such date had been
completed.
(c) After the allocation in subsection (b) is completed, the
Committee shall allocate any amounts separately accounted for (including the
increase or decrease in the net worth of the Trust Fund attributable to such
amounts) to the appropriate Account(s) if such separate accounting is no longer
necessary.
4.4 Allocation of Company Mandatory Contributions.
As of the last day of the Plan Year, the Committee shall allocate the
Company Mandatory Contributions for the Plan Year (including forfeitures
occurring during the Plan Year that are treated as Company Mandatory
Contributions pursuant to section 5.5). These amounts shall be allocated among
the Company Contributions Accounts of Participants who received credit for one
Hour of Service as a Covered Employee during the Plan Year and who were
employed on the last day of the Plan Year. Each such Participant shall receive
an allocation of 6% of his or her Compensation.
ARTICLE V
AMOUNT OF BENEFITS
5.1 Vesting Schedule.
A Participant shall have a fully vested and nonforfeitable interest in
all his or her Account(s) upon his or her Normal Retirement Age if he or she is
an Employee on such date, upon his or her death while an Employee or while on
an approved leave of absence from the Company or an Affiliated Entity, or upon
his or her termination of employment with the Company or an Affiliated Entity
because of a Disability. In all other instances a Participant's vested
interest shall be calculated according to the following rules.
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(a) Participant Before-Tax Contributions Account. A Participant
shall be fully vested at all times in his or her Participant Before-Tax
Contributions Account.
(b) Company Contributions Account. A Participant shall become
fully vested in his or her Company Contributions Account in accordance with the
following schedule:
Completed Years of Service Vested Percentage
fewer than 1 0
1 20
2 40
3 60
4 80
5 or more 100
(c) Special Vesting Rule. All Participants in the Plan who are
Employees of the Company on July 1, 1992 shall become 100% vested with respect
to all Company Matching Contributions and Company Mandatory Contributions,
together with any earnings attributable thereto, made as of any date prior to
July 2, 1992. If a Participant was not previously 100% vested, then the amount
that becomes 100% vested pursuant to this subsection shall be allocated to a
special Company Contributions Account; a new Company Contributions Account
shall be established for all Company Matching Contributions not designated as
QMACs and Company Mandatory Contributions made on behalf of the Participant as
of any date subsequent to July 1, 1992. Whenever any Participant becomes 100%
vested in the two separate Company Contributions Accounts, those Accounts shall
be merged into one Company Contributions Account.
(d) Partial Termination. A partial termination of the Plan
occurred as a result of the relocation of Apache's headquarters from Denver,
Colorado to Houston, Texas. As a result, notwithstanding subsection (b), the
Company Contributions Accounts off all Denver-based Participants who were laid
off or who voluntarily severed their employment with the Company after August
5, 1991, in connection with the corporate relocation, are 100% vested.
(e) Change of Control. Notwithstanding the foregoing provisions
of this section 5.1, the Company Contributions Accounts of all Participants
shall be fully vested as of the effective date of a Change of Control, as
defined in this subsection, and at all times thereafter. For purposes of this
subsection, a "Change of Control" shall mean the event occurring when a person,
partnership or corporation together with all persons, partnerships or
corporations acting in concert with such person, partnership or corporation, or
any or all of them, acquires more than 20% of Apache's outstanding voting
securities; provided that a Change of Control shall not occur if, prior to the
acquisition of more than 20% of Apache's voting securities, Apache's Board of
Directors by majority vote designates the person, partnership, or corporation
as an approved acquiror and resolves that a Change of Control will not have
occurred for purposes of this Plan.
5.2 Forfeitures.
(a) Notwithstanding the vesting rules of section 5.1, Annual
Additions to a Participant's Accounts and any increase or decrease in the net
worth of the Participant's Accounts attributable to such Annual Additions may
be reduced to satisfy the limits described in section 3.4. Any reduction shall
be allocated as specified in section 3.4.
(b) Notwithstanding the vesting rules of section 5.1, QMACs and
any increase or decrease in the net worth of the Account(s) attributable to
such contributions may be forfeited as of the last day of the Plan Year to
satisfy the ACP test, as provided in subsection 3.6(c). Any such forfeiture
shall be allocated as specified in section 5.5.
(c) Notwithstanding the vesting rules of section 5.1, Company
Matching Contributions and any increase or decrease in the net worth of the
Account(s) attributable to such contributions may be forfeited as of the last
day of the Plan Year if the Participant Before-Tax Contribution that they
matched was returned under section 3.2 or subsection 3.5(d). Any such
forfeiture shall be allocated as specified in section 5.5.
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(d) Notwithstanding the vesting rules of section 5.1, a missing
individual's vested Accounts may be forfeited as of the last day of any Plan
Year, as provided in section 13.12. Any such forfeiture shall be allocated as
specified in section 5.5.
(e) A Participant's non-vested interest in his or her Company
Contributions Account shall be forfeited at the end of the Plan Year in which
the Participant terminates employment. Any such forfeiture shall be allocated
as specified in section 5.5.
(f) Notwithstanding the vesting rules of section 5.1, Company
Matching Contributions that would violate Code section 401(a)(17), and any
increase or decrease in the net worth of the Account(s) attributable to such
contributions, may be forfeited as specified in subsection 3.1(b). Any such
reduction shall be allocated as specified in subsection 3.1(b).
5.3 Restoration of Forfeitures.
(a) The forfeiture of a missing individual's Account(s), as
described in section 13.12, shall be restored to such individual if the
individual makes a claim for such amount.
(b) If a Participant is rehired before incurring five-consecutive
one-year Lapses in Apache Employment , and the Participant has received a
distribution of his or her entire vested interest in his or her Company
Contribution Account (with the result that the Participant forfeited his or her
non-vested interest in such Account), then the exact amount of the forfeiture
shall be restored to the Participant's Account. All the rights, benefits and
features available to the Participant when the forfeiture occurred shall be
available with respect to the restored forfeiture.
(c) If a Participant who is rehired before incurring five
consecutive one-year Lapses in Apache Employment has his or her Accounts
restored as above provided, and again terminates employment prior to becoming
fully vested in his or her Company Contributions Account, the vested portion of
his or her Company Contributions Account shall be determined by applying the
vested percentage determined under section 5.1 to the sum of (A) and (B), then
subtracting (B) from such sum, where: (A) is the value of the Participant's
Company Contributions Account as of the Valuation Date immediately following
his or her most recent termination of employment; and (B) is the amount
previously distributed to the Participant on account of the prior termination
of employment.
(d) If a Participant is rehired after having incurred five
consecutive one-year Lapses in Apache Employment, then no amount forfeited from
his or her Company Contributions Account shall be restored to that Account.
5.4 Method of Forfeiture Restoration.
Forfeitures that are restored pursuant to section 5.3 shall be
accomplished by an allocation of the forfeitures occurring during the Plan
Year, pursuant to section 5.5, or if such forfeitures are insufficient, by a
special Company Contribution, pursuant to paragraph 3.1(c)(i).
5.5 Allocation of Forfeitures.
As of the last day of each Plan Year, the forfeitures that occurred
during the Plan Year shall be allocated first to restore the forfeited portions
of the Company Contributions Accounts of reemployed Participants described in
section 5.3. Any remaining forfeitures shall be applied to reduce any type(s)
of current or future Company Contributions under section 3.1, or to pay those
expenses of the Plan that are properly payable from the Trust Fund. Apache
shall decide, on behalf of each employer, the amount and type(s) of Company
Contributions or Plan expenses the forfeitures shall reduce.
5.6 Credits for Pre-Lapse Service.
(a) Company Contributions Made After Reemployment.
(i) A Participant who is vested in any portion of his or
her Company Contributions Account, who incurs a one-year Lapse in
Apache Employment, and who is thereafter reemployed, shall
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receive credit for vesting purposes for Years of Service prior to a
one-year Lapse in Apache Employment upon completing a Year of Service
after such one-year Lapse in Apache Employment.
(ii) A Participant who is not vested in any portion of his
or her Company Contributions Account, who incurs a one- year Lapse in
Apache Employment and who is thereafter reemployed, shall receive
credit for vesting purposes for Years of Service prior to a one-year
Lapse in Apache Employment only if (A) the Participant completes a
Year of Service after such Lapse in Apache Employment, and (B) the
number of consecutive one-year Lapses in Apache Employment is less
than the greater of five or the aggregate number of Years of Service
before such lapse.
(b) Company Contributions Made Prior to Termination. Years of
Service after a Participant has incurred five consecutive one-year Lapses in
Apache Employment shall be disregarded in determining the vested percentage in
a Participant's Company Contributions Account at the time of the lapse.
5.7 Transfers - Portability.
If any other employer adopts this or a similar profit sharing plan and
enters into a reciprocal agreement with the Company that provides that (a) the
transfer of a Participant from such employer to the Company (or vice versa)
shall not be deemed a termination of employment for purposes of the plans, and
(b) service with either or both employers shall be credited for purposes of
vesting under both plans, then the transferred Participant's Account shall be
unaffected by the transfer, except, if deemed advisable by the Committee, it
may be transferred to the trustee of the other plan.
5.8 Reemployment - Separate Account.
If a Participant who is not fully vested terminates employment and
then returns to employment with the Company or an Affiliated Entity before
receiving the entire vested portion of his or her Company Contributions
Account, the vested portion that has not been distributed shall be held in a
separate Company Contributions Account for such Participant. The Participant
shall be fully vested in such Account and no further Company Contributions
shall be allocated to that Account. In all other respects, such Account shall
be treated as a Company Contributions Account. A new Company Contributions
Account shall be established to which all appropriate Company Contributions
made after the date of reemployment shall be allocated. If a Participant
becomes fully vested in two or more Company Contributions Accounts, all such
amounts shall be merged into one Account.
5.9 Transfer of Participants to Natural Gas Clearinghouse.
A Transferred Participant shall be treated as though employed by the
Company, for all purposes of the Plan (and not for any other purpose) other
than eligibility to make Participant Before-Tax Contributions or to receive a
Company Mandatory Contribution, a Company Matching Contribution, or a QNEC with
respect to any period following the transfer of employment to NGC, so long as
the Transferred Participant is employed by NGC. A Transferred Participant
shall continue to be treated as an Employee for all purposes of the Plan (other
than the eligibility to make or receive contributions), including but not
limited to the right to make withdrawals under Article VII and to make
investment elections pursuant to Article IX, so long as the Transferred
Participant is employed by NGC. A Transferred Participant shall continue to be
treated as an Employee for such purposes (and for no other purpose) until such
time as his or her employment with NGC terminates, at which point such
termination of employment shall be treated as termination of employment with
the Company for purposes of Article VI. A Transferred Participant may borrow
from the Plan under section 7.2 only if the Transferred Participant is a party
in interest (within the meaning of ERISA section 3(14)) with respect to the
Plan.
If a Transferred Participant transfers employment from NGC back to the
Company pursuant to the terms of an Employee Benefits Agreement effective May
1, 1991 between Apache and NGC, such transfer shall not constitute a
termination of employment with the Company. Any such Participant shall become
eligible to participate in the Plan in accordance with the provisions of
section 2.1. If the Transferred Participant previously made an irrevocable
election, pursuant to the provisions of subsection 3.1(b), to have the
Participant's Before-Tax Contributions, and the related
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Company Matching Contributions, invested in Company Stock, such election shall
continue to govern the Transferred Participant's participation in the Plan.
ARTICLE VI
DISTRIBUTION OF BENEFITS
6.1 Beneficiaries.
(a) Each Account Owner shall file with the Committee a designation
of the beneficiaries and contingent beneficiaries to whom the distributable
amount (determined pursuant to section 6.3) shall be paid in the event of his
or her death. In the absence of an effective beneficiary designation as to any
portion of the distributable amount after a Participant dies, such amount shall
be paid to the Participant's surviving Spouse, or, if none, to his or her
estate. In the absence of an effective beneficiary designation as to any
portion of the distributable amount after any non-Participant Account Owner
dies, such amount shall be paid to the Account Owner's estate.
(b) A beneficiary designation may be changed by the Account Owner
at any time and without the consent of any previously designated beneficiary.
However, if the Account Owner is a married Participant, his or her Spouse shall
be his or her beneficiary unless his or her Spouse has consented to the
designation of a different beneficiary. To be effective, the Spouse's consent
must be in writing, witnessed by a notary public and filed with the Committee.
Any such election shall be effective only as to the Spouse who signed the
election. If a Participant has designated his or her Spouse as his or her
beneficiary, and the Participant and that Spouse subsequently divorce, then the
beneficiary designation shall be void and of no effect on the day such divorce
is final.
6.2 Consent.
(a) Except for distributions identified in subsection (b),
distributions may be made only after the appropriate consent has been obtained
under this subsection. Distributions to a Participant shall be made only with
the Participant's consent to the manner of distribution and the time of
distributions. Distributions to a beneficiary of a deceased Participant shall
be made only with the beneficiary's consent to the manner of distribution and
the time of distribution. Distributions to an Alternate Payee or his or her
beneficiary shall be made as specified in the QDRO. To be effective, the
consent must be in writing, signed by the distributee, and filed with the
Committee within 90 days before the distribution is to commence. A consent
once given shall be irrevocable after distribution has begun. Nevertheless, if
a distributee has elected to receive his or her distribution in the form of
installments, he or she may elect to accelerate any or all remaining
installments.
(b) Consent is not required for the following distributions:
(i) Corrective distributions under Article III that are
returned to the Participant because the contribution is not deductible
by the Company or because the contribution would exceed the limits of
Code sections 401(a)(17), 415(c)(1), 4415(e), 402(g), 401(k)(3),
401(m)(2), or 401(m)(9);
(ii) Distributions that are required to comply with Code
section 401(a)(9);
(iii) Immediate cashouts of less than $3,500, as described
in subsection 6.5(d);
(iv) Distributions pursuant to Code section 401(a)(14); and
(v) Distributions after the later of the Participant's
Normal Retirement Age or age 62, provided that the Participant has
terminated employment before the distribution is made.
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6.3 Distributable Amount.
The distributable amount of a Participant's Account(s) is the vested
portion of the Account(s) (as determined by Article V) as of the Valuation Date
coincident with or next preceding the date distribution is made to the
Participant or beneficiary, reduced by (a) any amount that is payable to an
Alternate Payee pursuant to section 13.9, (b) any amount withdrawn pursuant to
section 7.1 since such Valuation Date, and (c) the outstanding amount of any
loan under section 7.2. Nevertheless, the Committee shall temporarily suspend
or limit distributions (by reducing the distributable amount), as explained in
section 13.9, when the Committee is informed that a QDRO affecting the
Participant's Accounts is in process or may be in process.
6.4 Manner of Distribution.
(a) The distributable amount shall be paid in accordance with
either one or a combination of both of the following methods as the distributee
may elect subject to the limitations of subsection (b): (i) by a lump sum
distribution (other than an annuity), or (ii) by monthly, quarterly, or annual
installments (which must be as nearly equal as possible) over a specified
period not exceeding the joint life expectancy of the Participant and his or
her beneficiary, calculated according to the regulations issued under Code
section 401(a)(9). Once installment payments have begun, the distributee may
elect to accelerate any or all remaining payments pursuant to such requirements
as may be adopted by the Committee.
(b) Alternate Payees shall be entitled to only lump sum
distributions. Only lump sum distributions are available for distributions of
small amounts under subsection 6.5(d).
(c) If all or a portion of a Participant's Accounts are invested
in shares of Company Stock at the time amounts become distributable pursuant to
Article VI, the Participant may elect to receive a lump sum distribution of the
whole shares of Company Stock allocated to his or her Accounts together with a
cash lump sum payment for any fractional share and for any portion of the
Accounts not invested in shares of Company Stock. The Committee shall
establish appropriate election procedures from time to time with respect to
distribution elections. If a Participant fails to make an election with
respect to the form of distribution, the distribution of that portion of the
Participant's Accounts which is invested in shares of Company Stock shall be
made in the form of shares of Company Stock. Notwithstanding the foregoing,
any fractional share of Company Stock shall be converted to and paid in the
form of cash.
6.5 Time of Distribution.
(a) Earliest Date of Distribution. Unless an earlier distribution
is permitted by subsection (b) or required by subsection (c), the earliest date
that a Participant may elect to receive a distribution is as follows.
(i) Termination of Employment or Disability. A
Participate may elect to receive a distribution as soon as practicable
after he terminates employment or incurs a Disability. However,
distribution from a Participant Before-Tax Contribution Account shall
not occur pursuant to this paragraph unless (A) the Participant has
separated from service within the meaning of Code section
401(k)(2)(B)(i)(I), (B) the Participant has incurred a Disability, or
(C) the Participant has been affected by a corporate transaction
described in Code section 401(k)(10)(A)(ii) or Code section
401(k)(10)(A)(iii).
(ii) During Employment. A Participant may not obtain a
distribution while employed by the Company or an Affiliated Entity,
except as provided in subsection (c) (relating to the required minimum
distribution at a Participant's Required Beginning Date) or section
7.1 (relating to in-service withdrawals).
(b) Alternate Earliest Date of Distribution. Notwithstanding
subsection (a), unless a Participant elects otherwise, his or her distribution
shall commence no later than 60 days after the close of the latest of: (i) the
Plan Year in which the Participant attains Normal Retirement Age; (ii) the Plan
Year in which occurs the tenth anniversary of the year in which the Participant
commenced participation in the Plan; and (iii) the Plan Year in which the
Participant terminates employment with the Company and Affiliated Entities.
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(c) Latest Date of Distribution. Distribution must be made (i) in
a lump sum not later than the Required Beginning Date, or (ii) in installments
commencing not later than the Required Beginning Date. A Participant shall
receive annual distributions of at least the minimum amount required to be
distributed pursuant to regulations issued under Code section 401(a)(9). In
calculating the minimum required distribution, (i) the life expectancies of the
Participant and his or her beneficiary shall be used, (ii) the life expectancy
of the Participant shall be recalculated annually only if the Participant
affirmatively elects such recalculation, (iii) if the beneficiary is the
Participant's Spouse, the life expectancy of the Spouse shall be recalculated
annually only if the Participant affirmatively elects such recalculation, and
(iv) if the Participant does not inform the Committee of the birthdate of his
or her beneficiary a reasonable time before the Required Beginning Date, the
Participant's minimum required distributions shall be calculated using only the
Participant's life expectancy.
(d) Small Amounts. If the aggregate value of the nonforfeitable
portion of a Participant's Accounts is $3,500 or less (calculated in accordance
with the applicable Treasury regulations) on the earliest date the Participant
may elect to receive a distribution under this section, then the Participant
shall receive a lump sum distribution as soon as practicable after terminating
employment.
(e) Distribution Upon Participant's Death.
(i) This paragraph shall apply if the distribution did
not begin before the Participant died. If the aggregate cash value of
the nonforfeitable portion of the Participant's Accounts is $3,500 or
less (calculated in accordance with applicable Treasury regulations),
the beneficiary shall receive a lump sum distribution as soon as
practicable after the Participant dies. Otherwise, the beneficiary
may elect to have the distributable amount distributed (A) by the end
of the calendar year containing the fifth anniversary of the
Participant's death, or (B) in installments over a period not
exceeding the life expectancy of the beneficiary, with the first
installment distributed by the end of the calendar year containing the
first anniversary of the Participant's death. However, if the
beneficiary is the Participant's surviving Spouse, the beneficiary
may elect to defer distribution until the end of the calendar year in
which the Participant would have attained age 70-1/2, or, if later,
the end of the calendar year containing the first anniversary of the
Participant's death. If the surviving Spouse makes such an election
but dies before receiving the entire distributable amount, then the
rules of this paragraph shall be applied as if the Spouse were the
Participant and as if the Spouse's beneficiary were the Participant's
beneficiary.
(ii) If distribution began before the Participant died,
then the remaining distributable amount shall be distributed at least
as rapidly as under the method in use on the date of the Participant's
death.
(f) Alternate Payee. Distributions to Alternate Payees and their
beneficiaries shall be made as specified in section 13.9.
(g) 242(b) Elections. Notwithstanding the foregoing, distribution
of a Participant's Account(s), including the Account(s) of a Participant who is
a Key Employee in a top-heavy plan, may be made in accordance with all of the
following rules (regardless of when such distribution commences);
(i) The distribution must be one that would not have
disqualified the Plan under Code section 401(a)(9) prior to its
amendment by the Tax Equity and Fiscal Responsibility Act of 1982.
(ii) The distribution must be in accordance with a method
of distribution designated by the Participant whose interest in the
Plan is being distributed, or if the Participant is deceased, by the
designated beneficiary of such Participant.
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(iii) The designation must have been in writing, signed by
the Participant or designated beneficiary, and made before January 1,
1984.
(iv) The Participant must have accrued a benefit under the
Plan as of December 31, 1983.
6.6 Direct Rollover Election.
A Participant, an Alternate Payee who is the Spouse or former Spouse
of the Participant, or a surviving Spouse of a deceased Participant
(collectively, the "distributee") may direct the Trustee to pay all or any
portion of his or her "eligible rollover distribution" to an "eligible
retirement plan" in a "direct rollover." Within a reasonable period of time
before an eligible rollover distribution, the Committee shall inform the
distributee of this direct rollover option, the appropriate withholding rules,
other rollover options, the options regarding income taxation, and any other
information required by Code section 402(f).
An "eligible rollover distribution" is any distribution or in-service
withdrawal other than (a) distributions required under Code section 401(a)(9),
(b) distributions of amounts that have already been subject to federal income
tax (such as defaulted loans or after-tax voluntary contributions), (c)
installment payments in a series of substantially equal payments made at least
annually and (i) made over a specified period of ten or more years, (ii) made
for the life or life expectancy of the distributee, or (iii) made for the joint
life or joint life expectancy of the distributee and his or her designated
beneficiary, (d) a distribution to satisfy the limits of Code section 415 or
402(g), (e) a distribution to satisfy ADP, ACP, or multiple use tests, or (f)
any other actual or deemed distribution specified in the regulations issued
under Code section 402(c).
For a Participant or an Alternate Payee who is the Spouse or former
Spouse of the Participant, an "eligible retirement plan" is an individual
retirement account or annuity described in Code section 408(a) or 408(b), an
annuity plan described in Code section 403(a), or the qualified trust of a
defined contribution plan that accepts eligible rollover distributions. For a
surviving Spouse of a deceased Participant, an "eligible retirement plan" is an
individual retirement account or annuity.
A "direct rollover" is a payment by the Trustee to the eligible
retirement plan specified by the distributee.
ARTICLE VII
WITHDRAWALS
7.1 In-Service Withdrawals.
An Employee may withdraw amounts from his or her Account(s) only as
provided in this section. To request a withdrawal, an Employee must submit a
written request to the Committee. An Employee may make withdrawals as follows.
(a) Withdrawals for Employees Age 59-1/2 or Older.
(i) An Employee who has attained age 59-1/2 may at any
time thereafter withdraw any portion of his or her Participant
Before-Tax Contributions Account and any vested portion of his or her
Company Contributions Account in minimum amounts of $1,000 or the
Account balance, whichever is less, up to two times per Plan Year.
(ii) An Employee shall be permitted to make such a
withdrawal by delivering written notice to the Committee at least 15
days prior to the next following Valuation Date. Withdrawals shall be
made in cash except as provided in subsection (c) below.
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(iii) If the Employee is not fully vested in his or her
Company Contributions Account at the time of a withdrawal under this
subsection, the rules of subsection 5.3(c) shall be applied when
determining the vested portion of the Company Contributions Account at
any time thereafter.
(b) Participant Before-Tax Contributions Account. An Employee may
withdraw all or any portion of his or her Participant Before- Tax
Contributions, subject to the limits of subsection (d), provided that the
Employee has an immediate and heavy financial need, as defined in paragraph
(i), the withdrawal is needed to satisfy the financial need, as explained in
paragraph (ii), and the amount of the withdrawal does not exceed the limits in
paragraph (iii).
(i) Financial Need. The following expenses constitute an
immediate and heavy financial need: medical care of the Employee, the
Employee's Spouse, or the Employee's dependents; costs associated with
the purchase of a principal residence of the Employee; tuition and
related educational fees for the next 12 months of post-secondary
education of the Employee, the Employee's Spouse, or the Employee's
dependents; payments to prevent the Employee from being evicted from
his or her principal residence; and payments to prevent the mortgage
on the Employee's principle residence from being foreclosed. In
addition, the Committee may determine, based on a review of all
relevant facts and circumstances, that a particular expense or series
of expenses of the Employee constitutes an immediate and heavy
financial need.
(ii) Satisfaction of Need. The withdrawal is deemed to be
needed to satisfy the Employee's financial need if (A) the Employee
has obtained all withdrawals and all non-taxable loans available from
the Company's and any Affiliated Entities' qualified plans, (B) for a
period of at least 12 months from the date the Employee receives the
withdrawal, he or she ceases to make Participant Before-Tax
Contributions and elective contributions to all qualified and
non-qualified plans maintained by the Company or any Affiliated
Entity, and (C) the Participant Before-Tax Contributions that the
Employee makes in the calendar year after the withdrawal is limited to
the dollar limit in effect under Code section 402(g)(1) ($8,728 in
1992) for the calendar year after the withdrawal, less the Employee's
Participant Before-Tax Contributions made during the calendar year of
the withdrawal.
(iii) Maximum Withdrawal. An Employee may not withdraw
more than the sum of the amount needed to satisfy his or her financial
need and any taxes and penalties resulting from the withdrawal. An
Employee may not withdraw any amount in excess of his or her
Participant Before-Tax Contributions unless the Employee has attained
age 59-1/2.
(c) Form of Payment of Withdrawal. This subsection shall be
effective beginning March 1, 1990. Withdrawals under subsection (b) shall be
in cash. Withdrawals under subsection (a) shall be in cash, except that any
portion of a Participant's Accounts that is invested in Company Stock may, at
the election of the Participant made at the time that written notice of
withdrawal is made to the Committee, be withdrawn in the form of whole shares
of Company Stock.
(d) Withdrawal Rules. An Employee may not withdraw any amount
that has been borrowed or that is subject to a QDRO. The Committee shall
temporarily suspend or limit withdrawals under this section, as explained in
section 13.9, when the Committee is informed that a QDRO affecting the
Employee's Accounts is in process or may be in process. The Committee shall
issue such rules as to the frequency of withdrawals, and withdrawal procedures,
as it deems appropriate. The Committee may postpone the withdrawal until after
the next Valuation Date. The Committee may have a special valuation of the
Trust Fund performed before a withdrawal is permitted. The Plan may charge a
fee for the withdrawal as well as a fee for having a special valuation
performed, as determined by the Committee in its sole discretion.
7.2 Loans.
The Committee is authorized, as one of the Plan fiduciaries
responsible for investing Plan assets, to establish a loan program. The loan
program shall become effective on the date determined by the Committee. The
Committee shall administer the Plan's loan program in accordance with the
following rules:
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(a) Availability. Loans are available only to Participants who
are Employees, Participants who are parties-in-interest (within the meaning of
ERISA section 3(14)), and beneficiaries who are parties-in-interest
(collectively referred to in this section as "Borrowers"). No loan shall be
made to any individual while the individual falls into any of the following
categories, nor shall any loan be made of amounts accrued while such individual
fell into any of the following categories:
(i) owner-employee within the meaning of Code
section 401(c)(3); or
(ii) Employee or officer who owns (or is considered as
owning within the meaning of Code section 318(a)(1) on any day during
the taxable year of the Company or Affiliated Entity) 5% or more of
the stock of the Company or any Affiliated Entity that is an S
corporation; or
(iii) sibling (of the whole- or half-blood), spouse,
ancestor or lineal descendant of any individual described in
paragraphs (i) or (ii),
unless such individual has furnished to the Committee a written exemption,
granted by the Department of Labor, exempting the loan from the prohibited
transaction provisions of ERISA and the Code. The Committee shall temporarily
reduce the amount a Participant may borrow or temporarily prevent the
Participant from borrowing, as described in section 13.9, when the Committee is
informed that a QDRO affecting the Participant's Accounts is in process or may
be in process.
(b) Number of Loans. A Borrower may have no more than one loan
outstanding. The Committee may change the maximum number of outstanding loans
allowed at any time.
(c) Loan Amount. The Committee may establish a minimum loan
amount of no more than $500. The Committee may require loans to be made in
increments of no more than $100. The amount that a Borrower may borrow is
subject to the following limits.
(i) A Borrower may only borrow an amount up to the
aggregate Participant Before-Tax Contributions made by the relevant
Participant, less any of such amounts previously withdrawn.
(ii) At the time the loan from this Plan is made, the
aggregate outstanding balance of all the Borrower's loans from all
qualified plans maintained by the Company and Affiliated Entities,
including the new loan from this Plan, shall not exceed 50% of the
Borrower's vested interest in all qualified plans maintained by the
Company and Affiliated Entities.
(iii) For purposes of this paragraph, the term "one-year
maximum" means the largest aggregate outstanding balance, on any day
in the one-year period ending on the day before the new loan from this
Plan is obtained, of all loans to the Borrower from all qualified
plans maintained by the Company and Affiliated Entities. For purposes
of this paragraph, the term "existing loans" means the aggregate
outstanding balance, on the day the new loan is made to the Borrower,
of all loans to the Borrower from all qualified plans maintained by
the Company and Affiliated Entities, excluding the new loan from this
Plan. If the existing loans are greater than or equal to the one-year
maximum, then the new loan from this Plan shall not exceed $50,000
minus the existing loans. If the existing loans are less than the
one-year maximum, then the new loan from this Plan shall not exceed
$50,000 minus the one-year maximum.
For purposes of applying the above limits, the vested portion of the Borrower's
accounts under this Plan and all other plans maintained by the Company and
Affiliated Entities shall be determined without regard to any accumulated
deductible employee contributions (as defined in Code section 72(o)(5)(B)), and
without regard to any amounts accrued while the Borrower was ineligible to
obtain a loan (as described in subsection (a)). Notwithstanding the foregoing,
the Committee may, in its sole discretion, establish lesser limits on the
amounts that may be borrowed, which limits shall be applied in a
non-discriminatory manner. The Committee shall temporarily reduce the amount a
Participant may borrow or temporarily prevent the Participant from borrowing,
as described in section 13.9, when the Committee is informed that a QDRO
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affecting the Participant's Accounts is in process or may be in process. No
loan shall be made of amounts that are required to be distributed prior to the
end of the term of the loan.
(d) Interest. Each loan shall bear a reasonable rate of interest,
which shall remain fixed for the duration of the loan. The Committee or its
agent shall determine the reasonable rate of interest on the date the loan
documents are prepared. The Committee shall have the authority to establish
procedures from time to time for determining the rate of interest. In the
absence of Committee action, the interest rate shall be equal to the prime
lending rate, plus 1%, as published in the Wall Street Journal on the first day
that such newspaper is published during the calendar quarter in which the loan
documents are prepared.
(e) Repayment. All loans shall be repaid, with interest, in
substantially level amortized payments made not less frequently than quarterly.
The maximum term for a loan is four years; the minimum term for a loan is one
year. The Committee has the authority to decrease the minimum term for future
loans and the authority to increase the maximum term for future loans to no
more than five years. Loan repayments shall be accelerated, and all loans
shall be payable in full on the date the Borrower separates from service (if
the Borrower is an Employee), the date the Borrower becomes ineligible to
borrow from the Plan under to subsection (a), and on any other date or any
other contingency as determined by the Committee. If the Borrower is an
Employee, loans shall be repaid through payroll withholding unless (i) the
Employee is pre- paying his or her loan, in which case the pre-payment need not
be through payroll withholding, or (ii) the Employee is on an unpaid leave of
absence, in which case he or she may pay any installment by personal check.
Partial pre-payments are not accepted; however, the Committee may decide to
accept partial pre-payments in the future.
(f) Default. A loan shall be considered to be in default if any
loan installment is not paid within 60 days of its due date. If a default is
not cured within five days, the Committee may, in addition to all other
remedies, apply the Borrower's Plan accounts toward payment of the loan;
however, the Trustee may not exercise such right of set-off with respect to the
Borrower's Participant Before-Tax Account until such account has become
payable, pursuant to section 6.5 or 7.1.
(g) Administration. A Borrower shall apply for a loan by
completing the application procedures specified by the Committee. Until
changed by the Committee, a Borrower shall apply for a loan by calling the
Trustee and completing a voice application. The loan shall be processed in
accordance with reasonable procedures adopted from time to time by the
Committee. The Committee may impose a loan application fee, a loan origination
fee, a loan pre-payment fee, and loan maintenance fees. All loans shall be
evidenced by a promissory note and shall be fully secured. No Borrower whose
Plan accounts are so pledged may obtain distribution of any portion of the
accounts that have been pledged. The rights of the Trustee under such pledge
shall have priority over all claims of the Borrower, his or her beneficiaries,
and creditors. Each loan shall be treated as a directed investment. Any
increase or decrease in the net worth of the Trust Fund attributable to such
loan shall be allocated solely to the Plan accounts of the Borrower.
ARTICLE VIII
ALLOCATION OF RESPONSIBILITIES - NAMED FIDUCIARIES
8.1 No Joint Fiduciary Responsibilities.
The Trustee(s) and the Committee shall be the named fiduciaries under
the Plan and Trust agreement and shall be the only named fiduciaries
thereunder. The fiduciaries shall have only the responsibilities specifically
allocated to them herein or in the Trust agreement. Such allocations are
intended to be mutually exclusive and there shall be no sharing of fiduciary
responsibilities. Whenever one named fiduciary is required by the Plan or
Trust agreement to follow the directions of another named fiduciary, the two
named fiduciaries shall not be deemed to have been assigned a shared
responsibility, but the responsibility of the named fiduciary giving the
directions shall be deemed his or her sole responsibility, and the
responsibility of the named fiduciary receiving those directions shall be to
follow them insofar as the instructions are on their face proper under
applicable law.
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8.2 The Company.
The Company shall be responsible for: (a) making Company
Contributions; (b) certifying to the Trustee the names and specimen signatures
of the members of the Committee acting from time to time; (c) keeping accurate
books and records with respect to its Employees and the appropriate components
of each Employee's Compensation and furnishing such data to the Committee; (d)
selecting agents and fiduciaries to operate and administer the Plan and Trust;
(e) appointing an investment manager if it determines that one should be
appointed; and (f) reviewing periodically the performance of such agents,
managers, and fiduciaries.
8.3 The Trustee.
The Trustee shall be responsible for: (a) the investment of the Trust
Fund to the extent and in the manner provided in the Trust agreement; (b) the
custody and preservation of Trust assets delivered to it; and (c) the payment
of such amounts from the Trust Fund as the Committee shall direct.
8.4 The Committee - Plan Administrator.
The Board of Directors of Apache (the "Board") shall appoint an
administrative Committee consisting of no fewer than three individuals who may
be, but need not be, Participants, officers, directors, or Employees of the
Company. If the Board does not appoint a Committee, Apache shall act as the
Committee under the Plan. The members of the Committee shall hold office at
the pleasure of the Board and shall service without compensation. The
Committee shall be the "Plan administrator" as defined in section 3(16)(A) of
ERISA. It shall be responsible for establishing and implementing a funding
policy consistent with the objectives of the Plan and with the requirements of
ERISA. This responsibility shall include establishing (and revising as
necessary) short-term and long-term goals and requirements pertaining to the
financial condition of the Plan, communicating such goals and requirements to
the persons responsible for the various aspects of the Plan operations and
monitoring periodically the implementation of such goals and requirements.
8.5 Committee to Construe Plan.
(a) The Committee shall administer the Plan and shall have all
discretion, power and authority necessary for that purpose, including, but not
by way of limitation, the full and absolute discretion and power to interpret
the Plan, to determine the eligibility, status, and rights of all individuals
under the Plan, and in general to decide any dispute and all questions arising
in connection with the Plan. The Committee shall direct the Trustee concerning
all distributions from the Trust Fund, in accordance with the provisions of the
Plan, and shall have such other powers in the administration of the Trust Fund
as may be conferred upon it by the Trust agreement. The Committee shall
maintain all Plan records except records of the Trust Fund.
(b) The Committee may adjust the Account(s) of any Participant, in
order to correct errors and rectify omissions, in such manner as the Committee
believes will best result in the equitable and nondiscriminatory administration
of the Plan.
8.6 Organization of Committee.
The Committee shall adopt such rules as it deems desirable for the
conduct of its affairs and for the administration of the Plan. It may appoint
agents (who need not be members of the Committee) to whom it may delegate such
powers as it deems appropriate, except that any dispute shall be determined by
the Committee. The Committee may make its determinations with or without
meetings. It may authorize one or more of its members or agents to sign
instructions, notices and determinations on its behalf. The action of a
majority of the Committee shall constitute the action of the Committee.
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8.7 Interested Committee Members.
If a Committee decision or action affects a small number of
Participants including a Committee member, then such Committee member shall not
participate in the Committee decision or action. The action of a majority of
the disinterested Committee members shall constitute the action of the
Committee.
8.8 Agent for Process.
Apache's Vice President, General Counsel, and Secretary shall be the
agent of the Plan for service of all process.
8.9 Indemnification of Committee Members.
The Company shall indemnify and hold the members of the Committee, and
each of them, harmless from the effects and consequences of their acts,
omissions, and conduct in their official capacities, except to the extent that
the effects and consequences thereof shall result from their own willful
misconduct, breach of good faith, or gross negligence in the performance of
their duties. The foregoing right of indemnification shall not be exclusive of
the rights to which each such member may be entitled as a matter of law.
8.10 Conclusiveness of Action.
Any action taken by the Committee on matters within the discretion of
the Committee shall be conclusive, final and binding upon all participants in
the Plan and upon all persons claiming any rights hereunder, including
alternate payees and beneficiaries.
8.11 Payment of Expenses.
The members of the Committee shall serve without compensation but
their reasonable expenses shall be paid by the Company. The compensation of
fees of accountants, counsel and other specialists and any other costs of
administering the Plan or Trust Fund may be charged to the Trust Fund, to the
extent permissible under the provisions of ERISA.
ARTICLE IX
TRUST AGREEMENT - INVESTMENTS
9.1 Trust Agreement.
Apache has entered into a Trust agreement to provide for the holding,
investment and administration of the funds of the Plan. The Trust agreement
shall be part of the Plan, and the rights and duties of any individual under
the Plan shall be subject to all terms and provisions of the Trust agreement.
9.2 Expenses of Trust.
(a) Except as provided in subsection (b) below, all taxes upon or
in respect of the Trust shall be paid by the Trustee out of the Trust assets,
and all expenses of administering the Trust shall be paid by the Trustee out of
the Trust assets, to the extent such taxes and expenses are not paid by the
Company or the Account Owner. No fiduciary shall receive any compensation for
services rendered to the Plan if the fiduciary is being compensated on a full
time basis by the Company.
(b) To the extent not paid by the Company, all expenses of
individually directed transactions in Trust assets, including without
limitation the Trustee's transaction fee, brokerage commissions, transfer
taxes, interest on insurance policy loans, and any taxes and penalties that may
be imposed as a result of an individual's investment direction shall be
assessed against the Account(s) of the Account Owner directing such
transactions.
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9.3 Investments.
(a) Section 404(c) Plan. The Plan is intended to be a plan
described in ERISA section 404(c). To the extent that an Account Owner
exercises control over the investment of his or her Accounts, no person who is
a fiduciary shall be liable for any loss, or by reason of any breach, that is
the direct and necessary result of the Account Owner's exercise of control.
(b) Directed Investments. Accounts shall be invested, upon the
written or telephone voice-response direction of each Account Owner, in any one
or more of a series of investment funds designated by the Committee from time
to time. One or more such funds may, at the sole discretion of the Committee,
consist of shares of Company Stock. If so directed by Account Owners, up to
100% of the Accounts under the Plan may be invested in Company Stock. The
funds available for investment and the principal features thereof, including a
general description of the investment objectives, the risk and return
characteristics, and the type and diversification of the investment portfolio
of each fund, shall be communicated to the Account Owners in the Plan from time
to time. Any changes in such funds shall be immediately communicated to all
Account Owners.
(c) Absence of Directions. To the extent that an Account Owner
fails to affirmatively direct the investment of his or her Accounts, the
Committee shall direct the Trustee in writing concerning the investment of such
Accounts. The Committee shall act by majority vote. Any dissenting member of
the Committee shall, having registered his or her dissent in writing,
thereafter cooperate to the extent necessary to implement the decision of the
Committee.
(d) Change in Investment Directions. Account Owners may change
their investment directions, with respect to investment of new contributions
and with respect to the investment of existing amounts allocated to Accounts,
every three months unless the Committee determines that more frequent changes
in investment directions shall be made available with respect to one or more of
the investment funds. Such changes shall be effective, prospectively, as of
the time established by the Committee. The Committee shall establish
procedures for giving investment directions, which shall be in writing and
communicated to Account Owners. For example, the procedures could permit an
Account Owner to change the investment direction of new contributions as of the
first day of every calendar quarter, provided that the Committee receives at
least two weeks prior written notice; the procedures could also permit an
Account Owner to change the investment direction of existing Account balances
once in a calendar quarter, on any business day, by giving telephone
voice-response instructions to the Trustee.
ARTICLE X
TERMINATION AND AMENDMENT
10.1 Termination of Plan or Discontinuance of Contributions.
Apache expects to continue the Plan indefinitely, but the continuance
of the Plan and the payment of contributions are not assumed as contractual
obligations. Apache may terminate the Plan or discontinue contributions at any
time. Upon the termination (or partial termination) of the Plan or the
complete discontinuance of contributions, the Accounts of all affected
Participants shall become fully vested, notwithstanding any other provision
hereof, the only Participants who are affected by a partial termination are
those whose employment with the Company or Affiliated Entity is terminated as a
result of the corporate event causing the partial termination; Employees
terminated for cause are not affected by a partial termination.
10.2 Allocations upon Termination or Discontinuance of Company
Contributions.
Upon the termination or partial termination of the Plan or upon the
complete discontinuance of contributions , the Committee shall promptly notify
the Trustee of such termination or discontinuance. The Trustee shall then
determine, in the manner prescribed in section 4.2, the net worth of the Trust
Fund as of the close of the last business day of the calendar month in which
such notice was received by the Trustee. The Trustee shall advise the
Committee of any increase or decrease in such net worth that has occurred since
the preceding Valuation Date. After crediting to the Participant Before-
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Tax Contributions Account of each Participant any amount contributed since the
preceding Valuation Date, the Committee shall thereupon allocate, in the manner
described in section 4.3, among the remaining Plan Accounts, in the manner
described in Articles III, IV and V, any Company Contributions or forfeitures
occurring since the preceding Valuation Date.
10.3 Procedure Upon Termination of Plan or Discontinuance of Contributions.
If the Plan has been terminated or partially terminated, or if a
complete discontinuance of contributions to the Plan has occurred, then after
the allocations required under section 10.2 have been completed, the Trustee
shall distribute or transfer the Account(s) of affected Employees as follows.
(a) Participant Before-Tax Contributions Accounts. If the Company
or Affiliated Entity maintains or establishes another defined contribution plan
(other than an employee stock ownership plan defined in Code section
49756(e)(7)), then no amount in a Participant Before-Tax Contributions Account
may be distributed to any Employee who has not yet attained age 59-1/2.
(b) Other Rules.
(i) If the affected Employee's Account(s) have an
aggregate value of $3,500 or less (calculated in accordance with
applicable Treasury regulations), then the Trustee shall distribute
the Employee's Account(s) (except, if subsection (a) applies, the
Participant Before-Tax Contributions Account) to the Employee in a
lump sum (other than an annuity).
(ii) If the affected Employee's Account(s) have an
aggregate value of more than $3,500 (calculated in accordance with
applicable Treasury regulations), and if the Company or an Affiliated
Entity does not maintain another defined contribution plan (other than
an employee stock ownership plan within the meaning of Code section
4975(e)(7)), then the Trustee shall distribute the Employee's
Account(s) to the Employee in a lump sum (other than an annuity).
(iii) If the affected Employee's Account(s) have an
aggregate value of more than $3,500 (calculated in accordance with
applicable Treasury regulations), and if the Company or an Affiliated
Entity maintains another defined contribution plan (other than an
employee stock ownership plan within the meaning of Code section
4975(e)(7)), then the Trustee shall transfer the Employee's Account(s)
to the other plan unless the Employee consents to an immediate
distribution of such Account(s) (except, if subsection (a) applies,
for the Participant Before-Tax Contributions Account) in a lump sum
(other than an annuity).
Any distribution or transfer made pursuant to this section may be in cash, in
shares of Company Stock, to the extent a Participant's Accounts are invested in
Company Stock, or partly in cash and partly in shares of Company Stock. After
all such distributions or transfers have been made, the Trustee shall be
discharged from all obligation under the Trust; no Participant or beneficiary
who has received any such distribution, or for whom any such transfer has been
made, shall have any further right or claim under the Plan or Trust.
10.4 Amendment by Apache.
Apache may at any time amend the Plan in any respect, without prior
notice, subject to the following limitations. No amendment shall be made that
would have the effect of vesting in the Company any part of the Trust Fund or
of diverting any part of the Trust Fund to purposes other than for the
exclusive benefit of Account Owners. The rights of any Account Owner with
respect to contributions previously made shall not be adversely affected by any
amendment. No amendment shall reduce or restrict, either directly or
indirectly, the accrued benefit (within the meaning of Code section 411(d)(6))
provided that any Account Owner before the amendment, except as permitted by
the Internal Revenue Service.
If the vesting schedule is amended, each Participant with at least
three Years of Service may elect, within the period specified in the following
sentence after the adoption of the amendment, to have his or her nonforfeitable
percentage
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computed under the Plan without regard to such amendment. The period during
which the election may be made shall commence with the date the amendment is
adopted and shall end on the latest of: (a) 60 days after the amendment is
adopted; (b) 60 days after the amendment becomes effective; or (c) 60 days
after the Participant is issued written notice of the amendment by the Company
or Committee. Furthermore, no amendment shall decrease the nonforfeitable
percentage, measured as of the later of the date the amendment is adopted or
effective, of any Account Owner's Accounts.
Each amendment shall be in writing. Each amendment shall be approved
by Apache's Board of Directors (the "Board") or by an officer of Apache who is
authorized by the Board to amend the Plan. Each amendment shall be executed
by an officer of Apache to whom the Board has delegated the authority to
execute the amendment.
ARTICLE XI
PLAN ADOPTION BY AFFILIATED ENTITIES
11.1 Adoption of Plan.
Apache may permit any Affiliated Entity to adopt the Plan and Trust
for its Employees. Thereafter, such Affiliated Entity shall deliver to the
Trustee a certified copy of the resolutions or other documents evidencing its
adoption of the Plan and Trust. The Employees of the Affiliated Entity
adopting the Plan shall not be eligible to invest their Accounts in Company
Stock until compliance with the applicable registration and reporting
requirements of the securities laws.
11.2 Agent of Affiliated Entity.
By becoming a party to the Plan, each Affiliated Entity appoints
Apache as its agent with authority to act for the Affiliated Entity in all
transactions in which Apache believes such agency will facilitate the
administration of the Plan. Apache shall have the sole authority to amend and
terminate the Plan.
11.3 Disaffiliation and Withdrawal from Plan.
(a) Disaffiliation. Any Affiliated Entity that has adopted the
Plan and thereafter ceases for any reason to be an Affiliated Entity shall
forthwith cease to be a party to the Plan.
(b) Withdrawal. Any Affiliated Entity may, by appropriate action
and written notice thereof to Apache, provide for the discontinuance of its
participation in the Plan. Such withdrawal from the Plan shall not be
effective until the end of the Plan Year.
11.4 Effect of Disaffiliation or Withdrawal.
If at the time of disaffiliation or withdrawal, the disaffiliating or
withdrawing entity, by appropriate action, adopts a substantially identical
plan that provides for direct transfers from this Plan, then, as to employees
of such entity, no plan termination shall have occurred; the new plan shall be
deemed a continuation of this Plan for such employees. In such case, the
Trustee shall transfer to the trustee of the new plan all of the assets held
for the benefit of employees of the disaffiliating or withdrawing entity, and
no forfeitures or acceleration of vesting shall occur solely by reason of such
action. Such payment shall operate as a complete discharge of the Trustee, and
of all organizations except the disaffiliating or withdrawing entity, of all
obligations under this Plan to employees of the disaffiliating or withdrawing
entity and to their beneficiaries. A new plan shall not be deemed
substantially identical to this Plan if it provides slower vesting than this
Plan. Nothing in this section shall authorize the divesting of any vested
portion of a Participant's Account(s).
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11.5 Distribution Upon Disaffiliation or Withdrawal.
(a) Disaffiliation. If an entity disaffiliates from Apache and
the provisions of section 11.4 are not followed, then the following rules apply
to the Account(s) of employees of the disaffiliating entity.
(i) If the disaffiliating entity maintains a defined
contribution plan (other than an employee stock ownership plan within
the meaning of Code section 4975(e)(7)), then the Trustee shall
transfer the Employee's Account(s) to the other plan, if the other
plan so allows, unless the employee consents to an immediate
distribution in a lump sum (other than an annuity) of the vested
portion of his or her Account(s). If the other plan does not permit a
transfer of Accounts, then the employee may retain his or her Accounts
in this Plan until the employee consents to a distribution pursuant to
Article VI. Notwithstanding the preceding sentences, an employee may
not consent to an immediate distribution from his or her Participant
Before-Tax Contributions Account unless he or she has attained age
59-1/2.
(ii) If the disaffiliating entity does not maintain a
defined contribution plan (other than an employee stock ownership plan
within the meaning of Code section 4975(e)(7)), then the Trustee shall
distribute the vested portion of the employee's Account(s) to the
employee in a lump sum (other than an annuity), upon the consent of
the employee. If the employee does not consent to an immediate
distribution, then distribution may only be made according to Article
VI.
(b) Withdrawal. If an Affiliated Entity withdraws from the Plan
and the provisions of section 11.4 are not followed, then the following rules
apply to the Account(s) of Employees of the withdrawing entity.
(i) If the withdrawing entity maintains a defined
contribution plan that accepts transfers from this Plan, then the
Employee may transfer his or her Account(s) from this Plan to such
plan. No forfeitures or acceleration of vesting shall occur solely by
reason of such transfer.
(ii) If the withdrawing entity does not maintain a defined
contribution plan that accepts transfers from this Plan, then the
Employee's Account(s) shall remain in this Plan.
(c) Any distribution or transfer made pursuant to this section may
be in cash, in shares of Company Stock, or partly in cash and partly in shares
of Company Stock. After such distribution or transfer has been made, no
Participant or beneficiary who has received any such distribution, or for whom
any such transfer has been made, shall have any further right or claim under
the Plan or Trust.
ARTICLE XII
TOP-HEAVY PROVISIONS
12.1 Application of Top-Heavy Provisions.
The provisions of this Article XII shall be applicable only if the
Plan becomes "top-heavy" as defined below for any Plan Year beginning after
December 31, 1983. If the Plan becomes "top-heavy" as of the Determination
Date for a Plan Year, the provisions of this Article XII shall apply to the
Plan effective as of the first day of such Plan Year and shall continue to
apply to the Plan until the Plan ceases to be "top-heavy" or until the Plan is
terminated or otherwise amended.
12.2 Determination of Top-Heavy Status.
The Plan shall be considered "top-heavy" for a Plan Year if, as of the
Determination Date for that Plan Year, the aggregate of the Account balances
(as calculated according to the regulations under Code section 416) of Key
Employees under this Plan (and under all other plans required or permitted to
be aggregated with this Plan) exceeds 60% of the
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aggregate of the Account balances (as calculated according to the regulations
under Code section 416) in this Plan (and under all other plans required or
permitted to be aggregated with this Plan) of all current Employees and all
former Employees who terminated employment within five years of the
Determination Date. This ratio shall be referred to as the "top-heavy ratio".
For purposes of determining the Account balance of any Participant,
distributions made with respect to such individual within a five-year period
ending on the Determination Date shall be included. This shall also apply to
distributions under a terminated plan that, if it had not been terminated,
would have been required to be included in an aggregation group. The Account
balances of a Participant who had once been a Key Employee, but who is not a
Key Employee during the Plan Year, shall not be taken into account. The
following plans must be aggregated with this Plan for the top-heavy test: (a)
a qualified plan maintained by the Company or an Affiliated Entity in which a
Key Employee participated during this Plan Year or during the previous four
Plan Years and (b) any other qualified plan maintained by the Company or an
Affiliated Entity that enables this Plan or any plan described in clause (a) to
meet the requirements of Code sections 401(a)(4) or 410. The following plans
may be aggregated with this Plan for the top-heavy test: any qualified plan
maintained by the Company or an Affiliated Entity that, in combination with the
Plan or any plan required to be aggregated with this Plan when testing this
Plan for top-heaviness, would satisfy the requirements of Code sections
401(a)(4) and 410. If one or more of the plans required or permitted to be
aggregated with this Plan is a defined benefit plan, a Participant's "account
balance" shall equal the present value of his or her accrued benefit, including
any distributions within five years of the Determination Date. If the
aggregation group includes more than one defined benefit plan, the same
actuarial assumptions shall be used with respect to each such defined benefit
plan. The foregoing top-heavy ratio shall be computed in accordance with the
provisions of Code section 416(g), together with the regulations and rulings
thereunder.
12.3 Special Vesting Rule.
Unless section 5.1 provides for faster vesting, the amount credited
to the Participant's Company Contributions Account shall vest in accordance
with the following schedule during any top-heavy Plan Year:
Completed Years of Service Vested Percentage
fewer than 2 0
2 20
3 40
4 60
5 80
6 or more 100
12.4 Special Minimum Contribution.
Notwithstanding the provisions of section 3.1 and Article IV to the
contrary, in every top-heavy Plan Year, a minimum allocation is required for
each Non-Key Employee who both (a) performed one or more Hours of Service
during the Plan Year as a Covered Employee after satisfying any eligibility
requirement of section 2.1, and (b) was an Employee on the last day of the Plan
Year. This minimum allocation is required regardless of whether such Non-Key
Employee made any required contributions to the Plan for such Plan Year. The
minimum allocation shall be a percentage of such Non-Key Employee's
Compensation. The percentage shall be the lesser of 3% or the largest
percentage of any Key Employee's Compensation contributed to the Plan. For
Non-Key Employees, this percentage takes into account all Company Contributions
and forfeitures, except for amounts used to restore the Accounts of a rehired
or missing Participant, allocated for the Plan Year; however, any Company
Matching Contributions for purposes of the ADP, ACP, and multiple use tests of
sections 3.5, 3.6, and 3.7, but shall be treated as Company Mandatory
Contributions for purposes of the Code section 401(a)(4) discrimination test.
For Key Employees, the percentage takes into account all Company Matching
Contributions and forfeitures, except for amounts used to restore the Accounts
of a rehired or missing Participant, allocated for the Plan Year, and the
Participant's Participant Before-Tax Contributions for the Plan Year. If this
minimum allocation is not satisfied for any Non-Key Employee, the Company shall
contribute the additional amount needed to satisfy this requirement to such
Non-Key Employee's Participant Before-Tax Contributions Account, if the Non-Key
Employee is a Non-Highly Compensated Employee, or if the Non-Key Employee is a
Highly Compensated Employee, to his or her Company Contributions Account.
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12.5 Change in Top-Heavy Status.
If the Plan ceases to be a "top-heavy" plan as defined in this Article
XII, and if any change in the benefit structure, vesting schedule or other
component of a Participant's accrued benefit shall occur as a result of such
change in top-heavy status, the nonforfeitable portion of each Participant's
benefit attributable to Company Contributions shall not be decreased as a
result of such change. In addition, each Participant with at least three Years
of Service with the Company and Affiliated Entities on the date of such change,
may elect to have the nonforfeitable percentage computed under the Plan without
regard to such change in status. The period during which the election may be
made shall commence on the date the Plan ceases to be a top-heavy plan and
shall end on the later of (a) 60 days after the change in status occurs, (b) 60
days after the change in status becomes effective, or (c) 60 days after the
Participant is issued written notice of the change by the Company or the
Committee.
ARTICLE XIII
MISCELLANEOUS
13.1 RIGHT TO DISMISS EMPLOYEES - NO EMPLOYMENT CONTRACT.
THE COMPANY AND AFFILIATED ENTITIES MAY TERMINATE THE EMPLOYMENT OF
ANY EMPLOYEE AS FREELY AND WITH THE SAME EFFECT AS IF THIS PLAN WERE NOT IN
EXISTENCE. PARTICIPATION IN THIS PLAN BY AN EMPLOYEE SHALL NOT CONSTITUTE AN
EXPRESS OR IMPLIED CONTRACT OF EMPLOYMENT BETWEEN THE COMPANY OR AN AFFILIATED
ENTITY AND THE EMPLOYEE.
13.2 Claims Procedure.
(a) All claims shall be filed in writing by the Participant, the
Participant's beneficiary, or the authorized representative of the claimant, by
completing any procedures that the Committee requires. These procedures shall
be reasonable and may include the completion of forms and the submission of
documents and additional information. For purposes of this section, a request
for an in-service withdrawal shall be considered a claim.
(b) The Committee shall review all materials and shall decide
whether to approve or deny the claim. If a claim is denied in whole or in
part, written notice of denial shall be furnished by the Committee to the
claimant within 90 days after the receipt of the claim by the Committee, unless
special circumstances require an extension of time for processing the claim, in
which event notification of the extension shall be provided to the claimant and
the extension shall not exceed 90 days. The written notice shall set forth the
specific reasons for such denial, specific reference to pertinent Plan
provisions, 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, all written in a manner calculated to be
understood by the claimant. The notice shall include appropriate information
as to the steps taken if the claimant wishes to submit the denied claim for
review. The claimant may request a review upon written application, may review
pertinent documents, and may submit issues or comments in writing. The
claimant must request a review within the reasonable period of time prescribed
by the Committee. In no event shall such a period of time be less than 60
days. The Committee shall decide all reviews of denied claims. A decision on
review shall be rendered within 60 days of the receipt of request for review by
the Committee. If special circumstances require a further extension of time
for processing, a decision shall be rendered not later than 120 days following
the Committee's receipt of the request for review. If such an extension of
time for review is required, written notice of the extension shall be furnished
to the claimant prior to the commencement of the extension. The Committee's
decision on review shall be furnished to the claimant. Such decision shall be
in writing and shall include specific reasons for the decision, written in a
manner calculated to be understood by the claimant, as well as specific
references to the pertinent Plan provisions on which the decision is based.
(c) The Committee shall have total discretionary authority to
determine eligibility, status, and the rights of all individuals under the Plan
and to construe any and all terms of the Plan.
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13.3 Source of Benefits.
All benefits payable under the Plan shall be paid solely from the
Trust Fund, and the Company and Affiliated Entities assume no liability or
responsibility therefor.
13.4 Exclusive Benefit of Employees.
It is the intention of the Company that no part of the Trust, other
than as provided in sections 3.3, 9.2, and 13.9 hereof and the Trust Agreement,
ever to be used for or diverted for purposes other than for the exclusive
benefit of Participants, Alternate Payees, and their beneficiaries, and that
this Plan shall be construed to follow the spirit and intent of the Code and
ERISA.
13.5 Forms of Notices.
Wherever provision is made in the Plan for the filing of any notice,
election, or designation by a Participant, Spouse, Alternate Payee, or
beneficiary, the action of such individual shall be evidenced by the execution
of such form as the Committee may prescribe for the purpose.
13.6 Failure of Any Other Entity to Qualify.
If any entity adopts this Plan but fails to obtain or retain the
qualification of the Plan under the applicable provisions of the Code, such
entity shall withdraw from this Plan upon a determination by the Internal
Revenue Service that it has failed to obtain or retain such qualification.
Within 30 days after the date of such determination, the assets of the Trust
Fund held for the benefit of the Employees of such entity shall be separately
accounted for and disposed of in accordance with the Plan and Trust.
13.7 Notice of Adoption of the Plan.
The Company shall provide each of its Employees with notice of the
adoption of this Plan, notice of any amendments to the Plan, and notice of the
salient provisions of the Plan prior to the end of the first Plan Year. A
complete copy of the Plan shall also be made available for inspection by
Employees or any other individual with an Account balance under the Plan.
13.8 Plan Merger.
If this Plan is merged or consolidated with, or its assets or
liabilities are transferred to, any other qualified plan of deferred
compensation, each Participant shall be entitled to receive a benefit
immediately after the merger, consolidation, or transfer that is equal to or
greater than the benefit the Participant would have been entitled to receive
immediately before the merger, consolidation, or transfer if this Plan had then
been terminated.
13.9 Inalienability of Benefits - Domestic Relations Orders.
(a) Except as provided in section 7.2, relating to Plan loans, and
subsection (b) below, no Participant or beneficiary shall have any right to
assign, alienate, transfer, or encumber his or her interest in any benefits
under this Plan, nor shall such benefits be subject to any legal process to
levy upon or attach the same for payment of any claim against any such
Participant or beneficiary.
(b) Subsection (a) shall apply to the creation, assignment, or
recognition of a right to any benefit payable with respect to a Participant
pursuant to a Domestic Relations Order unless such Domestic Relations Order is
a QDRO, in which case the Plan shall make payment of benefits in accordance
with the applicable requirements of any such QDRO.
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(c) In order to be a QDRO, the Domestic Relations Order must
satisfy the requirements of Code section 414(p) and ERISA section 206(d)(3).
In particular, the Domestic Relations Order: (i) must specify the name and the
last known mailing address of the Participant; (ii) must specify the name and
mailing address of each Alternate Payee covered by the order; (iii) must
specify either the amount or percentage of the Participant's benefits to be
paid by the Plan to each such Alternate Payee, or the manner in which such
amount or percentage is to be determined; (iv) must specify the number of
payments or period to which such order applies; (v) must specify each plan to
which such order applies; (vi) may not require the Plan to provide any type or
form of benefit, or any option, not otherwise provided under the Plan, subject
to the provisions of subsection (f); (vii) may not require the Plan to provide
increased benefits (determined on the basis of actuarial value); and (viii) may
not require the payment of benefits to an Alternate Payee if such benefits have
already been designated to be paid to another Alternate Payee under another
order previously determined to be a QDRO.
(d) In the case of any payment before an Employee has separated
from service, a Domestic Relations Order shall not be treated as failing to
meet the requirements of subsection (c) solely because such order requires that
payment of benefits be made to an Alternate Payee (i) on or after the dates
specified in subsection (f), (ii) as if the Employee had retired on the date on
which such payment is to begin under such order (but taking into account only
the Account balance on such date), and (iii) in any form in which such benefits
may be paid under the Plan to the Employee. For purposes of this subsection,
the Account balance as of the date specified in the QDRO shall be the vested
portion of the Employee's Account(s) on such date.
(e) The Committee shall establish reasonable procedures to
determine the qualified status of Domestic Relations Orders and to administer
distributions under QDROs. Such procedures shall be in writing and shall
permit an Alternate Payee to designate a representative to receive copies of
notices. The Committee shall temporarily prevent the Participant from
borrowing from his or her Accounts and shall temporarily suspend distributions
and withdrawals from the Participant's Accounts, except to the extent necessary
to make the required minimum distributions under Code section 401(a)(9), when
the Committee receives a Domestic Relations Order or a draft of such an order
that affects the Participant's Accounts or when one of the following
individuals informs the Committee, orally and in writing, that a QDRO is in
process or may be in process: the Participant, a prospective Alternate Payee,
or counsel for the Participant or a prospective Alternate Payee. The Committee
shall promulgate reasonable and non-discriminatory rules regarding such
suspensions, including but not limited to how long such suspensions remain in
effect. However, the Participant may borrow such amounts from the Plan,
subject to the limits of section 7.2, and the Participant may receive such
distributions and withdrawals from the Plan, subject to the rules of Articles
VI and VII, as are consented to in writing by all prospective Alternate Payees
identified in the Domestic Relations Order or, in the absence of a Domestic
Relations Order, as are consented to in writing by the prospective Alternate
Payee(s) who informed the Committee that a QDRO was in process or may be in
process. When the Committee receives a Domestic Relations Order it shall
promptly notify the Participant and each Alternate Payee of such receipt and
provide them with copies of the Plan's procedures for determining the qualified
status of the order. Within a reasonable period after receipt of a Domestic
Relations Order, the Committee shall determine whether such order is a QDRO and
notify the Participant and each Alternate Payee of such determination. During
any period in which the issue of whether a Domestic Relations Order is a QDRO
is being determined (by the Committee, by a court of competent jurisdiction, or
otherwise), the Committee shall separately account for the amounts payable to
the Alternate Payee if the order is determined to be a QDRO. If the order (or
modification thereof) is determined to be a QDRO within 18 months after the
date the first payment would have been required by such order, the Committee
shall pay the amounts separately accounted for (plus any interest thereon) to
the individual(s) entitled thereto. However, if the Committee determines that
the order is not a QDRO, or if the issue as to whether such order is a QDRO has
not been resolved within 18 months after the date of the first payment would
have been required by such order, then the Committee shall pay the amounts
separately accounted for (plus any interest thereon) to the individual(s) who
would have been entitled to such amounts if there had been no order. Any
determination that an order is a QDRO that is made after the close of the
18-month period shall be applied prospectively only. If the Plan's fiduciaries
act in accordance with fiduciary provision of ERISA in treating a Domestic
Relations Order as being (or not being) a QDRO or in taking action in
accordance with this subsection, then the Plan's obligation to the Participant
and each Alternate Payee shall be discharged to the extent of any payment made
pursuant to the acts of such fiduciaries.
(f) The Alternate Payee shall have the following rights under the
Plan:
(i) An Alternate Payee shall receive a lump sum
distribution of his or her Plan assets as soon as administratively
practicable after the Committee determines that the Domestic Relations
Order
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is a QDRO. If the Alternate Payee dies before the distribution is
made, the distribution shall be paid to the Alternate Payee's
beneficiary, as determined in subsection 6.1(a).
(ii) If the Alternate Payee cannot receive an immediate
distribution of his or her entire interest in the Plan (which would
occur if the Alternate Payee is awarded more than the distributable
amount in section 6.3), then the Alternate Payee's remaining interest
in the Plan shall be distributed as soon as administratively
practicable, in annual lump sums of the distributable amount. Upon
the Alternate Payee's death, his or her interest in the Plan shall be
distributed in a lump sum as soon as practicable to the Alternate
Payee's beneficiary, as determined in subsection 6.1(a).
(iii) Distribution to an Alternate Payee must occur on or
before the Participant's Required Beginning Date.
(iv) The Alternate Payee may bring claims against the Plan
in the same manner as a Participant pursuant to section 13.2.
13.10 Payments Due Minors or Incapacitated Individuals.
If any individual entitled to payment under the Plan is a minor, the
Committee shall cause the payment to be made to the custodian or representative
who, under the state law of the minor's domicile, is authorized to receive
funds on behalf of the minor. If any individual entitled to payment under this
Plan has been legally adjudicated to be mentally incompetent or incapacitated,
the Committee shall cause the payment to be made to the custodian or
representative who, under the state law of the incapacitated individual's
domicile, is authorized to receive funds on behalf of the incapacitated
individual. Payments made pursuant to such power shall operate as a complete
discharge of the Trust Fund, the Trustee, and the Committee.
13.11 Uniformity of Application.
The provisions of this Plan shall be applied in a uniform and
non-discriminatory manner in accordance with rules adopted by the Committee,
which rules shall be systematically followed and consistently applied so that
all individuals similarly situated shall be treated alike.
13.12 Disposition of Unclaimed Payments.
Each Participant, Alternate Payee, or beneficiary with an Account
balance in this Plan must file with the Committee from time to time in writing
his or her address, the address of each beneficiary (if applicable), and each
change of address. Any communication, statement, or notice addressed to such
individual at the last address filed with the Committee (or if no address is
filed with the Committee then at the last address as shown on the Company's
records) will be binding on such individual for all purposes of the Plan.
Neither the Committee nor the Trustee shall be required to search for or locate
any missing individual. If the Committee notifies an individual that he or she
is entitled to a distribution and also notifies him or her that a failure to
respond may result in a forfeiture of benefits, and the individual fails to
claim his or her benefits under the Plan or make his or her address known to
the Committee within a reasonable period of time after the notification, then
the benefits under the Plan of such individual shall be forfeited. Any amount
forfeited pursuant to this section shall be allocated pursuant to section 5.5.
If the individual should later make a claim for this forfeited amount, the
Company shall, if the Plan is still in existence, make a special contribution
to the Plan equal to the forfeiture, and such amount shall be distributed to
the individual; if the Plan is not then in existence, the Company shall pay the
amount of the forfeiture to the individual.
13.13 Applicable Law.
This Plan shall be construed and regulated by ERISA, the Code, and,
unless otherwise specified herein and to the extent applicable, the laws of the
State of Texas, excluding any conflicts-of-law provisions.
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ARTICLE XIV
MATTERS AFFECTING COMPANY STOCK
14.1 Voting, Etc.
The shares of Company Stock in Accounts, whether or not vested, may be
voted by the Account Owner to the same extent as if duly registered in the
Account Owner's name. The Trustee or its nominee in which the shares are
registered shall vote the shares solely as agent of the Account Owner and in
accordance with the instructions of the Account Owner. If no instructions are
received, the Trustee shall vote the shares of company Stock for which it has
received no voting instructions in the same proportions as the Account Owners
affirmatively directed their shares of Company Stock to be voted unless the
Trustee determines that a pro rata vote would be inconsistent with its
fiduciary duties under ERISA. If the Trustee makes such a determination, the
Trustee shall vote the Company Stock as it determines to be consistent with its
fiduciary duties under ERISA. Each Account Owner who has Company Stock
allocated to his or her Accounts shall direct the Trustee concerning the tender
(as provided below) and the exercise of any other rights appurtenant to the
Company Stock. The Trustee shall follow the directions of the Account Owner
with respect to the tender.
14.2 Notices.
Apache shall cause to be mailed or delivered to each Account Owner
copies of all notices and other communications sent to the Apache shareholders
at the same times so mailed or delivered by Apache to its other shareholders.
14.3 Retention/Sale of Company Stock and Other Securities.
The Trustee is authorized and directed to retain the Company Stock and
any other Apache securities acquired by the Trust except as follows:
(a) In the normal course of Plan administration, the Trustee shall
sell Company Stock to satisfy Plan administration and distribution requirements
as directed by the Committee or in accordance with provisions of the Plan
specifically authorizing such sales.
(b) In the event of a transaction involving the Company Stock
evidenced by the filing of Schedule 14D-1 with the Securities and Exchange
Commission ("SEC") or any other similar transaction by which any person or
entity seeks to acquire beneficial ownership of 50% or more of the shares of
Company Stock outstanding and authorized to be issued from time to time under
Apache's articles of incorporation ("tender offer"), the Trustee shall sell,
convey, or transfer Company Stock pursuant to written instructions of Account
Owners delivered to the Trustee in accordance with the following sections 14.4
through 14.15. For purposes of such provisions, the term "filing date" means
the date relevant documents concerning a tender offer are filed with the SEC
or, if such filing is not required, the date the Trustee receives actual notice
that a tender offer has commenced.
(c) If Apache makes any distribution of Apache securities with
respect to the shares of Company Stock held in the Plan, other than additional
shares of Company Stock (any such securities are hereafter referred to as
"stock rights"), the Trustee shall sell, convey, transfer, or exercise such
stock rights pursuant to written instructions of Account Owners delivered to
the Trustee in accordance with the following sections of this Article.
14.4 Tender Offers.
(a) Allocated Stock. In the event of any tender offer, each
Account Owner shall have the right to instruct the Trustee to tender any or all
shares of Company Stock, whether or not vested, that are allocated to his or
her Accounts under the Plan on or before the filing date. The Trustee shall
follow the instructions of the Account Owner. The Trustee shall not tender any
Company Stock for which no instructions are received.
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(b) Unallocated Stock. The Trustee shall tender all shares of
Company Stock that are not allocated to Accounts in the same proportion as the
Account Owners directed the tender of Company Stock allocated to their Accounts
unless the Trustee determines that a pro rata tender would be inconsistent with
its fiduciary duties under ERISA. If the Trustee makes such a determination,
the Trustee shall tender or not tender the unallocated Company Stock as it
determines to be consistent with its fiduciary duties under ERISA.
(c) Suspension of Share Purchases. In the event of a tender
offer, the Trustee shall suspend all purchases of Company Stock pursuant to the
Plan unless the Committee otherwise directs. Until the termination of such
tender offer and pending such Committee direction, the Trustee shall invest
available cash pursuant to the applicable provisions of the Plan and the Trust
Agreement.
(d) Temporary Suspension of Certain Cash Distributions.
Notwithstanding anything in the Plan to the contrary, no option to receive cash
in lieu of Company Stock shall be honored during the pendency of a tender offer
unless the Committee otherwise directs.
14.5 Stock Rights.
(a) General. If Apache makes a distribution of stock rights with
respect to the Company Stock held in the Plan and if the stock rights become
exercisable or transferable (the date on which the stock rights become
exercisable or transferable shall be referred to as the "exercise date"), each
Account Owner shall determine whether to exercise the stock rights, sell the
stock rights, or hold the stock rights allocated to his or her Accounts. The
provisions of this section shall apply to all stock rights received with
respect to Company Stock held in Accounts, whether or not the Company Stock
with respect to which the stock rights were issued are vested.
(b) Independent Fiduciary. The Independent Fiduciary provided for
in this section 14.15 below shall act with respect to the stock rights. All
Account Owner directions concerning the exercise or disposition of the stock
rights shall be given to the Independent Fiduciary, who shall have the sole
responsibility of assuring that the Account Owners' directions are followed.
(c) Exercise of Stock Rights. If, on or after the exercise date,
an Account Owner wishes to exercise all or a portion of the stock rights
allocated to his or her Accounts, the Independent Fiduciary shall follow the
Account Owner's direction to the extent that there is cash or other liquid
assets available in his or her Accounts to exercise the stock rights.
Notwithstanding any other provision of the Plan, each Account Owner who has
stock rights allocated to his or her Accounts shall have a period of five
business days following the exercise date in which he or she may give
instructions to the Committee to liquidate any of the assets held in his or her
Accounts (except shares of Company Stock or assets such as guaranteed
investment contracts or similar investments), but only if he or she does not
have sufficient cash or other liquid assets in his or her Accounts to exercise
the stock rights. The liquidation of any necessary investments pursuant to an
Account Owner's direction shall be accomplished as soon as reasonably
practicable, taking into account any timing restrictions with respect to the
investment funds involved. The cash obtained shall be used to exercise the
stock rights, as the Account Owner directs. Any cash that is not so used shall
be invested in a cash equivalent until the next date on which the Account Owner
may change his or her investment directions under the Plan.
(d) Sale of Stock Rights. On and after the exercise date, the
Independent Fiduciary shall sell all or a portion of the stock rights allocated
to Accounts, as the Account Owner shall direct.
14.6 Other Rights Appurtenant to the Company Stock.
If there are any rights appurtenant to the Company Stock, other than
voting, tender, or stock rights, each Account Owner shall exercise or take
other appropriate action concerning such rights with respect to the Company
Stock, whether or not vested, that is allocated to their Accounts in the same
manner as the other holders of the Company Stock, by giving written
instructions to the Trustee. The Trustee shall follow all such instructions,
but shall take no action with respect to allocated Company Stock for which no
instructions are received. The Trustee shall exercise or take other
appropriate action concerning any such rights appurtenant to unallocated
Company Stock.
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14.7 Information to Trustee.
Promptly after the filing date, the exercise date, or any other event
that requires action with respect to the Company Stock, the Committee shall
deliver or cause to be delivered to the Trustee or the Independent Fiduciary,
as appropriate, a list of the names and addresses of Account Owners showing
(i) the number of shares of Company Stock allocated to each Account Owner's
Accounts under the Plan, (ii) each Account Owner's pro rata portion of any
unallocated Company Stock, and (iii) each Account Owner's share of any stock
rights distributed by Apache. The Committee shall date and certify the
accuracy of such information, and such information shall be updated
periodically by the Committee to reflect changes in the shares of Company Stock
and other assets allocated to Accounts.
14.8 Information to Account Owners.
The Trustee or the Independent Fiduciary, as appropriate, shall
distribute and/or make available to each affected Account Owner the following
materials:
(a) A copy of the description of the terms and conditions of any
tender offer filed with the SEC on Schedule 14D-1, or any similar materials if
such filing is not required, any material distributed to shareholders generally
with respect to the stock rights, and any proxy statements and any other
material distributed to shareholders generally with respect to any action to be
taken with respect to the Company Stock.
(b) If requested by Apache, a statement from Apache's management
setting forth its position with respect to a tender offer that is filed with
the SEC on Schedule 14D-9 and/or a communication from Apache given pursuant to
17 C.F.R. 240.14d-9(e), as amended.
(c) An instruction form prepared by Apache and approved by the
Trustee or the Independent Fiduciary, to be used by an Account Owner who wishes
to instruct the Trustee to tender Company Stock in response to the tender
offer, to instruct the Independent Fiduciary to sell or exercise stock rights,
or to instruct the Trustee or Independent Fiduciary with respect to any other
action to be taken with respect to the Company Stock. The instruction form
shall state that (i) if the Account Owner fails to return an instruction form
to the Trustee by the indicated deadline, the Trustee will not tender any
shares of Company Stock the Account Owner is otherwise entitled to tender, (ii)
the Independent Fiduciary will not sell or exercise any right allocated to the
Account except upon the written direction of the Account Owner, (iii) the
Trustee or Independent Fiduciary will not take any other action that the
Account Owner could have directed, and (iv) Apache acknowledges and agrees to
honor the confidentiality of the Account Owner's directions to the Trustee.
(d) Such additional material or information as the Trustee or the
Independent Fiduciary may consider necessary to assist the Account Owner in
making an informed decision and in completing or delivering the instruction
form (and any amendments thereto) to the Trustee or the Fiduciary on a timely
basis.
14.9 Expenses.
The Trustee and the Independent Fiduciary shall have the right to
require payment in advance by Apache and the party making the tender offer of
all reasonably anticipated expenses of the Trustee and the Independent
Fiduciary, respectively, in connection with the distribution of information to
and the processing of instructions received from Account Owners.
14.10 Former Account Owners.
Apache shall furnish former Account Owners who have received
distributions of Company Stock so recently as to not be shareholders of record
with the information furnished pursuant to section 14.8. The Trustee and the
Independent Fiduciary are hereby authorized to take action with respect to the
Company Stock distributed to such former Account Owners in accordance with
appropriate instructions from them. If the Trustee does not receive
appropriate instructions, it shall take no action with respect to the
distributed Company Stock.
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14.11 No Recommendations.
Neither the Committee, the Committee Fiduciary, the Trustee, nor the
Independent Fiduciary shall express any opinion or give any advice or
recommendation to any Account Owner concerning voting the Company Stock, any
tender offer, stock rights, or the exercise of any other rights appurtenant to
the Company Stock, nor shall they have any authority or responsibility to do
so. Neither the Trustee nor the Independent Fiduciary has any duty to monitor
or police the party making a tender offer or Apache in promoting or resisting a
tender offer; provided, however, that if the Trustee or the Independent
Fiduciary becomes aware of activity that on its face reasonably appears to the
Trustee or Independent Fiduciary to be materially false, misleading, or
coercive, the Trustee or the Independent Fiduciary, as the case may be, shall
promptly demand that the offending party take appropriate corrective action.
If the offending party fails or refuses to take appropriate corrective action,
the Trustee or the Independent Fiduciary, as the case may be, shall communicate
with affected Account Owners in such manner as it deems advisable.
14.12 Trustee to Follow Instructions.
(a) So long as the Trustee and the Independent Fiduciary, as the
case may be, have determined that the Plan is in compliance with ERISA section
404(c), the Trustee or the Independent Fiduciary shall tender, deal with stock
rights, and act with respect to any other rights appurtenant to the Company
Stock, pursuant to the terms and conditions of the particular transaction or
event, and in accordance with instructions received from Account Owners.
Except for voting, the Trustee or the Independent Fiduciary shall take no
action with respect to Company Stock, stock rights, or other appurtenant rights
for which no instructions are received, and such Company Stock, stock rights,
or other appurtenant rights shall be treated like all other Company Stock,
stock rights, or other appurtenant rights for which no instructions are
received. The Trustee, or if an Independent Fiduciary has been appointed, the
Independent Fiduciary, shall vote the allocated Company Stock that an Account
Owner does not vote as specified in section 14.1.
(b) If the Trustee or Independent Fiduciary determines that the
Plan does not satisfy the requirements of ERISA section 404(c), the Trustee or
Independent Fiduciary shall follow the instructions of the Account Owner with
respect to voting, tender, stock rights, or other rights appurtenant to the
Company Stock unless the Trustee or Independent Fiduciary determines that to do
so would be inconsistent with its fiduciary duties under ERISA. In such case,
the Trustee or the Independent Fiduciary shall take such action as it
determines to be consistent with its fiduciary duties under ERISA.
14.13 Confidentiality.
(a) The Committee shall designate one of its members (the
"Committee Fiduciary") to receive investment directions and to transmit such
directions to the Trustee or Independent Fiduciary, as the case may be. The
Committee Fiduciary shall also receive all Account Owner instructions
concerning voting, tender, stock rights, and other rights appurtenant to the
Company Stock. The Committee Fiduciary shall communicate the instructions to
the Trustee or the Fiduciary, as appropriate.
(b) Neither the Committee Fiduciary, the Trustee, nor the
Independent Fiduciary shall reveal or release any instructions received from
Account Owners concerning the Company Stock to Apache, an Affiliated Entity, or
the officers, directors, employees, agents, or representatives of Apache and
Affiliated Entities, except to the extent necessary to comply with Federal or
state law not preempted by ERISA. If disclosure is required by Federal or
state law, the information shall be disclosed to the extent possible in the
aggregate rather than on an individual basis.
(c) The Committee Fiduciary shall be responsible for reviewing the
confidentiality procedures from time to time to determine their adequacy. The
Committee Fiduciary shall ensure that the confidentiality procedures are
followed. The Committee Fiduciary shall also ensure that the Independent
Fiduciary provided for in section 14.15 is appointed.
(d) Apache, with the Trustee's cooperation, shall take such action
as is necessary to maintain the confidentiality of Account records including,
without limitation, establishment of security systems and procedures which
restrict access to Account records and retention of an independent agent to
maintain such records. If an independent recordkeeping agent is retained, such
agent must agree, as a condition of its retention by Apache, not to disclose
the
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composition of any Accounts to Apache, an Affiliated Entity or an officer,
director, employee, or representative of Apache or an Affiliated Entity.
(e) Apache acknowledges and agrees to honor the confidentiality of
the Account Owners' instructions to the Committee Fiduciary, the Trustee, and
the Independent Fiduciary. If Apache, by it own act or omission, breaches the
confidentiality of Account Owner instructions, Apache agrees to indemnify and
hold harmless the Committee Fiduciary, the Trustee, or the Independent
Fiduciary, as the case may be, against and from all liabilities, claims and
demands, damages, costs, and expenses, including reasonable attorneys' fees,
that the Committee Fiduciary, the Trustee, or the Independent Fiduciary may
incur as a result thereof.
14.14 Investment of Proceeds.
If Company Stock or the rights are sold pursuant to the tender offer
or the provisions of the rights, the proceeds of such sale shall be invested in
accordance with the provisions of the Plan and the Trust Agreement.
14.15 Independent Fiduciary.
Apache shall appoint a fiduciary (the "Independent Fiduciary") to act
solely with respect to the Company Stock in situations which the Committee
Fiduciary determines involve a potential for undue influence by Apache in
connection with the Company Stock and the exercise of any rights appurtenant to
the Company Stock. If the Committee Fiduciary so determines, it shall give
written notice to the Independent Fiduciary, which shall have sole
responsibility for assuring that Account Owners receive the information
necessary to make informed decisions concerning the Company Stock, are free
from undue influence or coercion, and that their instructions are followed to
the extent proper under ERISA. The Independent Fiduciary shall act until it
receives written notice to the contrary from the Committee Fiduciary.
APACHE CORPORATION
Date: 12-22-94 By: /s/ Roger B. Rice
Its: Vice President, Human Resources
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APPENDIX A
PARTICIPATING COMPANIES
The following Affiliated Entities were actively participating in the Plan as of
the following dates:
Business Participation Participation
Began As Of Ended As Of
Apache International, Inc. September 22, 1987 N/A
Hadson Energy Resources Corporation January 1, 1994 N/A
Apache Energy Limited (known as January 1, 1994 N/A
Hadson Energy Limited before
January 1, 1995)
- - END OF APPENDIX A --
A-1
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APPENDIX B
HADSON ENERGY RESOURCES CORPORATION
Introduction
Through a merger effective November 12, 1993, Apache now holds 100% of
the capital stock of Hadson Energy Resources Corporation ("HERC"). HERC and
its wholly owned subsidiary, Hadson Energy Limited ("HEL"), maintained the
Hadson Energy Resources Corporation Employee 401(k) Plan (the "HERC Plan"), a
profit sharing plan containing a cash or deferred arrangement. The HERC Plan
was terminated as of profit sharing plan containing a cash or deferred
arrangement. The HERC Plan was terminated as of December 31, 1993. Amounts
will be transferred from the HERC Plan to this Plan as soon as administratively
feasible after the Internal Revenue Service issues a favorable ruling with
respect to the termination of the HERC Plan. The transferred amounts will be
accounted for separately, and different distributional options will apply to
them, as described below. In addition, HERC and HEL have adopted this Plan,
and Apache has approved their adoption, as of January 1, 1994 for HERC's and
HEL's eligible employees. The employees will be given credit in this Plan, for
vesting and eligibility purposes, for their prior service with HERC and HEL.
This Appendix is intended to encompass all the protected benefits and
optional forms of benefit, as required by Code section 411(d)(6), with respect
to amounts transferred from the HERC Plan and shall be interpreted consistently
with that intent.
Capitalized terms in this Appendix have the same meanings as those
given to them in the Plan.
Service
This Appendix applies to all individuals who are common-law employees
of HERC or HEL ("Current HERC Employees") as of January 1, 1994. A Period of
Service for a Current HERC Employee shall include any periods of employment
before January 1, 1994 with HERC, HEL, and any of HERC's subsidiaries.
Participation
Notwithstanding sections 2.1 and 3.1, a Current HERC Employee who is a
Covered Employee shall be eligible to begin to make Participant Before-Tax
Contributions, and shall be eligible to participate in the Plan with respect to
the 6% Company Mandatory Contribution, on January 1, 1994.
Transfer of Accounts
The Trustee is authorized to accept the direct transfer of all assets
from the trustee of the HERC Plan. The assets may be transferred in kind or in
cash, as determined by the Committee. The Trustee shall accept a direct
transfer of any participant loan from the HERC Plan; such loan shall continue
to be administered according to the terms of its promissory note. The
Committee shall establish such procedures, rules, and regulations as it deems
necessary or appropriate to accommodate the transfer of assets. The Trustee
shall separately account for all assets directly transferred to this Plan. The
Trustee shall establish the following accounts for each individual whose
account(s) are transferred to this Plan: a Voluntary Contribution Account
(containing participant after-tax contributions and the investment earnings
thereon); a Salary Deferral Account (containing participant before-tax
contributions and the investment earnings thereon); a Salary Deferral Account
(containing qualified non-elective contributions, qualified matching
contributions, and the investment earnings thereon); and a HERC Contributions
Account (containing the employer's matching contributions, the employer's
discretionary contributions, and the investment earnings thereon)
(collectively, the "HERC Accounts").
Amounts transferred to this Plan from the HERC Plan cannot be
borrowed, and cannot be used as security for any loan from this Plan.
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Distributions
Unless waived in writing by the Participant or their beneficiary after
such person becomes entitled to a distribution from the Plan by reason of a
Participant's death, Disability, retirement, or other termination of employment
with the Company, or a termination or partial termination of the Plan, then in
addition to and notwithstanding any other provisions of the Plan, the
Participant or other beneficiary shall have the right to receive his or her
vested interest in the balance of his or her HERC Accounts in the following
optional forms and the at the following times.
To the extent that this Appendix does not provide for an alternative
or contrary requirement or procedure for distribution of a Participant's HERC
Account, the provisions of the Plan shall control. For example, all of the
consent and beneficiary designation provisions of the Plan govern the
distribution of HERC Accounts to the extent not inconsistent with the annuity
requirements below, and all distributions are subject to the direct rollover
rules of section 6.6.
Whether or not specifically stated hereinafter, the following
provisions apply only to the HERC Account balances.
1. Death or Disability.
Distributions pursuant to the Plan provisions control in the case of
distributions as a result of death or Disability, except to the extent that the
annuity requirements below are applicable, and except that installment payments
are not available.
2. Other than Death or Disability.
Distributions for reasons other than the Participant's death or
Disability shall be made in accordance with the following:
A Participant who has attained age 59-1/2 may withdraw any vested
amount from his or her HERC Accounts at any time, regardless of whether the
Participant has terminated employment with HERC.
A Participant may elect to withdraw any vested amount from his or her
HERC Accounts at any time after separating from service (within the meaning of
Code section 401(k)(2)(B)(i)(I)) with Apache, HERC, and all Affiliated
Entities.
A Participant may elect to withdraw any amount from his or her
Voluntary Contributions Account at any time, regardless of whether the
Participant has terminated employment with HERC.
A Participant younger than 59-1/2 who has not separated from service
with Apache, HERC, and Affiliated Entities, may make a hardship withdrawal from
his or her Salary Deferral Account under the same terms and conditions
described in section 7.1(b) of the Plan.
Notwithstanding any of the foregoing early distribution options, a
Participant whose vested interest in his or her HERC Account balances are
distributed pursuant to one of the options contained in this paragraph 2 shall
forfeit his or her nonvested interest in his or her HERC Account balances only
as of the last day of the Plan Year in which the Participant incurs a one-year
Lapse in Apache Employment.
All distributions made pursuant to this paragraph 2 shall be made in a
manner consistent with, and satisfies the provisions of, paragraphs 3 and 4
below, including, but not limited to, all notice and consent requirements of
Code sections 417 and 411(a)(11) and the Treasury Regulations thereunder.
3. Qualified Single Life or Joint and Survivor Annuity.
Paragraph 3 shall apply only to a Participant who elects to receive an
annuity.
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(a) Eligibility and Conditions. Unless the Participant elects, as
provided in 3(c), not to receive benefits in the form of a qualified joint and
survivor annuity, benefits attributable to HERC Account balances will be paid
in a form having the effect of a qualified joint and survivor annuity (as
defined in 3(b)(2)) with respect to any Participant who (1) is entitled to a
distribution, and (2) satisfies the marriage requirements provided in 3(d)(2).
In a similar fashion, if a Participant does not meet the marriage requirements,
such benefits will be paid in a form having the effect of a single life annuity
unless the Participant elects, similar to the election pursuant to 3(c) but
without the spousal consent requirement, to waive the life annuity.
(b) Definitions. As used in this paragraph
(1) Life Annuity. The term "life annuity" means an
annuity that provides retirement payments and requires the survival of the
Participant or the Participant's spouse as one of the conditions for any
payment or possible payment under the annuity.
(2) Qualified Joint and Survivor Annuity. The term
"qualified joint and survivor annuity" means an annuity for the life of the
Participant with a survivor annuity for the life of the Participant's spouse
which is one-half of the amount of the annuity payable during the joint lives
of the Participant and his or her spouse. A qualified joint and survivor
annuity shall be the actuarial equivalent of a life annuity for the life of the
Participant. The Committee shall direct the Trustee to apply the entire vested
amount in all of the Participant's HERC Accounts (whether vested before or upon
death, including the proceeds of insurance contract) to the purchase of an
annuity contract that satisfies all of the requirements of this paragraph 3 and
to distribute the contract to the Participant. Payments to the spouse of a
deceased Participant shall not be terminated or reduced because of such
spouse's remarriage.
(3) Normal Retirement Age. The term "normal retirement
age" means the Participant's 65th birthday.
(4) Annuity Starting Date. The term "annuity starting
date" means (i) the first day of the first period for which an amount is
payable as an annuity, whether by reason of retirement or by reason of
Disability, or (ii) in the case of a benefit not payable in the form of an
annuity, the first day on which all events have occurred which entitled the
Participant to such benefit.
(5) Day. The term "day" means a calendar day.
(c) Election Not to Take Joint and Survivor Annuity.
(1) In General. Each Participant may elect, at any time
during the election period described in 3(c)(3), not to receive a qualified
joint and survivor annuity. The election shall be in writing and clearly
indicate that the Participant is electing to receive all of his or her benefits
under the Plan in a form other than that of a qualified joint and survivor
annuity.
(2) Consent of Spouse. An election under 3(c)(1) above
shall not be effective unless (i) the Participant's spouse consents in writing
to the election, (ii) the election designates a beneficiary (or a form of
benefits) which may not be changed without spousal consent (or the consent of
the spouse expressly permits designation by the Participant without any
requirement of further consent by the spouse) and (iii) the spouse's consent
acknowledges the effect of the election and the consent is witnessed by a
Committee member or a notary public. The spouse's consent shall be filed with
the Committee at the same time that the Participant's election under 3(c)(1) is
filed with the Committee. If a spousal consent shall be filed together with
the Participant's election, the election shall take effect nevertheless it is
established to the satisfaction of the Committee that the Participant is not
married, the Participant's spouse cannot be located, or that other
circumstances prescribed in the Treasury Regulations exist. Any spousal
consent or establishment that spousal consent cannot be obtained shall be
effective only with respect to such spouse.
(3) Election Period. The Participant shall have an
election period which shall be a 90-day period ending on the annuity starting
date. If a Participant makes a request for additional information as provided
in 3(c)(4) below on or before the last day of the election period, the election
period shall be extended to the extent necessary to
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include the 90 calendar days immediately following the day the requested
additional information is personally delivered or mailed to the Participant.
(4) Information to be Provided by Plan Administrator.
(i) The Plan Administrator shall provide
to the Participants, at the time and in the manner specified
in 3(c)(4)(ii), the following information, as applicable to
the HERC Account balances under the Plan, written in
nontechnical language;
(A) A general explanation of the terms
and conditions of the qualified joint and survivor annuity;
the Participant's right to make, and the effect of, an
election to waive the joint and survivor annuity form of
benefit; the right of the Participant's spouse to consent to
any election to waive the joint and survivor annuity; the
right to revoke an election to waive; and the effect of such a
revocation; and
(B) A general explanation of the
relative financial effect on a Participant's annuity of the
election. Various methods may be used to explain such
relative financial effect, including information as to the
benefits the Participant would receive under the qualified
joint and survivor annuity stated as an arithmetic or
percentage reduction for a single life annuity; a table
showing the difference between a straight life annuity and a
qualified joint and survivor annuity in terms of a reduction
in dollar amounts or a table showing a percentage reduction
from the straight life annuity. The notice and explanation
required by this 3(c)(4)(i) must also inform the Participant
of the availability of the additional information specified in
3(c)(4)(iii) and how such information may be obtained.
(ii) The method or methods used to provide the
information may vary. If mail or personal delivery is used,
then, whether or not the information has been previously
provided, there must be a mailing or personal delivery of the
information by such time as to reasonably assure that it will
be received on a date that is no less than 30 days and no more
than 90 days before the annuity starting date. If a method
other than mail or personal delivery is used to provide
Participants with some or all of such information, it must be
a method that is reasonably calculated to reach the attention
of a Participant on or about the date prescribed in the
immediately preceding sentence and to continue to reach the
attention of such Participant during the election period
applicable to the Participant for which the information is
being provided (as, for example, by permanent posting,
repeated publication, etc.).
(iii) The Plan Administrator must furnish to a
particular Participant, upon a timely written request, a
written explanation in nontechnical language of the terms and
conditions of the qualified joint and survivor annuity and the
financial effect upon the particular Participant's annuity of
making any election under this paragraph. Such financial
effect shall be given in terms of dollars per annuity payment.
The Plan Administrator need not comply with more than one such
request made by a particular Participant. This explanation
must be personally delivered or mailed (first class mail,
postage prepaid) to the Participant within 30 days from the
date of the Participant's written request.
(5) Election is Revocable. Any election made under this
3(c) may be revoked in writing at any time during the specified election
period, and after such election has been revoked, another election under this
paragraph may be made at any time during the specified election period.
(6) Election by Surviving Spouse. The spouse of a
deceased Participant may elect to have the benefits attributable to HERC
Account balances paid in a form other than a survivor annuity. The Plan
Administrator must furnish to the spouse, within a reasonable amount of time
after a written request has been made by the spouse, a written explanation in
nontechnical language of the survivor annuity and any other form of payment
which may be selected. This explanation must state the financial effect (in
terms of dollars) of each form of payment. The Plan Administrator need not
respond to more than one such request.
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(d) Additional Plan Provisions.
(1) Claim for Benefits. As a condition precedent to the
payment of benefits, a Participant must express in writing to the Plan
Administrator the form in which he or she prefers benefits to be paid and
provide all the information reasonably necessary for the payment of such
benefits. However, if a Participant files a claim for benefits with the Plan
Administrator and provides the Plan Administrator with all the information
necessary for the payment of benefits but does not indicate a preference as to
the form for the payment of benefits, benefits attributable to HERC Account
balances must be paid in the form of a qualified joint and survivor annuity if
the Participant has attained normal retirement age unless such Participant has
made an effective election not to receive benefits in such form.
(2) Marriage Requirements.
(i) In General. A joint an survivor annuity
will be paid only if
(A) the Participant and his or her
spouse have been married to each other throughout a period of
one year ending on the annuity starting date; and
(B) the Participant shall notify the
Plan Administrator of his or her martial status within 30 days
after request is made for such information.
(ii) Special Rule. If a Participant marries
within one year before his or her annuity starting date and if
the Participant and such spouse have been married for at least
a one year period that ends on or before the Participant's
date of death, the Participant and such spouse shall be
treated as having been married throughout the one-year period
ending on the Participant's annuity starting date.
(3) Effect of Participant's Death on an Election or
Revocation of Election. The effect of an election or a revocation of an
election timely made under 3(c) shall not be altered by the death of the
Participant within any particular time period after such election or revocation
shall be made effective.
(e) Amount of Benefits. The amount of benefits shall be as
provided in 3(b).
(f) Commencement and Duration. The monthly surviving spouse's
benefit shall be payable to the spouse for life, beginning as of the first day
of the calendar month coincident with or next following the Participant's
death.
4. Qualified Preretirement Survivor Annuity.
Paragraph 4 shall apply only to a Participant who elects to receive an
annuity.
(a) Eligibility and Conditions. Unless the Participant elects,
as provided in 4(c), to waive death benefits in the form of a qualified
preretirement survivor annuity, death benefits attributable to HERC Account
balances will be paid in a form having the effect of a qualified preretirement
survivor annuity (as defined in paragraph 4(b)(2)) with respect to any
Participant who (1) dies prior to the annuity starting date, and (2) satisfies
the marriage requirement of 4(d).
(b) Definitions. As used in this paragraph
(1) Life Annuity. The term "life annuity" means an
annuity that provides retirement payments and requires the survival of the
Participant or the Participant's spouse as one of the conditions for any
payment or possible payment under the annuity.
(2) Qualified Preretirement Survivor Annuity. The term
"qualified preretirement survivor annuity" means an annuity for the life of the
surviving spouse of the Participant, which is the actuarial equivalent of 100%
of the Participant's HERC Account balance as of his or her
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date of death. The Committee shall direct the Trustee to purchase an annuity
contract that satisfies all of the requirements of this paragraph 4 (provided
that the present value of the annuity contract is not less than 50% of the
Participant's vested amount in all of his or her HERC Accounts at his or her
date of death, whether vested before or upon death, including the proceeds of
insurance contracts) and to distribute the annuity contract to the surviving
spouse.
(3) Normal Retirement Age. The term "normal retirement
age" means the Participant's 65th birthday.
(4) Annuity Starting Date. The term "annuity starting
date" means (i) the first day of the first period for which an amount is
payable as an annuity, whether by reason of retirement or by reason of
Disability or (ii) in the case of a benefit not payable in the form of an
annuity, the first day on which all events have occurred which entitled the
Participant to such benefit.
(5) Day. The term "day" means a calendar day.
(c) Election to Waive Qualified Preretirement Survivor Annuity.
(1) In General.
(i) Each Participant may elect, during the
election period described in 4(c)(3), to waive the payment of
death benefits in the form of a qualified preretirement
survivor annuity.
(ii) The election shall be in writing and clearly
indicate that the Participant is electing to waive the payment
of death benefits in the form of a qualified preretirement
survivor annuity.
(2) Consent of Spouse. An election under 4(c)(1) shall
not be effective unless (i) the Participant's spouse consents in writing to the
election, (ii) the election designates a beneficiary (or a form of benefits)
which may not be changed without spousal consent (or the consent of the spouse
expressly permits the designations by the Participant without any requirement
of further consent by the spouse) and (iii) the spouse's consent acknowledges
the effect of the election and the consent is witnessed by a Committee member
or a notary public. The spouse's consent shall be filed with the Committee at
the same time that the Participant's election under 4(c)(1) is filed with the
Committee. If a spousal consent is not filed together with the Participant's
election, the election shall take effect nevertheless if it is established to
the satisfaction of the Committee that the Participant is not married, the
Participant's spouse cannot be located, or that other circumstances prescribed
in the Treasury Regulations exist. Any spousal consent or establishment that
spousal consent cannot be obtained shall be effective only with respect to such
spouse.
(3) Election Period. The Participant shall have an
election period which shall be a period that ends the later of (i) the period
beginning with the first day of the Plan Year in which the Participant attains
age 32 and ending with the close of the Plan Year preceding the Plan Year in
which the Participant attains age 35, (ii) a reasonable time after the
individual becomes a Participant, (iii) a reasonable time after the joint and
survivor rules become effective to the Participant or (v) a reasonable time
after the Participant separates from service before attaining age 35.
(4) Information to be Provided by Plan Administrator.
(i) The Plan Administrator shall provide to the
Participants, at the time and in the manner specified in
4(c)(4), the following information, as applicable to the Plan,
written in nontechnical language:
(A) A general explanation of the
qualified preretirement survivor annuity; the Participant's
right to make, and the effect of, an election to waive the
preretirement survivor annuity form of death benefit; the
right of the Participant's spouse to consent to the election
to waive the preretirement survivor annuity; the right to
revoke an election to waive; and the effect of such a
revocation.
(B) A general explanation of the
relative financial effect on a Participant's death benefits of
the election. Various methods may be used to explain such
relative financial effect.
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(ii) The method or methods used to provide the
information may vary. If mail or personal delivery is used,
then, whether or not the information has been previously
provided, there must be a mailing personal delivery of the
information by such time as to reasonably assure that it will
be received within the period commencing with the first day of
the Plan Year in which the Participant attains age 32 and
ending with the last day of the Plan Year preceding the Plan
Year in which the Participant attains age 35. If a method
other than mail or personal delivery is used to provide
Participants with some or all of such information, it must be
a method that is reasonably calculated to reach the attention
of a Participant on or about the date prescribed in the
immediately preceding sentence and to continue to reach the
attention of such Participant during the election period
applicable to the Participant for which the information is
being provided (as, for example, be permanent posting,
repeated publication, etc.).
(5) Election is Revocable. Any election made under this
paragraph 4 may be revoked in writing at any time during the specified election
period, and after such election has been revoked, another election under this
paragraph may be made at any time during the specified election period.
(6) Election by Surviving Spouse. The surviving spouse
may elect to have benefits paid in a form other than a preretirement survivor
annuity. The Plan Administrator must furnish to the spouse, within a
reasonable amount of time after a written request has been made by the spouse,
a written explanation in nontechnical language of the preretirement survivor
annuity and any other form of payment that may be selected. The explanation
must state the financial effect (in terms of dollars) of each form of payment.
The Plan Administrator need not respond to more than one such request.
(d) Marriage Requirement. A preretirement survivor annuity will
be paid only if the Participant and his or her spouse have been married to each
other throughout a period of one year ending on the date of the Participant's
death.
(e) Amount of Benefits. The amount shall be as provided in 4(b).
(f) Commencement and Duration. The surviving spouse's benefit
shall be payable to the spouse for life, beginning as of the first day of the
calendar month coincident with or next following the Participant's death.
-- END OF APPENDIX B --
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APPENDIX C
CRYSTAL OIL COMPANY
Apache may enter into an asset purchase agreement with Crystal Oil
Company on or about December 31, 1994 (the "Closing Date"). Apache may hire
some employees of Crystal Oil Company on the Closing Date or within one week
after the Closing Date ("Ex-Crystal Employees"). This Appendix shall be
effective as of the Closing Date.
A Period of Service for an Ex-Crystal Employee shall include any
periods of employment with Crystal Oil Company and any business treated as a
single employer with Crystal Oil Company pursuant to Code section 414(b),
414(m), or 414(o).
Notwithstanding section 2.1 of the Plan, an Ex-Crystal Employee shall
be eligible to begin to make Participant Before-Tax Contributions, and shall be
eligible to participate in the Plan with respect to the 6% Company Mandatory
Contribution, on the date he or she becomes a Covered Employee.
--END OF APPENDIX C--
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