EXHIBIT 4
VALLEY RESOURCES, INC.
401(k) EMPLOYEE STOCK OWNERSHIP PLAN
Effective January 1, 1997
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VALLEY RESOURCES, INC.
401 (k) EMPLOYEE STOCK OWNERSHIP PLAN
Table of Contents
Page
Section 1
Name
Section 1 Name.......................................... 1
Section 2
Definitions
Section 2.1 Definitions................................... 1
Section 3
Participation
Section 3.1 Plan Eligibility.............................. 6
Section 3.2 Excluded Employees............................ 6
Section 3.3 Cessation of Participation.................... 6
Section 4
Contributions
Section 4.1 Compensation Deferral Contributions........... 7
Section 4.2 Employer Matching Contributions............... 7
Section 4.3 Discretionary Contributions................... 7
Section 4.4 Source of Employer Contributions.............. 8
Section 4.5 Investment of Contributions................... 8
Section 4.6 Recovery of Contributions..................... 8
Section 4.7 Other Provisions Relating to Compensation
Deferral Contributions........................ 9
Section 4.8 Nondiscrimination Test of Section 401(k)
of the Code................................. 10
Section 4.9 Nondiscrimination Test of Section 401(m)
of the Code................................. 15
Section 4.10 Allocation to Accounts........................ 17
Section 4.11 Dividends on Employer Securities............ 18
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Section 5
Accounts and Valuation of Funds
Section 5.1 Participant's Total Account.................... 18
Section 5.2 Establishment of Investment Accounts........... 19
Section 5.3 Investment Elections........................... 19
Section 5.4 Procedure as of Each Valuation Date............ 20
Section 5.5 Limitations on Annual Additions................ 20
Section 5.6 Section 415(e) Limitation...................... 22
Section 6
Vesting
Section 6.1 Vesting........................................ 22
Section 6.2 Service for Vesting............................ 23
Section 6.3 Forfeitures.................................... 23
Section 6.4 Full Vesting Upon Retirement, Disability or Death 24
Section 6.5 Amendment of Vesting Schedule.................... 24
Section 6.6 Failure to Locate Participant.................... 24
Section 7
Retirement
Section 8
Termination of Employment
Section 8.1 Deemed Distribution.............................. 25
Section 8.2 Voluntary Distribution........................... 25
Section 9
Payment of Benefits
Section 9.1 Manner of Payment................................ 25
Section 9.2 Minimum Distribution Requirements................ 26
Section 9.3 Distribution Upon Death.......................... 28
Section 9.4 Diversification Rights........................... 28
Section 9.5 Rollovers........................................ 29
Section 10
Withdrawals and Loans
Section 10.1 Withdrawals After Age 59-1/2..................... 30
Section 10.2 Hardship Withdrawals During Employment........... 31
Section 10.3 Withdrawal of Rollover........................... 32
Section 10.4 Loans............................................ 32
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Section 11
The Trust Fund
Section 11.1 Trust Agreement.................................. 34
Section 11.2 Appointment of Independent Accountants........... 34
Section 12
Administration of the Plan
Section 12.1 The Plan Administrator........................... 34
Section 12.2 Resignation or Removal........................... 34
Section 12.3 Meetings......................................... 35
Section 12.4 Uniform Rules of Administration.................. 35
Section 12.5 Proof of Age..................................... 35
Section 12.6 Records and Official Communications.............. 35
Section 12.7 Directions to Trustee............................ 35
Section 12.8 Written Authorization............................ 35
Section 12.9 Expenses......................................... 36
Section 12.10 Indemnification of Plan Administrator and
Committee Members.............................. 36
Section 13
Claims Procedure
Section 13.1 Claim for Benefit................................ 36
Section 13.2 Review of Denial of Claim........................ 37
Section 13.3 Decision by Board of Directors................... 37
Section 14
Miscellaneous
Section 14.1 Non-Alienation of Benefits....................... 37
Section 14.2 Payment Upon Final Determination of Qualified
Domestic Relations Order....................... 38
Section 14.3 Risk to Participants and Source of Payments...... 38
Section 14.4 Rights of Participants........................... 38
Section 14.5 Statement of Accounts............................ 38
Section 14.6 Designation of Beneficiary....................... 39
Section 14.7 Payment to Incompetents.......................... 39
Section 14.8 Plan Administrator Authority to Determine Payee.. 39
Section 14.9 Severability..................................... 40
Section 14.10 Application of Plan Provisions................... 40
Section 14.11 Voting of Company Common Stock................... 40
Section 14.12 Tender or Exchange Offers........................ 40
Section 14.13 Employer Securities Acquisition Loans............ 41
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Section 15
Amendment, Termination or Merger of the Plan
Section 15.1 Right to Amend................................... 42
Section 15.2 Right to Terminate............................... 43
Section 15.3 Procedure Upon Termination....................... 43
Section 15.4 Merger of Plans.................................. 43
Section 16
Top Heavy Provisions
Section 16.1 Top Heavy Provisions............................. 44
Section 16.2 Minimum Contribution............................. 45
Section 16.3 Plan Year in Which Plan is Top Heavy............. 46
Section 16.4 Plan Year in Which Plan is Super Top Heavy....... 46
Section 16.5 Vesting Schedule................................. 46
Section 16.6 Plan Year in Which Plan Ceases to be Top Heavy... 47
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VALLEY RESOURCES, INC.
401(k) EMPLOYEE STOCK OWNERSHIP PLAN
WHEREAS, effective January 1, 1976, Valley Gas Company, a subsidiary of
Valley Resources, Inc. ("Valley"), adopted the Valley Gas Company Employee Stock
Ownership Plan (the "Valley Gas ESOP") to provide retirement benefits and
ownership interests in Valley Gas Company for certain of its employees, which
plan was subsequently amended and restated effective September 1, 1984 and
September 1, 1989;
WHEREAS, effective January 1, 1985, Valley Gas Company adopted the
Valley Gas Company Employees Savings Plan (the "Valley Gas Savings Plan") to
provide a deferred compensation plan for certain of its employees, which plan
was subsequently amended and restated effective January 1, 1989;
WHEREAS, effective April 1, 1987, Valley Gas Company adopted the Valley
Gas Company Union Employees Savings Plan (the "Valley Gas Union Plan") to
provide a deferred compensation plan for certain of its employees covered by a
collective bargaining agreement, which plan was subsequently amended and
restated effective January 1, 1989;
WHEREAS, Valley wishes to merge the Valley Gas Union Plan and the
Valley Gas Savings Plan into the Valley Gas ESOP to form the Valley Resources,
Inc. 401(k) Employee Stock Ownership Plan (the "Plan");
WHEREAS, effective January 1, 1997 and subject to its acceptance of
fiduciary status, Valley appoints NYL Trust Company as trustee of the trust
established under the Plan;
NOW, THEREFORE, in consideration of the premises and of other good and
valuable consideration, the receipt of which is hereby acknowledged, Valley
adopts the Plan to read as follows:
SECTION 1
NAME
This plan shall be known as the Valley Resources, Inc. 401(k) Employee
Stock Ownership Plan and is referred to herein as the "Plan".
SECTION 2
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DEFINITIONS
2.1 "Affiliated Company" means any corporation which is a member of a controlled
group of corporations (as defined in Section 414(b) of the Code) which includes
the Company; any trade or business (whether or not incorporated) which is under
common control (as defined in Section 414(c) of the Code) with the Company; any
organization (whether or not incorporated) which is a member of an affiliated
service group (as defined in Section 414(m) of the Code) which includes the
Company; and any other entity required to be aggregated with the Company
pursuant to regulations under Section 414(o) of the Code.
2.2 "Break in Service" means one or more consecutive calendar years during which
the Participant does not complete more than five hundred (500) Hours of Service
with the Employer. A "Break in Service" shall not include any calendar year
during which the Employer was on lay-off or Leave of Absence, provided that the
Employee returns to employment upon termination of the lay-off or Leave of
Absence. Solely for purposes of determining whether a Break in Service has
occurred, an Employee who incurs an absence from work by reason of the (i)
pregnancy of the Employee, (ii) birth of a child of the Employee, (iii)
placement of a child with the Employee in connection with the adoption of such
child by the Employee, or (iv) caring for the child for a period beginning
immediately following such birth or placement, shall receive credit for the
number of hours the Employee would have received but for the absence as
described above up to five hundred one (501) Hours of Service during the Plan
Year in which the Employee's absence from work commenced if required to prevent
a Break in Service in that period, or, in all other cases, in the immediately
following Plan Year.
2.3 "Code" means the Internal Revenue Code of 1986, as heretofore and hereafter
amended, or any subsequent income tax law of the United States; references to
specific Code sections shall be deemed to include all subsequent amendments of
those sections, or the corresponding provisions of any subsequent income tax
law.
2.4 "Company" means Valley Resources, Inc.
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2.5 "Compensation" means, except as otherwise provided, total compensation paid
by the Employer to an Employee during a Plan Year which is reported as wages to
the Internal Revenue Service for federal income tax purposes, including pre-tax
contributions to a plan maintained by the Company or any Affiliated Company
pursuant to Code Sections 125, 402(e)(3) or 402(h).
(i) No more than One Hundred Thousand Dollars ($100,000.00) of
a Participant's Compensation shall be taken into account for
any Plan Year for allocations pursuant to ss.4.10.
(ii) The annual compensation of each Participant taken into
account under the Plan for any year shall not exceed the Code
Section 401(a)(17) limit as adjusted. Compensation shall not
include any amount in excess of One Hundred Fifty Thousand
Dollars ($150,000), as adjusted by the Commissioner for
increases in the cost of living in accordance with Section
401(a)(17)(B) of the Code. In determining the compensation of
a Participant for purposes of this limitation, the rules of
Section 414(q)(6) of the Code, which aggregate the
compensation of family members of certain Highly Compensated
Employees, shall apply, except in applying such rules the term
"family" shall include only the spouse of the Participant and
any lineal descendants of the Participant who have not
attained age nineteen (19) before the close of the year. If,
as a result of the application of such rules the limit is
exceeded, then the limit shall be prorated among the affected
individuals in proportion to each such individual's
compensation as determined under this Section prior to the
application of this limitation.
(iii) If an Employee initially becomes a Participant in the
Plan (or subsequently resumes participation in the Plan after
termination of his employment) other than on the first day of
any Plan Year, Compensation paid prior to the date on which
his participation becomes effective shall be disregarded.
2.6 "Compensation Deferral Contribution" means an Employer contribution to the
Plan pursuant to a Participant's election described in Section 4.1.
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2.7 "Compensation Deferral Limit" for any Plan Year shall mean the maximum
percentage of a Participant's Compensation which may be contributed to the Plan
pursuant to a salary reduction agreement under Section 401(k) of the Code;
provided, however, that contributions made under Section 4.1 in any calendar
year shall not exceed Nine Thousand Five Hundred Dollars ($9,500), or such
greater amount as is prescribed by the Secretary of the Treasury to reflect
increases in the cost of living, in accordance with Section 402(g)(5) of the
Code, in any calendar year. The Company shall establish the Compensation
Deferral Limit for each Plan Year for the purpose of meeting the
nondiscrimination tests of Sections 401(k) and (m) of the Internal Revenue Code
and shall apply the limit to such Employees as necessary to assure compliance
with such tests.
2.8 "Disability" means total and permanent disability which qualifies a
Participant for benefits under an Employer-sponsored long-term disability
program or, for Participants not covered by such a program, which would qualify
him for long-term disability benefits if he was covered. The Plan Administrator
shall, acting upon the basis of the diagnosis of a competent physician or
physicians, make a final determination as to the Participant's disability using
the same terms and conditions as would be applied under an Employer-sponsored
long-term disability program, including waiting periods.
2.9 "Effective Date" means January 1, 1997.
2.10 "Employee" means any person who on or after the Effective Date is
employed by an Employer.
2.11 "Employee Stock Fund" means an investment fund consisting primarily of
Employer Securities purchased with Compensation Deferral Contributions and
Rollover Contributions, which may include cash and cash equivalents for
liquidity purposes.
2.12 "Employer" means the Company and any Affiliated Company which, with the
consent of the Company, adopts the Plan after this document is executed, and any
successor or successors of any of them if such successor is an Affiliated
Company.
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2.13 "Employer Securities" means the common stock of the Company, as defined
in Section 409(l)(4) of the Code.
2.14 "Employer Stock Fund" means an investment fund consisting primarily of
Employer Securities purchased with Employer Matching Contributions and
Discretionary Contributions.
2.15 "Hour of Service" means each hour for which an Employee is paid or entitled
to payment by an Employer for the performance of duties and for reasons other
than the performance of duties (irrespective of whether the employment
relationship has terminated), excluding however, hours for which the Employee is
directly or indirectly paid or entitled to payment for the purpose of complying
with applicable workers' compensation, unemployment compensation or disability
insurance laws. In no event shall an Employee be credited with more than five
hundred one (501) Hours of Service for any period in which he is paid or
entitled to payment solely for reasons other than the performance of duties.
Hours of Service shall include each hour for which back pay, irrespective of
mitigation of damages, is either awarded or agreed to by an Employer, unless the
hour for which back pay has been awarded or agreed to has already been credited
to the Employee as an Hour of Service. Hours of Service shall be credited for
any period during which the Employee is on military duty in the Armed Forces of
the United States (provided he was employed by an Employer immediately prior to
entering the military service and he returns to work within the limits and under
the conditions prescribed by law) based on a forty (40) hour week or pro rata
portion thereof. Employees paid on other than an hourly basis shall be credited
with forty-five (45) hours per week or a pro rata portion thereof during each
period for which they are paid. Hours of Service shall be credited to the
Employee in the Plan Year in which the Hour of Service for which the Employee is
compensated occurs; provided, however, that in the event that an Employee
receives Compensation for an Hour of Service in a Plan Year in which such Hour
of Service occurred, the Hour of Service may be credited, on a consistent basis
for similarly situated Employees, to the Employee in the Plan Year in which such
Compensation was paid, except if the Hour of Service occurred within thirty-one
(31) days of the end of the Plan Year in which the Hour of Service is credited.
Hours of Service at premium rates shall be counted as straight time hours. No
Hour of Service shall be credited more than once under the application of the
foregoing rules. Hours of Service shall be computed and credited in accordance
with paragraphs (b) and (c) of Section 2530.200b-2 of the Department of Labor
Regulations which are incorporated herein by reference.
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2.16 "Leave of Absence" means (a) any absence from work of one (1) year or less
authorized by the Employer in a fair and nondiscriminatory manner in accordance
with its standard personnel practices, provided the Employee returns to work
with the Employer within the period specified by the Employer in authorizing the
leave of absence and (b) any absence from work for service in the Armed Forces
of the United States, provided the Employee returns to work with the Employer
within the period during which his reemployment rights are protected by law.
2.17 "Limitation Year" means the calendar year.
2.18 "Normal Retirement Age" means a Participant's sixty-second (62nd)
birthday.
2.19 "Participant" means any Employee who participates in the Plan as provided
in Section 3, and shall include any former Employee or the beneficiary of a
deceased Participant as long as the former Employee or beneficiary has a Total
Account.
2.20 "Plan Administrator" means the Company and shall include any committee or
committees appointed pursuant to Section 12 to administer the Plan.
2.21 "Plan Year" means the calendar year.
2.22 "Predecessor Plan" means any qualified deferred compensation plan described
in Exhibit A hereto, as amended from time to time, which has been merged with
and has had its assets and liabilities transferred into the Plan.
2.23 "Total Account" or "Account" means the total amount held under the
Plan for a Participant.
2.24 "Trust Agreement" means the trust agreement between the Company and NYL
Trust Company) as provided in Section 11, as amended from time to time.
2.25 "Trust Fund" or "Fund" means the fund established under the terms of
the Trust Agreement with the Trustee.
2.26 "Trustee" means NYL Trust Company acting as such under a Trust Agreement,
and any successor Trustee under the Trust Agreement.
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2.27 "Valuation Date" means each business day.
2.28 "Year of Service" means a twelve (12) month period in which the Employee
complete one thousand (1,000) Hours of Service with an Employer. The
determination of a Year of Service for eligibility to participate in the Plan
shall be first made during the twelve (12) month period commencing on the date
the Employee begins employment with the Employer ("initial employment year"). If
an Employee fails to complete one thousand (1,000) Hours of Service during such
initial employment year, the determination of a Year of Service for eligibility
to participate shall thereafter be made during the Plan Year, commencing with
the Plan Year which includes the last day of such initial employment year.
2.29 As used herein, the masculine pronoun shall include the feminine gender,
and the singular shall include the plural, and the plural the singular, unless
the context indicates a different meaning.
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SECTION 3
PARTICIPATION
3.1 Plan Eligibility
(a) Each Employee who was eligible to participate in a Predecessor Plan
shall be immediately eligible to participate in the Plan as of the Effective
Date.
(b) Except as otherwise provided, each other Employee shall be eligible
to participate in the Plan upon attainment of age twenty-one (21) and completion
of one Year of Service. Subject to Section 3.2, an Employee who meets the
aforementioned eligibility requirements may become a Participant on the January
1, April 1, July 1 or October 1 coincident with or next following his
fulfillment of the eligibility requirements.
(c) Notwithstanding anything contained herein to the contrary, any
Employee who is not otherwise eligible to participate in the Plan and who elects
to have distributions from retirement plans maintained by other employers and
qualified under Section 401 of the Code rolled over into this Plan shall be
considered a Participant for purposes of such rolled over amounts only until he
meets the eligibility requirements specified in subsection (b) above.
3.2 Excluded Employees
A leased employee shall not be eligible to participate in the Plan. If
a leased employee becomes an Employee, for purposes of the Plan's participation
and vesting requirements, service as a leased employee shall be treated as
service as an Employee of the Employer. The preceding sentence shall not apply
to any leased employee if (a) such employee is covered by a money purchase
pension plan providing: (i) a non-integrated employer contribution rate of at
least ten percent (10%) of compensation, as defined in Section 415(c)(3) of the
Code, but including amounts contributed pursuant to a salary reduction agreement
which are excludable from the Employee's gross income under Section 125, Section
402(a)(8), Section 402(h) or Section 403(b) of the Code, (ii) immediate
participation, and (iii) full and immediate vesting; and (b) leased employees do
not constitute more than twenty percent (20%) of the Employer's non-highly
compensated workforce. For purposes of this paragraph, the term "leased
employee" means any person (other than an Employee of an Employer or Affiliated
Company) who, pursuant to an agreement between an Employer and any other person
("leasing organization"), has performed services for an Employer (or for an
Employer and related persons determined in accordance with Section 414(n)(6) of
the Code) on a substantially full time basis for a period of at least one (1)
year and such services are of a type historically performed by employees in the
business field of the Employer.
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3.3 Cessation of Participation
An Employee's participation shall cease upon his retirement or earlier
separation from service with the Employer, except to the extent that funds are
held in the Trust for future distribution to him or his beneficiary. A
Participant who retires or terminates employment with the Employer and who is
subsequently reemployed by the Employer may resume active participation on the
first day of the first payroll period in the calendar quarter following his
reemployment.
SECTION 4
CONTRIBUTIONS
4.1 Compensation Deferral Contributions
A Participant may elect to have the Employer make Compensation Deferral
Contributions on his behalf in accordance with procedures established by the
Plan Administrator. Pursuant to such Compensation Deferral election, the
Employer shall make a Compensation Deferral Contribution to the Plan on behalf
of such Participant in an amount equal to the Participant's reduction in
Compensation. The Participant may elect to have his Compensation reduced by an
integral percentage from one percent (1%) to the maximum amount permitted under
the Code, subject to the Compensation Deferral Limit, if applicable. A
Participant's reduction in Compensation must be expressed as a whole percentage.
4.2 Employer Matching Contributions
For each Plan Year, the Employer shall contribute to the Trust Fund an
amount equal to fifty percent (50%) of Compensation Deferral Contributions up to
four percent (4%) of Compensation. The contributions made by the Employer under
this Section shall be known as Employer Matching Contributions and shall be
credited to the Participant's Matching Contribution Account. The Employer shall
make Employer Matching Contributions monthly. If the Plan acquires common stock
of the Company with the proceeds of an Employer Securities Acquisition Loan, the
Employer's obligation to make Matching Contributions may be satisfied by
crediting a Participant's Employer Account with Employer Securities equal in
value to the Employer Matching Contributions.
<PAGE>
4.3 Discretionary Contributions.
(a) The Employer may contribute to the Trust Fund for each respective
Plan Year such amount as its Board of Directors, in its sole discretion, shall
determine by a vote adopted prior to the due date for its federal income tax
return for each fiscal year; provided however, that such contribution for any
year shall not exceed the greater of (i) fifteen percent (15%) of the aggregate
compensation paid or accrued in such year to all Participants, or (ii) the
maximum amount deductible from the Employer's income for such year under Section
404 of the Code; and provided further that although the Employer intends to
contribute regularly to the Plan, it shall not have any obligation to make any
contribution to the Plan with respect to any year for which the Board of
Directors determines that it would not be in the Employer's best interest to
contribute.
(b) The Employer's contribution under this Section for any Plan Year
shall be paid by the Employer to the Trustee within the time permitted for
payment by the Code for a contribution to be deductible for such Plan Year.
(c) Notwithstanding the foregoing provisions of this Section, if the
Plan borrows money to acquire Employer Securities, the Employer shall contribute
cash to the Plan at such times and in such amounts as are necessary to enable
the Plan to meet its obligations under any such loan; provided, however, that if
dividends are paid on the Employer Securities, such dividends shall also be
applied to such payments.
(d) Contributions made to the Plan under this Section shall be in the
form of cash, Employer Securities, or a combination thereof and shall be
allocated as provided in ss.4.10. Contributions made in the form of cash and
allocated to the Participant's Total Account may be applied by the Trustee at
any time and from time to time towards the purchase of Employer Securities which
shall be credited to the Participant's Total Account.
4.4 Source of Employer Contributions
All Employer contributions shall be made in cash, except that Employer
contributions to the Employer Stock Fund may be made in the form of shares of
common stock of the Company.
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4.5 Investment of Contributions
All Compensation Deferral Contributions made on behalf of a Participant
shall be invested by the Trustee in accordance with the Participant's election
under Section 5.3.
4.6 Recovery of Contributions
(a) Except as otherwise provided in this Section, the assets of the
Plan shall never inure to the benefit of an Employer and shall be held for the
exclusive purposes of providing benefits under the Plan and defraying reasonable
expenses of the Plan. However, no provision of this Plan shall prohibit the
return of a contribution to an Employer or a Participant within one year after
payment if such contribution was made by a mistake of fact.
(b) All Employer contributions under the Plan are conditioned on their
deductibility under Section 404 of the Code. To the extent they are disallowed
as a deduction by the Internal Revenue Service, the Employer shall recover the
contribution within one (1) year after the disallowance.
(c) In the case of the return of a contribution which was made as a
result of a mistake of fact, the amount which shall be returned is the excess of
the amount contributed over the amount which would have been contributed had the
mistake of fact not occurred. Further, in the case of the return of a
contribution which was conditioned upon deductibility and in the case of a
contribution made as the result of a mistake of fact, earnings attributable to
the excess contribution may not be returned, but losses attributable thereto
must reduce the amount to be returned. Further, in both such cases, if the
withdrawal of the amount attributable to the mistaken or non-deductible
contribution would cause the balance of the Total Account of any Participant to
be reduced to less than the balance which would have been in the Total Account
had the mistaken amount not been contributed, then the amount to be returned to
the Employer shall be limited so as to avoid such reduction.
4.7 Other Provisions Relating to Compensation Deferral Contributions
(a) A Participant may suspend his Compensation Deferral Contributions
in accordance with procedures established by the Plan Administrator.
(b) A Participant may increase or decrease his rate of Compensation
Deferral Contributions, or have such contributions resumed after a period of
suspension, in accordance with procedures established by the Plan Administrator.
<PAGE>
(c) The amount of Compensation Deferral Contributions required to be
made to the Plan by the Employer on a Participant's behalf shall be paid by the
Employer to the Trust as soon as administratively practical following the end of
the month in which the Participant would have otherwise received the amount
thereof as Compensation.
(d) The Employer may amend or terminate a Participant's Compensation
Deferral election at any time the Employer determines that such action is
necessary (i) to ensure that the annual addition to a Participant's Total
Account for any Plan Year does not exceed the annual addition limitations under
Section 5 hereof, (ii) to limit contributions to the amount which is deductible
for any Plan Year under the Code, or (iii) to ensure that the nondiscrimination
tests of Section 401(k) of the Code are satisfied for any Plan Year.
(e) The term "Excess Deferrals" means those Compensation Deferral
Contributions that are includable in a Participant's gross income under Section
402(g) of the Code to the extent such Participant's Compensation Deferral
Contributions for a taxable year exceed the dollar limitation under such Code
section. Excess Deferrals shall be treated as annual additions under the Plan
unless such amounts are distributed no later than the first April 15 following
the close of the Participant's taxable year. Notwithstanding any other
provisions of the Plan, Excess Deferrals and income or loss allocable thereto
shall be distributed no later than April 15 of each year to Participants who
claim such Excess Deferrals for the preceding calendar year pursuant to the
following procedure:
(i) the Participant's claim shall be in writing, submitted to
the Plan Administrator no later than March 1, and shall specify the
Participant's Excess Deferrals for the preceding calendar year; and
(ii) the claim shall be accompanied by the Participant's
written statement that if such amounts are not distributed, the
Participant's Compensation Deferral Contributions, when added to
amounts deferred under other plans or arrangements described in Section
401(k), 408(d) or 403(b) of the Code, exceed the limit imposed on the
Participant under Section 402(g) of the Code for the year in which such
Excess Deferrals occurred.
The income or loss allocable to Excess Deferrals is the income or loss allocable
to the Participant's Compensation Deferral Contributions (and such amounts
treated as such, if any) for the taxable year multiplied by a fraction, the
numerator of which is such Participant's Excess Deferrals for the year and the
denominator of which is the Participant's Total Account balance attributable to
Compensation Deferral Contributions without regard to any income or loss
occurring during such taxable year.
<PAGE>
A Participant shall be deemed to have notified the Plan Administrator
of the existence of Excess Deferrals with respect to him for any calendar year
to the extent such Participant has Excess Deferrals for such year taking into
account only Compensation Deferral Contributions under the Plan and other plans
of an Employer.
A Participant may receive a corrective distribution of Excess Deferrals
during the calendar year to which they relate under circumstances contemplated
by regulations promulgated under Section 402(g) of the Code.
4.8 Nondiscrimination Test of Section 401(k) of the Code
(a) The Plan shall satisfy the nondiscrimination requirements of
Section 401(k) of the Code, which require Elective Deferrals to the Plan to
satisfy one of the alternative actual deferral percentage ("ADP") tests
described below. For purposes of this Section, an Eligible Employee is any
Employee who is directly or indirectly eligible to make a cash or deferred
election under the Plan for all or a portion of a Plan Year and includes (i) an
Employee who would be a Participant in the Plan but for the failure to make
required contributions, (ii) an Employee whose right to make Compensation
Deferral Contributions has been suspended because of an election (other than
certain one-time elections) not to participate or a hardship distribution, and
(iii) an Employee who is unable to make a Compensation Deferral Contribution
because his Compensation is less than a stated dollar amount. In the case of an
Eligible Employee who makes no Compensation Deferral Contributions, the deferral
ratio that is to be included in determining the ADP is zero (0).
(b) The ADP test is satisfied if the ADP for Highly Compensated
Employees for the Plan Year does not exceed (1) one hundred twenty-five percent
(125%) of the ADP for all other Eligible Employees for the Plan Year or (2) the
lesser of two hundred percent (200%) of the ADP for all other Eligible Employees
or the ADP of all other Eligible Employees plus two (2) percentage points.
(c) The Plan shall take into account the actual deferral ratio ("ADR")
of all Eligible Employees for purposes of the ADP test. The term "ADR" means the
ratio, calculated separately for each Eligible Employee in the highly
compensated group and for all other Eligible Employees, of the amount of
Elective Deferrals made on behalf of each such Employee to such Employee's
Compensation for the Plan Year. The ADP is the average of the ratios (ADR's)
determined in accordance with the preceding sentence for a specified group of
Participants for a Plan Year.
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(d) An Elective Deferral shall be taken into account under the ADP test
for a Plan Year only if:
(i) it relates to Compensation that either would have been
received by the Employee in the Plan Year (but for the deferral
election) or is attributable to services performed by the Employee in
the Plan Year and would have been received by the Employee within two
and one-half (2-1/2) months after the close of the Plan Year (but for
the deferral election); and
(ii) it is allocated to the Employee as of a date within the
Plan Year. For this purpose, an Elective Deferral is considered
allocated as of a date within a Plan Year if the allocation is not
contingent on participation or performance of services after such date
and the Elective Deferral is actually paid to the Trust no later than
twelve (12) months after the Plan Year to which it relates.
(e) For purposes of Section 4.8 and Section 4.9, the following terms
shall have the following meanings:
(i) With respect to each Participant, the term "Elective
Deferrals" shall mean (A) any Compensation Deferral Contributions,
including Excess Contributions, but excluding Compensation Deferral
Contributions that are taken into account in the ACP test (provided the
ADP test is satisfied both with and without the exclusion of these
Compensation Deferral Contributions); and (B) at the election of the
Employer, Qualified Non-Elective Contributions and Qualified Matching
Contributions.
(ii) The term "Matching Contributions" ("MCs") shall mean any
contributions to this or any other defined contribution plan made by
the Employer for the Plan Year and allocated with respect to a
Participant by reason of the Participant's Compensation Deferral
Contributions.
(iii) The term "Qualified Matching Contributions" ("QMCs")
shall mean any MCs which are subject to the distribution restrictions
and nonforfeitability requirements set forth under Section 401(k) of
the Code.
(iv) The term "Qualified Non-Elective Contributions" ("QNCs")
shall mean contributions (other than MCs or QMCs) made by the Employer
and allocated to Participants' Total Accounts that the Participant may
not elect to receive in cash until distributed from the Plan. QNCs
shall be subject to the distribution restrictions and nonforfeitability
requirements set forth under Section 401(k) of the Code.
<PAGE>
(v) The term "Highly Compensated Employee" shall mean any
Employee of an Employer who performs service during the determination
year and who, during the determination year or the look-back year (A)
was at any time a five percent (5%) owner of the Employer, (B) received
compensation from the Employer, including elective or salary reduction
contributions to a tax-sheltered annuity, cash or deferred arrangement
("CODA") or cafeteria plan, in excess of Seventy-Five Thousand Dollars
($75,000), (C) received compensation from the Employer in excess of
Fifty Thousand Dollars ($50,000) and was in the top-paid group of
Employees for such year, or (D) was at any time an officer of the
Employer and received compensation greater than fifty percent (50%) of
the amount in effect under Section 415(b)(1)(A) of the Code for such
year. For purposes of this clause (iii), the determination year is the
Plan Year for which the determination of who is highly compensated is
being made. The look-back year is the twelve (12) month period
immediately preceding the determination year. In the case of the Plan
Year for which the relevant determination is being made, an Employee
not described in either clause (B), (C) or (D) for the preceding Plan
Year shall not be treated as described in either clause (B), (C) or (D)
unless such Employee is a member of the group consisting of the one
hundred (100) Employees paid the greatest compensation during the Plan
Year for which such determination is being made. For purposes of this
clause (iii), all Employers aggregated under Sections 414(b), (c), (m)
or (o) shall be treated as a single Employer.
(1) For purposes of clause (v)(C) above, an Employee is in the
"top-paid group" of Employees for any Plan Year if such
Employee is in the group consisting of the top twenty percent
(20%) of active Employees (excluding Employees who perform no
service during the year) when ranked on the basis of
compensation paid during such Plan Year. The top-paid group
shall exclude (a) Employees with less than six (6) months of
service, (b) part-time Employees (less than seventeen and
one-half (17-1/2) hours per week or less than six (6) months
of service per year), (c) Employees under age twenty-one (21),
and (d) nonresident aliens; provided that such Employees shall
not be excluded for purposes of identifying the particular
Employees in the top-paid group.
(2) For purposes of clause (v)(D) above, no more than fifty
(50) Employees (or, if lesser, the greater of three (3)
Employees or ten percent (10%) of the Employees) shall be
treated as officers; provided that if for any year no officer
of the Employer is described in clause (iii)(D) above, the
highest paid officer for such year shall be treated as
described in such clause.
<PAGE>
(3) A former Employee shall be treated as a Highly Compensated
Employee if such Employee was a Highly Compensated Employee
upon termination of employment with the Employer or at any
time after attaining age fifty-five (55).
(4) For purposes of this clause (v), compensation shall mean
compensation which is actually paid or includable in gross
income during such Plan Year and shall include compensation
otherwise excludable from the Employee's gross income for the
Plan Year under Sections 125, 402(a)(8), or 402(h)(1)(B) of
the Code. The dollar limitations used herein shall be adjusted
annually to reflect cost of living increases.
(5) For purposes of this Section, the "determination year"
shall be the Plan Year for which a determination is being made
as to whether an Employee is a Highly Compensated Employee.
The "look-back year" shall be the twelve (12) month period
immediately preceding the "determination year". However, if
the Employer shall elect, the "look-back year" shall be the
calendar year ending with or within the Plan Year for which
testing for the determination of which Employees are Highly
Compensated Employees is being performed, and the
"determination year" (if applicable) shall be the period of
time, if any, which extends beyond the "look-back year" and
ends on the last day of the Plan Year for which such testing
is being performed (the "lag period"). If the "lag period" is
less than twelve (12) months, the dollar threshold amounts
specified in (b), (c) and (d) above shall be pro-rated based
upon the number of months in the "lag period".
(vi) The term "Non-Highly Compensated Employee" means an
Employee of the Employer who is neither a Highly Compensated Employee
nor a Family Member.
(vii) The term "Family Member" means, with respect to any
Employee, such Employee's spouse and lineal ascendants or descendants
(and their spouses), including those legally adopted.
<PAGE>
(f) In the case of a Highly Compensated Employee who is either a five
percent (5%) owner or one of the ten (10) most Highly Compensated Employees and
is therefore subject to the family aggregation rules of Section 414(q)(6) of the
Code, the ADR for the group of Family Members (which is treated as one (1)
Highly Compensated Employee) is the ADR determined by aggregating the Elective
Deferrals and Compensation of all eligible Family Members. Except to the extent
taken into account in the preceding sentence, the Elective Deferrals and
Compensation of all Family Members are disregarded in determining the ADP for
the groups of Highly Compensated Employees and Non-Highly Compensated Employees.
(g) The term "Excess Contributions" means, with respect to any Plan
Year, the excess of (i) the aggregate amount of contributions actually paid over
to the Trustee on behalf of Highly Compensated Employees which are treated as
Elective Deferrals for such year over (ii) the maximum amount of such
contributions permitted under the limitations of this Section, determined by a
leveling method under which the ADR of the Highly Compensated Employee with the
highest ADR is reduced to the maximum acceptable level until such Highly
Compensated Employee's ADR is equal to the ratio of the Highly Compensated
Employee with the next highest ADR or the nondiscrimination test of Section
401(k) of the Code is met. This process must be repeated until the Plan
satisfies the nondiscrimination test described in this Section.
(h) If reduction of the ADR of the family group whose ADR is determined
under the family aggregation rules above is required, correction of the ADR is
accomplished by reducing the ADR of the family unit in accordance with the
leveling method described in subsection (g) hereof.
(i) If the nondiscrimination test described in this Section is not
satisfied, Excess Contributions attributable to Highly Compensated Employees
during the Plan Year (and income or losses allocable to such contributions),
shall be distributed to the Highly Compensated Employees who have had a
reduction in their Compensation Deferral Contributions no later than the end of
the Plan Year immediately following the Plan Year in which the Excess
Contribution was made by the Employer.
(j) Any distribution of the Excess Contributions for any Plan Year
shall be made to Highly Compensated Employees on the basis of the respective
portions of the Excess Contributions attributable to each such Employee. Failure
to correct Excess Contributions by the close of the Plan Year following the Plan
Year for which they were made shall cause the cash or deferred arrangement (the
"CODA") to fail to satisfy the requirements of Section 401(k)(3) of the Code for
the Plan Year for which the Excess Contributions were made and for all
subsequent years they remain in the Trust. In addition, the Employer shall be
liable for a ten percent (10%) excise tax on the amount of Excess Contributions
unless they are corrected within two and one-half (2-1/2) months after the close
of the Plan Year for which they were made.
<PAGE>
(k) Notwithstanding anything contained herein to the contrary, for
purposes of Section 4.8 and Section 4.9, when two (2) or more plans are treated
as a single plan for purposes of Sections 401(a)(4) or 410(b) of the Code
(except for Section 410(b)(2)(A)(ii) of the Code), all CODAs included in such
plans are treated as a single CODA for purposes of the ADP test as well as for
purposes of Sections 401(a)(4) and 410(b) of the Code.
(l) If a Highly Compensated Employee is eligible under more than one
CODA of the Employer, such Employee's actual deferral percentage is calculated
by treating all the CODAs as one CODA. If a Highly Compensated Employee
participates in two (2) or more CODAs that have different plan years, all CODAs
ending with or within the same calendar year shall be treated as a single
arrangement. Notwithstanding the foregoing, certain plans shall be treated as
separate if mandatorily disaggregated under regulations under Section 401(k) of
the Code.
4.9 Nondiscrimination Test of Section 401(m) of the Code
(a) The Plan shall satisfy the nondiscrimination requirements of
Section 401(m) of the Code, which require Employer Matching Contributions to
satisfy one of the alternative actual contribution percentage ("ACP") tests
described below. For this purpose, an Eligible Employee is any Employee who is
directly or indirectly eligible to receive an allocation of Matching
Contributions and includes (i) an Employee who would be a Participant in the
Plan but for the failure to make required contributions, (ii) an Employee whose
right to receive Matching Contributions has been suspended because of an
election (other than certain one-time elections) not to participate, and (iii)
an Employee who is unable to receive a Matching Contribution because his
Compensation is less than a stated dollar amount. In the case of an Eligible
Employee who receives no Matching Contributions, the contribution ratio that is
to be included in determining the ACP is zero (0).
(b) The ACP test is satisfied if the ACP for Highly Compensated
Employees for the Plan Year does not exceed the greater of (1) one hundred
twenty-five percent (125%) of the ACP for all other Eligible Employees or (2)
the lesser of two hundred percent (200%) of the ACP for all other Eligible
Employees or the ACP for all other Eligible Employees plus two (2) percentage
points (the "alternative limitation").
(c) The Plan shall take into account the actual contribution ratio
("ACR") of all Eligible Employees for purposes of the ACP test. The term "ACR"
means the ratio, calculated separately for each Eligible Employee in the highly
compensated group and for all other Eligible Employees, of the amount of Section
401(m) Contributions made on behalf of each such Employee to such Employee's
Compensation for the Plan Year. The ACP is the average of the ratios (ACR's)
determined in accordance with the preceding sentence for a specified group of
Participants for a Plan Year.
<PAGE>
(d) Except as otherwise provided herein, with respect to each
Participant, the term "Section 401(m) Contributions" shall mean (1) any Matching
Contribution for a Plan Year if it is (A) made on account of an Employee's
Compensation Deferral Contributions for the Plan Year, (B) allocated to the
Employee's Total Account during that year, and (C) paid to the Trust by the end
of the twelfth (12th) month following the close of that year; and (2) at the
election of the Employer, Qualified Non-Elective Contributions and Compensation
Deferral Contributions.
Qualified Matching Contributions which are used to meet the
requirements of Section 401(k)(3)(A) of the Code are not to be taken into
account as Matching Contributions for purposes of the ACP test of Section 401(m)
of the Code.
(e) In the case of a Highly Compensated Employee who is either a five
percent (5%) owner or one of the ten (10) most Highly Compensated Employees and
is therefore subject to the family aggregation rules of Section 414(q)(6) of the
Code, the ACR for the group of Family Members (which is treated as one (1)
Highly Compensated Employee) is determined by aggregating the Section 401(m)
Contributions and Compensation of all eligible Family Members. Except to the
extent taken into account in the preceding sentence, the Section 401(m)
Contributions and Compensation of all Family Members are disregarded in
determining the ACP for the groups of Highly Compensated Employees and
Non-Highly Compensated Employees.
(f) The multiple use of the alternative limitation with respect to any
Highly Compensated Employee is restricted in accordance with Section
401(m)(9)(A) of the Code. Multiple use of the alternative limitation may occur
in the event that one (1) or more Highly Compensated Employees of the Employer
is eligible to participate in both a CODA and in a plan to which employee
contributions or Matching Contributions or both are made; provided that no
multiple use will be deemed to have occurred unless the percentage obtained by
adding the ADP and the ACP of the Highly Compensated Employees exceeds the
"aggregate limit". The aggregate limit is (i) one hundred twenty-five percent
(125%) of the greater of the ADP or the ACP of the Non-Highly Compensated
Eligible Employees, plus (ii) two (2) percentage points plus the lesser of the
ADP or the ACP of all the Non-Highly Compensated Employees (not to exceed two
hundred percent (200%) thereof). Notwithstanding the foregoing, the aggregate
limit may be determined by the formula set forth in the preceding sentence or by
substituting the "lesser" for the "greater" in clause (i) thereof and the
"greater" for the "lesser" in clause (ii) thereof.
<PAGE>
(g) The term "Excess Aggregate Contributions" means, with respect to a
Plan Year, the excess of (i) the aggregate amount of Section 401(m)
Contributions actually paid over to the Trustee on behalf of Highly Compensated
Employees for such year, over (ii) the maximum amount of such contributions
permitted under the limitations of this Section, determined by reducing such
contributions made on behalf of Highly Compensated Employees on the basis of the
respective portions of the Excess Aggregate Contributions attributable to each
such Highly Compensated Employee.
(h) In the event Excess Aggregate Contributions are determined to have
been made to the Plan after application of the nondiscrimination test set forth
in this Section, the amount of the reduction necessary to satisfy the ACP test
shall be forfeited, to the extent forfeitable under the terms of this Plan, no
later than the last day of the Plan Year following the Plan Year for which such
Excess Aggregate Contributions were made. To the extent such Excess Aggregate
Contributions are nonforfeitable, such Excess Aggregate Contributions (and any
income or loss allocable to such contributions) shall be distributed to the
Participant no later than the last day of the next Plan Year following the Plan
Year with respect to which the Excess Aggregate Contributions were made. The
amount of Excess Aggregate Contributions for a Highly Compensated Employee for a
Plan Year is to be determined by reducing the ACR of the Highly Compensated
Employee with the highest amount of excess Matching Contributions to satisfy the
nondiscrimination test pursuant to Section 401(m) of the Code or to cause such
Highly Compensated Employee's ACR to equal the Matching Contributions of the
Highly Compensated Employee with the next highest amount of Matching
Contributions. This process must be repeated until the Plan satisfies the
nondiscrimination test described above. The determination and treatment of the
ACR of any Participant shall satisfy such other requirements as may be
prescribed by the Secretary of the Treasury. Solely for purposes of the
nondiscrimination test described herein, the following provisions shall apply:
(i) In the case of a Highly Compensated Employee who is
eligible to participate in two (2) or more plans maintained by the
Employer or an Affiliated Company to which Matching Contributions or
employee contributions or both are made, all such contributions on
behalf of such Highly Compensated Employee shall be aggregated for
purposes of determining such Employee's ACR.
(ii) In the event that this Plan satisfies the requirements of
Section 410(b) of the Code only if aggregated with one or more other
plans, or if one or more other plans satisfy the requirements of
Section 410(b) of the Code only if aggregated with this Plan, then this
Section shall be applied by determining the ACP of Eligible Employees
as if all such plans were a single plan.
<PAGE>
(i) Notwithstanding any provision contained herein to the contrary, the
method of correcting Excess Aggregate Contributions set forth hereinabove must
meet the nondiscrimination requirements of Section 401(a)(4) of the Code.
(j) If reduction of the ACR of the family group whose ACR is determined
under the family aggregation rules above is required, correction of the ACR is
accomplished by reducing the ACR in accordance with the leveling method
described in subsection (h) of this Section and the Excess Aggregate
Contributions for the family unit are allocated among the Family Members in
proportion to the Contributions of each Family Member that are combined.
4.10 Allocation to Accounts
(a) The Employer's contribution under Section 4.3 for any Plan Year
shall be allocated to the Accounts of Participants (i) who have completed one
thousand (1,000) Hours of Service during the Plan Year or (ii) who have died,
become disabled as defined in Section 2.8 or retired at or after age sixty-two
(62) during such year, in the ratio that the Compensation paid to each
Participant during such year bears to the Total Compensation of all Participants
during such year; provided, however, that the Employer may, in its discretion,
in order for the Plan to satisfy the requirements of Section 410(b)(1)(B) of the
Code for a Plan Year, allocate Employer contributions under Section 4.10 for
such Plan Year to the Accounts of all Participants except those Participants who
have completed not more than five hundred (500) Hours of Service during the Plan
Year and whose employment with the Employer terminated during such Plan Year and
who were not actively employed by the Employer on the last day of such Plan
Year.
(b) Employer Contributions made pursuant to Section 4.3 shall
be allocated as of the last day of the Plan Year.
4.11 Dividends on Employer Securities.
--------------------------------
(a) Dividends on allocated and unallocated shares in the Employer Stock
Fund may be used to make payments on any outstanding Employer Securities
Acquisition Loan to the extent required by the loan documents or as directed by
the Plan Administrator. The Plan Administrator, in its sole discretion, may take
any action or combination of actions described below with respect to the
dividends on Employer Securities which are not used in the manner described in
the preceding sentence:
<PAGE>
(i) Dividends may be retained in the Employer Stock Fund; or
(ii) Dividends may be distributed in cash to Participants, on
a nondiscriminatory basis, if distributed not later than ninety (90)
days after the end of the Plan Year in which the dividends were
received by the Trust Fund.
(b) Any dividends received on unallocated Employer Securities held in a
suspense account pursuant to Section 14.14 or any economic benefits resulting
from the application of such dividends, shall be allocated proportionately to
Participants' Accounts in the same manner as Employer contributions under
Section 4.10.
(c) Any dividends received on Employer Securities that are allocated to
Participants' Accounts, or any economic benefits resulting from the application
of such dividends, shall be allocated in proportion to the balances in the
Participants' Accounts in the Employer Stock Fund. However, if dividends paid on
Employer Securities allocated to a Participant's Account are used to make
payments on an Employer Securities Acquisition Loan, such Participant shall be
credited with a number of shares of Employer Securities released from the loan
suspense account as determined under Section 14.14.
SECTION 5
ACCOUNTS AND VALUATION OF FUNDS
5.1 Participant's Total Account
A separate Account for each Participant shall be established in the
Trust Fund consisting of the following subaccounts:
(i) "Compensation Deferral Contribution Account" -- the
portion of the total Account attributable to Compensation Deferral Contributions
made in accordance with Section 4.1.
(ii) "Matching Contribution Account" -- the portion of the
Total Account attributable to Matching Contributions, if any, made in accordance
with Section 4.2.
(iii) "Employer Contribution Account" -- the portion of the
Total Account attributable to Employer Contributions, if any, made in accordance
with Section 4.3.
<PAGE>
(iv) "Rollover Account" -- the portion of the Total Account
attributable to Rollover Contributions, if any, made in accordance with Section
9.5.
5.2 Establishment of Investment Accounts
Contributions made pursuant to Section 4 shall be remitted by the
Employer to the Trustee for investment in accordance with the terms of the Trust
and this Section. Within each of the subaccounts within a Participant's Total
Account, separate records shall be kept of the portion, if any, invested in each
of the investment funds maintained by the Plan and made available to
Participants for the investment of their Accounts. Nothing shall prohibit the
Trustee from maintaining from time to time reasonable amounts in cash or cash
equivalent in the available investment funds. The Trust Fund shall include an
Employer Stock Fund, an Employee Stock Fund, and such other investment funds as
the Company shall select from time to time. All amounts attributable to Employer
Contributions under Section 4.2 and Section 4.3 shall be invested in the
Employer Stock Fund. Amounts attributable to Compensation Deferral Contributions
and Rollover Contributions shall be invested in accordance with Participant
Elections pursuant to Section 5.3. To the extent Participants elect to have
amounts attributable to Compensation Deferral Contributions and Rollover
Contributions invested in Employer Securities, such contributions shall be
invested in an Employee Stock Fund which shall acquire Employer Securities by
purchases from a public securities market.
5.3 Investment Elections
(a) Each Participant shall exercise exclusive control over the assets
credited to his Compensation Deferral Contribution Account and Rollover
Contribution Account in the Trust Fund. Participant's investment election shall
specify, in one percent (1%) increments from zero percent (0%) to one hundred
percent (100%), the percentage of future contributions to be invested in the
Plan's various investment funds in accordance with procedures established by the
Plan Administrator. The Plan Administrator shall communicate the available
investment options to each Participant and shall advise the Trustee of the
investment instructions communicated from time to time to it by the Participants
pursuant to the provisions hereof.
(b) Notwithstanding anything contained herein to the contrary, a
Participant's Compensation Deferral Contributions may not be invested in the
Employer Stock Fund.
<PAGE>
(c) A Participant shall have the opportunity to change the manner in
which contributions to his Compensation Deferral Contribution Account and
Rollover Account are invested in accordance with procedures established by the
Plan Administrator. The investment election shall specify, in one percent (1%)
increments from zero percent (0%) to one hundred percent (100%), the percentage
of each account invested in the Plan's various funds. A Participant may also
elect to transfer amounts between investment funds. Investment elections made
under this Section shall be done in accordance with procedures established by
the Plan Administrator. Any transfer of assets between the funds which may be
required to achieve the investment mix elected by the Participant shall take
place on the effective date of the change in investment under this Section.
(d) With respect to a Participant's Compensation Deferral Contribution
Account and Rollover Account, it is intended that the protections available
under Section 404(c) of ERISA ("Section 404(c)") shall be afforded to the
fiduciaries of the Plan and the Plan shall be operated and administered in
accordance with Section 2550.404c-1(d) of the regulations issued by the United
States Department of Labor. The provisions of this Section shall be administered
so that Participants have the opportunity to exercise independent control over
the assets in their Accounts (except the Matching Contribution Account and
Employer Contribution Account), including an opportunity to choose from a broad
range of investment alternatives, to deliver investment instruction with
appropriate frequency, to diversify investments, and to obtain sufficient
information to make informed investment decisions, all within the meaning of
section 404(c). The provisions of subsection(d) are intended generally to
relieve the fiduciaries of the Plan from liability for losses resulting from
Participants' investment directions, but in no event shall have application in
determining whether, or to what extent, the Plan (as to any period or
transaction for which it does not comply with Section 404(c)) or fiduciaries
satisfy the fiduciary responsibility or other provisions of Title I of ERISA.
5.4 Procedure as of Each Valuation Date
The Trustee shall value the Trust Fund as its fair market value as of
each December 31, and as of each such date, each Participant's balance in his
various accounts shall be adjusted to reflect additions to and withdrawals from
the accounts and their pro rata share of the earnings and losses of the
investment funds (realized and unrealized) for the period since the immediately
preceding Valuation Date.
<PAGE>
5.5 Limitations on Annual Additions
(a) The "annual addition" to a Participant's Total Account means with
respect to each Limitation Year the sum credited to his Total Account of (i)
Employer contributions, (ii) voluntary after-tax contributions and (iii)
forfeitures. The term "annual additions" also includes amounts allocated to any
individual medical account, as defined in Section 415(l)(2) of the Code, which
is part of a pension or annuity plan maintained by the Employer, and with
respect to any Key Employee, medical benefits allocated to a separate account
under a funded welfare benefit plan, as required by Section 419A(d)(3) of the
Code. The annual addition to a Participant's Total Account shall not exceed in
any Limitation Year the lesser of Thirty Thousand Dollars ($30,000) or
twenty-five percent (25%) of the Participant's Compensation for the Limitation
Year. The maximum amount of Thirty Thousand Dollars ($30,000) shall be increased
as permitted by the Secretary of the Treasury in accordance with Section 415(d)
of the Code, to take into account cost of living increases.
(b) In any Limitation Year in which not more than one-third (1/3) of
Employer Matching Contributions and Employer Contributions which are deductible
under Section 404(a)(9) of the Code are allocated to the accounts of Highly
Compensated Employees during the Plan Year, any such contributions which are
applied by the Trustee to pay interest on an acquisition loan which is charged
to Participants' Accounts and any Employer Securities acquired with such loan
which are allocated as forfeitures shall not be included in computing Annual
Additions.
(c) If an Employee is a Participant in more than one defined
contribution plan maintained by the Employer, the annual addition to his account
under each such plan shall be aggregated and subject to the limitations stated
herein.
(d) If the annual addition for any Participant in a Limitation Year
exceeds the limits stated in this Section, the excess shall be attributed first
to Compensation Deferral Contributions under Section 4.1, then to Employer
Matching Contributions under Section 4.2 and then to Employer Contributions, if
any, under Section 4.9. The excess amounts shall not be deemed annual additions
in the Limitation Year, but shall be treated in accordance with the following:
(i) amounts attributable to Compensation Deferral
Contributions, including earnings on such Contributions, shall be
returned to the Participant; and
<PAGE>
(ii) if the Participant is covered by the Plan at the end of
the Limitation Year, the remaining excess amount will be used to reduce
Employer contributions for such Participant in the next Limitation
Year, and each succeeding Limitation Year if necessary; or
(iii) if the Participant is not covered by the Plan at the end
of the Limitation Year, the remaining excess amount will be held
unallocated in a suspense account. The suspense account will be applied
to reduce future Employer contributions for all remaining Participants
in the next Limitation Year, and each succeeding Limitation Year if
necessary.
During the existence of the suspense account established under clause (ii), such
account will not participate in the allocation of the Trust's investment gains
and losses and all amounts in the suspense account must be allocated to the
Total Accounts of Participants before any contributions which would constitute
annual additions may be made to the Plan for that Limitation Year. Excess
amounts may not be distributed to Participants or former Participants. In the
event of termination of the Plan, the suspense account shall revert to the
Employer to the extent it may not be allocated to any Participant's Total
Account.
(e) For purposes of this Section, "Employer" means an employer that
adopts this Plan, and all members of a controlled group of corporations (as
defined in Section 414(b) of the Code as modified by Section 415(h)), all
commonly controlled trades or businesses (as defined in Section 414(c) as
modified by Section 415(h)) or affiliated service groups (as defined in Section
414(m)) of which the adopting employer is a part, and any other entity required
to be aggregated with the Employer pursuant regulations under Section 414(o) of
the Code.
<PAGE>
5.6 Section 415(e) Limitation
If an Employee is a Participant in both a defined benefit plan and a
defined contribution plan maintained by the Employer, the sum of the defined
benefit plan fraction and the defined contribution plan fraction for any
Limitation Year shall not exceed 1.0. The defined benefit plan fraction for any
Limitation Year is a fraction, the numerator of which is the sum of the
Participant's projected annual benefits under all the defined benefit plans
(whether or not terminated) maintained by the Employer (determined as of the
close of the Limitation Year), and the denominator of which is the lesser of the
following amounts: (i) 1.25 times the dollar limitation on benefits in effect
under Section 415(b)(1)(A) of the Code for such year, or (ii) 1.4 times one
hundred percent (100%) of the Participant's average annual compensation for his
highest three (3) consecutive years of participation in the defined benefit
plan. The defined contribution plan fraction for any Limitation Year is a
fraction, the numerator of which is the sum of the annual additions to the
Participant's account under all the defined contribution plans (whether or not
terminated) maintained by the Employer through the end of the Limitation Year,
and the denominator of which is the sum of the lesser of the following amounts
for the current Limitation Year and for each prior Limitation Year in the
service of the Employer: (i) 1.25 times the dollar limitation on contributions
in effect under Section 415(c)(1)(A) of the Code for the particular year, or
(ii) 1.4 times twenty-five percent (25%) of the Participant's compensation for
such year. Any adjustment in benefits necessary to meet the limitations of this
Section shall be made in the defined benefit plan.
SECTION 6
VESTING
6.1 Vesting
(a) Each Participant shall be fully vested in his Compensation Deferral
Contribution Account and Rollover Account and any investment growth thereon at
all times. Each Participant who is a participant in the Valley Gas Employee
Stock Ownership Plan on December 31, 1996 shall be fully vested in the amount in
his Employer Contribution Account.
<PAGE>
(b) Notwithstanding any provision to the contrary, a Participant shall
have a nonforfeitable and vested right to a percentage of the value of his
Matching Contribution Account and Employer Contribution Account (collectively
the "Employer Accounts") on and after the Effective Date determined in
accordance with the following schedule:
Year of Service Vested Percentage
Less than 1 year 0%
1 year but less than 2 10%
2 years but less than 3 20%
3 years but less than 4 30%
4 years but less than 5 40%
5 years but less than 6 60%
6 years but less than 7 80%
7 years or more 100%
6.2 Service for Vesting
(a) For vesting purposes, a Year of Service shall be determined in
accordance with Section 2.27 and shall be measured within a Plan Year. Subject
to the break in service provisions hereinafter described, all Years of Service
with the Employer, except for Years of Service before the Employee reached age
eighteen (18), shall be counted for purposes of this section.
(b) If a Participant who ceases to be employed by the Employer incurs
five (5) or more consecutive Breaks in Service and is later reemployed by the
Employer, Years of Service completed after his reemployment shall not be taken
into account for purposes of reinstating the non-vested portion of his Employer
Accounts previously forfeited in accordance with Section 6.3. However, except as
provided by law, Years of Service completed before a period of one (1) or more
Breaks in Service shall be restored upon his reemployment and included in
determining the nonforfeitable percentage of his Employer Accounts allocated
after his reemployment. If a Participant has no vested interest in the value of
his Employer Accounts when his employment terminates and he incurs five (5) or
more consecutive Breaks in Service, upon his reemployment by the Employer his
prior service will be disregarded for vesting purposes. Separate accounting will
be maintained for a Participant's pre-break Employer Accounts (in which he will
be fully vested after the forfeiture of the non-vested amount of such balance)
and for his post-break Employer Contributions Account unless and until his
post-break Employer Accounts is fully vested.
<PAGE>
6.3 Forfeitures
(a) Any nonvested balance in the Employer Accounts of a Participant who
ceases to be employed by the Employer and has incurred a Break in Service will
be forfeited at the end of the Plan Year in which the Participant incurs five
(5) consecutive Breaks in Service, except that any non-vested balance in the
Employer Accounts of a Participant who ceases to be employed by the Employer and
receives a distribution of his entire vested account balance pursuant to Section
9 prior to incurring such Break in Service will be forfeited at the time of
distribution if earlier. For purposes of this Section, if the value of a
Participant's vested account balance is zero (o), the Participant shall be
deemed to have received a distribution of such vested account balance
immediately following termination of employment. Forfeitures shall be used to
pay the administrative expenses of the Plan and/or Trust or to reduce Employer
contributions pursuant to Section 4.
(b) A Participant who is reemployed by the Employer prior to incurring
five (5) consecutive Breaks in Service and who suffered a forfeiture pursuant to
subsection (a) above shall have restored to his pre-Break Employer Accounts the
full amount of the forfeiture, without adjustment for gains or losses of the
Fund. At any relevant time, the vested portion of such a Participant's pre-Break
Employer Accounts shall be determined by the formula: X = P (AB + (R x D)) - (R
x D). For purposes of applying the formula: P is the vested percentage at the
relevant time; AB is the balance of the Employer Accounts at the relevant time;
D is the amount of the distribution (or deemed distribution); R is the ratio of
the balance of the Employer Accounts at the relevant time to the balance of the
Employer Accounts after the distribution (or deemed distribution); and the
relevant time is the time at which, under the Plan, the vested percentage in the
Employer Accounts cannot increase.
6.4 Full Vesting Upon Retirement, Disability or Death
Notwithstanding the preceding provisions of this Section, a Participant
shall be fully (100%) vested in his Matching Contribution Account and Employer
Contribution Account upon the earlier of his attainment of his Normal Retirement
Date, his death or his Disability while in the employ of the Employer.
<PAGE>
6.5 Amendment of Vesting Schedule
If the Plan's vesting schedule is amended or the Plan is amended in any
way that directly or indirectly affects the computation of a Participant's
vesting percentage, each Participant who has completed at least three (3) years
of service with the Employer (without regard to any periods of service
disregarded pursuant to Section 411(a)(4) of the Code) may elect, within sixty
(60) days after the latest of the amendment adoption date, the amendment
effective date, or the date the Participant is given written notice of the
amendment by the Plan Administrator, to have his vesting percentage determined
under the pre-amendment vesting program. No amendment to the Plan may have the
effect of decreasing a Participant's vesting percentage determined without
regard to such amendment as of the later of the date the amendment is adopted or
the date such amendment becomes effective.
6.6 Failure to Locate Participant.
-----------------------------
A Participant who is entitled to receive a distribution under the Plan
shall forfeit his Total Account if the Plan Administrator is not able to locate
the Participant (or the Participant's Beneficiary in the event of the
Participant's death) within the three (3) year period immediately following the
date the Plan is required to make a distribution to the Participant. In the
event the Participant incurs a forfeiture of his Total Account as aforesaid, the
amount so forfeited will be used to pay the administrative expenses of the Plan
and/or Trust or to reduce Employer contributions. Any amounts forfeited pursuant
to this Section shall be reinstated upon the proper application of the
Participant or Beneficiary suffering the forfeiture.
SECTION 7
RETIREMENT
A Participant may retire at his Normal Retirement Age or on the first
day of any month thereafter. Distribution of a Participant's Account shall
commence, in the manner provided in Section 9, by April 1 of the calendar year
following the calendar year in which the Participant attains age seventy and
one-half (70-1/2), except as provided in Section 9.2.
<PAGE>
SECTION 8
TERMINATION OF EMPLOYMENT
8.1 Deemed Distribution.
-------------------
If a Participant's employment with the Employer terminates prior to
Normal Retirement Age and the value of his vested Account is zero, he shall be
deemed to receive his vested Account as provided in Section 6.3(a).
8.2 Voluntary Distribution.
----------------------
(a) If a Participant's employment with the Employer terminates prior to
Normal Retirement Age, the Participant may elect to receive, after filing such
election as the Plan Administrator may require, the entire amount of his vested
Account in the Trust Fund, determined on the Valuation Date on which
distribution occurs distributions made after such Valuation Date.
(b) Subject to the minimum distribution requirements of Section 9.2,
unless the Participant elects otherwise, distribution of benefits will begin no
later than the sixtieth (60th) day after the latest of the close of the Plan
Year in which:
(i) the Participant attains age sixty-five (65), or
(ii) the Participant terminated employment with an Employer.
<PAGE>
SECTION 9
PAYMENT OF BENEFITS
9.1 Manner of Payment.
-----------------
(a) Except as limited by Section 8, the Participant has the sole right
to choose among the payment options provided in this Plan. Each optional form of
benefit provided under the Plan shall be made available to all Participants in a
nondiscriminatory basis. The requirements of this Section shall apply to any
distribution of a Participant's Account and shall take precedence over any
inconsistent provisions of this Plan.
(b) Amounts due to a Participant under the Plan shall be paid to the
Participant in accordance with the Participant's election of one of the
following options:
(i) Lump sum in cash; or
(ii) Lump sum partially in cash and partially in kind with the
whole number of shares of Employer Securities representing the vested
portion of his Total Account in the Employer and Employee Stock Funds
being distributed in kind and the balance of his vested Account being
distributed in cash.
(iii) Equal or substantially equal quarterly or annual
installments of cash calculated to extend over any period which does
not exceed the life expectancy of the Participant or the joint life
expectancy of the Participant and Beneficiary.
(c) If a Participant elects to receive periodic installments, the
unpaid balance of the amount due the Participant shall be retained in the Trust
Fund and it shall continue to be valued in accordance with Section 5.4.
<PAGE>
9.2 Minimum Distribution Requirements.
---------------------------------
(a) Subject to the requirements of Section 401(a)(9) of the Code and
the regulations thereunder with respect to required minimum distributions, the
amount of the Participant's benefit to be distributed under the Plan beginning
with the first distribution calendar year shall be the quotient obtained by
dividing (i) the Participant's benefit determined in accordance with paragraph
(b) below, by (ii) the applicable life expectancy.
(b) A Participant's benefit shall be determined as follows:
(i) The value of the Total Account as of the last Valuation
Date in the calendar year immediately preceding the distribution
calendar year (valuation calendar year) increased by the amount of any
contributions or forfeitures allocated to the Total Account as of dates
in the valuation calendar year after the Valuation Date and decreased
by distributions made in the valuation calendar year after the
Valuation Date.
(ii) Exception for second distribution calendar year: For
purposes of clause (i) above, if any portion of the minimum
distribution for the first distribution calendar year is made in the
second distribution calendar year on or before the required beginning
date, the amount of the minimum distribution made in the second
distribution calendar year shall be treated as if it had been made in
the immediately preceding distribution calendar year.
(c) The minimum distribution required for the Participant's first
distribution calendar year must be made on or before the Participant's required
beginning date. The minimum distribution for other calendar years, including the
minimum distribution for the distribution calendar year in which the Employee's
required beginning date occurs, must be made on or before December 31 of that
distribution calendar year.
<PAGE>
(d) Definitions:
(i) Distribution calendar year: A calendar year for which a
minimum distribution is required. For distributions beginning before
the Participant's death, the first distribution calendar year is the
calendar year immediately preceding the calendar year which contains
the Participant's required beginning date. For distributions beginning
after the Participant's death, the first distribution calendar year is
the calendar year in which distributions are required to begin pursuant
to Section 9.6.
(ii) Required beginning date:
(A) General Rule: With respect to Participants who
are not five percent (5%) owners, the required
beginning date is the first day of April of the
calendar year following the calendar year in which
the Participant retires.
(B) With respect to five percent (5%) owners, the
required beginning date is the first day of April
following the calendar year in which the Participant
attains age seventy and one-half (70-1/2).
(C) Five Percent Owner: A Participant is treated as a
five percent (5%) owner if such Participant is a five
percent (5%) owner as defined in Section 416 of the
Code at any time during the Plan Year ending with or
within the calendar year in which such owner attains
age seventy and one-half (70 1/2).
(D) Once distributions have begun to a five percent
(5%) owner under this Section, they must continue to
be distributed, even if the Participant ceases to be
a five percent (5%) owner in a subsequent year.
<PAGE>
9.3 Distribution Upon Death
(a) If a Participant dies prior to retirement or termination of
employment or subsequent thereto but prior to his receipt of the full amount of
his vested Total Account which is scheduled to be distributed in a lump sum or
in installments or which is currently being distributed in installments, the
entire amount of his Total Account in the event he dies while employed, or the
unpaid or unapplied balance of his vested Total Account in the event he dies
after retirement or termination of employment, shall be paid to his beneficiary
as provided below.
(b) Any distributions made on account of the Participant's death shall
be paid, at the election of the Participant's designated beneficiary, in one of
the following ways:
(i) Lump sum in cash; or
(ii) Lump sum in cash of his vested Total Account except the
amount in the Employer Stock Fund, plus shares of Employer Securities
representing the portion of his vested Total Account invested in the
Employer Stock Fund and the proceeds from the liquidation of any
fractional shares credited to his Total Account; or
(iii) Equal or substantially equal quarterly or annual
installments calculated to extend over any period which does not exceed
the life expectancy of the Beneficiary.
(iv) If the Participant was receiving benefit payments under
Section 9.5(c)(iii) above, by continuation of payments over the period
established by the Participant.
Installment payments shall be made to such beneficiary as of each
Valuation Date and shall be adjusted as of each Valuation Date to reflect the
investment performance of the Total Account since the previous Valuation Date.
(c) If the Participant dies after distribution of his Total Account has
begun, the remaining portion of his Total Account will continue to be
distributed at least as rapidly as under the method of distribution being used
prior to the Participant's death. If the Participant dies before distribution to
him begins, distribution of the Participant's vested Total Amount will be made,
or commence no later than the December 31 of the calendar year immediately
following the calendar year in which the Participant died.
<PAGE>
9.4 Diversification Rights
The following provisions of this Section apply solely with respect to
Employer Securities acquired after December 31, 1986 and allocated to the
Employer Stock Fund. If a Participant attains age fifty-five (55) and has ten
(10) years of participation in the Plan ("Qualified Participant"), the Plan
Administrator shall offer such Participant (i) a distribution of the value
(determined as of the last preceding Valuation Date) of at least twenty-five
percent (25%) of the number of shares of such Employer Securities credited to
his Total Account or (ii) a transfer of an amount equal to at least twenty five
percent (25%) of said shares to the Plan's other investment funds. If the
Participant elects such a distribution or transfer, it will be made within
ninety (90) days after the Election Period. The "Election Period" means the
ninety (90) day period next following each of the six (6) Plan Years beginning
with the Plan Year during which a Participant becomes a Qualified Participant.
The amount which may be distributed to or transferred for a Participant upon
future elections during such six (6) year period shall be determined by
multiplying the number of shares of Employer Securities credited to the
Participant's Employer Stock Fund account (including shares the value of which
has been previously distributed pursuant to this Section) by twenty-five percent
(25%) or, with respect to a Participant's final election, fifty percent (50%)
reduced by the amount of any prior distributions received by such Participant
pursuant to this Section.
9.5 Rollovers
(a) Notwithstanding any provision of the Plan to the contrary that
would otherwise limit a Distributee's election under this Section, a Distributee
may elect, at the time and in the manner prescribed by the Plan Administrator,
to have any portion of an Eligible Rollover Distribution paid directly to an
Eligible Retirement Plan specified by the Distributee in a Direct Rollover.
<PAGE>
(b) For purposes of this Section, the following definitions shall
apply:
(i) Eligible Rollover Distribution: An Eligible Rollover
Distribution is any distribution of all or any portion of the balance
to the credit of the Distributee, except that an Eligible Rollover
Distribution does not include: (A) any distribution that is one of a
series of substantially equal periodic payments (not less frequently
than annually) made for the life (or life expectancy) of the
Distributee or the joint lives (or joint life expectancies) of the
Distributee and the Distributee's designated beneficiary, or for a
specified period of ten (10) years or more; (B) any distribution to the
extent such distribution is required under Section 401(a)(9) of the
Code; and (C) the portion of any distribution that is not includable in
gross income (determined without regard to the exclusion for net
unrealized appreciation with respect to employer securities).
(ii) Eligible Retirement Plan: An Eligible Retirement Plan is
an individual retirement account described in Section 408(a) of the
Code, an individual retirement annuity described in Section 408(b) of
the Code, an annuity plan described in Section 403(a) of the Code, or a
qualified trust described in Section 401(a) of the Code, that accepts
the Distributee's Eligible Rollover Distribution. However, in the case
of an Eligible Rollover Distribution to the surviving spouse, an
Eligible Retirement Plan is an individual retirement account or
individual retirement annuity.
(iii) Distributee: A Distributee includes a Participant, the
Participant's surviving spouse and the Participant's spouse or former
spouse who is the alternate payee under a qualified domestic relations
order, as defined in Section 414(p) of the Code.
(iv) Direct Rollover: A Direct Rollover is a payment by the
Plan to the Eligible Retirement Plan specified by the Distributee.
<PAGE>
(c) Upon the approval of the Plan Administrator, a Participant may
transfer his account from another qualified stock bonus or profit sharing plan
into the Plan provided such funds are not subject to the joint and survivor
annuity requirements of Section 401(a)(11) of the Code. All amounts attributable
to employer contributions shall be credited to the Participant's Employer
Contribution Account and amounts attributable to elective compensation deferral
contributions shall be credited to his Compensation Deferral Contribution
Account. All other amounts transferred will be credited to the Participant's
Rollover Account.
(d) Under such rules and procedures as the Plan Administrator may
establish, an Employee may contribute to this Plan in cash all or a portion of
the amount received in an Eligible Rollover Distribution from another qualified
defined contribution plan. For purposes of this Section, the entire amount of
cash to be accepted by this Plan must qualify as an Eligible Rollover
Distribution as defined above. It must be received by the Trustee on or before
the sixtieth (60th) day after the day on which the Employee received the
distribution. Before accepting any rollover contributions from an Employee, the
Plan Administrator shall determine to its satisfaction that such contribution
meets the requirements of this Section. All Rollover Contributions will be
credited to the Employee's Rollover Account. A Participant shall be fully vested
in any Rollover Contribution to the Plan, together with any earnings thereon.
SECTION 10
WITHDRAWALS AND LOANS
10.1 Withdrawals After Age 59-1/2
(a) An Employee who is a Participant and who has attained the age of
fifty-nine and one-half (59-1/2) may elect to withdraw, without penalty, all or
any part of his vested Total Account. Only one such withdrawal may be made in a
Plan Year.
(b) Any withdrawal made in accordance with this Section shall be in an
amount of not less than Five Hundred Dollars ($500), unless the maximum amount
available to the Participant is less than Five Hundred Dollars ($500), in which
case the Participant must withdraw the maximum amount available to him.
<PAGE>
(c) Except for de minimis amounts, which will be taken from investment
fund with the highest balance, if the amount of any withdrawal under this
Section is such that only a portion of one of the Participant's accounts is to
be withdrawn, and if the Total Account is invested in more than one investment
fund, then the percentage of each fund to be withdrawn shall be equal to the
ratio of the amount to be withdrawn from the account to the value of the Total
Account determined as of the Valuation Date coincident with the effective date
of the withdrawal.
10.2 Hardship Withdrawals During Employment
(a) In the event of the financial hardship of an Employee who is a
Participant, the Plan Administrator shall, as hereinafter provided in this
Section, upon the written application of such Participant, permit him to
withdraw all or any part of his Rollover Contribution Account and his
Compensation Deferral Contribution Account (except earnings after 1988 on
Compensation Deferral Contributions). For purposes of this Section, a withdrawal
is on account of financial hardship only if the withdrawal is both made on
account of an immediate and heavy financial need of the Participant and is
necessary to satisfy such financial need.
(b) A hardship withdrawal will be deemed to be made on account of an
immediate and heavy financial need of the Participant if the withdrawal is on
account of:
(i) Medical expenses described in Section 213(d) of the Code
for the Participant, the Participant's spouse or any dependents of the
Participant as defined in Section 152 of the Code;
(ii) Purchase (excluding mortgage payments) of a principal
residence for the Participant;
(iii) Payment of tuition and related educational fees for the
next twelve (12) months of post-secondary education for the
Participant, his spouse, children or dependents;
(iv) The need to prevent the eviction of the Participant from
his principal residence or foreclosure on the mortgage of the
Participant's principal residence;
(c) In order for a withdrawal to be deemed necessary to satisfy an
immediate and heavy financial need of a Participant all of the following
requirements must be met:
<PAGE>
(i) such withdrawal must not exceed the amount required to
meet the immediate financial need (including amounts necessary to pay
any federal, state or local income taxes or penalties reasonably
anticipated to result from the distribution);
(ii) the Participant must have obtained all other
distributions, except hardship distributions, and nontaxable (at the
time of the loan) loans from plans maintained by the Employer which are
then available;
(iii) a twelve (12) month period of suspension of
participation in the Plan (during which the Participant may not elect
to make either Compensation Deferral Contributions or contributions to
any other qualified or nonqualified deferred compensation plan
maintained by the Employer, including stock option, stock purchase and
similar plans.) will commence for a Participant as of the first day of
the calendar quarter next following approval of his hardship withdrawal
and receipt of notice of such withdrawal;
(iv) for each Participant who obtains a hardship withdrawal
which includes amounts which are attributable to Compensation Deferral
Contributions, the Compensation Deferral Limit as defined in Section
2.6 shall be reduced for the calendar year following the calendar year
in which a hardship withdrawal is made to such Participant by an amount
equal to the total amount of the hardship withdrawal; and
(v) a Participant who has completed a twelve (12) month
suspension as described in clause (iii) above may elect to resume
participation in the Plan for the period immediately following such
suspension by notifying the Plan Administrator of such election in
accordance with its procedures.
10.3 Withdrawal of Rollover.
----------------------
A Participant may withdraw all or any portion of his Rollover
Contribution Account as he requests in writing delivered to the Plan
Administrator, provided, however, that no single withdrawal may be less than the
total amount available for withdrawal or Five Hundred Dollars ($500), whichever
is less. If a Participant makes a withdrawal under this Section, he may not make
another withdrawal during the same Plan Year.
<PAGE>
10.4 Loans.
-----
(a) A Participant who is a "party-in-interest" (as defined in Section
3(14) of the Employee Retirement Income Security Act of 1974, as heretofor and
hereafter amended) with respect to the Plan may be granted a loan from his
vested Total Account. An eligible Participant may apply for a loan in accordance
with procedures established by the Plan Administrator.
(b) The amount of a loan (when added to the Participant's outstanding
indebtedness to the Plan, if any) may not exceed the lesser of (A) Fifty
Thousand Dollars ($50,000) reduced by the excess (if any) of the Participant's
highest outstanding balance of loans from the Plan during the twelve (12) month
period ending on the day before the date on which the loan was made over the
Participant's outstanding loan balance on the date of the loan, or (B) fifty
percent (50%) of his Compensation Deferral Contribution Account and his Rollover
Account.
(c) Interest on any loan shall be a rate commercially reasonable at the
time the loan is made. The interest rate shall remain unchanged for the duration
of the loan. A loan shall be secured by the Participant's vested Account.
(d) A loan shall only be made in situations of financial need described
in Section 10.2(b).
(e) The minimum loan amount which may be granted is One Thousand
Dollars ($1,000).
(f) In applying for a loan, the Participant shall agree to repay the
loan plus interest over a period not to exceed five (5) years, except that for a
loan used to acquire any dwelling to be used within a reasonable time from the
date of the loan as a principal residence of the Participant, the term of the
loan may not exceed twenty (20) years.
(g) A loan shall be repaid over its term through payroll deductions.
The Participant shall authorize the Employer to deduct from his pay the level
amount sufficient to accomplish the repayment.
(h) A Participant shall have the right to prepay all or any portion of
the outstanding balance of his loan at any time without penalty.
<PAGE>
(i) In making the loan, the Plan shall comply with all applicable
federal and state laws, rules and regulations pertaining to disclosures to
borrowers of the terms of the loan transaction, including the rate of interest,
finance charges and other costs to the borrower for the loan.
(j) Any and all loans made pursuant to this Section shall be documented
by execution of a promissory note and any other such documents as may be
required by the Plan Administrator.
(k) The Plan Administrator shall establish loan documents which
together with the provisions of the Plan shall set forth the following
provisions relative to all loans allowable pursuant to this Section:
(i) the identity of the person(s) authorized to administer the
loan program; (ii) the procedure for applying for the loan;
(iii) the basis/criteria on which loans will be approved or
denied; (iv) the limitations, if any, on the types and amounts
of loans offered; (v) the procedure under the Plan for
determining a reasonable rate of interest; (vi) the types of
collateral that may be used to secure the loan; and (vii) the
events constituting default and the steps to be taken to
preserve Plan assets in the event of a default.
SECTION 11
THE TRUST FUND
11.1 Trust Agreement
The Company has entered into a Trust Agreement for the purpose of
holding the assets of the Trust Fund. The Trust Agreement provides, among other
things, that all funds received by the Trustee thereunder shall be held,
administered, invested and distributed by the Trustee, and that no part of the
corpus or income of the Trust Fund held by the Trustee shall be used for, or
diverted to, purposes other than for the exclusive benefit of Participants or
their beneficiaries. The Company shall have the authority to remove such Trustee
or any successor Trustee, and any Trustee or any successor Trustee may resign.
Upon removal or resignation of a Trustee, the Company shall appoint a successor
Trustee.
<PAGE>
11.2 Appointment of Independent Accountants
The Company may select a firm of independent public accountants to
examine and report on the financial position and the results of the operations
of the Trust Fund created under the Plan, at such times as it deems proper
and/or necessary.
SECTION 12
ADMINISTRATION OF THE PLAN
12.1 The Plan Administrator
The Company, as Plan Administrator, shall perform such powers and
duties as are specified in this Section and other provisions of the Plan. The
Plan Administrator may, however, delegate specific administrative powers and
responsibilities to one or more committees appointed by it. The Plan
Administrator shall appoint a Plan Administrative Committee, which shall direct
the Trustee with respect to the voting of Employer Securities, as provided in
Section 14.11.
12.2 Resignation or Removal
The Plan Administrator and any one or more of the members of a
committee appointed pursuant to Section 12.1 may be officers or directors of an
Employer and need not be Participants entitled to benefits under the Plan. The
Company in its sole discretion may remove or replace any member at any time with
or without cause. A member may resign by delivering his written resignation to
the Company, and such resignation shall become effective upon its delivery or at
any later date specified therein. If, at any time, there shall be a vacancy in
the membership of a committee, the remaining member or members shall continue to
act until such vacancy is filled by the Company.
<PAGE>
12.3 Meetings
A committee appointed pursuant to Section 12.1 shall hold meetings upon
such notice, at such place or places and at such times as its members may from
time to time determine. A simple majority of the members at the time in office
shall constitute a quorum for the transaction of business. All action taken by a
committee at any meeting shall be by vote of the simple majority of those
present at such meeting, but a committee may act without a meeting by unanimous
action of its members evidenced by a resolution or other written instrument
signed by all members.
12.4 Uniform Rules of Administration
Subject to the terms of the Plan, the Plan Administrator may from time
to time adopt by-laws, rules and regulations for the administration of the Plan
and for the conduct and transaction of its affairs. The Plan Administrator shall
have such power as may be necessary to discharge its duties hereunder,
including, but not limited to, the power to interpret and construe the Plan in
its discretion and to determine all questions of eligibility, length of service,
dates of birth, membership and retirement, computation of benefits, value of
benefits, hardship withdrawals and loan procedures and related matters. All
discretionary actions to be taken under the Plan by the Plan Administrator shall
be uniform in their nature and applicable to all individuals similarly situated.
12.5 Proof of Age
The Plan Administrator may require each Participant to submit to it, in
such form as it shall deem reasonable and acceptable, proof of age or date of
birth, and any other information that it deems necessary or desirable for the
proper administration of the Plan.
12.6 Records and Official Communications
The Plan Administrator shall maintain such records as are necessary to
carry out the provisions of the Plan. The Plan Administrator shall also make all
disclosures to Participants which are required by the Employee Retirement Income
Security Act of 1974, as amended ("ERISA") and any amendments thereto and any
regulations issued thereunder.
<PAGE>
12.7 Directions to Trustee
The Plan Administrator shall direct the Trustee concerning all payments
which are to be made out of the Trust Fund pursuant to the Plan, and all
terminations of such payments.
12.8 Written Authorization
The Plan Administrator may authorize one or more of its officers,
employees or agents to sign on its behalf any instructions of the Plan
Administrator to the Trustee.
12.9 Expenses
Administration expenses of the Plan shall be paid by the Company if
they are not paid by the Plan. The Company shall at its sole discretion
determine whether it or the Plan shall pay administrative expenses.
12.10 Indemnification of Plan Administrator and Committee Members
The Plan Administrator, members of a committee appointed pursuant to
Section 12.1 and the officers and directors of the Company shall be entitled to
rely upon all tables, valuations, certificates and reports furnished by an
actuary, upon all certificates and reports made by an accountant, and upon all
opinions given by legal counsel. The Plan Administrator, members of a committee
and the officers and directors of the Company shall be fully protected against
any action taken in good faith in reliance upon any such tables, valuations,
certificates, reports or opinions. All actions so taken shall be conclusive upon
each of them and upon all persons having an interest under the Plan. To the
extent permitted by law, no person serving as Plan Administrator or member of a
committee shall be personally liable by virtue of any instrument executed by him
or on his behalf as Plan Administrator or a member of a committee, or for any
mistake or judgment made by himself or any other member of a committee, or for
any neglect, omission or wrongdoing of any other member or of anyone employed by
the Company, or for any loss unless resulting from his own gross negligence or
willful misconduct. To the extent permitted by law and the bylaws of the
Company, each member of a committee and any officer, director or employee of the
Company who is a Plan fiduciary shall be indemnified by the Company against any
liabilities and expenses, including attorney's fees, reasonably incurred by him
in connection with any action to which he may be a party by reason of his
membership on a committee or other status as a fiduciary of the Plan. The
foregoing right of indemnification shall be in addition to any other rights to
which such individual may be entitled as a matter of law.
<PAGE>
SECTION 13
CLAIMS PROCEDURE
13.1 Claim for Benefit
For a Participant or a beneficiary to claim any benefit under the Plan,
he must file a claim for such benefit with the Plan Administrator on forms
provided therefor. If the Plan Administrator wholly or partially denies such
claim, written notice shall be provided to the Participant or the beneficiary
submitting the application within sixty (60) days of the receipt by the Plan
Administrator of the application. The Plan Administrator notice of denial shall
state the following:
(a) the specific reasons for the denial of the claim,
(b) the specific reference to pertinent provisions of the
Plan on which the denial is based,
(c) a description of any additional material or
information necessary to perfect the claim and an explanation of
why such material or information is necessary, and
(d) an explanation of the Plan's claims review procedure.
13.2 Review of Denial of Claim
A Participant or beneficiary whose application for benefits is denied
may request a full and fair review of the decision denying the claim within
ninety (90) days after receipt of the notice of the denial. The Participant or
beneficiary may
(a) file a written request for review of the denial with the
Board of Directors of the Company,
(b) review pertinent documents in the possession of the Plan
Administrator, and
(c) submit issues and comments in writing to the Board of
Directors of the Company for review.
<PAGE>
13.3 Decision by Board of Directors
A decision on review by the Board of Directors of the Company shall be
made promptly and not later than sixty (60) days after the receipt by the Board
of Directors of the Company of a request for review, unless special
circumstances (such as the need to hold a hearing) require an extension of time
for processing, in which case the Participant or beneficiary will be notified of
the extension and a decision shall be rendered as soon as possible, but not
later than one hundred twenty (120) days after the receipt of the request for
review. The decision shall be in writing and shall include specific reasons for
the decision written in a manner calculated to be understood by the Participant
or beneficiary, and specific references to the pertinent provisions of the Plan
on which the decision is based.
SECTION 14
MISCELLANEOUS
14.1 Non-Alienation of Benefits
No benefit payable under the Plan shall be subject in any manner to
anticipation, sale, transfer, assignment, pledge, encumbrance, security interest
or charge, and any action by way of anticipating, alienating, selling,
transferring, assigning, pledging, encumbering, charging or granting a security
interest in the same shall be void and of no effect; nor shall any such benefit
be in any manner liable for or subject to the debts, contracts, liabilities,
engagements or torts of the person entitled to such benefit. If any Participant
or beneficiary under the Plan shall be adjudged bankrupt, or be declared
insolvent, or make a general assignment for the benefit of creditors, or attempt
to anticipate, alienate, sell, transfer, assign, pledge, encumber or charge any
benefit, then such benefit may, in the discretion of the Plan Administrator,
cease and terminate. In that event, the Plan Administrator shall direct the
Trustee to hold or apply the benefit or any part thereof to or for such
Participant, or beneficiary, his spouse, children, or other dependents, or any
of them, in such manner and in such proportions as the Plan Administrator shall
in its sole discretion determine. This Section shall not apply to the creation,
assignment, or recognition of a right to any benefit payable pursuant to a
Qualified Domestic Relations Order as defined in Section 414(p) of the Code.
<PAGE>
14.2 Payment Upon Final Determination of Qualified Domestic Relations Order
Notwithstanding anything contained herein to the contrary, to the
extent provided under the provisions of a Qualified Domestic Relations Order (as
defined in Section 414(p)(1) of the Code), any amount which becomes payable to
an Alternate Payee (as defined in Section 414(p)(8) of the Code) may be paid to
the Alternate Payee at any time after entry of the Qualified Domestic Relations
Order even though the Participant may not be entitled to payment under the Plan
at such time, provided that the manner of payment is one which is available to
Participants under the Plan. Payment to an Alternate Payee shall be made in a
lump sum, either in cash or partly in cash and the remainder in Employer
Securities.
14.3 Risk to Participants and Source of Payments
Each Participant assumes all risk in connection with any decrease in
the value of any securities in the Trust Fund, and the Trust Fund shall be the
sole source of payments to be made to Participants or their beneficiaries under
the Plan.
14.4 Rights of Participants
The establishment of the Plan shall not be construed as conferring any
rights upon any Participant or any person for a continuation of employment, nor
shall it be construed as limiting in any way the right of the Employer to
discharge any Participant or to treat him without regard to the effect which
such treatment might have upon him as a Participant under the Plan.
14.5 Statement of Accounts
As soon as practicable after the close of each Plan Year, or such other
time or times as the Plan Administrator shall designate, the Company shall cause
to be sent to each Participant a written statement of his accounts.
<PAGE>
14.6 Designation of Beneficiary
Each Participant shall file with the Plan Administrator a written
designation of a beneficiary or beneficiaries, on a form approved by the Plan
Administrator, who shall receive payment of the Participant's interest under the
Plan in the event of his death. If a Participant is married, his spouse shall be
his beneficiary unless his spouse consents in writing to the designation of
another beneficiary, and such consent acknowledges the effect of the designation
and is witnessed by a Plan representative or notary public. However, spousal
consent is not required if the spouse cannot be located or in such other
circumstances as may be provided by applicable regulation. Subject to the
foregoing, each Participant has the right to nominate the beneficiary or
beneficiaries of any amount or portion of his account which may be payable under
the Plan upon and by reason of his death. A Participant may designate his
beneficiary or beneficiaries by written instrument signed by him and delivered
to the Plan Administrator, and will have the right to change any such
designation from time to time. Any portion of the amount payable under the Plan
to a primary beneficiary which is not disposed of because of a Participant's
failure to designate a primary beneficiary or because his primary beneficiary
has predeceased him and there is no designated contingent beneficiary will be
paid to his spouse, if living, or if there is no surviving spouse, to his
surviving children in equal shares, or if there is no surviving spouse or
children, to his estate. Any amount payable under the Plan upon the death of a
designated primary beneficiary after the death of the Participant who designated
such beneficiary which is not disposed of because of the Participant's failure
to designate a contingent beneficiary or because his designated contingent
beneficiary predeceased his primary beneficiary will be paid to the primary
beneficiary's estate.
14.7 Payment to Incompetents
If any person entitled to receive any benefits hereunder is a minor, or
is in the judgment of the Plan Administrator, legally, physically, or mentally
incapable of personally receiving and receipting for any distribution, the Plan
Administrator may instruct the Trustee to make distribution to such other
person, persons or institutions who, in the judgment of the Plan Administrator,
are then maintaining or have custody of such Distributee. As a condition to the
issuance of such instruction for the distribution to such other person or
institution, the Plan Administrator may require such person or institution to
exhibit or to secure an order, decree or judgment of a court of competent
jurisdiction with respect to the incapacity of the person who would otherwise be
entitled to receive the benefits.
<PAGE>
14.8 Plan Administrator Authority to Determine Payee
Except as otherwise provided in Section 13.1, the determination of the
Plan Administrator as to the identity of the proper payee of any benefit under
the Plan and the amount of such benefit properly payable shall be conclusive,
and payment in accordance with such determination shall constitute a complete
discharge of all obligations on account of such benefit.
14.9 Severability
If any provision of this Plan is held to be invalid or unenforceable,
such determination shall not affect the other provisions of this Plan. In such
event, this Plan shall be construed and enforced as if such provision had not
been included herein.
14.10 Application of Plan Provisions
This Plan shall be binding upon all Participants and their
beneficiaries and upon the heirs, executors, administrators, successors and
assigns of all persons having an interest herein.
14.11 Voting of Company Common Stock
The Trustee shall send, or cause to be sent, to each Participant or
other person for whose Account funds are invested in the Employer and Employee
Stock Funds, a copy of the notice of each meeting of the stockholders of Valley
Resources, Inc. and all material, except proxies, which may accompany any such
notice, together with a form which may be signed by such person and delivered to
the Trustee, directing the Trustee how it shall vote the shares of stock
represented by his beneficial interest in the Employer and Employee Stock Funds.
If within such reasonable period of time as may be specified by the Plan
Administrator prior to a meeting of the stockholders no instructions have been
received by the Trustee from a Participant with respect to voting the Employer
Securities allocated to his Account, the Trustee shall vote such shares as
directed by the Plan Administrator. The Plan Administrative Committee shall
direct the Trustee as to the voting of any unallocated Employer Securities. The
Plan Administrator shall maintain information relating to the purchase, holding,
and sale of Employee Securities, and the exercise of voting, tender and similar
rights with respect of such securities by Participants which are designed to
safeguard the confidentiality of such information, except to the extent
necessary to comply with federal or state laws. The Plan Administrative
Committee shall have the responsibility for determining that the Plan's
administrative procedures are sufficient to safeguard the confidentiality of the
information described above, that such procedures are being followed. The Plan
Administrative Committee shall appoint an independent fiduciary to communicate
with Participants and the Trustee with respect to the voting of Employer
Securities in any situation where there is the potential for undue Employer
influence upon Participants with regard to the exercise of their shareholder
rights. The independent fiduciary may not be affiliated with the Employer.
<PAGE>
14.12 Tender or Exchange Offers
Each Participant or, in the event of his death, his beneficiary, shall
have the right to instruct the Trustee in writing as to the manner in which to
respond to a tender or exchange offer for any or all shares of the Company's
common stock held in the Employer Stock Fund on the Participant's behalf. The
Company shall utilize its best efforts to notify each Participant or beneficiary
of the pendency of any such tender or exchange offer and to distribute or cause
to be distributed to him in a timely fashion such information as will be
distributed to shareholders of the Company in connection with any such tender or
exchange offer. Upon its receipt of such instructions the Trustee shall tender
such shares of the Company's common stock as and to the extent so instructed. If
the Trustee does not receive instructions from a Participant or his beneficiary
regarding any such tender or exchange offer for shares of the Company's common
stock, the Trustee shall have no discretion in such matter and shall take no
action with respect thereto.
14.13 Employer Securities Acquisition Loans
(a) The Company may direct the Trustee to borrow money from a lender
for the purpose of acquiring Employer Securities within a reasonable period of
time after receipt of the loan proceeds or to repay a prior loan made for such
acquisition. Any such borrowing is referred to herein as an Employer Securities
Acquisition Loan and shall satisfy all of the conditions set forth below in
subsection (b). Repayments of principal and interest on any such Employer
Securities Acquisition Loan shall be made by the Trustee only from Employer
contributions which are invested in the Employer Stock Fund, from earnings
attributable to such Employer contributions and from any cash dividends received
by the Trustee on Company common stock held in the Employer Stock Fund. If such
Employer contributions, earnings and dividends are insufficient to pay the
principal and interest due on an Employer Securities Acquisition Loan for a Plan
Year, the Employer shall contribute such amount as is necessary to enable the
Plan to pay the unpaid balance of principal and interest due for such year. If
dividends on Company common stock which are allocated to Participants' Total
Accounts are used to repay an Employer Securities Acquisition Loan, shares of
Company common stock with a fair market value not less than the amount of such
dividends shall be allocated to such Participants for the Plan Year in which the
dividends would otherwise have been credited to their Total Accounts. If Company
common stock is pledged as collateral for such loan or cannot be allocated in
the Plan Year in which it is acquired, there shall be a suspense account in
which such stock is held. For each Plan Year during which there is stock in the
suspense account, a number of shares shall be released from the suspense account
at least equal to the number of shares held in the suspense account immediately
before such release multiplied by a fraction, the numerator of which is the
amount of principal and interest paid by the Trustee for the month with respect
to the Employer Securities Acquisition Loan and the denominator of which is the
<PAGE>
sum of the numerator plus the principal and interest to be paid on the Employer
Securities Acquisition Loan for all future months (or such greater number as may
be permitted under a security agreement pursuant to which the shares in the
suspense account are pledged as collateral). For purposes of the above fraction,
no unexercised extension or renewal periods for the Employer Securities
Acquisition Loan shall be taken into account. Alternatively, if the term of the
Employer Securities Acquisition Loan does not exceed ten (10) years, shares of
Company common stock may be released from the suspense account in proportion to
principal payments on such Employer Securities Acquisition Loan during the Plan
Year (i) if the Employer Securities Acquisition Loan provides for annual
payments of principal and interest at a cumulative rate that is not less rapid
at any time than level annual payments of such amounts for ten (10) years and
(ii) the interest which is disregarded is no more than that which would be
treated as interest under standard loan amortization tables. An Employer
Securities Acquisition Loan shall have a repayment period in accordance with
subsection (b). Company common stock released from the suspense account shall be
allocated to the Total Accounts of Participants at the end of the month in which
they are released and the allocation shall be done on the basis of the value of
the shares at the time of allocation.
(b) An Employer Securities Acquisition Loan shall be subject to the
following terms and conditions:
(i) the Loan must be at a reasonable rate of interest and
shall have a definitely ascertainable repayment period;
(ii) any collateral pledged to the creditor by the Plan shall
consist only of the assets purchased with the borrowed funds, although
in addition to such collateral, the Employer may guarantee repayment of
the Loan;
(iii) under the terms of the Loan, the creditor shall have no
recourse against the Plan except with respect to such collateral;
(iv) the Employer shall contribute to the Trust amounts
sufficient to enable the Plan to pay each installment of principal and
interest on the Loan on or before the date such installment is due,
even if no tax benefit results from such contribution;
(v) upon the payment of any portion of the balance on the
Loan, the assets originally pledged as collateral or held in the
suspense account for such portion shall be released from encumbrance;
provided, however, that if the assets pledged as collateral or held in
the suspense account consist of Employer securities, such securities
shall be released from the suspense account in accordance with Section
14.14(a); and
<PAGE>
(vi) any earnings on the collateral pledged to the creditor or
to any guarantor of the Loan by the Plan or held in the suspense
account shall be used to repay the Loan.
SECTION 15
AMENDMENT, TERMINATION OR MERGER OF THE PLAN
15.1 Right to Amend
The Company reserves the right at any time or times to modify or amend
the Plan; provided, however, that no such modification or amendment shall be
made which would:
(a) increase the duties or liabilities of the Trustee
without its written consent; or
(b) divest a Participant of any right or benefit
hereunder that has accrued to him prior to the effective date of
such amendment; or
(c) cause or permit any portion of the Trust Fund to be
converted to or become the property of the Company; or
(d) cause any portion of the Trust Fund to be used for
purposes other than the exclusive benefit of the
Participants or their beneficiaries;
unless such modification or amendment is necessary or appropriate to enable the
Plan or Trust Fund to qualify under Section 401 of the Code or to retain for the
Plan or Trust Fund such qualified status.
15.2 Right to Terminate
Although it is the expectation of the Company that it will continue the
Plan as a permanent savings program for the benefit of the Employees eligible
hereunder, the Company reserves the right at any time, by action of its Board of
Directors, to discontinue its contributions, to suspend its contributions for
such period as the Board, at its sole discretion, shall determine, or to
terminate the Plan in whole or in part.
<PAGE>
15.3 Procedure Upon Termination
(a) In the event of the termination of the Plan in whole or in part, or
in the event of the complete discontinuance of Employer contributions under the
Plan (which complete discontinuance shall, for all purposes hereof, be treated
as a "termination of the Plan"), the termination date shall be considered a
Valuation Date, and the balance in each affected Participant's Total Account as
of the date of termination shall be determined. All amounts credited to the
Total Accounts of Participants shall be fully vested and nonforfeitable. The
balance in the Participant's Total Account shall be distributed to him in the
way described in Section 9.1.
(b) There shall be no liability or obligation on the part of the
Employer to make any further contributions to the Trust Fund in the event of the
termination of the Plan. Any funds held by the Trustee resulting from
forfeitures by Participants prior to the termination of the Plan shall be
allocated among the account balances of all Participants as an Employer
contribution for the period from the previous Valuation Date to the date of
termination.
(c) Notwithstanding anything to the contrary contained herein, the
Trustee's fees and other expenses incident to the operation and management of
the Plan incurred after the termination of the Plan may, at the discretion of
the Company, be paid from the income of the Trust Fund.
15.4 Merger of Plans
This Plan shall not be merged or consolidated with, or its assets or
liabilities transferred to, any other pension plan, unless each Participant in
the Plan shall be entitled to receive a benefit immediately after the merger,
consolidation, or transfer (assuming termination of the Plan) which is equal to
or greater than the benefit he would have been entitled to receive immediately
prior to such merger, consolidation or transfer (assuming termination of the
Plan).
<PAGE>
SECTION 16
TOP HEAVY PROVISIONS
16.1 Top Heavy Provisions
(a) The Plan shall be deemed a top heavy plan for a Plan Year if, as of
a Determination Date, the aggregate value of the Total Accounts of Key Employees
exceeds sixty percent (60%) of the aggregate value of the Total Accounts of all
Participants, or if the Plan is part of a required Aggregation Group which is
top heavy. For purposes of this test, any distributions made during the five (5)
Plan Years ending on the Determination Date shall be taken into account. If a
Participant was not a Key Employee during the five (5) Plan Years ending on the
Determination Date, but such individual was a Key Employee during any previous
Plan Year, the value of his Total Account shall not be taken into account. In no
event shall the Plan be considered top heavy if it is part of a required or
permissive Aggregation Group which is not top heavy.
(b) For purposes of this Section, the following terms shall have the
meaning indicated:
(i) Key Employee: Any Employee or former Employee in the
Plan (and the beneficiaries of any such Employee) who at any
time during the determination period is:
(A) an officer of the Employer if such individual's annual
compensation exceeds fifty percent (50%) of the dollar
limitation under Section 415(b)(1)(A) of the Code;
(B) an owner (or considered an owner under Section 318 of the
Code) of one of the ten (10) largest interests in the Employer
(provided such owner has more than a one-half percent (1/2%)
interest in the Employer) if such individual's annual
compensation exceeds the dollar limitation under Section
415(c)(1)(A) of the Code;
(C) a five percent (5%) owner of the Employer
(within the meaning of Section 416(i)(1)(B)(i) of the
Code);
(D) or a one percent (1%) owner of the Employer (within the
meaning of Section 416(i)(1)(B)(ii) of the Code), whose annual
compensation exceeds One Hundred Fifty Thousand Dollars
($150,000).
<PAGE>
For purposes of this subsection (b), compensation shall have the
meaning set forth in Section 4.7(e)(v) hereof with respect to the identification
of Highly Compensated Employees. The determination period shall be the Plan Year
containing the Determination Date (as defined in clause (ii) below) and the four
(4) preceding Plan Years. The determination of who is a Key Employee shall be
made in accordance with Section 416(i)(1) of the Code and the regulations
thereunder.
(ii) Determination Date means the last day of the preceding
Plan Year.
(iii) Plan Year means any calendar year.
(iv) A required Aggregation Group is each plan of the Company
which provides benefits to a Key Employee and each other plan of the
Company, if any, which is included with this Plan for purposes of
meeting the requirements of Section 401(a)(4) and 410 of the Code. A
permissive Aggregation Group is this Plan and each other plan of the
Company which in total would continue to meet the requirements of
Section 401(a)(4) and 410 of the Code with such other plan being taken
into account (i.e., such other plan provides comparable benefits and
satisfies the coverage test).
(v) "Employee" and "Key Employee" shall also include
beneficiaries of such an Employee.
16.2 Minimum Contribution
For any Plan Year during which the Plan is deemed to be top heavy, the
Employer shall make a minimum contribution for each Participant who is not a Key
Employee as follows:
(a) If the Participant is also a participant in a defined
benefit plan or a defined contribution plan sponsored by the Employer
which provides a top heavy minimum benefit, then the minimum
contribution to this Plan is zero percent (0%).
<PAGE>
(b) If the Participant is also a participant in a defined
benefit plan or a defined contribution plan sponsored by the Employer
which does not provide a top heavy minimum benefit, or which provides a
top heavy minimum benefit offset by the minimum benefit under this Plan
the minimum contribution to this Plan is five percent (5%) of his
annual compensation.
(c) If the Participant is not a participant in any defined
benefit plan or any other defined contribution plan sponsored by the
Employer, then the minimum contribution to this Plan is three percent
(3%) of his annual compensation.
(d) For purposes of computing the minimum allocation,
compensation shall have the meaning set forth in Section 5.5 of the
Plan with respect to the limitations on annual additions.
For purposes of this Section, Participants shall also include eligible
Employees who have waived participation in this Plan. The minimum allocation
shall be determined without regard to any Social Security contribution.
Compensation Deferral Contributions and Employer Matching Contributions shall
not be used to satisfy the minimum allocation requirements of this Section.
16.3 Plan Year in Which Plan is Top Heavy
In any Plan Year in which the Plan is top heavy, but not super top
heavy, the factor of 1.25 in Section 5.6 need not be changed if the contribution
of five percent (5%) is changed to seven and one-half percent (7-1/2%) in
Section 16.2(b) and the three percent (3%) is changed to four percent (4%) in
Section 16.2(c).
16.4 Plan Year in Which Plan is Super Top Heavy
In any Plan Year in which the Plan is super top heavy (substituting
ninety percent (90%) for sixty percent (60%) in Section 16.1(a)), the factor of
1.25 shall be changed to 1.0 in Section 5.6.
<PAGE>
16.5 Vesting Schedule.
----------------
(a) For any Plan Year in which this Plan is top-heavy, the following
vesting schedule shall, without further action by the Employer, automatically
apply to all benefits within the meaning of Section 411(a)(7) of the Code
attributable to Employer contributions, including benefits accrued before the
effective date of Section 416 of the Code and benefits accrued before the Plan
became top heavy:
Years of Vesting Services Vested Percentage
0-1 0%
2 20%
3 40%
4 60%
5 80%
6 100%
However, this Section 16.5 shall not apply to the account of any Participant who
does not have an Hour of Service after the Plan initially becomes top heavy and
such Participant's vested interest in his Total Account attributable to Employer
contributions and, if applicable, forfeitures shall be determined without regard
to this Section 16.5.
(b) If the vesting schedule under the Plan automatically shifts into
the schedule specified in subsection (a) in any Plan Year because of the Plan's
top heavy status, such shift shall constitute an automatic amendment to the
vesting schedule. If the Plan subsequently ceases to be top heavy, the vesting
schedule provided in subsection (a) shall nevertheless continue to apply unless
the Employer adopts a written amendment to the Plan to change the vesting
schedule.
<PAGE>
16.6 Plan Year in Which Plan Ceases to be Top Heavy
In any Plan Year that the Plan ceases to be top heavy, the above
provisions shall no longer apply.
IN WITNESS WHEREOF, the Company has caused this Plan to be executed by
its proper officer, thereunto duly authorized, as of the first day of January,
1997.
VALLEY RESOURCES, INC.
By: K. W. HOGAN
--------------------------------
Senior Vice President, Chief
Financial Officer and Secretary
<PAGE>
EXHIBIT A
Valley Gas Company Employee Stock Ownership Plan
Valley Gas Company Employees Savings Plan
Valley Gas Company Union Employees Savings Plan
<PAGE>
AMENDMENT TO THE
VALLEY RESOURCES, INC. 401(k)
EMPLOYEE STOCK OWNERSHIP PLAN
Pursuant to Section 15.1 of the Valley Resources 401(k) Employee Stock
Ownership Plan (the "Plan"), said Plan is hereby amended, effective January 1,
1997 unless otherwise provided, as follows:
1. The third and fourth sentences of clause (ii) of Section 2.5
are deleted.
2. The reference to Section 409(e)(4) of the Code in Section 2.13
of the Plan is replaced with Section 409(p).
3. The last sentence of Section 3.2 is amended by deleting the
words "of a type historically performed by employees in the business field
of the Employer" and replacing them with the words "performed under primary
direction or control by the recipient".
4. Section 4.8(e), clause (v) is amended to read as follows:
The term "Highly Compensated Employee" shall mean any Employee
of an Employer who performs service during the determination year and
who (A) was a 5% owner at any time during the year or the preceding
year, or (B) for the preceding year had compensation from the Employer
in excess of $80,000.
A former Employee shall be treated as a Highly Compensated
Employee if such Employee was a Highly Compensated Employee upon
termination of employment or at any time after attaining age fifty-five
(55), based on the rules applicable to determining Highly Compensated
Employee status in effect for the determination year that was a
separation year or that ended on or after the Employee's fifty-fifth
(55th) birthday.
5. Section 4.8(e), clause (vii) is deleted.
6. Section 4.8(f) is deleted.
7. Section 4.8(g) is amended to read as follows:
The term "Excess Contributions" means, with respect to any
Plan Year, the excess of (i) the aggregate amount of contributions
actually made to the Plan on behalf of Highly Compensated Employees
which are treated as Elective Deferrals for such year over (ii) the
maximum amount of such contributions permitted under the limitations of
this section. Any distribution of the Excess Contributions for any Plan
Year shall be made to Highly Compensated Employees on the basis of the
amount of Elective Deferrals by, or on behalf of, each such Employee.
<PAGE>
8. Section 4.8(h) is deleted.
9. Section 4.9(e) is deleted.
10. The third and fourth sentences of Section 4.9(h) are deleted
and the following is substituted in lieu thereof:
The amount of Excess Aggregate Contributions for a Highly Compensated
Employee for a Plan Year shall be determined on the basis of
contributions on behalf of, or by, each such Employee.
11. Section 4.9(j) is deleted.
12. The references to Section 14.14 of the Plan in Section 4.11
are replaced with references to Section 14.13.
13. The following Section 4.12 is hereby added after Section 4.11:
Notwithstanding any provision of this Plan to the contrary,
contributions, benefits and service credit with respect to qualified
military service shall be provided in accordance with Section 414(u) of
the Code.
14. The first sentence of Section 5.5(a) is amended to read as
follows:
The "annual addition" to a Participant's Total Account means,
with respect to each limitation year, the sum credited to his Total
Account of (i) Employer contributions, (ii) all Employee contributions
(including, but not limited to, Compensation Deferral Contributions and
voluntary after-tax contributions) and (iii) forfeitures.
15. The first sentence of Section 5.5(d) is amended to read as
follows:
If, as a result of the allocation of forfeitures, a reasonable
error in estimating a Participant's annual compensation, a reasonable
error in determining the amount of elective deferrals that may be made
with respect to any Participant under the limits of Section 415 of the
Code, the annual additions for any Participant exceeds the limits
stated in this section, the excess shall be attributed first to
Compensation Deferral Contributions under Section 4.1, then to Matching
Contributions under Section 4.2 and then to Employer Contributions, if
any, under Section 4.9.
<PAGE>
16. Section 6.4 is amended by replacing the phrase "Normal
Retirement Date" with "Normal Retirement Age".
17. The second sentence of Section 7 is amended to read as
follows:
Distribution of a Participant's Account shall commence, in the
manner provided in Section 9, by April 1 of the calendar year following
the later of (i) the calendar year in which the individual attains
70-1/2, or (ii) the calendar year in which the individual retires;
except that in the case of a Participant who is a 5% owner (as defined
in Section 416 of the Code) with respect to the Plan Year ending in the
calendar year in which such Participant attains age 70-1/2, item (ii)
shall not apply.
18. Section 8.2(a) is amended to read as follows:
If a Participant's employment with the Employer terminates
prior to Normal Retirement Age, the Participant may elect to receive,
after filing such election as the Plan Administrator may require, the
entire vested amount of his Account determined on the Valuation Date on
which such distribution occurs.
19. Section 9.1(b), clause (iii) is amended to read as follows:
Equal or substantially equal quarterly or annual installments
of cash calculated to extend over any period which does not exceed the
life expectancy of the Participant or the joint life expectancy of the
Participant and Beneficiary; provided, however, that the Participant's
vested Account must be more than $3,500 at the time of distribution in
order for the Participant to elect installment payments.
20. The definition of Required Aggegation Group in Section 16.1(b)(iv)
is amended to replace the phrase "for purposes of meeting the requirements of
Section 401(a)(4) and 410 of the Code" with the phrase "for purposes of meeting
the requirements of Section 401(a)(4) or 410 of the Code".
<PAGE>
21. A new clause (vi) is added to Section 16.1(b) to read as
follows:
(vi) Top-Heavy Ratio:
(i) If the Employer maintains one or more defined
contribution plans (including the Plan and any
simplified employee pension plan) and the Employer
has never maintained any defined benefit plan which
has covered or could cover a Participant in this
plan, the Top-Heavy Ratio is a fraction, the
numerator of which is the sum of the account balances
under the defined contribution plan or plans of all
Key Employees as of the Determination Date (including
any part of any account balance distributed in the
five year period ending on the Determination Date),
and the denominator of which is the sum of all
account balances under the defined contribution plan
or plans (including any part of any account balance
distributed in the five year period ending on the
Determination Date) of all Participants therein as of
the Determination Date. Both the numerator and
denominator of the Top-Heavy Ratio shall be adjusted
to include any contribution which is due but unpaid
as of the Determination Date.
(ii) If the Employer maintains one or more defined
contribution plans (including the Plan and any
simplified employee pension plan) and the Employer
maintains or has maintained one or more defined
benefit plans which has covered or could cover a
Participant in this Plan, the Top-Heavy Ratio or a
fraction, the numerator of which is the sum of the
account balances under the defined contribution plan
or plans of all Key Employees and the present value
of accrued benefits under the defined benefit plan or
plans of all Key Employees as of the Determination
Date, and the denominator of which is the sum of the
account balances under the defined contribution plan
<PAGE>
or plans of all Participants therein and the present
value of accrued benefits under the defined benefit
plan or plans of all Participants therein. Present
value may be based on any interest rate and mortality
table which is accepted as reasonable by the Internal
Revenue Service for this purpose. Both the numerator
and denominator of the Top-Heavy Ratio shall be
adjusted to include any distribution of an account
balance or an accrued benefit made in the five year
period ending on the Determination Date and any
contribution due but unpaid under the Plan and, if
applicable, under any other defined contribution plan
as of the Determination Date.
(iii) For purposes of clauses (i) and (ii) above, the
value of account balances and the present value of
accrued benefits shall be determined as of the most
recent Top-Heavy Valuation Date that falls within or
ends with the 12 month period ending on the
Determination Date. The account balance and accrued
benefits of a Participant in any defined contribution
and/or defined benefit plan who is not a Key Employee
but who was a Key Employee in a prior year shall be
disregarded. If a Participant has not performed any
service for the Employer at any time during the five
year period ending on the Determination Date, the
account balance and accrued benefit of such
individual shall be disregarded. The calculation of
the Top-Heavy Ratio, and the extent to which
distributions, rollovers and transfers are taken into
account, shall be made in accordance with Section 416
of the Code and the regulations thereunder. When
aggregating plans, the value of account balances and
accrued benefits shall be calculated with reference
to the Determination Dates that fall within the same
calendar year.
The accrued benefit of a Participant other than a Key
Employee shall be determined under (A) the method, if
any, that uniformly applies for accrual purposes
under all defined benefit plans maintained by the
Employer, or (B) if there is no such method, as if
such benefit accrued not more rapidly than the
slowest accrual rate permitted under the fractional
rule of Section 411(b)(1)(C) of the Code.
<PAGE>
22. The introductory sentence of Section 16.2 is amended to read
as follows:
For any Plan Year during which the Plan is deemed to be
top-heavy, the Employer shall make a minimum contribution for each
Participant who is not a Key Employee and who has not separated from
service by the end of the Plan Year (regardless of whether such
Participant has less than 1,000 hours of service) as follows:
IN WITNESS WHEREOF, the Company has caused this Amendment to be
executed this 28th day of August, 1998.
VALLEY RESOURCES, INC.
By: K. W. HOGAN
-----------------------------
Senior Vice President, Chief
Financial Officer and Secretary
<PAGE>
SECOND AMENDMENT
TO THE VALLEY RESOURCES, INC.
401(K) EMPLOYEE STOCK OWNERSHIP PLAN
Pursuant to Section 15.1 of the Valley Resources 401(k) Employee Stock
Ownership Plan, (the "Plan"), said Plan is hereby amended effective September
20, 2000, unless otherwise provided, as follows:
1. Section 1 is amended by changing the name of the Plan to
"Southern Union Company Valley Resources 401(k) Employee Stock
Ownership Plan".
2. Section 2.4 shall be amended by replacing the words "Valley
Resources, Inc." with "Southern Union Company".
3. The following new definition is added as Section 2.9A:
The term "Eligible Employee" means an individual who is
employed by Southern Union Company at a worksite previously
operated by Valley Gas Company or Bristol & Warren Gas Company
or who is employed by the following wholly-owned subsidiaries:
1) Alternate Energy Corporation
2) Morris Merchants, Inc.
4. Section 2.11 shall have the following sentence added to the
end thereof:
Valley Resources, Inc. common stock that is held in the
Employee Stock Fund on or after September 20, 2000 will be
converted to cash which will be reinvested in Southern Union
Company Employer Securities.
5. Section 2.13 shall be amended by changing the reference to
Section 409(p) of the Code to Section 409(l) of the Code.
6. Section 2.14 shall have the following sentence added to the
end thereof:
On September 20, 2000, Valley Resources, Inc common stock will
be converted to cash which will be reinvested in Southern
Union Company Employer Securities.
<PAGE>
7. Effective January 1, 1998, Section 2.24 and 2.26 shall be
amended by replacing the words "NYL Trust Company" with
"Wilmington Trust Company".
8. Section 3.1(b) is amended by replacing the word "Employee" with
the words "Eligible Employee."
9. Section 5.6 shall be amended by adding the following to the
beginning of the first sentence:
For limitation years beginning prior to January 1, 2000,
10. Section 9.5(b)(i) shall be amended by adding the following to
the end thereof:
Effective January 1, 2000, hardship withdrawals shall not be
considered eligible rollover distributions.
11. Section 14.11 shall be amended by replacing the words "Valley
Resources, Inc." with "Southern Union Company".
12. Section 14.13 shall be amended by replacing the last sentence
thereof with the following sentences:
If Employer Securities are exchanged for cash as part of a
merger, the cash shall be used to purchase Employer Securities
of the acquiring corporation which will be substituted as
collateral for the outstanding Employer Securities Acquisition
Loan.
IN WITNESS WHEREOF, the Company has caused this Amendment to be
executed this 19th day of September, 2000.
VALLEY RESOURCES, INC.
by: A. P. DEGEN
---------------------------------
President and Chief Executive Officer
