<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 24, 1997
REGISTRATION NO. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
____________________
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
MONTEREY RESOURCES, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
DELAWARE 76-0511993
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
</TABLE>
5201 TRUXTUN AVENUE, SUITE 100
BAKERSFIELD, CALIFORNIA 93309
(Address, including zip code, of Principal Executive Offices)
MONTEREY RESOURCES, INC.
SAVINGS INVESTMENT PLAN
(Full title of the plan)
TERRY L. ANDERSON
GENERAL COUNSEL AND SECRETARY
MONTEREY RESOURCES, INC.
5201 TRUXTUN AVENUE, SUITE 100
BAKERSFIELD, CALIFORNIA 93309
(805) 322-3992
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
____________________
copy to:
G. MICHAEL O'LEARY
ANDREWS & KURTH L.L.P.
4200 TEXAS COMMERCE TOWER
600 TRAVIS
HOUSTON, TEXAS 77002
(713) 220-4200
____________________
CALCULATION OF REGISTRATION FEE
<TABLE>
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============================================================================================================
PROPOSED
PROPOSED MAXIMUM
AMOUNT MAXIMUM AGGREGATE AMOUNT OF
TO BE OFFERING PRICE OFFERING REGISTRATION
TITLE OF SECURITIES TO BE REGISTERED REGISTERED PER SHARE (1) PRICE (1) FEE
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, Par Value $.01 Per Share(2) 1,000,000 $13-3/4 $13,750,000 $4,167
============================================================================================================
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(h), based upon the average of the high and low
prices of a share of the Company's Common Stock for July 21, 1997
on the New York Stock Exchange as reported in The Wall Street Journal
on July 22, 1997.
(2) Includes preferred share purchase rights associated with the
Common Stock. No separate fee is payable in respect of the
registration of such preferred share purchase rights. In
addition, pursuant to Rule 416(c) under the Securities Act of 1933,
this registration statement also covers an indeterminate amount of
interests to be offered or sold pursuant to the employee benefit
plan described herein.
================================================================================
<PAGE> 2
PART I
INFORMATION REQUIRED IN THE SECTION 10(A) PROSPECTUS
The documents containing the information specified in Part I of the
General Instructions to the Registration Statement on Form S-8 will be sent or
given to employees of the Registrant selected to participate in the Plan as
required by Rule 428(b)(1) promulgated under the Securities Act.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
Monterey Resources, Inc. (the "Company") incorporates herein by
reference the following documents, or portions of documents, as of their
respective dates as filed with the Securities and Exchange Commission (the
"Commission"):
(a) The Company's Annual Report on Form 10-K for the year
ended December 31, 1996;
(b) The Company's Quarterly Report on Form 10-Q for the
quarter ended March 31, 1997;
(c) The Company's Current Reports on Form 8-K dated
June 20, 1997 and July 16, 1997; and
(d) The description of the Company's common stock, par
value $.01 per share (the "Common Stock"), contained in the Company's
Registration Statement on Form 8-A filed with the Commission on
October 11, 1996 pursuant to Section 12 of the Securities Exchange Act
of 1934, as amended (the "Exchange Act").
All documents filed by the Company pursuant to Sections 13(a), 13(c),
14 and 15(d) of the Exchange Act after the date of this Registration Statement
and prior to the filing of a post-effective amendment which indicates that all
securities offered hereby have been sold or which deregisters all such
securities then remaining unsold, shall be deemed to be incorporated by
reference in this Registration Statement and to be a part hereof from the date
of filing such documents.
ITEM 4. DESCRIPTION OF SECURITIES.
The information required by Item 4 is not applicable to this
Registration Statement since the class of securities to be offered is
registered under Section 12 of the Exchange Act.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
The information required by Item 5 is not applicable to this
Registration Statement.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law, inter alia,
empowers a Delaware corporation to indemnify any person who was or is a party
or is threatened to be made a party to any threatened, pending or completed
action, suit or proceeding (other than an action by or in the right of the
corporation) by reason of the fact that such person is or was a director,
officer, employee or agent of the corporation or is or was serving at the
request of the corporation as a director, officer, employee or agent of another
corporation or other enterprise, against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if he acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the corporation, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe his conduct was unlawful.
Similar indemnity is authorized for such persons against expenses (including
attorneys' fees) actually and reasonably incurred in connection with the
defense or settlement of any such threatened, pending or completed action or
suit if such person acted in good faith and in a manner he reasonably believed
to be in or not opposed to the best interests of the corporation, and provided
further that (unless a court of competent jurisdiction otherwise provides) such
person shall not have been adjudged liable to the corporation. Any such
indemnification may be made only as authorized in each specific case upon a
determination by the stockholders or disinterested directors or
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<PAGE> 3
by independent legal counsel in a written opinion that indemnification is
proper because the indemnitee has met the applicable standard of conduct.
Section 145 further authorizes a corporation to purchase and maintain
insurance on behalf of any person who is or was a director, officer, employee
or agent of the corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of another corporation or
enterprise, against any liability asserted against him and incurred by him in
any such capacity, or arising out of his status as such, whether or not the
corporation would otherwise have the power to indemnify him under Section 145.
The Company maintains policies insuring its officers and directors against
certain liabilities for actions taken in their capacities as officers and
directors, including liabilities under the Securities Act of 1933.
The Company's Certificate of Incorporation and Bylaws permit the
directors and officers of the Company to be indemnified and permit the
advancement to them of expenses in connection with actual or threatened
proceedings and claims arising out of their status as such, to the fullest
extent permitted by the Delaware General Corporation Law. The Company has
entered into indemnification agreements with each of its directors and
executive officers that provide for indemnification and expense advancement to
the fullest extent permitted under the Delaware General Corporation Law. Such
indemnification agreements include related provisions intended to facilitate
the indemnities' receipt of such benefits, including certain provisions
applicable to constituent corporations in the event of certain mergers or
acquisitions.
The Company's Certificate of Incorporation limits under certain
circumstances the liability of the Company's directors to the Company or its
stockholders to the fullest extent permitted by Delaware law. Specifically,
directors of the Company will not be personally liable for monetary damages for
breach of a director's fiduciary duty as a director, except for liability (i)
for a breach of the director's duty of loyalty to the Company or its
stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) under Section 174
of the Delaware General Corporation Law (relating to the declaration of
dividends and purchase or redemption of shares in violation of the Delaware
General Corporation Law) or (iv) for any transaction from which the director
derived an improper personal benefit.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
The information required by Item 7 is not applicable to this
Registration Statement.
ITEM 8. EXHIBITS.
Exhibit
Number Description
- ------- -----------
4.1+ -- Amended and Restated Certificate of Incorporation (filed
as Exhibit 3.1 to the Company's Registration Statement on
Form S-1 (Reg. No. 333-12201))
4.2+ -- Amended and Restated Bylaws (filed as Exhibit 3.2
to the Company's Registration Statement on Form S-1
(Reg. No. 333-12201))
4.3+ -- Form of Certificate representing shares of Common Stock
(filed as Exhibit 4.1 to the Company's Registration
Statement on Form S-1 (Reg. No. 333-12201))
4.4+ -- Certificate of Designation of the Series A Junior
Participating Preferred Stock (filed as Exhibit 2 to the
Company's Registration Statement on Form 8-A (File
No. 001-12311) filed with the Commission on July 17, 1997)
4.5+ -- Rights Agreement, dated as of July 16, 1997, between
the Company and First Chicago Trust Company of New
York as Rights Agent (filed as Exhibit 1 to the
Company's Registration Statement on Form 8-A (File
No. 001-12311) filed with the Commission on July 17,
1997)
5.1 -- Opinion of Andrews & Kurth L.L.P., as to the legality of
the securities being registered
23.1 -- Consent of Andrews & Kurth L.L.P. (included in the
opinion filed as Exhibit 5.1 to this Registration
Statement)
23.2 -- Consent of Price Waterhouse L.L.P.
23.3 -- Consent of Ryder Scott Company Petroleum Engineers
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<PAGE> 4
24.1 -- Power of Attorney (set forth on the signature page
contained in Part II of this Registration Statement)
99.1 -- Monterey Resources, Inc. Savings Investment Plan
_____________
+ Incorporated herein by reference.
ITEM 9. UNDERTAKINGS.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales
are being made, a post-effective amendment to this Registration
Statement:
(i) To include any prospectus required by
Section 10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or
events arising after the effective date of this Registration
Statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate, represent a
fundamental change in the information set forth in this
Registration Statement; and
(iii) To include any material information with
respect to the plan of distribution not previously disclosed
in the Registration Statement or any material change to such
information in this Registration Statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not
apply if the information required to be included in a post-effective
amendment by those paragraphs is contained in periodic reports filed
by the registrant pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934 that are incorporated by reference in
this Registration Statement.
(2) That, for the purpose of determining any liability
under the Securities Act of 1933, each such post-effective amendment
shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering
thereof.
(3) To remove from registration by means of a
post-effective amendment any of the securities being registered which
remain unsold at the termination of the offering.
(b) The undersigned registrant hereby undertakes that, for
purposes of determining any liability under the Securities Act of 1933, each
filing of the registrant's annual report pursuant to Section 13(a) or 15(d) of
the Securities Exchange Act of 1934 that is incorporated by reference in this
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
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<PAGE> 5
SIGNATURES
The Registrant. Pursuant to the requirements of the Securities Act of
1933, the registrant certifies that it has reasonable grounds to believe that
it meets all of the requirements for filing on Form S-8 and has duly caused
this registration statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Bakersfield, State of California, on
the 16th day of July, 1997.
MONTEREY RESOURCES, INC.
(Registrant)
By: /s/ R. GRAHAM WHALING
------------------------------------
R. Graham Whaling
Chairman and Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned officers
and directors of Monterey Resources, Inc. (the "Company") hereby constitutes
and appoints R. Graham Whaling and Terry L. Anderson (with full power to each
of them to act alone) his true and lawful attorney-in-fact and agent, with full
power of substitution, for him and on his behalf and in his name, place and
stead, in any and all capacities, to sign, execute and file this Registration
Statement under the Securities Act of 1933, as amended, and any or all
amendments (including, without limitation, post-effective amendments), with all
exhibits and any and all documents required to be filed with respect thereto,
with the Securities and Exchange Commission or any regulatory authority,
granting unto such attorneys-in-fact and agents, and each of them, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises in order to effectuate the same,
as fully to all intents and purposes as he himself might or could do, if
personally present, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or any of them, or their substitute or
substitutes, may lawfully do or cause to be done.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
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<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ R. GRAHAM WHALING Chairman, Chief Executive July 16, 1997
- -------------------------------------- Officer and Director (Principal Executive
R. Graham Whaling Officer)
/s/ GERALD R. CARMAN Chief Financial Officer July 16, 1997
- -------------------------------------- (Principal Financial and
Gerald R. Carman Accounting Officer)
Director July , 1997
- --------------------------------------
Craig A. Huff
/s/ MICHAEL A. MORPHY Director July 16, 1997
- --------------------------------------
Michael A. Morphy
/s/ JAMES L. PAYNE Director July 16, 1997
- --------------------------------------
James L. Payne
Director July , 1997
- --------------------------------------
Robert F. Vagt
/s/ ROBERT J. WASIELEWSKIY Director July 16, 1997
- --------------------------------------
Robert J. Wasielewskiy
</TABLE>
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<PAGE> 6
SIGNATURES
The Plan. Pursuant to the requirements of the Securities Act of 1933,
the Compensation and Benefits Committee (which administers the subject plan) has
duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Bakersfield, State of
California, on July 16, 1997.
Monterey Resources, Inc. Savings Investment Plan
By: /s/ MICHAEL A. MORPHY
-----------------------------------------------
Michael A. Morphy
Chairman, Compensation and Benefits Committee
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<PAGE> 7
EXHIBIT INDEX
Exhibit
Number Description
- ------- -----------
4.1+ -- Amended and Restated Certificate of Incorporation (filed
as Exhibit 3.1 to the Company's Registration Statement on
Form S-1 (Reg. No. 333-12201))
4.2+ -- Amended and Restated Bylaws (filed as Exhibit 3.2
to the Company's Registration Statement on Form S-1
(Reg. No. 333-12201))
4.3+ -- Form of Certificate representing shares of Common Stock
(filed as Exhibit 4.1 to the Company's Registration
Statement on Form S-1 (Reg. No. 333-12201))
4.4+ -- Certificate of Designation of the Series A Junior
Participating Preferred Stock (filed as Exhibit 2 to the
Company's Registration Statement on Form 8-A (File
No. 001-12311) filed with the Commission on July 17,
1997)
4.5+ -- Rights Agreement, dated as of July 16, 1997, between
the Company and First Chicago Trust Company of New
York as Rights Agent (filed as Exhibit 1 to the
Company's Registration Statement on Form 8-A (File
No. 001-12311) filed with the Commission on July 17,
1997)
5.1 -- Opinion of Andrews & Kurth L.L.P., as to the legality of
the securities being registered
23.1 -- Consent of Andrews & Kurth L.L.P. (included in the
opinion filed as Exhibit 5.1 to this Registration
Statement)
23.2 -- Consent of Price Waterhouse L.L.P.
23.3 -- Consent of Ryder Scott Company Petroleum Engineers
24.1 -- Power of Attorney (set forth on the signature page
contained in Part II of this Registration Statement)
99.1 -- Monterey Resources, Inc. Savings Investment Plan
_____________
+ Incorporated herein by reference.
<PAGE> 1
Exhibit 5.1
[ANDREWS & KURTH L.L.P. LETTERHEAD]
July 21, 1997
Board of Directors
Monterey Resources, Inc.
3701 Truxtun Avenue
Bakersfield, California 93309
Ladies and Gentlemen:
We have acted as counsel to Monterey Resources, Inc. (the "Company")
in connection with the Company's Registration Statement on Form S-8 (the
"Registration Statement") relating to the registration under the Securities Act
of 1933, as amended, of the issuance of up to 1,000,000 shares (the "Shares")
of the Company's common stock, $0.01 par value (the "Common Stock"), pursuant
to the Monterey Resources, Inc. Savings Investment Plan (the "Plan").
In connection herewith, we have examined copies of such statutes,
regulations, corporate records and documents, certificates of public and
corporate officials and other agreements, contracts, documents and instruments
as we have deemed necessary as a basis for the opinion hereafter expressed. In
such examination, we have assumed the genuineness of all signatures, the
authenticity of all documents submitted to us as originals and the conformity
with the original documents of all documents submitted to us as copies. We
have also relied, to the extent we deem such reliance proper, upon information
supplied by officers and employees of the Company with respect to various
factual matters material to our opinion.
Based upon the foregoing and having due regard for such legal
considerations as we deem relevant, we are of the opinion that the Shares have
been duly authorized, and that such Shares of Common Stock will, when issued in
accordance with the terms of the Plan, be legally issued, fully paid and
nonassessable.
We hereby consent to the use of this opinion as an exhibit to the
Registration Statement.
Very truly yours,
ANDREWS & KURTH L.L.P.
<PAGE> 1
Exhibit 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-8 of our report dated February 20, 1997 appearing on page
27 of Monterey Resources, Inc.'s Annual Report on Form 10-K for the year
ended December 31, 1996.
PRICE WATERHOUSE LLP
Houston, Texas
July 23, 1997
<PAGE> 1
Exhibit 23.3
CONSENT OF EXPERTS
As petroleum engineers, we hereby consent to the incorporation
by reference in this registration statement on Form S-8 of our report included
in the Monterey Resources, Inc. Annual Report on Form 10-K for the year ended
December 31, 1996.
RYDER SCOTT COMPANY
PETROLEUM ENGINEERS
Houston, Texas
July 18, 1997
<PAGE> 1
EXHIBIT 99.1
MONTEREY RESOURCES, INC.
SAVINGS INVESTMENT PLAN
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
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PAGE
NO.
<S> <C> <C>
Section I Preamble . . . . . . . . . . . . . . . . . . . . . I-1
Section II Definitions . . . . . . . . . . . . . . . . . . . . II-1
Section III Employee Eligible to Participate . . . . . . . . . III-1
Section IV Contributions . . . . . . . . . . . . . . . . . . . IV-1
Section V Investment of Contributions . . . . . . . . . . . . V-1
Section VI Vesting . . . . . . . . . . . . . . . . . . . . . . VI-1
Section VII Withdrawals Prior to Termination of Employment . . VII-1
Section VIII Distributions Other Than Withdrawals . . . . . . . VIII-1
Section IX Death Benefits, Beneficiaries, Unclaimed Benefits . IX-1
Section X Administration . . . . . . . . . . . . . . . . . . X-1
Section XI Provisions Respecting the Company . . . . . . . . . XI-1
Section XII Termination of Plan . . . . . . . . . . . . . . . . XII-1
Section XIII Miscellaneous Provisions . . . . . . . . . . . . . XIII-1
Section XIV Loans . . . . . . . . . . . . . . . . . . . . . . . XIV-1
</TABLE>
Attachment A Investment Funds
(i)
<PAGE> 3
SECTION I
PREAMBLE
1.1 Monterey Resources, Inc. (the "Company") previously
adopted the Monterey Resources, Inc. Savings Investment Plan (the "Plan"), to
be effective as of the date the Company ceases to be a subsidiary of Santa Fe
Energy Resources, Inc. (the "Spinoff Date"). Prior to the Spinoff Date, the
Company hereby amends and restates the Plan effective as of the Spinoff Date.
1.2 The effective date of the Plan for each Participating
Company shall be the date so specified in the resolution of that company which
adopts the Plan.
1.3 The Plan is established by spinning off the accounts of
all employees of the Company on the Spinoff Date under the Santa Fe Energy
Resources Savings Investment Plan (the "SFER Plan") as a separate plan and
continuing such spun-off plan as the Plan without interruption or change,
except as specifically provided herein.
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<PAGE> 4
SECTION II
DEFINITIONS
When used in this Plan, the following terms shall have the
meanings set forth below unless a different meaning is plainly required by the
context:
2.1 "Accounts" shall mean a Participant's Deferred
Contributions Account, Employer Contributions Account, Rollover Account, and/or
Participant Contributions Account, if any.
2.2 "Affiliated Company" shall mean every corporation
(including the Company) which is a member of a controlled group of corporations
(within the meaning of Section 414(b) of the Code), which includes the Company.
"Affiliated Company" shall also mean any trade or business under common control
with an Affiliated Company within the meaning of Section 414(c) of the Code,
and any other entity required to be aggregated with the Company pursuant to
Section 414(m) or (o) of the Code. For purposes of Section 4.8, the
modification of Sections 414(b) and 414(c) of the Code by Section 415(h) of the
Code is incorporated.
2.3 "Annuity Starting Date" shall mean the first day of the
first period for which an amount is payable as an annuity, or in the case of a
benefit not payable in the form of an annuity, the first day on which all
events have occurred which entitle the Participant to such benefit.
2.4 "Beneficiary" shall mean any individual, trust or other
recipient entitled to receive benefits payable hereunder upon the death of the
Participant, as provided in Section 9.2 hereof.
2.5 "Break in Service" shall mean a 12 consecutive month
period during which an Employee remains unemployed by the Affiliated Companies,
which period shall commence with
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<PAGE> 5
the date on which such Employee's employment with the Affiliated Companies is
terminated. The date on which employment is terminated shall be the earlier of
(1) the date on which the Employee quits, is discharged, retires or dies, or
(2) the first anniversary of the date on which a Leave of Absence commences;
provided, however, if an Employee is absent from service for more than 12
months due to her pregnancy, birth or adoption of his or her child or the
caring for such child following its birth or adoption, the 12-month period
following the first anniversary of the date such absence began shall not be
treated as a period of absence for Break in Service purposes. The Employee may
be required to furnish proof of the reason and duration of the absence. The
Plan shall be administered in accordance with the requirements of the Family
Medical Leave Act of 1993.
2.6 "Code" shall mean the Internal Revenue Code of 1986, as
amended.
2.7 "Company Stock" shall mean the common stock of the
Company.
2.8 "Compensation" shall mean the total of base salary or base
wages paid to a Participant by a Participating Company, and any elective pre-
tax salary deferrals made by the Participant with respect to the same under
this Plan and any plan which meets the requirements of Sections 125 and/or 129
of the Code, and shall exclude all other items of compensation including but
not limited to, overtime, bonuses, severance benefits, payments while on a
leave of absence other than for short-term illness, unused vacation pay,
business expense reimbursements, any income realized for federal income tax
purposes as a result of group life insurance, other employee benefit plans or
the grant or exercise of an option to acquire stock, payments made under any
long-term disability plan of a Participating Company, restricted stock, phantom
units and amounts deferred under a non-qualified salary deferral plan.
Compensation shall be determined in accordance with the rules of Section 414(q)
of the Code.
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<PAGE> 6
For purposes of determining the Average Contribution Percentage,
however, Compensation shall mean the Employee's total pay from the
Participating Companies for purposes of Section 415 of the Code, plus any
elective deferrals excluded from his gross income pursuant to Sections 125, 129
or 402(g) of the Code.
Notwithstanding anything herein to the contrary, the amount of
annual compensation deemed to be "Compensation" with respect to any particular
Participant shall not in any event exceed $160,000 during any Plan Year,
subject to cost-of-living adjustments made thereto by the Secretary of the
Treasury or his delegate.
2.9 "Computation Period" means a period of 12 consecutive
months commencing on the date on which the Employee first completes (or,
following a Break in Service, again completes) an Hour of Service, and each
anniversary of such date.
2.10 "Deferred Contributions" shall mean contributions made on
behalf of a Participant pursuant to his election pursuant to Section 4.1
hereof.
2.11 "Deferred Contributions Account" shall mean that portion
of a Participant's interest in this Plan which is attributable to Deferred
Contributions made on his behalf hereunder and, if applicable, his SFP Plan
Deferred Contributions Account transferred to this Plan.
2.12 "Eligible Class" shall mean an Employee of a Participating
Company other than (1) a nonresident alien with no U.S. source income, (2) a
"leased employee" within the meaning of Section 414(n) of the Code, or (3) an
Employee who is included in a bargaining unit that has a collective bargaining
agreement with the Participating Company, unless the agreement provides for
participation in the Plan by the Employees in such unit. In addition, any
person who is treated as
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<PAGE> 7
an independent contractor by the Participating Employer and is subsequently
determined to have been an Employee, shall not be in the Eligible Class until
such subsequent determination.
2.13 "Employee" shall mean any person whose wages from an
Affiliated Company are subject to withholding under Section 3402 of the Code,
and shall also include any "leased employee" within the meaning of Section
414(n) of the Code, except as otherwise permitted by the Code and regulations.
2.14 "Employer" shall mean a Participating Company, or any
successor organization which shall assume the obligations of this Plan with
respect to its Employees.
2.15 "Employer Contributions Account" shall mean that portion
of a Participant's interest in this Plan which is attributable to Employer
contributions made at any time hereunder, other than Deferred Contributions
made on his behalf pursuant Section 4.1 hereof, and, if applicable, shall
include his SFER Plan Employer Contributions Account transferred to this Plan.
2.16 "Entry Date" shall mean the first day of each month.
2.17 "ERISA" shall mean the Employee Retirement Income Security
Act of 1974, as amended.
2.18 "Highly Compensated Employee" means any Employee who:
(a) was a 5-percent owner (as defined in Code Section
416(i)(1)) at any time during the year or the preceding year, or
(b) for the preceding year:
(1) had compensation from the Company and its
Affiliated Employers in excess of $80,000 (as adjusted
pursuant to Code Section 415(d)), and
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<PAGE> 8
(2) if the Company elects the application of
this clause for such preceding year, was in the top-paid
group of Employees for such preceding year.
An Employee is in the top-paid group of Employees for any year if
such Employee is in the group consisting of the top 20 percent of the Employees
when ranked on the basis of compensation paid during such year.
2.19 "Hours of Service" shall mean each hour for which an
Employee is paid, or entitled to payment, for the performance of duties for an
Affiliated Company.
2.20 "Named Fiduciary" shall mean the Plan Administrator.
2.21 "Normal Retirement Date" shall mean the Valuation Date on
or next following a Participant's 65th birthday (the "Normal Retirement Age").
2.22 "Participant" shall mean an Employee who meets the
eligibility requirements set forth in Section III hereof and who has taken all
of the steps required for participation by said Section III and a former
Employee who has an Account under the Plan. Participant shall also include an
Employee who makes a rollover contribution to the Plan pursuant to Section 4.2.
2.23 "Participant Contributions Account" shall mean, if
applicable, that portion of a Participant's interest in this Plan which is
attributable to his SFER Plan Participant Contributions Account transferred to
this Plan. Any portion thereof attributable to Participant after-tax
contributions made prior to 1987 shall be separately accounted for under the
Account.
2.24 "Participating Company" shall mean each Affiliated Company
which has adopted this Plan pursuant to Section XIII.
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<PAGE> 9
2.25 "Plan" shall mean the Monterey Resources, Inc. Savings
Investment Plan as set forth herein and all subsequent amendments thereto.
2.26 "Plan Administrator" shall mean the Company. The Chief
Executive Officer of the Company shall appoint an Employee Benefits Committee
of at least three persons to perform the duties of the Company as the Plan
Administrator.
2.27 "Plan Year" shall mean the calendar year, which shall also
be the limitation year for purposes of Section 415 of the Code.
2.28 "Qualified Joint and Survivor Annuity" shall mean an
immediate annuity for the life of the Participant with a survivor annuity of
50% for the life of his spouse, as his contingent annuitant, as described in
Option 2 in Section 8.1.
2.29 "Retirement" shall mean a Participant terminates his
employment with all Affiliated Companies at a time when he is eligible to
commence receiving a vested annuity benefit under any qualified defined benefit
plan maintained by an Affiliated Company.
2.30 "Rollover Account" shall mean that portion of a
Participant's interest in this Plan which is attributable to a qualified
rollover contribution (within the meaning of Section 402 of the Code) made to
the Plan by the Participant and/or a direct transfer from the Company's
Employee Stock Ownership Plan made pursuant to a participant's diversification
election thereunder pursuant to Code Section 401(a)(28).
2.31 "Total Disability" shall mean a Participant's eligibility
for benefits under the Company's Long-Term Disability Plan. Total Disability
shall be deemed to exist only when a written application has been filed with
the Employer or its designee by or on behalf of such
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<PAGE> 10
Participant and when such Total Disability is certified to the Employer or its
designee by a licensed physician approved by the Employer or his designee.
2.32 "Trustee" shall mean the trustee under any trust agreement
established between the Company and the Trustee for the purpose of holding
assets of the Plan.
2.33 "Valuation Date" shall mean each business day of the Plan
Year.
2.34 "Year of Service" shall mean a Computation Period during
which an Employee is employed or deemed to be employed by an Affiliated Company
for the full Computation Period; provided, however, if a termination of
employment of such Employee shall occur, followed by the completion of an Hour
of Service prior to incurring a Break in Service, then the period commencing
with such termination of employment and extending to the date he again
completes an Hour of Service shall be credited for determining the Employee's
Years of Service; provided further, however, if an Employee is absent from
service due to her pregnancy, birth or adoption of his or her child or the
caring for such child following its birth or adoption, the Employee shall be
credited with the period of such maternity/paternity absence but not in excess
of 12 months. The Employee may be required to furnish proof of the reason and
duration of such absence.
All Years of Service (and fractional parts thereof), whether or
not continuous, shall be aggregated on the basis that 365 days of service
equals one full Year of Service; provided, however, any Years of Service (or
parts thereof) completed prior to becoming vested shall be disregarded if the
Employee incurs five or more consecutive Breaks in Service.
Each Employee's service prior to the effective date of the Plan
shall be the amount shown by the Employer's records (or the SFER Plan) as of
that date. Further, prior service with a predecessor employer or an acquired
business before the date such entity or business became an
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<PAGE> 11
Affiliated Company shall not be credited under the Plan except to the extent
the Chief Executive Officer of the Company provides otherwise in a
nondiscriminatory manner.
The singular form of any word shall include the plural and the
masculine gender shall include the feminine wherever necessary for the proper
interpretation of this Plan.
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<PAGE> 12
SECTION III
EMPLOYEES ELIGIBLE TO PARTICIPATE
3.1 Each Employee who is a participant in the Plan as
established by the spinoff from the Santa Fe Energy Savings Income Plan on the
Spinoff Date shall continue as a Participant as of that date. Each other
Employee or future Employee of a Participating Company shall be eligible to
become a Participant as of the first Entry Date on or immediately following the
date he completes an Hour of Service, or on any subsequent Entry Date, provided
he is in the Eligible Class on such Entry Date.
3.2 In the event a former Employee is rehired and again
becomes a member of the Eligible Class, or an Employee transfers into the
Eligible Class, he shall be eligible to participate in the Plan as of his date
of rehire or transfer into the Eligible Class, as the case may be, or as of any
future Entry Date thereafter, provided he is in the Eligible Class on such
future Entry Date.
3.3 Participating Companies shall notify all Employees in the
Eligible Class of their eligibility to participate and shall give them an
opportunity to become Participants.
3.4 To become a Participant, an Employee must meet the above
requirements of this Section and execute and deliver to the Participating
Company in accordance with procedures established by the Plan Administrator a
written election form indicating his desire to have a portion of his
Compensation contributed to the Plan as Deferred Contributions. He must
specify his chosen rate of Deferred Contributions and authorize the
Participating Company to make regular payroll reductions of such Deferred
Contributions. In addition, the Employee must make an investment election as
described in Section V hereof. No Employee shall become a Participant until he
has met the above requirements. Elections shall be processed by the
Participating Companies, in accordance with procedures established by the Plan
Administrator, as soon as reasonably practicable after their receipt.
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SECTION IV
CONTRIBUTIONS
4.1 Each Employee who is eligible to participate in the Plan
must, in order to participate, elect to have his Compensation reduced each
payroll period by either (x) a whole percentage (not to exceed 12%) or (y) a
dollar amount equal to the maximum dollar amount permitted by Section 402(g) of
the Code for such Plan Year divided by the number of payroll periods in the
Plan Year (or, upon a Participant's initial participation following his date of
hire or rehire, the number of payroll periods remaining in the Plan Year), but
not to exceed 12% of Compensation, and to have the amount by which his
Compensation is reduced contributed to the Plan by his Employer on his behalf
as before-tax Deferred Contributions. No contributions may be made by a
Participant unless he is in the Eligible Class.
4.2 An Employee who is in the Eligible Class but elects not to
make contributions pursuant to Section 4.1 shall be eligible to make a rollover
contribution (including in the form of a "direct" rollover) to the Plan by wire
transfer or by check acceptable to the Plan Administrator, provided such
contribution satisfies the requirements of Section 402(a) of the Code as being
a 'qualified rollover,' and the Employee satisfies such other administrative
requirements concerning such rollover contributions as may be required,
including designating the investment fund(s) for such contribution. Rollover
contributions are not subject to a Company matching contribution.
In addition, an Employee who is a participant in the Company's
Employee Stock Ownership Plan ("ESOP") and makes a diversification election
pursuant to Code Section 401(a)(28) under the ESOP shall have his affected ESOP
diversification amount transferred directly from the ESOP to the Plan. Such
transferred ESOP amount shall be created to the Participant's Rollover
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<PAGE> 14
Account and invested pursuant to the Participant's direction in one or more of
the investment funds offered under this Plan.
4.3 Election forms shall be distributed by the Plan
Administrator to all eligible Employees. All elections shall apply to
Compensation to be received after the election becomes effective. Any eligible
Employee who fails to return a properly completed election form in a timely
manner to the Plan Administrator shall be deemed to have elected to have all of
his Compensation included in his regular paycheck.
4.4 Participant Deferred Contributions shall be made by means
of payroll reductions and the amounts so withheld shall be paid as soon as
reasonably practicable without interest to the Trustee by the Participating
Companies and shall be credited to the Participant's Deferred Contributions
Account.
4.5 The Participating Companies shall make matching Employer
contributions to the Trustee hereunder on or as soon as reasonably practicable
following the end of each pay period in regard to their Participants which
shall be credited to the Participants' Employer Contributions Accounts. The
amount of the matching Employer contribution to be made for any particular pay
period with respect to any particular Participant shall be equal to 100% of the
Deferred Contributions, up to 6% of his Compensation, actually made hereunder
on behalf of such Participant for that pay period.
The Plan is intended to qualify as a profit sharing plan under
Section 401(a) of the Code; however, unless the Board directs, with respect to
any Plan Year, that contributions shall not be made in the absence of profits,
the above described contributions shall be made by the Employer in the absence
of current or accumulated earnings and profits provided the Plan will continue
to
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<PAGE> 15
qualify as a profit sharing plan under Section 401(a)(27) of the Code. The
Employer matching contribution may be made in cash, Company Stock or any
contribution thereof as determined by the Company.
4.6 The Participant may elect to change his rate of Deferred
Contributions as of any payroll period (such changes shall be limited to those
percentages or amount described in Section 4.1) and may elect to suspend his
Deferred Contributions entirely as of any payroll period with each such
suspension being for three months. The Participant's election to suspend or
change his rate of contributions must be made by notice to the Participating
Company in the manner established by the Plan Administrator prior to the
processing cut-off date for such payroll period. If received after the cut-off
date, the election shall be processed by the Participating Company as soon as
reasonably practicable thereafter.
4.7 If the Participant elects to suspend his contributions, he
may elect to resume Deferred Contributions as of any payroll period that is
three or more months after the effective date of such suspension. An election
to resume contributions must notify the Participating Company and/or the
Administrator and such request will be processed as soon as reasonably
practicable after its receipt.
4.8 I. Excess Deferrals.
(a) A Participant's Deferred Contributions shall in no event
exceed $9,500 for the 1997 taxable year of the Participant. This dollar
limitation shall be adjusted annually for years after 1997 as provided
in Code Section 415(d) pursuant to regulations. The adjusted limitation
shall be effective as of January 1 of each calendar year.
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<PAGE> 16
(b) In the event that the dollar limitation provided for in
(a) is exceeded, the Plan Administrator shall direct the Trustee to
distribute such excess amount, and any income (or loss) allocable to
such amount (as provided in (d) below), to the Participant not later
than the first April 15 following the close of the Participant's taxable
year.
(c) In the event that a Participant is also a participant in
(1) another qualified cash or deferred arrangement (as defined in Code
Section 401(k)), (2) a simplified employee pension (as defined in Code
Section 408(k)), or (3) a salary reduction arrangement (within the
meaning of Code Section 3121(a)(5)(D)) and the elective deferrals, as
defined in Code Section 402(g)(3), made under such other arrangement(s)
and this Plan cumulatively exceed $9,500 (or such amount adjusted
annually as provided in Code Section 415(d) pursuant to regulations) for
such Participant's taxable year, the Participant may, not later than
March 1 following the close of his taxable year, notify the Plan
Administrator in writing of such excess and request that his 401(k)
contributions under this Plan be reduced by an amount specified by the
Participant. Such amount shall then be distributed in the same manner
as provided in (b).
(d) The income (or loss) allocable to returnable excess
deferrals for a Plan Year shall be determined by the Plan Administrator
in a reasonable manner and need not include any gain or loss for the
period between the end of the Plan Year and the date of distribution.
Income includes all earnings and appreciation, including such items as
interest, dividends, rent, royalties, gains from the sale of property,
appreciation in the value of stocks, bonds, annuity and life insurance
contracts, and other property, without regard to whether such
appreciation has been realized.
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<PAGE> 17
Unless the Plan Administrator elects otherwise for a Plan Year,
the income (or loss) allocable to returnable contributions for the Plan
Year shall be determined by multiplying the income (or loss) for the
Plan Year allocable to employee contributions, matching contributions,
and amounts treated as matching contributions (whichever is applicable)
by a fraction. The numerator of the fraction shall be the amount of
returnable contributions made on behalf of the employee for the Plan
Year. The denominator of the fraction shall be the total account
balance of the employee attributable to employee contributions, matching
contributions and amounts treated as matching contributions as of the
end of the Plan Year, reduced by the gain allocable to such total amount
for the Plan Year and increased by the loss allocable to such total
amount for the Plan Year.
II. Actual Deferral Percentage.
For purposes of this Section, Actual Deferral Percentage ("ADP")
means, with respect to the Highly Compensated Employee group and Non-Highly
Compensated Employee group for a Plan Year, the average of the ratios,
calculated separately for each member in such group, of the amount of Deferred
Contributions allocated to each Participant's Deferred Contribution Account
(unreduced by distributions made pursuant to I(b) and (d) above) for such Plan
Year, to such Participant's Section 415 Compensation for such Plan Year. In
the case of a Highly Compensated Employee who is either a 5% owner or one of
the ten most highly compensated employees, the ADP for the Family Member group
(which is treated as one Highly Compensated Employee) is the ADP determined by
combining the elective contributions, compensation and amounts treated as
elective contributions of all eligible Family Members. Except to the extent
taken into account in the preceding sentence, the contributions, compensation
and amounts treated as elective contributions
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<PAGE> 18
of all Family Members are disregarded in determining the ADP for the groups of
Highly Compensated Employees and Non-Highly Compensated Employees.
In the case of a Highly Compensated Employee whose ADP is
determined under the family aggregation rules, the ADP is reduced in accordance
with the "leveling" method described in the regulations and the excess
contributions for the family unit are allocated among the Family Members in
proportion to the contributions of each Family Member that have been combined.
For purposes of this Section 4.3, a Family Member is an Employee's spouse,
lineal ascendants or descendants or a spouse of such lineal ascendant or
descendent.
III. Actual Deferral Percentage Test.
(a) Maximum Annual Allocation: For each Plan Year, the annual
allocation derived from Deferred Contributions to a Participant's
Deferred Contribution Account shall satisfy one of the following tests:
(1) The ADP for the Highly Compensated Employee group
shall not be more than the ADP of the Non-Highly Compensated
Employee group multiplied by 1.25, or
(2) The excess of the ADP for the Highly Compensated
Employee group over the ADP for the Non-Highly Compensated
Employee group shall not be more than two percentage points.
Additionally, the ADP for the Highly Compensated Employee group
shall not exceed the ADP for the Non-Highly Compensated Employee
group multiplied by two. This alternative limitation test cannot
be used to satisfy the ADP test and the Actual Contribution
Percentage test set forth below
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<PAGE> 19
except as otherwise provided by Treasury Regulation Section
1.401(m)-2(b), the provisions of which are hereby incorporated by
reference.
(b) For the purposes of Sections II(a) and III, a Highly
Compensated Employee and a Non-Highly Compensated Employee shall include
any Employee eligible to make a Deferred Contribution, whether or not
such contribution was made.
(c) For the purposes of this Section, if two or more plans
which include cash or deferred arrangements are considered one plan for
the purposes of Code Section 401(a)(4) or 410(b), the cash or deferred
arrangements included in such plans shall be treated as one arrangement.
The aggregated plans must also satisfy Code Sections 401(a)(4) and
410(b) as though they were a single plan.
(d) For purposes of this Section, if a Highly Compensated
Employee is a member under two or more cash or deferred arrangements of
the Employer, all such cash or deferred arrangements (other than those
that may not be permissively aggregated as a single arrangement) shall
be treated as one cash or deferred arrangement for the purpose of
determining the deferral percentage with respect to such Highly
Compensated Employee.
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<PAGE> 20
IV. Adjustments As A Result of Actual Deferral Percentage
Test.
The amount of excess contributions for a Highly Compensated
Participant will be determined in the following manner: First, the actual
deferral ratio (ADR) of the Highly Compensated Participant with the highest ADR
is reduced to the extent the ADR of the Highly Compensated Participant with the
next highest ADR is reduced to the extent necessary to satisfy the actual
deferral percentage (ADP) test or cause such ratio to equal the ADR of the
Highly Compensated Participant with the next highest ratio. Second, this
process is repeated until the ADP test is satisfied. The amount of excess
contributions for a Highly Compensated Participant is then equal to the total
of elective and other contributions taken into account for the ADP test minus
the product of the employee's reduced deferral ratio as determined above and
the employee's compensation. In the case of a Highly Compensated Participant
whose ADR is determined under the family aggregation rules, the determination
of the amount of excess contributions shall be made as follows: The ADR is
reduced in accordance with the "leveling" method described above and the excess
contributions are allocated among the Family Members in proportion to the
contributions of each Family Member that have been combined.
The amount of excess contributions to be distributed shall be
reduced by excess deferrals previously distributed for the taxable year ending
in the same plan year and excess deferrals to be distributed for a taxable year
will be reduced by excess contributions previously distributed for the plan
year beginning in such taxable year. The distribution of excess contributions
will include the income allocable thereto. The income allocable to excess
contributions includes only income for the plan year for which the excess
contributions were made. Such correction shall be made on
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<PAGE> 21
or before the 15th day of the third month following the end of the Plan Year,
but in no event later than the close of the following Plan Year.
Nonelective contributions and Employer matching contributions may
be treated as elective contributions for purposes of the ADP test only if (i)
such contributions are nonforfeitable when made and are subject to the same
distribution restrictions that apply to elective contributions, (ii)
nonelective contributions and Employer matching contributions which may be
treated as elective contributions must satisfy these requirements without
regard to whether they are actually taken into account as elective
contributions, (iii) the amount of nonelective contributions, including those
qualified nonelective contributions treated as elective contributions for
purposes of the actual deferral percentage test, satisfies the requirements of
section 401(a)(4), (iv) the amount of nonelective contributions treated as
elective contributions for purposes of the actual deferral percentage test and
those qualified nonelective contributions treated as matching contributions for
purposes of the actual contribution percentage test, satisfies the requirement
of section 401(a)(4), and (v) the elective contribution is allocated to the
employees's account as of a date within that Plan Year, and (vi) the plan that
includes the cash or deferred arrangement and the plan or plans to which the
qualified nonelective contributions and qualified matching contributions are
made, could be aggregated for purposes of section 410(b) (other than the
average benefit percentage test).
In lieu of a corrective distribution, the Employer may make a
special contribution to the Employer Accounts of one or more groups of Non-
Highly Compensated Employees in a manner sufficient to satisfy one of the tests
set forth in Section III(a). Such contribution shall be fully vested,
separately accounted for and subject to the same restrictions on withdrawal as
apply to Deferred
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<PAGE> 22
Contributions, but no in-service hardship withdrawal shall be permitted with
respect to any such contribution.
V. Maximum Actual Contribution Percentage.
(a) The Actual Contribution Percentage ("ACP") for the Highly
Compensated Employee group shall not exceed the greater of:
(1) 125% of such percentage for the Non-Highly
Compensated Employee group; or
(2) the lesser of 200% of such percentage for the Non-
Highly Compensated Employee group, or such percentage for the
Non-Highly Compensated Employee group plus two percentage points.
(b) For the purposes of this Section V and Section VI, ACP for
a Plan Year means, with respect to the Highly Compensated Employee group
and Non-Highly Compensated Employee group, the average of the ratios
(calculated separately for each member in each group) of:
(1) the sum of the Employer matching contributions
contributed (and any employee after-tax contributions) under the
Plan on behalf of each such member for such Plan Year; to
(2) the Participant's Section 415 Compensation for such
Plan Year.
(c) In the case of a Highly Compensated Employee who is either
a 5% owner or one of the ten most highly compensated employees, the
actual contribution ratio (ACR) for the family group (which is treated
as one Highly Compensated Employee) is the ACR determined by combining
the contributions and compensation of all eligible Family
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<PAGE> 23
Members. Except to the extent taken into account in the preceding
sentence, the contributions, compensation of all Family Members are
disregarded in determining the actual contribution percentages for the
groups of Highly Compensated Employees and Non-Highly Compensated
Employees. In all cases the determination and treatment of the ACP of
any participant shall satisfy such other requirements as may be
prescribed by the Secretary of the Treasury.
(d) For purposes of this Section, if two or more plans of the
Employer to which matching contributions, Employee contributions, or
elective deferrals are made are treated as one plan for purposes of Code
Section 410(b), such plans shall be treated as one plan for purposes of
this Section. In addition, if a Highly Compensated Employee
participates in two or more plans described in Code Section 401(a) or
arrangements described in Code Section 401(k) which are maintained by
the Employer to which such contributions are made, all such
contributions shall be aggregated for purposes of this Section.
(e) For purposes hereof, Highly Compensated Employee and Non-
Highly Compensated Employee shall include any Employee eligible to have
matching contributions allocated to his account for the Plan Year.
VI. Adjustments for Excessive ACP.
(a) In the event that the ACP for the Highly Compensated
Employee group exceeds the ACP for the Non-Highly Compensated Employee
group pursuant to Section V(a), the Plan Administrator (on or before the
15th day of the third month following the end of the Plan Year, but in
no event later than the close of the following Plan Year) shall direct
the Trustee to proportionately distribute to the Highly Compensated
Employee group the
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<PAGE> 24
vested amount of "Excess Aggregate Contributions" (and any income
allocable to such contributions as provided in (d) of Section I and
forfeit such "Excess Aggregate Contributions" that are not vested
(including income or loss as determined under Section I). Employer
contributions and employee after-tax contributions shall be returned pro
rata as necessary to satisfy this Section. Such distribution or
forfeiture shall be made on behalf of the Highly Compensated Employee
group in the order of their ACP beginning with the highest of such
percentages. Forfeitures of "Excess Aggregate Contributions" shall not
be allocated to a Highly Compensated Employee whose contributions are
reduced pursuant to this Section.
In lieu of a corrective distribution, the Company may make a
special contribution to the Deferred Contribution Accounts of one or
more groups of Non-Highly Compensated Employees in a manner sufficient
to satisfy one of the tests set forth in Section V(a). Such
contribution shall be fully vested and subject to the same restrictions
on withdrawal as apply to Participant Deferred Contributions but may not
be withdrawn under the hardship rules.
(b) For the purposes of this Section, "Excess Aggregate
Contributions" means, with respect to any Plan Year, the excess of:
(1) the aggregate amount of contributions pursuant to
Sections VI(b)(1) and VI(c) actually made on behalf of the Highly
Compensated Employee group for such Plan Year, over
(2) the maximum amount of such contributions permitted
under the limitations of Section VI(a).
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<PAGE> 25
(c) The amount of excess aggregate contributions for a highly
compensated employee under the Plan will be determined in the following
manner: First, the actual contribution ratio (ACR) of the highly
compensated employee with the highest ACR is reduced to the extent
necessary to satisfy the actual contribution percentage (ACP) test or
cause such ratio to equal the ACR of the highly compensated employee
with the next highest ratio. Second this process if repeated until the
ACP test is satisfied. The amount of excess aggregate contributions for
a highly compensated employee is then equal to the total of employee,
matching and other contributions taken into account for the ACP test
minus the product of the employee's contribution ratio as determined
above and the employee's compensation.
In the case of a highly compensated employee whose ACR is
determined under the family aggregation rules, the determination of the
amount of excess aggregate contributions shall be made as follows: the
ACR is reduced is accordance with the "leveling" method described above
and the excess aggregate contributions are allocated among the family
members in proportion to the contributions of each family member that
have been combined.
In the case of a highly compensated employee who is either a 5%
owner or one of the ten most highly compensated employees and is thereby
subject to the family aggregation rules, the actual contribution ratio
(ACR) for the family group (which is treated as one highly compensated
employee) is the ACR determined by combining the contributions and
compensation of all eligible family members. Except to the extent taken
into account in the preceding sentence, the contributions and
compensation of all family members are
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<PAGE> 26
disregarded in determining the actual contribution percentages for the
groups of highly compensated employees and non-highly compensated
employees.
The amount of excess aggregate contributions for a plan year
shall be determined only after first determining the excess
contributions that are treated as employee contributions due to
recharacterization.
(d) Notwithstanding anything in the Plan to the contrary, an
employer matching contribution may be distributed only if such
contribution is an excess aggregate contribution. It may not be
distributed merely because it relates to an excess deferral, an excess
contribution or an excess aggregate contribution that is distributed.
In such cases, when an election contribution is distributed to meet the
requirements of Code Section 401(k) the related matching contribution
shall be forfeited notwithstanding anything in the Plan to the contrary.
To prevent the multiple use of the alternative methods of
compliance with the ADP test and the ACP test, the provision of section
1.401(m)-2 of the regulations are hereby incorporated by reference to
determine if such multiple use exists. If, after the applicable of such
test, multiple use exists, the actual contributions percentage shall be
reduced as provided in section 1.401(m)-2(c) of the regulations for all
highly compensated employees in the Plan.
If the Plan Administrator determines that the limitations set
forth in this section (with or without restructuring) would be exceeded for the
Plan Year, then the Plan Administrator shall reduce to the Limitation
Percentage described in the foregoing table the percentage amount of Deferred
Contributions (or the total percentage amount of Employer matching
contributions) of each
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<PAGE> 27
eligible Highly Compensated Employee whose Deferred Contribution percentage is
more than the Limitation Percentage (or whose Employer matching contribution
percentage gives rise to a percentage in excess of the Limitation Percentage).
The Plan Administrator shall have the authority to establish a lower Limitation
Percentage if, in the discretion of the Plan Administrator, this would be
beneficial to the Plan by ensuring compliance with the safe-harbor provisions
of Sections 401(k)(3)(A) and 401(m)(2) of the Code. The reduced percentage for
each such Highly Compensated Employee shall be substituted for his actual
elected percentage and shall represent the percentage of his Compensation that
shall be paid into the Plan on his behalf. The amount of any reduction which
is necessary shall be included in the Participant's regular paycheck.
Notwithstanding the foregoing, in the event the Actual
Contribution Percentage is not satisfied at year-end, the Plan Administrator
(on or before the 15th day of the third month following the end of the Plan
Year, but in no event later than the close of the following Plan Year) shall
direct the Trustee to distribute to the Highly Compensated Employee group (or
forfeit, if nonvested), beginning with the Highly Compensated Employee with the
highest Average Contribution Percentage, the amount of "Excess Deferred
Contributions", as described in Section 401(k)(8)(B) of the Code, and/or
"Excess Aggregate Contributions", as described in Section 401(m)(6)(B) of the
Code, as the case may be, and any income (or loss) allocable to such excess
contributions as provided below, until the applicable test set forth above is
met.
Excess Aggregate Contributions shall be distributed from the
Participant Deferred Contribution Account and the Participant's Employer
Contribution Account (unless otherwise forfeitable under the terms of the Plan,
in which event such amount shall be forfeited from the Employer Contribution
Account) in proportion to the Deferred Contributions and Employer
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<PAGE> 28
Contributions allocated with respect to the Participant for the Plan Year.
Amounts of Employer Contributions forfeited by Highly Compensated Employees
under this Section 4.7 shall be treated as Annual Additions under Section 4.8
of the Plan and applied to reduce future Employer Contributions otherwise to be
made under the Plan.
The income (or loss) allocable to such excess contributions shall
equal the sum of the allocable gain (or loss) for the Plan Year and the
allocable gain (or loss) for the period between the end of the Plan Year and
the date of distribution (or forfeiture) as determined below. Income includes
all earnings and appreciation, including such items as interest, dividends,
rent, royalties, gains from the sale of property, appreciation in the value of
stocks, bonds, annuity and life insurance contracts, and other property,
without regard to whether such appreciation has been realized.
(1) The income (or loss) allocable to returnable contributions
(or forfeitable Employer matching amounts) for the Plan Year is
determined by multiplying the income (or loss) for the Plan Year
allocable to Participant contributions and Employer matching
contributions by a fraction, the numerator of which is the amount of
returnable contributions (or forfeitable matching amounts) made on
behalf of the Participant for the Plan Year and the denominator of which
is the total account balance of the Participant attributable to
Participant contributions and Employer matching contributions as of the
end of the Plan Year, reduced by the gain allocable to such total amount
for the Plan Year and increased by the loss allocable to such total
amount for the Plan Year.
(2) The allocable income (or loss) for the period between the
end of the Plan Year and distribution date is equal to 10% of the income
(or loss) allocable to returnable contributions (or forfeitable Employer
matching amounts) for the Plan Year (as calculated
IV-16
<PAGE> 29
under subparagraph (1) (above) multiplied by the number of calendar
months that have elapsed since the end of the Plan Year. For purposes
of determining the number of calendar months that have elapsed, a
distribution occurring on or before the fifteenth day of the month will
be treated as having been made on the last day of the preceding month,
and a distribution occurring after such fifteenth day will be treated as
having been made on the first day of the next month.
4.9 Notwithstanding anything contained herein to the contrary,
the total annual additions (as defined below) allocated to the Accounts of a
Participant for any Plan Year shall not exceed the lesser of (i) $30,000, or,
if greater, 1/4 of the dollar limitation in effect under Code Section
415(b)(1)(A), or ((i) 25% of the Participant's Section 415 Compensation (as
defined below). Annual additions means the sum of the following amounts
credited to a Participants Accounts for the limitation year:
(a) employer contributions,
(b) employee contributions,
(c) forfeitures, and
(d) amounts allocated, after March 31, 1984, to an individual
medical account, as defined in section 415(1)(2) of the Code, which is
part of a pension or annuity plan maintained by the employer. Also
amounts derived from contributions paid or accrued after December 31,
1985, in taxable years ending after such date, which are attributable to
post-retirement medical benefits, allocated to the separate account of a
key employee, as defined in section 419A(d)(3) of the Code, under a
welfare benefit fund, as defined in section 419(e) of the Code,
maintained by the employer shall be treated as annual additional.
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<PAGE> 30
Section 415 Compensation means wages, salaries, and fees for
professional services and other amounts received (without regard to whether or
not an amount is paid in cash) for personal services actually rendered by the
employee in the course of employment with the employer maintaining the plan to
the extent that the amounts are includable in gross income (including, but not
limited to, commissions paid salesmen, compensation for services on the basis
of a percentage of profits, commissions on insurance premiums, tips, bonuses,
fringe benefits, reimbursements, and expense allowances), and excluding the
following:
(a) employer contributions to a plan of deferred compensation
which are not includable in the employee's gross income for the taxable
year in which contributed, or employer contributions under a simplified
employee pension plan to the extent such contributions are deductible by
the employee, or any distributions from a plan of deferred compensation;
(b) amounts realized from the exercise of a non-qualified
stock option, or when restricted stock (or property ) held by the
employee either becomes freely transferable or is no longer subject to a
substantial risk of forfeiture;
(c) amounts realized from the sale, exchange or other
disposition of stock acquired under a qualified stock option; and
(d) other amounts which received special tax benefits, or
contributions made by the employer (whether or not under a salary
reduction agreement) towards the purchase of an annuity described in
section 403(b) of the Internal Revenue Code (whether or not the amounts
are actually excludable from the gross income of the employee).
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<PAGE> 31
For purposes of applying these limitations, compensation for a
limitation year is the compensation actually paid or includable in the
employee's gross income during such limitation year.
If, as a result of the allocation of forfeitures, a reasonable
error in estimating a Participant's compensation, a reasonable error in
determining the amount of 401(k) contributions that may be made by a
Participant, or such other facts and circumstances as the Commissioner
approves, the annual additions exceed the applicable limitations set forth
above, the unmatched 401(k) contributions of the Participant (plus any income
thereon) shall first be returned to the extent necessary, then the Employer
contributions for the Plan Year beginning first with matching contributions
which cause the excess (and the income thereon) shall be placed in a suspense
account and used to reduce Employer contributions for that Participant for the
next Plan Year (and succeeding Plan Years, as necessary) if that Participant is
covered by the Plan as of the end of the Plan Year. If the Participant is not
covered by the Plan as of the end of the Plan Year, the amount in the suspense
account shall be reallocated the next Plan Year to the remaining Participants
as additional Employer contributions, subject to the limits of this Section.
Notwithstanding the foregoing, contributions with respect to any
Participant may be further reduced to the extent necessary, as determined by
the Plan Administrator, to prevent disqualification of the Plan under Section
415 of the Code, which imposes additional limitations on the benefits payable
to Participants who also may be participating in another tax-qualified pension,
profit-sharing, savings or stock bonus plan maintained by an Affiliated
Company.
If a Participant is at any time a participant in both a defined
benefit plan and a defined contribution plan maintained by an Affiliated
Company, the sum of the "defined benefit plan
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<PAGE> 32
fraction" and the "defined contribution plan fraction" for any Plan Year may
not exceed 1.0 and, if necessary, the annual benefit of the defined benefit
plan will be reduced first so that the sum of the fractions will not exceed
1.0; in no event will the annual benefit be decreased below the amount of the
accrued benefit to date. If additional reductions are required for the sum of
the fractions to equal 1.0, the reductions will then be made to the annual
additions (as defined in Section 415 of the Code) of the defined contribution
plans. For the purposes of applying the foregoing limitations, all defined
benefit plans and all defined contribution plans, whether or not terminated, of
an Affiliated Company are to be treated as one defined benefit plan and one
defined contribution plan, respectively; however, if defined contribution plans
are combined (or the combined limit is exceeded) and the annual addition is
required to be reduced, the annual addition to such other defined contribution
plans shall be reduced first.
Further, the provisions of Section 415 of the Code that may not
be applied in more than one manner are hereby incorporated by reference and
shall control over any provision in the Plan in conflict therewith.
4.10 Notwithstanding any provision of this Plan to the
contrary, contributions, benefits, and service credit with respect to qualified
military service will be provided in accordance with Code Section 414(u).
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<PAGE> 33
SECTION V
INVESTMENT OF CONTRIBUTIONS
5.1 For the purpose of investing contributions under this
Plan, the Company shall establish one or more trusts or enter into one or more
group annuity contracts with one or more insurers, or may establish a
combination of one or more trusts or insurance contracts. The Plan
Administrator shall have the responsibility for selecting the investment funds
offered hereunder and may, from time-to-time, select substitute funds,
establish additional funds, freeze or delete funds for the purpose of investing
Accounts, including, without limitation, providing for default investment
elections and other restrictions as it deems appropriate or necessary for the
Plan, e.g., temporary "blackout periods" for changes in recordkeepers, etc.
Until changed as provided above, contributions to the Plan shall be invested in
the Investment Funds on Attachment A to the Plan.
The Plan Administrator shall obtain descriptions of the
investment choices available for the purpose of informing Participants with
respect thereto. To the extent the Plan gives a Participant investment
discretion with respect to this Accounts, the selection of investment choices
is the sole responsibility of each Participant, and no Employee or
representative of the Company or any Participating Company is authorized to
make any recommendation to any Participant with respect to his investment
choices. If elected by the Participants, 100% of the Plan's assets may be
invested in Company Stock.
5.2 Prior to the date the Employee becomes a Participant
hereunder, he must make an investment election which will apply to the
investment of all his Deferred Contributions. If a Participant wishes to
utilize more than one Fund, he shall notify the Company in such manner
established by the Plan Administrator.
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<PAGE> 34
All Employer contributions made by a Participating Company on
behalf of a Participant shall be automatically invested 100% in the Company
Stock Fund; provided, however, a Participant may at any time thereafter
redirect the investment thereof into one or more of the other Investment Funds.
5.3 A Participant may change his investment election with
respect to his future Deferred Contributions to be made under the Plan as of
the next Valuation Date. Such change shall be limited to the investment
choices described in Attachment A. The Participant's election to change his
investment election may be made in any manner provided by the Plan
Administrator. Elections shall be processed as soon as reasonably practicable
after receipt.
5.4 The value of a Participant's Accounts which are held in an
Investment Fund that is a mutual fund shall be determined as of each Valuation
Date based on the published value of a unit in such mutual fund as of the
applicable Valuation Date.
5.5 The value of a Participant's Accounts which are held in
the Company Stock Fund or frozen SFER Stock Fund (as defined in Attachment A)
maintained hereunder shall be determined as of each Valuation Date and shall be
based upon the reported price of the Company Stock or SFER Stock (as defined in
Attachment A), as the case may be, at the close of business on that day. Any
interfund transfers, withdrawals or distributions from a Participant's Accounts
which are held in the Company Stock Fund or SFER Stock Fund shall be effected
by deducting the appropriate number of shares of Company Stock or SFER Stock
allocated to the Participant from the Company Stock Fund or SFER Stock Fund as
of such Valuation Date. The value of such shares of Company Stock or SFER
Stock determined in accordance with this section in the event of an interfund
transfer, or the amount to be paid to the Participant in the event of a cash
distribution,
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<PAGE> 35
withdrawal or the purchase of an annuity shall be the value of the Company
Stock or SFER Stock on the date the Participant's account was liquidated to
effect such transfer or withdrawal. In the event of a distribution in kind,
the number of shares deducted shall be distributed, with any fractional shares
converted to cash at the value determined in accordance with this section.
5.6 If not received in the form of an Employer matching
contribution, shares of Company Stock shall be purchased by the Trustee acting
independently as to when such purchases are made, the number of shares to be
purchased, the prices to be paid and if the Company elects not to sell Company
Stock to the Trustee at such time, the broker, if any, employed to effect the
purchases. The Trustee shall vote the shares of Company Stock or SFER Stock
held in the Company Stock Fund or SFER Stock Fund for the respective Accounts
of the Participants under the Plan in accordance with the directions of such
Participants, provided such directions are received by the Trustee at least
five days before the date set for the meeting at which such shares are to be
voted. The Trustee shall vote shares of Company Stock or SFER Stock for which
it has not received timely instructions on a particular matter, as well as any
shares held by the Trustee pending allocation to the Participant's Company
Stock Accounts, in the Trustee's discretion.
5.7 A Participant may elect to transfer all or a portion of
the value of his Accounts from one Fund to another. The Participant's election
to transfer must be made in accordance with procedures established by the Plan
Administrator. Any such change shall be made operative as soon as practicable
after the date such election is received.
5.8 Each Participant (or, in the event of his death, his
Beneficiary) shall have the right, to the extent of the number of shares of
Company Stock or SFER Stock allocated to his Accounts in the Company Stock Fund
or SFER Stock Fund, respectively, to instruct the Trustee in
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<PAGE> 36
writing as to the manner in which to respond to a tender offer or exchange
offer with respect to such shares. The Plan Administrator shall use its best
efforts timely to distribute or cause to be distributed to each present or
former Participant (or Beneficiary thereof) such information as will be
distributed to stockholders of the Company or SFER, as the case may be, in
connection with any such tender offer or exchange offer. Upon timely receipt
of such instructions, the Trustee shall respond as instructed with respect to
shares of such stock. The instructions received by the Trustee from
Participants shall be held by the Trustee in confidence and shall not be
divulged or released to any person, including officers or employees of the
Company or any Affiliated Company. If the Trustee shall not receive timely
instructions from a Participant (or Beneficiary thereof) as to the manner in
which to respond to such tender offer or exchange offer, such Participant (or
Beneficiary) shall be deemed to have instructed the Trustee not to tender or
exchange the Company Stock or SFER Stock.
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<PAGE> 37
SECTION VI
VESTING
6.1 The Participant's interest in his Deferred Contributions
Account, Rollover Account and Participant Contributions Account shall be 100%
vested in him at all times.
6.2 The Participant's interest in his Employer Contributions
Account shall become 100% vested in him at the earliest of the following dates:
(a) The date of the Participant's death while employed by an
Affiliated Company;
(b) The date the Participant incurs a Total Disability while
employed by an Affiliated Company;
(c) The Participant's attainment of his Normal Retirement Age
while employed by an Affiliated Company;
(d) The date of the Participant's Retirement; or
(e) The date of complete cessation of Employer contributions
hereunder.
6.3 Prior to the date that the Participant's interest in his
Employer Contributions Account becomes fully vested in accordance with Section
6.2, the Participant shall have a vested interest therein (subject to Section
8.5) as determined in accordance with the following schedule:
VI-1
<PAGE> 38
<TABLE>
<CAPTION>
Number of Years Vested
of Service Percentage
---------- ----------
<S> <C>
Less than 1 year 0%
1 year but less than 2 years 20%
2 years but less than 3 years 40%
3 years but less than 4 years 60%
4 years but less than 5 years 80%
5 years or more 100%
</TABLE>
6.4 In the event a Participant ceases to be in the Eligible
Class but remains an Employee, the Participant shall have a vested interest
determined in his Employer Contributions Account as if the Participant had
remained an Employee in the Eligible Class.
6.5 No amendment to the vesting provisions or merger of
another plan into this Plan shall deprive a Participant of his nonforfeitable
right accrued under this Plan or any other plan to the date of any such
amendment or merger.
In the event of an amendment to the Plan or the merger of another
plan into this Plan which directly or indirectly affects the computation of a
Participant's nonforfeitable percentage under this Plan or another plan, each
Participant with at least three Years of Service may irrevocably elect to have
his nonforfeitable percentage computed under this Plan without regard to such
amendment or merger.
Such election may be made in writing to the Plan Administrator
any time after the adoption of any such amendment or merger, provided, however,
that the election period shall end no earlier than the latest of 60 days
following the date the amendment or merger is adopted or effective or the date
the Participant is given written notification of the amendment or merger by the
Company or Plan Administrator.
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<PAGE> 39
SECTION VII
WITHDRAWALS PRIOR TO TERMINATION OF EMPLOYMENT
7.1 Subject to the spousal consent requirements of Section
7.5, a Participant who is an Employee may elect to withdraw an amount equal to
all or a specified portion of the value of (1) his Participant Contributions
Account, if any, and (2) provided he has previously withdrawn or is currently
withdrawing all of his Participant Contributions Account, his Rollover Account,
if any.
Each such withdrawal election must be made to the Company in the
manner established by the Plan Administrator and shall be processed as soon as
reasonably practicable. The total amount to be so withdrawn shall be that
specified in such notice and shall be made pro rata from the various Funds in
which such Account is invested. Amounts withdrawn from the Participant
Contributions Account shall be taken first from that portion of the Account
attributable to the Participant's pre-1987 contributions. Withdrawals shall be
payable only in cash, with the exception that a withdrawal from the Company
Stock Fund may be paid in cash or in whole shares (to the extent possible) as
elected by the Participant.
7.2 Subject to the spousal consent requirements of Section
7.5, a Participant who is an Employee and who has previously withdrawn or is
currently withdrawing the maximum amount available (if any) to such Participant
under Section 7.1 may request a hardship withdrawal from his Employer
Contributions Account of an amount equal to a specified portion of (1) the
vested amount of his Employer Contributions Account and (2) provided the
Participant has previously withdrawn or is requesting to withdraw the maximum
amount permitted above with respect to his Employer Contributions Account, his
Deferred Contribution Account (but not including amounts
VII-1
<PAGE> 40
representing income which is credited to a Participant's Deferred Contributions
Account after December 31, 1988).
The Participant's request to make a hardship withdrawal must be
made in writing to the Plan Administrator. The basis for the Plan
Administrator consenting to or refusing to consent to the Participant's
withdrawal request shall be that of demonstrated "hardship." For purposes of
this Section 7.2 a "hardship" will exist only if there is an "immediate and
heavy financial need" of the Participant (as defined below) and a withdrawal
under this Section is necessary to satisfy such financial need. A financial
need shall not fail to qualify as immediate and heavy merely because such need
was reasonably foreseeable or voluntarily incurred by the Participant.
A withdrawal request will be deemed to be made on account of an
"immediate and heavy financial need" of the Participant if the request is on
account of:
(1) Expenses for medical care described in Section 213(d) of
the Code incurred by the Participant, the Participant's spouse, or any
dependents of the Participant (as defined in Section 152 of the Code) or
necessary for such persons to obtain such medical care;
(2) Purchase (excluding mortgage payments) of a principal
residence for the Participant;
(3) Payment of tuition, room and board expenses and related
educational fees for the next 12 months of post-secondary education for
the Participant, his spouse, children, or dependents;
(4) The need to prevent the eviction of the Participant from
his principal residence or foreclosure on the mortgage of the
Participant's principal residence; or
VII-2
<PAGE> 41
(5) Other "safe-harbor" definitions of deemed immediate and
heavy financial needs with respect to 401(k) contributions promulgated
by the Commissioner of Internal Revenue through the publication of
revenue rulings, notices, and other documents of general applicability.
Moreover, a withdrawal will not be treated as necessary to
satisfy an immediate and heavy financial need of a Participant unless all of
the following requirements are satisfied:
(1) The Participant states in writing that the requested
withdrawal is not in excess of the amount of the immediate and heavy
financial need of the Participant;
(2) If a withdrawal is to be made from the Participant's
Deferred Contributions Account, the Participant has obtained all
distributions, other than 401(k) hardship distributions, and all
nontaxable loans concurrently available under all plans maintained by
the Affiliated Companies;
(3) If a withdrawal is to be made from the Participant's
Deferred Contributions Account, the Participant's contributions under
the Plan and all other plans of the employers (other than welfare
benefit plans) will be suspended for 12 months after receipt of the
hardship withdrawal and the Participant may not elect Deferred
Contributions for the Participant's taxable year immediately following
the taxable year of the hardship withdrawal in excess of the applicable
limit under Section 402(g) of the Code for such taxable year less the
amount of such Participant's Deferred Contributions for the taxable year
of the hardship withdrawal; and
(4) If a withdrawal is to be made from the Participant's
Employer Contribution Account, but not his Deferred Contributions
Account, the Participant's contributions to the
VII-3
<PAGE> 42
Plan will be suspended for a period of six months, unless the
Participant's aggregate period of participation in the Plan at the time
of such withdrawal equals or exceeds 60 months.
Each such withdrawal shall be processed as soon as reasonably
practicable and shall be given effect as of the applicable Valuation Date. The
total amount to be so withdrawn shall be that specified in such written notice
(which, with respect to a hardship withdrawal, may include any amounts
necessary to pay any taxes or penalties reasonably anticipated to result from
the withdrawal) and such withdrawal shall be made pro rata from the respective
investment Funds in which such Account is invested. Withdrawals shall be
payable only in cash, with the exception that a withdrawal from the Company
Stock Fund or SFER Stock Fund may be paid in cash or in whole shares (to the
extent possible), as elected by the Participant.
7.3 Subject to the spousal consent requirements of Section
7.5, a Participant who is an Employee and age 59-1/2 or older may elect to
withdraw an amount equal to all or a specified portion of his vested Accounts.
Any such withdrawal shall be taken from his Accounts in the following order:
Participant Contributions Account, Rollover Account, Deferred Contributions
Account and last, the Employer Contributions Account; however, unless the
Participant's aggregate period of participation in the Plan (and SFER Plan) at
the time of any withdrawal from the Employer Contributions Account equals or
exceeds 60 months, the Participant's contributions to the Plan will be
suspended for a period of six months.
Each such withdrawal shall be processed as soon as reasonably
practicable and shall be given effect as of the applicable Valuation Date. The
total amount to be so withdrawn shall be that specified in such notice and such
withdrawal shall be made pro rata from the respective investment Funds in which
such Account is invested. If the value of an Account, as of the actual
VII-4
<PAGE> 43
date of withdrawal, is lower than the value upon which the Participant shall
have based his withdrawal election, the total amount to be so withdrawn shall
be limited to the value of the Participant's vested interest in such Account as
of the date of such withdrawal. Withdrawals shall be payable only in cash,
with the exception that a withdrawal from the Company Stock Fund and SFER Stock
Fund may be paid in cash or in whole shares (to the extent possible), as
elected by the Participant.
7.4 Amounts withdrawn by a Participant may not be returned to
this Plan. If a Participant has an outstanding Plan loan pursuant to Section
XIV, no withdrawal shall be permitted which would reduce the Participant's
vested interest in his Accounts that are security for such loan below the
outstanding principal balance of the loan plus any interest to be accrued with
respect to such loan.
7.5 If the Participant is married as of the date of any
withdrawal, no withdrawal shall be permitted unless the Participant's spouse
consents to such distribution as provided in Section 8.4.
VII-5
<PAGE> 44
SECTION VIII
DISTRIBUTIONS OTHER THAN WITHDRAWALS
8.1 Upon the Participant's separation from service (within the
meaning of Section 401(k) of the Code), other than by death, the Participant
shall receive a distribution of the vested value of his Accounts on or as soon
as reasonably practical following the later of his termination date or Normal
Retirement Date. Payment of the Participant's benefits shall be effected by
purchasing an annuity contract with the Participant's vested Account balances,
which provides for a straight life annuity, if the Participant is not married,
or a Qualified Joint and Survivor Annuity, if the Participant is married, from
an insurance company selected by the Plan Administrator, unless the Participant
elects, as provided below, to receive his Accounts in one of the optional forms
of payment. Any annuity contract distributed pursuant to the Plan shall be
nontransferrable.
The optional forms of payment available under the Plan are:
Option 1: Life Annuity -- a level monthly benefit payable to
the Participant for his lifetime.
Option 2: Joint and Survivor Annuity -- a reduced level
monthly benefit payable to the Participant for his lifetime and
following the Participant's death, 50% (or, if elected by the
Participant 75% or 100%) of such reduced monthly benefit payable to his
designated contingent annuitant, if then living, for his lifetime.
Option 3: Certain and Continuous Annuity -- a reduced level
monthly benefit payable to the Participant for his lifetime, combined
with a period certain of 5, 10 or 15 years (as selected by the
Participant); if the Participant dies prior to the end of the designated
VIII-1
<PAGE> 45
period certain, such reduced monthly benefits shall continue to be paid
to the Participant's Beneficiary for the balance of such period certain.
Option 4: Period Certain Installment -- a reduced level
monthly benefit paid to the Participant for a period certain of either
5, 10 or 15 years (as selected by the Participant) with payments
stopping at the end of the designated period certain; if the Participant
dies prior to the end of the designated period certain, such reduced
monthly benefits shall continue to be paid to the Participant's
Beneficiary for the balance of such period certain.
Option 5: Installment Refund Annuity -- a reduced level
monthly benefit payable to the Participant for his lifetime and in the
event of the death of the Participant prior to the receipt of an amount
equal to the net premium paid for such annuity contract, the excess of
the net premium over the amount received as of the Participant's date of
death will be paid to the Participant's Beneficiary in a lump sum.
Option 6: Lump Sum -- all of the Participant's vested Account
balances paid in a single lump sum payment in cash; however, an Account
invested in the Company Stock Fund or SFER Stock Fund can be paid all in
stock or part in stock (whole shares only) and part in cash at the
election of the Participant.
Option 7: Combination -- a combination of Option 6 and any
one of Options 1 through 5.
The Plan Administrator shall furnish the Participants with general information
concerning the forms of payments available within a reasonable period prior to
their Annuity Starting Date. All optional annuity forms shall be the actuarial
equivalent of the single life annuity for the Participant.
VIII-2
<PAGE> 46
Upon the termination of his employment with all Affiliated
Companies prior to his Normal Retirement Date, a Participant may elect (subject
to Section 8.4 if married) in writing to receive a distribution of the vested
value of his Accounts in the automatic form or in any one of the optional
methods described above beginning as soon as reasonably practicable after a
specified Valuation Date preceding his Normal Retirement Date. Further, a
Participant who ceases to be an Employee may elect in writing to defer the
commencement of his benefits to any Valuation Date that is on or after his
Normal Retirement Date and before the April 1 following the calendar year in
which he reaches 70-1/2.
Notwithstanding the foregoing provisions of this Section 8.1 to
the contrary however, if upon termination of employment with all Affiliated
Companies the vested value of the Participant's Accounts does not (and at the
time of any prior withdrawal did not) exceed $3,500, the payment of the
Participant's vested benefits shall be made automatically in a single lump sum
payment in cash and Company Stock or SFER Stock to the extent then invested in
the Company Stock Fund or SFER Stock Fund under the Plan as soon as reasonably
practicable following the date of his termination of employment.
Unless the Participant elects otherwise, all distributions shall
be made or begin not later than the 60th day after the latest of the close of
the Plan Year in which (a) the Participant attains his Normal Retirement Age,
(b) occurs the 10th anniversary of the year in which the Participant began
participation in the Plan and (c) the Participant terminates his employment
with all Affiliated Companies.
Further, all distributions shall be made or commence by the April
1 following the calendar year in which the Participant reaches age 70-1/2,
regardless of whether the Participant has
VIII-3
<PAGE> 47
then terminated employment. Such benefit shall be paid with respect to a
terminated Participant in the applicable automatic annuity form described in
Section 7.1, unless an optional form is elected. With respect to a Participant
who has not then terminated employment, such required distribution shall be a
single payment based on the Participant's ending Account balances for the
applicable distribution year (as determined under Section 401(a)(9) of the
Code) based on his life expectancy (without a redetermination), less any
withdrawals for such year.
The provisions of Section 401(a)(9) of the Code, including Reg.
Section 1.401(a)(9)-2, are hereby incorporated by reference and shall control
over any Plan provision in conflict therewith.
8.2 The Plan Administrator shall furnish the following
information to the Participant within a reasonable period prior to the Annuity
Starting Date:
(a) a description or explanation, written in non-technical
language, of the terms and conditions of the Qualified Joint and
Survivor Annuity as well as the straight life annuity if not married,
(b) the Participant's right to make, and the effect of, an
election to waive the automatic form of payment,
(c) the rights of the Participant's spouse concerning the
consent to any such election, and
(d) the right to make, and the effect of a revocation of an
election not to receive the automatic form.
8.3 If a Participant fails to make an election during the
election period, such Participant shall be deemed to have elected the Qualified
Joint and Survivor Annuity if he is married or the straight life annuity if he
is not married. The election period shall be the period of not more
VIII-4
<PAGE> 48
than 90 days and not less than 30 days prior to the Participant's Annuity
Starting Date. A Participant may revoke and remake his election any number of
times during the election period.
8.4 No election to waive the Qualified Joint and Survivor
Annuity made by a married Participant, other than an election of Option 2 with
his spouse as his contingent annuitant, shall be effective unless the
Participant's spouse consents in writing to such election, such election
designates a beneficiary (or a form of benefits) which may not be changed
without a new spousal consent and the spouse's consent acknowledges the effect
of such election on the spouse's right to benefits under the Plan and is
witnessed by a Plan representative or a notary public. The spousal consent
requirement shall not apply if it is established to the satisfaction of the
Plan Administrator that there is no spouse, the spouse cannot be located or due
to such other circumstances as may be permitted by Treasury regulations.
8.5 If the Participant's employment with all Affiliated
Companies is terminated prior to his being 100% vested in his Employer
Contributions Account, then that nonvested portion of his Employer
Contributions Account shall be forfeited as of the earlier of the date the
Participant receives a total distribution of his vested interest or the
Valuation Date coincident with or next following the date the Participant
incurs five consecutive Breaks in Service; however, if a Participant who incurs
a forfeiture again becomes an Employee prior to incurring five consecutive
Breaks in Service, he may reinstate the earlier forfeited amount (unadjusted
for any subsequent Trust earnings or losses) by repaying to the Plan in cash an
amount equal to the distribution prior to the earlier of incurring five
consecutive Breaks in Service or the fifth anniversary of the date he again
becomes an Employee. Any reinstated forfeited amounts shall be taken from
current forfeitures or special
VIII-5
<PAGE> 49
Employer contributions. Any amounts forfeited by Participants shall be used to
offset future Employer contributions under this Plan except as otherwise
provided in Section 12.3 hereof.
If either a distribution is made to a terminated Participant from
his Employer Contribution Account when he is less than 100% vested therein and
he is reemployed prior to incurring five consecutive Breaks in Service or a
withdrawal is made from the Employer Contribution Account pursuant to Section
7.2 or 7.3 by a Participant who is not 100% vested therein, the vested portion
of his Employer Contribution Account shall thereafter, until such time as he
may become 100% vested, be an amount ("X") determined by the formula: X = P
(AB + D) - D. For purposes of applying the formula: P is the vested
percentage at the relevant time; AB is the account balance at the relevant
time; and D is the amount of the distribution or withdrawal.
8.6 In addition to the foregoing distributions, all Accounts
of an affected Participant shall be distributed to him as soon as
administratively feasible after the disposition (1) of substantially all of the
assets (within the meaning of Code Section 409(d)(2) used by the Company or
Employer in the trade or business in which the Participant is employed if the
Participant continues employment with the corporation acquiring such assets, or
(2) of the Company's or an Employer's interest in a subsidiary (within the
meaning of Code Section 409(d)(3)) which employs the Participant if the
Participant continues employment with such subsidiary. However, an event shall
not be treated as described in (1) or (2) above unless the transferor
corporation continues to maintain the Plan after the disposition.
Further, all Accounts shall be distributed upon a termination of
the Plan without a "successor plan" as defined in Section 401(k) of the Code
and regulations thereunder.
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8.7 Direct Rollover Distributions. Notwithstanding any
provision of the Plan to the contrary that would otherwise limit a
distributee's election under this Section, a distributee may elect, at the time
and in the manner prescribed by the plan administrator, to have any portion of
an eligible rollover distribution paid directly to an eligible retirement plan
specified by the distributee in a direct rollover.
Eligible rollover distribution: An eligible rollover
distribution is any distribution of all or any portion of the balance to the
credit of the distributee, except that an eligible rollover distribution does
not include: any distribution that is one of a series of substantially equal
periodic payments (not less frequently than annually) made for the life (or
life expectancy) of the distributee or the joint lives (or joint life
expectancies) of the distributee and the distributee's designated beneficiary,
or for a specified period of ten years or more; any distribution to the extent
such distribution is required under section 401(a)(9) of the Code; and the
portion of any distribution that is not includible in gross income (determined
without regard to the exclusion for net unrealized appreciation with respect to
employer securities).
Eligible retirement plan: An eligible retirement plan is an
individual retirement account described in section 408(a) of the Code, an
individual retirement annuity described in section 408(b) of the Code, an
annuity plan described in section 403(a) of the Code, or a qualified trust
described in section 401(a) of the Code, that accepts the distributee's
eligible rollover distribution. However, in the case of an eligible rollover
distribution to the surviving spouse, an eligible retirement plan is an
individual retirement account or individual retirement annuity.
Distributee: A distributee includes an employee or former
employee. In addition, the employee's or former employee's surviving spouse
and the employee's or former employee's
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spouse or former spouse who is the alternate payee under a qualified domestic
relations order, as defined in section 414(p) of the Code, are distributees
with regard to the interest of the spouse or former spouse.
Direct rollover: A direct rollover is a payment by the plan to
the eligible retirement plan specified by the distributee.
8.8 30-Day Waiver. If a distribution is one to which sections
401(a)(11) and 417 of the Internal Revenue Code do not apply, such distribution
may commence less than 30 days after the notice required under section
1.411(a)-11(c) of the Income Tax Regulations is given, provided that:
(1) the plan administrator clearly informs the participant
that the participant has a right to a period of at least 30 days after
receiving the notice to consider the decision of whether or not to elect
a distribution (and, if applicable, a particular distribution option),
and
(2) the participant, after receiving the notice, affirmatively
elects a distribution.
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SECTION IX
DEATH BENEFITS, BENEFICIARIES, UNCLAIMED BENEFITS
9.1 Upon the death of a vested Participant prior to his
Annuity Starting Date, a deceased Participant's vested Account balances shall
be applied to the purchase of a single life annuity contract for his
Beneficiary from an insurance company selected by the Plan Administrator unless
the Beneficiary elects one of the optional forms (other than the Qualified
Joint and Survivor Annuity) provided in Section 8.1. However, the
Participant's entire vested interest under the Plan must be distributed to his
Beneficiary within five years of his date of death unless his Beneficiary is
his spouse, in which event such spouse may elect to receive such death benefit
over her life (or a period not extending beyond the spouse's life expectancy)
with the benefits commencing as of any date specified by the spouse but not
later than the date on which the Participant would have reached age 70-1/2 had
he lived. And, if the Beneficiary is the Participant's estate (or a nonperson
such as a trust), the form of distribution shall be a single lump sum payment
and not the purchase of a single life annuity contract.
9.2 Except as provided below, the Participant shall have the
unrestricted right to designate the Beneficiary to receive the death benefits
to which he is entitled under the Plan and to change any such designation.
Each such designation for death benefits shall be evidenced by a written
instrument filed with the Plan Administrator and signed by the Participant.
However, if a Participant is married and wishes to designate a Beneficiary
other than his spouse, he must submit his spouse's written consent, executed
and witnessed by a Plan representative or a notary public, which consent must
acknowledge the affect of the consent on the spouse's right to benefits under
the Plan and be specific as to the form of payment elected and the other
Beneficiary designated, if
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applicable. No change (other than a revocation) in such election may be made
by a married Participant without obtaining a new spousal consent as provided
below. If no such designation is on file with the Plan Administrator at the
time of the death of the Participant, or if for any reason such designation is
defective, then the Participant's spouse, if living, his children, if living,
or his estate, in that order of preference, shall be conclusively deemed to be
the Beneficiary designated to receive such benefit. A Participant's marriage
or divorce subsequent to making a written beneficiary designation shall
automatically revoke such prior designation.
The Plan Administrator shall provide each Participant, within the
applicable period for such Participant (as defined below), a written
explanation of the qualified pre-retirement survivor annuity provided in
Section 9.1 above in such terms and in such a manner as would be comparable to
the explanation provided for meeting the requirements of Section 8.2 applicable
to a Qualified Joint and Survivor Annuity. The applicable period for a
Participant is whichever of the following periods ends last: (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; or (ii) a reasonable period ending after
the individual becomes a Participant. Notwithstanding the foregoing, notice
must be provided within a reasonable period ending after separation of service
in case of a Participant who separates from service before attaining age 35.
Notwithstanding anything above in this Section 9.2 to the
contrary, a designation of a beneficiary other than the Participant's spouse by
a Participant who has not attained age 35 will not be valid unless the
Participant receives a written explanation of the qualified pre-retirement
survivor annuity provided by Section 9.1 in such terms as are comparable to the
explanation required
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under Section 8.2. Further, the qualified pre-retirement survivor annuity
coverage of Section 9.1 will be automatically reinstated, i.e., the
Participant's spouse will automatically again become his sole beneficiary
entitled to the annuity provided in Section 9.1, as of the first day of the
Plan Year in which the Participant attains age 35 unless a new beneficiary
designation is filed by the Participant on or after such date, which new
designation complies in full with the above requirements of this Section 9.2
concerning spousal consent.
9.3 If benefits remain to be paid at a time when the Plan
Administrator is unable to locate the Participant or his Beneficiary, the Plan
Administrator shall cause the Participant's benefits to be forfeited. However,
such benefit shall be reinstated if a subsequent claim is made for the same.
9.4 Notwithstanding the foregoing provisions of this Section
IX, if, upon the death of a Participant prior to his Annuity Starting Date, the
vested value of his Accounts does not exceed $3,500, the payment of the
Participant's benefits shall be made to his Beneficiary in a single lump sum in
cash and Company Stock and, if applicable, SFER Stock to the extent then
invested in the same under the Plan as soon as reasonably practicable after the
monthly Valuation Date on or next following the date of the Participant's
death.
9.5 Upon the death of a Participant on or after his Annuity
Starting Date, the death benefit payable under the Plan, if any, shall be
determined by the form (and the terms) of benefit payment elected by the
Participant, with the remaining portion, if any, distributed as rapidly as
under the method of distribution in effect on his date of death.
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SECTION X
ADMINISTRATION
10.1 The Plan shall be administered by the Plan Administrator
which shall also be the Named Fiduciary. The Plan Administrator may delegate
from time to time ministerial duties to employees of the Participating
Companies and, further, may delegate its fiduciary duties among such employees.
From time to time, the Plan Administrator shall certify to the Trustee, the
person or persons designated by the Plan Administrator to give notifications,
instructions or advice to the Trustee. The Plan Administrator shall be
entitled to rely upon certificates of or communications from a Participating
Company or from the Trustee as to information pertinent to any calculation or
determination under the Plan. The Plan Administrator shall furnish to the
Board upon request appropriate reports with respect to the administration and
operation of the Plan and its trust.
10.2 Administrative Powers. The Plan Administrator shall have
full power and authority, within the limits provided by the Plan:
(a) To determine all questions arising concerning the
construction and interpretation of the Plan and in its administration,
including, but not by way of limitation, the determination of the rights
or eligibility under the Plan of Employees and Participants and their
Beneficiaries;
(b) To adopt such rules and regulations as it may deem
reasonably necessary for the proper and efficient administration of the
Plan consistent with its purposes;
(c) To enforce the Plan, in accordance with its terms; and
(d) To do all other acts, in its judgment necessary or
desirable, for the proper and advantageous administration of the Plan.
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The Plan Administrator shall act with or without a meeting by the
vote or concurrence of a majority of its members; but no member of the Plan
Administrator who is a Participant shall take part in any Plan Administrator
action or any matter that has particular reference to his own interest
hereunder. The Plan Administrator shall administer this Plan and discharge its
responsibilities hereunder in a uniform and nondiscriminatory manner as to all
Participants.
10.3 Information to be Provided to Participants and Others.
The Plan Administrator shall see that books of account are kept which shall
show all receipts and disbursements and a complete record of the operation of
the Plan, including records of the accounts of individual Participants. At
least once in each year, the Plan Administrator shall cause to be furnished to
each Participant a statement indicating on the basis of the latest available
information the status of the Participant's Account.
10.4 The Plan Administrator will direct the Trustee to make
investments pursuant to Section V hereof.
10.5 In any case where the provisions of this Plan require the
consent or approval by the Plan Administrator of an election or request made by
an Employee, Participant or Beneficiary in order to make such election or
request effective, the Plan Administrator shall act on such election or request
as promptly as shall be reasonable in the circumstances. In any case where
action by the Trustee is necessary in order to make operative an effective
election or request made by a Participant or Beneficiary, it shall be the
responsibility of the Plan Administrator to transmit such election or request
to the Trustee in writing and as promptly as shall be reasonable in the
circumstances. The Trustee shall not be obliged to take action with respect to
any particular election or request unless
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the Trustee shall have received the election or request in such form and detail
as shall reasonably be required by the Trustee.
10.6 Employment of Advisors and Staff. The Plan Administrator
may employ accountants, legal counsel, consultants, and any other persons or
organizations it deems necessary or proper to assist it in the performance of
its duties under the Plan.
10.7 Fiduciary Duties. The Plan Administrator shall discharge
its duties solely in the interest of the Participants and Beneficiaries and for
the exclusive purpose of providing benefits to Participants and their
Beneficiaries. They shall discharge their duties with the care, skill,
prudence and diligence under the circumstances then prevailing that a prudent
man acting in a like capacity and familiar with such matters would use in the
conduct of an enterprise of a like character and with the like aims.
10.8 Indemnification. Except as provided by law, the
Participating Companies, their directors, officers, employees and agents and
the persons appointed to perform the duties of the Plan Administrator, or any
of them, shall not incur any personal liability for the breach of any
responsibility, obligation or duty in connection with any act done or omitted
to be done in good faith in the management and administration of the Plan and
the investment and handling of the accounts and shall be indemnified and held
harmless by the Participating Companies from and against any such personal
liability including all expenses reasonably incurred in its or their defense in
case the Participating Companies fail to provide such defense.
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SECTION XI
PROVISIONS RESPECTING THE COMPANY
11.1 Amendment of Plan. This Plan may be amended at any time
and from time to time by the Chief Executive Officer of the Company or
resolution of the Board of Directors of the Company; however, the Chief
Executive Officer of the Company may not amend the Plan in any manner which
would increase the level of Participating Company contributions. The Plan, as
amended, shall apply to the Participants and Participating Companies, unless a
Participating Company elects to withdraw from the Plan. Such power of
amendment shall under no circumstances include the right to reinvest or
otherwise transfer any interest in or to the accounts, or any income therefrom,
to any Participating Company; nor shall the power of amendment include the
right, in any way or to any extent, to divest any Participant of the interest
in his Accounts to which he would be entitled if he had terminated his service
immediately before such amendment, eliminate any "protected benefit" except as
otherwise permitted by Treasury Regulations or impose any Employer or Plan
Administrator consent on the exercise of a Participant's elections under the
Plan other than as permitted by Treasury Regulations; provided further that the
rights, duties or responsibilities of the Trustee shall not be substantially
changed without its written consent. Neither shall such power of amendment be
exercised in any way which would or could give to any Participant or
Beneficiary any right or thing of exchangeable value in advance of the receipt
of distributions hereunder. There shall be no merger or consolidation of part
or all of the Plan with, or any transfer of part or all of its assets or
liabilities to, any other plan or trust ("Other Plan") unless, pursuant to the
terms of such merger, consolidation or transfer, each Participant and
Beneficiary in the Plan whose interests are so merged, consolidated or
transferred into, with, or to the Other Plan would (if the Other Plan were
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then terminated) receive a benefit immediately after such merger, consolidation
or transfer which would be equal to or greater than the benefit he would have
been entitled to receive immediately before such merger, consolidation or
transfer (if the Plan were then terminated). Notwithstanding the foregoing
provisions of this Section, this Plan may be amended in any manner whatsoever,
with prospective or retroactive effect, for the purpose of qualifying it under,
or complying with, any provision of the Code or ERISA.
11.2 California Law to Govern. This Plan shall be construed
and regulated and its validity and effect and the rights hereunder of all
parties interested shall at all times be determined, and this Plan shall be
administered, in accordance with the laws of the State of California, subject,
however, to applicable provisions of any federal law.
11.3 Intent. The Participating Companies intend that this
Plan, as amended from time to time, shall constitute a qualified plan under the
provisions of Sections 401(a), (k) and (m) of the Code. The Participating
Companies intend that this Plan shall continue to be maintained by them for the
above purposes indefinitely, subject, however, to the rights reserved to amend
and terminate the Plan as set forth herein. Nothing contained in this Plan
shall be construed as disqualifying any Employee of any Participating Company
from any benefits under any other plan or program to which such Employee would
be entitled in the absence of this Plan.
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SECTION XII
TERMINATION OF PLAN
12.1 This Plan may be terminated as to all Participating
Companies on any date specified by the Company upon 10 days' advance written
notice of the termination to the Plan Administrator and the Participating
Companies. This Plan shall be terminated at any time as to any particular
Participating Company, for the following reasons:
(a) The Participating Company voluntarily terminates this
Plan;
(b) The final and total discontinuance of Participating
Company contributions hereunder;
(c) The legal dissolution, merger, consolidation or
reorganization of the Participating Company; or
(d) The date that Participating Company ceases to qualify as
an Affiliated Company.
Notwithstanding the foregoing, if any of the events described
above should occur but some or all of the Participants employed by a
Participating Company are transferred to another Participating Company
coincident with or immediately after the occurrence of such event, the Plan as
applied to those Participants will automatically continue in effect without a
termination thereof.
12.2 Except as provided for in Section XI hereof, each
Participant and the Beneficiary of each deceased Participant shall be vested
with all rights to any funds in his Accounts as of the date of such Plan
termination.
12.3 Any forfeitures which shall have occurred in accordance
with Section 9.3 hereof prior to the termination of this Plan but which shall
not have been applied to reduce Employer
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contributions hereunder shall be distributed pro rata to those Participants who
were Employees of the Participating Company or Companies on the effective date
of the termination of this Plan.
12.4 In the event of a partial termination of this Plan, the
provisions of this Section XII shall apply to each Participant affected by the
partial termination.
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SECTION XIII
MISCELLANEOUS PROVISIONS
13.1 This Plan is created for the exclusive benefit of
Employees of the Participating Companies and their Beneficiaries. If any
provision of this Plan is subject to more than one interpretation, then among
those interpretations which are possible, that one shall always be given to
this Plan and each and every one of its provisions which will be consistent
with this Plan being a qualified plan within the meaning of Section 401 of the
Code, and ERISA, or as they may be amended or replaced by any sections of the
federal law of like intent and purpose.
13.2 Except as provided by the terms of Section XI hereof, no
funds contributed hereunder or any assets of this Plan shall ever revert to, or
be used or enjoyed by, any Participating Company or any successor of any
Participating Company, nor shall any such funds or assets ever be used other
than for the benefit of the Participants or the Beneficiaries of such
Participants.
13.3 Any Affiliated Company may, with the consent of the Chief
Executive Officer of the Company, become a Participating Company in the Plan by
filing a duly certified copy of the resolution of its Board of Directors
adopting the Plan and executing and delivering such instruments and taking such
other action as may be necessary to put the Plan into effect with respect to
such Affiliated Company.
13.4 No right or interest of any Participant of the Plan shall
be assignable or transferable in whole or in part, either directly or by
operation of law or otherwise, including, but in no way limited to, execution,
levy, garnishment, attachment, pledge or bankruptcy, and no right or interest
of any Participant in the Plan shall be liable for or subject to any obligation
or liability of such Participant, including claims for alimony or the support
of any Participant's spouse.
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Notwithstanding any other provisions of this Plan, an alternate
payee under a qualified domestic relations order as determined in accordance
with Section 206 of ERISA shall be entitled, within 180 days from the date the
alternate payee receives written notification that the Company has made such a
determination, to elect to receive any benefits to which the alternate payee is
entitled payable in accordance with the distribution provisions set forth in
Section VIII of this Plan in full satisfaction of any liability of the Plan to
such person. Payment of the benefits from the Alternate Payee's account shall
be made or shall commence to be made as established by court order which may
provide for payment prior to the Participant's attainment of his "earliest
retirement age", or if not so specified, as of the Valuation Date coincident
with or next following the Participant's Normal Retirement Date or actual
retirement date, whichever is later. An alternate payee may make investment
elections pursuant to Section V of the Plan but may make withdrawals pursuant
to Section VII of the Plan.
13.5 Any person claiming entitlement to benefits in an amount
other than that received shall have the right after review and denial, in whole
or in part, of such claim by the Director -- Administration to a review of such
denial by the Plan Administrator. Such review shall be initiated by the
written request therefor by such person filed with the Plan Administrator
within 60 days after receipt by the person of the denial by the Director of
Administration. The written request shall state the nature of the claim, the
facts in support thereof and the amount claimed, and may include a demand for a
personal hearing before the Plan Administrator as well as for reasonable access
to the pertinent data upon which denial of the claim by the Director of
Administration was based, which demands shall not be unreasonably denied. The
Plan Administrator shall conduct its review of the claim within 60 days after
receipt of the written request of such person and furnish,
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within such time, to the claimant written notice of its decision, including
therein specific reasons and references to pertinent Plan provisions upon which
decision is based.
13.6 Copies of the Plan and any amendments thereto will be on
file at the principal office of each Employer where they may be examined by any
Participant or any other person entitled to benefits under the Plan.
13.7 If any person entitled to benefits under the Plan is under
a legal disability or, in the Plan Administrator's opinion, is incapacitated in
any way so as to be unable to manage his or her financial affairs, the Plan
Administrator may direct the payment of such benefits to such person's legal
representative or to a relative or friend of such person or such person's
benefit, or the Plan Administrator may direct the application of such benefits
for the benefit of such person in any manner which the Plan Administrator may
select that is permitted by federal law and is consistent with the Plan. Any
payments made in accordance with the foregoing provisions of this section shall
be a full and complete discharge of any liability for such payments.
13.8 None of the establishment of the Plan, any modification
thereof, the creation of any fund or account, or the payment of any benefits
shall be construed as giving to any Participant or other person any legal or
equitable right against the Employers, the Plan Administrator or any Trustee
except as provided herein. Under no circumstances shall the maintenance of this
Plan constitute a contract of employment or shall the terms of employment of
any Participant be modified or in any way affected hereby. Accordingly,
participation in the Plan will not give any Participant a right to be retained
in the employ of any Employer. Neither the Plan Administrator nor any Employer
in any way guarantees any assets of the Plan from loss or depreciation or any
payment to
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any person. The liability of the Plan Administrator or any Employer as to any
payment or distribution of benefits under the Plan is limited to the available
assets of the trust fund.
13.9 In any action or proceeding regarding any Plan assets, any
Plan benefits or the administration of the Plan, employees or former employees
of the Employers, their beneficiaries and any other person claiming to have an
interest in the Plan shall not be necessary parties and shall not be entitled
to any notice of process. Any final judgment which is not appealed or
appealable and which may be entered in any such action or proceeding shall be
binding and conclusive on the parties hereto and on all persons having or
claiming to have any interest in the Plan. To the extent permitted by law, if
a legal action is begun against the Plan Administrator, an Employer, or any
Trustee by or on behalf of any person and such action results adversely to such
persons, or if a legal action arises because of conflicting claims to a
Participant's or other person's benefit, the cost to the Employers, the Plan
Administrator, or the Trustee of defending the action will be charged to the
sums, if any, which were involved in the action or were payable to the
Participant or the other person concerned. Acceptance of participation in the
Plan shall constitute a release of the Company and the Plan Administrator, any
trustee and their agents from any and all liability and obligation not
involving willful misconduct or gross neglect to the extent permitted by
applicable law. Notwithstanding any other provisions of the Plan, if the Plan
Administrator is required by a final court order to distribute the benefits of
a Participant other than in a manner required under the Plan, then the Plan
Administrator shall cause the Participant's benefits to be distributed in a
manner consistent with such final court order. The Plan Administrator shall
not be required to comply with the requirements of a final court order in any
action in which the Plan Administrator, a Trustee, the Plan or the trust was
not a party.
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13.10 If any provisions of the Plan shall be held illegal or
invalid for any reason, such illegality shall not affect the remaining
provisions of the Plan, and the Plan shall be construed and enforced as if such
illegal and invalid provisions had never been set forth in the Plan.
13.11 Top Heavy Rules.
(a) If the Plan is or ever becomes "top-heavy" as determined
under subsection (b), the following special rules shall apply.
(1) If the Plan is top-heavy for a Plan Year, each
Participant who is an Employee on the last day of the Plan Year
shall receive an allocation of Employer contributions and
forfeitures equal to the product of
a the Participant's compensation during the
Plan Year, and
b the lesser of 3% or the ratio of Employer
contributions plus Deferred Contributions to compensation
with respect to the Key Employee (as defined in subsection
(c)) whose ratio is highest for the year.
For purposes of this Section, including the determination of a
Participant's allocation of Employer contributions under Section
IV if this Section applies, compensation shall mean the total
amount of wages, tips and other compensation shown on an
Employee's Form W-2 for the Year, but not to exceed $150,000, as
adjusted by the Treasury from time to time.
An Employee shall not fail to receive an allocation
pursuant to this subsection because (i) he fails to elect to make
Deferred Contributions for the Plan Year, (2) receives
compensation less than a stated amount or (3) completes less than
1,000 Hours of Service.
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Notwithstanding any other provisions of the Plan, an
Employee shall not forfeit any allocations made pursuant to this
subsection because of a withdrawal of Deferred Contributions.
If a Participant also participates in a defined benefit
plan maintained by the Employer or an Affiliated Company which is
top-heavy, the minimum allocation percentage specified in this
subsection shall be increased to 5% of compensation. This
sentence shall not apply to the extent that the Participant
participates in any other plan or plans of the Employer or an
Affiliated Company which provide that the defined benefit minimum
allocation or benefit applicable to top-heavy plans will be
provided by such other plan or plans.
(2) All Employer-provided benefits shall become fully
vested upon completion of three Plan Years during which the
Participant completes 1,000 Hours of Service, and a person who is
not already a Participant shall become a Participant upon the
first day he meets all the eligibility requirements of Section
3.1.
(b) This Plan is "top heavy", if, as of the last day of the
preceding Plan Year (the Determination Date) (or the initial Plan Year
for its year of establishment), the amount credited to the Accounts of
Key Employees (as defined in subsection (c)) exceeds 60% of the amount
credited to the Accounts of all Participants (except former Key
Employees). Notwithstanding the foregoing, the Plan shall not be top
heavy if, as of the Determination Date described above, it is included
in either a "required aggregation group" or a "permissive aggregation
group" which is not a "top heavy group." A required aggregation group
is each plan in which a Key Employee participates or which allows such
plan to meet the
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requirements of Code Section 401(a)(4) or 410. A permissive aggregation
group is the required aggregation group of plans plus any other plan or
plans of the Employer which, when considered as a group with the
required aggregation group, would continue to satisfy the requirements
of Code Section 401(a)(4) or 410. For purposes of determining whether
this Plan is top heavy, the aggregate distributions (without interest
thereon) made under the Plan to a Participant during the 5-year period
ending on the Determination Date shall be taken into account if the
Participant's account or benefit is otherwise taken in account in
determining whether the Plan is top heavy. However, the accrued
benefits of any Participants who have performed no services for the
Affiliated Companies during the five-year test period shall be
disregarded.
The accrued benefit of a non-key employee shall be
determined under the method that uniformly applies to all defined
benefit plans of the employer or, if there is none, as if such benefit
accrued not more rapidly than the slowest accrual rate permitted under
the fractional rule of Code Section 411(b)(1)(C).
(c) A Participant shall be a "Key Employee" if, during the
Plan Year in question or any of the four preceding Plan Years, he is:
(1) an officer of the Employer having annual
compensation greater than 50% of the Code Section 415(b)(1)(A)
limit for such Plan Year (but no more than fifty Employees or, if
less, the greater of three Employees or ten percent of all
Employees) shall be taken into account, as specified by the Plan
Administrator;
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(2) one of the ten Employees having compensation in
excess of the Code Section 415(c)(1)(A) limit for such Plan Year
and owning (or considered as owning within the meaning of Section
318 of the Code) the largest interest in the Employer;
(3) 5% owner of the Employer; or
(4) 1% or more owner of the Employer having an annual
compensation from the Employer of more than $150,000.
Each Employee who is not a Key Employee shall be a non-key employee.
(d) If, the Plan is top-heavy for a Plan Year, then for
purposes of computing the maximum additions described in Section 4.8,
the defined benefit plan fraction and the defined contribution plan
fraction shall be computed by substituting the number 1.0 for the number
1.25.
The Employer may elect to disregard the preceding sentence if, as
of the last day of the preceding Plan Year, the amount credited to the
Accounts of Key Employees does not exceed 90% of the amount credited to
the Accounts of all Participants (except former Key Employees).
If the Employer makes the election described in the preceding
sentence, the minimum allocation percentage specified in subsection (a)
shall be increased to 4% of compensation for all Participants and 7 1/2%
for Participants who also participate in a defined benefit plan
maintained by the Employer or an Affiliated Company which is top-heavy.
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SECTION XIV
LOANS
14.1 A Participant or beneficiary, who is a "party in interest"
as defined in ERISA Section 3(14), may borrow from the Plan, subject to the
following provisions of this Section XIV and to such additional standards as
the Plan Administrator may adopt, by making application to the Plan
Administrator. A Participant seeking a loan hereunder must submit a written
application (hereinafter referred to as the "completed application") which
shall (i) specify the terms pursuant to which the loan is requested to be made,
including the requested effective date, (ii) authorize the repayment of the
loan through payroll deductions, if applicable, and (iii) provide such
information and documentation as the Plan Administrator shall require. If the
Participant is married, his spouse must consent to such loan being secured by
the Participant's accrued benefit under the Plan as provided in this Section
XIV and such consent meets the requirements of Section 8.4.
14.2 Any loan to a Participant under this Section XIV shall be
subject to the following requirements:
(a) The loan may not exceed the lesser of $50,000 or 50% of
the value of the Participant's vested interest in his Accounts. The
maximum loan amount of $50,000 otherwise available to a Participant is
reduced by the excess, if any, of the highest outstanding balance of
Plan loans to the Participant during the one-year period ending on the
day before the loan is made over the outstanding balance of loans from
the Plan on the date when the loan is made.
(b) The loan must be at least $1,000.
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(c) The loan shall provide for a fixed rate of interest for
the entire term of the loan. The applicable interest rate for Plan
loans shall be a reasonable rate equal to a commercially comparable rate
as established by the Plan Administrator consistent with the provisions
of Section 4975(d)(1) of the Code and other applicable legal
requirements.
(d) The loan shall be for a term not to exceed five years
except as provided below.
(e) Notwithstanding the five year limit in Section 14.2(d),
any loan used to acquire or construct any dwelling unit which, within a
reasonable time, is to be used as the principal residence of the
Participant may be for a term of up to 15 years.
(f) The Plan Administrator shall establish standards in
accordance with ERISA and the Code and such rules as it deems necessary
which shall be uniformly applicable to all Participants similarly
situated and shall govern the Plan Administrator's approval or
disapproval of completed applications. The terms for each loan shall be
set solely in accordance with this Section and such standards adopted by
the Plan Administrator in accordance with Section 14.4. Such standards
may prescribe minimum repayment periods, a maximum and minimum loan
amount (within the limitations specified above), and shall require
spousal consent for loans to married Participants and other relevant
factors.
(g) The Plan Administrator shall establish rules concerning
the frequency with which loans may be made under the Plan. Such rules,
as changed from time to time, shall be applied in a uniform and
nondiscriminatory manner and shall be communicated in writing to all
eligible Participants.
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(h) Loan repayments will be suspended under this Plan
as permitted under Code Section 414(u)(4).
14.3 (a) Each loan shall be evidenced by a promissory note
executed by the person and payable to the Trustee, due and payable in full not
later than the earliest of: (i) a fixed maturity date meeting the requirements
of Section 14.2(d) above; (ii) the person's death; or (iii) the time which the
person ceases to be a party in interest.
(b) The promissory note shall provide for the payment of equal
installments (by payroll periods not less frequently than monthly) of
principal and interest on the unpaid balance of principal at the fixed
annual rate set forth in Section 14.2(c) on the date the note is
executed. The note shall further provide, with respect to a person who
is an Employee, that the payments shall be through payroll deductions.
(c) The promissory note shall evidence such additional terms
as are required by this Section 14.2 or by the Plan Administrator.
14.4 The Plan Administrator shall, in accordance with its
established standards, review and approve or disapprove a completed application
as soon as practicable after its receipt thereof, and shall promptly notify the
applying person of such approval or disapproval.
14.5 Loans shall be funded by exhausting Accounts or portions
thereof in the following order:
(a) First, the Rollover Account;
(b) Second, the SFP Plan Employer Contributions Account;
(c) Third, the vested portion of the Employer Contributions
Account;
(d) Fourth, the Deferred Contributions Account; and
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(e) Fifth, the Participant Contributions Account.
14.6 Each loan shall be made only from the Accounts of the
borrowing Participant, shall be taken pro rata from the investment funds in
which such Accounts are invested, and shall be treated as a separate investment
of, and shall be allocated solely to, the Participant's Accounts from which the
Participant's loan was funded.
14.7 A person may elect to prepay the entire balance of the
loan at any time. A person may request a subsequent loan after full repayment
of a prior loan, subject to the maximum loan amount set forth in Section
14.2(a) hereof. No partial prepayments will be permitted. All loan repayments
shall be transmitted by the Company or Participating Company to the Trustee as
soon as practicable after such amounts are withheld or received.
14.8 Each loan repayment of principal and interest will be
allocated to the Participant's Accounts in the same proportion from which the
loan was funded as provided in Section 14.5 hereof.
14.9 Repayment of any loan under the Plan shall be secured by
50% of the present value of the Participant's entire vested interest in the
Plan.
14.10 If a Participant with an outstanding loan takes an
authorized leave of absence or incurs a temporary disability so the regular
monthly installment payments cannot be made on a payroll deduction basis, the
Participant will be required to make the regular payments of principal and
interest at the time and place established by the Plan Administrator.
14.11 If any time prior to the full repayment of a loan, the
Participant or Beneficiary should cease to be a party in interest, or the Plan
should terminate, or any event of default otherwise occurs under the documents
evidencing the loan; the unpaid balance owed by the Participant on the
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loan shall be due and payable in full immediately without notice or demand. If
the Participant or Beneficiary does not repay the full amount of the unpaid
balance within the time established by the Plan Administrator, the Plan
Administrator may take whatever steps it deems necessary to collect the unpaid
balance of the loan; provided, however, in no event shall an "offset" to the
Participant's Accounts occur prior to the date the Participant would otherwise
be entitled to a distribution of his Deferred Contributions Account.
14.12 Notwithstanding anything to the contrary contained herein,
each loan shall be made only in accordance with the regulations and rulings of
the Internal Revenue Service and other applicable state or federal laws. The
Plan Administrator shall act in its sole discretion to ascertain whether the
requirement of such laws, regulations, and rulings have been met.
IN WITNESS WHEREOF, the Company has caused its duly authorized
officer to execute this Plan this May 8, 1997, effective for all purposes as
provided above.
MONTEREY RESOURCES, INC.
By: /s/ R. GRAHAM WHALING
--------------------------------
Name: R. Graham Whaling
------------------------------
Title: Chief Executive Officer
------------------------------
XIV-5
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ATTACHMENT A
MONTEREY RESOURCES, INC.
SAVINGS INVESTMENT PLAN
INVESTMENT FUNDS
1. Putnam Stable Value Fund (and certain guaranteed investment contracts
issued by the Travelers Insurance Company)
2. INVESCO Total Return Fund
3. Putman Fund for Growth and Income A
4. Putman S&P 500 Index Fund
5. Putman Voyager Fund A
6. Putman Overseas Growth Fund A
7. Putman New Opportunities Fund A
8. Company Stock Fund
9. SFER Stock Fund, which shall be a "frozen" fund holding the shares of
common stock of Santa Fe Energy Resources, Inc. ("SFER Stock") allocated
to the Accounts as of the Spinoff Date of the Company from SFER. No
transfers from other funds may be transferred into the SFER Stock Fund.
