As filed with the Securities and Exchange Commission on January 8, 1999
Registration No. 33-__________
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------------
FORM S-8
REGISTRATION STATEMENT
Under
The Securities Act of 1933
---------------------------
THE COASTAL CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 74-1734212
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
Coastal Tower
Nine Greenway Plaza
Houston, Texas 77046-0995
(Address of Principal Executive Offices) (Zip Code)
---------------------------
THE COASTAL CORPORATION THRIFT PLAN
(Full title of the plan)
---------------------------
Austin M. O'Toole, Esq.
Senior Vice President and Secretary
The Coastal Corporation, Coastal Tower, Nine Greenway Plaza
Houston, Texas 77046-0995
(Name and address of agent for service)
(713) 877-1400
(Telephone number, including area code, of agent for service)
---------------------------
CALCULATION OF REGISTRATION FEE
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<TABLE>
<CAPTION>
Proposed Proposed
Amount maximum maximum
Title of securities to be offering price aggregate Amount of
to be registered registered per unit offering price <F3> registration fee
- ---------------------------------------------- -------------- -------------- -------------- ----------------
<S> <C> <C> <C> <C>
Participations in the plan . . . . . . . . . . $100,000,000 <F1> $100,000,000 $27,800
Common Stock of The Coastal Corporation:
par value $.33-1/3 per share . . . . . . . . . 2,852,049 shs.<F2> $35.0625 <F2> $100,000,000
<FN>
<F1>
The $100,000,000 of Plan participations being registered represent
contributions that may be made by participating employees under the Plan; in
addition, pursuant to Rule 416(c) under the Securities Act of 1933, as amended,
this Registration Statement also covers an indeterminate amount of interests to
be offered or sold pursuant to the employee benefit plan described herein.
<F2>
The 2,852,049 shares of Common Stock of The Coastal Corporation being
registered represent the estimated maximum number of shares of such stock which
may be purchased with the Plan participations being registered. Such estimate is
based on the closing price in the daily composite list for transactions on the
New York Stock Exchange and other markets on January 7, 1999 ($35.0625 per
share).
<F3>
Estimated solely for the purpose of determining the registration fee in
accordance with Rule 457(c) under the Securities Act of 1933, as amended.
</FN>
</TABLE>
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<PAGE>
PART II
Item 3. Incorporation of Documents by Reference
This Registration Statement incorporates herein by reference the following
documents which have been filed with the Securities and Exchange Commission (the
"Commission") by The Coastal Corporation ("Coastal") pursuant to the Securities
Exchange Act of 1934, as amended (the "Exchange Act"):
(a) Coastal's Annual Report on Form 10-K for the fiscal year ended
December 31, 1997 (the "1997 Annual Report");
(b) The Coastal Corporation Thrift Plan's Annual Report on Form 11-K for
the fiscal year ended December 31, 1997 ("Form 11-K"); and
(c) Coastal's Registration Statement on Form S-3 describing Coastal's
Common Stock - Registration No. 33-30902 filed with the Commission on
September l, 1989.
All documents subsequently filed by Coastal pursuant to Sections 13(a),
13(c), 14 or 15(d) of the Exchange Act and prior to the filing of the
post-effective amendment which indicates that all securities offered have been
sold or which deregisters all securities then remaining unsold, shall be deemed
to be incorporated by reference herein and to be a part hereof from the date of
filing of such documents.
Item 4. Description of Securities
Not Applicable.
Item 5. Interests of Named Experts and Counsel
Legal Matters
The legality of the securities offered hereby has been passed upon by
Austin M. O'Toole, Esq., Senior Vice President and Secretary of Coastal, Coastal
Tower, Nine Greenway Plaza, Houston, Texas 77046-0995. As of December 31, 1998,
Mr. O'Toole beneficially owned approximately 47,279 shares of Common Stock and
553 shares of Class A Common Stock of Coastal, including exercisable stock
options.
Experts
The annual consolidated financial statements of Coastal incorporated in
this Registration Statement by reference to the 1997 Annual Report and the
annual financial statements of The Coastal Corporation Thrift Plan incorporated
in this Registration Statement by reference to the Form 11-K have been audited
by Deloitte & Touche LLP, independent accountants, as stated in their reports.
Such financial statements are incorporated herein by reference and have been so
incorporated in reliance on the reports of such firm, given on the authority of
such firm as experts in accounting and auditing.
Information derived from the report of Huddleston & Co., Inc., independent
petroleum engineering consultants, with respect to the estimates of the oil and
gas reserves of Coastal and its subsidiaries included in the 1997 Annual Report
has been incorporated in reliance upon the authority of such firm as experts
with respect to the matters contained therein.
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FORM S-8/ 2
<PAGE>
Item 6. Indemnification of Directors and Officers
(a) Section 145 of the General Corporation Law of the State of Delaware
permits a corporation to indemnify its officers, directors and other agents
against certain liabilities at least to the extent provided for in the
Certificates of Incorporation and By-Laws of Coastal.
(b) Article FIFTH of Coastal's Certificate of Incorporation provides as
follows:
FIFTH: A director of the Corporation shall not be personally liable to
the Corporation or its stockholders for monetary damages for breach of
fiduciary duty as a director, except for liability (i) for any breach of
the director's duty of loyalty to the Corporation or its stockholders, (ii)
for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (iii) under Section 174 of the
Delaware General Corporation Law, or (iv) for any transaction from which
the director derived any improper personal benefit. If the Delaware General
Corporation Law is amended after approval by the stockholders of this
article to authorize corporate action further eliminating or limiting the
personal liability of directors, then the liability of a director of the
Corporation shall be eliminated or limited to the fullest extent permitted
by the Delaware General Corporation Law, as so amended.
Any repeal or modification of the foregoing paragraph by the
stockholders of the Corporation shall not adversely affect any right or
protection of a director of the Corporation existing at the time of such
repeal or modification.
(c) Article IX of Coastal's By-Laws reads as follows:
ARTICLE IX
INDEMNIFICATION
SECTION 1. Third Party Actions. The Corporation shall indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceedings, whether
civil, criminal, administrative or investigative (other than an action by
or in the right of the corporation) by reason of the fact that he is or was
a director, officer, employee or agent of the Corporation, or is or was
serving at the request of the Corporation, as a director, officer, employee
or agent of another corporation, partnership, joint venture, trust or other
enterprise, against expenses (including attorneys' fees), judgments, fines
and amounts paid in settlement actually and reasonably incurred by him in
connection with such action, suit or proceeding if he acted in good faith
and in a manner he reasonably believed to be in or not opposed to the best
interests of the Corporation, and with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful.
The termination of any action, suit or proceeding by judgment, order,
settlement or conviction, or upon a plea of nolo contendere or its
equivalent, shall not, of itself, create a presumption that the person did
not act in good faith and in a manner which he reasonably believed to be in
or not opposed to the best interests of the Corporation, and with respect
to any criminal action or proceeding, had reasonable cause to believe that
his conduct was unlawful.
SECTION 2. Actions by or in the Right of the Corporation. The
Corporation shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed
action or suit by or in the right of the Corporation to procure a judgment
in its favor by reason of the fact that he is or was a director, officer,
employee or agent of the Corporation, or is or was serving at the request
of the Corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise against
expenses (including attorneys' fees) actually and reasonably incurred by
him in connection with the defense or settlement of such action or suit if
he acted in good faith
II-3
FORM S-8/ 3
<PAGE>
and in a manner he reasonably believed to be in or not opposed to the best
interests of the Corporation and except that no indemnification shall be
made in respect of any claim, issue or matter as to which such person
shall have been adjudged to be liable to the Corporation unless and only
to the extent that the Court of Chancery or the court in which such action
or suit was brought shall determine upon application that, despite the
adjudication of liability but in view of all the circumstances of the case,
such person is fairly and reasonably entitled to indemnity for such
expenses which the Court of Chancery or such other court shall deem proper.
SECTION 3. Determination of Conduct. The determination that an
officer, director, employee or agent, has met the applicable standard of
conduct set forth in Section 1 and 2 of this Article IX (unless
indemnification is ordered by a court) shall be made (i) by the Board of
Directors by a majority vote of a quorum consisting of directors who were
not parties to such action, suit or proceedings or (ii) if such quorum is
not obtainable, or even if obtainable a quorum of disinterested directors
so directs, by independent legal counsel in a written opinion, or (iii) by
the stockholders.
SECTION 4. Payment of Expenses in Advance. Expenses incurred in
defending a civil or criminal action, suit or proceeding shall be paid by
the Corporation in advance of the final disposition of such action, suit or
proceeding upon receipt of an undertaking by or on behalf of the director,
officer, employee or agent to repay such amount if it shall ultimately be
determined that he is not entitled to be indemnified by the Corporation as
authorized in this Article IX.
SECTION 5. Definition. As used in this Article IX, the term
"Corporation" includes all constituent corporations absorbed by The Coastal
Corporation or a subsidiary thereof in a consolidation, merger or other
acquisition transaction, as well as the resulting or surviving corporation,
so that any person who is or was a director, officer, employee or agent of
such a constituent corporation, or is or was serving at the request of such
a constituent corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise,
shall stand in the same position under the provisions of this Article IX
with respect to The Coastal Corporation as he would if he had served the
resulting or surviving corporation in the same capacity.
SECTION 6. Indemnity Not Exclusive. The indemnification and
advancement of expenses provided hereunder shall not be deemed exclusive of
any other rights to which those seeking indemnification or advancement of
expenses may be entitled under any other by-law, agreement, vote of
stockholders or disinterested directors or otherwise, both as to action in
his official capacity and as to action in another capacity while holding
such office, and shall continue as to a person who has ceased to be a
director, officer, employee or agent and shall inure to the benefit of the
heirs, executors and administrators of such a person. It is the intent of
this Article IX that the Corporation shall indemnify those persons eligible
hereunder to the fullest extent permitted under The General Corporation
Laws of Delaware.
(d) An Indemnity Agreement was approved on May 27, 1981, at the annual
meeting of the holders of the common and convertible preferred stocks of Coastal
and is incorporated herein by reference to the definitive Proxy Statement of
Coastal (Exhibit A) dated April 15, 1981. In April of 1988, the Board of
Directors of Coastal approved a revised and updated Indemnity Agreement which is
incorporated herein by reference to the 1990 Annual Report (Exhibit 28).
Insofar as indemnification for liabilities arising under the Securities Act
of 1933, as amended (the "Act"), may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion of the Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer
II-4
FORM S-8/ 4
<PAGE>
or controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
Item 7. Exemption from Registration Claimed
Not Applicable.
Item 8. Exhibits
The following documents are filed as a part of this Registration Statement:
4.1 The Coastal Corporation Thrift Plan, Amended and Restated as of
January l, 1999.
4.2 The Coastal Corporation Thrift Trust.
5 Opinion of Austin M. O'Toole, Esq., Senior Vice President and
Secretary of The Coastal Corporation, as to the legality of securities
to be registered. Also, see undertaking at Item 9(c) of this Part II.
24.1 Consent of Deloitte & Touche LLP.
24.2 Consent of Huddleston & Co., Inc.
24.3 Consent of Austin O'Toole, Esq. (included in Exhibit 5).
25 Powers of Attorney (included on the signature pages hereof).
Item 9. Undertakings
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of
the Act;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the Registration Statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the Registration Statement;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the Registration
Statement or any material change to such information in the
Registration Statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if
the Registration Statement is on Form S-3 or Form S-8, and the information
required to be included in a post-effective amendment by those paragraphs
II-5
FORM S-8/ 5
<PAGE>
is contained in periodic reports filed with or furnished to the
Commission by the Registrant pursuant to Section 13 or Section 15(d) of
the Exchange Act that are incorporated by reference in the Registration
Statement.
(2) That, for the purpose of determining any liability under the Act,
each such post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of
such securities at that time shall be deeded to be the initial bona fide
offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Act, each filing of the Registrant's annual
report pursuant to Section 13(a) or Section 15(d) of the Exchange Act (and,
where applicable, each filing of an employee benefit plan's annual report
pursuant to Section 15(d) of the Exchange Act) that is incorporated by reference
in the Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(c) The undersigned Registrant hereby undertakes that it will submit the
plan and any amendment thereto to the Internal Revenue Service ("IRS") in a
timely manner, and will make all changes required by the IRS in order to qualify
the plan.
I-5
FORM S-8/ 6
<PAGE>
POWER OF ATTORNEY
Each person whose signature appears below hereby appoints David A. Arledge,
Coby C. Hesse and Austin M. O'Toole and each of them, any of whom may act
without the joinder of the others, as his attorney-in-fact to sign on his behalf
and in the capacity stated below and to file all amendments and post-effective
amendments to this Registration Statement, which amendment or amendments may
make such changes and additions in this Registration Statement as such
attorney-in-fact may deem necessary or appropriate.
SIGNATURES
The Registrant. Pursuant to the requirements of the Securities Act of 1933,
the Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-8 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Houston, State of Texas, on January 6, 1999.
THE COASTAL CORPORATION
(Registrant)
By DAVID A. ARLEDGE
-------------------------------------
David A. Arledge
President and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the date indicated.
Signature Title Date
--------- ----- ----
DAVID A. ARLEDGE Chairman of the Board, President
- -------------------------- Chief Executive Office, Principal January 6, 1999
David A. Arledge Financial Officer, and Director
COBY C. HESSE Principal Accounting Officer January 6, 1999
- --------------------------
Coby C. Hesse
JOHN M. BISSELL Director January 6, 1999
- --------------------------
John M. Bissell
GEORGE L. BRUNDRETT, JR. Director January 6, 1999
- --------------------------
George L. Brundrett, Jr.
II-7
FORM S-8/ 7
<PAGE>
Signature Title Date
--------- ----- ----
HAROLD BURROW Director January 6, 1999
- --------------------------
Harold Burrow
ROY D. CHAPIN, JR. Director January 6, 1999
- --------------------------
Roy D. Chapin, Jr.
JAMES F. CORDES Director January 6, 1999
- --------------------------
James F. Cordes
ROY L. GATES Director January 6, 1999
- --------------------------
Roy L. Gates
KENNETH O. JOHNSON Director January 6, 1999
- --------------------------
Kenneth O. Johnson
JEROME S. KATZIN Director January 6, 1999
- --------------------------
Jerome S. Katzin
J. CARLETON MACNEIL, JR. Director January 6, 1999
- --------------------------
J. Carleton MacNeil, Jr.
THOMAS R. MCDADE Director January 6, 1999
- --------------------------
Thomas R. McDade
Director January __, 1999
- --------------------------
O. S. Wyatt, Jr.
II-8
FORM S-8/ 8
<PAGE>
The Plan. Pursuant to the requirements of the Securities Act of 1933, the
Plan has duly caused this Registration Statement to be signed on its behalf by
the undersigned, thereunto duly authorized, in the City of Houston, State of
Texas, on January 7, 1999.
THE COASTAL CORPORATION
AS ADMINISTRATOR OF
THE COASTAL CORPORATION THRIFT PLAN
By: AUSTIN M. O'TOOLE
------------------------------------
Austin M. O'Toole
Member of The Coastal Corporation
Thrift Plan
Administrative Committee
II-9
FORM S-8/ 9
<PAGE>
INDEX TO EXHIBITS
THE COASTAL CORPORATION
THRIFT PLAN
Sequentially
Exhibit Numbered
No. Description Page
- ------- ------------------------------------------------------- ------------
4.1 The Coastal Corporation Thrift Plan, Amended and
Restated as of January 1, 1999. 11
4.2 The Coastal Corporation Thrift Trust. 75
5 Opinion of Austin M O'Toole, Esq., Senior Vice President
and Secretary of The Coastal Corporation, as to the
legality of the securities to be registered. 88
24.1 Consent of Deloitte & Touche LLP. 89
24.2 Consent of Huddleston & Co., Inc. 90
24.3 Consent of Austin M. O'Toole (included in Exhibit 5). 91
25 Powers of Attorney (included on the signature pages hereof). II-7
II-10
FORM S-8/ 10
THE COASTAL CORPORATION
THRIFT PLAN
JANUARY 1, 1999
INCLUDING THE PLAN AS
AMENDED AND RESTATED AS OF JANUARY 1, 1999
FORM S-8/ 11
<PAGE>
THE COASTAL CORPORATION
THRIFT PLAN
TABLE OF CONTENTS
Page
INTRODUCTION............................................................ 1
I. DEFINITIONS.................................................... 1
1.1 "Active Participation"................................. 1
1.2 "Actual Contribution Percentage"....................... 2
1.3 "Actual Deferral Percentage"........................... 2
1.4 "After Tax Contribution"............................... 2
1.5 "Adjusted Balance"..................................... 2
1.6 "Annual Additions"..................................... 2
1.7 "Basic Compensation"................................... 2
1.8 "Beneficiary........................................... 2
1.9 "Board"................................................ 2
1.10 "Break in Service"..................................... 3
1.11 "Coastal".............................................. 3
1.12 "Code"................................................. 3
1.13 "Committee"............................................ 3
1.14 "Common Stock"......................................... 3
1.15 "Company".............................................. 3
1.16 "Compensation"......................................... 4
1.17 "Earnings"............................................. 4
1.18 "Eligible Employee".................................... 4
1.19 "Employee"............................................. 4
1.20 "Employment Year"...................................... 5
1.21 "Entry Date"........................................... 5
1.22 "ERISA"................................................ 5
1.23 "ESOP"................................................. 5
1.24 "ESOP Participant"..................................... 5
1.25 "Highly Compensated Eligible Employee"................. 5
1.26 "Hour of Service"...................................... 5
1.27 "Investment Fund"...................................... 6
1.28 "Limitation Year"...................................... 6
1.29 "Matching Contributions"............................... 6
1.30 "Matching Contributions Account"....................... 7
1.31 "Maximum Permissible Amount"........................... 7
1.32 "Non-ESOP Participant"................................. 7
1.33 "Normal Retirement Date"............................... 7
1.34 "Participant".......................................... 7
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FORM S-8/ 12
<PAGE>
1.35 "Participation"........................................ 7
1.36 "Plan"................................................. 7
1.37 "Plan Year"............................................ 7
1.38 "Related Employer"..................................... 7
1.39 "Related Plan"......................................... 7
1.40 "Regulations".......................................... 7
1.41 "Salary Reduction Agreement"........................... 7
1.42 "Salary Reduction Contributions"....................... 7
1.43 "Salary Reduction Contribution Account"................ 7
1.44 "Service".............................................. 7
1.45 "Severance Period of One Year"......................... 8
1.46 "Subsidiary"........................................... 8
1.47 "Trust" or "Trust Fund"................................ 8
1.48 "Trust Agreement"..................................... 8
1.49 "Trustee".............................................. 8
1.50 "Uniformed Services"................................... 8
1.51 "Valuation Date"....................................... 8
1.52 "Veterans' Rights Act"................................. 8
II. PARTICIPATION.................................................. 8
2.1 Eligibility............................................ 8
2.2 Participation.......................................... 8
2.3 Reemployment of a Participant.......................... 8
2.4 Discontinuance of Contributions........................ 8
III. CONTRIBUTIONS.................................................. 9
3.1 After Tax Contributions................................ 9
3.2 Salary Reductions...................................... 9
3.3 Salary Reduction Contributions......................... 9
3.4 Maximum Contribution................................... 10
3.5 Matching Contributions................................. 10
3.6 Limitations on Contributions........................... 10
3.7 Rollover Contributions................................. 10
3.8 Withdrawal of Rollover Contribution.................... 11
3.9 Rules Governing Matching Contributions................. 11
3.10 Exclusive Benefit of Employees......................... 14
3.11 Forfeitures of Matching Contributions.................. 14
3.12 Return of Contributions................................ 15
3.13 Veterans' Rights Act................................... 15
IV. SPECIAL RULES GOVERNING SALARY REDUCTION CONTRIBUTIONS
AND SALARY REDUCTION CONTRIBUTION ACCOUNTS..................... 15
4.1 Administrative Rules Governing Salary Reduction
Agreements............................................. 15
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FORM S-8/ 13
<PAGE>
4.2 Limitations on Salary Reduction Contributions.......... 15
4.3 Return of Certain Salary Reduction Contributions....... 18
4.4 Distributions from Salary Reduction Contribution
Accounts........................................... 18
4.5 Accounting............................................. 18
V. ALLOCATIONS TO PARTICIPANTS' ACCOUNTS.......................... 18
5.1 Separate Accounts...................................... 18
5.2 Allocation of After Tax Contribution Accounts.......... 19
5.3 Allocation to Salary Reduction Accounts................ 19
5.4 Allocation of Matching Contributions................... 19
5.5 Maximum Allocation..................................... 19
5.6 Vesting................................................ 20
5.7 Allocations and Adjustment to Accounts................. 21
5.8 Special Allocation Provisions.......................... 21
VI. PAYMENT OF BENEFITS............................................ 22
6.1 General Requirements................................... 22
6.2 Payments on Death...................................... 22
6.3 Payments on Disability................................. 23
6.4 Payments on Termination................................ 23
6.5 Pretermination Distributions........................... 24
6.6 Property Distributed................................... 25
6.7 Methods of Payment..................................... 26
6.8 Distribution of Unallocated Employee Contributions..... 29
6.9 Administrative Powers Relating to Payments............. 30
6.10 Withdrawals from Participant Contribution Account...... 30
6.11 Ten-Year Withdrawal.................................... 30
6.12 Participant to Elect Source of Funds for
Distribution........................................... 30
VII. PLAN ADMINISTRATION............................................ 31
7.1 Company Responsibility................................. 31
7.2 Powers and Duties of Administrator..................... 31
7.3 Organization and Operation of Committee................ 32
7.4 Records and Reports of Committee....................... 32
7.5 Claims Procedure....................................... 32
7.6 Compensation and Expenses of Committee................. 32
7.7 Indemnity of Committee Members......................... 32
VIII. TRUST AND TRUSTEE.............................................. 33
8.1 Trust Agreement........................................ 33
8.2 Exclusive Benefit of Employees......................... 33
8.3 Appointment of Trustee and Investment Managers......... 33
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<PAGE>
8.4 Assignment of Assets to Trustees....................... 33
8.5 Assignment of Assets to Investment Managers............ 34
8.6 Voting Company Stock - Annual or Special Meeting....... 34
8.7 Voting Company Stock - Tender or Exchange Offer........ 34
8.8 Common Trust Fund Authorization........................ 34
IX. LOANS TO PARTICIPANTS.......................................... 34
9.1 Loans.................................................. 34
X. INVESTMENT FUNDS............................................... 35
10.1 Investment Funds....................................... 35
10.2 Initial Investment..................................... 35
10.3 Investment Options..................................... 35
10.4 Diversification of Investments......................... 37
10.5 Rules Governing Investments of Non-ESOP Participants... 38
10.6 Description of Funds................................... 38
XI. AMENDMENT AND TERMINATION...................................... 40
11.1 Amendment of Plan...................................... 40
11.2 Voluntary Termination of/ or Permanent
Discontinuance of Contributions to the Plan........ 40
11.3 Involuntary Termination of Plan........................ 40
11.4 Payments on Termination of/ or Permanent
Discontinuance of Contributions to the Plan........ 41
11.5 Assets Available for All Controlled Group
Participants....................................... 41
XII. MISCELLANEOUS.................................................. 41
12.1 Duty to Furnish Information and Documents.............. 41
12.2 Annual Statements and Available Information............ 41
12.3 No Enlargement of Employment Rights.................... 41
12.4 Applicable Law......................................... 42
12.5 No Guarantee except for Colorado Plan.................. 42
12.6 Unclaimed Funds........................................ 42
12.7 Merger or Consolidation of Plan........................ 42
12.8 Interest Nontransferable............................... 42
12.9 Prudent Man Rule....................................... 43
12.10 Limitations on Liability............................... 43
12.11 Headings............................................... 43
12.12 Gender and Number...................................... 43
12.13 ERISA and Approval Under Internal Revenue Code......... 43
12.14 Extension of Plan to Related Employers................. 43
12.15 Rules of Interpretation................................ 44
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<PAGE>
12.16 Electronic Procedures.................................. 44
XIII. TOP-HEAVY PROVISIONS........................................... 44
13.1 Top-Heavy Status....................................... 44
13.2 Definitions............................................ 44
13.3 Determination of Top-Heavy Status...................... 45
13.4 Vesting................................................ 45
13.5 Minimum Contribution................................... 46
13.6 Compensation........................................... 46
13.7 Collective Bargaining Agreements....................... 46
13.8 Limit on Annual Additions: Combined Plan-Limit........ 46
13.9 Safe-Harbor Rule....................................... 47
SUPPLEMENTS
ANR Supplement................................................. 48
Coastal Mart, Inc. Supplement.................................. 49
Coal Supplement................................................ 49
Coastal Canada Supplement...................................... 50
Maverick Supplement............................................ 50
St. Helen's Facility Supplement................................ 51
Derby Supplement............................................... 51
Conoco Supplement.............................................. 54
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<PAGE>
THE COASTAL CORPORATION
THRIFT PLAN
JANUARY 1, 1999
INCLUDING THE PLAN AS
AMENDED AND RESTATED AS OF JANUARY 1, 1999
Introduction
Name and Effective Date
The name of this plan is "The Coastal Corporation Thrift Plan" (hereinafter
referred to as the "Plan" or "Coastal Plan"). The Plan was also known by its
former names, which are "The Coastal Corporation Thrift Plan and Trust" and
prior to 1980, the "Coastal States Gas Corporation Thrift Plan and Trust." The
Plan became effective on January 1, 1963.
The Plan was amended and restated as of January 1, 1999 to convert certain
of the Section 401(k) provisions of the Plan to ESOP provisions.
The Plan is an ESOP with respect to contributions made pursuant to a Salary
Reduction Agreement (Code Section 401(k) contribution) by a Participant during
the period the Participant is an Employee of a corporation with respect to which
Common Stock of the Company is an employer security as defined in Section 409(l)
of the Code, specifically, (i) a corporation which is a Related Employer; (ii) a
Subsidiary which is a corporation in which the Company owns, directly, at least
fifty percent of the total combined voting power of all classes of stock
entitled to vote or at least fifty percent of the total value of shares of all
classes of stock in such corporation and all other corporations below it in the
organizational structure would be considered Related Employers assuming such
Subsidiary were the Company.
As of January 1, 1986, the American Natural Resources System Companies
Employees' Savings Plan (hereinafter referred to as the "ANR Plan") was merged
into the Coastal Plan.
The purpose of the Plan is to enable participating Employees to share in
the growth and prosperity of the Company, to provide Employees with an
opportunity to accumulate capital for their future economic needs and to enable
Employees to acquire stock ownership interest in the Company.
This Plan is designed to be a profit sharing plan as defined in Code
Section 401(a) and this statement is intended to satisfy the requirements of
Section 401(a)(27) of the Code, except that the ESOP provisions of the Plan are
designed to invest primarily in qualifying employer securities (as defined in
Sections 409(l) and 4975(e)(8) of the Code) and are intended to be a stock bonus
plan as defined in Section 401(a)(23) of the Code.
Plan provisions apply on a prospective basis from their effective date and
do not alter Plan provisions with respect to periods of time prior to the
effective date.
ARTICLE I
DEFINITIONS
Whenever used herein the following words and phrases shall have the
meanings stated below unless a different meaning is plainly required by the
context:
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1.1 "Active Participation" means a calendar month (a) with respect to which
a contribution is made to the Plan for a Participant pursuant to a Salary
Reduction Agreement and/or an After Tax Contribution election, (b) during which
a Participant would have been eligible to contribute to the Plan but was
prohibited from contributing due to a withdrawal of funds from the Plan, (c)
during which the Participant would have been eligible to contribute to the Plan
but was prohibited from doing so due to a decision by the Administrator to stop
contributions for such period of time for such Participant in order to meet the
requirements for continued qualification of the Plan, (d) during which the
Participant would have been eligible to contribute to the Plan except that (i)
such Participant was employed by a Related Employer or Subsidiary which had not
adopted the Plan with respect to such period of time and (ii) such Participant,
if eligible, contributed to a defined contribution plan which met the
qualification requirements of Code Section 401(a) adopted by such Related
Employer or Subsidiary, (e) during which, due to disability, a Participant
qualified for benefits under a long-term disability plan of the Company and was
therefore ineligible to participate in the Plan as an Employee, or (f) during
which a Participant was not an Employee but was a "leased employee" as defined
in Section 1.19(d) provided that, if eligible, such Participant contributed to a
defined contribution plan adopted by the employer of such "leased employee" if
such plan met the qualification requirements of Section 401(a) of the Code. A
Participant shall receive full credit for any calendar month during which the
Participant makes a contribution. Any full calendar month during which a
Participant is eligible to contribute and declines to do so shall be excluded
from Active Participation.
Active Participation includes any period of participation in the Coastal
Plan, the ANR Plan and the Original and Amended Colorado Plans (which were
merged into this Plan in 1974).
1.2 "Actual Contribution Percentage" for the purpose of testing compliance
with Code Section 401(m) for a specified group for a given Plan Year, is the
average of the ratios, calculated separately for each Eligible Employee in such
group of (i) the After Tax Contribution, if any, contributed by the Participant
for such Plan Year and the Matching Contributions, if any contributed by the
Company on behalf of such Participant for such Plan year to (ii) the
Participant's Earnings for such Plan Year.
1.3 "Actual Deferral Percentage" shall mean, for a specified group for a
given Plan Year, the average of the ratios calculated separately for each
Eligible Employee in such group: (i) the Salary Reduction contributions, if any,
contributed by the Company on behalf of each such Eligible Employee for such
Plan Year to (ii) the Participant's Earnings for such Plan Year.
1.4 "After Tax Contribution" is a contribution by a Participant which is
subject to federal income tax prior to contribution to the Plan.
1.5 "Adjusted Balance" means the balance in a Participant's account or
accounts, as adjusted in accordance with Plan provisions including Sections 5.2,
5.3, 5.4, 5.5 and 5.7 of the Plan as of the applicable Valuation Date.
1.6 "Annual Additions" means the total of: (a) Company contributions
allocated to a Participant's accounts under this Plan and any Related Plan
during any Limitation Year; (b) the amount of employee contributions made by the
Participant under this Plan and any Related Plan; and (c) forfeitures allocated
to a Participant's accounts under this Plan and any Related Plan.
Clauses (a) and (b) above include excess contributions under Sections 3.9
and 4.3.
1.7 "Basic Compensation" means the fixed salaries or wages per hour based
on an eight-hour per day schedule paid by the Company to the Participant for the
Plan Year including pay on the basis of sales commissions, truck mileage and
loading but excluding compensation for bonuses, overtime and other incentive
compensation. Basic Compensation includes payment for current year earned
vacation, but not for accrued vacation. Basic Compensation includes any amount
paid by an Employer pursuant to the direction of an Employee (where the
direction is delivered in writing or by using the electronic procedure provided
by the Administrator) under a Salary Reduction Agreement and under any salary
reduction program maintained by the Employer which meets the qualification
requirements of Code
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Section 125 for exclusion from the gross income of the Participant. Except as
provided in this definition, only payments included in the definition of
Compensation are included in Basic Compensation.
In no event shall Basic Compensation of a Participant taken into
account under the Plan for any Plan Year exceed $160,000 (or such greater amount
provided pursuant to Section 401(a)(17) of the Code).
1.8 "Beneficiary" means the person, persons, or entity designated or
determined pursuant to the provisions of Section 6.2(b) of the Plan.
1.9 "Board" means the Board of Directors of the Company.
1.10 "Break in Service" means the termination of employment of an Employee
followed by (i) for purposes of subsection (a), a Severance Period of One Year
during which the Employee accumulates no Hours of Service, or (ii) for purposes
of subsections (b), (c), (d) and (e), the expiration of an Employment Year in
which the Employee accumulates fewer than 501 Hours of Service.
(a) A Break in Service shall not be deemed to have occurred if (i) the
employment of a terminated Employee is resumed prior to the expiration of a
Severance Period of One Year in which he accumulates any Hours of Service;
(ii) the Employee is absent from the active employment with the Company and
Related Employers for periods of employment with the Company or Related
Companies during which the individual is disabled due to illness or injury;
or (iii) the Employee is absent from employment with the Company by reason
of service in the "uniformed services" (as that term is defined in the
Veterans' Rights Act) for a period during which the Employee's reemployment
rights are guaranteed by the Veterans' Rights Act, and the Employee is
reemployed by the Company under the terms of Section 4312 of the Veterans'
Rights Act; or (iv) the Employee is absent on an approved leave of absence
granted to the Employee on or after August 5, 1993 pursuant to the Family
and Medical Leave Act, if the Employee returns to work for an Employer at
the end of such leave of absence.
(b) An Employee who is absent from work with the Company because of:
(i) Employee's pregnancy, (ii) the birth of the Employee's child, (iii) the
placement of a child with the Employee in connection with the Employee's
adoption of the child, or (iv) caring for such child immediately following
such birth or placement shall receive credit, solely for purposes of
determining whether a Break in Service has occurred under this Section, for
the Hours of Service described in subsection (c) of this Section; provided
that the total number of hours credited as Hours of Service under this
subsection shall not exceed 501 Hours of Service.
(c) In the event of an Employee's absence from work for any of the
reasons set forth in subsection (b) of this Section, the Hours of Service
that the Employee will be credited with under subsection (b) are (i) the
Hours of Service that otherwise would normally have been credited to the
Employee but for such absence, or (ii) eight Hours of Service per day of
such absence if the Administrator is unable to determine the Hours of
Service described in clause (i).
(d) An Employee who is absent from work for any of the reasons set
forth in subsection (b) of this Section shall be credited with Hours of
Service under subsection (b), (i) only in the Employment Year in which the
absence begins, if the Employee would be prevented from incurring a Break
in Service in that Year solely because the period of absence is treated as
credited Hours of Service, as provided in subsections (b) and (c), or (ii)
in any other case, in the immediately following Employment Year.
(e) No credit for Hours of Service will be given pursuant to
subsections (b), (c) and (d) of this Section unless such timely information
that the Administrator may reasonably require to establish: (i) that the
absence from work is for one of the reasons specified in subsection (b);
and (ii) the number of days for which there was such an absence. No credit
for Hours of Service will be given pursuant to subsections (b), (c), and
(d) for any
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purpose of the Plan other than the determination of whether an Employee has
incurred a Break in Service pursuant to this Section.
1.11 "Coastal" means The Coastal Corporation, a Delaware corporation.
1.12 "Code" means the Internal Revenue Code of 1986, as amended from time
to time. Reference to a section of the Code shall include that section and any
comparable section or sections of any future legislation that amends,
supplements or supersedes said section.
1.13 "Committee" means the Administrative Committee described in Section
7.1 of the Plan.
1.14 "Common Stock" means the shares of common stock of Coastal, $.33-1/3
par value, which are publicly traded.
1.15 "Company" means Coastal, or any successor corporation resulting from a
merger or consolidation with the Company or transfer of substantially all of the
assets of the Company, if such successor or transferee shall adopt and continue
the Plan by appropriate corporate action, pursuant to Section 11.3 of the Plan.
All employees of a Related Employer shall be treated as employed by the Company
only for purposes of determining Hours of Service under Section 1.26, Service
under Section 1.44, eligibility to participate under Section 2.1, vesting under
Section 5.6 and the commencement of benefits under Section 6.7(b).
Notwithstanding anything to the contrary contained in this Section, no provision
of this Section shall be construed or interpreted to require the Company to make
a Company contribution under the Plan for any individual who is not an Employee.
1.16 "Compensation" means all amounts received (without regard to whether
or not an amount is paid in cash) by a Participant for personal services
actually rendered in the course of employment with the Company to the extent
such amounts are includible in gross income, but shall not include payments or
reimbursements for moving expenses to the extent that the Company determines
that such moving expenses meet the requirements of Section 217 of the Code to be
allowed as a deduction by the Participant, income arising from the exercise of a
nonqualified stock option and income arising from premature disposition of stock
acquired pursuant to exercise of a qualified stock option. In no event shall
Compensation of a Participant taken into account under the Plan for any Plan
Year exceed $160,000 (or such greater amount provided pursuant to Section
401(a)(17) of Code.)
Effective for Plan Years commencing after December 31, 1997, for
purposes of applying the contribution and benefit limitations of Section 415 of
the Code, Compensation shall include an Employer contribution pursuant to a
salary reduction agreement to a plan which meets the qualification requirements
of Section 401(k) of the Code and any amount which is excluded from gross income
pursuant to Section 125 of the Code.
1.17 "Earnings" means a Participant's Compensation paid during a Plan Year,
increased by the amount subject to any Salary Reduction Agreement entered into
by the Participant for such Year.
In no event shall Earnings of a Participant taken into account under
the Plan for any Plan Year exceed $160,000 (or such greater amount provided
pursuant to Section 401(a)(17) of the Code).
1.18 "Eligible Employee" means, for purposes of Sections 3.9 and 4.2, any
Employee who has met the requirements of Section 2.1 of the Plan and who is
directly or indirectly eligible to make an election under the Plan for all or a
portion of a Plan Year and includes an Employee who would be a Participant but
for the failure to make required contributions; an Employee whose eligibility to
make After Tax Contributions or Salary Reduction Contributions has been
suspended because of a distribution, a loan or an election (other than certain
one-time elections) not to participate in the Plan; an Employee who may not
receive additional Annual Additions because of Code Section 415 limits; or an
Employee who may not contribute due to the limitations of Code Section
401(a)(17).
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1.19 "Employee" means an individual employed by the Company provided,
however, that "Employee" does not include any individual covered by a collective
bargaining agreement or other agreement between employee representatives and the
Company if retirement, thrift, profit sharing or similar benefits were the
subject of good faith bargaining between such employee representatives and the
Company and such agreement does not provide for eligibility for this benefit.
(a) Any person who is, with respect to the United States, a
nonresident alien and who does not receive earned income from sources
within the United States from a Related Employer or Subsidiary which has
adopted this Plan is not an "Employee" unless such person is employed at a
work location in Canada of a Related Employer or Subsidiary which has
adopted this Plan.
(b) Any United States citizen who is employed by a foreign subsidiary
of a Related Employer or Subsidiary which has adopted this Plan shall be
considered an "Employee" of such Employer provided there is in effect an
agreement between the Internal Revenue Service and such Employer to pay,
with respect to foreign service, an amount equivalent to the tax under the
Federal Insurance Contributions Act, and provided further that
contributions under a funded plan of deferred compensation are not provided
by any other person with respect to the remuneration paid to such United
States citizen by the foreign subsidiary.
(c) A person who, due to disability, qualifies for benefits under a
long term disability plan of the Company is not eligible to participate in
the Plan and shall not be considered an "Employee" for purposes of the Plan
during the period of time such person qualifies for such long term
disability benefits. This provision applies to periods after 1989.
(d) A person who is not an employee of the Company, a Subsidiary or a
Related Employer and who performs services for the Company, Subsidiary or
Related Employer pursuant to an agreement between the Company, a Subsidiary
or a Related Employer and a leasing organization shall be considered a
"leased employee" after such person performs such services for a
twelve-month period and the services are performed under the primary
direction or control of the Company, Subsidiary or a Related Employer. A
person who is considered a leased employee of the Company, a Subsidiary or
a Related Employer shall not be considered an Employee for purposes of the
Plan. If a leased employee subsequently becomes an Employee and thereafter
participates in the Plan, he shall be given credit for Hours of Service and
Service for his period of employment as a leased Employee, except to the
extent that the requirements of Section 414(n)(5) of the Code were
satisfied with respect to such Employee while he was a leased Employee.
A person who is not considered to be a "leased employee" as defined
above and who is engaged as an independent contractor pursuant to a
contract or agreement between such person and the Company, a Subsidiary or
a Related Employer which designates him as an independent contractor or
otherwise contemplates or implies that he will function as an independent
contractor is not considered an Employee for purposes of the Plan. Only
individuals who are paid as employees from the payroll of the Company, a
Subsidiary or a Related Employer and treated by the Company, Subsidiary or
Related Employer at all times as Employees shall be deemed Employees for
purposes of the Plan, and no independent contractor shall be treated as an
Employee under the Plan during the period he renders services to the
Company as an independent contractor. Any person retroactively or in any
other way held or found to be a "common law employee" shall not be eligible
to participate in the Plan for any period during which he was not treated
as an Employee by the Company and considered to be an "Employee" under this
definition. If an independent contractor subsequently becomes an Employee
and thereafter participates in the Plan, he shall be given credit for Hours
of Service and Service for his period of employment as a leased Employee,
except to the extent that the requirements of Section 414(n)(5) of the Code
were satisfied with respect to such Employee while he was an independent
contractor.
1.20 "Employment Year" means a twelve consecutive month period commencing
with an individual's initial date of hire (or last date of rehire if he has
incurred a Break in Service) or with any anniversary thereof. For purposes
hereof, an individual's date of hire shall be the first day on which he
completes an Hour of Service and his date of rehire shall be the first day on
which he completes an Hour of Service following a Break in Service.
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1.21 "Entry Date" means the first day of the first full pay period for an
Employee which occurs after completion of a year of Service.
1.22 "ERISA" means Public Law No. 93-406, the Employee Retirement Income
Security Act of 1974, as amended from time to time.
1.23 "ESOP" means employee stock ownership plan as defined in Section
4975(e)(7) of the Code.
1.24 "ESOP Participant" means a Participant subject to a Salary Reduction
Agreement and to which the ESOP provisions of the Plan apply.
1.25 "Highly Compensated Participant" means a Participant who, (a) during
the current Plan Year or the preceding Plan Year, was at any time a five-percent
owner (as defined in Section 416 of the Code) of the Company, or (b) during the
preceding Plan Year (I) received Compensation from the Company in excess of
$80,000 (or such greater amount provided by the Secretary of the Treasury
pursuant to Section 414(q) of the Code) and, if elected by the Company, was in
the top-paid group of Employees (as defined in Section 414(q) of the Code) for
such Year. A Participant is in the top paid group for such Plan Year if he is in
the group consisting of the top 20 percent of the Employees when ranked on the
basis of compensation (as defined in Section 414(q)(4)) paid during such Plan
Year.
1.26 "Hour of Service" means a period of time consisting of an
individual's period of employment with the Company, a Subsidiary or a Related
Employer and for all purposes except vesting means (i) each hour for which an
individual is paid, or entitled to payment, for the performance of duties during
a period of employment with the Company, a Subsidiary or Related Employer, and
(ii) each hour for which an individual is directly or indirectly paid by the
Company, a Subsidiary or Related Employer or is entitled to payment from the
Company, a Subsidiary or Related Employer during which no duties are performed
by reason of vacation, holiday, illness, incapacity (including disability),
layoff, jury duty, military duty or leave of absence (but not in excess of 501
hours in any continuous period during which no duties are performed). Each Hour
of Service for which back pay, irrespective of mitigation of damages, is either
awarded or agreed to by the Company, a Subsidiary or a Related Employer shall be
included under either (i) or (ii) as may be appropriate. Hours of Service shall
be credited:
(a) in the case of hours referred to in clause (i) of the first
sentence of this section, for the computation period in which the duties
are performed;
(b) in the case of hours referred to in clause (ii) of the first
sentence of this section, for the computation period or periods in which
the period during which no duties are performed occurs; and
(c) in the case of hours for which back pay is awarded or agreed to by
the Company, a Subsidiary or a Related Employer for the computation period
or periods to which the award or agreement pertains, rather than to the
computation period in which the award, agreement or payment is made.
In determining Hours of Service, an individual who is employed by the
Company, a Subsidiary or a Related Employer on other than an hourly-rated
basis shall be credited with ten (10) Hours of Service per day for each day
the individual would, if hourly-rated, be credited with service pursuant to
clause (i) of the first sentence of this Section. If an individual is paid
for reasons other than the performance of duties pursuant to clause (ii) of
the first sentence of this Section: (i) in the case of a payment made or
due that is calculated on the basis of units of time, an individual shall
be credited with the number of regularly scheduled working hours included
in the units of time on the basis of which the payment is calculated; and
(ii) an individual without a regular work schedule shall be credited with
eight (8) Hours of Service per day (to a maximum of forty (40) Hours of
Service per week) for each day that the individual is so paid. Hours of
Service shall be calculated in accordance with Department of Labor
Regulations Section 2530.200b-2 or any future legislation or regulation
that amends, supplements or supersedes said section.
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(d) Hours of Service shall not be credited for the performance of
duties for any entity prior to the time of acquisition of fifty percent of
the voting or other ownership interest of such entity by Coastal. Provided,
however, that Hours of Service under this Plan shall include Hours of
Service credited under the Plan prior to the January 1, 1989 restatement of
the Plan.
(e) Solely for purposes of determining an individual's
(i) eligibility to participate in the Plan under Section 2.1,
and
(ii) vesting under Section 5.6, Hours of Service shall include
hours during an approved leave of absence granted by the
Company to an individual on or after August 5, 1993 pursuant
to the Family and Medical Leave Act, if the individual
returns to employment with the Company, a Subsidiary or
Related Employer at the end of such leave of absence.
Such Hours of Service shall be calculated pursuant to the provisions
of Subsection (c) of this Section.
1.27 "Investment Fund" or "Fund" means any fund as described in the Plan.
1.28 "Limitation Year" means the twelve (12) consecutive month period to be
used in determining the Plan's compliance with Code Section 415 and the
Regulations thereunder. The Company shall take all actions necessary to ensure
that the Limitation Year is the same twelve (12) month period as the Plan Year.
1.29 "Matching Contributions" means amounts contributed by the Company
pursuant to Section 3.5 of the Plan.
1.30 "Matching Contributions Account" means the record of money and assets
held by the Trustee for an individual Participant or Beneficiary pursuant to the
provisions of the Plan derived from Matching Contributions.
1.31 "Maximum Permissible Amount" means the lesser of: (a) $30,000 (or, if
greater, one-quarter of the dollar limitation in effect pursuant to Section
415(b)(1)(A) of the Code); or (b) 25% of a Participant's Compensation.
1.32 "Non-ESOP Participant" means a Participant under a Salary Reduction
Agreement and to which the ESOP provisions of the Plan do not apply.
1.33 "Normal Retirement Date" means the date a Participant attains age 65.
1.34 "Participant" means an Employee who becomes a Participant under the
provisions of Section 2.2 of the Plan.
(a) For purposes of Sections 3.9 and 4.2 of the Plan, "Participant"
means an Eligible Employee, and;
(b) An Employee who makes a Rollover Contribution prior to the Entry
Date of such Employee shall be a Participant only with respect to such
Rollover Contributions until the Entry Date of such Employee.
(c) A former Employee or Beneficiary who has no vested Adjusted
Balance in any account under the Plan is not a Participant.
1.35 "Participation" means the months of participation calculated under the
provisions of Active Participation excluding the provisions of subsection
1.1(d)(ii) and including any full calendar month during which a Participant is
eligible to contribute and declines to do so.
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1.36 "Plan" means The Coastal Corporation Thrift Plan. For purposes of
Section 401(a) of the Code, the Plan shall constitute a profit-sharing plan,
except for the ESOP provisions which shall constitute a stock bonus plan.
1.37 "Plan Year" means the fiscal year of Coastal, which is currently
designated as the twelve-month period from January through December of each
year. Any other twelve consecutive month period that may hereafter be designated
as the fiscal year of Coastal shall be the Plan Year.
1.38 "Related Employer" means (i) any corporation that is a member of a
controlled group of corporations (as defined in Section 414(b) of the Code) that
includes the Company; (ii) any trade or business (whether incorporated or
unincorporated) that is under common control (as defined in Section 414(c) of
the Code) with the Company; and (iii) any member of an affiliated service group
(as defined in Section 414(m) of the Code) that includes the Company.
1.39 "Related Plan" means any other defined contribution plan (as defined
in Section 415 of the Code) maintained by the Company or by any Related
Employer.
1.40 "Regulations"means regulations issued pursuant to provisions of the
Code.
1.41 "Salary Reduction Agreement" means a written agreement, entered into
by a Participant, pursuant to the provisions of Section 3.2 of the Plan.
1.42 "Salary Reduction Contributions" means amounts contributed by the
Company pursuant to the provisions of Section 3.3 of the Plan.
1.43 "Salary Reduction Contribution Account" means the record of money and
assets held by the Trustee for an individual Participant or Beneficiary pursuant
to the provisions of the Plan, derived from Salary Reduction Contributions.
1.44 "Service" means the number of Employment Years, commencing with the
Employment Year in which an individual is initially employed and ending with the
Employment Year in which a Break in Service occurs during which the individual
accrues at least 1,000 Hours of Service. Service will include an approved leave
of absence granted to an individual on or after August 5, 1993 pursuant to the
Family and Medical Leave Act, if such individual returns to employment with the
Company, a Subsidiary or Related Employer at the end of such approved leave of
absence. Without regard to the preceding provisions of this Section, a
Participant's years of Service after a period of five consecutive one-year
Breaks in Service shall be disregarded for purposes of determining his
nonforfeitable interest in his Company Matching Contribution Account as of the
Valuation Date coincident with or next preceding the date he incurs such five
consecutive one-year Breaks in Service. For purposes of determining eligibility
to participate in the Plan only, Service during the initial Employment Year
shall be based on the initial date of hire or date of rehire, as is appropriate,
and, for subsequent Employment Years (including the Plan Year which includes the
first anniversary of the individual's date of hire or rehire, as appropriate),
Service shall be determined based upon the Plan Year in lieu of the Employment
Year.
1.45 "Severance Period of One Year" means a twelve consecutive month period
during which an Employee performs no Hours of Service and which begins on the
earlier of the date, on which (i) the Participant terminates employment with the
Company or (ii) the first date of a period in which the Participant remains
absent from service of the Company for any reason other than termination of
employment. For this purpose a Participant shall not be considered to have
terminated employment while such Participant, due to disability, qualified for
benefits under a long-term disability plan of the Company.
1.46 "Subsidiary" means any corporation or unincorporated trade, business
or partnership in which Coastal owns, directly or indirectly, fifty percent of
the outstanding voting securities in such corporation or 50% of the ownership
interest in such unincorporated entity.
1.47 "Trust" or "Trust Fund" means all money, securities and other property
held under the Trust Agreement for the purposes of the Plan.
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1.48 "Trust Agreement" means The Coastal Corporation Thrift Trust document,
as it may be amended from time to time.
1.49 "Trustee" with respect to the Trust Agreement is defined in such Trust
Agreement.
1.50 "Uniformed Services" means, with respect to the United States of
America, the Armed Forces, the Army National Guard and the Air National Guard
when engaged in active duty for training, or full-time National Guard duty, the
commissioned corps of the Public Health Service, and other category of persons
designated by the President of the United States of America in time of war or
emergency.
1.51 "Valuation Date" means the last business day of each calendar month
and such other date, if any, as shall be selected by the Administrator.
1.52 "Veterans' Rights Act" means the Uniformed Services Employment and
Reemployment Rights Act of 1994 (P.L. 103-353), as amended.
ARTICLE II
PARTICIPATION
2.1 Eligibility. Each employee is eligible to participate in the Plan as of
the Entry Date of such Employee or the first day of any pay period of such
Employee which is subsequent to such Entry Date.
2.2 Participation. To participate, an Employee who has met the eligibility
requirements of Section 2.1 must enroll by submitting a written election to
participate to the Administrator on a form provided by or acceptable to the
Administrator or by using the electronic enrollment procedure provided by the
Administrator.
2.3 Reemployment of a Participant. If an Employee who has satisfied the
eligibility requirements of Section 2.1 shall incur a Break in Service and shall
thereafter be reemployed by the Company, he shall again become eligible to
participate under the Plan on the date of his resumption of employment.
2.4 Discontinuance of Contributions. To discontinue contributions to the
Plan, a Participant must submit a written election to discontinue contribution
to the Administrator on a form provided by or acceptable to the Administrator or
by using the electronic procedure provided by the Administrator. Such
discontinuance may be effective the first day of any pay period of such
Participant subsequent to its receipt by the Administrator. Such discontinuance
must be effective for at least twelve weeks.
ARTICLE III
CONTRIBUTIONS
3.1 After Tax Contributions.
(a) Each Participant may elect to contribute from one percent (1%) to
eight percent (8%) in increments of one percent (1%) of the Basic
Compensation of such Participant to the Plan.
(b) The minimum of one percent (1%) stated in the preceding subsection
shall be two percent (2%) unless the Participant has also elected at least
a one percent (1%) reduction in Basic Compensation pursuant to a Salary
Reduction Agreement. The total of After Tax Contributions and Salary
Reduction amount may not exceed the maximum percentage for such Participant
established pursuant to Section 3.4.
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3.2 Salary Reductions.
(a) By entering into a Salary Reduction Agreement with the Company, a
Participant elects to reduce his Basic Compensation from the Company by a
percentage between one percent (1%) and eight percent (8%) (in increments
of one percent (1%)). Reductions to a Participant's Basic Compensation
pursuant to his Salary Reduction Agreement shall be effected through
payroll deductions. Salary Reduction Agreements shall be subject to the
special rules set forth in ARTICLE IV below.
(b) The minimum of one percent (1%) stated in preceding subsection (a)
shall be two percent (2%) unless the Participant is also contributing at
least one percent (1%) as an After Tax Contribution. The total of After Tax
Contributions and Salary Reduction amount may not exceed the maximum
percentage for the Participant as established pursuant to Section 3.4.
(c) Notwithstanding any provision of the Plan to the contrary, the
elective deferrals (as defined in Section 402(g)(3) of the Code, including
Salary Reduction Contributions) of any Participant for any taxable year of
the Participant shall not exceed the amount set forth in Section 402(g) of
the Code, as adjusted by the Secretary of the Treasury pursuant to Sections
402(g)(5) and 415(d) of the Code. Notwithstanding subsection 3.2(a),
fractional reductions shall be permitted where necessary to comply with the
limit imposed by Section 402(g)(1) of the Code. Any amount contributed to
the Plan by the Company on behalf of a Participant during any Plan Year,
pursuant to the Participant's Salary Reduction Agreement, in excess of the
limitations set forth in this subsection, adjusted for earnings, gains, and
losses allocable thereto, shall be paid directly to the Participant within
the time period set forth in Section 402(g)(2) of the Code.
(d) Salary Reduction Contributions for ESOP Participants shall
constitute and shall be treated as an ESOP. Except as otherwise provided in
Sections 10.3 and 10.4, all Salary Reduction Contributions for ESOP
Participants shall be invested in Common Stock.
3.3 Salary Reduction Contributions. The Company shall contribute to the
Trust for each Plan Year a Salary Reduction Contribution in an amount equal to
the total amount subject to Salary Reduction Agreements for such Year and
deducted from payroll during such Year and not reduced pursuant to Section
3.2(c). The Company shall pay to the Trustee its Salary Reduction Contribution
as of the earliest date on which such Contributions can reasonably be segregated
from the Company's general assets, which date shall not be later than the
fifteenth business day of the month following the date on which such amounts
would otherwise have been payable to the Participants in cash.
3.4 Maximum Contribution.
(a) The total percentage of Basic Compensation contributed to the Plan
for a Participant pursuant to both a Salary Reduction Agreement and an
After Tax Contribution election and eligible for Company Matching
Contribution shall not exceed two percent during the first twenty-four
months of Active Participation, four percent during the twenty-fifth
through the forty-eighth month of Active Participation, six percent during
the forty-ninth through the seventy-second month of Active Participation
and eight percent for months of Active Participation thereafter.
(b) In addition to the amount eligible for Company Matching
Contribution, a Participant who has less than seventy-two months of Active
Participation may contribute an additional amount to the Plan. Such
additional amount is not eligible for the Company Matching Contribution.
Such additional amount shall be in whole percentages of the Basic
Compensation of the Participant and may not exceed the percentage by which
eight percent exceeds the total percentage of Basic Compensation of such
Participant which is eligible for the Company Matching Contribution. Such
additional percentage may be contributed pursuant to a Salary Reduction
Agreement and/or After Tax Contribution election provided that the total
contributed under both such options shall not exceed such additional
percentage. This provision is effective on, and applies to periods of time
after, January 1, 1990.
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3.5 Matching Contributions.
(a) For each Plan Year the Company shall contribute to the Trust for
each Participant a Matching Contribution in an amount equal to one hundred
percent of the amount eligible for Company Matching Contribution pursuant
to Section 3.4 of the Plan and designated by such Participant pursuant to a
Salary Reduction Agreement and After Tax Contribution election and deducted
from his Earnings through payroll deductions during such Plan Year.
Matching Contributions shall be held in trust uninvested by the Company and
shall not accrue earnings until remitted to the Trustee, which shall be as
soon as practicable following the end of each payroll period. Matching
Contributions shall be subject to the special rules set forth in Section
3.9 below.
(b) Matching Contributions made with respect to a Plan Year or any
part thereof pursuant to this Section shall in no event be made later than
the time prescribed by law for filing the income tax return of the Company
for the fiscal year of the Company (including extensions thereto) which
corresponds to such Plan Year.
(c) Matching Contributions to the Trust under the Plan shall be made
in cash or other property as the Company, in its discretion, shall
determine.
(d) Matching Contributions shall be considered to be made with respect
to After Tax Contributions for the period of time with respect to which the
Matching Contribution is made to the extent that there are After Tax
Contributions eligible for Matching Contributions and any remaining
Matching Contributions shall be considered to be made with respect to a
Salary Reduction Agreement.
3.6 Limitations on Contributions. Notwithstanding anything to the contrary
in Section 3.3 or 3.5, in no event shall: (i) the aggregate amount contributed
by the Company pursuant to this Plan exceed the maximum deduction allowable by
Section 404 of the Code, or (ii) the Company contribute an amount for any
Limitation Year which would cause: (a) the Annual Additions to the accounts of
any Participant to exceed the Maximum Permissible Amount for such Participant
for that Year (except as provided in Section 5.5(b)); or (b) the sum of the
defined benefit plan fraction and the defined contribution plan fraction (as
such terms are defined in Section 5.5) to exceed one (1) for any Participant for
that Year. All contributions made by the Company under the Plan are conditioned
upon the qualification of the Plan under Section 401 of the Code and
deductibility of the contribution under Section 404 of the Code.
3.7 Rollover Contributions.
(a) An Employee may make a Rollover Contribution to the Plan. A
Rollover Contribution shall be invested in the Coastal Common Stock Fund.
If the Rollover Contribution consists of assets other than cash, such other
assets shall be liquidated and the proceeds invested in the Coastal Common
Stock Fund. Rollover Contributions are not eligible for Company Matching
Contributions.
(b) "Rollover Contribution" is a contribution to the Plan for the
account of an Employee of an amount which is not subject to federal income
tax if it is transferred to a qualified plan and which originated from (i)
another qualified plan or (ii) an individual retirement account, the entire
value of which is attributable to a rollover contribution from a qualified
plan. Specifically, Rollover Contributions must meet the requirements of
Sections 401(a)(31) or 408(d)(3) of the Code if such life annuity form of
payment must be preserved in the Plan.
A contribution shall not be accepted as a Rollover Contribution if the
Administrator determines that such acceptance would render this Plan a
direct or indirect transferee of a defined benefit plan, money purchase
pension plan (including a target benefit plan), stock bonus or profit
sharing plan that provides for a life annuity form of payment to the
Employee.
(c) The Employee shall furnish any information requested by the
Administrator with respect to a contribution which the Employee wishes to
make to the Plan as a Rollover Contribution.
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(d) The Administrator shall determine if assets qualify as a Rollover
Contribution before accepting such assets for the Plan. Assets which the
Administrator determines do not qualify shall not be accepted. The
Administrator shall not accept assets as a Rollover Contribution if, in its
judgment, such acceptance would cause the Plan to violate any provision of
the Code.
(e) The Administrator shall establish accounting records which
separately identify any Rollover Contributions, including earnings and
appreciation or depreciation thereon, of a Participant.
(f) Rollover Contribution shall remain invested in the Coastal Common
Stock Fund.
3.8 Withdrawal of Rollover Contribution. A Participant may withdraw all or
any portion of the Rollover Account of such Participant as of any Valuation Date
by submitting a written request to the Administrator. Such request must be
received by the Administrator at least five days prior to the effective
Valuation Date and must be in written form acceptable to the Administrator. The
Participant may make one such withdrawal in a Plan Year. A withdrawal from the
Rollover Account of a Participant shall not result in the suspension of
contributions to the Plan for a Participant.
3.9 Rules Governing Matching Contributions.
(a) For each Plan Year, the Actual Contribution Percentage for Highly
Compensated Eligible Employees for such Plan Year shall bear to the Actual
Contribution Percentage for all other Eligible Employees for the preceding
Plan Year a relationship that satisfies either of the following tests:
(i) The Actual Contribution Percentage for Highly Compensated
Eligible Employees is not more than the Actual Contribution Percentage
for all other Eligible Employees multiplied by 1.25; or
(ii) The Actual Contribution Percentage for Highly Compensated
Eligible Employees is not more than the Actual Contribution Percentage
for all other Eligible Employees multiplied by two and the excess of
the Actual Contribution Percentage for the group of Highly Compensated
Eligible Employees over that of all other Eligible Employees is not
more than two percentage points.
The Administrator may apply the test of this subsection (a) by
using the Actual Contribution Percentage for all other Eligible
Employees for the Plan Year in lieu of the preceding Plan Year if the
Administrator so elects; provided, however, that such election once
made, requires governmental approval to change.
(b) Aggregation Rules. The following aggregation rules shall apply in
determining the Actual Contribution Percentage for purposes of determining
the tests in Section 3.9(a):
(i) If the Plan is aggregated with any other plan for purposes of
Sections 401(a)(4) and 410(b) of the Code (except the average benefit
percentage test of Section 410(b)(2)(A)(ii) of the Code), then all
employee contributions and matching contributions made under such
aggregated plans shall be treated as a single plan for purposes of
Sections 401(a)(4), 401(m) and 410(b).
(ii) If a Highly Compensated Eligible Employee is eligible to
participate in more than one plan of the Employer to which employee or
matching contributions are made, the Actual Contribution Percentage is
calculated by treating all plans in which the Highly Compensated
Eligible Employee is eligible to participate (except those plans that
may not be permissively aggregated under Regulations Section
1.401(m)-1(b)(3)(i)) as a single plan.
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(c) If, at the end of any Plan Year, neither of the tests set forth in
subsection (a) is satisfied for such Year, then the Matching Contributions
made for such Year on behalf of Highly Compensated Eligible Employees and
the After Tax Contributions made for such Year by Highly Compensated
Eligible Employees shall be reduced in a manner set forth in this
subsection (c) to the extent necessary to comply with one of the tests set
forth in subsection (a). Reductions pursuant to the preceding sentence
shall be effected with respect to Highly Compensated Eligible Employees
pursuant to the following procedure:
(i) The Actual Contribution Percentage of the Highly Compensated
Eligible Employee with the highest Actual Contribution Percentage for
the Plan year shall be reduced to the extent necessary to cause such
Highly Compensated Eligible Employee's Actual Contribution Percentage
to equal the Actual Contribution Percentage of the Highly Compensated
Eligible Employee with the next highest Actual Contribution Percentage
for such Plan Year. This process shall be repeated until the Plan
satisfies one of the tests set forth in subsection (a) of this Section
for such Plan Year.
(ii) The dollar amount of each reduction made pursuant to (i)
next above shall be determined for each Highly Compensated Eligible
Employee and all such dollar amounts for such Plan Year shall be
aggregated.
(iii) The Matching Contributions and After Tax Contributions of
the Highly Compensated Eligible Employee with the highest dollar
amount of Matching Contributions and After Tax Contributions for the
Plan Year shall be reduced to the extent necessary to cause the amount
of such Highly Compensated Eligible Employee's Matching Contributions
and After Tax Contributions to equal the amount of Matching
Contributions and After Tax Contributions of the Highly Compensated
Eligible Employee with the next highest dollar amount of Matching
Contributions and After Tax Contributions so reduced equals the
aggregate dollar amount in (ii) next above. In connection with the
aforementioned procedure, (i) Matching Contributions made with respect
to the amount of reduction in Salary Reduction Contributions for such
year pursuant to provisions of Article III including Section 3.2(c)
and Article IV including Section 4.2(c) shall be reduced first, and
then (ii) After Tax Contributions and Matching Contributions with
respect to After Tax Contributions shall be reduced equally to the
extent necessary.
(d) After Tax Contributions made by Eligible Employees who are not
Highly Compensated Eligible Employees and Matching Contributions made on
account of Eligible Employees who are not Highly Compensated Eligible
Employees shall be valid and shall not be affected by this Section. After
Tax Contributions and Matching Contributions that are reduced pursuant to
the preceding provisions of this Section for a Plan Year, adjusted for
earnings, gains, and losses allocable thereto pursuant to Section 401(m) of
the Code for such Plan Year, shall be paid as soon as feasible to the
applicable Eligible Employee. If the vested portion of the Matching
Contributions Account of the Eligible Employee is not sufficient to satisfy
the necessary reduction, the nonvested portion of the Matching
Contributions Account shall be forfeited to the extent necessary to satisfy
such reduction. The calculations, reductions, and payments required by this
Section shall be made by the Administrator with respect to a Plan Year at
any time prior to the close of the following Plan Year.
(e) If, at any time during a Plan Year, the Administrator, in its sole
discretion, determines that both of the tests set forth in subsection (a)
of this Section 3.9 may not be met for such Plan Year, then:
(i) The Administrator shall have the unilateral right during the
Plan Year to require the prospective reduction, for the balance of the
Year, or any part thereof, of the percentage of Earnings of Highly
Compensated Eligible Employees that may be contributed as After Tax
Contributions. Such reductions shall be made to the extent necessary,
in the discretion of the Administrator, to assure that one of the
tests set forth in subsection (a) of this Section 3.9 shall be met for
the Plan Year and shall be based upon estimates made from data
available to the Administrator at any time during the Plan Year.
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(ii) Reductions pursuant to subsection (i) next above shall be
effected with respect to Highly Compensated Eligible Employees
pursuant to one of the following procedures selected by the
Administrator in its discretion.
(A) The Administrator may establish a maximum percentage of
Basic Compensation which may be contributed by a Highly
Compensated Eligible Employee for all or any portion of the Plan
Year. Such maximum percentage shall apply prospectively to all
Highly Compensated Eligible Employees and may range from zero to
eight percent, or
(B) The Actual Contribution Percentage of Highly Compensated
Eligible Employees shall be reduced on the basis of the amount of
contributions by, or on behalf of, each such Highly Compensated
Eligible Employee to the extent necessary to assume that one of
the tests set forth in subsection (a) shall not be exceeded for
such Plan Year.
(f) If a "Multiple Use of the Alternative Limitation" occurs in a Plan
Year, then, notwithstanding any other provision of Section 4.2 or of this
Section 3.9, the test in paragraph (a)(ii) of this Section shall not be
used to satisfy the requirements of this Section for After Tax
Contributions and Matching Contributions in the same Plan Year that the
test contained in Section 4.2(b)(ii) is used to satisfy the requirements of
Section 4.2 with respect to Salary Reduction Contributions. If the
preceding sentence shall be applicable for a Plan Year, then the
Administrator shall determine whether to use the test in paragraph (a)(ii)
of this Section to satisfy the requirements of this Section 3.9, or to use
with the test in paragraph (b)(ii) of Section 4.2 to satisfy the
requirements of Section 4.2 for such Plan Year.
A Multiple Use of the Alternative Limitation shall occur in any Plan
Year if both of the following conditions are satisfied in the Plan Year:
(1) At least one Highly Compensated Eligible Employee is eligible to
authorize Salary Reduction Contributions to be made on his behalf, and to
make After Tax Contributions or have Matching Contributions allocated to
his Matching Contributions Account, pursuant to the Plan during such Plan
Year, and
(2) The sum of the Actual Deferral Percentage of the entire group of
Highly Compensated Eligible Employees and of the Actual Contribution
Percentage of the entire group of Highly Compensated Eligible Employees for
such Plan Year exceeds the greater of A and B below:
A. The sum of:
(i) 125% of the greater of (I) the Actual Deferral
Percentage of the group of Eligible Employees for such Plan Year
who are not Highly Compensated Eligible Employees, or (II) the
Actual Contribution Percentage of the group of Eligible Employees
who are not Highly Compensated Eligible Employees for such Plan
Year, and
(ii) Two plus the lesser of (I) or (II) above. In no event,
however, shall this amount exceed 200% of the lesser of (I) or
(II) above;
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B. The sum of:
(i) 125% of the lesser of (I) the Actual Deferral Percentage
of the group of Eligible Employees who are not Highly Compensated
Eligible Employees for such Plan Year, or (II) the Actual
Contribution Percentage of the group of Eligible Employees who
are not Highly Compensated Eligible Employees for such Plan Year,
and
(ii) Two plus the greater of (I) or (II) above. In no event,
however, shall this amount exceed 200% of the greater of (I) or
(II) above.
(3) The Actual Deferral Percentage of the entire group of Highly
Compensated Eligible Employees exceeds the amount described in Section
4.2(b)(i); and
(4) The Actual Contribution Percentage of the entire group of Highly
Compensated Eligible Employees exceeds the amount described in Section
3.9(a)(i).
3.10 Exclusive Benefit of Employees. All contributions made pursuant to the
Plan shall be held by the Trustee in accordance with the terms of the Trust
Agreement for the exclusive benefit of those Employees who are Participants
under the Plan, including former Employees and their Beneficiaries, and shall be
applied to provide benefits under the Plan and to pay expenses of administration
of the Plan and the Trust, to the extent that such expenses are not otherwise
paid. At no time prior to the satisfaction of all liabilities with respect to
such Employees and their Beneficiaries shall any part of the Trust Fund (other
than such part as may be required to pay administration expenses and taxes), be
used for, or diverted to, purposes other than for the exclusive benefit of such
Employees and their Beneficiaries. However, without regard to the provisions of
this Section 3.10:
(a) If a contribution under the Plan is conditioned on initial
qualification of the Plan under Section 401(a) of the Code, and the Plan
receives an adverse determination with respect to its initial
qualification, the Trustee shall, upon written request of the Company,
return to the Company the amount of such contribution (increased by
earnings attributable thereto and reduced by losses attributable thereto)
within one calendar year after the date that qualification of the Plan is
denied, provided that the application for the determination is made by the
time prescribed by law for filing the Company's return for the taxable year
in which the Plan is adopted, or such later date as the Secretary of the
Treasury may prescribe;
(b) If a contribution is conditioned upon the deductibility of the
contribution under Section 404 of the Code; then, to the extent the
deduction is disallowed, the Trustee shall upon written request of the
Company return the contribution (to the extent disallowed) to the Company
within one year after the date the deduction is disallowed;
(c) If a contribution or any portion thereof is made by the Company by
a mistake of fact, the Trustee shall, upon written request of the Company,
return the contribution or such portion to the Company within one year
after the date of payment to the Trustee; and
(d) Earnings attributable to amounts to be returned to the Company
pursuant to subsection (b) or (c) above shall not be returned, and losses
attributable to amounts to be returned pursuant to subsection (b) or (c)
shall reduce the amount to be so returned.
3.11 Forfeitures of Matching Contributions.
Matching Contributions with respect to Salary Reduction Contributions
shall be forfeited to the extent that (i) such Matching Contributions were
contributed with respect to Salary Reduction Contributions which must be
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distributed pursuant to the provisions of Section 4.3 and (ii) such Matching
Contributions exceed contributions which must be distributed pursuant to Section
3.9(d).
3.12 Return of Contributions.
If a Participant has After Tax Contributions and/or Salary Reduction
Contributions some of which were eligible for Company Matching Contributions and
some of which were not so eligible, then in determining the amount of After Tax
Contributions or Salary Reduction Contributions to be returned to a Participant
pursuant to Sections 3.9 or 4.3, such distribution shall be considered to be
made first from contributions of the respective type which were not eligible for
a Company Matching Contribution.
3.13 Veterans' Rights Act.
a) The provisions of this Section apply only to the extent required by
the Veterans' Rights Act.
b) The Veterans' Rights Act provides for coverage under the Plan for
persons who were covered Employees at the time of their departure to render
service in the Uniformed Services and who otherwise qualify for coverage
under such Act.
c) Notwithstanding any provision of this Plan to the contrary,
contributions, benefits and Service credit with respect to qualified
service in the Uniformed Services will be provided in accordance with
Section 414(u) of the Code.
ARTICLE IV
SPECIAL RULES GOVERNING SALARY REDUCTION
CONTRIBUTIONS AND SALARY REDUCTION
CONTRIBUTION ACCOUNTS
4.1 Administrative Rules Governing Salary Reduction Agreements.
(a) A Salary Reduction Agreement entered into by a Participant
pursuant to Section 3.2 and any amendment or revocation thereof, shall
become effective on the Entry Date of a Participant or at the beginning of
the first full payroll period following such Entry Date if such Participant
executes and delivers a new or amended Salary Reduction Agreement, and
other forms required by the Administrator prior to such effective date.
(b) A Participant may unilaterally revoke a Salary Reduction Agreement
at any time after it becomes effective by written instrument delivered to
the Company or by using the electronic procedure provided by the
Administrator.
(c) The Company may amend or revoke a Salary Reduction Agreement with
a Participant at any time if the Company determines that such amendment or
revocation is necessary to ensure that the Annual Additions to the accounts
of a Participant do not exceed the Maximum Permissible Amount for such
Participant for that Year or to ensure that the requirements of Sections
3.2(c) and 4.2 are met for such Year.
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4.2 Limitations on Salary Reduction Contributions.
(a) Notwithstanding anything to the contrary contained elsewhere in
the Plan or contained in any Salary Reduction Agreement, all Salary
Reduction Agreements entered into with respect to any Plan Year shall be
valid only if one of the tests set forth in paragraph (b) next below is
satisfied for such Plan Year. In determining whether such tests are
satisfied, all Salary Reduction Contributions, if any, made with respect to
such Plan Year shall be considered.
(b) For each Plan Year, the Actual Deferral Percentage for Highly
Compensated Eligible Employees for such Plan Year shall bear to the Actual
Deferral Percentage for all other Eligible Employees for the preceding Plan
Year a relationship that satisfies either of the following tests:
(i) The Actual Deferral Percentage for Highly Compensated
Eligible Employees is not more than the Actual Deferral Percentage of
all other Eligible Employees multiplied by 1.25; or
(ii) The Actual Deferral Percentage for Highly Compensated
Eligible Employees is not more than the Actual Deferral Percentage for
all other Eligible Employees multiplied by two and the excess of the
Actual Deferral Percentage for the group of Highly Compensated
Eligible Employees over that of all other Eligible Employees is not
more than two percentage points.
The following rules shall apply in determining the Actual Deferral
Percentage:
(iii) A Salary Reduction Contribution will be taken into account
under the Actual Deferral Percentage Test for a Plan Year only if it
relates to Compensation that either (a) would have been received by
the Employee in the Plan Year (but for the Eligible Employee's Salary
Reduction Agreement), or (b) is attributable to services performed by
the Eligible Employee in the Plan Year and, but for the Eligible
Employee's Salary Reduction Agreement, would have been received by the
Eligible Employee within two and one-half months after the close of
the Plan Year.
(iv) A Salary Reduction Contribution will be taken into account
under the Actual Deferral Percentage Test for a Plan Year only if it
is allocated to Eligible Employees as of a date within that Plan Year.
For purposes of this subsection, a Salary Reduction Contribution is
considered allocated as of a date within a Plan Year if the allocation
is not contingent on the Eligible Employee's participation in the Plan
or the performance of Service on any date subsequent to that date and
the Salary Reduction Contribution is actually paid to the trust no
later than twelve months after the Plan Year to which the Salary
Reduction Contribution relates.
(v) If the Plan is aggregated with any other plan for purposes of
Sections 401(a)(4) and 410(b) of the Code (except the average benefit
percentage test of Section 410(b)(2)(A)(ii) of the Code), then all
employee contributions and matching contributions made under such
aggregated plans shall be treated as a single plan for purposes of
Sections 401(a)(4) and 410(b).
(vi) If a Highly Compensated Eligible Employee is eligible to
participate in more than one plan of the Employer to which employee or
matching contributions are made, the Actual Deferral Percentage is
calculated by treating all plans in which the Highly Compensated
Eligible Employee is eligible to participate (except those plans that
may not be permissively aggregated under Regulations Section
1.401(k)-1(g)(1)(ii)) as a single plan. The Administrator may apply
the test of subsection (b) by using the Actual Deferral Percentage for
all other Eligible Employees for the Plan Year in lieu of the
preceding Plan Year if the Administrator so elects; provided, however,
that such election once made, requires governmental approval to
change.
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<PAGE>
(c) If at the end of any Plan Year neither of the tests set forth in
subsection (b) next above is satisfied for such Year, then:
(i) Salary Reduction Agreements entered into for such Year by
Highly Compensated Eligible Employees shall be valid only to the
extent permitted by one of the tests set forth in subsection (b) next
above, and Salary Reduction Contributions made by the Company for such
year for Highly Compensated Eligible Employees shall be reduced in the
manner set forth in subsection (c)(ii) to the extent necessary to
comply with one of the tests set forth in subsection (b) next above.
All Salary Reduction contributions so reduced, adjusted for earnings,
gain and losses allocable thereto, shall be allocated and distributed
in the manner provided in Section 4.3.
The Administrator may apply the test of subsection (b) by using
the Actual Deferral Percentage for all other Eligible Employees for
the Plan Year in lieu of the preceding Plan Year if the Administrator
so elects; provided, however, that such election once made, requires
governmental approval to change.
(ii) Reductions pursuant to subsection (i) next above shall be
effected with respect to Highly Compensated Eligible Employees
pursuant to the following procedure:
(A) The Actual Deferral Percentage of the Highly Compensated
Eligible Employee with the highest deferral percentage for the
Plan Year shall be reduced to the extent necessary to cause such
Highly Compensated Eligible Employee's Actual Deferral Percentage
to equal the Actual Deferral Percentage of the Highly Compensated
Eligible Employee with the next highest Actual Deferral
Percentage. This process shall be repeated until the Plan
satisfies one of the tests set forth in subsection (b) of this
Section for such Plan Year.
(B) The dollar amount of each reduction made pursuant to (A)
next above shall be determined for each Highly Compensated
Eligible Employee and all such dollar amounts for such Plan Year
shall be aggregated.
(C) The Salary Reduction Contributions of the Highly
Compensated Eligible Employee with the highest dollar amount of
Salary Reduction Contributions for the Plan Year shall be reduced
by the amount necessary to cause the amount of such Highly
Compensated Eligible Employee's Salary Reduction Contributions to
equal the amount of Salary Reduction Contributions of the Highly
Compensated Eligible Employee with the next highest dollar amount
of Salary Reduction Contributions for such Plan Year. This
process shall be repeated until the total amount of Salary
Reduction Contributions so reduced equals the aggregate dollar
amount determined in (B) next above.
(iii) Salary Reduction Agreements entered into by all Eligible
Employees who are not Highly Compensated Eligible Employees shall be
valid and Salary Deferral Contributions made by the Company for such
Eligible Employee shall not be changed.
The amount of excess Salary Reduction Contributions to be
distributed shall be reduced by any excess Salary Reduction
Contributions previously distributed to the Eligible Employee for the
taxable year ending with or within the same Plan Year and excess
Salary Reduction Contributions to be distributed for a taxable year
will be reduced by excess Salary Reduction Contributions previously
distributed for the Plan beginning with or within such taxable year.
The calculations, reductions and allocations required by this
Section 4.2(c) and Section 4.3 shall be made by the Company with
respect to a Plan Year at any time prior to the close of the following
Plan Year.
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<PAGE>
(d) If at any time during a Plan Year the Company, in its sole
discretion, determines that both of the tests set forth in subsection (b)
of this Section 4.2 may not be met for such Plan Year, then:
(i) The Administrator shall have the unilateral right during the
Plan Year to require the prospective reduction, for the balance of
such Year or any part thereof of the percentage of the Earnings of
Highly Compensated Eligible Employees that may be subject to Salary
Reduction Agreements. Such reductions shall be made to the extent
necessary, in the discretion of the Administrator, to assure that one
of the tests set forth in subsection (b) of this Section 4.2 shall be
met for the Plan Year and shall be based upon estimates made from data
available to the Administrator at any time during the Plan Year.
(ii) Reductions pursuant to subsection (i) next above shall be
effected with respect to Highly Compensated Eligible Employees
pursuant to one of the following procedures selected by the
Administrator in its discretion:
(A) The Administrator may establish a maximum percentage of
Basic Compensation which may be contributed with respect to a
Highly Compensated Eligible Employee pursuant to a Salary
Reduction Agreement for all or any portion of the Plan Year. Such
maximum percentage shall apply prospectively to all Highly
Compensated Eligible Employees and may range from zero to eight
percent, or
(B) The Actual Deferral Percentage of Highly Compensated
Eligible Employees shall be reduced on the basis of the amount of
contributions by, or on behalf of, each such Highly Compensated
Eligible Employee to the extent necessary to assume that one of
the tests set forth in subsection (b) shall not be exceeded for
such Plan Year.
4.3 Return of Certain Salary Reduction Contributions. If a Salary Reduction
Contribution made by the Company for a Highly Compensated Participant is reduced
for Plan Year pursuant to Section 4.2(c), the amount so reduced, adjusted for
earnings, gains and losses allocable thereto, shall be allocated and distributed
to such Participant, at any time prior to the close of the following Plan Year.
4.4 Distributions From Salary Reduction Contribution Accounts.
Notwithstanding anything to the contrary contained elsewhere in the Plan, a
Participant's Salary Reduction Contribution Account shall not be distributable
other than upon:
(a) The Participant's separation from service, death, or total and
permanent disability;
(b) Termination of the Plan without establishment of a successor plan;
(c) The date of the sale or other disposition by the Company to an
unrelated entity of substantially all of the assets (within the meaning of
Section 409(d)(2) of the Code) used by the Company in a trade or business
of the Company, where (i) the Participant is employed by such trade or
business and continues employment with the entity acquiring such assets,
and (ii) the Company continues to maintain the Plan after the sale or other
disposition. The sale of 85% of the assets used in the trade or business
shall be deemed a sale of "substantially all" of the assets used in such
trade or business;
(d) The date of the sale or other disposition by the Company of the
Company's interest in a subsidiary (within the meaning of Section 409(d)(3)
of the Code) to an unrelated entity, where (i) the Participant is employed
by such subsidiary and continues employment with such subsidiary following
such sale or other disposition, and (ii) the Company continues to maintain
the Plan after the sale or other disposition;
(e) The Participant's attainment of age 59 1/2; or
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(f) The Participant's hardship (as defined in Section 6.5(a)).
Notwithstanding anything to the contrary contained herein, an event
shall not be treated as described in clause (b), (c) or (d) above with
respect to any Participant unless the Participant receives a single sum
distribution (as defined in Section 401(k)(10)(B)(ii) of the Code) by
reason of the event.
4.5 Accounting. Each Participant's Salary Reduction Contribution Account
shall be accounted for separately from the Participant's other accounts under
the Plan.
ARTICLE V
ALLOCATIONS TO PARTICIPANTS' ACCOUNTS
5.1 Separate Accounts. The Administrator shall create and maintain such
separate accounts for each Participant as shall be needed, including an After
Tax Contribution Account, a Salary Reduction Contribution Account, and Matching
Contributions Accounts. The Administrator shall also create and maintain a
Suspense Account in the event that such an Account is required pursuant to
Section 5.5. Such accounts are primarily for accounting purposes and do not
require a segregation of the Trust Fund. The Administrator may delegate the
responsibility for the maintenance of the accounts to the Trustee or to Company.
Notwithstanding any provisions of this Article, in no event shall an allocation
be made to any Account of any Participant, for any Limitation Year which would
cause: (a) Annual Additions to the accounts of such Participant to exceed the
Maximum Permissible Amount for that Year (except as permitted in Section 5.5(b);
or (b) the sum of the defined benefit plan fraction (as defined in Section 5.5)
and the defined contribution plan fraction (as defined in Section 5.5) to exceed
one for such Participant for that Year.
5.2 Allocation of After Tax Contribution Accounts. After Tax Contributions
made pursuant to an election of a Participant pursuant to Section 3.1 and not
reduced pursuant to Section 3.9, shall be allocated to his After Tax
Contribution Account as of the Valuation Date coincident with or next following
the pay date with respect to which such contributions are made (even though
receipt of such contributions by the Trustee may take place after such date).
5.3 Allocation to Salary Reduction Accounts.
(a) Salary Reduction Contributions made on behalf of a Participant
shall be allocated to his Salary Reduction Contribution Account as of the
Valuation Date coincident with or next following the pay date with respect
to which such contributions are made.
5.4 Allocation of Matching Contributions.
(a) Matching Contributions made on behalf of a Participant pursuant to
Section 3.5 and not reduced pursuant to Sections 3.6, 3.9 and 3.11, shall
be allocated to his Matching Contributions Accounts as of each Valuation
Date (even though receipt of the Matching Contributions by the Trustee may
take place after such date).
5.5 Maximum Allocation.
(a) Except as provided in subsection (b) of this Section, the
allocations to the accounts of any Participant in any Limitation Year shall
be limited so that the Participant's Annual Additions for such Year do not
exceed the Maximum Permissible Amount.
(b) If the foregoing limitation on allocations would be exceeded in
any Limitation Year for any Participant as a result of (i) the allocation
of forfeitures, (ii) reasonable error in estimating a Participant's
Compensation, (iii) reasonable error in determining the amount of elective
deferrals (within the meaning of
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Section 402(g)(3) of the Code) that may be made with respect to a
Participant, or (iv) under such other limited facts and circumstances that
the Commissioner of Internal Revenue, pursuant to Regulations Section
1.415-6(b)(6), finds justify the availability of this Section 5.5, the
After Tax Contributions and Salary Reduction Contributions made by or with
respect to such Participant shall be distributed to him to the extent that
any such distribution would reduce the amount in excess of the limits of
this Section 5.5 and any amount in excess of the limits of this Section 5.5
remaining after such distribution shall be placed, unallocated to any
Participant, in a Suspense Account. If a Suspense Account is in existence
at any time during a particular Limitation Year, other than the Limitation
Year described in the preceding sentence, all amounts in the Suspense
Account must be allocated to Participants' accounts (subject to the limits
of this Section 5.5) before any contributions which would constitute Annual
Additions may be made to the Plan for that Limitation Year. The excess
amount allocated pursuant to this Section 5.5(b) shall be used to reduce
Matching Contributions for the next Limitation Year (and succeeding
Limitation Years, as necessary) for that Participant. However, if that
Participant is not covered by the Plan as of the end of the applicable
Limitation Year, then the excess amounts must be held unallocated in the
Suspense Account for the Limitation Year and allocated and reallocated in
the next Limitation Year to all of the remaining Participants in the Plan.
The Suspense Account will not share in the valuation of Participants'
accounts and the allocation of earnings set forth in Section 5.7 of the
Plan, and the change in fair market value and allocation of earnings
attributable to the Suspense Account shall be allocated to the remaining
accounts hereunder as set forth in Section 5.7.
(c) Any reduction in the contributions and allocations under this Plan
made with respect to a Participant's accounts required pursuant to this
Section 5.5 and Section 415 of the Code shall be effected, to the minimum
extent necessary, in the following manner: (i) first, After Tax
Contributions made by such Participant, adjusted for earnings, gains, and
losses allocable thereto, shall be reduced; (ii) next, the Salary Reduction
Contributions that would have been made by the Company for the applicable
Limitation Year with respect to the Participant shall be reduced; and (iii)
finally, the Matching Contributions that would have been made by the
Company for the applicable Plan Year with respect to such Participant shall
be reduced. The amount of any reductions in After Tax Contributions and
Salary Reduction Contributions pursuant to clauses (i) and (ii), adjusted
for earnings, gains and losses allocable to After Tax Contributions, shall
be paid by the Trustee directly to the affected Participant pursuant to
subsection (b) of this Section, and the amount of earnings, gains and
losses allocable to Salary Reduction Contributions, and any reductions in
Matching Contributions, pursuant to clause (iii), adjusted for gains
earnings, and losses allocable thereto, shall be treated pursuant to
subsection (b) of this Section.
(d) Upon termination of the Plan, any amounts in a Suspense Account at
the time of such termination shall revert to the Company.
(e) In the event that any Participant under this Plan is also a
Participant in a defined benefit plan (as defined in Section 415(k) of the
Code) maintained by the Company, the sum of the defined benefit plan
fraction and the defined contribution plan fraction (as such terms are
defined in Section 415(e) of the Code) for any Limitation Year with respect
to such Participant shall not exceed one. If that sum exceeds one, then no
reduction in contributions or allocations to obtain compliance with Section
415(e) of the Code shall occur under this Plan until the Participant's
benefits under such defined benefit plan have been reduced pursuant to the
terms thereof. Any reduction under this Plan shall be made only to the
extent necessary so that the sum of such fractions shall equal one. For
purposes of this Section 5.5, a plan is deemed to be maintained by the
Company if the plan is maintained by any Related Employer.
Effective for Plan Years commencing after December 31, 1999, 5.5(e) is
deleted in its entirety and replaced with "Reserved."
(f) If a Participant is entitled to receive an allocation under this
Plan and any Related Plan and, in the absence of the limitations contained
in this Section 5.5, the Company would contribute or allocate to the
accounts of that Participant an amount for a Limitation Year that would
cause the Annual Additions to the accounts of the Participant to exceed the
Maximum Permissible Amount for such Year, then the contributions or
allocations made with respect to the Participant under this Plan shall not
be reduced until the contributions or allocations under the
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Related Plan have been reduced to the extent necessary so that the
allocation of such Annual Additions does not exceed the Maximum Permissible
Amount.
(g) The provisions of this Section shall be interpreted by the
Administrator in the administration of the Plan, to reduce contributions
and allocations (as required by this Section) only to the minimum extent
necessary to reflect the requirements of Section 415 of the Code, as
amended and in force from time to time, and Regulations promulgated
pursuant to that Section, which are incorporated by reference herein.
5.6 Vesting.
(a) Each Participant shall have a vested interest in the Adjusted
Balance of his Matching Contributions Account in accordance with the
following formula:
Calendar Months of Vested Forfeitable
Active Participation Percentage Percentage
-------------------- ---------- -----------
Less than Twelve Months 0% 100%
Twelve Months 20% 80%
Twenty-four Months 40% 60%
Thirty-six Months 60% 40%
Forty-eight Months 80% 20%
Sixty Months 100% 0%
(b) On reaching his Normal Retirement Date, a Participant who is then
employed on such Normal Retirement Date by the Company, a Related Employer,
or a Subsidiary shall be one hundred percent (100%) vested in the Adjusted
Balance of his Matching Contributions Account.
(c) In the event a Participant dies or becomes disabled within the
meaning of Sections 6.2 or 6.3 while an Employee, he shall be one hundred
percent (100%) vested in the Adjusted Balance of his Matching Contributions
Account as of the date of his death or disability.
(d) In the event the Plan is terminated, or upon the complete
discontinuance of Company contributions to the Plan, each Participant shall
become one hundred percent (100%) vested in the Adjusted Balance of his
Matching Contribution Account.
(e) Each Participant shall at all times be fully vested in the
Adjusted Balances of his Salary Reduction Contribution Account and After
Tax Contribution Account.
(f) Upon reemployment, a Participant shall be credited with his prior
months of Active Participation for purposes of vesting with respect to
Matching Contributions for Service after such reemployment date. This
reinstatement does not apply to any amount forfeited under provisions of
the Plan.
5.7 Allocations and Adjustments to Accounts. As of each Valuation Date, and
subject to any applicable provisions of Article IX Loans, to Participants, the
Administrator shall determine, on an accrual basis of accounting, the Adjusted
Balance of the Account of each Participant in the following manner:
(a) As soon as feasible after each Valuation Date, the Administrator
shall determine the earning and the amount of any realized or unrealized
appreciation or depreciation in the fair market value of each of the
Investment Funds, determined as of the Valuation Date. In determining such
value, the Administrator shall use such
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generally accepted methods and bases as the Administrator, in its
discretion, shall deem advisable. The judgment of the Administrator as to
the fair market value of any asset shall be presumptively conclusive and
binding on all persons.
(b) The Account Balances shall be adjusted to reflect the changes in
the number of shares, amount of cash and short-term investments, units or
dollar value as is appropriate for each Investment Fund.
The Coastal Common Stock Fund, Coastal Class A Common Stock Fund,
Coastal Preferred Stock Fund, Valero Stock Fund, Intelect Stock Fund and
PG&E Stock Fund are maintained in shares of stock and cash and short-term
investments.
The Diversified Fund and the Index Fund shall be accounted for on
a unit basis and the number of units shall not be adjusted to reflect
changes in the market value of assets held by such Fund.
The Interest Income Fund shall be accounted for on a cash basis.
Each Account Balance shall be adjusted by an amount equal to the pro rata
increase or decrease in fair market value of the assets of each such Fund.
(c) Each Account shall then be further adjusted by adding to it the
amount of contributions allocable thereto, for each Participant's Account
pursuant to Sections 5.2, 5.3, and 5.4 for the appropriate period ending on
that Valuation Date.
(d) Following the above adjustments to each Account there shall be
deducted from each Account the distributions and withdrawals made therefrom
as of such Valuation Date and as of a date since the prior Valuation Date.
5.8 Special Allocation Provisions. Whenever an account balance is
distributable in installments, the undistributed balance of such account shall
participate in the valuation provided in Section 5.7 until fully distributed.
ARTICLE VI
PAYMENT OF BENEFITS
6.1 General Requirements.
(a) Withdrawals are effective on a Valuation Date, provided the
Administrator receives a written withdrawal request at least five days
prior to the Valuation Date.
(b) Only one withdrawal may be made per calendar year except that, in
the year the Participant terminates employment, both a withdrawal during
employment and a withdrawal due to termination may be made.
(c) The Company shall not make any contribution to the Trust for the
account of a Participant with respect to any period the Participant is not
permitted to contribute to the Trust.
6.2 Payments on Death.
(a) Upon the death of a Participant, distribution shall be made
pursuant to written direction from the Beneficiary of such Participant in
accordance with the withdrawal provisions of the Plan.
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(b) Each unmarried Participant or each married Participant whose
surviving Spouse has consented to an alternate Beneficiary designation or
alternate method of payment as provided in subsection (c), shall have the
right to designate, by giving a written designation to the Administrator,
(i) a person or persons or entity as Beneficiary to receive the death
benefit provided under this Section 6.2 and (ii) the method of payment of
such death benefit to his Beneficiary pursuant to Section 6.7. Successive
designations may be made, and the last designation received by the
Administrator prior to the death of the Participant shall be effective and
shall revoke all prior designations. If a designated Beneficiary shall die
before the Participant, the Beneficiary's interest shall terminate, and,
unless otherwise provided in the Participant's designation, if the
designation included more than one Beneficiary, such interest shall be paid
in equal shares to those Beneficiaries, if any, who survive the
Participant. A Participant to whom this subsection applies shall have the
right to designate different Beneficiaries to receive the Adjusted Balance
in his various accounts under the Plan and shall have the right to revoke
the designation of any Beneficiary without the consent of the Beneficiary.
(c) The Beneficiary of each married Participant shall be the surviving
Spouse, if any, of the Participant and the death benefits of any
Participant who is married at the date of his death shall be paid in full
to his surviving Spouse, if any, in a single sum or such other form of
distribution as is permitted by the Plan. Notwithstanding the preceding
sentence, the death benefits provided pursuant to subsection (a) shall be
distributed to any other Beneficiary designated by a married Participant as
provided in subsection (b) of this Section and pursuant to the method, if
any, designated by the Participant as provided in subsection (b) if the
Participant's surviving Spouse consented to such designation by the
Participant, prior to the date of the Participant's death, in writing. Such
consent must acknowledge the effect of the election and the identity of any
nonsurviving Spouse Beneficiary, including any class of Beneficiaries or
contingent Beneficiaries, and must be witnessed by a representative of the
Plan or a notary public. The consent of the Participant's surviving Spouse
shall not be required if the Participant establishes to the satisfaction of
the Administrator that consent may not be obtained because there is no
surviving Spouse or the surviving Spouse cannot be located, or because of
such other circumstances as the Secretary of the Treasury may prescribe by
regulations. The Participant may not subsequently change the method of
distribution elected by the Participant or the designation of his
Beneficiary unless his surviving Spouse consents to the new election or
designation in accordance with the requirements set forth in the preceding
sentence, or unless the surviving Spouse's consent permits the Participant
to change the election of method of payment or the designation of his
Beneficiary without the Spouse's further consent. Any consent by a
surviving Spouse, or establishment that the consent of the surviving Spouse
may not be obtained, shall be effective only with respect to that surviving
Spouse.
(d) If a Participant fails to designate a Beneficiary, if such
designation is for any reason illegal or ineffective, or if no Beneficiary
survives the Participant, his death benefits otherwise payable pursuant to
subsections (b) or (c) shall be paid:
(i) to his surviving Spouse; or
(ii) if there is no surviving Spouse, or if the surviving Spouse
has rejected the death benefits under the Plan pursuant to provisions
of the Plan, then to the estate of the Participant.
(e) The Administrator may determine the identity of the distributees
of any death benefit payable under the Plan and in so doing may act and
rely upon any information it may deem reliable upon reasonable inquiry, and
upon any affidavit, certificate, or other paper believed by it to be
genuine, and upon any evidence believed by it to be sufficient.
(f) A Participant's surviving Spouse, for purposes of distributions
pursuant to this Section 6.2 of the Plan, is the person who is legally
married to the Participant throughout the twelve month period immediately
prior to the death of the Participant.
6.3 Payments on Disability. A Participant who is totally and permanently
disabled may request a withdrawal of the Adjusted Balance of the Participant's
accounts in a method provided in the Plan. For purposes of this section "total
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and permanent disability" means a physical or mental condition which is
expected to render the Participant permanently unable to perform duties of any
gainful employment based on the education, training and background of the
Participant. The determination of the existence of such disability shall be made
by the Administrator and shall be final and binding upon the Participant and all
other parties. The Administrator may require the submission of such medical
evidence as it may deem necessary in order to arrive at its determination. The
Administrator's determination of the existence of a disability will be made with
reference to the nature of the injury without regard to the period the
Participant is absent from work.
6.4 Payments on Termination. Upon the termination of a Participant's
employment with the Company for any reason other than death, the Participant may
request a withdrawal of the Adjusted Balance of his Salary Reduction
Contribution Account and After Tax Contribution Account, if any, and the vested
portion of the Adjusted Balance of his Matching Contributions Account, if any,
in a method provided in the Plan. The vested portion of a Participant's Matching
Contributions Account shall be determined in accordance with Plan provisions
including Section 5.6.
If the Participant was at least fifty percent vested at the time of such
termination of employment or if the Participant does not withdraw any amount
attributable to the benefit derived from contributions made by such Participant,
the nonvested portion, if any, of the Adjusted Balance of his Matching
Contributions Account shall be retained in his Matching Contributions Account
until a period has elapsed sufficient to determine whether he will be reemployed
or will incur five consecutive one-year Breaks in Service. If he is reemployed
before he incurs five consecutive one-year Breaks in Service, his Matching
Contributions Account will continue to vest. If he incurs five consecutive
one-year Breaks in Service the amount in such accounts shall be deemed a
forfeiture and shall be applied to reduce future Company Matching Contributions
to the Plan. If a Participant who is rehired before he incurs five consecutive
one-year Breaks in Service again incurs a termination of employment under
circumstances in which he is not fully vested in his Matching Contributions
Account, the portion of his Matching Contributions Account distributable on the
date of his later termination of employment shall be calculated as follows:
(i) the amount distributed to the Participant from his Matching
Contributions Account upon his earlier termination of employment shall
be added to the Adjusted Balance of his Matching Contributions
Account;
(ii) the amount determined under subsection (i) shall be
multiplied by the vested percentage as of the date of his later
termination of employment determined under; Section 5.6 and
(iii) the amount distributed to the Participant upon his earlier
termination of employment shall be deducted from the product
calculated under subsection (ii) to determine the amount distributable
upon his later termination of employment.
If the Participant was less than fifty percent vested at the time of
termination of employment with the Company for any reason other than death and
withdraws any amount attributable to the benefit derived from contributions made
by such Participant, the nonvested portion, if any, of the Adjusted Balance of
his Matching Contributions Account shall be forfeited. However, such forfeited
amount shall remain subject to reinstatement and further vesting under
provisions of the Plan if the Participant is reemployed before he incurs five
consecutive one-year Breaks in Service. If such Participant is reemployed before
he incurs five consecutive one-year Breaks in Service, any amount forfeited due
to a withdrawal described in the preceding sentence shall be restored upon
repayment by such Participant of the full amount of such withdrawal. Any such
repayment must be made before the earlier of five years after the first day the
employee is subsequently reemployed or the close of the first period of five
consecutive one-year Breaks in Service commencing after the withdrawal. Upon
reemployment prior to incurring five consecutive one-year Breaks in Service, the
dollar value of the forfeited amount shall be restored without adjustment for
gains or losses and shall be subject to further vesting on a prospective basis
pursuant to Plan provisions. In computing future vesting with respect to such
reinstated amount, such reinstated amount shall be multiplied by a factor
described in the following sentence prior to being multiplied by the percentage
of increased vesting so as to adjust the reinstated amount to reflect the amount
which would have vested if the full Adjusted Balance of his Matching
Contributions Account were being multiplied by the vesting percentage. The
factor described in the preceding sentence is a fraction, the numerator of which
is one, and the
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denominator of which is the fractional portion of such Adjusted Balance of
his Matching Contributions Account prior to the distribution represented by the
reinstated amount. The preceding applies to a Participant who terminated
employment after 1984.
Amounts forfeited shall be applied to reduce future Matching Contributions
to the Plan.
6.5 Pretermination Distributions - Salary Reduction Contribution Accounts.
(a) The Administrator may upon the request of a Participant who
has not attained the age of fifty-nine and one-half and who makes such
request prior to his termination of employment, direct the Trustee to
make distribution to the Participant from his Salary Reduction
Contribution Account for the purposes set forth below, subject to the
following rules:
(i) Each request for a distribution must be made by written
application to the Administrator supported by such evidence as
the Administrator may require;
(ii) In no event shall the amount distributed to a
Participant in accordance with this Section 6.5 exceed 100% of
his Salary Reduction Contribution Account as of December 31,
1988, plus amounts attributable to contributions only after 1988
but excluding earnings after 1988;
(iii) Each distribution made pursuant to this Section 6.5
shall be on account of a hardship suffered by the Participant.
For purposes of this Section 6.5, a hardship shall be limited to:
(1) Medical expenses described in Section 213(d) of the
Code previously incurred by the Participant, the
Participant's spouse, or any dependents of the Participant
(as defined in Section 152 of the Code); or necessary for
these persons to obtain medical care described in Section
213(d) of the Code;
(2) Purchase (excluding mortgage payments) of a
principal residence for the Participant;
(3) Payment of tuition and related educational fees for
the next twelve months of post-secondary education for
Participant, his spouse, children or dependent;
(4) The need to prevent eviction of the Participant
from his principal residence or foreclosure on the mortgage
of the Participant's principal residence; and
(5) Funeral expenses of a family member of the
Participant;
(iv) The amount distributed shall not be in excess of the
immediate and heavy financial need of the Participant which need
shall be deemed to include any amounts reasonably anticipated by
the Participant to be necessary to pay federal, state or local
income taxes and penalties incurred as a result of the
distribution;
(v) The Participant shall first obtain all distributions,
other than hardship distributions, and all nontaxable loans
currently available under the Plan and all other Plans maintained
by the Company;
(vi) The Participant's elective contributions and employee
contributions (as defined in Regulations Section 1.401(k)) shall
be suspended under the Plan and all other deferred compensation
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plans maintained by the Company for 12 months after his receipt
of the hardship distribution (except for mandatory employee
contributions to a defined benefit plan);
(vii) The Participant may not make elective contributions
(as defined in Regulations Section 1.401(k)) under the Plan or
any other Plan maintained by the Company for the Participant's
taxable year immediately following the taxable year of the
hardship distribution in excess of the applicable limit under
Section 402(g) of the Code for such next taxable year less the
amount of such Participant's elective contributions for the
taxable year of the hardship distribution;
(viii) The amount distributed to a Participant in accordance
with this Section 6.5 shall not exceed (A) the Adjusted Balance
of a Participant's Salary Reduction Contribution Account as of
December 31, 1988, plus (B) Salary Reduction Contributions
allocated to such Salary Reduction Contribution Account after
December 31, 1988; and
(ix) If a Participant's termination of employment occurs
after a request is approved in accordance with this Section 6.5
but prior to distribution of the full amount approved, the
approval of his request shall be automatically void and the
benefits which he or his Beneficiary are entitled to receive
under the Plan shall be distributed in accordance with the
preceding provisions of this Article.
(b) A Participant who has attained the age of 59 1/2 may elect, by
written instrument given to the Administrator, to withdraw from his Salary
Reduction Contribution Account an amount not in excess of the Adjusted
Balance thereof, pursuant to withdrawal provisions of the Plan.
(c) A request for a distribution pursuant to subsection (a) of this
Section 6.5 shall be approved or denied by written instrument given by the
Administrator to the Participant within a reasonable time after the date
the written request is given to the Administrator by the Participant.
6.6 Property Distributed - Salary Reduction Contribution Accounts (ESOP).
(a) (i) An ESOP Participant, or his Beneficiary, shall have the
right to demand that all or any part of the distribution from his
account be made in the form of Common Stock; provided, however, the
Participant, or his Beneficiary, shall not have the right to demand a
distribution in the form of Common Stock with respect to that portion
of the Participant's account invested in other than Common Stock, at
the Participant's election, including an election pursuant to Section
401(a)(28)(B) of the Code. Only whole shares of stock shall be
distributed. Cash will be distributed in lieu of fractional shares in
all cases. Subject to the foregoing right of a Participant, or his
Beneficiary, to elect to receive a distribution in whole shares,
distributions from the Plan may be made in cash, in whole shares of
stock, or partially in whole shares and partially in cash, at the
option of the Administrator.
(ii) Prior to a distribution from the Plan initiated by the
Administrator, the Administrator shall notify the Participant of the
right to demand to receive stock from the Plan. Such notice shall also
state that distributions involving less than fifty shares of stock of
the Company and/or stock of companies other than the Company will be
made in cash unless the Participant elects to receive stock within
thirty days of such notice. The Participant shall have thirty days
from the receipt of such notice in which to exercise his right to
receive stock.
6.7 Methods of Payment. (a) Whenever the Administrator shall direct the
Trustee to make payment to a Participant or his Beneficiary upon
termination of the Participant's employment (whether by reason of death or
for other reasons), the Administrator shall direct the Trustee to pay the
Adjusted Balance of his Salary Reduction Contribution Account, After Tax
Contribution Account, the vested portion of the Adjusted Balance of his
Matching Contributions Account, and any Rollover Contribution Account to or
for the benefit of the Participant or his
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Beneficiary, in cash or wholly or partly in kind, in any of the following
ways as the Participant shall determine (or, if a deceased former
Participant shall have failed to select a method of payment, as his
Beneficiary shall determine):
(i) In a single sum, provided that distributions in kind shall be
valued at the fair market value of the assets distributed on the
Valuation Date as of which such distribution is made;
(ii) Subject to Section 6.2, in annual installments computed
pursuant to the method specified in this subsection (a) commencing,
prospectively, at any time after termination of the Participant's
employment and continuing over a period that complies with subsection
(c); and
(iii) With respect to the Interest Income Fund account balances,
an annuity, if any, offered by the insurance company with whom the
funds are deposited which meets the criteria established by ERISA and
the Code for distribution from a qualified plan.
Annual installments distributed pursuant to subsection (ii) shall be
in an amount equal to the value of the account balances of the Participant
in the Plan divided by the number of annual installments remaining to be
made. An election for annual installments may be cancelled prospectively up
to five days before the Valuation Date for any annual installment.
The annual installment method of distribution described in subsection
(a)(ii) of this Section may be elected by a Participant only if the
Participant's vested interest in his accounts at the time for any
distribution exceeds $5,000.
If a Participant is married at the time an annuity is distributed
pursuant to subsection (iii), such annuity shall provide that the Spouse to
whom the Participant is married at the time of such distribution shall
receive, upon the death of the Participant, a periodic benefit for the life
of such Spouse which is at least fifty percent of the periodic benefit
which was payable to the Participant. This requirement with respect to
periodic payments for the surviving Spouse shall not apply if such Spouse
rejects it in a manner which satisfies the requirements of Section 6.2 with
respect to consent to an alternate Beneficiary by a surviving Spouse. For
purposes of this Section 6.7, the term "Spouse" means the person married to
the Participant at the time of distribution of the annuity with no twelve
month of marriage requirement.
(b) Payment shall be made or commence as follows:
(i) In the case of a Participant whose employment terminated due
to retirement, death, or disability, payment shall be made or commence
not more than 60 days after the close of the Plan Year in which the
employment of the Participant terminates.
(ii) In the case of a Participant whose employment terminates for
any reason other than retirement, death, or disability, payment shall
be made or commence not more than 60 days after the close of the Plan
Year in which the Participant incurs a Break in Service.
(iii) Notwithstanding the provisions of subsections (i) and (ii),
if the Participant's vested interest in his accounts at the time for
any distribution exceeds $5,000, then neither such distribution nor
any subsequent distribution shall be made to the Participant at any
time before his 65th birthday without his written consent.
(c) ESOP Participants. Notwithstanding the provisions of subsection
(b),:
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(i) Unless an ESOP Participant otherwise elects, the distribution
of the Adjusted Balance of his Salary Reduction Contribution Account
will commence not later than twelve months after the close of the Plan
Year (A) in which the ESOP Participant's employment with the Company
terminates because of retirement on or after his Normal Retirement
Date, permanent disability, or death, or (B) that is the fifth Plan
Year following the Plan Year in which the ESOP Participant's
employment with the Company terminates for any other reason, except
that this clause (B) shall not apply if the ESOP Participant is
reemployed by the Company before the first day of such fifth Plan
Year.
(ii) Unless the ESOP Participant otherwise elects, the
distribution of the Adjusted Balance of his Salary Reduction
Contribution Account will be in substantially equal annual payments
over a period not longer than the greater of (A) five years, or (B)
where the aggregate Adjusted Balance of an ESOP Participant's Salary
Reduction Contribution Account exceeds $735,000, five years plus one
additional year (but not more than five additional years) for each
$145,000 or fraction thereof by which such aggregate Adjusted Balance
exceeds $735,000. The dollar amounts contained in this subsection (ii)
shall be adjusted by the Secretary of the Treasury pursuant to Section
409(o)(2) of the Code.
(d) Notwithstanding anything to the contrary contained elsewhere in
the Plan:
(i) A Participant's benefits under the Plan will:
(1) be distributed to him not later than the Required
Distribution Date (as defined in subsection (iii)), or
(2) be distributed commencing not later than the Required
Distribution Date in accordance with regulations prescribed by
the Secretary of the Treasury over a period not extending beyond
the life expectancy of the Participant or the life expectancy of
the Participant and his Beneficiary.
(ii) (1) If the Participant dies after distribution has commenced
pursuant to subsection (i)(2) but before his entire interest in
the Plan has been distributed to him, then the remaining portion
or that interest will be distributed at least as rapidly as under
the method of distribution being used under subsection (i)(2) at
the date of his death.
(2) If the Participant dies before distribution has
commenced pursuant to subsection (i)(2), then, except as provided
in subsections (ii)(3) and (ii)(4), his entire interest in the
Plan will be distributed within five years after his death.
(3) Notwithstanding the provisions of subsection (ii)(2), if
the Participant dies before distribution has commenced pursuant
to subsection (i)(2) and if any portion of his interest in the
Plan is payable (A) to or for the benefit of a Beneficiary, (B)
in accordance with regulations prescribed by the Secretary of the
Treasury over a period not extending beyond the life expectancy
of the Beneficiary, and (C) beginning not later than one year
after the date of the Participant's death or such later date as
the Secretary of Treasury may prescribe by regulations, then the
portion referred to in this subsection (ii)(3) shall be treated
as distributed on the date on which such distribution begins.
(4) Notwithstanding the provisions of subsections (ii)(2)
and (ii)(3), if the Beneficiary referred to in subsection (ii)(3)
is the surviving spouse of the Participant, then:
(A) the date on which the distributions are required to
begin under subsection (ii)(3)(C) of this Section shall not
be earlier than the date on which the Participant would have
attained age 70 1/2, and
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(B) if the surviving spouse dies before the
distributions to that spouse begin, then this subsection
(ii)(4) shall be applied as if the surviving spouse were the
Participant.
(iii) For purposes of this subsection (c), the Required
Distribution Date means April 1 of the calendar year following the
later of (A) the calendar year in which the Participant attains age 70
1/2, or (B) the calendar year in which the Participant terminates
service with the Company, unless he is a 5% owner (as defined in
Section 416 of the Code) of the Company with respect to the Plan Year
ending in the calendar year in which he attains age 70 1/2, in which
case clause (B) shall not apply.
However, if the Participant attains age 70 1/2 in calendar year
1988, the Required Distribution Date means April 1, 1990, and if the
Participant attains age 70 1/2 prior to January 1, 1988, the Required
Distribution Date means the April 1 following the later of the
calendar year in which the Participant: (A) attains age 70 1/2, or (B)
terminates service with the Company, unless he is a 5% owner (as
defined in Section 416 of the Code) of the Company with respect to the
Plan Year ending in the calendar year in which he attains age 70 1/2,
in which case clause (B) shall not apply.
If a Participant (other than a 5% owner) attained age 70 1/2
prior to 1997 and elected not to retire, the Participant shall
continue to receive the distribution of Retirement Income until the
Participant affirmatively elects to discontinue such distributions
until the Participant retires, subject to the terms of an applicable
qualified domestic relations order, as defined in Section 414(p) of
the Code.
If a Participant (other than a 5% owner) attains age 70 1/2 in
1996 and elects not to retire during 1996, the Participant may elect
to defer the commencement of the distribution of Retirement Income,
which election must be made by December 31, 1997. If such Participant
elects not to defer the distribution of Retirement Income, the
Participant must be paid a "make-up" distribution which is the
Actuarial Equivalent of Retirement Income calculated as though the
Participant had retired at age 70 1/2 during 1996 and distributions of
Retirement Income had commenced on April 1, 1997 and were paid through
December 31, 1997. The make-up distribution calculated under this
provision must be paid to the Participant by December 31, 1997.
If a Participant (other than a 5% owner) attains age 70 1/2 in
1997 or 1998 and elects not to retire, such Participant may
affirmatively elect to have his Retirement Income commence April 1 of
the year following the calendar year in which the Participant attains
age 70 1/2.
A Participant (other than a 5% owner) who attains age 70 1/2
after December 31, 1998 shall no longer have the option of electing to
commence the distribution of Retirement Income prior to termination of
employment.
(iv) For purposes of this subsection (c), the life expectancy of
a Participant and his surviving spouse shall be redetermined but only
if the Participant (or spouse, if the Participant is deceased)
requests such redetermination. Such redetermination may be made no
more frequently than annually.
(v) A Participant may not elect a form of distribution pursuant
to subsection (i) providing payments to a Beneficiary who is other
than his surviving spouse unless the actuarial value of the payments
expected to be paid to the Participant is more than 50% of the
actuarial value of the total payments expected to be paid under such
form of distribution.
(d) (i) This subsection applies to distributions made on or after
January 1, 1993. Notwithstanding any provision of the Plan to the
contrary that would otherwise limit a Distributee's election under
this subsection, a Distributee may elect, at the time and in the
manner prescribed by the Plan
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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.
(ii) Definitions.
(A) "Eligible Rollover Distribution" is any distribution of
all or any portion of the balance to the credit of the
Distributee, except that an Eligible Rollover Distribution does
not include: Any distribution that is one of a series of
substantially equal periodic payments (not less frequently than
annually) made for the life (or life expectancy) of the
Distributee or the joint lives (or joint life expectancies) of
the Distributee and the Distributee's designated Beneficiary, or
for a specified period of ten years or more; any distribution to
the extent such distribution is required under Section 401(a)(9)
of the Code; any hardship distribution described in Section
401(k)(2)(B)(i)(IV); and the portion of any distribution that is
not includible in gross income (determined without regard to the
exclusion for net unrealized appreciation with respect to
employer securities).
(B) "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 described in Section 408(a) of the Code or
individual retirement annuity described in Section 408(b) of the
Code.
(C) "Distributee" includes an Employee or former Employee.
In addition, the Employee's or former Employee's surviving Spouse
and the Employee's or former Employee's spouse or former spouse
who is the alternate payee under a qualified domestic relations
order, as defined in Section 414(p) of the Code, are Distributees
with regard to the interest of the spouse or former spouse.
(D) "Direct Rollover" is a payment by the Plan to the
Eligible Retirement Plan specified by the Distributee.
(iii) If a distribution is one to which Sections 401(a)(11) and
417 of the Code do not apply, such distribution may commence less than
thirty days after the notice required under Regulations Section
1.411(a)-11(c) is given, provided that:
(1) the Plan Administrator clearly informs the Participant
that the Participant has a right to a period of at least thirty
days after receiving such notice to consider the decision of
whether or not to elect a distribution (and, if applicable, a
particular distribution option), and
(2) the Participant, after receiving such notice,
affirmatively elects a distribution.
Prior to January 1, 1998, $3,500 should be used in lieu of $5,000.
6.8 Distribution of Unallocated Employee Contributions.
(a) If on the date of termination of a Participant's employment, the
Company shall be holding After Tax Contributions made by the Participant,
but not yet allocated to his After Tax Contribution Account, the
Administrator shall direct the Company to pay such amounts either directly
to the Participant (or his Beneficiary,
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as the case may be) or to the Trustee, to be distributed by the Trustee in
accordance with the method of distribution determined under Section 6.7.
(b) If on the date of termination of a Participant's employment, a
Participant's Earnings have been reduced by any amount pursuant to a Salary
Reduction Agreement, and such amount has not yet been allocated to his
Salary Reduction Contribution Account, the Administrator shall direct the
Company to pay such amounts to the Trustee to be credited to the
Participant's Salary Reduction Contribution Account, to be distributed by
the Trustee in accordance with the method of distribution determined under
Section 6.7.
6.9 Administrative Powers Relating to Payments. If a Participant or
Beneficiary is under a legal disability or, by reasons of illness or mental or
physical disability, is in the opinion of the Administrator unable properly to
attend to his personal financial matters, the Trustee may make such payments in
such of the following ways as the Administrator shall direct:
(i) directly to such Participant or Beneficiary;
(ii) to the legal representative of such Participant or Beneficiary;
or
(iii) to some relative by blood or marriage, or friend, for the
benefit of such Participant or Beneficiary.
Any payment made pursuant to this section shall be in complete discharge of
the obligation therefor under the Plan.
6.10 Withdrawals from Participant Contribution Account.
(a) As of any Valuation Date, a Participant may withdraw from his
After Tax Contribution Account an amount not in excess of the Adjusted
Balance thereof.
(b) For a Participant with ten or more years of Active Participation,
the preceding subsection (a) shall apply to his Matching Contribution
Account.
(c) If a withdrawal is made by a Participant from his After Tax
Contribution Account or Salary Reduction Account, such Participant may not
make an additional withdrawal from the Plan for the remainder of such Plan
Year. In addition, the Participant may not make After Tax Contributions or
contributions pursuant to a Salary Reduction Agreement until a period of
twenty-six weeks has elapsed since the prior withdrawal. A fifty-two week
suspension period shall apply if a withdrawal requiring such suspension is
made pursuant to Section 6.5.
6.11 Ten-Year Withdrawal.
(a) After ten years of Active Participation in the Plan, each
Participant may elect once during each such subsequent ten years of Active
Participation to withdraw any portion of such Participant's Account
Balances.
(b) To receive a distribution as of a Valuation Date, the
Administrator must receive a written withdrawal request at least five days
prior to such Valuation Date. A Participant may continue to contribute to
the Plan after a ten year withdrawal.
(c) The withdrawals permitted by this Section shall not apply to the
portion of the Account Balances attributable to the Salary Reduction
Contribution Account of the Participant unless the Participant has attained
the
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age of fifty nine and one half years, the Participant is totally and
permanently disabled (as determined by the Administrator) or the withdrawal
is approved by the Administrator pursuant to the criteria and procedure
contained in Section 6.5.
(d) Unless the Participant specifies otherwise, withdrawals shall be
made first from the portion of the Account Balances attributable to After
Tax Contributions of the Participant, next from the portion attributable to
the Company Matching Contributions which are eligible for withdrawal and
finally from the portion contributed pursuant to a Salary Reduction
Agreement of the Participant.
6.12 Participant to Elect Source of Funds for Distribution. A Participant
or where appropriate, a Beneficiary may designate the accounting fund from which
a distribution of assets from the Trust are to be made.
ARTICLE VII
PLAN ADMINISTRATION
7.1 Company Responsibility.
(a) Coastal shall be responsible for and shall control and manage the
operation and administration of the Plan. It shall be the "Plan
Administrator" and "Named Fiduciary" for purposes of ERISA and shall be
subject to service of process on behalf of the Plan. The Board may, in its
discretion, appoint a Committee of one or more persons, to be known as the
"Plan Administrative Committee" to act as the agent of Coastal in
performing these duties. In the event that the Board chooses not to appoint
such a Committee, all references in the Plan to the "Committee" (except for
such references in this Section 7.1) shall mean Coastal. The members of the
Committee shall serve at the pleasure of the Board; they may be officers,
directors, or employees of the Company or any other individuals. Any member
may resign by delivering his written resignation to the Board and to the
Committee. Vacancies in the Committee arising by resignation, death,
removal or otherwise, shall be filled by the Board. The Company shall
advise the Trustee in writing of the names of the members of the Committee
and of changes in membership from time to time.
(b) Except as specified otherwise in the Plan, any action permitted or
required with respect to the Plan shall be performed by an officer of the
Company.
7.2 Powers and Duties of Administrator.
(a) The Administrator shall administer the Plan in accordance with its
terms and shall have all the powers necessary to carry out the provisions
of the Plan. The Administrator shall direct the Trustee concerning all
payments which shall be made out of the Trust pursuant to the Plan. The
Administrator shall interpret the Plan and shall determine all questions
arising in the administration, interpretation, and application of the Plan,
including but not limited to, questions of eligibility and the status of
rights to Participants, Beneficiaries and other persons. Any such
determination by the Administrator shall presumptively be conclusive and
binding on all persons. The regularly kept records of the Company shall be
conclusive and binding upon all persons with respect to an Employee's Hours
of Service, date and length of employment, time and amount of Compensation
and the manner of payment thereof, type and length of any absence from work
and all other matters contained therein relating to Employees. All rules
and determinations of the Administrator shall be uniformly and consistently
applied to all persons in similar circumstances. The Committee shall have
the powers and duties of the Administrator to the extent the Board
designates a Committee and directs it to exercise such powers and perform
such duties.
(b) The Administrator has full and absolute discretion in the exercise
of each and every aspect of its authority under the Plan, including without
limitation, the authority to determine any person's right to benefits under
the Plan, the correct amount and form of any such benefits, the authority
to decide any appeal, the authority to
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review and correct any prior actions, and all of the rights, powers, and
authorities specified in the Plan. Notwithstanding any provision of law or
any explicit or implicit provision of this document, any action taken, or
ruling or decision made, by the Administrator in the exercise of any of its
powers and authorities under the Plan shall be final and conclusive as to
all parties, including without limitation, all Participants and
Beneficiaries, regardless of whether the Administrator may have an actual
or potential conflict of interest with respect to the subject matter of
such action, ruling, or decision. No such final action, ruling, or decision
of the Administrator shall be subject to de novo review in any judicial
proceeding; and no such final action, ruling, or decision of the
Administrator may be set aside unless it is held to have been an abuse of
discretion or arbitrary and capricious by a final judgment of a court
having jurisdiction with respect to the issue.
(c) When a misstatement or mistake of fact becomes known, the
Administrator shall make such adjustments as it determines to be practical
and equitable.
7.3 Organization and Operation of Committee.
(a) The Committee shall act by majority vote of its members at the
time in office, and such action may be taken either by vote at a meeting or
in writing without a meeting. The signatures of a majority of the members
will be sufficient to authorize Committee action. A Committee member shall
not participate in discussions of or vote upon matters pertaining to his
own participation in the Plan.
(b) The Committee may authorize any of its members or any other person
to execute any document or documents on behalf of the Committee, in which
event the Committee shall notify the Trustee in writing of such action and
the name or names of such member or person. The Trustee thereafter shall
accept and rely upon any document executed by such members or persons as
representing action by the Committee, until the Committee shall file with
the Trustee a written revocation of such designation.
(c) The Committee may adopt such bylaws and regulations as it deems
desirable for the conduct of its affairs and with the consent of the
Administrator, may appoint such accountants, counsel, specialists, and
other persons as it deems necessary or desirable in connection with the
administration of this Plan. The Committee shall be entitled to rely
conclusively upon, and shall be fully protected in any action taken by it
in good faith in relying upon, any opinions or reports which shall be
furnished to it by any such accountant, counsel, specialist or other
person.
7.4 Records and Reports of Committee. The Committee shall keep a record of
all its proceedings and acts and shall keep all such books of account, records,
and other data as may be necessary for proper administration of the Plan. The
Committee shall, when appropriate, notify the Trustee and the Company of any
action taken by the Committee and, when required, shall notify any other
interested person or persons.
7.5 Claims Procedure. Claims for benefits under the Plan shall be made in
writing to the Committee. In the event a claim for benefits is wholly or
partially denied by the Committee, the Committee shall, within a reasonable
period of time, but not later than ninety (90) days after receipt of the claim,
notify the claimant in writing of the denial of the claim. If the claimant shall
not be notified in writing of the denial of the claim within ninety (90) days
after it is received by the Committee, the claim shall be deemed denied. A
notice of denial shall be written in a manner calculated to be understood by the
claimant, and shall contain (i) the specific reason or reasons for denial of the
claim, (ii) a specific reference to the pertinent Plan provisions upon which the
denial is based, (iii) a description of any additional material or information
necessary for the claimant to perfect the claim, together with an explanation of
why such material or information is necessary, and (iv) an explanation of the
Plan's review procedure. Within sixty (60) days of the receipt by the claimant
of the written notice of denial of the claim, or within sixty (60) days after
the claim is deemed denied as set forth above, if applicable, the claimant may
file a written request with the Committee that it conduct a full and fair review
of the denial of the claimant's claim for benefits including the conducting of a
hearing, if necessary by the Committee. In connection with the claimant's appeal
of the denial of his benefit, the claimant may review pertinent documents and
may submit issues and comments in writing. The Committee shall render a decision
on the claim appeal
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promptly, but not later than sixty (60) days after the receipt of the
claimant's request for review, unless special circumstances (such as the
need to hold a hearing, if necessary), required an extension of time for
processing, in which case the sixty (60) day period may be extended to one
hundred and twenty (120) days. The Committee shall notify the claimant in
writing of any such extension. The decision upon review shall (i) include
specific reasons for the decision, (ii) be written in a manner calculated
to be understood by the claimant and (iii) contain specific references to
the pertinent Plan provisions upon which the decision is based.
7.6 Compensation and Expenses of Committee. The members of the Committee
shall serve without compensation for services as such, but all proper expenses
incurred by the Committee incident to the functioning of the Plan shall be paid
by the Company; provided, however, that reasonable compensation or expenses of
administering the Plan shall be borne by, and paid out of the Plan assets,
except to the extent that the Administrator elects to have such expenses paid
directly by the Company.
7.7 Indemnity of Committee Members. The Company shall indemnify and defend
each member of the Committee and each of its other employees against any and all
claims, loss, damages, expenses (including reasonable attorney fees), and
liability arising in connection with the administration of the Plan, except when
the same is judicially determined to be due to the gross negligence or willful
misconduct of such member or other employee.
ARTICLE VIII
TRUST AND TRUSTEE
8.1 Trust Agreement. A Trust has been created and will be maintained for
the purposes of the Plan. All contributions under the Plan will be paid into the
Trust. The Trust Fund will be held, invested and disposed of by the Trustee from
time to time acting in accordance with the Trust Agreement. All benefits payable
under the Plan will be paid from the Trust Fund.
8.2 Exclusive Benefit of Employees.
(a) All contributions made pursuant to the Plan shall be held by the
Trustee in accordance with the terms of the Trust Agreement and the Plan
for the exclusive benefit of those Employees who are Participants under the
Plan, including former Employees and their Beneficiaries.
The Company, Related Employers and Subsidiaries may pay all expenses
incurred in the establishment and administration of the Plan, including
expenses and fees of the Trustee, but they shall not be obligated to do so.
Any such expenses not so paid may be paid from the Trust Fund to the extent
permitted by applicable laws, including ERISA.
(b) Compensation of the Trustee shall be paid by the Company. All
taxes of any and all kinds whatsoever that may be levied or assessed under
existing or future laws upon, or in respect of, the Trust Fund or the
income thereof shall be paid from the Trust Fund.
8.3 Appointment of Trustee and Investment Managers. The Administrator, by
action of its Board of Directors, may appoint one or more Trustees and
Investment Managers. Each Trustee and Investment Manager shall, upon acceptance
of the Plan, be bound by its terms. The provisions of the Plan applicable to
Trustee or Investment Manager shall apply to each Trustee or Investment Manager
with respect to the assets assigned to it pursuant to the provisions of the
Plan.
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Each Trustee and each Investment Manager shall be responsible for
assets during the time that such assets are assigned to it and shall not be
responsible for assets during a time when such assets are assigned to another
Trustee or Investment Manager. Each Trustee or Investment Manager shall be
liable with respect to its own acts, but not with respect to the act of any
other Trustee or Investment Manager.
Each Investment Manager shall be (a) registered as an investment
advisor under the Investment Advisers Act of 1940, (b) a bank, as defined in
the Investment Advisers Act of 1940, or (c) an insurance company qualified to
manage, acquire or dispose of any assets of a plan under the laws of more than
one state. Upon appointment, each Investment Manager shall certify and
acknowledge, in writing, to the Administrator and the Trustee that he has a copy
of the Plan, that he is a fiduciary with respect to such Plan, and that he has
assumed the duties and responsibilities conferred upon him by the Administrator.
The duties, responsibilities and authority of any Investment Manager may be
revoked or modified by the Administrator at any time by written notice to such
Investment Manager and to the Trustee. Any Investment Manager duly appointed and
authorized by the Administrator shall, during the period of his appointment,
possess fully and absolutely those powers, rights and duties of the Trustee (to
the extent delegated by the Administrator and to the extent permissible under
the terms of the Plan) with respect to the investment or reinvestment of that
portion of the Plan assets over which such Investment Manager has investment
management authority.
8.4 Assignment of Assets to Trustees. The Administrator shall have the
power to assign all or a portion of the assets of the Trust to any Trustee. The
Administrator shall provide written notice at least thirty days in advance to a
Trustee of the Administrator's decision to transfer any assets from such Trustee
to another Trustee. Any transfer of assets among Trustees shall occur as of a
Valuation Date, unless all of the Trustees involved in the asset transfer
consent to another date.
8.5 Assignment of Assets to Investment Managers. With respect to assets
assigned to it by the Administrator, each Trustee may assign all or a portion of
such assets to an Investment Manager, provided such assignment is consistent
with the duties, responsibilities and authorities granted to such Investment
Manager by the Administrator. The Trustees may retain custody of the indicia of
ownership of such assets.
8.6 Voting Company Stock - Annual or Special Meeting. Each Participant (or,
in the event of his death, his Beneficiary) is entitled to direct the Trustee as
to the manner in which any shares of stock allocated to the account of the
Participant is to be voted. Before each annual or special meeting of the
stockholders of The Coastal Corporation, Valero Energy Corporation, Intelect
Communications, Inc. or Pacific Gas and Electric Company, the Trustee shall
utilize its best efforts to timely distribute or cause to be distributed to each
Participant (or, in the event of his death, his Beneficiary) a copy of the proxy
solicitation material for such meeting, and request written instructions from
the Participants as to the voting of the stock credited to their accounts. Such
instructions shall be on a confidential basis. The Trustee shall exercise the
voting rights on stock credited to accounts of Participants in accordance with
instructions of such Participants. The Trustee shall exercise voting rights on
stock credited to accounts of Participants from whom the Trustee does not
receive instructions. The Administrator shall exercise the voting rights on
stock which has not been credited to the accounts of Participants as of the
applicable record date for determination of holders of stock entitled to vote.
8.7 Voting Company Stock - Tender or Exchange Offer. Each Participant (or,
in the event of his death, his Beneficiary) shall have the right, to the extent
of shares of stock allocated to the account of the Participant under the Plan,
to direct the Trustee in writing on a confidential basis as to the manner in
which to respond to a tender or exchange offer with respect to such stock. The
Trustee shall utilize its best efforts to timely distribute or cause to be
distributed to each Participant (or Beneficiary) such information as will be
distributed to shareholders of such stock in connection with any such tender or
exchange offer. If the Trustee shall not receive timely direction from a
Participant (or Beneficiary) as to the manner in which to respond to such a
tender or exchange offer, the Trustee shall not tender or exchange any shares of
such stock with respect to which such Participant (or Beneficiary) has the right
of direction. Shares of stock which have not been allocated to the account of a
Participant shall be tendered or exchanged by the Trustee in the same proportion
as shares with respect to which Participants (or Beneficiaries) have the right
of direction are tendered or exchanged.
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8.8 Common Trust Fund Authorization. Notwithstanding anything contained in
this ARTICLE VIII to the contrary, the Trustee may engage in any transaction
with:
(a) a common or collective trust fund or pooled investment fund which
is authorized and permitted to receive investments from the Trust and which
is maintained by any "party-in-interest," within the meaning of Section
3(14) of ERISA, which is a bank or trust company supervised by a state or
federal agency including, where otherwise permissible under the applicable
laws and regulations, any such fund as maintained by the Trustee, its
affiliates, any Investment Manager appointed hereunder or another fiduciary
hereunder (provided such other fiduciary qualified as an Investment Manager
under Section 3(38) of ERISA), the provisions of which as they may now or
hereafter exist are hereby incorporated by reference, or
(b) a pooled investment fund or an insurance company qualified to do
business in a state, provided such fund is authorized and permitted to
receive investments from the Trust, if (i) the transaction is a sale or
purchase of an interest in such fund, and (ii) the bank, trust company or
insurance company receives not more than reasonable compensation. This
provision constitutes the express permission required by Section 408(b)(8)
of ERISA.
ARTICLE IX
LOANS TO PARTICIPANTS
9.1 Loans. Loans to Participants are not available under the Plan.
ARTICLE X
INVESTMENT OF ACCOUNT BALANCES
10.1 Investment Funds. The Adjusted Balance of each Participant's Salary
Reduction Contribution Account, After Tax Contribution Account and Matching
Contributions Account will be invested in the various Investment Funds as
described in this article.
10.2 Initial Investment. Salary Reduction Contributions, After Tax
Contributions and Matching Contributions received by the Trustee may be
initially invested in such short-term investment obligations as selected by the
Trustee from time to time pending investment pursuant to Section 10.3. These
deposits and earnings will be allocated between the Investment Funds as of the
Valuation Date next following receipt by the Trustee of such deposits and
earnings in accordance with Participants' selection of Investment Funds pursuant
to Section 10.3.
10.3 Investment Options.
(a) Salary Reduction Contributions shall be invested in the Coastal
Common Stock Fund.
(b) Matching Contributions shall be invested in the Coastal Common
Stock Fund.
(c) (i) After Tax Contributions which, pursuant to Plan Section
3.4(a), are eligible for Company Matching Contributions shall be
allocated, pursuant to Participant's election (either in writing or by
using the electronic procedure provided by the Administrator), to the
Coastal Common Stock Fund, the Diversified Fund, the Index Fund and
the Interest Income Fund. A minimum of twenty-five percent of After
Tax Contributions must be allocated to the Coastal Common Stock Fund.
Allocations to the various funds must be in multiples of five percent.
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(ii) In default of any Participant's direction, such
contributions will be invested in the Coastal Common Stock Fund until
a form designating a different Investment Fund is submitted to the
Administrator.
(iii) After Tax Contributions which, pursuant to Plan
Section 3.4(b), are not eligible for Company Matching Contributions
shall be invested in the Coastal Common Stock Fund.
(d) Each Participant shall have the right to file a maximum of four
written forms per Plan Year with the Administrator modifying the direction
made in subsection (c) with respect to subsequent After Tax Contributions
under the Plan. Such investment elections shall be effective as of the
first day of either a calendar month or pay period as is determined by the
Administrator on a uniform basis. Such investment elections must be
received by the Administrator (either in writing or made using the
electronic procedure provided by the Administrator) prior to the first day
of the period for which such election is effective.
(e) Each Participant shall have the right once each Plan Year to file
a written form with the Administrator directing that the portion of (i) his
After Tax Contribution Account attributable to contributions which were
eligible for Company Matching Contributions and/or (ii) (A) after he is
both eligible for Company Matching Contributions at a level of eight
percent and has attained the age of fifty-nine and one half years, or (B)
after he has both attained the age of 55 years and completed ten years of
Participation, his Salary Reduction Contribution Account held in the
Coastal Common Stock Fund, the Diversified Fund, the Index Fund and/or the
Interest Income Fund be transferred, in whole or in part, to any other such
Funds. This direction shall be made by designating the percentage of the
Adjusted Balance of such Accounts that is to be transferred to such other
Funds. Such a reinvestment election may be effective as of any Valuation
Date provided that such election is received by the Administrator (either
in writing or made using the electronic procedure provided by the
Administrator) at least five days before such Valuation Date.
A Participant is limited to one transfer among funds per calendar year
under the Plan and a transfer among funds pursuant to Section 10.4 or 10.5
shall be in lieu of, and not in addition to, a transfer among funds
pursuant to this Section 10.3.
(f) In general, the process for purchase and sale of stock and other
investments is as described herein. When a Participant requests a transfer
among funds, the Account Balance of the Participant will indicate the
transfer out of one fund and into the other fund as of the Valuation Date
selected by the Participant.
The amount transferred from a stock fund is determined as
described herein in subsection (g) of this Section.
Any amount transferred to the Coastal Common Stock Fund is entered
as short-term investment and stock is allocated as of the next Valuation
Date. See subsection (i) of this Section.
Any amount transferred to or from the Interest Income Fund, the
Diversified Fund or the Index Fund is entered or removed, respectively, as
of the Valuation Date selected by the Participant for such transfer. This
differs from transactions involving Coastal common stock since the Interest
Income Fund, Diversified Fund and the Index Fund do not have a short-term
investment account.
(g) Sale of Stock.
Sale of Coastal common stock from an account is considered to
have occurred as of the Valuation Date and the Participant directing the
sale will generally receive the closing price on that day. The closing
price is the "Close" price for New York Stock Exchange Composite
Transactions as reported in "The Wall Street Journal" or, if not so
reported, the closing price as determined by the Administrator from
independent reporting sources. The shares being sold by the Participant
are purchased by the Trust from the Participant at the closing
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price. The shares are then available as part of the "purchase pool,"
discussed below, for allocation to the accounts of Participants who
purchase shares through contribution or transfer of funds. In the event
that the volume of sales by Participants exceeds the anticipated need of
the Trust for Coastal common stock, the Trustee may sell the stock which
exceeds the anticipated need of the Trust. Such sales will be in the open
market and the price received by the Trustee may vary substantially from
the closing price on the Valuation Date. When such market sales occur, the
price received by a Participant for sale of stock in his account will be
the average sale price of shares retained by the Trust at closing market
price on the Valuation Date and the actual sale price of shares sold on the
market. This means that a Participant making a withdrawal of cash or a
transfer among funds may receive a price per share which is less than or
greater than the closing market price on the Valuation Date.
Coastal Preferred Stock Fund, Valero Stock Fund, Intelect Stock
Fund and PG&E Stock Fund are similar to the Coastal Common Stock Fund,
except that all shares from these funds must be sold in the market. Thus,
the proceeds of market sales are the amount the Participant receives upon
transfer or withdrawal of cash from these funds. These market sales are
made on or as close to the Valuation Date as practical. The average price
received for all shares sold for a particular Valuation Date is the amount
realized by each Participant. There are no purchases by the Trust because
contributions and transfers to these funds are not permitted.
(h) Purchase of Stock.
The purchase price of shares allocated to the account of a
Participant is an average purchase price of shares which are, for
convenience, called a "purchase pool." The purchase pool consists of
shares retained by the Trust from the accounts of Participants who sell
shares due to transfer among funds or withdrawal of cash from the Trust
plus shares purchased by the Trustee in the open market. The purchase pool
price for any end of month allocation is the average price of all shares
in the purchase pool. Because the Trustee purchases shares in the market
as needed for allocation, the Participant cannot determine in advance the
purchase pool price. The Trustee does not purchase stock from Coastal and
Coastal does not donate stock to the Thrift Plan. All purchases and sales
involve parties other than Coastal.
(i) Short-Term Cash Investment.
The stock funds, including the Coastal Common Stock Fund, are to
be invested in stock.
Any funds which have not been invested in stock are described in
the account of a Participant as "short-term cash." Any transfer to a stock
fund as of a Valuation Date will be shown as short-term cash. This amount
will be used as the basis for allocation of stock as of the following
Valuation Date. This allocation is made using the purchase pool price for
the Valuation Date the allocation is made. For example, if a Participant
requests that $1,000 be transferred from the Interest Income Fund to the
Coastal Common Stock Fund as of the February Valuation Date, the account
of the Participant will reflect (1) a removal of $1,000 from Interest
Income Fund as of the February Valuation Date, (2) short-term investment of
$1,000 in the Coastal Common Stock Fund as of the February Valuation Date,
(3) short-term investment of $0 as of the March Valuation Date, and (4)
number of shares of stock which $1,000 purchased at the purchase pool
price as of the March Valuation Date.
Short-term investment is invested on a short term basis pending
purchase of stock. Earnings from such investments are allocated to accounts
of Participants.
(j) Allocation of Earnings.
The Interest Income Fund may include contracts with insurance
companies which pay different rates of interest and short term investments
income which results from temporary investment of funds pending their
transmission to the insurance companies. The earnings are commingled and
allocated to each account based on the Account Balance as of the prior
Valuation Date. For example, March earnings are allocated based on the
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Participant Account Balance as of the end of February. Then current
contributions are added to give the total value as of the March Valuation
Date.
Processing of withdrawals can take 30 to 90 days. Funds being
withdrawn do not receive an allocation of interest during that period of
processing.
Earnings for the Diversified Fund and the Index Fund are handled
in the same general way as the Interest Income Fund. However, in the
Diversified Fund and the Index Fund, the value of the unit reflects the
change in value due to both earnings and market price changes.
(k) The Administrator will maintain individual accounts representing
the interests of Participants in the several investment funds.
10.4 Diversification of Investments - Salary Reduction Contribution
Accounts (ESOP).
(a) Each Qualified Participant (as defined below) may elect once each
Plan Year in the Qualified Election Period (as defined below), by written
instrument delivered to the Administrator [or by using the electronic
procedure provided by the Administrator], to direct the investment of the
Participant's Adjusted Balance of his Salary Reduction Contribution
Account. The Administrator shall direct the Trustee to invest the Adjusted
Balance of such Qualified Participant's Salary Reduction Contribution
Account pursuant to the procedure described in Section 10.3(e) of the Plan.
(b) A Qualified Participant's election pursuant to this Section shall
direct the investment of the amount subject to that election among the
Interest Income Fund, the Diversified Fund and the Index Fund.
(c) Definitions.
(1) "Qualified Election Period" means once each Plan Year
beginning with the first Plan Year in which a Participant first
becomes a Qualified Participant.
(2) "Qualified Participant" means any Participant who has both
attained the age of fifty-five years and completed ten years of
Participation.
10.5 Rules Governing Investments of Non-ESOP Participants. The
provisions of this Section apply to Participant contributions pursuant to
a Salary Reduction Agreement by a Participant during the time the
Participant is an Employee of an adopting employer which (i) is not a
corporation or (ii) is a corporation to which the ESOP provisions do not
apply. (See the Introduction Section of the Plan for a description of
corporations to which the ESOP provisions apply.)
(a) The Participant may have his Salary Reduction Contribution
Account invested in the Coastal Common Stock Fund, the Diversified Fund,
the Index Fund and/ or the Interest Income Fund. The Participant must
elect the investment allocation in writing or by using the electronic
procedure provided by the Administrator. Allocations to the various funds
must be in multiples of five percent. A minimum of one percent of the
Basic Compensation of a Participant who elects the Salary Reduction
Contribution must be allocated to the Coastal Common Stock Fund.
(b) Once each Plan Year, the Participant may direct that funds in
his Salary Reduction Contribution Account be transferred among the Coastal
Common Stock Fund, the Interest Income Fund, the Diversified Fund and the
Index Fund using the procedure described in Section 10.3(e) of the Plan.
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10.6 Description of Funds
(a) The Coastal Common Stock Fund. This Fund shall be invested in
Common Stock. Cash dividends on Common Stock shall be reinvested in Common
Stock.
(b) Interest Income Fund. The Interest Income Fund is an unsegregated
fund invested in interest bearing investments such as bonds, notes,
debentures, savings accounts, savings certificates, commercial paper,
obligations of the United States of America, deposit accounts maintained
by one or more legal reserve life insurance companies which provide for
the payment of fixed or variable rates of interest for specified periods
of time, and other similar types of investments, although such investments
may not be legal investments for trustees under the applicable statutes. A
portion of the fund may be retained in cash.
(c) Diversified Fund. The Diversified Fund is an unsegregated fund
invested in capital stocks of issuers (other than Coastal or any Subsidiary
thereof), notes, bonds, debentures, and other similar types of investments,
although such investments may not be legal investments for trustees under
the applicable statutes. A portion of the fund may be retained in cash or
invested temporarily in obligations of the United States of America, or in
commercial paper.
(d) Index Fund. The Index Fund is an unsegregated fund invested in
capital stocks or similar securities of issuers (other than Coastal or any
Subsidiary thereof), although such investments may not be legal investments
for trustees under the applicable statutes. The Index Fund seeks investment
results which parallel the performance of an unmanaged stock index fund
such as the Standard & Poor's 500 Composite Stock Price Index. A portion of
the fund may be retained in cash or invested temporarily in obligations of
the United States of America, or in commercial paper.
(e) Coastal Class A Common Stock Fund. This fund is to hold Coastal
Class A common stock which was issued as a dividend to holders of Common
Stock.
Cash realized from Coastal Class A common stock will be invested
in the Coastal Common Stock Fund.
A Participant may direct the Administrator in writing to have
Coastal Class A common stock converted into Common Stock. When stock
attributable to Employer contributions and earnings thereon is converted,
the Common Stock received shall become part of the Coastal Common Stock
Fund. When stock attributable to Participant contributions and earnings
thereon is converted, the Common Stock received shall become part of the
Coastal Common Stock Fund unless the Participant has directed in writing
that the Common Stock is to be sold and the proceeds invested in the
Diversified Fund, the Index Fund or the Interest Income Fund.
(f) Coastal Preferred Stock Fund. The Coastal Preferred Stock
Fund shall be invested in Coastal Series B $1.83 convertible preferred
stock. Dividends shall be reinvested in the Coastal Common Stock Fund.
Each Participant may elect to have the Coastal Series B
$1.83 preferred stock in the Participant's account converted to Common
Stock and Coastal Class A common stock. The Participant shall notify the
Administrator of the election to convert such preferred stock and the
number of shares to be converted. The Administrator shall instruct the
Trustee to convert such preferred stock.
(g) Valero Stock Fund. This fund is to hold common stock of Valero
Energy Corporation (hereinafter, Valero) which was issued to holders of
Common Stock as of the result of a corporate spinoff.
A Participant may direct the Administrator to have cash realized
from Valero stock invested in the Coastal Common Stock Fund. Such election
shall be in writing and will become effective the first day of any
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month, provided the election is received by the Administrator prior to the
first of such month. The election may be revoked by writing to the
Administrator. Such revocation shall be effective the first day of any
month, provided the election is received by the Administrator prior to the
first of such month. All cash realized from Valero stock shall be invested
in the Diversified Fund to the extent it is not invested in the Coastal
Common Stock Fund pursuant to a Participant election.
A Participant may direct the Administrator in writing to sell the
Valero stock in the Participant's account and invest the proceeds in the
Coastal Common Stock Fund or the Diversified Fund. In addition, a
Participant may direct the Administrator, in writing, to sell the Valero
stock in the Participant's account which is attributable to his
contributions and earnings thereon, and invest the proceeds in the Interest
Income Fund. A Participant may direct the Administrator to sell any
Diversified Fund units purchased with proceeds of Valero stock attributable
to Employer contributions and reinvest the proceeds in the Coastal Common
Stock Fund.
For purposes of the Withdrawal provisions of the Plan, the Valero
stock shall be considered to have the same contribution date as the
Coastal stock with respect to which the Valero stock was issued.
(h) PG&E Stock Fund. This fund is to hold common stock of Pacific Gas
and Electric Company (hereinafter PG&E) which was issued to holders of
Valero common stock as a dividend.
A Participant may direct the Administrator to have cash realized
from PG&E stock invested in the Coastal Common Stock Fund. Such election
shall be in writing and will become effective the first day of any month,
provided the election is received by the Administrator prior to the first
of such month. The election may be revoked by writing to the Administrator.
Such revocation shall be effective the first day of any month, provided the
election is received by the Administrator prior to the first of such month.
All cash realized from PG&E stock shall be invested in the Diversified Fund
to the extent it is not invested in Common Stock pursuant to a Participant
election.
A Participant may direct the Administrator in writing to sell the
PG&E stock in the Participant's account and invest the proceeds in the
Coastal Common Stock Fund or the Diversified Fund. In addition, a
Participant may direct the Administrator, in writing, to sell the PG&E
stock in the Participant's account which is attributable to his
contributions and earnings thereon, and invest the proceeds in the
Interest Income Fund. A Participant may direct the Administrator to sell
any Diversified Fund units purchased with proceeds of PG&E stock
attributable to Employer contributions and reinvest the proceeds in the
Coastal Common Stock Fund.
For purposes of the Withdrawal provisions of the Plan the PG&E
stock shall be considered to have the same contribution date as the
Valero stock with respect to which the PG&E stock was issued.
(i) Intelect Stock Fund. This fund is to hold common stock of
Intelect Communications, Inc. formerly Coastal International, Ltd.
(hereinafter "Intelect") issued to holders of Common Stock, as the
result of a corporate spinoff.
Cash realized from Intelect stock will be reinvested in the
Coastal Common Stock Fund.
A Participant may direct the Administrator in writing to sell
Intelect stock in the Participant's account and invest the proceeds in
the Coastal Common Stock Fund or the Diversified Fund. In addition, a
Participant may direct the Administrator in writing to sell the Intelect
stock in the Participant's account which is attributable to his
contributions and earnings thereon and to invest the proceeds in the
Interest Income Fund.
For purposes of the withdrawal provisions of the Plan, the date
of contribution for the Intelect common stock is considered to be
October 31, 1980.
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ARTICLE XI
AMENDMENT AND TERMINATION
11.1 Amendment of Plan. The Company reserves the right at any time and from
time to time to modify or amend, in whole or in part, any or all of the
provisions of the Plan, by resolution of the board, as evidenced by a written
instrument executed by an authorized officer of the Company, and all Employees
and persons claiming any interest hereunder shall be bound thereby; provided
however, that no amendment shall have the effect of:
(i) directly or indirectly divesting the interest of any Participant in
any amount that he would have received had he terminated his
employment with the Company immediately prior to the effective date
of such amendment, or the interest of any Beneficiary as such
interest existed immediately prior to the effective date of such
amendment;
(ii) directly or indirectly affecting the vesting schedule set forth in
Section 5.6 used to determine the vested interest of a Participant on
the effective date of the amendment unless (a) the conditions of
Section 203(c) of ERISA are satisfied and (b) each Participant whose
nonforfeitable percentage of his accrued benefit derived from
Matching Contributions is determined under such schedule and who has
completed three years of Service with the Employer, may elect, during
the election period, to have the nonforfeitable percentage determined
under the old vesting schedule;
(iii) vesting in the Company any right, title, or interest in or to any
Plan assets except as provided in Section 11.4 of the Plan;
(iv) causing or effecting discrimination in favor of officers,
shareholders, or highly compensated Employees; or
(v) causing any part of the Plan assets to be used for any purpose other
than for the exclusive benefit of the Participants and their
Beneficiaries.
11.2 Voluntary Termination of/or Permanent Discontinuance of Contributions
to the Plan. The Company expects the Plan to be permanent, but since future
conditions affecting the Company cannot be anticipated, the Company shall have
the right to terminate the Plan in whole or in part, or to permanently
discontinue contributions to the Plan, at any time by resolution of its Board of
Directors and by giving written notice of such termination or permanent
discontinuance to the Trustee. Such resolution shall specify the effective date
of termination or permanent discontinuance, which shall not be earlier than the
first day of the Plan Year which includes the date of the resolution.
11.3 Involuntary Termination of Plan. The Plan shall automatically
terminate if the Company is legally adjudicated as bankrupt, makes a general
assignment for the benefit of creditors, or is dissolved. In the event of the
merger or consolidation of the Company with or into any other corporation, or in
the event substantially all of the assets of the Company shall be transferred to
another corporation, the successor corporation resulting from the consolidation
or merger, or transfer of such assets, as the case may be, shall have the right
to adopt and continue the Plan and succeed to the position of the Company
hereunder. If, however, the Plan is not so adopted as of a date within ninety
(90) days after the effective date of such consolidation, merger or sale, the
Plan shall automatically be deemed terminated as of the effective date of such
transaction. Nothing in this Plan shall prevent the dissolution, liquidation,
consolidation or merger of the Company, or the sale or transfer of all or
substantially all of its assets.
11.4 Payments on Termination of/or Permanent Discontinuance of
Contributions to the Plan. If the Plan is terminated as herein provided, or if
it should be partially terminated, or upon the complete discontinuance of
Company contributions to the Plan, the following procedure shall be followed,
except that, in the event of a partial termination, it shall be followed only in
cases of those Participants and Beneficiaries directly affected:
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(i) The Administrator may continue to administer the Plan, but if it
fails to do so, its records, books of account and other necessary
data shall be turned over to the Trustee and the Trustee shall act
on its own motion as hereinafter provided.
(ii) Notwithstanding any other provisions of the Plan, all interests of
Participant shall become fully vested and nonforfeitable.
(iii) The value of the Trust and the shares of all Participants and
Beneficiaries shall be determined as of the date of termination or
discontinuance.
(iv) Distribution to Participants and Beneficiaries shall be made at such
time after termination of or discontinuance of contributions to the
Plan as shall be determined by the Administrator (or the Trustee if
no Administrator is then acting) not later than the time specified
in Section 6.6.
(v) Any assets remaining after allocation to the accounts of Participants
of all amounts due such Participants shall be distributed to the
Company.
11.5 Assets Available for All Controlled Group Participants. All assets
held in the Trust allocated to a particular member of a Controlled Group shall
be available to pay benefits with respect to all Participants of such Controlled
Group. A "Controlled Group" is a controlled group of corporations and/or trades
or businesses as defined in Sections 414(b) and (c) of the Code.
ARTICLE XII
MISCELLANEOUS
12.1 Duty to Furnish Information and Documents. Participants and their
Beneficiaries must furnish to the Administrator and the Trustee such evidence,
data or information as the Administrator considers necessary or desirable for
the purpose of administering the Plan, and the provisions of the Plan for each
person are upon the condition that he will furnish promptly full, true, and
complete evidence, data and information requested by the Administrator. All
parties to, or claiming any interest under, the Plan hereby agree to perform any
and all acts, and to execute any and all documents and papers, necessary or
desirable for carrying out the Plan and the Trust.
12.2 Annual Statements and Available Information. The Administrator shall
advise Employees of the eligibility requirements and benefits under the Plan. As
soon as practicable after making the annual valuation and allocations provided
for in the Plan, and at such other times as the Administrator may determine, the
Administrator shall provide each Participant, and each former Participant
(except former Participants who have no vested Adjusted Balance) and Beneficiary
(except former Beneficiaries who have no vested Adjusted Balance) with respect
to whom an account is maintained, with a statement reflecting the current status
of his accounts, including the Adjusted Balance thereof. No Participant, except
as necessary to administer the Plan, shall have the right to inspect the records
reflecting the account of any other Participant. The Administrator shall make
available for inspection at reasonable times by Participants and Beneficiaries
copies of the Plan, any amendments thereto, the Plan summary, and all reports of
Plan and Trust operations required by law.
12.3 No Enlargement of Employment Rights. Nothing contained in the Plan
shall be construed as a contract of employment between the Company and any
person, nor shall the Plan be deemed to give any person the right to be retained
in the employ of the Company or limit the right of the Company to employ or
discharge any person with or without cause, or to discipline any Employee.
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12.4 Applicable Law. All questions pertaining to the validity, construction
and administration of the Plan shall be determined in conformity with the laws
of Texas to the extent that such laws are not preempted by federal laws
including the Code and ERISA and valid regulations published thereunder.
12.5 No Guarantee except for Colorado Plan.
(a) Neither Trustee, the Administrator, the Committee, nor the
Company in any way guarantees the Trust Fund from loss or depreciation or
the payment of any benefits which may be or become due to any person from
the Trust Fund. No Participant or other person shall have any recourse
against the Trustee, the Administrator, the Company or the Committee if
the Trust Fund is insufficient to provide Plan benefits in full. Nothing
herein contained shall be deemed to give any Participant, former
Participant, or Beneficiary an interest in any specific part of the Trust
Fund or any other interest except the right to receive benefits out of the
Trust Fund in accordance with the provisions of the Plan and Trust.
(b) Notwithstanding the preceding provisions of this Section, the
adopting employers of the Original and Amended Colorado Plans guarantee to
the former Participants in the Original and Amended Colorado Plans that,
in the event of any withdrawal or settlement of their account, they will
receive, with respect to the credit balance in their account as of April
30, 1974, an amount which is not less than equal to the contributions
which were deducted from the compensation of the Participants and paid
into the Trust Fund, after considering all prior withdrawals. The Company
makes no such guarantee with respect to contributions to the Plan by said
Participants after April 30, 1974.
12.6 Unclaimed Funds. Each Participant shall keep the Administrator,
informed of his current address and current address of his Beneficiary or
Beneficiaries. Neither the Company, the Committee nor the Trustee shall be
obligated to search for the whereabouts of any person. If the location of a
Participant is not made known to the Administrator within three (3) years after
the date on which distribution of the Participant's account may be first made,
distribution may be made as though the Participant had died at the end of the
three-year period. If, within one additional year after such three-year period
has elapsed, or within three years after the actual death of a Participant, the
Administrator is unable to locate any individual who would receive distribution
under the Plan upon the death of the Participant pursuant to Section 6.2 of the
Plan, the Adjusted Balance in the Participant's accounts shall be disposed of in
accordance with applicable laws.
12.7 Merger or Consolidation of Plan. Any merger or consolidation of the
Plan with another Plan, or transfer of Plan assets or liabilities to another
plan, shall be effected in accordance with such regulations, if any, as may be
issued pursuant to Section 208 of ERISA, in such manner that each Participant in
the Plan would receive, if the merged, consolidated or transferee plan were
terminated immediately following such event, a benefit which is equal to or
greater than the benefit he would have been entitled to receive if the Plan had
terminated immediately before such event.
12.8 Interest Nontransferable. Except as provided in Article IX, the Code,
ERISA, and this Section, no interest of any person or entity in, or right to
receive distributions from, the Trust Fund shall be subject in any manner to
sale, transfer, assignment, pledge, attachment, garnishment, or other alienation
or encumbrance of any kind; nor may such interest or right to receive
distributions be taken, either voluntarily or involuntarily, for the
satisfaction of the debts of, or other obligations or claims against, such
person or entity, including claims in bankruptcy proceedings. The account of any
Participant, however, shall be subject to and payable in accordance with the
applicable requirements of any qualified domestic relations order, as that term
is defined in Section 414(p) of the Code, and the Administrator shall direct the
Trustee to provide for payment from a Participant's account in accordance with
such order and with the provisions of Section 414(p) of the Code and any
regulations promulgated thereunder. A payment from a Participant's account may
be made to an alternate payee (as defined in Section 414(p)(8) of the Code)
prior to the date the Participant reaches his earliest retirement age (as
defined in Section 414(p)(4)(B) of the Code) if such payments are made pursuant
to a qualified domestic relations order. All such payments pursuant to a
qualified domestic relations order shall be subject to reasonable rules and
regulations promulgated by the Administrator respecting the time of payment
pursuant to such order and the valuation of the Participant's account or
accounts from which payment is made; provided, that all such
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payments are made in accordance with such order and Section 414(p). The
balance of an account that is subject to any qualified domestic relations order
shall be reduced by the amount of any payment made pursuant to such order.
Notwithstanding the preceding paragraph, if any Participant borrows
money pursuant to Article IX, the Trustee and the Administrator shall have all
rights to collect upon such indebtedness as are granted pursuant to Article IX
and any agreements or documents executed in connection with such loan.
The account of any Participant, may also be offset by an amount set
forth in a court order or requirement to pay that arises from (1) a judgment of
conviction for a crime involving the Plan, (2) a civil judgment (or consent to
order or decree) that is entered by a court in an action brought in connection
with a breach (or alleged breach) of a fiduciary duty under ERISA, or (3) a
settlement agreement entered into by the Participant with either the Secretary
of Labor or the Pension Benefit Guaranty Corporation in connection with a breach
of fiduciary duty under ERISA by a fiduciary or any other person.
12.9 Prudent Man Rule. Notwithstanding any other provision of this Plan and
Trust Agreement, the Trustee, the Committee and the Company shall exercise their
powers and discharge their duties under this Plan and Trust Agreement for the
exclusive purpose of providing benefits to Employees and their Beneficiaries,
and shall act with the care, skill, prudence and diligence under the
circumstances that a prudent man acting in a like capacity and familiar with
such matters would use in the conduct of an enterprise of a like character and
with like aims. Subject to the terms of the Plan, the Code, ERISA and the
preceding sentence, the Trustee shall diversify investments of the Trust Fund so
as to minimize the risk of large losses, unless under the circumstances it is
clearly prudent not to do so.
12.10 Limitations on Liability. Notwithstanding any of the preceding
provisions of the Plan, none of the Trustee, the Company, the Administrator, the
Committee and each individual acting as an employee or agent of any of them
shall be liable to any Participant, former Participant or Beneficiary for any
claim, loss, liability or expense incurred in connection with the Plan, except
when the same shall have been judicially determined to be due to the gross
negligence or willful misconduct of such person. The Company shall indemnify and
hold harmless each individual acting as an employee or agent of the Company
(including Committee members) from any and all claims, liabilities, costs and
expense (including attorney's fees) arising out of any actual or alleged act or
failure to act with respect to the administration of the Plan, except that no
indemnification or defense shall be provided to any person with respect to
conduct which has been judicially determined, or agreed by the parties, to have
constituted bad faith or willful misconduct on the part of such person, or to
have resulted in his receipt of personal profit or advantage to which he is not
entitled.
12.11 Headings. The headings in this Plan are inserted for convenience of
reference only and are not to be considered in construction of the provisions
thereof.
12.12 Gender and Number. Except when otherwise required by the context, any
masculine terminology in this document shall include the feminine, and any
singular terminology shall include the plural.
12.13 ERISA and Approval Under Internal Revenue Code. This Plan is intended
to qualify as a Plan and Trust meeting the requirements of Sections 401 and
501(a) of the Code, as now in effect or hereafter amended, so that the income of
the Trust Fund may be exempt from taxation under Section 501(a) of the Code,
contributions of the Company under the Plan may be deductible for federal income
tax purposes under Section 404 of the Code and amounts subject to Salary
Reduction Agreements are not treated as distributed to Participants for federal
income tax purposes under Section 402(e)(3) of the Code. Any modification or
amendment of the Plan and/or Trust may be made retroactively, as necessary or
appropriate, to establish and maintain such qualification and to meet any
requirement of the Code or ERISA.
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12.14 Extension of Plan to Related Employers.
(a) With the approval of the Company, any Related Employer or
Subsidiary may adopt the Plan and qualify its Employees to become
Participants thereunder by taking proper corporate action to adopt the
Plan and making such contributions to the Trust Fund as the board of
directors of the Related Employer or Subsidiary may require.
(b) The Plan will terminate with respect to any Related Employer
or Subsidiary that has adopted the Plan pursuant to this Section if the
Related Employer or Subsidiary ceases to be a Related Employer or
Subsidiary, revokes its adoption of the Plan by appropriate corporate
action, permanently discontinues its contributions for its Employees, is
judicially declared bankrupt, or makes a general assignment for the
benefit of creditors. If the Plan is terminated or contributions are
discontinued with respect to any Related Employer or Subsidiary, the
provisions of Section 11.4 shall apply to the interest in the Plan of
persons who are, at the time of such event, the Employees of such Related
Employer or Subsidiary.
(c) The terms "Company" and "Employee" in the Plan shall include any
Related Employer or Subsidiary that has adopted the Plan pursuant to this
Section 12.14 and the Employees of such Related Employer or Subsidiary;
provided, however, that the term "Company" shall not include any such
Related Employer or Subsidiary where used in Articles VII or VIII of the
Plan. The Administrator shall act as the agent for each Related Employer
and Subsidiary that adopts the Plan for all purposes of administration
thereof.
(d) Amendments and supplements to the Plan by Coastal shall be
binding on each Related Employer and Subsidiary which has adopted the Plan
to the extent that each Related Employer or Subsidiary does not reject
such amendment or supplement within ninety days of adoption by Coastal.
(e) Each Related Employer or Subsidiary may, by action of its
Board of Directors, adopt a supplement to the Plan which modifies
provisions of the Plan, but such modification shall apply only to
Employees of such Related Employer or Subsidiary. Any such supplement
shall be effective only if approved by the Board of Directors of Coastal.
12.15 Rules of Interpretation. The provisions of the Plan apply to all
Participants generally, unless a provision states otherwise. The provisions of
the Plan with respect to Salary Reduction Agreements, Salary Reduction
Contributions and Salary Reduction Contribution Accounts apply generally to both
ESOP Participants and Non-ESOP Participants unless the provision states
otherwise.
12.16 Electronic Procedures. The Administrator has established an
electronic procedure which may be used for certain transactions under the Plan,
including certain Participant elections. Where an electronic procedure has been
established, a Participant may use the electronic procedure in lieu of
submitting a written form to the Administrator.
ARTICLE XIII
TOP-HEAVY PROVISIONS
13.1 Top-Heavy Status. Except as provided in Sections 13.4(b) and (c), the
provisions of this Article shall not apply to the Plan with respect to any Plan
Year for which the Plan is not Top-Heavy. If the Plan is or becomes Top-Heavy in
any Plan Year, the provisions of this Article XIII will supersede any
conflicting provisions elsewhere in the Plan.
13.2 Definitions. For purposes of this Article XIII, the following words
and phrases shall have the meanings stated below unless a different meaning is
required by the context:
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(a) "Determination Date" means, with respect to any Plan Year: (i) the
last day of the preceding Plan Year, or (ii) in the case of the first Plan
Year of the Plan, the last day of such Plan Year.
(b) "Key Employee" means an Employee meeting the definition of "key
employee" contained in Section 416(i)(1) of the Code and the Regulations
interpreting that Section. For purposes of determining whether an Employee
is a Key Employee, the definition of compensation set forth in Section
13.6 shall apply.
(c) "Non-Key Employee" means any Employee who is not a Key Employee.
(d) "Valuation Date" means with respect to a particular Determination
Date, the most recent Valuation Date (as defined in Section 1.51)
occurring within a twelve month period ending on the applicable
Determination Date.
13.3 Determination of Top-Heavy Status.
(a) The Plan will be "Top-Heavy" with respect to any Plan Year if,
as of the Determination Date applicable to such Year, the ratio of the
Adjusted Balances in the accounts of Key Employees (determined as of the
Valuation Date applicable to such Determination Date) to the Adjusted
Balances in the accounts of all Employees (determined as of such Valuation
Date) exceeds 60%. For purposes of computing such ratio, and for all other
purposes of applying and interpreting this paragraph (a): (i) the amount
of the accounts of any Employee shall be increased by the aggregate
distributions made with respect to such Employee under the Plan during the
five-year period ending on any Determination Date; (ii) benefits provided
under all plans which are aggregated pursuant to (b) of this Section must
be considered; and (iii) the provisions of Section 416 of the Code and all
Regulations interpreting that Section shall be applied. If any Employee
has not performed services for the Company or any Related Employer at any
time during the five-year period ending on any Determination Date, the
balances of the accounts of such Employee shall not be taken into
consideration for purposes of determining whether the Plan is Top-Heavy
with respect to the Plan Year to which such Determination Date applies.
(b) For purposes of determining whether the Plan is Top-Heavy, all
qualified retirement plans maintained by the Company and each Related
Employer shall be aggregated to the extent that such aggregation is
required under the applicable provisions of Section 416 of the Code and
the Regulations interpreting that Section. All other qualified retirement
plans maintained by the Company and each Related Employer shall be
aggregated only to the extent permitted by Section 416 of the Code and
such Regulations and elected by the Company.
(c) For purposes of determining whether the Plan is Top-Heavy, the
Adjusted Balance of a Participant's account shall not include (i) the
amount of a rollover contribution (or similar transfer) and earnings
thereon attributable to a rollover contribution (or similar transfer)
accepted after December 31, 1983, initiated by the Participant and derived
from a plan not maintained by the Company or any Related Employer, or (ii)
a distribution made with respect to an Employee which is a tax-free
rollover contribution (or similar transfer) that is either not initiated
by the Employee or that is made to a plan maintained by the Company or any
Related Employer.
(d) Solely for purposes of determining whether the Plan is Top-Heavy,
the accrued benefit of any Non-Key Employee shall be determined (i) under
the method, if any, that uniformly applies for accrual purposes under all
plans of the Company or any Related Employer, or (ii) if there is no such
method, as if such benefit accrued not more rapidly than the slowest
accrual rate permitted under the fractional accrual rule of Section
411(b)(1)(C) of the Code.
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13.4 Vesting.
(a) If the Plan becomes Top-Heavy, the vested interest of a
Participant in the portion of his Matching Contributions Account referred
to in paragraph (b) below shall be determined in accordance with the
following formula in lieu of the formula set forth in Section 5.6;
provided, however, that the following formula for vesting of Top-Heavy
Participants shall be at least as favorable at all points in time as the
formula set forth in Section 5.6:
Vested Forfeitable
Years of Service Percentage Percentage
Less than 2 0% 100%
2 but less than 3 20% 80%
3 but less than 4 40% 60%
4 but less than 5 60% 40%
5 but less than 6 80% 20%
6 or more 100% 0%
For purposes of the above schedule, years of Service shall
include all years of Service required to be counted under Section 411(a)
of the Code, disregarding all years of Service permitted to be disregarded
under Section 411(a)(4) of the Code.
(b) The vesting schedule set forth in paragraph (a) next above shall
apply to all amounts allocated to a Participant's Matching Contributions
Account while the Plan is Top-Heavy and during the period of time before
the Plan becomes Top-Heavy. This vesting schedule shall not apply to the
Matching Contributions Account of any Employee who does not have an Hour
of Service after the Plan becomes Top-Heavy.
(c) If the Plan becomes Top-Heavy and subsequently ceases to be
Top-Heavy, the vesting schedule set forth in subsection (a) shall
automatically cease to apply, and the vesting schedule set forth in Section
5.6 above shall automatically apply, with respect to all amounts allocated
to a Participant's Matching Contributions Account for all Plan Years after
the Plan Year with respect to which the Plan was last Top-Heavy. For
purposes of this subsection (c), this change in vesting schedules shall
only be valid to the extent that the conditions of Section 11.1 of the
Plan and Section 411(a)(10) of the Code are satisfied.
13.5 Minimum Contribution. For each Plan Year that the Plan is Top-Heavy,
the Company will contribute and allocate to the Salary Reduction Contribution
Account and Matching Contributions Account of each Participant who is a Non-Key
Employee and is employed by the Company on the last day of such Plan Year an
amount consisting of contributions and forfeitures equal to the lesser of (i) 3%
of such Employee's compensation (as defined in Section 13.6) for such Plan Year
and (ii) the largest percentage of Salary Reduction Contributions, Matching
Contributions and forfeitures, as a percentage of the Key Employee's
compensation (as defined in Section 13.6), allocated to the Salary Reduction
Contribution Account and Matching Contributions Account of any Key Employee for
such Year. The minimum contribution allocable pursuant to this Section 13.5 will
be determined without regard to any contributions by the Company for any
Employee under the Federal Social Security Act. A Non-Key Employee will not be
excluded from an allocation pursuant to this Section merely because his
compensation is less than a stated amount. A Non-Key Employee who has become a
Participant but who fails to complete at least 1,000 Hours of Service in a Plan
Year in which the Plan is Top-Heavy shall not be excluded from an allocation
pursuant to this Section. A Non-Key Employee who is a Participant in the Plan
and who declined to elect to have Salary Reduction Contribution made to his
Account for the Plan Year shall receive an allocation for that Plan pursuant to
this Section.
13.6 Compensation. For any Plan Year in which the Plan is Top-Heavy, annual
compensation for purposes of this Article XIII shall have the meaning set forth
in Section 414(q)(7) of the Code. In no event shall compensation
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of a Participant taken into account for purposes of this Article XIII for any
Plan Year exceed $160,000 (or such greater amount provided pursuant to Section
401(a)(17) of the Code).
13.7 Collective Bargaining Agreements. The requirements of Section 13.4 and
13.5 shall not apply with respect to any employee included in a unit of
employees covered by a collective bargaining agreement between employee
representatives and the Company or a Related Employer if retirement benefits
were the subject of good faith bargaining between such employee representatives
and the Company or Related Employer.
13.8 Limit on Annual Additions: Combined Plan-Limit.
(a) If the Plan is determined to be Top-Heavy under Section 13.3,
Section 5.5(d) shall be applied by substituting "1.0" for "1.25" in
applying Section 415(e) of the Code to the Plan.
(b) Subsection (a) above shall not apply if:
(1) Section 13.5 is applied by substituting "4%" for "3%," and
(2) The Plan would not be Top-Heavy if "90%" were substituted for
"60%" in Section 13.3.
(c) If, but for this subsection (c), subsection (a) would begin to
apply with respect to the Plan, the operation of subsection (a) shall be
suspended with respect to an Employee so long as there are:
(1) No Company contributions, forfeitures or voluntary
nondeductible contributions allocated with respect to such
Employee, and
(2) No accruals under a qualified defined benefit plan for such
Employee.
13.9 Safe-Harbor Rule. Each Non-Key Employee covered under both a Top-Heavy
defined benefit plan and a Top-Heavy defined contribution plan maintained by the
Company or any Related Employer must receive the defined benefit minimum (as
defined in Section 416(c)(1) of the Code) under the provisions of the defined
benefit plan.
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ANR SUPPLEMENT
Introduction
The provisions of this Supplement are in addition to other provisions of
the Plan. This Supplement applies only to "ANR Employee" as defined herein. The
purpose of this Supplement is to set forth specific provisions associated with
the merger of the Coastal Plan and the "ANR Plan" as defined herein. The
effective date of the merger is January 1, 1986.
Definitions
1. "ANR Plan" means the American Natural Resources System Companies
Employees' Savings Plan and the American Natural Resources System Companies
Employees' Savings Plan Trust Agreement.
2. "ANR Employee" means an employee of American Natural Resources
Company and subsidiaries which are at least 50% owned directly or
indirectly by American Natural Resources Company.
3. "Coastal Plan" means The Coastal Corporation Thrift Plan and Trust.
4. "Eligible ANR Employee" means a person who was either (a) a
participant in the ANR Plan before 1986, or (b) an ANR Employee before
1986 who would have been eligible to participate in the ANR Plan after
1985 if the ANR Plan had continued after 1985 without change as to plan
provisions or adopting employers and, where applicable, an Employee who
became an employee of a Related Employer or Subsidiary which adopted the
Coastal Plan had instead remained as an ANR Employee.
Merger
As of January 1, 1986 the ANR Plan and the Coastal Plan merged. The terms
of the merged plans are contained in the Coastal Plan as amended to include this
Supplement.
Continued ANR Plan Provisions
1. Vesting. Employer contributions to the ANR Plan for periods
before 1986 shall vest in accordance with the vesting schedule contained
in the ANR Plan as of the end of 1985.
2. Service. In applying the terms of the Coastal Plan, an ANR
Employee shall receive credit for "Hours of Employment" and "Years of
Service" (both terms as defined in the ANR Plan at the end of 1985) for
periods before 1986 on the same basis as such ANR Employee would have
received credit under the ANR Plan. Service under the ANR Plan shall be
counted for purposes of eligibility, vesting, contribution percentage and
withdrawal under the merged plan.
However, in determining the contribution level for periods after
1985 and the vesting as of the end of 1985 pursuant to the five years of
participation rule under the ANR Plan, the following periods are excluded:
(i) periods of time during which the Participant was not eligible to
contribute to the ANR Plan, and (ii) periods of time during which the
Participant was eligible to contribute to the ANR Plan and declined to do
so.
3. Transition Contribution and Vesting. An Eligible ANR Employee who
would have been eligible to contribute to the ANR Plan at a four percent
rate during 1986, 1987 and/or 1988 was eligible to contribute at such rate
for such period. The ANR Plan vesting schedule as in effect at the end of
1985 shall apply to Employer matching contributions made pursuant to this
provision to the extent such contributions exceed the amount such
Participant would be eligible to contribute to the Coastal Plan in the
absence of this transition rule.
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4. The following vesting and distribution provisions shall apply
only to contributions and earnings before 1986:
(a) Termination of Participation. Any Participant may, upon 20
days written notice to the Administrator, terminate his participation
in the Plan as of any Valuation Date. Upon such termination the
Administrator shall direct the Trustee to distribute to the
Participant an amount equal to the greater of (i) the total of his
contributions under the Plan and (ii) an amount which bears the same
ratio to the value of his Plan account as of such Valuation Date as
the total of his contributions under the Plan bears to the total of
such contributions and all Employer contributions to the Plan on his
behalf. The amount distributable shall in no event exceed the value of
the Participant's Plan account. Such a Participant shall continue to
be considered a Participant for all purposes of the Plan except that
he shall be ineligible to again elect to make contributions under the
Plan for a period of twelve full accounting periods from the date of
termination of his Participation.
This provision shall be administered in accordance with
administrative procedures in effect at the end of 1985.
(b) Suspension of Participation. If a Participant shall, prior to
termination of his employment, cease to meet the eligibility requirements
of the Plan, his contributions and Employer contributions on his behalf
shall be suspended during the period of his ineligibility. Distribution of
such Participant's Plan account shall be deferred until termination of his
employment with the Employer, whereupon the Administrator shall direct the
Trustee to distribute the value of the Participant's Plan account whether
or not such Participant would have otherwise been fully vested upon
termination of employment.
(c) Distribution Upon Termination of Employment Under Circumstances
Resulting in Forfeiture of Employer Contributions. Upon termination of a
Participant's employment under circumstances in which the Participant is
not fully vested, the Administrator shall direct the Trustee to distribute
to the Participant an amount equal to the greater of (i) the total of his
contributions remaining in the Plan and (ii) an amount which bears the
same ratio to the value of his Plan account as of the Valuation Date
coincident with or next following his termination of employment as the
total of his contributions remaining in the Plan bears to the total of
such contributions remaining in the Plan and all employer contributions on
his behalf remaining in the Plan. The amount distributable shall in no
event exceed the value of the Participant's Plan account. The remaining
portion of the Participant's Plan account shall be forfeited.
(d) Transfer of Employment.
(i) A transfer of employment from one Related Employer or
Subsidiary to another shall not be considered as a
termination of employment.
(ii) If a Participant shall be transferred to the employ of
a Related Company or Subsidiary which has not elected to
participate in the Plan, distribution of such Participant's
Plan account shall be deferred until the date on which he
is no longer in the employ of any Related Company or
Subsidiary, whereupon the Administrator shall direct the
Trustee to distribute the value of the Participant's Plan
account whether or not such Participant would have
otherwise been fully vested upon termination of employment.
COASTAL MART, INC. SUPPLEMENT
With respect to an individual employed by Coastal Mart, Inc. for a position
in a retail outlet, the term "Employee" includes an individual only if such
individual is classified as a Manager, Retail Outlet. This provision is
effective January 1, 1990.
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COAL SUPPLEMENT
Introduction
The purpose of this Supplement is to provide for participation in the Plan
on a modified basis for Employees of Coastal Coal Company, LLC (formerly ANR
Coal Company, LLC) and Related Employers and Subsidiaries which have adopted
this Supplement. The provisions of the Plan apply to such Employees except to
the extent this Supplement modifies any such Plan provisions.
This Supplement became effective January 1, 1990, and was amended as of
January 1, 1999.
Contributions
Contributions for a Participant are eligible for Company Matching
Contributions to a maximum of two percent of Basic Compensation.
Investment
2.1 The Participant may have his Salary Reduction Contribution invested in
the Coastal Common Stock Fund, the Diversified Fund, the Index Fund and/or the
Interest Income Fund. The Participant must elect the investment allocation in
writing or by using the electronic enrollment procedure provided by the
Administrator. Allocations to the various funds must be in multiples of five
percent. A minimum of one percent of the Basic Compensation of a Participant who
elects a Salary Reduction Contribution must be allocated to the Coastal Common
Stock Fund.
2.2 Once each Plan Year, the Participant may direct that funds in the
Salary Reduction Contribution accounts be transferred among the Coastal Common
Stock Fund, the Interest Income Fund, the Diversified Fund and the Index Fund
using the procedure described in Plan Section 10.3(e).
COASTAL CANADA SUPPLEMENT
The provisions of this Supplement apply only to Employees of Coastal Canada
Petroleum, Inc. ("Coastal Canada"). The provisions of this Supplement are in
addition to other provisions of the Plan and the provisions of the Plan apply to
such Employees, except to the extent this Supplement modifies Plan provisions.
The purpose of this Supplement is to allow Employees of Coastal Canada to
participate in the Plan on a basis consistent with the laws of Canada and its
provinces.
Contributions
Salary Reduction Contributions are not permitted. Coastal Canada
Participants may only make After Tax Contributions to the Plan.
Investment Option
The Coastal Common Stock Fund is the only investment option available to
Coastal Canada Participants.
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MAVERICK SUPPLEMENT
The provisions of this Supplement apply to persons who were employed by
Maverick Markets, Inc. ("Maverick") during April 1995 and who became Employees
of Related Employers on or about May 1, 1995 as a result of the acquisition by
Coastal Markets, Ltd. ("Coastal Markets") of certain assets of Maverick on May
1, 1995. The provisions of the Plan apply to such Employees, except to the
extent this Supplement modifies Plan provisions.
The purpose of this Supplement is to provide credit for prior service for
determining eligibility of certain Employees of Coastal Markets and Coastal
Mart, Inc.
Section 1.17 of the Plan with respect to Employees who were former
employees of Maverick is modified to read as follows:
"Entry Date" shall be the earlier of (a) the date determined pursuant to
provisions of the Plan, excluding this Supplement; or (b) the date which is both
(i) 90 or more days after May 1, 1995 and (ii) for purposes of determining
eligibility to participate in the Plan only, determined by crediting Hours of
Service with respect to periods of employment with Maverick prior to May 1,
1995.
ST. HELENS FACILITY SUPPLEMENT
ARTICLE I
INTRODUCTION
This Supplement is referred to as the "St. Helens Facility Supplement." The
purpose of this Supplement is to provide for prior service credit under the Plan
for Participants who were formerly employees of Chevron Chemical Company at the
St. Helens Facility located in St. Helens, Oregon and who became employees of
Coastal Refining & Marketing, Inc. or a Related Employer on or about January 24,
1996.
The provisions of the St. Helens Facility Supplement apply in lieu of
inconsistent or contrary provisions contained in the Plan (excluding this
Supplement) with respect to persons to whom this Supplement applies.
Terms used in this Supplement which are defined in the Plan have the same
meaning in this Supplement unless such terms are defined differently for
purposes of this Supplement. The definition of terms defined in this Supplement
apply only to this Supplement and not to other parts of the Plan.
ARTICLE II
PRIOR SERVICE CREDIT
2.1 In applying the terms of the Plan, an Employee who was formerly an
employee of Chevron Chemical Company, a Delaware corporation, and who became an
employee of the Company or a Related Employer on or about January 24, 1996 in
conjunction with the acquisition of the St. Helens plant located in St. Helens,
Oregon, shall receive credit for periods of immediate and continuous service
prior to January 24, 1996 up to a maximum of seven years for purposes of
determining eligibility to participate, vesting and calculating Company matching
contributions. However, Employees shall not receive credit for prior service for
purposes of calculating benefit accruals.
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DERBY SUPPLEMENT
Introduction
This Supplement is referred to as the "Derby Supplement." The provisions of
this Supplement apply only to Participants in the Derby Refining Company Thrift
Plan, as in effect on December 31, 1997 (the "Derby Refining Plan") with
Adjusted Balances as of December 31, 1997. Additional contributions by such
Participants are not permitted. The provisions of the Plan apply to such
Participants except to the extent this Supplement modifies Plan provisions.
In addition to Participants with Adjusted Balances on December 31, 1997,
Article III of this Supplement shall apply to any former Participant with an
Adjusted Balance which is subject to reinstatement pursuant to the provisions of
Article III of this Supplement.
Upon the merger of the Derby Refining Plan into the Plan, each Participant
in the Plan, as merged, shall have account balances in the Plan equal to the sum
of the account balances the Participant had in the Plan and the Derby Refining
Plan immediately prior to the merger.
ARTICLE I
Participation
Individuals with Adjusted Balances are eligible to participate.
ARTICLE II
Contributions
No contributions are permitted under this Supplement.
ARTICLE III
Payments on Termination
Upon the termination of a Participant's employment with the Company for any
reason other than death, the Participant may request a withdrawal of the
Adjusted Balance of his After Tax Contribution Account, if any, and the vested
portion of the Adjusted Balance of his Matching Contributions Account, if any,
in a method provided in the Plan. The vested portion of a Participant's Matching
Contributions Account shall be determined in accordance with Plan provisions.
The portion of a Participant's Adjusted Balance of his Matching
Contributions Account which is not vested when the Participant terminates
employment with the Company, Subsidiaries and Related Employers shall be
forfeited but shall remain subject to reinstatement and further vesting under
provisions of the Plan if the Participant is reemployed by the Company, a
Subsidiary or a Related Employer prior to the time the Participant incurs five
consecutive one-year Breaks in Service.
Upon reemployment prior to incurring five consecutive one-year Breaks in
Service, the dollar value of the forfeited amount shall be restored without
adjustment for gains or losses and shall be subject to further vesting on a
prospective basis pursuant to Plan provisions. In computing future vesting with
respect to such reinstated amount, such reinstated amount shall be multiplied by
a factor described in the following sentence prior to being multiplied by the
percentage of increased vesting so as to adjust the reinstated amount to reflect
the amount which would have vested if the full Adjusted Balance in his Matching
Contributions Account were being multiplied by the vesting percentage. The
factor described in the preceding sentence is a fraction, the numerator of which
is one and the denominator of which is the
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fractional portion of such Adjusted Balance in his matching Contribution Account
prior to the distribution represented by the reinstated amount. The preceding
applies to a Participant who terminated employment after March 31, 1987.
Any amount forfeited shall be applied to reduce future Matching
Contributions to the Plan.
ARTICLE IV
Withdrawals
4.1 Withdrawals from Participant Contribution Account. Subject to the
approval of the Administrator based on the financial necessity for the
withdrawal, a Participant shall have the right to withdraw, in whole or in part,
the value of his contributions into the Trust to the date of withdrawal under
the Plan, exclusive of any earnings thereon, provided that such withdrawals are
effective as of a Valuation Date and the Participant gives written notice
thereof to the Administrator at least ten (10) days prior to the effective date
of the withdrawal. An Employee who has participated in the Plan for at least
five (5) years, may withdraw not more than the value of his contributions into
the Trust on the date of withdrawal, except for the value of those contributions
during the preceding twelve (12) months, without suffering any penalties. In the
event such Participant should withdraw any portion of the value of his
contributions into the Trust during the period of twelve (12) months preceding
the date of withdrawal, he shall not be permitted to contribute to the Trust for
a period of twenty-six (26) weeks from the date of withdrawal. An Employee, who
has participated in the Plan for less than five (5) years, may withdraw the
value of his contributions into the Trust to the date of withdrawal, provided he
suffers certain penalties. In the event such Participant withdraws not more than
fifty percent (50%) of the value of his contributions into the Trust to the date
of withdrawal, he shall not be permitted to contribute to the Trust for a period
of thirteen (13) weeks from the date of withdrawal. In the event such
Participant should withdraw more than fifty percent (50%) of the value of his
contributions into the Trust to the date of withdrawal, he shall not be
permitted to contribute to the Trust for a period of twenty-six (26) weeks from
the date of withdrawal. During the period the Participant is not permitted to
contribute to the Trust, the Company shall make no contributions to the Trust
for his account. The Administrator shall not approve more than one withdrawal
for a Participant during any Plan Year. In no event will a Participant suffer
any forfeitures of amounts in his account as a result of withdrawals permitted
under this Section.
4.2 Ten-Year Withdrawal. (a) Upon completion of each ten (10) years of
Active Participation, a Participant may withdraw any portion of his Adjusted
Balance, provided he files an irrevocable written election with the
Administrator at least ninety (90) days prior to the completion of such ten (10)
year period. A Participant may continue to contribute to the Trust after a ten
(10) year withdrawal.
(b) At any time after completion of ten (10) years of Active
Participation in the Plan, a Participant may withdraw any portion of such
Participant's entire Adjusted Balance, provided that such Participant may
not contribute to the Trust for a period of six (6) months following the
Valuation Date applicable to such withdrawal.
(c) The following requirements apply to withdrawals pursuant to this
section.
(i) Withdrawals are effective on a Valuation Date, provided that
the Administrator receives a written withdrawal request at least ten
(10) days prior to the Valuation Date and, for a withdrawal pursuant
to subsection (a), at least ninety (90) days prior to completion of
the ten (10) year period.
(ii) Only one withdrawal may be made per calendar year, and
(iii) The Company shall not make any contributions to the Trust
for the account of the Participant with respect to any period that
the Participant is not permitted to contribute to the Trust.
(d) Unless the Participant specifies otherwise, withdrawals shall be
made first from the portion of the Account Balances attributable to After
Tax Contributions of the Participant, and next from the portion
attributable to the Company Matching Contributions which are eligible for
withdrawal.
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ARTICLE V
Description of Funds
5.1 The Coastal Common Stock Fund. This Fund shall be invested in
Common Stock. Cash dividends on Common Stock shall be reinvested in the
Coastal Common Stock Fund.
5.2 Government Bond Fund. This Fund is an unsegregated fund which is
invested, at the discretion of the Trustee, in obligations issued or
guaranteed by the United States of America or by any agency or
instrumentality thereof, and in savings deposits in any bank (including
the Trustee bank) to the extent they are fully guaranteed by the Federal
Deposit Insurance Corporation.
5.3 Diversified Fund. This Fund is an unsegregated fund invested, at
the discretion of the Trustee, in common or capital stock of issuers (other
than Coastal or any subsidiary of Coastal), notes, bonds or debentures or
preferred stocks whether or not convertible into eligible common or capital
stocks, and other similar types of investments, although the same may not
be legal investments for trustees under the laws applicable thereto, and
which may be temporarily invested in obligations of the United States of
America or in commercial paper (including participation in pooled
commercial paper accounts).
5.4 Index Fund. The Index Fund is as described in the Plan.
5.5 The Coastal Preferred Stock Fund. This Fund is as described in the
Plan.
5.6 The Valero Energy Corporation Stock Fund. This fund is as
described in the Plan.
5.7 PG&E Stock Fund. This fund is as described in the Plan.
5.8 Intelect Stock Fund. This fund is as described in the Plan.
5.9 Coastal Class A Common Stock Fund. This fund is as described in
the Plan.
ARTICLE VI
Company Guarantee
The Company guarantees to each Participant that through withdrawals and
final settlement, he will receive an amount from the Trust which is at least
equal to the amount he has contributed to the Trust. This guarantee does not
apply to Company contributions or any earnings on either Participant or Company
contributions.
CONOCO SUPPLEMENT
The provisions of this Supplement apply to persons who became Employees of
Related Employers, including Coastal Oil & Gas Corporation and Coastal Field
Services Company on November 2, 1998 in conjunction with a transaction which
included the acquisition of certain oil and gas assets from Conoco, Inc. and who
had been employed at certain facilities which were part of the acquisition
immediately prior to the effective date of the transaction ("Conoco Employees").
The provisions of the Plan apply to the Conoco Employees, except to the extent
this Supplement modifies Plan provisions.
The purpose of this Supplement is to provide credit for prior service only
for purposes of determining eligibility to participate in the Plan for the
Conoco Employees.
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Section 1.17 of the Plan with respect to Employees is modified to read as
follows only for purposes of determining eligibility to participate in the Plan:
"Entry Date" shall be the earlier of (a) the date determined pursuant to
provisions of the Plan, excluding this Supplement; or (b) the date determined by
crediting Hours of Service with respect to periods of employment with Conoco,
Inc. and its affiliates prior to November 2, 1998."
The effective date of this Supplement is November 2, 1998.
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FORM S-8/ 74
RESTATEMENT AND AMENDMENT OF
THE TRUST PROVISIONS OF
THE COASTAL CORPORATION
THRIFT PLAN AND TRUST
AGREEMENT, made this 17th day of November, 1989, between The Coastal
Corporation, a Delaware corporation (hereinafter referred to as the "Company" or
"Coastal") and MTrust Corp, N.A., a national banking association, (hereinafter
referred to as the "Trustee"):
W I T N E S S E T H:
WHEREAS, the Company has adopted The Coastal Corporation Thrift Plan,
hereinafter referred to as the "Plan," to carry out the general and specific
provisions set forth in the Introduction section of the Plan, all in compliance
with the provisions of the Employee Retirement Income Security Act of 1974
(ERISA); and
WHEREAS, the Company intends that the Plan qualify under Sections 401(a) of
the Internal Revenue Code; and
WHEREAS, the Company desires to establish a trust known as The Coastal
Corporation Thrift Trust (hereinafter referred to as the "Trust") as the funding
medium for the Plan; and
WHEREAS, the Trust is a modification and continuation of the trust
established previously as part of The Coastal Corporation Thrift Plan and Trust:
NOW, THEREFORE, the~Company and the Trustee hereby agree as follows:
FORM S-8/ 75
<PAGE>
THE COASTAL CORPORATION
THRIFT TRUST
Restated as of January 1, 1989
FORM S-8/ 76
<PAGE>
THE COASTAL CORPORATION THRIFT TRUST
Table of Contents
PAGE
I. Establishment of Trust
1.1 Trust..................................................... 1
1.2 Company................................................... 1
II. Contributions
2.1 Receipt of Contributions.................................. 1
2.2 Exclusive Benefits of Employees........................... 1
III. Payments from Trust Fund
3.1 Committee to Direct Payments.............................. 2
3.2 Interest Nontransferable.................................. 2
3.3 Unclaimed Funds........................................... 2
IV. Trustee's Powers, Duties and Investments
4.1 Investments Authorized.................................... 3
4.2 Power of Trustee.......................................... 3
4.3 Voting Company Stock...................................... 4
4.4 Nominees.................................................. 4
4.5 Expenses and Compensation................................. 4
4.6 Indemnification of Trustee................................ 4
4.7 Incapacity of Committee and Company....................... 4
4.8 Prudent Man Rule.......................................... 4
4.9 Liability................................................. 5
4.10 Assignment of Assets to Investment Managers or Other
Trustees.................................................. 5
V. Administration, Accounts and Reports
5.1 Administration............................................ 5
5.2 Records and Accounts of Trustee........................... 5
5.3 Annual Account............................................ 5
VI. Resignation, Removal and Succession of Trustee
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6.1 Resignation or Removal of Trustee......................... 6
6.2 Final Account of Succeeded Trustee........................ 6
6.3 Rights of Successor Trustee............................... 6
6.4 Organizational Changes of Trustee......................... 6
VII. Amendment and Termination
7.1 Right of Amendment........................................ 6
7.2 Method of Amendment....................................... 6
7.3 Termination or Disqualification........................... 7
VIII. Miscellaneous
8.1 Applicable Law............................................ 7
8.2 Legal Actions............................................. 7
8.3 Protection of Persons Dealing with the Trustee............ 7
8.4 Gender and Number; Headings............................... 7
8.5 Definitions............................................... 7
8.6 Merger or Consolidation................................... 7
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<PAGE>
THE COASTAL CORPORATION
THRIFT TRUST
This is a Trust Agreement made at Houston, Texas, between The Coastal
Corporation, a Delaware corporation (hereinafter referred to as the "Company"),
and MTrust Corp, N.A., a national banking association, (referred to as the
"Trustee").
ARTICLE I
ESTABLISHMENT OF TRUST
1.1 Trust. The Company hereby establishes The Coastal Corporation Thrift
Trust (the "Trust Agreement"). This Trust Agreement is a restatement and
amendment of the trust provisions previously contained in The Coastal
Corporation Thrift Plan and Trust. The Trustee shall receive, hold, invest,
administer and distribute in accordance with the provisions of this Trust
Agreement, as it may be amended and in force from time to time, all assets of
every kind from time to time held by it hereunder (the "Trust Fund"). Except as
otherwise provided herein, title to all assets comprising the Trust Fund shall
at all times be vested in the Trustee, subject to the right of the Trustee to
hold title in bearer form or in the name of a nominee, and the interest of
others in the assets of the Trust Fund shall be solely the right to have such
assets received, held, invested, administered and distributed to the Trustee in
accordance with the provisions of this Trust Agreement.
1.2 Company. The Plan provides that The Coastal Corporation shall be the
Plan Administrator, and it shall be responsible for the general administration
of the Plan. Unless otherwise specified herein, any powers which are exercisable
by the Company may be exercised by the resident, or a Vice-President of the
Company, or by such other officer or agent as may be authorized to do so by
resolution of the Board of Directors of he Company. If the Company shall appoint
a Committee to administer the Plan on its behalf, the Company shall furnish to
the Trustee, at the time of their appointment, the name and specimen signature
of each Committee member upon whose statement the Trustee is authorized to rely.
If the Company chooses not to appoint such a Committee, all references to the
Committee (except in this Section 1.2) shall mean the Company. Until notified of
a change of such persons, the Trustee shall act upon the assumption that there
has been no such change. The Trustee shall be fully protected by the Company at
all times in dealing with or in aching upon the directions of the agents on
behalf of the Company except in case of gross negligence or willful misconduct.
ARTICLE II
CONTRIBUTIONS
2.1 Receipt of Contributions. Company add Participant contributions shall
be paid to the Trustee from time to time in accordance with the Plan. All
Company and Participant contributions and all investments thereof, together with
all accumulations, accruals, earnings and income with respect thereto, shall be
held by the Trustee in trust hereunder as part of the Trust Fund. The Trust Fund
shall be invested by the Trustee pursuant to written instructions given to the
Trustee by the Committee. The Trustee shall not be responsible for the
administration of the Plan, maintaining any records of Participants' Accounts
under the Plan, or the computation of or collection of Company contributions,
but shall hold, invest, reinvest, manage, administer and distribute the Trust
Fund as directed by the Committee and as provided herein, for the exclusive
benefit of Participants (and their Beneficiaries).
2.2 Exclusive Benefit of Employees. All contributions made pursuant to the
Plan shall be held by the Trustee in accordance with the terms of the Plan and
this Trust Agreement for the exclusive benefit of those Employees of the Company
as defined in the Plan who are Participants under the Plan, including former
Employees, and their Beneficiaries, and shall be applied to provide benefits
under the Plan and to pay the expenses of the administration of the Plan and the
Trust, to the extent that such expenses are not otherwise paid. At no time prior
to the satisfaction of all liabilities with respect to such Employees and their
Beneficiaries shall any portion of the Trust Fund (other than such part as may
be required to pay administration expenses and taxes) be used for, or diverted
to, purposes other than for the
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<PAGE>
exclusive benefit of such Participants and their Beneficiaries. However,
without regard to the provisions of this Section 2.2:
(a) If a contribution under the Plan is conditioned on initial
qualification of the Plan under Section 401(a) of the Code, and the Plan
receives an adverse determination with respect to its initial qualification, the
Trustee shall, upon written request of the Company, return to the Company the
amount of such contribution (increased by earnings attributable thereto and
reduced by losses attributable thereto) within one calendar year after the date
that qualification of the Plan is denied, provided that the application for the
determination is made by the time prescribed by law for filing the Company's
return for the taxable year in which the plan is adopted, or such later date as
the Secretary of the Treasury may prescribe;
(b) If a contribution is conditioned upon the deductibility of the
contribution under Section 404 of the Code, then, to the extent the deduction is
disallowed, the Trustee shall upon written request of the Company return the
contribution (to the extent disallowed) to the Company within one year after the
date the deductions is disallowed;
(c) If a contribution or any portion thereof is made by the Company by
a mistake of fact, the Trustee shall, upon written request of the Company,
return the contribution or such portion to the Company within one year after
the date of payment to the Trustee; and
(d) Earnings attributable to amounts to be returned to the Company
pursuant to subsection (b)or (c) above shall not be returned, and losses
attributable to amounts to be returned pursuant to subsection (b) or (c) shall
reduce the amount to be so returned
ARTICLE III
PAYMENTS FROM TRUST FUND
3.1 Committee To Direct Payments. The Trustee shall make distributions
from the Trust at such times and in such number of shares of Company Stock and
amounts of cash, to the person entitled thereto under the Plan, as the Committee
directs in writing. Any undistributed part of a Participant's vested interest in
the Plan shall be retained in the Trust until the Committee directs its
distribution. Where distribution is directed in Company Stock the Committee or
the Trustee shall cause the Company to issue an appropriate stock certificate to
the person entitled thereto, to be delivered to such person; provided that the
Committee and the Trustee (as directed by the Committee) shall comply with the
provisions of the Plan and any rules or the Committee relating to the repurchase
of such Company Stock by the Trustee. Any portion of a Participant's vested
interest in the Plan to be distributed in cash shall be paid by check to the
Participant (or Beneficiary). Shares of Company Stock distributed by the Trustee
may include such legend restrictions as the Company may reasonably require in
order to insure compliance with applicable federal or state securities laws, and
as may be necessary to reflect restrictions required by the Plan. The Trustee
shall be fully protected in making or discontinuing payments in accordance with
written directions of the Committee and shall have no responsibility to see to
the application of said payments or to ascertain whether such directions comply
with the terms of the Plan. The Committee may direct the Trustee to deliver
stock certificates and checks to persons entitled thereto.
3.2 Interest Nontransferable. Except as provided in this Section, no
interest of any person or entity in, or right to receive distributions from, the
Trust Fund shall be subject in any manner to sale, transfer, assignment, pledge
attachment, garnishment, or other alienation or encumbrance of any kind; nor may
such interest or right to receive distributions be taken, either voluntarily or
involuntarily, for the satisfaction of the debts of, or other obligations or
claims against, such person or entity, including claims in bankruptcy
proceedings. The account of any Participant, however, shall be subject to and
payable in accordance with the applicable requirements of federal law, including
any qualified domestic relations order, as that term is defined in Section
414(p) of the Code, and the Committee shall direct the Trustees to provide for
payment from a Participant's account in accordance with such order and with the
provisions of Section 414(p) of the Code and any regulations promulgated
thereunder. All such payments pursuant to a qualified domestic relations order
shall be subject to reasonable rules and regulations promulgated by the
Committee respecting the time of payment pursuant to such order and the
valuation of the Participant's account or accounts from which payment
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<PAGE>
is made; provided, that all such payments are made in accordance with such
order and Section 414(p). The balance of an account that is subject to any
qualified domestic relations order shall be reduced by the amount of any payment
made pursuant to such order.
3.3 Unclaimed Funds. If any distribution directed to be made from the Trust
Fund is not claimed, the Trustee shall notify the Administrator in due course.
The Administrator shall direct the disposition of such unclaimed distributions
in accordance with then existing applicable laws.
ARTICLE IV
TRUSTEE'S POWERS, DUTIES AND INVESTMENTS
4.1 Investments Authorized.
A. (i) As directed by the Committees the Trustee shall invest and
reinvest the Trust Fund in accordance with the terms of the Plan and to this
Trust Agreement. The Trustee may also, as directed by the Committee, place Trust
Fund assets in savings accounts, certificates of deposit, high grade short-term
securities, equity stock, bonds of corporations, deposit accounts maintained by
legal reserve life insurance companies, any kind of investments fund (open-end
or otherwise), a common trust fund for the investment of qualified employee
benefit trusts or in other investments desirable for the Trust Fund, without
regard to whether or not such investment is an authorized or appropriate
investment for trustees under any state laws applicable thereto. (ii) In the
event the Committee fails to direct the Trustee with respect to the investment
of any portion of the Trust Fund, the Trustee is hereby authorized to invest any
uninvested portion of the Trust Fund in any group trust fund which at the time
of the investment provides for the pooling of the assets of plans qualified
under Section 401(a) of the Code. This authorization applies solely to a group
trust fund exempt from taxation under Section 501(a) of the Code and the trust
agreement of which satisfies the requirements of Revenue Ruling 81-100. The
provisions of the group trust fund agreement, as amended from time to time, are
by this reference incorporated within this Plan and Trust. The provisions of the
group trust fund will govern any investment of Plan assets in that fund. (iii)
The Committee shall assume responsibility and liability for the prudence of
investments directed under this Section 4.1.
B. In the event that Committee directs the Trustee to dispose of any
Company Stock held as part of the Trust Fund, under circumstances which require
registration and/or qualification of the securities under applicable federal or
state securities laws, then the Company, at its own expense, will take or cause
to be taken any and all such action as may be necessary or appropriate to effect
such registration and/or qualification.
C. The Trustee shall not be liable for the making, retaining or
selling of any investment or reinvestment by it as is provided for in this
Section, or for any loss to or diminution of the Trust Fund, except such as are
due to its own willful misconduct or failure to act in good faith, so long as
such actions are taken in accordance with proper direction of the Committee.
4.2 Power of Trustee. As directed by the Committee, the Trustee shall have
the authority and power to:
(a) Sell, transfer, mortgage, pledge, lease or otherwise dispose of,
or grant options with respect to, any portion of the Trust Fund at public or
private sale;
(b) Invest cash contributions by the Company;
(c) Vote any stocks (including Company Stock, as provided in Section
4.3 of this Trust Agreement), bonds or other securities held in the Trust Fund
or otherwise consent to or request any action on the part of the issue in person
or by proxy;
(d) Give general or specific proxies or powers of attorney with or
without powers of substitution;
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FORM S-8/ 81
<PAGE>
(e) Participate in reorganizations, recapitalizations, consolidations,
mergers, tender offers, offers to purchase and similar transactions with respect
to Company Stock or any other securities;
(f) Deposit such Company Stock or other securities in any voting
trust, or with any protective or like committee, or with a trustee or with
depositories designated thereby;
(g) Exercise any options, subscription rights and conversion
privileges;
(h) Sue, defend, compromise, arbitrate or settle any suit or legal
proceeding or any claim due it or on which it is liable;
(i) Perform all acts which the Trustee shall deem necessary or
appropriate and exercise any and all powers and authority of the Trustee under
this Trust Agreement; and
(j) Exercise any of the powers of an owner, with respect to such
Company Stock and other property in the Trust Fund.
The Committee may authorize the Trustee to act on any matter or class
of matters with respect to which direction or instruction to the Trustee by the
Committee is called for hereunder without specific direction or other
instruction from the Committee.
4.3 Voting Company Stock.
(a) Before each annual or special meeting of the stockholders of The
Coastal Corporation, the Trustee shall utilize its best efforts to timely
distribute or cause to be distributed to each Participant other than
Participants who have terminated employment with the Company, related employers
and subsidiaries and whose adjusted balance consists only of forfeitable amounts
attributable to matching contributions (or, in the event of the death of a
Participant, his Beneficiary) a copy of the proxy solicitation material for such
meeting, and request written instructions from the Participants as to the voting
of the Coastal common stock, Coastal Series B $1.83 convertible preferred stock
and Coastal Class A common Stock credited to their accounts. Such instructions
shall be on a confidential basis. The Trustee shall exercise the voting rights
on stock credited to accounts of Participants in accordance with instruction of
such Participants. The Trustee shall exercise its discretion as to the voting
rights on stock credited to accounts of participants from whom the Trustee does
not receive instructions. The Trustee shall exercise the voting rights on any
other stock in its discretion.
(b) Each Participant (or, in the event of his death, his Beneficiary)
shall have the right, to the extent of shares of stock allocated to the account
of the Participant under the Plan, to direct the Trustee in writing on a
confidential basis as to the manner in which to respond to a tender or exchange
offer with respect to such stock. The Trustee shall utilize its best efforts to
timely distribute or cause to be distributed to each Participant (or
Beneficiary) such information as will be distributed to shareholders of such
stock in connection with any such tender or exchange offer. If the Trustee
shall not receive timely direction from a Participant (or Beneficiary) as to
the banner in which to respond to such a tender or exchange offer, the Trustee
shall not tender or exchange any shares of such stock with respect to which
such Participant (or Beneficiary) has the right of direction. Shares of stock
which have not been allocated to the account of a Participant shall be tendered
or exchanged by the Trustee in the same proportion as shares with respect to
which Participants (or Beneficiaries) have the right of direction are tendered
or exchanged.
4.4 Nominees. The Trustee may register any securities or other property
held by it to the Trust Fund in its own name or in the name of its nominees with
or without the addition of words indicating that such securities are held in a
fiduciary capacity, and may hold any securities in bearer form, but the books
and records of the Trustee shall at all times show that all such investments are
part of the Trust.
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FORM S-8/ 82
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4.5 Expenses and Compensation. The Trustee is authorized and directed to
pay from the Trust Fund all of its reasonable expenses of administering the
Trust (including reasonable fees and expenses of its attorneys and agents), to
the extent that such amounts are not paid by the Company. No person who receives
full time pay from the Company shall receive compensation from the Trust Fund,
except for reimbursement of expenses properly incurred.
4.6 Indemnification of Trustee. The Company shall indemnify and defend each
person acting as Trustee against any and all claims, loss, damages, expenses
(including reasonable attorneys fees), and liability arising from any action or
failure to act in connection with the administration of the Plan or the Trust,
except when the same is judicially determined to be due to the gross negligence
or willful misconduct of such person.
4.7 Incapacity of Committee and Company. If at any time the Committee and
Company shall be incapable of giving the Trustee directions, instructions or
authorizations as herein provided, the Trustee may act as it, in its sole
discretion, deems appropriate and advisable in the circumstances for the
carrying out of the provisions of the Plan and the Trust.
4.8 Prudent Man Rule. Notwithstanding any other provision of this Trust
Agreement, the Trustee, the Committee and the Company shall exercise their
powers and discharge their duties under this Trust Agreement for the exclusive
purpose of providing benefits to Employees and their Beneficiaries, and shall
act with the care, skill, prudence and diligence under the circumstances that a
prudent man acting in a like capacity and familiar with such matters would use
in the conduct of an enterprise of a like character and with like aims.
4.9 Liability. Except as provided in Section 4.1(C), the Trustee shall not
be liable for the making, retention, or sale of any investment or reinvestment
made by it as herein provided, nor for any loss to or diminution of the Trust
Fund, nor for any action it takes or refrains from taking at the direction of
the Committee. The Trustee shall not be required to pay interest on any part of
the Trust Fund which is held uninvested pursuant to the Committee's direction.
4.10 Assignment of Assets to Investment Managers or Other Trustees.
(a) The Company may assign all or a portion of the assets of the Trust
to any Trustee or Investment Manager which has been appointed by the Board of
Directors of the Company.
(b) Each Trustee and each investment Manager shall be responsible for
assets during the time that such assets are assigned to it and shall not be
responsible for assets during a time when such assets are assigned to another
Trustee or Investment Manager. Each Trustee or Investment Manager shall be
liable with respect to its own acts, but not with respect to the act of any
other Trustee or Investment Manager.
(c) Each Investment Manager shall be (a) registered as an investment
advisor under the Investment Advisers Act of 1940, (b) a bank, as defined in the
Investment Advisors Act of 1940, or (c) an insurance company qualified to
manage, acquire or dispose of any assets of a plan under the laws of more than
one state. Upon appointment, each Investment Manager shall certify and
acknowledge, in writing, to the Company and the Trustee that he has a copy of
the Plan, that he is a fiduciary with respect to such Plan, and that he has
assumed the duties and responsibilities conferred upon him by the Company. The
duties, responsibilities and authority of any Investment Manager may be revoked
or modified by the Company at any time by written notice to such Investment
Manager and to the Trustee. Any Investment Manager duly appointed and authorized
by the Administrator shall, during the period of this appointment, possess fully
and absolutely those powers, rights and duties of the Trustee (to the extent
delegated by the Company and to the extent permissible under the terms of the
Plan) with respect to the investment or reinvestment of that portion of the Plan
assets over which such Investment Manager has investment management authority.
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ARTICLE V
ADMINISTRATION, ACCOUNTS AND REPORTS
5.1 Administration. The Trustee may adopt such bylaws and regulations as it
seems desirable for the conduct of its duties. The Trustee shall determine the
depositories in which Trust assets shall be kept.
5.2 Records and Accounts of Trustee. The Trustee shall maintain accurate
and detailed records and accounts of all transactions of the Trust, which shall
be available at all reasonable times for inspection or audit by any person
designated by the Company. The Trustee, at the direction of the Company, shall
submit to auditors and to others designated by the Company such valuations,
reports or other information as the Company may reasonably require.
5.3 Annual Account. Within ninety (90) days after the close of each fiscal
year of the Trust, the Trustee shall furnish to the Company a written account of
the operations of the trust for the fiscal year. The Company may approve such
annual account by written notice of approval delivered to the Trustee or by
failure to file with the Trustee written objections to specific items in such
account within ninety (90) days after the account has been furnished to the
Company; and any annual account so approved shall have the same effect as though
judicially approved by a court of competent jurisdiction in a proceeding in
which the Trustee and the Company were made parties and were properly
represented before such court. In the event the Trustee shall furnish accounts
more frequently than annually, all of such accounts submitted for a fiscal year
taken together shall be deemed an annual account. The Trustee nevertheless shall
have the right, if it so elects, to have its accounts settled by judicial
proceedings, in which event only the Trustee and the Company shall be necessary
parties. Nothing in this Section 5.3 shall relieve the Trustee from any
responsibility or duty under ERISA. The Trustee may rely without liability upon
the valuation of Company Stock as determined in good faith by the Committee
pursuant to the terms of the Plan.
ARTICLE VI
RESIGNATION, REMOVAL AND SUCCESSION OF
TRUSTEE
6.1 Resignation or Removal of Trustee. Any Trustee may at any time resign
(upon thirty (30) days prior written notice to the Company and the remaining
Trustee or Trustees) or may be removed by the Company. In the event of the
resignation or removal of any Trustee, or of a vacancy in the office of Trustee,
however arising, the Company may, in its discretion, appoint a successor Trustee
by an instrument in writing delivered to and accepted by the successor Trustee,
provided that at all times at least one Trustee shall be acting. Notice of such
appointment shall be given by the Company to the remaining Trustee or Trustees.
If no appointment of a successor Trustee is made within a reasonable time after
the resignation, removal, or incapacity of all acting Trustees, any court of
competent jurisdiction may appoint a successor Trustee or Trustees after such
notice, if any, as the court may deem proper and suitable has been given to the
Company. Resignation or removal of a Trustee or Trustees shall not cause a
failure of the Plan or Trust, and the Plan and Trust may operate with one or
more duly appointed Trustees.
6.2 Final Account of Succeeded Trustee. At the request of the Company or
one or more acting as Trustees, upon the removal or resignation of any Trustee,
the Trustee shall file with the Company a final account, to which the provisions
of Section 5.3 relating to annual accounts shall be applicable.
6.3 Rights of Successor Trustee. In the event of the appointment of a
successor Trustee, such successor Trustee will succeed as of the effective date
of his appointment to all the rights, title and estate of the succeeded Trustee,
and no instrument of transfer, conveyance or assignment or order of any court
shall be necessary in connection therewith. Notwithstanding the foregoing,
however, the succeeded Trustee shall deliver to the remaining acting Trustees or
to the successor Trustee such instruments of transfer, conveyance, assignment
and further assurance as they may reasonably require. Except to the extent, if
any, otherwise provided by ERISA, no successor Trustee shall be personally
liable for any act or omission which occurred prior to the time he became a
Trustee.
6.4 Organizational Change of Trustee. Any national banking association or
corporation into which Trustee may be merged or with which Trustee may be
consolidated, or any such association or corporation resulting from any merger,
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FORM S-8/ 85
<PAGE>
reorganization or consolidation to which the Trustee may be a party, or any such
association or corporation to which all or substantially all of the trust
business of Trustee may be transferred, shall be the successor of Trustee
hereunder without the execution or filing of any instrument or the performance
of any further act and with the same powers and duties as conferred upon Trustee
hereunder. In any such event, it shall not be necessary for Trustee or any
successor trustee to give notice thereof to any person, and any requirement,
statutory or otherwise, that notice shall be given is hereby waived.
ARTICLE VII
AMENDMENT AND TERMINATION
7.1 Right of Amendment. The Company shall have the right to amend this
Trust Agreement at any time and from time to time, by resolution of its Board of
Directors, and all Employees and persons claiming any interest hereunder shall
be bound thereby; provided, however, that no amendment shall have the effect of:
(i) directly or indirectly divesting the interest of any Participant in any
amount that he would have received had he terminated his employment with the
Company immediately prior to the effective date of such amendment, or the
interest of any Beneficiary as such interest existed immediately prior to the
effective date of such amendment; (ii) vesting in the Company any right, title
or interest in or to any assets of the Trust Fund except as permitted by ERISA
and the Code; (iii) causing or affecting discrimination in favor of officers,
shareholders, or highly compensated Employees; (iv) except as permitted by ERISA
and the Code, causing any part of the Trust Fund to be used for any purpose
other than for the exclusive benefit of the Participants and their Beneficiaries
or (v) changing the rights, duties or responsibilities of the Trustee in any
manner, without its written consent thereto.
7.2 Method of Amendment. Each amendment of the Trust Agreement shall be
made by delivery to the Trustee of copies of the amendment and the resolution of
the Board of Directors of the Company, certified by an officer of the Company.
Any amendment which changes the rights, duties or responsibilities of the
Trustee shall not be effective without the written consent of the Trustee.
7.3 Termination or Disqualification. The Company may elect to terminate the
Plan at any time, by giving written notice to the Trustee. In the event of such
termination, or if the Plan shall be involuntarily terminated, or if the Company
receives notice that the Trust is no longer qualified under the provisions of
the Code, the Company shall thereupon cause a valuation of the Trust Fund to be
made. The Trustee shall segregate and dispose of the Trust Fund, in accordance
with the written directions of the Company, accompanied by the certification of
the Company to the Trustee that such segregation and disposition are in
accordance with the terms of the Plan. Unless sooner termination by action of
the Company, the Trust shall terminate when there shall be no assets remaining
in the hands of the Trustee. The Trustee shall continue to have all the powers
and duties provided under this Trust Agreement which are necessary or expedient
for the orderly liquidation and distribution of the Trust Fund.
ARTICLE VIII
MISCELLANEOUS
8.1 Applicable Law. All questions pertaining to the validity, construction
and administration of the Trust shall be determined in conformity with the laws
of the State of Texas to the extent that such laws are not preempted by ERISA
and other federal laws and valid regulations published thereunder.
8.2 Legal Actions. The Company shall have the authority to enforce the
Trust on behalf of any and all persons having or claiming an interest in the
Trust Fund. In any legal action or equitable proceeding pertaining to the Trust
or the Trust Funds or any interest therein or the administration thereof, or for
instructions to the Trustee, the Company and the Trustee shall be the only
necessary parties and any judgment entered in any such proceeding shall be
conclusive upon all persons. The Trustee may consult with legal counsel, who may
be counsel for the Company, in respect of any of its rights, duties or
obligations hereunder and shall be entitled to act or refrain from acting in
accordance with the advice of such counsel. In any action brought by or against
the Trustee arising out of or based upon the Plan or this Trust Agreement, the
Trustee shall be represented by counsel selected by the Company unless the
Company has an interest in the outcome of the action adverse to the Trustee.
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FORM S-8/ 85
<PAGE>
8.3 Protection of Persons Dealing with the Trustee. No person dealing with
the Trustee shall be required or entitled to see to the application of any money
paid or property delivered to the Trustee, or to determine whether or not the
Trustee is acting pursuant to authority granted to it under this Trust Agreement
or to authorizations or directions being required.
8.4 Gender and Number; Headings. Except when otherwise required by the
context, any masculine terminology in this Trust Agreement shall also include
the feminine, and any singular terminology shall also include the plural. The
headings in this Trust Agreement have been inserted for convenience of reference
only, and are not to be considered in the construction of the provisions hereof.
8.5 Definitions. All words and phrases defined in the Plan shall have the
same meaning in this Trust Agreement, except as otherwise expressly provided
herein.
8.6 Merger or Consolidation. In the event of the merger or consolidation of
the Company with or into any other corporation, or in the event substantially
all of the assets of the Company shall be transferred to another corporation,
the successor corporation resulting from the consolidation or merger, or the
transferee of such assets, as the case may be, shall be substituted for the
Company hereunder if it shall expressly agree in writing to adopt and continue
the Plan. Such corporation shall become a party to this Trust Agreement by
filing with the Trustee (i) a certified copy of a resolution of its Board of
Directors evidencing its election to adopt the Plan and the Trust, together with
(ii) a certified copy of resolutions of the Board of Directors of the Company
reciting the facts and circumstances relating to such adoption and approving the
same.
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FORM S-8/ 86
<PAGE>
IN WITNESS WHEREOF, the Company and Trustee have caused this instrument
to be executed by their duly authorized officers and their corporate seals to
be affixed hereto as of the 17th day of November, 1989, but unless otherwise
stated or required, this restatement and amendment shall be effective as of the
first day of January, 1989.
ATTEST: THE COASTAL CORPORATION
(Seal)
/s/ AUSTIN M. O'TOOLE By /s/ JAMES R. PAUL
- ------------------------------- ------------------------
Austin M. O'Toole James R. Paul
Senior Vice President and Secretary President and Chief
Executive Officer
ATTEST: MTRUST CORP, N.A.
(Seal)
/s/ SUE COLE By /S/ R. E. Peschke
- ------------------------------- ------------------------
Sue Cole Name: R. E. Peschke
A.V.P. Title: Vice President
- 9 -
FORM S-8/ 87
January 7, 1999
The Coastal Corporation
Coastal Tower
Nine Greenway Plaza
Houston, TX 77046-0995
Gentlemen:
I have acted as counsel to The Coastal Corporation (the "Company") in
connection with the Registration Statement on Form S-8 of the Company for the
registration of participation in the Company's Thrift Plan (the "Plan"), and the
common stock, par value $.33-1/3 per share, of the Company (the "Common Stock")
offered in connection therewith.
In such capacity, I have familiarized myself with the Certificate of
Incorporation and By-laws, each as amended to date, of the Company and have
examined the originals, or copies certified or otherwise identified, of the
Plan, corporate records of the Company, certificates of public officials and
representatives of the Company, statutes and other instruments and documents as
the basis for the opinion hereinafter expressed.
On the basis of the foregoing, I am of the opinion that:
(1) The Company is a corporation, duly organized and validly existing, in
good standing under the laws of the State of Delaware.
(2) The Plan and the participations of employees in the Plan are valid.
(3) The Common Stock which may be purchased in accordance with the terms of
the Plan has been duly authorized and validly issued and is fully paid and
nonassessable.
I hereby consent to the use and filing of this opinion as an exhibit to the
Registration Statement. I further consent to all references to me in the
Registration Statement, any amendments thereto, or in any prospectus.
Very truly yours,
Austin M. O'Toole
FORM S-8/ 88
Consent of Deloitte & Touche
We consent to the incorporation by reference in this Registration Statement
of The Coastal Corporation on Form S-8 relating to The Coastal Corporation
Thrift Plan of (i) our report dated February 3, 1998 (February 13, 1998 as to
Note 15), appearing in the Annual Report on Form 10-K of The Coastal Corporation
for the year ended December 31, 1997, (ii) our report dated June 17, 1998,
appearing in the Annual Report on Form 11-K of The Coastal Corporation Thrift
Plan for the year ended December 31, 1997, and (iii) to the reference to us
under the heading "Experts" in this Registration Statement.
DELOITTE & TOUCHE LLP
Houston, Texas
January 7, 1999
FORM S-8/ 89
Consent of Huddleston & Co., Inc.
We consent to the incorporation by reference in this Registration Statement
of The Coastal Corporation on Form S-8 relating to The Coastal Corporation
Thrift Plan of our report under the captions "Business-Gas System Reserves" and
"Supplemental Information on Oil and Gas Producing Activities (Unaudited)"
appearing in and incorporated by reference in the Annual Report on Form 10-K of
The Coastal Corporation for the year ended December 31, 1997, and to the
reference to us under the heading "Experts" in this Registration Statement.
HUDDLESTON & CO., INC.
Houston, Texas
January 7, 1999
FORM S-8/ 90
Consent of Austin M. O'Toole
The consent of AUSTIN M. O'TOOLE, Esq., Senior Vice President and Secretary
of The Coastal Corporation, is contained in his opinion filed as Exhibit 5 to
this Registration Statement.
FORM S-8/ 91
