As filed with the Securities and Exchange Commission on May 9, 1997
Registration No. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
-----------------
EL PASO NATURAL GAS COMPANY
(Exact Name of Registrant as Specified in Its Charter)
Delaware 74-0608280
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification No.)
El Paso Energy Building
1001 Louisiana Street
Houston, Texas 77002
(Address of Principal Executive Offices, Including Zip Code)
EL PASO ENERGY CORPORATION RETIREMENT SAVINGS PLAN
(Full Title of the Plan)
BRITTON WHITE, JR.
Executive Vice President and General Counsel
El Paso Natural Gas Company
El Paso Energy Building
1001 Louisiana Street
Houston, Texas 77002
(713) 757-2131
(Name, Address and Telephone Number, Including Area Code, of Agent For Service)
-----------------
COPY TO:
JAMES P. PRENETTA, JR.
KELLEY DRYE & WARREN LLP
Two Stamford Plaza
281 Tresser Boulevard
Stamford, Connecticut 06901
-----------------
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
===========================================================================================================
Title of Securities Amount to be Proposed Maximum Proposed Maximum Amount of
to be Registered Registered Offering Price Per Aggregate Offering Registration Fee
Share(1) Price(1)
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Common Stock,
par value $3 per share 2.0 million shares(2) $58.625 $117,250,000.00 $35,530.00
===========================================================================================================
</TABLE>
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 El Paso Energy Corporation
Retirement Savings Plan.
(1) Estimated pursuant to Rule 457(c) solely for the purpose of calculating
the amount of the registration fee. The price per share is estimated based
on the average of the high and low trading prices for El Paso Natural Gas
Company's Common Stock on May 2, 1997, as reported by the New York Stock
Exchange.
(2) Includes an indeterminate number of additional shares which may be
necessary to adjust the number of shares reserved for issuance pursuant to
the El Paso Energy Corporation Retirement Savings Plan as a result of any
future stock split, stock dividend or similar adjustment of the
outstanding Common Stock of El Paso Natural Gas Company.
================================================================================
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The following documents filed with the Securities and Exchange Commission
(the "Commission") by El Paso Natural Gas Company (the "Registrant") pursuant to
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), are hereby
incorporated by reference in this Registration Statement:
(a) The Registrant's Annual Report on Form 10-K for the year ended
December 31, 1996, which contains audited financial statements for the most
recent year for which such statements have been filed;
(b) All other reports filed by the Registrant pursuant to Section 13(a) or
15(d) of the Exchange Act, since the end of the fiscal year covered by the
Annual Report referred to in (a) above; and
(c) The description of the Registrant's common stock, $3 par value (the
"Common Stock"), contained in the Registrant's Registration Statement on Form
8-A (Registration No. 1-2700) filed with the Commission on February 13, 1992
under Section 12 of the Exchange Act, including any amendments or reports filed
for the purpose of updating such descriptions.
All documents and reports filed by the Registrant pursuant to Sections
13(a), 13(c), 14 or 15(d) of the Exchange Act, after the date hereof and prior
to the filing of a post-effective amendment to the Registration Statement which
indicates that the securities offered hereby have been sold, or which
deregisters all such securities remaining unsold, shall also be deemed to be
incorporated by reference into this Registration Statement and to be a part
hereof commencing on the respective dates on which such documents are filed.
ITEM 4. DESCRIPTION OF SECURITIES.
Not Applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
Not Applicable.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law (the "DGCL") provides
that a Delaware corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative (a
"proceeding") (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. A
Delaware corporation may indemnify any person under such Section in connection
with a proceeding by or in the right of the corporation to procure judgment in
its favor, as provided in the preceding sentence, against expenses (including
attorneys' fees) actually and reasonably incurred by him in connection with the
defense or settlement of such action, except that no indemnification shall be
made in respect thereof unless, and then only to the extent that, a court of
competent
<PAGE>
jurisdiction shall determine upon application that such person is fairly and
reasonably entitled to indemnity for such expenses as the court shall deem
proper. A Delaware corporation must indemnify any person who was successful on
the merits or otherwise in defense of any action, suit or proceeding or in
defense of any claim, issue or matter in any proceeding, 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, against expenses (including
attorneys' fees) actually and reasonably incurred by him in connection
therewith. A Delaware corporation may pay for the expenses (including attorneys'
fees) incurred by an officer or director in defending a proceeding in advance of
the final disposition upon receipt of an undertaking by or on behalf of such
officer or director to repay such amount if it shall ultimately be determined
that he is not entitled to be indemnified by the corporation.
Article X of the Registrant's By-laws requires indemnification to the full
extent permitted under Delaware law as from time to time in effect. Subject to
any restrictions imposed by Delaware law, the By-laws provide an unconditional
right to indemnification for all expense, liability and loss (including
attorneys' fees, judgments, fines, ERISA excise taxes, or penalties and amounts
paid in settlement) actually and reasonably incurred or suffered by any person
in connection with any actual or threatened proceeding (including, to the extent
permitted by law, any derivative action) by reason of the fact that such person
is or was serving as a director, officer or employee of the Registrant or that,
being or having been such a director or officer or an employee of the
Registrant, such person is or was serving at the request of the Registrant as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, including an employee benefit plan. The
By-laws also provide that the Registrant may, by action of its Board of
Directors, provide indemnification to its agents with the same scope and effect
as the foregoing indemnification of directors and officers.
Section 102(b)(7) of the DGCL, permits a corporation to provide in its
certificate of incorporation that a director shall not be personally liable to
the corporation or its stockholders for monetary damages for a 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 any
acts or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) in respect of certain unlawful dividend payments
or stock redemptions or repurchases, or (iv) for any transaction from which the
director derived an improper personal benefit. Article 10 of the Registrant's
Restated Certificate of Incorporation, as amended, provides that to the full
extent that the DGCL, as it now exists or may hereafter be amended, permits the
limitation or elimination of the liability of directors, a director of the
Registrant shall not be liable to the Registrant or its stockholders for
monetary damages for breach of fiduciary duty as a director. Any amendment to or
repeal of such Article 10 shall not adversely affect any right or protection of
a director of the Registrant for or with respect to any acts or omissions of
such director occurring prior to such amendment or repeal. The DGCL permits the
purchase of insurance on behalf of directors and officers against any liability
asserted against directors and officers and incurred by such persons in such
capacity, or arising out of their status as such, whether or not the corporation
would have the power to indemnify directors and officers against such liability.
The Registrant maintains Directors' and Officers' liability insurance
which provides for payment on behalf of the directors and officers of the
Registrant and its subsidiaries, of certain losses of such persons (other than
matters uninsurable under the law) arising from claims, including claims arising
under the Securities Act of 1933, as amended (the "Securities Act"), for acts or
omissions by such persons while acting as directors or officers of the
Registrant and/or its subsidiaries, as the case may be.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not Applicable.
-2-
<PAGE>
ITEM 8. EXHIBITS.
EXHIBIT
NUMBER DESCRIPTION
4.1 Restated Certificate of Incorporation of the Registrant dated January
22, 1992 (incorporated by reference to Exhibit 3.A to the Registrant's
Annual Report on Form 10-K for the fiscal year ended December 31,
1991, File No. 1-2700, filed January 29, 1992); Certificate of
Designation, Preferences and Rights of Series A Junior Participating
Preferred Stock of the Registrant, dated July 7, 1992 (incorporated by
reference to Exhibit 3.A.1 of the Registrant's Annual Report on Form
10-K for the fiscal year ended December 31, 1992, File No. 1-2700,
filed February 3, 1993).
*4.2 El Paso Energy Corporation Retirement Savings Plan.
*5 Opinion of Kelley Drye & Warren LLP regarding legality of the Common
Stock being registered.
*23.1 Consent of Kelley Drye & Warren LLP (included in their opinion filed
as Exhibit 5).
*23.2 Consent of Coopers & Lybrand L.L.P.
*24 Powers of Attorney (See signature page).
- ------------
* Filed herewith.
ITEM 9. UNDERTAKINGS.
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of this Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in this Registration
Statement; and
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in this Registration Statement or any
material change to such information in this Registration Statement;
PROVIDED, HOWEVER, that paragraphs (a)(1)(i) and (a)(1)(ii) above do not apply
if the information required to be included in a post-effective amendment by
those paragraphs 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 this Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities 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 deemed to be the initial BONA
FIDE offering thereof.
-3-
<PAGE>
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or 15(d) of the Exchange
Act that is incorporated by reference in this Registration Statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial BONA FIDE offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the provisions of Item 6, or otherwise, the Registrant
has been advised that in the opinion of the Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred or
paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
(d) The undersigned Registrant hereby undertakes that the Registrant will
timely submit to the Internal Revenue Service (the "IRS") a request for the
continued qualification of the El Paso Energy Corporation Retirement Savings
Plan (the "Plan") and will make all changes required by the IRS to continue the
Plan's qualification.
-4-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
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 El Paso, State of Texas, on May 9, 1997.
EL PASO NATURAL GAS COMPANY
By: /S/ WILLIAM A. WISE
-----------------------------------
William A. Wise
Chairman of the Board and
and Chief Executive Officer
POWER OF ATTORNEY
Each person whose individual signature appears below hereby authorizes H.
Brent Austin and Britton White, Jr., and each of them as attorneys-in-fact with
full power of substitution, to execute in the name and on behalf of such person,
individually and in each capacity stated below, and to file, any and all
amendments to this Registration Statement, including any and all post-effective
amendments.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed below by the following persons in
the capacities and on the dates as indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
<S> <C> <C>
/S/ WILLIAM A. WISE Chairman of the Board, Chief Executive May 9, 1997
- -------------------------------- Officer and Director
William A. Wise
/S/ RICHARD O. BAISH President May 9, 1997
- --------------------------------
Richard O. Baish
/S/ H. BRENT AUSTIN Executive Vice President and Chief May 9, 1997
- -------------------------------- Financial Officer
H. Brent Austin
/S/ JEFFREY I. BEASON Vice President, Chief Accounting May 9, 1997
- -------------------------------- Officer, Controller and Treasurer
Jeffrey I. Beason
/S/ BYRON ALLUMBAUGH Director May 9, 1997
- --------------------------------
Byron Allumbaugh
- -------------------------------- Director May 9, 1997
Peter T. Flawn
/S/ EUGENIO GARZA LAGUERA Director May 9, 1997
- ----------------------------------
Eugenio Garza Laguera
/S/ JAMES F. GIBBONS Director May 9, 1997
- ----------------------------------
James F. Gibbons
/S/ BEN F. LOVE Director May 9, 1997
- ----------------------------------
Ben F. Love
<PAGE>
/S/ KENNETH L. SMALLEY Director May 9, 1997
- ----------------------------------
Kenneth L. Smalley
/S/ MALCOLM WALLOP Director May 9, 1997
- ----------------------------------
Malcolm Wallop
</TABLE>
THE PLAN
Pursuant to the requirements of the Securities Act of 1933, as amended,
the persons who administer the Plan have duly caused this Registration Statement
to be signed on its behalf by the undersigned, thereunto duly authorized, in the
City of El Paso, State of Texas, on May 9, 1997.
EL PASO ENERGY CORPORATION
RETIREMENT SAVINGS PLAN
EL PASO NATURAL GAS COMPANY
By: /S/ WILLIAM A. WISE
-----------------------------------
William A. Wise
Chairman of the Board
and Chief Executive Officer
-6-
<PAGE>
EXHIBITS INDEX
EXHIBIT
NUMBER DESCRIPTION
4.1 Restated Certificate of Incorporation of the Registrant dated
January 22, 1992 (incorporated by reference to Exhibit 3.A to the
Registrant's Annual Report on Form 10-K for the fiscal year ended
December 31, 1991, File No. 1-2700, filed January 29, 1992);
Certificate of Designation, Preferences and Rights of Series A
Junior Participating Preferred Stock of the Registrant dated July
7, 1992 (incorporated by reference to Exhibit 3.A.1 of the
Registrant's Annual Report on Form 10-K for the fiscal year ended
December 31, 1992, File No. 1-2700, filed February 3, 1993).
*4.2 El Paso Energy Corporation Retirement Savings Plan.
*5 Opinion of Kelley Drye & Warren LLP regarding legality of the
Common Stock being registered.
*23.1 Consent of Kelley Drye & Warren LLP (included in their opinion
filed as Exhibit 5).
*23.2 Consent of Coopers & Lybrand L.L.P.
*24 Powers of Attorney (See signature page).
- -----------
* Filed herewith.
-7-
EL PASO ENERGY CORPORATION
RETIREMENT SAVINGS PLAN
(Amended and Restated
Effective as of January 1, 1997)
<PAGE>
EL PASO ENERGY CORPORATION RETIREMENT SAVINGS PLAN
(Amended and Restated Effective as of January 1, 1997)
CONTENTS
- --------------------------------------------------------------------------------
SECTION PAGE
ARTICLE 1. INTRODUCTION
1.1 Establishment and History of the Plan 1
1.2 Merger of Plans 1
1.3 Amendment and Restatement of the Plan 2
1.4 Applicability of the Plan 2
1.5 Purpose of the Plan 2
ARTICLE 2. DEFINITIONS
2.1 General Definitions 3
2.2 Gender and Number 14
ARTICLE 3. PARTICIPATION AND SERVICE
3.1 Date of Participation 15
3.2 Duration 16
3.3 Transfers to Participation 16
3.4 Inactive Participant 16
3.5 Service 17
3.6 Special Tenneco Retroactive Participation Provisions 19
ARTICLE 4. CONTRIBUTIONS
4.1 Basic Contributions 20
4.2 Elections 22
4.3 Election Changes 22
4.4 Suspension of Basic Contributions 22
4.5 Compensation Reduction 22
4.6 Supplemental Contributions 23
4.7 Changes in Supplemental Contributions 23
4.8 Suspension of Supplemental Contributions 23
4.9 Transfer and Crediting of Basic and Supplemental Contributions 23
4.10 Flex Contributions 24
4.11 Restrictions on Basic Contributions and Flex Contributions 24
i
<PAGE>
EL PASO ENERGY CORPORATION RETIREMENT SAVINGS PLAN
(Amended and Restated Effective as of January 1, 1997)
CONTENTS
- --------------------------------------------------------------------------------
SECTION PAGE
ARTICLE 5. COMPANY MATCHING CONTRIBUTIONS AND ROLLOVERS
5.1 Company Matching Contributions 27
5.2 Restrictions on Company Matching Contributions 27
5.3 Deductibility Limitation 30
5.4 Transfer of Company Matching Contributions 30
5.5 Crediting of Company Matching Contributions 30
5.6 Rollovers 31
ARTICLE 6. MAXIMUM CONTRIBUTIONS AND BENEFIT LIMITATIONS
6.1 Limitation on Annual Additions 33
6.2 Other Defined Contribution Plans 33
6.3 Defined Benefit Plans 34
6.4 Adjustment of Allocations 34
ARTICLE 7. BENEFITS
7.1 Vesting 35
7.2 Distributions Upon Separation from Service 35
7.3 Distributions Upon Death or Divorce 36
7.4 Form of Payments 37
7.5 Timing of Payments 38
7.6 Withdrawals 39
7.7 Age 59-1/2 Withdrawals 40
7.8 Loans to Participants and Beneficiaries 41
7.9 Debiting of Investment Funds 44
7.10 Missing Persons 44
7.11 Requirement for Consent to Certain Distributions 45
7.12 Eligible Rollover Distributions 45
ii
<PAGE>
EL PASO ENERGY CORPORATION RETIREMENT SAVINGS PLAN
(Amended and Restated Effective as of January 1, 1997)
CONTENTS
- --------------------------------------------------------------------------------
SECTION PAGE
ARTICLE 8. INVESTMENT ELECTIONS
8.1 Investment of Contributions 47
8.2 Investment Transfers 47
8.3 Investment Elections 47
8.4 Transfer of Assets 48
8.5 Voting Company Stock 48
8.6 Tender Offers 48
8.7 Securities Law Requirements 49
8.8 Compliance With ERISA Section 404(c) 50
8.9 Tenneco Stock Fund 51
ARTICLE 9. ACCOUNTS AND RECORDS OF THE PLAN
9.1 Accounts and Records 52
9.2 Investment Funds 52
9.3 Valuation Adjustments 53
9.4 Accounts and Contributions from Merged Plans 53
ARTICLE 10. FINANCING
10.1 Financing 55
10.2 Employer Contributions 55
10.3 Non-Reversion 55
10.4 Transactions Involving Employer Securities 56
ARTICLE 11. ADMINISTRATION
11.1 Named Fiduciaries 57
11.2 Committee 57
11.3 Organization of Committee 58
11.4 Procedures 58
11.5 Committee's Powers and Duties 58
11.6 Committee's Decisions Conclusive 59
11.7 Indemnity 60
11.8 Claims Procedure 60
11.9 Compensation and Expenses 61
iii
<PAGE>
EL PASO ENERGY CORPORATION RETIREMENT SAVINGS PLAN
(Amended and Restated Effective as of January 1, 1997)
CONTENTS
- --------------------------------------------------------------------------------
SECTION PAGE
ARTICLE 12. PLAN AMENDMENT, TERMINATION, MERGER, AND
ADOPTION BY AFFILIATES
12.1 Amendment and Termination 63
12.2 Limitations on Amendments 63
12.3 Distribution on Termination 64
12.4 Corporate Reorganization 64
12.5 Plan Merger or Transfer 65
12.6 Affiliate Participation 65
12.7 Action Binding on Participating Affiliates 65
12.8 Termination of Participation of Affiliate 65
ARTICLE 13. TOP-HEAVY PROVISIONS
13.1 Application 67
13.2 Key Employees 67
13.3 Top-Heavy Group 68
13.4 Additional Rules 69
13.5 Code Section 415(h) Adjustment 69
13.6 Minimum Contributions 70
ARTICLE 14. MISCELLANEOUS PROVISIONS
14.1 Employment Rights 71
14.2 No Examination or Accounting 71
14.3 Investment Risk 71
14.4 Non-Alienation 71
14.5 Incompetency 72
14.6 Severability 73
14.7 Service of Legal Process 73
14.8 Headings of Articles and Sections 73
14.9 Applicable Law 73
14.10 Special Delayed Effective Date 73
14.11 Special Military Leave Provisions 73
INVESTMENT FUND APPENDIX A.1
PARTICIPATING EMPLOYER APPENDIX B.1
iv
<PAGE>
ARTICLE 1. INTRODUCTION
1.1 ESTABLISHMENT AND HISTORY OF THE PLAN
Effective as of January 1, 1992, El Paso Natural Gas Company ("Company")
established the "El Paso Natural Gas Company Retirement Savings Plan" ("1992
Plan") as a successor to the qualified defined contribution plan originally
established by the Company effective as of January 1, 1961. The 1992 Plan was
established in anticipation of a corporate separation of the Company and its
Affiliates from the Burlington Resources Inc. Code section 414(b) controlled
group ("Corporate Separation") that resulted in a spinoff from the Burlington
Resources Inc. Retirement Savings Plan ("BR Plan") to the 1992 Plan. The BR Plan
at that time constituted a version of the Company's original, 1961 plan. The
1992 Plan became applicable to certain Employees on July 1, 1992 ("Plan
Implementation Date" as described in the 1992 Plan), and certain BR Plan
participants had their BR Plan balances transferred directly from the BR Plan to
the 1992 Plan, as provided in section 12.4 of the 1992 Plan. With respect to
such BR Plan participants, the 1992 Plan was, to the full extent as legally
required, treated as a continuation of the BR Plan and included all such
participants' years of participation in the BR Plan prior to the participants'
participation in this Plan, and preserved all legally protected, valuable rights
of such participants with respect to the transferred account balances in
accordance with Code sections 414(l) and 411(d)(6), as well as other applicable
laws, all as provided in the 1992 Plan. The 1992 Plan, as subsequently amended
after its establishment, was amended and restated effective as of February 1,
1996 ("1996 Plan").
1.2 MERGER OF PLANS
Effective as of January 1, 1997, two other defined contribution plans ("Merged
Plans"), the "Tenneco Energy Plan" and the "Cornerstone Plan", as defined
herein, are merged into the 1996 Plan. This amended and restated Plan reflects
the merger of such Plans. With respect to the "Tenneco Participants" and
"Cornerstone Participants", as defined herein, the amended and restated Plan as
described in section 1.3 is, to the full extent as legally required, treated as
a continuation of the Merged Plans, with all legally protected, valuable rights
of such Participants protected in accordance with Code sections 414(l) and
411(d)(6), as well as other applicable laws.
1.3 AMENDMENT AND RESTATEMENT OF THE PLAN
The 1996 Plan is hereby amended and restated effective as of January 1, 1997
("Plan") as set forth herein, to reflect the merger of the Merged Plans
1
<PAGE>
into the 1996 Plan and to reflect certain design changes. "Plan" shall also mean
the Plan as it may be amended from time to time hereafter; and where the content
requires, "Plan" shall also mean the 1996 Plan as it existed prior to January 1,
1997. Additionally, as part of the creation of this amended and restated Plan,
the name of the Plan is changed to the "El Paso Energy Corporation Retirement
Savings Plan."
1.4 APPLICABILITY OF THE PLAN
The Plan as amended and restated herein shall apply to Participants under the
Plan from and after January 1, 1997, the Plan's "Restatement Date", with respect
to participation under the Plan from and after such Restatement Date. Certain
provisions of the Plan are not effective as to "EP Participants", as defined
herein, until April 1, 1997, as further explained in section 14.10.
Additionally, the provisions of the Plan are retroactively effective to certain
former employees of Tenneco prior to the Restatement Date, as further explained
in section 3.6.
1.5 PURPOSE OF THE PLAN
This Plan is intended to encourage and assist Eligible Employees in adopting a
regular program of saving to provide additional security for their retirement.
For tax purposes, the Plan and Trust maintained as a part thereof are intended
to qualify under Code sections 401(a) and 501(a), with the Plan qualifying and
being hereby designated as a "profit-sharing plan" under Code section
401(a)(27), which includes a qualified cash or deferred arrangement and
nondiscriminatory matching contributions. In accordance with Code section
401(a)(27)(A), determinations shall be made with respect to Basic Contributions
and Flex Contributions that are provided on a before-tax basis without regard to
whether the Company and its Affiliates have current or accumulated profits.
However, Company Matching Contributions shall be conditioned on the availability
of current and/or accumulated profits.
2
<PAGE>
ARTICLE 2. DEFINITIONS
2.1 GENERAL DEFINITIONS
In addition to any other definitions set forth in other sections of the Plan,
the following terms shall have the respective meanings set forth below when used
in the Plan, except as otherwise expressly provided herein:
(a) "AFFILIATE" means a corporation or other employer which, at the
time for which the determination is made, is controlled by, or under
common control with, the Company, within the meaning of sections 414
and 1563 of the Code. The determination of control shall be made
without reference to paragraphs (a)(4) and (e)(3)(C) of section 1563,
and solely for the purpose of applying the limitations of Article 6 and
section 13.5 of this Plan and for the purpose of allowing a related
corporation or other employer to adopt the Plan with the Company's
permission under an arrangement resulting in treatment of the Plan as a
multiple employer plan described in Code section 413(c), the phrase
"more than 50 percent" shall be substituted for the phrase "at least 80
percent" each place it appears in section 1563(a)(1). In addition, to
the extent that the context may so require, "Affiliate" shall mean a
member of an affiliated service group (within the meaning of Code
section 414(m)) of which the Company or an Affiliate is a member, any
leasing organization (as defined in Code section 414(n)) to the extent
its employees constitute Leased Employees with respect to the Company
or any Affiliate, and any other entity required to be aggregated with
the Company in accordance with section 414(o) of the Code.
(b) "ALTERNATE PAYEE" means a spouse, former spouse, child or other
dependent of a Participant who is recognized by a Qualified Domestic
Relations Order as having a right to receive all, or a portion of, the
benefits payable under the Plan with respect to a Participant.
(c) "ANNUAL ADDITION" means with respect to any Participant, the sum
of the following items for a Plan Year (which is also the
limitation year): (i) all employer and Employee contributions
(including as employer contributions both before-tax Basic
Contributions and Flex Contributions elected by the Participant) and
all forfeitures allocated to the Participant under this and any other
qualified defined contribution plan maintained by the Company or an
Affiliate, and (ii) any contributions allocated to any individual
medical account under a qualified defined benefit plan or a welfare
benefit fund to the extent required by Code section 415(l) or
419A(d)(2). The Annual Additions resulting from contributions to the
Plan shall be determined on a cash basis as of the time of the
contribution, except
3
<PAGE>
that contributions made after the end of the prior Plan Year and
treated as attributable to such prior year for purposes of deductions
and percentage testing under sections 4.11 and 5.2 shall be treated as
Annual Additions for such prior year.
(d) "BASIC CONTRIBUTIONS" means contributions made by the Employer or
Employee under section 4.1 at the election of the Employee and any
similar amounts transferred from the BR Plan or any Other Plan.
(e) "BENEFICIARY" means the person or persons (who may be named
contingently or successively) designated by a Participant (or the
Beneficiary of a deceased Participant) to receive his Account in the
event of his death. Each designation shall be in the form prescribed
by the Committee, shall be effective only when filed in writing as
prescribed by the Committee, and shall revoke all prior designations
by the same Participant. The designation by a married Participant of
someone other than his spouse as a Beneficiary shall be invalid unless
the spouse consents in writing to such designation, the consent
acknowledges the effect of such designation and is notarized or is
witnessed by a Plan representative, and the Beneficiary designation
complies in all other respects with the requirements of Code sections
401(a)(11)(B)(iii)(I) and 417(a)(2). However, no consent shall be
required if it is established to the satisfaction of the Plan
representative that such consent cannot be obtained because there is
no spouse or because the spouse cannot be located. If there is no
surviving spouse and if no other Beneficiary is designated, then the
Beneficiary shall be the Participant's estate. If a designation is
ineffective in whole or in part, all or such part of the Participant's
Account as has not been distributed, shall be payable to the
Participant's surviving spouse, or if the deceased Participant has no
surviving spouse, to his estate. If a designated Beneficiary is
receiving payments and does not survive to receive all payments due
hereunder, the remaining payments shall be made to his Beneficiary or,
if there is none, to his estate.
(f) "BOARD OF DIRECTORS" means the Board of Directors of the Company.
(g) "CHANGE DATE" means any business day during a Plan Year as of which
a Participant is allowed to make an election that changes his level
of contributions or his investments under the Plan in accordance
with the terms and limitations specified below and elsewhere in the
Plan. A Change Date may be used by a Participant to begin, stop,
increase, or decrease the amount of Basic Contributions or
Supplemental Contributions to his Account under the Plan, or to change
the before-tax or after-tax nature of Basic Contributions, or to
direct the way that amounts in his Account are to be invested, or to
make any number of the foregoing
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choices on any Change Date. All choices that are implemented on
behalf of a Participant on a Change Date are subject to the
satisfaction of such reasonable procedural requirements as may be
specified in the Plan or prescribed by the Committee, which procedures
may include the ability to make changes through a voice response or
electronic means, or may require the completion of appropriate forms.
Notwithstanding the foregoing, the Committee may change the timing of
Change Dates to any other date or dates that it deems appropriate and
may relax or eliminate any restrictions on the frequency of the Change
Dates on which any or all elections described in this section may be
made. Before implementing any such change, the Committee shall provide
appropriate notice to Participants.
(h) "CODE" means the Internal Revenue Code of 1986, as amended from time to
time. Where reference is made to an incorrect or outdated Code section,
the reference shall be reformed to indicate a proper Code section that
is consistent with the context and the intended meaning.
(i) "COMMITTEE" means the committee appointed by the Chief Executive
Officer to administer the Plan as described in section 11.2 hereof.
(j) "COMPANY" means El Paso Natural Gas Company, doing business as "El Paso
Energy Corporation."
(k) "COMPANY MATCHING CONTRIBUTIONS" means the matching contributions made
by an Employer under section 5.1 on behalf of a Participant,
conditioned on the making of certain Basic Contributions, as described
in Articles 4 and 5, and includes any similar amounts transferred from
the BR Plan or any Other Plan.
(l) "COMPANY STOCK" means the common stock described in the definition of
the Company Stock Fund.
(m) "COMPENSATION" means, with respect to a Participant for a period
considered under the Plan, the Participant's full salary and wages from
an Employer (including all payments of salary, wages, short-term
disability or sick pay continuation of salary and wages, spot bonuses
and nondeferred annual performance bonuses, shift differentials, and
overtime compensation) plus his before-tax Basic Contributions under
this Plan and any Code section 125 salary reduction amounts under a
plan maintained by the Company or an Affiliate, but excluding all
amounts described in the next following sentence, and provided, in
addition, that Flex Contributions shall also be treated as Compensation
hereunder, but only if and to the extent that a Participant elects to
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have unmatched Flex Contributions made on his behalf under the Plan and
then only for the purpose of making such Flex Contributions. All of
the following items shall be excluded in determining a Participant's
Compensation: (i) gifts and other non-bonus payments of like character,
(ii) reimbursement for expenses or allowances therefor, including
automobile allowances and moving allowances, (iii) any amount
contributed by the Employer to any pension plan or plan of deferred
compensation other than this Plan, (iv) any amount contributed by the
Employer to this Plan other than before-tax contributions elected by
the Participant, (v) any amount paid by an Employer or a separate
funding vehicle under a long-term disability plan, (vi) termination
payments, (vii) income attributable to the exercise of options or lapse
of restrictions on Company Stock, (viii) any other special or
extraordinary forms of remuneration, whether or not paid pursuant to an
incentive compensation plan and (ix) any amount paid by the Employer
for other fringe benefits, such as health and welfare, hospitalization,
group life insurance benefits, or perquisites.
As required by Code section 401(a)(17), Compensation shall be
determined after application of the annual dollar limitations of Code
section 401(a)(17). For this purpose, from and after the Restatement
Date, the annual Compensation of each Participant taken into account
under the Plan for any year shall not exceed the 1994 base year
limitation of $150,000, as such amount may be adjusted or changed from
year to year in accordance with the adjustment provisions of Code
section 401(a)(17), or as a result of changes to the provisions of Code
section 401(a)(17). If the Plan determines Compensation on a period of
time that contains fewer than 12 calendar months, then the annual
Compensation limit is an amount equal to the annual Compensation limit
for the calendar year in which the Compensation period begins
multiplied by the ratio obtained by dividing the number of full months
in the period by 12. The rules regarding permitted disparity and the
use of Compensation for a prior Plan Year do not apply to this Plan
because it does not provide for any permitted disparity or any use of
Compensation for a prior Plan Year in determining an Employee's
contributions or benefits.
(n) "CORNERSTONE" means "Cornerstone Natural Gas, Inc." and its affiliates.
(o) "CORNERSTONE PARTICIPANT" means an Employee or a former employee of
Cornerstone who is a participant with a balance credited to his account
under the Cornerstone Plan immediately prior to and as such account is
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merged into the Plan as of the Restatement Date.
(p) "CORNERSTONE PLAN" means the "Cornerstone Natural Gas, Inc. Employee
Savings Plan", as such Plan exists immediately prior to and as of the
Restatement Date when such Plan is merged with and into this Plan.
(q) "DISABILITY" means a total and presumably permanent incapacity
resulting from personal injury or sickness whether or not resulting
from employment with the Employer, which in the opinion of the
Committee, after reviewing any medical evidence and requiring any
reasonable medical examination the Committee considers necessary, will
prevent a Participant or inactive Participant from performing the
principal duties of his occupation and from engaging in any employment
or occupation for remuneration or profit for which he is or may
reasonably become qualified by training, education or experience. The
Committee may rely upon the adjudication of such Participant's or
inactive Participant's total and permanent disability by the Social
Security Administration, or such other evidence as the Committee, in
its discretion, deems appropriate.
(r) "EASTEX PARTICIPANT" means an Eligible Employee who is or was an
Employee of Eastex Gas Transmission Company and who became a
Participant under the Plan effective as of January 1, 1996, or on some
later date before February 1, 1996.
(s) "ELIGIBLE EMPLOYEE" means any Employee employed on a salaried basis by
an Employer other than an Employee, if there is any, who is (i) a
member of a unit covered by a collective bargaining agreement under
which retirement benefits were the subject of good faith bargaining
and no provision was made for including such Employee in the Plan,
(ii) a nonresident alien who receives no earned income from an
Employer which constitutes income from sources within the United
States, or (iii) a Leased Employee.
(t) "EMPLOYEE" means any person who is employed as a common law employee by
the Company or an Affiliate, as determined from appropriate personnel
records, and shall also include any Leased Employee to the extent
required under Code section 414(n) and Code section 401(a), 410, 411,
415 or 416.
(u) "EMPLOYER" means either the Company or any Affiliate which, with the
approval of the Company, elects to become a party to the Plan by
adopting the Plan for the benefit of some or all of its Eligible
Employees.
(v) "EP PARTICIPANT" means an Employee or former Employee who is a
"Participant" under the Plan with a balance credited to his Account
immediately prior to and as of the Restatement Date.
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(w) "EP PRIOR PLAN" means this Plan, and the terms and provisions thereof,
as it exists immediately prior to the Restatement Date.
(x) "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time.
(y) "FLEX CONTRIBUTION" means an amount transferred from the Code section
125 FlexPlan of the Company on a before-tax basis at a Participant's
election and credited to his Basic Account, and includes any similar
contributions transferred from the BR Plan or an Other Plan.
(z) "HIGHLY COMPENSATED EMPLOYEE" means an Employee described in Code
section 414(q) and generally includes any Employee who:
(1) during the Plan Year or immediately preceding Plan Year, was at
any time a 5-percent owner (as defined in subsection 13.2(b) of
the Plan); or
(2) during the preceding Plan Year, received compensation in excess
of $80,000, as adjusted by reference to Code section 414(q).
For purposes of this subsection, "compensation" means Section 415
Compensation for the Plan Year plus any Code section 401(k) deferrals
(including before-tax Basic Contributions and Flex Contributions under
this Plan) and any Code section 125 salary reduction amounts under a
plan maintained by the Company or an Affiliate for the Plan Year.
A former Employee shall be treated as a Highly Compensated Employee if
he was a Highly Compensated Employee when he incurred a Separation from
Service or at any time after attaining age 55.
(aa) "INVESTMENT FUND" means any of the following funds of the Trust Fund,
all of which may hold a reasonable amount of cash and liquid assets in
addition to the assets described below, but may not include direct
holdings by t he Trustee of securities of an Employer except as
specifically authorized in the case of the Company Stock Fund and
Tenneco Stock Fund, and each of which may make appropriate investments
either directly, or indirectly by means of securities of a regulated
investment company or trust or interests in an insurance company's
pooled account or a common trust fund or collective investment fund of
a bank or similar financial institution with a similar investment
purpose, in accordance with the description of the fund:
(1) A "COMPANY STOCK FUND" which shall be invested primarily in
shares of the common stock of the Company.
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(2) A "TENNECO STOCK FUND" as further described in section 2.1(ss)
of the Plan.
(3) A "LOAN FUND" which shall be invested individually for each
borrowing Participant in any loans that such Participant has
under the Plan.
(4) Each such other investment funds as may be designated and
selected by the Committee from time to time, and as may be
described in the "Investment Fund Appendix" to the Plan as it
may exist from time to time.
By administrative action of the provisions of this section of the Plan,
the Committee may designate and make changes as regards the Investment
Funds provided for under the Plan. When making Investment Fund changes,
the Committee shall do so on a prospective basis with such transition
rules as it deems appropriate for the change being made. Investment
Fund changes by the Committee may include the elimination of one or
more existing Investment Funds or the establishment of one or more
additional Investment Funds that are to be invested in such appropriate
investments, as described in the Trust, as the Trustee, acting in
accordance with the provisions of the Trust and instructions from the
Committee or an investment manager designated by the Committee, deems
advisable.
(bb) "LEASED EMPLOYEE" means a person who is not a common law employee but
who performs services for the Company or an Affiliate pursuant to an
agreement with a leasing organization (within the meaning of Code
section 414(n)(2)) if such person has performed the services on
substantially a full-time basis for a period of at least one year, the
services are performed under the primary direction or control of the
Company or an Affiliate, and the person is required to be treated as
an Employee pursuant to Code section 414(n), but only for the period
and the purposes to which such requirements apply.
(cc) "MERGED PLANS" means the Tenneco Energy Plan and the Cornerstone Plan,
which are merged into and with this Plan effective as of that time that
instantaneously occurs following twelve o'clock midnight on December
31, 1996. References to the merger of such Plans into this Plan as of
January 1, 1997 or the Restatement Date shall be the time of merger
described herein.
(dd) "OTHER PLAN" means any defined contribution plan maintained by an
Affiliate and that is designated by the Committee as an Other Plan for
purposes of section 3.3 or section 9.4, provided that such plan is
qualified under Code section 401(a) and does not provide a life annuity
form of benefit. Section 9.4 provides additional information concerning
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<PAGE>
the transferred funds and accounts of former Participants in the Merged
Plans, which are included as "Other Plans."
(ee) "PARTICIPANT'S ACCOUNT" or "ACCOUNT" means the separate account
maintained for each Participant which represents his total
proportionate interest in the Trust Fund as of any Valuation Date and
which consists of the sum of his Basic Account, his Company Match
Account, his IRA Account, his Supplemental Account and his Rollover
Account (together with any additional Accounts that the Committee may
establish from time to time and including any subaccount that may be
maintained under an existing Account), as described further below and
in section 9.4 with respect to amounts attributable to certain
balances transferred directly to this Plan from similar accounts in an
Other Plan.
(1) "BASIC ACCOUNT" means the Account maintained for each
Participant under each Investment Fund in which all or part of
the Participant's Basic Contributions and any Flex
Contributions have been invested and adjusted from time to time
as provided in section 9.3.
(2) "COMPANY MATCH ACCOUNT" means the Account maintained for each
Participant under each Investment Fund in which all or part of
the Company Matching Contributions conditioned on certain Basic
Contributions have been invested and adjusted from time to time
as provided in section 9.3. This Account includes the former
subaccount I relating to the value of contributions for periods
before 1985 and having a December 31, 1989 grandfathered value
(excluding any subsequent earnings and investment gains or
losses thereon) that continues to be available for withdrawals
under section 7.6, and also includes the former subaccount II
relating to the value of contributions for periods after 1984,
as such former subaccounts are described in the BR Plan.
(3) "ROLLOVER ACCOUNT" means the Account described in section 5.6
maintained for each Participant under each Investment Fund in
which all or part of the Participant's rollover contributions
have been invested and adjusted from time to time as provided in
section 9.3.
(4) "SUPPLEMENTAL ACCOUNT" means the Account maintained for each
Participant under each Investment Fund in which all or part of
the Supplemental Contributions which have been made by the
Participant have been invested and adjusted from time to time as
provided in section 9.3.
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(5) "IRA ACCOUNT" means, with respect to amounts attributable to
certain balances transferred to this Plan from the BR Plan or
any Other Plan, the Account maintained for each Participant
under each Investment Fund in which all or part of the
deductible contributions made by the Participant, as permitted
under the terms of the transferring plan and Code section 219
prior to January 1, 1987, have been invested and adjusted from
time to time as provided in section 9.3.
(ff) "PARTICIPANT" means any Eligible Employee who has met the requirements
to become a Participant as set forth in section 3.1 hereof, and shall
include, where appropriate to the context, any former Participant
described in section 3.2 and any inactive Participant described in
section 3.4.
(gg) "PAY" means all remuneration for service performed for the Company or
an Affiliate which is currently includible in gross income and
generally reportable on Form W-2, which remuneration shall, except as
prohibited by applicable law and regulations, be the same as Section
415 Compensation. In addition, except as prohibited by Treasury
regulations, the Company may elect to include as Pay all before-tax
Basic Contributions, Flex Contributions, and other Code section 401(k)
elective deferrals and all Code section 125 salary reduction amounts,
if any, under a plan maintained by the Company or an Affiliate,
provided that such treatment and the determination of Pay in general
shall be applied on a consistent basis in accordance with Code section
414(s) and the regulations thereunder. Pay as determined hereunder
shall also be subject to and be determined in accordance with the
annual dollar limitation under Code section 401(a)(17), as described
in section 2.1(m).
(hh) "PLAN YEAR" means the calendar year.
(ii) "QUALIFIED DOMESTIC RELATIONS ORDER" means a judgment, decree or order
(including approval of a property settlement agreement) pursuant to a
state domestic relations law (including a community property law) that
provides benefits to an Alternate Payee in accordance with Code section
414(p) and subsections 7.3(b) and 11.5(o) and section 14.4 of this Plan
and the procedures established thereunder.
(jj) "QUALIFIED NONELECTIVE CONTRIBUTIONS" means any contributions described
in Code section 401(m)(4)(C).
(kk) "RESTATEMENT DATE" means January 1, 1997.
(ll) "SECTION 415 COMPENSATION" means, generally, an Employee's taxable W-2
earnings for income tax purposes under Code section 3401(a), with such
modifications as may be required to conform to the definition of
"participant's compensation" in Code section 415(c)(3) and the
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regulation thereunder, and, to the extent consistent with such
authorities, shall be construed as an Employee's wages, salaries,
commissions, professional fees and other amounts received for personal
services rendered in the course of employment with the Company and
Affiliates: (1) including amounts received through accident or health
insurance (but only to the extent includible in gross income),
disability payments (whether or not excludable from gross income),
earned income from sources outside the United States (whether or not
excludable or deductible from gross income), amounts paid or
reimbursed for nondeductible moving expenses, the value of
nonqualified stock options to the extent includible in gross income in
the taxable year in which granted, and amounts includible in gross
income upon making the election described in Code section 83(b); but
(2) excluding Company or Affiliate contributions to a deferred
compensation plan (to the extent excludable from gross income when
contributed), distributions from a qualified plan, amounts realized on
the exercise of nonqualified stock options or when restricted property
either becomes transferable or is no longer subject to a substantial
risk of forfeitures, amounts realized on the disposition of stock
acquired under a qualified or incentive stock option, and other
amounts which receive special tax benefits. In applying the provisions
of section 13.2 prior to January 1, 1998, "Section 415 Compensation"
shall reflect the provisions of Code section 414(q)(4). Effective
January 1, 1998, the definition of "Section 415 Compensation" shall be
determined by reflecting the application of Code section 415(c)(3)(D).
(mm) "SEPARATION FROM SERVICE" means any termination of the employment
relationship between an Employee and the Company or Affiliate for any
reason including death, resignation, discharge, retirement or
Disability. A Separation from Service shall not occur upon a
Participant's transfer to a position where he continues to be an
Employee but is no longer an Eligible Employee (whether by reason of
becoming a member of a labor union or otherwise), nor shall a
Separation from Service occur as a result of a leave of absence
authorized by the Employer or Affiliate if the Employee returns to
employment upon expiration of such leave. Except as otherwise agreed
by the parties to the transaction, a disposition of the stock or other
ownership interest in a subsidiary or a disposition of substantially
all the assets used in a trade or business of an Employer shall be
treated as a Separation from Service for the purpose of making lump
sum distributions to the Employees who continue to work in essentially
the same business and employment position following the disposition,
provided that the date of such disposition is treated as a permissible
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distribution event under Code sections 401(k)(2)(B)(i)(II) and
401(k)(10).
(nn) "SUPPLEMENTAL CONTRIBUTIONS" means the after-tax contributions made by
a Participant under section 4.6 and any similar amounts transferred
from the BR Plan or any Other Plan.
(oo) "TENNECO" means "Tenneco Inc." and its affiliates.
(pp) "TENNECO ENERGY PLAN" means the "Tenneco Energy Thrift Plan" that
constitutes a spun-off portion of the Tenneco Plan, as such
Tenneco Energy Thrift Plan momentarily exists based on terms of the
Tenneco Plan provisions covering the employees to be covered by this
Plan for the sole purpose of merging the Tenneco Energy Thrift Plan
with and into this Plan.
(qq) "TENNECO PARTICIPANT" means an Employee or a former employee of Tenneco
who is a participant with a balance credited to his account under the
Tenneco Energy Plan immediately prior to and as such account is merged
into the Plan as of the Restatement Date.
(rr) "TENNECO PLAN" means the "Tenneco Inc. Thrift Plan", as such Plan
exists prior to the Restatement Date.
(ss) "TENNECO STOCK FUND" means the Investment Fund maintained under the
Plan that accounts for those shares of stock which are transferred and
merged into this Plan from the Tenneco Energy Plan as of the
Restatement Date, which shares are the investment fund under such Plan
that was used to invest and account for "Tenneco Inc. Common Stock".
From and after the Restatement Date, any "Company Stock" constituting a
portion of the Tenneco Stock Fund as it is constituted at and
immediately following the Restatement Date shall be transferred and
credited to the Company Stock Fund as soon as administratively
practicable, at which time such Company Stock shall no longer be part
of the Tenneco Stock Fund. The term "Tenneco Stock Fund" shall also
mean the separate Investment Funds constituting such Investment Fund
that represent the shares of new Tenneco Inc. and Newport News
Shipbuilding Inc. held under the Tenneco Stock Fund.
(tt) "TRUST" or "TRUST AGREEMENT" means any agreement in the nature of a
trust established to form a part of the Plan to receive, hold, invest,
and dispose of the Trust Fund.
(uu) "TRUST FUND" means the assets of every kind and description held under
any Trust Agreement forming a part of the Plan.
(vv) "TRUSTEE" means the corporation, or persons acting as trustee under any
Trust Agreement at any time of reference.
(ww) "VALUATION DATE" means each business day during a Plan Year, or such
other dates as may be declared by the Committee from time to time.
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<PAGE>
(xx) "YEAR OF PARTICIPATION" means each 12-month period of Service beginning
with the first day a Participant was credited with a balance to his
Account (including an account under a Merged Plan) and during which he
retained a balance credited to his Account (or such account under a
Merged Plan).
2.2 GENDER AND NUMBER
Except when otherwise indicated by the context, any masculine or feminine
terminology herein shall also include the opposite gender, and the definition of
any term herein in the singular or plural shall also include the opposite
number.
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ARTICLE 3. PARTICIPATION AND SERVICE
3.1 DATE OF PARTICIPATION
Each person who was a "Participant" as defined under the Plan immediately prior
to the Restatement Date shall remain as a Participant as of the Effective Date
if he continues to satisfy the conditions for such Participant status on the
Restatement Date, and his status as Participant thereafter shall be determined
under the provisions of sections 3.2, 3.3 and 3.4. Each Employee other than an
Employee described in the immediately preceding sentence shall become a
Participant as of the first day on which occurs the later of-
(a) the Restatement Date;
(b) the date on which he becomes an Eligible Employee; or
(c) the date on hich he completes at least one year of Service.
In addition to and notwithstanding the foregoing provisions of this section 3.1,
the following provisions shall apply to "Participant" status under the Plan:
(1) An individual who is a Tenneco Participant and who has a balance
transferred to this Plan from the Tenneco Energy Plan effective as of the
Restatement Date shall become a Participant under this Plan as of the
Restatement Date.
(2) An individual who is a Cornerstone Participant and who has a balance
transferred to this Plan from the Cornerstone Plan effective as of the
Restatement Date shall become a Participant under this Plan as of the
Restatement Date.
(3) An individual described in section 3.6 shall become a Participant as
described therein.
(4) An individual who is an Eligible Employee, who was employed in an
employment class eligible to participate under the Cornerstone Plan prior
to the Restatement Date, and who is not a participant under the
Cornerstone Plan due to the lack of the service eligibility requirement
under such Plan shall become a Participant under this Plan on the
earliest date as provided in the preceding provisions of this section
3.1, but by substituting the required service eligibility period under
the Cornerstone Plan for this Plan's one-year Service requirement.
(5) An individual who is an Eligible Employee and who was not a Participant
under the Plan due to the lack of the satisfaction of the required age
and Service requirements under the Plan prior to the Restatement Date
shall continue to be eligible to become a Participant under the Plan in
accordance with the Plan's age and Service requirements as in effect
under the EP Prior Plan.
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Any such Participant described above shall have his continuing status under the
Plan determined under the provisions of sections 3.2, 3.3 and 3.4.
3.2 DURATION
An Employee who becomes a Participant shall remain a Participant until he has a
Separation from Service, and thereafter shall be a former Participant for as
long as he is entitled to receive any benefits under the Plan. A Participant who
has a Separation from Service and is subsequently reemployed as an Eligible
Employee shall become a Participant as of the date of his reemployment, and
shall be eligible to elect to make Basic Contributions or Supplemental
Contributions beginning with his reemployment date. A Participant who is
transferred from one Employer to another Employer and continues to perform
services as an Eligible Employee shall remain a Participant on the same basis as
immediately prior to the transfer, except as he may be affected by special
provisions of his Employer's adoption agreement relating to this Plan.
3.3 TRANSFERS TO PARTICIPATION
An Employee other than a Participant who is transferred by or from an Employer
or Affiliate into employment that causes him to be an Eligible Employee shall
become a Participant as of the earliest date he would become a Participant in
accordance with section 3.1, except that he shall become a Participant and make
elections hereunder as of the date of his transfer if he was a participant in an
Other Plan immediately prior to his transfer.
3.4 INACTIVE PARTICIPANT
Any Participant who transfers to an employment status with the Company or an
Affiliate in which he is no longer an Eligible Employee shall become an inactive
Participant. An inactive Participant shall not be eligible to make Basic
Contributions or Supplemental Contributions based on Compensation earned after
the date of his transfer during the period he is an Employee. If a Participant
becomes an inactive Participant, his Account shall continue to be held under the
Plan until he becomes entitled to a distribution under the provisions of Article
7. An inactive Participant shall have the right to receive a loan or make a
withdrawal under the provisions of sections 7.6, 7.7, or 7.8, and to exercise
voting and investment election rights under Article 8.
3.5 SERVICE
An Employee shall be credited with "Service" in accordance with the following
provisions:
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(a) Service shall be determined in completed years and days, with each 365
days constituting one year.
(b) An Employee shall receive credit for Service from his Employment
Commencement Date until his Severance from Service. All separate periods
of Service shall be aggregated for purposes of determining an Employee's
Service under the Plan.
(c) If an Employee who has had a Severance from Service is subsequently
reemployed as an Employee, the Service he had at such Severance from
Service shall be reinstated upon his reemployment and, if such Severance
from Service resulted from quit, discharge or retirement, and he is
reemployed within a 12-month period from the date of his Severance from
Service, he shall be credited with Service for the period between his
Severance from Service and his reemployment.
(d) In determining an Employee's Service pursuant to this section 3.5, the
following terms shall apply:
(1) "Severance from Service" shall mean the earlier of (A) or (B)below:
(A) The date the Employee quits, retires, is discharged or dies;
or
(B) In the case of an Employee's absence from employment as an
Employee (with or without pay) for any reason other than in
(A) above, such as vacation, sickness, leave of absence,
layoff or military service, the later to occur of the
expiration of the period for which the Employee is
authorized to be so absent, or the first anniversary of the
first day of the Employee's absence; provided, however, an
Employee who fails to return to employment at the expiration
of such absence shall be deemed to have had a Severance from
Service on the first anniversary of the first day of his
absence.
(2) A "One-Year Period of Severance" shall mean each 12-
consecutive-month period beginning on the date an Employee incurs a
Severance from Service and ending on each anniversary of such date,
provided that the Employee does not perform an Hour of Service
during such period. Solely for purposes of determining whether an
Employee has incurred a period of severance following a Severance
from Service, in the case of an Employee who is absent from work
beyond the first anniversary of the first date of an absence and
the absence is for an approved leave for maternity or paternity
reasons, the date the Employee incurs a Severance from Service
shall be the second anniversary of the Employee's absence from
employment. The period between the first and second anniversary of
the first date of absence shall not constitute Service. For
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purposes of this section 3.5, an absence from work for maternity or
paternity reasons means an absence (A) by reason of pregnancy of
the Employee, (B) by reason of the birth of a child of the
Employee, (C) by reason of the placement of a child with the
Employee in connection with the adoption of such child by such
Employee, or (D) for purposes of caring for such child for a period
beginning immediately following such birth or placement.
(3) "Hours of Service" shall mean the hours of service credited to an
Employee as follows:
(A) One hour for each hour for which he is paid, or entitled to
payment, by an Employer or Affiliate for the performance of
duties during the applicable computation period for which
his Hours of Service are being determined under the Plan.
(B) One hour for each hour, in addition to the hours in
paragraph (A), for which he is directly or indirectly paid,
or entitled to payment, by an Employer or Affiliate, on
account of a period of time during which no duties are
performed due to vacation, holiday, illness, disability,
layoff, jury duty, military duty or leave of absence.
(C) One hour for each hour for which back pay, irrespective of
mitigation of damages, is either awarded or agreed to by an
Employer or Affiliate, with no duplication of credit for
hours.
(D) In the case of an Employee whose hours are not required to
be counted under applicable Federal wage and hour laws, such
Employee shall be credited with Hours of Service on the
basis of the equivalency methods provided for under
Department of Labor regulation section 2530.00b-3 based on
the pay period applicable to such Employee.
(E) Hours of Service shall be credited in accordance with the
rules of Department of Labor regulation section 2530.200b-
2(b) and (c), which are incorporated herein by reference.
(4) "Employment Commencement Date" shall mean the first day on which an
Employee is credited with an Hour of Service with an Employer or an
Affiliate or, if applicable, the first day following a Severance
from Service, on which an Employee is credited with an Hour of
Service with an Employer or an Affiliate.
(e) In determining an Employee's Service pursuant to this section 3.5 for
periods prior to the date the Employee became an Employee, the Employee's
Service shall also include periods of service with any entity which is
acquired by, merged with or into or otherwise consolidated or combined
with an Employer or an Affiliate as a result of amerger, consolidation
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or other acquisition or combination, whether effected through a
purchase or exchange of assets or stock, or both, and which periods of
service are not otherwise credited to such Employee under this section
3.5. In applying the preceding sentence of this section 3.5(e), any
period of service with an affiliated employer of any such entity shall
also be recognized if service with such affiliated employer had been
recognized for purposes of any Code section 401(a) qualified plan in
which the entity and such affiliated employer participated. The
determination of service under this section 3.5(e) shall be made in the
same manner as the Employee's Service is determined under the preceding
provisions of this section 3.5; provided, however, with respect to
Tenneco Participants and Cornerstone Participants, such "Service" shall
not be less than as provided under section 1.2. All determinations
regarding the occurrence of any such acquisition and the application of
the foregoing provisions of this section 3.5(e) shall be made by the
Committee.
(f) If a Participant is absent from employment for voluntary or involuntary
military service with the armed forces of the United States and returns
to employment as an Employee within the period required under the law
pertaining to veterans' reemployment rights, he shall receive Service
credit for the period of his absence from employment.
3.6 SPECIAL TENNECO RETROACTIVE PARTICIPATION PROVISIONS
An individual who becomes an Eligible Employee prior to the Restatement Date and
who immediately prior to such employment was an employee of Tenneco and who
would be eligible to actively participate in the Tenneco Plan or Tenneco Energy
Plan but for the lack of employment status with Tenneco shall be considered a
"Participant" under this Plan for the period prior to the Restatement Date
during which he is such Eligible Employee. As regards such special Participant
status, the terms and provisions of this Plan as in effect as of the Effective
Date shall be retroactively effective to such Participant group, so as to define
the terms of their participation in this Plan, except that the contribution
provisions of the Tenneco Energy Plan shall be applied as to such Participants'
contributions for such interim pre-Effective Date period.
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ARTICLE 4. CONTRIBUTIONS
4.1 BASIC CONTRIBUTIONS
(a) From and after the Restatement Date, each Participant may elect to have
his Employer contribute to the Plan on his behalf an amount equal to any
whole percentage from two percent to ten percent of his Compensation
from such Employer during the period in which the election is in effect.
Such amount shall be contributed as a Ba sic Contribution that is made on
a before-tax basis in lieu of urrent cash payment of the percentage of
Compensation that the Participant elected to defer. Such election shall
be made in accordance with the rules set forth in this Article 4 and such
other consistent rules of an administrative nature as the Committee may
prescribe. No before-tax Basic Contributions may be elected under this
subsection 4.1(a) for any period during which the Participant has in
effect an election to make after-tax Basic Contributions pursuant to
subsection 4.1(d).
(b) The Committee shall adopt reasonable procedures to assist a Participant
in fulfilling his responsibility of ensuring that the before-tax Basic
Contributions and Flex Contributions made on his behalf under this Plan,
together with any elective deferrals under other qualified plans of the
Company and its Affiliates, for the Participant's taxable year do not
exceed $7,000 (or such other amount as may be prescribed under Code
section 402(g)(5)), less any other elective deferrals of the Participant
under other plans of other employers. The Participant will be treated as
having a calendar taxable year and as having no elective deferrals other
than before-tax Basic Contributions and Flex Contributions and elective
deferrals under other qualified plans of the Company and its Affiliates,
unless the Participant notifies the Committee differently, in writing,
before his initial election of Basic Contributions for the Plan Year. For
purposes of this section 4.1(b), "elective deferrals" include:
(i) employer contributions to a Code section 401(k) qualified cash or
deferred arrangement to the extent excluded from the Participant's
gross income for the taxable year pursuant to Code section
402(a)(8);
(ii) employer contributions to a simplified employee pension to the
extent excluded from the Participant's gross income for the taxable
year under Code section 402(h)(1)(b); and
(iii) employer contributions to purchase an annuity contract under Code
section 403(b) under a salary reduction agreement.
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If the Participant notifies the Committee in writing no later than March
1 following his taxable year of the amount of any excess before-tax Basic
Contributions and Flex Contributions that exist under this section 4.1(b)
for such taxable year, after the application of the limitations specified
under section 4.1(c), the Plan may, but need not, distribute such excess
(and any income and investment gain or loss allocable to such excess) to
him no later than April 15 following such taxable year and, if so
distributed, such excess shall not be included as an Annual Addition for
the Participant for the immediately preceding Plan Year. The Pay of the
Participant for the Plan Year of the excess before-tax Basic
Contributions and Flex Contributions shall be increased by the excess
amount that is distributed under this section. The distribution described
in this section 4.1(b) may be made notwithstanding any other Plan
provision. The Committee shall adopt reasonable procedures for
coordinating distributions of excess before-tax Basic Contributions and
Flex Contributions under this section 4.1 and section 4.11, in accordance
with any applicable legal requirements.
(c) In furtherance of the limitation set forth in section 4.1(b), a
Participant's before-tax Basic Contributions and Flex Contributions under
this Plan and his Code section 401(k) elective deferrals under other
qualified plans of the Company and its Affiliates in each Plan Year shall
be restricted, based on the chronological order in which such elective
deferrals are contributed, so as not to exceed the $7,000 or other
applicable annual limit specified pursuant to section 4.1(b). If a
Participant's election to have before-tax Basic Contributions or Flex
Contributions made on his behalf causes him to reach the point at which
the total of such contributions under the Plan for the year equals such
annual limit, then all further before-tax Basic Contributions of the
Participant in excess of such limit for such year shall be restricted so
as not to exceed the maximum percentage that is eligible for Company
Matching Contributions under Article 5 and shall be made and accounted
for on an after-tax basis, and all further Flex Contributions elected by
the Participant shall be paid to the Participant in cash rather than
contributed to the Plan.
(d) In lieu of electing to make any Basic Contributions on a before-tax basis
as provided in section 4.1(a), a Participant may elect to make after-tax
Basic Contributions of a similar amount and subject to similar rules.
After-tax Basic Contributions that are made pursuant to the foregoing
sentence or to section 4.1(c) shall be eligible for Company Matching
Contributions under section 5.1 to the same extent as if they had been
before-tax Basic Contributions, and they shall also be treated as such
for all other purposes of the Plan except those directly related to their
tax character.
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4.2 ELECTIONS
Each Participant (or Employee expected to become a Participant by the time that
the election will take effect) shall make the elections described in section 4.1
in accordance with procedures prescribed by the Committee. Except as otherwise
provided herein, all elections shall be irrevocable beginning on or after the
effective date of the election. The Committee shall from time to time prescribe
requirements and procedures for all elections with respect to Basic
Contributions and Supplemental Contributions, which procedures may include the
making and changing of such Contributions through a voice response or electronic
means, or the requirement of completing appropriate forms.
4.3 ELECTION CHANGES
Elections made in accordance with section 4.2 shall remain in effect until a new
election to begin, stop, increase, or decrease the Participant's Basic
Contributions is made by the Participant in accordance with such requirements
and other rules as the Committee may specify from time to time. Any new election
so filed shall become effective on the specified Change Date and shall remain in
effect until changed under the rules of this section 4.3.
4.4 SUSPENSION OF BASIC CONTRIBUTIONS
A Participant may suspend his Basic Contributions under the Plan by making a
change in accordance with such requirements and other rules as the Committee may
specify from time to time. The suspension shall become effective as of the
specified Change Date. Such Participant may resume Basic Contributions under the
Plan by making a new election in accordance with section 4.2. A Participant
shall not be permitted to make up suspended Basic Contributions.
4.5 COMPENSATION REDUCTION
Except as otherwise provided in sections 4.1(c) and 4.1(d) with respect to
after-tax Basic Contributions, each Participant who makes an election to have
the Employer contribute a percentage of his Compensation as Basic Contributions
under this Plan shall, by the act of making such election, agree to have his
Compensation reduced by an equivalent percentage for so long as the election
remains in effect.
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<PAGE>
4.6 SUPPLEMENTAL CONTRIBUTIONS
A Participant may elect to make after-tax Supplemental Contributions as of any
Change Date in accordance with such requirements and other rules as the
Committee may specify from time to time, including any requirement relating to
the Participant's consent to the payroll deduction of Supplemental
Contributions. Such Supplemental Contributions may be elected only if the
Participant has in effect at the time an election to make Basic Contributions in
an amount at least equal to six percent of Compensation, which is the maximum
percentage for which the Participant is eligible to receive a Company Matching
Contribution. Such Supplemental Contributions shall, upon satisfaction of the
conditions for making such Contributions, be in any whole percentage between one
percent and five percent of the Participant's Compensation as he shall elect to
contribute on an after-tax basis with respect to Compensation from the Employer
during the period in which the election is in effect. In no event shall a
Supplemental Contribution be matched by a Company Matching Contribution on
behalf of the Participant.
4.7 CHANGES IN SUPPLEMENTAL CONTRIBUTIONS
A Participant may change the percentage of his Supplemental Contributions as of
any Change Date in accordance with the election procedures of section 4.6 and
subject to the conditions in such section 4.6 and section 4.8 for continued
eligibility to make Supplemental Contributions.
4.8 SUSPENSION OF SUPPLEMENTAL CONTRIBUTIONS
A Participant may suspend his Supplemental Contributions effective as of any
Change Date in accordance with such requirements and other rules as the
Committee may specify from time to time. A Participant may thereafter elect to
have his Supplemental Contributions resumed, at the same or a changed rate
permitted under section 4.6, effective as of any subsequent Change Date. In
addition, a Participant's Supplemental Contributions will be automatically
suspended during any period in which he is permitted to elect the required
minimum level of Basic Contributions specified in section 4.6 and has chosen not
to do so. A Participant shall not be permitted to make up suspended Supplemental
Contributions.
4.9 TRANSFER AND CREDITING OF BASIC AND SUPPLEMENTAL CONTRIBUTIONS
Each Participant's Basic Contributions and Supplemental Contributions shall be
transferred to the Trust Fund as soon as they can reasonably be segregated from
the Employer's general assets. Basic Contributions shall be allocated to the
Participant's Basic Account, and Supplemental Contributions shall be allocated
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to the Participant's Supplemental Account, as of such dates when such
Contributions are deposited to the Trust Fund.
4.10 FLEX CONTRIBUTIONS
In accordance with rules established by the Committee that are consistent with
the rules of the Employer's Code section 125 cafeteria plan covering the
Participant, the Participant may elect to have his Employer transfer to the
Trust Fund, as a Flex Contribution made on a before-tax basis on his behalf, all
or a portion of the amounts available for such transfer under such cafeteria
plan. The Flex Contribution shall be transferred to the Trust when the amounts
subject to this election are made available and shall then be credited
immediately to the Participant's Basic Account. In no event shall a Flex
Contribution be matched by a Company Matching Contribution on behalf of the
Participant.
4.11 RESTRICTIONS ON BASIC CONTRIBUTIONS AND FLEX CONTRIBUTIONS
In conjunction with Participant elections of Basic Contributions and at such
other times throughout the Plan Year as the Committee may determine, the
Committee shall require testing of the elections of before-tax Basic
Contributions and Flex Contributions by Participants (and any other Employer
contributions that the Company elects to include in the testing under the
conditions specified below) to assure that the average deferral percentage for
the Plan Year of Participants who are Highly Compensated Employees will not
exceed the greater of:
(a) 1.25 times the average deferral percentage for the preceding Plan Year of
all other Participants who were non-Highly Compensated Employees for such
Plan Year, or
(b) the lesser of (i) 2 percentage points more than, or (ii) 2 times the average
deferral percentage for the preceding Plan Year of all other Participants
who are non-Highly Compensated Employees for such Plan Year.
For purposes of this section, the term "average deferral percentage" for each
group of Participants for any period shall be the average of the percentages,
calculated separately for each Participant in such group, of the aggregate
amount of Pay that each Participant elects to have contributed to the Plan for
the period as before-tax Basic Contributions or Flex Contributions, provided
that, if the Company so elects in accordance with rules prescribed by the
Secretary of the Treasury, Qualified Nonelective Contributions and Code section
401(m) matching contributions (including Company Matching Contributions under
this Plan) that meet the withdrawal and vesting requirements of Code sections
401(k)(2)(B) and (C) shall be added to before-tax Basic Contributions and Flex
Contributions in computing each Participant's average deferral percentage.
Except as provided in Treasury Regulations, excess before-tax Basic
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Contributions and Flex Contributions under section 4.1(b) shall be treated as an
amount elected under section 4.2 and contributed to the Plan, whether or not
such excess contribution is distributed.
Advance testing done under this section 4.11 shall be based on a Participant's
annual rate of Pay in effect at the time of the test, and corrections to be made
to reduce the amount in excess of the maximum permissible deferral percentage
shall be made from Pay to be earned for the remainder of the Plan Year. Final
Plan Year compliance with the restrictions of this section 4.11 shall be based
on the Participant's actual Pay and applicable contributions subject to testing
for the Plan Year.
The adjustments in this paragraph shall be made if, at the end of the Plan Year,
the percentage of before-tax Basic Contributions and Flex Contributions elected
by Highly Compensated Employees (and any other Employer contributions that are
included in the testing at the Company's election) would (if not distributed)
cause the average deferral percentage of such Participants to exceed the maximum
deferral percentage permitted for the Plan Year under this section 4.11. In such
a case, before the end of the following Plan Year, the excess amount of such
contributions (and the income and investment gain or loss attributable thereto)
for the Highly Compensated Employees shall be distributed to such Participants
in the order of their actual dollar amounts contributed and considered in the
testing, beginning with the Highly Compensated Employees with the highest of
such actual dollar amounts until the limitations of this section 4.11 are met.
For this purpose, the income and investment gain or loss attributable to the
excess contribution being distributed shall be determined under the Plan's
normal method of accounting for the period following such contribution and
continuing until the end of the Plan Year in which such contribution was made,
excluding any subsequent period in the following Plan Year prior to the
distribution of the excess amount. Except as otherwise required by applicable
regulations, any amount distributed under this paragraph to a Highly Compensated
Employee shall be included in that Employee's taxable wages for the Plan Year
for which the contribution was made. The distribution described in this section
4.11 may be made notwithstanding any other Plan provision. The Committee shall
adopt reasonable procedures for coordinating distributions of excess
contributions under this section 4.11 and subsection 4.1(b).
Moreover, notwithstanding the foregoing rules, the Committee shall take steps to
ensure that this section 4.11 is interpreted and administered so as to comply
with applicable legal requirements for the determination of what amounts
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<PAGE>
constitute excess Code section 401(k) elective deferrals and for the return
of such excess amounts and any income and investment gain or loss
attributable thereto. If two or more plans which include Code section 401(k)
cash or deferred arrangements are considered as one plan for purposes of Code
section 401(a)(4) or 410(b), the cash or deferred arrangements included in such
plans shall be treated as one arrangement for purposes of this section 4.11. If
any Highly Compensated Employee is a participant under two or more cash or
deferred arrangements of an Employer or Affiliate, all such cash or deferred
arrangements shall be treated as one such arrangement for purposes of
determining the actual deferral percentage with respect to such Employee.
Moreover, no benefits other than Code section 401(m) matching contributions
shall be conditioned on a Participant's election of before-tax Basic
Contributions or Flex Contributions under this Plan.
All determinations under this section 4.11 shall comply with Code section 401(k)
and the regulations thereunder which are applicable with respect to the then
existing provisions of Code section 401(k). In the event of any conflict, the
rules of such Code section and regulations shall control.
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ARTICLE 5. COMPANY MATCHING CONTRIBUTIONS AND ROLLOVERS
5.1 COMPANY MATCHING CONTRIBUTIONS
(a) Subject to section 5.2 and the other limitations under this Plan, the
Employer shall make Company Matching Contributions in an amount equal to
"applicable percentage" of the "considered Basic Contributions" made on
behalf of each Participant who has such considered Basic Contributions
allocated to his Account during the month to which such Contributions
relate. Such Company Matching Contributions shall be allocated to the
Company Match Account of the Participants for whom matchable Basic
Contributions are made, at the times and as of the Valuation Dates
applicable to such Basic Contributions. For purposes of this subsection
5.1(a), the term "applicable percentage" shall mean 75 percent, and the
term "considered Basic Contributions" shall mean that amount of the
Participant's Basic Contributions for the relevant determination period
which is not in excess of six percent of such Participant's Compensation
for such determination period.
(b) Notwithstanding subsection 5.1(a), Company Matching Contributions may be
made only if and to the extent that the Company and its Affiliates have
current and/or accumulated profits, as determined in accordance with the
Company's accounting records prior to taxes and contributions to this
Plan that are treated for tax purposes as made by an Employer.
(c) Company Matching Contributions with respect to Basic Contributions
attributable to periods from and after the Restatement Date shall be made
in Company Stock, except for cash in lieu of fractional shares of Company
Stock as may be determined to be necessary to make such Contributions. In
lieu of contributing Company Stock, the Company may elect to contribute
cash to be used to purchase Company Stock. Such contributions made in
Company Stock or used to purchase Company Stock shall initially be
invested in the Company Stock Fund as part of a Participant's Account,
notwithstanding an investment direction in effect by the Participant.
5.2 RESTRICTIONS ON COMPANY MATCHING CONTRIBUTIONS
At such times throughout the Plan Year as the Committee may determine, the
Committee shall require testing to assure that the contribution percentage for
the Plan Year of Participants who are Highly Compensated Employees will not
exceed the greater of:
(a) 1.25 times the contribution percentage for the Preceding Plan Year of all
other Participants who were non-Highly Compensated Employees for such
Plan Year, or
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(b) the lesser of (i) 2 percentage points more than, or (ii) 2 times the
contribution percentage for the preceding Plan Year of all other
Participants who are non-Highly Compensated Employees for such Plan Year.
For purposes of this section 5.2, the term "contribution percentage" for each
group of Participants shall be the average of the ratios, calculated separately
for each Participant in such group, of the aggregate amount of Company Matching
Contributions, after-tax Basic Contributions, and Supplemental Contributions
made by or on behalf of the Participant for the Plan Year to that Participant's
Pay for the Plan Year. To the extent permitted by Treasury Regulations, the
Company may elect, in computing contribution percentages, to treat Qualified
Nonelective Contributions and Code section 401(k) elective deferrals (including
before-tax Basic Contributions and Flex Contributions) for the Plan Year as
Company Matching Contributions.
Advance testing under this section 5.2 shall be based on a Participant's level
of after-tax Basic Contributions and Supplemental Contributions and his annual
rate of Pay in effect at the time of the test, and corrections to be made to
reduce the amount in excess of the maximum permissible contribution percentage
shall be from Company Matching Contributions and Supplemental Contributions to
be made for the remainder of the Plan Year. Final Plan Year compliance with the
restrictions of this section 5.2 shall be based on the Participant's actual Pay
and applicable contributions subject to testing for the Plan Year.
The adjustments in this paragraph shall be made if, at the end of the Plan Year,
the contribution percentage of Highly Compensated Employees exceeds the maximum
contribution percentage permitted for the Plan Year under this section 5.2. In
such a case, before the end of the following Plan Year--
(1) the excess Supplemental Contributions (and income and investment gain or
loss attributable thereto) for Highly Compensated Employees shall be
distributed to such Participants,
(2) the excess after-tax Basic Contributions and any related Company Matching
Contributions (and the income and investment gain or loss attributable
thereto) for Highly Compensated Employees shall be distributed to such
Participants (or, in the case of an amount related to a forfeitable
Company Matching Contribution, shall be forfeited), and
(3) the remaining excess Company Matching Contributions (and income and
investment gain or loss attributable thereto) for Highly Compensated
Employees shall be distributed to such Participants if nonforfeitable or
forfeited if forfeitable, in the order of their actual dollar amounts
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contributed and considered in the testing, beginning with the Highly
Compensated Employee with the highest of such actual dollar amounts until
the limitations of this section are met.
(4) For purposes of the foregoing, the income and investment gain or loss
attributable to the excess contribution being distributed (or forfeited,
as the case may be) shall be determined under the Plan's normal method of
accounting for the period following such contribution and continuing
until the end of the Plan Year in which such contribution was made,
excluding any subsequent period in the following Plan Year prior to the
distribution of the excess amount. Except as otherwise required by
applicable regulations, any amount distributed under this paragraph to a
Highly Compensated Employee (other than a return of his after-tax Basic
Contributions or Supplemental Contributions) shall be included in that
Employee's taxable wages for the Plan Year for which the contribution was
made. The distribution described in this section 5.2 may be made
notwithstanding any other Plan provision.
(5) Any amounts forfeited in accordance with the foregoing provisions of this
section 5.2 shall not be available for reallocation to the Account of the
Participant who had such amount forfeited.
In the event that this Plan satisfies the requirements of section 410(b) of the
Code only if aggregated with one or more other plans, or if one or more other
plans satisfy the requirements of section 410(b) of the Code only if aggregated
with this Plan, then this section 5.2 shall be applied by determining the
contribution percentages of eligible Participants as if all such plans were a
single plan. If a Highly Compensated Employee participates in two or more plans
of an Employer or Affiliate to which such contributions are made, all such
contributions shall be aggregated for purposes of this section 5.2. Any Employee
required to be taken into consideration under Code section 401(m)(5) shall be
treated as an eligible Employee in accordance with such Code section for
purposes of the application of this section 5.2. Moreover, the determination of
excess contributions under this section 5.2 shall be made after first
determining the excess deferrals (within the meaning of Code section 402(g))
pursuant to subsection 4.1(b) of this Plan and then determining the excess Code
section 401(k) deferrals pursuant to section 4.11 of this Plan.
All determinations under this section 5.2 shall comply with Code section 401(m)
and the regulations thereunder which are applicable with respect to the then
existing provisions of Code section 401(m), including any such regulations as
may be necessary to prevent the multiple use of the alternative percentage
limitations in Code sections 401(k)(3)(A)(ii)(II) and 401(m)(2)(A)(ii) with
respect to any Highly Compensated Employee and also including regulations
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permitting appropriate aggregation of plans and contributions. In the event of
any conflict, the rules of such Code sections and regulations shall control.
To correct any situation that would, if not corrected, result in multiple use of
the alternative percentage limitations, the Plan shall reduce the actual
contribution percentage of all Highly Compensated Employees who are eligible
under the arrangement subject to Code section 401(m). This reduction shall be
made in accordance with the ordering rules for reducing contributions that are
described earlier in this section 5.2 and shall be consistent with the
requirements of any applicable regulations under Code section 401(m).
5.3 DEDUCTIBILITY LIMITATION
The dollar amount of Company Matching Contributions shall be limited to the
amount deductible under section 404 of the Code for the taxable year in which
such amounts accrue or are paid, including by means of carryover deductions. All
contributions under the Plan which are subject to the deductibility provisions
under Code section 404 are hereby specifically conditioned on such
deductibility.
5.4 TRANSFER OF COMPANY MATCHING CONTRIBUTIONS
The Company Matching Contributions under section 5.1(a) shall be transferred
to the Trust Fund together with the Basic Contributions to which they relate in
accordance with the timing rules of section 4.9.
5.5 CREDITING OF COMPANY MATCHING CONTRIBUTIONS
The Company Matching Contributions described in section 5.1 shall be credited to
the Company Match Account of the Participants on whose behalf they are made
according to the amount of their matched Basic Contributions (those not in
excess of the applicable percentage of Compensation specified in section 5.1)
for the period. The crediting shall occur as of the date when the applicable
Company Matching Contributions are deposited to the Trust Fund.
5.6 ROLLOVERS
Amounts which an Eligible Employee or Participant has received from any other
qualified employee benefit plan may, subject to the Committee's approval and in
accordance with uniform, nondiscriminatory procedures designed to protect the
qualification and the integrity of the administrative design of the Plan, be
transferred by the Eligible Employee to this Plan incash and/or common stock of
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of the Company, provided the following conditions are satisfied:
(a) Amounts that have previously been distributed to the Eligible Employee or
Participant from another qualified plan and rolled over to this Plan
shall be fully vested and shall be credited to the Eligible Employee's
or Participant's Rollover Account.
(b) The amounts tendered to the Committee must have previously been received
by the Eligible Employee or Participant as a qualified total distribution
described in Code section 402(a)(5) and must be transferred following a
distribution from:
(1) A plan qualified under Code section 401(a); or
(2) A rollover or conduit individual retirement account or annuity
which has received a rollover contribution described in Code
section 408(d)(3) (determined without regard to section
408(d)(3)(D) thereof);
(c) The amounts tendered must not include nondeductible employee
contributions to a qualified plan by an Eligible Employee or Participant
or amounts attributable to:
(1) Contributions to an individual retirement account or annuity that
are deductible under Code section 219,
(2) Accumulated deductible employee contributions described in Code
section 72(o)(5)(B), or
(3) A partial distribution described in Code section 402(a)(5)(D).
(d) The transfer to this Plan of amounts described in paragraph (b) will only
be accepted if the Eligible Employee or Participant presents to the
Committee (or its designate) the Internal Revenue Service Form 1099, or
equivalent, and the original and any other distribution checks, a copy
thereof, or such other evidence as the Committee may require to ensure
that they verify the nature of the amount and ensure that its receipt
will not adversely affect the qualified status of this Plan.
(e) Amounts must be received by the Committee not later than 60 days after a
distribution was received by the Eligible Employee or Participant.
(f) An Eligible Employee who makes a rollover when he is not otherwise a
Participant shall be treated as a Participant for purposes of
implementing Plan provisions related to rollovers.
(g) Notwithstanding the foregoing, on and after January 1, 1993, a
distribution or amount received, as used in this section 5.6, shall
include an eligible rollover distribution described in Code section
402(c)(4), and a transfer to this Plan pursuant to this section 5.6 shall
include a direct rollover of an eligible rollover distribution that is
made in accordance with Code section 401(a)(31) and the rules of this
section 5.6. Accordingly, in the case of any distribution occurring after
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December 31, 1992, the rule in section 5.6(c)(3) relating to partial
distributions shall no longer apply, and the reference in section 5.6(b)
to "a qualified total distribution described in Code section 402(a)(5)"
shall be replaced by a reference to "an eligible rollover distribution
described in Code section 402(c)(4)." The Committee may establish
additional rules and procedures, consistent with the rules of the Code
and related regulatory guidance, concerning the acceptance of direct
rollovers and sixty-day rollovers of eligible rollover distributions in
this Plan, including rules that limit or prohibit wire transfers and
other payments that are made directly to this Plan by another plan in
lieu of giving the Participant a check payable to the Trustee that the
Participant can deliver to a Plan representative.
(h) An Eligible Employee or Participant may not make more than one rollover
transfer as described in this section 5.6 from or with respect to a
particular qualified plan.
Upon approval by the Committee, rollover amounts shall be transmitted to the
Trustee to be invested in such Investment Funds as the Eligible Employee may
select in accordance with the rules provided in Article 8.
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ARTICLE 6. MAXIMUM CONTRIBUTIONS AND BENEFIT LIMITATIONS
6.1 LIMITATION ON ANNUAL ADDITIONS
Notwithstanding anything to the contrary contained in this Plan, the total
Annual Additions under this Plan to a Participant's Account for any Plan Year,
which shall be the limitation year for purposes of Code section 415, shall not
exceed the lesser of:
(a) $30,000 or such adjusted amount as may be prescribed under Code
section 415(d), or
(b) 25 percent of the Participant's Section 415 Compensation for the
limitation year.
6.2 OTHER DEFINED CONTRIBUTION PLANS
If the Company or an Affiliate maintains or maintained any other defined
contribution plan, as defined in Code section 414(i), for its Employees, some or
all of whom are Participants of this Plan, then the limitation of section 6.1
shall apply to employer contributions, forfeitures, and Employee contributions
credited to the Participant under all such plans.
If a Participant receives allocations under this Plan and another defined
contribution plan, then any reductions necessary to make allocations for the
Participant under all such plans comply with the limit of section 6.1 shall
first be made under such other plan, except that the reductions shall be made
first under this Plan if the Participant is covered under this Plan at a time
during the Plan Year when he has ceased to be covered under such other plan and
is no longer eligible to receive further allocations of Annual Additions for the
year under such other plan.
Any reductions under this Plan for such a Participant which are necessary to
comply with the above limitations shall be made prospectively to prevent the
occurrence of excess contributions and other Annual Additions to the
Participant's Account for the limitation year. Such reductions shall be made in
the following order of priority with respect to the listed contributions to the
extent that they are still available for such prospective reduction: first, by
reducing the Participant's Flex Contributions, second, by reducing his
Supplemental Contributions, third, by reducing his unmatched Basic
Contributions, and, finally, by reducing his other Basic Contributions and his
Company Matching Contributions proportionally. If such prospective reductions
are not sufficient to satisfy applicable limits, the Committee may require a
return of Supplemental Contributions to the Participant in accordance with
Income Tax Regulation section 1.415- 6(a)(6)(iv).
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6.3 DEFINED BENEFIT PLANS
If a Participant in this Plan is or was also a Participant in a defined benefit
plan, as defined in section 414(j) of the Code, maintained by the Company or any
Affiliate, then in addition to the limitations contained in section 6.1 of this
Plan, the projected benefit of the Participant under the defined benefit plan
shall be limited to the extent necessary to comply with the limitation set forth
in Code section 415(e).
6.4 ADJUSTMENT OF ALLOCATIONS
If an allocation to a Participant's Account would exceed the limits described in
this Article, and the excess is a result of an allocation of forfeitures, a
reasonable error in estimating a Participant's Section 415 Compensation, or
other appropriate circumstances recognized by the Commissioner of Internal
Revenue, then, except in the case of a return of Supplemental Contributions
pursuant to section 6.2, any amount which cannot be allocated shall be held in a
suspense account and shall be allocated to the applicable Account of such
Participant as of the last day of the first calendar month in which such an
allocation is permissible.
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ARTICLE 7. BENEFITS
7.1 VESTING
(a) FULLY VESTED ACCOUNTS. A Participant shall at all times be fully vested
and have a nonforfeitable interest in the balance credited to his
Account, including all Accounts or subaccount maintained for such
Participant.
(b) GENERAL PROVISIONS RELATING TO VESTING. No benefit or interest which has
become nonforfeitable under the provisions of this Plan shall be subject
to becoming forfeitable, or being divested, by reason of subsequent
events or conduct of the Participant. Being vested does not mean that a
Participant's Account balance is guaranteed against investment risk or
that a Participant has a right to receive his benefit. Benefits under the
Plan shall be paid only in accordance with the Plan provisions related to
distributions. Participants shall not be considered to have a vested
right to amounts allocated under a mistake of fact or under any other
circumstances causing them to be subject to a possible reversion to the
Employer.
7.2 DISTRIBUTIONS UPON SEPARATION FROM SERVICE
(a) DISTRIBUTIONS UPON RETIREMENT, DEATH OR DISABILITY. Upon a Participant's
retirement after attaining age 65 or as an Employee because of his
Disability or death, or upon the death of a Participant following such
retirement or Separation from Service because of his Disability but
before a complete distribution has been made to him from the Plan, there
shall be distributed to the Participant, or to his Beneficiary in case of
his death, the balance credited to the Participant's Account. Section 7.3
provides additional provisions relating to distributions following a
Participant's death.
(b) DISTRIBUTIONS UPON SEPARATION FROM SERVICE FOR REASONS OTHER THAN
RETIREMENT, DEATH OR DISABILITY. Upon the Participant's Separation from
Service as an Employee for any reason other than his retirement after
attaining age 65, death, or Disability, there shall be distributed to him
the balance credited to his Account. In the case of a Participant who has
Separated from Service as provided in this section 7.2(b), but who dies
before a complete distribution has been made to him under the Plan, the
distribution the Participant would otherwise be eligible to receive shall
be made to his Beneficiary.
(c) TIME OF DISTRIBUTION. Distributions to or with respect to a Participant
pursuant to sections 7.2(a) or 7.2(b) shall be subject to the following
provisions:
(1) If a Participant Separates from Service and the value of the
balance credited to his Account is not greater than $3,500 (or
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such higher amount as may be permitted by applicable law or
regulation), the Participant shall receive a distribution of the
value of his Account.
(2) If a Participant Separates from Service and the value of the
balance credited to his Account is greater than $3,500 (or such
higher amount as may be permitted by applicable law or regulation),
the Participant may elect to receive a distribution of the value of
his Account.
(d) ADDITIONAL PROVISIONS APPLICABLE TO DISTRIBUTIONS. Unless a Participant
otherwise elects to defer his distribution as provided in section
7.2(c)(2), such distribution shall be made or commence to or with respect
to the Participant as soon as practicable following his Separation from
Service as an Employee, and all distributions shall be further subject to
the following provisions:
(1) As provided in and in accordance with section 7.11, if the value
of the balance credited to the Participant's Account exceeds $3,500
(or such higher amount as may be permitted by applicable law or
regulation), then the distribution shall not be made at any time
before he attains age 65 (or his death, if earlier) without his
consent. If a Participant so elects to defer his distribution, the
Committee may periodically deduct from the Participant's Account an
amount to be determined from time to time to reimburse the Plan for
the cost of administering such Account.
(2) Notwithstanding any provision of the Plan to the contrary, no
distributions to or with respect to a Participant shall be made of
any balance credited to the Participant's Basic Account
attributable to Basic Contributions made on a before-tax basis
unless such distribution satisfies the distribution restrictions of
Code section 401(k)(2)(B)(i) or Code section 401(k)(10), as
applicable.
7.3 DISTRIBUTIONS UPON DEATH OR DIVORCE
(a) Upon the death of a Participant, the Committee shall direct the Trustee
to pay the Participant's entire Account balance to his Beneficiary, as
identified in accordance with section 2.1(e).
(1) If a distribution to the Participant has commenced prior to his
death in accordance with section 7.2, the remainder of his
Participant's Account will be distributed to his Beneficiary under
the method of distribution in effect prior to his death, unless the
Beneficiary elects to accelerate the payments and receive the
remaining balance in a lump sum instead.
(2) If distribution to the Participant had not commenced at the time of
his death, the entire balance of the Participant's Account shall
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be distributed to his Beneficiary in a lump sum as soon as
practicable and in any event not later than one year after the
Participant's death.
(b) Benefits under the Plan may be paid to an Alternate Payee, rather than to
the Participant or his designated Beneficiary, in the manner provided by
an order that is determined by the Committee to be a Qualified Domestic
Relations Order.
7.4 FORM OF PAYMENTS
(a) Distribution of benefit payments to Participants who do not elect a
deferred distribution of benefits pursuant to sections 7.2 and 7.11 shall
be in a lump sum cash payment (except to the extent that the Participant
elects to receive Company Stock, as provided below) to be made as soon as
practicable following the event giving rise to the distribution. Instead,
any such Participant may elect an immediate distribution of his benefit
in the form of installment payments as described in (ii) of the next
paragraph of this section 7.4(a), with such distribution commencing as
soon as practicable following the event giving rise to the distribution.
Distribution of benefits to Participants who qualify for a deferred
distribution shall, as elected by the Participant, be (i) in a lump sum
distribution as soon as practicable after the Valuation Date which is
coincident with or immediately following the Participant's Separation
from Service or after any deferred Valuation Date falling within the time
limits for benefit payouts under the Plan that the Participant may
select, or (ii) in substantially equal installments, payable either
quarterly or annually, following Separation from Service over a period
specified by the Participant that ends on or before the April 1 of the
year following the year in which the Participant attains age 70-1/2.
If a Participant has elected installment payments or a deferred lump sum
and later wishes to change the form of payment, the Participant may elect
either an immediate or deferred lump sum payment of his remaining Account
balance or installment payments that begin as soon as administratively
possible. All distributions in accordance with this section 7.4 shall
commence and be completed in accordance with the time limits described in
this section 7.4(a) and as required by section 7.5.
(b) Notwithstanding any other provision of this section 7.4, when any
distribution is to be made from the Company Stock Fund, the value of the
Participant's interest in the Company Stock Fund shall be distributed in
cash, unless the Participant (or his Beneficiary) elects
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instead to receive whole shares of Company Stock plus cash in lieu of any
fractional share. In the case of a distribution of Company Stock, the
number of shares available to be distributed, in whole or in part, by the
Trustee are the number of shares credited to the Participant's Account as
of the Valuation Date for the distribution.
If Company Stock is distributed from the Plan at a time when it is not
readily tradeable on an established securities market, then, if and to
the extent required by Code section 401(a)(23), the Plan shall provide
the Participant with a put option that complies with the requirements of
section 409(h) of the Code. Such put option shall provide that if the
Participant exercises the put option, the Employer, or the Plan if the
Plan so elects, shall repurchase the such stock as follows:
(1) If the distribution constitutes a total distribution, payment of
the fair market value of Participant's Account balance shall be
made in five substantially equal annual payments. The first
installment shall be paid not later than 30 days after the
Participant exercises the put option. The Plan will pay a
reasonable rate of interest and provide adequate security on
amounts not paid after 30 days.
(2) If the distribution does not constitute a total distribution, the
Plan shall pay the Participant, not later than 30 days after the
Participant exercises the put option, an amount equal to the fair
market value of Company Stock being repurchased.
For purposes of this section 7.4(b), "total distribution" shall mean a
distribution to a Participant or a Participant's Beneficiary, within one
taxable year of such recipient, of the entire balance to the credit of
the Participant.
7.5 TIMING OF PAYMENTS
Payments on account of an event described in section 7.2 or 7.3 shall commence
as soon as practicable after such event, or after the deferred distribution date
(not later than April 1 of the year after the year in which the Participant
attains age 70-1/2) that the Participant elects in accordance with the terms of
the Plan. The precise timing of any distribution is subject to normal processing
delays and any other administrative exigencies or special circumstances
affecting the distribution and cannot, therefore, be guaranteed. However,
distributions will normally be paid as soon as administratively practicable
following the receipt of any properly completed election form or information
that is necessary to process the distribution. No interest or investment gains
or losses will be allocated for the processing period with respect to an amount
that is distributed.
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In addition, the timing of all payments under the Plan shall conform to the
outside limits specified in Code sections 401(a)(9) and 401(a)(14) and all other
applicable Code provisions. For this purpose, the entire value of the Account of
a Participant who, at the time, has already had a Separation from Service and
has not been rehired as an Employee shall be distributed by the April 1 of the
year following the year in which the Participant attains age 70-1/2. Moreover,
unless the Participant otherwise elects in accordance with the Plan, the payment
of his benefits must begin no later than the 60th day after the close of the
Plan Year in which occurs the latest of (i) the Participant's attainment of age
65, (ii) the 10th anniversary of the year in which the Participant commenced
participation in the Plan, or (iii) the Participant's Separation from Service.
7.6 WITHDRAWALS
A Participant who is still an Employee may withdraw any amount up to the entire
value of the Participant's Supplemental Account, his IRA Account, and his
Rollover Account and the "grandfathered value in the Company Match Account", as
described in this section 7.6. The withdrawal may be made as of any Valuation
Date following the completion of such withdrawal requirements and in accordance
with such procedures as shall be prescribed by the Committee from time to time.
To make a withdrawal of all or part of the grandfathered value in the Company
Match Account, the Participant must also withdraw the entire remaining balance
in his Supplemental Account. A Tenneco Participant who has attained age 55 and
has made a withdrawal of the entire remaining balance in his Supplemental
Account shall also be able to make a withdrawal under this section 7.6 of his
"grandfathered pre-1997 Company Match Account", as described in this section
7.6. The Participant's withdrawal request shall specify the amount to be
withdrawn, and the amount from each separate Account shall be limited as set
forth above and also shall not exceed the Participant's balance in such Account.
All withdrawals under this section 7.6 shall be paid in cash. As necessary, the
Committee shall establish a hierarchy among the Participant's available Accounts
to be used in determining the order in which funds are considered to be
withdrawn from a Participant's Account when a withdrawal under this section 7.6
is made, and such hierarchy shall apply absent a specific Account withdrawal
designation by the Participant. Such Account hierarchy shall be disclosed to
Participants. The Committee shall direct the Trustee to pay the Participant the
amount so requested under the withdrawal provisions of this section 7.6, and the
amount so withdrawn shall be debited, on a pro rata basis, from each of the
Investment Funds in which the Participant's Account is invested. For purposes of
this section 7.6 and elsewhere in the Plan, as necessary, the term
"grandfathered value in the Company Match Account" shall mean (i) as to EP
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Participants, the December 31, 1989 frozen amount as accounted for within such
a Participant's Company Match Account (including any such amount that
corresponds to the former subaccount I under the BR Plan), as adjusted for
investment results and withdrawals or distributions for periods from and after
March 1, 1997, and (ii) as to Tenneco Participants, the December 31, 1992 value
amount as accounted for within such a Participant's Company Match Account, as
adjusted for investment results and withdrawals or distributions since that
time. For purposes of this section 7.6 and elsewhere in the Plan, as necessary,
the term "grandfathered pre-1997 Company Match Account" shall be the December
31, 1996 value amount as accounted for within such a Participant's Company Match
Account, as adjusted for investment results and withdrawals or distributions
since that time.
7.7 AGE 59-1/2 WITHDRAWALS
A Participant who is still an Employee and who has at least five Years of
Participation may withdraw any amount up to the entire value of his Account at
any time after he attains age 59-1/2. The withdrawal may be made as of any
Valuation Date following the completion of such withdrawal requirements and in
accordance with such procedures as shall be prescribed by the Committee from
time to time. The Participant's withdrawal request shall specify the amount to
be withdrawn, and such amount shall not exceed the balance in the Participant's
Account. All withdrawals under this section 7.7 shall be paid in cash. The
Committee shall establish a hierarchy among the Participant's Accounts to be
used in determining the order in which funds are considered to be withdrawn from
a Participant's Account when a withdrawal under this section 7.7 is made. Such
Account hierarchy shall be disclosed to Participants. The Committee shall direct
the Trustee to pay the Participant the amount so requested under the withdrawal
provisions of this section 7.7, and the amount so withdrawn shall be debited, on
a pro rata basis, from each of the Investment Funds in which the Participant's
Account is invested.
7.8 LOANS TO PARTICIPANTS AND BENEFICIARIES
The Committee, in its sole discretion and upon proper written application, may
permit the Plan to make a loan to an eligible Participant or Beneficiary,
provided that all loans shall comply with such rules and regulations as the
Committee may establish for making Plan loans consistent with the following
terms and conditions:
(a) Loans shall be made available on a nondiscriminatory and reasonably
equivalent basis to all Participants and Beneficiaries who are
actively employed by the Company or an Affiliate or are otherwise
"parties in interest" for purposes of ERISA section 3(14). Subsequent
references to a Participant in this section shall be deemed to include
a Beneficiary who is eligible for a loan. Loans are processed as of
the Valuation Date when a loan payment is to be made under this
section 7.8.
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(b) To receive a loan from the Plan, a Participant must provide a
promissory note in the proper amount and in the form and manner as
prescribed by the Committee and authorize payroll deductions for
payment of interest and principal in accordance with procedures
adopted by the Committee. To secure repayment of the loan, the
Participant shall, within the 90 day period before the loan is made,
consent to any distribution resulting from a setoff of the loan
against the Participant's Account under section 7.8(i).
(c) The amount of the loan shall not be less than $1,000 nor more than 50
percent of the first $100,000 of the balance in the Participant's
Account (excluding any IRA Account balance). The 50 percent limitation
shall be reduced by the highest outstanding balance of loans to the
Participant from the Plan during the 1-year period ending on the day
before the date on which the loan is made. The balance credited to a
Participant's IRA Account is not available for loans under the Plan.
If such Participant is also covered under another qualified plan
maintained by the Company or an Affiliate, the above limitations shall
be applied as though all such qualified plans are one plan. A
Participant shall not be allowed to have more than two loans from this
Plan outstanding at any time or to obtain more than one loan from the
Plan in any period of 12 consecutive months, provided, however, that
these restrictions shall not apply if a Participant, for valid reasons
such as a prior suspension of loan repayments during a period of
unpaid leave, needs an additional loan that will be used in part to
repay a loan that would otherwise extend beyond its original term of
five years.
(d) The Committee shall establish a hierarchy among the Participant's
Accounts (other than the IRA Account) to be used in determining the
order in which funds are considered to be withdrawn from a
Participant's Account when a loan is made and the order in which funds
are considered to be restored to such Account when loan repayments are
received. Alternative hierarchies may be offered to provide the
Participant a choice between (i) preserving his possible right to a
tax deduction for payments of loan interest and (ii) abandoning this
right in favor of making additional Account balances available for
borrowing. The Account hierarchy or hierarchies shall be disclosed in
the loan forms and agreed to by the Participant, who shall remain
solely responsible for his personal tax situation, there being no
guarantee of interest deductibility or of specific tax
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treatment of any sort for Participants or their Beneficiaries with
respect to particular transactions under the Plan.
(e) The loan repayment period shall be 1, 2, 3, 4, or 5 years as elected
by the Participant. In no event, however, shall the loan repayment
period end later than the end of the second month following the month
in which the Participant ceases to be a party in interest for purposes
of section 3(14) of ERISA.
(f) Each loan shall bear an interest rate equal to one percentage point
above the prime rate, as shown in the Money Rates published in The
Wall Street Journal on the last business day of the month immediately
prior to the quarter in which the loan is approved; provided, however,
that such interest rate shall be reduced, if necessary, so as not to
violate any applicable usury law then in effect. The interest rate so
determined shall be fixed for the term of the loan.
(g) The Committee shall establish a Loan Fund representing the
Participant's individual investment of amounts that have been
withdrawn from his various Accounts and lent to him against the
security of such Accounts. Each repayment of principal on the loan
received by the Trustee from the Participant shall reduce the Partici-
pant's investment in his Loan Fund and such repayment of principal
together with each payment of loan interest shall increase pro rata
the amount invested in each other Investment Fund in accordance with
the Participant's investment elections at the time of such repayment,
subject to any Investment Fund restrictions.
(h) Except as otherwise provided below, repayment in equal semimonthly
installments of interest and principal shall be accomplished through
regular payroll deductions. The obligation to make repayments of
principal and interest shall be suspended during the period not to
exceed one year that the Participant is on an authorized leave of
absence without pay (including a layoff that has not yet resulted in a
Separation from Service). If the unpaid leave continues thereafter,
the Participant shall be required to recommence repayments, on a
monthly basis by check, until he returns to pay status and resumes
regular repayments by means of payroll deductions. To satisfy legal
requirements, the Committee may specify rules for redetermining the
amount, timing, or manner of repayments following a period of
suspension due to unpaid leave; but such redeterminations shall not be
made for other reasons. The obligation to make repayments shall
continue during a paid leave of absence or a transfer to a paid status
as an Employee who is no longer an Eligible Employee. Where it is not
feasible in such a case to continue processing the loan repayments as
payroll deductions under a payroll system that currently covers the
Participant, the repayments shall be made by the Participant by check
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on a monthly basis. A Participant shall be entitled at any time to
prepay, without penalty, the total accrued interest and outstanding
principal amount of the loan by direct payment. No other prepayments
outside the regular payment schedule shall be permitted.
(i) If a Participant (i) incurs a Separation from Service and either
receives an immediate distribution of his remaining interest in the
Plan or does not pay the total accrued interest and outstanding
principal amount of the loan within 60 days, or (ii) is in default for
90 days on any required loan payment prior to his repayment of the
total principal and interest on an outstanding loan under the Plan and
a permitted distribution event for the amount to be treated as a
distribution has occurred under the rules for profit sharing plans or
under Code section 401(k)(2)(B), the Participant's note shall be
canceled and the principal deemed distributed by the Trust Fund to him
or, if applicable, his Beneficiary, and a corresponding reduction
shall be made to the Account from which the deemed distribution is
made. This paragraph shall not apply, however, as long as a
Participant, notwithstanding his Separation from Service, continues to
be a party in interest under section 3(14) of ERISA and therefore has
a legal right to continue his loan during such time as he is not in
default on his regular loan payments. In this case, the regular loan
payments may be made by check or other means suitable to the Committee
once the Participant ceases to be covered by a payroll of the Company
or an Affiliate.
(j) The Company and the Trustee may make suitable arrangements, consistent
with the requirements of the Code and ERISA, for holding the
Participant's note under an agency, subtrust, or other arrangement
that provides adequate safeguards while simplifying the handling of
the loan and eliminating the need to transfer the actual note to the
Trustee. Additionally, the Committee may establish such procedures and
requirements as it deems appropriate to allow for the making and
documentation of loans under the Plan through a voice response or
other electronic means, notwithstanding other provisions that might be
construed as not permitting loans through such methods.
(k) The foregoing provisions of this section notwithstanding, the
Committee reserves the right to stop granting loans to Participants at
any time.
7.9 DEBITING OF INVESTMENT FUNDS
If a Participant makes less than a total withdrawal of his Participant's Account
or obtains a Plan loan under Article 7 of the Plan and has his Participant's
Account invested in more than one Investment Fund, a portion of the amount
withdrawn from his Participant's Account shall be debited
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from each such Investment Fund in the proportion which the current dollar
balance of the Participant in such Fund bears to the value of his Participant's
Account.
7.10 MISSING PERSONS
If the Company or the Committee shall be unable, within two years after the
Participant's distribution becomes due from the Trust Fund to a Participant,
inactive Participant or Beneficiary, to make payment because the identity or
whereabouts of such person cannot be ascertained, the Committee (a) shall be
deemed to have elected to continue the Participant's interest in his
Participant's Account (in which event the Committee shall not have the power to
change the Participant's investment elections in effect when the distribution
became due) until such time as (b) the Committee (i) pays such benefit pursuant
to state escheat laws or (ii) directs that such Participant's interest in his
Participant's Account and all further benefits with respect to such person be
discontinued and all liability for the payment thereof terminated; provided,
however, that in the event of the subsequent reappearance of the Participant,
inactive Participant or Beneficiary, the benefit due such person (adjusted
upward or downward in the manner provided in section 9.3 as if the Participant's
Account had not been terminated) shall be paid in a single sum unless such
discontinued interest was paid pursuant to state escheat laws. The amount of any
discontinued interest shall be applied to reduce Company Matching Contributions
under section 5.1, and reinstatement of a benefit shall be accomplished by the
making of a special Employer Contribution in an appropriate amount to restore to
the Trust the Participant's distribution. Notwithstanding the foregoing, should
the Plan be terminated at a time a missing Participant or Beneficiary could have
reappeared and had his or her discontinued interest in the Plan reinstated and
paid pursuant to this section , then such discontinued interest shall be
reinstated and protected outside the terminated Plan through the establishment
of an individual retirement account, the purchase of a commercial annuity
contract, or other appropriate means.
7.11 REQUIREMENT FOR CONSENT TO CERTAIN DISTRIBUTIONS
Notwithstanding any other provision regarding the Plan distributions, the Plan
may not immediately distribute the balance of a Participant's Account that
exceeds or has ever exceeded $3,500 without the written consent of the
Participant. Where the Participant does not consent to a distribution that is
subject to the foregoing requirement, this section shall be interpreted and
administered so as to comply with Code section 411(a)(11) by delaying any
distribution that might otherwise be required under the Plan to the extent
necessary to comply with said Code section.
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7.12 ELIGIBLE ROLLOVER DISTRIBUTIONS
Eligible rollover distributions from the Plan shall comply with the requirements
of Code section 401(a)(31) as follows. Notwithstanding any provision of the Plan
to the contrary that would otherwise limit a distributee's election under this
section, a distributee may elect, at the time and in the manner prescribed by
the Committee, to have any portion of an eligible rollover distribution paid
directly to an eligible retirement plan specified by the distributee in a direct
rollover. For purposes of this section, the following definitions shall apply.
An "eligible rollover distribution" is any distribution of all or any portion of
the balance to the credit of the distributee, except that an "eligible rollover
distribution" does not include: any distribution that is one of a series of
substantially equal period payments (not less frequently than annually) made for
the life (or life expectancy) of the distributee and the distributee's
designated Beneficiary, or for a specified period of ten years or more; any
distribution to the extent such distribution is required under section 401(a)(9)
of the Code; and the portion of any distribution that is not includible in gross
income (determined without regard to the exclusion for net unrealized
appreciation with respect to employer securities); and provided further that the
determination of what constitutes an "eligible rollover distribution" shall at
all times be made in accordance with the current rules of Code section 402(c),
which shall be controlling for this purpose.
An "eligible retirement plan" is an individual retirement account described in
section 408(a) of the Code, an individual retirement annuity described in
section 408(b) of the Code, an annuity plan described in section 403(a) of the
Code, or a qualified trust described in section 401(a) of the Code that accepts
the distributee's eligible rollover distribution. However, in the case of an
eligible rollover distribution to the surviving spouse, an "eligible retirement
plan" is an individual retirement account or individual retirement annuity.
A "distributee" includes an Employee or former Employee. In addition, the
Employee's or former Employee's surviving spouse and the Employee's or former
Employee's spouse or former spouse who is the alternate payee under a qualified
domestic relations order, as defined in section 414(p) of the Code, are
distributees with regard to the interest of the spouse or former spouse.
A "direct rollover" is a payment by the Plan to the eligible retirement plan
specified by the distributee.
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In prescribing the manner of making elections with respect to eligible rollover
distributions, as described above, the Committee may provide for the uniform,
nondiscriminatory application of any restrictions permitted under applicable
sections of the Code and related rules and regulations, including a requirement
that a distributee may not elect a partial direct rollover in an amount less
than $500 and a requirement that a distributee may not elect to make a direct
rollover from a single eligible rollover distribution to more than one eligible
retirement plan. Moreover, if a distribution is one to which sections 401(a)(11)
and 417 of the Code do not apply, such distribution may commence less than 30
days after the notice required under section 1.411(a)-11(c) of the Income Tax
Regulations is given, provided that:
(1) the Plan administrator clearly informs the Participant that the Participant
has a right to a period of at least 30 days after receiving the notice to
consider the decision of whether or not to elect a distribution (and, if
applicable, a particular distribution option), and
(2) the Participant, after receiving the notice, affirmatively elects a
distribution.
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ARTICLE 8. INVESTMENT ELECTIONS
8.1 INVESTMENT OF CONTRIBUTIONS
Each Participant may elect to have all or any whole percentage of the total
amount of his Accounts (excluding any specialized Account to the extent that it
is subject to particular investment restrictions) invested in any one or more of
the available Investment Funds. If a Participant does not make an election in
accordance with procedures approved by the Committee within the election period
provided for that purpose, the balances in his Participant's Account shall be
invested in an Investment Fund as designated by Committee for default
investments. Section 9.2 contains additional provisions relating to the
Investment Funds under the Plan.
8.2 INVESTMENT TRANSFERS
As of any Change Date, each Participant may change the Investment Funds in which
the balances in his Participant's Account are invested by electing, in
increments of any whole percentage, to have the assets in a particular
Investment Fund transferred within a reasonable time after the election to any
one or more of the other Investment Funds. As of any other date that the
Committee may designate as a special election date for unusual reasons (such as
the introduction of a new Investment Fund, the transfer of a Participant
entitled to make a special election under section 3.3, or the investment of a
rollover contribution received pursuant to section 5.6), each Participant shall
be allowed to make a special election, without regard to the normal limits on
the frequency of investment elections, in order to make a similar change in his
choice of Investment Funds and have such assets and his Account balances
transferred accordingly to other Investment Funds. The election may apply to the
investment of amounts previously allocated to his Participant's Account or to
future contributions, or both.
8.3 INVESTMENT ELECTIONS
Each Participant may make the election described in section 8.1 upon becoming a
Participant in accordance with requirements and procedures prescribed by the
Committee. The elections described in sections 8.1 and 8.2 may be changed,
together or separately, on any permissible Change Date, to be effective as of
the Valuation Date corresponding with or next following such Change Date as may
be prescribed by the Committee. Each investment election shall be within the
independent control of the Participant who makes it. Neither the Trustee, the
Employer, nor anyone else other than the Participant shall be liable for any
loss that may result from the exercise of such control by the Participant.
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8.4 TRANSFER OF ASSETS
The Committee shall see that appropriate agreements and procedures exist to
require the Trustee to transfer the appropriate amounts of money or other
property to and from the appropriate Investment Funds in order to carry out the
aggregate transfer transactions after the Committee has caused the necessary
entries to be made in the Participants' Accounts and in the Investment Funds and
has reconciled offsetting transfer elections, in accordance with the elections
of Participants and accounting and investment rules approved by the Committee.
8.5 VOTING COMPANY STOCK
Each Participant and Beneficiary who has common stock of the Company allocated
to his Account shall be entitled to instruct the Trustee regarding the voting of
the number of such shares allocated to the Account at all stockholders meetings
of the Company, determined on the last practicable day prior to such
stockholders meeting. If clear and timely instructions have not been received
from the Participant or Beneficiary, or if shares of the Company's common stock
have not yet been allocated to the Accounts of Participants and Beneficiaries,
the Trustee shall vote such shares in the same proportion as are voted the
shares for which clear and timely voting instructions have been received from
Participants and Beneficiaries, unless the Trustee determines in the exercise of
its fiduciary responsibility that it must vote such shares in a different manner
to protect the interest of Participants and Beneficiaries. As agreed by the
Company and the Trustee, the Company or the Trustee will send, or cause to be
sent, to each Participant and Beneficiary who has common stock of the Company
allocated to his Account a voting instruction form and the same proxy
solicitation material as is sent to stockholders generally.
8.6 TENDER OFFERS
Notwithstanding any other provisions of the Plan to the contrary:
(a) If any person shall make a tender offer to acquire (by purchase or
exchange) common stock of the Company, including shares of such common
stock that are held in the Trust, the Trustee shall act as follows:
(1) The Trustee shall ensure that the materials made available to
shareholders generally in connection with the tender offer are
provided to each Participant who has shares of common stock of the
Company allocated to his Participant's Account, and the response of
the Trustee as to whether to accept or reject the tender offer with
respect to the full and fractional shares of such common stock that
are so allocated shall be made in accordance with the instructions of
the Participant given to the Trustee on forms provided for that
purpose.
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(2) Notwithstanding paragraph (1) above, if the Trustee in its sole
discretion determines that under the circumstances of a particular
tender offer there is not sufficient time to pass the decision through
to Participants in the manner anticipated in paragraph (1), or if the
Trustee fails to receive clear and timely instructions from a
Participant in a case where instructions have been sought by the
Trustee as provided in paragraph (1), the Trustee shall in its sole
discretion determine whether to accept or reject the tender offer (in
whole or in part) with respect to the affected full and fractional
shares of common stock of the Company that are allocated to the
Accounts of Participants.
(3) With respect to full and fractional shares of common stock of the
Company that have been acquired by the Plan and are not yet allocated
(including any such common stock held in a suspense account because it
cannot be allocated currently due to the Code section 415 limits), the
Trustee shall in its sole discretion determine whether to accept the
tender offer (in whole or in part).
(b) If any tender offer is accepted (in whole or in part) pursuant to
subsection (a), the Trustee shall have the power to transfer common stock
of the Company in order to effect such acceptance.
(c) For purposes of this section 'tender offer' shall mean any offer to
acquire common stock of the Company which is subject to either section
13(e) or 14(d) of the Securities Exchange Act of 1934 and which under
applicable rules and regulations is required to be the subject of a
filing with the Securities and Exchange Commission on either Schedule
13E-4 or Schedule 14D-9.
(d) The foregoing notwithstanding, nothing herein shall serve to modify the
related rules of the Trust Agreement or to expand the duties of the
Trustee unless and until the Trustee gives its consent in the manner
provided in the Trust Agreement.
8.7 SECURITIES LAW REQUIREMENTS
The Plan is intended to comply with requirements that permit an exemption from
liability under section 16(b) of the Securities Exchange Act of 1934 ("1934
Act") to be obtained for any transaction that is reportable under section 16(a)
of the 1934 Act. This section shall take effect as of November 1, 1996, on which
the Company chooses to apply new rules promulgated under section 16(b) of the
1934 Act to Company Stock transactions under this and other plans of the
Company, but this section shall then apply only if and to the extent necessary
to preserve the
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exemption from section 16(b) liability for the Company Stock transactions of
Participants hereunder in accordance with such new section 16(b) rules as they
apply to qualified plan transactions occurring while this section is in effect.
The Committee shall prescribe such restrictions and procedures as it deems
necessary to comply with the requirements of such new section 16(b) rules, and
to prohibit transactions under the Plan which would create liability under such
section 16(b) rules.
8.8 COMPLIANCE WITH ERISA SECTION 404(C)
The Plan provisions pertaining to Participant-directed investments are intended
to permit the Plan and Participant-directed transactions under it to comply with
requirements in ERISA section 404(c) and related regulations so that a
Participant will not be deemed to be a fiduciary by reason of exercising control
over assets in his Account, and no person who is otherwise a fiduciary shall be
liable, either for any loss or by reason of any breach, which results from the
exercise of such control. For purposes of carrying out this intent, any Plan
reference to a Participant or Participants who exercise control over Account
assets shall be deemed to include a Beneficiary or Beneficiaries who exercise
such control, and any reference to a specific Department of Labor regulation
shall be deemed to include a reference to any other currently applicable rule or
regulation pertaining to the same subject.
To comply with section 404(c) of ERISA and Department of Labor regulation
2550.404(c)-1 thereunder, the Committee is designated as the Plan fiduciary
responsible for giving Participants all required information, receiving and
carrying out investment directions from Participants, and giving Participants
written confirmation of instructions received from them. Accordingly, the
Committee (or a person or persons designated by the Committee to act on its
behalf) shall provide information to Participants in accordance with section
1(b)(2)(B) of the above Department of Labor regulation, shall receive investment
instructions provided by Participants in accordance with this article of the
Plan, and shall provide Participants with written confirmation of such
instructions. The Committee and any person or persons it has designated to act
on its behalf shall comply with all such investment instructions from
Participants except in cases where the Committee declines to implement such
instructions in accordance with sections 1(b)(2)(ii)(B) and 1(d)(2)(ii) of the
above Department of Labor regulation.
The Committee shall establish procedures to safeguard the confidentiality of
information relating to the purchase, sale, holding, and exercise of voting and
similar rights with respect to Company Stock, provided that such
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procedures relating to confidentiality shall not apply to the extent necessary
to comply with federal or state laws not preempted by ERISA, including any such
laws that may require certain Participants who are corporate officers or large
stockholders to report their transactions in Company Stock. Where the Committee
determines, in its discretion, that the situation involves a potential for undue
Employer influence upon Participants with regard to their direct or indirect
exercise of shareholder rights, the Committee shall appoint an independent
fiduciary who is not affiliated with any sponsor of the Plan to carry out Plan
activities relating to Company Stock on behalf of Participants in such
situation.
8.9 TENNECO STOCK FUND
From and after the Restatement Date, there shall be no new contributions
allocated to and invested in the Tenneco Stock Fund and funds from other
Investment Funds may not be transferred into the Tenneco Stock Fund.
Participants may make elections to transfer funds out of the Tenneco Stock Fund
into other Investment Funds in accordance with the foregoing provisions of this
Article 8.
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ARTICLE 9. ACCOUNTS AND RECORDS OF THE PLAN
9.1 ACCOUNTS AND RECORDS
The accounts and records of the Plan shall be maintained at the direction of the
Committee and shall accurately disclose the status of the Accounts of each
Participant or his Beneficiary in the Plan. Such accounts and records may be
kept in dollars or in units or both, as determined in accordance with generally
acceptable principles of trust accounting approved by the Committee. The
information maintained shall be sufficient to determine the number of shares of
Company Stock held under the Company Stock Fund and the shares of stock held
under the Tenneco Stock Fund that are allocated to the Participant's Account as
of any Valuation Date, and the tax status of distributions with respect to
matters such as the determination of net unrealized appreciation on any such
shares that are distributed (as required and as necessary) and the determination
of the Code section 72 contract and the Participant's investment in such
contract for purposes of any withdrawal or other distributions from the Plan.
Each Account of a Participant shall be assigned a share of each Investment Fund
in which the Participant's Account is invested in the proportion which the
balance of each such Account bears to the total Participant's Account. The
Committee shall cause records to be maintained relative to a Participant's
Account so that there may be determined as of any Valuation Date the current
value of his Accounts in the Trust Fund and the adjustments from the previous
Valuation Date that have produced such current value. Any portion of a
Participant's Account that is invested in the Loan Fund in order to secure the
outstanding balance of a loan to the Participant is subject to a possible setoff
and deemed distribution for tax purposes, as described in subsection 7.8(i), and
is therefore not available for actual payments to a Participant.
Each Participant shall be advised from time to time, at least once each Plan
Year, as to the status of his Participant's Account and the portions thereof
attributable to each Account existing thereunder.
9.2 INVESTMENT FUNDS
As provided in section 2.1(aa) and this section 8.1, the Committee shall have
the authority to designate and change the Investment Funds that are available
under the Plan from time to time, and to implement and carry out such investment
objectives and policies as established by the Committee. The Investment Funds
that are available from time to time, and other provisions relating to such
Investment Funds, shall be set forth in the "Investment Fund Appendix" to this
Plan. Such Appendix shall also
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include provisions relating to the transfer of funds from the Merged Plans into
Investment Funds under this Plan in the absence of investment directions from
Participants. The Trust Fund shall consist of the Investment Funds, and each
Participant who has any interest in an Investment Fund shall have an undivided
proportionate interest.
9.3 VALUATION ADJUSTMENTS
As of each Valuation Date, the recordkeeper, in accordance with accounting
principles approved by the Committee, shall credit the Accounts of Participants
and Beneficiaries with contributions made during the accounting period and debit
such Accounts with withdrawals and distributions for such period, and shall also
adjust the net credit balances of such Accounts in the respective Investment
Funds of the Trust Fund, upward or downward, pro rata (using reasonable
assumptions about the availability of current period contributions, withdrawals,
and distributions for purposes of sharing in current period earnings and
investment gains or losses), so that such net credit balances will equal the net
worth of each Investment Fund of the Trust Fund as of that Valuation Date. The
net worth of an Investment Fund shall be determined by the Trustee and reported
to the recordkeeper under procedures approved by the Committee, by subtracting
from the fair market value of assets held in such Investment Fund any expenses,
withdrawals, distributions and transfers chargeable to that Investment Fund
which have been incurred but not yet paid. All determinations made by the
Trustee with respect to fair market values and net worth shall be made in
accordance with generally accepted principles of trust accounting, and the
accounting based thereon in accordance with procedures approved by the
Committee, shall be conclusive and binding upon all persons having an interest
under the Plan.
9.4 ACCOUNTS AND CONTRIBUTIONS FROM MERGED PLANS
In connection with the merger of the Tenneco Energy Plan and the Cornerstone
Plan with and into this Plan effective as of January 1, 1997, the following
special provisions shall apply under the Plan as to the accounting and
recordkeeping of contributions and account balances transferred from such Plans
into this Plan:
(a) Any account balances attributable to contributions contributed on a
before-tax basis, or that were treated along with before-tax contributions
for nondiscrimination testing purposes, shall be transferred and maintained
under this Plan under the Participant's Basic Account for before-tax
contributions.
(b) Any account balance attributable to contributions contributed on an
after-tax basis shall be transferred and maintained under this Plan under
the Participant's Supplemental Account.
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(c) Any account balance attributable to rollover contributions shall be
transferred and maintained under this Plan under the Participant's Rollover
Account.
(d) Any account balance attributable to contributions that were made as
employer matching contributions on any contributions described under
subsection 9.4(a) and 9.4(b) shall be transferred and maintained under the
Plan under the Participant's Company Match Account.
The Committee shall maintain or cause to be maintained such other account or
subaccounts as are necessary to properly account for the funds described in this
section 9.4, and to carry out the provisions of Article 7 and other provisions
of the Plan.
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ARTICLE 10. FINANCING
10.1 FINANCING
The Company shall maintain a Trust Fund to finance the benefits under the Plan,
by entering into one or more Trust Agreements or insurance contracts approved by
the Company, or by causing insurance contracts to be held under a Trust
Agreement. Any Trust Agreement is designated as and shall constitute a part of
this Plan, and all rights which may accrue to any person under this Plan shall
be subject to all the terms and provisions of such Trust Agreement. The Company
may modify any Trust Agreement or insurance contract from time to time to
accomplish the purpose of the Plan and may replace any insurance company or
appoint a successor Trustee or Trustees. By entering into such Trust Agreements
or insurance contracts, the Company shall vest in the Trustee, or in one or more
investment managers appointed under the terms of the Trust Agreement from time
to time by action of the Committee, responsibility for the management and
control of the Trust Fund. In the event the Committee appoints any such
investment manager, the Trustee shall not be liable for the acts or omissions of
the investment manager or have any responsibility to invest or otherwise manage
any portion of the Trust Fund subject to the management and control of the
investment manager. The Company from time to time shall establish a funding
policy which is consistent with the objectives of the Plan and shall communicate
it to the Trustee and each investment manager so that they may coordinate
investment policies with such funding policy. Nothing in this section 10.1 shall
eliminate the responsibility of Participants for the results of investment
elections that are within their control, as provided in section 8.2.
10.2 EMPLOYER CONTRIBUTIONS
Each Employer shall make such contributions to the Trust Fund as are required by
this Plan, subject to the right of the Company to discontinue the Plan.
10.3 NON-REVERSION
Anything in this Plan to the contrary notwithstanding, it shall be impossible at
any time for the contributions of the Employer or any part of the Trust Fund to
revert to the Employer or an Affiliate or to be used for or diverted to any
purpose other than the exclusive benefit of Participants or their Beneficiaries,
except that:
(a) If all or any part of a contribution is made by the Employer by a mistake
of fact, upon written request to the Committee, such
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contribution or such portion and any increment thereon shall be returned to
the Employer within one year after the date of payment.
(b) If all or any part of an Employer's Company Matching Contributions under
the Plan is disallowed as a deduction for federal income tax purposes, then
to the extent such contribution is disallowed, the contribution and any
increment thereon shall be returned to the Employer within one year after
such disallowance.
(c) If all or any part of an Employer's contribution would give rise to an
excise tax under Code section 4972(b), a correcting distribution with
respect to such contribution shall be made to the Employer to the extent
permitted by said Code section in order to avoid payment of an excise tax
on excess contributions.
(d) Any Basic Contributions or Flex Contributions that are returned to an
Employer pursuant to this section 10.3 shall be paid over by the Employer
to the Participant on whose behalf they were made (or to his Beneficiary).
10.4 TRANSACTIONS INVOLVING EMPLOYER SECURITIES
In any transaction with a party in interest, as defined in section 3(14) of
ERISA, involving the acquisition or sale of Employer securities by the Plan, the
Plan shall pay no commission and the terms of the acquisition or sale shall be
such that the Plan receives no less than adequate consideration, as determined
under section 3(18) of ERISA, or otherwise satisfies the requirements of section
408(e) of ERISA.
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ARTICLE 11. ADMINISTRATION
11.1 NAMED FIDUCIARIES
The fiduciaries named in this section 11.1 shall have only those specific
powers, duties, responsibilities and obligations as are specifically given them
under this Plan or the Trust. The Employer shall have the sole responsibility
for making the contributions specified in Articles 4 and 5 (other than the
contributions made by Employees on an after-tax basis). The Company shall have
the sole authority to amend or terminate, in whole or in part, this Plan or the
Trust. The Company, acting directly or through the Committee, shall have the
sole responsibility for the administration of this Plan, which responsibility is
specifically described in this Plan and the Trust Agreement, and shall have the
sole authority to appoint and remove the Trustee. The senior officer of the
Company responsible for the Company's human resources function shall have the
responsibility of implementing the Plan as the Committee shall direct. The
Trustee shall have the sole responsibility for the administration of the Trust
and the management of the assets held under the Trust, all as specifically
provided in the Trust Agreement. A fiduciary may rely upon any direction,
information or action of another fiduciary as being proper under this Plan or
the Trust, and is not required under this Plan or the Trust to inquire into the
propriety of any such direction, information or action. It is intended under
this Plan and the Trust that each fiduciary shall be responsible for the proper
exercise of his or its own powers, duties, responsibilities and obligations
under this Plan and the Trust and shall not be responsible for any act or
failure to act of another fiduciary. No fiduciary guarantees the Trust Fund in
any manner against investment loss or depreciation in asset value. Any party may
serve in more than one fiduciary capacity with respect to the Plan or Trust.
11.2 COMMITTEE
Responsibility for the general administration of the Plan and for carrying out
the provisions hereof shall be placed in a Committee of three or more members,
each of whom shall be an Employee of an Employer and each of whom shall be
appointed by the Chief Executive Officer of the Company and serve at the
pleasure of the latter. Any member of the Committee may resign by notice in
writing filed with the Secretary of the Committee, such resignation to become
effective no earlier than the date of such written notice.
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11.3 ORGANIZATION OF COMMITTEE
The Committee shall elect a Chairman and a Secretary. The Secretary need not be
one of the members of the Committee. The Committee shall issue directions to the
Trustee concerning all benefits which are to be paid from the Trust Fund
pursuant to the provisions of the Plan. The Committee may authorize one or more
of its number, or any agent, to direct any payment on behalf of the Committee
(including instructions to the Trustee as to the application or disbursement of
the Trust fund) and may appoint agents and clerks, and retain such professional
services, including legal, medical, accounting, and actuarial specialists, as
may be required in carrying out the provisions of the Plan.
The Committee shall hold meetings upon notice, at such place or places, and at
such time or times, as they may determine. A majority of the members of the
Committee at the time in office shall constitute a quorum for the transaction of
business. All resolutions or actions taken by the Committee at a meeting shall
be by vote of the majority of the Committee present. Action by the Committee may
be taken without a formal meeting by the written authorization of all of the
members thereof. A Committee member shall be disqualified from acting upon any
matter affecting only himself.
11.4 PROCEDURES
The Committee shall adopt administrative rules as it deems desirable and shall
keep all such books of accounts, records and other data as may be necessary for
the proper administration of the Plan. The Committee shall keep a record of all
actions and forward all necessary communications to the Trustee, Company or
Employer, Participants, inactive Participants, Beneficiaries, Alternate Payees,
providers of services to the Plan, and other interested parties, as the case may
be.
11.5 COMMITTEE'S POWERS AND DUTIES
The Committee shall have such powers and duties as may be necessary to discharge
its functions hereunder, including but not limited to, the following:
(a) To construe and interpret the Plan, to decide all questions of eligibility
and determine the amount, manner and time of payment of any benefits
hereunder;
(b) To make a determination as to the right of any person to a benefit;
(c) To obtain from the Employer and from Employees such information as shall be
necessary for the proper administration of the Plan and, when
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appropriate, to furnish such information promptly to the Trustees or other
persons entitled thereto;
(d) To prepare and distribute, in such manner as the Committee determines to be
appropriate, information explaining the Plan;
(e) To furnish the Employer, upon request, such reports with respect to the
administration of the Plan as are reasonable and appropriate;
(f) To establish and maintain such accounts in the name of the Employer and of
each Participant as are necessary;
(g) To instruct the Trustee with respect to the payment of benefits hereunder;
(h) To provide for any required bonding of fiduciaries and other persons who
may from time to time handle Plan assets;
(i) To prepare and file any reports required by the Code, ERISA, the Securities
Act of 1933, the Securities Exchange Act of 1934, or any other applicable
law;
(j) To engage an independent public accountant to conduct such examinations and
to render such opinions as may be required by the ERISA;
(k) To allocate contributions and Trust Fund earnings and investment gains or
losses to the Accounts of Participants;
(l) To establish a funding policy and method consistent with the objectives of
the Plan and the requirements of ERISA;
(m) To correct any errors and remedy any defects in the administration of this
Plan, including, if necessary, by requiring any Employer to make a
Qualified Nonelective Contribution that prevents discrimination under Code
section 401(k) or 401(m) without materially increasing the cost of the
Plan;
(n) To establish reasonable claims procedures in accordance with the terms of
this Plan and ERISA;
(o) To establish procedures for identifying and complying with Qualified
Domestic Relations Orders; and
(p) To appoint or replace any Trustee of any portion of the Trust Fund under
the Plan.
11.6 COMMITTEE'S DECISIONS CONCLUSIVE
The Committee shall exercise its power hereunder in a uniform and
nondiscriminatory manner. Any and all disputes with respect to the Plan which
may arise involving Participants or their Beneficiaries shall be referred to the
Committee and its decision shall be final, conclusive and binding. Furthermore,
if any question arises as to the meaning, interpretation or application of any
provision hereof, the decision of the Committee with respect thereto shall be
final.
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11.7 INDEMNITY
The Company shall indemnify each member of the Committee (which, for purposes of
this section, includes any Employee to whom the Committee has delegated
fiduciary duties) against any and all claims, losses, damages, expenses,
including counsel fees, incurred by the Committee and any liability, including
any amounts paid in settlement with the Company's approval, arising from the
member's or the Committee's action or failure to act, except when the same is
judicially determined to be attributable to the gross negligence or willful
misconduct of such member. The right of indemnity described in the preceding
sentence shall be conditioned upon (i) the timely receipt of notice by the
Employer of any claim asserted against the Committee member, which notice, in
the event of a lawsuit shall be given within 10 days after receipt by the
Committee member, which notice, in the event of a lawsuit shall be given within
10 days after receipt by the Committee member of the complaint, and (ii) the
receipt by the Company of an offer from the Committee member of an opportunity
to participate in the settlement or defense of such claim.
11.8 CLAIMS PROCEDURE
(a) CLAIMS FOR BENEFITS. Inquiries about benefits under the Plan may be made to
appropriate Human Resources personnel of the Company and their designated
field representatives. Formal claims for benefits shall be made in writing
to the Chairman of the Committee. Written inquiries to Human Resources
personnel and field representatives that cannot be resolved within a
reasonable time will be treated as formal claims and forwarded to the
Chairman of the Committee, in which case the claimant shall be advised of
this action and of the claims procedure under the Plan.
(b) NOTICE OF DENIAL OF CLAIM. If a claim for benefits is wholly or partially
denied, the Chairman of the Committee shall within a reasonable period of
time, but no later than 90 days after receipt of the claim, notify the
claimant of the denial of benefits. If special circumstances justify
extending the period up to an additional 90 days, the claimant shall be
given written notice of this extension within the initial 90-day period and
such notice shall set forth the special circumstances and the date a
decision is expected. A notice of denial
(1) shall be written in a manner calculated to be understood by the
claimant; and
(2) shall contain (i) the specific reasons for denial of the claim, (ii)
specific reference to the Plan provisions on which the denial is
based, (iii) a description of any additional material or information
necessary for the claimant to perfect the claim, along with an
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explanation why such material or information is necessary, and (iv) an
explanation of the Plan's claim review procedures.
(c) REQUEST FOR REVIEW OF DENIAL OF CLAIM. Within 60 days of the receipt
by the claimant of the written denial of his claim or, if the claim
has not been granted within a reasonable period of time (which shall
not be less than the 90 days described in subsection (b)), the
claimant may file a written request with the full Committee that it
conduct a full review of the denial of the claim, including a hearing
if deemed necessary by the full Committee. In connection with the
claimant's appeal, the claimant may review pertinent documents and may
submit issues and comments in writing.
(d) DECISION OF REVIEW OF DENIAL OF CLAIM. The full Committee shall
deliver to the claimant a written decision on the claim promptly, but
not later than 60 days after the receipt of the claimant's request for
such review, unless special circumstances exist which justify
extending this period up to an additional 60 days. If the period is
extended, the claimant shall be given written notice of this extension
during the initial 60-day period. The decision on review of the denial
of the claim--
(1) shall be written in a manner calculated to be understood by the
claimant;
(2) shall include specific reasons for the decision; and
(3) shall contain specific references to the Plan provisions on which
the decision is based.
All decisions made under the procedure set out in this section shall
be final, binding, and conclusive.
11.9 COMPENSATION AND EXPENSES
A member of the Committee shall serve without compensation for services as such
if he is receiving full-time pay from an Employer as an Employee. Any other
member of the Committee may receive compensation for services as a member, to be
paid from the Trust Fund to the extent not paid by the Employers. The Employers
shall pay all expenses incurred in the administration of the Plan (except that
such expenses may be paid from any forfeitures arising under the Plan),
including expenses and fees of the Trustee, counsel, accountants and other
specialists providing services for the Plan; provided, however, that brokerage
fees, commissions, stock transfer taxes and other charges and expenses incurred
in connection with the purchase and sale of stock and securities for the Trust
shall be paid from the Trust Fund by the Trustee. Notwithstanding the foregoing
provisions of this section 11.9, the Company acting through the Committee may
provide that the various administrative expenses of the Plan and Trust
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Fund shall be paid from the Trust Fund, and that such expenses paid for the
Trust Fund shall be charged to the Accounts of Participants in such manner as
prescribed by the Committee. The Committee shall notify the Trustee and the
Participants as regards the details of administrative expense payments from the
Trust Fund and charges to Participant Accounts.
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ARTICLE 12. PLAN AMENDMENT, TERMINATION, MERGER, AND
ADOPTION BY AFFILIATES
12.1 AMENDMENT AND TERMINATION
The Company expects the Plan to be permanent and continue indefinitely, but
since future conditions affecting the Company cannot be anticipated or foreseen,
the Company must necessarily and does hereby reserve the right to amend, modify
or terminate the Plan for itself and all other Employers at any time by action
of the Board of Directors. In addition, the Chief Executive Officer of the
Company and the senior officer of the Company responsible for the Company's
human resources function may approve any modifications or amendments to the Plan
that are necessary or appropriate to meet the requirements of ERISA, the Code,
or any other law as now in effect or as hereafter amended, and the Committee may
approve any modification or amendment which does not significantly increase
benefit costs. Retroactive Plan amendments may not decrease the accrued benefits
of any Participant determined as of effective date of the amendment applies or,
if later, as of the time the amendment was adopted; provided, however, that
retroactive amendments to preserve the qualification of the Plan shall be
permitted to the full extent permitted by the Internal Revenue Service or
section 1140 of the Tax Reform Act of 1986 or any other applicable laws.
Amendments to the Plan shall be subject to the further provisions of section
12.2.
12.2 LIMITATIONS ON AMENDMENTS
The provisions of this Article 12 relating to amendments shall be subject to and
limited by the following restrictions:
(a) No amendment shall operate either directly or indirectly to give any
Employer any interest whatsoever in any funds or property held by the
Trustee under the terms of the Plan, or to permit the corpus or income of
the trust to be used for or diverted to purposes other than the exclusive
benefit of Participants or their Beneficiaries or the payment of the
reasonable expenses of administering the Plan and Trust.
(b) No such amendment shall operate either directly or indirectly to deprive
any Participant or Beneficiary of his vested and nonforfeitable interest as
of the time of such amendment.
(c) No amendment shall change the rights, duties or responsibilities of the
Trustee under the Plan without its written consent.
Subject to the foregoing limitations, any amendment which in the judgment of the
Committee is necessary or advisable may be made retroactively, provided that
such retroactive amendment does not deprive a Participant
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or Beneficiary, without his consent, of a right to receive benefits under the
Plan which have already vested and matured, except as such modification or
amendment shall be necessary in order to comply with any laws or regulations of
the United States or of any state to qualify this as a tax-exempt Plan and
Trust, or otherwise. In any case where the Plan is amended to change the vesting
schedule under the Plan, any Participant who has at least three years of Service
shall have the option of electing to remain covered under the vesting schedule
in effect prior to such amendment; provided, however, such election shall not be
applicable with respect to any Participant whose nonforfeitable percentage under
the vesting schedule, as amended, cannot at any time be less than such
percentage determined without regard to such amendment. The Participant shall be
permitted to make such election at any time after such amendment is adopted and
before the expiration of the 60-day period from the date the amendment is
adopted, the effective date of such amendment or the date the Participant
receives written notice of the amendment, whichever is later.
12.3 DISTRIBUTION ON TERMINATION
Upon termination of the Plan in whole or in part, or upon complete
discontinuance of contributions to the Plan by the Employers, the value of the
vested proportionate interest in the Trust Fund of each Participant affected by
such termination having an interest in the Trust Fund shall be determined as of
the date of such termination or discontinuance. Thereafter distribution shall be
made to such Participants as directed by the Committee in accordance with the
Plan and applicable law. Upon the partial termination of the Plan, the Committee
may in its sole discretion determine the timing of a distribution of the balance
of the affected Participants' Accounts in accordance with the provisions of the
Plan and applicable law. The nonforfeitable interest of affected Participants in
their Accounts in the event of a complete discontinuance or Plan termination
shall be determined as provided in section 7.1.
12.4 CORPORATE REORGANIZATION
The bankruptcy, dissolution, merger, consolidation or reorganization of the
Company or any other Employer, or the sale of all or substantially all of the
assets or stock of the Company or any other Employer, shall not automatically
terminate the Plan, unless a Plan, unless a Plan termination is otherwise
required under this Article 12 and no provision is made for continuation of the
Plan.
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12.5 PLAN MERGER OR TRANSFER
In the event of and effective as of the date of merger or consolidation with, or
transfer of assets and liabilities of the Plan to or from any other employee
benefit plan, each Participant in this Plan will (if the Plan had then
terminated) receive a benefit immediately after the merger, consolidation or
transfer which is not less than the benefit the Participant would have been
entitled to receive immediately before the merger, consolidation or transfer of
assets (if this Plan had then terminated).
12.6 AFFILIATE PARTICIPATION
Subject to the approval of the Company, any Affiliate desiring to become an
Employer may elect to become a party to the Plan by adopting the Plan for the
benefit of any specified group of its Employees, with such modification of the
terms of the Plan with respect to such Employees as the Company may approve,
effective as of the date specified in such adoption, by filing with the Company
an adoption agreement or such other or additional instruments evidencing the
adoption as the Company may require.
12.7 ACTION BINDING ON PARTICIPATING AFFILIATES
As long as the Company is a party to the Plan and the Trust Agreement, it shall
be empowered to act thereunder for any Employer in all matters respecting the
Committee and the Trustee and the designation of Affiliates and any action taken
by the Company with respect thereto shall automatically include and be binding
upon any Employer which is a party to the Plan.
12.8 TERMINATION OF PARTICIPATION OF AFFILIATE
The Company reserves the right, in its sole discretion and at any time, to
terminate the participation in this Plan of any or all Employers. Such
termination shall be effective immediately upon notice of such termination from
the Company to the Trustee and the Employer being terminated. In event of such
termination, this Plan shall not terminate, but the portion of the Plan
attributable to the Affiliate shall become a separate Plan, and the Company
shall inform the Trustee of the portion of the Trust Fund that is then
attributable to the participation of such terminated Affiliate. Such portion
shall as soon thereafter as is administratively feasible be set apart by the
Trustee as a separate Trust which shall be a part of the separate Plan of such
terminated Affiliate. Any Affiliate may withdraw from the Plan and Trust and end
its status as an Employer hereunder, by action of its Board of Directors, after
obtaining approval of the Company. Thereafter, the administration, control, and
operation of the Plan with respect to such
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terminated Affiliate shall be on a separate basis in accordance with the terms
hereof, or as such terms may be amended by appropriate action of such terminated
Affiliate in accordance with the provisions of Article 12.
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ARTICLE 13. TOP-HEAVY PROVISIONS
13.1 APPLICATION
The provisions of this Article 13 shall be interpreted and administered in
accordance with the requirements of Code section 416. If as of the Determination
Date in any Plan Year
(a) the sum of the Account balances of Employees who are "Key Employees" for
such Plan Year exceeds 60% of the sum of the Account balances of all
Employees and their Beneficiaries; or
(b) the Plan is part of a Top-Heavy Group;
then the following provisions under this Article 13 shall apply for such Plan
Year. The foregoing notwithstanding, the provisions of this Article 13 shall not
apply to the Plan in any Plan Year during which it is part of an Aggregation
Group (as defined in section 13.3), whether or not it is top-heavy as a single
plan, unless the Aggregation Group of which it is a part is top-heavy in such
Plan Year.
The "Determination Date" is the date for determining the applicability of this
Article 13 is:
(i) for the first Plan Year, the last day of the Plan Year; and
(ii) for any other Plan Year, the last day of the preceding Plan Year.
13.2 KEY EMPLOYEES
(a) A "non-Key Employee" means any Participant who is not a Key Employee (as
hereafter defined), but who is an Employee on the last day of the Plan
Year. For purposes of this Article 13, the term "Key Employee" means any
Employee or former Employee (and the Benefi- ciary of such an Employee) who
at any time during the Plan Year in which a determination of top-heaviness
is made or any of the four preceding Plan Years is:
(1) an officer of the Company or an Affiliate whose Section 415
Compensation during the relevant Plan Year exceeded 50% of the dollar
limitation in effect under Code section 415(b)(1)(A); provided that no
more than 50 Employees shall be treated as officers;
(2) one of the 10 Employees having Section 415 Compensation for the
relevant Plan Year in excess of the dollar limitation in effect under
Code section 415(c)(1)(A) and owning (or considered as owning within
the meaning of Code section 318) the largest interests in the Company
or an Affiliate; provided, however, that if 2 Employees have the same
interest in the Company or an Affiliate, then the Employee with the
greater Section 415 Compensation shall be treated as having the larger
interest;
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(3) a 5-percent owner of the Company or an Affiliate; or
(4) a 1-percent owner of the Company or an Affiliate having annual Section
415 Compensation of more than $150,000.
(b) An Employee is considered a "5-percent owner" if the Employee owns (or is
considered as owning within the meaning of Code section 318, as modified by
Code section 416(i)(1)(B)) more than 5 percent of the outstanding stock of
the Company or an Affiliate or stock possessing 5 percent of the total
combined voting power of all of the stock of the Company or an Affiliate.
For purposes of this paragraph, "stock" shall also mean the appropriate
ownership interest of an Affiliate which is not a corporation. The same
rules apply to determine whether an Employee is a 1-percent owner.
(c) If an Employee who has not terminated his employment ceases to be a Key
Employee, such Employee's Account balance or accrued benefit shall be
disregarded under the top-heavy plan computation for any Plan Year
following the last Plan Year for which he was treated as a Key Employee.
The Account balance or accrued benefit of any Employee or former Employee,
who has not performed any services for the Company or any Affiliate at any
time during the 5-year period ending on the Determination Date, will not be
taken into account to determine whether the Plan or Aggregation Group is
top-heavy.
13.3 TOP-HEAVY GROUP
For purposes of determining whether the Plan is a part of a Top-Heavy
Group, the following rules shall apply:
(a) AGGREGATION GROUP. The required Aggregation Group shall include any plan
maintained by the Company or an Affiliate which covers a Key Employee and
any other plan which enables such a plan covering a Key Employee to meet
the requirements of Code sections 401(a)(4) or 410(b). A permissive
Aggregation Group shall include the required Aggregation Group of plans
plus any other plan or plans of the Company or an Affiliate which, when
considered as a group with the required Aggregation Group, would continue
to satisfy the requirements of Code sections 401(a)(4) and 410(b).
(b) TOP-HEAVY GROUP. An Aggregation Group is a Top-Heavy Group if the sum of
the account balances of Key Employees under all defined contribution plans
included in the group and the present value of the accumulated accrued
benefits for Key Employees under all defined benefit plans in the group
exceeds 60% of a similar sum determined for all Employees and their
Beneficiaries under all such plans in the group. The present value of
accrued benefits under defined benefit plans and the account balances under
defined contribution plans shall
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be determined separately as of each plan's determination date. For purposes
of determining whether an Aggregation Group is a Top- Heavy Group, the
present value of accrued benefits under all defined benefit plans in the
Aggregation Group shall be determined using a single set of actuarial
assumptions, as defined in such defined benefit plans. The determination of
whether the Aggregation Group is a Top- Heavy Group shall be made using
each plan's results as of that plan's determination date which falls within
the calendar year. In any Plan Year, in testing for top-heaviness under
this Article 13, the Company may, in its discretion, take into account
accumulated accrued benefits and account balances in any other plan
maintained by it or an Affiliate, so long as such expanded Aggregation
Group continues to meet the requirements of Code sections 401(a)(4) and
410.
13.4 ADDITIONAL RULES
In determining the present value of the accrued benefits under a defined benefit
plan and the sum of the account balances under a defined contribution plan,
Company contributions and voluntary Employee contributions shall be taken into
account and any rollover contribution or similar transaction initiated by the
Employee, which results in a transfer to this Plan, shall not be taken into
account. The present value of the accrued benefits in a defined benefit plan and
the account balance in a defined contribution plan shall include any amount
distributed to an Employee or Beneficiary within the five-year period ending on
that plan's determination date.
The present value of any Employee's accrued benefit under any defined benefit
plan as of any determination date shall be calculated (i) as of the most recent
Actuarial Valuation Date which is within a 12-month period ending on the
Determination Date, (ii) as if his employment terminated as of such valuation
date, and (iii) without regard to the automatic preretirement survivor annuity
benefit or any other nonproportional subsidy. The term "Actuarial Valuation
Date" shall mean the valuation date used for computing plan costs for minimum
funding.
13.5 CODE SECTION 415(H) ADJUSTMENT
If the Plan is determined to be top-heavy in any Plan Year, then the combined
limits of Code section 415(e) and section 6.3 of the Plan shall be applied in
accordance with Code section 416(h)(1) by substituting "1.0" for "1.25" in
computing the defined benefit fraction and the defined contribution fraction
under Plan section 6.3 and paragraphs 2(B) and 3(B) of Code section 415(e).
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13.6 MINIMUM CONTRIBUTIONS
If this Plan is determined to be top-heavy in any Plan Year under the provisions
of section 13.1 or 13.3, then the aggregate contributions to be made by the
Employer on behalf of each non-Key Employee for the Plan Year (excluding any
contributions under sections 4.1, and 5.1, to the extent required in applicable
regulations) shall not be less than 3 percent of the Participant's Section 415
Compensation for such year (or such lesser percentage as represents the maximum
percentage of Section 415 Compensation contributed on behalf of a Key Employee
for the Plan Year), as determined under section 416(c) of the Code. Code section
401(k) elective deferrals made on behalf of Key Employees shall be taken into
account in determining the minimum contribution requirement of this section, but
Code section 401(k) elective deferrals made on behalf of non- Key Employees
shall not be treated as Employer contributions for purposes of such requirement.
If the Plan is top-heavy and a minimum contribution is required for non-Key
Employees, each non-Key Employee will receive a minimum contribution if he or
she has not had a Separation from Service prior to the end of the Plan Year,
regardless of his or her level of compensation and regardless of whether he or
she has less than 1,000 hours of service (or the equivalent) during the Plan
Year.
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ARTICLE 14. MISCELLANEOUS PROVISIONS
14.1 EMPLOYMENT RIGHTS
Neither anything contained in this Plan nor any modification of the same or act
done in pursuance hereof shall be construed as giving any person any legal or
equitable right against the Committee, the Employer, the Company, the Trustee or
the Trust Fund, unless specifically provided herein, or as giving any person a
right to be retained in the employ of the Employer. All Participants shall
remain subject to assignment, reassignment, promotion, transfer, layoff,
reduction, suspension and discharge to the same extent as if this Plan had never
been established.
14.2 NO EXAMINATION OR ACCOUNTING
Neither this Plan nor any action taken thereunder shall be construed as giving
any person the right to an accounting or to examine the books or affairs of an
Employer.
14.3 INVESTMENT RISK
The Participants and their Beneficiaries shall assume all risks in connection
with any decreases in the value of any assets or funds which may be invested or
reinvested in the Trust Fund which supports this Plan.
14.4 NON-ALIENATION
Except as permitted under the Plan in accordance with Code section 401(a)(13)
and ERISA section 206(d) with respect to matters such as loans to Participants
and assignments to Alternate Payees under Qualified Domestic Relations Orders,
no benefit payable at any time under the Plan shall be subject to the debts or
liabilities of a Participant or his spouse or Beneficiary, and any attempt to
alienate, sell, transfer, assign, pledge or otherwise encumber any such benefit,
whether presently or thereafter payable, shall be void. Subject to the foregoing
exception, no benefit under the Plan shall be subject in any manner to
alienation, sale, transfer, assignment, pledge, attachment, garnishment or
encumbrance of any kind. In accordance with procedures consistent with Code
section 414(p) that are established by the Committee (including procedures
requiring prompt notification of the affected Participant and each Alternate
Payee of the Plan's receipt of a domestic relations order and its procedures for
determining the qualified status of such order), judicial orders for purposes of
enforcing family support obligations or pertaining to domestic relations (which
orders do not alter the amount, timing or form of benefit other than to have it
commence at the earliest legally permissible date) shall be honored by the Plan
if the Committee determines that they constitute
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Qualified Domestic Relations Orders. Except as may otherwise be required by
regulations of the Secretary of Labor, such orders may not require a retroactive
transfer of all or part of a Participant's Account to or for the benefit of an
Alternate Payee without permitting an appropriate adjustment for earnings and
investment gains or losses that have occurred in the interim, nor shall such
orders require the Plan to provide loans, self- directed investment elections,
or other rights to Alternate Payees that are not available to Beneficiaries
generally. To the full extent permitted by Code section 414(p)(10) and by the
terms of a Qualified Domestic Relations Order, amounts assigned to an Alternate
Payee may be paid as soon as possible in a lump sum, notwithstanding the age,
financial hardship, employment status, or other factors affecting the ability of
the Participant to make a withdrawal or otherwise receive a distribution of
balances to his credit under the Plan.
In cases where such full and prompt payment of amounts assigned to an Alternate
Payee will not be made, the assigned amounts will be transferred within a
reasonable time to the Income Fund and, pending payment, shall be maintained in
a separate Account, for the benefit of the Alternate Payee.
14.5 INCOMPETENCY
Every person receiving or claiming benefits under the Plan shall be conclusively
presumed to be mentally competent and of age until the date on which the
Committee receives a written notice, in a form and manner acceptable to the
Committee, that such person is incompetent or a minor, for whom a guardian or
other person legally vested with the care of his person or estate has been
appointed; provided, however, that if the Committee shall find that any person
to whom a benefit is payable under the Plan is unable to care for his affairs
because of incompetency, or is a minor, any payment due (unless a prior claim
therefor shall have been made by a duly appointed legal representative) may be
paid to the spouse, a child, a parent or a brother or sister, or to any person
or institution deemed by the Committee to have incurred expense for such person
otherwise entitled to payment. To the extent permitted by law, any such payment
so made shall be a complete discharge of liability therefor under the Plan.
In the event a guardian of the estate of any person receiving or claiming
benefits under the Plan shall be appointed by a court of competent jurisdiction,
benefit payments may be made to such guardian provided that proper proof of
appointment and continuing qualification is furnished in a form and manner
acceptable to the Committee. To the extent permitted by
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law, any such payment so made shall be a complete discharge of any liability
therefor under the Plan.
14.6 SEVERABILITY
In the event any provision of this Plan shall be held illegal or invalid for any
reason, such illegality or invalidity shall not affect the remaining parts of
this Plan, and it shall be construed and enforced as if such illegal or invalid
provision had never been inserted herein.
14.7 SERVICE OF LEGAL PROCESS
The Corporate Secretary of the Company is hereby designated agent of the Plan
for the purpose of receiving service of summons, subpoena or other legal
process.
14.8 HEADINGS OF ARTICLES AND SECTIONS
The headings of Articles and sections are included solely for convenience of
reference, and if there is any conflict between such headings and the text of
the Plan, the text shall control.
14.9 APPLICABLE LAW
To the extent that state law is not preempted by ERISA or any other law of the
United States, the Plan and all rights hereunder shall be governed, construed
and administered in accordance with the laws of the State of Texas, with the
exception that any Trust Agreement which may constitute a part of the Plan shall
be construed and enforced in all respects under and by the laws of the state in
which the Trustee thereunder is located.
14.10 SPECIAL DELAYED EFFECTIVE DATE
Notwithstanding any other provisions of this Plan to the contrary, the terms and
provisions of this Plan as amended and restated effective as of the Restatement
Date shall not be effective as to EP Participants until April 1, 1997. Until
such delayed effective date, the terms and provisions of the EP Prior Plan shall
continue to apply to such EP Plan Participants.
14.11 SPECIAL MILITARY LEAVE PROVISIONS
Notwithstanding any provisions of this Plan to the contrary, contributions,
benefits and service credits with respect to "qualified military service" (as
defined in Code section 414(u)(5)) shall be provided and administered in
accordance with Code section 414(u). Additionally, loan repayments shall be
suspended as permitted under Code section 414(u)(4). It is the intent of this
section 14.11 to comply with the provisions and requirements of Code
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section 414(u) as implemented and interpreted under Plan administrative
procedures and provisions as may be in effect from time to time.
* * * * * * * * * *
IN WITNESS WHEREOF, the Company has caused the Plan to be executed effective as
of January 1, 1997.
EL PASO NATURAL GAS COMPANY,
D.B.A. EL PASO ENERGY CORPORATION
By: Joel Richardson, III
Title: Senior Vice President
Date Signed: January 1, 1997
ATTEST:
By: Stacy J. James
Title: Corporate Secretary
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EXHIBIT 5.1
KELLEY DRYE & WARREN LLP
A Limited Liability Partnership Including Professional Associations
TWO STAMFORD PLAZA
281 TRESSER BOULEVARD
STAMFORD, CT 06901-3229
May 9, 1997
El Paso Natural Gas Company
El Paso Energy Building
1001 Louisiana Street
Houston, Texas 77002
Re: EL PASO ENERGY CORPORATION RETIREMENT SAVINGS PLAN
Dear Sirs:
We are acting as special counsel to El Paso Natural Gas Company, a
Delaware corporation (the "Company"), in connection with the preparation and
filing with the Securities and Exchange Commission of a Registration Statement
on Form S-8 (the "Registration Statement") under the Securities Act of 1933, as
amended (the "Act"). The Registration Statement relates to 2,000,000 shares of
the Company's Common Stock, $3 par value per share (the "Shares"), which will be
issued pursuant to the El Paso Energy Corporation Retirement Savings Plan (the
"Plan").
In connection with this opinion, we have examined and relied upon
copies certified or otherwise identified to our satisfaction of: (i) the Plan;
(ii) an executed copy of the Registration Statement; (iii) the Company's
Restated Certificate of Incorporation and By-laws, as amended; (iv) the minute
books and other records of corporate proceedings of the Company, as made
available to us by officers of the Company; and have reviewed such matters of
law as we have deemed necessary or appropriate for the purpose of rendering this
opinion.
For purposes of this opinion we have assumed the authenticity of all
documents submitted to us as originals, the conformity to originals of all
documents submitted to us as certified or photostatic copies, and the
authenticity of the originals of all documents submitted
<PAGE>
El Paso Natural Gas Company
May 9, 1997
Page 2
to us as copies. We have also assumed the legal capacity of all natural persons,
the genuineness of all signatures on all documents examined by us, the authority
of such persons signing on behalf of the parties thereto other than the Company
and the due authorization, execution and delivery of all documents by the
parties thereto other than the Company. As to certain factual matters material
to the opinion expressed herein, we have relied to the extent we deemed proper
upon representations, warranties and statements as to factual matters of
officers and other representatives of the Company. Our opinion expressed below
is subject to the qualification that we express no opinion as to any law other
than the laws of the State of New York, the federal laws of the United States of
America and the General Corporation Law of the State of Delaware. Without
limiting the foregoing, we express no opinion with respect to the applicability
thereto or effect of municipal laws or the rules, regulations or orders of any
municipal agencies within any such state.
Based upon and subject to the foregoing qualifications, assumptions
and limitations and the further limitations set forth below, it is our opinion
that the Shares to be issued by the Company pursuant to the Plan have been duly
authorized and reserved for issuance and, when certificates for the Shares have
been duly executed by the Company, countersigned by a transfer agent, duly
registered by a registrar for the Shares and issued and paid for in accordance
with the terms of the Plan, the Shares will be validly issued, fully paid and
non-assessable.
This opinion is limited to the specific issues addressed herein, and
no opinion may be inferred or implied beyond that expressly stated herein. We
assume no obligation to revise or supplement this opinion should the present
laws of the States of Delaware or New York or the federal laws of the United
States of America be changed by legislative action, judicial decision or
otherwise.
We hereby consent to the filing of this letter as an exhibit to the
Registration Statement. In giving such consent, we do not admit that we are in
the category of persons whose consent is required under Section 7 of the Act or
the rules and regulations of the Commission promulgated thereunder.
This opinion is furnished to you in connection with the filing of
the Registration Statement and is not to be used, circulated, quoted or
otherwise relied upon for any other purpose.
Very truly yours,
/S/ KELLEY DRYE & WARREN LLP
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this Registration Statement on
Form S-8, relating to the El Paso Energy Corporation Retirement Savings Plan, of
our report dated February 28, 1997, on our audits of the consolidated financial
statements and financial statement schedule of El Paso Natural Gas Company as
of December 31, 1996 and 1995, and for each of the three years in the period
ended December 31, 1996, which report is included in its Annual Report on Form
10-K for the year ended December 31, 1996, filed with the Securities and
Exchange Commission.
/S/ COOPERS & LYBRAND L.L.P
El Paso, Texas
May 6, 1997
