<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________________
SCHEDULE 13D
Under the Securities Exchange Act of 1934
____________________
PRESIDIO OIL COMPANY
(Name of Issuer)
CLASS B COMMON STOCK, PAR VALUE $.10 PER SHARE
(Title of Class of Securities)
____________________
741016-10-9
(CUSIP Number)
Robert L. Smith
c/o Presidio Oil Company
5613 DTC Parkway, Suite 750
Englewood, Colorado 80111
(303) 773-0100
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
JULY 16, 1992
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box { }
Check the following box if a fee is being paid with this statement {X}
Page 1 of 60 Pages
Exhibit Index on Page 8
<PAGE> 2
CUSIP No. 741016-10-9 13D
<TABLE>
____________________________________________________________________________________________________________________________________
<S> <C>
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Robert L. Smith, individually and as co-Trustee on behalf of the
Presidio Oil Company Employee Stock Ownership Plan Trust.
____________________________________________________________________________________________________________________________________
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) { }
(b) {X}
____________________________________________________________________________________________________________________________________
3 SEC USE ONLY
____________________________________________________________________________________________________________________________________
4 SOURCE OF FUNDS
PF; AF; SC
____________________________________________________________________________________________________________________________________
5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS
2(d) or 2(e) { }
____________________________________________________________________________________________________________________________________
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Mr. Smith is a citizen of the United States of America. The plan is
a Colorado entity.
____________________________________________________________________________________________________________________________________
</TABLE>
<TABLE>
<S> <C> <C> <C>
NUMBER OF SHARES 7 SOLE VOTING POWER 200,535 (includes shares subject to
BENEFICIALLY OWNED BY outstanding options and warrants)
EACH REPORTING PERSON __________________________________________________________________________________________________________
WITH
8 SHARED VOTING POWER 529,157
__________________________________________________________________________________________________________
9 SOLE DISPOSITIVE POWER 200,535 (includes shares subject to
outstanding options and warrants)
__________________________________________________________________________________________________________
10 SHARED DISPOSITIVE POWER 529,157
____________________________________________________________________________________________________________________________________
</TABLE>
<TABLE>
<S> <C>
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
200,535
____________________________________________________________________________________________________________________________________
12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES {x}
____________________________________________________________________________________________________________________________________
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 5.9%
____________________________________________________________________________________________________________________________________
14 TYPE OF REPORTING PERSON
IN; EP
____________________________________________________________________________________________________________________________________
</TABLE>
Page 2 of 60 Pages
Exhibit Index on Page 8
<PAGE> 3
CUSIP No. 741016-10-9 13D
ITEM 1. SECURITY AND ISSUER.
This statement relates to the Class B Common Stock, par value $.10 per
share (the "Shares") of Presidio Oil Company, a Delaware corporation (the
"Company"). The address of the principal executive offices of the Company is
5613 DTC Parkway, Suite 750, Englewood, Colorado 80111.
ITEM 2. IDENTITY AND BACKGROUND.
This statement is filed by Robert L. Smith, individually and as
co-Trustee on behalf of the Employee Stock Ownership Plan Trust of Presidio Oil
Company (the "Plan"). Mr. Smith is President and Chief Operating Officer of
the Company.
The Plan was originally established effective as of July 1, 1981. The
Plan is an employee pension benefit plan as defined under the provisions of the
Employee Retirement Income Security Act of 1974 that is qualified under the
applicable provisions of the Internal Revenue Code of 1986. A copy of the Plan
is attached hereto as Exhibit 1 and is incorporated herein by reference for all
purposes. The Plan's assets are held by the trust (the "Trust") created under
the terms of the Plan, the Trustees of which are George P. Giard, Jr. and
Robert L. Smith (the "Trustees"). Under its terms, the Plan is administered by
the administrative committee (the "Committee") appointed by the Board of
Directors of the Company, the current members of which are George P. Giard, Jr.
and Robert L. Smith.
The business address of Mr. Smith and of the Plan is 5613 DTC Parkway,
Suite 750, Englewood, Colorado 80111.
Neither the Plan nor Mr. Smith has, during the last five years, been
convicted in any criminal proceeding (excluding traffic violations or similar
misdemeanors) or been a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction, as a result of which proceeding
he or it was or is subject to a judgment, decree or final order enjoining
future violations of, or prohibiting or mandating activities subject to,
federal or state securities laws or finding any violation with respect to such
laws.
The provisions of the Plan are to be construed in accordance with the
laws of the State of Colorado and applicable federal law, and the situs of the
Plan and the Trust is the State of Colorado. Mr. Smith is a citizen of the
United States of America.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
The Shares beneficially owned by Mr. Smith over which Mr. Smith has
sole voting power and sole dispositive power were purchased with his own funds
or are shares subject to outstanding options or warrants which have not yet
been purchased. The approximate purchase price paid for such Shares and
warrants is $65,126.00. If any options or warrants are exercised, Mr. Smith
anticipates using his personal funds.
Effective January 1, 1989, January 1, 1990, January 1, 1991, January
1, 1992, and January 1, 1993, the Company and the Plan entered into ESOP Loan
Agreements (collectively, the "Loan Agreements") under which the Company agreed
to establish a line of credit and loan up to $2,000,000, $6,000,000,
$4,000,000, $3,000,000, and $3,000,000, respectively, to the Plan for the
purchase of Shares or shares of Class A Common Stock, $.10 par value per share,
of the Company (the "Class A Shares"). Each Loan Agreement was accompanied by
a Non-recourse Promissory Note (collectively, the "Notes") and Pledge Agreement
(collectively, the "Pledge Agreements"). Under each Loan Agreement and
Promissory Note, the Plan could or can draw on the respective line of credit to
purchase Shares or Class A Shares throughout the year. At the end of each year
or (if earlier) at the time the line of credit amount had been fully advanced,
the indebtedness incurred converted or will convert to a term note.
Page 3 of 60 Pages
Exhibit Index on Page 8
<PAGE> 4
CUSIP No. 741016-10-9 13D
The interest rate under the Notes was 10% for the 1989, 1990, and 1991
Notes and 7% for the 1992 and 1993 Notes. Each Note is payable in ten
consecutive substantially equal installments of principal and interest based on
a ten-year amortization. The first payment under each Note was or is due and
payable on the April 1st following the close of the year for which the line of
credit was available.
The amount actually advanced under the Notes and the Shares and Class
A Shares purchased are set forth in the following chart.
<TABLE>
<CAPTION>
NOTE AMOUNT BORROWED CLASS A SHARES CLASS B SHARES
---- --------------- -------------- --------------
<S> <C> <C> <C>
1989 Note $1,714,951.13 123,458 124,682
1990 Note $5,101,102.92 568,506 171,600
1991 Note $2,942,126.19 354,955 229,919
1992 Note $2,040,963.83 565,698 227,500
1993 Note $ 585,475.00 221,300 65,000
</TABLE>
It is anticipated that the Plan will fund any required payments on the
Notes with contributions from the Company, although other permissible sources
may be used, including dividends, if any, on Shares or Class A Shares held by
the Plan. The Company may elect to discontinue its contributions to the Plan,
although it has no current intention of doing so.
Each Note is secured by a Pledge Agreement. To the extent that
payments are made on a Note, a proportionate number of Shares and/or Class A
Shares will be released from the pledge under the Pledge Agreement based upon
the ratio of the principal paid on the Note to the future principal payments to
be made under the Note and will be allocated to participants' accounts in
accordance with the Plan. Shares not released under the Pledge Agreements are
such Shares which the Trustees may be deemed to beneficially own for the
purposes of Section 13(d).
ITEM 4. PURPOSE OF TRANSACTION.
The Shares beneficially owned by Mr. Smith over which Mr. Smith has
sole voting power and sole dispositive power were purchased for investment
purposes. Mr. Smith has no plans which relate to a change in management or
otherwise relating to the Board of Directors, any change in corporate structure
or any of the actions specified in clauses (a) through (j) of Item 4 of
Schedule 13D. Mr. Smith may from time to time purchase additional Shares,
directly or through the exercise of stock options or warrants, for investment
purposes or otherwise or may sell such Shares.
The acquisition of the Shares by the Plan was made for investment
purposes in furtherance of the purpose of the Plan, namely to allow
participating employees to acquire stock ownership interests in the Company.
The Plan may acquire from time to time additional Shares in conformance with
the immediately preceding section, although the Plan currently has no specific
plans or proposals that relate to or would result in any of the matters
described in paragraphs (a) through (j) of Item 4 of Schedule 13D.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
The Shares beneficially owned by Mr. Smith over which Mr. Smith has
sole voting power and sole dispositive power total 200,535 Shares as of
December 31, 1993. Of such Shares, 20,000 Shares and 10,811 Shares may be
acquired by Mr. Smith pursuant to the exercise of a warrant at $4.625 per share
and $2.50 per share, respectively, 35,000 Shares may be acquired pursuant to the
exercise of options at $4.625 per share, 19,000 Shares may be acquired pursuant
to the exercise of options at $5.00 per share, 52,000 Shares may be acquired,
under certain
Page 4 of 60 Pages
Exhibit Index on Page 8
<PAGE> 5
CUSIP No. 741016-10-9 13D
circumstances, pursuant to the exercise of options at $4.00 per share and
51,622 Shares may be acquired pursuant to the exercise of options at $2.50 per
share. Such Shares would represent 5.9% of the Company's outstanding Shares as
of such date if all warrants or options to purchase Shares were exercised by
Mr. Smith and were added to the number of outstanding Shares. The Company has
informed Mr. Smith that as of such date, 3,222,785 Shares were outstanding.
Under the terms of the Plan, the participating employees have the
power to direct the voting of (as well as the tendering of in a cash tender
offer or exchange offer for Shares) Shares that have been allocated to
participating employees' accounts; however, if the participants do not provide
timely instructions regarding the voting or tendering of such Shares, then such
Shares shall be voted or tendered, as the case may be, by the Plan to reflect
the directions received from employee participants with respect to the Shares
allocated to their accounts.
Under the terms of the Plan, the Shares that have not been allocated
to participating employees' accounts will be voted or tendered to the extent
possible to reflect the voting or tender directions, as the case may be,
received from employee participants with respect to the Shares allocated to
their accounts. Thus, the Plan may be deemed to share voting and dispositive
power with respect to such Shares, which Shares consisted of 529,157 Shares as
of December 31, 1993. Such Shares represent 13.6% of the Company's outstanding
Shares (as adjusted) as of such date. Mr. Smith disclaims beneficial ownership
for purposes of Section 13(d) of all unallocated Shares. Upon allocation of
such Shares from time to time to the accounts of participating employees, the
participants will have the power to direct the vote and tender of such Shares,
as described in the preceding paragraph. The Company has informed the Plan
that as of such date, 3,222,785 Shares were outstanding.
In addition, the Pledge Agreements contain certain restrictions on the
disposition of the Shares subject thereto.
Mr. Smith has not effected any transaction in Shares during the past
60 days. The Plan has purchased 65,000 Shares and 221,300 Class A Shares
during the past 60 days.
Except as provided in the Security Agreement and except for the rights
of the employee participants (or their heirs or legal representatives) of the
Plan, no person other than the Plan is known to have the right to receive or
the power to direct the receipt of dividends from, or the proceeds from the
sale of, the Shares.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO SECURITIES OF THE ISSUER.
Except as indicated in Items 3, 4, and 5, there are no contracts,
arrangements, understandings, or relationships (legal or otherwise) between the
Plan and any person with respect to any securities of the Company, including
but not limited to the transfer or voting of any of such securities, finder's
fees, joint ventures, loan or option arrangements, puts or calls, guaranties of
profits, division of profits or loss, or the giving or withholding of proxies.
Except as described in Item 3, no Shares owned by the Plan are pledged
or otherwise subject to any contingency.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
Exhibit 1. The Plan.
Exhibit 2. The 1989 ESOP Loan Agreement.
Exhibit 3. First Amendment to 1989 ESOP Loan Agreement.
Page 5 of 60 Pages
Exhibit Index on Page 8
<PAGE> 6
CUSIP No. 741016-10-9 13D
Exhibit 4. The 1990 ESOP Loan Agreement.
Exhibit 5. The 1991 ESOP Loan Agreement.
Exhibit 6. The 1992 ESOP Loan Agreement.
Exhibit 7. The 1993 ESOP Loan Agreement.
Exhibit 8. The 1989 Pledge Agreement.
Exhibit 9. First Amendment to 1989 Pledge Agreement.
Exhibit 10. The 1990 Pledge Agreement.
Exhibit 11. The 1991 Pledge Agreement.
Exhibit 12. The 1992 Pledge Agreement.
Exhibit 13. The 1993 Pledge Agreement.
Page 6 of 60 Pages
Exhibit Index on Page 8
<PAGE> 7
CUSIP No. 741016-10-9 13D
SIGNATURES
After reasonable inquiry and to the best of my knowledge and belief,
the information set forth in this statement is true, complete and correct.
_______________________________________________
ROBERT L. SMITH
Individually and as co-Trustee on behalf of the
Presidio Oil Company Employee Stock Ownership
Plan Trust
Dated: January 24, 1994
Page 7 of 60 Pages
Exhibit Index on Page 8
<PAGE> 8
CUSIP No. 741016-10-9 13D
EXHIBIT INDEX
<TABLE>
<S> <C> <C>
Exhibit 1. The Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Exhibit 2. The 1989 ESOP Loan Agreement (Incorporated herein by reference to Exhibit 2 to the Schedule 13D relating to the
Class B Common Stock, par value $.10 per share, of the Company of George P. Giard, Jr, individually and as
co-Trustee on behalf of the Presidio Oil Company Employee Stock Ownership Plan Trust, dated January 24, 1994).
Exhibit 3. First Amendment to 1989 ESOP Loan Agreement (Incorporated herein by reference to Exhibit 3 to the Schedule 13D
relating to the Class B Common Stock, par value $.10 per share, of the Company of George P. Giard, Jr,
individually and as co-Trustee on behalf of the Presidio Oil Company Employee Stock Ownership Plan Trust,
dated January 24, 1994).
Exhibit 4. The 1990 ESOP Loan Agreement (Incorporated herein by reference to Exhibit 4 to the Schedule 13D relating to the
Class B Common Stock, par value $.10 per share, of the Company of George P. Giard, Jr, individually and as
co-Trustee on behalf of the Presidio Oil Company Employee Stock Ownership Plan Trust, dated January 24, 1994).
Exhibit 5. The 1991 ESOP Loan Agreement (Incorporated herein by reference to Exhibit 5 to the Schedule 13D relating to the
Class B Common Stock, par value $.10 per share, of the Company of George P. Giard, Jr, individually and as
co-Trustee on behalf of the Presidio Oil Company Employee Stock Ownership Plan Trust, dated January 24, 1994).
Exhibit 6. The 1992 ESOP Loan Agreement (Incorporated herein by reference to Exhibit 6 to the Schedule 13D relating to the
Class B Common Stock, par value $.10 per share, of the Company of George P. Giard, Jr, individually and as
co-Trustee on behalf of the Presidio Oil Company Employee Stock Ownership Plan Trust, dated January 24, 1994).
Exhibit 7. The 1993 ESOP Loan Agreement (Incorporated herein by reference to Exhibit 7 to the Schedule 13D relating to the
Class B Common Stock, par value $.10 per share, of the Company of George P. Giard, Jr, individually and as
co-Trustee on behalf of the Presidio Oil Company Employee Stock Ownership Plan Trust, dated January 24, 1994).
Exhibit 8. The 1989 Pledge Agreement (Incorporated herein by reference to Exhibit 8 to the Schedule 13D relating to the
Class B Common Stock, par value $.10 per share, of the Company of George P. Giard, Jr, individually and as
co-Trustee on behalf of the Presidio Oil Company Employee Stock Ownership Plan Trust, dated January 24, 1994).
Exhibit 9. First Amendment to 1989 Pledge Agreement (Incorporated herein by reference to Exhibit 9 to the Schedule 13D
relating to the Class B Common Stock, par value $.10 per share, of the Company of George P. Giard, Jr,
individually and as co-Trustee on behalf of the Presidio Oil Company Employee Stock Ownership Plan Trust,
dated January 24, 1994).
Exhibit 10. The 1990 Pledge Agreement (Incorporated herein by reference to Exhibit 10 to the Schedule 13D relating to the
Class B Common Stock, par value $.10 per share, of the Company of George P. Giard, Jr, individually and as
co-Trustee on behalf of the Presidio Oil Company Employee Stock Ownership Plan Trust, dated January 24, 1994).
Exhibit 11. The 1991 Pledge Agreement (Incorporated herein by reference to Exhibit 11 to the Schedule 13D relating to the
Class B Common Stock, par value $.10 per share, of the Company of George P. Giard, Jr, individually and as
co-Trustee on behalf of the Presidio Oil Company Employee Stock Ownership Plan Trust, dated January 24, 1994).
Exhibit 12. The 1992 Pledge Agreement (Incorporated herein by reference to Exhibit 12 to the Schedule 13D relating to the
Class B Common Stock, par value $.10 per share, of the Company of George P. Giard, Jr, individually and as
co-Trustee on behalf of the Presidio Oil Company Employee Stock Ownership Plan Trust, dated January 24, 1994).
Exhibit 13. The 1993 Pledge Agreement (Incorporated herein by reference to Exhibit 13 to the Schedule 13D relating to the
Class B Common Stock, par value $.10 per share, of the Company of George P. Giard, Jr, individually and as
co-Trustee on behalf of the Presidio Oil Company Employee Stock Ownership Plan Trust, dated January 24, 1994).
</TABLE>
Page 8 of 60 Pages
Exhibit Index on Page 8
<PAGE> 1
EXHIBIT 1
EMPLOYEE STOCK OWNERSHIP PLAN
OF
PRESIDIO OIL COMPANY
__________________________________________________
AMENDMENT AND THIRD RESTATEMENT
EFFECTIVE AS OF JANUARY 1, 1989
JULY 1993
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
I. Purpose
-------
1.1 Purpose . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
II. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
-----------
III. Participation Requirements
--------------------------
3.1 Eligibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.2 ReEntry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.3 Action Required . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.4 Omissions of Eligible Employee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.5 Inclusion of Ineligible Employee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
IV. Contributions
-------------
4.1 Company Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
4.2 Participant Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
4.3 Basic Allocation Limitation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
4.4 Combined Plan Limitation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
4.5 Special ESOP Allocation Limitation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
4.6 Return of Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
V. Interests in the Trust Fund
---------------------------
5.1 Participants' Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.2 Valuation of Trust Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.3 Allocation of Increase or Decrease in Net Worth . . . . . . . . . . . . . . . . . . . . . . 17
5.4 Allocation of Voluntary Contribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.5 Allocation of Company Contributions and Forfeitures . . . . . . . . . . . . . . . . . . . . 18
VI. Benefits on Retirement, Death or Disability
-------------------------------------------
6.1 Normal Retirement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
6.2 Death Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
6.3 Disability Retirement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
6.4 Beneficiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
6.5 Amount and Form of Benefits Upon Retirement, Death or Disability . . . . . . . . . . . . . . 19
(a) Consent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
(b) Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
(c) Manner of Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
(d) Time of Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
6.6 Segregation of Amounts Payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
6.7 Payments in Case of Death Pending Distributions . . . . . . . . . . . . . . . . . . . . . . 20
6.8 Distribution of Benefits Prior to Severance of Service . . . . . . . . . . . . . . . . . . . 20
6.9 Diversification of Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
</TABLE>
-i-
<PAGE> 3
TABLE OF CONTENTS, CONTINUED
<TABLE>
<CAPTION>
PAGE
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<S> <C> <C>
VII. Benefits on Termination of Employment
-------------------------------------
7.1 Vesting Schedule - Forfeitures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
(a) Mountain Gas Divestiture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
(b) Peake Divestiture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
7.2 Distribution of Vested Amounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
7.3 Amendment to Vesting Schedule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
VIII. Allocation of Responsibilities - Named Fiduciaries
--------------------------------------------------
8.1 No Joint Fiduciary Responsibilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
8.2 The Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
8.3 The Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
8.4 The Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
8.5 Committee to Administer and Interpret Plan . . . . . . . . . . . . . . . . . . . . . . . . . 25
8.6 Organization of Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
8.7 Agent for Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
8.8 Indemnification of Committee Members . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
IX. Trust
-----
9.1 Trust Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
9.2 Expenses of Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
X. Termination and Amendment
-------------------------
10.1 Termination of Plan or Discontinuance of Contribution . . . . . . . . . . . . . . . . . . . 26
10.2 Allocations upon Termination or Discontinuance of Company Contributions . . . . . . . . . . 26
10.3 Procedure Upon Termination of Plan or Discontinuation of Company Contributions . . . . . . . 27
10.4 Amendment by Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
XI. Special Provisions Regarding Company Stock
------------------------------------------
11.1 Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
11.2 Investment of Trust Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
11.3 Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
11.4 Voting Company Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
11.5 Company Stock to be Subject to Certain Conditions . . . . . . . . . . . . . . . . . . . . . 28
11.6 Valuation of Company Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
11.7 Put Option . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
11.8 Right of First Refusal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
11.9 Distribution of Cash or Company Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
11.10 Exchange Offers; Tender Offers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
</TABLE>
-ii-
<PAGE> 4
TABLE OF CONTENTS, CONTINUED
<TABLE>
<CAPTION>
PAGE
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<S> <C> <C>
XII. Company Stock Purchased with Loans
12.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
(a) Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
(b) Publicly Traded . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
12.2 Prohibition Against Non-Exempt Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
12.3 Primary Benefit Retirement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
12.4 Use of Loan Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
12.5 Liability and Collateral of Plan for Loan . . . . . . . . . . . . . . . . . . . . . . . . . 34
12.6 Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
12.7 Reasonable Rate of Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
12.8 Release From Encumbrance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
12.9 Voting Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
12.10 Allocation to Accounts of Participants . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
12.11 Non-Terminable Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
XIII. Affiliated Corporations
-----------------------
13.1 Adoption of Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
13.2 Agency of Presidio Oil Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
13.3 Disaffiliation and Withdrawal from Plan . . . . . . . . . . . . . . . . . . . . . . . . . . 36
13.4 Effect of Disaffiliation or Withdrawal . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
13.5 Distribution Upon Disaffiliation or Withdrawal . . . . . . . . . . . . . . . . . . . . . . . 37
XIV. Top-Heavy Provisions
--------------------
14.1 Application of Top-Heavy Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
14.2 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
14.3 Determination of Top-Heavy Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
14.4 Special Vesting Rule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
14.5 Special Minimum Contribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
14.6 Limitation on Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
14.7 Change in Top-Heavy Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
XV. Miscellaneous
-------------
15.1 Right to Dismiss Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
15.2 Claims Procedure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
15.3 Source of Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
15.4 Exclusive Benefit of Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
15.5 Forms of Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
15.6 Failure of Any Other Corporation to Qualify . . . . . . . . . . . . . . . . . . . . . . . . 41
15.7 Notice of Adoption of the Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
</TABLE>
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TABLE OF CONTENTS, CONTINUED
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
15.8 Plan Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
15.9 Inalienability of Benefits - Domestic Relations Orders . . . . . . . . . . . . . . . . . . . 42
15.10 Payments Due Minors or Incapacitated Persons . . . . . . . . . . . . . . . . . . . . . . . . 43
15.11 Uniformity of Application . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
15.12 Disposition of Unclaimed Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
15.13 Time of Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
15.14 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
XVI. Rollovers and Transfers
-----------------------
16.1 Rollovers and Transfers into the Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
16.2 Eligible Rollover Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
16.3 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
</TABLE>
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<PAGE> 6
AMENDMENT AND THIRD RESTATEMENT
OF THE
EMPLOYEE STOCK OWNERSHIP PLAN
OF
PRESIDIO OIL COMPANY
(effective as of JANUARY 1, 1989)
THIS AMENDMENT AND THIRD RESTATEMENT OF THE EMPLOYEE STOCK OWNERSHIP
PLAN OF PRESIDIO OIL COMPANY is made and entered into this 1st day of July,
1993, by Presidio Oil Company, a corporation organized and existing under the
laws of the State of Delaware.
WITNESSETH:
WHEREAS, Presidio Oil Company (the "Company") established the Employee
Stock Ownership Plan of Presidio Oil Company (the "Plan") pursuant to an
instrument effective July 1, 1981, for the purpose of providing retirement
benefits to the employees of the Company;
WHEREAS, the Plan was restated effective July 1, 1984 and July 1, 1985
and amended various times subsequent to July 1, 1985; and
WHEREAS, in order to comply with the provisions of the Tax Reform Act
of 1986 ("TRA '86"), the Omnibus Budget Reconciliation Acts of 1986 and 1987
("OBRA '86" and "OBRA '87" respectively), the Technical and Miscellaneous
Revenue Act of 1988 ("TAMRA") and final regulations promulgated under the
Employee Retirement Income Security Act of 1974 ("ERISA") and the Internal
Revenue Code of 1986, as amended, the Company desires to amend and restate the
Plan in its entirety.
NOW THEREFORE, in consideration of the premises and the mutual
covenants hereinafter contained, it is agreed by the Company, subject to the
approval of the United States Treasury Department, that the Plan is hereby
amended and restated in its entirety effective January 1, 1989, except where
otherwise indicated herein, to provide as follows:
ARTICLE I
PURPOSE
1.1 PURPOSE. The purpose of the Plan is to reward eligible
Employees of the Company for their loyal and faithful service by providing them
with an opportunity to become shareholders of the Company. The Plan is
designed to invest primarily in
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<PAGE> 7
Company Stock. The benefits provided by the Plan will be paid from the Trust
and will be in addition to the benefits eligible Employees are entitled to
receive from the Federal Social Security Act. The Plan and the Trust are
established and shall be maintained for the exclusive benefit of the eligible
Employees of the Company and their Beneficiaries.
Except as provided in Article IV, under no circumstances shall any
property of the Trust, or any contributions made by the Company pursuant to the
terms of this Agreement be used for, or diverted to, purposes other than for
the exclusive benefit of the Employees of the Company or their Beneficiaries.
ARTICLE II
DEFINITIONS
Where the following words and phrases appear in this Plan, they shall
have the respective meanings, set forth in this Article, unless the context
clearly indicates a different meaning. All references to the masculine shall
include the feminine and the singular shall include the plural, and vice versa,
unless the context clearly indicates a different interpretation. The words
"hereof", "herein", "hereunder", and other similar compounds of the word "here"
shall mean and refer to the entire Plan and not to any particular provision or
section.
2.1 "ACCOUNT(S)" shall mean a Participant's Company Contribution
Account and Voluntary Contribution Account.
2.2 "ACCRUED BENEFIT" shall mean the amount standing in a
Participant's Account as of any date.
2.3 "AFFILIATED COMPANY" shall mean (a) any corporation or
organization, other than the Company, which is a member of a controlled group
of corporations (within the meaning of Section 414(b) of the Code) or of an
affiliated service group (within the meaning of Section 414(m) of the Code)
with respect to which the Company is also a member, (b) any incorporated or
uncorporated trade or business which along with the Company is under common
control (within the meanings of the regulations from time to time promulgated
by the Secretary of the Treasury pursuant to Section 414(c) of the Code, and
(c) any other incorporated or unincorporated trade or business which is
designated by the Board of Directors of the Company as an Affiliated Company
for the purposes of the Plan; provided however, that in determining the
applicable annual addition under Article IV of the Plan, Section 414(b) and (c)
of the Code Shall be applied as modified by Section 415(h) of the Code.
2.4 "ANNIVERSARY DATE" shall be December 31st of each year.
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<PAGE> 8
2.5 "BENEFICIARY" shall mean any person, trust, organization, or
estate designed to receive benefits payable on or after the death of a
Participant. The Beneficiary of a married Participant shall be the
Participant's surviving spouse unless the Participant and such spouse have made
a designation in accordance with Section 6.4 of the Plan.
2.6 "BREAK(S) IN SERVICE" shall mean a period of twelve (12)
consecutive months (computation period) during which an Employee does not
complete more than 500 Hours of Service with the Company. An employee shall
not incur a Break in Service for the Plan Year in which he becomes a
Participant, dies, retires, or suffers a disability. Further, solely for the
purpose of determining whether an Employee has incurred a Break in Service,
Hours of Service shall be recognized for authorized leaves of absence and
maternity and paternity leaves of absence.
If a Break in Service occurs and later if the Employee earns one or
more Years of Service, his Years of Service for vesting and eligibility
purposes prior to such Break in Service shall be included in any subsequent
determination of benefits hereunder, but only if:
(a) The Employee was entitled to at least one (1) Year of
Service for eligibility proposes at the commencement of such Break in
Service; or
(b) In the case of a nonvested Participant, his
consecutive one (1) year Breaks in Service did not equal or exceed the
greater of (i) five (5) years or (ii) his Years of Service for
eligibility purposes at the commencement of the consecutive one (1)
year Breaks in Service.
2.7 "CODE" shall mean the Internal Revenue Code of 1986, as
amended.
2.8 "COMMITTEE" shall mean the administrative Committee provided
for in Section 8.4.
2.9 "COMPANY" shall mean Presidio Oil Company, a Delaware
corporation, and any successor thereto, and, where the context requires, any
other Affiliated Company which becomes a party to the Plan.
2.10 "COMPENSATION" shall mean all remuneration paid to an Employee
by the Company for service rendered to the Company, but excluding contributions
under this Plan or any other retirement or life insurance program, or under any
health or welfare plan, maintained by the Company to the extent that such
contributions are not included in the Employee's gross income for federal
income tax purposes, but excluding any non-taxable fringe benefits provided by
the Company.
Compensation in excess of $200,000 shall be disregarded. Such amount
shall be adjusted at the same time and in such manner as permitted under Code
Section 415(d). In applying this limitation, the family group of a Highly
Compensated Participant who is
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<PAGE> 9
subject to the Family Member aggregation rules of Code Section 414(q)(6)
because such Participant is either a "five percent owner" of the Company or one
of the ten (10) Highly Compensated Employees paid the greatest "415
Compensation" during the year, shall be treated as a single Participant, except
that for this purpose Family Members shall include only the affected
Participant's spouse and any lineal descendants who have not attained age
nineteen (19) before the close of the year. If, as a result of the application
of such rules, the adjusted $200,000 limitation is exceeded, then the
limitation shall be prorated among the affected individuals in proportion to
each such individual's Compensation as determined under this Section prior to
the application of this limitation.
For Plan Years beginning prior to January 1, 1989, the $200,000 limit
(without regard to Family Member aggregation) shall apply only to Top Heavy
Plan Years and shall not be adjusted.
2.11 "EFFECTIVE DATE" shall mean July 1, 1981. The Effective Date
of this restatement shall mean January 1, 1989.
2.12 "EMPLOYEE" shall mean any person who, on or after the
Effective Date, is employed by the Company or by any other entity required to
be aggregated with the Company under Code Section 414(b), (c), (m), or (o), but
excludes any person who is employed as an independent contractor.
The term Employee shall also include any Leased Employee deemed to be
an Employee of a Company described in the previous paragraph as provided in
Code Sections 414(n) or (o).
The term "Leased Employee" shall mean any person (other than an
Employee of the Company) who pursuant to an agreement between the Company and
any other person ("leasing organization") has performed services for the
Company (or for the Company and related persons determined in accordance with
Code Section 414(n)(6)) on a substantially full time basis for a period of at
least one (1) year, and such services are of a type historically performed by
Employees in the business field of the Company. Contributions or benefits
provided a Leased Employee by the leasing organization which are attributable
to services performed for the Company shall be treated as provided by the
Company.
A Leased Employee shall not be considered an Employee of the Company
if: (a) such Employee is covered by a money purchase pension plan providing:
(i) a nonintegrated employer contribution rate of at least ten percent (10%) of
Compensation, as defined in Code Section 415(c)(3), but including amounts
contributed by the Company pursuant to a salary reduction agreement which are
excludable from the Employee's gross income under Code Sections 125, 402(a)(8),
402(h) or 403(b), (ii) immediate participation, and (iii) full and immediate
vesting; and (b) Leased Employees do not constitute more than twenty percent
(20%) of the Company's Nonhighly Compensated workforce.
-4-
<PAGE> 10
2.13 "EMPLOYEE STOCK OWNERSHIP PLAN" or "ESOP" shall mean this Plan
which is designed to invest primarily in Qualifying Employer Securities as
defined in Section 4975(e)(8) and Section 409(l) of the Code, as amended.
2.14 "ENTRY DATE" shall mean January 1st or July 1st.
2.15 "ERISA" shall mean the Employee Retirement Income Security
Act of 1974, as amended.
2.16 "EXEMPT LOAN" shall mean a loan made to an ESOP by a
disqualified person (as defined in Section 4975(e) of the Code) and which is
exempt under Internal Revenue Service Regulation Section 54.4975-7(b). It
includes a direct loan of cash, a purchase-money transaction, and an assumption
of the obligation of an ESOP.
2.17 "FAMILY MEMBER" shall mean the spouse, lineal ascendants and
descendants of the Employee or former Employee and the spouses of such lineal
ascendants and descendants.
2.18 "FIDUCIARY" or "FIDUCIARIES" shall mean any person who (a)
exercises discretionary authority or discretionary control respecting
management of the Plan or exercises any authority or control respecting
management or disposition of its assets; (b) renders investment advice for a
fee or other Compensation, direct or indirect, with respect to any monies or
other property of the Plan or has any authority or discretionary responsibility
to do so; or (c) has any discretionary authority or discretionary
responsibility in the administration of the Plan, including, but not limited
to, the Trustee, the Company and its representative body, and the Committee.
2.19 "HIGHLY COMPENSATED EMPLOYEE" includes Highly Compensated
active Employees and Highly Compensated former Employees.
For this purpose, the "determination year" shall be the Plan Year.
The "look-back" year shall be the twelve (12) month period immediately
preceding the determination year.
A Highly Compensated active Employee includes any Employee who
performs Service for the Company during the determination year and who, during
the look-back year: (a) received Compensation from the Company in excess of
$75,000 (as adjusted pursuant to Code Section 415(d); (b) received Compensation
from the Company in excess of $50,000 (as adjusted pursuant to Code Section
415(d) and was a member of the top-paid group for such year; or (c) was an
officer of the Company and received Compensation during such year that is
greater than fifty percent (50%) of the dollar limitation in effect under Code
Section 415(b)(1)(A).
The term "Highly Compensated Employee" also includes: (a) Employees
who are both described in the preceding paragraph if the term "determination
year" is substituted for the term "look-back year" and the Employee is one of
the one hundred (100)
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<PAGE> 11
Employees who received the most Compensation from the Company during the
determination year; and (b) Employees who are five-percent (5%) owners at any
time during the look-back year or determination year.
If no officer has satisfied the Compensation requirement of (c) above
during either a determination year or look-back year, the highest paid officer
for such year shall be treated as a Highly Compensated Employee.
Further, a Highly Compensated former Employee includes any Employee
who separated from Service (or was deemed to have separated) prior to the
determination year, performs no services for the Company during the
determination year, and was a Highly Compensated Employee of the Company for
either the separation year or any determination year ending on or after the
Employee's fifty-fifth (55th) birthday.
If an Employee is, during a determination year or look-back year, a
Family Member of either a five-percent (5%) owner who is an active or former
Employee or a Highly Compensated Employee who is one of the ten (10) most
Highly Compensated Employees ranked on the basis of Compensation paid by the
Company during such year, then the Family Member and the five-percent owner or
top-ten Highly Compensated Employee shall be treated as a single Employee
receiving Compensation and Plan contributions or benefits of the Family Member
and five-percent (5%) owner or top-ten Highly Compensated Employee.
The determination of who is a Highly Compensated Employee, including
the determinations of the number and identity of Employees in the top-paid
group, the top one hundred (100) Employees, the number of Employees treated as
officers and the Compensation that is considered, will be made in accordance
with Code Section 414(q) and the regulations thereunder.
2.20 "HOUR OF SERVICE" shall mean:
(a) Each hour for which an Employee is paid or entitled
to payment by the Company for the performance of duties for the
Company during the applicable computation period.
(b) Each hour for which an Employee is paid or entitled
to payment by the Company on account of a period of time during which
no duties are performed (irrespective of whether the employment
relationship has terminated) due to vacation, holiday, illness,
incapacity (including disability), layoff, jury duty, military duty or
leave of absence. Notwithstanding the preceding sentence:
(i) No more than 501 Hours of Service are
required to be credited to an Employee on account of any
single continuous period during which the Employee performs no
duties (whether or not such period occurs in a single
computation period);
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<PAGE> 12
(ii) An hour for which an Employee is directly or
indirectly paid, or entitled to payment, on account or a
period during which no duties are performed is not required to
be credited to the Employee if such payment is made or due
under a plan maintained solely for the purpose of complying
with applicable worker's compensation, unemployment
compensation or disability insurance laws; and
(iii) Hours of Service are not required to be
credited for a payment which solely reimburses an Employee for
medical or medically related expenses incurred by the
Employee. For this purpose, a payment shall be deemed to be
made by or due from the Company regardless of whether such
payment is made by or due from the Company directly, or
indirectly through, among others, a trust fund, or insurer, to
which the Company contributes or pays premiums and regardless
of whether contributions made or due to the trust fund,
insurer or other entity are for the benefit of particular
Employees or are on behalf of a group of Employees in the
aggregate.
(c) Each hour for which back pay, irrespective of
mitigation of damages, is either awarded or agreed to by the Company.
Such hours shall be credited to the Employee for the computation
period or periods to which the award or agreement pertains rather than
the computation period in which the award, agreement or payment was
made. The same hours of service shall not be credited both under
2.20(a) or 2.20(b), as the case may be and under this 2.20(c).
(d) In the case of each Employee who is absent from work
for any period (i) by reason of pregnancy of the Employee, (ii) by
reason of the birth of a child of the Employee, (iii) by reason of the
placement of a child with the Employee in connection with the adoption
of such child by such Employee, or (iv) for purposes of caring for
such birth or placement, the Plan shall treat as Hours of Service,
solely for purposes of determining whether a one-year Break in Service
has occurred for purposes of vesting and participation (but not for
purposes of benefit accrual), the following hours: (i) the Hours of
Service which otherwise would normally have been credited to such
Employee but for such absence, or (ii) in any case in which the Plan
is unable to determine the hours described in clause (i), eight Hours
of Service per day of such absence, provided, however, that the total
number of hours treated as hours of service under this subsection by
reason of any such pregnancy or placement shall not exceed 501 Hours
of Service. The hours described in this subsection (d) shall be
treated as Hours of Service only in the year in which the absence from
work begins, if a Participant would be prevented from incurring a one
year Break in Service in such year solely because the period of
absence is treated as Hours of Service provided in this subsection, or
in any other case, in the immediately following Plan Year.
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<PAGE> 13
Notwithstanding the foregoing, the Committee may determine
that no credit will be given pursuant to this subsection unless the
Employee furnishes to the Committee such timely information as the
Committee may reasonably require to establish that the absence from
work is for reasons referred to in the first sentence of this
subsection (d) and the number of days for which there was such an
absence.
(e) For purposes of calculating the Hours of Service to
be credited to periods during which no duties are performed and
determining the computation periods to which hours shall be credited,
the rules set forth in paragraphs (b) and (c) of Department of Labor
Regulations Section 2530.200b-2 are hereby incorporated by reference
as though such provisions were fully set forth at this point.
2.21 "KEY EMPLOYEE" shall mean any Employee or former Employee (and
his Beneficiaries) who, at any time during the Plan Year or any of the
preceding four Plan Years, is described below:
(a) An officer of the Company (as that term is defined
within the meaning of the regulations under Code Section 416) having
annual Compensation greater than fifty percent (50%) of the amount in
effect for the Plan Year under Code Section 415(b)(1)(A).
(b) One of the ten (10) Employees owning (or considered
as owning with in the meaning of Code Section 318, as modified by Code
Section 416(i)) the largest interest in the Company and having annual
Compensation in excess of the amount in effect for the Plan Year under
Code Section 415(c)(1)(A).
(c) A "five-percent owner" of the Company. "Five-percent
owner" means any person who owns (or is considered as owning within
the meaning of Code Section 318, as modified by Code Section 416(i))
more than five percent (5%) of the outstanding stock of the Company or
stock possessing more than five percent (5%) of the total combined
voting power of all stock of the Company.
(d) A "one-percent owner" of the Company having annual
Compensation from the Employer of more than $150,000. "One-percent
owner" means any person who owns (or is considered as owning within
the meaning of Code Section 318, as modified by Code Section 416(i))
more than one percent of the outstanding stock of the Company or stock
possessing more than one percent of the total combined voting power of
all stock of the Company.
In determining percentage ownership hereunder, Companies that
would otherwise be aggregated under Code Sections 414(b), (c), and (m)
shall be treated as separate Companies.
2.22 "LIMITATION YEAR" shall mean the Plan Year.
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<PAGE> 14
2.23 "NON-HIGHLY COMPENSATED EMPLOYEE" shall mean any Participant
who is neither a Highly Compensated Employee nor a Family Member.
2.24 "NON-KEY EMPLOYEE" shall mean any Employee or former Employee
who is not a Key Employee.
2.25 "NORMAL RETIREMENT AGE" shall mean the date the participant
attains age 65. A Participant shall be fully vested in all his Accounts upon
attainment of his Normal Retirement Age.
2.26 "PARTICIPANT" shall mean any Employee who has satisfied all of
the requirements for eligibility under this plan and has not elected to not
participate in the Plan. "Participant" also shall mean any person who was a
Participant and has subsequently terminated active employment, but has not yet
received his total vested interest in the Plan.
2.27 "PLAN" shall mean the Employee Stock Ownership Plan of
Presidio Oil Company as amended and restated from time to time.
2.28 "PLAN YEAR", "TRUST YEAR" and "TAX YEAR" shall mean the period
of twelve (12) consecutive months beginning on January 1st and ending on the
following December 31st of each year.
2.29 "QUALIFYING EMPLOYER SECURITY" shall mean common stock
(including Treasury Stock) issued by the Company, or by a corporation which is
a member of a controlled group (as defined in Section 409(1)(4) of the Code, as
amended) with the Company provided such common stock is readily tradeable on an
established securities market. In the event the applicable common stock is not
readily tradeable on an established securities market, then in addition to the
foregoing, such common stock must have a combination of voting power and
dividend rates that is at least equal to that class of common stock of the
Company or any other member of the controlled group whose stock is used to fund
benefits under this Plan, having the greatest voting power, and that class of
common stock of the Company or any other corporation which is a member of the
control group whose stock is used herein, having the greatest dividend rights.
Qualifying Employer Security shall also mean noncallable preferred
stock if such preferred stock is convertible at any time into common stock at a
reasonable conversion price which meets the requirements described in this
Section 2.29. Preferred stock shall be treated as noncallable if after the
call there will be a reasonable opportunity for a conversion which meets the
requirements of the preceding sentence.
2.30 "STOCK" shall mean the Company's $.10 par value Class A Common
Stock and the Company's $.10 par value Class B Common Stock.
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<PAGE> 15
2.31 "SUSPENSE ACCOUNT" shall mean the ESOP account maintained by
the Trust which is credited with all shares of Qualifying Employer Securities
purchased through the use of installment purchase contracts or loan agreements.
Such shares shall be released from this Suspense Account in accordance with
Section 12.8.
2.32 "TRUST AGREEMENT" shall mean the Trust Agreement for Employee
Stock Ownership Plan of Presidio Oil Company dated June 1, 1982 between the
Company and the First National Bank of Denver and any amendments subsequent
thereto.
2.33 "TRUST" shall mean the entity forming a part of the ESOP, and
established by the Trustee and the Company for the purpose of receiving
contributions of the Company, subsequent investments and reinvestments,
disbursement of deposits and payments to terminated, retired or disabled
Participants and Beneficiaries.
2.34 "TRUST FUND" shall mean the fund established and used by the
Trustee for investing contributions made to the Trust.
2.35 "VALUATION DATE" shall mean the last day of each Plan Year and
any other dates selected by the Committee as of which the assets of the trust
fund are valued at fair market value and the net increase or decrease in the
value of Plan assets, and income, gain, loss and expense, are credited to
Participant accounts under the Plan.
2.36 "YEAR OF SERVICE" shall mean the computation period of twelve
(12) consecutive months, herein set forth, during which an Employee is credited
with at least 1,000 Hours of Service.
For purposes of eligibility for participation, the initial computation
period shall begin with the date on which the Employee first performs an Hour
of Service. The subsequent computation period shall then begin on the
anniversary of the date on which the Employee first performed an Hour of
Service. The participation computation period beginning after a Break in
Service shall be measured from the date on which an Employee again performs an
Hour of Service.
For vesting purposes a Year of Service shall be a Plan Year in which
an Employee completes 1,000 Hours of Service.
Years of Service with any corporation, trade or business which is a
member of a controlled group of corporations or under common control (as
defined by Code Section 1563(a) and Code Section 414(c)), or is a member of an
affiliated service group (as defined by Code Section 414(m) shall be
recognized. For purposes of eligibility, but not vesting, all Years of Service
with any corporation that becomes a wholly-owned subsidiary of the Company
shall be included. For purposes of determining the number of Years of Service,
the rules of the Plan in effect on the date that such corporation becomes a
wholly-owned subsidiary of the Company shall apply.
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<PAGE> 16
Effective December 13, 1989, the Company acquired all of the assets of
Home Petroleum Corporation ("Home"). For purposes of eligibility, but not for
purposes of vesting all Years of Service rendered by those employees of Home
shall be included. For purposes of determining the number of Years of Service,
the rules of the Plan in effect on the date that such employees become
Employees of the Company shall apply.
ARTICLE III
PARTICIPATION REQUIREMENTS
3.1 ELIGIBILITY. Each Employee who was a Participant in the Plan
on the Effective Date of this restated Plan shall remain a Participant in this
Plan.
Any other Employee shall become a Participant in the Plan on the Entry
Date coincident with or immediately following completion of one (1) Year of
Service for eligibility purposes with the Company.
Notwithstanding the above, any Leased Employee and any Employee who is
covered by a collective bargaining agreement under which pension, profit
sharing or similar benefits have been the subject of good faith bargaining
shall not be eligible to participate in this Plan unless such collective
bargaining agreement expressly provides for the inclusion of such person(s) as
Participants in this Plan (if they otherwise satisfy this Plan's requirements
for participation). In addition to the foregoing, each individual who is
classified as a "temporary employee" on the payroll records of the Company
shall not be eligible to participate.
3.2 REENTRY. Any Participant who terminates employment may again
become a Participant on the date on which he completes an Hour of Service
unless such prior service is excluded under the Break in Service rules.
3.3 ACTION REQUIRED. Each eligible Employee who becomes a
Participant under this Plan shall provide information to the Committee in such
form as the Committee shall require. Such form shall contain the Employee's
legal name, birth date, Beneficiary, and any other pertinent information
required by the Committee.
3.4 OMISSIONS OF ELIGIBLE EMPLOYEE. If, in any Plan Year, an
Employee who should be included as a Participant in the Plan is erroneously
omitted and discovery of such omission is not made until after a contribution
by the Company for the year has been made, the Company shall make a subsequent
contribution with respect to said Employee in the amount which the Company
would have contributed with respect to him had he not been omitted. Such
contribution shall be made regardless of whether or not it is deductible in
whole or in part in any taxable year and in accordance with provisions of the
Code.
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<PAGE> 17
3.5 INCLUSION OF INELIGIBLE EMPLOYEE. If, in any Plan Year, an
Employee who should not have been included as a Participant in the Plan is
erroneously included and discovery of such incorrect inclusion is not made
until after a contribution for the year has been made, the Company shall not be
entitled to recover the contribution made with respect to the ineligible person
regardless of whether or not a deduction is allowable with respect to such
contribution. In such event, the amount contributed with respect to the
ineligible person shall constitute a forfeiture for the Plan Year in which the
discovery is made.
ARTICLE IV
CONTRIBUTIONS
4.1 COMPANY CONTRIBUTIONS.
(a) For each Taxable Year, the Company shall contribute
to the Trust Fund such amount, if any, as the Company's board of
directors may determine by resolution timely adopted.
(b) Company contributions may be made in cash or in
Stock, as determined by the Company's board of directors.
Contributions to the Plan may be made regardless of whether the
Company has "profits" or "losses" for any given Plan Year, whether
such terms are defined in a strict accounting sense or otherwise.
(c) Except as provided in Section 3.4, the Company's
contribution for a Taxable Year shall not exceed the amount allowable
as a deduction for such year pursuant to Section 404 of the Code
together with carry forwards of unused deductions for prior years, and
shall be paid to the Trustee not later than the due date (including
any extensions) for filing the Company's federal income tax return for
such year.
4.2 PARTICIPANT CONTRIBUTIONS. The Committee, in its sole
discretion, may permit voluntary contributions by Participants. If the
Committee permits such voluntary contributions, they shall be made according to
the provisions of this 4.2 and such other reasonable rules as the Committee may
prescribe. A Participant may elect to make voluntary contributions of up to
six percent (6%) of his Compensation (but not less that ten dollars per month)
during any Plan Year. Participant contributions may be made in cash, by
payroll deduction or a combination of the two methods according to rules
prescribed by the Committee, which may require a written authorization for the
Company to deduct such contributions from the Participant's Compensation. Such
authorization shall remain in effect until revoked or changed by the
Participant. The Company shall pay the amount so deducted to the Trustee
promptly after the deduction is made. Any authorization, change of
authorization or notice of revocation shall be filed with the Committee during
such period and subject to such restrictions and requirements as the
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<PAGE> 18
Committee shall prescribe. In no event shall the aggregate voluntary
contributions made by a Participant for any limitation year to this Plan and
all other plans maintained by the Company exceed ten percent (10%) of such
Participant's Compensation. If a Participant contributes less than the allowed
amount in any year, he or she shall be entitled to make up the deficiency in
any future year, subject, however to the limitations of 4.3. If a Participant
contributes more than the maximum amount in any year, he shall withdraw the
excess promptly.
4.3 BASIC ALLOCATION LIMITATION. The maximum annual addition
(hereinafter referred to as an "Annual Addition") for any Participant in any
Limitation Year shall not exceed the lesser of:
(a) $30,000 or if greater, one-quarter of the dollar
limitation in effect under Code Section 415(b)(1)(A); or
(b) Twenty five percent (25%) of a Participant's
Compensation.
The compensation limitation referred to in (b) above shall not
apply to any contribution for medical benefits (within the meaning of
Section 401(h) or Section 419A(f)(2) of the Code) which is otherwise
treated as an Annual Addition under Section 415(l)(l) or 419A(d)(2) of
the Code.
If a short limitation year is created because of an amendment
changing the Limitation Year to a different twelve (12) consecutive
month period, the maximum permissible amount shall not exceed the
defined contribution dollar limitation multiplied by the following
fraction:
Number of months in the short limitation year
12
The term "Annual Addition" means the sum of (i) and (ii) below:
(i) The aggregate Company and voluntary
Participant contributions made during such Limitation Year in
respect to the Participant. Such Company and voluntary
Participant contributions shall include:
(A) the fair market value of Qualifying
Employer Securities contributed in kind and allocated
to the Participant's Accounts;
(B) cash contributions.
(ii) Any forfeitures for the Limitation Year
applied to increase the benefits of the Participant (except
those forfeitures of Stock acquired with an Exempt Loan).
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<PAGE> 19
For the purpose of applying the limitation imposed by this Section,
the Company and all Affiliated Companies shall be considered a single Company,
and all defined contribution plans (meaning plans providing for individual
accounts and for benefits based solely upon the amounts contributed to such
amounts and forfeitures, income, expenses, gains and losses allocated to such
accounts), whether or not terminated, maintained by the Company shall be
considered to be a part of this Plan.
If in any Plan Year, as a result of the allocation of forfeitures, a
reasonable error in estimating a Participant's Compensation or other facts and
circumstances to which Section 1.415-6(b)(6) of the Income Tax Regulations
shall be applicable, the Annual Addition to a Participant's Account(s) would
exceed the maximum permissible Annual Addition, then such Annual Addition shall
first be reduced by refunding any voluntary Participant contributions and
second, if further reduction is necessary, by applying the excess Company
contributions in the Participant's Account(s) to reduce Company contributions
for the next Limitation Year (and succeeding Limitation Years, as necessary)
for that Participant if that Participant is covered by the plan as of the end
of the Limitation Year.
However, if that Participant is not covered by the Plan as of the end
of the Limitation Year, then the excess amounts shall be held unallocated in an
"IRC 415 Suspense Account" for the Limitation Year and allocated and
reallocated in the next Limitation Year to the remaining Participants' Accounts
to whom such additional allocation would not in turn create an excess Annual
Addition. Provided, however, if the further allocation of the excess amounts
would cause the Annual Addition with respect to each Participant in the plan to
exceed the maximum Annual Addition for such Limitation Year, then these amounts
must continue to be held unallocated in the "IRC 415 Suspense Account." These
amounts in the "IRC 415 Suspense Account" shall be allocated in the next
Limitation Year (and succeeding Limitation Years, if necessary) in the same
manner as forfeitures before any Company contributions which would constitute
in Annual Addition may be made to the plan for that Limitation Year.
For purposes of applying the Limitations of this Section, Compensation
for the Limitation Year shall mean a Participant's earned income, wages,
salaries and other amounts paid or which are includable in income for the
Limitation Year for personal services actually rendered in the course of
employment with the Company maintaining the Plan (including, but not limited to
Compensation for services on the basis of a percentage of profits, and
bonuses), and excluding the following:
(a) Company contributions to a plan of deferred
compensation which are not includable in the Employee's gross income
for a taxable year in which contributed, or contributions under a
simplified employee pension plan to the extent such contributions are
deductible by the Employee, or any distributions from a plan of
deferred compensation;
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<PAGE> 20
(b) Amounts realized from the exercise of a non-qualified
stock option or when restricted stock (or property) held by the
Employee either becomes freely transferable or is no longer subject to
a substantial risk of forfeiture;
(c) Amounts realized from the sale, exchange or other
disposition of stock acquired under a qualified stock option; and
(d) Other amounts which received special tax benefits, or
contributions made by the Company (whether or not under a salary
reduction agreement) toward the purchase of an annuity described in
Section 403(b) of the Code (whether or not the amounts are actually
excludable from the gross income of the Employee).
4.4 COMBINED PLAN LIMITATION. For those Participants who also
participate in a defined benefit plan of the Company (whether or not
terminated), it is necessary to determine the applicability of a second
limitation, after the Participant's benefits have been adjusted (if necessary)
to comply with Section 4.3. The limitation shall be determined as of the end
of any Limitation Year by first computing the sum of:
(a) The Participant's projected annual benefit from the
defined benefit plan,divided by the lesser of:
(i) 1.25 times the dollar limitation in effect
under Section 415(b)(1)(A) of the Code for such year; or
(ii) 1.4 times the Participant's average
Compensation for his high three (3) consecutive Plan Years (or
all employment if he has less than three (3) Plan Years of
employment.
(b) The sum of the Participant's Annual Additions under
this plan divided by the sum of the lesser of the following amounts
determined for the current year and for each prior year with the
Company:
(i) 1.25 times the dollar limitation in effect
under Section 415(c)(1)(A) of the Code for each such year; or
(ii) 1.4 times twenty-five percent (25%) of the
Participant's Compensation (as compensation is defined in
Section 4.3) for each such year.
If at the end of any Limitation Year the sum of (a) and (b) exceeds
1.0, then the Participant's benefit under the defined benefit plan shall be
reduced such that the sum is 1.0.
4.5 SPECIAL ESOP ALLOCATION LIMITATION. Notwithstanding the
limitation described in Section 4.3, if no more than one- third (1/3) of the
Company's deductible contributions for a given Limitation Year are allocated to
Employees who are officers,
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<PAGE> 21
shareholders owning more than ten percent (10%) of the Company's Stock (as
determined under Section 415(c)(6)(B) of the Code), or whose Compensation for
the Limitation Year exceeds twice the dollar limitation determined under
Section 4.3, then the maximum Annual Addition to any Participant's Accounts in
any Limitation Year shall not exceed the lesser of:
(a) Twice the dollar amount determined under Section 4.3;
or
(b) 25% of the Participant's Compensation.
For purposes of this Section, Annual Additions shall have the same
meaning as described in Section 4.3 except that Annual Additions shall not
include (i) any forfeitures of Qualifying Employer Securities that were
acquired with purchase money debt and (ii) Company contributions which are
deductible and are charged against the Participant's account for interest
payments on purchase money debt during such Limitation Year.
Effective for Plan Years beginning after July 12, 1989, the Special
ESOP Allocation Limitation above shall read as follows: If no more than
one-third (1/3) of the Company contributions to the ESOP for a year which are
deductible under paragraph (9) of Section 404(a) of the Code are allocated to
Highly Compensated Employees the Annual Addition limitations imposed by this
Article shall not apply to:
(a) Forfeitures of Company Stock (within the meaning of
Section 409 of the Code) under the ESOP if such securities were
acquired with the proceeds of an Exempt Loan (as described in Section
404(a)(9)(A) of the Code); or
(b) Company contributions to the ESOP which are
deductible under Section 404(a)(9)(B) of the Code and charged against
the Participant's Account.
4.6 RETURN OF CONTRIBUTIONS.
(a) Any Company contribution made under a mistake of fact
may be returned to the Company. The amount that may be returned may
not exceed the excess of the amount contributed (reduced to reflect
any loss or depreciation attributable thereto) over the amount that
would have been contributed had there not occurred a mistake of fact.
Appropriate reductions will be made in the Accounts of Participants to
reflect the return of any contributions previously credited to such
Accounts. However, no contribution shall be returned to the extent
that such reduction would reduce the Account of a Participant to an
amount less than the balance that would have been credited to his
Account had the contribution not been made. Any contribution made
under a mistake of fact shall be returned within one year after the
date of payment.
(b) Any Company contribution conditioned upon its
deductibility under Section 404 of the Code may be returned to the
Company. All contributions under
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<PAGE> 22
the Plan are expressly made conditional upon their deductibility for
federal income tax purposes. The amount that may be returned may not
exceed the excess of the amount contributed (reduced to reflect any
loss or depreciation attributable thereto) over the amount that would
have been contributed had there not occurred a mistake in determining
the deduction. Appropriate reductions shall be made in the Accounts
of Participants to reflect the return of any contributions previously
credited to such Accounts. However, no contribution shall be returned
to the extent that such reduction would reduce the Account of a
Participant to an amount less than the balance that would have been
credited to his Account had the contribution not been made. Any
contribution conditioned on its deductibility shall be returned within
one year after it is disallowed as a deduction.
ARTICLE V
INTERESTS IN THE TRUST FUND
5.1 PARTICIPANTS' ACCOUNTS. The Committee shall establish and
maintain separate Accounts in the name of each Participant, but the maintenance
of such Accounts shall not require any segregation of assets of the Trust Fund.
Each Participant's share of the Company's contributions and forfeitures,
together with any increase or decrease in the net worth of the Trust Fund
attributable to such contributions and forfeitures, shall be credited to his
Company Contributions Account. A separate account shall be maintained for each
Participant with respect to assets attributable to voluntary contributions,
which account shall be referred to as a Participant's "Voluntary Contributions
Account". Shares of Stock contributed to or purchased by the Trust Fund shall
be allocated directly to the appropriate Participant Accounts.
5.2 VALUATION OF TRUST FUND. The Trustee shall value the assets
of the Trust Fund at least annually, as of the last day of the Plan Year, at
their current fair market value and determine the net worth of the Trust Fund.
Such valuation shall not, however, include any contributions made by the
Company or Participants for the current Plan Year or any unallocated
forfeitures. The Trustee shall then determine the amount of increase or
decrease in the net worth of the Trust Fund occurring since the preceding
Valuation Date.
5.3 ALLOCATION OF INCREASE OR DECREASE IN NET WORTH. The
Committee shall, as of each Valuation Date, allocate the increase or decrease
in the net worth of the Trust Fund attributable to assets other than Stock
occurring since the preceding Valuation Date among the various Accounts in the
ratio which the dollar value (other than the value attributable to Stock) of
each bore to the aggregate dollar value (other than the value attributable to
Stock) of all such Accounts on the preceding Valuation Date after all
allocations and credits made as of such date had been completed.
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<PAGE> 23
5.4 ALLOCATION OF VOLUNTARY CONTRIBUTION. The Committee shall, as
of each Valuation Date, but after the allocation required under 5.3, credit to
the Voluntary Contributions Accounts of each Participant the amount contributed
by him or her as voluntary contributions since the preceding Valuation Date.
5.5 ALLOCATION OF COMPANY CONTRIBUTIONS AND FORFEITURES. As of
the last day of each Plan Year, but after the allocations required by 5.3 and
5.4 as of such date have been completed, the Committee shall allocate all
Company contributions for such Plan Year, together with the forfeitures
occurring during such Plan Year among the Company Contributions Accounts of
Participants who received credit for a Year of Service during such Plan Year
and who were employed on the last day of the Plan Year or who died, retired or
became disabled during such year in the proportion which the Compensation of
each such Participant for such Plan Year bears to the aggregate Compensation of
all such Participants for such Plan Year.
ARTICLE VI
BENEFITS ON RETIREMENT, DEATH OR DISABILITY
6.1 NORMAL RETIREMENT. The entire interest of a Participant in
the Trust Fund shall become payable upon normal retirement. On the last day of
the month in which a Participant attains Normal Retirement Age he shall be
entitled to retire voluntarily. Until actual retirement, a Participant shall
continue to participate in the Plan. Even though a participant continues in
employment beyond Normal Retirement Age, distributions will not be made until
actual retirement unless required under the provisions of Article XV.
6.2 DEATH BENEFITS. Upon the death of a Participant, the
Participant's entire interest in the Trust Fund shall become payable. The
Participant's entire interest shall be paid to the Participant's surviving
spouse as provided in 6.5. However, if either (a) the Participant was not
married at the time of his death, or (b) the Participant's spouse has consented
to the designation of another Beneficiary, which consent shall be in writing,
witnessed by a notary public and filed with the Committee, then the entire
interest shall be paid in a lump sum to the Beneficiary designated by the
Participant under 6.4. Any spousal consent shall be effective only as to the
spouse who signed such consent.
6.3 DISABILITY RETIREMENT. A Participant shall be considered
disabled if he has a physical or mental condition which, in the judgement of
the Committee, based upon medical reports and other evidence satisfactory to
the Committee, presumably permanently prevents him from satisfactorily
performing his usual duties for the Company or the duties of such other
position or job which the Company makes available to him and for which such
Employee is qualified by reason of his training, education or experience.
6.4 BENEFICIARIES. Each Participant shall file with the Committee
a designation of the Beneficiaries and contingent Beneficiaries to whom his
interest in the Trust Fund
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<PAGE> 24
shall be paid in the event of his death. Such designation may be changed by
the Participant at any time and without the consent of any previously
designated Beneficiary provided however, that if the Participant is married,
the Participant's spouse, shall be designated as the Beneficiary to receive
benefits payable under 6.2 unless the Participant's spouse shall have consented
to the designation of a Beneficiary other than such spouse. The consent shall
be in writing, shall be witnessed by a notary public, and shall be filed with
the Committee. Any such election shall be effective only as to the spouse who
signed the election. In the absence of an effective Beneficiary designation as
to any portion of the Participant's interest in the Trust Fund, such amount
shall be paid to the Participant's estate.
6.5 AMOUNT AND FORM OF BENEFITS UPON RETIREMENT, DEATH OR
DISABILITY.
(A) CONSENT. No distribution from a Participant's
Company Contributions Account or Voluntary Contributions Account shall
be made to a Participant before his Normal Retirement Age without his
consent, except upon the death of the Participant. Notwithstanding
the above, consent shall not be required and distributions shall be
made if the value of the Participant Accounts is not in excess of
$3,500. Upon the death of the Participant, distribution shall be made
in accordance with 6.2 and this 6.5.
(B) AMOUNT. Subject to the provisions of this section,
distributions shall be made from the Trust Fund by the Trustee only
upon the direction of the Committee and at the times and in the manner
directed by the Committee. When the interest of a Participant or
Beneficiary becomes distributable under this Article, the amount shall
be calculated as of the Valuation Date coincident with or next
following the date of retirement, death or disability including the
Participant's allocable share, if any, of the Company contribution for
the Plan Year in which the Participant retired, died, or became
disabled. If the Account is not distributed until the Participant
attains Normal Retirement Age or until the Participant dies, the
account shall be valued as of the Valuation Date of the Plan Year
coincident with or next following the date the Participant attains
Normal Retirement Age or when the Participant dies.
(C) MANNER OF DISTRIBUTION. The amount distributable
shall be paid in a lump sum (other than an annuity). All
distributions, other than those distributions which were diversified
in accordance with Section 6.9 and which shall be payable in cash,
shall be made in whole shares of Stock, except that a fractional share
may be converted to and paid in cash. In accordance with Article XVI,
distributions may be paid in the form of a Direct Rollover.
(D) TIME OF DISTRIBUTION. All distributions shall be
made, subject to the consent requirements in 6.5(a), as soon as
reasonably practicable after the date on which all allocations for the
Plan Year in which the Participant dies, retires, or becomes disabled
are completed. If the consent requirements of 6.5(a) apply and
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if the required consent is not given, the distribution shall not be
made to the Participant until Normal Retirement Age. If the
Participant dies prior to Normal Retirement Age, the distribution
shall be made as soon as reasonably practicable after the date on
which all allocations for the Plan Year in which the Participant dies
are completed.
6.6 SEGREGATION OF AMOUNTS PAYABLE. Where a Participant's Account
or Accounts have become distributable, in whole or in part, the Committee may
direct the Trustee to segregate the Account or Accounts, or the distributable
portion thereof, in which case all distributions shall be paid solely from the
segregated Account. Accounts thus segregated shall not share in the allocation
of forfeitures and of increases and decreases in the value of the unsegregated
portion of the Trust Fund.
6.7 PAYMENTS IN CASE OF DEATH PENDING DISTRIBUTIONS. If any
person entitled to payment shall die prior to the completion of such payment,
the amount unpaid shall be paid to the Beneficiary designated by the
Participant. In the absence of an effective Beneficiary designation, payment
shall be made as provided in 6.4.
6.8 DISTRIBUTION OF BENEFITS PRIOR TO SEVERANCE OF SERVICE. The
Accrued Benefit of Participant must be distributed, or commence to be
distributed no later than the first day of April following the calendar year in
which such individual attains age 70 1/2 in accordance with the provisions of
Article XV.
6.9 DIVERSIFICATION OF INVESTMENTS. Each Qualified Participant
shall be able to elect, within 90 days after the close of each Plan Year in the
Qualified Election Period if he so desires, to diversify the investments held
in his Account up to twenty- five percent (25%) of the Qualified Participant's
Account balance. This percentage may be increased in the last election year in
the Qualified Election Period (as defined below) to up to fifty percent (50%).
The Qualified Participant shall be able to direct the diversification in his
Account balance by instructing the Company to transfer that portion of his
Account balance for which diversification is elected into one or more of the
three (3) investment options within the ESOP that may be offered by the
Company. None of these three investment options shall be Company Stock.
Alternatively, if the ESOP does not offer investment options, the
Qualified Participant may request the Company to distribute the portion of the
Account balance which the Qualified Participant elected to diversify.
Distributions will be subject to the usual put option rules, if then
applicable, and the distribution must be made within ninety (90) days following
the end of the ninety (90) day election period which would be 180 days after
the end of the Plan Year. In accordance with Article XVI, this distribution
may be paid in the form of a Direct Rollover.
(a) For purposes of this Section, "Qualified Election
Period" shall mean the six Plan-Year period beginning with the Plan
Year in which the Participant becomes a Qualified Participant.
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(b) For purposes of this Section, a "Qualified
Participant" means any Employee who has completed at least ten (10)
years of participation under the Plan and has attained age 55.
(c) For purposes of this Section, only Company Stock
acquired after December 31, 1986 shall be eligible for
diversification.
ARTICLE VII
BENEFITS ON TERMINATION OF EMPLOYMENT
7.1 VESTING SCHEDULE - FORFEITURES. A Participant shall have a
fully vested and nonforfeitable interest in his Company Contributions Account
balance upon Normal Retirement Age, death, or termination of employment because
of disability. A Participant shall always be fully vested in his Voluntary
Contributions Account. In all other instances his vested interest shall be
calculated according to the following rules. His non-vested interest shall be
forfeited at the end of the Plan Year in which he shall have received a
distribution of his entire vested interest in the Plan or, if he has not
consented to and received such distribution, at the end of the Plan Year in
which he shall have incurred five consecutive one year Breaks in Service.
The amount credited to the Participant's Company Contributions Account
and dividends allocated to the Participant's Company Contributions Account
during the Plan Year shall vest in accordance with the following schedule until
such time the Participant is credited with five Years of Service:
<TABLE>
<CAPTION>
Vested
Plan Year Percentage
--------- ----------
<S> <C>
end of first year after contribution 20%
end of second year after contribution an additional 20%
end of third year after contribution an additional 20%
end of fourth year after contribution an additional 20%
end of fifth year after contribution an additional 20%
</TABLE>
In order for a Participant to receive credit for an increase pursuant to the
schedule above, he must be employed by the Company or on an approved leave of
absence on the last day of the Plan Year. Notwithstanding the foregoing, a
Participant shall be fully vested in his Company Contributions Account on the
completion of five Years of Service. In addition, a Participant who received
credit for one thousand (1,000) or more Hours of Service during the twelve
consecutive month period commencing July 1, 1987 and during the twelve
consecutive month period beginning January 1, 1988 shall receive credit for two
Years of Service.
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<PAGE> 27
(a) MOUNTAIN GAS DIVESTITURE. Notwithstanding the vested
percentage determined above, each Participant whose employment with
the Company was discontinued due to the July 16, 1992 merger of
Mountain Gas Resources, Inc., an indirect subsidiary of the Company,
with and into MS Gas Resources, Inc. a Delaware corporation, shall be
one hundred percent (100%) vested in his or her Account under the Plan
as of June 30, 1992.
(b) PEAKE DIVESTITURE. Notwithstanding the vested
percentage determined above, each Participant whose employment with
the Company was discontinued due to the divestiture of Peake Operating
Company and Peake Energy, Inc., indirect subsidiaries of the Company,
shall be one hundred percent (100%) vested in his or her Account under
the Plan.
7.2 DISTRIBUTION OF VESTED AMOUNTS.
(a) Upon termination of a Participant's employment for
reasons other than death, disability or retirement, the entire balance
in the Participant's Voluntary Contributions Account and the vested
balance of his Company Contributions Account shall be paid to him in a
lump sum. The unvested portion of the Participant's Company
Contributions Account shall be forfeited at the end of the Plan Year
in which he shall have received distribution of his entire vested
interest in the Plan or, if he has not consented to and received such
distribution, at the end of the Plan Year in which he shall have
incurred five consecutive one year Breaks in Service before returning
to employment with the Company. Notwithstanding the consent
requirements in the preceding sentence, if the vested Account value is
not greater than $3,500 the account shall be distributed without
consent. All distributions shall be made as soon as reasonably
practicable after the date on which all allocations for the Plan Year
during which termination of employment occurs are completed. All
Accounts distributed shall be valued as of the most recent Valuation
Date.
(b) If the distribution is not made upon the
Participant's termination of employment, the Trustee shall continue to
hold such Accounts in trust for the Participant. The unvested portion
of the Participant's Company Contributions Account shall be forfeited
as provided in section 7.1. The vested portion of the Participant's
Accounts, together with the net earnings thereon, if any, shall not be
distributed to the Participant until his Normal Retirement Age or, if
earlier and requested by the Participant, the end of the Plan Year
following the Plan Year in which he incurs five consecutive one year
Breaks in Service. If the Participant is reemployed by the Company
prior to incurring five consecutive one year Breaks in Service, then
such distribution shall not be made until a subsequent event requiring
a distribution. If the Participant dies before distributions are
made, distribution shall be made to the Participant's Beneficiary upon
the Participant's death. Distributions pursuant to this 7.2(b) shall
be made in the manner specified in 6.5
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as soon as reasonably practicable after the date on which all
allocations required for the Plan Year in which the Participant dies,
are completed. All Accounts distributed under this 7.2(b) shall be
valued as of the last day of the Valuation Date preceding
distribution.
(c) If a Participant has received a distribution of his
Company Contributions Account representing less than one hundred
percent (100%) of such Account and if such Participant is subsequently
reemployed before incurring five consecutive one year Breaks in
Service, the Participant may repay the amount of such distribution to
the Trustee before the first to occur of (i) the fifth anniversary of
the date the Participant was reemployed or (ii) the date the
Participant incurs five consecutive one year Breaks in Service. Upon
such repayment, a Participant's Company Contributions Account shall
consist of the amount repaid plus the amount previously forfeited,
which shall be restored to his Company Contributions Account either
(i) by a special Company contribution, which shall be allocated in its
entirety to the Account, (ii) by an allocation to the Account of the
forfeitures occurring during the Plan Year, or (iii) by any
combination of (i) and (ii) as the Company shall determine in its sole
discretion. If a Participant eligible to make such repayment fails to
do so within the relevant time period, the forfeited amount shall not
be restored to the Participant's Company Contributions Account.
(d) All distributions paid under this Section 7.2 may be
made, in accordance with Article XVI, in the form of a Direct
Rollover.
7.3 AMENDMENT TO VESTING SCHEDULE. If the Plan's vesting schedule
is amended, or the Plan is amended in any way that directly or indirectly
affects the computation of a Participant's nonforfeitable percentage, each
Participant with a least three (3) Years of Service with the Company may elect,
within a reasonable period after the adoption of the amendment or change, to
have the nonforfeitable percentage computed under the Plan without regard to
such amendment or change. The period during which the election may be made
shall commence with the date the amendment is adopted or needed to be made and
shall end on the latest of:
(a) sixty (60) days after the amendment is adopted;
(b) sixty (60) days after the amendment becomes
effective; or
(c) sixty (60) days after at Participant is issued
written notice of the amendment by the Company or Committee.
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ARTICLE VIII
ALLOCATION OF RESPONSIBILITIES - NAMED FIDUCIARIES
8.1 NO JOINT FIDUCIARY RESPONSIBILITIES. The persons designated
in this Article shall be the named Fiduciaries under the Plan and Trust
Agreement and shall be the only named Fiduciaries thereunder. The Fiduciaries
shall have only the responsibilities specifically allocated to them herein or
in the Trust Agreement. Such allocations are intended to be mutually exclusive
and there shall be no sharing of Fiduciary responsibilities. Whenever one
named Fiduciary is required by the Plan or Trust Agreement to follow the
directions of another named Fiduciary, the two named Fiduciaries shall not be
deemed to have been assigned a shared responsibility, but the responsibility of
the named Fiduciary giving the directions shall be deemed his or her sole
responsibility, and the responsibility of the named Fiduciary receiving those
directions shall be to follow them insofar as such instructions are on their
face proper under applicable law.
8.2 THE COMPANY. The Company or, in the event the Company
delegates such responsibility to the Committee, the Committee shall be
responsible for:
(a) making the employer contributions hereunder;
(b) certifying to the Trustee the names and specimen
signatures of the members of the Committee acting from time to time;
(c) keeping accurate books and records with respect to
its employees and their compensation and furnishing such data to the
Committee;
(d) directing the Trustee concerning the investment of
the assets in the Trust Fund, other than Stock;
(e) directing the Trustee with respect to the purchase of
Stock;
(f) valuing the Stock; and
(g) the periodic review of the performance of Plan agents
and Fiduciaries.
8.3 THE TRUSTEE. The Trustee shall be responsible for:
(a) in the absence of investment direction from the
Company, the investment of the Trust Fund to the extent and in the
manner provided in the Trust agreement;
(b) the custody and preservation of Trust assets
delivered to it;
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(c) the purchase of shares of Stock in accordance with
the written directions of the Company or the Committee; and
(d) making such payments from the Trust Fund as the
Committee shall direct.
8.4 THE COMMITTEE. The board of directors of the Company shall
appoint an administrative Committee consisting of not fewer than three persons
who may but need not be officers, directors or Employees of the Company or
Participants. The members of the Committee shall hold office at the pleasure
of the board of directors and shall serve without compensation. The Committee
shall be the "Plan administrator". It shall be responsible for establishing
and implementing a funding policy consistent with the objectives of the Plan
and with the requirements of ERISA. This responsibility shall include
establishing (and revising as necessary) short term and long term goals and
requirement pertaining to the financial condition of the Plan, communicating
such goals and requirements to the persons responsible for the various aspects
of Plan operations, and periodically monitoring the implementation of such
goals and requirements. The Committee shall also be responsible for duties
delegated to it by the Company in accordance with Section 8.2 of the Plan.
8.5 COMMITTEE TO ADMINISTER AND INTERPRET PLAN. The Committee
shall administer the Plan and shall have all powers necessary for that purpose,
including, but not by way of limitation, power to interpret the Plan, to
determine the eligibility, status and rights of all persons under the Plan and
in general to decide any dispute. The Committee shall direct the Trustee
concerning all distributions from the Trust Fund, in accordance with the
provisions of the Plan, and shall have such other powers in the administration
of the Trust Fund as may be conferred upon it by the trust agreement. The
Committee shall maintain all Plan records except records of the Trust Fund.
8.6 ORGANIZATION OF COMMITTEE. The Committee shall elect a
chairman and shall adopt such rules as it deems desirable for the conduct of
its affairs and for the administration of the Plan. It may appoint agents (who
need not be members of the Committee) to whom it may delegate such powers as it
deems appropriate, except that any dispute shall be determined by the
Committee. The Committee may make its determinations with or without meetings.
It may authorize one or more of its members or agents to sign instructions,
notices and determinations on its behalf. The action of a majority of the
Committee shall constitute the action of the Committee.
8.7 AGENT FOR PROCESS. The chairman of the Committee shall be
agent of the Plan for service of all process.
8.8 INDEMNIFICATION OF COMMITTEE MEMBERS. The Company shall
indemnify each member of the Committee against any and all claims, loss,
damages, expense and liability arising from any action or failure to act,
except when the same is judicially determined to be due to the gross negligence
or willful misconduct of such member.
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ARTICLE IX
TRUST
9.1 TRUST AGREEMENT. The Company has entered into a Trust
Agreement to provide for the holding, investment and administration of the
funds of the Plan. The Trust Agreement shall be part of the Plan, and the
rights and duties of any person under the Plan shall be subject to all terms
and provisions of the Trust Agreement.
9.2 EXPENSES OF TRUST. All taxes upon or in respect of the Trust
shall be paid by the Trustee out of the Trust assets. All expenses of
administering the Trust shall be paid by the Trustee our of the Trust assets,
to the extent they are not paid by the Company. No Fiduciary shall receive any
compensation from the Plan for services with respect to the Plan if such
Fiduciary is receiving compensation as a full-time employee of the Company.
ARTICLE X
TERMINATION AND AMENDMENT
10.1 TERMINATION OF PLAN OR DISCONTINUANCE OF CONTRIBUTION. The
Company expects to continue the Plan indefinitely, but the continuance of the
Plan and the payment of contributions are not assumed as contractual
obligations. The Company may terminate the Plan or discontinue contributions
at any time. Upon the termination (or partial termination) of the Plan or
complete discontinuance of Company contributions, the interests of all affected
Participants in the Trust Fund shall become fully vested, notwithstanding any
other provision hereof.
10.2 ALLOCATIONS UPON TERMINATION OR DISCONTINUANCE OF COMPANY
CONTRIBUTIONS. Upon the termination or partial termination of the Plan or upon
the complete discontinuance of contributions, the Committee shall promptly
notify the Trustee of such termination or discontinuance and the Trustee shall
determine the net worth of the Trust Fund as of the close of the last business
day of the calendar month in which such notice was received by the Trustee and
shall advise the Committee of any increase or decrease in such net worth
occurring since the last preceding valuation date. The Committee shall
thereupon allocate among the Accounts of the Participants then remaining in the
Plan, any such increase or decrease in the net worth of assets other than Stock
in the Trust Fund. Immediately after the allocation of such increase or
decrease in net worth, the Committee shall allocate among the Accounts of the
Participants then remaining in the Plan, the amounts of any Company
contributions or forfeitures occurring since the preceding Valuation Date.
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10.3 PROCEDURE UPON TERMINATION OF PLAN OR DISCONTINUATION OF
COMPANY CONTRIBUTIONS. If the Plan has been terminated (or partially
terminated), or if Company contributions have been completely discontinued, the
Committee shall, after all allocations required have been completed, direct the
Trustee to distribute to each Participant the amount then credited to his
Accounts.
10.4 AMENDMENT BY COMPANY. The Company may at any time amend the
Plan in any respect by action of its board of directors, but no amendment shall
be made that would have the effect of vesting in the Company any part of the
Trust Fund or of diverting any part of the Trust Fund to purposes other than
for the exclusive benefit of employees of the Company or their beneficiaries,
and the rights of any Participant with respect to contributions previously made
shall not be adversely affected by any amendment.
ARTICLE XI
SPECIAL PROVISIONS REGARDING COMPANY STOCK
11.1 DISTRIBUTIONS. Notwithstanding any other provision hereof, no
Stock shall be distributed to any person unless such distribution is at that
time effectively registered or exempt from registration under the Securities
Act of 1933, as amended. In the event that the distribution of Stock to a
Participant or Beneficiary is prohibited by the foregoing limitation, the
Company shall take such steps as are necessary to permit the distribution of
such Participant's interest in the Trust Fund.
11.2 INVESTMENT OF TRUST FUND. The investment policy of the Plan
is to invest primarily in Stock. All cash received by the Trustee shall, at
the written direction of the Company or the Committee, be used to purchase
Stock at the fair market value of the Stock. At the written direction of the
Company or the Committee, the Trustee shall temporarily invest Trust assets,
pending the purchase of Stock, as provided in the Trust Agreement. In the
absence of written direction from the Company or the Committee, the Trustee may
temporarily invest Trust assets, pending the purchase of Stock, in savings
accounts, certificates of deposit high-grade short-term securities, or such
funds may be held in cash or cash equivalents.
11.3 DIVIDENDS. The Company may from time to time declare and pay
dividends, either in cash or in shares of Stock, with respect to shares of
Stock in the Trust Fund. Cash dividends paid with respect to Stock shall be
allocated to the Accounts of the respective Participants on the basis of the
number of shares of Stock allocated to their Accounts at the time such dividend
is declared and dividends of Stock shall be allocated to Participants' Accounts
on the same basis.
Dividends also may be used, at the direction of the Company or the
Committee, to pay debt on an Exempt Loan or distributed in cash to Participants
or Beneficiaries in
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accordance with this paragraph. Dividends paid in cash and used in accordance
with the preceding sentence, hereinafter referred to as "Applicable Dividends",
shall be allowable as a deduction in the taxable year of the Company in which
paid or distributed to a Participant or Beneficiary or in the taxable year in
which used to repay an Exempt Loan. An Applicable Dividend is any dividend
which:
(a) is paid in cash to the Participants in the Plan or
their Beneficiaries;
(b) is paid to the Plan and is distributed in cash to
Participants in the Plan or their Beneficiaries not later than 90 days
after the close of the Plan Year in which paid; or
(c) is used to make payments on an Exempt Loan the
proceeds of which were used to acquire the Stock (whether or not
allocated to Participants) with respect to which the dividend is paid.
A dividend described in (c) which is paid with respect to any Stock which is
allocated to a Participant shall not be treated as an Applicable Dividend
unless Stock with a fair market value of not less than the amount of such
dividend is allocated to such Participant for the year which such dividend
would have been allocated to such Participant.
11.4 VOTING COMPANY STOCK. If the Company has a "registration-type
class of securities", as defined in Section 409(e) of the Code, each
Participant shall be entitled to vote the shares of Stock, including fractional
shares, allocated to his Account and shall be entitled to receive all proxy
materials and other information distributed to shareholders as the other
shareholders of the Company. If the Company does not have a "registration-type
class of securities", each Participant shall be entitled to vote the shares of
Stock, including fractional shares, allocated to his Account with respect to
corporate matters that (by law or charter) must be decided by more than a
majority vote of outstanding common shares voted, and shall be entitled to
receive all proxy materials and other information distributed to shareholders
as the other shareholders of the Company. Shares of Stock that have not been
allocated to Participant Accounts shall be voted by the Trustee in the same
proportion as shares of Stock that are allocated to Participant Accounts are
voted.
11.5 COMPANY STOCK TO BE SUBJECT TO CERTAIN CONDITIONS. All shares
of Stock distributed to a Participant or his Beneficiary shall bear such
legends and statements as the Company may deem advisable to assure compliance
with applicable federal and state securities laws and regulations. If
requested by the Company, a recipient of shares of Stock shall, prior to
receipt of such shares, deliver to the Company such written statements as the
Company or its counsel may reasonably require to indicate that the recipient is
acquiring such shares for his own account, for investment and not with the view
to a distribution thereof and that the recipient of such shares understands
that such shares have not been registered under the Securities Act of 1933 (the
Act) and that neither the shares nor any interest therein may be transferred,
sold, assigned or conveyed except in accordance with the Act and applicable
state securities laws and must therefore be held
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indefinitely unless they are subsequently registered under the Act or an
exemption from such registration is available. Such written statements may
also require the recipient's acknowledgment that he understands that if, after
the Stock has been held for a period of at least two years and if the
provisions of Rule 144 of the General Rules and Regulations adopted under the
Act are otherwise available (there being no representations by the Company that
the provisions of Rule 144 will be applicable), then the recipient may make
routine sales of such shares in limited amounts, in a specified manner, in
accordance with other items and conditions of Rule 144. In the case of Stock
to which Rule 144 is not applicable, any sales by a recipient would have to be
made in compliance with Regulation A or some other exception from the
registration requirements of the Act.
11.6 VALUATION OF COMPANY STOCK. Shares of Stock held in the Trust
Fund shall be valued annually, for all purposes of the Plan, at their fair
market value as of the last day of each fiscal year, as determined in good
faith by the Company. In the case of purchases of Stock from "disqualified
persons" (as defined in Section 4975 of the Internal Revenue Code), the value
must be determined as of the date of the transaction. The Company may use any
reasonable valuation method for the purpose of determining fair market value
that complies with the applicable regulations of the Department of Labor and
the Treasury Department. Without limiting the generality of the foregoing, the
Company may direct the Trustee to engage an independent expert appraiser to
evaluation the Company and the Stock and to provide an appraisal as to the fair
market value of the Stock as of any date. The fees of such appraiser shall be
paid by the Company or the trust, or may be shared by each, as determined by
the Company.
11.7 PUT OPTION. A share of Stock shall be subject to a put option
if it is not publicly traded when distributed out of the Trust or if it is
subject to a trading limitation when so distributed. Such put option must
comply with the following:
(a) It must be exercisable only by the Participant or
Beneficiary to whom the Company Stock subject thereto is distributed
by the Trust, a donee of such Participant or Beneficiary, the trustee
of an Individual Retirement Account that has received a rollover
including such stock, or by a person (including an estate or its
distributee) to whom such stock passes by reason of the death of such
Participant or Beneficiary;
(b) It must permit the person exercising it to put the
Company Stock subject thereto to the Company; under no circumstances
may it bind the Plan or Trust, but it may grant the Plan or Trust an
option to assume the rights the obligations of the Company at the time
it is exercised. If it is known, at the time such Stock is acquired,
that Federal or state law will be violated by the Company's honoring
such put option, it must permit the stock subject thereto to be put,
in a manner consistent with such law, to a third party (e.g., an
affiliate or a shareholder of the Company other than the Plan or
Trust);
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(c) (i) It must be exercisable at least during a
sixty (60) day period following the date of distribution from
the Trust to the Participant or Beneficiary and for an
additional sixty (60) day period during the Plan Year
immediately following the Plan Year in which the first option
period ends;
(ii) The period during which it is exercisable
shall not include any time when a distributee is unable to
exercise it because the party bound by it is prohibited from
honoring it by applicable Federal or state law;
(iii) It shall be exercisable by the holder
notifying the Company in writing that it is being exercised;
(iv) The price at which it is exercisable shall be
the current market value of the Stock subject thereto,
determined as of the most recent Valuation Date, provided,
however, that such value shall be determined as of the date
the put is honored if the holder of such put is a
"disqualified person" (as defined under Section 4975 of the
Code);
(v) For purposes of the Plan, all valuations of
Company Stock which are not readily tradeable on an
established securities market shall be made by an independent
appraiser (as described in the Regulations under Code Section
170(a)(1)).
(d) (i) If the Company is empowered to repurchase the
total distribution of a Participant, the Company may do so
beginning no later than thirty days after the exercise of the
put option over a five year period, in substantially equal
periodic payments (not less frequently than annually) provided
there is adequate security furnished and reasonable interest
paid on the unpaid amounts. For purposes of this paragraph
the term "total distribution" means the distribution within
one (1) taxable year to the Participant of the balance of the
credit of the Participant's Account.
(ii) If the Company is required to repurchase
Company Stock as part of an installment distribution, the
payments by the Company shall be made no later than thirty
(30) days after the exercise of the put option.
(iii) Payment under a put option may not be
restricted by the provisions of a loan or any other
arrangement, including the terms of the Company's certificate
of incorporation, unless as required by applicable state law.
11.8 RIGHT OF FIRST REFUSAL. If not then regularly traded on an
Established Securities Market any Company Stock that was acquired by the ESOP
and distributed to a Participant or his Beneficiary shall be subject to a right
of first refusal provided that prior to any sale of any such Stock to a
prospective buyer by the Participant or his
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Beneficiary or any transferee thereof (the "Stockholder"), such shares must
first be offered to the Plan and then to the Company at the price which the
prospective buyer is willing to pay as follows:
(a) Any Stockholder wishing to sell, assign, transfer,
pledge or otherwise alienate any of such shares of any Company Stock
that were distributed by the ESOP shall first give written notice of
any proposed transfer to the Committee and Trustee and to the Company.
The notice shall name the proposed transferee and state the number of
shares to be transferred, the price per share and all other terms of
the offer made by a bonafide purchaser in writing.
(b) For fourteen (14) days following the receipt of such
notice, the Plan and, to the extent the Trustee elects not to exercise
the Plan's right of first refusal, the Company, shall have the option
but not the obligation, in its sole discretion, to purchase all or any
portion of the Stock specified in the notice at the purchase price (or
if greater, fair market value) and on the terms of payment as set
forth in the notice.
(c) In the event the Plan and/or the Company elects to
acquire some portion or all of the stock as specified in said
Stockholder's notice, the Trustee and/or the Company shall so notify
the Stockholder and settlement for said shares shall be made at the
purchase price (or if greater, fair market value) and on the terms of
payment as set forth in the stockholder's notice.
(d) In the event the Plan and/or the Company do not elect
to acquire all of the shares of Stock specified in the Stockholder's
notice, the Stockholder may, within the sixty (60) day period
following the expiration of the first refusal rights granted herein,
transfer the remaining shares specified in the Stockholder's notice
elsewhere, provided that the sale shall not be on terms and conditions
more favorable to the purchase than those contained in the bonafide
offer set forth in the Stockholder's notice. In no event will the
terms and the purchase price by the Company or the Plan be less than
the fair market value of the Company Stock as of the most recent
Valuation Date.
11.9 DISTRIBUTION OF CASH OR COMPANY STOCK. Except for those
investments diversified in accordance with Section 6.9, a Participant shall
have the right to require that any distribution under this Plan be made in
shares of Stock (with the value of fractional shares payable in cash). Subject
to that right, the fair market value of shares of Stock may be distributed, at
the option of the Committee, in cash. The Committee shall advise each
Participant in writing of his right to receive a distribution of benefits in
shares of Stock before a cash distribution may be elected by the Committee.
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11.10 EXCHANGE OFFERS; TENDER OFFERS.
(a) As soon as practicable after the commencement of an
exchange offer or tender offer (the "Offer") for shares of Stock, the
Committee shall use its best efforts to cause each Participant to be
advised in writing of the terms of the Offer and to be provided the
forms by which the Participant may instruct the Trustee, or revoke
such instruction, to the extent permitted by the terms of the Offer,
to exchange or tender, as the case may be, all or a portion of the
Stock allocated to his Accounts. The Trustee shall follow the
direction of each Participant. All shares of Stock that have been
allocated to Participants' accounts for which instructions have not
been received shall not be exchanged or tendered, as the case may be.
Shares of Stock that have not been allocated to Participants' accounts
shall be exchanged or tendered, as the case may be, by the Trustee in
the same proportion as shares of Stock that are allocated to
Participants' accounts have been exchanged or tendered, as the case
may be.
(b) In advising Participants of the terms of the Offer,
the Committee shall use its best efforts to provide the Participants
with all materials that are furnished to Stockholders of the Company.
The giving of instructions by Participants to the Trustee to exchange
or tender shares of Stock and the exchange or tender thereof shall not
be deemed to be a withdrawal from a Participant's Account, an election
not to participate in the Plan, or a forfeiture of any part of a
Participant's interest in the Plan solely by reason of giving such
instructions and the Trustee's compliance with such instructions. The
Trustee shall keep all instructions given it by Participants
confidential at all times. The number of shares as to which a
Participant may provide instructions shall be the total number of
shares allocated to his Accounts, whether or not the shares are vested
as of the date of Offer commenced, except as specifically provided
otherwise. Any Stock received by the Trustee as a result of the
exchange of shares of Stock shall be allocated to the Account of the
Participant with respect to whom the shares were exchanged. Any
securities received by the Trustee as a result of the exchange or
tender of shares of Stock shall be held and any cash so received shall
be invested in short-term investments for the account of the
Participant with respect to whom the shares were exchanged or tendered
pending any reinvestment by the Trustee.
ARTICLE XII
COMPANY STOCK PURCHASED WITH LOANS
12.1 DEFINITIONS. When used in this Article, the following terms
have the meanings set forth:
(a) LOAN. The term "loan" refers to a loan made to the
Plan by a dis-qualified person or a loan to the Plan that is
guaranteed by a disqualified person. It includes a direct loan of
cash, a purchase-money transaction, and an assumption
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of the obligation of the Plan. "Guarantee" includes an unsecured
guarantee and the use of assets of a disqualified person as collateral
for a loan, even though the use of assets may not be a guarantee under
applicable state law. An amendment of a loan in order to qualify as
an Exempt Loan is not a refinancing of the loan or the making of
another loan.
(b) PUBLICLY TRADED. The term "publicly traded" refers
to a security that is listed on a national securities exchange
registered under Section 6 of the Securities Exchange Act of 1934, as
amended (15 U.S.C. 78f), or that is quoted on a system sponsored by a
national securities association registered under Section 15A(b) of the
Securities Exchange Act of 1934, as amended (15 U.S.C. 78o).
12.2 PROHIBITION AGAINST NON-EXEMPT LOANS. Notwithstanding
anything to the contrary contained in the Plan or Trust Agreement, no loan
shall be made to the Plan unless such loan is an Exempt Loan.
12.3 PRIMARY BENEFIT RETIREMENT.
(a) An Exempt Loan must be primarily for the benefit of
the Plan Participants and their Beneficiaries.
(b) At the time that a loan is made, the interest rate
for the loan and the price of the Stock to be acquired with the loan
proceeds should not be such that Plan assets might be drained off.
(c) The terms of a loan, whether or not between
independent parties, must, at the time the loan is made, be at least
as favorable to the Plan as the terms of a comparable loan resulting
from arm's-length negotiations between independent parties.
12.4 USE OF LOAN PROCEEDS. The proceeds of an Exempt Loan must be
used within a reasonable time after their receipt by the Plan only for any or
all of the following purposes:
(a) To acquire Stock.
(b) To repay such loan.
(c) To repay a prior Exempt Loan. A new loan, the
proceeds of which are so used, must satisfy the provisions of this
Article. Except as provided in 11.7, or as otherwise required by
applicable law, no Stock acquired with the proceeds of an Exempt Loan
may be subject to a put, call, or other option, or buy-sell or similar
arrangement while held by and when distributed from the Plan.
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12.5 LIABILITY AND COLLATERAL OF PLAN FOR LOAN. An Exempt Loan
must be without recourse against the Plan. Furthermore, the only assets of the
Plan that may be given as collateral on an Exempt Loan are of two classes:
those acquired with the proceeds of the loan and those that were used as
collateral on a prior Exempt Loan repaid with the proceeds of the current
exempt loan. No person entitled to payment under the Exempt Loan shall have
any right to assets of the Plan other than:
(a) Collateral given for the loan;
(b) Contributions (other than contributions of employer
securities) that are made under the Plan to meet its obligations under
the loan; and
(c) Earnings attributable to such collateral and the
investment of such contributions. The payments made with respect to
an Exempt Loan by the Plan during a Plan Year must not exceed an
amount equal to the sum of such contributions and earnings received
during or prior to the year less such payments in prior years. Such
contributions and earnings must be accounted for separately in the
books of Account of the Plan until the loan is repaid.
12.6 DEFAULT. In the event of default upon an Exempt Loan, the
value of Plan assets transferred in satisfaction of the loan must not exceed
the amount of default. If the lender is a disqualified person, a loan must
provide for a transfer of Plan assets upon default only upon and to the extent
of the failure of the Plan to meet the payment schedule of the loan. For the
purposes of this section, the making of a guarantee does not make a person a
lender.
12.7 REASONABLE RATE OF INTEREST. The interest rate of a loan must
not be in excess of a reasonable rate of interest. All relevant factors will
be considered in determining a reasonable rate of interest, including the
amount and duration of the loan, the security and guarantee (if any) involved,
the credit standing of the Plan and the guarantor (if any), and the interest
rate prevailing for comparable loans. When these factors are considered, a
variable interest rate may be reasonable.
12.8 RELEASE FROM ENCUMBRANCE.
(a) Shares of Stock purchased with an Exempt Loan shall
be allocated to a Suspense Account and released from the Suspense
Account (and the encumbrance) in accordance with this 12.8 and 12.11.
Shares of Stock released from the Suspense Account shall be allocated
to the Participants' Company Contributions Accounts. In general, an
exempt loan must provide for the release from encumbrance under this
subsection of Plan assets used as collateral for the loan. For each
Plan Year during the duration of the loan, the number of securities
released must equal the number of encumbered securities held
immediately before release for the current Plan Year multiplied by a
fraction. The numerator of the fraction is the amount of principal
and interest paid for the year. The denominator
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of the fraction is the sum of the numerator plus the principal and
interest to be paid for all future years. The number of future years
under the loan must be definitely ascertainable and must be determined
without taking into account any possible extensions or renewal
periods. If the interest rate under the loan is variable, the
interest to be paid in future years must be computed by using the
interest rate applicable as of the end of the Plan Year. If
collateral includes more than one class of securities, the number of
securities of each class to be released for a Plan Year must be
determined by applying the same fraction to each class.
(b) A loan will not fail to be an Exempt Loan merely
because the number of securities to be released from encumbrance is
determined solely with reference to principal payments. However, if
release is determined with reference to principal payments only, the
following three additional rules apply. The first rule is that the
loan must provide for annual payments of principal and interest at a
cumulative rate that is not less rapid at any time than level annual
payments of such amounts for 10 years. The second rule is that
interest included in any payment is disregarded only to the extent
that it would be determined to be interest under standard loan
amortization tables. The third rule is that this subsection is not
applicable from the time that, by reason of a renewal, extension, or
refinancing, the sum of the expired duration of the exempt loan, the
renewal period, the extension period, and the duration of a new exempt
loan exceeds 10 years.
12.9 VOTING RIGHTS. Stock acquired with the proceeds of an Exempt
Loan shall be subject to the voting rights and voting procedures described in
11.4.
12.10 ALLOCATION TO ACCOUNTS OF PARTICIPANTS.
(a) Except as provided in this section, amounts
contributed to the Plan must be allocated as provided under Section
1.401-1(b)(ii) and (iii) of the Income Tax Regulations, and securities
acquired by the Plan must be accounted for as provided under Section
1.402(a)-1(b)(2)(ii) of the Income Tax Regulations.
(b) As of the end of each Plan Year, the Plan must
consistently allocate to the Participants' Accounts non- monetary
units representing Participants' interests in assets withdrawn from
the Suspense Account.
(c) Income with respect to securities acquired with the
proceeds of an Exempt Loan must be allocated as income of the Plan
except to the extent that the Plan provides for the use of income from
such securities to repay the loan.
(d) If a portion of a Participant's account is forfeited,
Stock allocated under subsection 12.10(b) of this section must be
forfeited only after other assets. If interests in more than one
class of qualifying employer securities have been allocated to the
Participant's account, the Participant must be treated as forfeiting
the same proportion of each such class.
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12.11 NON-TERMINABLE PROVISIONS. Notwithstanding the fact that the
Plan may cease to be an Employee Stock Ownership Plan, Stock acquired with
proceeds of an Exempt Loan shall continue to be subject to the provisions of
this Article.
ARTICLE XIII
AFFILIATED CORPORATIONS
13.1 ADOPTION OF PLAN. Any corporation, whether or not presently
existing which is or shall become a member of an Affiliated Company of which
Presidio Oil Company is also a member may become a party to the Plan and Trust
by adopting the Plan and Trust for its employees. Thereafter, such Affiliated
Company shall deliver to the Trustee a certified copy of the resolutions or
other documents evidencing its adoption of the Plan and Trust. Such Affiliated
Company shall also execute a copy of the Trust.
13.2 AGENCY OF PRESIDIO OIL COMPANY. By becoming a party to the
Plan, each Affiliated Company constitutes Presidio Oil Company as its agent
with authority to act for it in all transactions in which Presidio Oil Company
believes such agency will facilitate the administration of the Plan and with
authority to amend and terminate the Plan.
13.3 DISAFFILIATION AND WITHDRAWAL FROM PLAN. Any Affiliated
Company that has adopted the Plan and that thereafter ceases for any reason to
be a member of an Affiliated Company which includes Presidio Oil Company shall
cease to be a party to the Plan. Any Affiliated Company may, by resolution of
its board of directors and written notice thereof to Presidio Oil Company
provide from and after the end of any Plan Year for the discontinuance of Plan
participation by such corporation and its employees.
13.4 EFFECT OF DISAFFILIATION OR WITHDRAWAL. If at the time of
disaffiliation or withdrawal the disaffiliating or withdrawing corporation
shall by resolution of its board of directors determine to adopt a
substantially identical Plan, then, as to employees of such corporation, no
Plan termination shall be held to have occurred and the new Plan shall, as to
such employees, be deemed a continuation of this Plan. In such case the
Trustee shall transfer to the trustee of the new plan all of the assets held
for the benefit of employees of the disaffiliating or withdrawing corporation
and no forfeitures or acceleration of vesting shall occur by reason of such
action. Such payment shall operate as a complete discharge of the Trustee, and
of all corporations except the disaffiliating or withdrawing corporation, of
all obligations under this Plan to employees of the disaffiliating or
withdrawing corporation and to their beneficiaries. A new plan shall not be
deemed substantially identical to this Plan if it provides slower vesting than
this Plan, and nothing in this subsection shall authorize the divesting of any
vested portion of any Employee's Account.
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13.5 DISTRIBUTION UPON DISAFFILIATION OR WITHDRAWAL. In the event
of disaffiliation or withdrawal, if the provisions of 13.4 are not followed,
the Trustee shall distribute to each Participant or Beneficiary his entire
Account. Such distribution have been made, the Trustee shall be discharged
from all obligation under the Trust and no Participant or Beneficiary to whom
any such distribution shall have been made shall have any further right or
claim under the Plan or Trust.
ARTICLE XIV
TOP-HEAVY PROVISIONS
14.1 APPLICATION OF TOP-HEAVY PROVISIONS. The provision of this
Article shall be applicable only if the Plan becomes "top-heavy" as defined
below for any Plan Year beginning after December 31, 1983. If the Plan becomes
"top-heavy" as of the Determination Date for a Plan Year, the provisions of
this Article shall apply to the Plan effective as of the first day of such Plan
Year and shall continue to apply to the Plan (whether or not the Plan ceases to
be "top-heavy") until the Plan is terminated or otherwise amended.
14.2 DEFINITIONS. Notwithstanding any other provision of the Plan
to the contrary, when used in this Article the following terms shall have the
meaning set forth below:
(a) "Determination Date" means, with respect to each Plan
Year, the last day of the preceding Plan Year; provided however, that
in the case of the first Plan Year of the Plan the Determination Date
shall be the last day of such Plan Year.
(b) "Special Compensation" means (i) the Participant's
wages, salary, fees for professional service and other amounts
received for personal services actually rendered in the course of
employment with the Company (including, but not limited to,
commissions paid salesmen, compensation for services on the basis of a
percentage of profits, commissions on insurance premiums, tips and
bonuses); (ii) in the case of a Participant who is self-employed, the
Participant's earned income; (iii) amounts described in Sections
104(a)(3), 105(a) and 105(h) of the Code, but only to the extent that
these amounts are includable in the gross income of the Participant
(iv) amounts described in Section 105(d) of the Code, whether or not
these amounts are excludable from the gross income of the Participant
under that section; (v) amounts paid or reimbursed by the Company for
moving expenses incurred by the Participant, but only to the extent
that these amounts are not deductible by the Participant under Section
217 of the Code; (vi) the value of a non-qualified Stock option
granted to a Participant by the Company, but only to the extent that
the value of the option is includable in the gross income of the
Participant for the taxable year in which granted; and (vii) the
amount includable in the gross income of Participant upon making the
election described in Section 83(b) of the Code. Special compensation
shall not include amounts such as (i)
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contributions made by the Company to a Plan of deferred compensation
that are not includable in the employee's compensation for the taxable
year in which contributed; (ii) amounts realized from the exercise of
a non-qualified Stock option or amounts realized under Section 83(a)
of the Code when restricted property is either freely transferable or
not subject to a substantial risk of forfeiture, (iii) amounts
realized from the sale, exchange, or other disposition of Stock
acquired through the exercise of an incentive stock option; or (iv)
other amounts that receive special tax benefits. However, solely for
purposes of this Article, special compensation shall not include any
amount in excess of $200,000 (as such amount may be adjusted from time
to time in accordance with the provisions of Section 416(d) of the
Code) for any Plan Year in which the Plan is "top-heavy" as defined in
this Article. Notwithstanding the foregoing, for the Plan Year
beginning July 1, 1987 and ending December 31, 1987, special
compensation shall not include any amount in excess of $100,000.
(c) "Valuation Date" for purposes of this Article only,
means the date as of which the Account balances shall be valued, which
date shall be the Determination Date.
14.3 DETERMINATION OF TOP-HEAVY STATUS. The Plan shall be
considered "top-heavy" for a Plan Year if, as of the Determination Date for
that Plan Year, the aggregate of the Account balances of Key Employees under
the Plan (and under all other plans required or permitted to be aggregated with
this Plan) exceeds 60% of the aggregate of the Account balances of all
Employees under the Plan (and under all other plans required or permitted to be
aggregated with this Plan). For purposes of determining the Account balance or
the present value of the accrued benefit of any Employee, distributions made
with respect to such Employee within a five-year period ending on the
Determination Date must be included. This shall also apply to distributions
under a terminated Plan which, if it had not been terminated, would have been
required to be included in an aggregation group. However, if any individual
has not performed services for any Employer maintaining the Plan at any time
during the five-year period ending on the Determination Date, any accrued
benefit for such individual (and the account of such individual) shall not be
taken into account. Each plan of the Company in which a Key Employee
participates and each other plan of the Company which enables this Plan to meet
the requirements of Section 401(a) or Section 410 of the Internal Revenue Code
is required to be aggregated to test for top-heaviness. Plans of the Company,
which, when considered with the Plan and other plans of the Company that are
required to be aggregated with this Plan, would continue to satisfy the
requirement of Section 401(a) and 410 of the Internal Revenue Code, may be
aggregated to test for top-heaviness. If one or more of the plans required or
permitted to be aggregated with this Plan is a defined benefit plan, the Plan
will be top-heavy if the sum of the aggregate Account balances of the Key
Employees under the Plan (and under all other plans required or permitted to be
aggregated with the Plan) and the aggregate present values of the accrued
benefits of the Key Employees under the defined benefit plan or plans required
or permitted to be aggregated with this Plan exceeds 60% of the sum of the
aggregate Account balances of all employees under the
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Plan (and under all other plans required or permitted to be aggregated with
this Plan) and the aggregate present values of the accrued benefits of all
Employees under the defined benefit plan or plans required or permitted to be
aggregated with this Plan. For the purposes of computing the present values of
the accrued benefits under a defined benefit plan, if the aggregation group
includes more that one defined benefit plan, the same actuarial assumptions
shall be used with respect to each such defined benefit plan. The foregoing
top-heavy ratio shall be computed in accordance with the provisions of Section
416(q) of the Internal Revenue Code, together with the regulations and rulings
thereunder.
14.4 SPECIAL VESTING RULE. Notwithstanding the provisions of 7.1
hereof to the contrary, a Participant shall be fully vested in all of his
Account balances hereunder upon the completion of six Years of Service and
shall be partially vested beginning upon the completion of two Years of
Service, as determined in accordance with the following schedule:
<TABLE>
<CAPTION>
Years of Service Vested Percentage
---------------- -----------------
<S> <C>
fewer than 2 0
2 20
3 40
4 60
5 80
6 or more 100
</TABLE>
14.5 SPECIAL MINIMUM CONTRIBUTION. Notwithstanding the provisions
of 4.1 and 5.5 hereof to the contrary, each active Participant in the Plan who
is not a Key Employee and who is employed by the Company of the last day of the
Plan Year, regardless of whether the Participant received credit for 1,000 or
more Hours of Service, made any required Employee contributions for such year
or satisfied any other requirements for eligibility to share in the Company's
contribution, shall be entitled to a minimum Company contribution, together
with forfeitures, for each Plan Year of an amount not less than the lesser of
(a) 3% of such Participant's special compensation for such year or (b) the
largest percentage of special compensation provided for any Key Employee as a
contribution (including forfeitures) for that Plan Year; provided however, that
Social Security contributions may not be used to reduce this contribution. If
the Company's contribution and the allocation of the Company's contribution
does not satisfy the requirements of the preceding sentence for any Plan Year
when this Plan is a top-heavy Plan, the Company shall contribute an additional
amount to the Plan such that each non-key employee shall receive an allocation
of at least the minimum contribution required by this 14.5 for such Plan Year.
14.6 LIMITATION ON COMPENSATION. If the Plan becomes top-heavy as
defined in this Article, Compensation of each Participant in excess of $200,000
(as such amount may be adjusted from time to time in accordance with the
provisions of Section 415(d) of the Internal Revenue Code) shall be disregarded
for all purposes of the Plan.
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14.7 CHANGE IN TOP-HEAVY STATUS. If the Plan shall cease to be a
"top-heavy" Plan as defined in this Article, and if any change in the benefit
structure, vesting schedule or other component of a Participant's accrued
benefit, shall change as a result of such change in top-heavy status, the
non-forfeitable percentage computed under the Plan shall be determined without
regard to such change in status unless the election provisions of Section 7.3
are first satisfied.
ARTICLE XV
MISCELLANEOUS
15.1 RIGHT TO DISMISS EMPLOYEES. The Company may terminate the
employment of any Employee as freely and with the same effect as if this Plan
were not in existence. Participation is this Plan by an Employee shall not
constitute an express or implied contract of employment between the Company and
the Employee.
15.2 CLAIMS PROCEDURE.
(a) All claims shall be filed in writing by the
Participant, his Beneficiary, or the authorized representative of the
claimant, by completing such procedures as the Committee shall
require. Such procedures shall be reasonable and may include the
completion of forms and the submission of documents and additional
information.
(b) If a claim is denied, notice of denial shall be
furnished by the Committee to the claimant within 90 days after the
receipt of the claim by the Committee, unless special circumstances
require an extension of time for processing the claim, in which event
notification of the extension shall be provided to the Participant or
beneficiary and the extension shall not exceed 90 days.
(c) The Committee shall provide adequate notice, in
writing, to any claimant whose claim has been denied, setting forth
the specific reasons for such denial, specific reference to pertinent
Plan provisions, a description of any additional material or
information necessary for the claimant to perfect his claims and an
explanation of why such material or information is necessary, all
written in a manner calculated to be understood by the claimant. Such
notice shall include appropriate information as to the steps to be
taken if the claimant wishes to submit his claim for review. The
claimant or his authorized representative may request such a review
upon written application. He or she may review pertinent documents,
and he may submit issues or comments in writing. The claimant or his
duly authorized representative must request such review within the
reasonable period of time prescribed by the Committee. In no event
shall such a period of time be less than 60 days. A decision on
review shall be rendered within 60 days of the receipt of request for
review by the Committee. If special circumstances
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require a further extension of time for processing, a decision shall
be rendered not later than 120 days following the Committee's receipt
of the request for review. If such an extension of time of review is
required, written notice of the extension shall be furnished to the
claimant prior to the commencement of the extension. The decision on
review shall be furnished to the claimant. Such decision shall be in
writing and shall include specific reasons for the decision, written
in a manner calculated to be understood by the claimant, as well as
specific references to the pertinent Plan provisions on which the
decision is based.
15.3 SOURCE OF BENEFITS. All benefits payable under the Plan shall
be paid solely from the Trust Fund, and the Company assumes no liability or
responsibility therefor.
15.4 EXCLUSIVE BENEFIT OF EMPLOYEES. It is the intention of the
Company that it shall be impossible for any part of the Trust, other than as
provided in 9.2 hereof and the trust agreement, ever to be used for or diverted
to purposes other than for the exclusive benefit of the employees of the
Company and their beneficiaries, and that this Plan shall be construed to
follow the spirit and intent of the Code and ERISA.
15.5 FORMS OF NOTICES. Wherever provision is made in the Plan for
the filing of any notice, election or designation by a Participant, the action
of such Participant shall be evidenced by the execution of such form as the
Committee may prescribe for the purpose.
15.6 FAILURE OF ANY OTHER CORPORATION TO QUALIFY. If any
corporation joins in the adoption of this Plan but fails to obtain or retain
the qualification of the Plan under the applicable provisions of the Code, such
corporation shall withdraw from this Plan upon a determination by the Internal
Revenue Service that it has failed to obtain or retain such qualification.
Within thirty days after the date of such determination, the assets of the
Trust Fund held for the benefit of the employees of such corporation shall be
segregated and disposed of in accordance with the Plan and trust.
15.7 NOTICE OF ADOPTION OF THE PLAN. The Company shall provide
each of its Employees with notice of the adoption of this Plan and of any
amendments and of the salient provisions thereof. A complete copy of the Plan
shall also be made available for inspection by Employees.
15.8 PLAN MERGER. If this Plan merges or consolidates with, or
transfers its assets or liabilities to, any other qualified plan of deferred
compensation, provisions shall be made so that each Participant would (if the
Plan then terminated) be entitled to receive a benefit immediately after the
merger, consolidation or transfer which is equal to or greater than the benefit
he or she would have been entitled to receive immediately before the merger,
consolidation or transfer if this Plan had then been terminated.
15.9 INALIENABILITY OF BENEFITS - DOMESTIC RELATIONS ORDERS.
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(a) Except as provided below, no Participant or
Beneficiary shall have any right to assign, alienate, transfer,
hypothecate, encumber or anticipate his or her interest in any
benefits under this Plan, nor shall such benefits be subject to any
legal process to levy upon or attach the same for payment of any claim
against any such Participant or Beneficiary.
(b) Subsection (a) shall apply to the creation,
assignment, or recognition of a right to any benefit payable with
respect to a Participant pursuant to a domestic relations order unless
such domestic relations order is a "qualified domestic relations
order", in which case the Plan shall make payment of benefits in
accordance with the applicable requirements of any such qualified
domestic relations order. For purposes of this section, the term
"qualified domestic relations order" means a domestic relations order
that creates or recognizes the existence of an alternate payee's right
to, or assigns to an alternate payee the right to, receive all or a
portion of the benefits payable with respect to a Participant under
the Plan and with respect to which the requirements of subsection (c)
below are met. The term "domestic relations order" means any
judgement, decree or order (including approval of property settlement
agreement) that relates to the provision of child support, alimony
payments, or marital property rights to a spouse, former spouse,
child, or other dependent of the Participant and is made pursuant to a
state domestic relations law (including a community property law).
(c) A domestic relations order meets the requirements of
this subsection only if such order clearly specifies (i) the name and
the last known mailing address (if any) of the Participant and the
name and mailing address of each alternate payee covered by the order,
(ii) the amount or percentage of the Participant's benefits to be paid
by the Plan to each such alternate payee, or the manner in which such
amount or percentage is to be determined, (iii) the number of payments
or period to which such order applies, and (iv) each Plan to which
such order applies. Moreover, a domestic relations order meets the
requirements of this subsection only if such order (i) does not
require the Plan to provide any type or form of benefit, or any
option, not otherwise provided under the Plan, (ii) does not require
the Plan to provide increased benefits (determined on the basis of
actuarial value), and (iii) does not require the payment of benefits
to an alternate payee that are required to be paid to another
alternate payee under another order previously determined to be a
qualified domestic relations order.
(d) A domestic relations order shall not be treated as
failing to meet the requirements of subsection (c) solely because such
order requires that payment of benefits be made to an alternate payee
(i) before a Participant has separated from service, and (ii) in any
form in which such benefits may be paid under the Plan to the
Participant had he separated from service on such payment date.
(e) In the case of any domestic relations order received
by the Plan, the
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Committee shall promptly notify the Participant and any other
alternate payee of the receipt of such order and the Plan's procedures
for determining the qualified status of domestic relations orders and,
within a reasonable period after receipt of such order, the Committee
shall determine whether such order is a qualified domestic relations
order and notify the Participant and each alternate payee of such
determination. The Committee shall establish reasonable procedures to
determine the qualified status of domestic relations orders to
administer distributions under such qualified orders. Such procedures
shall be in writing, shall provide for the notification of each person
specified in the domestic relations order as entitled to payment of
benefits under the Plan (at the address included in the domestic
relations order) of such procedures promptly upon receipt by the Plan
of the domestic relations order and shall permit an alternate payee to
designate a representative for receipt of copies of notices that are
sent to the alternate payee with respect to a domestic relations
order. During any period in which the issue of whether a domestic
relations order is a qualified domestic relations order is being
determined (by the Committee, by a court of competent jurisdiction, or
otherwise), the Committee shall separately account for the amounts
(hereinafter referred to as the "segregated amounts") which would have
been payable to the alternate payee during such period if the order
had been determined to be a qualified domestic relations order. If
within 18 months the order (or modification thereof) is determined to
be a qualified domestic relations order, the Committee shall pay the
segregated amounts (plus any interest thereon) to the person or
persons entitled thereto. However, if within 18 months it is
determined that the order is not a qualified domestic relations order
or the issue as to whether such order is a qualified domestic
relations order is not resolved, then the Committee shall pay the
segregated amounts (plus any interest thereon) to the person or
persons who would have been entitled to such amounts if there had been
no order. Any determination that an order is a qualified domestic
relations order that is made after the close of the 18 month period
shall be applied prospectively only. If the Plan's fiduciaries act in
accordance with fiduciary provisions of ERISA in treating a domestic
relations order as being (or not being) a qualified domestic relations
order or in taking action in accordance with this subsection, then the
Plan's obligation to the Participant and each alternate payee shall be
discharged to the extent of any payment made pursuant to the acts of
such fiduciaries. For purposes of this section, the term "alternate
payee" means any spouse, former spouse, child, or other dependent of a
Participant who is recognized by a domestic relations order as having
a right to receive all, or a portion of, the benefits payable under
this Plan with respect to such Participant.
15.10 PAYMENTS DUE MINORS OR INCAPACITATED PERSONS. If any person
entitled to a payment under the Plan is a minor, or if the Committee determines
that any such person is incapacitated by reason of physical of mental
disability, whether or not legally adjudicated as such, the Committee shall
have the power to cause the payments becoming due to such person to be made to
his personal representative or to another for his benefit, without
responsibility of the Committee or the Trustee to see to the application of
such
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payments. Payments made pursuant to such power shall operate as a complete
discharge of the Trust Fund, the Trustee and the Committee.
15.11 UNIFORMITY OF APPLICATION. The provisions of this Plan shall
be applied in a uniform and non-discriminatory manner in accordance with rules
adopted by the Committee which shall be systematically followed and
consistently applied so that all person similarly situated shall be treated
alike.
15.12 DISPOSITION OF UNCLAIMED PAYMENTS. Each Participant must file
with the Committee from time to time in writing his or her post office address
and the post address of each of his Beneficiaries and each change of post
office address. Any communication, statement or notice addressed to a
Participant or Beneficiary at his last post office address filed with the
Committee, or if no address is filed with the Committee then at his last post
office address as shown on the Company's records, will be binding on the
Participant and his Beneficiaries for all purposes of the Plan. Neither the
Committee nor the Trustee shall be required to search for or locate a
Participant or Beneficiary. If the Committee notifies a Participant or
Beneficiary that he is entitled to a distribution and also notifies him of the
provisions of this section, and the Participant or Beneficiary fails to claim
his benefits under the Plan or make his address known to the Committee within
three calendar years after the notification, the benefits under the Plan of the
Participant or Beneficiary will, as the Committee in its discretion determines,
either be forfeited as of the end of any Plan Year following the three year
waiting period, or continue to be held in the Trust Fund for the benefit of the
Participant. If such a Participant's Accounts are forfeited, and if the
Participant should later make claim for his benefit, the Company shall
contribute to the Trust Fund shares of Stock equal in value to the shares the
Participant would have been entitled to but for the forfeiture.
15.13 TIME OF PAYMENT.
(a) Unless a Participant otherwise elects, the payment of
a benefit to which he has become entitled must begin not later than
the sixtieth day after the close of the latest of the following Plan
Years:
(i) the year in which the Participant attains
Normal Retirement Age;
(ii) the year in which occurs the tenth
anniversary of the year in which the Participant commenced
participation; or
(iii) the year in which the Participant terminates
service with the Company.
(b) A Participant who wishes to defer the commencement of
a benefit beyond the latest date specified in the preceding paragraph
(a) may elect to do so by filing with the Committee a written
statement signed by the Participant which
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described the benefit and the date on which the payment of such
benefit shall commence. No election may be made that would defer the
first payment date beyond the Participant's seventieth birthday. An
election once filed may be amended only with the consent of the
Committee.
(c) Notwithstanding the foregoing, the entire interest of
a Participant in the Plan shall be distributed (i) in a lump sum to
such Participant not later than the required beginning date, or (ii)
in installments commencing not later than the required beginning date,
in accordance with Regulations to be issued by the Secretary of
Treasury, over the life of such Participant or over the lives of such
Participant and designated beneficiary (or over a period not extending
beyond the life expectancy of such Participant or the life expectancy
of such Participant and a designated beneficiary).
(d) If the distribution of a Participant's interest has
begun and if the Participant dies before his or her entire interest
has been distributed to him or her, the remaining portion of such
interest shall be distributed at least as rapidly as under the method
of distribution being used as of the date of his death. If a
Participant dies before the distribution of the Participant's interest
has begun, the entire interest of the Participant shall be distributed
within five years after the death of such Participant.
Notwithstanding the foregoing sentence, if any portion of the
Participant's interest is payable to (or for the benefit of) a
designated beneficiary, and if such portion will be distributed (in
accordance with Regulations to be issued by the Secretary of the
Treasury) over the life of such designated Beneficiary (or over a
period not extending beyond the life expectancy of such Beneficiary),
and if such distributions begin not later than one year after the date
of the Participant's death or such later date as the Secretary of the
Treasury may by Regulations prescribe, then for purposes of this
section any portion of the Participant's interest payable to (or for
the benefit of) a designated Beneficiary shall be treated as
distributed on the date on which such distributions begin.
Notwithstanding the foregoing, if the designated Beneficiary referred
to in the preceding sentence is the surviving spouse of the
Participant, the date on which the distributions are required to begin
under the foregoing sentence shall not be earlier than the date on
which the Participant would have attained age 70 1/2 and, if the
surviving spouse dies before the distributions to such spouse begin,
this provision shall be applied as if the surviving spouse were the
Participant.
(e) For purposes of the foregoing subsections, the
following definitions shall apply:
(i) The term "required beginning date" means
April 1 of the calendar year following the calendar year in
which the Participant attains age 70 1/2.
(ii) The life expectancy of a Participant and the
Participant's
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spouse (other than in the case of a life annuity) may be
redetermined but not more frequently than annually.
(iii) For purposes of this Section, any amount paid
to a child shall be treated as if it had been paid to the
surviving spouse if such amount will become payable to the
surviving spouse upon such child reaching majority (or other
designated event permitted under regulations to be issued by
the Secretary of Treasury).
15.14 GOVERNING LAW. All provisions of the Plan shall be construed
in accordance with the laws of the State of Colorado, except to the extent
pre-empted by federal law.
ARTICLE XVI
ROLLOVERS AND TRANSFERS
16.1 ROLLOVERS AND TRANSFERS INTO THE PLAN. This Plan shall not
accept transfers or rollovers of any amounts, directly or indirectly, from any
other employer's retirement plan.
16.2 ELIGIBLE ROLLOVER DISTRIBUTION. Effective for distributions
made on or after January 1, 1993, a Participant may elect, at the time and in
the manner prescribed by the Committee, to have any portion of an Eligible
Rollover Distribution paid directly to an Eligible Retirement Plan specified by
the Participant in a Direct Rollover. A Participant shall be limited to
designating only one Eligible Retirement Plan to receive such direct rollover.
16.3 DEFINITIONS.
(a) 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: any distribution that is one of a
series of substantially equal periodic payments (not less frequently
than annually) made for the life (or life expectancy) of the
Distributee or the joint lives (or joint life expectancies) of the
Distributee and the Distributee's designated beneficiary, or for a
specified period of ten years or more; any distribution to the extent
such distribution is required under Section 401(a)(9) of the Code; and
the portion of any distribution that is not includable in gross income
(determined without regard to the exclusion for net unrealized
appreciation with respect to the Stock).
(b) 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
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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 limited to an individual retirement account or
individual retirement annuity.
(c) 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 the alternate payee under a qualified domestic
relations order, as defined in Section 414(p) of the Code, are
Distributees with regard to the interest of the spouse or former
spouse.
(d) Direct rollover: A Direct Rollover is a payment by
the Plan to the Eligible Retirement Plan specified by the Distributee.
ATTEST: PRESIDIO OIL COMPANY
By:/s/ BRUCE R. DEBOER By:/s/ ROBERT L. SMITH
----------------------------- ----------------------------
Bruce R. DeBoer Robert L. Smith
Secretary President
(Seal)
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