As filed with the Securities and Exchange Commission on February 24, 1994
Registration No. 33-38344
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
_______________
POST-EFFECTIVE AMENDMENT NO. 1 to FORM S-8
REGISTRATION STATEMENT Under THE SECURITIES ACT OF 1933
_______________
HOUSTON INDUSTRIES INCORPORATED
(Exact name of registrant as specified in its charter)
Texas
(State or other jurisdiction of incorporation or organization)
74-1885573
(I.R.S. Employer Identification No.)
5 Post Oak Park
4400 Post Oak Parkway
Houston, Texas 77027
(Address of principal executive offices)
77027
(Zip Code)
______________________________________
HOUSTON INDUSTRIES INCORPORATED SAVINGS PLAN
(Full title of the plan)
1<PAGE>
<PAGE>
WILLIAM A. CROPPER
Vice President and Treasurer
Houston Industries Incorporated
5 Post Oak Park
4400 Post Oak Parkway
Houston, Texas 77027
with a copy to
HUGH RICE KELLY
Vice President and General Counsel
Houston Industries Incorporated
5 Post Oak Park
4400 Post Oak Parkway
Houston, Texas 77027
(Name and address of agent for service)
713-629-3000
(Telephone number, including area code, of agent for service)
2<PAGE>
<PAGE>
EXPLANATORY NOTE
Houston Industries Incorporated (the "Company") has prepared this
Amendment No. 1 for the purpose of filing with the Securities and Exchange
Commission (i) an opinion of counsel as Exhibit 5 to the Registration Statement
covering original issue securities and (ii) certain other exhibits. Amendment
No. 1 does not modify any other provision of the Registration Statement;
accordingly, other items of the Registration Statement have not been included
herein.
3<PAGE>
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 8. Exhibits.
The following documents are filed as a part of this registration statement
or incorporated by reference herein:
<TABLE>
<CAPTION>
REPORT OR SEC FILE OR
EXHIBIT REGISTRATION REGISTRATION EXHIBIT
NO. DESCRIPTION STATEMENT NUMBER REFERENCE
<S> <S> <S> <S> <C> <S>
4.1* - Restated Articles of Form 10-Q for 1-7629 3
Incorporation of the the quarter
Company. ended
June 30, 1993
4.2* - Amended and Restated Form 8-K dated 1-7629 3
Bylaws of the Company. June 29, 1992
4.3** - Rights Agreement dated
July 11, 1990 between
the Company and Texas
Commerce Bank National
Association, as
Rights Agent (Rights
Agent), which
includes form of Statement
of Resolution Establishing
Series of Shares
designated Series A
Preference Stock and
form of Rights
Certificate.
4.4* - Agreement and Appointment Form 8-K 1-7629 4(a)(2)
of Agent dated as of dated
July 11, 1990 between the July 11, 1990
Company and the Rights
Agent.
4.5 - Houston Industries
Incorporated Savings
Plan, as amended and
restated effective as
of January 1, 1994.
</TABLE>
4PAGE
<PAGE>
<TABLE>
<CAPTION>
REPORT OR SEC FILE OR
EXHIBIT REGISTRATION REGISTRATION EXHIBIT
NO. DESCRIPTION STATEMENT NUMBER REFERENCE
<S> <S> <S> <S> <S> <S>
4.6** - Savings Plan of
Houston Industries
Incorporated ESOP
Trust Agreement
dated October 5,
1990 between the
Company and State
Street Bank and
Trust Company, as
ESOP Trustee.
5 - Opinion of Baker
& Botts, L.L.P.
23.1 - Consent of Baker
& Botts, L.L.P.
(included in
Exhibit 5).
23.2 - Consent of Independent
Auditors.
24** - Powers of Attorney of
Directors of the Company.
</TABLE>
_________
* Incorporated herein by reference as indicated.
** Previously filed.
5<PAGE>
<PAGE>
SIGNATURES
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 amendment to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Houston, State of Texas, on February 24,
1994.
HOUSTON INDUSTRIES INCORPORATED
By /s/ Don D. Jordan
-----------------
(Don D. Jordan, Chairman
and Chief Executive Officer)
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/ Don D. Jordan Chairman and Chief February 24, 1994
- ----------------- Executive Officer
(Don D. Jordan) and Director
(Principal Executive and
Financial Officer and
Director)
/s/ Mary P. Ricciardello Comptroller February 24, 1994
- ------------------------ (Principal Accounting
(Mary P. Ricciardello) Officer)
* JOHN T. CATER, A MAJORITY OF DIRECTORS February 24, 1994
JOSEPH M. HENDRIE,
HOWARD W. HORNE,
THOMAS B. McDADE,
KENNETH L. SCHNITZER, SR.,
D. D. SYKORA,
JACK T. TROTTER
</TABLE>
6<PAGE>
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
<S> <C> <C>
*By /s/ William A. Cropper February 24, 1994
----------------------
(William A. Cropper,
Attorney-in-Fact)
</TABLE>
The Plan. Pursuant to the requirements of the Securities Act of 1933,
the Compensation and Benefits Committee has duly caused this amendment to be
signed on behalf of the Plan by the undersigned, thereunto duly authorized,
in the City of Houston, State of Texas, on February 24, 1994.
HOUSTON INDUSTRIES INCORPORATED
SAVINGS PLAN
By /s/ D. D. Sykora
-----------------------------------
(D. D. Sykora, Chairman of the
Compensation and Benefits Committee)
7<PAGE>
<PAGE>
EXHIBITS
<TABLE>
<CAPTION>
REPORT OR SEC FILE OR
EXHIBT REGISTRATION REGISTRATION EXHIBIT
NO. DESCRIPTION STATEMENT NUMBER REFERENCE
<S> <S> <S> <S> <C> <C>
4.1* - Restated Articles of Form 10-Q 1-7629 3
Incorporation of the for the quarter
Company. ended June 30, 1993
4.2* - Amended and Restated Form 8-K dated 1-7629 3
Bylaws of the Company. June 29, 1992
4.3** - Rights Agreement dated
July 11, 1990 between
the Company and Texas
Commerce Bank National
Association, as Rights
Agent (Rights Agent),
which includes
form of Statement of
Resolution Establishing
Series of Shares
designated Series A
Preference Stock and
form of Rights
Certificate.
4.4* - Agreement and Appoint- Form 8-K dated 1-7629 4(a)(2)
ment of Agent dated as July 11, 1990
of July 11, 1990
between the Company
and the Rights Agent.
4.5 - Houston Industries
Incorporated Savings
Plan, as amended and
restated effective
as of January 1, 1994.
4.6** - Savings Plan of
Houston Industries
Incorporated ESOP
Trust Agreement
dated October 5,
1990 between
the Company and
State Street Bank
and Trust Company,
as ESOP Trustee.
5 - Opinion of Baker
and Botts, L.L.P.
23.1 - Consent of Baker
and Botts, L.L.P.
(included in
Exhibit 5).
</TABLE>
8<PAGE>
<PAGE>
<TABLE>
<CAPTION>
REPORT OR SEC FILE OR
EXHIBT REGISTRATION REGISTRATION EXHIBIT
NO. DESCRIPTION STATEMENT NUMBER REFERENCE
<C> <S> <S> <S> <S>
23.2 - Consent of
Independent Auditors.
24** - Powers of Attorney
of Directors
of the Company.
</TABLE>
__________
* Incorporated herein by reference as indicated.
** Previously filed.
9<PAGE>
EXHIBIT 4.5
HOUSTON INDUSTRIES INCORPORATED
SAVINGS PLAN
(As Amended and Restated Effective January 1, 1994)
<PAGE>
HOUSTON INDUSTRIES INCORPORATED
SAVINGS PLAN
(As Amended and Restated Effective January 1, 1994)
I N D E X
Page
ARTICLE I DEFINITIONS. . . . . . . . . . . . . . . . . . . .3
Section:
1.1 Accounts . . . . . . . . . . . . . . . . . . . . .3
1.2 Affiliate. . . . . . . . . . . . . . . . . . . . .3
1.3 After-Tax Contributions. . . . . . . . . . . . . .3
1.4 After-Tax Contribution Account . . . . . . . . . .3
1.5 Anniversary Date . . . . . . . . . . . . . . . . .3
1.6 Beneficiary. . . . . . . . . . . . . . . . . . . .3
1.7 Code . . . . . . . . . . . . . . . . . . . . . . .3
1.8 Committee. . . . . . . . . . . . . . . . . . . . .3
1.9 Company. . . . . . . . . . . . . . . . . . . . . .3
1.10 Company Stock. . . . . . . . . . . . . . . . . . .3
1.11 Compensation . . . . . . . . . . . . . . . . . . .4
1.12 Contribution . . . . . . . . . . . . . . . . . . .4
1.13 Defined Benefit Plan . . . . . . . . . . . . . . .4
1.14 Effective Date . . . . . . . . . . . . . . . . . .4
1.15 Employee . . . . . . . . . . . . . . . . . . . . 4
1.16 Employer . . . . . . . . . . . . . . . . . . . . 4
1.17 Employer Contributions . . . . . . . . . . . . . 5
1.18 Employer Matching Account. . . . . . . . . . . . 5
1.19 Employer Matching Contributions. . . . . . . . . 5
1.20 Entry Date . . . . . . . . . . . . . . . . . . . 5
1.21 ERISA. . . . . . . . . . . . . . . . . . . . . . 5
1.22 ESOP Account . . . . . . . . . . . . . . . . . . 5
1.23 ESOP Contributions . . . . . . . . . . . . . . . 5
1.24 ESOP Fund. . . . . . . . . . . . . . . . . . . . 5
1.25 ESOP Trustee . . . . . . . . . . . . . . . . . . 5
1.26 Exempt Loan. . . . . . . . . . . . . . . . . . . 5
1.27 Financed Stock . . . . . . . . . . . . . . . . . 5
1.28 Fiduciaries. . . . . . . . . . . . . . . . . . . 5
1.29 HII Participant. . . . . . . . . . . . . . . . . 5
1.30 Investment Fund. . . . . . . . . . . . . . . . . 6
1.31 Investment Manager . . . . . . . . . . . . . . . 6
1.32 KBLCOM Participant . . . . . . . . . . . . . . . 6
<PAGE>
1.33 Participant. . . . . . . . . . . . . . . . . . . 6
1.34 Plan . . . . . . . . . . . . . . . . . . . . . . 6
1.35 Plan Year. . . . . . . . . . . . . . . . . . . . 6
1.36 Pre-Tax Contributions. . . . . . . . . . . . . . 6
1.37 Pre-Tax Contribution Account . . . . . . . . . . 6
1.38 Prior Plan . . . . . . . . . . . . . . . . . . . 6
1.39 Prior Plan Participant . . . . . . . . . . . . . 6
1.40 Retirement . . . . . . . . . . . . . . . . . . . 6
1.41 Retirement Date. . . . . . . . . . . . . . . . . 7
1.42 Savings Trustee. . . . . . . . . . . . . . . . . 7
1.43 Service. . . . . . . . . . . . . . . . . . . . . 7
1.44 Stock Suspense Account . . . . . . . . . . . . . 7
1.45 Trust Agreements . . . . . . . . . . . . . . . . 7
1.46 Trust Fund . . . . . . . . . . . . . . . . . . . 7
1.47 Trustees . . . . . . . . . . . . . . . . . . . . 7
1.48 Valuation Date . . . . . . . . . . . . . . . . . 7
1.49 Vesting Computation Period . . . . . . . . . . . 7
1.50 Vesting Service. . . . . . . . . . . . . . . . . 7
ARTICLE II ADMINISTRATION OF THE PLAN . . . . . . . . . . 8
Section:
2.1 Appointment of Committee . . . . . . . . . . . . . 8
2.2 Records of Committee . . . . . . . . . . . . . . . 8
2.3 Committee Action . . . . . . . . . . . . . . . . . 8
2.4 Committee Disqualification . . . . . . . . . . . . 8
2.5 Committee Compensation and Expenses. . . . . . . . 8
2.6 Committee Liability. . . . . . . . . . . . . . . . 8
2.7 Committee Determinations . . . . . . . . . . . . . 9
2.8 Information from Employer. . . . . . . . . . . . . 10
2.9 Uniform Administration . . . . . . . . . . . . . . 10
2.10 Reporting Responsibilities . . . . . . . . . . . . 11
2.11 Disclosure Responsibilities. . . . . . . . . . . . 11
2.12 Annual Statements. . . . . . . . . . . . . . . . . 11
2.13 Allocation of Responsibility Among Fiduciaries
for Plan and Trust Administration. . . . . . . . . 11
2.14 Annual Audit . . . . . . . . . . . . . . . . . . . 12
2.15 Presenting Claims for Benefits . . . . . . . . . . 12
2.16 Claims Review Procedure. . . . . . . . . . . . . . 13
2.17 Disputed Benefits. . . . . . . . . . . . . . . . . 13
<PAGE>
ARTICLE III PARTICIPATION IN THE PLAN. . . . . . . . . . . 14
3.1 Eligibility of Employees . . . . . . . . . . . . . 14
3.2 Employee Information . . . . . . . . . . . . . . . 14
3.3 Notification of Eligible Employees . . . . . . . . 14
3.4 Application by Participants. . . . . . . . . . . . 14
3.5 Authorized Absences. . . . . . . . . . . . . . . . 14
3.6 Vesting Service. . . . . . . . . . . . . . . . . . 15
3.7 Hour of Service. . . . . . . . . . . . . . . . . . 15
3.8 Break In Service . . . . . . . . . . . . . . . . . 17
3.9 Participation and Vesting upon Re-Employment . . . 17
3.10 Transfers. . . . . . . . . . . . . . . . . . . . . 18
ARTICLE IV CONTRIBUTIONS TO THE PLAN. . . . . . . . . . . . 20
Section:
4.1 Employer Contributions . . . . . . . . . . . . . . 20
4.2 Pre-Tax Contributions. . . . . . . . . . . . . . . 20
4.3 After-Tax Contributions. . . . . . . . . . . . . . 21
4.4 Actual Deferral Percentage . . . . . . . . . . . . 22
4.5 Actual Deferral Percentage Limits. . . . . . . . . 22
4.6 Reduction of Pre-Tax Contribution Rates
by Leveling Method . . . . . . . . . . . . . . . . 24
4.7 Increase in Pre-Tax Contribution Rates . . . . . . 25
4.8 Excess Pre-Tax Contributions . . . . . . . . . . . 25
4.9 Aggregation of Family Members in
Determining the Actual Deferral Ratio. . . . . . . 26
4.10 Contribution Percentage and ESOP Percentage. . . . 26
4.11 Contribution Percentage and ESOP
Percentage Limits . . . . . . . . . . . . . . . . .28
4.12 Treatment of Excess Aggregate Contributions
or ESOP Contributions. . . . . . . . . . . . . . . 29
4.13 Aggregation of Family Members in Determining
the Actual Contribution Ratio. . . . . . . . . . . 29
4.14 Multiple Use of Alternative Limitation . . . . . . 30
4.15 ESOP Contributions, Employer Matching
Contributions and Pre-Tax Contributions
to be Tax Deductible . . . . . . . . . . . . . . . 30
4.16 Maximum Allocations. . . . . . . . . . . . . . . . 30
4.17 Refunds to Employer. . . . . . . . . . . . . . . . 31
4.18 Rollover Contributions . . . . . . . . . . . . . . 31
ARTICLE V PARTICIPANTS' ACCOUNTS . . . . . . . . . . . . . . 33
Section:
5.1 Trust Accounts . . . . . . . . . . . . . . . . . . 33
5.2 Valuation of Trust Fund. . . . . . . . . . . . . . 33
5.3 Allocation to Accounts . . . . . . . . . . . . . . 34
<PAGE>
5.4 Treatment of Company Stock Purchased with
an Exempt Loan . . . . . . . . . . . . . . . . . . 36
5.5 Maximum Annual Additions . . . . . . . . . . . . . 37
5.6 Borrowings to Purchase Company Stock;
Certain Conditions Applicable to such Company
Stock. . . . . . . . . . . . . . . . . . . . . . . 45
ARTICLE VI PARTICIPANTS' BENEFITS. . . . . . . . . . . . . . 48
Section:
6.1 Termination of Service . . . . . . . . . . . . . . 48
6.2 Disability of Participants . . . . . . . . . . . . 48
6.3 Death of Participants. . . . . . . . . . . . . . . 48
6.4 Retirement of Participants on or After
Retirement Date. . . . . . . . . . . . . . . . . . 49
6.5 In-Service Distributions . . . . . . . . . . . . . 49
6.6 Payments of Benefits . . . . . . . . . . . . . . . 50
6.7 Payment of Distribution Directly to Eligible
Retirement Plan. . . . . . . . . . . . . . . . . . 51
6.8 Participation Rights Determined as of Valuation
Date Preceding Termination of Employment . . . . . 52
6.9 Disposition of Forfeitures . . . . . . . . . . . . 53
6.10 Required Minimum Distributions . . . . . . . . . . 53
6.11 Unclaimed Benefits . . . . . . . . . . . . . . . . 53
VII WITHDRAWALS AND LOANS . . . . . . . . . . . . . . . . . 54
Section:
7.1 Withdrawal of After-Tax Excess Contributions . . . 54
7.2 Withdrawal of After-Tax Basic Contributions. . . . 54
7.3 Conditions of Withdrawals. . . . . . . . . . . . . 54
7.4 Loans. . . . . . . . . . . . . . . . . . . . . . . 54
ARTICLE VIII INVESTMENT DIRECTIONS. . . . . . . . . . . . . 57
Section:
8.1 Investment of Trust Fund . . . . . . . . . . . . . 57
8.2 Diversification Election . . . . . . . . . . . . . 59
8.3 Voting of Company Stock; Exercise of Other Rights. 59
ARTICLE IX TRUST AGREEMENT AND TRUST FUND . . . . . . . . . 61
Section:
9.1 Trust Agreement. . . . . . . . . . . . . . . . . . 61
9.2 Benefits Paid Solely from Trust Fund . . . . . . . 61
9.3 Committee Directions to Trustee. . . . . . . . . . 61
9.4 Trustee's Reliance on Committee Instructions . . . 61
9.5 Authority of Trustee in Absence of
Instructions from the Committee. . . . . . . . . . 61
<PAGE>
9.6 Compliance with Exchange Act Rule 10(b)(18). . . . 62
ARTICLE X ADOPTION OF PLAN BY OTHER CORPORATIONS,
AMENDMENT AND TERMINATION OF THE PLAN,
AND DISCONTINUANCE OF CONTRIBUTIONS TO THE
TRUST FUND . . . . . . . . . . . . . . . . . . . . 63
Section:
10.1 Adoption by Employers. . . . . . . . . . . . . . . 63
10.2 Continuous Service . . . . . . . . . . . . . . . . 63
10.3 Amendment of the Plan. . . . . . . . . . . . . . . 64
10.4 Termination of the Plan. . . . . . . . . . . . . . 64
10.5 Distribution of Trust Fund on Termination. . . . . 64
10.6 Effect of Discontinuance of Contributions. . . . . 65
10.7 Merger of Plan with Another Plan . . . . . . . . . 65
ARTICLE XI TOP-HEAVY PLAN REQUIREMENTS. . . . . . . . . . . .66
Section:
11.1 General Rule . . . . . . . . . . . . . . . . . . . 66
11.2 Vesting Provisions . . . . . . . . . . . . . . . . 66
11.3 Minimum Contribution Provisions. . . . . . . . . . 66
11.4 Limitation on Compensation . . . . . . . . . . . . 67
11.5 Limitation on Contributions. . . . . . . . . . . . 67
11.6 Coordination with Other Plans. . . . . . . . . . . 68
11.7 Distributions to Certain Key Employees . . . . . . 68
11.8 Determination of Top-Heavy Status. . . . . . . . . 68
ARTICLE XII MISCELLANEOUS PROVISIONS. . . . . . . . . . . . 73
Section:
12.1 Terms of Employment. . . . . . . . . . . . . . . . 73
12.2 Controlling Law. . . . . . . . . . . . . . . . . . 73
12.3 Invalidity of Particular Provisions. . . . . . . . 73
12.4 Non-Alienability of Rights of Participants . . . . 73
12.5 Payments in Satisfaction of Claims of Participants 74
12.6 Payments Due Minors and Incompetents . . . . . . . 74
12.7 Acceptance of Terms and Conditions of
Plan by Participants . . . . . . . . . . . . . . . 74
12.8 Impossibility of Diversion of Trust Fund . . . . . 74
<PAGE>
HOUSTON INDUSTRIES INCORPORATED
SAVINGS PLAN
(As Amended and Restated Effective January 1, 1994)
Recitals
Houston Industries Incorporated (the "Company"), a Texas
corporation with its principal place of business in Houston, Harris County,
Texas, established a Savings Plan effective July 1, 1973 for the benefit
of its eligible Employees and retained the right to amend such Savings Plan
under Section 10.3 thereof. Effective as of January 1, 1989, said Savings
Plan was amended to comply with the provisions of the Tax Reform Act of
1986 and to make certain other changes therein.
Effective October 5, 1990, the Savings Plan was amended and
restated to include an employee stock ownership plan which is a stock bonus
plan intended to qualify under Sections 401(a) and 4975(e)(7) of the
Internal Revenue Code of 1986, as amended (the "Code"), and as such is
designed to invest primarily in Company Stock (said Savings Plan, as
amended and restated effective October 5, 1990, and as thereafter amended
and in effect on December 31, 1993, being herein referred to as the "HII
Plan").
In connection with the HII Plan, the Company adopted the
Houston Industries Incorporated Master Savings Trust (the "Master Savings
Trust"), as established effective July 1, 1989, with Texas Commerce Bank
National Association as trustee thereof, and also adopted the Savings Plan
of Houston Industries Incorporated ESOP Trust (the "ESOP Trust"), as
established by Trust Agreement with State Street Bank and Trust Company
dated October 5, 1990. The Master Savings Trust and ESOP Trust are both
intended to form a part of the HII Plan.
KBLCOM Incorporated ("KBLCOM"), a Delaware corporation and
wholly owned subsidiary of the Company, established the KBLCOM Incorporated
Savings Plan, effective July 1, 1989 (the "KBLCOM Plan"), for the benefit
of its eligible employees. In connection with the establishment of the
KBLCOM Plan, KBLCOM adopted the Master Savings Trust to fund and administer
funds contributed under the KBLCOM Plan for the exclusive benefit of the
participants thereunder.
1<PAGE>
<PAGE>
Effective as of January 1, 1994, the Boards of Directors of
the Company and KBLCOM have authorized and directed that the KBLCOM Plan
be amended, restated, consolidated with, merged into and continued in the
form of and by the adoption of the Houston Industries Incorporated Savings
Plan, as amended and restated effective January 1, 1994 (the "Plan"), so
as to provide for a continuation of substantially identical benefits for
the former participants of each of the KBLCOM Plan and the HII Plan,
respectively, and the merger of all the assets held under the Master
Savings Trust for the benefit of the participants in the KBLCOM Plan with
all the assets held under the Master Savings Trust for the benefit of the
participants in the HII Plan so that from and after January 1, 1994, such
Plans shall constitute a "single plan" within the meaning and purview of
Section 414(l) of the Code (with the HII Plan being the surviving plan for
all legal purposes, including reporting and disclosure under ERISA),
notwithstanding that KBLCOM Participants (as herein defined) are not
eligible to make After-Tax Contributions to the Plan.
The provisions of this Plan shall apply to a Participant who
continues his Service after the Effective Date. Except as otherwise
expressly set forth herein, the rights and benefits, if any, of a Prior
Plan Participant (as herein defined) who terminated his Service prior to
the Effective Date shall be determined under the provisions of the
applicable Prior Plan (as herein defined) in effect on the date his Service
terminated.
NOW, THEREFORE, the Company and KBLCOM hereby amend, restate
in their entirety, consolidate, merge and continue the HII Plan and the
KBLCOM Plan in the form of and by the adoption of the Plan as herein set
forth, effective as of January 1, 1994, to read as follows:
2<PAGE>
<PAGE>
ARTICLE I
DEFINITIONS
As used in the Plan, the following words and phrases shall
have the following meanings unless the context clearly requires a different
meaning:
1.1 Accounts: The accounts maintained for a Participant pursuant
to Section 5.1.
1.2 Affiliate: A corporation or other trade or business which,
together with an Employer, is "under common control" within the meaning of
Section 414(b) or (c), as modified by Section 415(h) of the Code; any
organization (whether or not incorporated) which is a member of an
"affiliated service group" (within the meaning of Section 414(m) of the
Code) which includes the Employer; and any other entity required to be
aggregated with the Employer pursuant to regulations under Section 414(o)
of the Code. In addition, "Affiliate" means, for all purposes of the Plan
except for testing under Sections 4.4, 4.5, 4.10 and 4.11 and determining
maximum Annual Additions under Section 5.5 of the Plan, Paragon
Communications, a partnership, as long as the Company or one of its wholly
owned subsidiaries owns at least fifty percent (50 percent) of the profits
interest or fifty percent (50 percent) of the capital interest of Paragon
Communications.
1.3 After-Tax Contributions: Any amount contributed by a
Participant to the Trust Fund from his Compensation as "After-Tax Basic
Contributions" and "After-Tax Excess Contributions" pursuant to
Section 4.3.
1.4 After-Tax Contribution Account: The account or accounts
maintained for each Participant to reflect his After-Tax Basic
Contributions and After-Tax Excess Contributions, and adjustments relating
thereto.
1.5 Anniversary Date: January 1.
1.6 Beneficiary: Such natural person or persons, or the trustee
of an inter vivos trust for the benefit of natural persons, entitled to
receive a Participant's death benefits under the Plan, as provided in
Section 6.3 hereof.
1.7 Code: The Internal Revenue Code of 1986, as amended.
1.8 Committee: The Compensation and Benefits Committee as
described in Article II.
3<PAGE>
<PAGE>
1.9 Company: Houston Industries Incorporated, a Texas corporation,
or a successor to Houston Industries Incorporated in the ownership of
substantially all of its assets, and prior to January 14, 1977, Houston
Lighting and Power Company, a Texas corporation.
1.10 Company Stock: Common stock or convertible preference stock
of the Company which constitute employer securities within the meaning of
Section 409(l) of the Code.
1.11 Compensation: The total cash compensation actually paid to the
respective Participants by the Employer during the applicable payroll
period plus any amounts contributed by an Employer pursuant to a salary
reduction agreement and which is not includable in gross income of the
Participant under Code Section 125. Compensation specifically includes
salaries, wages, commissions, overtime pay, benefits paid under the Houston
Industries Incorporated Executive Incentive Compensation Plan (including
annual and long-term awards), and any other payments of compensation which
would be subject to tax under Code Section 3101(a), without the dollar
limitations of Code Section 3121(a)(1). Compensation specifically excludes
expense allowances and contributions of the Employer to or benefits under
this Plan or any other welfare or deferred compensation plan not expressly
included above. The Compensation of the respective Participants as
reflected by the books and records of the Employer shall be conclusive.
Notwithstanding anything herein to the contrary, in no event shall
(i) Compensation include any payments made in connection with a
Participant's termination of employment or severance pay or
(ii) Compensation taken into account under the Plan for any Participant
during a given Plan Year beginning on or after the Effective Date exceed
$150,000, or such other dollar amount as may be prescribed by the Secretary
of the Treasury or his delegate. For purposes of applying the $150,000
limit on Compensation, the family unit of an Employee who either is a five
percent (5 percent) owner or is both a highly compensated employee and one
(1) of the ten (10) most highly compensated employees will be treated as
a single Employee with one Compensation, and the $150,000 limit will be
allocated among the members of the family unit in proportion to the total
Compensation of each member of the family unit. For this purpose, a family
unit consists of the Employee who is a five percent (5 percent) owner or
one (1) of the ten (10) most highly compensated employees, the Employee's
spouse, and the Employee's lineal descendants who have not attained age
nineteen (19) before the close of the year.
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1.12 Contribution: Any amount contributed to the Trust Fund
pursuant to the provisions of this Plan by the Employer or by a Participant
from his Compensation, including ESOP Contributions, Employer Matching
Contributions, Pre-Tax Basic Contributions, Pre-Tax Excess Contributions,
After-Tax Basic Contributions, and After-Tax Excess Contributions.
1.13 Defined Benefit Plan: The Retirement Plan for Employees of
Houston Industries Incorporated, the KBLCOM Retirement Plan and/or any
other defined benefit plan (as defined in Section 415(k) of the Code)
maintained by the Company or by any Affiliate.
1.14 Effective Date: January 1, 1994.
1.15 Employee: Any person regularly and principally employed by an
Employer, and including any "leased employee" (as defined in Section 414
of the Code, subject to Section 414(n)(5)) performing services for an
Employer.
1.16 Employer: The Company, its successors, Houston Lighting and
Power Company, Houston Industries Energy, Inc., Houston Industries
Products, Inc., KBLCOM Incorporated, and any other eligible organization
that shall adopt this Plan pursuant to the provisions of Article X, and the
successors, if any, to such organization.
1.17 Employer Contributions: Collectively, the Employer Matching
Contributions and ESOP Contributions.
1.18 Employer Matching Account: The account maintained to reflect
the Employer Matching Contributions to the Plan for each Participant or to
the applicable Prior Plan for each Prior Plan Participant, and any
adjustments thereto made pursuant to the provisions of the Plan.
1.19 Employer Matching Contributions: Any amount, with the
exception of ESOP Contributions, contributed to the Trust Fund by the
Employer pursuant to Section 4.1.
1.20 Entry Date: January 1 of each Plan Year.
1.21 ERISA: Public Law No. 93-406, the Employee Retirement Income
Security Act of 1974, as amended from time to time.
1.22 ESOP Account: The account maintained for each Participant to
reflect the interest in the ESOP Fund allocated to each Participant.
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1.23 ESOP Contributions: The Employer Contributions to the ESOP
Trust for the purpose of repayment of an Exempt Loan, as described in
Section 4.1.
1.24 ESOP Fund: The investment fund held by the ESOP Trustee which
shall be primarily invested and reinvested in shares of Company Stock.
1.25 ESOP Trustee: State Street Bank and Trust Company, a
Massachusetts trust company.
1.26 Exempt Loan: Any loan or other extension of credit that is
used to finance the purchase of Company Stock by the Trustee and that meets
the requirements of Section 5.6.
1.27 Financed Stock: Company Stock acquired with the proceeds of
an Exempt Loan; provided, however, that the number of shares of Financed
Stock shall be proportionately adjusted to reflect any share split, share
dividend or combination of outstanding shares of the Company Stock that
were acquired with the proceeds of an Exempt Loan.
1.28 Fiduciaries: The Employer, the Committee, the ESOP Trustee,
the Savings Trustee, and any other person designated as a Fiduciary with
respect to the Plan or the Trust Agreements, but only with respect to the
specific responsibilities of each as described in Section 2.13 hereof. Any
person or group of persons may serve in more than one fiduciary capacity
with respect to the Plan.
1.29 HII Participant: A Participant who is participating in this
Plan as an employee of Houston Industries Incorporated or as an employee
of any of its subsidiaries or affiliates which, together with the Company,
is treated as constituting a part of the same "qualifying separate line of
business" within the meaning of Section 414(r) of the Code.
1.30 Investment Fund: One (1) of the four (4) Investment Funds held
under the Trust Fund, as described in Section 8.1.
1.31 Investment Manager: The Investment Manager, if any, appointed
under the Savings Trust, as such term is defined by Section 3(38) of ERISA.
1.32 KBLCOM Participant: A Participant who is participating in this
Plan as an employee of KBLCOM Incorporated or as an employee of any of its
subsidiaries or affiliates which, together with KBLCOM, is treated as
constituting a part of the same "qualifying separate line of business"
within the meaning of Section 414(r) of the Code.
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1.33 Participant: An eligible Employee who, pursuant to the
provisions of Article III hereof, has elected to participate in the Plan,
and who at any relevant time is either making, or has made, Pre-Tax Basic
Contributions and/or After-Tax Basic Contributions to the Plan, and for
whom contribution accounts continue to be held under the Plan.
1.34 Plan: The Savings Plan set forth herein, intended to
constitute a profit-sharing plan under Section 401(a)(27) of the Code and
an employee stock ownership plan under Section 4975(e)(7) of the Code,
including all subsequent amendments hereto.
1.35 Plan Year: Each fiscal year commencing January 1 and ending
December 31 of each calendar year.
1.36 Pre-Tax Contributions: Any amount deferred by a Participant
from his Compensation as "Pre-Tax Basic Contributions" and "Pre-Tax Excess
Contributions" pursuant to Section 4.2.
1.37 Pre-Tax Contribution Account: The account or accounts
maintained for each Participant to reflect his Pre-Tax Basic Contributions
and Pre-Tax Excess Contributions to the Plan, and any adjustments thereto
made pursuant to the provisions of the Plan.
1.38 Prior Plan: The applicable of the (i) Savings Plan of Houston
Industries Incorporated, adopted effective July 1, 1973, as amended and
restated effective October 5, 1990 and as thereafter amended and in effect
on December 31, 1993, and (ii) the KBLCOM Incorporated Savings Plan, as
established July 1, 1989 and as thereafter amended and in effect on
December 31, 1993.
1.39 Prior Plan Participant: Any person who is in the employment
of an Employer or Affiliate on the Effective Date and was included in and
covered by the applicable Prior Plan immediately prior thereto, or who is
the alternate payee, beneficiary, spouse or estate representative of such
a person who died or was receiving or entitled to receive benefits under
the Prior Plan.
1.40 Retirement: Termination of employment on or after the
Retirement Date of a Participant.
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1.41 Retirement Date: With respect to HII Participants employed
prior to January 1, 1988 and with respect to KBLCOM Participants hired
prior to July 1, 1989, the term "Retirement Date" shall mean the first day
of the calendar month coincident with or next following the sixty-fifth
(65th) birthday of a Participant; and, with respect to HII Participants
hired on or after January 1, 1988 and with respect to KBLCOM Participants
hired on or after July 1, 1989, such term shall mean the later of (i) the
Participant's attainment of age sixty-five (65) or (ii) the Participant's
completion of five (5) years of Vesting Service.
1.42 Savings Trustee: Texas Commerce Bank National Association.
1.43 Service: Active employment as an Employee of an Employer and
periods of Authorized Absences of the kinds described in Section 3.5.
1.44 Stock Suspense Account: The suspense account maintained by the
ESOP Trustee in accordance with Section 5.1 and to which will be credited
all shares of Financed Stock prior to the allocation of such shares to the
ESOP Accounts in accordance with Section 5.3.
1.45 Trust Agreements: The Houston Industries Incorporated Master
Savings Trust, as amended and restated effective January 1, 1994
(the "Savings Trust"), and the Savings Plan of Houston Industries
Incorporated ESOP Trust, as established October 5, 1990 (the "ESOP Trust"),
as either may hereafter be amended from time to time.
1.46 Trust Fund: All contributions of Employers and Participants,
and the investments and reinvestments thereof, held by the Trustees under
the Trust Agreements, together with all income, profits or increments
thereon.
1.47 Trustees: Collectively, the ESOP Trustee and the Savings
Trustee.
1.48 Valuation Date: The last business day of each calendar month
during the Plan Year and any other date on which the value of the assets
of the Trust Fund is determined by the Trustees pursuant to Section 5.2.
The last business day of each calendar month shall be the "monthly
Valuation Date," and the last day of December of each Plan Year shall be
the "annual Valuation Date."
1.49 Vesting Computation Period: The twelve (12) consecutive month
period beginning January 1 and ending December 31.
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1.50 Vesting Service: The period of a Participant's employment
considered in the determination of his eligibility for benefits under
Section 3.6 of the Plan.
Words used in this Plan and in the Trust Agreements in the
singular shall include the plural and in the plural the singular, and the
gender of words used shall be construed to include whichever may be
appropriate under any particular circumstances of the masculine, feminine
or neuter genders.
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ARTICLE II
ADMINISTRATION OF THE PLAN
2.1 Appointment of Committee: The Board of Directors of the
Company shall appoint a Committee of not less than three (3) persons, who
may be Employees of the Company, to perform the administrative duties set
forth herein. The Committee shall be the administrator of the Plan for the
purposes of ERISA. Each member of the Committee shall serve for such term
as the Board of Directors of the Company may designate or until his death,
resignation or removal by the Board. The Board of Directors of the Company
shall promptly appoint successors to fill any vacancies in the Committee.
2.2 Records of Committee: The Committee shall keep appropriate
records of its proceedings and the administration of the Plan. The
Committee shall make available to Participants and their Beneficiaries for
examination, during business hours, such records of the Plan as pertain to
the examining person and such documents relating to the Plan as are
required by any applicable disclosure acts.
2.3 Committee Action: The Committee may act through the
concurrence of a majority of its members expressed either at a meeting of
the Committee, or in writing without a meeting. Any member of the
Committee, or the Secretary or Assistant Secretary of the Committee (who
need not be members of the Committee), may execute on behalf of the
Committee any certificate or other written instrument evidencing or
carrying out any action approved by the Committee. The Committee may
delegate any of its rights, powers and duties to any one or more of its
members. The Chairman of the Committee shall be agent of the Plan and the
Committee for the service of legal process at the principal office of the
Company in Houston, Texas.
2.4 Committee Disqualification: A member of the Committee who may
be a Participant shall not vote on any question relating specifically to
himself.
2.5 Committee Compensation and Expenses: The members of the
Committee shall serve without bond (unless otherwise required by law) and
without compensation for their services as such. The Committee may select
and authorize the Trustee to suitably compensate such attorneys, agents and
representatives as it may deem necessary or advisable to the performance
of its duties. Expenses of the Committee that shall arise in connection
with the administration of the Plan shall be paid by the Company or, if not
paid by the Company, by the Trustees out of the Trust Fund.
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2.6 Committee Liability: Except to the extent that such liability
is created by ERISA, no member of the Committee shall be liable for any act
or omission of any other member of the Committee, nor for any act or
omission on his own part except for his gross negligence or willful
misconduct, nor for the exercise of any power or discretion in the
performance of any duty assumed by him hereunder. The Company shall
indemnify and hold harmless each member of the Committee from any and all
claims, losses, damages, expenses (including counsel fees approved by the
Committee) and liabilities (including any amounts paid in settlement with
the Committee's approval, but excluding any excise tax assessed against any
member or members of the Committee pursuant to the provisions of
Section 4975 of the Code) arising from any act or omission of such member
in connection with duties and responsibilities under the Plan, except where
the same is judicially determined to be due to the gross negligence or
willful misconduct of such member.
2.7 Committee Determinations: The Committee shall enforce this
Plan in accordance with its terms and shall have all powers necessary for
the accomplishment of that purpose, including, but not by way of
limitation, the following powers:
(a) To employ such agents and assistants, such counsel
(who may be of counsel to the Company) and such clerical,
accounting, and investment services as the Committee may
require in carrying out the provisions of the Plan.
(b) To authorize one or more of their number, or any
agent, to make payment, or to execute or deliver any
instrument, on behalf of the Committee, except that all
requisitions for funds from, and requests, directions,
notifications, certifications, and instructions to, the
Trustees (except as provided in (i) below) or to the Company
shall be signed either by a member of the Committee or by the
Secretary or Assistant Secretary of the Committee.
(c) To determine from the records of the Company the
considered Compensation, Service and other pertinent facts
regarding Employees and Participants for the purpose of the
Plan.
(d) To construe and interpret the Plan, decide all
questions of eligibility and determine the amount, manner and
time of payment of any benefits hereunder.
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(e) To prescribe forms and procedures to be followed
by Employees for participation in the Plan, by Participants or
Beneficiaries filing applications for benefits, by
Participants applying for withdrawals or loans, and for other
occurrences in the administration of the Plan.
(f) To prepare and distribute, in such manner as the
Committee determines to be appropriate, information explaining
the Plan.
(g) To furnish the Company and the Participants, upon
request, such annual reports with respect to the
administration of the Plan as are reasonable and appropriate.
(h) To certify to the Trustees the amount and kind of
benefits payable to Participants and their Beneficiaries.
(i) To authorize all disbursements by the Trustees
from the Trust Fund by a written authorization signed either
by a member of the Committee or by the Secretary or Assistant
Secretary of the Committee; provided, however, that
disbursements for ordinary expenses incurred in the
administration of the Trust Fund and disbursements to
Participants need not be authorized by the Committee.
(j) In the event of any share split, share dividend or
combination of outstanding shares of Company Stock, to
determine the appropriate allocation of shares of Company
Stock to the Stock Suspense Account and the Accounts
maintained for the Participants and to determine the
appropriate number of shares distributable to a Participant
under Section 6.6 hereof immediately following such share
split, share dividend or combination so as to effectuate the
intent and purpose of the Plan.
(k) To interpret and construe all terms, provisions,
conditions and limitations of this Plan and to reconcile any
inconsistency or supply any omitted detail that may appear in
this Plan in such manner and to such extent, consistent with
the general terms of this Plan, as the Committee shall deem
necessary and proper to effectuate the Plan for the greatest
benefit of all parties interested in the Plan.
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(l) To make and enforce such rules and regulations for
the administration of the Plan as are not inconsistent with
the terms set forth herein.
(m) In addition to all other powers herein granted,
and in general consistent with provisions hereof, the
Committee shall have all other rights and powers reasonably
necessary to supervise and control the administration of this
Plan.
2.8 Information from Employer: To enable the Committee to perform
its functions, the Employer shall supply full and timely information to the
Committee of all matters relating to the dates of employment of its
Employees for purposes of determining eligibility of Employees to
participate hereunder, the Compensation of all Participants, their
Retirement, death or other cause for termination of employment, and such
other pertinent facts as the Committee may require; and the Committee shall
advise the Trustees of such of the foregoing facts as may be pertinent to
the Trustees' administration of the Trust Fund.
2.9 Uniform Administration: Whenever in the administration of the
Plan any action is required by the Employer or the Committee, including,
but not by way of limitation, action with respect to eligibility of
Employees, Contributions, and benefits, such action shall be uniform in
nature as applied to all persons similarly situated, and no action shall
be taken which will discriminate in favor of Participants who are officers
or shareholders of the Employer, highly compensated Employees, or persons
whose principal duties consist of supervising the work of others.
2.10 Reporting Responsibilities: As administrator of the Plan under
ERISA, the Committee shall file with the appropriate office of the Internal
Revenue Service or the Department of Labor all reports, returns and notices
required under ERISA, including, but not limited to, the summary Plan
description, annual reports and amendments thereof to be filed with the
Department of Labor, and requests for determination letters, annual
report(s) and registration statement(s) required by Section 6057(a) of the
Code.
2.11 Disclosure Responsibilities: The Committee shall make
available to each Participant and Beneficiary such records, documents and
other data as may be required under ERISA, and Participants or
Beneficiaries shall have the right to examine such records at reasonable
times during business hours. Nothing contained in this Plan shall give any
Participant or Beneficiary the right to examine any data or records
reflecting the Compensation paid to, or relating to any Account of, any
other Participant or Beneficiary, except as may be required under ERISA.
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2.12 Annual Statements: As soon as practicable after each annual
(December 31) Valuation Date, the Committee shall prepare and deliver to
each Participant a written statement reflecting as of that annual Valuation
Date:
(a) Such information applicable to contributions by
and for each such Participant and the increase or decrease
thereof as a consequence of valuation adjustments as may be
pertinent in the premises.
(b) The balance in his Account as of that annual
Valuation Date.
2.13 Allocation of Responsibility Among Fiduciaries for Plan and
Trust Administration: The Fiduciaries shall have only those specific
powers, duties, responsibilities and obligations as are specifically given
them under this Plan or the Trust Agreements. In general, the Employer
shall have the sole responsibility for making the Contributions provided
for under Sections 4.1, 4.2 and 4.3. The Company shall have the sole
authority to appoint and remove the Trustees and members of the Committee.
The Company may amend or terminate, in whole or in part, this Plan or the
Trust Agreements. The Committee shall have the sole responsibility for the
administration of the Plan and the sole authority to appoint and remove any
Investment Manager which may be provided for under the Savings Trust. The
Trustees shall have the sole responsibility for the administration of the
Trust Fund and shall have exclusive authority and discretion to manage and
control the assets held under the Trust Fund, except to the extent that the
authority to manage, acquire and dispose of the assets of the Trust Fund
is delegated to an Investment Manager, all as specifically provided in the
Trust Agreements. Each Fiduciary warrants that any directions given,
information furnished, or action taken by it shall be in accordance with
the provisions of the Plan or the Trust Agreements, as the case may be,
authorizing or providing for such direction, information or action.
Furthermore, each Fiduciary may rely upon any such direction, information
or action of another Fiduciary as being proper under this Plan or the Trust
Agreements and is not required under this Plan or the Trust Agreements to
inquire into the propriety of any such direction, information or action.
It is intended under this Plan and the Trust Agreements that each Fiduciary
shall be responsible for the proper exercise of its own powers, duties,
responsibilities and obligations under this Plan and the Trust Agreements
and shall not be responsible for any act or failure to act of another
Fiduciary. No Fiduciary guarantees the Trust Fund in any manner against
investment loss or depreciation in asset value.
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2.14 Annual Audit: The Committee shall engage, on behalf of all
Participants, an independent Certified Public Accountant who shall conduct
an annual examination of any financial statements of the Plan and Trust
Fund and of other books and records of the Plan and Trust Fund as the
Certified Public Accountant may deem necessary to enable him to form and
provide a written opinion as to whether the financial statements and
related schedules required to be filed with the Department of Labor or
furnished to each Participant are presented fairly and in conformity with
generally accepted accounting principles applied on a basis consistent with
that of the preceding Plan Year. If, however, the statements required to
be submitted as part of the reports to the Department of Labor are prepared
by a bank or similar institution or insurance carrier regulated and
supervised and subject to periodic examination by a state or federal agency
and if such statements are, in fact, made a part of the annual report to
the Department of Labor and no such audit is required by ERISA, then the
audit required by the foregoing provisions of this Section shall be
optional with the Committee.
2.15 Presenting Claims for Benefits: Any Participant or any other
person claiming under any deceased Participant may submit written
application to the Committee for the payment of any benefit asserted to be
due him under the Plan. Such application shall set forth the nature of the
claim and such other information as the Committee may reasonably request.
Promptly upon the receipt of any application required by this Section, the
Committee shall determine whether or not the Participant or Beneficiary
involved is entitled to a benefit hereunder and, if so, the amount thereof
and shall notify the applicant of its findings.
If a claim is wholly or partially denied, the Committee shall
so notify the applicant within ninety (90) days after receipt of the
application by the Committee, unless special circumstances require an
extension of time for processing the application. If such an extension of
time for processing is required, written notice of the extension shall be
furnished to the applicant prior to the end of the initial ninety (90) day
period. In no event shall such extension exceed a period of ninety (90)
days from the end of such initial period. The extension notice shall
indicate the special circumstances requiring an extension of time and the
date by which the Committee expects to render its final decision. Notice
of the Committee's decision to deny a claim in whole or in part shall be
set forth in a manner calculated to be understood by the applicant and
shall contain the following:
(a) the specific reason or reasons for the denial;
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(b) specific reference to the pertinent Plan
provisions on which the denial is based;
(c) a description of any additional material or
information necessary for the applicant to perfect the claim
and an explanation of why such material or information is
necessary; and
(d) an explanation of the claims review procedures set
forth in Section 2.16 hereof.
If notice of denial is not furnished and if the claim is not granted within
the period of time set forth above, the claim shall be deemed denied for
purposes of proceeding to the review stage described in Section 2.16.
2.16 Claims Review Procedure: If an application filed by a
Participant or Beneficiary under Section 2.15 above shall result in a
denial by the Committee of the benefit applied for, either in whole or in
part, such applicant shall have the right, to be exercised by written
request filed with the Committee within sixty (60) days after receipt of
notice of the denial of his application or, if no such notice has been
given, within sixty (60) days after the application is deemed denied under
Section 2.15, for the review of his application and of his entitlement to
the benefit for which he applied. Such request for review may contain such
additional information and comments as the applicant may wish to present.
Within sixty (60) days after receipt of any such request for review, the
Committee shall reconsider the application in light of such additional
information and comments as the applicant may have presented, and if the
applicant shall have so requested, shall afford the applicant a hearing
before the Committee. The Committee shall also permit the applicant or his
designated representative to review pertinent documents in its possession,
including copies of the Plan document and information provided by the
Employer relating to the applicant's entitlement to such benefit. The
Committee shall make a final determination with respect to the applicant's
application for review as soon as practicable, and in any event not later
than sixty (60) days after receipt of the aforesaid request for review,
except that under special circumstances, such as the necessity for holding
a hearing, such sixty (60) day period may be extended to the extent
necessary, but in no event beyond the expiration of one hundred twenty
(120) days after receipt by the Committee of such request. If such an
extension of time for review is required because of special circumstances,
written notice of the extension shall be furnished to the applicant prior
to the commencement of the extension. Notice of such final determination
of the Committee shall be furnished to the applicant in writing, in a
manner calculated to be understood by him, and shall set forth the specific
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reasons for the decision and specific references to the pertinent
provisions of the Plan upon which the decision is based. If the decision
on review is not furnished within the time period set forth above, the
claim shall be deemed denied on review.
2.17 Disputed Benefits: If any dispute shall arise between a
Participant or other person claiming under a Participant and the Committee
after review of a claim for benefits, or in the event any dispute shall
develop as to the person to whom the payment of any benefit under the Plan
shall be made, the Trustee may withhold the payment of all or any part of
the benefits payable hereunder to the Participant or other person claiming
under the Participant until such dispute has been resolved by a court of
competent jurisdiction or settled by the parties involved.
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ARTICLE III
PARTICIPATION IN THE PLAN
3.1 Eligibility of Employees: An Employee eligible under the
applicable Prior Plan immediately preceding the Effective Date shall
continue to be eligible to participate in this Plan in accordance with the
provisions of this Plan. Each of (i) an Employee who is employed as a
building trades worker under a construction industry collective bargaining
agreement providing specifically for retirement benefit payments to be made
thereunder for such building trades worker and (ii) an Employee who is a
"leased employee" as defined in Section 414(n) of the Code shall be
ineligible to participate in this Plan. Each Employee who is not
ineligible and who begins Service with the Employer on or before October
1 of any Plan Year shall be eligible to participate in the Plan as of the
next following Entry Date.
3.2 Employee Information: The Committee shall maintain records
which shall reflect as to each Employee his date of birth, all dates
reflecting when he entered into or left the employment of any Employer, and
his years of Vesting Service. The Employer shall make available to the
Committee all such information as may be required by the Committee for the
purposes of maintaining such information as to each Employee.
3.3 Notification of Eligible Employees: The Committee shall notify
each Employee included for the first time in any list of eligible Employees
that he is eligible to participate in the Plan.
3.4 Application by Participants: Each Employee who shall become
eligible to participate in the Plan and who shall desire to become a
Participant shall execute and file with the Committee an application in
such form as may be prescribed by the Committee in which the Participant
shall elect to make and designate the amount of his Contributions, as
contemplated under Sections 4.2 and 4.3 hereof, and his choice of
investment options under Section 8.1 hereof.
3.5 Authorized Absences: Authorized Absences shall have the
following meaning and consequences:
(a) The following shall be "Authorized Absences":
(i) Absence without pay of an Employee due
to membership in the Armed Forces of the United
States (but if such absence is not pursuant to
orders issued by the Armed Forces of the United
States, only if with the consent of the Employer).
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(ii) Absence due to an authorized leave of
absence without pay granted by the Employer in a
non-discriminatory manner in order that all
Employees under similar circumstances shall be
treated alike.
(iii) An absence otherwise recognized as an
"Authorized Absence" shall not be so recognized
(1) under (i) above unless such Employee shall
apply for reinstatement in the employment of
Employer within ninety (90) days after discharge
or release to inactive duty, as the case may be,
or (2) under (ii) above unless within ten (10)
days after the expiration date thereof such
Employee shall apply for reinstatement in the
employment of the Employer.
(b) The years of Vesting Service of an Employee
immediately after his re-employment following an Authorized
Absence shall be determined as if he had continued employment
throughout his Authorized Absence. If, however, an Employee,
following his re-employment after an Authorized Absence,
thereafter terminates his employment (other than as a
consequence of Retirement, death, disability, or subsequent
Authorized Absence) before completion of one (1) year of
Service or fails to apply for re-employment as specified under
Section 3.5(a)(iii), the commencement date of his Authorized
Absence will be treated as having marked the termination of
the employment of such Employee for all purposes of the Plan
(including specifically but without limitation his years of
Vesting Service); provided that for valuation purposes only,
the distributions from the Plan to which such an Employee may
then be entitled shall be determined by reference to the value
of his Pre-Tax Contribution Account, his After-Tax
Contribution Account, his Employer Matching Account and his
ESOP Account as of the last immediately preceding Valuation
Date.
(c) Solely for the purpose of determining the
eligibility of an Employee to participate in the Plan
immediately following the resumption of his employment after
expiration of his Authorized Absence, the employment status of
such Employee prior to his Authorized Absence shall be
considered as continuing throughout his Authorized Absence.
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3.6 Vesting Service: An Employee shall be credited with one (1)
and only one (1) year of Vesting Service for each Vesting Computation
Period before or after the Effective Date during which such Employee
completes at least one thousand (1,000) Hours of Service for an Employer
or an Affiliate. An Employee will not be credited with a year of Vesting
Service with respect to a Vesting Computation Period if the Employee
completes less than one thousand (1,000) Hours of Service for the Employer
or an Affiliate during such Vesting Computation Period.
3.7 Hour of Service: An Employee shall be credited with an Hour
of Service as follows:
(a) An Hour of Service shall be credited to an
Employee for each hour for which an Employee is directly paid,
or entitled to payment, by the Employer or an Affiliate for
the performance of duties during the applicable computation
period. Such hours shall be credited to the Employee for the
computation period or periods in which the duties were
performed.
(b) An Hour of Service shall be credited to an
Employee for each hour for which back pay, irrespective of
mitigation of damages, has been either awarded or agreed to by
the Employer or an Affiliate. These hours shall be credited
to the Employee for the computation period or periods to which
the award or agreement pertains rather than the computation
period in which the award, agreement, or payment is made.
Hours of Service shall not be credited to an Employee under
both paragraphs (a) and (b) of this Section.
(c) In addition to Hours of Service credited in
paragraphs (a) and (b) of this Section, an Hour of Service
shall be credited to an Employee for each hour for which such
Employee is directly or indirectly paid, or entitled to such
payment by the Employer or an Affiliate for reasons (such as
vacation, sickness, or disability) other than for the
performance of duties during the applicable computation
period. For purposes of this paragraph (c), irrespective of
whether such hours have accrued in other computation periods,
such hours shall be counted in the computation period in which
either payment is actually made or amounts payable to the
Employee become due. For purposes of this paragraph (c),
Hours of Service shall be determined by dividing the payments
received or due for reasons other than the performance of
duties by the lesser of (i) the Employee's most recent hourly
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rates of compensation for the performance of duties or (ii) the
Employee's average hourly rate of compensation for the performance
of duties for the most recent computation period in which the
Employee completed more than five hundred (500) Hours of Service.
(d) The number of Hours of Service which are credited for
reasons other than the performance of duties for the Employer in
determining a Break In Service shall be determined in accordance
with Sections 2530.200b-2(b) and (c) of Title 29, Chapter XXV of the
Code of Federal Regulations.
Hours of Service will be credited for employment with other members
of an affiliated service group (under Section 414(m)), a controlled
group of corporations (under Section 414(b)), or a group of trades
or businesses under common control (under Section 414(c)) of which
the adopting Employer is a member.
Notwithstanding the foregoing, no Hours of Service will be
credited for a KBLCOM Participant's employment with an "employer" as
defined in the KBLCOM Incorporated Savings Plan prior to the later
of (i) July 1, 1989 or (ii) the date such "employer" became an
Affiliate of KBLCOM.
Solely for purposes of determining whether a Break In Service,
as defined in Section 3.8, for participation and vesting purposes
has occurred in a computation period for any Plan Year beginning
after December 31, 1984, an individual who is absent from work for
maternity or paternity reasons shall receive credit for the Hours of
Service which would otherwise have been credited to such individual
but for such absence, or in any case in which such hours cannot be
determined, eight (8) Hours of Service per day of such absence. For
purposes of this paragraph, an absence from work for maternity or
paternity reasons means an absence (i) by reason of the pregnancy of
the individual, (ii) by reason of the birth of a child of the
individual, (iii) by reason of the placement of a child with the
individual in connection with the adoption of such child by such
individual, or (iv) for purposes of caring for such child for a
period beginning immediately following such birth or placement. The
Hours of Service credited under this paragraph shall be credited
(1) in the computation period in which the absence begins if the
crediting is necessary to prevent a Break In Service in that period
or (2) in all other cases, in the following computation period.
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3.8 Break In Service: A Vesting Computation Period during which
a Participant completes five hundred (500) Hours of Service or less for an
Employer or an Affiliate shall constitute a Break In Service. Upon
incurring a Break In Service, an Employee's or former Employee's rights and
benefits under this Plan shall be determined as provided in Section 3.9.
In the case of a Participant who incurs a Break In Service and
is not again employed by the Employer, such Participant's Vesting Service
shall consist of such Service which is properly credited to the Participant
prior to the Vesting Computation Period in which such Break In Service
occurred.
3.9 Participation and Vesting Upon Re-Employment: Participation
in the Plan shall cease at the close of the month during which termination
of Service occurs. Termination of Service may result from Retirement,
death or voluntary or involuntary termination of employment with the
Employer and its Affiliates, if any, unauthorized absence, or by failure
to return to active employment with the Employer by the date on which an
Authorized Absence expired. Upon the re-employment of any person before
he has a Break In Service, he shall participate in the Plan as of the date
of his re-employment or, if later, as of the Entry Date next following the
date he meets the requirements of Section 3.1, and he may be entitled to
a reinstated Employer Matching Account and ESOP Account if he had received
no distribution by reason of his prior termination of Service. Upon the
re-employment after a Break In Service of any person who had previously
been employed by the Employer, the following rules shall apply in
determining his Participation in the Plan and his Vesting Service under
Sections 3.1 and 3.6:
(a) Participation: If the re-employed Employee was
not a Participant in the Plan during his prior period of
Service, he shall commence participation in the Plan when he
meets the requirements of Section 3.1. If the re-employed
Employee was a Participant in the Plan during his prior period
of Service, he shall recommence participation in the Plan on
the date of his re-employment, and the allocations to his
Employer Matching Account and ESOP Account shall be reinstated
as provided in Section 5.3.
(b) Vesting: In the case of a Participant whose prior
Service terminated with entitlement to a distribution from his
Employer Matching Account or his ESOP Account under any
provision of Article VI, any Vesting Service attributable to
his prior period of employment shall be reinstated as of the
date of his re-employment and his Employer Matching Account,
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and his ESOP Account shall be reinstated, less any distributions
therefrom to the Participant. In the case of a Participant whose
prior employment terminated without entitlement to a distribution
from his Employer Matching Account or ESOP Account under Article VI,
any Vesting Service attributable to his prior period of employment
shall be reinstated as of the date of his recommencement of
participation, and his Employer Matching Account and ESOP Account
shall be reinstated.
3.10 Transfers:
(a) For the purposes of determining eligibility to
participate in the Plan and Service under this Article III, a
Participant shall receive Vesting Service and Hours of Service
for employment with an Affiliate after it became an Affiliate,
provided that all such employment is determined in accordance
with the re-employment provisions of Section 3.9.
If an individual is transferred to eligible
employment covered by this Plan from employment with an
Employer or Affiliate not covered by the Plan, he shall be
eligible to participate in this Plan as of the date of his
transfer, provided he would otherwise meet the requirements of
Section 3.1, or else on the following Entry Date. In
addition, if such transferred Participant had an account in a
qualified defined contribution plan maintained by such
Affiliate, such account shall be transferred to the Trust Fund
under this Plan if the transfer is permitted by the terms of
said plan and if the Committee determines that the transferred
account will not fail to satisfy Section 401(a) or 411(d)(6)
of the Code. Any transferred account shall be subject to the
provisions of this Plan; provided, however, that the vesting
provisions of the transferor plan shall continue to apply.
(b) If a Participant is transferred to employment with
an Employer or Affiliate which is not eligible employment
covered by the Plan, his participation in the Plan shall be
suspended, provided, however, that during the period of his
employment in such ineligible position:
(i) subject to the re-employment
provisions of Section 3.9, service for vesting
purposes shall continue to accrue;
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(ii) he shall cease to have any right to
make Contributions pursuant to Sections 4.2 and
4.3;
(iii) his Employer Matching Account and ESOP
Account shall receive no Employer Matching
Contribution or ESOP Contribution allocations
under Section 4.1;
(iv) he shall continue to participate in
income allocations of the earnings and/or losses
of the Trust Fund pursuant to Section 5.3;
(v) no distribution event shall be deemed
to have occurred under Section 6.1; and
(vi) the loan privileges under Article VII
and the provisions of Article VIII shall continue
to apply.
In addition, the Committee may, at its discretion,
authorize the transfer of his Accounts under this Plan to the
Trust Fund funding the qualified defined contribution plan, if
any, of the Affiliate to which the Participant was
transferred. In such event, the provisions of the transferee
plan shall govern.
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ARTICLE IV
CONTRIBUTIONS TO THE PLAN
4.1 Employer Contributions: For each Plan Year during which an
Exempt Loan is outstanding, the Employer shall make an ESOP Contribution
to the ESOP Trust in such amount and at such times as shall be determined
by the Company.
The Employer shall also make an Employer Matching Contribution
(subject to adjustments for forfeitures and limitations on annual additions
as elsewhere specified in the Plan) in the amount, if any, necessary to
result in a total allocation under Article V to each Participant's Prior
Plan and ESOP Accounts of not less than (i) seventy percent (70 percent)
of the total of his Pre-Tax Basic Contribution and After-Tax Basic
Contribution for the Plan Year in the case of HII Participants and
(ii) seventy percent (70 percent) of the total of his Pre-Tax Basic
Contribution for the Plan Year in the case of KBLCOM Participants.
Further, the Employer shall make an additional ESOP Contribution and/or
Employer Matching Contribution, if necessary, to make the allocation
required under Section 5.3(d)(ii) with respect to dividends used to repay
an Exempt Loan.
To the extent specified in Section 5.3(d)(iii), any amounts
attributable to forfeitures will be applied to reduce, to the extent of
such forfeitures, the Employer Matching Contributions required to be made
next following the determination of any such forfeiture amounts.
In the event that a forfeiture arising under Section 6.1 is
reinstated under Section 6.8 because of the return to the employment of the
terminated Participant, or in the event that a forfeiture arising under
Section 6.11 is reinstated in accordance with the provisions of
Section 6.11 because of an appropriate claim of forfeited unclaimed benefit
by the Participant, Beneficiary or other distributee, the Employer shall
contribute, within a reasonable time following such re-employment or claim,
an amount equal to the forfeiture to be reinstated.
4.2 Pre-Tax Contributions: Each Participant who has elected to
defer a portion of his salary as a Pre-Tax Basic Contribution to the Plan
pursuant to Section 3.4 shall defer as his Pre-Tax Basic Contribution to
the Trust Fund one percent (1 percent), two percent (2 percent), three
percent (3 percent), four percent (4 percent), five percent (5 percent),
or six percent (6 percent), as he may designate, of his Compensation. In
addition, each HII Participant may also elect to defer any whole percent,
up to a maximum of ten percent (10 percent), of his Compensation, and each
KBLCOM Participant may also elect to defer any whole percent, up to a
maximum of four percent (4 percent), of his Compensation, as a
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Pre-Tax Excess Contribution. Each Participant's Pre-Tax Basic Contribution
and Pre-Tax Excess Contribution, if any, shall be contributed to the Trust
Fund by the Employer as soon as practicable. A Participant's Pre-Tax
Contributions under this Plan and all other plans, contracts or
arrangements of the Employer shall not exceed a maximum contribution of
$8,994 (as adjusted by the Secretary of the Treasury) for each calendar
year. In the event a Participant's Pre-Tax Contributions exceed the
applicable limit described in the preceding sentence, or in the event the
Participant submits a written claim to the Committee, at the time and in
the manner prescribed by the Committee, specifying an amount of Pre-Tax
Contributions that will exceed the applicable limit of Section 402(g) of
the Code when added to the amounts deferred by the Participant in other
plans or arrangements, such excess (the "Excess Deferrals"), plus any
income and minus any loss allocable to such amount, shall be returned to
the Participant by the April 15 of the following year. Excess Deferrals
shall be treated as Annual Additions under Section 5.5 of the Plan. Each
Participant's Pre-Tax Contribution Account shall be fully vested and
non-forfeitable at all times.
Each Participant shall give the Committee written notification
at least forty-five (45) days prior to enrollment (or on the date of
enrollment if participation commences immediately upon re-employment) of
the amount he elects to defer as a Pre-Tax Basic Contribution and as a
Pre-Tax Excess Contribution until the next following January 1, or until
the Committee may authorize the discontinuance of the Pre-Tax Contributions
according to uniform, non-discriminatory policies applied by the Committee.
Each such election shall continue in effect during subsequent Plan Years
unless the Participant shall timely notify the Committee in writing of his
election to change or discontinue his Pre-Tax Basic Contribution or his
Pre-Tax Excess Contribution.
A Participant may change the amount of his Pre-Tax Basic
Contribution and/or Pre-Tax Excess Contribution as of January 1 of any Plan
Year by directing the Committee in writing at least forty-five (45) days
prior to such date to change the rate of the Contribution(s). A Participant
may discontinue his Pre-Tax Basic Contribution and/or Pre-Tax Excess
Contribution as of the January 1 of any Plan Year by directing the
Committee in writing at least forty-five (45) days prior to such date to
discontinue the deferral of his Compensation. Any Participant who
discontinues his Pre-Tax Basic Contribution or Pre-Tax Excess Contribution
shall be ineligible to recommence such Contribution prior to a subsequent
January 1.
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4.3 After-Tax Contributions: Each HII Participant who has elected
to make a Pre-Tax Basic Contribution of less than six percent (6 percent)
of his Compensation may elect to make an After-Tax Basic Contribution to
the Plan pursuant to Section 3.4 of one percent (1 percent), two percent
(2 percent), three percent (3 percent), four percent (4 percent), five
percent (5 percent) or six percent (6 percent), as he may designate, of his
Compensation, provided that the total of his Pre-Tax Basic Contribution,
if any, and his After-Tax Basic Contribution does not exceed six percent
(6 percent) of his Compensation. In addition, each HII Participant who has
elected to make a Pre-Tax Excess Contribution of less than ten percent (10
percent) of his Compensation may elect to contribute to the Plan any whole
percent, up to a maximum of ten percent (10 percent), of his Compensation,
as an After-Tax Excess Contribution; provided that the total of his Pre-Tax
Excess Contribution, if any, and his After-Tax Excess Contribution does not
exceed ten percent (10 percent) of his Compensation. Each HII
Participant's After-Tax Basic Contribution and After-Tax Excess
Contribution, if any, shall be withheld from each of his paychecks and
contributed to the Trust Fund by the Employer as soon as practicable. Each
HII Participant's After-Tax Contribution Account shall be fully vested and
non-forfeitable at all times.
Each HII Participant shall give the Committee written
notification at least forty-five (45) days prior to enrollment (or on the
date of enrollment if participation commences immediately upon
re-employment) of the amount he elects to contribute as an After-Tax Basic
Contribution and as an After-Tax Excess Contribution until the next
following January 1, or until the Committee may authorize the
discontinuance of the After-Tax Basic Contributions or the After-Tax Excess
Contributions according to uniform, non-discriminatory policies which may
be developed by the Committee. Each such election shall continue in effect
during subsequent Plan Years unless the HII Participant shall timely notify
the Committee in writing of his election to change or discontinue his
After-Tax Basic Contribution or his After-Tax Excess Contribution.
An HII Participant may change the amount of his After-Tax Basic
Contribution and/or After-Tax Excess Contribution as of January 1 of any
Plan Year by directing the Committee in writing at least forty-five (45)
days prior to such date to change the rate of the Contribution(s). An HII
Participant may discontinue his After-Tax Basic Contribution and/or
After-Tax Excess Contribution as of the January 1 of any Plan Year by
directing the Committee in writing at least forty-five (45) days prior to
such date to discontinue the withholding therefor from his Compensation.
Any HII Participant who discontinues his After-Tax Basic Contribution or
After-Tax Excess Contribution shall be ineligible to recommence such
Contribution prior to a subsequent January 1.
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KBLCOM Participants are not eligible to make After-Tax Basic
Contributions or After-Tax Excess Contributions.
4.4 Actual Deferral Percentage: The Actual Deferral Percentage for
a specified group of Employees for a Plan Year shall be the average of the
ratios (calculated separately for each Employee in such group) of:
(a) the amount of Pre-Tax Contributions actually paid
to the Plan on behalf of each such Employee for such Plan
Year; over
(b) the Employee's Compensation (as defined in
Section 5.5(d)(6)) for such Plan Year. Notwithstanding any
provision in this Plan to the contrary, an Employer may, to
the extent permitted by the Code and applicable regulations,
elect to include as Compensation pre-tax or after-tax
contributions made under this Plan or any other plan of the
Employer.
An eligible Employee for the purpose of computing the Actual
Deferral Percentage is defined in Treasury Regulation
Section 1.401(k)-1(g)(4). The Actual Deferral Percentage of an eligible
Employee who makes no Pre-Tax Contributions is zero (0).
4.5 Actual Deferral Percentage Limits: The Actual Deferral
Percentage for the eligible Highly Compensated Employees for any Plan Year
shall not exceed the greater of (a) or (b), as follows:
(a) the Actual Deferral Percentage of Compensation for
the eligible non-Highly Compensated Employees times 1.25; or
(b) the lesser of (i) the Actual Deferral Percentage
of Compensation for the eligible non-Highly Compensated
Employees times 2.0 or (ii) the Actual Deferral Percentage of
Compensation for the eligible non-Highly Compensated Employees
plus two (2) percentage points or such lesser amount as the
Secretary of the Treasury shall prescribe to prevent the
multiple use of this alternative limitation with respect to
any Highly Compensated Employee.
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"Highly Compensated Employee" shall mean any
Employee and any employee of an Affiliate who is a highly
compensated employee under Section 414(q) of the Code,
including any Employee and any employee of an Affiliate who is
a highly compensated employee under Section 414(q) of the Code
and who, during the current Plan Year or prior Plan Year:
(i) was at any time a five percent (5
percent) owner; or
(ii) received Compensation (as defined in
Section 5.5(d)(6)) in excess of $75,000 (or such
other amount as determined by the Secretary of the
Treasury which reflects cost-of-living increases
in accordance with the provisions of Code
Section 414(q)(1)); or
(iii) received Compensation (as defined in
Section 5.5(d)(6)) in excess of $50,000 (or such
other amount as determined by the Secretary of the
Treasury which reflects cost-of-living increases
in accordance with the provisions of Code
Section 414(q)(1)) and was in the "top-paid group"
(the top twenty percent (20 percent) of payroll,
excluding Employees described in Code
Section 414(q)(8) and applicable regulations) for
the Plan Year; or
(iv) was an officer receiving Compensation
(as defined in Section 5.5(d)(6)) exceeding fifty
percent (50 percent) of the dollar limit in
Section 415(b)(1)(A) of the Code. The number of
officers shall be limited to fifty (50) employees
(or, if lesser, the greater of three (3) employees
or ten percent (10 percent) of the employees).
If for any year no officer of the Employer is described in
subparagraph (iv) above, the highest paid officer of the Employer for such
year shall be treated as described in such paragraph.
In determining an Employee's status as a Highly Compensated
Employee within the meaning of Section 414(q), the entities set forth in
Treasury Regulation Section 1.414(q)-1T Q and A-6(a)(1) through (4) must
be taken into account as a single employer.
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For purposes of determining whether an individual is a Highly
Compensated Employee for the current Plan Year, an Employee who meets the
definition of Highly Compensated Employee set forth in this Section by
virtue of subparagraph (ii), (iii) or (iv) for the current Plan Year (but
not for the prior Plan Year) shall not be treated as a Highly Compensated
Employee unless such individual is a member of the group consisting of the
one hundred (100) individuals who were paid the greatest Compensation (as
defined in Section 5.5(d)(6)) during the current Plan Year.
In determining the Actual Deferral Percentage of an Employee
who is a five percent (5 percent) owner or one of the ten (10) most Highly
Compensated Employees and who has a Family Member who is an Employee, any
remuneration paid to the Family Member for services rendered to an Employer
or an Affiliate and any contributions made on behalf of or by such Family
Member shall be attributed to such Highly Compensated Employee. Family
Members, with respect to Highly Compensated Employees, shall be disregarded
as separate Employees in determining the Actual Deferral Percentage both
for Employees who are non-Highly Compensated Employees and for Employees
who are Highly Compensated Employees. "Family Member" means the spouse and
the lineal ascendants and descendants (and spouses of such ascendants and
descendants) of any Employee or former Employee.
The Actual Deferral Percentage for any Highly Compensated
Employee who is eligible to have deferred contributions allocated to his
account under one or more plans described in Section 401(k) of the Code
that are maintained by an Employer or an Affiliate in addition to this Plan
shall be determined as if all such contributions were made to this Plan.
For purposes of determining whether the Actual Deferral Percentage limits
of this Section are satisfied, all Pre-Tax Contributions that are made
under two or more plans that are aggregated for purposes of Code
Section 401(a)(4) or 410(b) (other than Code Section 410(b)(2)(A)(ii)) are
to be treated as made under a single plan, and if two (2) or more plans are
permissively aggregated for purposes of Code Section 401(k), the aggregated
plans must also satisfy Code Sections 401(a)(4) and 410(b) as though they
were a single plan.
4.6 Reduction of Pre-Tax Contribution Rates by Leveling
Method: If, on the basis of the Pre-Tax Contribution rates elected by
Participants for any Plan Year, the Committee determines, in its sole
discretion, that neither of the tests contained in (a) or (b) of
Section 4.5 will be satisfied, the Committee may reduce the Pre-Tax
Contribution rate of any Participant who is among the eligible Highly
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Compensated Employees to the extent necessary to reduce the overall Actual
Deferral Percentage for eligible Highly Compensated Employees to a level
which will satisfy either (a) or (b) of Section 4.5. The reductions in
Pre-Tax Contribution rates shall be made in a manner so that the Actual
Deferral Percentage of the affected Participants who elected the highest
Actual Deferral Percentage shall be first lowered to the level of the
affected Participants who elected the next to the highest Actual Deferral
Percentage. If further overall reductions are required to achieve
compliance with (a) or (b) of Section 4.5, both of the above-described
groups of Participants will be lowered to the level of Participants with
the next highest Actual Deferral Percentage, and so on, until sufficient
total reductions in Pre-Tax Contribution rates have occurred to achieve
compliance with (a) or (b) of Section 4.5. The Committee may, in its
discretion, permit a Participant whose Pre-Tax Contributions are reduced
under this paragraph to contribute a like amount to his After-Tax
Contribution Account.
4.7 Increase in Pre-Tax Contribution Rates: If a Participant's
Pre-Tax Contribution is reduced below the level necessary to satisfy either
(a) or (b) of Section 4.5 for the Plan Year, such Participant may be
eligible to increase his Pre-Tax Contribution rate for the remainder of the
Plan Year to a level not in excess of that level which will satisfy the
greater of (a) or (b) of Section 4.5. Such an increase in the Pre-Tax
Contribution rate shall be made by Participants on a uniform and
non-discriminatory basis, pursuant to such rules and procedures as the
Committee may prescribe.
4.8 Excess Pre-Tax Contributions: As soon as possible following
the end of the Plan Year, the Committee shall determine whether either of
the tests contained in Section 4.5 were satisfied as of the end of the Plan
Year, and any excess Pre-Tax Contributions, plus any income and minus any
loss attributable thereto, of those Participants who are among the Highly
Compensated Employees shall be distributed to such Participants. In
addition, the Employer Contribution made with respect to such excess
Pre-Tax Contributions shall be forfeited and applied to reduce future
Employer Contributions otherwise required under Section 4.1. In the event
of excess Pre-Tax Contributions attributable to a Highly Compensated
Employee whose actual deferral ratio is determined under the rules of
family aggregation, the actual deferral ratio shall be reduced using the
leveling method set forth below, and the excess Pre-Tax Contributions to
be distributed thereby shall be allocated among the Family Members in
proportion to the Pre-Tax Contribution of each Family Member that is
combined to determine the actual deferral ratio. Such income shall include
the allocable gain or loss for the Plan Year only.
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The amount of any excess Pre-Tax Contributions to be
distributed to a Participant shall be reduced by Excess Deferrals
previously distributed to him pursuant to Section 4.2 for the taxable year
ending in the same Plan Year. All excess Pre-Tax Contributions shall be
returned to the Participants no later than the last day of the following
Plan Year. The excess Pre-Tax Contributions, if any, of each Participant
who is among the Highly Compensated Employees shall be determined by
computing the maximum Actual Deferral Percentage which each such
Participant may defer under (a) or (b) of Section 4.5 and then reducing the
Actual Deferral Percentage of some or all of such Participants who elected
an Actual Deferral Percentage in excess of such maximum by an amount of
sufficient size to reduce the overall Actual Deferral Percentage for
eligible Participants who are among the Highly Compensated Employees to a
level which satisfies either (a) or (b) of Section 4.5. The excess Pre-Tax
Contributions, if any, of each Participant shall be determined in such a
manner that the Actual Deferral Percentage of such Participants who elected
the highest Actual Deferral Percentage shall be first lowered to the level
of such Participants who elected the next to the highest Actual Deferral
Percentage. If further overall reductions are required to achieve
compliance with (a) or (b) of Section 4.5, both of the above-described
groups of Participants will be lowered to the level of Participants with
the next highest Actual Deferral Percentages, and so on, until sufficient
total reductions have occurred to achieve compliance with (a) or (b) of
Section 4.5.
The income or loss attributable to the Participant's excess
Pre-Tax Contributions for the Plan Year shall be determined by multiplying
the income or loss attributable to the Participant's Pre-Tax Contribution
Account balance for the Plan Year by a fraction, the numerator of which is
the excess Pre-Tax Contribution and the denominator of which is the
Participant's total Pre-Tax Contribution Account balance. Excess Pre-Tax
Contributions shall be treated as Annual Additions under Section 5.5 of the
Plan.
4.9 Aggregation of Family Members in Determining the Actual
Deferral Ratio:
A. Calculation of Actual Deferral Ratios: If an eligible Highly
Compensated Employee is subject to the family aggregation rules of
Section 414(q)(6) of the Code because such Employee is either a five
percent (5 percent) owner or one of the ten (10) most Highly Compensated
Employees, the combined actual deferral ratio of this family group (which
is treated as one Highly Compensated Employee) shall be determined by
combining the Pre-Tax Contributions and the Compensation for all the
eligible Family Members.
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Pre-Tax Contributions and Compensation of all Family Members
are disregarded for purposes of determining the actual deferral percentage
for the group of non-Highly Compensated Employees, except to the extent
taken into account in paragraph (A) above.
B. Aggregation of Family Groups: If an Employee is required to
be aggregated as a Family Member of more than one (1) family group, all
eligible Employees who are Family Members of those groups that include the
Employee are aggregated as one (1) family group in accordance with
paragraph (A) above.
C. Excess Pre-Tax Contributions of Family Members: In the event
that it becomes necessary to determine and correct the excess Pre-Tax
Contributions of a Highly Compensated Employee whose actual deferral ratio
is determined under the rules of Section 414(q)(6) of the Code and this
Section 4.9, the actual deferral ratio calculated in paragraph (A) above
shall be reduced using the leveling method set forth in Section 4.6, and
the excess Pre-Tax Contributions to be distributed thereby shall be
allocated among the Family Members in proportion to the Pre-Tax
Contribution of each Family Member that is combined to determine the actual
deferral ratio.
4.10 Contribution Percentage and ESOP Percentage:
A. Contribution Percentage: The Contribution Percentage for a
specified group of Employees for a Plan Year shall be the average of the
ratios (calculated separately for each Employee in such group) of:
(a) the total of the Employer Matching Contributions
and the After-Tax Contributions (the "Aggregate
Contributions") paid under the Plan on behalf of each such
Employee for such Plan Year; to
(b) the Employee's Compensation (as defined in
Section 5.5(d)(6)) for such Plan Year.
In computing the Contribution Percentage, the Employer may
elect to take into account After-Tax and Pre-Tax Contributions
made under this Plan or any other plan of the Employer to the
extent that the following requirements are satisfied:
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(i) the amount of non-elective
contributions, including those qualified
non-elective contributions treated as Employer
Matching Contributions for purposes of calculating
the Contribution Percentage, satisfies the
requirements of Section 401(a)(4) of the Code;
(ii) the amount of non-elective
contributions, excluding those qualified
non-elective contributions treated as Employer
Matching Contributions for purposes of calculating
the Contribution Percentage and those qualified
non-elective contributions treated as elective
contributions under Section 1.401(k)-1(b)(5) for
purposes of calculating the Actual Deferral
Percentage, satisfies the requirements of
Section 401(a)(4) of the Code;
(iii) the elective contributions, including
those treated as Employer Matching Contributions
for purposes of calculating the Contribution
Percentage, satisfy the requirements of Code
Section 401(k)(3);
(iv) the qualified non-elective
contributions are allocated to the Employee under
the Plan as of a date within the Plan Year and the
elective contributions satisfy
Section 1.401(k)-1(b)(i) for the Plan Year; and,
if applicable, the Plan and the plans to which the
qualified non-elective contributions and elective
contributions are made, are or could be aggregated
for purposes of Code Section 410(b).
A Participant's Contribution Percentage shall be determined after
determining the Participant's Excess Deferrals, if any, pursuant to
Section 4.2, and after determining the Participant's excess Pre-Tax
Contributions pursuant to Section 4.8.
B. ESOP Percentage: The ESOP Percentage for a specified group of
Employees for a Plan Year shall be the average of the ratios (calculated
separately for each Employee in such group) of:
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(a) The total of the ESOP Contributions paid under the
Plan on behalf of each such Employee for such Plan Year; to
(b) The Employee's Compensation (as defined in
Section 5.5(d)(6)) for such Plan Year.
A Participant's ESOP Percentage shall be determined after determining the
Participant's Excess Deferrals, if any, pursuant to Section 4.2 and after
determining the Participant's excess Pre-Tax Contributions pursuant to
Section 4.8.
An eligible Employee for purposes of computing the Contribution
Percentage is defined in Treasury Regulation Section 1.401(m)-1(f)(4). The
Contribution Percentage will be zero (0) for an eligible Employee who
received no allocation of Aggregate Contributions.
4.11 Contribution Percentage and ESOP Percentage Limits: Each of
the Contribution Percentage and ESOP Percentage (with respect to each, the
"Applicable Percentage") for the eligible Employees for any Plan Year who
are Highly Compensated Employees shall not exceed the greater of (a) or
(b), as follows:
(a) the Applicable Percentage for the eligible
Employees who are not Highly Compensated Employees times 1.25;
or
(b) the lesser of (i) the Applicable Percentage for
the eligible Employees who are not Highly Compensated
Employees times 2.0 or (ii) the Applicable Percentage for the
eligible Employees who are not Highly Compensated Employees
plus two (2) percentage points or such lesser amount as the
Secretary of the Treasury shall prescribe to prevent the
multiple use of this alternative limitation with respect to
any Highly Compensated Employee.
In determining the Applicable Percentage of an Employee who is
a five percent (5 percent) owner or one of the ten (10) most Highly
Compensated Employees and who has a Family Member who is an Employee, any
remuneration paid to the Family Member for services rendered to an Employer
or an Affiliate and any contributions made on behalf of or by such Family
Member shall be attributed to such Highly Compensated Employee. Family
Members, with respect to Highly Compensated Employees, shall be disregarded
as separate Employees in determining the Applicable Percentage both for
Employees who are non-Highly Compensated Employees and for Employees who
are Highly Compensated Employees.
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The Contribution Percentage for any Highly Compensated Employee
for any Plan Year who is eligible to have matching employer contributions
made on his behalf or to make after-tax contributions under one (1) or more
plans described in Section 401(a) of the Code that are maintained by an
Employer or an Affiliate in addition to this Plan shall be determined as
if all such contributions were made to this Plan.
In the event that this Plan must be combined with one (1) or
more other plans in order to satisfy the requirements of Code
Section 410(b), then the Contribution Percentage shall be determined as if
all such plans were a single plan. If two (2) or more plans are
permissively aggregated for the purposes of Code Section 410(b) (other than
the average benefit percentage test), then the Contribution Percentage
shall be determined as if all such plans were a single plan.
4.12 Treatment of Excess Aggregate Contributions or ESOP
Contributions: If neither of the tests described above in Section 4.11 are
satisfied with respect to either Aggregate Contributions or ESOP
Contributions, the excess Aggregate Contributions or ESOP Contributions (as
applicable), plus any income and minus any loss attributable thereto, shall
be forfeited or, if not forfeitable, shall be distributed no later than the
last day of the Plan Year following the Plan Year in which such excess
Aggregate Contributions or ESOP Contributions (as applicable) were made.
Such income shall include the allocable gain or loss for the Plan Year
only. The income or loss attributable to the Participant's excess
Aggregate Contributions or ESOP Contributions (as applicable) for the Plan
Year shall be determined by multiplying the income or loss attributable to
the Participant's Account for the Plan Year by a fraction, the numerator
of which is the excess Aggregate Contribution or ESOP Contributions (as
applicable), and the denominator of which is the Participant's total
Account balance. Excess Aggregate Contributions or ESOP Contributions
shall be treated as Annual Additions under Section 5.5 of the Plan.
The excess Aggregate Contributions or ESOP Contributions (as
applicable), if any, of each Participant who is among the Highly
Compensated Employees shall be determined by computing the maximum
Contribution Percentage under (a) or (b) of Section 4.11 and then reducing
the Contribution Percentage of some or all of such Participants whose
Contribution Percentage exceeds the maximum by an amount of sufficient size
to reduce the overall Contribution Percentage for eligible Participants who
are among the Highly Compensated Employees to a level which satisfies
either (a) or (b) of Section 4.11. The excess Aggregate Contributions or
ESOP Contributions (as applicable), if any, of each Participant shall be
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determined in such a manner that the Contribution Percentage of such
Participants who have the highest actual contribution ratio under
Section 4.10 shall be first lowered to the level of such Participants with
the next to the highest actual contribution ratio under Section 4.10. If
further overall reductions are required to achieve compliance with (a) or
(b) of Section 4.11, both of the above-described groups of Participants
will be lowered to the level of Participants with the next highest actual
contribution ratio under Section 4.10, and so on, until sufficient total
reductions have occurred to achieve compliance with (a) or (b) of
Section 4.11. For each Participant who is a Highly Compensated Employee,
the amount of excess Aggregate Contributions or ESOP Contributions (as
applicable) is equal to the total Employer Contributions and After-Tax
Contributions on behalf of the Participant (determined prior to the
application of this paragraph) minus the amount determined by multiplying
the Participant's actual contribution ratio (determined after application
of this paragraph) by his Compensation used in determining such ratio. The
individual ratios and Contribution Percentages shall be calculated to the
nearest one-hundredth (1/100) of one percent (1 percent) of the Employee's
Compensation, as such term is used in paragraph (b) of Section 4.11.
4.13 Aggregation of Family Members in Determining the Actual
Contribution Ratio:
A. Calculation of Actual Contribution Ratio: If an eligible
Highly Compensated Employee is subject to the family aggregation rules of
Section 414(q)(6) of the Code because such Employee is either a five
percent (5 percent) owner or one (1) of the ten (10) most Highly
Compensated Employees, the combined actual contribution ratio for the
family group (which is treated as one Highly Compensated Employee) shall
be determined by combining the Employer Contributions not taken into
account in applying the Actual Deferral Percentage test, After-Tax
Contributions and Compensation of all the eligible Family Members.
The Employer Contributions, After-Tax Contributions and
Compensation of all Family Members are disregarded for purposes of
determining the Contribution Percentage for the group of Highly Compensated
Employees and the group of non-Highly Compensated Employees except to the
extent taken into account in paragraph (A) of this Section.
B. Aggregation of Family Groups: If an Employee is required to
be aggregated as a Family Member of more than one (1) family group, all
eligible Employees or Family Members of those groups that include the
Employee shall be aggregated as one (1) family group in accordance with
paragraph (A) above.
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C. Excess Aggregate Contributions of Family Members: In the event
that it becomes necessary to determine and correct the excess Aggregate
Contributions of a Highly Compensated Employee whose actual contribution
ratio is determined under the rules of Code Section 414(q)(6) and this
Section 4.13, the actual contribution ratio shall be reduced as required
under Section 4.12, and the excess Aggregate Contributions to be forfeited
or distributed thereby shall be allocated among the Family Members in
proportion to the Employer Contributions and After-Tax Contributions of
each Family Member that are combined to determine the actual contribution
ratio.
4.14 Multiple Use of Alternative Limitation: The rules set forth
in Treasury Regulation Section 1.401(m)-2(b) for determination of multiple
use of the alternative methods of compliance with respect to
Sections 4.5(b) and 4.11(b) are hereby incorporated into the Plan. If a
multiple use of the alternative limitation occurs with respect to two (2)
or more plans or arrangements maintained by an Employer, it shall be
treated as an excess Aggregate Contribution and must be corrected by
reducing the actual contribution ratio of Highly Compensated Employees
eligible both to make elective contributions to receive matching
contributions under the 401(k) arrangement or to make contributions under
the 401(m) plan. Such reduction shall be by the leveling process set forth
in Section 4.12.
4.15 ESOP Contributions, Employer Matching Contributions and Pre-Tax
Contributions to be Tax Deductible: ESOP Contributions, Employer Matching
Contributions and Pre-Tax Contributions shall not be made in excess of the
amount deductible under applicable Federal law now or hereafter in effect
limiting the allowable deduction for contributions to profit-sharing plans.
The ESOP Contributions, Employer Matching Contributions and Pre-Tax
Contributions to this Plan when taken together with all other contributions
made by the Employer to other qualified retirement plans shall not exceed
the maximum amount deductible under Section 404 of the Code.
4.16 Maximum Allocations: Notwithstanding the above, the total
Annual Additions made to the Account of any Participant shall not exceed
the limits prescribed in Section 5.5.
4.17 Refunds to Employer: Once Contributions are made to the Plan
by the Employer on behalf of the Participants, they are not refundable to
the Employer unless a Contribution:
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(a) was made by mistake of fact; or
(b) was made conditioned upon the contribution being
allowed as a deduction and such deduction was disallowed.
Any Contribution made by the Employer during any Plan Year in excess of the
amount deductible or any Contribution attributable to a good faith mistake
of fact shall be refunded to the Employer. The amount which may be
returned to the Employer is the excess of the amount contributed over the
amount that would have been contributed had there not occurred a mistake
of fact or the excess of the amount contributed over the amount deductible,
as applicable. A Contribution made by reason of a mistake of fact may be
refunded only within one (1) year following the date of payment. Any
Contribution to be refunded because it was not deductible under Section 404
of the Code may be refunded only within one (1) year following the date the
deduction was disallowed. Earnings attributable to any such excess
Contribution may not be withdrawn, but losses attributable thereto must
reduce the amount to be returned. In no event may a refund be due which
would cause the Account balance of any Participant to be reduced to less
than the Participant's Account balance would have been had the mistaken
amount, or the amount determined to be non-deductible, not been
contributed.
4.18 Rollover Contributions: Notwithstanding any other provision
of the Plan, the Trustee shall be authorized to accept an "eligible
rollover distribution" within the meaning of Code Section 402(c)(4) on
behalf of or from a person who is (or who will be entitled under
Section 3.1 to become) a Participant in this Plan, provided that the
transfer of the assets to this Plan is one described in Section 402(c)(4),
403(a)(4) or 408(d)(3)(A)(ii) of the Code. Such a transferred distribution
is referred to herein as a "rollover contribution."
The acceptance of rollover contributions under this
Section 4.18 shall be subject to the following conditions:
(a) No rollover contribution shall be in an amount
less than $500.
(b) Rollover contributions shall be in cash only.
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(c) No rollover contribution may be transferred to the
Plan without the prior approval of the Committee. The
Committee shall develop such procedures and may require such
information from an Employee desiring to make such a transfer
as it deems necessary or desirable. The Committee may act in
its sole discretion in determining whether to accept the
transfer, and shall act in a uniform, non-discriminatory
manner in this regard.
(d) Upon approval by the Committee, a rollover
contribution shall be paid to the Trustee to be held in the
Trust Fund.
(e) A separate account shall be established and
maintained for each Employee who has made a rollover
contribution. A rollover account shall share in the earnings
and/or losses of the Trust Fund (and component Investment
Funds in which such account may be invested) commencing on the
Valuation Date coincident with or next following the date on
which the transferred amount is placed in the Trust Fund. The
Employee's interest in his rollover contribution account shall
be fully vested and non-forfeitable. If an Employee who is
otherwise eligible to participate in the Plan but who has not
yet reached the applicable Entry Date under Section 3.1 of the
Plan makes a rollover contribution to the Plan, his rollover
contribution account shall represent his sole interest in the
Plan until he becomes a Participant.
(f) A rollover contribution and any income therefrom
shall be treated the same as the Employee's Pre-Tax
Contributions for all purposes of the Plan, including, but not
by way of limitation, investments, withdrawals, distributions
and loans under the Plan.
(g) No rollover contributions may be transferred from
a plan which is required to provide automatic survivor
benefits under Section 401(a)(11) of the Code, or which is a
transferee of a plan required to provide such benefits.
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(h) The Committee shall be entitled to rely on the
representation of the Employee that the rollover contribution
is an eligible rollover distribution. If, however, it is
determined that a transfer received from or on behalf of a
Employee failed to qualify as an eligible rollover
distribution within the meaning of Code Section 402(c)(4),
then the balance in the Employee's account attributable to the
ineligible transfer shall, as soon as is administratively
practicable, be:
(1) segregated from all other Plan assets,
(2) treated as a non-qualified trust
established by and for the benefit of the
Participant; and
(3) distributed to the Employee.
Such an ineligible transfer shall be deemed never to have been a
part of the Plan or Trust.
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ARTICLE V
PARTICIPANTS' ACCOUNTS
5.1 Trust Accounts: The Committee shall create and maintain
adequate records to reflect all transactions of the Trust Fund and to
disclose the interest in the Trust Fund of each Participant (whether on
active or inactive status), former Participant and Beneficiary.
(a) Accounts for Participants: Such accounts shall be
maintained for each Participant as may be appropriate from
time to time to reflect his interest in the ESOP Fund and each
Investment Fund in which he may be participating at any time
as contemplated under Section 8.1. The interest in each
Investment Fund attributable to the Contributions made by or
on behalf of each Participant shall be reflected in a Pre-Tax
Contribution Account and/or an After-Tax Contribution Account
for each Participant. The interest in Fund A of each
Participant attributable to the Employer Matching
Contributions made to the Plan or the Prior Plan shall be
reflected in an Employer Matching Account for each
Participant. The interest in the ESOP Fund of each
Participant shall be reflected in an ESOP Account for each
Participant as described in Section 5.3.
(b) Stock Suspense Account: There shall also be
established and maintained under the ESOP Trust a suspense
account to be known as the Stock Suspense Account.
(c) Rights in Trust Fund: The maintenance of
individual Accounts is only for accounting purposes, and a
segregation of the assets of the Trust Fund to each Account
shall not be required. Distribution and withdrawals made from
an Account shall be charged to the Account as of the date
paid.
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5.2 Valuation of Trust Fund: A valuation of the Trust Fund shall
be made as of each Valuation Date and on any other date during the Plan
Year that the Committee deems a valuation to be advisable. Any such
interim valuation shall be exercised on a uniform and non-discriminatory
basis. For the purposes of each such valuation, the assets of each
Investment Fund shall be valued at their respective current market values,
and the amount of any obligations for which the Investment Fund may be
liable, as shown on the books of the Trustee, shall be deducted from the
total value of the assets. For the purposes of maintenance of books of
account in respect of properties comprising the Trust Fund, and of making
any such valuation, the Trustee shall account for the transactions of the
Trust Fund on a modified cash basis. The current market value shall, for
the purposes hereof, be determined as follows:
(a) Where the properties are securities which are
listed on a securities exchange, or which are actively traded
over the counter, the value shall be the last recorded bid and
asked prices, whichever shall be the later. In the event
transactions regarding such property are recorded over more
than one such exchange, the Trustee may select the exchange to
be used for purposes hereof. Recorded information regarding
any such securities published in The Wall Street Journal or
any other publication deemed appropriate may be relied upon by
the Trustee. If no transactions involving any such securities
have been recorded within ten (10) days prior to the
particular Valuation Date, such securities shall be valued as
provided in paragraph (b) below.
(b) Where paragraph (a) hereof shall be inapplicable
in the valuation of any properties, the Trustee shall obtain
from at least two (2) qualified persons an opinion as to the
value of such properties as of the close of business on the
particular Valuation Date. The average of such estimates
shall be used.
5.3 Allocation to Accounts:
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(a) Pre-Tax, After-Tax and Employer Matching
Contributions: Pre-Tax Contributions and After-Tax
Contributions received in the Trust Fund since the preceding
Valuation Date shall be credited to the respective Pre-Tax
Contribution Accounts and After-Tax Contribution Accounts of
the Participants and invested in the Investment Funds in
accordance with their instructions pursuant to Section 8.1.
Employer Matching Contributions received in the Trust Fund
since the preceding Valuation Date shall be allocated to the
Participants' Employer Matching Accounts in the ratio that the
sum of each Participant's Pre-Tax Basic Contribution and
After-Tax Basic Contribution for the period bears to the total
Pre-Tax Basic Contributions and After-Tax Basic Contributions
of all Participants for the period.
(b) ESOP Accounts: The ESOP Account of each
Participant shall be credited with his allocable portion of
(i) the Company Stock investment in the ESOP Fund purchased
and paid for by the ESOP Trust (other than Financed Stock) or
contributed in kind by the Employer, (ii) forfeitures from the
ESOP Fund, (iii) the Company Stock investment in the ESOP Fund
released from the Stock Suspense Account and (iv) any cash
held in the ESOP Fund. Such allocation shall be made in the
ratio that the sum of each Participant's Pre-Tax Basic
Contribution and After-Tax Basic Contribution for the period
bears to the total Pre-Tax Basic Contributions and After-Tax
Basic Contributions of all Participants for the period.
Allocations made pursuant to this Section 5.3(b) shall be made
as of each monthly Valuation Date in an amount not to exceed
(i) seventy percent (70 percent) of the total of each HII
Participant's Pre-Tax Basic Contributions and After-Tax Basic
Contributions and (ii) seventy percent (70 percent) of the
total of each KBLCOM Participant's Pre-Tax Basic
Contributions. All amounts not otherwise allocated hereunder
during the Plan Year on the monthly Valuation Dates shall be
allocated in full on the annual Valuation Date.
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(c) Stock Suspense Account: The Stock Suspense
Account shall be credited as of each Valuation Date with the
number of shares of Financed Stock purchased by the ESOP
Trustee since the preceding Valuation Date. In addition, the
Stock Suspense Account shall be credited with all ESOP
Contributions for the Plan Year which are to be used to repay
Exempt Loans. The Stock Suspense Account shall be debited
with amounts used to repay Exempt Loans and with the number of
shares of Financed Stock that are to be released from such
Account in accordance with the provisions of Section 5.3(b).
(d) Allocation Procedures: The Accounts of
Participants, former Participants and Beneficiaries shall be
adjusted in accordance with the following:
(i) Earnings of the Investment Fund: The
earnings (or loss) of the Investment Fund since
the preceding Valuation Date (including the
appreciation or depreciation in value of the
assets of the Investment Fund) shall be allocated
to the Accounts of Participants (other than a
terminated Participant's Accounts which have
become current obligations of the Investment Fund)
in proportion to the balances in such Accounts on
the preceding Valuation Date, but after first
reducing each such Account balance by any
distribution from such Account since the preceding
Valuation Date.
(ii) Income and Appreciation in Value of
Stock Suspense Account and ESOP Accounts in the
Trust Fund: The income of the ESOP Fund shall be
allocated in proportion to the balances, as of the
preceding Valuation Date, in the Stock Suspense
Account and the ESOP Accounts, but after first
reducing each such Account balance by any
distributions or charges from such Accounts since
the preceding Valuation Date. Notwithstanding
anything to the contrary in the Plan, if and to
the extent that dividends credited to
Participants' ESOP Accounts are used to amortize
an Exempt Loan pursuant to Section 5.6, an
interest in the ESOP Fund with a fair market value
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not less than the amount of such dividends must be
allocated to the Participants' ESOP Accounts
(resulting from the release of Financed Stock
attributable to such use of dividends to amortize
the Exempt Loan) for the year of payment of such
dividends to the Plan, and the Company shall make
such additional Employer Matching Contributions as
are necessary to accomplish such result. Any
dividends with respect to Financed Stock that are
used to amortize an Exempt Loan shall be used
first to repay current principal and then to repay
current interest with respect to such loan.
(iii) Forfeitures: As of each Valuation
Date, any amounts in the Employer Matching
Accounts which have become forfeitures since the
preceding Valuation Date shall first be made
available to reinstate previously forfeited
Account balances of former Participants, if any,
in accordance with Section 6.8 and previous
Participants who have unclaimed benefits, if any,
in accordance with Section 6.11. The remaining
forfeitures from the Employer Matching Accounts
and all forfeitures from the ESOP Accounts, if
any, shall be used to reduce Employer Matching
Contributions as specified under Section 4.1.
5.4 Treatment of Company Stock Purchased with an Exempt Loan:
(a) Financed Stock: Any Company Stock purchased by
the ESOP Trust with the proceeds of an Exempt Loan shall be
credited initially to the Stock Suspense Account.
(b) Allocation from Stock Suspense Account to ESOP
Accounts: As of each Valuation Date, and as of any special
Valuation Date if directed by the Committee, there shall be
released an interest in the ESOP Fund equal to the excess, if
any, of shares of Financed Stock determined in (i) over (ii),
where (i) and (ii) are as follows: (i) is equal to the
product of the number of shares of Financed Stock not released
prior to January 1 of the current Plan Year multiplied by the
ratio of (y) the amount of principal and interest paid under
the Exempt Loan during the current Plan Year to (z) the sum of
the amount determined in clause (y) plus the total of all
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principal and interest to be paid in the future, assuming if
the interest rate is variable that the interest rate in the
future will be the same as that currently in effect, and (ii)
is equal to the number of shares of Financed Stock previously
released in the current Plan Year. The Company Stock
investment in the ESOP Fund released pursuant to the preceding
sentence shall be allocated to the Participants' ESOP Accounts
in accordance with the provisions of Section 5.3(b).
(c) Payments on Exempt Loans: As of each Valuation
Date, installment payments, including principal and interest,
made by the ESOP Trustee since the last preceding Valuation
Date under Exempt Loans will be debited to the Stock Suspense
Account and to Participants' ESOP Accounts under the
provisions of Section 5.3 hereof. Specified income shall not
include shares of Company Stock attributable to any share
split or share dividend on outstanding shares.
For purposes of determining payments on Exempt
Loans, payment of principal and interest shall be accounted
for substantially in accordance with the following: All
income ("specified income") allocable to the Stock Suspense
Account that is attributable to collateral for the Exempt Loan
or to ESOP Contributions shall be used, before any ESOP
Contributions are so used, to pay principal amounts due under
such Exempt Loan; ESOP Contributions shall be first applied to
repay interest under such Exempt Loan with any excess ESOP
Contribution used to fund current principal requirements not
otherwise funded by the specified income; if the specified
income exceeds the amount necessary to pay principal due on
Exempt Loans for the Plan Year, then such excess amount shall
be first used to pay interest currently due with respect to
the Exempt Loans and any remaining amount of income may, at
the direction of the Committee, be used to prepay principal
due on Exempt Loans in succeeding periods. In the event that
there are insufficient funds available to make payments of
principal or interest on Exempt Loans when due, the Committee
may direct the ESOP Trustee to sell any Financed Stock which
has not yet been allocated to ESOP Accounts or the Committee
may direct the Trustee to obtain a new Exempt Loan in an
amount sufficient to make such payments.
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5.5 Maximum Annual Additions: Notwithstanding anything contained
herein to the contrary, the total Annual Additions made to the Account of
a Participant for any Plan Year commencing on or after the Effective Date
shall be subject to the following limitations:
(a) Single Defined Contribution Plan
1. If an Employer does not maintain any other
qualified plan, the amount of Annual Additions which may be
allocated under this Plan on a Participant's behalf for a
Limitation Year shall not exceed the lesser of the Maximum
Permissible Amount or any other limitation contained in this
Plan.
2. Prior to the determination of the Participant's
actual Compensation for a Limitation Year, the Maximum
Permissible Amount may be determined on the basis of the
Participant's estimated annual Compensation for such
Limitation Year. Such estimated annual Compensation shall be
determined on a reasonable basis and shall be uniformly
determined for all Participants similarly situated. Any
Employer contributions (including allocation of forfeitures)
based on estimated annual Compensation shall be reduced by any
Excess Amounts carried over from prior years.
3. As soon as is administratively feasible after the
end of the Limitation Year, the Maximum Permissible Amount for
such Limitation Year shall be determined on the basis of the
Participant's actual Compensation for such Limitation Year.
4. If there is an Excess Amount with respect to a
Participant for the Limitation Year, such Excess Amount shall
be disposed of as follows:
A. There shall first be returned to the
Participant his After-Tax Excess Contributions as
defined in Section 4.3, if any, attributable to
that Limitation Year, and then his Pre-Tax Excess
Contributions as defined in Section 4.2, if any,
attributable to that Limitation Year to the extent
such returned Contributions would reduce the
Excess Amount. If any such Excess Amount shall
then remain, the Participant's After-Tax Basic
Contributions as defined in Section 4.3, if any,
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attributable to that Limitation Year shall be
returned to the Participant, and the Employer
Matching Contributions made with respect to said
After-Tax Basic Contributions shall be reduced and
allocated to a suspense account in the manner set
forth in Paragraph B below, both to the extent
such returned and reduced Contributions would
reduce the Excess Amount. If any such Excess
Amount shall then remain, the Participant's
Pre-Tax Basic Contributions as defined in
Section 4.2, if any, attributable to that
Limitation Year shall be returned to the
Participant, and the Employer Matching
Contributions made with respect to said Pre-Tax
Basic Contributions shall be reduced and allocated
to a suspense account in the manner set forth in
Paragraph B below, both to the extent such
returned and reduced Contributions would reduce
the Excess Amount. All such amounts shall be
adjusted for any income or loss allocated thereon.
B. The amount of the reduction of the
Employer Matching Contributions for the
Participant shall be reallocated out of the ESOP
Account of such Participant and shall be held in
a suspense account which shall be applied as a
part of (and to reduce to such extent what would
otherwise be) the Employer Matching Contributions
for all Participants required to be made to the
Plan during the next subsequent calendar quarter
or quarters. No portion of such Excess Amount may
be distributed to Participants or former
Participants. If a suspense account is in
existence at any time during the Limitation Year
pursuant to this Paragraph B, such suspense
account shall not participate in the allocation of
investment gains or losses of the Trust Fund.
(b) Two or More Defined Contribution Plans
1. If, in addition to this Plan, the Employer
maintains any other qualified defined contribution plan, the
amount of Annual Additions which may be allocated under this
Plan on a Participant's behalf for a Limitation Year, shall
not exceed the lesser of:
49<PAGE>
<PAGE>
A. the Maximum Permissible Amount,
reduced by the sum of any Annual Additions
allocated to the Participant's accounts for the
same Limitation Year under such other defined
contribution plan or plans; or
B. any other limitation contained in this
Plan.
2. Prior to the determination of the Participant's
actual Compensation for the Limitation Year, the amount
referred to in paragraph 1.A. above may be determined on the
basis of the Participant's estimated annual Compensation for
such Limitation Year. Such estimated annual Compensation
shall be determined on a reasonable basis and shall be
uniformly determined for all Participants similarly situated.
Any Employer Contribution (including allocation of
forfeitures) based on estimated annual Compensation shall be
reduced by any Excess Amounts carried over from prior years.
3. As soon as is administratively feasible after the
end of the Limitation Year, the amounts referred to in
paragraph 1.A. above shall be determined on the basis of the
Participant's actual Compensation for such Limitation Year.
4. If a Participant's Annual Additions under this
Plan and all such other defined contribution plans result in
an Excess Amount, such Excess Amount shall be deemed to
consist of the amounts last allocated.
5. If an Excess Amount was allocated to a Participant
on an allocation date of this Plan which coincides with an
allocation date of another plan, the Excess Amount attributed
to this Plan will be the product of:
A. the total Excess Amount allocated as
of such date (including any amount which would
have been allocated but for the limitations of
Section 415 of the Code); times
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B. the ratio of (i) the amount allocated
to the Participant as of such date under this Plan
divided by (ii) the total amount allocated as of
such date under all qualified defined contribution
plans (determined without regard to the
limitations of Section 415 of the Code).
6. Any Excess Amounts attributed to this Plan shall
be disposed of as provided in paragraph (a) above.
(c) Defined Contribution Plan and Defined Benefit Plan
1. General Rule: If the Employer maintains (or has
ever maintained) one or more defined contribution plans and
one (1) or more defined benefit plans, the sum of the "defined
contribution plan fraction" and the "defined benefit plan
fraction," as defined below, cannot exceed 1.0 for any
Limitation Year. For purposes of this paragraph (c) of
Section 5.5, employee contributions to a qualified defined
benefit plan are treated as a separate defined contribution
plan, and all defined contribution plans of an Employer are to
be treated as one (1) defined contribution plan, and all
defined benefit plans of an Employer are to be treated as one
(1) defined benefit plan, whether or not such plans have been
terminated.
2. If the sum of the defined contribution plan
fraction and defined benefit plan fraction exceeds 1.0, the
annual benefit of the defined benefit plan or plans will be
reduced so that the sum of the fractions will not exceed 1.0.
If additional reductions are required for the sum of the
fractions to equal 1.0, the reductions will then be made first
to the Annual Additions of the defined contribution plans.
3. Defined Contribution Fraction
A. General Rule: The defined
contribution fraction for any year is (i) divided
by (ii), where (i) and (ii) are:
(i) the numerator: the sum of
the actual Annual Additions to the
Participant's account at the close of
the Limitation Year; and
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(ii) the denominator: the sum
of the lesser of the following
amounts determined for such year and
for each prior year of service of the
Employee:
a. 1.25 times
the dollar limitation in
effect for each such year
(without regard to the
special dollar
limitations for employee
stock ownership plans);
or
b. 1.4 times
twenty-five percent (25
percent) of the
Participant's
Compensation for each
such year.
B. Special Adjustment to Defined
Contribution Plan Fraction: The numerator of the
Defined Contribution Plan Fraction of any
Participant in the Plan on December 31, 1982 shall
be reduced by an amount required to decrease the
combined fractions of such Participant to 1.0 as
of December 31, 1982. The amount to be subtracted
is the product of (i) the excess of the sum of the
fractions over 1.0 and (ii) the denominator of the
Defined Contribution Plan Fraction, as computed
through the Limitation Year ending December 31,
1982.
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 (i) the excess of
52<PAGE>
<PAGE>
the sum of the fractions over 1.0 times (ii) 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.
4. Defined Benefit Plan Fraction
A. General Rule: The defined benefit
plan fraction for any year is (i) divided by (ii),
where:
(i) is the projected annual
benefit of the Participant under the
Plan (determined as of the close of
the Limitation Year); and
(ii) is the lesser of:
a. 1.25 times
the dollar limitation
(adjusted, if necessary)
for such year; or
b. 1.4 times one
hundred percent (100
percent) of the
Participant's Average
Compensation for the high
three (3) years
(adjusted, if necessary).
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<PAGE>
B. Special Rule for Accrued Benefits on
December 31, 1982: In the case of an individual
who before January 1, 1983 was a Member in the
Retirement Plan for Employees of Houston
Industries Incorporated whose current accrued
benefit under said Plan on December 31, 1982
exceeded the limitation of Section 415(b) of the
Code, as amended by the Tax Equity and Fiscal
Responsibility Act of 1982, then, for purposes of
subsections (b) and (e) of said Section 415 of the
Code, the maximum permissible amount under the
limitation described in subsection (b) of
Section 415 with respect to such individual shall
be equal to such current accrued benefit under
said Plan; and for purposes hereof, the term
"current accrued benefit" shall be defined as
provided in Section 415(b)(2) of the Code.
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 one hundred
twenty-five percent (125 percent) of the sum of
the annual benefits accrued by the participant
under such plans 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.
54<PAGE>
<PAGE>
(d) Definitions
1. Employer: The Employer that adopts
this Plan. In the case of a group of employers
which constitutes a controlled group of
corporations (as defined in Section 414(b) of the
Code as modified by Section 415(h)) or which
constitutes trades and businesses (whether or not
incorporated) which are under common control (as
defined in Section 414(c) as modified by
Section 415(h)) or an affiliated service group (as
defined in Section 414(m)), all such employers
shall be considered a single Employer for purposes
of applying the limitations of this Section.
2. Annual Additions: With respect to
each Plan Year (Limitation Year), the total of the
Employer Matching Contributions, ESOP
Contributions (except to the extent herein
provided), Pre-Tax Contributions, After-Tax
Contributions, forfeitures, and amounts described
in Sections 415(e)(1) and 419(d)(2) of the Code,
which are allocated to the Participant's Account;
excluding, however, any amounts contributed to
reinstate an amount forfeited or an unclaimed
benefit. ESOP Contributions used to repay
interest on an Exempt Loan as described in
Section 5.6 of the Plan shall not constitute an
Annual Addition. Subject to the provisions of
Section 415(c)(6) of the Code, Annual Additions
shall not include (i) forfeitures of Financed
Stock, or (ii) ESOP Contributions used to pay
interest on the Exempt Loan and charged against
the Participant's Account.
3. Excess Amount: The excess of the
Participant's Annual Additions for the Limitation
Year over the Maximum Permissible Amount.
4. Limitation Year: A twelve (12)
consecutive month period ending on December 31.
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<PAGE>
5. Maximum Permissible Amount: For a
Limitation Year, the Maximum Permissible Amount
with respect to any Participant shall be the
lesser of:
A. $30,000 (or, if greater,
one-fourth (1/4) of the defined
benefit dollar limitation set forth
in Section 415(b)(1) of the Code as
in effect for the Limitation Year);
or
B. twenty-five percent (25
percent) of the Participant's
Compensation for the Limitation Year.
6. Compensation: For purposes of
applying the limitations of Code Section 415,
Compensation shall include the Participant's
wages, salaries, fees for professional service and
other amounts received (without regard to whether
or not an amount is paid in cash) for personal
services actually rendered in the course of
employment with an Employer maintaining the Plan
to the extent that the amounts are includable in
gross income (including, but not limited to,
commissions paid to salesmen, compensation for
services on the basis of a percentage of profits,
commissions on insurance premiums, tips, bonuses,
fringe benefits, reimbursements and expense
allowances) and shall exclude the following:
A. (i) 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, (ii) Employer
contributions made on behalf of an
Employee to a simplified employee
pension plan described in Code
Section 408(k) to the extent such
56<PAGE>
<PAGE>
contributions are excludable from the
Employee's gross income and (iii) any
distributions from a plan of deferred
compensation regardless of whether
such amounts are includable in the
gross income of the Employee when
distributed, except any amounts
received by an Employee pursuant to
an unfunded non-qualified plan to the
extent such amounts are includable in
the gross income of the Employee;
B. 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;
C. Amounts realized from the
sale, exchange or other disposition
of stock acquired under a qualified
stock option; and
D. Other amounts which
receive special tax benefits, such as
premiums for group life insurance
(but only to the extent that the
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).
57<PAGE>
<PAGE>
For the purposes of this
Section, the determination of
Compensation shall be made by not
including amounts that would
otherwise be excluded from a Member's
gross income by reason of the
application of Code Sections 125,
402(a)(8), 402(h)(1)(B) and, in the
case of Employer contributions made
pursuant to a salary reduction
agreement, Code Section 403(b). For
"Limitation Years" beginning after
December 31, 1993, Compensation shall
be limited to $150,000 (unless
adjusted in the same manner as
permitted under Code Section 415(d)).
Notwithstanding anything to the
contrary, the definition Code
Section 415 Compensation shall
include any and all items which may
be included under Code
Section 415(c)(3).
7. Average Compensation: The average
compensation during a Participant's high three (3)
years of Service, which period is the three (3)
consecutive calendar years (or, the actual number
of consecutive years of employment for those
Employees who are employed for less than three (3)
consecutive years with the Employer) during which
the Participant had the greatest aggregate
compensation from the Employer.
8. Annual Benefit: A benefit payable
annually in the form of a straight life annuity
(with no ancillary benefits) under a plan to which
Employees do not contribute and under which no
rollover contributions are made.
58<PAGE>
<PAGE>
5.6 Borrowings to Purchase Company Stock; Certain Conditions
Applicable to such Company Stock: It is the express purpose of this Plan
and the ESOP Trust Agreement to invest substantial sums in Company Stock
for the benefit of Participants in the Plan. Pursuant to this purpose, it
is contemplated that the ESOP Trustee will from time to time borrow funds
either through installment purchase contract, loan agreement or other
instrument of indebtedness in order to purchase Company Stock (with such
indebtedness qualifying as an "Exempt Loan" within the ambit of
Section 54.4975-7(b)(1)(iii) of the Treasury Regulations). Such loans
shall be primarily for the benefit of Participants and their Beneficiaries
within the meaning of Treasury Regulation Section 54.4975-7(b)(3). In
addition to other provisions of the Plan as may be applicable from time to
time, the provisions of this Section 5.6 shall be especially applicable to
indebtedness incurred to purchase Company Stock and Company Stock purchased
with loan proceeds.
(a) Use of Proceeds: All proceeds of such an Exempt
Loan shall be used within a reasonable time after receipt by
the ESOP Trustee only for any or all of the following
purposes: to purchase Company Stock, to repay obligations
incurred under the loan agreement or to repay a prior Exempt
Loan.
(b) Non-Recourse Loans Only: Any loan must be without
recourse as against the Plan and the Trust Fund.
(c) Collateral: The only assets of the Plan and Trust
Fund that may be given as collateral for a loan are shares of
Company Stock acquired with the proceeds of the loan and those
shares of Company Stock that were used as collateral on a
prior Exempt Loan repaid with the proceeds of the current
Exempt Loan; provided, however, that such shares of Company
Stock shall be proportionately adjusted upon any share split,
share dividend or combination of outstanding shares of such
Company Stock.
(d) Creditor's Rights to Assets: No person entitled
to payment under the loan agreement shall have any right to
assets of the Plan or Trust Fund other than collateral given
for the loan, contributions (other than contributions of
Company Stock) that are made under the Plan to meet the Plan's
obligations under the loan and earnings attributable to such
collateral and the investment of such contributions.
59<PAGE>
<PAGE>
(e) Transfers upon Default: In the event of default
of the Exempt Loan, the value of Plan assets transferred in
satisfaction of the loan must not exceed the amount of
default. If the lender is a "disqualified person," the loan
must provide for a transfer of Plan assets upon default only
upon and to the extent of failure of the Plan to meet the
payment schedule of the loan.
(f) Interest: The interest rate of any loan described
herein must not be in excess of a reasonable rate of interest.
In determining what is a reasonable rate of interest, all
relevant factors will be considered, including the amount and
duration of the loan, the security and guarantee (if any)
involved, the credit standing of the Plan and Trust Fund and
the guarantor (if any), and the interest rate prevailing for
comparable loans. A variable interest rate is permissible if
determined to be reasonable.
(g) Release from Collateral or Suspense: The
instrument evidencing indebtedness shall provide for release
from collateral or suspense in accordance with the provisions
of Section 5.4(b) of the Plan.
(h) Limitation on Restrictions on Company Stock: No
Company Stock acquired with the proceeds of a loan described
herein may be subject to a put, call, or other option, or
buy-sell or similar arrangement while held by and when
distributed from the Plan or its related Trust Fund, whether
or not the Plan is then an "ESOP" within the ambit of
Section 54.4975-7(b)(1) of the Treasury Regulations, unless
specifically required or permitted by such regulations.
(i) Limitations on Payments: The payments made during
any Plan Year, with respect to a loan described herein, may
not exceed an amount equal to the sum of the ESOP
Contributions and any earnings received during or previous to
the current Plan Year on Company Stock purchased with such
loan, less payments previously made with respect to such loan;
provided, however, that payment may in any event be made from
the proceeds of the sale of any Company Stock which was
purchased with the loan and which has not yet been allocated
to Participants' ESOP Accounts in the event of default, or in
the event of termination of the Trust Fund, to the extent
provided in Section 5.3(c) or Section 10.5, or under other
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circumstances determined appropriate by the Committee. The
ESOP Contributions and earnings described herein must be
accounted for separately on the books of account of the Plan
and ESOP Trust until any Exempt Loan is repaid, as is provided
in the other provisions of Article V of this Plan. For
purposes of this Section 5.6(i), Company Stock purchased with
a loan shall reflect proportionate adjustments attributable to
any share split, share dividend or combination of outstanding
shares of Company Stock.
(j) Certain Rights with Respect to Financed
Stock: Any Financed Stock, if it is not publicly traded when
distributed or is subject to a trading limitation when
distributed, must be subject to a put option. The put option
is to be exercisable only by the Participant, 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. The put option must permit the
Participant to put the Company Stock to the Employer. The put
option must be exercisable during the sixty (60) consecutive
days beginning on the date that the Company Stock subject to
the put option is distributed by the Plan, and for another
sixty (60) consecutive days during the Plan Year next
following the Plan Year in which the shares were distributed.
The put option may be exercised by the holder notifying the
Employer in writing that the put option is being exercised.
The period during which a put option is exercisable does not
include any period 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 the put option is exercisable is the fair market value
of the Company Stock on the date of the transaction determined
in good faith based on all relevant factors. In the
discretion of the Committee, either (i) payment under a put
option will be in cash within thirty (30) days after the put
option is exercised or (ii) if the payment in respect of a put
option is to repurchase Company Stock which is distributed as
part of a total distribution, then the amount to be paid may
be paid in substantially equal periodic payments not less
frequently than annually over a period beginning not later
than thirty (30) days after the exercise of the put option and
not exceeding five (5) years provided that there is adequate
61<PAGE>
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security provided and a reasonable interest paid on unpaid
amounts. For purposes of the preceding sentence, a total
distribution means the distribution within one (1) taxable
year to the recipient of the balance of the credit of the
recipient's Account. The provisions described in this
subparagraph (j) are non-terminable even if the exempt loan is
repaid or the Plan ceases to be an ESOP.
(k) Term of Exempt Loans: Any Exempt Loan made by the
Plan or Trust Fund for the purpose of purchasing Company Stock
must be for a specific term and may not be payable on the
demand of any person, except in the case of default.
62<PAGE>
<PAGE>
ARTICLE VI
PARTICIPANTS' BENEFITS
6.1 Termination of Service: Notwithstanding any provisions of the
Plan to the contrary, the vesting provisions of this Section 6.1 shall
apply to any former Employee who participated in the Prior Plan and who
terminated employment prior to the Effective Date, but if and only if he
has an Account balance in this Plan on or after the Effective Date. In the
event of termination of Service on or after the Effective Date of any
Participant for any reason other than disability, Retirement on or after
Retirement Date, or death, a Participant shall, subject to the further
provisions of the Plan, be entitled to receive one hundred percent (100
percent) of the values in his Pre-Tax Contribution Account and After-Tax
Contribution Account, plus a portion of his Employer Matching Account and
ESOP Account determined by reference to his number of years of Vesting
Service and the following schedule:
<TABLE>
<CAPTION>
Vesting
Years of Vesting Service Percentage
<S> <C>
Less than 2 0 percent
2 but less than 3 20 percent
3 but less than 4 40 percent
4 but less than 5 60 percent
5 but less than 6 80 percent
6 and more 100 percent
</TABLE>
Subject to the provisions of Section 6.8, any portion of the
Employer Matching Account and ESOP Account of a terminated Participant in
excess of the vested portion specified herein shall be forfeited.
6.2 Disability of Participants: If the Committee shall find and
advise the Trustee that the employment of a Participant has been terminated
as a consequence of such Participant having become totally and permanently
disabled and entitled to receive disability benefits under the provisions
of the Employer's Long Term Disability Plan, such Participant shall become
entitled to receive the entire interest in his Pre-Tax Contribution
Account, his After-Tax Contribution Account, his Employer Matching Account
and his ESOP Account. Disability hereunder shall not include any
disability sustained in the course of, or as a consequence of, military
63<PAGE>
<PAGE>
service, or occupational hazard arising out of, and in the course of,
employment by any person other than an Employer, or the commission of any
criminal offense.
6.3 Death of Participants: In the event of the death of any
Participant, the entire amount in the Accounts of such Participant after
receipt by the Committee of acceptable proof of death shall be payable as
follows:
(a) The Participant's Account shall be distributed to
the Participant's surviving spouse, but if there is no
surviving spouse, or if the surviving spouse has already
consented by a qualified election pursuant to Section 6.3(b),
to the Beneficiary or Beneficiaries designated by the
Participant in a written designation filed with his Employer,
or if no such designation shall have been so filed, or if no
designated Beneficiary survives the Participant or can be
located by the Committee, then to the duly appointed executor
or administrator of the Participant's estate; or if no
administration of the estate of such decedent is necessary,
then to the Beneficiary entitled thereto under the last will
of such deceased Participant; or if such decedent left no
will, to the legal heirs of such decedent determined in
accordance with the laws of intestate succession of the state
of the decedent's domicile. No designation of any Beneficiary
other than the Participant's surviving spouse shall be
effective unless in writing and received by the Participant's
Employer and in no event shall it be effective as of the date
prior to such receipt. The former spouse of a Participant
shall be treated as a surviving spouse to the extent provided
under a qualified domestic relations order as described in
Section 414(p) of the Code.
(b) The Participant's spouse may waive the right to be
the Participant's sole Beneficiary and consent to the
Beneficiary designation made by the Participant. The waiver
must be in writing and the spouse must acknowledge the effect
of the waiver. The spouse's waiver must be witnessed by a
Plan representative or a notary public. The Beneficiary
designated by the Participant may not be changed without the
spouse's consent, unless the consent of the spouse permits
designation of Beneficiaries by the Participant without any
64<PAGE>
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requirement of further consent by the spouse. The Participant
may file a waiver without the spouse's consent if it is
established to the satisfaction of the Committee that such
written consent may not be obtained because there is no spouse
or the spouse may not be located. Any consent under this
Section 6.3(b) will be valid only with respect to the spouse
who signs the consent. Additionally, a revocation of a prior
spousal waiver may be made by a Participant without the
consent of the spouse at any time before the distribution of
the Account. The number of revocations shall not be limited.
6.4 Retirement of Participants on or After Retirement Date: A
Participant's interest in the full balance of his Account shall be fully
vested and non-forfeitable upon reaching his Retirement Date. Any
Participant who terminates his Service on or after his Retirement Date
shall attain a fully vested non-forfeitable interest in the entire amount
of his Account and shall be entitled to receive the entire amount of his
Account upon the termination of his Service.
6.5 In-Service Distributions: Cash dividends paid with respect to
shares of Company Stock in a Participant's ESOP Account may be distributed
at least annually in the discretion of the Committee. Otherwise, except
to the extent that distribution of a Participant's Account is required
prior to termination of his employment under Section 6.10 hereof (in the
case of a Participant whose required beginning date occurs prior to his
termination of employment) or under Section 10.5 hereof relating to
termination of the Plan, or at the election of the Participant under
Article VII hereof relating to certain withdrawals and loans, no
distribution or withdrawal of any benefits under the Plan shall be
permitted prior to the Participant's termination of employment.
6.6 Payments of Benefits: Upon a Participant's entitlement to
payment of benefits under either Section 6.1, 6.2 or 6.4, he shall file
with the Committee his written election on such form or forms, and subject
to such conditions, as the Committee shall provide. His election shall
specify whether he wishes payment of his benefits to be made as of such
entitlement or to be deferred to the extent provided below. If payments
become due for any reason other than Retirement, death or Disability, and
if the amounts due from the Participant's Accounts are in excess of $3,500,
payment of such amounts shall be deferred to the extent provided below
unless the Participant consents to earlier payment. If the Participant so
consents to an earlier payment, such payment shall be made as soon as
practicable.
65<PAGE>
<PAGE>
In the case of a distribution under Section 6.3 on account of
the Participant's death, the Committee shall pay the entire amount in the
Participant's Accounts to his surviving spouse, or if there is no surviving
spouse, or if the surviving spouse gives her consent as provided in
Section 6.3, the entire amount will be paid to a Beneficiary other than the
surviving spouse designated by the Participant in accordance with
Section 6.3. Payments to a Participant's surviving spouse and/or
Beneficiary shall commence as soon as practicable after a Participant's
death.
Unless a Participant elects otherwise, payment of his benefits
under this Plan shall be made or commence no later than the sixtieth (60th)
day after the later of (a) the end of the Plan Year of his sixty-fifth
(65th) birthday or (b) the end of the Plan Year in which his employment
terminates. Any distribution to be made to a Participant under the
provisions of this Article VI shall be made within a reasonable period of
time after the Valuation Date coinciding with or next preceding the
termination of employment of such Participant, unless such Participant duly
elects in writing for a deferred distribution as provided above. A
Participant or his designated Beneficiaries (but only by his designated
Beneficiaries in the event of the death of a Participant without having
made such an election), may elect that the benefits payable to the
Participant and/or Beneficiary be paid in one of, or in any combination of,
the following methods:
(a) As a lump-sum distribution in cash, provided that
no lump-sum distribution may be paid to the Participant,
unless he has elected such distribution on an election form
provided by the Committee.
(b) As a distribution in kind of the shares held for
his Account in Investment Fund A and the ESOP Fund. A
Participant shall be entitled to receive a whole number of
shares of Company Stock equal to the total number of shares
held in such Investment Fund A and the ESOP Fund as of the
Valuation Date specified in Section 6.8 multiplied by a
fraction the numerator of which shall be (i) the value in
Investment Fund A held in his Pre-Tax Contribution Account
and/or his After-Tax Contribution Account as of such Valuation
Date, plus (ii) the vested portion of the value in Investment
Fund A held in his Employer Matching Account and the vested
portion of the value in the ESOP Fund held in his ESOP Account
as of such Valuation Date, and the denominator of which shall
be the total value in Investment Fund A and the ESOP Fund held
in the Pre-Tax Contribution Accounts, After-Tax Contribution
66<PAGE>
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Accounts, Employer Matching Accounts and ESOP Accounts for all
Participants as of such Valuation Date.
All amounts attributable to (i) any excess of the values
attributable to the interest in his Pre-Tax Contribution Account and/or his
After-Tax Contribution Account, and the vested portion of his interest in
his Employer Matching Account and his ESOP Account that are invested in
Fund A and the ESOP Fund, over the interest therein provided to be
distributed to him in kind, plus (ii) any interest of such Participant in
his Pre-Tax Contribution Account and/or his After-Tax Contribution Account
in Investment Fund B, C or D shall be distributed in cash.
6.7 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 Committee, to have any portion
of an Eligible Rollover Distribution paid directly to an
Eligible Retirement Plan specified by the Distributee in a
Direct Rollover.
(b) The terms used in Section 6.7(a) above shall have
the following meaning:
(i) Eligible Rollover Distribution: An
Eligible Rollover Distribution is any distribution
of all or any portion of the balance to the credit
of the Distributee, except that an Eligible
Rollover Distribution does not include: any
distribution that is one of a series of
substantially equal periodic payments (not less
frequently than annually) made for the life (or
life expectancy) of the Distributee or the joint
lives (or joint life expectancies) of the
Distributee and the Distributee's designated
Beneficiary, or for a specified period of ten
years or more; any distribution to the extent that
such distribution is required under
Section 401(a)(9) of the Code; and the portion of
any distribution that is not includable in gross
income (determined without regard to the exclusion
for net unrealized appreciation with respect to
employer securities).
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(ii) 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.
(iii) 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.
(iv) Direct Rollover: A Direct Rollover is
a payment by the Plan to the Eligible Retirement
Plan specified by the Distributee.
(c) In the event that a Distributee, after receiving
the explanation required by Section 402(f) of the Code, does
not affirmatively elect a Direct Rollover under Section 6.7(a)
above, the Distributee shall be deemed to have elected not to
have any portion of the Eligible Rollover Distribution paid
directly to an Eligible Retirement Plan.
(d) Each Eligible Rollover Distribution which a
Distributee elects to have distributed in a Direct Rollover
may be paid to only one Eligible Retirement Plan designated by
the Distributee.
(e) Notwithstanding any provisions of this Section to
the contrary, a Distributee may not elect a Direct Rollover
with respect to Eligible Rollover Distributions under this
Plan which are reasonably expected to total less than $200
during any calendar year.
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6.8 Participation Rights Determined as of Valuation Date Preceding
Termination of Employment: In the case of any Participant whose employment
shall be terminated for any reason, no further credits or charges arising
from any source shall be made to the Accounts of any such terminating
Participant after the credits or charges made as of the Valuation Date
immediately preceding his termination of employment, except for
(a) Pre-Tax Contributions, After-Tax Contributions and
Employer Matching Contributions and ESOP Contributions made
subsequent to such Valuation Date;
(b) Withdrawals or distributions made subsequent to
such Valuation Date; or
(c) In the case of a delayed distribution pursuant to
a Participant's election as provided in Section 6.6, such
subsequent adjustments to the values in the Accounts of such
Participant up to the Valuation Date coinciding with or
preceding the receipt of the Participant's election for
distribution.
6.9 Disposition of Forfeitures: Upon termination of employment of
a Participant to which the forfeiture provisions of Section 6.1 are
applicable, such Participant shall forfeit the non-vested portion of his
Employer Matching Account and his ESOP Account; provided, however, that if
such Participant returns to the employment of the Employer, any amounts so
forfeited shall be reinstated to the Participant's Employer Matching
Account or ESOP Account as of the close of the Plan Year during which such
Participant returns to the employment of the Employer. In the event
previously forfeited amounts are reinstated in a Participant's Employer
Matching Account and ESOP Account upon his return to employment, such
Participant's vested interest in his reinstated Employer Matching Account
and ESOP Account at any subsequent relevant time shall be the amount X
determined by the formula: X = P(AB + D) - D. For purposes of applying
the formula: P is the vested percentage under Section 6.1 at such relevant
time; AB is the account balance at such relevant time; D is the amount of
the prior distribution to the Participant.
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6.10 Required Minimum Distributions: Notwithstanding any provision
of this Plan to the contrary, any benefits to which a Participant is
entitled shall commence not later than the April 1 following the calendar
year in which the Participant attains age 70 1/2, whether or not his
employment had terminated in such year. Such distribution shall be at
least equal to the required minimum distributions under the Code; however,
any installment distributions pursuant to this Section 6.10 to Participants
who have not terminated employment shall be made over a period not to
exceed ten (10) years.
6.11 Unclaimed Benefits: If at, after or during the time when a
benefit hereunder is payable to any Participant, Beneficiary or other
distributee, the Committee, upon request of the Trustee, or at its own
instance, shall mail by registered or certified mail to such distributee,
at his last known address, a written demand for his present address or for
satisfactory evidence of his continued life, or both, and if such
distributee shall fail to furnish the same to the Committee within two (2)
years from mailing of such demand, then the Committee may, in its sole
discretion, determine that such Participant, Beneficiary or other
distributee has forfeited his right to such benefit and may declare such
benefit, or any unpaid portion thereof, terminated, as if the death of the
distributee (with no surviving Beneficiary) had occurred on the later of
the date of the last payment made thereon, or the date such Participant,
Beneficiary or other distributee first became entitled to receive benefit
payments. Any such forfeited benefit shall be applied as a part of (and
to reduce to such extent) the Employer Contributions required to be made
next following the date such forfeiture is declared to be forfeited by the
Committee. Notwithstanding the provisions of this Section 6.11, any such
forfeited benefit shall be reinstated if a claim for the same is made by
the Participant, Beneficiary or other distributee at any time thereafter.
The reinstatement shall be made by a mandatory contribution by the Company,
allocated solely to such reinstatement.
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ARTICLE VII
WITHDRAWALS AND LOANS
7.1 Withdrawal of After-Tax Excess Contributions: Pursuant to
written notice to the Committee given on or before the fifteenth (15th) day
of the preceding month and subject to the conditions of Section 7.3, each
Participant may elect to withdraw, as of the last day of any month of any
Plan Year, all or any amounts attributable to his After-Tax Excess
Contributions determined as of the Valuation Date immediately preceding the
withdrawal date.
7.2 Withdrawal of After-Tax Basic Contributions: Pursuant to
written notice to the Committee given on or before the fifteenth (15th) day
of the preceding month and subject to the conditions of Section 7.3, each
Participant may elect to withdraw (in addition to any amounts attributable
to his After-Tax Excess Contributions), as of the last day of any month of
any Plan Year, an amount specified by the Participant which may be
attributable to his After-Tax Basic Contributions under this Plan and to
his After-Tax Basic Contributions under the Prior Plan determined as of the
Valuation Date immediately preceding such withdrawal date. No withdrawal
shall be charged to the After-Tax Basic Contributions of a Participant
until the withdrawable amounts attributable to the After-Tax Excess
Contributions of a Participant have been withdrawn.
7.3 Conditions of Withdrawals: Each Participant who elects to
withdraw all or a portion of his After-Tax Basic Contributions shall be
suspended from participation in the Plan from the Valuation Date preceding
the distribution of the withdrawal until the first January 1 or July 1
coincident with or next following six (6) full months from the date of such
withdrawal provided the Committee has received prior to such January 1 or
July 1 the Participant's written election (in the form and manner
prescribed in Section 3.4 hereof) to commence participation after such
suspension; provided further, however, that such suspension shall not apply
to any Participant who has at least five (5) years of Service. No
Participant shall be permitted to make more than two (2) withdrawals from
his After-Tax Contribution Account within any twelve (12) month period.
No Participant shall be permitted to withdraw from his After-Tax
Contribution Account less than $500, or the balance of his Account, if less
than $500. Except as provided under Article VI, no withdrawals shall be
permitted from a Participant's Pre-Tax Contribution Account, Employer
Matching Account or ESOP Account.
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7.4 Loans: Any Participant who is an active Employee (including
any such Participant on an Authorized Absence) may make application to the
Committee to borrow from his Pre-Tax Contribution Account in the Trust
Fund, and the Committee in its sole discretion may permit such a loan. In
addition to active Participants, loans shall be available to any former
Participant or any Beneficiary or "alternate payee" with respect to a
former Participant, but if and only if such person is a "party in interest"
with respect to the Plan within the meaning of ERISA Section 3(14) and who
must be eligible to obtain a Plan loan in order for the exemptions set
forth in 29 C.F.R. Section 2550.408b-1 to apply to the Plan (herein, together
with active Participants, collectively referred to as "Borrower"). Loans
shall be granted in a uniform and non-discriminatory manner on terms and
conditions determined by the Committee which shall not result in more
favorable treatment of highly compensated employees and shall be set forth
in written procedures promulgated by the Committee in accordance with
applicable governmental regulations. All such loans shall also be subject
to the following terms and conditions:
(a) The amount of the loan when added to the amount of
any outstanding loan or loans to the Borrower from any other
plan of the Employer or an Affiliate which is qualified under
Code Section 401(a) shall not exceed the lesser of
(i) $50,000, reduced by the excess, if any, of the highest
outstanding balance of loans from all such plans during the
one (1) year period ending on the day before the date on which
such loan was made over the outstanding balance of loans from
the Plan on the date on which such loan was made or (ii) fifty
percent (50 percent) of the present value of Borrower's vested
Account balance under the Plan. In no event shall a loan of
less than $500 be made to a Borrower.
(b) The loan shall be for a term not to exceed five
(5) years and shall be evidenced by a note signed by the
Borrower. The loan shall be payable in periodic installments
and shall bear interest at a reasonable rate which shall be
determined by the Committee on a uniform and consistent basis
and set forth in the procedures in accordance with applicable
governmental regulations. Payments by a Borrower who is an
Employee will be made by means of payroll deduction from the
Borrower's compensation. If the Borrower is not receiving
compensation from the Employer, the loan repayment shall be
made in accordance with the terms and procedures established
by the Committee. A Borrower may repay an outstanding loan in
full at any time.
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(c) In the event an installment payment is not paid
within seven (7) days following the monthly due date, the
Committee shall give written notice to the Borrower sent to
his last known address. If such installment payment is not
made within thirty (30) days thereafter, the Committee shall
proceed with foreclosure in order to collect the full
remaining loan balance or shall make such other arrangements
with the Borrower as the Committee deems appropriate.
Foreclosures need not be effected until occurrence of a
distributable event under the terms of the Plan and no rights
against the Borrower or the security shall be deemed waived by
the Plan as a result of such delay.
(d) The unpaid balance of the loan, together with
interest thereon, shall become due and payable upon the date
of distribution of the Account and the Trustee shall first
satisfy the indebtedness from the amount payable to the
Borrower or to the Borrower's Beneficiary before making any
payments to the Borrower or to the Beneficiary.
(e) Any loan to a Borrower under the Plan shall be
adequately secured. Such security shall include a pledge of
a portion of the Borrower's right, title and interest in the
Trust Fund which shall not exceed fifty percent (50 percent)
of the present value of the Borrower's vested Account balance
under the Plan as determined immediately after the loan is
extended. Such pledge shall be evidenced by the execution of
a promissory note by the Borrower which shall grant the
security interest and provide that, in the event of any
default by the Borrower on a loan repayment, the Committee
shall be authorized to take any and all appropriate lawful
actions necessary to enforce collection of the unpaid loan.
(f) A request by a Borrower for a loan shall be made
in writing to the Committee and shall specify the amount of
the loan. If a Borrower's request for a loan is approved by
the Committee, the Committee shall furnish the Trustee with
written instructions directing the Trustee to make the loan in
a lump-sum payment of cash to the Borrower. The cash for such
payment shall be obtained by redeeming proportionately as of
the date of payment the Investment Fund or Funds, or portions
thereof, that are credited to the Pre-Tax Contribution Account
of such Borrower.
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(g) A loan to a Borrower shall be considered an
investment of the Pre-Tax Contribution Account of the Borrower
from which the loan is made. All loan repayments shall be
credited pro rata to such Pre-Tax Contribution Account and
reinvested exclusively in shares of one or more of the
Investment Funds in accordance with Section 8.1.
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ARTICLE VIII
INVESTMENT DIRECTIONS
8.1 Investment of Trust Fund: Except as provided in Article VII
with respect to Plan loans and as provided below with respect to the ESOP
Fund, the Trust Fund shall be divided into four (4) separate Investment
Funds, namely, Fund A, Fund B, Fund C and Fund D; these four (4) funds
being more particularly described as follows:
(a) Fund A shall be invested and reinvested in Common
Stock of the Company.
(b) Fund B shall be invested and reinvested in,
directly or indirectly through collective investment media
including but not limited to mutual funds and any common,
collective, group or commingled trust fund that invests
primarily in (i) common stock and preferred stock and limited
partnership interests, (ii) leaseholds, fees and other
interests in real estate, (iii) income-producing debt
securities or (iv) contracts, conditional sale agreements,
choses in action, trust and participation certificates, or
other evidences of ownership, part ownership or interest or
part interest in any property, real, personal or mixed, all
exclusive of direct investment in securities of the Company.
It is intended that the assets of Fund B be predominantly
invested in equity securities and/or real estate. Investment
practices and techniques that may be utilized in Fund B
include but are not limited to (i) securities lending,
(ii) investments in futures contracts, forwards contracts and
options, (iii) swap agreements and (iv) indexed securities in
which value is linked to currencies, interest rates,
commodities indices or other financial indicators.
(c) Fund C shall be invested and reinvested in,
directly or indirectly through collective investment media
including but not limited to mutual funds and any common,
collective, group or commingled trust fund that invests
primarily in, income-producing debt securities including but
not limited to (i) obligations issued or fully guaranteed by
the United States of America or any agency thereof, (ii) debt
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securities issued by corporations, partnerships,
trans-national organizations or other entities,
(iii) interests in notes secured by mortgages on real estate
and equity interest in real estate, (iv) asset-backed
securities, (v) debt securities issued by foreign governments
or any agency thereof or (vi) demand or time deposits,
repurchase agreements or commercial paper. Investment
practices and techniques that may be utilized in Fund C
include but are not limited to (i) securities lending,
(ii) investments in futures contracts, forwards contracts and
options, (iii) swap agreements and (iv) indexed securities in
which value is linked to currencies, interest rates,
commodities indices or other financial indicators.
(d) Fund D shall be invested and reinvested in,
directly or indirectly through collective investment media
including but not limited to mutual funds and any common,
collective, group or commingled trust fund that invests
primarily in (i) money market or short-term investments
(including but not limited to repurchase agreements, bankers
acceptances, certificates of deposit, commercial paper, demand
or time deposits, obligations issued or fully guaranteed by
the United States of America or any agency thereof, securities
with an interest rate or dividend rate that resets to a
market-based rate within one (1) year from the date of
issuance or the most recent date on which interest rates or
dividend rates were set, medium to long-term securities which
at time of purchase have less than one (1) year to maturity
and other securities which at time of purchase have less than
one (1) year to maturity) or (ii) annuity or investment
contracts with life insurance companies or other financial
institutions under which certain guaranteed interest is
provided and a repayment of the principal amount is
guaranteed, with such contract to be owned and held by the
Savings Trustee for the benefit of Participants holding
accounts in Fund D. As owner of any such investment contract,
the Savings Trustee shall have authority to exercise any and
all rights, options or privileges which belong to the owner of
the contract but shall have no duty to exercise any such
powers unless and until it shall have received instructions
concerning such exercise from the Committee.
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(e) Pending the acquisition of an investment in an
orderly manner for the purposes of Fund A, Fund B, Fund C or
Fund D, as the case may be, the Savings Trustee may
temporarily hold funds thereof uninvested or in repurchase
agreements, bankers acceptances, certificates of deposit,
commercial paper, demand or time deposits, obligations issued
or fully guaranteed by the United States of America or any
agency thereof, master notes or like holdings either
separately or through the medium of a common, collective,
group or commingled trust fund that invests primarily in such
like investments.
The Participant shall have the right to direct the Committee
to instruct the Trustee to invest his Pre-Tax Contributions and After-Tax
Contributions, and the earnings and accretions thereon, one hundred percent
(100 percent) in any one (1) of the four (4) Investment Funds, or divided
equally between two (2) of the four (4) Funds.
Each Participant shall elect an investment option at the time
he begins participating in the Plan. The Participant, on any succeeding
January 1, April 1, July 1 or October 1 through written notice to the
Committee given at least forty-five (45) days prior thereto, may (i) change
his instructions with respect to the investment of his future Pre-Tax and
After-Tax Contributions in the Trust Fund and/or (ii) change his
instructions with respect to the investment of the current values in his
Pre-Tax Contribution Account and After-Tax Contribution Account in such
manner as he may determine between the investment accounts.
Except as otherwise expressly provided herein, interest,
dividends and other income and all profits and gains produced by each
Investment Fund shall be paid in such Investment Fund, and such interest,
dividends and other income, and profits or gains without distinction
between principal and income, shall be invested and reinvested, but only
in property of the class hereinabove specified for the particular
Investment Fund. However, the Committee may direct that dividends paid
with respect to shares in the ESOP Fund be distributed on an annual basis
or more frequently in order that the deduction under Code Section 404(k)
be available to the Company, in which event income that constitutes
dividends on shares of Company Stock in the ESOP Fund shall not be invested
in Company Stock but shall be temporarily invested in cash equivalents
until distribution to Participants. In making payments in respect of
Exempt Loans, the Trustee shall utilize income and ESOP Contributions as
is specified in Section 5.3 hereof; namely, that income shall be first used
to fund principal payments and ESOP Contributions shall be first used to
fund interest payments. All purchases of Company Stock shall be made at
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prices which, in the judgment of the Trustee, do not exceed the fair market
value of such Company Stock. Pending such investment or application of
cash, the ESOP Trustee may retain cash uninvested without liability for
interest if it is prudent to do so, or may invest all or any part thereof
in Treasury Bills, commercial paper, or like holdings.
It is hereby explicitly provided and expressly acknowledged
that up to 100 percent of the assets of the Plan held in the Trust Fund may
be invested in Common Stock, as contemplated by the exception provided in
Section 407(b) of ERISA.
8.2 Diversification Election: Each qualified Participant (as
defined herein) may elect within ninety (90) days after the close of each
Plan Year in the initial election period (as defined herein) to direct the
investment of up to twenty-five percent (25 percent) of the sum of the
balances in the Participant's ESOP Account and Employer Matching Account
(to the extent such portion exceeds the amount to which a prior election
to diversify under this Section 8.2 applies) into Investment Fund B, C
and/or D. In each Plan Year after the initial election period, the
percentage shall be fifty percent (50 percent) instead of twenty-five
percent (25 percent). A qualified Participant is any Participant who has
completed at least ten years of participation in the Plan and the Prior
Plan and who has attained age fifty-five (55). The initial election period
means the five (5) Plan Year period beginning with the first Plan Year on
or after January 1, 1992 in which the Participant first became a qualified
Participant.
8.3 Voting of Company Stock; Exercise of Other Rights:
(a) Voting rights with respect to shares of Company
Stock in the ESOP Fund allocated to the ESOP Accounts of
Participants and shares in Investment Fund A allocated to the
Accounts of Participants shall be voted by the Trustees in
such manner as may be directed by the respective Participants,
with fractional shares being voted on a combined basis to the
extent possible to reflect the direction of the voting
Participants. The Trustees shall vote both allocated shares
of Company Stock for which they have not received direction,
as well as shares of Company Stock held in the Stock Suspense
Account, in the same proportion as directed shares are voted,
giving effect to all affirmative directions by Participants,
including directions to vote for or against, to abstain or to
withhold the vote, and the Trustees shall have no discretion
in such matter.
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(b) In the event that there is a tender offer or
exchange offer for outstanding shares of Company Stock, rights
with respect to the tender offer or exchange offer shall be as
with respect to voting rights described in Section 8.3(a)
above. If the Trustees shall not receive timely instruction
from a Participant as to the manner in which to respond to
such a tender offer, the Trustees shall not tender or exchange
any shares of Company Stock with respect to which such
Participant has the right to direction, and the Trustees shall
have no discretion in such matter. With respect to shares of
Company Stock held in the Stock Suspense Account and
fractional shares of Company Stock allocated to Participants'
ESOP Accounts and Employer Matching Accounts, voting rights
and rights to tender or exchange in connection with a tender
offer or exchange offer for the shares of Company Stock shall
be exercised by the Trustees in the same proportion as they
vote, tender or exchange shares of Company Stock with respect
to shares allocated to the Participants' ESOP Accounts and
Employer Matching Accounts, and the Trustees shall have no
discretion in such matter.
(c) Solicitation of exercise of Participants' voting
rights by management of the Company and others under a proxy
or consent provision applicable to all holders of Company
Stock shall be permitted. Solicitation of exercise of
Participant tender or exchange offer rights by management of
the Company and others shall be permitted. The Trustees shall
notify Participants of each occasion for the exercise of
voting rights or rights with respect to a tender offer or
exchange offer within a reasonable time before such rights are
to be exercised. Such notification shall include all
information distributed to shareholders by the Company
regarding the exercise of such rights. Copies of Company
written communications to Participants relating to each
opportunity for Participant exercise of rights under this
Section 8.3 shall be promptly furnished to the Trustees. The
instructions received by the Trustees from Participants shall
be held by the Trustees in confidence and shall not be
divulged or released to any person, including the Committee or
officers or employees of the Company or its Affiliates. In
the event any shares of Company Stock held in the Stock
Suspense Account are tendered or exchanged pursuant to this
Section 8.3, the proceeds shall at the direction of the Board
of Directors of the Company either (i) if and to the extent
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the proceeds are attributable to unallocated Company Stock be
used to repay installment purchase or other indebtedness used
to purchase the Common Stock to which such proceeds are
attributable or (ii) be reinvested in Company Stock within
ninety (90) days, or within such longer period as may be
approved by the Commissioner of Internal Revenue.
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ARTICLE IX
TRUST AGREEMENT AND TRUST FUND
9.1 Trust Agreement: The Trust Agreements include the Houston
Industries Incorporated Master Savings Trust, as amended and restated
effective January 1, 1994 (the "Savings Trust"), and the Savings Plan of
Houston Industries Incorporated ESOP Trust, as established effective
October 5, 1990 (the "ESOP Trust"), as either may be amended from time to
time. The provisions of such Trust Agreements are herein incorporated by
reference as fully as if set out herein, and the assets held under said
Trust Agreements on behalf of this Plan shall constitute the Trust Fund.
9.2 Benefits Paid Solely from Trust Fund: All of the benefits
provided to be paid under Article VI hereof shall be paid by the Trustee
out of the Trust Fund to be administered under such Trust Agreement.
Neither the Employer nor the Trustee shall be responsible or liable in any
manner for payment of any such benefits, and all Participants hereunder
shall look solely to such Trust Fund and to the adequacy thereof for the
payment of any such benefits of any nature or kind which may at any time
be payable hereunder.
9.3 Committee Directions to Trustee: The Trustee shall make only
such payments out of the Trust Fund as may be directed by the Committee.
The Trustee shall not be required to determine or make any investigation
to determine the identity or mailing address of any person entitled to any
payments out of the Trust Fund and shall have discharged its obligation in
that respect when it shall have sent checks or other papers by ordinary
mail to such persons and addresses as may be certified to it by the
Committee.
9.4 Trustee's Reliance on Committee Instructions: In any case
where the Trustee shall be required hereunder to act upon instructions to
be received from the Committee, the Trustee shall be protected in relying
on any such instructions which shall be in writing and signed by any member
of, or Secretary of, the Committee, and the Trustee shall be protected in
relying upon the authority to act of any person certified to it by the
Company as a member of, or Secretary of, the Committee until a successor
to any such person shall be certified to the Trustee by the Company.
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9.5 Authority of Trustee in Absence of Instructions from the
Committee: If at any time the Committee shall be incapable for any reason
of giving any directions, instructions or authorizations to the Trustee as
are herein provided for and as may be required incidental to the
administration of this Plan, the Trustee may act and shall be completely
protected and without liability in so acting without such directions,
instructions and authorizations as it in its sole discretion deems
appropriate and advisable under the circumstances for the carrying out of
the provisions of this Plan. In the event of termination of this Plan for
any reason, the Committee shall be authorized to give all such instructions
to the Trustee, and the Trustee shall be protected in relying on all such
instructions, as may be necessary to make payment to any persons then
interested in the Trust Fund of all such amounts as are specified herein
to be paid under Section 10.3 hereof upon the termination of this Plan and
the Trust Agreement.
9.6 Compliance with Exchange Act Rule 10(b)(18): At any time that
the Trustee makes open market purchases of Company Stock, the Trustee will
either (i) be an "agent independent of the issuer" as that term is defined
in Rule 10(b)(18) promulgated pursuant to the Securities and Exchange Act
of 1934, as amended (the "Exchange Act") or (ii) make such open market
purchases in accordance with the provisions, and subject to the
restrictions, of Rule 10(b)(18) of the Exchange Act.
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ARTICLE X
ADOPTION OF PLAN BY OTHER CORPORATIONS,
AMENDMENT AND TERMINATION OF THE PLAN, AND
DISCONTINUANCE OF CONTRIBUTIONS TO THE TRUST FUND
10.1 Adoption by Employers: Every Employer which shall have adopted
the Plan shall thereby become a participating Employer whose eligible
Employees, subject to the Plan provisions, shall make and receive
Contributions and have established for them Accounts under the Plan. Any
corporation or other organization with employees, now in existence or
hereafter formed or acquired which is not already an Employer under this
Plan and which is otherwise legally eligible may, with the approval of the
Company as evidenced by action of the Committee, adopt and become an
Employer by executing and delivering to the Committee and the Trustee an
adoptive instrument specifying the classification of its Employees who
shall be eligible to participate in the Plan and evidencing the terms of
the Plan with respect to its eligible Employees. The adoptive instrument
may contain such changes and amendments in the terms and provisions of the
Plan as adopted by such Employer as may be desired by such Employer and
acceptable to the Committee. Any such Affiliate which shall adopt this
Plan shall designate the Company as its agent to act for it in all
transactions affecting the administration of the Plan and shall designate
the Committee to act for such corporation and its Participants in the same
manner in which the Committee may act for the Company and its Participants
hereunder. The adoptive instrument shall specify the effective date of
such adoption of the Plan and shall become, as to such corporation and its
Employees, a part of this Plan. Upon an Employer's liquidation,
bankruptcy, insolvency, sale, consolidation or merger to or with another
organization that is not an Employer hereunder, in which such Employer is
not the surviving company, all obligations of that Employer hereunder and
under the Trust Agreements shall terminate automatically, and the Trust
Fund assets attributable to the Employees of such Employer shall be held
or distributed as herein provided unless, with the approval of the Company
as evidenced by action of the Committee, the successor to that Employer
assumes the duties and responsibilities of such Employer, by adopting this
Plan and the Trust Agreements, or by establishment of a separate plan and
trust to which the assets of the Trust Fund held on behalf of the Employees
of such Employer shall be transferred with the consent and agreement of
that Employer. Upon the consolidation or merger of two or more of the
Employers under this Plan with each other, the surviving Employer or
organization shall automatically succeed to all the rights and duties under
the Plan and Trust Agreements of the Employers involved.
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10.2 Continuous Service: The following special provisions shall
apply to all Employers:
(a) An Employee shall be considered in continuous
Service while regularly employed simultaneously or
successively by one or more Employers.
(b) The transfer of a Participant from one Employer to
another Employer shall not be deemed a termination of Service.
10.3 Amendment of the Plan: The Company shall have the right to
amend or modify this Plan and the Trust Agreements (with the consent of the
applicable Trustee) at any time and from time to time to any extent that
it may deem advisable. Any such amendment or modification shall be set out
in an instrument in writing duly authorized by the Board of Directors of
the Company, and executed by an officer of the Company. Upon delivery by
the Company of such an instrument amending the Plan to the Trustee, this
Plan shall be deemed to have been amended or modified in such manner and
to such extent and effective as of the date therein set forth, and
thereupon any and all Participants whether or not they shall have become
such prior to such amendment or modification shall be bound thereby. No
such amendment or modification shall, however, increase the duties or
responsibilities of the Trustee without its consent thereto in writing, or
have the effect of transferring to or vesting in any Employer any interest
or ownership in any properties of the Trust Fund, or of permitting the same
to be used for or diverted to purposes other than for the exclusive benefit
of the Participants and their Beneficiaries. No such amendment shall
decrease the Account of any Participant or shall decrease any Participant's
vested interest in his Account. No amendment shall directly or indirectly
reduce a Participant's non-forfeitable vested percentage in his benefits
under Section 6.1 of this Plan, unless each Participant having not less
than three (3) years of Service is permitted to elect to have his
non-forfeitable vested percentage in his benefits computed under the
provisions of Section 6.1 without regard to the amendment. Such election
shall be available during an election period, which shall begin on the date
such amendment is adopted, and shall end on the latest of (i) the date
sixty (60) days after such amendment is adopted, (ii) the date sixty (60)
days after such amendment is effective, or (iii) the date sixty (60) days
after such Participant is issued written notice of the amendment by the
Committee or the Employer. Notwithstanding anything herein to the
contrary, the Plan or the Trust Agreement may be amended in such manner as
may be required at any time to make it conform to the requirements of the
84<PAGE>
<PAGE>
Code or of any United States statutes with respect to employees' trusts,
or of any amendment thereto, or of any regulations or rulings issued
pursuant thereto, and no such amendment shall be considered prejudicial to
any then existing rights of any Participant or his Beneficiary under the
Plan.
10.4 Termination of the Plan: The Plan may be terminated pursuant
to the provisions of, and as of any subsequent date specified in, an
instrument in writing executed by the Company, and approved and authorized
by the Board of Directors of the Company, and which said instrument shall
be delivered to the Trustee.
10.5 Distribution of Trust Fund on Termination: In the event of a
termination of the Plan by the Company, the assets and properties of the
Trust Fund shall be valued and allocated as provided in Sections 5.2 and
5.3, and each Participant shall be fully vested in all amounts attributable
to his Employer Matching Account and his ESOP Account, and thereafter, each
such Participant shall become entitled to distributions in respect of his
Accounts in the Plan in the manner as provided in Sections 6.6(a) and
6.6(b) herein. In the event the Plan is terminated with respect to all
Employers, any Company Stock held in the Suspense Stock Account shall be
sold to the extent necessary to pay the outstanding principal balance and
any accrued interest on any installment purchase contracts and/or loan
obligations of the Trust Fund incurred for the purpose of directly or
indirectly funding the purchase of such Stock, and any such installment
purchase contracts and/or loan obligations shall be paid in full prior to
distribution of the assets of the Trust Fund to Participants; provided,
however, that the Board of Directors of the Company may authorize
distribution of Trust Fund assets prior to satisfaction of installment
purchase contracts and/or loan obligations, but only if under applicable
federal law such assets or income attributable thereto cannot be used to
repay such installment purchase contracts or loan obligations.
10.6 Effect of Discontinuance of Contributions: If the Company
shall discontinue its Contributions to the Trust Fund, or suspend its
Contributions to the Trust Fund under such circumstances so as to
constitute a discontinuance of Contributions within the purview of the
reasoning of Treasury Regulations Section 1.401-6(c), then all amounts
theretofore credited to the Accounts of the Participants shall become fully
vested, and throughout any such period of discontinuance of Contributions,
all other provisions of the Plan shall continue in full force and effect
other than the provisions for Contributions by an Employer or Participants
and the forfeiture provisions of Section 6.1.
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10.7 Merger of Plan with Another Plan: In the case of any merger
or consolidation of the Plan with, or transfer in whole or in part of the
assets and liabilities of the Trust Fund to another trust fund held under,
any other plan of deferred compensation maintained or to be established for
the benefit of all or some of the Participants of this Plan, the assets of
the Trust Fund applicable to such Participants shall be transferred to the
other trust fund only if:
(a) Each Participant would (if either this Plan or the
other plan then terminated) receive a benefit immediately
after the merger, consolidation or transfer which is equal to
or greater than the benefit he would have been entitled to
receive immediately before the merger, consolidation or
transfer (if this Plan had then terminated);
(b) Resolutions of the Board of Directors of the
Employer under this Plan, and of any new or successor employer
of the affected Participants, shall authorize such transfer of
assets; and, in the case of the new or successor employer of
the affected Participants, its resolutions shall include an
assumption of liabilities with respect to such Participants'
inclusion in the new employer's plan; and
(c) Such other plan and trust are qualified under
Sections 401(a) and 501(a) of the Code.
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ARTICLE XI
TOP-HEAVY PLAN REQUIREMENTS
11.1 General Rule: For any Plan Year for which this Plan is a
Top-Heavy Plan, as defined in Section 11.8, and despite any other
provisions of this Plan to the contrary, this Plan shall be subject to the
provisions of this Article XI.
11.2 Vesting Provisions: Each Participant who has completed an Hour
of Service after the Plan becomes top-heavy and while the Plan is top-heavy
and who has completed the Vesting Service specified in the following table
shall be vested in his Account under this Plan at least as rapidly as is
provided in the following schedule:
<TABLE>
<CAPTION>
Vesting Service Vested Percent
<S> <C>
Less than 2 years 0 percent
2 but less than 3 years 20 percent
3 but less than 4 years 40 percent
4 but less than 5 years 60 percent
5 but less than 6 years 80 percent
6 years or more 100 percent
</TABLE>
If an Account becomes vested by reason of the application of the preceding
schedule, it may not therefore be forfeited by reason of re-employment
after retirement pursuant to a suspension of benefits provision, by reason
of withdrawal of any mandatory employee contributions to which employer
contributions were keyed, or for any other reason. If the Plan
subsequently ceases to be top-heavy, the preceding schedule shall continue
to apply with respect to any Participant who had at least three (3) years
of Service (as defined in Treasury Regulation Section 1.411(a)-8T(b)(3))
as of the close of the last year that the Plan was top-heavy. For all
other Participants, the non-forfeitable percentage of their Accounts
provided in the preceding schedule prior to the date the Plan ceases to be
top-heavy shall not be reduced.
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11.3 Minimum Contribution Provisions: Each Participant who (i) is
a Non-Key Employee, as defined in Section 11.8 and (ii) is employed on the
last day of the Plan Year (regardless of whether or not such Participant
has completed one thousand (1,000) Hours of Service) will be entitled to
have contributions and forfeitures (if applicable) allocated to his Account
of not less than three percent (3 percent) (the "Minimum Contribution
Percentage") of the Participant's Compensation. This minimum allocation
percentage shall be provided without taking Pre-Tax Contributions into
account. A Non-Key Employee may not fail to receive a Minimum Contribution
Percentage because of a failure to receive a specified minimum amount of
Compensation or a failure to make mandatory employee or elective
contributions. This Minimum Contribution Percentage will be reduced for
any Plan Year to the percentage at which contributions (including
forfeitures) are made or are required to be made under the Plan for the
Plan Year for the Key Employee for whom such percentage is the highest for
such Plan Year. For this purpose, the percentage with respect to a Key
Employee will be determined by dividing the contributions (including
forfeitures) made for such Key Employee by his total compensation (as
defined in Section 415 of the Code) not in excess of $150,000 for the Plan
Year. Such amount will be adjusted in the same manner as the amount set
forth in Section 11.4 below.
Contributions considered under the first paragraph of this
Section 11.3 will include Employer contributions under this Plan and under
all other defined contribution plans required to be included in an
Aggregation Group (as defined in Section 11.8 below), but will not include
Employer contributions under any plan required to be included in such
aggregation group if the plan enables a defined benefit plan required to
be included in such group to meet the requirements of the Code prohibiting
discrimination as to contributions in favor of employees who are officers,
shareholders, or the highly compensated or prescribing the minimum
participation standards. If the highest rate allocated to a Key Employee
for a year in which the Plan is top-heavy is less than three percent (3
percent), amounts contributed as a result of a salary reduction agreement
must be included in determining contributions made on behalf of Key
Employees.
Employer Contributions made on behalf of Non-Key Employees that
are taken into account to satisfy the Minimum Contribution Percentage shall
not be treated as Employer Matching Contributions for purposes of
determining the Actual Contribution Percentage under Article IV and must
meet the non-discrimination requirements of Section 401(a)(4) without
regard to Section 401(m).
Contributions considered under this Section will not include
any contributions under the Social Security Act or any other federal or
state law.
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11.4 Limitation on Compensation: Each Participant's Compensation
taken into account under this Article XI and under Section 1.11 for
purposes of computing benefits under this Plan will not exceed $150,000.
Such amount will be adjusted automatically for each Plan Year to the amount
prescribed by the Secretary of the Treasury or his delegate pursuant to
regulations for the calendar year in which such Plan Year commences.
11.5 Limitation on Contributions: In the event that the Company,
other Employer or an Affiliate (herein in this Article collectively
referred to as a "Considered Company") also maintains a defined benefit
plan providing benefits on behalf of Participants in this Plan, one of the
two following provisions will apply:
(a) If for the Plan Year this Plan would not be a
Top-Heavy Plan if "ninety percent (90 percent)" were
substituted for "sixty percent (60 percent)" in Section 11.8,
then the percentage of three percent (3 percent) used in
Section 11.3 is changed to four percent (4 percent).
(b) If for the Plan Year this Plan would continue to
be a Top-Heavy Plan if "ninety percent (90 percent)" were
substituted for "sixty percent (60 percent)," in Section 11.8,
then the denominator of both the defined contribution plan
fraction and the defined benefit plan fraction will be
calculated as set forth in Section 5.5 for the limitation year
ending in such Plan Year by substituting "one (1.0)" for "one
and twenty-five hundredths (1.25)" in each place such figure
appears. This subsection (b) will not apply for such Plan
Year with respect to any individual for whom there are no
(i) Employer contributions, forfeitures or voluntary
non-deductible contributions allocated to such individual or
(ii) accruals earned under the defined benefit plan.
Furthermore, the transitional rule set forth in
Section 415(e)(6)(B)(i) of the Code shall be applied by
substituting "Forty-One Thousand Five Hundred Dollars
($41,500)" for "Fifty-One Thousand Eight Hundred Seventy-Five
Dollars ($51,875)" where it appears therein.
89<PAGE>
<PAGE>
11.6 Coordination with Other Plans: If another defined contribution
or defined benefit plan maintained by a Considered Company provides
contributions or benefits on behalf of a Participant in this Plan, the
other plan will be treated as part of this Plan pursuant to applicable
principles prescribed by U.S. Treasury Regulations or applicable IRS
rulings (such as Revenue Ruling 81-202 or any successor ruling) to
determine whether this Plan satisfies the requirements of Sections 11.2,
11.3 and 11.4 and to avoid inappropriate omissions or inappropriate
duplication of minimum contributions. The determination will be made by
the Plan Administrator upon the advice of counsel.
In the event a Participant is covered by a defined benefit plan
which is top-heavy pursuant to Section 416 of the Code, a comparability
analysis (as prescribed by Revenue Ruling 81-202 or any successor ruling)
shall be performed in order to establish that the plans are providing
benefits at least equal to the defined benefit minimum.
11.7 Distributions to Certain Key Employees: Notwithstanding any
other provision of this Plan, the entire interest in this Plan of each
Participant who is a Key Employee, by reason of clause (iii) of
subparagraph (c) of Section 11.8 in the calendar year in which the
Participant attains age 70 1/2, shall commence to be distributed to such
Participant not later than the April 1 following such calendar year.
11.8 Determination of Top-Heavy Status: The Plan will be a
Top-Heavy Plan for any Plan Year if, as of the Determination Date, the
aggregate of the Accounts under the Plan (determined as of the Valuation
Date) for Participants (including former Participants) who are Key
Employees exceeds sixty percent (60 percent) of the aggregate of the
Accounts of all Participants, excluding former Key Employees, or if this
Plan is required to be in an Aggregation Group in any such Plan Year in
which such Group is a Top-Heavy Group. In determining Top-Heavy status if
an individual has not performed one (1) Hour of Service for any Considered
Company at any time during the five (5) year period ending on the
Determination Date, any accrued benefit for such individual and the
aggregate Accounts of such individual shall not be taken into account.
For purposes of this Section, the capitalized words have the
following meanings:
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(a) "Aggregation Group" means the group of plans, if
any, that includes both the group of plans required to be
aggregated and the group of plans permitted to be aggregated.
The group of plans required to be aggregated (the "required
aggregation group") includes:
(i) each plan of a Considered Company in
which a Key Employee is a participant; and
(ii) each other plan, including
collectively bargained plans, of a Considered
Company which enables a plan in which a Key
Employee is a participant to meet the requirements
of Code Section 401(a)(4) or 410.
The group of plans that are permitted to be aggregated
(the "permissive aggregation group") includes the required
aggregation group plus one (1) or more plans of a Considered
Company that is not part of the required aggregation group and
that the Considered Company certifies as a plan within the
permissive aggregation group. Such plan or plans may be added
to the permissive aggregation group only if, after the
addition, the aggregation group as a whole continues to
satisfy the requirements of Code Sections 401(a)(4) and 410.
(b) "Determination Date" means for any Plan Year the
last day of the immediately preceding Plan Year.
(c) "Key Employee" means any Employee or former
Employee under this Plan who, at any time during the Plan Year
in question or during any of the four (4) preceding Plan
Years, is or was one of the following:
(i) An officer of a Considered Company
having an annual compensation greater than fifty
percent (50 percent) of the amount in effect under
Code Section 415(b)(1)(A) for any such Plan Year.
Whether an individual is an officer shall be
determined by the Considered Company on the basis
of all the facts and circumstances, such as an
individual's authority, duties and term of office,
not on the mere fact that the individual has the
title of an officer. For any such Plan Year,
officers considered to be Key Employees will be no
more than the fewer of:
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<PAGE>
(A) Fifty (50) employees; or
(B) Ten percent (10 percent)
of the employees or, if greater than
ten percent (10 percent), three (3)
employees.
For this purpose, the highest paid officers shall
be selected.
(ii) One (1) of the ten (10) employees
owning (or considered as owning, within the
meaning of the constructive ownership rules of
Code Section 416(i)(1)(B)) the largest interests
in the Considered Company. An employee who has
some ownership interest is considered to be one
(1) of the top ten (10) owners unless at least ten
(10) other employees own a greater interest than
that employee. However, an employee will not be
considered a top ten (10) owner for a Plan Year if
the employee earns less than the limitation in
effect under Code Section 415(c)(1)(A) as in
effect for the calendar year in which the
Determination Date falls.
(iii) Any person who owns (or is considered
as owning, within the meaning of the constructive
ownership rules of Code Section 416(i)(1)(B)) more
than five percent (5 percent) of the outstanding
stock of a Considered Company or stock possessing
more than five percent (5 percent) of the combined
voting power of all stock of the Considered
Company.
(iv) Any person who has an annual
compensation from the Considered Company of more
than One Hundred Fifty Thousand Dollars ($150,000)
and who owns (or is considered as owning, within
the meaning of the constructive ownership rules of
Code Section 416(i)(1)(B)) more than one percent
(1 percent) of the outstanding stock of the
Considered Company or stock possessing more than
one percent (1 percent) of the outstanding stock
of the Considered Company or stock possessing more
than one percent (1 percent) of the combined
voting power of all stock of
92<PAGE>
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the Considered Company. For purposes of this
subsection, Annual Compensation includes all items
includable as Compensation within the meaning of
Section 11.8(k) and further includes the amount
otherwise excludable from an employee's gross
income by reason of Code Section 125, 402(e)(3) or
402(h)(1)(B).
For purposes of this subsection (c), a Beneficiary of a Key
Employee shall be treated as a Key Employee. For purposes of
parts (iii) and (iv), each Considered Company is treated
separately in determining ownership percentages; but all such
Considered Companies shall be considered a single employer in
determining the amount of compensation.
(d) "Non-Key Employee" means any employee (and any
Beneficiary of an employee) who is not a Key Employee.
(e) "Top-Heavy Group" means the Aggregation Group if,
as of the applicable Determination Date, the sum of the
present value of the cumulative accrued benefits for Key
Employees under all defined benefit plans included in the
Aggregation Group plus the aggregate of the accounts of Key
Employees under all defined contribution plans included in the
Aggregation Group exceeds sixty percent (60 percent) of the
sum of the present value of the cumulative accrued benefits
for all employees, excluding former Key Employees as provided
in paragraph (i) below, under all such defined benefit plans
plus the aggregate accounts for all employees, excluding
former Key Employees as provided in paragraph (i) below, under
all such defined contribution plans. In determining Top-Heavy
status, if an individual has not performed one (1) Hour of
Service for any Considered Company at any time during the five
(5) year period ending on the Determination Date, any accrued
benefit for such individual and the aggregate accounts of such
individual shall not be taken into account. If the
Aggregation Group that is a Top-Heavy Group is a required
aggregation group, each plan in the group will be a Top-Heavy
Plan. If the Aggregation Group that is a Top-Heavy Group is
a permissive aggregation group, only those plans that are part
of the required aggregation group will be treated as Top-Heavy
Plans. If the Aggregation Group is not a Top-Heavy Group, no
plan within such group will be a Top-Heavy Plan.
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In determining whether this Plan constitutes a Top-Heavy Plan,
the Committee (or its agent) will make the following
adjustments:
(f) When more than one (1) plan is aggregated, the
Committee shall determine separately for each plan as of each
plan's Determination Date the present value of the accrued
benefits (for this purpose using the actuarial assumptions set
forth in the applicable plan) or account balance. The results
shall then be aggregated by adding the results of each plan as
of the Determination Dates for such plans that fall within the
same calendar year.
(g) In determining the present value of the cumulative
accrued benefit or the amount of the account of any employee,
such present value or account will include the amount in
dollar value of the aggregate distributions made to such
employee under the applicable plan during the five (5) year
period ending on the Determination Date unless reflected in
the value of the accrued benefit or account balance as of the
most recent Valuation Date. The amounts will include
distributions to employees representing the entire amount
credited to their accounts under the applicable plan.
(h) Further, in making such determination, such
present value or such account shall include any rollover
contribution (or similar transfer), as follows:
(i) If the rollover contribution (or
similar transfer) is initiated by the employee and
made to or from a plan maintained by another
Considered Company, the plan providing the
distribution shall include such distribution in
the present value or such account and the plan
accepting the distribution shall not include such
distribution in the present value or such account
unless the plan accepted it before December 31,
1983.
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(ii) If the rollover contribution (or
similar transfer) is not initiated by the employee
or made from a plan maintained by another
Considered Company, the plan accepting the
distribution shall include such distribution in
the present value or such account, whether the
plan accepted the distribution before or after
December 31, 1983; the plan making the
distribution shall not include the distribution in
the present value or such account.
(i) In any case where an individual is a Non-Key
Employee with respect to an applicable plan but was a Key
Employee with respect to such plan for any prior Plan Year,
any accrued benefit and any account of such employee will be
altogether disregarded. For this purpose, to the extent that
a Key Employee is deemed to be a Key Employee if he or she met
the definition of Key Employee within any of the four (4)
preceding Plan Years, this provision will apply following the
end of such period of time.
(j) "Valuation Date" means for purposes for
determining the present value of an accrued benefit as of the
Determination Date the date determined as of the most recent
valuation date which is within a twelve (12) month period
ending on the Determination Date. For the first plan year of
a plan, the accrued benefit for a current employee shall be
determined either (i) as if the individual terminated service
as of the Determination Date or (ii) as if the individual
terminated service as of the valuation date, but taking into
account the estimated accrued benefit as of the Determination
Date. The Valuation Date shall be determined in accordance
with the principles set forth in Q and A-T-25 of Treasury
Regulations Section 1.416-1.
(k) For purposes of this Section, "Compensation" shall
have the meaning given to it in Section 5.5(d)(6) of the Plan.
95<PAGE>
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ARTICLE XII
MISCELLANEOUS PROVISIONS
12.1 Terms of Employment: The adoption and maintenance of the
provisions of this Plan shall not be deemed to constitute a contract
between the Employer and any Employee, or to be a consideration for, or an
inducement or condition of, the employment of any person. Nothing herein
contained shall be deemed to give to any Employee the right to be retained
in the employ of the Employer or to interfere with the right of the
Employer to discharge any Employee at any time, nor shall it be deemed to
give the Employer the right to require any Employee to remain in its
employ, nor shall it interfere with any Employee's right to terminate his
employment at any time.
12.2 Controlling Law: This Plan and the Savings Trust shall be
construed, regulated and administered under the laws of the State of Texas,
and the ESOP Trust shall be construed, regulated and administered under the
laws of the Commonwealth of Massachusetts, all subject, however, to such
determinations under the Plan as may be governed by ERISA and related
provisions of the Code.
12.3 Invalidity of Particular Provisions: In the event any
provision of this Plan shall be held illegal or invalid for any reason,
said illegality or invalidity shall not affect the remaining provisions of
this Plan but shall be fully severable, and this Plan shall be construed
and enforced as if said illegal or invalid provisions had never been
inserted herein.
12.4 Non-Alienability of Rights of Participants: No interest, right
or claim in or to the part of the Trust Fund attributable to the Pre-Tax
Contribution Account, the After-Tax Contribution Account, the Employer
Matching Account or the ESOP Account of any Participant, or any
distribution of benefits therefrom, shall be assignable, transferable or
subject to sale, mortgage, pledge, hypothecation, commutation,
anticipation, garnishment, attachment, execution, claim or levy of any
kind, voluntary or involuntary (excluding a levy on an Account other than
a Pre-Tax Contribution Account for taxes filed upon the Plan by the
Internal Revenue Service), including without limitation any claim asserted
by a spouse or former spouse of any Participant, and the Trustees shall not
recognize any attempt to assign, transfer, sell, mortgage, pledge,
hypothecate, commute or anticipate the same. The preceding sentence shall
also apply to the creation, assignment or recognition of a right to any
96<PAGE>
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benefit payable with respect to a Participant pursuant to a domestic
relations order, unless such order is determined to be a qualified domestic
relations order, as defined in Section 414(p) of the Code. The Committee
shall establish a written procedure to be used to determine the qualified
status of such orders and to administer distributions under such orders.
Further, to the extent provided under the qualified domestic relations
order, a former spouse of a Participant shall be treated as a spouse for
all purposes of the Plan. If the Committee receives a qualified domestic
relations order with respect to a Participant, the amount assigned to the
Participant's former spouse may be immediately distributed, to the extent
permitted by law, from the Participant's Pre-Tax Contribution Account,
After-Tax Contribution Account, and the vested portion of his Employer
Matching Account and ESOP Account.
12.5 Payments in Satisfaction of Claims of Participants: Any
distribution to any Participant or his Beneficiary or legal representative,
in accordance with the provisions of the Plan, of the interest in the Trust
Fund attributable to his Pre-Tax Contribution Account and/or After-Tax
Contribution Account, and the vested portion of his Employer Matching
Account and ESOP Account, shall be in full satisfaction of all claims under
the Plan against the Trust Fund, the Trustee, the Company, and the
Employer. The Trustee may require that any distributee execute and deliver
to the Trustee a receipt and a full and complete release of the Employer
as a condition precedent to any payment or distribution under the Plan.
12.6 Payments Due Minors and Incompetents: If the Committee
determines that any person to whom a payment is due hereunder is a minor
or is incompetent by reason of physical or mental disability, the Committee
shall have power to cause the payments becoming due such person to be made
to the guardian of the minor or the guardian of the estate of the
incompetent, without the Committee or the Trustee being responsible to see
to the application of such payment. Payments made pursuant to such power
shall operate as a complete discharge of the Committee, the Trustee and the
Employer.
12.7 Acceptance of Terms and Conditions of Plan by
Participants: Each Participant, through execution of the application
required under the terms of the Plan as a condition of participation
herein, for himself, his heirs, executors, administrators, legal
representatives and assigns, approves and agrees to be bound by the
provisions of this Plan and the Trust Agreement and any subsequent
amendments thereto and all actions of the Committee and the Trustee
hereunder. In consideration of the adoption of this Plan by the Employer
and the Contributions of the Employer to the Trust Fund, each Participant
agrees by the execution of his application to participate herein to release
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and hold harmless to the extent permitted by ERISA the Employer, the
Committee and the Trustee from any liability for any act whatsoever, past,
present, or future, performed in good faith in such respective capacities
pursuant to the provisions of this Plan or the Trust Agreement.
12.8 Impossibility of Diversion of Trust Fund: Notwithstanding any
provision herein to the contrary, no part of the corpus or the income of
the Trust Fund shall ever be used for or diverted to purposes other than
for the exclusive benefit of the Participants or their Beneficiaries or for
the payment of expenses of the Plan. No part of the Trust Fund shall ever
revert to the Employer.
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IN WITNESS WHEREOF, HOUSTON INDUSTRIES INCORPORATED has
executed these presents as evidenced by the signatures affixed hereto of
its officers hereunto duly authorized, in a number of copies, all of which
shall constitute but one and the same instrument, which instrument may be
sufficiently evidenced by any such executed copy hereof, this 17th day of
February, 1994, effective as of January 1, 1994.
HOUSTON INDUSTRIES INCORPORATED
By /s/ D. D. Sykora
------------------------------------
President and Chief Operating Officer
ATTEST:
/s/ Rufus S. Scott
- ----------------------------
Assistant Corporate Secretary
The undersigned participating Employer hereby consents to and
approves of the amendment, restatement and merger of the KBLCOM Savings
Plan, as amended and in effect on December 31, 1993, in the form of this
Plan, effective January 1, 1994.
KBLCOM INCORPORATED
By /s/ Gary G. Weik
-----------------
President and Chief Operating Officer
ATTEST:
/s/ Jonathan F. Myers
- -----------------------------
Assistant Corporate Secretary
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EXHIBIT 5
Baker and Botts, L.L.P.
One Shell Plaza
910 Louisiana
Houston, Texas 77002-4995
February 24, 1994
Houston Industries Incorporated
5 Post Oak Park
4400 Post Oak Parkway
Houston, Texas 77027
Gentlemen:
As set forth in the Registration Statement on Form S-8
(Registration No. 33-38344) (the "Registration Statement") filed by
Houston Industries Incorporated, a Texas corporation (the "Company"),
with the Securities and Exchange Commission under the Securities Act of
1933, as amended, relating to up to 2,500,000 shares (the "Shares") of
common stock, without par value, of the Company ("Common Stock") subject
to issuance pursuant to the Company's Savings Plan (the "Plan"), certain
legal matters in connection with the Shares are being passed upon for
the Company by us. At your request, this opinion is being furnished to
you for filing as Exhibit 5 to the Registration Statement.
In our capacity as your counsel in connection with the matter
referred to above, we have examined the Company's Articles of
Incorporation and Bylaws, each as amended to date, and have examined the
originals, or copies certified or otherwise identified, of corporate
records of the Company, certificates of public officials and of
representatives of the Company, statutes and other instruments and
documents as a basis for the opinions hereinafter expressed. In giving
such opinions, we have relied upon certificates of officers of the
Company with respect to the accuracy of the material factual matters
contained in such certificates. In making our examination, we have
assumed that all signatures on documents examined by us are genuine, all
documents submitted to us as originals are authentic and all documents
submitted to us as certified or photostatic copies conform with the
original copies of such documents.
On the basis of the foregoing, and subject to the limitations and
qualifications hereinafter set forth, we are of the opinion that:
1. The Company is a corporation duly organized and validly
existing in good standing under the laws of the State of Texas.
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2. When issued in accordance with the terms and provisions of
the Plan and at a price per share at least equal to the closing
price of a share of Common Stock on the New York Stock Exchange
on the day of the purchase by the respective Trustee under the
Plan, the Shares that are issued as newly issued shares by the
Company will be duly authorized, validly issued, fully paid and
nonassessable.
We are members of the Texas Bar and the opinions set forth above
are limited in all respects to matters of Texas law and applicable
federal law.
Very truly yours,
Baker and Botts, L.L.P.
MSS/WLS
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Exhibit 23.2
INDEPENDENT AUDITORS' CONSENT
HOUSTON INDUSTRIES INCORPORATED:
We consent to the incorporation by reference in the Registration
Statement, as amended, of Houston Industries Incorporated on Form S-8
(Registration No. 33-38344) of our reports dated February 16, 1993,
appearing in the Annual Report on Form 10-K of Houston Industries
Incorporated for the year ended December 31, 1992, and June 18, 1993,
appearing in the Annual Report on Form 11-K of the Savings Plan of
Houston Industries Incorporated for the year ended December 31, 1992,
and to the reference to us under the heading "Experts" in the Prospectus
relating to the Registration Statement of Houston Industries
Incorporated on Form S-8 (Registration No. 33-38344) which is hereby
amended by this Post-Effective Amendment No. 1.
/s/ Deloitte & Touche
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DELOITTE & TOUCHE
Houston, Texas
February 23, 1994
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