<PAGE> 1
As filed with the Securities and Exchange Commission on April 26, 1996
REGISTRATION STATEMENT NO. 33-
===============================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
-----------------
PANENERGY CORP
(Exact name of issuer as specified in charter)
Delaware 74-2150460
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
5400 Westheimer Court
P.O. Box 1642
Houston, Texas 77251-1642
(713) 627-5400
(Address, including zip code, and telephone number, including area
code, of registrant's principal executive offices)
-----------------
TAX CREDIT EMPLOYEE STOCK OWNERSHIP PLAN OF
PANHANDLE EASTERN CORPORATION
AND PARTICIPATING AFFILIATES
(Full title of the plan)
-----------------
ROBERT W. REED, Secretary
PanEnergy Corp
5400 Westheimer Court, P.O. Box 1642, Houston, Texas 77251-1642
(713) 627-5400
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
-----------------
Approximate date of commencement of proposed sale to public:
From time to time after the Registration Statement becomes effective.
-----------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
================================================================================================================
Proposed Proposed
Title of each Amount maximum maximum Amount of
class of securities to be offering price aggregate registration
to be registered (1) registered(2) per unit offering price fee
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, par value 1,000,000 shares 32 1/4(3) $32,250,000(3) $11,121.00
$1.00 per share
================================================================================================================
</TABLE>
<PAGE> 2
(1) 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 plan
described herein.
(2) Plus an indeterminate number of shares of Common Stock which may be
issued as a result of any stock dividend, stock split or other
recapitalization.
(3) Estimated solely for the purpose of determining the registration fee
in accordance with Rule 457(c) and Rule 457(h) under the Securities
Act of 1933, as amended, based on the average of the high and low
prices of the Common Stock as reported on The New York Stock Exchange,
Inc. Composite Transactions Reporting System on April 24, 1996.
===============================================================================
<PAGE> 3
PART II
Item 3. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
This Registration Statement incorporates herein by reference the
following documents which have been filed with the Securities and Exchange
Commission (the "Commission") by PanEnergy Corp ("PEC" or the "Company")
(formerly Panhandle Eastern Corporation) pursuant to the Securities Exchange
Act of 1934, as amended ("Exchange Act"):
1. The Company's Annual Report on Form l0-K for the year ended
December 31, 1995. (File No. 1-8157).
2. The Annual Report on Form 11-K for the year ended December
31, 1995 of the Tax Credit Employee Stock Ownership Plan of Panhandle
Eastern Corporation and Participating Affiliates (the "Plan"). (File
No. 1-8157).
All other documents hereinafter filed by the Company and by the Plan
pursuant to Sections 13, 14 or 15(d) of the Exchange Act subsequent to the date
of this Registration Statement and prior to the filing of a post-effective
amendment which indicates that all securities offered have been sold or which
deregisters all securities then remaining unsold, shall be deemed to be
incorporated herein by reference in this Registration Statement and to be a
part hereof from the date of filing of such documents.
Any statement incorporated by reference herein shall be deemed to be
modified or superseded for purposes of this Registration Statement to the
extent that a statement contained herein or in any other subsequently filed
document which also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any statement so modified or superseded
shall not be deemed, except as so modified or superseded, to constitute a part
of this Registration Statement.
The consolidated financial statements of PEC and Subsidiaries as of
December 31, 1995 and 1994 and for each of the years in the three-year period
ended December 31, 1995 and the financial statements of the Plan as of and for
the year ended December 31, 1995, both incorporated by reference herein have
been incorporated herein in reliance upon the reports of KPMG Peat Marwick LLP,
independent certified public accountants, incorporated by reference herein,
and upon the authority of said firm as experts in accounting and auditing.
Item 4. DESCRIPTION OF CAPITAL STOCK
At March 31, 1996, the authorized capital stock of the Company
included 300,000,000 shares of Common Stock, par value $1.00 per share (the
"Common Stock"), of which 150,753,152 were outstanding. At that date 1,000,000
shares were reserved for the Plan described herein, 2,196,640 were
reserved for issuance under the Company's Dividend Reinvestment & Stock
Purchase Plan, 398,717 were reserved for issuance under the Company's 1977
Non-Qualified Stock
<PAGE> 4
Option Plan, 34,430 were reserved for issuance under the Company's Employees'
Stock Ownership Plan, 1,217,994 were reserved for issuance under the Company's
1982 Key Employee Stock Option Plan, 1,862,242 were reserved for issuance under
the Company's Employees' Savings Plan, 1,754,893 were reserved for issuance
under the Company's 1990 Long Term Incentive Plan, 292,470 were reserved for
issuance under the Company's Special Recognition Bonus Plan, 198,000 were
reserved for issuance under the Company's 1989 Nonemployee Directors Stock
Option Plan, 593,551 were reserved for issuance under the Associated Natural
Gas Equity Incentive Plan and 2,873,459 were reserved for issuance under
the Company's 1994 Long Term Incentive Plan.
At March 31, 1996, the Company also had authorized 3,000,000 shares
of Preferred Stock, par value $1.00 per share ("Preferred Stock"). At March
31, 1996, no Preferred Stock was outstanding.
The following statements constitute brief summaries of certain
provisions of the Company's Restated Certificate of Incorporation, By-Laws and
other documents, all of which are listed as exhibits to this Registration
Statement and are incorporated herein by reference. Such summaries do not
purport to be complete and are qualified in their entirety by reference to the
above documents.
COMMON STOCK
General. Each share of Common Stock has one vote on all matters on
which stockholders are entitled or permitted to vote, including the election or
removal of directors. Holders of the Common Stock have no redemption or
conversion rights, participate ratably in any distribution of assets to
stockholders in liquidation, subject to the preferential rights of holders of
Preferred Stock, and have no preemptive or other subscription rights.
Cumulative voting is not permitted in the election of directors. Holders of the
Common Stock are entitled to receive such dividends as may be declared by the
Board of Directors (the "Board") out of funds legally available therefor,
subject to the preferential rights of the holders of Preferred Stock. All
outstanding shares of Common Stock are, and the shares offered hereby will be,
fully paid and nonassessable. Continental Stock Transfer & Trust Company is
transfer agent and registrar for the Company's Common Stock.
Certain Provisions of the Restated Certificate of incorporation and
By-Laws. The By-Laws of the Company provide that the Board shall consist of no
less than three members, divided into three classes, each class to have a
three-year term and to be as nearly equal in number of directors as possible.
The three-year terms of office of the directors shall expire at successive
annual meetings of stockholders, so that one class is elected each year. Under
the Company's Restated Certificate of Incorporation, the By-Laws of the Company
may only be amended or repealed by (a) resolution adopted by a majority of the
Board or (b) at any annual or special meeting of stockholders by the
affirmative vote of the holders of not less than 75 percent of the outstanding
shares of capital stock of the Company at the time entitled to vote generally
in the election of directors ("Voting Stock").
The Company's Restated Certificate of Incorporation also requires
that certain "Business Transactions," including mergers, consolidations and
sales of a substantial amount of assets, between the Company and a "Related
Person" (e.g., any person who is the beneficial owner of more than ten percent
of the voting power of the Company) be approved by the affirmative vote of the
holders of
<PAGE> 5
at least 80 percent of the outstanding Voting Stock unless (a) the transaction
is approved by two-thirds (2/3) of the "Continuing Directors" of the Company
(generally, the members of the Board as constituted prior to the time such
Related Person became a Related Person with such additional persons as such
members shall appoint or nominate for election by the stockholders), or (b) the
transaction is a merger or consolidation in which stockholders of the Company
will receive at least a certain minimum price for their shares (based on the
highest price paid by the Related Person in specified instances) and certain
other conditions are satisfied.
RESTRICTIONS ON DIVIDENDS
At March 31, 1996, under the most restrictive covenant limiting the
payment of dividends by the Company, the consolidated stockholders' equity of
the Company available for the payment of dividends was $1,054,772,000.
PREFERRED STOCK
The Board, without further action by the stockholders, is authorized
to issue shares of Preferred Stock in one or more series and, with certain
limitations, to determine preferences as to dividends and in liquidation and
voting, conversion, redemption and other rights of each series. The Board could
issue a series or series of Preferred Stock with rights more favorable with
respect to dividends and liquidation than those held by the holders of the
Common Stock.
Item 5. INTERESTS OF NAMED EXPERTS AND COUNSEL
Not Applicable.
Item 6. INDEMNIFICATION
Section 145 of the Delaware General Corporation Law provides that
every corporation shall have the power to indemnify officers and directors
against certain liabilities. The By-Laws of the Company provide that it shall
indemnify any director, advisory director, officer or employee of the Company
against certain liabilities, which include liabilities under the Securities Act
of 1933, as amended ("Securities Act").
The Company also maintains insurance for officers and directors
against certain liabilities, including liabilities under the Securities Act,
under insurance policies, the premiums for which are paid by the Company. The
effect of these is to indemnify any officer or director of the Company against
expenses, judgements, fines, attorney's fees, and other amounts paid in
settlements incurred by an officer or director upon a determination that such
person acted in good faith.
Item 7. EXEMPTION FROM REGISTRATION CLAIMED
Not Applicable.
<PAGE> 6
Item 8. EXHIBITS
The following documents are filed as a part of this Registration
Statement or incorporated by referenced herein:
<TABLE>
<CAPTION>
EXHIBIT FILE
NUMBER DESCRIPTION ORIGINALLY FILED AS EXHIBIT NUMBER
- ------ ----------- --------------------------- -------
<S> <C> <C> <C>
3.1 Amended and Restated Certificate of 3.01 to Form 10-K of PEC for year 1-8157
Incorporation of Panhandle Eastern ended December 31, 1995
Corporation, including the Certificate
of Elimination of the Participating
Stock of Panhandle Eastern Corporation
3.2 By-Laws of Panhandle Eastern 19(a) to Form 10-Q of PEC for 1-8157
Corporation, effective July 8, 1986 quarter ended September 30, 1986
* 5.1 Opinion of Carl B. King
*23.1 Consent of KPMG Peat Marwick LLP
*23.2 Consent of Carl B. King
(contained in Exhibit 5.1)
*24 Powers of Attorney
*99 Tax Credit Employee Stock Ownership
Plan of Panhandle Eastern Corporation
and Participating Affiliates
</TABLE>
- -------------
*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 the registration
statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate, represent a
fundamental change in the information set forth in the
registration statement;
(iii) To include any material information with
respect to the plan of distribution not previously disclosed
in the registration statement or any material change to such
information in the registration statement;
Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do
not apply if the registration statement is on Form S-3 or Form S-8,
and the information required to be included in a post-effective
amendment by those paragraphs is contained in periodic reports
<PAGE> 7
filed with the Commission by the registrant pursuant to section 13 or
section 15(d) of the Exchange Act that are incorporated by reference
in the registration statement.
(2) That, for the purpose of determining any liability under
the 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) 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 section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to section 15(d) of the Exchange Act) that is
incorporated by reference in the registration statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
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 foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the 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
against the registrant 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.
In reliance upon the requirements of this Form S-8, the Company has
not obtained an opinion of counsel concerning compliance with the requirements
of the Employee Retirement Insurance Security Act of 1974 or a determination
letter from the Internal Revenue Service (the "IRS") that the Plan is qualified
under Section 401 of the Internal Revenue Code of 1986. The undersigned Company
hereby undertakes to submit the Plan and, from time to time, any amendments
thereto, to the IRS in a timely manner and to make all changes required by the
IRS in order to qualify the Plan.
<PAGE> 8
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 OR AMENDMENT TO BE SIGNED ON ITS BEHALF BY
THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF HOUSTON AND STATE OF
TEXAS ON THE 26TH DAY OF APRIL, 1996.
PanEnergy Corp
Registrant
By /s/ Paul F. Ferguson, Jr.
--------------------------------------
(Paul F. Ferguson, Jr., Senior Vice
President and Chief Financial Officer)
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS
AMENDED, THIS REGISTRATION STATEMENT OR AMENDMENT HAS BEEN SIGNED BY THE
FOLLOWING PERSONS IN THEIR CAPACITIES AND ON THE DATES INDICATED:
<TABLE>
<CAPTION>
Signature Title
--------- -----
<S> <C>
(i) Principal executive officer:*
PAUL M. ANDERSON President and Chief Executive
- -------------------------------------------- Officer
(Paul M. Anderson)
(ii) Principal financial officer:*
PAUL F. FERGUSON, JR. Senior Vice President and
- -------------------------------------------- Chief Financial Officer
(Paul F. Ferguson, Jr.)
(iii) Principal accounting officer:*
SANDRA P. MEYER Vice President and Controller
- --------------------------------------------
(Sandra P. Meyer)
(iv) Board of Directors:*
DENNIS R. HENDRIX
- --------------------------------------------
(Dennis R. Hendrix)
PAUL M. ANDERSON
- --------------------------------------------
(Paul M. Anderson)
</TABLE>
<PAGE> 9
MILTON CARROLL
- --------------------------------------------
(Milton Carroll)
ROBERT CIZIK
- --------------------------------------------
(Robert Cizik)
CHARLES W. DUNCAN, JR.
- --------------------------------------------
(Charles W. Duncan, Jr.)
HARRY E. EKBLOM
- --------------------------------------------
(Harry E. Ekblom)
WILLIAM T. ESREY
- --------------------------------------------
(William T. Esrey)
ANN MAYNARD GRAY
- --------------------------------------------
(Ann Maynard Gray)
HAROLD S. HOOK
- --------------------------------------------
(Harold S. Hook)
LEO E. LINBECK, JR.
- --------------------------------------------
(Leo E. Linbeck, Jr.)
GEORGE L. MAZANEC
- --------------------------------------------
(George L. Mazanec)
RALPH S. O'CONNOR
- --------------------------------------------
(Ralph S. O'Connor)
- ---------
*Signed on behalf of each of these persons.
By /s/ Robert W. Reed
------------------------------------------
(Robert W. Reed, Attorney-in-Fact)
<PAGE> 10
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS
AMENDED, THE PLAN HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON
ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF
HOUSTON, STATE OF TEXAS ON THE 26TH DAY OF APRIL, 1996.
Tax Credit Employee Stock Ownership
Plan of Panhandle Eastern Corporation
and Participating Affiliates
By /s/ Bruce A. Williamson
-------------------------------------
(Bruce A. Williamson, Chairman of
Administrative Committee)
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 INDICATED.
ALL OF THE MEMBERS OF THE ADMINISTRATIVE COMMITTEE*
ERIK B. CARLSON
H. D. CHURCH
PAUL F. FERGUSON, JR.
D. R. HENNIG
P. J. HESTER
THEOPOLIS HOLEMAN
SANDRA P. MEYER
BRUCE A. WILLIAMSON
- -------------
* Signed on behalf of the Administrative Committee:
By /s/ Robert W. Reed
-------------------------------------
(Robert W. Reed, Attorney-in-Fact)
<PAGE> 11
EXHIBIT
NUMBER DESCRIPTION
- ------ -----------
5.1 Opinion of Carl B. King
23.1 Consent of KPMG Peat Marwick LLP
23.2 Consent of Carl B. King
(contained in Exhibit 5.1)
24 Powers of Attorney
99 Tax Credit Employee Stock Ownership
Plan of Panhandle Eastern Corporation
and Participating Affiliates
<PAGE> 1
EXHIBIT 5.1
[PANENERGY LETTERHEAD]
April 25, 1996
PanEnergy Corp
5400 Westheimer Court
Houston, Texas 77056
Dear Sirs:
This opinion is provided in connection with the registration under the
Securities Act of 1933 (the "Act") of 1,000,000 shares (the "Securities") of
Common Stock, par value $1.00 per share, of PanEnergy Corp, a Delaware
corporation (the "Company"). As General Counsel of the Company, I am generally
familiar with the organization and affairs of the Company. Lawyers in the Legal
Department of the Company have been asked, by me or others, to review legal
matters arising in connection with the registration under the Act of the
Securities. Accordingly, some of the matters referred to herein have not been
handled personally by me, but I have been made familiar with the facts and
circumstances and applicable law, and the opinion herein expressed is my own or
the opinion of other lawyers in which I concur. In rendering the opinion
expressed herein, I or lawyers in the Legal Department of the Company have
examined such corporate records, certificates and other documents and such
questions of law as were considered necessary or appropriate for the purposes
hereof.
Based upon the foregoing, I am of the opinion that when the registration
statement relating to the Securities (the "Registration Statement") has become
effective under the Act, the terms of the sale of the Securities have been duly
established in conformity with the Company's Restated Certificate of
Incorporation, and any Securities originally issued by the Company in
connection with the Tax Credit Employee Stock Ownership Plan of Panhandle
Eastern Corporation and Participating Affiliates have been duly issued and sold
as contemplated by the Registration Statement, such originally issued
Securities will be validly issued, fully paid and nonassessable.
<PAGE> 2
EXHIBIT 5.1
Continued
PanEnergy Corp
April 25, 1996
Page 2
The foregoing opinion is limited to the Federal laws of the United States
and the General Corporation Law of the State of Delaware, and I am expressing
no opinion as to the effect of the laws of any other jurisdiction. I have
relied as to certain matters on information obtained from public officials,
officers of the Company and other sources believed by me to be responsible.
I hereby consent to the filing of this opinion as an exhibit to the
Registration Statement.
Very truly yours,
/s/ CARL B. KING
Carl B. King
Senior Vice President
and General Counsel
<PAGE> 1
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
PanEnergy Corp:
We consent to the use in this registration statement on Form S-8 of our
report dated January 23, 1996 on the consolidated financial statements of
PanEnergy Corp and subsidiaries and our report dated April 4, 1996 on the
financial statements of the Tax Credit Employee Stock Ownership Plan of
Panhandle Eastern Corporation and Participating Affiliates, both incorporated
by reference herein and to the reference to our firm as experts in Item 3 of
this registration statement.
KPMG Peat Marwick LLP
Houston, Texas
April 26, 1996
<PAGE> 1
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned Officers and/or
Directors of PANHANDLE EASTERN CORPORATION (the "Company"), a Delaware
corporation, do hereby constitute and appoint PAUL F. FERGUSON, JR., CARL B.
KING and ROBERT W. REED, and each of them, their true and lawful attorney and
agent to do any and all acts and things, and execute any and all instruments
which, with the advice of Counsel, said attorney and agent may deem necessary
or advisable to enable the Company to comply with the Securities Act of 1933,
as amended, and any rules, regulations and requirements of the Securities and
Exchange Commission, in connection with the filing under said Act of the Form
S-8 Registration Statement with the Securities and Exchange Commission,
including specifically, but without limitation thereof, to sign their names as
Officers and/or Directors of the Company to the Form S-8, and to any instrument
or document filed as a part of, or in connection with, said Form S-8 or
Amendment thereto; and the undersigned do hereby ratify and confirm that said
attorney and agent shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned have subscribed these presents this
26th day of April, 1996.
/s/ DENNIS R. HENDRIX /s/ ANN MAYNARD GRAY
- ------------------------------ ------------------------------
Dennis R. Hendrix Ann Maynard Gray
/s/ PAUL M. ANDERSON /s/ HAROLD S. HOOK
- ------------------------------ ------------------------------
Paul M. Anderson Harold S. Hook
/s/ MILTON CARROLL /s/ LEO E. LINBECK, JR.
- ------------------------------ ------------------------------
Milton Carroll Leo E. Linbeck, Jr.
/s/ ROBERT CIZIK /s/ GEORGE L. MAZANEC
- ------------------------------ ------------------------------
Robert Cizik George L. Mazanec
/s/ CHARLES W. DUNCAN, JR. /s/ RALPH S. O'CONNOR
- ------------------------------ ------------------------------
Charles W. Duncan, Jr. Ralph S. O'Connor
/s/ HARRY E. EKBLOM /s/ WILLIAM T. ESREY
- ------------------------------ ------------------------------
Harry E. Ekblom William T. Esrey
/s/ PAUL F. FERGUSON, JR. /s/ SANDRA P. MEYER
- ------------------------------ ------------------------------
Paul F. Ferguson, Jr. Sandra P. Meyer
Senior Vice President and Vice President and Controller
Chief Financial Officer (Principal Accounting Officer)
/s/ PAUL M. ANDERSON, JR.
- ------------------------------
Paul M. Anderson, Jr.
President, Chief Executive
Officer and Director
<PAGE> 2
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned members of the
Administrative Committee of PANHANDLE EASTERN CORPORATION (the "Company"), a
Delaware corporation, do hereby constitute and appoint PAUL F. FERGUSON, JR.,
CARL B. KING and ROBERT W. REED, and each of them, their true and lawful
attorney and agent to do any and all acts and things, and execute any and all
instruments which, with the advice of Counsel, said attorney and agent may deem
necessary or advisable to enable the Company to comply with the Securities Act
of 1933, as amended, and any rules, regulations and requirements of the
Securities and Exchange Commission, in connection with the filing under said Act
of the Form S-8 Registration Statement with the Securities and Exchange
Commission, including specifically, but without limitation thereof, to sign
their names as members of the Administrative Committee of the Company to the
Form S-8, and to any instrument or document filed as a part of, or in connection
with, said Form S-8 or Amendment thereto; and the undersigned do hereby ratify
and confirm that said attorney and agent shall do or cause to be done by virtue
hereof.
IN WITNESS WHEREOF, the undersigned have subscribed these presents this
26th day of April, 1996.
/s/ ERIK B. CARLSON /s/ H. D. CHURCH
- ------------------------------ ------------------------------
Erik B. Carlson H. D. Church
/s/ PAUL F. FERGUSON, JR. /s/ D. R. HENNIG
- ------------------------------ ------------------------------
Paul F. Ferguson, Jr. D. R. Hennig
/s/ THEOPOLIS HOLEMAN /s/ S. P. MEYER
- ------------------------------ ------------------------------
Theopolis Holeman S. P. Meyer
/s/ P. J. HESTER /s/ BRUCE A. WILLIAMSON
- ------------------------------ ------------------------------
P. J. Hester Bruce A. Williamson
<PAGE> 1
TAX CREDIT EMPLOYEE STOCK OWNERSHIP PLAN
OF PANHANDLE EASTERN CORPORATION
AND PARTICIPATING AFFILIATES
ADOPTED EFFECTIVE JANUARY 1, 1995
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
ARTICLE I - INTRODUCTION
1.1 Background 1
1.2 Purpose 1
ARTICLE 2 - DEFINITIONS
2.1 Account 2
2.2 Act 2
2.3 Affiliate 2
2.4 Applicable Year 2
2.5 Authorized Leave Of Absence 2
2.6 Beneficiary 2
2.7 Board 3
2.8 Code 3
2.9 Committee 3
2.10 Company 3
2.11 Company Stock 3
2.12 Compensation 3
2.13 ESP 3
2.14 Effective Date 3
2.15 Eligible Employee 3
2.16 Employee 3
2.17 Employer 3
2.18 Entry Dates 3
2.19 Fiduciary 4
2.20 Fund 4
2.21 Highly Compensated Employee 4
2.22 Hour of Service 4
2.23 Incremental Investment Credit 4
2.24 Leased Employee 4
2.25 Matching Investment Credit 4
2.26 Participant 4
2.27 Period of Service 4
2.28 Period of Severance 4
2.29 Plan 4
2.30 Plan Year 4
2.31 Qualified 4
2.32 Reemployment Commencement Date 5
2.33 Severance from Service Date 5
2.34 Taxable Year 5
2.35 Termination of Employment 5
2.36 Treasury Regulation 5
2.37 Trust 5
</TABLE>
<PAGE> 3
<TABLE>
<S> <C>
2.38 Trustee 5
2.39 Valuation Date 5
2.40 Construction 5
ARTICLE 3 - PARTICIPATION
3.1 Eligibility and Participation 6
3.2 Termination of Employment and Rehire 6
3.3 Not a Contract for Employment 6
ARTICLE 4 - CONTRIBUTIONS
4.1 Company TRASOP Contributions 7
4.2 Participant TRASOP Contributions 8
4.3 Expenses 9
4.4 Separate Accounting 10
4.5 Form of Basic and Matching TRASOP Contributions 10
4.6 Redetermination and Recapture of Investment Credit 10
ARTICLE 5 - ACCOUNTS AND ALLOCATIONS
5.1 Participant Accounts 12
5.2 Allocation of Basic TRASOP Contributions 12
5.3 Allocation of Matching TRASOP Contributions 12
5.4 Allocation of Participant TRASOP Contributions 13
5.5 Allocation of Dividends On Company Stock 13
5.6 Units and Net Asset Value 13
5.7 Valuation Procedures 14
5.8 Diversification of Participant Accounts 14
5.9 Value of Account for Purposes of Distribution 15
5.10 Errors 15
5.11 Vesting 15
ARTICLE 6 - VOTING AND TENDER OF TRASOP SECURITIES
6.1 Pass-Through Voting, Tender and Exchange 16
6.2 Distribution of Information 16
</TABLE>
- ii -
<PAGE> 4
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
ARTICLE 7 - DISTRIBUTIONS TO PARTICIPANTS
7.1 Entitlement to Distribution 18
7.2 Form of Distribution 18
7.3 Time of Distribution 18
7.4 Special Distribution Rules 19
7.5 Right of First Refusal 19
7.6 Put Option 20
7.7 Exercise of Put Option 21
7.8 Stock Transfer Taxes 21
7.9 Payment to Minors and Incapacitated Persons 21
7.10 Application for Benefits; Missing Persons 23
7.11 Direct Rollovers 23
ARTICLE 8 - ADMINISTRATION OF THE PLAN
8.1 Named Fiduciaries 25
8.2 Board of Directors 25
8.3 Trustee 25
8.4 Committee 25
8.5 Standard of Fiduciary Duty 27
8.6 Claims Review 27
8.7 Indemnification 28
ARTICLE 9 - AMENDMENT AND TERMINATION
9.1 Right to Amend 29
9.2 Termination and Discontinuance of Contributions 29
9.3 IRS Approval of Termination 30
ARTICLE 10 - MISCELLANEOUS
10.1 Headings 31
10.2 Spendthrift Clause 31
10.3 Discrimination 31
10.4 Release 32
10.5 Compliance with Applicable Laws 32
10.6 Agent for Service of Process 32
10.7 Merger 32
10.8 Governing Law 32
10.9 Internal Revenue Service Approval 32
10.10 Non-reversion 32
10.11 Severability 33
10.12 Adoption of the Plan by an Affiliated Company 33
</TABLE>
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<PAGE> 5
<TABLE>
<S> <C>
ARTICLE 11 - MAXIMUM AMOUNT OF ALLOCATION
11.1 Application of Article 11 34
11.2 Maximum Additions to Account 34
11.3 Order of Reduction 34
11.4 Additional Account Limitation 35
11.5 Definitions 35
ARTICLE 12 - TOP HEAVY PROVISIONS
12.1 General 37
12.2 Definitions 37
12.3 Minimum Benefit 38
12.4 Combined Plan Limitation for Top Heavy Years 38
ARTICLE 13 - HIGHLY COMPENSATED EMPLOYEES
13.1 In General 39
13.2 Highly Compensated Employees 39
13.3 Former Highly Compensated Employee 40
13.4 Family Aggregation Rules 40
13.5 Definitions 41
13.6 Other Methods Permissible 42
ARTICLE 14 - SPECIAL DISCRIMINATION RULES
14.1 Definitions 43
14.2 Average Actual Contribution Percentage 44
14.3 Special Rules for Determining Average Actual
Contribution Percentages 45
14.4 Distribution of Excess ACP Contributions 45
</TABLE>
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<PAGE> 6
TAX CREDIT EMPLOYEE STOCK OWNERSHIP PLAN
OF PANHANDLE EASTERN CORPORATION
AND PARTICIPATING AFFILIATES
ADOPTED EFFECTIVE JANUARY 1, 1995
ARTICLE 1
INTRODUCTION
1.1 Background.
On January 1, 1975 Panhandle Eastern Pipe Line Company adopted the Employees'
Stock Ownership Plan of Panhandle Eastern Pipe Line Company and Participating
Subsidiaries (the "Original TRASOP"). The Original TRASOP was intended to be a
tax credit employee stock ownership plan pursuant to the provisions of the Tax
Reform Act of 1976 and Section 301 of the Revenue Act of 1978. Panhandle
Eastern Pipe Line Company made contributions to the Original TRASOP until 1982,
when Panhandle Eastern Pipe Line Company was no longer able to utilize the tax
credits provided under predecessor to Code Section 46(a)(2)(E) of the Internal
Revenue Code of 1954 (the "1954 Code"). The unused tax credits became
carryover tax credits within the meaning of 1954 Code Section 46(b)(1) and the
Original TRASOP was continued, but received no contributions.
In 1981, Panhandle Eastern Pipe Line Company became a wholly-owned subsidiary
of Panhandle Eastern Corporation (the "Company") and the Company became the
sponsor of the Original TRASOP. Effective January 1, 1991, the Original TRASOP
was merged into, and the Original TRASOP accounts were thereafter maintained
under, the Employees' Savings Plan of Panhandle Eastern Corporation and
Participating Affiliates (the "ESP") a cash or deferred profit sharing plan
qualified under Sections 401(k) and 401(a) of the Internal Revenue Code of 1986
(the "Code").
In 1995 the Company determined that it could utilize a portion of the carryover
tax credits for the Company's 1995 taxable year. The Company has determined
that contributions to the Original TRASOP accounts under the ESP would
substantially complicate ESP administration, resulting in significant
additional costs and confusion among ESP Participants. Accordingly, the
Company determined that it is in the best interests of the Company and its
employees to separately maintain the Tax Credit Employee Stock Ownership Plan
of Panhandle Eastern Corporation and Participating Affiliates (the "Plan"), as
set forth in its entirety in this document.
1.2 Purpose.
The Plan is intended to qualify as a stock bonus plan which is qualified and
exempt from taxation under Sections 401(a) and 501(a) of the Code, an employee
stock ownership plan, as defined in Section 4975(e)(7) of the Code and Section
407(d)(6) of the Act, and as a tax credit employee stock ownership plan, as
defined in Section 409 of the Code. The Plan shall invest its assets in shares
of "employer securities" under Section 409(1) of the Code and "qualifying
employer securities" under Section 407(d)(5) of the Act.
<PAGE> 7
ARTICLE 2
DEFINITIONS
2.1 Account. The total Account for each Participant and his Beneficiaries
under the Plan. Each Account shall reflect each Participant's
interest, if any, in the Fund.
2.2 Act. Public Law No. 93-406, the Employee Retirement Income Security
Act of 1974, as the same may be amended from time to time.
2.3 Affiliate. Any corporation which is a member of a controlled group of
corporations (as defined in Code Section 414(b)) which includes the
Company; any trade or business which is under common control (as
defined in Code Section 414(c)) with the Company; any organization
which is a member of an affiliated service group (as defined in Code
Section 414(m)) which includes the Company; and any other entity
required to be aggregated with the Company pursuant to regulations
under Code Section 414(o).
2.4 Applicable Year. The Taxable Year for which the Company claims on
its federal income tax return the Incremental Investment Credit and/or
the Matching Investment Credit.
2.5 Authorized Leave of Absence. Any layoff or any absence of a
Participant authorized by an Affiliate under that Affiliate's standard
personnel practices provided that all persons under similar
circumstances must be treated alike in the granting of such Authorized
Leaves of Absence and provided that the Participant returns to
employment within the period of authorized absence. An absence due to
service in the Armed Forces of the United States shall be considered
an Authorized Leave of Absence to the extent required by federal law.
2.6 Beneficiary. For unmarried Participants, any individual(s), trust(s),
estate(s), partnership(s), corporation(s) or other entity or entities
designated by the Participant in accordance with procedures
established by the Committee to receive any distribution to which the
Participant is entitled under the Plan. The Committee may require
certification by a Participant in any form it deems appropriate of the
Participant's marital status prior to accepting or honoring any
Beneficiary designation. Any Beneficiary designation shall be void if
the Participant revokes the designation or marries. Any Beneficiary
designation shall be void to the extent that it conflicts with the
terms of a qualified domestic relations order. If an unmarried
Participant fails to designate a Beneficiary or if the designated
Beneficiary fails to survive the Participant, the Beneficiary shall be
the Participant's estate. For the purposes of the foregoing sentence,
the term "descendants" shall include any persons adopted by a
Participant or by any of his descendants.
A married Participant's Beneficiary shall be his spouse at the time of
his death unless the Participant has designated a non-spouse
Beneficiary (or Beneficiaries) with the written consent of his spouse
given in the presence of a Notary Public on a form provided by the
Committee, or unless the terms of a qualified domestic relations order
require payment to a non-spouse Beneficiary. A married Participant's
designation of a non-spouse Beneficiary in accordance with the
preceding sentence shall remain valid until revoked by the Participant
or until the Participant marries a spouse who has not consented to a
designation in accordance with the preceding sentence.
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<PAGE> 8
For the purposes of this Section, revocation of prior Beneficiary
designations will occur when a Participant; (i) files a valid
designation with the Committee, or (ii) files a signed statement with
the Committee evidencing his intent to revoke any prior designations.
A married Participant shall not be permitted to designate a new
Beneficiary without his spouse's written consent given in accordance
with this Section.
2.7 Board. The Board of Directors of the Company.
2.8 Code. The Internal Revenue Code of 1986, as amended.
2.9 Committee. The Committee appointed by the Board under Article 8 to
administer the Plan.
2.10 Company. Panhandle Eastern Corporation.
2.11 Company Stock. The common stock of Panhandle Eastern Corporation
which constitutes "employer securities" within the meaning of Code
Section 409(l).
2.12 Compensation. The gross annual earnings, including bonuses and
overtime, reported on a Participant's Form W-2 (box 1 or its
comparable location as provided on Form W-2 in future years) as
required by Code Sections 6041(d) and 6051(a)(3). Compensation shall
be determined by ignoring any income exclusions under Code Section
3401(a) based on the nature or location of employment.
Compensation taken into account shall not exceed $100,000 and shall
only include Compensation earned as an Eligible Employee.
2.13 ESP shall mean Employees' Savings Plan of Panhandle Eastern and
Participating Affiliates.
2.14 Effective Date. January 1, 1995.
2.15 Eligible Employee. Any Employee of an Employer other than (A) an
individual whose terms of employment are subject to collective
bargaining between a collective bargaining representative and an
Employer unless there is in effect a collective bargaining agreement
that provides for coverage of such individual under the Plan, (B) an
individual (i) who is a nonresident alien who receives no earned
income from sources within the United States or (ii) who is otherwise
classified by the Employer as Non-U.S. Payroll, (C) any Leased
Employee, or (D) an individual whose terms of employment are subject
to a written employment contract or agreement that provides that such
individual shall not be covered under the Plan.
2.16 Employee. Any common law employee of an Affiliate or any Leased
Employee with respect to an Affiliate.
2.17 Employer. The Company and any Affiliate who adopts this Plan with
the approval of the Board.
2.18 Entry Dates. January 1, 1995 and the first day of each succeeding
month.
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<PAGE> 9
2.19 Fiduciary. Any party named as a Fiduciary in Article 8 of the Plan.
A party will be a Fiduciary only to the extent of the powers and
duties specifically allocated to and actually exercised by such party
under the Plan.
2.20 Fund. The money and other property held and administered by the
Trustee in accordance with the Plan and Trust Agreement.
2.21 Highly Compensated Employee See Article 13.
2.22 Hour of Service. Each hour for which an Employee is paid, or entitled
to payment, for performance of duties or otherwise for an Affiliate or
Affiliates as defined in 29 C.F.R. part 2530.
2.23 Incremental Investment Credit. The additional investment tax credit
that is contingent upon the establishment and funding of a tax credit
employee stock ownership plan, as defined in Section 409 of the Code,
which is permitted and determined (i) for periods prior to January 1,
1983, pursuant to Sections 38, 46(a)(2)(E)(i), and 48(n)(1)(A) of the
1954 Code as determined with respect to the Company, and (ii) for
periods from and after January 1, 1983, pursuant to Section 41(a) of
the Code.
2.24 Leased Employee: Any person who is not an employee of an Employer but
who is a leased employee of the Employer within the meaning of Code
Section 414(n)(2) (or any successor section thereto).
2.25 Matching Investment Credit. As determined with respect to the
Company, the additional investment tax credit, permitted and
determined pursuant to Sections 38, 46(a)(2)(E)(ii), and 48(n)(1)(B)
of the 1954 Code that is contingent upon the Company and such
Controlled Entities making a contribution to the Plan to match
Participant after-tax contributions.
2.26 Participant. An individual for whom an Account is maintained under
the Plan.
2.27 Period of Service. Each period of an Employee's employment commencing
on the date he first performs an Hour of Service or a Reemployment
Commencement Date, if applicable, and ending on a Severance from
Service Date. Notwithstanding the foregoing, a period during which an
Employee is absent by reason of the Employee's pregnancy, the birth of
a child of the Employee or the placement of a child with the Employee
in connection with the adoption of such child by the Employee or for
the purposes of caring for such child for the period immediately
following such birth or placement shall not constitute a Period of
Service between the first and second anniversary of the first date of
such absence.
2.28 Period of Severance. Each period of time commencing on an Employee's
Severence from Service Date and ending on a Reemployment Commencement
Date.
2.29 Plan. The Tax Credit Employee Stock Ownership Plan of Panhandle
Eastern Corporation as set forth in this document and as amended from
time to time.
2.30 Plan Year. The period beginning January 1 and ending December 31.
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<PAGE> 10
2.31 Qualified. A plan and trust which is qualified and exempt from tax
under Sections 401 and 501 of the Code, and related provisions of the
Code.
2.32 Reemployment Commencement Date. The first date upon which an Employee
performs an Hour of Service following a Severance from Service Date.
2.33 Severance from Service Date. The first date on which an Employee
terminates his employment following commencement of a Period of
Service. Notwithstanding the foregoing, the Severance from Service
Date of an Employee who is absent by reason of the Employee's
pregnancy, the birth of a child of the Employee or the placement of a
child with the Employee in connection with the adoption of such child
by the Employee or for purposes of caring for such child for the
period immediately following such birth or placement shall be the
second anniversary of the first date of such absence.
2.34 Taxable Year. The annual accounting period coincident with the Plan
Year, beginning January 1 and ending December 31, that has been
adopted by the Company for federal income tax purposes.
2.35 Termination of Employment. The cessation of employment with all
Affiliates for any reason except that a Participant who ceases to be
actively employed by reason of an Authorized Leave of Absence shall
not be deemed to have a Termination of Employment nor shall the
transfer of a Participant's employment among Affiliates constitute
Termination of Employment.
2.36 Treasury Regulation. Regulations pertaining to certain Sections of
the Code as issued by the Secretary of the Treasury.
2.37 Trust. The Trust Agreement for the Tax Credit Employee Stock
Ownership Plan of Panhandle Eastern Corporation as amended from time
to time.
2.38 Trustee. The Northern Trust Company and any additional Trustees or
successors appointed in accordance with the Trust.
2.39 Valuation Date. The last day of the Plan Year and the date (if
applicable) specified in Section 5.8.
2.40 Construction. In this Plan and Trust, a defined term will govern the
definitions of its derivatives even though such derivatives are not
specifically defined or capitalized. The masculine gender shall be
deemed to include the feminine gender, unless the context clearly
indicates otherwise. Singular and plural nouns and pronouns shall be
interchangeable as the factual context may allow or require. The
words "hereof," "herein," "hereunder" and other similar compounds of
the word "here" shall mean and refer to the entire Plan and Trust and
not to any particular provision or Section.
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<PAGE> 11
ARTICLE 3
PARTICIPATION
3.1 Eligibility and Participation.
(a) As of the Effective Date any Eligible Employee who is a
Participant in the Employees' Savings Plan of Panhandle
Eastern and Participating Affiliates shall become a
Participant in this Plan. Each Eligible Employee who is not a
Participant in the ESP on the Effective Date shall become a
Participant on the earliest Entry Date on or after which such
Eligible Employee:
(i) is in the employ of the Employer; and
(ii) completes a one year Period of Service. For this
purpose, an Eligible Employee's Period of Service
shall not terminate unless the Employee's Period of
Severance exceeds twelve consecutive months.
(b) Any Eligible Employee who becomes eligible to participate may
be asked to complete certain forms provided by the Committee
on which he will designate Beneficiaries. However, his
participation in the Plan shall be automatic from the date he
becomes eligible to participate and shall not be contingent
upon his signing any such forms.
3.2 Termination of Employment and Rehire.
A Participant who has a Termination of Employment and receives a
distribution of his Account shall cease his participation in the Plan.
A Participant who has a Termination of Employment and is subsequently
rehired by an Affiliate shall be eligible to resume participation
immediately upon becoming an Eligible Employee.
3.3 Not a Contract for Employment.
Participation in the Plan shall not give any Participant the right to
be retained in the employ of any Affiliate nor shall any Employee,
upon dismissal from or voluntary termination of his employment, have
any right or interest in the Fund, except as herein provided.
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<PAGE> 12
ARTICLE 4
CONTRIBUTIONS
4.1 Company TRASOP Contributions.
(a) Basic Contribution. As of the last day of each Plan Year, the
Company shall contribute to the Plan, as its Basic TRASOP
Contribution for such Plan Year, an amount no less than the
amount of its Incremental Investment Credit, if any, claimed
and utilized to reduce the Company's federal income tax for
the Applicable Year coinciding with the Plan Year.
(b) Matching Contribution. As of the last day of each Plan Year,
the Company shall contribute to the Plan, as its Matching
TRASOP Contribution for such Plan Year, an amount no less than
the amount of its Matching Investment Credit, if any, claimed
and utilized to reduce the Company's federal income tax for
the Applicable Year coinciding with the Plan Year
(c) Timing of Basic and Matching TRASOP Contributions. For each
Plan Year, the Company may make payment of its TRASOP and
Matching TRASOP Contributions on any date or dates during or
after the Plan Year, provided that the total amount of such
Basic TRASOP Contributions must be paid in full not later than
the thirtieth day following the last day for filing the
Company's federal income tax return for the Applicable Year
coinciding with the Plan Year (including extensions) (the
"Required Date"). Basic TRASOP Contributions made by the
Required Date shall be treated, for all purposes under this
Plan, as if they were made on the last day of the Plan Year to
which they relate.
(d) Participants Eligible to Receive Allocations of TRASOP and
Matching TRASOP Contributions. As of the last day of each
Plan Year, the total amount of TRASOP and Matching TRASOP
Contributions allocable during that Plan Year will be
allocated among the Basic TRASOP Contribution and Matching
TRASOP Contribution Accounts of the following Participants:
(i) Participants who are Eligible Employees on the last day of
the Plan Year; (ii) Participants who had a Termination of
Employment during the Plan Year after attainment of
eligibility for an immediate early or normal retirement
benefit under the Retirement Income Plan of Panhandle Eastern
Corporation and Participating Affiliates and who were Eligible
Employees at the time of their Termination of Employment;
(iii) Participants who had a Termination of Employment during
the Plan Year on account of disability qualifying the
Participants for benefits under an Employer's group long term
disability plan and who were Eligible Employees at the time of
their Termination of Employment; and (iv) Participants who had
a Termination of Employment during the Plan Year on account of
death and who were Eligible Employees at the time of their
Termination of Employment.
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<PAGE> 13
4.2 Participant TRASOP Contributions.
(a) Defined. Each Participant who, pursuant to Section 4.1, is
entitled to an allocation of the Basic TRASOP Contribution for
a Plan Year shall be permitted, in accordance with the
procedures set forth below, to make after-tax contributions to
the Plan provided the Company makes a Matching TRASOP
Contribution with respect to such Plan Year.
(b) Participant Pledges. Each Participant who is entitled to an
allocation of the Basic TRASOP Contribution will be given the
opportunity to pledge Participant TRASOP Contribution which
may be equal to or less than the "maximum amount". The
maximum amount is equal to the Matching TRASOP Contribution
multiplied by a fraction, the numerator of which is the
Participant's Compensation and the denominator of which is the
aggregate Compensation of all Participants entitled to receive
allocations of the Basic TRASOP Contribution. Initial
Participant pledges shall be made by the date(s) prescribed by
the Committee but shall not be made later than the last day
for the Company to file its federal income tax return
(including extensions) for the Applicable Year coinciding with
the Plan Year. Each Participant who pledges to make the
maximum permissible Participant TRASOP Contribution may also
pledge an additional amount subject to limits established by
the Committee, which will entitle the Participant to make
additional Participant TRASOP Contributions reflecting
Participant TRASOP Contributions not pledged by or collected
from other Participants. A Participant's allocable share of
permissible Participant TRASOP Contributions not pledged by or
collected from other Participants shall be determined by
multiplying the amount of such Contributions by a fraction,
the numerator of which is the Participant's Compensation for
the Plan Year for which the Matching TRASOP Contribution is
made and a denominator of which is the Compensation of all
Participants pledging to make additional Participant TRASOP
Contributions.
(c) Collection of Participant Pledges. Participant TRASOP
Contributions shall be collected pursuant to the pledges of
Participants as described in subparagraphs (i)-(iii), below.
Participant TRASOP Contribution pledges must be paid in full
by the time determined by the Committee, but in no event later
than twenty-four months following the end of the Plan Year in
which they are allocated.
(i) With respect to any Participant whose employment with
an Employer has not terminated prior to the time
determined by the Committee for payment of
Participant TRASOP Contributions, the total amount of
Participant TRASOP Contributions shall be withheld
from his Compensation by means of payroll deductions
over a period of time determined by the Committee;
provided, however, that the Committee may establish a
procedure whereby some or all of such Participants
shall make payments of their TRASOP Contributions (or
unpaid balance thereof) by means of a single cash
payment in the form determined by the Committee.
(ii) With respect to any Participant entitled to make a
Participant TRASOP Contribution but whose employment
with an Employer has terminated prior to the time
determined by the Committee for payment of his
Participant TRASOP Contributions for such Plan Year,
the total amount of Participant TRASOP Contributions
shall be paid by a single cash payment prior to the
time
- 8 -
<PAGE> 14
determined by the Committee. Such cash payment
shall be in the form determined by the Committee.
(iii) With respect to any Participant whose Participant
TRASOP Contributions are initially paid by means of
payroll deduction pursuant to subparagraph (i) above
and whose employment with an Employer terminates
prior to the time that his Participant TRASOP
Contribution pledge has been fully paid, the
remaining portion of such pledge shall be paid by a
single cash payment prior to the time determined by
the Committee. Such cash payment shall be in the
form determined by the Committee.
(d) Limitation on Participant TRASOP Contributions. In addition
to the limitations on Participant TRASOP Contributions imposed
under Article 14, the Committee shall have the right to reduce
the amount of Participant TRASOP Contributions made by Highly
Compensated Employees to insure that the Plan complies with
the requirements of Code Section 401(a)(4) and the regulations
promulgated thereunder.
4.3 Expenses.
Notwithstanding any other provision of this Plan, the following
provisions with respect to Plan Start-Up and Administrative Expenses
(as defined below) shall apply:
(a) Start-Up Expenses. The Company may withhold Start-Up Expenses
(as defined in Treasury Regulation Section 1.46-8(e)(6)(i),
from its Basic TRASOP Contributions to the extent the amount
of these expenses is known by the Company at the time it makes
is Basic TRASOP Contributions for the first Plan Year under
the Plan. To the extent the amount of these expenses is not
known at the time the Company makes its Basic TRASOP
Contributions, the Plan shall reimburse the Company out of
Plan Assets for Start-Up Expenses within a reasonable time
after the amounts are known to the Plan. In no event may the
aggregate Start-Up Expenses withheld by and paid to the
Company exceed the ceiling on Start-Up Expenses specified in
Treasury Regulation Sections 1.46-8(e)(6)(iii) and
1.46-9(e)(1)(iii).
(b) Administrative Expenses. The Company may withhold
Administrative Expenses (as defined in Treasury Regulation
Section 1.46-8(e)(7)(i)), incurred with respect to Plan Year
from its Basic TRASOP Contributions to the extent the amount
of these expenses is known by the Company at the time it makes
is Basic TRASOP Contributions for an Applicable Year. To the
extent the amount of these expenses is not known at the time
the Company makes its Basic TRASOP Contributions, the Plan
shall reimburse the Company out of Plan Assets for
Administrative Expenses within a reasonable time after the
amounts are known to the Plan. In no event may the aggregate
Administrative Expenses withheld by and paid to the Company
exceed the ceiling on Administrative Expenses specified in
Treasury Regulation Sections 1.46-8(e)(7)(ii) and
1.46-9(e)(1)(iii).
(c) Allocation of Expenses. Administrative and Start Up Expenses
shall be applied to reduce the Basic TRASOP and Matching
TRASOP Contributions on a pro rata basis. If such
Contributions have been made, an amount shall be subtracted
from each Participant's Account who receives an allocation of
such contributions which amount is equal to the difference
between the allocation(s) credited to the Participant's
Account
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<PAGE> 15
and the Allocations that would have been credited if
the Administrative and Start Up Expenses had been applied to
reduce such Contributions.
4.4 Separate Accounting.
All Basic TRASOP Contributions, Matching TRASOP Contributions, and
Participant TRASOP Contributions shall be accounted for separately
from each other and any other contributions to the Plan.
4.5 Form of Basic and Matching TRASOP Contributions.
Basic, Matching, and Participant TRASOP Contributions shall be made in
cash or Company Stock which shall be allocated to Participant Accounts
in accordance with Section 5.2 and shall be applied to purchase, or
exchanged for, units in the Company Stock Fund (which shall be
credited to the Participants' Accounts) within ninety days.
Any purchase of Company Stock for the Plan may be made by the Trustee
either on the open market or, if agreed to by the Company, by
purchasing directly from the Company authorized but unissued shares or
shares previously issued and reacquired by the Company. If the
Company sells Company Stock directly to the Trustee for the Plan, no
commission may be charged and the purchase price per share shall be
equal to the lower of:
(a) the unweighted average of the reported daily high and low sales
prices for Company Stock on the New York Stock Exchange, Inc.
for the five consecutive trading days up to and including the
date on which the Trustee and the Company agree to the sale,
or, if the New York Stock Exchange, Inc. is closed on such
date, the period of five consecutive trading days immediately
preceding such date; or
(b) the unweighted average of the reported daily high and low
sales prices for Company Stock on the New York Stock Exchange,
Inc. for the trading day on which the Trustee and the Company
agree to the sale, or, if the New York Stock Exchange, Inc. is
closed on such date, the trading day immediately preceding
such date.
4.6 Redetermination and Recapture of Investment Credit.
(a) If for any reason any Company contribution to the Plan for
any Plan Year is determined to be less than the Incremental
Investment Credit for such year, the Company shall make up the
deficiency contributing additional cash or Company Stock
(based on the fair market value at the time the contribution
originally was to have been made) plus an amount equal to
dividends paid between the time that the contribution should
have been made and the actual time of contribution. If for
any reason the Company contribution to the Plan for any Plan
Year is determined to be greater than its Incremental
Investment Credit for such year, the Company may either reduce
its contributions to the Plan for the current or succeeding
Plan Years by the amount of such excess or deduct such excess
subject to section 404 of the Code.
(b) The Company's contribution to the Plan for any Plan Year shall
remain in the Plan (and, if allocated under the Plan, shall
remain so allocated) even though part or all of the
Incremental Investment Credit utilized for such year is
reduced pursuant to a
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<PAGE> 16
redetermination or an investment tax credit recapture
in accordance with applicable Code provisions then;
(i) the Company may reduce its contributions to the Plan
for the current or succeeding Plan Years by an amount equal
to such reduction; or
(ii) the Company may deduct the amount of such reduction
subject to section 404 of the Code.
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<PAGE> 17
ARTICLE 5
ACCOUNTS AND ALLOCATIONS
5.1 Participant Accounts.
The Trustee shall establish and maintain a separate Fund Account for
each Participant. Such Account shall be credited each Plan Year with
all Contributions made by or on behalf of the Participant during such
Plan Year. Such separate accounts shall not require a segregation of
the Trust assets, and no Participant shall acquire any right to or
interest in any specific asset of the Trust as a result of the
allocations provided for in the Plan. Separate accounts shall also be
maintained for all inactive Participants who have an interest in the
Plan. Each account shall be divided into the following subaccounts:
(a) The Basic TRASOP Contribution Account into which shall be
allocated Basic TRASOP Contributions;
(b) The Matching TRASOP Contribution Account into which shall be
allocated Matching TRASOP Contributions; and
(c) The Participant TRASOP Contribution Account into which shall
be allocated a Participant TRASOP Contributions.
5.2 Allocation of Basic TRASOP Contributions.
Basic TRASOP Contributions for a Plan Year will be allocated as of the
last day of the Plan Year to the Basic TRASOP Contribution Account of
each eligible Participant entitled to receive such an allocation in an
amount equal to the Company's Basic TRASOP Contribution multiplied by
a fraction, the numerator of which is the Participant's Compensation
for the Plan Year, and the denominator of which is the aggregate
Compensation for the Plan Year of all Participants entitled to receive
allocations of the Basic TRASOP Contribution.
5.3 Allocation of Matching TRASOP Contributions.
Matching TRASOP Contributions for a Plan Year will be allocated as of
the last day of the Plan Year to an eligible Participant's Matching
TRASOP Contribution Account in an amount equal to the Participant's
TRASOP Contribution made or pledged for the Plan Year. However, if
the aggregate Matching TRASOP Contribution exceeds the aggregate
Participant TRASOP Contributions for such Plan Year, the excess
Matching Contribution shall be returned to the Company.
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<PAGE> 18
5.4 Allocation of Participant TRASOP Contributions.
(a) Participant TRASOP Contributions shall be allocated to the
Participant TRASOP Contribution Account of the Participant who
made such contribution as of the last day of the Plan Year
preceding the Plan Year in which the Contributions are
actually made by the Participant.
(b) If, for any reason, a Participant's after tax contribution for
an Applicable Year exceeds the amount of the Matching TRASOP
Contribution allocated to that Participant's Account for the
Applicable Year, the excess shall be returned to the
Participant no later than 30 days after the date for
investment of collected Participant pledges (as specified in
Plan Section 4.2(e)).
5.5 Allocation of Dividends on Company Stock. Dividends paid, if any,
with respect to Company Stock held in the Fund will be received by the
Trustee, and credited to the Company Stock Fund and allocated in
accordance with Section 5.6.
5.6 Units and Net Asset Value.
(a) Following close of business on a Valuation Date and before
effecting any addition/reduction described in Paragraph (b),
below, to the Company Stock Fund for the Valuation Date, the
Trustee shall determine the fair market value of the Plan
assets held in the Company Stock Fund and, by dividing such
value by the number of outstanding units of the Company Stock
Fund immediately prior to the Valuation Date, shall determine
the net asset value of a unit of the Company Stock Fund for
the Valuation Date. The number of outstanding units of the
Company Stock fund for a Valuation Date shall initially equal
the number of outstanding units of the Company Stock Fund
immediately prior to the Valuation Date, but shall be subject
to increase and decrease according to Paragraph (b), below.
(b) After determining the net asset value of a unit of the Company
Stock Fund for the Valuation Date, the Trustee shall account
for any addition to the Company Stock Fund for the Valuation
Date resulting from dividends on Company Stock held in the
Company Stock Fund or interest or earnings of any kind by
increasing the number of outstanding units of the Company
Stock Fund, on the basis of the net asset value of a unit of
the Company Stock Fund for the Valuation Date. The Trustee
shall then allocate such additional units among Accounts in
proportion to the number of Company Stock Fund units credited
to an Account immediately prior to the Valuation Date.
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<PAGE> 19
5.7 Valuation Procedures.
(a) Committee Discretion. The Committee shall establish
accounting procedures for the purpose of making the
allocations, valuations and adjustments to Participants
accounts provided for in this Article. Should the Committee
determine that the strict application of its accounting
procedures will not result in an equitable and
non-discriminatory allocation among the accounts of
Participants, it may modify its procedures for the purpose of
achieving an equitable and non-discriminatory allocation in
accordance with the general concepts of the Plan and the
provisions of this Article.
(b) Company Stock. All valuations of Company Stock, where such
securities are not readily tradable on an established
securities market and where such valuations relate to
activities carried on by the Plan, shall be made by one or
more independent appraisers who meet the requirements, if any,
of the Code and applicable regulations.
5.8 Diversification of Participant Accounts. A Participant who has
attained age 55 and completed a total of ten years of participation in
this Plan and the ESP (a "Qualified Participant"), shall be entitled
to elect to diversify the investment of his Account as follows:
(a) The diversification election shall be made in writing on a
form provided by the Committee during the 90 day period
following the last day of each of the six consecutive Plan
Years beginning with the Plan Year the Participant becomes a
Qualified Participant.
(b) The diversification election shall be made by electing that
the amount subject to the diversification election shall be
transferred directly to the Qualified Participant's account in
the ESP and allocated to the appropriate subaccounts within
the ESP. (If the Qualified Participant does not have an
account in the ESP, an account will be established for him.)
The Qualified Participant may invest his ESP account by
electing from among no less than three investment options
offered on terms consistent with regulations issued under Code
Section 401(a)(28). If the ESP does not provide alternative
investment options at the time a Qualified Participant
acquires the right to make a diversification election, the
Committee shall distribute the portion of the Qualified
Participant's Account subject to the election to the Qualified
Participant no later than 90 days after the end of the
election period referred to in subsection (a), provided the
Participant requests the distribution in writing.
(c) During the first five election periods, the amount subject to
a diversification or distribution election shall be no less
and no more than 25% of the Participant's Account, including
any amount subject to a prior election. During the sixth
election period, the amount subject to a diversification
election shall not exceed 50% of the Participant's Account,
including any amount subject to a prior election.
(d) For purposes of determining who is a Qualified Participant,
Plan participation shall be computed by adding a Participant's
years of participation in this Plan and years of Participation
in the ESP; however, years during which the Participant
participated both in this Plan and the ESP shall not be
counted twice.
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<PAGE> 20
(e) For the purposes of distribution or transfer to the ESP
pursuant to the Participant's diversification election, the
Plan Administrator shall value a Qualified Participant's
Account as of the last business day of May.
5.9 Value of Account for Purposes of Distribution.
The value of a Participant's Account for purposes of distributions
made to Participants in accordance with the Section 5.8(b) and the
provisions of Article 6, shall be the value of that Account determined
as of the Valuation Date immediately preceding the distribution.
5.10 Errors.
Where an error or omission is discovered in any Participant's Account,
the Committee shall make appropriate corrective adjustments as of the
end of the Plan Year in which the error or omission is discovered. If
it is not practical to correct the error retroactively, an addition to
an Account shall be treated as an expense of the Trust Fund and a
subtraction from an Account shall be treated as income to the Trust
Fund.
5.11 Vesting.
A Participant shall at all times be 100% vested in his Account.
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ARTICLE 6
VOTING AND TENDER OF TRASOP SECURITIES
6.1 Pass-Through Voting, Tender and Exchange.
(a) A Participant shall be entitled to direct the Trustee as to
the manner in which any Company Stock held in the Company
Stock Fund that represents the proportional interest of the
units of such Fund held in the Participant's Account, as
determined by the Committee, shall be voted. The Committee
shall furnish to each Participant explanatory materials
adequate for such purpose together with such form of voting
instructions as the Committee shall prescribe. The Trustee
shall vote specifically in accordance with each Participant's
instructions to the extent of such Participant's whole shares
of Company Stock and shall, to the extent possible, vote
Participants' fractional shares the Company Stock Fund in such
manner as to reflect the Participants' expressed desires with
respect to whole shares. The Trustee shall vote shares of the
Company Stock held in the Stock Fund with respect to which the
Trustee does not receive instructions in the same proportion
as are voted the shares of Company Stock with respect to which
instructions were received by the Trustee.
(b) Subject to the provisions of the Trust Agreement, if a "cash
tender offer" or "exchange offer" for shares of Company Stock
is made, Company Stock held in the Company Stock Fund that
represents the proportional interest of the units of such
Investment Fund held in a Participant's Account shall be
tendered or exchanged by the Trustee only in accordance with
the written instructions and directions of such Participant to
the Trustee. If written instructions or directions to tender
or exchange are not timely received from a Participant, the
Participant's shares of Company Stock shall not be tendered or
exchanged pursuant to such "cash tender offer'" or "exchange
offer" by the Trustee. For purposes of this Paragraph (b),
the term "cash tender offer" shall include a tender offer for,
or request or invitation for tenders of, shares of Company
Stock in exchange for cash, as made to the Plan or to holders
of shares Company Stock generally; and the term "exchange
offer" shall include a tender offer for, or request or
invitation for tenders of, any shares of Company Stock in
exchange for any consideration other than for all cash, as
made to the Plan or to holders of shares of Company Stock is
made.
6.2 Distribution of Information.
(a) The Trustee shall use its best efforts to take those steps
reasonably necessary to furnish information to, and allow
decision by, each Participant with respect to such "cash
tender offer" or "exchange offer" and the Participant's shares
of Company Stock in substantially the same manner as would be
available to holders of Company Stock generally, and, in that
connection, the Trustee shall:
(i) inform each Participant as to the existence of such
"cash tender offer" or "exchange offer;"
(ii) transmit to each Participant as soon as practicable
such written information, explanation and other material
relative to such "cash tender offer" or "exchange offer" as
are made available by Panhandle Eastern Corporation or by the
persons or entities
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<PAGE> 22
making such "cash tender offer" or "exchange offer" to the
holders of shares of Company Stock generally;
(iii) request detailed written instructions and directions
from each Participant as to whether to tender or exchange the
Participant's shares of Company Stock and, if so instructed
and directed, as to the time and manner of such tender or
exchange, and such instructions, and directions of the
individual Participants shall be given to the election judge
or the Trustee and shall be kept confidential from the
Company; and
(iv) use its best efforts to effect on a confidential and
nondiscriminatory basis the order or exchange of Company Stock
held under the Plan with respect to such "cash tender offer"
or "exchange offer" solely in accordance with written
instructions and directions received from the Participants.
(b) The Corporate Secretary of the Company is the Plan fiduciary
responsible for ensuring (i) that information relating to the
purchase, holding and sale of units of the Company Stock Fund
and to the exercise of voting, tender and similar rights with
respect to shares of Company Stock held in the Company Stock
Fund by Participants, is maintained in accordance with
procedures which are designated to safeguard the
confidentiality of such information except to the extent
necessary to comply with federal laws or state laws not
preempted by the Act, and (ii) that an independent fiduciary
is appointed to carry out activities relating to any
situations which the Corporate Secretary of the Company
determines involves a potential for undue Employer influence
upon Participants with regard to the direct or indirect
exercise of shareholder rights.
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<PAGE> 23
ARTICLE 7
DISTRIBUTIONS TO PARTICIPANTS
7.1 Entitlement to Distribution.
A Participant shall be entitled to a distribution of his Account
following a Termination of Employment. The sole method of
distribution of a Participant's Account shall be payment in a single
lump sum.
7.2 Form of Distribution.
Unless a Participant elects to receive a distribution of his Account
in cash, any distribution of a Participant's Account shall, to the
maximum extent possible, be made entirely in whole shares of Company
Stock, with the value of any fractional interest to be paid in cash.
7.3 Time of Distribution.
(a) Following Termination of Employment and subject to the
Participants' consent, distributions of Participants' Accounts
shall be made within 90 days after the first Valuation Date
with respect to which the Participant's Account does not
receive an allocation of a Basic TRASOP Contribution, a
Matching TRASOP Contribution, or a Participant TRASOP
Contribution.
(b) Requests for distribution from the Plan shall be made on a
form provided by the Committee. If the Participant does not
consent to distribution of his Account then the Account shall
be distributed no later than the Valuation Date coincident
with or following the Participant's 65th birthday. See
paragraph (c) for circumstances where the Participant's
consent to a Distribution is not required.
(c) A Participant's consent to a Distribution of his Account shall
not be required in the circumstances described below, and the
Committee shall direct the Trustee to distribute the
Participant's Account as provided below:
(i) Account Less Than $3,500. If the value Participant's
Account is less than or equal to $3,500, such Account
will be distributed in a lump sum no later than 90
days after the date set forth in paragraph (a).
(ii) Age 70-1/2. If a distribution is required under
Section 7.4 (relating to mandatory distributions for
Participants age 70-1/2), the Participant's Account
will be distributed as provided in such Section.
(d) Except in case of Termination of Employment, or as required
under Sections 5.8, 7.4 or otherwise permitted under Code
Section 409(d), no Company Stock allocated to a Participant's
Account shall be distributed from that account before the end
of the 84th month beginning after the month in which such
Company Stock is deemed allocated to the Account under the
terms of the Plan.
(e) The Plan shall not distribute from a Participant's Account
cash or Company Stock attributable to unpaid pledges of
Participant TRASOP Contributions by such Participant.
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<PAGE> 24
(f) The Committee shall issue directions to the Trustee concerning
the recipient and the distribution date of benefits which are
to be paid from the Trust pursuant to the Plan.
(g) The Committee may establish for administrative purposes,
uniform and nondiscriminatory guidelines concerning the
commencement of benefits.
7.4 Special Distribution Rules.
(a) To the extent that the distribution rules described in this
Section provide a limitation upon distribution rules stated
elsewhere in this Plan, the distribution rules stated in this
Section shall take precedence over such conflicting rules.
However, under no circumstances shall the rules stated in this
Section be deemed to provide distribution rights to
Participants or their Beneficiaries which are more expansive
or greater than the distribution rights stated elsewhere in
this Plan. For example, if the only distribution method
permitted under the Plan is a lump sum, then distributions
under this Section 7.4 may only be made in a lump sum. In
addition, if the Plan requires distributions to commence at
age 65 for Participants who have terminated Employment,
distributions must commence at age 65 and may not be delayed
to age 70-1/2.
(b) In no event may the distribution of a Participant's Account
commence later than April 1 following the calendar year in
which the Participant attains age 70-1/2 (the "required
beginning date"). However, if a Participant attained age
70-1/2 prior to January 1, 1988 and is not a 5% owner of an
Employer (as defined in Code Section 401(a)(9) and the
Treasury Regulations thereunder), such Participant's Account
shall commence to be distributed no later than April 1
following the calendar year in which incurs his Termination
Date.
(c) The entire interest of each Participant shall be distributed,
beginning not later than the required beginning date, in a
single lump sum.
(d) If a Participant dies before the required beginning date, the
Participant's vested Account must be distributed in a lump sum
within five years after the death of the Participant.
(e) Notwithstanding anything to the contrary herein, distributions
under the Plan will comply with Treasury Regulations issued
under Code Section 401(a)(9) and any other provisions
reflecting Code Section 401(a)(9) as prescribed by the
Commissioner of the Internal Revenue Service.
7.5 Right of First Refusal.
(a) During any period when Company Stock is not publicly traded,
all distributions of Company Stock to any Participant or his
Beneficiary (the "Distributee") by the Trust shall be subject
to a "right of first refusal" upon the terms and conditions
hereinafter set forth. The right of first refusal shall
provide that, prior to any transfer of Company Stock by a
distributee, the Company Stock must first be offered for
purchase in writing to the Company, and then, if refused by
the Company, to the Trustee, at the Company Stock then fair
market value. The Company may require that a Distributee
execute an appropriate stock transfer agreement which
recognizes and includes the terms of the
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<PAGE> 25
right of first refusal prior to receiving Company Stock.
Neither the Trust nor the Company shall be required to
exercise the "right of first refusal".
(b) The terms and conditions of the "right of first refusal" shall
be as follows:
(1) If the distributee receives a bona fide offer for the
purchase of all or any part of his Company Stock from
a third party, the distributee shall forthwith
deliver (by registered mail, return receipt
requested) written notice of such offer to the
Committee and the Trustee. The Trustee (as directed
by the Committee) or the Company, as the case may be,
shall then have 14 days after receipt by the
Committee of the written notice of such offer to
exercise the right to purchase all or any portion of
the Company Stock. Subject to paragraph (2), the
purchase price to be paid by the Trust or the Company
for the Company Stock and the terms of such purchase
shall be the purchase price and terms stated in the
bona fide offer received by the distributee; and
(2) The purchase price and other terms under the "right
of first refusal" must not be less favorable to the
distributee than the greater of the value of the
Company Stock determined on the preceding or
coincident Valuation Date or the purchase price and
other terms offered by a buyer other than the Company
or the Trust, making a good faith offer to purchase
the Company Stock from the distributee.
(c) Shares of Company Stock held or distributed by the Trustee
may include such legend restrictions on transferability as
the Company may reasonably require in order to assure
compliance with applicable federal and state securities
laws and legend restrictions reflecting the right of first
refusal described in this Section. Aside from the
restrictions described herein, no shares of Company Stock
may be subject to restrictions on transferability or call
options, except to the extent that a Participant may agree
to place restrictions upon any shares of Company Stock
which he is entitled to receive from the Trust.
(d) The provisions of this Section shall apply only to shares
of Company Stock held or distributed by the Trustee during
any period when such shares are not readily tradable on an
established market and shall continue to apply even if the
Plan ceases to be an employee stock ownership plan under
Section 4975(e)(7) of the Code.
7.6 Put Option.
If at the time of distribution, Company Stock distributed from the
Trust Fund is not treated as "readily tradable on an established
market" within the meaning of Section 409(h) of the Code and the
Regulations, such stock shall be subject to a put option in the hands
of a Qualified Holder (as defined below) by which such Qualified
Holder may sell all or any part of the Company Stock distributed to
him by the Trust to the Trust. Should the Trust decline to purchase
all or any part of the Company Stock put to it by the Qualified
Holder, the Company shall purchase those shares that the Trust
declines to purchase. The put option shall be subject to the
following conditions:
(a) The term "Qualified Holder" shall mean the Participant or
Beneficiary receiving the distribution of Company Stock from
the Plan, any other party to whom Company Stock
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<PAGE> 26
is transferred by gift or by reason of death, and any
trustee of an individual retirement account (as defined under
Code Section 408) to which all or any portion of the
distributed Company Stock is transferred pursuant to a
tax-free "rollover" transaction satisfying the requirements of
Sections 402 and 408 of the Code.
(b) During the 60-day period following any distribution of Company
Stock, a Qualified Holder shall have the right to require the
Company to purchase all or a portion of the distributed stock
held by the Qualified Holder. The purchase price to be paid
for any Company Stock shall be its fair market value
determined (1) as of the Valuation Date coinciding with or
next preceding the exercise of the put option under this
Section 7.6 or, in the case of a transaction between the Plan
and a "disqualified person" within the meaning of Section
4975(e)(2) of the Code, (2) as of the date of the transaction.
(c) If a Qualified Holder fails to exercise his put option under
Section 7.6(b), the option shall temporarily lapse upon the
expiration of the 60-day period. As soon as practicable
following the last day of the Plan Year in which the 60-day
option period under Section 7.6(b) expires, the Committee
shall notify the non-electing Qualified Holder (if he is then
a shareholder of record) of the valuation of the Company Stock
as of the last day of the Plan Year in which such 60-day
option period expired. During the 60-day period following
receipt of such valuation notice, the Qualified Holder shall
again have the right to require the Company to purchase all or
any portion of the distributed stock. The purchase price to
be paid therefor shall be based on the valuation of the
Company Stock as of the Valuation Date coinciding with or next
preceding the exercise of the option under this subsection
7.6(c).
(d) The foregoing put options under Section 7.6 shall be effective
solely against the Company and shall not obligate the Plan or
Trust in any manner.
(e) Except as otherwise required or permitted by the Code, the put
options under Section 7.6 shall satisfy the requirements of
Section 54.4975-7(b) of the Treasury Regulations to the
extent, if any, that such requirements apply to such put
options.
7.7 Exercise of Put Option.
If a Qualified Holder exercises his put option under Section 7.6,
payment for the Company Stock repurchased shall be made in a lump sum
payment not later than 30 days after such exercise.
7.8 Stock Transfer Taxes.
Subject to applicable law, the stock transfer or similar taxes, if
any, arising in connection with the purchase of shares pursuant to
this Article shall be the obligation of the purchaser of such shares.
7.9 Payment to Minors and Incapacitated Persons.
If any amount is payable to a minor or to any person who, in the
judgment of the Committee, is incapable of making proper disposition
thereof, such payment shall be made for the benefit of such minor or
such person in any of the following ways as the Committee, in its sole
discretion, shall determine:
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<PAGE> 27
(a) By payment to the legal representative of such minor or such
person;
(b) By payment directly to such minor or such person;
(c) By payment in discharge of liabilities incurred by or for the
benefit of such minor or such person. The Trustee will make
such payments as directed by the Committee without the
necessary intervention of any guardian or like fiduciary, and
without any obligation to require bond or to see to the
further application of such payment. Any payment so made
shall be in complete discharge of the Plan's obligation to the
Participant and his Beneficiaries.
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<PAGE> 28
7.10 Application for Benefits; Missing Persons.
The Committee may require a Participant or Beneficiary to complete and
file with the Committee certain forms as a condition precedent to the
payment of benefits. The Committee may rely upon all such information
given to it, including the Participant's current mailing address. It
is the responsibility of all persons interested in distributions from
the Trust Fund to keep the Committee informed of their current mailing
addresses.
7.11 Direct Rollovers.
(a) In General. Notwithstanding any provision of the Plan to the
contrary that would otherwise limit a Distributee's election
under this Section, a Distributee may elect, at the time and
in the manner prescribed by the Plan Administrator, to have
any portion of an eligible rollover distribution paid directly
to an eligible retirement plan specified by the Distributee in
a direct rollover.
(b) Definitions.
Eligible Rollover Distribution. An Eligible Rollover
Distribution is any distribution of all or any portion of the
balance to the credit of the Distributee, except that an
Eligible Rollover Distribution does not include (i) any
distribution that is one of a series of substantially equal
periodic payments (not less frequently than annually) made for
the life (or life expectancy) of the Distributee or the joint
lives (or joint life expectancies) of the Distributee and the
Distributee's designated Beneficiary, or for a specified
period of ten years or more; (ii) any distribution to the
extent such distribution is required under Section 401(a)(9)
of the Code; and (iii) 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).
Eligible Retirement Plan. An Eligible Retirement Plan is an
individual retirement account described in Section 408(a) of
the Code, an individual retirement annuity described in
Section 408(b) of the Code, an annuity plan described in
Section 403(a) of the Code, or a qualified trust described in
Section 401(a) of the Code, that accepts the Distributee's
Eligible Rollover Distribution. However, in the case of an
Eligible Rollover Distribution to the surviving spouse, an
Eligible Retirement Plan is an individual retirement account
or individual retirement annuity.
Distributee. A Distributee includes an Employee or former
Employee. In addition, the Employee's or former Employee's
surviving spouse and the Employee's or former Employee's
spouse or former spouse who is an 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.
Direct Rollover. A Direct Rollover is a payment by the Plan
to the Eligible Retirement Plan specified by the Distributee.
(c) Waiver of 30-day Notice. If a distribution is one to which
Sections 401(a)(11) and 417 of the Internal Revenue Code do
not apply, such distribution may commence less than 30
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<PAGE> 29
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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<PAGE> 30
ARTICLE 8
ADMINISTRATION OF THE PLAN
8.1 Named Fiduciaries.
The following parties are named as Fiduciaries of the Plan and shall
have the authority to control and manage the operation and
administration of the Plan:
(i) The Board;
(ii) The Trustee;
(iii) The Committee.
The Fiduciaries named above shall have only the powers and duties
expressly allocated to them under the Plan and Trust Agreement;
provided, however, that if a power or responsibility is not expressly
allocated to a named fiduciary, the power or responsibility shall be
that of the Company. Except as otherwise provided herein, no
Fiduciary shall have any liability for, or responsibility to inquire
into, the acts and omissions of any other Fiduciary in the exercise of
powers or the discharge of responsibilities assigned to such other
Fiduciary under this Plan or the Trust Agreement.
8.2 Board of Directors.
The Board shall have the following powers and duties with respect to
the administration of the Plan:
(a) to cause an Employer to make contributions to the Plan as
required by the Plan and the Act;
(b) to appoint and remove the Trustee and the members of the
Committee.
8.3 Trustee.
The Trustee shall exercise all of the powers and duties assigned to
the Trustee as set forth in the Trust. The Trustee shall have no
other responsibilities with respect to the Plan.
8.4 Committee.
(a) A Committee of three or more individuals shall be appointed by
and serve at the pleasure of the Board to administer the Plan.
The Board shall have the right to remove any member of the
Committee at any time, with or without cause. A member may
resign at any time by written notice to the Committee and the
Board. The Committee shall by written notice keep the Trustee
notified of current membership of the Committee, its officers
and agents. The Committee shall furnish the Trustee a
certified signature card for each member of the Committee and
for all purposes hereunder the Trustee shall be entitled to
rely upon such certified signatures.
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<PAGE> 31
(b) The Board shall appoint a Secretary from among the members of
the Committee. All resolutions, determinations and other
actions shall be by a majority vote of all members of the
Committee. The Committee may appoint such agents, who need
not be members of the Committee, as it deems necessary for the
effective performance of its duties, and may delegate to such
agents such powers and duties, whether ministerial or
discretionary, as the Committee deems expedient or
appropriate. The compensation of such agents shall be fixed
by the Committee; provided, however, that in no event shall
compensation be paid if such payment violates the provisions
of the Act.
(c) The Committee shall have complete discretionary control of the
administration and interpretation of the Plan with all powers
necessary to enable it to properly carry out the provisions of
the Plan. In addition to all implied powers and
responsibilities necessary to carry out the objectives of the
Plan and to comply with the requirements of the Act, the
Committee shall have the following specific powers and
responsibilities to be exercised in the Committee's sole
discretion:
(i) To construe the Plan and Trust Agreement and to
determine all questions arising in the
administration, interpretation and operation of the
Plan;
(ii) To decide all questions relating to the eligibility
of Eligible Employees to participate in the benefits
of the Plan and Trust Agreement;
(iii) To determine the benefits of the Plan to which any
Participant, Beneficiary or other person may be
entitled;
(iv) To keep records of all acts and determinations of the
Committee, and to keep all such records, books of
accounts, data and other documents as may be
necessary for the proper administration of the Plan;
(v) To prepare and distribute to all Plan Participants
and Beneficiaries information concerning the Plan and
their rights under the Plan, including, but not
limited to, all information which is required to be
distributed by the Act, the regulations thereunder,
or by any other applicable law;
(vi) To file with the Secretary of Labor such reports and
additional documents as may be required by the Act
and regulations issued thereunder, including, but not
limited to, summary plan descriptions, modifications
and changes, annual reports, terminal reports and
supplementary reports;
(vii) To file with the Secretary of the Treasury all
reports and information required to be filed by the
Internal Revenue Code, the Act and regulations issued
under each; and
(viii) To do all things necessary to operate and administer
the Plan in accordance with its provisions and in
compliance with applicable provisions of federal law.
(d) To enable the Committee to perform its functions, an Employer
shall supply full and timely information of all matters
relating to the compensation and length of service of all
Participants, their retirement, death or other cause of
Termination of Employment, and
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<PAGE> 32
such other pertinent facts as the Committee may require. The
Committee shall advise the Trustee of such facts and issue to
the Trustee such instructions as may be required by the Trustee
in the administration of the Plan. The Committee and any
Employer shall be entitled to rely upon all certificates and
reports made by a Certified Public Accountant selected or
approved by the Employer. The Committee, each Employer and its
officers and the Trustee, shall be fully protected in respect
of any action suffered by them in good faith in reliance upon
the advice or opinion of any accountant or attorney, and all
action so taken or suffered shall be conclusive upon each of
them and upon all other persons interested in the Plan.
8.5 Standard of Fiduciary Duty.
Any Fiduciary, or any person designated by a Fiduciary to carry
out fiduciary responsibilities with respect to the Plan, shall
discharge his duties solely in the interests of the Participants and
Beneficiaries for the exclusive purpose of providing them with
benefits and defraying the reasonable expenses of administering the
Plan. Any Fiduciary shall discharge his duties with the care, skill,
prudence and diligence under the circumstances then prevailing that a
prudent man acting in a like capacity and familiar with such matter
would use in the conduct of an enterprise of a like character and with
like aims. Any Fiduciary shall discharge his duties in accordance
with the documents and instruments governing the Plan insofar as such
documents and instruments are consistent with the provisions of the
Act. Notwithstanding any other provisions of the Plan, no Fiduciary
shall be authorized to engage in any non-exempt transaction which is
prohibited by Sections 406 and 2003(a) of the Act or Section 4975 of
the Code in the performance of its duties hereunder.
8.6 Claims Review.
In any case in which a claim for Plan benefits of a Participant or
beneficiary is denied or modified, the Committee shall within a
reasonable period of time after receipt of such claim, furnish to the
claimant a notice of its decision which shall:
(a) state the specific reason or reasons for the denial or
modification,
(b) provide specific reference to pertinent Plan provisions on
which the denial or modification is based,
(c) provide a description or any additional material or
information necessary for the Participant, his beneficiary or
representative to perfect the claim and an explanation of why
such material or information is necessary, and
(d) explain the Plan's claim review procedure as contained herein.
If such notice is not furnished to the claimant within a reasonable
period of time following receipt of the claim by the Committee, the
claim shall be deemed denied.
In the event a claim for benefits is denied or modified, if
the Participant, his beneficiary or representative desires to have
such denial or modification reviewed, he must, within sixty days
following receipt of the notice of such denial or modification, submit
a written request for review by the Committee of its initial decision.
Within sixty days following such request for
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<PAGE> 33
review the Committee shall, after providing a full and fair hearing,
render its final decision in writing to the Participant, his
beneficiary or representative stating specific reasons for such
decision. If special circumstances require an extension of such
sixty-day period, the Committee's decision shall be rendered as soon
as possible, but not later than 120 days after receipt of the request
for review. If an extension of time for review is required, written
notice of the extension shall be furnished to the Participant,
beneficiary or representative prior to the commencement of the
extension period. The Committee's decision on review of an specific
reasons for the decision, shall be written in a manner calculated to
be understood by the appealing claimant and shall include specific
references to the pertinent Plan provisions on which such decision was
based. If the Committee's decision on review of an appealed claim is
not furnished to the claimant within the sixty-day period following
the appealing claimant's request for review or the 120 days following
such request if the sixty-day period is extended, the appealed claim
shall be deemed denied on review.
8.7 Indemnification.
The Company shall indemnify any hold harmless each member of the
Committee and any other person acting on its behalf, against any and
all expenses and liabilities arising out of his or her administrative
functions or fiduciary responsibilities, excepting only expenses and
liabilities arising out of the individual's own willful misconduct.
Expenses against which such person shall be indemnified hereunder
include, without limitation, the amounts of any settlement or
judgment, costs, counsel fees and related charges reasonably incurred
in connection with a claim asserted or a proceeding brought or
settlement thereof.
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<PAGE> 34
ARTICLE 9
AMENDMENT AND TERMINATION
9.1 Right to Amend.
No amendment of the Plan may be made which would vest in any Employer,
directly or indirectly, any interest in or control of the Trust Fund.
No amendment may be made which would vary the Plan's exclusive purpose
of providing benefits to Participants, and their beneficiaries, and
defraying reasonable expenses of administering the Plan or which would
permit the diversion of any part of the Trust Fund from that exclusive
purpose. No amendment shall be made which would reduce any then
nonforfeitable interest of a Participant. No amendment shall increase
the duties or responsibilities of the Trustee unless the Trustee
consents thereto in writing. Subject to these limitations and any
other limitations contained in the Act or the Code, the Company may
from time to time unilaterally amend, in whole or in part, any or all
provisions of the Plan on behalf of itself and the other Employers.
The Company's right to amend the Plan may be exercised by resolution
of its Board of Directors, the Finance Committee of its Board of
Directors (or any successor committee) or its Policy Committee, and
any such amendment of the Plan shall be set forth in writing.
Specifically, but not by way of limitation, the Company may
unilaterally make any amendment necessary to acquire and maintain a
qualified status for the Plan under the Code, whether or not
retroactive, on behalf of itself and the other Employers which have
adopted the Plan.
9.2 Termination and Discontinuance of Contributions.
The Company shall have the right at any time to terminate this Plan or
to discontinue permanently its contributions hereunder through action
of the Board in accordance with its normal procedures. Upon Plan
termination, the Committee shall direct the Trustee with reference to
the disposition of the Fund, after payment of any expenses properly
chargeable against the Fund. Alternatively, the Committee may direct
the Trustee to either continue to hold the Fund in Trust and
distribute the accounts of Participants in the manner provided in
Article 7, or to immediately distribute all amounts held in Trust to
the Participants as of the date of such termination (subject to the
requirements of Plan Section 7.3(e)).
Upon any termination of the Plan with respect to a group of
Participants which amounts to a "partial termination" under
Regulations adopted by the Commissioner of Internal Revenue, the
Committee shall determine whether the accounts of Participants with
respect to which the Plan is terminated shall be distributed to the
Participants and Beneficiaries prior to the date they would otherwise
receive distributions under the Plan, and the Trustee shall act in
accordance with such determination.
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<PAGE> 35
9.3 IRS Approval of Termination.
The Trustee shall not be required to make any distribution from this
Plan in the event of complete or partial termination until the
Internal Revenue Service has issued a favorable determination with
respect to termination.
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<PAGE> 36
ARTICLE 10
MISCELLANEOUS
10.1 Headings.
The headings and sub-headings in this Plan have been inserted for
convenience of reference only and are to be ignored in any
construction of the provisions hereof.
10.2 Spendthrift Clause.
Except as otherwise required by a "qualified domestic relations order"
as defined in code Section 414(p), none of the benefits, payments,
proceeds or distributions under this Plan shall be subject to the
claim of any creditor of any Participant or Beneficiary, or to any
legal process by any creditor of such Participant or Beneficiary, and
none of them shall have any right to alienate, commute, anticipate or
assign any of the benefits, payments, proceeds or distributions under
this Plan except for the extent expressly provided herein to the
contrary. If any Participant shall attempt to dispose of the benefits
provided for him hereunder, or to dispose of the right to receive such
benefits, or in the event there should be an effort to seize such
benefits or the right to receive such benefits by attachment,
execution or other legal or equitable process, such right to benefits
shall pass and be transferred, at the discretion of the Plan
Administrator, to such one or more as may be appointed by the Plan
Administrator from among the Beneficiaries, if any therefore
designated by the Participant, or from the spouse, children or other
dependents of the Participant, in such shares as the Committee may
appoint. Any appointment so made by the Committee may be revoked by
it at any time and further appointment made by it which may include
the Participant.
10.3 Discrimination.
The Employer, the Committee, the Trustee and all other persons
involved in the administration and operation of the Plan shall
administer and operate the Plan and Trust in a uniform and consistent
manner with respect to all Participants similarly situated and shall
not permit discrimination in favor of officers, stockholders, or
highly-paid Employees.
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<PAGE> 37
10.4 Release.
Any payment to a Participant or Beneficiary, or to their legal
representatives, in accordance with the provisions of this Plan, shall
to the extent thereof be in full satisfaction of all claims hereunder
against the Trustee, Plan Administrator, Committee and any Employer,
any of whom may require such Participant, Beneficiary, or legal
representative, as a condition precedent to such payment, to execute a
receipt and release therefor in such form as shall be determined by
the Trustee, the Committee, or the Employer, as the case may be.
10.5 Compliance with Applicable Laws.
The Company, through the Plan Administrator, shall interpret and
administer the Plan in such manner that the Plan and Trust shall
remain in compliance with the Code, with the Act, and all other
applicable laws, regulations, and rulings.
10.6 Agent for Service of Process.
The agent for service of process of this Plan shall be the Company's
corporate secretary.
10.7 Merger.
In the event of any merger or consolidation of the Plan with any other
Plan, or the transfer of assets or liabilities by the Plan to another
plan, each Participant must receive a benefit immediately after the
merger, consolidation, or transfer which is equal to or greater than
the benefit such Participant would have been entitled to receive
immediately before the merger, consolidation, or transfer (assuming
that the Plan had then terminated), provided such merger,
consolidation, or transfer took place after the date of enactment of
the Act.
10.8 Governing Law.
The Plan shall be governed by the laws of the State of Texas to the
extent that such laws are not preempted by federal law.
10.9 Internal Revenue Service Approval.
Notwithstanding anything to the contrary elsewhere provided in this
agreement, this Plan is restated and amended on the condition that the
same shall be approved and the Plan qualified by the Internal Revenue
Service as meeting the requirements of the Internal Revenue Code of
1986, as amended, and the regulations issued thereunder, and in the
event qualification is not obtained, or cannot be obtained by
additional amendment satisfactory to the Company, the contribution
made by the Company for the years during which such Plan was to
be effective shall be delivered to the Company within one year after
the denial of such qualification.
10.10 Non-Reversion.
Except with respect to Contributions made by reason of mistake of
fact, of Contributions conditioned on qualification under 10.10 and
contributions conditioned on deductibility under Section 404 of the
Internal Revenue Code, no portion of the Fund may inure to the benefit
of any Employer. In the event of any such exceptions, the Trustee
shall promptly refund the amount in
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<PAGE> 38
question to the Employer. Returns of Contributions under this
10.11 shall be made within one year of the mistaken Contribution, the
date of denial of qualification, or disallowance of the deduction, as
the case may be.
10.11 Severability.
Should any provision of this Plan be deemed in violation of any law,
such provision shall be deemed void only to the extent required by
law, and all provisions of this Plan other than that held void shall
remain in effect.
10.12 Adoption of the Plan by an Affiliated Company.
(a) The Board shall determine which Affiliates shall become
Affiliated Companies within the terms of the Plan and shall so
designate in writing. The Committee may also specify such
terms and conditions pertaining to the adoption of the Plan by
the Affiliated Sponsor as the Committee deems appropriate.
(b) The Plan of the Affiliated Company and of the Company shall be
considered a single plan for purposes of Section
1.414(1)-1(b)(1) of the Treasury Regulations.
(c) So long as the Affiliated Company's designation as such
remains in effect, the Affiliated Company shall be bound by,
and subject to all provisions of the Plan and the Trust
Agreement. The exclusive authority to amend the Plan and the
Trust Agreement shall be vested in the Board and no Affiliated
Company shall have any right to amend the Plan or the Trust
Agreement. Any amendment to the Plan or the Trust Agreement
adopted by the Board shall be binding upon every Affiliated
Company without further action by such Affiliated Company.
(d) By action of the Committee, each Affiliated Company shall be
solely responsible for making Basic and Matching TRASOP
Contributions and any Qualified Nonelective Contributions with
respect to its Participants.
(e) The Company and each Affiliated Company will be tested on a
combined basis to determine whether the Company and such
Affiliated Companies satisfy the Average Actual Contribution
Percentage test described in Article 14.
(f) No Affiliated Company other than the Company shall have the
right to terminate the Plan. However, any Affiliated Company
may withdraw from the Plan by action of its board of directors
provided such action is communicated in writing to the Board
and the Committee. The withdrawal of an Affiliated Company
shall be effective as of the last day of the Plan Year
following receipt of the notice of withdrawal (unless the
Committee consents to a different effective date). In
addition, the Board may terminate the designation of an
Affiliated Company to be effective on such date as the
Committee specifies. Any such Affiliated Company which ceases
to be an Affiliated Company shall be liable for all costs
accrued through the effective date of its withdrawal or
termination and any contributions owing. In the event of the
withdrawal or termination of an Affiliated Company as provided
in this paragraph, such Affiliated Company shall have no right
to direct that assets of the Plan be transferred to a
successor plan for its Employees unless such a transfer is
approved by the Committee in its sole discretion.
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<PAGE> 39
ARTICLE 11
MAXIMUM AMOUNT OF ALLOCATION
11.1 Application of Article 11.
The provisions of this Article 11 shall govern notwithstanding any
other provisions of the Plan.
11.2 Maximum Additions to Account.
Annual Additions to a Participant's Account during any Plan Year may
not exceed the lesser of (a) $30,000 or (b) 25 percent of the
Participant's Compensation, provided that said $30,000 limitation
shall be adjusted annually for increases in cost of living in
accordance with the Regulations. For this purpose, the term "Annual
Additions" shall mean the following amounts which, without regard to
this Article 11, would have been credited to the Participant's Account
for any Plan Year: (a) Basic TRASOP Contributions allocated to a
Participant's Account during the Plan Year; (b) Matching TRASOP
Contributions allocated to a Participant's Account during the Plan
Year; (c) Participant TRASOP Contributions allocated during the Plan
Year; and (d) such other amounts as are contributed to this Plan or
any other plan of an Affiliate which may be required to be included
under the Code and regulations.
11.3 Order of Reduction.
If the amounts that would otherwise be allocated to a Participant's
Account must be reduced by reason of the limitations of Section 11.2,
such reduction shall be made in the following order of priority, but
only to the extent necessary:
(a) Participant TRASOP Contributions shall be returned to
Participants; Matching TRASOP Contributions to which the
refunded Participant TRASOP Contributions relate shall be
returned to the Company.
(b) Basic TRASOP Contributions shall be re-allocated to the
Accounts of other Participants as of the Valuation Date upon
which the excess allocation would occur in the same manner as
Basic TRASOP Contributions are allocated under Section 5.2.
To the extent that such reallocation is not possible because
of the limitations of Section 11.2, such Basic TRASOP
Contributions shall be held in an unallocated suspense account
under this Plan. Such suspense account shall be treated and
disposed of in accordance with Treasury Regulation Section
1.46-8(d)(6).
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<PAGE> 40
11.4 Additional Account Limitations.
(a) Subject to paragraph (c) of this Section 11.4, in the event
that, in any Plan Year and with respect to any Participant,
the sum of the "Defined Contribution Fraction" (as defined in
paragraph (b)) and the "Defined Benefit Fraction" (as defined
in paragraph (b)) would otherwise exceed 1.0, the benefit
payable under the defined benefit plan shall be reduced in
accordance with the provisions of that plan, but only to the
extent necessary to ensure that such limitation is not
exceeded. If this reduction does not ensure that the
limitation is not exceeded, then the Annual Addition to the
Plan shall be reduced in accordance with the provisions of the
Plan, but only to the extent necessary to ensure that such
limitation is not exceeded. If this reduction does not ensure
that the limitation is not exceeded, then the annual addition
to any defined contribution plan, other than the Plan, shall
be reduced in accordance with the provisions of that plan but
only to the extent necessary to ensure that such limitation is
not exceeded.
(b) In the case of a Participant with respect to whom the sum of
the Defined Contribution Fraction and the Defined Benefit
Fraction exceeds 1.0 with respect to the last Plan Year
beginning before January 1, 1983, an amount, determined in
accordance with the Regulations, may be subtracted from the
numerator of the Defined Contribution Fraction (not exceeding
such numerator) so that the sum of such Participant's Defined
Contribution Fraction and his Defined Benefit Fraction
computed under paragraph (a) of this Section 11.4 does not
exceed 1.0 for the last Plan Year beginning before January 1,
1983.
For purposes of this Article the following terms shall have the
following meanings:
11.5 Definitions. For the purposes of this Article:
(a) "Defined Contribution Fraction" shall mean, as to any
Participant for any Plan Year, a fraction, (A) the numerator
of which is the sum of Annual Additions, for the Plan Year and
all prior Plan Years, as of the close of the Plan Year and (B)
the denominator of which is the sum of the lesser of the
following amounts, determined for such Plan Year and for each
prior Plan Year in which a Participant had an Hour of Service
(1) the product of 1.25 multiplied by the dollar limitation in
effect for such year under Section 415(c)(1)(A) of the Code,
or (2) the product of 1.4 multiplied by the amount which may
be taken into account under Section 415(c)(1)(B) of the Code
with respect to the Participant for such year; provided,
however, that for years ending prior to January 1, 1976, the
numerator of such fraction shall in no event be deemed to
exceed the denominator of such fraction; further provided,
that, at the election of the Committee, in determining the
Defined Contribution Fraction for Plan Years ending after
December 31, 1982, the portion of the denominator for all
years ending before January 1, 1983 with respect to each
Participant shall be an amount equal to the product of the
denominator determined as provided in (b) above (as in effect
for the year ending in 1982) for the year ending in 1982,
multiplied by a fraction, the numerator of which is the lesser
of $51,875, or 25 percent of the Participant's compensation
for the year ending in 1981 multiplied by 1.4, and the
denominator of which is the lesser of $41,500, or 25 percent
of the Participant's compensation for the year ending in 1981.
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<PAGE> 41
(b) "Defined Benefit Fraction" shall mean, as to any Participant
for any Plan Year, a fraction, (A) the numerator of which is
the projected annual benefit (determined as of the close of
the Plan Year and in accordance with the Regulations of the
Participant under any defined benefit plan (as defined in
Sections 414(j) and 415(k) of the Code) maintained by the
Company or any Affiliate and (B) the denominator of which is
the lesser of (1) the product of 1.25 multiplied by the dollar
limitation in effect under Section 415(b)(1)(A) of the Code
for such Plan Year or (2) the product of 1.4 multiplied by an
amount equal to 100 percent of the Participant's average
compensation for his high three years within the meaning of
Section 415(b)(3) of the Code for such Plan Year.
(c) "Compensation" shall be as defined in Section 2.12 but subject
only to the limit in effect from time to time under Code
Section 401(a)(17).
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<PAGE> 42
ARTICLE 12
TOP HEAVY PROVISIONS
12.1 General.
The provisions of this Article shall become effective in any Plan Year
in which the Plan is determined to be Top Heavy and shall supersede
any conflicting provision of this Plan.
12.2 Definitions.
(a) Top Heavy. The Plan shall be Top Heavy for the plan Year if,
as of the Determination Date, the value of the Participant
Accounts of Key Employees exceeds 60% of the value of all
Participant Accounts. if an Employer maintains more than one
plan, all plans in which any Key Employee participates and all
plans which enable this Plan to satisfy the anti
discrimination requirements of Code Sections 401(a)(4) or 410
must be combined with this Plan ("required aggregation group")
for the purposes of applying the 60% test described in the
preceding sentence. Plans maintained by an Employer which are
not in the required aggregation group may be combined at the
Employer's election with this Plan for the purposes of
determining Top Heavy status if the combined plan satisfies
the requirements of Code Section 401(a)(4) and 410
("permissive aggregation group"). In determining the value of
Participant Accounts, all distributions made during the
five-year period ending on the Determination Date shall be
included and any unallocated contributions or forfeitures
attributable to the Plan Year in which the Determination Date
falls shall also be included. The following Accounts shall be
disregarded in determining Top Heavy status: (i) the Account
of any employee who was a Key Employee in a prior Plan Year
but is not a Key Employee for any of the five Plan Years
ending on the Determination Date; and (ii) the Account of any
current or former employee who has performed no services for
the Company or an Affiliate maintaining a plan in the
aggregation group for any of the five Plan Years ending on the
Determination Date.
For the purposes of this subsection, a Participant rollover
account shall be included in the value of Participant Accounts
except to the extent that the rollover account balance was
received in a transaction consummated after December 31, 1983
which was initiated by the Participant and the amount received
is attributable to a distribution or transfer from the plan of
an employer which is unrelated to the Employer.
If an Employer maintains a defined benefit plan during the
Plan Year which is subject to aggregation with this Plan, the
60% test shall be applied after calculating the present value
of the Participants' accrued benefits under the defined
benefit plan in accordance with the rules set forth in that
Plan and combining the present value of such accrued benefits
with the Participant's account balances under this Plan.
Solely for the purpose of determining if the Plan, or any
other plan included in the required aggregation group, is
Top-Heavy, a Non-key Employee's accrued benefit in a defined
benefit plan shall be determined under (i) the method, if any,
that uniformly applies for accrual purposes under all plans
maintained by the Affiliates, or (ii) if there is no such
method, as if such benefit accrued not more rapidly than the
slowest accrual rate permitted under the fractional accrual
rate of Code Section 411(b)(1)(C). The provisions of this
paragraph shall be effective January 1, 1987.
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<PAGE> 43
(b) Key Employee. Any employee of an Employer who, during the
Plan Year or the four preceding Plan Years was an officer
receiving Compensation in excess of 50% of the limit described
in Code Section 415(b)(1)(A), one of the ten employees of an
Employer owning the largest interests in the Employer and
receiving Compensation equal to or greater than the dollar
limit described in Code Section 415(c)(1)(A), a greater than
5% owner of the Employer, a greater than 1% owner of the
Employer receiving Compensation in excess of $150,000, or the
Beneficiary of a Key Employee. The Code Section 415(b)(1)(A)
and 415(c)(1)(A) limits referred to in the preceding sentence
shall be the specified dollar limit plus any increases
reflecting cost of living adjustments specified by the
Secretary of the Treasury.
(c) Determination Date. The last day of the Plan Year immediately
preceding the Plan Year for which Top Heavy status is
determined.
12.3 Minimum Benefit.
Notwithstanding any contrary provisions of this Plan. an Employer
shall direct the allocation, as of the last day of any Plan Year in
which the Plan is Top Heavy, of an Employer contribution to the
Account of each Non-Key Employee but who is employed on the last day
of the Plan Year (without regard to the Participant's Hours of Service
during the Plan Year) which, when combined with forfeitures allocated
for the Plan Year is at least the lesser of (i) 3% of the Non-Key
Employee's Compensation; or (ii) the same percentage of his
Compensation as the allocation to any Key Employee's Participant
Account for the Plan Year which constitutes the highest percentage of
the Compensation of any Key Employee for the Plan Year.
12.4 Combined Plan Limitation For Top Heavy Years.
In any Plan Year during which more than 90% of the Participant Account
balances are attributable to Key Employees, 100% or an equivalent
factor shall be substituted for 125% or an equivalent factor in the
combined plan fraction denominators described in Section 11.4. In any
Plan Year during which more than 60% but not more than 90% of the
Participant Account balances are attributable to Key Employees, 100%
or an equivalent factor shall be substituted for 125% or an equivalent
factor in the combined plan fraction denominators described in Section
11.4, unless the Participant Account of each non Key Employee
participating in the Plan receives Employer contributions and
Forfeitures totaling at least the lesser of 4% of the Participant's
Compensation or an amount equal to the allocation to a Key Employee's
Account which constitutes the greatest percentage of any participating
Key Employee's Compensation.
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<PAGE> 44
ARTICLE 13
HIGHLY COMPENSATED EMPLOYEES
13.1 In General.
For the purposes of this Plan, the term "Highly Compensated Employee"
is any active Employee described in Section 13.2 below and any Former
Employee described in Section 13.3 below. Various definitions used
in this Section are contained in Section 13.4. A Non-highly
Compensated Employee is an Employee who is neither a Highly
Compensated Employee nor a Family Member of a Highly Compensated
Employee.
13.2 Highly Compensated Employees.
(a) Look-Back Year. An Employee is a Highly Compensated
Employee if during a Look Back Year the Employee:
(1) is a 5 Percent Owner;
(2) receives Compensation in excess of $75,000;
(3) receives Compensation in excess of $50,000 and is a
member of the Top Paid Group; or
(4) is an Includable Officer.
The dollar amounts described above shall be increased
annually as provided in Code Section 414(q)(1).
(b) Determination Year. An Employee is a Highly Compensated
Employee if during a Determination Year the Employee:
(1) is a 5 Percent Owner; or
(2) is one of the 100 Employees who receives the most
Compensation from the Employer during the
Determination Year and during the Determination Year
(A) receives Compensation in excess of $75,000; (B)
receives Compensation in excess of $50,000 and is a
member of the Top Paid Group; or (C) is an
Includable Officer.
The dollar amounts described above shall be increased
annually as provided in Code Section 414(q)(1).
(c) Election to Use Simplified Method.
(1) If elected by the Committee (which election may
change from year to year), an Employee's status as a
Highly Compensated Employee shall be determined
pursuant to the simplified method described in Code
Section 401(k)(12).
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<PAGE> 45
(2) If the Committee elects to use the simplified method
for the Look Back Year, an Employee's status during
the Look Back Year shall be determined by
substituting "$50,000" for "$75,000" in subsection
(a)(2) and by ignoring the provisions of subsection
(a)(3).
(3) If the Committee elects to use the simplified method
for the Determination Year, an Employee's status for
the Determination Year shall be determined by
substituting "$50,000" for "$75,000" in subsection
(b)(2)(A) and by ignoring the provisions of
subsection (b)(2)(B).
(4) The Committee may make separate elections for both
Look Back Year and for the Determination Year.
(5) The simplified method may not be elected for a given
year unless (i) at all times during such year the
Employer maintained significant business activities
and employed Employees in at least two significantly
separate geographic areas and (ii) the Employer
satisfies all other conditions prescribed by the
Secretary of the Treasury or his delegate as a
prerequisite for electing the simplified method.
13.3 Former Highly Compensated Employee.
A Former Employee is a Highly Compensated Employee if (applying the
rules of Section 13.2) the Former Employee was a Highly Compensated
Employee during a Separation Year or during any Determination Year
ending on or after the Former Employee's 55th birthday. With respect
to a Former Employee whose Separation Year was prior to January 1,
1987, such Former Employee will be treated as a Highly Compensated
Employee only if the Former Employee was a 5% Owner or received
Compensation in excess of $50,000 during (i) the Former Employee's
Separation Year (or the year preceding such Separation Year); or (ii)
any year ending on or after such Former Employee's 55th birthday (or
the last year ending before such Former Employee's 55th birthday).
13.4 Family Aggregation Rules.
(a) For purposes of this Article 13, an Employee who is, for a
given Determination Year or Look-Back Year, either (i) a 5
Percent Owner, or (ii) a Highly Compensated Employee who is
one of the ten most highly compensated Employees ranked on
the basis of Compensation paid during such year, shall be
aggregated with such Employee's Family Members.
(b) For purposes of this Section 13.4, the term "Family Member"
means, with respect to an Employee described in Section
13.4(a), a person who is, on any day during the given
Determination Year or Look-Back Year:
(1) his spouse; or
(2) his lineal ascendant or descendant; or
(3) the spouse of his lineal ascendant or descendant.
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<PAGE> 46
(c) The determination of Employees and Family Members who must
be aggregated for purposes of this Article 13 shall be made
in accordance with Temporary Regulation Section 1.414(q)-1T,
Q&A-11 and Q&A-12.
(d) For purposes of applying the limits of Code Section
401(a)(17) (i.e., the $150,000 limit on compensation, as
adjusted) with respect to Compensation under Articles 11
(Section 415 limits) and 14 (401(k)/401(m) tests), the
Compensation for any Employee described in Section 13.4(a)
and for any Family Member who is such Employee's spouse or
lineal descendant under age 19, shall be aggregated. In
such event, the deemed Compensation for each such Employee
shall be an amount equal to the Section 401(a)(17) limit for
the Plan Year (as adjusted) multiplied by a fraction, the
numerator of which is the Employee's actual Compensation for
the Plan Year, and the denominator of which is the aggregate
Compensation of the Employee and the aggregated Family
Member for the Plan Year. The same procedure shall then be
used to determine the deemed Compensation of the aggregated
Family Member.
13.5 Definitions.
The following special definitions shall apply to this Article 13:
Compensation for purposes of this Article 13 shall mean the gross
annual earnings reported on the Participant's IRS Form W-2 (Box 1 or
its comparable location as provided on Form W-2 in future years) as
required by Code Sections 6041(d) and 6051(a)(3). In addition,
Compensation shall include compensation which is not includible in
the Participant's IRS Form W-2 (Box 1) by reason of Code Section
402(a)(8) (employee pre-tax contributions under a Code Section
401(k) plan) or Code Section 125 (salary deferrals under a cafeteria
plan). Compensation shall not include amounts paid or reimbursed by
the Employer for moving expenses if, at the time of the payment of
such moving expenses, it is reasonable to believe that the moving
expenses will be deductible by the Participant under Code Section
217. Compensation shall be determined by ignoring any income
exclusions under Code Section 3401(a) based on the nature or location
of employment. In no event shall more than $150,000 (as adjusted
annually pursuant to Code Section 401(a)(17)) in Compensation be
taken into account for any Employee.
Determination Year shall mean the Plan Year for which the ACP and the
ADP are computed.
Employer for purposes of this Article 13 shall mean the Company and
its Affiliates.
5 Percent Owner shall mean any Employee who owns or is deemed to own
(within the meaning of Code Section 318), more than five percent of
the value of the outstanding stock of the Employer or stock
possessing more than five percent of the total combined voting power
of the Employer.
Former Employee shall mean an Employee (i) who has incurred a
Severance from Service or (ii) who remains employed by the Employer
but who has not performed services for the Employer during the
Determination Year (e.g., an Employee on Authorized Leave of
Absence).
Includable Officer shall mean any officer of the Employer who, during
the applicable year, receives Compensation in excess of 50% of the
dollar limitations under Code Section
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<PAGE> 47
415(b)(1)(A) (as adjusted by the Secretary of the Treasury for
cost of living increases). The Employer shall be deemed to
have a minimum of 3 officers or, if greater, a number equal to
10 percent of all Employees. However, no more than 50 officers
shall be considered Includable Officers under this Article 13. If
the Employer does not have any Includable Officers because no officer
receives Compensation in excess of the dollar limitations of Code
Section 415(b)(1)(A), the Employer's highest paid officer shall be
considered an Includable Officer.
Look Back Year shall mean the Plan Year preceding the Determination
Year, or if the Employer elects, the calendar year ending with or
within the determination year.
Separation Year shall mean any of the following years:
(1) An Employee who incurs a Termination of Employment shall
have a Separation Year in the Determination Year in which
such Termination of Employment occurs;
(2) An Employee who remains employed by the Employer but who
temporarily ceases to perform services for the Employer
(e.g., an Employee on Authorized Leave of Absence) shall
have a Separation Year in the calendar year in which he last
performs services for the Employer;
(3) An Employee who remains employed by the Employer but whose
Compensation for a calendar year is less than 50% of the
Employee's average annual Compensation for the immediately
preceding three calendar years (or the Employee's total
years of employment, if less) shall have a Separation Year
in such calendar year. However, such Separation Year shall
be ignored if the Employee remains employed by the Employer
and the Employee's Compensation returns to a level
comparable to the Employee's Compensation immediately prior
to such Separation Year.
Top Paid Group shall mean the top 20% of all Employees ranked on the
basis of Compensation received from the Employer during the
applicable year. The number of Employees in the Top Paid Group shall
be determined by ignoring Employees who are non-resident aliens and
Employees who do not perform services for the Employer during the
applicable year. The Employer elects to compute the Top Paid Group
without the age and service exclusion provided in applicable Treasury
Regulations.
13.6 Other Methods Permissible.
To the extent permitted by the Code, judicial decisions, Treasury
Regulations and IRS pronouncements, the Committee may (without
further amendment to this Plan) take such other steps and actions or
adopt such other methods or procedures (in addition to those methods
and procedures described in this Article 13) to determine and
identify Highly Compensated Employees (including adopting alternative
definitions of Compensation which satisfy Code Section 414(q)(7) and
are uniformly applied).
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<PAGE> 48
ARTICLE 14
SPECIAL DISCRIMINATION RULES
14.1 Definitions.
(a) Actual Contribution Percentage or ACP shall mean the ratio
(expressed as a percentage) of (i) the sum of the Matching
TRASOP and Participant TRASOP Contributions allocated (or
deemed allocated pursuant to Section 5.4(a) to a Participant's
Account during that Plan Year and contributed to the Trust no
later than the end of the 12-month period following the close
of such Plan Year and the Participant's Qualified Nonelective
Contributions for the Plan Year to (ii) the Participant's
Compensation for the Plan Year.
(b) Average Actual Contribution Percentage shall mean the average
(expressed as a percentage) of the Actual Contribution
Percentages of the Participants in a group. The percentage
shall be rounded to the nearest one-hundredth of one percent
(four decimal places).
(c) Compensation for purposes of this Article 14 shall be any
definition selected by the Committee that satisfies the
requirements of Code Section 414(s). Such definition may
change from year to year but must apply uniformly among all
Participants being tested under the Plan for a given Plan Year
and among all Participants being tested under any other plan
that is aggregated with this Plan during the Plan Year.
If the Committee fails to select a definition of Compensation
for purposes of this Article 14, the definition shall mean
wages as defined in Treasury Regulations Section
1.415-2(d)(11)(i). In addition, the term wages (as defined
above) shall include the following salary deferrals that are
not included in the Participant's gross wages: elective
deferrals under a Code Section 401(k) Plan; salary deferrals
under a Code Section 125 cafeteria plan; and other salary
deferrals under Code Sections 402(h), 403(b), 457 and 414(h).
No more than $150,000 (multiplied by the Cost of Living
Factor) in Compensation shall be taken into account for any
Participant for any Plan Year. For purposes of applying the
limits of Code Section 401(a)(17) with respect to Compensation
under this Article 14 (401(m) test), as well as Section 11.2
(Section 415 limits), the Compensation for any Participant who
is either (i) a 5 percent owner of the Employer or (ii) is a
Highly Compensated Employee who is one of the ten most highly
compensated employees ranked on the basis of Compensation paid
during the Plan Year, and for any Family Member who is such
Participant's spouse or lineal descendant under age 19, shall
be aggregated. In such event, the deemed Compensation for
each such Participant shall be an amount equal to the Section
401(a)(17) limit for the Plan Year (as adjusted) multiplied by
a fraction, the numerator of which is the Participant's actual
Compensation for the Plan Year, and the denominator of which
is the aggregate Compensation of the Participant and the
aggregated Family Member for the Plan Year. The same
procedure shall then be used to determine the deemed
Compensation of the aggregated Family Member.
(d) Excess ACP Contributions shall have that meaning as defined in
Section 14.4.
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<PAGE> 49
(e) Family Member shall have meaning as defined in Article 13.
(f) Highly Compensated Employee shall have that meaning as defined
in Article 13.
(g) Non-highly Compensated Employee shall have that meaning as
defined in Article 13.
(h) Qualified Nonelective Contribution shall mean an Employer
contribution designated by the Committee as a Qualified
Nonelective Contribution in order to meet the ACP testing
requirements of Section 14.2. In addition, the following
requirements must be satisfied:
(1) The Qualified Nonelective Contribution must
meet the requirements of Code Section
401(a)(4).
(2) The Qualified Nonelective Contributions shall
be subject to all provisions of this Plan
applicable to Matching TRASOP Contributions.
(3) Except as provided in this paragraph, the
Qualified Nonelective Contributions shall be
excluded in determining whether any other
contribution or benefit satisfies the
nondiscrimination requirements of Code
Section 401(a)(4).
14.2 Average Actual Contribution Percentage.
(a) The Average Actual Contribution Percentage for Highly
Compensated Employees for each Plan Year and the Average
Actual Contribution Percentage for Non-highly Compensated
Employees for the same Plan Year must satisfy one of the
following tests:
(i) The Average Actual Contribution Percentage
for Participants who are Highly Compensated
Employees for the Plan Year shall not exceed
the Average Actual Contribution Percentage
for Participants who are Non-highly
Compensated Employees for the Plan Year
multiplied by 1.25; or
(ii) The excess of the Average Actual Contribution
Percentage for Participants who are Highly
Compensated Employees for the Plan Year over
the Average Actual Contribution Percentage
for Participants who are Non-highly
Compensated Employees for the Plan Year is
not more than two percentage points, and the
Average Actual Contribution Percentage for
Participants who are Highly Compensated
Employees is not more than the Average Actual
Contribution Percentage for Participants who
are Non-highly Compensated Employees
multiplied by two.
(b) If at the end of the Plan Year, the Plan does not comply with
the provisions of Section 14.2(a), the Company may do either
or both of the following in order to comply with such
provision (except as otherwise provided in the Code or in
Treasury Regulations):
(1) Distribute Participant TRASOP Contributions to
certain Highly Compensated Employees as provided in
Section 14.4 but subject to forfeiture of Matching
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<PAGE> 50
TRASOP Contributions allocated with respect to such
Matching TRASOP Contributions.
(2) Make a Qualified Nonelective Contribution on behalf
of any or all of the Non-highly Compensated Employees
and aggregate such contributions with the Non-highly
Compensated Employees' Matching TRASOP Contributions
as provided in Section 14.1(a).
14.3 Special Rules For Determining Average Actual Contribution Percentages.
(a) The Actual Contribution Percentage for any Highly Compensated
Employee for the Plan Year who is eligible to have matching
contributions, after-tax contributions or elective deferrals
allocated to his Account under two or more arrangements
described in Sections 401(a) or 401(k) of the Code that are
maintained by the Company or an Affiliate shall be determined
as if such contributions were made under a single arrangement.
(b) If two or more plans maintained by the Company or its
Affiliates are treated as one plan for purposes of the
nondiscrimination requirements of Code Section 401(a)(4) or
the coverage requirements of Code Section 410(b) (other than
for purposes of the average benefits test), all Employer
matching contributions and after-tax contributions that are
made pursuant to those plans shall be treated as having been
made pursuant to one plan.
(c) For purposes of determining the Actual Contribution Percentage
of a Highly Compensated Employee who is a 5% or more owner of
the Company or one of the ten highest paid Highly Compensated
Employees during the Plan Year, the Matching TRASOP
Contributions, Participant TRASOP Contributions and
Compensation of such Participant shall include all Matching
TRASOP Contributions, Participant TRASOP Contributions and
Compensation of Family Members. Family Members shall not be
treated as separate Employees for purposes of determining the
Average Actual Contribution Percentage for either Non-highly
Compensated Employees or for Highly Compensated Employees.
(d) In no event shall a Participant's Excess ACP Contributions for
a Plan Year exceed the Matching TRASOP Contributions and
Participant TRASOP Contributions for such Plan Year.
(e) The determination and treatment of the Actual Contribution
Percentage of any Participant shall satisfy such other
requirements as may be prescribed by the Secretary of the
Treasury.
14.4 Distribution of Excess ACP Contributions.
(a) Matching TRASOP Contributions and Participant TRASOP
Contributions exceeding the limitations of Section 14.2(a)
("Excess ACP Contributions") and any income or loss allocable
to such Excess ACP Contributions shall be designated by the
Committee as Excess ACP Contributions and shall be distributed
in the Plan Year following the Plan Year in which the Excess
ACP Contributions arose to those Highly Compensated Employees
whose Accounts were credited with Excess ACP Contributions in
the
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<PAGE> 51
preceding Plan Year. The amount of Excess ACP Contributions
to be distributed to a Highly Compensated Employee shall be
determined using the following procedure:
(i) The ACP for the Highly Compensated
Employee(s) with the highest ACP will be
reduced until equal to the second highest ACP
under the Plan; then
(ii) The ACP for the two (or more) Highly
Compensated Employees with the highest ACPs
under the Plan will be reduced until equal to
the third highest ACP level under the Plan;
then
(iii) The steps described in (i) and (ii) shall be
repeated with respect to the third and
successive highest ACP levels under the Plan
until the Plan complies with one or both of
the ACP tests described in Section 14.2(a).
(b) To the extent administratively possible, the Committee shall
distribute all Excess ACP Contributions and any income or loss
allocable thereto (for the Plan Year) prior to 2 1/2 months
following the end of the Plan Year in which the Excess ACP
Contributions arose. In any event, however, the Excess ACP
Contributions and any income or loss allocable thereto (for
the Plan Year) shall be distributed prior to the end of the
Plan Year following the Plan Year in which the Excess ACP
Contributions arose.
(c) The income or loss allocable to Excess ACP Contributions shall
be determined by multiplying the income or loss allocable to
the Participant's Account for the Plan Year in which the
Excess ACP Contribution arose by a fraction. The numerator of
the fraction is the Excess ACP Contributions. The denominator
of the fraction is the value of the Participant's Account on
the last day of the Plan Year reduced by any income allocated
to the Participant's Account by such Plan Year and increased
by any loss allocated to the Participant's Account for the
Plan Year.
(d) Amounts distributed to Highly Compensated Employees under this
Section 14.4 shall be treated as annual additions with respect
to the Employee who received such amount.
(e) Distribution of Excess ACP Contributions to Participants
described in Section 14.3(c) shall be made in accordance with
the provisions of Treasury Regulation Section
1.401(m)-1(e)(2)(iii) or any successor Treasury Regulations
thereto.
(f) Unless specifically identified to the contrary, any
distributions of Excess ACP Contributions shall be made
equally from Participant TRASOP Contributions and Matching
TRASOP Contributions.
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<PAGE> 52
IN WITNESS WHEREOF, the Company has caused this Plan to be duly executed and
its seal to be hereunto affixed this _____ day of ___________, 1995.
PANHANDLE EASTERN CORPORATION
By:_______________________________
Title:____________________________
(CORPORATE SEAL)
ATTEST:
___________________________________
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<PAGE> 53
ADOPTING AFFILIATES
ALGONQUIN GAS TRANSMISSION
COMPANY
By_______________________________
ALGONQUIN LNG, INC.
By_______________________________
ASSOCIATED NATURAL GAS, INC.
By:_______________________________
PANHANDLE EASTERN PIPE LINE
COMPANY
By_______________________________
TEXAS EASTERN PRODUCTS
PIPE LINE COMPANY
By_______________________________
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<PAGE> 54
TEXAS EASTERN TRANSMISSION
CORPORATION
By_______________________________
TRUNKLINE GAS COMPANY
By_______________________________
TRUNKLINE LNG COMPANY
By_______________________________
PANENERGY INFORMATION
SERVICES COMPANY
(Formerly 1 Source Information
Services Company)
By_______________________________
PAN SERVICE COMPANY
By_______________________________
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