<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)
DELAWARE 76-0511993
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
5201 TRUXTUN AVENUE, SUITE 100
BAKERSFIELD, CALIFORNIA 93309
(Address, including zip code, of Principal Executive Offices)
MONTEREY RESOURCES, INC.
EMPLOYEE STOCK OWNERSHIP 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>
<CAPTION>
============================================================================================================
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) 150,000 $13 3/4 $2,062,500 $625
============================================================================================================
</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
II-1
<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.
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------ -----------
<S> <C>
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
</TABLE>
- ---------------
+ Incorporated herein by reference.
II-2
<PAGE> 4
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------ -----------
<S> <C>
24.1 -- Power of Attorney (set forth on the signature page
contained in Part II of this Registration Statement)
99.1 -- Monterey Resources, Inc. Employee Stock Ownership Plan
</TABLE>
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.
II-3
<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.
<TABLE>
<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. WASIELEWSKI Director July 16, 1997
- --------------------------------------
Robert J. Wasielewski
</TABLE>
II-4
<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. Employee Stock
Ownership Plan
By: /s/ MICHAEL A. MORPHY
--------------------------------------
Michael A. Morphy
Chairman, Compensation and Benefits
Committee
II-5
<PAGE> 7
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------ -----------
<S> <C>
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. Employee Stock Ownership Plan
</TABLE>
- ---------------
+ 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 150,000 shares (the "Shares") of
the Company's common stock, $0.01 par value (the "Common Stock"), pursuant to
the Monterey Resources, Inc. Employee Stock Ownership 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.
EMPLOYEE STOCK OWNERSHIP PLAN
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Section Page
- ------- ----
<S> <C>
ARTICLE I
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-1
ARTICLE II
ADMINISTRATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-1
2.1 ASSIGNMENT AND DESIGNATION OF ADMINISTRATIVE
AUTHORITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-1
2.2 ALLOCATION AND DELEGATION OF RESPONSIBILITIES . . . . . . . . . . . . . . . . . . . . . . . . . . II-1
2.3 POWERS AND DUTIES OF THE ADMINISTRATOR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-1
2.4 RECORDS AND REPORTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-3
2.5 AUDIT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-3
2.6 APPOINTMENT OF ADVISORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-4
2.7 INFORMATION FROM EMPLOYER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-4
2.8 PAYMENT OF EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-4
2.9 ACTIONS BY ADMINISTRATOR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-4
2.10 CLAIMS PROCEDURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-4
2.11 CLAIMS REVIEW PROCEDURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-5
ARTICLE III
ELIGIBILITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . III-1
3.1 CONDITIONS OF ELIGIBILITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . III-1
3.2 EFFECT OF PARTICIPATION UPON THE ACCEPTANCE OF
ANY BENEFITS UNDER THIS PLAN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . III-1
3.3 DETERMINATION OF ELIGIBILITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . III-1
3.4 TERMINATION OF ELIGIBILITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . III-1
3.5 OMISSION OF ELIGIBLE EMPLOYEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . III-1
3.6 INCLUSION OF INELIGIBLE EMPLOYEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . III-1
ARTICLE IV
CONTRIBUTIONS AND ALLOCATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . IV-1
4.1 EMPLOYER'S CONTRIBUTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . IV-1
4.2 TIME OF PAYMENT OF EMPLOYER'S CONTRIBUTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . IV-1
4.3 ALLOCATIONS AND FORFEITURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . IV-2
4.4 MAXIMUM ANNUAL ADDITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . IV-4
4.5 ADJUSTMENT FOR EXCESSIVE ANNUAL ADDITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . IV-9
4.6 DIRECTED DIVERSIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . IV-9
ARTICLE V
FUNDING AND INVESTMENT POLICY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . V-1
</TABLE>
-i-
<PAGE> 3
<TABLE>
<S> <C>
5.1 INVESTMENT POLICY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . V-1
5.2 APPLICATION OF CASH . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . V-1
ARTICLE VI
VALUATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VI-1
6.1 VALUATION OF THE TRUST FUND . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VI-1
6.2 METHOD OF VALUATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VI-1
ARTICLE VII
VESTING DETERMINATION AND DISTRIBUTION OF BENEFITS . . . . . . . . . . . . . . . . . . . . . . . . . . . . VII-1
7.1 BENEFITS UPON RETIREMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VII-1
7.2 BENEFITS UPON DEATH . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VII-1
7.3 BENEFITS UPON DISABILITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VII-2
7.4 BENEFITS UPON OTHER TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VII-2
7.5 DISTRIBUTION OF BENEFITS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VII-3
7.6 HOW PLAN BENEFITS WILL BE DISTRIBUTED . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VII-6
7.7 DISTRIBUTION FOR MINOR BENEFICIARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VII-7
7.8 LOCATION OF PARTICIPANT OR BENEFICIARY UNKNOWN . . . . . . . . . . . . . . . . . . . . . . . . . . VII-7
7.9 PUT OPTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VII-7
7.10 LIMITATIONS ON BENEFITS AND DISTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . VII-9
7.11 PAYMENT OF DISTRIBUTION DIRECTLY TO
ELIGIBLE RETIREMENT PLAN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VII-9
7.12 30-DAY WAIVER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VII-10
ARTICLE VIII
TRUSTEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VIII-1
8.1 RESPONSIBILITIES OF THE TRUSTEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VIII-1
8.2 VOTING COMPANY STOCK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VIII-1
ARTICLE IX
AMENDMENT, TERMINATIONS, AND MERGERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . IX-1
9.1 AMENDMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . IX-1
9.2 TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . IX-1
9.3 MERGER OR CONSOLIDATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . IX-2
ARTICLE X
MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . X-1
10.1 PARTICIPANT'S RIGHTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . X-1
10.2 ALIENATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . X-1
10.3 CONSTRUCTION OF PLAN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . X-1
10.4 GENDER AND NUMBER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . X-1
10.5 LEGAL ACTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . X-2
10.6 PROHIBITION AGAINST DIVERSION OF FUNDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . X-2
</TABLE>
-ii-
<PAGE> 4
<TABLE>
<S> <C>
10.7 BONDING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . X-2
10.8 RECEIPT AND RELEASE FOR PAYMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . X-3
10.9 ACTION BY THE EMPLOYER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . X-3
10.10 NAMED FIDUCIARIES AND ALLOCATION OF RESPONSIBILITY . . . . . . . . . . . . . . . . . . . . . . . . . X-3
10.11 HEADINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . X-3
10.12 APPROVAL BY INTERNAL REVENUE SERVICE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . X-3
10.13 UNIFORMITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . X-4
10.14 SECURITIES AND EXCHANGE COMMISSION APPROVAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . X-4
10.15 INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . X-4
10.16 CONTROLLING LAW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . X-4
ARTICLE XI
PARTICIPATING EMPLOYERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . XI-1
11.1 ADOPTION BY OTHER EMPLOYERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . XI-1
11.2 REQUIREMENTS OF PARTICIPATING EMPLOYERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . XI-1
11.3 DESIGNATION OF AGENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . XI-1
11.4 EMPLOYEE TRANSFERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . XI-1
11.5 PARTICIPATING EMPLOYER'S CONTRIBUTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . XI-2
11.6 AMENDMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . XI-2
11.7 DISCONTINUANCE OF PARTICIPATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . XI-2
11.8 ADMINISTRATOR'S AUTHORITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . XI-2
11.9 PARTICIPATING EMPLOYER CONTRIBUTION FOR AFFILIATE . . . . . . . . . . . . . . . . . . . . . . . . XI-3
ARTICLE XII
TOP-HEAVY STATUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . XII-1
12.1 ARTICLE CONTROLS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . XII-1
12.2 DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . XII-1
12.3 TOP-HEAVY STATUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . XII-2
12.4 TERMINATION OF TOP-HEAVY STATUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . XII-3
12.5 EFFECT OF ARTICLE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . XII-3
</TABLE>
-iii-
<PAGE> 5
MONTEREY RESOURCES, INC.
EMPLOYEE STOCK OWNERSHIP PLAN
W I T N E S S E T H:
WHEREAS, the Company desires to recognize the contributions employees
of the Employers will make to the successful operation of its parent
corporation and to reward such contributions by means of an employee stock
ownership plan for those employees who qualify as Participants hereunder; and
WHEREAS, contributions to the Plan will be made by the Employers and
such contributions made to the Plan's trust will be invested primarily in
Company Stock;
WHEREAS, the Company previously adopted the Plan to be effective as of
the Effective Date and prior to such date determined it was appropriate to
amend the Plan;
NOW, THEREFORE, as of the Effective Date the Company hereby amends and
restates the Plan for the exclusive benefit of its Participants and their
Beneficiaries under the following terms.
<PAGE> 6
ARTICLE I
DEFINITIONS
1.1 "Act" means the Employee Retirement Income Security Act of
1974, as it may be amended from time to time.
1.2 "Administrator" means the Company; the Chief Executive Officer
of the Company shall designate the persons to act on behalf of the Company
pursuant to Section 2.1 to administer the Plan.
1.3 "Affiliated Employer" means the Employer and any corporation
which is a member of a controlled group of corporations (as defined in Code
Section 414(b)) which include the Employer; any trade or business (whether or
not incorporated) which is under common control (as defined in Code Section
414(c)) with the Employer; any organization (whether or not incorporated) which
is a member of an affiliated service group (as defined in Code Section 414(m))
which includes the Employer; and any other entity required to be aggregated
with the Employer pursuant to Regulations under Code Section 414(o).
1.4 "Beneficiary" means the person to whom the share of a deceased
Participant's total account is payable.
1.5 "Code" means the Internal Revenue Code of 1986, as amended or
replaced from time to time.
1.6 "Company" means Monterey Resources, Inc. (or its successor).
1.7 "Company Stock" means common stock issued by the Company which
is readily tradeable on an established securities market. If there is no common
stock which meets the foregoing requirement, the term "Company Stock" means
common stock issued by the Company having a combination of voting power and
dividend rights equal to or in excess of: (A) that class of common stock of the
Company having the greatest voting power, and (B) that class of stock of the
Company having the greatest dividend rights. Preferred stock shall be deemed to
be "Company Stock" if such stock is convertible at any time into stock which
constitutes "Company Stock" hereunder and if such conversion is at a conversion
price which (as of the date of the acquisition by the Trust) is reasonable.
1.8 "Compensation" means, with respect to any Participant, the
total basic compensation paid by the Employers to the Participant while an
Eligible Employee during the applicable Plan Year, including any elective
salary deferral amounts excluded from income pursuant to Section 125 or 402 of
the Code , plus overtime, shift differentials and bonuses (whether cash or
stock) paid pursuant to recurring bonus programs, but excluding any special or
extraordinary bonuses. A Participant's basic compensation is the regular rate
of pay specified for his position and does not include automobile allowances,
imputed income under any group term left insurance program,
I-1
<PAGE> 7
moving expense or other reimbursements, fringe benefits or any other items of
compensation. Compensation shall be determined in accordance with the rules of
Section 414(g)(6) of the Code.
In addition to other applicable limitations set forth in the Plan, and
notwithstanding any other provision of the Plan to the contrary, the annual
compensation of each Employee taken into account under the Plan shall not
exceed the "OBRA '93 Annual Compensation Limit." The "OBRA '93 Annual
Compensation Limit" is $160,000, as adjusted for increases in the cost of
living in accordance with Code Section 401(a)(17)(B). The cost of living
adjustment in effect for a calendar year applies to any period, not exceeding
12 months, over which compensation is determined ("Determination Period")
beginning in such calendar year. If a Determination Period consists of fewer
than 12 months, the "OBRA '93 Annual Compensation Limit" will be multiplied by
a fraction, the numerator of which is the number of months in the Determination
Period, and the denominator of which is 12. Any reference in this Plan to the
limitation under Code Section 401(a)(17) shall mean the "OBRA '93 Annual
Compensation Limit" set forth in this Section.
1.9 "Effective Date" means date the Company ceases to be a
subsidiary of Santa Fe Energy Resources, Inc.
1.10 "Eligible Employee" means any Employee of an Employer who (1)
is not (i) a Leased Employee or (ii) a nonresident alien with no U.S. source
income and (2) has satisfied the provisions of Section 3.1; provided, however,
Employees whose employment is governed by the terms of a collective bargaining
agreement between employee representatives and the Employer will not be
eligible to participate in this Plan unless such agreement expressly provides
for such coverage in this Plan. In addition, any person who is treated as an
independent contractor by the Employer and is subsequently determined to have
been an Employee, shall not be in the Eligible Class until such subsequent
determination.
1.11 "Employee" means any person who is an employee of the Employer
or an Affiliated Employer as defined in Code Section 3121(d). Employee shall
also include Leased Employees, except when they are not required to be treated
as employees for Plan purposes by the Code.
1.12 "Employer" means the Company and any Participating Employer
(as defined in Section 11.1) which shall adopt this Plan, and any successor
which shall maintain this Plan.
1.13 "Employer Contributions" means the Employer's contributions to
the Plan.
1.14 "ESOP" means an employee stock ownership plan that meets the
requirements of Code Section 409.
1.15 "Family Member" means an individual described in Code Section
414(q)(6)(B).
1.16 "Fiduciary" means any person who (a) exercises any
discretionary authority or discretionary control respecting management of the
Plan or exercises any authority or control
I-2
<PAGE> 8
respecting management or disposition of its assets, (b) renders investment
advice for a fee or other compensation, direct or indirect, with respect to any
monies or other property of the Plan or has any authority or responsibility to
do so, or (c) has any discretionary authority or discretionary responsibility
in the administration of the Plan.
1.17 "Forfeiture" means that portion of a Participant's Account
that is not Vested in accordance with the provisions of Section 7.4, on account
of the Participant's termination of employment before full vesting.
1.18 "Former Participant" means a person who has been a
Participant, but who has ceased to be a Participant for any reason.
1.19 "415 Compensation" means compensation as defined in Section
4.4(e).
1.20 "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
(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.
1.21 "Highly Compensated Participant" means any Highly Compensated
Employee who is eligible to participate in the Plan.
1.22 "Hour of Service" means (1) each hour for which an Employee is
directly or indirectly compensated or entitled to compensation by the Employer
or an Affiliated Employer for the performance of duties during the applicable
computation period; (2) each hour for which an Employee is directly or
indirectly compensated or entitled to compensation by the Employer or an
Affiliated Employer (irrespective of whether the employment relationship has
terminated) for reasons other than performance of duties (such as vacation,
holidays, sickness, jury duty, disability, lay-off, military duty, or leave of
absence) during the applicable computation period; and (3) each hour for which
back pay is awarded or agreed to by the Employer or Affiliated Employer without
I-3
<PAGE> 9
regard to mitigation of damages. An Employee shall be credited with 95 Hours of
Service for each semimonthly period the Employee is credited with at least one
Hour of Service.
Notwithstanding the above, (i) no more than 501 Hours of Service are
required to be credited to an Employee on account of any single continuous
period during which the Employee performs no duties (whether or not such period
occurs in a single computation period); (ii) an hour for which an Employee is
directly or indirectly paid, or entitled to payment, on account of a period
during which no duties are performed is not required to be credited to the
Employee if such payment is made or due under a plan maintained solely for the
purpose of complying with applicable worker's compensation, or unemployment
compensation or disability insurance laws; and (iii) Hours of Service are not
required to be credited for a payment which solely reimburses an Employee for
medical or medically related expenses incurred by the Employee.
For purposes of this Section, a payment shall be deemed to be made by
or due from the Employer or Affiliated Employer regardless of whether such
payment is made by or due from the Employer directly, or indirectly through,
among others, a trust fund, or insurer, to which the Employer or Affiliated
Employer contributes or pays premiums and regardless of whether contributions
made or due to the trust fund, insurer, or other entity are for the benefit of
particular Employees or are on behalf of a group of Employees in the aggregate.
An Hour of Service must be counted for the purpose of determining a
Year of Service, a 1-Year Break in Service, and employment commencement date
(or reemployment commencement date). The provisions of Department of Labor
regulations 2530.200b-2(b) and (c) are incorporated herein by reference.
1.23 "Investment Manager" means an entity that (a) has the power to
manage, acquire, or dispose of Plan assets and (b) acknowledges fiduciary
responsibility to the Plan in writing. Such entity must be a person, firm, or
corporation registered as an investment adviser under the Investment Advisers
Act of 1940, a bank, or an insurance company.
1.24 "Key Employee" means an Employee as defined in Code Section
416(i) and the Regulations thereunder. Generally, any Employee or Former
Employee (as well as each of his Beneficiaries) is considered a Key Employee if
he, at any time during the Plan Year or any of the preceding four Plan Years,
has been included in one of the following categories:
(a) an officer of the Employer (as that term is defined
within the meaning of the Regulations under Code Section 416) having
annual "415 Compensation" greater than 50% of the amount in effect
under Code Section 415(b)(1)(A) for any such Plan Year;
(b) one of the ten Employees having annual "415
Compensation" from the Employer for a Plan Year greater than the
dollar limitation in effect under Code Section 415(c)(1)(A) for the
calendar year in which such Plan Year ends and owning (or considered
I-4
<PAGE> 10
as owning within the meaning of Code Section 318) both more than
one-half percent interest and the largest interests in the Employer;
(c) a "five percent owner" of the Employer. "Five percent
owner" means any person who owns (or is considered as owning within
the meaning of Code Section 318) more than 5% of the outstanding stock
of the Employer or stock possessing more than 5% of the total combined
voting power of all stock of the Employer, or, in the case of an
unincorporated business, any person who owns more than 5% of the
capital or profits interest in the Employer. In determining percentage
ownership hereunder, Employers that would otherwise be aggregated
under Code Sections 414(b), (c), (m) and (o) shall be treated as
separate employers; or
(d) a "one percent owner" of the Employer having an
annual "415 Compensation" from the Employer of more than $150,000.
"One percent owner" means any person who owns (or is considered as
owning within the meaning of Code Section 318) more than 1% of the
outstanding stock of the Employer or stock possessing more than 1% of
the total combined voting power of all stock of the Employer, or, in
the case of an unincorporated business, any person who owns more than
1% of the capital or profits interest in the Employer. In determining
percentage ownership hereunder, Employers that would otherwise be
aggregated under Code Sections 414(b), (c), (m) and (o) shall be
treated as separate Employers. However, in determining whether an
individual has "415 Compensation" of more than $150,000, "415
Compensation" from each employer required to be aggregated under Code
Sections 414(b), (c), (m) and (o) shall be taken into account.
For purposes of this Section, the determination of "415 Compensation"
shall be based only on "415 Compensation" which is actually paid and shall be
made by including amounts which are contributed by the Employer pursuant to a
salary reduction agreement and which are not includible in the gross income of
the Participant under Code Sections 125, 402(e)(3), 402(h), 403(b) or 457, and
Employee contributions described in Code Section 414(h)(2) that are treated as
Employer contributions.
1.25 "Leased Employee" means any person who would be within the
meaning of Code Section 414(n)(2).
1.26 "Non-Highly Compensated Employee" means any Employee or former
Employee who is not a Highly Compensated Employee nor a Family Member.
1.27 "Non-Highly Compensated Participant" means any Participant or
Former Participant who is neither a Highly Compensated Participant nor a Family
Member.
1.28 "Non-Key Employee" means any Employee or former Employee (and
his Beneficiaries) who is not a Key Employee.
I-5
<PAGE> 11
1.29 "Normal Retirement Age" means the later of the Participant's
65th birthday or the fifth anniversary of the date his participation in the
Plan commenced.
1.30 "1-Year Break in Service" means the applicable computation
period of 12 consecutive months during which an Employee fails to complete more
than 500 Hours of Service. Further, solely for the purpose of determining
whether a Participant has incurred a 1-Year Break in Service, Hours of Service
shall be recognized for "authorized leaves of absence" and "maternity and
paternity leaves of absence."
An Employee shall not be deemed to have incurred a 1-Year Break in
Service if he completes an Hour of Service within 12 months following the last
day of the month during which his employment terminated.
"Authorized leave of absence" means an unpaid, temporary cessation
from active employment with the Employer or Affiliated Employer pursuant to an
established nondiscriminatory policy, whether occasioned by illness, military
service, or any other reason.
A "maternity or paternity leave of absence" means an absence from work
for any period by reason of the Employee's pregnancy, birth of the Employee's
child, placement of a child with the Employee in connection with the adoption
of such child, or any absence for the purpose of caring for such child for a
period immediately following such birth or placement. For this purpose, Hours
of Service shall be credited for the computation period in which the absence
from work begins, only if credit therefor is necessary to prevent the Employees
from incurring a 1-Year Break in Service, or, in any other case, in the
immediately following computation period.
1.31 "Participant" means any Eligible Employee who participates in
the Plan pursuant to Section 3.1. It shall also include, when the context so
requires, any former Eligible Employee who continues to have an account balance
under the Plan.
1.32 "Participant's Account" means the account established and
maintained by the Administrator for each Participant to reflect his total
interest in the Plan and Trust, which shall include the shares of Company Stock
and any other assets allocated to his account.
1.33 "Plan" means this instrument, including all amendments
thereto.
1.34 "Plan Year" means the calendar year, which shall also be the
limitation year for purposes of Code Section 415; provided, however, the
initial Plan Year shall be a short year beginning on the Effective Date.
1.35 "Regulation" means the Income Tax Regulations as promulgated
by the Secretary of the Treasury or his delegate, and as amended from time to
time.
I-6
<PAGE> 12
1.36 "Retirement" means a Participant's ceasing to be an Employee
on or after reaching age 55 and completing 10 or more Years of Service.
1.37 "Top Heavy Plan" means a plan described in Article XII.
1.38 "Top Heavy Plan Year" means a Plan Year during which the Plan
is a Top Heavy Plan.
1.39 "Total and Permanent Disability" means, as determined by the
Administrator, a Participant's complete inability to substantially perform each
of the material duties of any gainful occupation for which the Participant is
reasonably qualified by reason of his education, training or experience, which
condition is reasonably expected to continue for an extended period of time.
1.40 "Trust" means the trust established under the Trust Agreement
to hold and invest contributions made under the Plan and from which the Plan
benefits will be distributed.
1.41 "Trust Agreement" means the agreement entered into between the
Company and the Trustee establishing a trust to hold and invest contributions
made under the Plan and from which benefits will be distributed.
1.42 "Trust Fund" means the assets of the Plan and Trust as the
same shall exist from time to time.
1.43 "Trustee" means the person or entity named as trustee herein
or in any separate trust forming a part of this Plan, and any successors.
1.44 "Valuation Date" means each business day of each Plan Year.
1.45 "Vested" means the portion of a Participant's Account that is
nonforfeitable.
1.46 "Year of Service" means a Plan Year during which an Employee
has at least 1,000 Hours of Service. For any short Plan Year, the determination
of whether an Employee has completed a Year of Service shall be made in
accordance with Department of Labor Regulation 2530.203-2(c). In addition,
Years of Service recognized under the Company's 401(k) plan on the Effective
Date shall be recognized under this Plan.
I-7
<PAGE> 13
ARTICLE II
ADMINISTRATION
2.1 ASSIGNMENT AND DESIGNATION OF ADMINISTRATIVE AUTHORITY
(a) The Chief Executive Officer of the Company ("CEO")
shall appoint one or more persons to carry out the duties of the
Company as the Administrator. Any person, including, but not limited
to, the Employees, shall be eligible to serve in this capacity. Any
person so appointed may resign by delivering his written resignation
to the Company or be removed by the CEO by delivery of written notice
of removal, to take effect at a date specified therein, or upon
delivery to the CEO if no date is specified.
(b) The CEO, upon the resignation or removal of an
appointed person, may designate in writing a successor to this
position.
(c) The CEO shall be empowered to appoint and remove an
appointed person from time to time as it deems necessary for the
proper administration of the Plan to assure that the Plan is being
operated for the exclusive benefit of the Participants and their
Beneficiaries in accordance with the terms of the Plan, the Code, and
the Act.
(d) The CEO shall periodically review the performance of
the persons appointed or other person to whom duties have been
delegated or allocated by it under the provisions of this Plan or
pursuant to procedures established hereunder. This requirement may be
satisfied by formal periodic review by the CEO or by a qualified
person specifically designated by the CEO, through day-to-day conduct
and evaluation, or through any other appropriate method.
2.2 ALLOCATION AND DELEGATION OF RESPONSIBILITIES
If more than one person is appointed to act on behalf of the
Administrator, the CEO may designate the responsibilities of each person as may
be specified by the CEO and accepted in writing by each person. In the event
that no such delegation is made by the CEO, such persons may allocate the
responsibilities among themselves, in which event they shall notify the CEO and
the Trustee in writing of such action and specify the responsibilities of each
such persons. The Trustee thereafter shall accept and rely upon any documents
executed by the Administrator until such time as the CEO or the Administrator
files with the Trustee a written revocation of such designation.
2.3 POWERS AND DUTIES OF THE ADMINISTRATOR
The primary responsibility of the Administrator is to administer the
Plan for the exclusive benefit of the Participants and their Beneficiaries,
subject to the specific terms of the Plan. The Administrator shall administer
the Plan in accordance with its terms and shall have the power to determine all
questions arising in connection with the administration, interpretation, and
application
II-1
<PAGE> 14
of the Plan. Any such determination by the Administrator shall be conclusive
and binding upon all persons. The Administrator may establish procedures,
correct any defect, supply any information, or reconcile any inconsistency in
such manner and to such extent as shall be deemed necessary or advisable to
carry out the purpose of the Plan; provided, however, that any procedure,
discretionary act, interpretation or construction shall be done in a
nondiscriminatory manner based upon uniform principles consistently applied and
shall be consistent with the intent that the Plan shall continue to be deemed a
qualified plan under the terms of Code Section 401(a), and shall comply with
the terms of the Act and all regulations issued pursuant thereto. The
Administrator shall have all powers necessary or appropriate to accomplish his
duties under this Plan.
The Administrator shall be charged with the duties of the general
administration of the Plan, including, but not limited to, the following:
(a) to determine all questions relating to the
eligibility of Employees to participate or remain a Participant
hereunder;
(b) to compute, certify, and direct the Trustee with
respect to the amount and the kind of benefits to which any
Participant shall be entitled hereunder;
(c) to authorize and direct the Trustee with respect to
all disbursements from the Trust;
(d) to maintain all necessary records for the
administration of the Plan;
(e) to interpret the provisions of the Plan and to make
and publish such rules for regulation of the Plan as are consistent
with the terms hereof;
(f) to determine the size and type of any contract to be
purchased from any insurer, and to designate the insurer from which
such contract shall be purchased;
(g) to compute and certify to the Employer from time to
time the sums of money and/or shares of Company Stock necessary or
desirable to be contributed to the Trust Fund;
(h) to establish a "funding policy and method", i.e., it
shall consult with the Employer, and it shall determine whether the
Plan has a short range need for liquidity (e.g., to pay benefits) or
whether liquidity is a long range goal and investment growth (and
stability of same) is a more current need, or shall appoint a
qualified person to do so. Such "funding policy and method" shall be
consistent with the objectives of this Plan and with the requirements
of Title I of the Act;
(i) to establish and communicate to Participants a
procedure and method to insure that each Participant will vote Company
Stock allocated to such Participant's Company Stock Account pursuant
to Section 8.2; and
II-2
<PAGE> 15
(j) to assist any Participant regarding his rights,
benefits, or elections available under the Plan.
2.4 RECORDS AND REPORTS
The Administrator shall keep a record of all actions taken and shall
keep all other books of account, records, and other data that may be necessary
for proper administration of the Plan and shall be responsible for supplying
all information and reports to the Internal Revenue Service, Department of
Labor, Participants, Beneficiaries and others as required by law.
2.5 AUDIT
(a) If an audit of the Plan's records shall be required
by the Act and the regulations thereunder for any Plan Year, the
Administrator shall appoint an independent qualified public accountant
for that purpose. Such accountant shall, after an audit of the books
and records of the Plan in accordance with generally accepted auditing
standards, within a reasonable period after the close of the Plan
Year, furnish to the Administrator and the Trustee a report of his
audit setting forth his opinion as to whether each of the following
statements, schedules or lists, or any others that are required by
Section 103 of the Act or the Secretary of Labor to be filed with the
Plan's annual report, are presented fairly and in conformity with
generally accepted accounting principles applied consistently:
(1) statement of the assets and liabilities of
the Plan;
(2) statement of changes in net assets available
to the Plan;
(3) statement of receipts and disbursements, a
schedule of all assets held for investment purposes, a
schedule of all loans or fixed income obligations in default
at the close of the Plan Year;
(4) a list of all leases in default or
uncollectible during the Plan Year;
(5) the most recent annual statement of assets
and liabilities of any bank common or collective trust fund in
which Plan assets are invested or such information regarding
separate accounts or trusts with a bank or insurance company
as the Administrator deems necessary; and
(6) a schedule of each transaction or series of
transactions involving an amount in excess of 5% of Plan
assets.
(b) If some or all of the information necessary to enable
the Administrator to comply with Section 103 of the Act is maintained
by a bank, insurance company, or similar institution, regulated and
supervised and subject to periodic examination by a state or federal
II-3
<PAGE> 16
agency, it shall transmit and certify the accuracy of that information
to the Administrator as provided in Section 103(b) of the Act within
120 days after the end of the Plan Year or such other date as may be
prescribed under regulations of the Secretary of Labor.
2.6 APPOINTMENT OF ADVISORS
The Administrator may appoint counsel, specialists, advisors, and
other persons as the Administrator deems necessary or desirable in connection
with the administration of this Plan.
2.7 INFORMATION FROM EMPLOYER
To enable the Administrator to perform his functions, the Employer
shall supply full and timely information to the Administrator on all matters
relating to the Compensation of all Participants, their Hours of Service, their
Years of Service, their retirement, death, disability, or termination of
employment, and such other pertinent facts as the Administrator may require;
and the Administrator shall advise the Trustee of such of the foregoing facts
as may be pertinent to the Trustee's duties under the Plan. The Administrator
may rely upon such information as is supplied by the Employer and shall have no
duty or responsibility to verify such information.
2.8 PAYMENT OF EXPENSES
All expenses of administration may be paid out of the Trust Fund
unless voluntarily paid by the Employer. Such expenses shall include any
expenses incident to the functioning of the Administrator, including, but not
limited to, fees of accountants, counsel, the Trustee and other specialists and
their agents, and other costs of administering the Plan and/or the Trust. Until
paid, the expenses shall constitute a liability of the Trust Fund. However, the
Employer may reimburse the Trust Fund for any administration expense incurred.
Any administration expense paid to the Trust Fund as a reimbursement shall not
be considered an Employer contribution.
2.9 ACTIONS BY ADMINISTRATOR
The Administrator shall hold meetings upon such notice and at such
time and places as it may from time to time determine. Notice to a member shall
not be required if waived in writing by that member. A majority of the members
of the Administrator duly appointed shall constitute a quorum for the
transaction of business. All resolutions or other actions taken by the
Administrator at any meeting where a quorum is present shall be by vote of a
majority of those present at such meeting and entitled to vote. Resolutions may
be adopted or other action taken without a meeting upon written consent signed
by all of the Administrators.
2.10 CLAIMS PROCEDURE
Claims for benefits under the Plan must be filed with the
Administrator in writing. Written notice of the disposition of a claim shall be
furnished to the claimant within 90 days after the
II-4
<PAGE> 17
application is filed. In the event the claim is denied, the reasons for the
denial shall be specifically set forth in the notice in language calculated to
be understood by the claimant, pertinent provisions of the Plan shall be cited,
and, where appropriate, an explanation as to how the claimant can perfect the
claim will be provided. In addition, the claimant shall be furnished with an
explanation of the Plan's claims review procedure.
2.11 CLAIMS REVIEW PROCEDURE
Any Employee, Former Employee, or Beneficiary of either, who has been
denied a benefit by a decision of the Administrator pursuant to Section 2.10
shall be entitled to request the Administrator to give further consideration to
his claim by filing with the Administrator (on a form which may be obtained
from the Administrator) a request for a hearing. Such request, together with a
written statement of the reasons why the claimant believes his claim should be
allowed, shall be filed with the Administrator no later than 60 days after
receipt of the written notification provided for in Section 2.10. The
Administrator shall then conduct a hearing within the next 60 days, at which
the claimant may be represented by an attorney or any other representative of
his choosing and at which the claimant shall have an opportunity to submit
written and oral evidence and arguments in support of his claim. At the hearing
(or prior thereto upon 5 business days written notice to the Administrator) the
claimant or his representative shall have an opportunity to review all
documents in the possession of the Administrator which are pertinent to the
claim at issue and its disallowance. Either the claimant or the Administrator
may cause a court reporter to attend the hearing and record the proceedings. In
such event, a complete written transcript of the proceedings shall be furnished
to both parties by the court reporter. The full expense of any such court
reporter and such transcripts shall be borne by the party causing the court
reporter to attend the hearing. A final decision as to the allowance of the
claim shall be made by the Administrator within 60 days of receipt of the
appeal (unless there has been an extension of 60 days due to special
circumstances, provided the delay and the special circumstances occasioning it
are communicated to the claimant within the 60 day period). Such communication
shall be written in a manner calculated to be understood by the claimant and
shall include specific reasons for the decision and specific references to the
pertinent Plan provisions on which the decision is based.
II-5
<PAGE> 18
ARTICLE III
ELIGIBILITY
3.1 CONDITIONS OF ELIGIBILITY
Each Employee who is an Eligible Employee on the Effective Date shall
automatically participate in the Plan commencing on the Effective Date. All
other Employees shall automatically become Participants as of the date they
become an Eligible Employee.
3.2 EFFECT OF PARTICIPATION UPON THE ACCEPTANCE OF ANY BENEFITS
UNDER THIS PLAN
An Eligible Employee shall automatically be bound by the terms and
conditions of the Plan and all amendments hereto.
3.3 DETERMINATION OF ELIGIBILITY
The Administrator shall determine the eligibility of each Employee for
participation in the Plan based upon information furnished by the Employer.
Such determination shall be conclusive and binding upon all persons, as long as
the same is made pursuant to the Plan and the Act. Such determination shall be
subject to review as provided for in Section 2.8 and 2.9.
3.4 TERMINATION OF ELIGIBILITY
In the event a Participant shall cease to be an Eligible Employee but
continue to be an Employee, such Participant shall continue to vest in his
interest in the Plan for each Year of Service completed while an Employee.
Additionally, his interest in the Plan shall continue to share in the
earnings/losses of the Trust Fund.
3.5 OMISSION OF ELIGIBLE EMPLOYEE
If, in any Plan Year, any Eligible Employee who should be included as
a Participant in the Plan is erroneously omitted and discovery of such omission
is not made until after a contribution by his Employer for the year has been
made, the Employer shall make a subsequent contribution with respect to the
omitted Eligible Employee in the amount which the Employer would have
contributed with respect to him had he not been omitted.
3.6 INCLUSION OF INELIGIBLE EMPLOYEE
If, in any Plan Year, any person who should not have been included as
a Participant in the Plan is erroneously included and discovery of such
incorrect inclusion is not made until after a contribution for the year has
been made, the Employer shall not be entitled to recover the contribution made
with respect to the ineligible person regardless of whether or not a deduction
is
III-1
<PAGE> 19
allowable with respect to such contribution. In such event, the amount
contributed with respect to the ineligible person shall constitute a Forfeiture
for the Plan Year in which the discovery is made.
III-2
<PAGE> 20
ARTICLE IV
CONTRIBUTIONS AND ALLOCATIONS
4.1 EMPLOYER'S CONTRIBUTION
(a) Subject to paragraph (b) below, Section 4.3(g) and
Section 4.4, as of the last day of each Plan Year the Employer shall
contribute to the Plan the following percentage of Compensation for
each "eligible" Participant, based on the Participant's Years of
Service as of the end of the Plan Year (as provided in Section 4.3
(b)):
<TABLE>
<CAPTION>
PARTICIPANT'S YEARS OF SERVICE PERCENTAGE OF COMPENSATION
------------------------------ --------------------------
<S> <C>
less than 5 4%
5, but less than 10 7%
10, but less than 20 10%
20 or more 13%
</TABLE>
provided, however, if for any Plan Year the above contribution levels
would fail to satisfy the nondiscrimination requirements of Code
Section 401(a)(4), the Company, in its discretion, may establish a
"minimum" contribution for one or more groups of nonhighly compensated
employees for such year (such minimum amount may be changed from year
to year) in an amount, which when aggregated with the above
contributions, will satisfy the nondiscrimination requirements of Code
Section 401(a)(4).
(b) The Employer Contribution for any Plan Year shall not
exceed the maximum amount allowable as a deduction to the Employer
under the provisions of Code Section 404; provided however, to the
extent necessary to provide the top heavy minimum allocations, the
Employer shall make a contribution even if it exceeds the amount which
is deductible under Code Section 404.
4.2 TIME OF PAYMENT OF EMPLOYER'S CONTRIBUTION
Employer Contributions will be paid in cash and/or in Company Stock as
the Company's Board of Directors or its delegatees may from time to time
determine. Company Stock will be valued at its then fair market value. The
Employer Contribution with respect to a Plan Year will be paid to the Plan in
all events on or before the date required to make such contribution a deduction
on the Employer's federal income tax return for the year.
IV-1
<PAGE> 21
4.3 ALLOCATIONS AND FORFEITURES
(a) The Administrator shall establish and maintain a
Participant's Account in the name of each Participant to which the
Administrator shall credit or cause to be credited all amounts
allocated to each such Participant as set forth herein. However, the
Administrator may separately account for that portion of each
Participant's Account attributable to Top Heavy Plan Years.
(b) The Employer shall provide the Administrator with all
information required by the Administrator to make a proper allocation
of the Employer Contribution for each Plan Year. As soon as reasonably
practicable after the date of receipt by the Administrator for such
information, the Administrator shall allocate the Employer
Contribution to each eligible Participant (as provided below).
Notwithstanding anything in this Article IV to the contrary, a
Participant who is not an Employee on the last day of the Plan Year
shall not receive an Employer Contribution for that year, unless (1)
otherwise required pursuant to the "top heavy" rules of Section 4.3(h)
or (2) his employment with the Affiliated Employers terminated during
the Plan Year due to death, Total and Permanent Disability or
Retirement.
(c) Cash dividends on Company Stock may, in the sole
discretion of the CEO or his designee, be reinvested in Company Stock
or distributed to the Participant pursuant to Code Section 404(h).
(d) Dividends shall be allocated as of the Valuation Date
they are received. If the Trust Fund is invested in any assets other
than Common Stock, any such earnings or losses (net appreciation or
net depreciation) of the Trust Fund shall be allocated in the same
proportion that each Participant's Account bears to the total of all
Participants' Accounts as of such date. Earnings or losses include the
increase (or decrease) in the fair market value of assets of the Trust
Fund (other than Company Stock) since the preceding Valuation Date.
(e) The Administrator shall establish or cause to be
established recordkeeping procedures for the purpose of making the
allocations, valuations and adjustments to Participants' Accounts
provided for in this Section. Should the Administrator determine that
the strict application of its procedures shall not result in an
equitable and nondiscriminatory allocation among the Participants'
Accounts, it may modify its procedures for the purpose of achieving an
equitable and nondiscriminatory allocation in accordance with the
general concepts of the Plan and the provisions of this Section,
provided, however, that such adjustments to achieve equity shall not
reduce the Vested portion of a Participant's Account.
(f) Separate accounts shall be maintained for all
Participants. Such separate accounts shall not require a segregation
of the Plan assets and no Participant shall acquire
IV-2
<PAGE> 22
any right to or interest in any specific asset of the Trust as a
result of the allocations provided for in the Plan.
(g) As of the last Valuation Date in the Plan Year any
amounts which became Forfeitures since the prior Plan Year shall first
be applied to reinstate any previously forfeited account balances of
rehired Former Participants, if any, that may be required to be
reinstated under the further terms of the Plan. The remaining
Forfeitures, if any, shall be applied as an Employer Contribution for
such year and shall reduce the amount of the Employer Contribution for
such year.
(h) Minimum Allocations Required for Top Heavy Plan
Years: Notwithstanding the foregoing, for any Top Heavy Plan Year, the
sum of the Employer Contributions and Forfeitures allocated to the
Participant's Account for each Non-Key Employee shall be equal to at
least 3% of such Non-Key Employee's "415 Compensation" (reduced by
contributions and forfeitures, if any, allocated to each Non-Key
Employee in any defined contribution plan included with this plan in a
Required Aggregation Group). However, if (i) the sum of the Employer
Contributions and Forfeitures allocated to the Participant's Account
of each Key Employee for such Top Heavy Plan Year is less than 3% of
each Key Employee's "415 Compensation" and (ii) this Plan is not
required to be included in an Aggregation Group to enable a defined
benefit plan to meet the requirements of Code Sections 401(a)(4) or
410, the sum of the Employer Contributions and Forfeitures allocated
to the Participant's Account of each Non-Key Employee shall be equal
to the largest percentage allocated to the Participant's Account of
any Key Employee. Except, however, no such minimum allocation shall be
required in this Plan for any Non-Key Employee who participates in
another defined contribution plan subject to Code Section 412
providing such benefits included with this Plan in a Required
Aggregation Group.
(i) For purposes of the minimum allocations set forth
above the percentage allocated to the Participant's Account of any Key
Employee shall be equal to the ratio of the sum of the Employer
Contributions allocated on behalf of such Key Employee divided by the
"415 Compensation" for such Key Employee.
(j) For any Top Heavy Plan Year, the minimum allocations
set forth above shall be allocated to the Participant's Account of all
Non-Key Employees who are Participants and who are employed by the
Employer on the last day of the Plan Year, including Non-Key Employees
who have (1) failed to complete a Year of Service; (2) declined to
make mandatory contributions (if required) or elective deferrals to
the Plan; and (3) been excluded from participation because of their
level of Compensation.
(k) In lieu of the above, in any Plan Year in which a
Non-Key Employee is a Participant in both this Plan and a defined
benefit pension plan included in a Required Aggregation Group which is
top heavy, the Employer shall not be required to provide such
IV-3
<PAGE> 23
Non-Key Employee with both the full separate defined benefit plan
minimum benefit and the full separate defined contribution plan
minimum allocation.
Therefore, for any Plan Year when the Plan is a Top Heavy
Plan, Non-Key Employees who are participating in this Plan and a
defined benefit plan maintained by the Employer shall receive a
minimum monthly accrued benefit in the defined benefit plan equal to
the product of (1) 1/12th of "415 Compensation" averaged over a five
consecutive "limitation years" (or actual "limitation years" if less)
which produce the highest average and (2) the lesser of (i) 2%
multiplied by Years of Service when the plan is top heavy or (ii) 20%.
(l) For the purposes of this Section, "415 Compensation"
shall be as defined in Section 4.4(e), and shall be limited to
$160,000 in all Plan Years (unless adjusted in such manner as
permitted under Code Section 401(a)(17).
(m) If a Former Participant is reemployed after five
consecutive 1-Year Breaks in Service, then separate accounts shall be
maintained as follows:
(1) one account for nonforfeitable benefits
attributable to pre-break service; and
(2) one account representing his status in the
Plan attributable to post-break service.
(n) Notwithstanding any provision in the 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).
4.4 MAXIMUM ANNUAL ADDITIONS
(a) Notwithstanding the foregoing, the maximum "annual
additions" credited to a Participant's accounts for any "limitation
year" shall equal the lesser of: (1) $30,000 (or, if greater,
one-fourth of the dollar limitation in effect under Code Section
415(b)(1)(A)) or (2) 25% of the Participant's "415 Compensation" for
such "limitation year".
(b) For purposes of applying the limitations of Code
Section 415, "annual additions" means the sum credited to a
Participant's accounts for any "limitation year" of (1) Employer
Contributions, (2) Employee contributions, (3) Forfeitures, (4)
amounts allocated, after March 31, 1984, to an individual medical
account, as defined in Code Section 415(l)(2) which is part of a
pension or annuity plan maintained by the Employer and (5) 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 Code Section 419A(d)(3)) under a welfare
benefit plan (as defined in Code Section 419(e)) maintained by the
IV-4
<PAGE> 24
Employer. Except, however, the "415 Compensation" percentage
limitation referred to in paragraph (a)(2) above shall not apply to:
(1) any contribution for medical benefits (within the meaning of Code
Section 419A(f)(2)) after separation from service which is otherwise
treated as an "annual addition", or (2) any amount otherwise treated
as an "annual addition" under Code Section 415(l)(1).
(c) For purposes of applying the limitations of Code
Section 415, the transfer of funds from one qualified plan to another
is not an "annual addition." In addition, the following are not
Employee contributions for the purposes of Section 4.4(b)(2): (1)
rollover contributions (as defined in Code Sections 402(a)(5),
403(a)(4), 403(b)(8) and 408(d)(3)); (2) repayments of loans made to a
Participant from the Plan; (3) repayments of distributions received by
an Employee pursuant to Code Section 411(a)(7)(B) (cash- outs); (4)
repayments of distributions received by an Employee pursuant to Code
Section 411(a)(3)(D) (mandatory contributions); and (5) Employee
contributions to a simplified employee pension excludable from gross
income under Code Section 408(k)(6).
(d) If no more than one-third of the Employer
Contributions to this Plan for a Plan Year which are deductible under
Code Section 404(a)(9) are allocated to Highly Compensated Employees,
the limitations of paragraph (a) shall not apply to Employer
Contributions to this Plan which are deductible under Code Section
404(a)(9)(B) and charged against the Participant's accounts.
(e) For purposes of applying the limitations of Code
Section 415, "415 Compensation" shall include the Participant's wages,
salaries, fees for professional services, and other amounts received
for personal services actually rendered in the course of employment
with an Employer maintaining the Plan (including, but not limited to,
commissions paid salesmen, compensation for services on the basis of a
percentage of profits, commissions on insurance premiums, tips,
bonuses, fringe benefits, and reimbursements or other expense
allowances under a nonaccountable plan (as described in Regulation
1.62-2(c)) for a Plan Year.
"415 Compensation" shall exclude (1)(A) contributions made by
the Employer to a plan of deferred compensation to the extent that,
before the application of the Code Section 415 limitations to the
Plan, the contributions are not includable in the gross income of the
Employee for the taxable year in which contributed, (B) Employer
contributions made on behalf of an Employee to a simplified employee
pension plan described in Code Section 408(k) to the extent such
contributions are excludable from the Employee's gross income, (C) any
distributions from a plan of deferred compensation; (2) amounts
realized from the exercise of a non-qualified stock option or when
restricted stock (or property) held by an Employee either becomes
freely transferable or is no longer subject to a substantial risk of
forfeiture; (3) amounts realized from the sale, exchange, or other
disposition of stock acquired under a qualified stock option; and (4)
other amounts that receive special tax benefits, such as premiums for
group term life insurance (but only to the extent that the
IV-5
<PAGE> 25
premiums are not includable in the gross income of the Employee), or
contributions made by the Employer (whether or not under a salary
reduction agreement) towards the purchase of any annuity contract
described in Code Section 403(b) (whether or not the contributions are
excludable from the gross income of the Employee). "415 Compensation"
shall be limited to $160,000 (unless adjusted in the same manner as
permitted under Code Section 415(d)).
(f) For purposes of applying the limitations of Code
Section 415, the "limitation year" shall be the Plan Year.
(g) The dollar limitation under Code Section 415(b)(1)(A)
stated in paragraph (a)(1) above shall be adjusted annually as
provided in Code Section 415(d) pursuant to the Regulations. The
adjusted limitation is effective as of January 1st of each calendar
year and is applicable to "limitation years" ending with or within
that calendar year.
(h) For the purpose of this Section, all qualified
defined benefit plans (whether terminated or not) ever maintained by
the Employer shall be treated as one defined benefit plan, and all
qualified defined contribution plans (whether terminated or not) ever
maintained by the Employer shall be treated as one defined
contribution plan.
(i) For the purpose of this Section, if the Employer is a
member of a controlled group of corporations, trades or businesses
under common control (as defined by Code Section 1563(a) or Code
Section 414(b) and (c) as modified by Code Section 415(h)), is a
member of an affiliated service group (as defined by Code Section
414(m)), or is a member of a group of entities required to be
aggregated pursuant to Regulations under Code Section 414(o), all
Employees of such Employers shall be considered to be employed by a
single Employer.
(j) For the purpose of this Section, if this Plan is a
Code Section 413(c) plan, all Employers of a Participant who maintain
this Plan will be considered to be a single Employer.
(k) (1) If a Participant participates in more than
one defined contribution plan maintained by the Employer which
have different Anniversary Dates, the maximum "annual
additions" under this Plan shall equal the maximum "annual
additions" for the "limitation year" minus any "annual
additions" previously credited to such Participant's accounts
under the other plan during the "limitation year."
(2) If a Participant participates in both a
defined contribution plan subject to Code Section 412 and a
defined contribution plan not subject to Code Section 412
maintained by the Employer which have the same Anniversary
Date, "annual additions" will be credited to the Participant's
accounts under the defined contribution plan subject to Code
Section 412 prior to crediting "annual additions"
IV-6
<PAGE> 26
to the Participant's accounts under the defined contribution
plan not subject to Code Section 412.
(3) If a Participant participates in more than
one defined contribution plan not subject to Code Section 412
maintained by the Employer which have the same Anniversary
Date, the maximum "annual additions" under this Plan shall
equal the product of (A) the maximum "annual additions" for
the "limitation year" minus any "annual additions" previously
credited under subparagraphs (1) or (2) above, multiplied by
(B) a fraction (i) the numerator of which is the "annual
additions" which would be credited to such Participant's
accounts under this Plan without regard to the limitations of
Code Section 415 and (ii) the denominator of which is such
"annual additions" for all plans described in this
subparagraph.
(l) If an Employee is (or has been) a participant in one
or more defined benefit plans and one or more defined contribution
plans maintained by the Employer, the sum of the defined benefit plan
fraction and the defined contribution plan fraction for any
"limitation year" may not exceed 1.0.
(m) The defined benefit plan fraction for any "limitation
year" is a fraction, the numerator of which is the sum of the
Participant's projected annual benefits under all the defined benefit
plans (whether or not terminated) maintained by the Employer, and the
denominator of which is the lesser of 125 percent of the dollar
limitation determined for the "limitation year" under Code Sections
415(b) and (d) or 140 percent of the highest average compensation,
including any adjustments under Code Section 415(b).
Notwithstanding the above, if the Participant was a
Participant as of the first day of the first "limitation year"
beginning after December 31, 1986, in one or more defined benefit
plans maintained by the Employer which were in existence on May 6,
1986, the denominator of this fraction will not be less than 125
percent of the sum of the annual benefits under such plans which the
Participant had accrued as of the close of the last "limitation year"
beginning before January 1, 1987, disregarding any changes in the
terms and conditions of the plan after May 5, 1986. The preceding
sentence applies only if the defined benefit plans individually and in
the aggregate satisfied the requirements of Code Section 415 for all
"limitation years" beginning before January 1, 1987.
(n) The defined contribution plan fraction for any
"limitation year" is a fraction, the numerator of which is the sum of
the annual additions to the Participant's Account under all the
defined contribution plans (whether or not terminated) maintained by
the Employer for the current and all prior "limitation years"
(including the annual additions attributable to the Participant's
nondeductible Employee contributions to all defined benefit plans,
whether or not terminated, maintained by the Employer, and the annual
additions attributable to all welfare benefit funds, as defined in
Code Section 419(e), and individual medical accounts, as defined in
Code Section 415(l)(2), maintained by the Employer), and the
denominator of
IV-7
<PAGE> 27
which is the sum of the maximum aggregate amounts for the current and
all prior "limitation years" of service with the Employer (regardless
of whether a defined contribution plan was maintained by the
Employer). The maximum aggregate amount in any "limitation year" is
the lesser of 125 percent of the dollar limitation determined under
Code Sections 415(b) and (d) in effect under Code Section 415(c)(1)(A)
or 35 percent of the Participant's Compensation for such year.
If the Employee was a participant as of the end of the first
day of the first "limitation year" beginning after December 31, 1986,
in one or more defined contribution plans maintained by the Employer
which were in existence on May 6, 1986, the numerator of this fraction
will be adjusted if the sum of this fraction and the defined benefit
fraction would otherwise exceed 1.0 under the terms of this Plan.
Under the adjustment, an amount equal to the product of (1) the excess
of the sum of the fractions over 1.0 times (2) the denominator of this
fraction, will be permanently subtracted from the numerator of this
fraction. The adjustment is calculated using the fractions as they
would be computed as of the end of the last "limitation year"
beginning before January 1, 1987, and disregarding any changes in the
terms and conditions of the Plan made after May 5, 1986, but using the
Code Section 415 limitation applicable to the first "limitation year"
beginning on or after January 1, 1987. The annual addition for any
"limitation year" beginning before January 1, 1987 shall not be
recomputed to treat all Employee contributions as annual additions.
(o) Notwithstanding the foregoing, for any "limitation
year" in which the Plan is a Top Heavy Plan, 100 percent shall be
substituted for 125 percent in paragraph (l) and (m) unless the extra
minimum allocation is being provided pursuant to Section 4.3(h).
However, for any "limitation year" in which the Plan is a Super Top
Heavy Plan, 100 percent shall be substituted for 125 percent in any
event.
(p) If the sum of the defined benefit plan fraction and
the defined contribution plan fraction shall exceed 1.0 in any
"limitation year" for any Participant in this Plan, the Administrator
shall limit, to the extent necessary, the "annual additions" to such
Participant's accounts for such "limitation year." If, after limiting
the "annual additions" to such Participant's accounts for the
"limitation year,"the sum of the defined benefit plan fraction and the
defined contribution plan fraction still exceed 1.0, the Administrator
shall then adjust the numerator of the defined benefit plan fraction
so that the sum of both fractions shall not exceed 1.0 in any
"limitation year" for such Participant.
(q) Notwithstanding anything contained in this Section to
the contrary, the limitations, adjustments and other requirements
prescribed in this Section shall at all times comply with the
provisions of Code Section 415 and the Regulations thereunder, the
terms of which are specifically incorporated herein by reference and
which to the extent they may not be applied in more than one manner
shall control over any provision in this Plan.
IV-8
<PAGE> 28
4.5 ADJUSTMENT FOR EXCESSIVE ANNUAL ADDITIONS
(a) If, as a result of the allocation of Forfeitures, a
reasonable error in estimating a Participant's Compensation or other
facts and circumstances to which Regulation 1.415-6(b)(6) shall be
applicable, the "annual additions" under this Plan would cause the
maximum "annual additions" to be exceeded for any Participant, the
Administrator shall (1) hold any "excess amount" remaining after the
return of any voluntary Employee contributions in a "Section 415
suspense account" (2) allocate and reallocate the "Section 415
suspense account" in the next "limitation year" (and succeeding
"limitation years" if necessary) to all Participants in the Plan
before any Employer or Employee contributions which would constitute
"annual additions" are made to the Plan for such "limitation year" or
(3) reduce Employer Contributions otherwise to be made to the Plan for
such affected Participant for such "limitation year" by the amount
necessary to comply with Section 415. Notwithstanding the foregoing,
if the Company maintains another defined contribution plan, the annual
addition excess amount shall be "cured" under this Plan first.
(b) For purposes of this Article, "excess amount" for any
Participant for a "limitation year" shall mean the excess, if any, of
(1) the "annual additions" which would be credited to his account
under the terms of the Plan without regard to the limitations of Code
Section 415 over (2) the maximum "annual additions" determined
pursuant to Section 415.
(c) For purposes of this Section, "Section 415 suspense
account" shall mean an unallocated account equal to the sum of "excess
amounts" for all Participants in the Plan during the "limitation
year". The "Section 415 suspense account" shall not share in any
earnings or losses of the Trust Fund.
(d) The Plan may not distribute "excess amounts" to
Participants or Former Participants.
4.6 DIRECTED DIVERSIFICATION
(a) Each "Qualified Participant" may elect within 90 days
after the close of each Plan Year during the "Qualified Election
Period" to direct the Administrator in writing to transfer in cash
(such election must be accompanied by an appropriate reinvestment
direction) 25 percent of the Participant's shares of Company Stock (to
the extent such portion exceeds the amount to which a prior election
under this subparagraph applies) to the Employer's qualified 401(k)
plan, provided that such plan offers at least three investment
options, other than a Company Stock fund, that qualify for
diversification purposes under Section 401(a)(28) of the Code. In the
case of the election year in which the Qualified Participant can make
his last election, the preceding sentence shall be applied by
substituting "50 percent" for "25 percent". If the "Qualified
Participant" elects to direct the Administrator to transfer and
reinvest his shares of Company Stock, such direction shall be
IV-9
<PAGE> 29
effective no later than 180 days after the close of the Plan Year to
which such direction applies. In lieu of so directing the
Administrator, the "Qualified Participant" may elect a distribution of
the portion of his shares of Company Stock Account covered by the
election within 90 days after the last day of the period during which
the election can be made.
(b) For the purposes of this Section the following
definitions shall apply:
(1) "Qualified Participant" means any Participant
who has completed 10 Years of Service as a Participant in this
Plan and has attained age 55.
(2) "Qualified Election Period" means the six
Plan Year period beginning with the first Plan Year in which
the Participant first became a "Qualified Participant".
IV-10
<PAGE> 30
ARTICLE V
FUNDING AND INVESTMENT POLICY
5.1 INVESTMENT POLICY
(a) The Plan is intended to be an ESOP with its assets
invested primarily in Company Stock. In that regard, up to 100% of the
Plan's asset may be invested in Company Stock.
(b) The Plan may not obligate itself to acquire Company
Stock from a particular holder thereof at an indefinite time
determined upon the happening of an event such as the death of the
holder.
(c) The Plan may not obligate itself to acquire Company
Stock under a put option binding upon the Plan. However, at the time a
put option is exercised, the Plan may be given an option to assume the
rights and obligations of the Employer under a put option binding upon
the Employer.
(d) All purchases or sales of Company Stock and the price
of such purchases or sales shall be made as the Administrator
instructs the Trustee. All purchases of Company Stock shall be made at
a price which, in the judgment of the Administrator, does not exceed
the fair market value thereof. All sales of Company Stock shall be
made at a price which, in the judgment of the Administrator, is not
less than the fair market value thereof. The valuation rules set forth
in Article VI shall be applicable.
5.2 APPLICATION OF CASH
Employer Contributions received by the Trust Fund in cash may be
applied to purchase Company Stock in the open market or from the Company or any
other person, in the Trustee's discretion.
V-1
<PAGE> 31
ARTICLE VI
VALUATIONS
6.1 VALUATION OF THE TRUST FUND
The Administrator shall direct the Trustee, as of each Valuation Date
to determine the net worth of the assets comprising the Trust Fund as it exists
on the Valuation Date prior to taking into consideration any contribution to be
allocated for that Plan Year. In determining such net worth, the Trustee shall
value the assets comprising the Trust Fund at their fair market value as of the
Valuation Date and shall deduct all expenses for which the Trustee has not yet
obtained reimbursement from the Employer or the Trust Fund.
6.2 METHOD OF VALUATION
Valuations must be made in good faith and based on all relevant
factors for determining the fair market value of securities. In the case of a
transaction between a Plan and a disqualified person, value must be determined
as of the date of the transaction. For all other Plan purposes, value must be
determined as of the most recent Valuation Date under the Plan. Company Stock
not readily tradeable on an established securities market shall be valued by an
independent appraiser appointed by the Administrator meeting requirements
similar to the requirements of the Regulations prescribed under Code Section
170(a)(1).
VI-1
<PAGE> 32
ARTICLE VII
VESTING DETERMINATION AND DISTRIBUTION OF BENEFITS
7.1 BENEFITS UPON RETIREMENT
A Participant who terminates his employment due to his Retirement
shall be entitled to receive the entire balance (100%) of his Participant's
Account.
7.2 BENEFITS UPON DEATH
(a) Upon the death of a Participant before termination of
his employment with the Affiliated Employers, the Participant's
Beneficiary shall be entitled to receive the entire balance (100%) of
the Participant's Account. Upon the death of a Participant after he
ceases to be an Employee, his Beneficiary shall be entitled to only
his Vested account, determined as of his date of death.
(b) The Administrator may require such proper proof of
death and such evidence of the right of any person to receive payment
of the value of the account of a deceased Participant as the
Administrator may deem desirable. The Administrator's determination of
death and of the right of any person to receive payment shall be
conclusive.
(c) The Beneficiary of the death benefit payable pursuant
to this Section shall be the Participant's spouse; provided, however,
the Participant may designate a Beneficiary other than his spouse only
if:
(1) the spouse has waived her right to be the
Participant's Beneficiary, or
(2) the Participant has no spouse, or
(3) the spouse cannot be located.
In such event, the designation of a Beneficiary shall be made on a
form provided by the Administrator. A Participant may at any time
revoke his designation of a Beneficiary or change his Beneficiary by
filing written notice of such revocation or change with the
Administrator. However, the Participant's spouse must again consent in
writing to any such change or revocation unless the original consent
acknowledged that the spouse had the right to limit consent only to a
specific Beneficiary and that the spouse voluntarily elected to
relinquish such right. In the event no valid designation of
Beneficiary exists at the time of the Participant's death, the death
benefit shall be payable to his estate. In the event of a divorce,
such divorce shall automatically rescind any designation of such
former spouse as the Participant's Beneficiary under the Plan except
to the extent provided otherwise in a qualified domestic relations
order.
VII-1
<PAGE> 33
(d) Any consent by the Participant's spouse to waive any
rights to the death benefit must be in writing, must acknowledge the
effect of such waiver, and be witnessed by a Plan representative or a
notary public. Further, the spouse's consent must be irrevocable and
must acknowledge the specific nonspouse Beneficiary.
7.3 BENEFITS UPON DISABILITY
In the event a Participant ceases to be an Employee due to a Total and
Permanent Disability, such Participant shall be entitled to the entire balance
(100%) of his Participant's Account.
7.4 BENEFITS UPON OTHER TERMINATION
(a) Each Participant whose employment is terminated for
any reason other than Total and Permanent Disability, Retirement, or
death shall be entitled to his Vested interest in his Participant's
Account.
(b) For purposes of this Section, a Participant's Vested
interest in his Participant's Account shall be determined by such
Participant's Years of Service in accordance with the following
schedule:
<TABLE>
<CAPTION>
Years of Service Vested Interest
---------------- ---------------
<S> <C>
Less than 1 year 0%
1 year 20%
2 years 40%
3 years 60%
4 years 80%
5 years or more 100%
</TABLE>
(c) The computation of a Participant's nonforfeitable
percentage of his interest in the Plan shall not be reduced as the
result of any direct or indirect amendment to this Article. In the
event that the Plan is amended to change or modify any vesting
schedule, a Participant with a least three Years of Service as of the
expiration date of the election period may elect to have his
nonforfeitable percentage computed under the Plan without regard to
such amendment. If a Participant fails to make such election, then
such Participant shall be subject to the new vesting schedule. The
Participant's election period shall commence on the adoption date of
the amendment and shall end 60 days after the latest of:
(1) the adoption date of the amendment,
(2) the effective date of the amendment, or
VII-2
<PAGE> 34
(3) the date the Participant receives written
notice of the amendment from the Employer or Administrator.
(d) Paragraph (b) above not withstanding, a Participant
shall have a 100% Vested interest in his Participant's Account upon
attainment of his Normal Retirement Age as an Employee.
(e) (1) If any Former Participant shall be reemployed
by the Employer before five consecutive 1-Year Breaks in
Service, and such Former Participant had received a
distribution of his entire Vested interest prior to his
reemployment, his forfeited account shall be reinstated only
if he repays the full amount distributed to him before the
earlier of five years after the first date on which the
Participant is subsequently reemployed by the Employer or the
close of the first period of five consecutive 1-Year Breaks in
Service commencing after the distribution. In the event the
Former Participant does repay the full amount distributed to
him, the forfeited portion of the Participant's Account must
be restored in full, unadjusted by any gains or losses
occurring subsequent to the Anniversary Date or other
Valuation Date preceding his termination. A Forfeiture shall
occur on the date the Participant receives full distribution
of his Vested interest.
(2) If any Former Participant is reemployed after
a 1-Year Break in Service has occurred, Years of Service shall
include Years of Service prior to his 1-Year Break in Service
subject to the following rules:
(i) If a Former Participant has a 1-Year
Break in Service, his pre-break and post- break
service shall be used for computing Years of Service;
and
(ii) Any Former Participant who under the
Plan does not have a nonforfeitable right to any
interest in the Plan resulting from Employer
Contributions shall lose credits otherwise allowable
under (i) above if his consecutive 1-Year Breaks in
Service equal or exceed the greater of (A) five or
(B) the aggregate number of his pre-break Years of
Service.
7.5 DISTRIBUTION OF BENEFITS
(a) Subject to the further provisions of this Section
7.5, payment of a Participant's or Beneficiary's benefit hereunder
shall be made or begin as soon as administratively feasible after the
Participant's termination of employment with the Affiliated Employers
or death and shall be valued as of the actual date of distribution.
(b) If elected by the Participant (or his Beneficiary),
the Administrator shall direct the Trustee to distribute to the
Participant (or his Beneficiary) any amount to which he is
VII-3
<PAGE> 35
entitled under the Plan in one lump-sum payment. If no election is
made, payment shall be made as provided in paragraph (c) below.
(c) Subject to Sections 7.5(b) and (d), this Plan shall
distribute to a Participant (or his Beneficiary) his Vested account in
substantially equal (with respect to Company Stock, in terms of number
of shares of Company Stock) annual installments over a five year
period. In the case of a Participant with an account balance in the
Plan in excess of $500,000, the five year period shall be extended one
additional year (but not more than five additional years) for each
$100,000 or fraction thereof by which such balance exceeds $500,000.
The dollar limits shall be adjusted at the same time and in the same
manner as provided in Code Section 415(d). Distribution of the
Participant's Account shall be made or begin, subject to the consent
requirement to paragraph (d) below if applicable, not later than one
year after the close of the Plan Year (i) in which the Participant
separates from service on account of retirement on or after his Normal
Retirement Age, Total and Permanent Disability or death, or (ii) which
is the fifth Plan Year following the Plan Year in which the
Participant otherwise separates from service.
(d) Any distribution to a Participant who has a Vested
benefit which exceeds, or at the time of any prior distribution
exceeded, $3,500 shall require such Participant's consent if such
distribution commences prior to his Normal Retirement Age. With regard
to this required consent:
(1) The Participant must be informed of his right
to defer receipt of the distribution until his Normal
Retirement Age. If a Participant fails to consent, it shall be
deemed an election to defer the commencement of payment of any
benefit until his Normal Retirement Age. However, any election
to defer the receipt of benefits shall not apply with respect
to distributions which are required under Section 7.5(h).
(2) Subject to Section 7.12, notice of the rights
specified under this paragraph shall be provided no less than
30 days and no more than 90 days before the first day on which
all events have occurred which entitle the Participant to such
benefit.
(3) Written consent of the Participant to the
distribution must not be made before the Participant receives
the notice and must not be made more than 90 days before the
first day on which all events have occurred which entitle the
Participant to such benefit.
(4) No consent shall be valid if a significant
detriment is imposed under the Plan on any Participant who
does not consent to the distribution.
If, at the Valuation Date of a Participant's termination, the
value of a Participant's Vested benefit does not exceed $3,500 and has
never exceeded $3,500 at the time of any
VII-4
<PAGE> 36
prior distribution (or diversification election pursuant to Section
4.6), the Administrator shall direct the Trustee to cause the entire
Vested benefit to be immediately paid to such Participant in a lump
sum without regard to the Participant's election.
(e) Except as limited by Sections 7.5 and 7.6, whenever
the Trustee is to make a distribution or to commence a series of
payments on a Valuation Date, the distribution or series of payments
may be made or begun on such date or as soon thereafter as is
practicable, but in no event later than 180 days after the Anniversary
Date for the Plan Year in which such Valuation Date falls. Except,
however, the payment of benefits shall begin not later than the 60th
day after the close of the Plan Year in which the latest of the
following events occurs:
(1) the date on which the Participant attains the
Normal Retirement Age specified herein,
(2) the 10th anniversary of the year in which the
Participant commenced participation in the Plan, or
(3) the date the Participant terminates his
service with the Employer.
(f) Any part of a Participant's benefit which is retained
in the Plan after the Valuation Date on which his participation ends
will not be credited with any further Employer Contributions.
(g) Notwithstanding any provision in the Plan to the
contrary, the distribution of a Participant's benefits shall be made
in accordance with the following requirements and shall otherwise
comply with Code Section 401(a)(9) and the Regulations thereunder
(including Regulation Section 1.401(a)(9)(2), the provisions of which
are incorporated herein by reference:
(1) A Participant's benefits shall be distributed
to him not later than April 1st of the calendar year following
the later of (i) the calendar year in which the Participant
attains age 70 1/2 or (ii) the calendar year in which the
Participant retires, provided, however, that this clause (ii)
shall not apply in the case of a Participant who is a "five
percent owner" at any time during the five Plan Year period
ending in the calendar year in which he attains age 70 1/2 or,
in the case of a Participant who becomes a "five percent
owner" during any subsequent Plan Year, clause (ii) shall no
longer apply and the required beginning date shall be the
April 1st of the calendar year following the calendar year in
which such subsequent Plan Year ends.
(2) Distributions to a Participant and his
Beneficiaries shall only be made in accordance with the
incidental death benefit requirements of Code Section
401(a)(9)(G) and the Regulations thereunder.
VII-5
<PAGE> 37
(h) For purposes of this Section, the life expectancy of
a Participant and a Participant's spouse may not be redetermined.
7.6 HOW PLAN BENEFITS WILL BE DISTRIBUTED
(a) Distribution of a Participant's benefit shall be made
in whole shares of Company Stock, unless the Participant elects to
receive such distribution in cash, with any fractional share paid in
cash.
(b) The Trustee will make distribution from the Trust
only on instructions from the Administrator.
(c) Notwithstanding anything contained herein to the
contrary, if the Company Stock is not readily tradeable on a national
securities market and the Employer's charter or by-laws restrict
ownership of substantially all shares of Company Stock to Employees
and the Trust Fund, as described in Code Section 409(h)(2), the
Administrator, in his sole discretion, may distribute a Participant's
Account entirely in cash or distribute entirely in Company Stock
subject to a requirement that such Company Stock may be resold to the
Employer pursuant to Section 7.9.
(d) Except as otherwise provided in Section 7.10, the
Company Stock is not readily tradeable on a national securities
market, the Company Stock distributed by the Trustee may be restricted
as to sale or transfer by the by-laws or articles of incorporation of
the Employer, provided restrictions are applicable to all Company
Stock of the same class. If a Participant is required to offer the
sale of his Company Stock to the Employer before offering to sell his
Company Stock to a third party, in no event may the Employer pay a
price less than that offered to the distributee by another potential
buyer making a bona fide offer and in no event shall the Trustee pay a
price less than the fair market value of the Company Stock.
(e) Except as otherwise provided in this Article, a
Participant is not entitled to any payment, withdrawal or distribution
under the Plan during his participation. If any such partial
distribution is made, the Participant's account will be reduced by the
amount of any such withdrawal or distribution.
(f) Notwithstanding any provision in the Plan to the
contrary, distributions upon the death of a Participant shall be made
in accordance with the following requirements and shall otherwise
comply with Code Section 401(a)(9) and the Regulations thereunder. If
it is determined, pursuant to Regulations, that the distribution of a
Participant's interest has begun and the Participant dies before his
entire interest has been distributed to him, the remaining portion of
such interest shall be distributed at least as rapidly as under the
method of distribution selected pursuant to Section 7.5 as of his date
of death. If a Participant dies before he has begun to receive any
distributions of his interest under the Plan or before
VII-6
<PAGE> 38
distributions are deemed to have begun pursuant to Regulations, then
his death benefit shall be distributed to his Beneficiaries by
December 31st of the calendar year in which the fifth anniversary of
his date of death occurs.
However, in the event that the Participant's spouse
(determined as of the date of the Participant's death) is his
Beneficiary, then in lieu of the preceding rules, distributions must
be made over a period not extending beyond the life expectancy of the
spouse and must commence on or before the later of (1) December 31st
of the calendar year immediately following the calendar year in which
the Participant died; or (2) December 31st of the calendar year in
which the Participant would have attained 70 1/2. If the surviving
spouse dies before distributions to such spouse begin, then the 5-year
distribution requirement of this section shall apply as if the spouse
was the Participant.
(g) For purposes of this Section, the life expectancy of
a Participant and a Participant's spouse may not be redetermined.
7.7 DISTRIBUTION FOR MINOR BENEFICIARY
In the event a distribution is to be made to a minor, then the
Administrator may direct that such distribution be paid to the legal guardian,
or if none, to a parent of such Beneficiary, or to the custodian for such
Beneficiary under the Uniform Gift to Minors Act or Gift to Minors act, if such
is permitted by the laws of the state in which said Beneficiary resides. Such a
payment to the legal guardian, custodian or parent of a minor Beneficiary shall
fully discharge the Trustee, Employer, and Plan from further liability on
account thereof.
7.8 LOCATION OF PARTICIPANT OR BENEFICIARY UNKNOWN
In the event that all, or any portion, of the distribution payable to
a Participant or his Beneficiary hereunder shall, at the expiration of five
years after it shall become payable, remain unpaid solely by reason of the
inability of the Administrator, after sending a registered letter, return
receipt requested, to the last known address, and after further diligent
effort, to ascertain the whereabouts of such Participant or his Beneficiary,
the amount so distributable shall be treated as a Forfeiture pursuant to the
Plan. In the event a Participant or Beneficiary is located subsequent to his
benefit being reallocated, such benefit shall be restored first from existing
forfeitures, and then an additional Employer Contribution.
7.9 PUT OPTION
(a) If Company Stock is not readily tradeable on an
established securities market, a Participant has a right to require
the Employer to repurchase the Company Stock distributed to such
Participant under a fair valuation formula. Such stock shall be
subject to the following provisions of this Section.
VII-7
<PAGE> 39
(b) Company Stock which is subject to a trading
limitation when distributed, must be subject to a put option. For
purposes of this paragraph, a "trading limitation" on a Company Stock
is a restriction under any Federal or State securities law or any
regulation thereunder, or an agreement affecting the Company Stock
which would make the Company Stock not as freely tradeable as stock
not subject to such restriction.
(c) The put option must be exercisable only by a
Participant, by the Participant's donees, or by a person (including an
estate or its distributee) to whom the Company Stock passes by reason
of a Participant's death. (Under this paragraph, Participant means a
Participant or Former Participant and the Beneficiaries of the
Participant or Former Participant under the Plan.) The put option must
permit a Participant to put the Company Stock to the Employer. Under
no circumstances may the put option bind the Plan. However, it shall
grant the Plan an option to assume the rights and obligations of the
Employer at the time that the put option is exercised. If it is known
at the time a loan is made that Federal or state law will be violated
by the Employer's honoring such put option, the put option must permit
the Company Stock to be put, in a manner consistent with such law, to
a third party (e.g., an affiliate of the Employer or a shareholder
other than the Plan) that has substantial net worth at the time the
loan is made and whose net worth is reasonably expected to remain
substantial.
The put option shall commence as of the day following the date
the Company Stock is distributed to the Former Participant and end 60
days thereafter and if not exercised within such 60-day period, an
additional 60-day option shall commence on the first day of the fifth
month of the Plan Year next following the date the stock was
distributed to the Former Participant (or such other 60-day period as
provided in regulations promulgated by the Secretary of the Treasury).
However, in the case of Company Stock that is publicly traded without
restrictions when distributed but ceases to be so traded within either
of the 60-day periods described herein after distribution, the
Employer must notify each holder of such Company Stock in writing on
or before the tenth day after the date the Company Stock ceases to be
so traded that for the remainder of the applicable 60-day period the
Company Stock is subject to the put option. The number of days between
the tenth day and the date on which notice is actually given, if later
than the tenth day, must be added to the duration of the put option.
The notice must inform distributees of the terms of the put options
that they are to hold. The terms must satisfy the requirements of this
paragraph.
The put option is exercised by the holder notifying the
Employer in writing that the put option is being exercised; the notice
shall state the name and address of the holder and the number of
shares to be sold. The period during which a put option is
exercisable does not include any time when a distributee is unable to
exercise it because the party bound by the put option is prohibited
from honoring it by applicable Federal or state law. The price at
which a put option must be exercisable is the value of the Company
Stock determined in accordance with Section 6.2. Payment under the put
option involving a "Total Distribution" shall be paid in substantially
equal monthly, quarterly, semiannual or annual installments
VII-8
<PAGE> 40
over a period certain beginning not later than 30 days after the
exercise of the put option and not extending beyond 5 years. The
deferral of payment is reasonable if adequate security and a
reasonable interest rate on the unpaid amounts are provided. The
amount to be paid under the put option involving installment
distributions must be paid not later than 30 days after the exercise
of the put option. Payment under a put option must not be restricted
by the provisions of a loan or any other arrangement, including the
terms of the employer's articles of incorporation, unless so required
by applicable state law.
For purposes of this Section, "Total Distribution" means a
distribution to a Participant or Former Participant within one taxable
year of the entire Vested Participant's Account.
(d) An arrangement involving the Plan that creates a put
option must not provide for the issuance of put options other than as
provided under this Section. The Plan (and the Trust Fund) must not
otherwise obligate itself to acquire Company Stock from a particular
holder thereof at an indefinite time determined upon the happening of
an event such as the death of the holder.
7.10 LIMITATIONS ON BENEFITS AND DISTRIBUTIONS
All rights and benefits, including elections, provided to a
Participant in this plan shall be subject to the rights afforded to any
"alternate payee" under a "qualified domestic relations order." Furthermore, a
distribution to an "alternate payee" shall be permitted if such distribution is
authorized by a "qualified domestic relations order,"even if the affected
Participant has not separated from service and has not reached the "earliest
retirement age" under the Plan. For purposes of this Section, "alternate
payee," "qualified domestic relations order" and "earliest retirement age"
shall have the meaning set forth under Code Section 414(p).
7.11 PAYMENT OF DISTRIBUTION DIRECTLY TO ELIGIBLE RETIREMENT PLAN
(a) 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 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.
(b) For purposes of this Section the following
definitions shall apply:
(1) "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
VII-9
<PAGE> 41
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).
(2) "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.
(3) "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 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.
(4) "Direct Rollover": A Direct Rollover is a payment
by the Plan to the Eligible Retirement Plan specified by the
Distributee.
7.12 30-DAY WAIVER
If a distribution is one to which Sections 401(a)(11) and 417 of the
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 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.
VII-10
<PAGE> 42
ARTICLE VIII
TRUSTEE
8.1 RESPONSIBILITIES OF THE TRUSTEE
The Trustee shall have the duties and responsibilities as set forth in
the Trust Agreement, which is incorporated herein by reference.
8.2 VOTING COMPANY STOCK
Each Participant or Beneficiary shall be entitled to direct the
Trustee as to the manner in which the Company Stock allocated to the account of
such Participant or Beneficiary is to be voted.
The Trustee shall notify each Participant or Beneficiary of each
tender or exchange offer and utilize its best efforts to distribute or cause to
be distributed to such Participant or Beneficiary in a timely manner all
information received by the Trustee as a recordholder of shares of Company
Stock in connection with any such tender or exchange offer. Each Participant or
Beneficiary shall have the right from time to time with respect to the shares
of Company Stock allocated to his account, to instruct the Trustee in writing
as to the manner in which to respond to any tender or exchange offer which
shall be pending or which may be made in the future for all shares of Company
Stock or any portion thereof. A Participant's or Beneficiary's instructions
shall remain in force until superseded in writing by the Participant or
Beneficiary. The Trustee shall tender or exchange such shares of Company Stock
as and to the extent so instructed. Unless and until shares of Company Stock
are tendered or exchanged, the individual instructions received by the Trustee
from Participant or Beneficiaries shall be held in strict confidence by the
Trustee and shall not be divulged or released to any person, including, but not
limited to officers or Employees of the Employer, or of any other Participating
Employer; provided, however, that the Trustee shall advise the Employer, at any
time upon request, of the total number of shares not subject to instructions to
tender or exchange. The Trustee shall not make recommendations to Participants
or Beneficiaries on whether to instruct the Trustee to tender or exchange.
The Trustee shall not vote, sell, convey or transfer any allocated
shares of Company Stock for which no directions are timely received from
Participants or Beneficiaries pursuant to the immediately preceding paragraph.
VIII-1
<PAGE> 43
ARTICLE IX
AMENDMENT, TERMINATIONS, AND MERGERS
9.1 AMENDMENT
The Company shall have the right at any time to amend the Plan by
action of its Board of Directors. In addition, the Chief Executive Officer of
the Company shall have the authority to amend the Plan, provided such amendment
does not materially increase the Company's financial obligations hereunder or
are of a ministerial, administrative or technical compliance nature. However,
no such amendment shall authorize or permit any part of the Trust Fund (other
than such part as is required to pay taxes and administration expenses) to be
used for or diverted to purposes other than for the exclusive benefit of the
Participants or their Beneficiaries or estates; no such amendment shall cause
any reduction in the amount credited to the account of any Participant or cause
or permit any portion of the Trust Fund to revert to or become the property of
the Employer; and no such amendment which affects the rights, duties or
responsibilities of the Trustee and Administrator may be made without the
Trustee's and Administrator's written consent. The Trustee shall not be
required to execute any such amendment unless the Trust provisions contained
herein are as part of the Plan and the amendment affects the duties of the
Trustee hereunder.
For the purposes of this Section, a Plan amendment which has the
effect of (1) eliminating or reducing an early retirement benefit or a
retirement-type subsidy, (2) eliminating an optional form of benefit (as
provided in Regulations) or (3) restricting, directly or indirectly, the
benefit provided to any Participant prior to the amendment shall be treated as
reducing the amount credited to the account of a Participant except that an
amendment described in clause (2) above (other than an amendment having an
effect described in clause (1) above) shall not be treated as reducing the
amount credited to the account of a Participant to the extent so provided in
Regulations. Any Plan amendment which modifies distribution options in a
nondiscriminatory manner shall not be treated as reducing the amount credited
to the account of a Participant.
9.2 TERMINATION
The Board of Directors of the Company shall have the right at any time
to terminate the Plan by delivering to the Trustee and Administrator written
notice of such termination. Upon any termination (full or partial) or complete
discontinuance of contributions, all amounts credited to the affected
Participants' Accounts shall become 100% Vested and shall not thereafter be
subject to forfeiture and all unallocated amounts shall be allocated to the
accounts of all Participants in accordance with the provisions hereof. Upon
such termination of the Plan, the Employer, by written notice to the Trustee
and Administrator, may direct either:
(a) complete distribution of the assets in the Trust Fund
to the Participants in a manner consistent with the requirements of
Sections 7.5 and 7.6; or
IX-1
<PAGE> 44
(b) continuation of the Trust created by this agreement
and the distribution of benefits at such time and in such manner as
though the Plan had not been terminated.
9.3 MERGER OR CONSOLIDATION
This Plan may be merged or consolidated with, or its assets and/or
liabilities maybe transferred to any other Plan and Trust only if the benefits
which would be received by a Participant of this Plan, in the event of a
termination of the Plan immediately after such transfer, merger or
consolidation, are at least equal to the benefits the Participant would have
received if the Plan had terminated immediately before the transfer, merger or
consolidation.
IX-2
<PAGE> 45
ARTICLE X
MISCELLANEOUS
10.1 PARTICIPANT'S RIGHTS
This Plan shall not be deemed to constitute a contract between the
Employer and any Participant or to be a consideration or an inducement for the
employment of any Participant or Employee. Nothing contained in this Plan shall
be deemed to give any Participant or Employee the right to be retained in the
service of the Employer or to interfere with the right of the Employer to
discharge any Participant or Employee at any time regardless of the effect
which such discharge shall have upon him as a Participant of this Plan.
10.2 ALIENATION
(a) Subject to the exceptions provided below, no benefit
which shall be payable out of the Trust Fund to any person (including
a Participant or his Beneficiary) shall be subject in any manner to
anticipation, alienation, sale, transfer, assignment, pledge,
encumbrance, or charge, and any attempt to anticipate, alienate, sell,
transfer, assign, pledge, encumber, or charge the same shall be void;
and no such benefit shall be in any manner be liable for, or subject
to, the debts, contracts, liabilities, engagements, or torts of any
such person, nor shall it be subject to attachment or legal process
for or against such person, and the same shall not be recognized by
the Trustee, except to such extent as may be required by law.
(b) This provision shall not apply to a "qualified
domestic relations order" defined in Code Section 414(p), and those
other domestic relations orders permitted to be so treated by the
Administrator under the provisions of the Retirement Equity Act of
1984. The Administrator shall establish a written procedure to
determine the qualified status of domestic relations orders and to
administer distributions under such qualified orders. Further, to the
extent provided under a "qualified domestic relations order", (i) a
Former spouse of a Participant shall be treated as the spouse or
surviving spouse for all purposes under the Plan and (ii) the Plan may
include distribution prior to the Participant's attainment of his
"earliest retirement age."
10.3 CONSTRUCTION OF PLAN
This Plan shall be construed and enforced according to the Act and the
laws of the State of Delaware, other than its laws respecting choice of law, to
the extent not preempted by the Act.
10.4 GENDER AND NUMBER
Wherever any words are used herein in the masculine, feminine or
neuter gender, they shall be construed as though they were also used in another
gender in all cases where they would so apply,
X-1
<PAGE> 46
and whenever any words are used herein in the singular or plural form, they
shall be construed as though they were also used in the other form in all cases
where they would so apply.
10.5 LEGAL ACTION
In the event any claim, suit, or proceeding is brought regarding the
Plan established hereunder to which the Administrator may be a party, and such
claim suit, or proceeding is resolved in favor of the Administrator, they shall
be entitled to be reimbursed from the Company for any and all costs, attorney's
fees, and other expenses pertaining thereto incurred by them for which they
shall have become liable.
10.6 PROHIBITION AGAINST DIVERSION OF FUNDS
(a) Except as provided below and otherwise specifically
permitted by law, it shall be impossible by operation of the Plan or
of the Trust, by termination of either, by power or revocation or
amendment, by the happening of any contingency, by collateral
arrangement or by any other means, for any part of the corpus or
income of any trust fund maintained pursuant to the Plan or any funds
contributed thereto to be used for, or diverted to, purposes other
than the exclusive benefit of Participants or their Beneficiaries.
(b) In the event the Employer shall make an excessive
contribution under a mistake of fact pursuant to Section 403(c)(2)(A)
of the Act, the Employer may demand repayment of such excessive
contribution at any time within one year following the time of payment
and the Trustees shall return such amount to the Employer within the
one year period. Earnings of the Plan attributable to the excess
contributions may not be returned to the Employer but any losses
attributable thereto must reduce the amount so returned.
10.7 BONDING
Every Fiduciary, except a bank or an insurance company, unless
exempted by the Act and regulations thereunder, shall be bonded in an amount
not less than 10% of the amount of the funds such Fiduciary handles; provided,
however, that the minimum bond shall be $1,000 and the maximum bond, $500,000.
The amount of funds handled shall be determined at the beginning of each Plan
Year by the amount of funds handled by such person, group, or class to be
covered and their predecessors, if any, during the preceding Plan Year, or if
there is no preceding Plan Year, then by the amount of the funds to be handled
during the then current year. The bond shall provide protection to the Plan
against any loss by reason of acts of fraud or dishonesty by the Fiduciary
alone or in connivance with others. The surety shall be a corporate surety
company (as such term is used in Section 412(a)(2) of the Act), and the bond
shall be in a form approved by the Secretary of Labor. Notwithstanding anything
in the Plan to the contrary, the cost of such bonds shall be an expense of and
may, at the election of the Administrator, be paid from the Trust Fund or by
the Employer.
X-2
<PAGE> 47
10.8 RECEIPT AND RELEASE FOR PAYMENTS
Any payment to any Participant, his legal representative, Beneficiary,
or to any guardian or committee appointed for such Participant or Beneficiary
in accordance with the provisions of the Plan, shall, to the extent thereof, be
in full satisfaction of all claims hereunder against the Trustee and the
Employer, either of whom may require such Participant, legal representative,
Beneficiary, guardian or committee, as a condition precedent to such payment,
to execute a receipt and release thereof in such form as shall be determined by
the Trustee or Employer.
10.9 ACTION BY THE EMPLOYER
Whenever the Employer under the terms of the Plan is permitted or
required to do or perform any act or matter or thing, it shall be done and
performed by a person duly authorized by its legally constituted authority.
10.10 NAMED FIDUCIARIES AND ALLOCATION OF RESPONSIBILITY
The "named Fiduciaries" of this Plan are the Company and the
Administrator. The named Fiduciaries shall have only those specific powers,
duties, responsibilities, and obligations as are specifically given them under
the Plan. In general, the Company shall have the sole responsibility for making
the contributions provided for under Section 4.1; and shall have the sole
authority to appoint and remove the Trustee; to formulate the Plan's "funding
policy and method"; and to amend or terminate, in whole or in part, the Plan.
The Administrator shall have the sole responsibility for the administration of
the Plan.
10.11 HEADINGS
The headings and subheadings of this Plan have been inserted for
convenience of reference and are to be ignored in any construction of the
provisions hereof.
10.12 APPROVAL BY INTERNAL REVENUE SERVICE
(a) Notwithstanding anything herein to the contrary,
contributions to this Plan are conditioned upon the initial
qualification of the Plan under Code Section 401. If the Plan receives
an adverse determination with respect to its initial qualification,
then the Plan may return such contributions to the Employer within one
year after such determination, provided the application for the
determination is made by the time prescribed by law for filing the
Employer's return for the taxable year in which the Plan was adopted,
or such later date as the Secretary of the Treasury may prescribe.
(b) Notwithstanding any provisions to the contrary,
except Sections 3.6 and 4.3(d), any contribution by the Employer to
the Trust Fund is conditioned upon the deductibility of the
contribution by the Employer under the Code and, to the extent any
such
X-3
<PAGE> 48
deduction is disallowed, the Employer may, within one year following
the disallowance of the deduction, demand repayment of such disallowed
contribution and the Trustee shall return such contribution within one
year following the disallowance of the deduction, demand repayment of
such disallowed contribution and the Trustee shall return such
contribution within one year following the disallowance. Earnings of
the Plan attributable to the excess contribution may not be returned
to the Employer, but any losses attributable thereto must reduce the
amount so returned.
10.13 UNIFORMITY
All provisions of this Plan shall be interpreted and applied in a
uniform, nondiscriminatory manner.
10.14 SECURITIES AND EXCHANGE COMMISSION APPROVAL
The Company may request an interpretative letter from the Securities
and Exchange Commission stating that the transfer of Company Stock contemplated
hereunder does not involve transactions requiring a registration of such
Company Stock under the Securities Act of 1933. In the event that a favorable
interpretative letter is not obtained, the Employer reserves the right to amend
the Plan and Trust retroactively to their Effective Dates in order to obtain a
favorable interpretative letter or to terminate the Plan.
10.15 INDEMNIFICATION
To the maximum extent permitted by law, neither the Employer, any of
its officers or directors, nor the Administrator shall be personally liable for
any action or inaction with respect to any duty or responsibility imposed upon
such person by the terms of the Plan, unless such action or inaction is
judicially determined to be a breach of that person's fiduciary responsibility
with respect to the Plan under any applicable law. The Employer may indemnify
or purchase insurance to underwrite indemnity for the Administrator and/or the
Employer's board of directors against any personal liability or expense except
for their own gross negligence.
10.16 CONTROLLING LAW
All legal questions pertaining to the Plan, all construction and all
Regulations shall be determined in accordance with the laws of the State of
Delaware and the United States. All contributions shall be deemed to have been
made under such laws. Notwithstanding anything in this Agreement to the
contrary, the effective dates provided for herein for the application of any
Code Section to this Plan shall be extended in accordance with any act of
Congress or any effective Regulation, Ruling or other measure of like import.
X-4
<PAGE> 49
ARTICLE XI
PARTICIPATING EMPLOYERS
11.1 ADOPTION BY OTHER EMPLOYERS
Notwithstanding anything herein to the contrary, with the consent of
the Company and Trustee, any other Affiliated Employer may adopt this Plan and
all of the provisions hereof, and participate herein and be known as a
Participating Employer, by a properly executed document evidencing said intent
and will of such Participating Employer.
11.2 REQUIREMENTS OF PARTICIPATING EMPLOYERS
(a) Each such Participating Employer shall be required to
use the same Trustee as provided in this Plan.
(b) The Trustee, unless directed otherwise by the
Administrator, shall commingle and hold as one Trust Fund all
contributions made by Participating Employers.
(c) The transfer of any Participant from or to an
Employer participating in this Plan, whether he be an Employee of the
Employer or a Participating Employer, shall not affect such
Participant's rights under the Plan, and all amounts credited to such
Participant's Account as well as his accumulated service time with the
transferor or predecessor, and his length of participation in the
Plan, shall continue to his credit.
(d) Any expenses of the Trust which are to be paid by the
Employer or borne by the Trust Fund shall be paid by each
Participating Employer in the same proportion that the total amount
standing to the credit of all Participants employed by such Employer
bears to the total standing to the credit of all Participants.
11.3 DESIGNATION OF AGENT
Each Participating Employer shall be deemed to be a part of this Plan;
provided, however, that with respect to all of its relations with the Trustee
and Administrator for the purpose of this Plan, each Participating Employer
shall be deemed to have designated irrevocably the Employer as its agent.
Unless the context of the Plan clearly indicates the contrary, the word
"Employer" shall be deemed to include each Participating Employer as related to
its adoption of the Plan.
11.4 EMPLOYEE TRANSFERS
It is anticipated that an Employee may be transferred between
Participating Employers, and in the event of any such transfer, the Employee
involved shall carry with him his accumulated service and eligibility. No such
transfer shall effect a termination of employment hereunder, and the
Participating Employer to which the Employee is transferred shall thereupon
become obligated
XI-1
<PAGE> 50
hereunder with respect to such Employee in the same manner as was the
Participating Employer from whom the Employee was transferred.
11.5 PARTICIPATING EMPLOYER'S CONTRIBUTION
The contributions during each Plan Year shall be allocated among all
Participants in accordance with the provisions of this Plan. On the basis of
the information furnished by the Administrator, the Trustee shall keep separate
books and records concerning the affairs of each Participating Employer
hereunder and as to the accounts and credits of the Employees of each
Participating Employer. The Trustee may, but need not, register contracts so as
to evidence that a particular Participating Employer is the interested Employer
hereunder, but in the event of an Employee transfer from one Participating
Employer to another, the employing Employer shall immediately notify the
Administrator will notify the Trustee thereof. Notwithstanding anything herein
seemingly to the contrary, the Plan shall constitute a "single" Plan as to all
Participating Employers and not a separate plan as to any such Participating
Employer.
11.6 AMENDMENT
Each amendment of this Plan shall be binding on each and every
Participating Employer and on the Trustee, unless its consent is necessary in
accordance with the terms of this Plan.
11.7 DISCONTINUANCE OF PARTICIPATION
Any Participating Employer shall be permitted to discontinue or revoke
its participation in the Plan. At the time of any such discontinuance or
revocation, satisfactory evidence thereof and of any applicable conditions
imposed shall be delivered to the Trustee. The Trustee shall thereafter
transfer, deliver and assign Trust Fund assets allocable to the Participants of
such Participating Employer or to such new Trustee as shall have been
designated by such Participating Employer, in the event that it has established
a separate pension plan for its Employees. If no successor is designated, the
Trustee shall retain such assets for the Employees of said Participating
Employer pursuant to the provisions of Article VII hereof. In no such event
shall any part of the corpus or income of the Trust as it relates to such
Participating Employer be used for or diverted for purposes other than for the
exclusive benefit of the Employees of such Participating Employer.
11.8 ADMINISTRATOR'S AUTHORITY
The Administrator shall have authority to make any and all necessary
rules or regulations, binding upon all Participating Employers and all
Participants, to effectuate the purpose of this Article.
XI-2
<PAGE> 51
11.9 PARTICIPATING EMPLOYER CONTRIBUTION FOR AFFILIATE
If any Participating Employer is prevented in whole or in part from
making a contribution to the Trust Fund which it would otherwise have made
under the Plan by reason of having no current or accumulated earnings or
profits, or because such earnings or profits are less than the contribution
which it would otherwise have made, then, pursuant to Code Section
404(a)(3)(B), so much of the contribution which such Participating Employer was
so prevented from making may be made, for the benefit of the participating
employees of such Participating Employer, by the other Participating Employers
who are members of the same affiliated group within the meaning of Code Section
1504 to the extent of their current or accumulated earnings or profits, except
that such contribution by each such other Participating Employer shall be
limited to the proportion of its total current and accumulated earnings or
profits remaining after adjustment for its contribution to the Plan made
without regard to this paragraph which the total prevented contribution bears
to the total current and accumulated earnings or profits of all the
Participating Employers remaining after adjustment for all contributions made
to the Plan without regard to this paragraph.
XI-3
<PAGE> 52
ARTICLE XII
TOP-HEAVY STATUS
12.1 ARTICLE CONTROLS
Any Plan provisions to the contrary notwithstanding, the provisions of
this Article shall control to the extent required to cause the Plan to comply
with the requirements imposed under Code Section 416.
12.2 DEFINITIONS
For purposes of this Article, the following terms and phrases shall
have these respective meanings:
(a) Account Balance: As of any Valuation Date, the
aggregate amount credited to an individual's account or accounts under
a qualified defined contribution plan maintained by the Employer or an
Affiliated Employer (excluding employee contributions which were
deductible within the meaning of section 219 of the Code and rollover
or transfer contributions made after December 31, 1983 by or on behalf
of such individual to such plan from another qualified plan sponsored
by an entity other than the Employer or an Affiliated Employer),
increased by (1) the aggregate distributions made to such individual
from such plan during a five-year period ending on the Determination
Date and (2) the amount of any contributions due as of the
Determination Date immediately following such Valuation Date.
(b) Accrued Benefit: As of any Valuation Date, the
present value (computed on the basis of the Assumptions) of the
cumulative accrued benefit (excluding the portion thereof which is
attributable to employee contributions which were deductible pursuant
to section 219 of the Code, to rollover or transfer contributions made
after December 31, 1983 by or on behalf of such individual to such
plan from another qualified plan sponsored by an entity other than the
Employer or an Affiliated Employer, to proportional subsidies or to
ancillary benefits) of an individual under a qualified defined benefit
plan maintained by the Employer or an Affiliated Employer increased by
(1) the aggregate distributions made to such individual from such plan
during a five-year period ending on the Determination Date and (2) the
estimated benefit accrued by such individual between such Valuation
Date and the Determination Date immediately following such Valuation
Date. Solely for the purpose of determining top-heavy status, the
Accrued Benefit of an individual shall be determined under (1) the
method, if any, that uniformly applies for accrual purposes under all
qualified defined benefit plans maintained by the Employer or an
Affiliated Employer, or (2) if there is no such method, as if such
benefit accrued not more rapidly than under the slowest accrual rate
permitted under section 411(b)(1)(C) of the Code.
(c) Aggregation Group: The group of qualified plans
maintained by the Employer and each Affiliated Employer consisting of
(1) each plan in which a Key
XII-1
<PAGE> 53
Employee participates and each other plan which enables a plan in
which a Key Employee participates to meet the requirements of sections
401(a)(4) or 410 of the Code, or (2) each plan in which a Key Employee
participates, each other plan which enables a plan in which a Key
Employee participates to meet the requirements of sections 401(a)(4)
or 410 of the Code and any other plan which the Employer elects to
include as a part of such group; provided, however, that the Employer
may not elect to include a plan in such group if its inclusion would
cause the group to fail to meet the requirements of sections 401(a)(4)
or 410 of the Code.
(d) Assumptions: The interest rate and mortality
assumptions specified for top-heavy status determination purposes in
any defined benefit plan included in the Aggregation Group including
the Plan.
(e) Determination Date: For the first Plan Year of any
plan, the last day of such Plan Year and for each subsequent Plan Year
of such plan, the last day of the preceding Plan Year.
(f) Key Employee: A "key employee" as defined in section
416(i) of the Code and the Treasury Regulations thereunder.
(g) Plan Year: With respect to any plan, the annual
accounting period used by such plan for annual reporting purposes.
(h) Remuneration: Compensation within the meaning of
section 415(c)(3) of the Code, as limited by section 401(a)(17) of the
Code for Plan Years beginning after December 31, 1988.
(i) Valuation Date: With respect to any Plan Year of any
defined contribution plan, the most recent date within the
twelve-month period ending on a Determination Date as of which the
trust fund established under such plan was valued and the net income
(or loss) thereof allocated to participants' accounts. With respect to
any Plan Year of any defined benefit plan, the most recent date within
a twelve-month period ending on a Determination Date as of which the
plan assets were valued for purposes of computing plan costs for
purposes of the requirements imposed under section 412 of the Code.
12.3 TOP-HEAVY STATUS
(a) The Plan shall be deemed to be top-heavy for a Plan
Year, if, as of the Determination Date for such Plan Year, (1) the sum
of Account Balances of Participants who are Key Employees exceeds 60%
of the sum of Account Balances of all Participants unless an
Aggregation Group including the Plan is not top-heavy or (2) an
Aggregation Group including the Plan is top-heavy. An Aggregation
Group shall be deemed to be top-heavy as of a Determination Date if
the sum (computed in accordance with section 416(g)(2)(B) of
XII-2
<PAGE> 54
the Code and the Treasury Regulations promulgated thereunder) of (1)
the Account Balances of Key Employees under all defined contribution
plans included in the Aggregation Group and (2) the Accrued Benefits
of Key Employees under all defined benefit plans included in the
Aggregation Group exceeds 60% of the sum of the Account Balances and
the Accrued Benefits of all individuals under such plans.
Notwithstanding the foregoing, the Account Balances and Accrued
Benefits of individuals who are not Key Employees in any Plan Year but
who were Key Employees in any prior Plan Year shall not be considered
in determining the top-heavy status of the Plan for such Plan Year.
Further, notwithstanding the foregoing, the Account Balances and
Accrued Benefits of individuals who have not performed services for
the Employer at any time during the five-year period ending on the
applicable Determination Date shall not be considered.
12.4 TERMINATION OF TOP-HEAVY STATUS
If the Plan has been deemed to be top-heavy for one or more Plan Years
and thereafter ceases to be top-heavy, the provisions of this Article shall
cease to apply to the Plan effective as of the Determination Date on which it
is determined to no longer be top-heavy.
12.5 EFFECT OF ARTICLE
Notwithstanding anything contained herein to the contrary, the
provisions of this Article shall automatically become inoperative and of no
effect to the extent not required by the Code or the Act.
IN WITNESS WHEREOF, this Plan has been executed this May 8, 1997,
effective for all purposes as of the Effective Date.
MONTEREY RESOURCES, INC.
By: /s/ R. GRAHAM WHALING
------------------------------
Name: R. Graham Whaling
----------------------------
Title: Chief Executive Officer
---------------------------
XII-3
