<PAGE>
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As filed with the Securities and Exchange Commission on
November 4, 1999
Registration No. 33-______
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
under
THE SECURITIES ACT OF 1933
SOUTHERN UNION COMPANY
(Exact Name of Registrant as Specified in Its Charter)
Delaware 75-0571592
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification No.)
--------------------
SOUTHERN UNION COMPANY PENNSYLVANIA DIVISION
EMPLOYEES' SAVINGS PLAN
(Full Title of the Plan)
With a copy to:
Dennis K. Morgan, Esq. Stephen A. Bouchard, Esq.
Senior Vice President - FLEISCHMAN AND WALSH, L.L.P.
Legal and Secretary 1400 Sixteenth Street, N. W.
SOUTHERN UNION COMPANY Suite 600
504 Lavaca Street, Suite 800 Washington, DC 20036
Austin, Texas 78701 (202) 939-7900
(512) 477-5852
(Name, Address and Telephone Number, Including Area Code
of Agent for Service)
---------------------
CALCULATION OF REGISTRATION FEE
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Proposed Proposed
Maximum Maximum
Amount Offering Aggregate Amount of
Title of to be Price Per Offering Registration
Securities to Registered Share Price Fee
be Registered (1)(2) (3) (3) (3)
- -----------------------------------------------------------------
Common Stock,
par value $1.00 200,000
per share shares $18.8125 $3,762,500 $1,045.98
- --------------------
(1) Pursuant to Rule 416 under the Securities Act of 1933, as
amended (the "Securities Act"), this Registration Statement
also covers, in addition to the number of shares of common
stock stated above, a number of shares which by reason of
certain events specified in the Plan may become subject to
the Plan.
(2) The shares of Common Stock being registered consist of
shares to be acquired by the Trustee through open market
purchases pursuant to the Plan for the account of the Plan's
participants.
(3) Estimated in accordance with Rule 457(c) under the
Securities Act, solely for the purpose of calculating the
registration fee and based upon the average of the high and
low sales prices for shares of the Registrant's Common Stock
on the New York Stock Exchange on November 2, 1999 of
$18.8125 per share.
<PAGE>
PART I
INFORMATION REQUIRED IN THE SECTION 10(A) PROSPECTUS
The document(s) containing the information specified in Part I of
Form S-8 will be sent or given to participants in the Southern
Union Company Pennsylvania Division Employees' Savings Plan (the
"Plan") as specified by Rule 428(b)(1) promulgated by the
Securities and Exchange Commission (the "Commission") under the
Securities Act.
Such document(s) (along with the documents incorporated by
reference into the Registration Statement pursuant to Item 3 of
Part II hereof) constitute a prospectus that meets the require-
ments of Section 10(a) of the Securities Act.
<PAGE>
PART II
INFORMATION REQUIRED IN REGISTRATION STATEMENT
Item 3. Incorporation of Certain Documents by Reference.
- ------ -----------------------------------------------
The following documents previously or concurrently filed by
Southern Union Company (the "Company") with the Commission are
hereby incorporated by reference in this Registration Statement:
(a) the Company's Annual Report on Form 10-K for the fiscal year
ended June 30, 1999, filed pursuant to Rule 13a-1 of the
Securities Exchange Act of 1934, as amended (the "Exchange
Act");
(b) the Company's current Report on Form 8-K filed on October 8,
1999, pursuant to Rule 13a-1 of the Exchange Act;
(c) the Company's Quarterly Report on Form 10-Q for the quarter
ended September 30, 1999 filed pursuant to Rule 13a-1 of the
Exchange Act;
(d) all other reports filed by the Company pursuant to Section
13(a) or 15(d) of the Exchange Act since the end of the
fiscal year covered by the Annual Report referred to above;
(e) the Company's definitive Proxy Statement for its Annual
Meeting of Stockholders on October 19, 1999; and
(f) the description of the common stock, par value $1.00 per
share, of the Registrant (the "Common Stock") contained in
the Registrant's Registration Statement on Form S-3 (File
No. 333-10585) filed with the Commission on August 22, 1996,
and all amendments or reports filed for the purpose of
updating such description.
All documents subsequently filed by the Registrant with the
Commission pursuant to Sections 13(a), 13(c), 14, or 15(d) of the
Exchange Act, prior to the filing of a post-effective amendment
which indicates that all securities offered hereby have been sold
or which deregisters all securities then remaining unsold, shall
be deemed incorporated by reference into this Registration State-
ment and to be a part thereof from the date of the filing of such
documents. Any statement contained in the documents incorpo-
rated, or deemed to be incorporated, by reference herein or
therein shall be deemed to be modified or superseded for purposes
of this Registration Statement to the extent that a statement
contained herein or therein or in any other subsequently filed
document which also is, or is deemed to be, incorporated by
reference herein or therein modifies or supersedes such state-
ment. Any such statement so modified or superseded shall not be
deemed, except as so modified or superseded, to constitute a part
of this Registration Statement.
The Company shall furnish without charge to each person to whom
the Prospectus is delivered, on the written or oral request of
such person, a copy of any or all of the documents incorporated
by reference, other than exhibits to such documents (unless such
exhibits are specifically incorporated by reference to the infor-
mation that is incorporated). Requests should be directed to
George E. Yankowski, Treasurer and Director of Investor Rela-
tions, Southern Union Company, 504 Lavaca Street, Eighth Floor,
Suite 800, Austin, Texas 78701, telephone number (512) 477-5852.
All information appearing in this Registration Statement is
qualified in its entirety by the detailed information, including
financial statements, appearing in the documents incorporated
herein or therein by reference.
Item 4. Description of Securities.
- ------ -------------------------
Not Applicable.
Item 5. Interests of Named Experts and Counsel.
- ------ --------------------------------------
The validity of the shares of Common Stock being offered has been
passed upon for the Company by Fleischman and Walsh, L.L.P.,
Washington, D.C. Aaron I. Fleischman, Senior Partner of
Fleischman and Walsh, L.L.P., is a director of the Company.
Mr. Fleischman, Fleischman and Walsh, L.L.P., and other attorneys
in that firm beneficially own shares of Common Stock that, in the
aggregate, represent less than two percent (2%) of the shares of
Common Stock outstanding.
Item 6. Indemnification of Directors and Officers.
- ------ -----------------------------------------
Section 145 of the General Corporation Law of Delaware empowers a
corporation to indemnify its directors and officers, subject to
certain limitations. The Company's Bylaws require the Company to
indemnify their respective directors and officers to the fullest
extent permitted by law.
Article TWELFTH of the Restated Certificate of Incorporation of
Southern Union eliminates personal liability of directors to the
fullest extent permitted by Delaware law. Section 145 of the
Delaware General Corporation Law provides that a Delaware corpo-
ration may indemnify any person against expenses, fines and set-
tlements actually and reasonably incurred by any such person in
connection with a threatened, pending or completed action, suit
or proceeding in which he is involved by reason of the fact that
he is or was a director, officer, employee or agent of such cor-
poration, provided that (i) he acted in good faith and in a man-
ner he reasonably believed to be in or not opposed to the best
interests of the corporation and (ii) with respect to any crimi-
nal action or proceeding, he had no reasonable cause to believe
his conduct was unlawful. If the action or suit is by or in the
name of the corporation, the corporation may indemnify any such
person against expenses actually and reasonably incurred by him
in connection with the defense or settlement of such action or
suit if he acted in good faith and in a manner he reasonably
believed to be in or not opposed to the best interests of the
corporation, except that no indemnification may be made in
respect to any claim, issue or matter as to which such person
shall have been adjudged to be liable for negligence or miscon-
duct in the performance of his duty to the corporation, unless
and only to the extent that the Delaware Court of Chancery or the
court in which the action or suit is brought determines upon
application that, despite the adjudication of liability but in
the light of the circumstances of the case, such person is fairly
and reasonably entitled to indemnity for such expense as the
court deems proper.
The directors and officers of Southern Union are covered by
insurance policies indemnifying against certain liabilities,
including certain liabilities arising under the Securities Act,
which might be incurred by them in such capacities and against
which they cannot be indemnified by Southern Union. Southern
Union has entered into an Indemnification Agreement with each
member of its Board of Directors. The Indemnification Agreement
provides the Directors with the contractual right to indemnifica-
tion for any acts taken in their capacity as a director of
Southern Union to the fullest extent permitted under Delaware
law.
Any agents, dealers or underwriters who execute any of the
agreements filed as Exhibit 1 to this registration statement will
agree to indemnify Southern Union's directors and their officers
who signed the registration statement against certain liabilities
that may arise under the Securities Act with respect to informa-
tion furnished to Southern Union by or on behalf of any such
indemnifying party.
Item 7. Exemption from Registration Claimed.
- ------ -----------------------------------
Not Applicable.
Item 8. Exhibits.
- ------ --------
Regulation
S-K Item Reference to
601 Exhibit Exhibit Number
Number Document Attached Hereto
- ----------- ------------------------------------ ---------------
4 Southern Union Company Pennsylvania Attached as
Division Employees' Savings Plan, as Exhibit 4
amended and restated
23-A Consent of Independent Accountants, Attached as
PricewaterhouseCoopers LLP Exhibit 23-A
23-B Consent of Independent Accountants, Attached as
PricewaterhouseCoopers LLP Exhibit 23-B
23-C Consent of Independent Public Attached as
Accountants, Arthur Andersen LLP Exhibit 23-C
24 Power of Attorney Attached as
Exhibit 24
In lieu of the opinion of counsel or determination letter con-
templated by Item 601(b)(5) of Regulation S-K, Registrant hereby
confirms that it has submitted the Plan and undertakes that it
will submit all amendments thereto to the Internal Revenue Ser-
vice (the "IRS") in a timely manner, and that it has made or will
make all changes required by the IRS in order to qualify the Plan
under Section 401 of the Internal Revenue Code. Pursuant to sub-
section (a) of Item 8 of Form S-8, no opinion with respect to
legality of the Common Stock, $1.00 par value per share (the
"Common Stock"), being registered is required as the Common Stock
being registered herein is currently outstanding.
Item 9. Undertakings.
- ------ ------------
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this regis-
tration statement to include any material information
with respect to the plan of distribution not previously
disclosed in the registration statement or any material
change to such information in the registration state-
ment.
(2) That, for the purpose of determining any liability
under the Securities Act of 1933, each such post-
effective amendment shall be deemed to be a new regis-
tration statement relating to the securities offered
therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide
offering thereof.
(3) To remove from registration by means of a post-
effective amendment any of the securities being regis-
tered which remain unsold at the termination of the
offering.
(b) The undersigned Registrant hereby undertakes that, for pur-
poses of determining any liability under the Securities Act
of 1933, each filing of the Registrant's annual report pur-
suant to Section 13(a) or Section 15(d) of the Exchange Act
that is incorporated by reference in the registration
statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering
of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, offi-
cers and controlling persons of the Registrant pursuant to
the foregoing provisions, or otherwise, the Registrant has
been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unen-
forceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, offi-
cer or controlling person of the Registrant in the success-
ful defense of any action, suit or proceeding) is asserted
by such director, officer or controlling person in connec-
tion with the securities being registered, the Registrant
will, unless in the opinion of its counsel the matter has
been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemni-
fication by it is against public policy as expressed in the
Act and will be governed by the final adjudication of such
issue.
<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 the requirements for filing on Form S-8 and the
Registrant has duly caused this Registration Statement to be
signed on its behalf by the undersigned, thereunto duly autho-
rized, in the City of Austin, State of Texas on November 4, 1999.
SOUTHERN UNION COMPANY
By: RONALD J. ENDRES
------------------
Ronald J. Endres
Executive Vice President and
Chief Financial Officer
(Duly Authorized Representative)
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons
on behalf of the Registrant and in the capacities indicated on
November 4, 1999.
Signature/Name Title
- ---------------------- ----------------------------------------
GEORGE L. LINDEMANN* Director and Chief Executive Officer
PETER H. KELLEY* Director
JOHN E. BRENNAN* Director
FRANK W. DENIUS* Director
AARON I. FLEISCHMAN* Director
ADAM M. LINDEMANN* Director
ROGER J. PEARSON* Director
GEORGE ROUNTREE, III* Director
DAN K. WASSONG* Director
KURT A. GITTER, M.D.* Director
RONALD J. ENDRES Executive Vice President and
- ---------------- Chief Financial Officer
Ronald J. Endres
DAVID J. KVAPIL Senior Vice President and Corporate
- --------------- Controller
David J. Kvapil (Principal Accounting Officer)
*By: DAVID J. KVAPIL
-------------------
David J. Kvapil
Attorney-in-fact
<PAGE>
EXHIBIT 4
SOUTHERN UNION COMPANY PENNSYLVANIA DIVISION
EMPLOYEES' SAVINGS PLAN
As Amended and Restated
Effective as of November 4, 1999
<PAGE>
TABLE OF CONTENTS
Page
----
PREAMBLE
ARTICLE I. DEFINITIONS
ARTICLE II. PARTICIPATION
2.1 Eligibility
2.2 Enrollment
2.3 Transfer of Participant to Non-Eligible Employment
ARTICLE III. CONTRIBUTIONS
3.1 Deferred Contributions
3.2 Matching Contributions
3.3 Rollover Contributions
3.4 Special Contributions
3.5 Forfeitures
3.6 Profits Not Required
3.7 Contributions Conditioned
ARTICLE IV. LIMITS ON CONTRIBUTIONS
4.1 Code Section 402(g) Limit
4.2 ADP Limit
4.3 ACP Limit
4.4 Multiple Use Limit
4.5 Code Section 415 Limits
4.6 Adjustment by Administration Committee
ARTICLE V. ACCOUNTS AND VESTING
5.1 Accounts
5.2 Vesting
ARTICLE VI. TRUST FUND
6.1 Trustee; Trust Fund
6.2 Investment Funds
6.3 Investment of Participant Accounts
6.4 Valuation
6.5 Voting and Tender of Company Stock
6.6 Investment Committee
ARTICLE VII. IN-SERVICE WITHDRAWALS AND LOANS
7.1 Withdrawals - Age 59-1/2
7.2 Withdrawals - Financial Hardship
7.3 Withdrawals - Prior Plan and Rollover Accounts
7.4 Withdrawal Rules
7.5 Loans
ARTICLE VIII. DISTRIBUTION OF BENEFITS
8.1 Distribution Events
8.2 Form of Distribution
8.3 Forfeitures; Restoration of Forfeitured
Account Balances
8.4 Required Commencement of Benefits
8.5 Direct Rollovers
ARTICLE IX. PLAN ADMINISTRATION
9.1 The Administration Committee
9.2 Administration Committee Powers and Duties
9.3 Delegation of Responsibility
9.4 Claims Procedure
9.5 Qualified Domestic Relations Orders
9.6 Facility of Payment
9.7 Inability to Locate Participants or
Beneficiaries
9.8 Indemnification
ARTICLE X. PLAN AMENDMENT OR TERMINATION
10.1 Plan Amendment
10.2 Plan Termination
ARTICLE XI. MISCELLANEOUS PROVISIONS
11.1 Benefits Not Assignable
11.2 Plan Not a Contract of Employment
11.3 Source of Benefits
11.4 Merger or Transfer of Assets
11.5 Adoption of Plan by Affiliates
11.6 Action by the Company
11.7 Governing Law
11.8 Severability
11.9 Construction
11.10 Conditional Adoption
ARTICLE XII. TOP HEAVY PROVISIONS
12.1 Definitions
12.2 Minimum Allocation
12.3 Coordination with Code Section 415 Limits
12.4 Limitations
<PAGE>
PREAMBLE
--------
The Southern Union Company Pennsylvania Division Employees'
Savings Plan, as set forth herein (the "Plan"), was originally
established by Pennsylvania Enterprises, Inc. effective
January 1, 1992, as the Pennsylvania Enterprises, Inc. Employees'
Savings Plan. Effective November 4, 1999, Pennsylvania
Enterprises, Inc. was merged into Southern Union Company (the
"Company"). The principal purpose of the Plan is to provide
eligible employees of the Pennsylvania Division of Southern Union
Company and certain participating subsidiaries of Southern Union
Company with a means of saving to provide for retirement. The
Plan is intended to qualify as a profit sharing plan under
Sections 401(a) and 401(k) of the Internal Revenue Code of 1986,
as amended. The Plan is hereby amended and restated effective as
of November 4, 1999.
<PAGE>
ARTICLE I. DEFINITIONS
Wherever used in the Plan, the following terms shall have the
respective meanings set forth in this Article, unless the context
otherwise indicates:
Account Balance shall mean the total value of a Participant's
- ---------------
Accounts.
Accounts shall mean a Participant's Deferred Contribution
- --------
Account, Matching Contribution Account, Prior Plan Account, and
Rollover Account, if any.
ACP Limit shall mean, for any Plan Year, the limit imposed by
- ---------
Code Section 401(m)(2) on the Average Contribution Percentage of
Eligible Participants who are Highly Compensated Employees, as
set forth in Section 4.3.
Administration Committee or Committee shall mean the committee
- ------------------------ ---------
appointed pursuant to Article IX to administer the Plan, or any
person or persons to whom the Administration Committee has allo-
cated or delegated in writing the authority to act in its place.
ADP Limit shall mean, for any Plan Year, the limit imposed by
- ---------
Code Section 401(k)(3) on the Average Deferral Percentage of
Eligible Participants who are Highly Compensated Employees, as
set forth in Section 4.2.
Affiliate shall mean any entity while it is:
- ---------
(a) a member of a "controlled group of corporations," within the
meaning of Code Section 414(b), with the Company;
(b) a trade or business (whether or not incorporated) under
"common control," within the meaning of Code Section 414(c),
with the Company;
(c) a member of an "affiliated service group," within the
meaning of Code Section 414(m), with the Company; or
(d) any other entity required to be aggregated with the Company
pursuant to Code Section 414(o).
Appropriate Form shall mean the form or forms prescribed by the
- ----------------
Administration Committee for the particular purpose.
Average Deferral Percentage shall mean, for any group of Eligible
- ---------------------------
Participants, the average (expressed as a percentage calculated
to the nearest l/l00th of 1%) of the Deferral Percentages for
each of the Eligible Participants in that group.
Average Contribution Percentage shall mean, for any group of
- -------------------------------
Eligible Participants, the average (expressed as a percentage
calculated to the nearest l/l00th of 1%) of the Contribution
Percentages for each of the Eligible Participants in that group.
Beneficiary shall mean the person, persons, trust or estate, as
- -----------
determined in accordance with Section 8.1(c)(2), entitled to any
benefits which may be payable from the Plan upon the Partici-
pant's death.
Break-in-Service shall mean one or more consecutive Computation
- ----------------
Periods during which an Employee does not complete at least 501
Hours of Service. Solely for the purpose of determining whether
a Break-in-Service has occurred, an Employee who is absent from
work for any period by reason of the Employee's pregnancy; the
birth of a child of the Employee; the placement of a child with
the Employee for adoption by such Employee; or caring for such
child immediately following such birth or adoption, shall be
credited with the lesser of (1) the Hours of Service which would
normally have been credited to the Employee but for such absence,
or if the Administration Committee is unable to determine such
hours, 8 Hours of Service per day of such absence, or (2) 501
hours; provided, that if such absence spans more than one Compu-
tation Period, such hours shall be credited only in the Computa-
tion Period in which such absence commenced if the Employee would
thereby be prevented from incurring a Break-in-Service or, in any
other case, in the immediately following Computation Period.
Code shall mean the Internal Revenue Code of 1986, as amended
- ----
from time to time. A reference to a specific provision of the
Code shall include any applicable regulation pertaining thereto.
Company shall mean (1) with respect to the period prior to
- -------
November 4, 1999, Pennsylvania Enterprises, Inc., and (2) with
respect to the period on and after November 4, 1999, Southern
Union Company or any successor thereto.
Company Stock shall mean the common stock of the Company.
- -------------
Compensation shall mean (1) all remuneration from the Employer or
- ------------
an Affiliate which is defined as wages in Code Section 3401(a),
without regard to any rules under Code Section 3401(a) which
limit the remuneration included in wages based on the nature or
location of the employment or services performed*, and (2) all
remuneration which is not currently includible in the Partici-
pant's gross income by reason of elective deferrals made pursuant
- ---------------------------
* NOTE: Clause (1) as set forth in the text reflects the Plan
as applicable to non-bargaining unit employees. For bar-
gaining unit employees, clause (1) reads as follows: "all
straight time earnings."
to Code Section 125, 401(k), 408(k) or 403(b). Notwithstanding
the foregoing, Compensation taken into account for a Participant
for any Plan Year shall not exceed the adjusted $200,000 dollar
limit in effect for such Plan Year under Code Section 401(a)(17).
This adjusted $200,000 limitation shall be applied as of the last
day of the Plan Year. In addition, the family member rules of
Code Section 414(q)(6) shall apply with respect to an Employee
who is a 5% owner or one of the 10 Highly Compensated Employees
paid the greatest Compensation during the Plan Year except that
in applying such rules, the term "family" shall include only the
Employee's Spouse and any lineal descendants who have not at-
tained age 19 before the close of the Plan Year. If, as a result
of the application of such family member rules, the adjusted
$200,000 limitation is exceeded, then the adjusted $200,000 limi-
tation shall be prorated among the affected individuals in pro-
portion to each such individual's Compensation as determined
under this definition prior to the application of the adjusted
$200,000 limitation. In addition to other applicable limitations
set forth in the Plan, and notwithstanding any other provision of
the Plan to the contrary, for Plan Years beginning on or after
January 1, 1994, the annual Compensation of each Employee taken
into account under the Plan shall not exceed the "OBRA '93 annual
compensation limit". The OBRA '93 annual compensation limit is
$150,000, as adjusted by the Commissioner of Internal Revenue for
increases in the cost-of-living in accordance with Code Section
401(a)(17)(B). The cost-of-living adjustment in effect for a
calendar year applies to any period, not exceeding 12 months,
over which compensation is determined (determination period)
beginning in such calendar year. If a determination period con-
sists of fewer than 12 months, the OBRA '93 annual compensation
limit will be multiplied by a fraction, the numerator of which is
the number of months in the determination period, and the denomi-
nator of which is 12. For Plan Years beginning on or after
January 1, 1994, any reference in this Plan to the limitation
under Code Section 401(a)(17) shall mean the OBRA '93 annual
compensation limit set forth in this provision.
Computation Period shall mean the relevant 12-month period used
- ------------------
to determine a Year of Eligibility Service or a Year of Vesting
Service, as applicable.
Contribution Percentage shall mean, for any Plan Year, the ratio
- -----------------------
of (1) the amount of any Matching Contributions (and any Special
Contributions and Deferred Contributions treated as Matching Con-
tributions) made on behalf of an Eligible Participant for the
Plan Year to (2) the Eligible Participant's Testing Compensation
for that portion of the Plan Year during which he was an Eligible
Participant. For this purpose, Matching Contributions which are
forfeited because they relate to Excess Deferrals or Excess Con-
tributions and Matching Contributions returned as in excess of
the Code Section 415 limits shall not be taken into account. The
determination and treatment of the Contribution Percentage of any
Eligible Participant shall be made in accordance with Code
Section 401(m).
Deferral Percentage shall mean, for any Plan Year, the ratio of
- -------------------
(1) the amount of any Deferred Contributions (and any Special
Contributions treated as Deferred Contributions) made on behalf
of an Eligible Participant for the Plan Year to (2) the Eligible
Participant's Testing Compensation for that portion of the Plan
Year during which he was an Eligible Participant. For this pur-
pose, Deferred Contributions shall not be taken into account to
the extent (1) they are Excess Deferrals of a Non-Highly Compen-
sated Employee made under one or more plans of the Company or an
Affiliate, or (2) they are returned to the Participant as in
excess of the limits of Code Section 415. The determination and
treatment of the Deferral Percentage of any Eligible Participant
shall be made in accordance with Code Section 401(k).
Deferred Contribution shall mean an Employer contribution made to
- ---------------------
the Plan pursuant to a Participant's Deferred Contribution
Election.
Deferred Contribution Account shall mean the Account maintained
- -----------------------------
for a Participant pursuant to Section 5.1(a).
Deferred Contribution Election shall mean a written election made
- ------------------------------
by a Participant on the Appropriate Form to have a specified
portion or amount of his Compensation, which is not yet currently
available, contributed to the Plan by the Employer in lieu of
receiving such amount in cash.
Disability shall mean a physical or mental condition which
- ----------
renders the Participant unable to remain in continued employment
with the Employer and which can be expected to result in death or
last for a continuous period of not less than 12 months; pro-
vided, however that a condition caused by engagement in an act
that results in the Participant being convicted of a felony, an
intentionally self-inflicted injury or drug or alcohol abuse
shall not be considered a Disability.
Eligible Employee shall mean all Employees of the Employer other
- -----------------
than:
(a) Employees of Keystone Pipeline Services, Inc. who are
employed on its field payroll or project payroll;
(b) Employees included in a unit covered by a collective bar-
gaining agreement between the Employer and an employee
representative, provided that the negotiation of retirement
benefits was the subject of good faith bargaining and
participation in the Plan is not provided for under any
bargaining agreement;
(c) nonresident aliens who receive no earned income from the
Employer which constitutes income from sources within the
United States; and
(d) Leased Employees.
Eligible Participant shall mean any Eligible Employee on whose
- --------------------
behalf Deferred Contributions may be made to the Plan under
Section 2.1, whether or not the Eligible Employee has made a
Deferred Contribution Election. For purposes of the ADP Limit
and the ACP Limit, an Eligible Employee on whose behalf Deferred
Contributions could be made but for a suspension of, or limit on,
Deferred Contributions imposed by the Administration Committee,
the terms of the Plan or Code Section 415 shall be treated as an
Eligible Participant.
Employee shall mean any employee of the Company or an Affiliate
- --------
and any Leased Employee.
Employer shall mean (1) with respect to the period prior to
- --------
November 4, 1999, Pennsylvania Enterprises, Inc. and each Affili-
ate which adopted the Plan in accordance with Section 11.5, and
(2) with respect to the period on and after November 4, 1999, the
Pennsylvania Division of Southern Union Company and each Affili-
ate which has adopted the Plan in accordance with Section 11.5.
Employment shall mean employment as an Employee with the Company
- ----------
or an Affiliate.
Employment Commencement Date shall mean the date on which an
- ----------------------------
Employee first performs an Hour of Service.
Entry Date shall mean the first payroll period beginning after
- ----------
each January 1, April 1, July 1 or October 1, and such other
dates as may be designated by the Administration Committee.
ERISA shall mean the Employee Retirement Income Security Act of
- -----
1974, as amended from time to time. Reference to a specific pro-
vision of ERISA shall include any applicable regulation per-
taining thereto.
Excess Aggregate Contributions shall mean the amount of a Highly
- ------------------------------
Compensated Employee's Matching Contributions in excess of the
ACP Limit for any Plan Year, as determined in accordance with
Section 4.3(b).
Excess Contributions shall mean the amount of a Highly Compen-
- --------------------
sated Employee's Deferred Contributions in excess of the ADP
Limit for any Plan Year, as determined in accordance with Section
4.2(b).
Excess Deferrals shall mean the Deferred Contributions of a
- ----------------
Participant for any taxable year in excess of the maximum dollar
amount permitted by Code Section 402(g) for such year.
Family Member shall mean an Employee who, during the Plan Year or
- -------------
the prior Plan Year, is the Spouse of, a lineal ascendant or
descendant of, or the spouse of a lineal ascendant or descendant
of: (1) a 5% owner who is an active or former Employee, or (2) a
Highly Compensated Employee who is among the 10 highest paid
Employees during such year.
Highly Compensated Employee shall mean any Employee who:
- ---------------------------
(1) performs services for the Company or an Affiliate during the
Plan Year; and
(2) during the Plan Year (a) was a 5% owner; (b) received com-
pensation in excess of $75,000, as adjusted pursuant to Code
Section 415(d); (c) received compensation in excess of
$50,000, as adjusted pursuant to Code Section 415(d) and was
one of the top-paid 20% of Employees; or (d) was an officer
of the Company or an Affiliate and received compensation
during such year in excess of 50% of the dollar limitation
in effect under Code Section 415(b)(1)(A) (provided that no
more than 50 Employees or, if less, the greater of 3
Employees or 10% of all Employees shall be treated as
officers); or is an Employee described in (b), (c) and/or
(d) above and is among the top-paid 100 Employees.
The determination of who is a Highly Compensated Employee,
including the determination of the top-paid 20% of Employees, the
top-paid 100 Employees, and the compensation that is considered,
will be made in accordance with Code Section 414(q).
Hour of Service shall mean:
- ---------------
(a) Each hour for which an Employee is paid or entitled to pay-
ment by the Company or an Affiliate for the performance of
duties. These hours shall be credited to the Employee for
the Computation Period during which the duties are
performed;
(b) Each hour for which an Employee is paid or entitled to pay-
ment by the Company or an Affiliate on account of a period
of time during which no duties are performed (irrespective
of whether Employment has terminated) due to vacation,
holiday, illness, incapacity (including Disability), layoff,
jury duty, Military Leave or Leave of Absence. Hours of
Service shall be credited under this Subsection (b) to the
Computation Period or Periods for which the performance of
duties is not required, and all payments made or due,
directly or indirectly, from the Company or an Affiliate,
shall be taken into account, except that:
(1) no more than 501 hours of service shall be credited
under this Subsection (b) for any single continuous
period (whether or not such period occurs in a single
Computation Period); and
(2) no hours shall be credited under this Subsection (b)
for payments (i) made or due under a plan maintained
solely for the purpose of complying with any workers'
compensation, unemployment compensation or disability
insurance laws, or (ii) which are made solely to
reimburse the Employee for medical or medically related
expenses;
(c) To the extent not credited under Subsections (a) or (b)
above, each hour for which back pay, irrespective of mitiga-
tion of damages, is either awarded or agreed to by the Com-
pany or an Affiliate. These hours will be credited to the
Employee for the Computation Period or Periods to which the
award or agreement pertains rather than for the Computation
Period in which the award, agreement or payment is made; and
(d) To the extent not included under Subsections (a) through (c)
hereof, an Employee shall receive credit for each hour of --
(1) a Leave of Absence without pay, up to a maximum of 501
hours; or
(2) absence because of non-paid sickness where such absence
has not exceeded one continuous year from its incep-
tion, up to a maximum of 501 hours; or
(3) Military Leave, provided the Employee reports for work
within the period required by law and is returned to
Employment.
Credit shall be given for leave under this Subsection
(d) at the rate of 40 hours per week.
An Employee paid on a non-hourly basis or for whom hourly records
of Employment are not required to be maintained shall be credited
with 45 Hours of Service for each week for which such Employee
would be credited with one Hour of Service under Subsection (a),
(b) or (c) above. Hours of Service under Subsections (a), (b)
and (c) shall be calculated and credited in accordance with
Department of Labor Regulations Section 2530.200b-2(b) and (c)
which is hereby incorporated by reference.
Investment Committee shall mean the committee appointed pursuant
- --------------------
to Section 6.6 to designate Investment Funds and appoint Invest-
ment Managers, or any person or persons to whom the Investment
Committee has allocated or delegated in writing the authority to
act in its place.
Investment Fund shall mean any of the investment funds estab-
- ---------------
lished and maintained under the Trust Fund pursuant to Section
6.2.
Investment Manager shall mean an investment adviser registered
- ------------------
under the Investment Advisers Act of 1940; a bank, as defined in
that Act; or an insurance company qualified under the laws of
more than one state to manage, acquire or dispose of plan assets
which is appointed to manage an Investment Fund in accordance
with Section 6.2(c).
Keystone Matching Contribution shall mean a Matching Contribution
- ------------------------------
made by Keystone Pipeline Services, Inc.
Keystone Matching Contribution Subaccount shall mean the sub-
- -----------------------------------------
account maintained pursuant to Section 5.1(b) for a Participant's
Keystone Matching Contributions.
Leased Employee shall mean any individual who provides services
- ---------------
to the Company or an Affiliate (or a related person within the
meaning of Code Section 144(a)(3)) and who is a "leased employee"
within the meaning of Code Section 414(n)(2), unless (1) such
individual is covered by a money purchase pension plan providing:
(a) a nonintegrated employer contribution rate of at least 10
percent of "compensation," as defined in Code Section 414(n)(5),
(b) immediate participation, and (c) full and immediate vesting;
and (2) leased employees do not constitute more than 20 percent
of the Non-Highly Compensated Employees.
Leave of Absence shall mean a leave of absence authorized by the
- ----------------
Employer or an Affiliate in accordance with a uniform and nondis-
criminatory leave of absence policy.
Matching Contribution shall mean an Employer contribution made on
- ---------------------
account of an Eligible Participant's Deferred Contribution pursu-
ant to Section 3.2. The term Matching Contribution shall refer
to both Keystone Matching Contributions and PEI Matching Contri-
butions.
Matching Contribution Account shall mean the Account or Accounts
- -----------------------------
maintained for a Participant pursuant to Section 5.1(b) and
Section 8.3(c).
Military Leave shall mean a leave of absence from Employment for
- --------------
service in the armed forces of the United States during which the
Employee's re-employment rights are protected by law.
Money Market Fund shall mean the Dean Witter Liquid Asset Fund or
- -----------------
any successor fund designated by the Investment Committee.
Multiple Use Limit shall mean, for any Plan Year, the limit
- ------------------
imposed by Code Section 401(m)(9)(A) on the Average Contribution
Percentage of Eligible Participants who are Highly Compensated
Employees, as set forth in Section 4.4.
Non-Highly Compensated Employee shall mean an Employee of the
- -------------------------------
Company or an Affiliate who is neither a Highly Compensated
Employee nor a Family Member.
Normal Retirement Age shall mean the later of (a) age 65, or (b)
- ---------------------
the earlier of the 5th anniversary of the date the Participant
first became an Eligible Participant or the date the Participant
completes 5 years of Vesting Service.
Participant shall mean (a) an Eligible Participant who has a
- -----------
Deferred Contribution Election in effect in accordance with
Article II, and (b) an Employee or former Employee for whom an
Account is maintained.
PEI Matching Contribution shall mean a Matching Contribution made
- -------------------------
by an Employer other than Keystone Pipeline Services, Inc.
PEI Matching Contribution Subaccount shall mean the subaccount
- ------------------------------------
maintained pursuant to Section 5.1(b) for a Participant's PEI
Matching Contributions.
Plan shall mean the Southern Union Company Pennsylvania Division
- ----
Employees' Savings Plan, as set forth herein and as amended from
time to time.
Plan Year shall mean each 12-consecutive month period beginning
- ---------
on January 1, 1992 and each January 1 thereafter.
Prior Plan shall mean the Employee Stock Ownership Plan of
- ----------
Pennsylvania Gas & Water Company.
Prior Plan Account shall mean the Account maintained for a
- ------------------
Participant pursuant to Section 5.1(c).
Qualified Plan shall mean a pension, profit sharing or stock
- --------------
bonus plan qualified under Code Section 401(a).
Re-Employment Commencement Date shall mean the first date fol-
- -------------------------------
lowing a Break-in-Service on which an Employee again performs an
Hour of Service.
Rollover Account shall mean the Account maintained for a Partici-
- ----------------
pant pursuant to Section 5.1(d).
Rollover Contribution shall mean a rollover contribution made to
- ---------------------
the Plan by an Eligible Employee in accordance with Section 3.3.
Sale of a Subsidiary or Division shall mean:
- --------------------------------
(a) the disposition by an Employer, which is a corporation, to
an unrelated corporation of substantially all of the assets
(within the meaning of Code Section 409(d)(2)) used in a
trade or business of the Employer if the Employer continues
to maintain the Plan after the disposition, but only with
respect to Employees who continue employment with the
corporation acquiring such assets; or
(b) the disposition by an Employer, which is a corporation, to
an unrelated entity or individual of such Employer's
interest in a subsidiary (within the meaning of Code Section
409(d)(3)) if the Employer continues to maintain the Plan,
but only with respect to Employees who continue employment
with such subsidiary.
Special Contribution shall mean an Employer Contribution made on
- --------------------
behalf of an Eligible Participant pursuant to Section 3.4.
Spouse shall mean the person legally married to an Employee as of
- ------
the relevant date.
Surviving Spouse shall mean the Spouse of a Participant on the
- ----------------
date of the Participant's death.
Termination of Employment shall mean, solely for purposes of this
- -------------------------
Plan, (1) the voluntary or involuntary severance of Employment
which constitutes a "separation from service" within the meaning
of Code Section 401(k)(2), or (2) the Sale of a Subsidiary or
Division with respect to an Employee who continues in employment
with the subsidiary or corporation which acquired the trade or
business, as appropriate. A Leave of Absence or a Military Leave
shall not be considered a Termination of Employment, provided the
Employee returns to Employment immediately following the end of
the Leave of Absence or within the time prescribed by law in the
case of a Military Leave.
Testing Compensation shall mean, for purposes of applying the ADP
- --------------------
and ACP Limits for any Plan Year, any definition of compensation
specified by the Administrative Committee which satisfies Code
Section 414(s) and is uniformly applied to all Eligible Partici-
pants. Testing Compensation shall be subject to the dollar limi-
tation of Code Section 401(a)(17) in effect for such year.
Testing Compensation shall include only compensation for the por-
tion of the Plan Year during which an Employee was an Eligible
Participant.
Trust Agreement shall mean the agreement between the Company and
- ---------------
the Trustee governing the administration of the Trust Fund, as
amended from time to time, which constitutes a part of the Plan.
Trust or Trust Fund shall mean the assets of the Plan derived
- ----- ----------
from contributions and any earnings thereon which are held by the
Trustee in accordance with the terms of the Plan and the Trust
Agreement.
Trustee shall mean the person or corporation appointed pursuant
- -------
to Article VI to hold and maintain the Trust Fund in accordance
with the Plan and the Trust Agreement.
Valuation Date shall mean the last business day of each Plan Year
- --------------
and each other date as may be specified by the Administration
Committee.
Year of Eligibility Service shall mean the 12-consecutive month
- ---------------------------
period beginning on the Employee's Employment Commencement Date
or Re-Employment Commencement Date, as applicable, or any Plan,
Year beginning on or after the Employee's Employment Commencement
Date or Re-Employment Commencement Date, as applicable, if the
Employee is credited with at least 1,000 Hours of Service during
such 12-month period. Credit shall be given for purposes of
eligibility under the Plan for service with an employer prior to
the date such employer became an Affiliate only to the extent
required by Code Section 414(a) or upon such terms and conditions
as the Company may approve.
Year of Vesting Service shall mean any Plan Year during which an
- -----------------------
Employee is credited with at least 1,000 Hours of Service.
Credit shall be given for purposes of vesting under the Plan for
service with an employer prior to the date such employer became
an Affiliate only to the extent required by Code Section 414(a)
or upon such terms and conditions as the Company may approve.
<PAGE>
ARTICLE II. PARTICIPATION
2.1 Eligibility.
-----------
(a) Each Eligible Employee shall become an Eligible Participant
as of the Entry Date coincident with or immediately fol-
lowing the later of the date the Eligible Employee --
(1) completes one Year of Eligibility Service, and
(2) attains age 21,
provided he is an Eligible Employee on such date.
(b) An Employee who terminated Employment and subsequently
returns to Employment as an Eligible Employee shall become
an Eligible Participant as of the later of the date of his
Re-Employment or the date determined under Subsection 2.1(a)
above; provided, however, that in applying Section 2.1(a) to
a rehired Employee who has incurred a Break-in-Service, the
Employee's prior Years of Eligibility Service shall be
disregarded and he shall be treated as a new Employee on his
Re-Employment Commencement Date if (1) he was not yet a Plan
Participant at the time he incurred the break, and (2) the
number of his consecutive years of Break-in-Service is equal
to or greater than the greater of 5 or the number of Years
of Eligibility Service he completed prior to the break.
2.2 Enrollment.
----------
An Eligible Participant may elect to make a Deferred Contribution
Election effective as of the first Entry Date as of which the
Employee became an Eligible Participant under Section 2.1 (or on
any subsequent Entry Date provided he is an Eligible Employee on
such date) by filing the Appropriate Form for enrollment with the
Administration Committee on or before the deadline established by
the Committee for such election. By becoming a Participant, the
Employee shall for all purposes be deemed conclusively to have
assented to the provisions of the Plan.
2.3 Transfer of Participant to Non-Eligible Employment.
--------------------------------------------------
If a Participant transfers from Employment as an Eligible
Employee to any other Employment, any Deferred Contribution
Election of the Employee shall be revoked as of the first payroll
period following the date of the Participant's transfer. How-
ever, the Participant's service in such non-covered Employment
shall be credited towards Years of Vesting Service, and the Par-
ticipant's other rights and privileges under the Plan shall con-
tinue as if he were still an Eligible Employee of the Employer
as long as he remains an Employee of any Affiliate.
<PAGE>
ARTICLE III. CONTRIBUTIONS
3.1 Deferred Contributions.
----------------------
(a) Subject to the limitations of Article IV, each Employer
shall make a Deferred Contribution for each payroll period
on behalf of each of its Eligible Employees who is a Parti-
cipant and has a Deferred Contribution Election in effect
for such payroll period equal to the amount by which the
Participant has elected to have his Compensation reduced for
such payroll period. The amount to be deferred pursuant to
a Deferred Contribution Election may be stated as a dollar
amount or a whole percentage of Compensation, provided that
in either event the Deferred Contribution shall not exceed
15% of the Participant's Compensation.
(b) Any Deferred Contribution Election shall remain in effect
until the Participant ceases to be an Eligible Employee or
until the election is changed or canceled by the Partici-
pant. A Participant may elect to change the rate of his
Deferred Contributions effective as of any following payroll
period and may cancel a Deferred Contribution Election
immediately; provided, however, that any such change or
cancellation shall not be effective unless the Participant
files the Appropriate Form with the Administration Committee
on or before the deadline established by the Committee for
such election. A Participant who cancels his Deferred
Contribution Election shall be ineligible to resume making
Deferred Contributions until the next Entry Date following
the date his cancellation election is filed with the
Administration Committee.
(c) The Employer shall transmit Deferred Contributions to the
Trustee as soon as practicable following the last day of
each month, but in no event later than 90 days after the end
of the payroll period or such other period as may be
required by law.
3.2 Matching Contributions.
----------------------
(a) Subject to the limitations of Article IV:
(1) Each Employer, other than Keystone Pipeline Services,
Inc., shall make a Matching Contribution for each cal-
endar quarter on behalf of each of its Eligible
Employees who is a Participant in an amount equal to
40% of such Participant's Deferred Contributions for
such quarter which are not in excess of 4% of Compensa-
tion; and
(2) Keystone Pipeline Services, Inc. shall make a Matching
Contribution for each calendar quarter on behalf of
each of its Eligible Employees who is a Participant in
an amount equal to 50% of such Participant's Deferred
Contributions for such quarter which are not in excess
of 4% of Compensation.
(b) PEI Matching Contributions may, in the Employer's discre-
tion, be made in cash and/or authorized, but unissued or
Treasury shares of Company Stock. Keystone Matching Con-
tributions shall be made in cash.
(c) The Employer shall transmit Matching Contributions to the
Trustee as soon as practicable following the last day of
each calendar quarter, but in no event later than the time
prescribed by law for filing the return for the taxable year
ending with or within the quarter (including extensions).
3.3 Rollover Contributions.
----------------------
(a) Subject to the prior approval of the Administration Com-
mittee, an Eligible Employee may make a Rollover Contribu-
tion to the Plan consisting of all or part of a distribution
(other than the amount of his own after-tax contributions)
received by the Eligible Employee from a Qualified Plan or
an individual retirement account which consists solely of
amounts attributable to such a distribution, provided the
distribution is eligible for rollover under Code Section
402(c) or 408(d)(3)(A)(ii) and is rolled over in accordance
with the requirements of the Code. Rollover Contributions
must be made in cash or such other property as may be
acceptable to the Administration Committee. A Rollover Con-
tribution shall be permitted only if the Administration Com-
mittee determines that the contribution qualifies as a
rollover contribution under the Code and shall be subject to
such uniform and nondiscriminatory rules as the Administra-
tion Committee may establish. If a Rollover Contribution is
made to the Administration Committee, it shall be remitted
to the Trustee as soon as practicable following the last day
of the month in which received by the Administration Com-
mittee, but in no event later than 90 days after the date
received by the Administration Committee or such other
period as may be required by law.
(b) If an Eligible Employee who makes a Rollover Contribution is
not a Participant, then he shall become a Participant on
that date except that he shall not be eligible to make De-
ferred Contributions until he has satisfied the requirements
of Sections 2.1 and 2.2. Rollover Contributions shall not
be eligible for Matching Contributions.
(c) Notwithstanding anything in this Plan to the contrary, in
the event that an Eligible Employee makes a contribution
intended to be a Rollover Contribution but which the Admin-
istration Committee later concludes did not qualify, either
in whole or in part, as a Rollover Contribution, then the
Administration Committee shall direct the immediate distri-
bution of that portion of the contribution which was not
qualified, adjusted for allocable gain or loss.
3.4 Special Contributions.
---------------------
For any Plan Year, a Special Contribution may be made in such
amount, if any, as may be determined by the Company. Any such
Special Contribution shall be allocated to the Deferred Contribu-
tion Account of (1) each Eligible Participant or (2) each
Eligible Participant who is a Non-Highly Compensated Employee and
is an Employee on the last day of the Plan Year in proportion to
the ratio that such Eligible Participant's Testing Compensation
for the Plan Year bears to the aggregate Testing Compensation for
the Plan Year of all such Eligible Participants. The Employer
shall transmit Special Contributions to the Trustee as soon as
practicable following the last day of the Plan Year but in no
event later than the last day prescribed by law for filing of the
Employer's federal income tax return (including extensions
thereof) for the taxable year of the Employer which includes the
last day of the Plan Year.
3.5 Forfeitures.
-----------
As of the last day of each Plan Year, forfeitures occurring in
that Plan Year shall be allocated to the Matching Contribution
Account of each active Participant who is an Employee on the last
day of the Plan Year in proportion to the ratio that such Parti-
cipant's Compensation for the Plan Year bears to the aggregate
Compensation for the Plan Year of all Participants eligible to
receive an allocation of forfeitures.
3.6 Profits Not Required.
--------------------
All Employer contributions under the Plan may be made without
regard to the Employer's current or accumulated earnings and
profits. The Plan shall, however, be designated as a profit
sharing plan for purposes of the Code.
3.7 Contributions Conditioned.
-------------------------
All Employer contributions are hereby made on the condition that
they are deductible under Code Section 404; provided, however,
that no contributions shall be returned to the Employer, except
as provided in Section 6.1(c) or 11.10.
<PAGE>
ARTICLE IV. LIMITS ON CONTRIBUTIONS
4.1 Code Section 402(g) Limit.
-------------------------
(a) The total amount of a Participant's Deferred Contributions
under this Plan and elective deferrals, within the meaning
of Code Section 402(g), under any other plan maintained by
the Company or an Affiliate for any taxable year shall not
exceed the maximum amount permitted for such year under Code
Section 402(g).
(b) Notwithstanding anything in this Plan to the contrary, any
amount of Deferred Contributions designated by the Adminis-
tration Committee or a Participant as Excess Deferrals for
any taxable year shall be returned to the Participant, to-
gether with any allocable income, no later than the April 15
following the close of the year for which the Excess Defer-
rals were contributed. Any such designation by a Partici-
pant shall be made in writing to the Administration
Committee no later than March 1 following the taxable year
for which the Excess Deferrals were contributed; shall
specify the amount of Excess Deferrals allocated to this
Plan; and shall certify that the designated amount is an
Excess Deferral. For this purpose, "allocable income" shall
mean the product of the gain (or loss) of the Participant's
Deferred Contribution Account for the taxable year multi-
plied by a fraction, the numerator of which is the Partici-
pant's Excess Deferrals for the taxable year and the
denominator of which is the sum of: (1) the balance of the
Participant's Deferred Contribution Account as of the
beginning of the taxable year, plus (2) the amount of Par-
ticipant's Deferred Contributions for the taxable year.
(c) Matching Contributions related to the Excess Deferrals of
Highly Compensated Employees, together with any allocable
income, shall be forfeited and reallocated to the accounts
of Participants who did not have Excess Deferrals for the
year in accordance with Section 3.5. For this purpose,
Excess Deferrals shall be deemed attributable first to
unmatched Deferred Contributions.
4.2 ADP Limit.
---------
(a) For any Plan Year, the Average Deferral Percentage for
Highly Compensated Employees shall not exceed the ADP Limit
imposed by Code Section 401(k)(3), the greater of --
(1) 125% of the Average Deferral Percentage for all
Eligible Participants who are Non-Highly Compensated
Employees; or
(2) the lesser of (i) the Average Deferral Percentage for
all Eligible Participants who are Non-Highly Compen-
sated Employees plus 2 percentage points, or (ii) 200%
of the Average Deferral Percentage for all Eligible
Participants who are Non-Highly Compensated Employees.
The ADP Limit shall be applied in accordance with Code Sec-
tion 401(k)(3), which is hereby incorporated by reference;
provided, however, that to the extent designated by the
Administration Committee, any Special Contributions for the
Plan Year may be treated as Deferred Contributions.
(b) Notwithstanding anything in this Plan to the contrary, if
for any Plan Year, the Average Deferral Percentage for
Highly Compensated Employees exceeds the ADP Limit, then the
Excess Contributions of any Highly Compensated Employee,
adjusted for allocable income, shall be distributed to the
Employee. For this purpose, "allocable income" shall mean
the product of the gain (or loss) of the Participant's De-
ferred Contribution Account for the Plan Year multiplied by
a fraction, the numerator of which is the Participant's
Excess Contributions for the Plan Year and the denominator
of which is the sum of: (1) the balance of the Participant's
Deferred Contribution Account as of the beginning of the
Plan Year, plus (2) the amount of Participant's Deferred
Contributions for the Plan Year. Distribution of Excess
Contributions and allocable income shall be made, to the
extent practicable, within 2-1/2 months after the close of
the Plan Year (but in no event later than 12 months after
the close of the Plan Year) for which such contributions
were made. Excess Contributions shall be determined by
reducing the Deferred Contributions of the Highly Compen-
sated Employee or Employees whose Deferral Percentage is
highest to the amount necessary to satisfy the ADP Limit or,
if less, to the amount that results in a Deferral Percentage
equal to the Deferral Percentage of the Highly Compensated
Employee whose Deferral Percentage is next highest. If
necessary, a series of such reductions shall be made until
the Average Deferral Percentage for Highly Compensated
Employees has been reduced to the highest Average Deferral
Percentage that will satisfy the ADP Limit. Excess Contri-
butions shall be reduced by the amount of any Excess Defer-
rals previously distributed to a Participant for the taxable
year beginning with or within the Plan Year. Excess Contri-
butions shall be allocated to Participants who are subject
to the family member aggregation rules of Code Section
414(q)(6) in proportion to their Deferred Contributions for
the year.
(c) Aggregation of Elective 401(k) Deferrals.
----------------------------------------
(1) For purposes of this Section 4.2, the Actual Deferral
Percentage for any Eligible Participant who is a Highly
Compensated Employee for the Plan Year and who is
eligible to have Elective 401(k) Deferrals allocated to
his or her account under two or more plans or arrange-
ments described in Code Section 401(k) that are main-
tained by the Company or an Affiliate (other than those
that may not be permissively aggregated) shall be
determined as if all such Elective 401(k) Deferrals
were made under a single arrangement.
(2) For purposes of determining the Actual Deferral Per-
centage of an Eligible Participant who is a 5% owner or
one of the ten most highly paid Highly Compensated
Employees, the Elective 401(k) Deferrals and Compensa-
tion of such Eligible Participant shall include the
Elective 401(k) Deferrals and Compensation of Family
Members of such Participant. Such Family Members shall
be disregarded in determining the Actual Deferral Per-
centage both for Eligible Participants who are Non-
highly Compensated Employees and, except as provided in
the preceding sentence, for Eligible Participants who
are Highly Compensated Employees.
(3) For who purposes of this Section 4.2, the Actual Defer-
ral Percentage for any Eligible Participant is eligible
to have Elective 401(k) Deferrals allocated to his or
her account under two or more plans or arrangements
described in Section 401(k) that are maintained by the
Company or an Affiliate and which are aggregated for
purposes of Sections 401(a)(4) and 410(b) (other than
Section 410(b)(2)(A)(ii)) of the Code shall be deter-
mined as if all such elective 401(k) deferrals were
made under a single plan or arrangement. In addition,
if two or more plans maintained by the Company or an
Affiliate are permissively aggregated for purposes of
this Section 4.2, such plans must also satisfy Code
Sections 401(a)(4) and 410(b) as though they were a
single plan.
(d) Matching Contributions related to Excess Contributions,
together with any allocable income, shall be forfeited and
reallocated to the accounts of Participants who did not have
Excess Contributions for the year in accordance with Section
3.5. For this purpose, Excess Contributions shall be deemed
attributable first to unmatched Deferred Contributions.
4.3 ACP Limit.
---------
(a) For any Plan Year, the Average Contribution Percentage for
Highly Compensated Employees shall not exceed the ACP Limit
imposed by Code Section 401(m)(2), the greater of --
(1) 125% of the Average Contribution Percentage for all
Eligible Participants who are Non-Highly Compensated
Employees; or
(2) the lesser of (i) the Average Contribution Percentage
for all Eligible Participants who are Non-Highly Com-
pensated Employees plus 2 percentage points, or (ii)
200% of the Average Contribution Percentage for all
Eligible Participants who are Non-Highly Compensated
Employees.
The ACP Limit shall be applied in accordance with Code Sec-
tion 401(m)(2), which is hereby incorporated by reference;
provided, however, that to the extent designated by the Ad-
ministration Committee, all or a portion of Deferred Contri-
butions and any Special Contributions for the Plan Year may
be treated as Matching Contributions; provided further, that
if Deferred Contributions are used to meet the ACP Limit
then the ADP Limit must be met for such year both with and
without the Deferred Contributions used to meet the ACP
Limit.
(b) Notwithstanding anything in this Plan to the contrary, if
for any Plan Year, the Contribution Percentage for Highly
Compensated Employees exceeds the ACP Limit, then the Excess
Aggregate Contributions of any Highly Compensated Employee,
adjusted for Allocable Income, shall be distributed to the
Employee and/or forfeited in proportion to the Employee's
vested percentage. For this purpose, "allocable income"
shall mean the product of the gain (or loss) of the Partici-
pant's Matching Contribution Account for the Plan Year
multiplied by a fraction, the numerator of which is the Par-
ticipant's Excess Aggregate Contributions for the Plan Year
and the denominator of which is the sum of: (1) the balance
of the Participant's Matching Contribution Account as of the
beginning of the Plan Year, plus (2) the amount of Partici-
pant's Matching Contributions for the Plan Year. Distribu-
tion of Excess Aggregate Contributions and allocable income
shall be made, to the extent practicable, within 2-1/2
months after the close of the Plan Year (but in no event
later than 12 months after the close of the Plan Year) for
which such contributions were made. Excess Aggregate Con-
tributions shall be determined by reducing the Matching Con-
tributions of the Highly Compensated Employee or Employees
whose Contribution Percentage is highest to the amount
necessary to satisfy the ACP Limit or, if less, to the
amount that results in an Contribution Percentage equal to
the Contribution Percentage of the Highly Compensated
Employee whose Contribution Percentage is next highest. If
necessary, a series of such reductions shall be made until
the Average Contribution Percentage for Highly Compensated
Employees has been reduced to the highest Average Contribu-
tion Percentage that will satisfy the ACP Limit. Excess
Aggregate Contributions for any Plan Year shall be deter-
mined after the amount of Excess Deferrals and Excess Con-
tributions for such year have been determined. Excess
Aggregate Contributions shall be allocated to Participants
who are subject to the family member aggregation rules of
Code Section 414(q)(6) in proportion to their Matching
Contributions for the year.
(c) Aggregation of Contributions.
----------------------------
(1) For purposes of this Section 4.3, the Contribution Per-
centage for any Eligible Participant who is a Highly
Compensated Employee for the Plan Year and who is
eligible to receive Matching Contributions or to make
employee contributions under one or more other plans
described in Code Section 401(a) that are maintained by
the Company or an Affiliate (other than those that may
not be permissively aggregated) shall be determined as
if all such contributions were made under a single plan
aggregated with this Plan.
(2) For purposes of determining the Contribution Percentage
of an Eligible Participant who is a 5% owner or who is
one of the ten most highly paid Highly Compensated
Employees, the Matching Contributions and Compensation
of such Participant shall include the Matching Contri-
butions and Compensation of Family Members of such Par-
ticipant. Such Family Members shall be disregarded in
determining the Contribution Percentage for Eligible
Participants who are Non-highly Compensated Employees
and, except as provided in the preceding sentence, for
Eligible Participants who are Highly Compensated
Employees.
(3) For purposes of this Section 4.3, the Contribution Per-
centage for any Eligible Participant who is eligible to
receive matching contributions or to make employee con-
tributions under two or more plans described in Code
Section 401(a) that are maintained by the Company or an
Affiliate and which are aggregated for purposes of Sec-
tions 401(a)(4) and 410(b) (other than Section
410(b)(2)(A)(ii)) of the Code shall be determined as if
all such contributions were made under a single plan.
In addition, if two or more plans maintained by the
Company or an Affiliate are permissively aggregated for
purposes of this Section 4.3, such plans must also
satisfy Code Sections 401(a)(4) and 410(b) as though
they were a single plan.
4.4 Multiple Use Limit.
------------------
(a) If for any Plan Year, the Average Deferral Percentage and
the Average Contribution Percentage (both determined after
the correction of Excess Deferrals, Excess Contributions and
Excess Aggregate Contributions) for all Eligible Partici-
pants who are Highly Compensated Employees both exceed 125%
of the relevant percentage for all Eligible Participants who
are Non-Highly Compensated Employees, then the sum of the
Average Deferral Percentage and the Average Contribution
Percentage (both determined after the correction of Excess
Deferrals, Excess Contributions and Excess Aggregate Contri-
butions) for all Eligible Participants who are Highly Com-
pensated Employees shall not exceed the greater of the
following:
(1) the sum of (A) 125% of the greater of the Average
Deferral Percentage or the Average Contribution Per-
centage for all Eligible Participants who are Non-
Highly Compensated Employees and (B) 2 percentage
points plus the lesser of the Average Deferral Per-
centage or the Average Contribution Percentage for such
Non-Highly Compensated Employees (not to exceed 200% of
the lesser of such Average Deferral Percentage or
Average Contribution Percentage); or
(2) the sum of (A) 125% of the lesser of the Average Defer-
ral Percentage or the Average Contribution Percentage
for all Eligible Participants who are Non-Highly
Compensated Employees, and (B) 2 percentage points plus
the greater of the Average Deferral Percentage or the
Average Contribution Percentage for such Non-Highly
Compensated Participants (not to exceed 200% of the
greater of such Average Deferral Percentage or Average
Contribution Percentage).
The Multiple Use Test shall be applied in accordance with
Code Section 401(m)(9)(A), which is hereby incorporated by
reference.
(b) Notwithstanding anything in this Plan to the contrary, if
the Multiple Use Limit is not met for any year, then
Matching Contributions in excess of the maximum amount
permitted by the Multiple Use Limit shall be allocated among
Eligible Participants who are Highly Compensated Employees
and either distributed or forfeited (as applicable) in
accordance with the rules applicable to Excess Aggregate
Contributions under Section 4.3.
4.5 Code Section 415 Limits.
-----------------------
(a) Code Section 415 Limit. Deferred Contributions, Matching
----------------------
Contributions, forfeitures, and Special Contributions allo-
cated to a Participant for any Limitation Year shall not
exceed the maximum amount permitted by Code Section 415(c),
the lesser of --
(1) $30,000 (or, if greater, 25% of the dollar limit on
annual benefits from defined benefit plans under Code
Section 415(b)(1)(A) in effect for such year), or
(2) 25% of the Participant's Limitation Compensation.
The limitations of Code Section 415, as adjusted from time
to time and including any applicable legislative transi-
tional rules (including, but not limited to, Section 1106(i)
of the Tax Reform Act of 1986) are hereby incorporated by
reference.
(b) Multiple Defined Contribution Plan Participation. If a
------------------------------------------------
Participant's total annual additions for a Limitation Year
under this Plan and any other defined contribution plan or
plans maintained by the Employer or any Affiliate would
exceed the amount permitted under Code Section 415(c), then
the Participant's rate of allocations under this Plan shall
be frozen or reduced to the extent necessary to comply with
the limit of Code Section 415(c).
(c) Excess Annual Additions. If as a result of excess forfei-
-----------------------
tures, a reasonable error in estimating a Participant's
Limitation Compensation, a reasonable error in determining
the amount of elective deferrals which may be made with
respect to any Participant under the limits of Code Section
415, or because of other facts and circumstances which the
Commissioner of Internal Revenue finds justify the avail-
ability of this Section 4.5, annual additions allocated to a
Participant exceed the limitations of Code Section 415, the
excess amounts shall be eliminated as follows to the extent
necessary to comply with Code Section 415:
(1) first, Matching Contributions shall be reduced to the
extent necessary and used to reduce Matching Contribu-
tions for the Participant for the next Limitation Year
(and succeeding Limitation Years, as necessary) if the
Participant is still an Eligible Employee at the end of
such year or, if the Participant is not an Eligible
Employee at the end of such year, held unallocated in a
suspense account and used to reduce Matching Contribu-
tions for the next Limitation Year (and succeeding
Limitation Years, as necessary) for all other Partici-
pants; and
(2) then, Deferred Contributions, with Allocable Income,
shall be returned to the Participant.
Any suspense account maintained pursuant to this Section
shall not share in the allocation of the Trust Fund's gains
and losses.
(d) Defined Benefit Plan Participation. If a Participant is, or
----------------------------------
was at any time, also covered by a defined benefit plan or
plans maintained by the Employer or any Affiliate, the sum
of the defined benefit fraction and the defined contribution
fraction, both determined in accordance with Code Section
415(e), shall not exceed 1.0 for any Limitation Year, except
as may be permitted under any applicable legislative transi-
tional rules, including, Section 1106(i) of the Tax Reform
Act of 1986. If the sum of a Participant's defined benefit
plan fraction and defined contribution plan fractions for
any Limitation Year would otherwise exceed 1.0, then the
rate of the Participant's benefit accruals under the defined
benefit plan shall be frozen or reduced to the extent neces-
sary to comply with the limitation of Code Section 415(e).
(e) Definitions. In applying the limitations of Code Section
-----------
415:
(1) Affiliate shall have the meaning set forth in Article
---------
I, except that Code Sections 414(b) and 414(c) shall be
modified as provided in Code Section 415(h).
(2) Limitation Compensation shall mean Compensation as
-----------------------
defined in Article I.
(3) Limitation Year shall mean the Plan Year.
---------------
4.6 Adjustment by Administration Committee.
--------------------------------------
The Administration Committee may, as it deems appropriate, amend
or cancel any Participant's Deferred Contribution Election at any
time in order to insure that contributions by or on behalf of
such Participant for any year will not exceed any applicable Code
limitations, including, Code Sections 401(k), 401(m), 402(g),
401(a)(17) or 415, and that contributions will be deductible
under Code Section 404.
<PAGE>
ARTICLE V. ACCOUNTS AND VESTING
5.1 Accounts.
--------
The Administration Committee shall establish and maintain the
following Accounts with respect to each Participant:
(a) Deferred Contribution Account -- an account credited with
-----------------------------
any Deferred Contributions and any Special Contributions
made on behalf of the Participant, adjusted for any in-
service withdrawals and any allocable expenses and invest-
ment gain or loss.
(b) Matching Contribution Account -- an account credited with
-----------------------------
any Matching Contributions and forfeitures allocated to the
Participant, adjusted for any allocable expenses and invest-
ment gain or loss. Separate subaccounts shall be maintained
for PEI Matching Contributions and for Keystone Matching
Contributions.
(c) Prior Plan Account -- an account credited with any amount
------------------
transferred from the Prior Plan upon its termination,
adjusted for any in-service withdrawals and any allocable
expenses and investment gain or loss.
(d) Rollover Account -- an account credited with any Rollover
----------------
Contributions made by the Participant, adjusted for any in-
service withdrawals and any allocable expenses and invest-
ment gain or loss.
The maintenance of Accounts under this Section 5.1 is for
accounting purposes and a segregation of assets to each Account
shall not be required. The Administration Committee shall
deliver to each Participant as soon as practicable after the end
of each Plan Year, a statement which shows the balance of each
Account of the Participant as of the end of the Plan Year.
5.2 Vesting.
-------
(a) Deferred Contribution, Prior Plan and Rollover Accounts. A
-------------------------------------------------------
Participant shall at all times have a fully vested and
nonforfeitable interest in his Deferred Contribution, Prior
Plan and Rollover Accounts.
(b) Matching Contribution Account.
-----------------------------
(1) Except as provided by Subsection (2) below, a Partici-
pant's vested interest in his Matching Contribution
Account shall be determined according to the following
table:
Years of Vested Percentage of
Vesting Service Matching Contribution Account
--------------- -----------------------------
Less than 1 0%
1 20%
2 40%
3 60%
4 80%
5 or more 100%
In determining the vested percentage of a Participant
who has incurred a Break-in-Service, any years of
Vesting Service completed by the Participant prior to
the Break-in-Service shall be disregarded if (A) the
Participant was not at least partially vested in his
Matching Contribution Account at the time he incurred
the break and (B) the number of his consecutive years
of Break-in-Service was equal to or greater than the
greater of 5 or the number of Years of Vesting Service
he completed prior to the break.
(2) A Participant shall have a 100% vested interest in his
Matching Contribution Account upon attaining Normal
Retirement Age while an Employee, or upon his death or
Disability while an Employee.
<PAGE>
ARTICLE VI. TRUST FUND
6.1 Trustee; Trust Fund.
-------------------
(a) The Company shall appoint a Trustee and shall enter into a
Trust Agreement with the Trustee. The Company may remove
the Trustee at any time, upon such notice as may be required
by the provisions of the Trust Agreement, and designate a
successor Trustee. The Trustee shall have such powers to
hold, invest, reinvest, control and disburse the Trust Fund
as shall be set forth in the Trust Agreement.
(b) The reasonable expenses incident to the administration of
the Plan including, without limitation, compensation of the
Trustee and consultants, attorneys and other advisors, may
be paid directly by the Company or, in the Company's discre-
tion, may be paid, in whole or in part, out of the Trust
Fund.
(c) All assets of the Trust Fund, including investment income,
shall be retained for the exclusive purposes of providing
benefits to Participants and their Beneficiaries and
defraying the reasonable expenses of administering the Plan,
except as provided in Section 11.10 and except that:
(1) any contribution made by the Employer by a mistake of
fact shall be returned within one year after the pay-
ment of the contribution; and
(2) any contribution made by the Employer shall be returned
to the extent disallowed as a deduction under Code
Section 404 within one year after the disallowance of
the deduction.
6.2 Investment Funds.
----------------
(a) The Trustee shall establish and maintain within the Trust
Fund:
(1) a Company Stock Fund invested primarily in shares of
Company Stock; and
(2) such other investment funds as the Investment Committee
may designate from time to time ("Investment Funds").
(b) All earnings and gains attributable to assets in an Invest-
ment Fund shall be reinvested in such Investment Fund.
(c) The Investment Committee may, in its sole discretion,
appoint an Investment Manager with the power to manage,
acquire or dispose of the assets of an Investment Fund. Any
such appointment shall be evidenced by a written investment
management agreement with the Investment Manager which
specifies the terms and conditions of the appointment,
including investment objectives and guidelines, and under
which the Investment Manager shall acknowledge that it is a
fiduciary with respect to the management, acquisition and
control of the Investment Fund over which it has been dele-
gated authority. The Investment Committee shall not be
liable for any act or omission of any Investment Manager and
shall not be liable for following the advice of any Invest-
ment Manager, with respect to any duties delegated to the
Investment Manager.
6.3 Investment of Participant Accounts.
----------------------------------
(a) Amounts Other than PEI Matching Contributions. Except as
---------------------------------------------
provided in Section 6.3(b), a Participant's future contri-
butions and existing account balances shall be invested and
reinvested among the Investment Funds as directed by the
Participant in accordance with procedures prescribed by the
Administration Committee. A Participant shall be permitted
to change his investment directions as to such amounts in
accordance with procedures established by the Administration
Committee from time to time. Any such election shall remain
in effect until changed. If no initial election is made,
contributions shall be entirely invested in the Money Market
Fund.
(b) PEI Matching Contributions. The investment of any PEI
--------------------------
Matching Contributions made on behalf of a Participant and
the PEI Matching Contribution Subaccount maintained for the
Participant (other than the portion of such Subaccount, if
any, which represents the proceeds from the Participant's
tender of shares of Company Stock to the Company from his
Account Balance pursuant to the Company's Offer to Purchase
dated March 11, 1996) shall be invested and reinvested in
the Company Stock Fund; provided, however, that Participants
who have attained age 55 shall be permitted to elect to
direct the investment of such PEI Matching Contribution Sub-
account balance and future PEI Matching Contributions to the
Money Market Fund in accordance with procedures established
by the Administration Committee. If a Participant tendered
shares of Company Stock to the Company from his Account
Balance pursuant to the Company's offer to Purchase dated
March 11, 1996, the portion of his Account Balance
attributable to the proceeds from such tender shall be
invested as directed by the Participant in accordance with
Section 6.3(a).
(c) Each Participant shall be solely responsible for the invest-
ment of his Accounts among the Investment Funds. Neither
the Investment Committee nor the Administration Committee
shall have any obligation to provide investment advice to
Participants or to monitor Participant investment elections.
6.4 Valuation.
---------
As of each Valuation Date, the Investment Funds shall be valued
at fair market value by the Trustee. Earnings or losses of each
Investment Fund since the last Valuation Date shall be allocated
among Participants with Accounts invested in such Investment Fund
in proportion to the balance of each Participant's Account or
Accounts invested in such Investment Fund.
6.5 Voting and Tender of Company Stock.
----------------------------------
(a) The Company shall furnish to each Participant who has a
separate account invested in the Company Stock Fund (whether
or not vested), notice of the date and purpose of each
meeting of the stockholders of the Company at which Company
Stock is entitled to be voted, and a voting instruction form
to be returned to the Trustee. If the Participant furnishes
such instructions to the Trustee within the time specified
in the notification, the Trustee shall vote the shares of
Company Stock credited to the Participant under the Company
Stock Fund (including fractional shares), in accordance with
the Participant's instructions. With respect to shares of
Company Stock in the Company Stock Fund credited to Partici-
pant accounts as to which the Trustee does not receive
timely voting instructions and shares of Company Stock in
the Company Stock Fund not credited to a Participant's
account, the Trustee shall vote all such shares of Company
Stock in the same proportion as were voted the shares
credited to the accounts of Participants who provided timely
instructions.
(b) The Trustee shall furnish to each Participant who has a
separate account invested in the Company Stock Fund (whether
or not vested) notice of any tender or exchange offer for
Company Stock made to the Trustee. The Trustee shall
request from each such Participant instructions as to the
tendering or exchanging of the shares of Company Stock
credited to the Participant's account under the Company
Stock Fund and for this purpose the Trustee shall provide
each Participant with a reasonable period of time in which
he may consider any such tender or exchange offer for
Company Stock made to the Trustee. The Trustee shall tender
or exchange such Company Stock held in the Company Stock
Fund as to which the Trustee has received instructions to
tender or exchange from Participants within the time
specified by the Trustee. Company Stock credited to
Participant accounts under the Company Stock Fund as to
which the Trustee has not received timely instructions from
Participants shall not be tendered or exchanged. Company
Stock held in the Company Stock Fund and not credited to a
Participant's account shall be tendered or exchanged by the
Trustee in the same proportion as were tendered the shares
credited to Participants who provided timely instructions.
(c) Participant voting and tender or exchange instructions shall
be held in confidence by the Trustee. In carrying out its
responsibilities under this provision, the Trustee may con-
clusively rely on information furnished to it by the Admin-
istration Committee, including the names and current
addresses of Participants, the number of shares of Company
Stock credited to Participant accounts, and the number of
shares of Company Stock held by the Trustee that have not
yet been credited to Participant accounts.
6.6 Investment Committee.
--------------------
(a) Investment Committee members shall be appointed by the Com-
pany and may be removed by the Company at its discretion.
Employees of the Company or an Affiliate shall receive no
compensation for their services rendered to or as members of
the Investment Committee.
(b) The Investment Committee shall act by a majority of its mem-
bers at the time in office and such action may be taken
either by a vote at a meeting or in writing without a
meeting. The Investment Committee may authorize in writing
any person to execute any document or documents on its
behalf, and any interested person, upon receipt of notice of
such authorization directed to it, may thereafter accept and
rely upon any document executed by such authorized person
until the Investment Committee shall deliver to such
interested person a written revocation of such authoriza-
tion.
(c) The Investment Committee shall have the power to designate
Investment Funds and to appoint and remove Investment Man-
agers, subject to any limits or guidelines established by
the Company.
(d) The Investment Committee may designate persons, including
persons other than "named fiduciaries" (as defined in ERISA
Section 402(a)(2)) to carry out the specified responsibili-
ties of the Investment Committee and shall not be liable for
any act or omission of a person so designated.
<PAGE>
ARTICLE VII. IN-SERVICE WITHDRAWALS AND LOANS
7.1 Withdrawals - Age 59-1/2.
------------------------
Subject to the rules set forth in Section 7.4 below, a Partici-
pant may withdraw all or any portion of his Deferred Contribution
Account after attaining age 59-1/2.
7.2 Withdrawals - Financial Hardship.
--------------------------------
Subject to the rules set forth in Section 7.4 below, each Parti-
cipant may request to withdraw all or part of his Deferred Con-
tributions on account of an immediate and heavy financial
hardship. A financial hardship withdrawal request shall include
such documentation in support of the Participant's request as the
Administration Committee may require, and shall be granted only
to the extent that the Administration Committee determines the
following requirements have been met:
(a) The withdrawal will be used for:
(1) Expenses for medical care described in Code Section
213(d) previously incurred by the Employee, the
Employee's Spouse, or any dependents of the Employee
(as defined in Code Section 152) or necessary to obtain
such medical care;
(2) Costs directly related to the purchase of a principal
residence for the Employee (excluding mortgage pay-
ments);
(3) Payment of tuition and related educational fees for the
next 12 months of post-secondary education for the
Employee, the Employee's Spouse, children or dependents
(as defined in Code Section 152);
(4) Payments necessary to prevent the eviction of the
Employee from the Employee's principal residence or
foreclosure on the mortgage on the Employee's principal
residence; and
(5) Such other financial needs which the Internal Revenue
Service, through the publication of revenue rulings,
notices and other documents of general applicability,
deems to be immediate and heavy.
(b) The withdrawal is not in excess of the lesser of (1) the sum
of the Participant's Deferred Contributions, without
earnings and reduced by the amount of any prior distribu-
tions of Deferred Contributions made on account of hardship;
and (2) the amount of the immediate and heavy financial need
and any amounts necessary to pay federal, state or local
income taxes or penalties reasonably anticipated to result
from the withdrawal;
(c) The Employee has obtained all withdrawals, other than hard-
ship withdrawals, and all nontaxable loans currently avail-
able under all plans maintained by the Employer and its
Affiliates;
(d) The Employee is prohibited from making elective contribu-
tions to the Plan and all other plans maintained by the
Employer for the Employee's taxable year immediately fol-
lowing the taxable year of the hardship withdrawal in excess
of the applicable limit under Code Section 402(g) for such
next taxable year less the amount of such Employee's
elective contributions for the taxable year of the hardship
withdrawal; and
(e) The Employee is prohibited from making elective contribu-
tions and employee contributions under this Plan and all
other qualified and nonqualified deferred compensation plans
maintained by the Employer for at least 12 months after
receipt of the withdrawal. For this purpose, the phrase
"qualified and nonqualified deferred compensation plans"
includes stock option, stock purchase and similar plans, and
cash or deferred arrangements under a "cafeteria plan"
(within the meaning of Code Section 125), but does not
include dependent care assistance plans, health plans or
welfare benefit plans (whether or not maintained under a
cafeteria plan).
7.3 Withdrawals - Prior Plan and Rollover Accounts.
----------------------------------------------
Subject to the rules set forth in Section 7.4 below, a Partici-
pant may withdraw all or a portion of his Prior Plan and Rollover
Accounts at any time.
7.4 Withdrawal Rules.
----------------
Any withdrawal shall be subject to the following requirements:
(a) Withdrawals shall only be permitted during Employment.
(b) Only one withdrawal will be permitted during any Plan Year.
(c) The minimum amount that may be withdrawn is $500 or the
balance of the Participant's Deferred Contribution and
Rollover Accounts, if less.
(d) Withdrawals shall be taken from the Investment Funds in
which the Participant's Account is invested as directed by
the Participant. Distributions from the Company Stock Fund
shall be made in shares of Company Stock, except that any
fractional interest shall be distributed in cash.
(e) Requests for withdrawals shall be made, and withdrawals
shall be processed, in accordance with rules established by
the Administration Committee and the Trustee.
7.5 Loans.
-----
Subject to Subsections (a) through (j) below, a Participant who
is a "party in interest," within the meaning of ERISA Section
3(14), may borrow from his Deferred Contribution and Prior Plan
Accounts an amount which the Committee, in its discretion, deems
necessary to satisfy an event of financial need specified in Sec-
tion 7.2(a) and may borrow from his Rollover Account in
accordance with Committee procedures. A Participant's request
for a loan shall be on the Appropriate Form and shall include
such documentation as to the existence and amount of the
financial need as the Administration Committee may require.
(a) Each loan shall be in an amount of at least $1,000.
(b) No Participant may have more than two loans outstanding at
any time.
(c) Each loan shall be evidenced by a promissory note from the
Participant which shall be an investment solely of the
appropriate Account or Accounts of the Participant and will
for purposes of the Plan be deemed to have a fair market
value at any given time equal to the unpaid balance of the
note plus the amount of any accrued but unpaid interest.
Principal and interest payments with respect to any loan
shall be credited solely to the appropriate Account or
Accounts of the Participant, and any loss caused by nonpay-
ment or other default on a Participant's loan obligation
shall be borne solely by the appropriate Account or Accounts
of the Participant.
(d) Each loan shall be taken from the Investment Funds in which
the Participant's Deferred Contribution, Prior Plan and
Rollover Accounts are invested as directed by the Partici-
pant.
(e) Loans to Participants who are Employees shall be repaid
through payroll deduction.
(f) Each loan shall bear interest on the unpaid balance at a
reasonable rate determined by the Administration Committee,
taking into consideration factors which would be considered
by a commercial lender, including the availability of pay-
roll deductions as a means of repayment.
(g) Each loan, when added to the outstanding balance of all
other loans of the Participant from the Plan or any other
Qualified Plan maintained by the Employer or any Affiliate
("Qualified Plan Loans"), shall not exceed the lesser of:
(1) $50,000 reduced by the excess, if any, of (i) the
highest outstanding balance of all Qualified Plan Loans
during the one year period ending on the day before the
date on which the loan is made, over (ii) the
outstanding balance of all Qualified Plan Loans on the
date on which such loan was made, or
(2) 50% of the vested portion of the Participant's Deferred
Contribution, Prior Plan and Rollover Accounts deter-
mined as of the date of the loan.
(h) Each loan, by its terms, shall require substantially level
amortization of repayments of principal and interest (to be
made not less frequently than quarterly) within 5 years,
except that (1) the term of the loan may be for a period of
in excess of 5 years if the proceeds of the loan are used to
acquire any dwelling unit which within a reasonable time
(determined at the time the loan is made) will be used as
the principal residence of the Participant; (2) repayment of
the loan may be suspended for a period of up to one year in
the case of a Participant on an unpaid Leave of Absence; and
(3) the loan may be pre-paid in full or in part at any time.
(i) Each loan shall be secured by the Participant's vested
Account Balance; provided, however, that no more than 50% of
the balance of the Participant's Account Balance, determined
as of the date of the loan, shall be used as security for a
loan.
(j) No distribution shall be made under Article VIII to a Parti-
cipant or a Beneficiary of a deceased Participant unless any
outstanding loan balance is fully repaid or the amount of
the distribution is reduced by the outstanding loan balance.
In no event shall reduction of the outstanding balance of a
loan from a Participant's Account Balance occur until a
distributable event under this Article VII, Article VIII or
Article X.
(k) Each loan shall be subject to such additional terms and con-
ditions as the Administration Committee may prescribe in
accordance with written procedures, including terms as to
default and acceleration, which procedures are hereby incor-
porated and made a part of this Plan. Any such procedures
prescribed by the Committee shall apply on a uniform and
nondiscriminatory basis.
<PAGE>
ARTICLE VIII. DISTRIBUTION OF BENEFITS
8.1 Distribution Events.
-------------------
(a) Termination of Employment.
-------------------------
(1) Subject to Section 8.1(a)(2) below, a Participant who
has terminated Employment may elect to receive a lump
sum distribution (in accordance with Section 8.2) of
his entire vested Account Balance at any time following
his Termination of Employment. Any such election must
be made within 90 days prior to the distribution date,
on the Appropriate Form and in accordance with proce-
dures established by the Administration Committee.
Within 30 to 90 days prior to the Participant's distri-
bution date, the Participant shall be provided with
written notice describing the form of payment under the
Plan and, if applicable, the Participant's right to
defer distribution until Normal Retirement Age; pro-
vided, however, that the Participant may elect to
receive a distribution of his entire vested Account
Balance prior to the end of such 30-day period if the
Participant is notified of the right to a period of at
least 30 days to make such election.
(2) Notwithstanding Section 8.1(a)(1) above, if the entire
vested Account Balance of a Participant who has termi-
nated Employment does not exceed $3,500 (and did not at
the time of any prior in-service withdrawal exceed
$3,500), then the Participant's entire vested Account
Balance shall be distributed to the Participant in a
lump sum distribution (in accordance with Section 8.2)
as soon as practicable following his or her Termination
of Employment.
(b) Disability. A Participant who has been determined by the
----------
Administration Committee to have incurred a Disability may
elect to receive a lump sum distribution (in accordance with
Section 8.2) of his entire vested Account Balance at any
time following such determination in accordance with proce-
dures established by the Administration Committee.
(c) Death.
-----
(1) Upon the death of a Participant, the Participant's
entire vested Account Balance shall be distributed to
the Participant's Beneficiary in a lump sum payment (in
accordance with Section 8.2) as soon as practicable
following the Participant's death.
(2) A Participant may designate a person, persons, trust or
estate as Beneficiary; provided, however, that if the
Participant is survived by a Spouse, then such Sur-
viving Spouse shall be the Beneficiary unless (A) the
written consent of the Surviving Spouse was obtained to
the Beneficiary designation, (B) the Participant estab-
lished to the satisfaction of the Administration Com-
mittee that his Surviving Spouse could not be located
or (C) such other circumstances existed as the Adminis-
tration Committee, in accordance with applicable regu-
lations, deemed appropriate to waive the requirement of
spousal consent. Spousal consent to the designation of
a non-Spouse Beneficiary shall specifically identify
the Beneficiary (including any class of Beneficiaries
or contingent Beneficiaries) to receive benefits, shall
acknowledge the effect of the Beneficiary's designation
and shall be witnessed by a notary public or Plan
representative. Once given, spousal consent to a Bene-
ficiary designation may not be revoked without the Par-
ticipant's consent. A Beneficiary designation shall be
effective only when filed by the Participant with the
Administration Committee on the Appropriate Form, and
shall revoke all prior designations. If no valid
designation is in effect at the Participant's death, or
if the designated Beneficiary shall not survive the
Participant, the Beneficiary shall be the Participant's
Surviving Spouse, or if the Participant has no Sur-
viving Spouse, the Participant's estate.
8.2 Form of Distribution.
--------------------
Distribution of a Participant's Accounts under Section 8.1 shall
be made in a lump sum payment in cash and full shares of Company
Stock to the extent invested in Company Stock (with any
fractional interest in Company Stock distributed in cash).
8.3 Forfeitures; Restoration of Forfeitured Account Balances.
--------------------------------------------------------
(a) The non-vested balance of a Participant's Matching Contribu-
tion Account shall be forfeited upon the earlier of (1) dis-
tribution of the vested portion of the Participant's Account
balance, or (2) the date the Participant incurs a Break-in-
Service of at least 5 consecutive years. For this purpose,
a Participant with a vested interest of 0% in his Matching
Contribution Account at Termination of Employment shall be
deemed to have received a distribution of his vested
interest in such Account. Forfeitures shall be reallocated
in accordance with Section 3.5.
(b) A Participant who forfeited his non-vested Matching Contri-
bution Account balance upon a prior Termination of Employ-
ment and resumes Employment as an Eligible Employee prior to
incurring a Break-in-Service of at least 5 consecutive years
shall be permitted to have the amount forfeited (unadjusted
for gains or losses) restored to his Matching Contribution
Account by repaying to the Plan the full amount of the dis-
tribution in cash within 5 years after his Re-Employment
Commencement Date. If a Participant had a 0% vested
interest in his Matching Contribution Account at Termination
of Employment and resumes Employment as an Eligible Employee
before incurring a Break-in-Service of at least 5 consecu-
tive years, the forfeited amount (unadjusted for gains and
losses) shall be restored to the Participant's Matching Con-
tribution Account. Any amount required to be restored pur-
suant to this Section 8.3(b) shall be paid first from any
forfeitures which occur in that year and then by a special
Employer contribution.
(c) If a Participant was partially vested (but not 100% vested)
in his Matching Contribution Account upon a Termination of
Employment and resumes Employment as an Eligible Employee
after a Break-in-Service of at least 5 consecutive years but
before a distribution of the vested portion of his Matching
Contribution Account, then a separate Matching Contribution
Account B shall be established to hold his prior vested
account balance and a Matching Contribution Account A shall
be established to receive any Matching Contributions made on
his behalf after his re-Employment. Vesting Service after
such re-Employment shall be disregarded in determining the
Participant's vested portion of his Matching Contribution
Account B.
8.4 Required Commencement of Benefits.
---------------------------------
(a) In no event shall distribution of a Participant's vested
Account Balance begin later than the 60th day after the
close of the Plan Year in which the later of the following
events occurs:
(1) the Participant's attainment of Normal Retirement Age;
or
(2) the Participant's Termination of Employment.
If the amount of benefits payable to or in respect of a Par-
ticipant cannot be determined within this 60-day period, or
if it is not possible to pay such benefits within such
period because the Administration Committee has been unable
to locate the Participant or the Participant's Beneficiary,
as the case may be, after making reasonable efforts to do
so, then a payment shall be made no later than 60 days after
the earliest date on which the amount of such benefits can
be determined or the Participant can be located, as the case
may be.
(b) Notwithstanding any other provision of this Plan to the con-
trary, distribution of a Participant's Account Balance must
commence in accordance with Section 401(a)(9) of the Code no
later than the April 1 following the calendar year in which
the Participant attains age 70-1/2, whether or not the Par-
ticipant has terminated Employment; provided however, that
in the case of a Participant who has attained age 70-1/2
prior to January 1, 1988 and was not a 5% owner (as defined
in Code Section 416(i)) at any time during the Plan Year
ending with or within the calendar year in which he attained
age 66-1/2 or any subsequent year, benefits shall commence
no later than the April 1 following the calendar year in
which occurs the later of his attainment of age 70-1/2 or
Termination of Employment. If not made in a single sum dis-
tribution, a Participant's Account Balance shall be distri-
buted over a period not exceeding the Participant's life
expectancy (or over the life expectancy of the Participant
and a designated Beneficiary). If a Participant dies after
distributions have begun, the Participant's remaining
Account Balance shall be distributed at least as rapidly as
under the method of distribution in effect at the time of
the Participant's death. If the Participant dies before
distribution of the Participant's Account Balance has begun,
the Participant's entire interest must be distributed within
5 years after the Participant's death. All distributions
required under this Section 8.4(b) shall be made in
accordance with Code Section 401(a)(9), including the mini-
mum distribution incidental benefit requirement of proposed
Treasury Regulation Section 1.401(a)(9)-2, which is hereby
incorporated by reference.
8.5 Direct Rollovers.
----------------
(a) Notwithstanding any provision in this Plan to the contrary,
a Participant or a Beneficiary who is the surviving spouse
of a Participant may elect to have all or a portion of any
amount payable to him/her from the Plan which is an
"eligible rollover distribution" (as defined in (b) below)
transferred directly to an "eligible retirement plan" (as
defined in (b) below). Any such election shall be made in
accordance with such uniform rules and procedures as the
Administration Committee may prescribe from time to time as
to the time and manner of the election in accordance with
Code Section 401(a)(31).
(b) For purposes of this Section 8.5:
"Eligible rollover distribution" shall mean any distribution
of all or any portion of the balance to the credit of the
distributee other than: (1) any distribution that is one of
a series of substantially equal periodic payments (not less
frequently than annually) made for the life (or life expec-
tancy) of the distributee or the joint lives (or joint life
expectancies) of the distributee and the distributee's
designated beneficiary; (2) any distribution for a specified
period of ten years or more; (3) any distribution to the
extent such distribution is required under Code Section
401(a)(9); or (4) the portion of any distribution that is
not includable in gross income.
"Eligible retirement plan" shall mean, with respect to a
Participant, an individual retirement account or annuity
described in Code Section 408(a) or 408(b) ("IRA"); an
annuity plan described in Code Section 403(a); or a
qualified plan described in Code Section 401(a), that
accepts the distributee's eligible rollover distribution
and, with respect to a surviving spouse, shall mean an IRA.
<PAGE>
ARTICLE IX. PLAN ADMINISTRATION
9.1 The Administration Committee.
----------------------------
(a) The Plan shall be administered by an Administration Com-
mittee consisting of one or more persons appointed by the
Company. The Administration Committee shall be the "named
fiduciary", within the meaning of ERISA Section 402(a)(2),
with respect to administration of the Plan except for such
responsibilities as are allocated to the Investment Com-
mittee.
(b) A person appointed to the Administration Committee shall
become a member upon filing a written notice of acceptance
with the Secretary of the Company, and shall serve until he
resigns, dies or is removed by the Company. Members of the
Committee shall serve at the Company's pleasure and may be
removed by the Company at any time, with or without cause.
A member of the Administration Committee may resign upon
delivery of a written notice of resignation to the Secretary
of the Company. Unless the Company provides otherwise, a
member of the Administration Committee who is an Employee
shall be deemed to resign upon his Termination of Employ-
ment. Vacancies on the Administration Committee arising by
resignation, removal or otherwise shall be filled by the
Company. However, until any vacancy is filled by the Com-
pany, the remaining member or members of the Committee shall
constitute the entire Committee.
(c) The Administration Committee shall act by a majority of its
members, which shall constitute a quorum, and such action
may be taken either by a vote at a meeting or in writing or
by telephone communication without a meeting. Where action
is taken by the members of the Administration Committee by
telephone communication without a meeting, such action shall
be confirmed in writing by such members as soon as
practicable thereafter. However, no member of the
Administration Committee shall vote or act upon any matter
which relates solely to such himself. Any matter which
relates directly to a member of the Committee shall be
determined by a majority of the remainder of the Committee.
(d) No member of the Committee who receives full-time pay from
the Company or an Affiliate shall receive compensation for
his services as a member of the Committee; provided, how-
ever, that Committee members shall be reimbursed for any
reasonable and proper expenses incurred in carrying out
their duties hereunder. The members of the Committee shall
be bonded to the extent required by ERISA Section 412.
(e) The Administration Committee may designate one or more of
its members or a third party to act on its behalf. The Com-
mittee may employ or engage counsel, accountants, con-
sultants or other advisors or service providers (who may be
persons who provide services to the Employer), and shall be
entitled to rely conclusively upon any tables, valuations,
certificates, opinions or reports furnished by any person so
retained. A member of the Committee may serve in more than
one fiduciary capacity with respect to the Plan.
9.2 Administration Committee Powers and Duties.
------------------------------------------
The Administration Committee shall have such duties and powers as
are expressly allocated to it elsewhere in the Plan and in the
Trust Agreement and shall have such other powers and duties as
may be necessary to discharge its duties hereunder, including,
without limitation, the exclusive authority:
(a) To make and enforce such rules and regulations and maintain
such records as it shall deem necessary or appropriate for
the efficient administration of the Plan or to comply with
applicable law;
(b) To interpret and construe the terms of the Plan and decide
all questions, including questions of fact, as to eligi-
bility for benefits hereunder and as to the amount, manner
and time of payments hereunder. The Committee shall have
full discretion to carry out its duties hereunder and shall
be the sole judge of the standard of proof required in any
case (including, but not limited to, questions as to Dis-
ability or financial hardship) and the application and
interpretation of the terms of this Plan. The decisions of
the Committee on appeal pursuant to Section 9.4 shall be
final and binding on all affected parties;
(c) To authorize the Trustee to make payments of Plan benefits
or expenses from the Trust Fund;
(d) To establish and carry out a funding policy and method con-
sistent with the objectives of the Plan and the requirements
of ERISA;
(e) To recommend to the Company amendments to the Plan which may
be necessary to retain the Plan's status as a Qualified Plan
or to comply with applicable law or which may be desirable
for efficient administration of the Plan;
(f) To keep such records as may be required by applicable law:
(g) To file and distribute such information and material as may
be required by the reporting and disclosure requirements of
the Code and ERISA or other applicable law;
(h) To engage such agents, counsel, accountants and consultants
as the Administration Committee may deem advisable;
(i) To monitor the limitations of the Code on contributions and
to take such action as it deems appropriate to assure that
such limits are satisfied for each year; and
(j) To establish forms and procedures for the administration of
the Plan.
9.3 Delegation of Responsibility.
----------------------------
The Administration Committee may designate one or more persons,
to carry out such of the responsibilities of the Administration
Committee as the Committee may deem appropriate for proper admin-
istration of the Plan. Such designation must be in writing,
specifying the powers or duties being delegated, and must be
accepted in writing by the delegatee. The Committee shall not be
liable for any act or omission of a person so designated.
9.4 Claims Procedure.
----------------
(a) Claims for benefits shall be submitted in writing to the
Administration Committee and in accordance with procedures
established by the Committee. The Administration Committee
shall provide a claimant whose claim has been wholly or par-
tially denied with a written notice of such denial within 90
days after receipt of the claim (or within 180 days after
receipt of the claim if special circumstances warrant and
the claimant is notified within the original 90-day period
of the extension and the circumstances warranting the exten-
sion). Such notice of denial shall set forth the specific
reason or reasons for the denial, the Plan provisions on
which the denial is based, a description of any additional
material or information necessary for the claimant to per-
fect the claim, and an explanation of why such material or
information is necessary, and the procedure for submitting a
request for review;
(b) A claimant whose claim for Plan benefits has been denied may
submit a request for review of the denial in accordance with
procedures established by the Committee which shall include
provisions allowing a claimant or his duly authorized repre-
sentative to review pertinent documents and submit issues
and comments in writing. Any such request must be in
writing and must be made within 60 days after the claimant's
receipt of written notice of denial of his claim. The Ad-
ministration Committee shall notify the claimant of its
decision on review in writing no later than 60 days after
its receipt of a request for review, or 120 days if the Ad-
ministration Committee notifies the claimant within the
initial 60-day period that special circumstances exist which
require an extension of such period. Such decision on re-
view shall be written in a manner calculated to be under-
stood by the claimant; shall include specific reasons for
the decision and specific references to the pertinent plan
provisions on which the decision is based; and shall be
final and binding on all affected parties.
9.5 Qualified Domestic Relations Orders.
-----------------------------------
Notwithstanding anything in this Plan to the contrary, a Partici-
pant's Account Balance shall be subject to allocation or distri-
bution in accordance with the terms of a court order determined
by the Administration Committee to be a "qualified domestic rela-
tions order" within the meaning of Section 414(p) of the Code (a
"QDRO"). To the extent provided in a QDRO, distributions shall
be made to an alternate payee whether or not the Participant has
terminated Employment or is eligible for an in-service with-
drawal.
The Administration Committee shall establish such written proce-
dures as it shall deem necessary or proper to determine the qual-
ified status of any domestic relations order under Code Section
414(p) which affects a Participant's interest in the Plan, and to
administer distributions pursuant to any domestic relations order
which the Administration Committee determines to be a QDRO.
9.6 Facility of Payment.
-------------------
If the Administration Committee determines that any Participant
or Beneficiary to whom a benefit is payable under the Plan is a
minor or is incompetent by reason of a mental or physical dis-
ability, then the Administration Committee may direct payment of
the benefit to any other person the Administration Committee
determines to be maintaining or responsible for the maintenance
of such Participant or Beneficiary. The Administration Committee
shall not have any duty to see to the application of any benefit
so paid, and any such payment shall be a complete discharge of
the Plan's obligation therefor.
9.7 Inability to Locate Participants or Beneficiaries.
-------------------------------------------------
In the event that benefits payable under this Plan to a Partici-
pant or Beneficiary cannot be distributed within 5 years of the
date they became payable because the Administration Committee is
unable to locate the whereabouts or determine the identity of
such person, then such benefits shall be forfeited and applied as
set forth in Section 3.5; provided, however, that if the Partici-
pant or Beneficiary (or his legal representative) subsequently
makes a written claim for benefits, such forfeited amount (unad-
justed for gains and losses) shall be restored from amounts for-
feited by Participants and, if necessary, from an additional
Employer contribution.
9.8 Indemnification.
---------------
To the extent permitted by law, the Company agrees to, and shall,
indemnify and save harmless any Employee, officer or director of
the Company or an Affiliate from all claims for liability, loss,
damage or expense (including payment of reasonable expenses in
connection with defense against any such claim) which result from
any exercise or failure to exercise any of the indemnified per-
son's responsibilities with respect to the Plan, other than by
reason of gross negligence, willful misconduct or a breach of
good faith.
<PAGE>
ARTICLE X. PLAN AMENDMENT OR TERMINATION
10.1 Plan Amendment.
--------------
The Company shall have the right to amend the Plan at any time,
effective retroactively or otherwise; provided, however, that no
such amendment shall:
(a) authorize any part of the Trust Fund to be used for, or
diverted to, purposes other than for the exclusive benefit
of Participants or their Beneficiaries;
(b) result in discrimination in favor of Highly Compensated
Employees prohibited by Code Section 401(a)(4);
(c) decrease any Participant's Account Balance or vested per-
centage;
(d) eliminate an optional form of benefit, except as permitted
by the Code; or
(e) directly or indirectly change the vesting schedule of any
Participant who has at least 3 years of service and could
be adversely affected by such change unless such Partici-
pant is permitted to elect to have his vested percentage
determined without regard to such amendment. Such election
shall be permitted during the 60-day period beginning on
the latest of the date the amendment is adopted, the date
the amendment is effective or the date written notice of
the right to make the election is given,
10.2 Plan Termination.
----------------
The Company expects the Plan to be permanent, but reserves the
right to at any time either discontinue contributions to the Plan
or terminate the Plan in whole or in part. Upon a complete or
partial termination of the Plan or a complete discontinuance of
contributions to the Plan, each affected Employee shall become
fully vested in his Matching Contribution Account. In the event
of a complete termination of the Plan without the establishment
or maintenance of a "successor plan," within the meaning of Code
Section 401(k)(10), Account Balances shall be distributed as soon
as practicable after the termination.
<PAGE>
ARTICLE XI. MISCELLANEOUS PROVISIONS
11.1 Benefits Not Assignable.
-----------------------
The Trust Fund shall not in any manner be liable for or subject
to the debts or liabilities of any Participant or Beneficiary,
and no Participant's or Beneficiary's right or interest of any
kind under the Plan shall at any time be transferable or assign-
able or subject in any manner to alienation, encumbrance, gar-
nishment, attachment, execution or levy of any kind, except
pursuant to a QDRO (as defined in Section 9.5), pursuant to a
Plan loan made in accordance with Section 7.5 or as otherwise
required by law.
11.2 Plan Not a Contract of Employment.
---------------------------------
Neither the Plan nor the Trust Fund shall be deemed a contract of
Employment between the Employer and any person. Nothing herein
contained shall be deemed to give any person the right to be
retained in the employ of the Employer or to restrict the right
of the Employer to discharge any person at any time.
11.3 Source of Benefits.
------------------
Benefits under the Plan shall be paid or provided for solely from
the Trust Fund, and neither the Employer, the Administration
Committee nor Trustee shall be liable or responsible for the
adequacy thereof.
11.4 Merger or Transfer of Assets.
----------------------------
(a) Subject to Subsection (b), the Company may, in accordance
with uniform and nondiscriminatory rules, direct the trans-
fer to the trust of another Qualified Plan, or accept a
direct transfer from the trust of another Qualified Plan,
of the account balances of one or more Eligible Employees
or Participants.
(b) The Plan may not be merged or consolidated with, nor may
any assets or liabilities be transferred to, any other
plan, unless each Participant would (if the Plan then ter-
minated) 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 immedi-
ately before the merger, consolidation or transfer (if the
Plan had then terminated).
11.5 Adoption of Plan by Affiliates.
------------------------------
(a) With the consent of the Company and the Trustee, any Affil-
iate may by written resolution of its board of directors
adopt the Plan and Trust Agreement with respect to its
Employees. As long as an Affiliate's designation as an
Employer remains in effect, such Affiliate shall be bound
by, and subject to, all provisions of the Plan and the
Trust Agreement. Each Employer shall be solely responsible
for contributions hereunder with respect to its Employees.
(b) Notwithstanding adoption of the Plan by one or more Affili-
ates, all assets of the Trust Fund shall be available to
pay benefits to all Participants and Beneficiaries, and the
Plan shall be administered as a "single plan" within the
meaning of Code Section 414(1); provided, however, that
nothing contained herein shall be construed to prohibit the
segregation of the Trust Fund for investment purposes or
separate Trust Fund accounting for the allocation of Plan
expenses among Employers as determined by the Administra-
tion Committee.
(c) With the consent of the Company, any Employer may, by
written resolution of its board of directors, terminate its
participation in the Plan. In addition, the Company may
terminate the participation of an Employer at any time and,
unless the Company provides otherwise, the participation of
any Employer which ceases to be an Affiliate shall auto-
matically terminate as of the date it ceases to be an
Affiliate.
(d) The Company shall have the sole power to amend or terminate
the Plan and Trust Agreement, and to appoint or remove mem-
bers of the Administration Committee and the Trustee, and
the Administration Committee shall have the sole power to
administer the Plan. Any amendment to the Plan or the
Trust Agreement adopted by the Company shall be binding
upon every Employer without further action by such
Employer, except that any amendment relating solely to the
employees of an Employer shall not be effective unless
adopted by written resolution of the board of directors of
such Employer.
11.6 Action by the Company.
---------------------
Any action required to be taken by the Company hereunder shall be
taken by written action of the board of directors of the Company
or any person or persons to whom the board of directors has allo-
cated or delegated in writing the authority to act in its place.
11.7 Governing Law.
-------------
The Plan shall be construed and governed in accordance with the
laws of the State of Pennsylvania, except to the extent preempted
by ERISA.
11.8 Severability.
------------
If any provision of this Plan shall be held illegal or invalid
for any reason, said illegality or invalidity shall not affect
the remaining parts of this Plan, but this Plan shall be
construed and enforced as if said illegal and invalid provisions
had never been included herein.
11.9 Construction.
------------
Wherever appropriate herein, words used in the singular shall be
considered to include the plural and the plural to include the
singular, and the masculine gender shall be deemed to include the
feminine gender. The words "herein" and "hereunder" refer to the
entire Plan and not to any particular Article or Section.
Article and Section headings are included in the Plan for
convenience of reference only and are not intended to add to, or
subtract from, the terms of the Plan.
11.10 Conditional Adoption.
--------------------
The Plan has been adopted subject to receipt of a favorable
determination from the Internal Revenue Service that the Plan
qualifies under Code Section 401(a) and 401(k) and the Trust Fund
is exempt from taxation under Code Section 501(a). If, upon
timely application to the Internal Revenue Service, the Internal
Revenue Service determines that the Plan does not initially
qualify under Code Section 401(a) or the Trust is not exempt
under Code Section 501(a), all Plan assets then held by the
Trustee shall be returned to the Company within one year of such
determination. Upon such payment, the Plan will be considered to
be rescinded and of no force or effect.
<PAGE>
ARTICLE XII. TOP HEAVY PROVISIONS
The provisions of this Article XII shall be effective for any
Plan Year in which the Plan is Top Heavy and shall supersede any
conflicting provisions of the Plan.
12.1 Definitions.
-----------
Wherever used in this Article XII, unless the context
otherwise indicates, the following terms shall have the
respective meanings set forth below:
(a) Determination Date means (1) with respect to the first Plan
------------------
Year, the last day of such year, and (2) with respect to
any subsequent Plan Year, the last day of the preceding
Plan Year.
(b) Determination Period means the 5-year period ending on the
--------------------
Determination Date.
(c) Key Employee means any Employee or former Employee (and any
------------
Beneficiary of such Employee) who at any time during the
Determination Period was:
(1) an officer of the Employer or an Affiliate having
annual compensation greater than 50% of the dollar
limitation under Code Section 415(b)(1)(A) (provided
that no more than 50 Employees or, if less, the
greater of 3 Employees or 10% of all Employees shall
be treated as officers for this purpose);
(2) one of the 10 Employees owning (or considered under
Section 318 as owning) the largest interests in the
Employer or an Affiliate (which is at least .5%) and
having annual compensation in excess of the dollar
limitation under Code Section 415(c)(1)(A);
(3) a 5% owner of the Employer or an Affiliate; or
(4) a 1% owner of the Employer or an Affiliate who has
annual compensation of more than $150,000.
For this purpose, "annual compensation" means Limitation
Compensation plus amounts contributed by the Employer
pursuant to the Employee's salary reduction agreement which
are excludable from gross income under Code Section 125,
402(a)(8), 402(h) or 403(b). The determination of who is a
Key Employee will be made in accordance with Code Section
416(I)(1).
(d) Limitation Compensation shall mean Limitation Compensation
-----------------------
as defined in Section 4.5.
(e) Non-Key Employee means any Employee who is not a Key
----------------
Employee.
(f) Permissive Aggregation Group means the Required Aggregation
----------------------------
Group of plans and one or more other qualified plans of the
Employer or an Affiliate which when considered together
with the Required Aggregation Group would continue to
satisfy the requirements of Code Sections 401(a)(4) and
410.
(g) Relevant Aggregation Group means (1) this Plan, if this
--------------------------
Plan is not part of a Required Aggregation Group or a Per-
missive Aggregation Group designated by the Administration
Committee, or (2) any Required Aggregation Group or any
Permissive Aggregation Group designated by the Administra-
tion Committee which includes this Plan.
(h) Required Aggregation Group means (1) each qualified plan of
--------------------------
the Employer or an Affiliate in which a Key Employee parti-
cipates at any time during the Determination Period
(including a terminated plan), and (2) each other qualified
plan of the Employer or an Affiliate which enables a plan
described in (1) to meet the requirements of Code Section
401(a)(4) or 410.
(i) Top Heavy means that, as of a Determination Date for a Plan
---------
Year, the Top Heavy Ratio for the Relevant Aggregation
Group exceeds 60%.
(j) Top Heavy Ratio means the ratio, determined as of a Deter-
---------------
mination Date, of (1) the sum of account balances and, if
applicable, the present value of accrued benefits of Key
Employees (both determined as of the Valuation Date) under
all plans in the Relevant Aggregation Group, to (2) the sum
of account balances and, if applicable, the present value
of accrued benefits of all Employees (both determined as of
the Valuation Date) under all plans in the Relevant Aggre-
gation Group. The account balances and accrued benefits of
Non-Key Employees who were Key Employees and former
Employees who have not performed services for the Employer
or any Affiliate during the Determination Period shall not
be taken into account. The calculation of the Top Heavy
Ratio, including the extent to which distributions and
rollovers are taken into account shall be made in
accordance with Code Section 416(g). The present value of
accrued benefits under any defined benefit plan in the
Relevant Aggregation Group shall be determined in
accordance with the actuarial assumptions specified in the
defined benefit plan.
(k) Valuation Date means (1) for purposes of valuing account
--------------
balances, the most recent Valuation Date occurring during
the Plan Year including the Determination Date and (2) for
purposes of determining the present value of accrued bene-
fits, the valuation date for computing Plan costs for mini-
mum funding requirements, whether or not a valuation is
performed for such year.
12.2 Minimum Allocation.
------------------
(a) Except as provided in Subsections (b) and (c) below, for
any Plan Year in which this Plan is Top Heavy, each Eligi-
ble Participant who is employed on the last day of such
Plan Year and who is a Non-Key Employee shall receive an
allocation of Employer contributions and forfeitures in an
amount equal to the following percentage of such Partici-
pant's Limitation Compensation for that year: the lesser of
(1) 3% or (2), if neither the Plan is not part of a Re-
quired Aggregation Group which includes a defined benefit
plan, the highest percentage of Limitation Compensation at
which contributions are made (or required to be made) and
forfeitures allocated for such Plan Year on behalf of a Key
Employee in the Relevant Aggregation Group. For purposes
of determining whether a Non-Key Employee has received an
allocation of at least 3% of Limitation Compensation,
elective deferrals and matching contributions shall not be
taken into account.
(b) The minimum allocation shall be made even if under other
Plan provisions the Participant would not otherwise be
entitled to receive an allocation, or would have received a
lesser allocation for the year, because the Participant (1)
was not credited with a specified number of hours of ser-
vice, (2) did not make elective deferrals or other manda-
tory employee contributions, or (3) had compensation less
than a stated amount.
(c) The minimum allocation required under Section 12.2(a) above
shall not apply (1) to the extent provided to a Participant
under another defined contribution plan of the Employer or
an Affiliate, or (2) if the Participant receives a top
heavy minimum accrual for such year under a defined benefit
plan maintained by the Employer or an Affiliate.
12.3 Coordination with Code Section 415 Limits.
-----------------------------------------
(a) Subject to (b) below, for any Plan Year in which the Plan
is Top Heavy, the defined benefit plan fraction and the
defined contribution plan fraction under Code Section
415(e) shall be determined by substituting "1.00" for
"1.25" in the denominator of each of those fractions
(provided that such substitution shall not reduce any
benefit accrued prior to the first day of the Plan Year in
which the Plan becomes Top Heavy), unless
(1) the Top Heavy Ratio for the Relevant Aggregation Group
does not exceed 90%; and
(2) the Employer or any Affiliate provides a minimum bene-
fit under a defined benefit plan or a defined contri-
bution plan which satisfies Code Section 416(h)(2).
(b) This Section 12.3 shall not apply to a Participant so long
as there are no employer contributions or forfeitures
allocated to such individual and no defined benefit
accruals for such individual under any qualified plan of
the Employer or an Affiliate.
12.4 Limitations.
-----------
(a) The provisions of Sections 12.2 and 12.3 shall not apply
with respect to any employee included in a unit of
employees covered by a collective bargaining agreement
unless the application of such Sections has been agreed
upon with such unit's collective bargaining representative.
(b) In the event of a determination by statute, court decision
(acquiesced in by the Internal Revenue Service) or ruling
by the Internal Revenue Service that all or any portion of
this Article XII is not necessary to qualify this Plan
under the Code, then this Article XII, to the extent so
determined, shall automatically become inoperative and of
no effect.
(c) Nothing in this Article XII shall be construed as limiting
the Company's right to terminate the Plan.
IN WITNESS WHEREOF, Southern Union Company has caused this
amended and restated Plan to be executed this 4th day of November,
1999.
Southern Union Company
By: NANCY CAPEZZUTI
-----------------
Nancy Capezzuti
<PAGE>
Appendix A
Employees of Pennsylvania-American Water Company
------------------------------------------------
This Appendix A applies to any Participant who transferred from
employment with Pennsylvania Gas and Water Company ("PG&W") to
employment with Pennsylvania-American Water Company
("Pennsylvania American") in connection with the sale of PG&W's
Water Business to Pennsylvania American on February 16, 1996 and
who elected not to have the portion of his Account Balance
invested in Company Stock transferred to the Savings Plan for
Employees of American Water Works Company, Inc. ("Pennsylvania-
American Participant").
Notwithstanding anything in this Plan to the contrary:
1. The Account Balance of any Pennsylvania-American Participant
shall be 100% fully vested at all times.
2. The Account Balance of any Pennsylvania-American Participant
shall be invested in the same manner as are PEI Matching
Contributions in accordance with Section 6.3(b).
3. Distribution shall be permitted from the Account Balance of a
Pennsylvania-American Participant only (i) upon termination
of employment with Pennsylvania American or (ii) from the
Participant's Prior Plan Account in accordance with the rules
established by the Administration Committee; provided that
any such distribution must be a complete distribution of the
Participant's Account Balance in the case of a distribution
under (i) or a complete distribution of the Participant's
Prior Plan Account in the case of a distribution under (ii).
<PAGE>
EXHIBIT 23-A
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this
Registration Statement on Form S-8 of our report dated August 12,
1999, except for Note XVI as to which the date is September 3,
1999, relating to the consolidated financial statements, which
appears in Southern Union Company's 1999 Annual Report to
Shareholders, which is incorporated by reference in its Annual
Report on Form 10-K for the year ended June 30, 1999.
PRICEWATERHOUSECOOPERS LLP
--------------------------
PricewaterhouseCoopers LLP
Austin, Texas
November 4, 1999
<PAGE>
EXHIBIT 23-B
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this
Registration Statement on Form S-8 of our report dated
February 17, 1999, relating to the consolidated financial
statements and financial statement schedules, which appears in
Pennsylvania Enterprises, Inc.'s Annual Report on Form 10-K for
the year ended December 31, 1998.
PRICEWATERHOUSECOOPERS LLP
--------------------------
PricewaterhouseCoopers LLP
Philadelphia, Pennsylvania
November 4, 1999
<PAGE>
EXHIBIT 23-C
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation by reference in this Registration Statement of our
report dated February 19, 1997, included in Pennsylvania
Enterprises, Inc.'s Form 10-K for the year ended December 31,
1998, and to all references to our Firm included in this
Registration Statement. It should be noted that we have not
audited any financial statements of the company subsequent to
December 31, 1996, or performed any audit procedures subsequent
to the date of our report.
ARTHUR ANDERSEN LLP
-------------------
Arthur Andersen LLP
New York, New York
November 4, 1999
<PAGE>
EXHIBIT 24
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS that each person whose
signature appears below constitutes and appoints Peter H. Kelley,
Ronald J. Endres, Dennis K. Morgan and David J. Kvapil, acting
individually or together, as such person's true and lawful
attorney(s)-in-fact and agent(s), with full power of substitution
and revocation, to act in any capacity for such person and in
such person's name, place and stead in executing the Registration
Statement on Form S-8 and any amendments thereto, and filing said
Registration Statement, together with all exhibits thereto and
any other documents connected therewith, with the Securities and
Exchange Commission for the purpose of registering shares of
Southern Union common stock in connection with the Southern Union
Company Pennsylvania Division Employees' Savings Plan.
Dated: October 29, 1999
JOHN E. BRENNAN GEORGE L. LINDEMANN
- --------------- -------------------
John E. Brennan George L. Lindemann
FRANK W. DENIUS ROGER J. PEARSON
- --------------- ----------------
Frank W. Denius Roger J. Pearson
AARON I. FLEISCHMAN GEORGE ROUNTREE, III
- ------------------- --------------------
Aaron I. Fleischman George Rountree, III
PETER H. KELLEY DAN K. WASSONG
- --------------- --------------
Peter H. Kelley Dan K. Wassong
ADAM M. LINDEMANN KURT A. GITTER, M.D.
- ----------------- --------------------
Adam M. Lindemann Kurt A. Gitter
