EXHIBIT 4.1
UDS 401(k) RETIREMENT SAVINGS PLAN
Effective January 1, 1998,
and other dates provided herein
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UDS 401(k) Retirement Savings Plan
Table of Contents
Page
INTRODUCTION ........................................................... 1
ARTICLE I--DEFINITIONS................................................... 2
Section 1.1. Account Balance....................................... 2
Section 1.2. ACP and ACP Test...................................... 2
Section 1.3. Active Member......................................... 2
Section 1.4. ADP and ADP Test...................................... 2
Section 1.5. Affiliate............................................. 2
Section 1.6. Beneficiary........................................... 2
Section 1.7. Benefit Review Committee.............................. 2
Section 1.8. Board of Directors.................................... 2
Section 1.9. Break in Service...................................... 2
Section 1.10. Code.................................................. 3
Section 1.11. Committee............................................. 3
Section 1.12. Company............................................... 3
Section 1.13. Company Contribution.................................. 3
Section 1.14. Compensation.......................................... 3
Section 1.15. Disability............................................ 4
Section 1.16. Disability Retirement Date............................ 5
Section 1.17. Early Retirement Date................................. 5
Section 1.18. Early Retirement Eligibility Age...................... 5
Section 1.19. Effective Date........................................ 5
Section 1.20. Eligibility Computation Period........................ 5
Section 1.21. Eligible Employee..................................... 5
Section 1.22. Employee.............................................. 5
Section 1.23. Entry Date............................................ 5
Section 1.24. ERISA................................................. 6
Section 1.25. Fund.................................................. 6
Section 1.26. Highly Compensated Employee........................... 6
Section 1.27. Hour of Service....................................... 6
Section 1.28. Leased Employee....................................... 10
Section 1.29. Matching Contribution................................. 10
Section 1.30. Member................................................ 10
Section 1.31. Member's Account...................................... 10
Section 1.32. Normal Retirement Age................................. 10
Section 1.33. Normal Retirement Date................................ 10
Section 1.34. Plan.................................................. 11
Section 1.35. Plan Merger Date...................................... 11
Section 1.36. Plan Year............................................. 11
Section 1.37. Prior Plan............................................ 11
Section 1.38. Prior Plan Member..................................... 11
Section 1.39. Qualified Matching Contribution....................... 12
Section 1.40. Qualified Nonelective Contribution.................... 12
Section 1.41 Required Beginning Date............................... 12
Section 1.42. Rollover Contribution................................. 12
Section 1.43. Salary Deferral Agreement............................. 12
Section 1.44. Salary Deferral Contributions......................... 12
Section 1.45. Termination from Employment........................... 12
Section 1.46. Trust................................................. 13
Section 1.47. Trustee............................................... 13
Section 1.48. Union Employee........................................ 13
Section 1.49. Vested Account Balance................................ 13
Section 1.50. Vesting Computation Period............................ 13
Section 1.51. Year of Eligibility Service........................... 13
Section 1.52. Year of Vesting Service............................... 13
ARTICLE II--ELIGIBILITY, ENROLLMENT AND PARTICIPATION.................... 14
Section 2.1. Eligibility to Make Salary Deferral Agreements........ 14
Section 2.2. General Eligibility Requirements...................... 14
Section 2.3. Prior Plan Members.................................... 14
Section 2.4. Previously Eligible Employees......................... 14
Section 2.5. Participation by Employees Who Are Not Eligible
Employees........................................ 14
ARTICLE III--CONTRIBUTIONS............................................... 16
Section 3.1. Salary Deferral Contributions......................... 16
Section 3.2. Matching Contributions................................ 17
Section 3.3. Qualified Matching Contributions...................... 17
Section 3.4. Discretionary Company Contributions................... 17
Section 3.5. Qualified Nonelective Contribution.................... 17
Section 3.6. Rollover Contributions................................ 17
Section 3.7. Certain Transfers Not Permitted....................... 17
Section 3.8. Profits Not Required.................................. 18
ARTICLE IV--VESTING AND FORFEITURES...................................... 19
Section 4.1. 100% Immediate Vesting for Certain Contributions...... 19
Section 4.2. 5-Year Vesting........................................ 19
Section 4.3. Special Vesting Rules for Prior Plan Members.......... 19
Section 4.4. 100% Vesting Upon Occurrence of Certain Events........ 20
Section 4.5. Forfeitures of Nonvested Account Balances and Cut-Off
of Member Status................................. 21
Section 4.6. Application of Forfeitures............................ 21
ARTICLE V--SECTION 402(g) LIMIT.......................................... 22
Section 5.1. General Rule.......................................... 22
Section 5.2. Special Definitions................................... 22
Section 5.3. Corrective Distribution of Excess Deferrals........... 22
ARTICLE VI--SECTION 401(k) AND 401(m) LIMITS............................. 25
Section 6.1. General Rule.......................................... 25
Section 6.2. ACP Test.............................................. 25
Section 6.3. Multiple Use of the Alternative Limitation............ 25
Section 6.4. Prior Plan Year Testing............................... 25
ARTICLE VII--CORRECTION OF FAILURES OF ADP AND ACP TESTS................. 26
Section 7.1. General Rule.......................................... 26
Section 7.2. Corrective Distribution of Excess ADP Contributions... 27
Section 7.3. Corrective Forfeitures of Excess ACP Contributions.... 27
Section 7.4. Corrections for Failures of the Multiple Use
Limitation....................................... 27
ARTICLE VIII--SECTION 415 LIMITS......................................... 29
Section 8.1. General Rule.......................................... 29
Section 8.2. Reductions Among Defined Contribution Plans........... 29
Section 8.3. Reductions Under the 415(e) Limit..................... 29
Section 8.4. Treatment of Excesses................................. 29
ARTICLE IX--PARTICIPANTS' ACCOUNTS....................................... 31
Section 9.1. Generally............................................. 31
Section 9.2. Valuation............................................. 32
Section 9.3. Members' Self-Directed Investments.................... 32
Section 9.4. ESOP I and ESOP II Accounts........................... 33
ARTICLE X--DISTRIBUTIONS................................................. 34
Section 10.1. General Rule.......................................... 34
Section 10.2. Timing and Manner of Distributions.................... 34
Section 10.3. Account Balances of $5,000 or Less.................... 35
Section 10.4. Death Benefits........................................ 35
Section 10.5. Limitations on In-Service Distributions............... 35
Section 10.6. Notification and Member Election for Distributions
Before Normal Retirement Age..................... 35
Section 10.7. Special Rules for Plan Termination and Corporate
Reorganizations.................................. 36
Section 10.8. QDROs................................................. 36
Section 10.9. Other Restrictions on Distributions................... 37
Section 10.10. Distributions to Comply With Other Code Requirements.. 37
Section 10.11. Direct Rollovers...................................... 37
ARTICLE XI--PARTIAL AND TOTAL WITHDRAWALS OF ACCOUNT BALANCE............. 40
Section 11.1. General Rule.......................................... 40
Section 11.2. Hardship Distributions................................ 40
Section 11.3. Withdrawal of Rollover Contributions.................. 42
Section 11.4. Withdrawals of After-Tax Employee Contribution Amounts 42
Section 11.5. Withdrawals On and After Attainment of Age 59-1/2..... 42
ARTICLE XII--LOANS TO PARTICIPANTS....................................... 44
Section 12.1. General Availability of Loans......................... 44
Section 12.2. Amount of Loan........................................ 45
Section 12.3. Terms of Loan......................................... 45
Section 12.4. Nonpayment of Required Installment.................... 46
Section 12.5. Acceleration of Loan.................................. 47
Section 12.6. Repayment Not Permitted After Deemed Distribution..... 48
Section 12.7. Alternate Payees...................................... 48
Section 12.8. Fees.................................................. 49
Section 12.9. USERRA................................................ 49
ARTICLE XIII--DEATH BENEFITS............................................. 50
Section 13.1. General Rules......................................... 50
Section 13.2. Married Members....................................... 50
Section 13.3. Unmarried Members..................................... 50
Section 13.4. Divorced or Separated Members......................... 50
Section 13.5. Qualified Beneficiary Designation..................... 51
ARTICLE XIV--ADMINISTRATIVE PROCEDURES................................... 52
Section 14.1. Appointment of Employee Benefits Committee Members.... 52
Section 14.2. Officers and Employees of the Employee Benefits
Committee........................................ 52
Section 14.3. Action of the Employee Benefits Committee............. 52
Section 14.4. Expenses.............................................. 53
Section 14.5. Indemnification....................................... 53
Section 14.6. General Powers and Duties of the Employee Benefits
Committee........................................ 53
Section 14.7. Specific Powers of the Employee Benefits Committee.... 54
Section 14.8. Records and Reports................................... 55
Section 14.9. Allocation and Delegation of Fiduciary Responsibility. 55
Section 14.10. Claims Procedure...................................... 55
Section 14.11. Service of Process.................................... 58
Section 14.12. Payment to Minors or Persons Under Legal Disability... 58
Section 14.13. Mistakes in Plan Administration....................... 58
ARTICLE XV--ADOPTION OF PLAN BY AFFILIATES............................... 59
Section 15.1. Adoption Procedure.................................... 59
Section 15.2. Effect of Adoption by Affiliate....................... 59
Section 15.3. Withdrawal by Participating Company................... 60
ARTICLE XVI--AMENDMENT, TERMINATION AND MERGER........................... 61
Section 16.1. Amendment of the Plan................................. 61
Section 16.2. Protected Benefits.................................... 61
Section 16.3. Reduction or Cessation of Contributions............... 61
Section 16.4. Termination of the Plan............................... 61
Section 16.5. Treatment of Account Balances Upon Plan Termination... 61
Section 16.6. Unfavorable Determination After Initial Qualification. 62
Section 16.7. Mergers or Transfers.................................. 62
ARTICLE XVII--REVERSIONS................................................. 64
Section 17.1. No Reversion Permitted................................ 64
Section 17.2. Approval by the Internal Revenue Service.............. 64
Section 17.3. Contribution Recapture................................ 65
ARTICLE XVIII--TOP HEAVY PROVISIONS...................................... 66
Section 18.1. Purpose of Article.................................... 66
Section 18.2. Definitions........................................... 66
Section 18.3. Determination of a Top-Heavy Plan..................... 67
Section 18.4. Determination of the Top-Heavy Ratio.................. 68
Section 18.5. Vesting Requirements.................................. 69
Section 18.6. Minimum Allocation.................................... 70
Section 18.7. Reduction in Section 415 Limits....................... 71
ARTICLE XIX--MISCELLANEOUS............................................... 72
Section 19.1. Gender and Number..................................... 72
Section 19.2. Reference to the Code and ERISA....................... 72
Section 19.3. Governing Law......................................... 72
Section 19.4. Compliance With the Code and ERISA.................... 72
Section 19.5. Prohibition Against Assignment or Alienation.......... 72
Section 19.6. Limitation of Rights.................................. 72
Section 19.7. USERRA Compliance..................................... 73
APPENDIX A--SPECIAL SERVICE COUNTING RULES............................... 74
Section A.1. General Rule.......................................... 74
Section A.2. Year of Vesting Service............................... 74
Section A.3. Hours of Service...................................... 74
Section A.4. Break in Service...................................... 74
Section A.5. Additional Rules...................................... 75
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UDS 401(k) Retirement Savings Plan
INTRODUCTION
This Plan, known as the UDS 401(k) Retirement Savings Plan (the "Plan"), is
sponsored by Ultramar Diamond Shamrock Corporation, and has been adopted
effective January 1, 1998. The Plan is created from the merger of the following
plans effective January 1, 1998:
(a) Ultramar Diamond Shamrock Corporation U.S. Savings Incentive Plan; and
(b) Ultramar Diamond Shamrock Corporation 401(k) Retirement Savings Plan;
the following plans effective April 1, 1998:
(c) Total Petroleum, Inc. Tax Reduction Thrift Plan; and
(d) Total Petroleum, Inc. Retail Thrift Plan;
and the following plan effective January 1, 1999:
(e) Ultramar Energy Inc. U.S. Savings Incentive Plan.
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ARTICLE I
DEFINITIONS
Section 1.1. Account Balance on any date shall mean the value on that date
of the Member's Account.
Section 1.2. ACP Test shall mean the actual contribution percentage test
set forth in Article VI.
Section 1.3. Active Member shall mean a Member who is an Eligible Employee.
Section 1.4. ADP and ADP Test shall mean actual deferral percentage test
set forth in Article VI.
Section 1.5. Affiliate shall mean the Company and all members of a
controlled group of corporations (as defined in section 414(b) of the Code), all
commonly controlled trades or businesses (as defined in Section 414(c) of the
Code) and all members of an affiliated service group (as defined in Section
414(m) of the Code) of which the Company is a part, and any other entity
required to be aggregated with the company pursuant to regulations under Section
414(o) of the Code.
Section 1.6. Beneficiary shall mean the person (or persons) to whom the
Member's Vested Account Balance is distributed after his death in accordance
with Article XIII.
Section 1.7. Benefit Review Committee shall mean the Committee appointed by
the Chief Executive Officer of Ultramar Diamond Shamrock Corporation pursuant to
Section 14.10 hereof, consisting of not less than three nor more than five
persons, with full discretionary power and authority to construe the Plan and
determine all questions of eligibility and interpretation under the Plan, and
all questions of fact, pursuant to Section 14.10 below.
Section 1.8. Board of Directors shall mean the Board of Directors of
Ultramar Diamond Shamrock Corporation.
Section 1.9. Break in Service shall mean a Plan Year in which an Employee
is credited with less than 501 Hours of Service. See Appendix A for special
rules governing Breaks in Service with respect to an Employee credited with
service under the Ultramar Energy Inc. U.S. Savings Incentive Plan.
Section 1.10. Code shall mean the Internal Revenue Code of 1986, as
amended.
Section 1.11. Committee shall mean the Employee Benefits Committee
appointed and acting pursuant to the provisions of Article XIV.
Section 1.12. Company shall mean Ultramar Diamond Shamrock Corporation and
any corporation or partnership which adopts the Plan in accordance with Article
XV.
Section 1.13. Company Contribution shall mean any contribution made to the
Plan by the Company on behalf of a Member, other than a Rollover Contribution,
or a transfer of assets under section 414(l) of the Code.
Section 1.14. Compensation shall mean, except as otherwise provided in
subsections (b) and (c):
(a) All remuneration paid to an Employee for services rendered in the
course of employment with the Company, to the extent includible in gross income
and reportable to the Employee under Code section 3402 on his W-2, subject to
the following qualifications and exceptions:
(1) Compensation shall include any amounts deducted from an
Employee's salary as elective deferrals to a cash or deferred arrangement under
Code section 401(k), or as elective contributions to a cafeteria plan under Code
section 125. Compensation shall not include any other amounts contributed to a
plan or arrangement of deferred compensation, whether or not qualified under
section 401(a) of the Code.
(2) Compensation shall not include any fringe benefits such as
moving expenses, employee discounts, meals, van pooling, reimbursed medical and
educational expenses and life insurance to the extent not included in gross
income and reported on the Employee's W-2.
(3) Compensation shall not include amounts realized from (A) the
exercise of a nonqualified stock option; (B) the sale, exchange or other
disposition of stock acquired under a qualified stock option; (C) restricted
stock or property held by the Employee at the time it becomes freely
transferable or is no longer subject to substantial risk of forfeiture; (D)
stock appreciation rights; (E) distributions from a plan of deferred
compensation, whether or not qualified under section 401(a) of the Code; (F) the
transfer of property to an Employee accompanied by an election under section
83(b) of the Code, or (G) bonus performance units or stock performance units.
(4) Compensation shall include amounts received as long or short
term disability benefits only if paid directly from the Company's payroll
system, including payments under the Company's Unavoidable Absence Pay and
Salary Continuation Pay programs. Compensation shall not include any amounts
paid under the Ultramar Diamond Shamrock Corporation Work Injury Program or any
other plan maintained solely for the purpose of complying with applicable
workmen's compensation laws, or with unemployment compensation or disability
insurance laws, whether or not paid through the Company's payroll system.
(b) For purposes of Section 1.26 (relating to the definition of
Highly Compensated Employee), Article VI (relating to the ADP and ACP tests)
and Article VIII (relating to Code section 415 limitations), the term
compensation is undefined and shall have the meanings permitted by the Code and
regulations thereunder for construction of those provisions. For purposes of
Article XVIII (relating to top-heavy requirements) the term "Compensation" shall
have the meaning set forth in that Article.
(c) Compensation shall be subject to the limitations of section
401(a)(17) of the Code, as set forth in regulations under that section.
Section 1.15. Disability shall mean a physical or mental condition of an
Employee resulting from bodily injury, disease or mental disorder which
renders him incapable of continuing his usual and customary employment with the
Company and which condition constitutes disability under the terms of the
Company's long-term disability plan or the Social Security Act. The period of
Disability shall include any waiting period under the Company's long-term
disability plan and any period during which such Employee is eligible for and
receiving Social Security disability benefits.
Section 1.16. Disability Retirement Date shall mean the first day of the
month after the Committee has determined that a Member's incapacity is
a Disability.
Section 1.17. Early Retirement Date shall mean the first day of the
month following the month in which the Member incurs a Termination from
Employment after his attainment of Early Retirement Eligibility Age.
Section 1.18. Early Retirement Eligibility Age shall mean attainment of
age 55 and completion of 5 Years of Vesting Service.
Section 1.19. Effective Date shall mean January 1, 1998.
Section 1.20. Eligibility Computation Period shall mean the 12-consecu-
tive month period measured from the date an Employee is first credited with an
Hour of Service, and thereafter shall mean the succeeding 12-consecutive month
period beginning on the January 1st following such date.
Section 1.21. Eligible Employee shall mean an Employee eligible to make
Salary Deferral Contributions to the Plan under Sections 2.2, 2.3 or 2.4 of the
Plan.
Section 1.22. Employee shall mean only an individual paid through the
Company's payroll system as a common law employee of the Company. The term
Employee does not include any other common law employee or any Leased Employee.
The term Employee does not include any individual, including any common law
employee, paid other than through the Company's payroll system. In particular,
it is expressly intended that individuals not paid through the Company's payroll
system are to be excluded from Plan participation even if a court or
administrative agency determines that such individuals are common law employees
and not independent contractors.
Section 1.23. Entry Date shall mean the date on which an Employee
becomes a Member in the Plan, as follows:
(a) For a Prior Plan Member, the Entry Date is the Plan Merger Date.
(b) For an Eligible Employee, the Entry Date is the first day on
which his valid Salary Deferral Agreement becomes effective under the provisions
of Article III of the Plan.
(c) For an Eligible Employee who was a Member but is no longer
because he took a distribution of his entire Account Balance (including a deemed
distribution of a nonvested Account Balance) under the Plan, the Entry Date is
the first date thereafter that a new valid Salary Deferral Agreement becomes
effective under Article III of the Plan.
(d) For any Employee (including an Employee who is not an Eligible
Employee), who is not yet a Member and who makes a Rollover Contribution
to the Plan, the Entry Date is the date the Rollover Contribution is received by
the Plan.
Section 1.24. ERISA shall mean the Employee Retirement Income Security
Act of 1974 (PL 93-406) as amended.
Section 1.25. Fund shall mean the fund or funds held for the Plan by a
Trustee or insurance company in Members' Accounts or otherwise.
Section 1.26. Highly Compensated Employee shall mean an Employee who is
a highly compensated employee as that term is defined in section 414(q) of the
Code.
Section 1.27. Hour of Service shall mean:
(a) Each hour for which an Employee is directly or indirectly
compensated, or entitled to compensation, by the Company, an Affiliate or a
predecessor employer as required by Section 414(a)(2) of the Code and the
Treasury regulations thereunder for the performance of services. Hours of
Service under this subsection will be credited to the Employee for the
computation period in which the services are performed.
(b) Each hour for which an Employee is directly or indirectly
compensated, or entitled to compensation, by the Company or an Affiliate on
account of a period of time during which no services are performed (without
regard to whether the employment relationship between the Employee and the
Company or Affiliate has terminated) due to vacation, holiday, illness,
incapacity, disability, layoff, jury duty, military duty or leave of absence
with pay. Hours of Service under this subsection will be calculated and credited
pursuant to Section 2530.200b-2 of the Department of Labor Regulations which are
incorporated herein by this reference.
(c) Each hour for which an Employee is directly or indirectly
compensated, or entitled to compensation for, an amount as back pay (without
regard to mitigation of damages) either awarded or agreed to by the Company
or an Affiliate. Hours of Service under this subsection will be credited to the
Employee for the Plan Year or Eligibility Computation period, as the case may
be, to which the award or agreement pertains rather than the Plan Year or
Eligibility Computation period in which the award, agreement or payment is made.
(d) Each hour credited on the basis of applicable regulations under
ERISA for unpaid periods of absence for service in the armed forces of the
United States or the Public Health Service of the United States as a result by
which such Employee's reemployment rights are guaranteed by law, provided that
the Employee returns to employment with the Company or any Affiliate within the
time such rights are guaranteed.
(e) If the Company or an Affiliate maintains a qualified plan of a
predecessor employer, each hour credited by such predecessor employer as
required by Section 414(a) of the Code.
(f) Solely for purposes of preventing a Break in Service, each hour
credited in accordance with Sections 410(a)(5)(E) and 411(a)(6)(E) of the Code
for unpaid period during which an Employee is absent from work by reason of the
pregnancy of the Employee, the birth of a child of the Employee, the placement
of a child with the Employee in connection with the adoption of such child by
the Employee, or for purposes of caring for such child for a period beginning
immediately following such birth or placement, provided that the Employee
furnishes timely information to the Company to establish that the absence from
work is for one of the aforementioned reasons, and the number of days for which
there was such an absence. The Hours of Service credited under this subsection
shall be credited in the Plan Year or Eligibility Computation Period, as the
case may be, in which the absence begins only if necessary to prevent a Break in
Service in that period, and in all other cases, in the immediately succeeding
Plan Year or Eligibility Computation Period.
Notwithstanding the foregoing: (1) no more than 501 Hours of Service
shall be credited to an Employee under subsection (b), (c) or (f) on account of
any single continuous period of time during which no services are performed; (2)
an hour for which an Employee is directly or indirectly compensated or entitled
to compensation by the Company or an Affiliate on account of a period during
which no services are performed shall not constitute an Hour of Service
hereunder if such compensation is paid or due under a plan maintained solely for
the purpose of complying with applicable workers' compensation, unemployment
compensation or disability insurance laws or under the Ultramar Diamond Shamrock
Corporation Work Injury Program; (3) Hours of Service shall not be credited for
payments which solely reimburse an Employee for medical or medically related
expenses; and (4) the same Hour of Service shall not be credited to an Employee
both under subsection (a) or (b) and under subsection (c).
(g) For any individual who
(1) is an Employee on or after the January 1, 1998, and
(2) on December 31, 1997, performed service as an employee of
(or on such date was shown on the relevant payroll as an employee of, but on
approved leave of absence from) Ultramar Diamond Shamrock Corporation, an hour
of service credited under the terms of the Ultramar Diamond Shamrock Corporation
401(k) Retirement Savings Plan and performed before the Effective Date, shall
count as an Hour of Service.
(h) For any individual who
(1) is an Employee on or after April 1, 1998, and
(2) on March 31, 1998, performed service as an employee of (or
on such date was shown on the relevant payroll as an employee of, but on
approved leave of absence from) Total Petroleum, Inc., an hour of service
credited under the terms of Total Petroleum, Inc. Tax Reduction Thrift Plan or
the Total Petroleum, Inc. Retail Thrift Plan and performed before the Effective
Date, shall count as an Hour of Service.
(i) Any individual who
(1) is an Employee on or after January 1, 1999, and
(2) on December 31, 1998, performed service as an employee of
(or on such date was shown on the relevant payroll as an employee of, but on
approved leave of absence from) Ultramar Energy Inc., and who was credited with
service under the Ultramar Energy Inc. U.S. Savings Incentive Plan shall be
credited with Hours of Service as set forth in Appendix A.
(j) For purposes only of counting Years of Vesting Service, Hours of
Service shall include the number of hours that would normally be worked (up to 8
hours) on any day in which an Employee is not performing services because of an
incapacity but is receiving Company-subsidized short term disability benefits
(if any).
(k) Each Employee whose Compensation is not determined on the basis
of certain amounts for each hour worked (such as salaried, commission and
piecework employees) and whose hours are not required to be counted and
recorded by any federal law (such as the Fair Labor Standards Act) shall be
credited with 190 Hours of Service for each month in which the Employee would be
credited with at least One Hour of Service pursuant to this Section.
The Committee shall determine the number of Hours of Service, if any,
to be credited to an Employee under the foregoing rules in a uniform and
nondiscriminatory manner and in accordance with applicable federal laws and
regulations including without limitation Department of Labor Regulation Section
2530.200b-2(b) and (c).
(l) If an Employee has previously performed services as a common law
employee of the Company or an Affiliate who is not an Employee, or as leased
Employee, his service as a common law employee or Leased Employee and as an
Employee are added together to determine his total Hours of Service to the
extent required by law. For this purpose, the Employee who was a Leased Employee
shall be credited with 190 Hours of Service for every month he would have been
credited with an Hour of Service if he had been an Employee during such period
of Leased Employment.
Section 1.28. Leased Employee shall mean an individual who is a leased
employee, as that term is defined in section 414(n) of the Code, of the Company
or an Affiliate.
For purposes only of the rules defining Hour of Service under Section
1.27 of the Plan, a Leased Employee includes an individual who would have been a
Leased Employee but for the requirement that services be performed on a
substantially full time basis for one year.
Section 1.29. Matching Contribution shall mean a Company Contribution
treated as a Matching Contribution under section 3.2 of the Plan.
Section 1.30. Member shall mean an Employee with an Account Balance of
greater than zero, and any Employee who has had a Termination from Employment
with a Vested Account Balance.
Section 1.31. Member's Account shall mean the sum of the sub-accounts
held on behalf of a Member, in accordance with the provisions of Article IX.
Section 1.32. Normal Retirement Age shall mean (a) the later of age 65
or the fifth anniversary of the date an Employee first performed an Hour of
Service, or (b), if earlier, in the case of a Prior Plan Member, the normal
retirement age specified in such Prior Plan.
Section 1.33. Normal Retirement Date shall mean the date a Member
incurs a Termination from Employment on or after attaining his Normal Retirement
Age.
Section 1.34. Plan shall mean the UDS 401(k) Retirement Savings Plan.
Section 1.35. Plan Merger Date shall mean January 1, 1998, with respect
to:
(a) Ultramar Diamond Shamrock Corporation U.S. Savings Incentive
Plan;
(b) Ultramar Diamond Shamrock Corporation 401(k) Retirement Savings
Plan;
April 1, 1998, with respect to:
(c) Total Petroleum, Inc. Tax Reduction Thrift Plan;
(d) Total Petroleum, Inc. Retail Thrift Plan;
and January 1, 1999, with respect to:
(e) Ultramar Energy Inc. U.S. Savings Incentive Plan.
Section 1.36. Plan Year shall mean the 12-month period commencing on
January 1 and ending on the following December 31.
Section 1.37. Prior Plan shall mean the following plans:
(a) Ultramar Diamond Shamrock Corporation U.S. Savings Incentive
Plan;
(b) Ultramar Diamond Shamrock Corporation 401(k) Retirement Savings
Plan;
(c) Total Petroleum, Inc. Tax Reduction Thrift Plan;
(d) Total Petroleum, Inc. Retail Thrift Plan; and
(e) Ultramar Energy Inc. U.S. Savings Incentive Plan.
Section 1.38. Prior Plan Member shall mean any individual with an account
balance greater than zero in any of the following plans on December 31, 1997:
(a) Ultramar Diamond Shamrock Corporation U.S. Savings Incentive
Plan;
(b) Ultramar Diamond Shamrock Corporation 401(k) Retirement Savings
Plan;
in any of the following plans on March 31, 1998:
(c) Total Petroleum, Inc. Tax Reduction Thrift Plan;
(d) Total Petroleum, Inc. Retail Thrift Plan. and
in the following plan on December 31, 1998:
(e) Ultramar Energy Inc. U.S. Savings Incentive Plan.
Section 1.39. Qualified Matching Contribution shall mean a Company
Contribution described in Section 3.3 of the Plan.
Section 1.40. Qualified Nonelective Contribution shall mean a Company
Contribution described in Section 3.5 of the Plan.
Section 1.41. Required Beginning Date shall mean:
(a) For an individual not described in subsection (b), April 1 of the
calendar year following the later of the calendar year in which the individual
(1) attains age 70-1/2; or (2) has a Termination of Employment.
(b) For an individual who is a 5%-owner (as defined in section 416 of
the Code) of an Affiliate, April 1 of the calendar year following the calendar
year in which the individual attains age 70 1/2.
Section 1.42. Rollover Contribution shall mean a contribution eligible
for rollover to this Plan in accordance with the requirements of section 402 or
section 408(d)(3) of the Code.
Section 1.43. Salary Deferral Agreement shall mean an agreement between
an Eligible Employee and the Company to defer Compensation for the purpose of
making Salary Deferral Contributions to the Plan.
Section 1.44. Salary Deferral Contributions shall mean a Company
Contribution treated as made pursuant to a Salary Deferral Agreement under
Section 3.1 of the Plan.
Section 1.45. Termination from Employment shall mean the date on which
occurs the earlier of (a) or (b):
(a) The date on which an Employee's employment with an Affiliate
terminates by reason of a quit, discharge, retirement, administrative
termination, death, or attainment of his Disability Retirement Date;
(b) The first business day following the end of an approved leave of
absence if the Member fails to return to active employment with an Affiliate by
that date.
Section 1.46. Trust shall mean the trust agreement entered into by
Ultramar Diamond Shamrock Corporation and the Trustee.
Section 1.47. Trustee shall mean one or more persons collectively
appointed and acting under the Trust, and any successor thereto.
Section 1.48. Union Employee shall mean an Employee who is in a unit of
employees covered by a collective bargaining agreement.
Section 1.49. Vested Account Balance shall mean that portion of his
Account Balance in which a Member is vested in accordance with the terms of
Article IV.
Section 1.50. Vesting Computation Period shall mean the 12-consecutive
month period that coincides with the Plan Year.
Section 1.51. Year of Eligibility Service shall mean an Eligibility
Computation Period during which the Employee completes 1000 Hours of Service.
Section 1.52. Year of Vesting Service shall mean a Vesting Computation
Period in which an Employee completes 1000 Hours of Service. In the case of a
Member with a zero Vested Account Balance, Years of Vesting Service before any
period of five consecutive Breaks in Service shall not be counted.
<PAGE>
ARTICLE II
ELIGIBILITY, ENROLLMENT AND PARTICIPATION
Section 2.1. Eligibility to Make Salary Deferral Agreements. An Eligible
Employee is permitted to make Salary Deferral Contributions under the terms of
Article III.
Section 2.2. General Eligibility Requirements. Each individual who:
(a) Is an Employee of the Company;
(b) Is (1) not a Union Employee, or (2) a Union Employee covered by a
collective bargaining agreement that expressly provides for participation in the
Plan;
(c) Has attained age 21; and
(d) Has completed a Year of Eligibility Service;
is an Eligible Employee, except that in subsection (c) "age 18" shall be read in
lieu of "age 21" after December 31, 1998.
Section 2.3. Prior Plan Members. A Prior Plan Member is an Eligible
Employee on the first day in which he performs an Hour of Service as an Employee
on or after the Plan Merger Date with respect to the Prior Plan of which he is a
Prior Plan Member.
Section 2.4. Previously Eligible Employees. An individual who is an
Eligible Employee but ceases to be an Eligible Employee because he has ceased to
satisfy subsection (a) or (b) of Section 2.2, shall be an Eligible Employee on
the first day on which he again satisfies both such subsections.
Section 2.5. Participation by Employees Who Are Not Eligible Employees.
(a) A Member who has ceased to be an Eligible Employee is not
eligible to make Salary Deferral Contributions to the Plan. Such Member,
however, is eligible to make withdrawals and change investment options under the
terms of the Plan, and to make Plan loan repayments via payroll deduction in
accordance with Article XII.
(b) Such Member is not an Active Member until he is again an Eligible
Employee and has executed a new Salary Deferral Agreement.
(c) An Employee who is not an Eligible Employee may make a Rollover
Contribution to the Plan.
<PAGE>
ARTICLE III
CONTRIBUTIONS
Section 3.1. Salary Deferral Contributions.
(a) By executing a Salary Deferral Agreement in accordance with
procedures specified by the Committee, an Eligible Employee may elect to defer
his Compensation in an amount equal to not less than 1% nor more than 15% of
Compensation.
(b) Percentage designations under subsection (a) will be in whole
numbers, except that partial percentages may be permitted as determined under
the ADP or ACP Tests.
(c) Salary Deferral Contributions are subject to Article IV
(vesting); Article V (Code section 402(g) dollar cap ); Article VI (ADP and ACP
Tests); Article VII (correction of violations and potential violations of ADP
and ACP Tests); Article VIII (Code section 415 limits); and Articles X and XI
(distribution limits).
(d) A Member may elect to change the percentage deferral under his
Salary Deferral Agreement, or to cease Salary Deferral Contributions, at any
time by executing a new Salary Deferral Agreement. A Member who elects to cease
Salary Deferral Contributions shall cease to be an Active Member on the date
such election is effective. An initial Salary Agreement, any later election to
change an earlier Salary Deferral Agreement, and an election to cease Salary
Deferral Contributions, shall be effective within such time or times specified
in procedures issued by the Committee. Notwithstanding a Member's Salary
Deferral Agreement, if a Member who has an outstanding loan from the Plan, in
any pay period has Compensation net of taxes, employee-paid benefits,
garnishments and any other withholding amounts, that is less than the sum of (1)
the Salary Deferral Contribution elected for that pay period plus (2) the loan
repayment due in that period, effective January 1, 1999, such net Compensation
shall be allocated first to the loan repayment, so that the Salary Deferral
Contribution may be less than the amount elected in the Salary Deferral
Agreement.
Section 3.2. Matching Contributions.
(a) The Company may designate Company Contributions as a Matching
Contribution on behalf of a Member who is an Eligible Employee. Such Matching
Contributions, if any, shall be in an amount and according to a formula to be
determined from time to time by Ultramar Diamond Shamrock Corporation.
(b) Matching Contributions are subject to Article IV (vesting
rules); Article VI (ADP and ACP Tests); Article VII (correction of violations
and potential violations of ADP and ACP Tests); and Article VIII (Code section
415 limits).
Section 3.3. Qualified Matching Contributions. To the extent permitted
by Code sections 401(k) and 401(m) and Treasury regulations thereunder, all or a
portion of any Company Contribution may be tested under the ACP or ADP Tests as
a Qualified Matching Contribution.
Section 3.4. Discretionary Company Contributions. The Company may make
discretionary Company Contributions to the Plan for a Plan Year, if so
determined by Ultramar Diamond Shamrock Corporation. Discretionary Company
Contributions, if any, are subject to Article IV (vesting rules) and Article
VIII (Code section 415 limits)
Section 3.5. Qualified Nonelective Contribution. To the extent per-
mitted by Code sections 401(k) and 401(m) and Treasury regulations thereunder,
all or a portion of any Company Contribution may be tested under the ACP or ADP
Tests as a Qualified Nonelective Contribution.
Section 3.6. Rollover Contributions. The Plan shall accept Rollover
Contributions. A Rollover Contribution may be made by any Employee, including
any Employee who is not an Eligible Employee.
Section 3.7. Certain Transfers Not Permitted. The Plan will not be a
direct or indirect transferee of a defined benefit plan, money purchase pension
plan (including a target benefit plan), stock bonus, or profit-sharing plan
which would otherwise provide for a life annuity form of payment to the Member.
This Section does not apply to any transferor plan which is a Prior Plan.
Section 3.8. Profits Not Required. Company Contributions to the Plan
shall not be precluded because any of the Affiliates does not have profits.
<PAGE>
ARTICLE IV
VESTING AND FORFEITURES
Section 4.1. 100% Immediate Vesting for Certain Contributions. The
Member shall be vested in 100% of his Account Balance attributable to the
following contributions, including earnings thereon:
(a) Salary Deferral Contributions;
(b) Rollover Contributions;
(c) Qualified Matching Contributions;
(d) Qualified Nonelective Contributions.
Section 4.2. 5-Year Vesting. For the portion of the Account Balance in
which he is not vested under any other provision of this Article, a Member shall
be vested in a specified percentage, determined by his Years of Vesting Service
in accordance with the following schedule.
Years of Vesting Service Percentage
------------------------ ----------
Less than 5 0%
5 or more 100%
Section 4.3. Special Vesting Rules for Prior Plan Members.
(a) A Prior Plan Member who as of December 31, 1997, is a participant
(or as of January 1, 1998 would have satisfied the eligibility rules for being a
participant) in the Ultramar Diamond Shamrock Corporation U.S. Savings Incentive
Plan shall be 100% vested in his Account Balance under the Plan.
(b) A Prior Plan Member who as of March 31, 1998, is a participant
(or as of April 1, 1998 would have satisfied the eligibility rules for being a
participant) in the Total Petroleum, Inc. Tax Reduction Thrift Plan or the Total
Petroleum, Inc. Retail Thrift Plan, shall be 100% vested in his Account Balance
under the Plan.
(c) A Prior Plan Member who as of December 31, 1997, is a participant
in the Ultramar Diamond Shamrock Corporation 401(k) Retirement Savings Plan, and
who was a participant in the NCS Plan immediately before the merger of these two
plans, with 3 or more Years of Vesting Service as of the July 1, 1996 merger
date between such two plans, shall be 100% vested in his Account Balance.
(d) A Prior Plan Member who as of December 31, 1998, is a participant
(or as of January 1, 1999, would have satisfied the eligibility rules for being
a participant) in the Ultramar Energy Inc. U.S. Savings Plan, shall be 100%
vested in his Account Balance under the Plan.
Section 4.4. 100% Vesting Upon Occurrence of Certain Events. A Member
shall be vested in 100% of his Account Balance upon:
(a) His death;
(b) Disability;
(c) Attainment of Normal Retirement Age;
(d) A termination or partial termination of the Plan;
(e) A change in control. For this purpose, a change in control means
any event which the Board of Directors determines in its sole discretion by
majority vote to constitute a change in control. A change in control will be
deemed to have occurred when a report is filed on Schedule 13D or Schedule 14D-1
(or any successor schedule, form or report), each as promulgated pursuant to the
Securities Exchange Act of 1934, as amended disclosing that any person has
become the beneficial owner of securities representing more than 25% of the
combined voting power of the then-outstanding voting securities of Ultramar
Diamond Shamrock Corporation and such acquisition has not been authorized,
approved or recommended by majority vote of the Board of Directors prior to the
date of the filing of such report.
<PAGE>
Section 4.5. Forfeitures of Nonvested Account Balances and Cut-Off of
Member Status.
(a) If a Member receives a distribution of his vested Account Balance
following a Termination from Employment, the nonvested portion of his Account
Balance will be treated as a forfeiture.
(b) If the vested Account Balance is zero upon his Termination from
Employment, the entire Account Balance is treated as a forfeiture, and the
employee will be deemed to have received a distribution of the entirety of his
vested Account Balance in accordance with Article X.
Section 4.6. Application of Forfeitures.
(a) Any forfeiture arising under this Article shall be used by the
Company to reduce contributions made by the Company due under Article III, or to
pay Plan expenses.
(b) Upon the termination of the Plan, any forfeitures which have not
been applied towards subsection (a) shall be credited on a pro rata basis to the
Accounts of Active Members in the same manner as the last contribution made by
the Company under the Plan.
<PAGE>
ARTICLE V
SECTION 402(g) LIMIT
Section 5.1. General Rule. The sum of the Salary Deferral Contributions,
plus any other Company Contributions defined as elective deferrals under section
402(g)(3) of the Code and regulations thereunder, contributed by the Company on
behalf of a Member for a taxable year may not exceed the greater of $7,000 or
the dollar limit of section 402(g) of the Code, as indexed in accordance with
that section and regulations thereunder.
Section 5.2. Special Definitions. For the purposes of this Article:
(a) "Excess Deferrals" shall be defined as the Member's Salary
Deferral Contributions for a taxable year, to the extent such Contributions,
when added to the sum of any other Company Contributions defined as elective
deferrals under section 402(g)(3) of the Code and regulations thereunder,
contributed by the Company on behalf of such Member for the taxable year exceed
the limit of section 402(g) of the Code, as indexed in accordance with that
section and regulations thereunder.
(b) A "Corrective Distribution of Excess Deferrals" shall be defined
as the Excess Deferrals, plus any income and minus any loss allocable thereto,
distributed to a Member to whose account Excess Deferrals were allocated for his
taxable year.
Section 5.3. Corrective Distribution of Excess Deferrals. The Plan is
permitted but not required to make Corrective Distributions of Excess Deferrals,
according to the provisions of this Section.
(a) Correction After Taxable Year.
(1) Not later than the March 15 following the close of a
Member's taxable year, the Member may notify the Plan of the amount of Excess
Deferrals received by the Plan during that taxable year, in accordance with
procedures set forth by the Committee.
(2) Not later than the April 15 following the close of the
taxable year, the Plan may distribute to the Member the amount of Excess
Deferrals designated under paragraph (1) of this subsection.
(b) Correction During the Taxable Year. A Corrective Distribution of
Excess Deferrals may be made during the taxable year in which the Excess
Deferral arose if:
(1) The Member designates the distribution as an Excess
Deferral in accordance with procedures set forth by the Committee (or a deemed
designation is made for the Member by the Committee in accordance with Plan pro-
cedures);
(2) The distribution is made after the date on which the Plan
received the Excess Deferral; and
(3) The Plan designates the distribution as a Corrective
Distribution of Excess Deferrals.
(c) A Corrective Distribution of Excess Deferrals may in no event
exceed the amount of Salary Deferral Contributions actually contributed on
behalf of the Member to this Plan during the Member's taxable year.
(d) The income and loss allocable to Excess Deferrals:
(1) Shall equal the sum of allocable gain or loss for the
taxable year of the Member, determined in accordance with procedures specified
by the Committee, to the degree consistent with Code section 402(g) and Treasury
regulations thereunder, but
(2) Shall not include the allocable gain or loss for the period
between the end of the taxable year and the date of distribution.
(e) A Corrective Distribution of Excess Deferrals shall be made
without regard to any notice or consent otherwise required under sections
411(a)(11) or 417 of the Code.
(f) Any Matching Contributions (including any Qualified Matching
Contributions) that relate to the Excess Deferral being distributed under this
Article shall be treated as forfeitures under Article IV of the Plan. The
Matching Contribution so forfeited shall be in proportion to the applicable
Employee's vested and nonvested interest in Matching Contributions under the
Plan for the Plan Year in which the Excess Deferral arose. Forfeitures under
this Article shall be treated under the rules of Section 4.6.
<PAGE>
ARTICLE VI
SECTION 401(k) AND 401(m) LIMITS
Section 6.1. ADP Test. For each Plan Year, the Plan shall satisfy the
ADP Test described in section 401(k)(3) of the Code, section 401(k)-1 of
Treasury regulations, and subsequent guidance thereunder, which are herein
incorporated by reference.
Section 6.2. ACP Test. For each Plan Year, the Plan shall satisfy the
ACP Test described in section 401(m)(2) of the Code, section 1.401(m)-1 of
Treasury regulations, and subsequent guidance thereunder, which are herein
incorporated by reference.
Section 6.3. Multiple Use of the Alternative Limitation. The Plan may
not make multiple use of the alternative limitation, as provided in section
1.401(m)-2 of Treasury regulations, which is incorporated here by reference.
Section 6.4. Prior Plan Year Testing. For any Plan Year, except as
prohibited in Treasury regulations or other guidance, the ADP Test, ACP Test,
and multiple use of alternative limitations test, will be conducted by reference
to Company Contributions made in the preceding Plan Year on behalf of Employees
who are not Highly Compensated Employees.
<PAGE>
ARTICLE VII
CORRECTION OF FAILURES OF ADP AND ACP TESTS
Section 7.1. General Rule.
(a) The Company may prevent or correct failures of the ADP Test in
any one or combination of appropriate ways decided by the Committee, to the
extent not prohibited by sections 401(k), 401(m) or regulations under those
sections; including but not limited to the following:
(1) Testing any Company Contributions under the ADP Test,
(2) Limiting allowable Salary Deferral Contributions on behalf
of Highly Compensated Employees;
(3) Distributing Company Contributions to the extent permitted
by section 401(k)(8) of the Code and regulations thereunder.
(b) The Company may prevent or correct failures of the ACP Test in
any one or combination of appropriate ways decided by the Committee, to the
extent not prohibited by sections 401(k), 401(m) or regulations under those
sections, including but not limited to the following:
(1) Testing any Company Contributions under the ACP Test;
(2) Limiting the amount of Company Contributions allocated to
the accounts of Highly Compensated Employees;
(3) Distributing Company Contributions in accordance with
section 401(m)(6) of the Code and regulations thereunder;
(4) Making corrective forfeitures of Company Contributions.
Section 7.2. Corrective Distribution of Excess ADP Contributions.
(a) Distributions of Company Contributions under this Article, plus
allocable earnings thereon, shall be made within 12 months after the close of
the Plan Year in which the applicable failure of the ADP or ACP test arose.
(b) Distribution of Company Contributions plus allocable earnings
thereon, to the extent made to correct failures of the ADP Test, shall be
reduced by Excess Deferrals (as defined in Article V) previously distributed to
the Employee for the Employee's taxable year ending with or within the Plan
Year.
(c) Distributions of Company Contributions under this Article shall
be made without regard to any Member or spousal consent or any notice otherwise
required under sections 411(a) (11) and 417 of the Code.
(d) Any Company Contributions made as matching contributions that
relate Salary Deferral Contributions distributed under this Article shall be a
forfeiture. Matching contribution forfeited under this subsection shall be in
proportion to the applicable Employee's vested and nonvested interest in
matching contributions under the Plan for the Plan Year in which the Total
Excess ADP Contribution arose.
(e) Distributions to an Employee made to correct failures of the ADP
test for any Plan Year may not exceed the amount of Salary Deferral Contribu-
tions made on behalf of that Employee for the Plan Year.
(f) In the event of a complete termination of the Plan during the
Plan Year in which the failure of the APD test arose, corrective
distributions under this Article shall be made not later than 12 months after
the date of termination.
Section 7.3. Corrective Forfeitures of Excess ACP Contributions.
Forfeitures of Company Contributions under this Article are treated in
accordance with the rules governing forfeitures under Section 4.6 of the Plan.
Section 7.4. Corrections for Failures of the Multiple Use Limitation.
If Contributions for a Plan Year for Highly Compensated Employees exceed the
aggregate limit as defined in section 1.401(m)-2 of Treasury regulations, the
corrections of violations of the ADP Test or ACP Test shall be made in
accordance with this Article.
<PAGE>
ARTICLE VIII
SECTION 415 LIMITS
Section 8.1. General Rule. Under the Plan, annual additions, as that
term is defined in section 415(c)(2) of the Code, are subject to the limitations
of section 415 of the Code and its regulations, which are incorporated here by
reference.
Section 8.2. Reductions Among Defined Contribution Plans. For a Member
participating in more than one defined contribution plan, any reductions
required by Code section 415 with respect to the Member will be made first with
respect to the plan in which the Member most recently accrued benefits. Any
further reductions will be made according the priorities established by the
Committee and the administrators of the other plans.
Section 8.3. Reductions Under the 415(e) Limit. For Members subject to
the overall limit under Code section 415(e) (relating to contributions and
benefits under both defined contribution and defined benefit plans) in Plan
Years beginning before January 1, 2000, reductions will be made under defined
benefit plans rather than defined contribution plans. The defined benefit
reductions will be made as set forth in those plans.
Section 8.4. Treatment of Excesses. Amounts under this Plan which are in
excess of the Code section 415 limits will be treated as follows:
(a) First, any such excess otherwise allocable to a Member's Account
(excluding Salary Deferral Contributions) shall be held unallocated in a
suspense account for the Plan Year and allocate in the next Plan Year to all
Members in the Plan. The excess amount must be used to reduce Company
Contributions for the next Plan Year (and succeeding Plan Years, as necessary)
for all of the Members in the Plan, and may not be distributed to Members or
former Members.
(b) If, after the application of subsection (a) any of the excess
still exists, then the Member's Salary Deferral Contributions (including
earnings and losses thereon) allocated for the Limitation Year shall be returned
to the Member to the extent that an Excess Amount exists. This distribution
shall be made as soon as administratively feasible after the Excess Amount is
determined. Any Salary Deferral Contributions returned under this paragraph
shall be disregarded for purposes of the ADP Test.
(c) Alternatively, the Committee may elect to dispose of the Excess
Amount by applying the procedure in subsection (b) before applying the procedure
in subsection (a). If the Committee makes this election, the Committee must
apply it uniformly to all Members in a Limitation Year.
(d) Amounts in the suspense account will not be credited with any
earnings or losses.
(e) If the Plan is terminated, a special allocation of any amounts in
a suspense account will be made to all Members employed as of the termination
date in proportion to their Compensation as of such date for the Plan Year,
subject to the limitations of section 415 of the Code.
<PAGE>
ARTICLE IX
PARTICIPANTS' ACCOUNTS
Section 9.1. Generally. A Member's Account shall be maintained on
behalf of each Member until distributed (or deemed distributed) in accordance
with the terms of this Plan. A Member's Account shall include subaccounts, which
as appropriate may include (but are not limited to):
(a) Salary Deferral Contribution Account, consisting of Salary
Deferral Contributions and earnings thereon;
(b) Matching Contribution Account, consisting of Matching Contribu-
tions and earnings thereon;
(c) Qualified Matching Contributions Account, consisting of Qualified
Matching Contributions and earnings thereon;
(d) Qualified Nonelective Contributions Account, consisting of
Qualified Nonelective Contributions and earnings thereon;
(e) Rollover Contributions Account, consisting of Rollover Contribu-
tions and earnings thereon;
(f) Frozen After-Tax Contribution Account, consisting of after-tax
employee contributions made by an participant of a Prior Plan before January 1,
1998, and earnings thereon;
(g) Employer Stock Account, consisting of funds transferred from any
other subaccount at the direction of the Member, and invested solely in the
stock of Ultramar Diamond Shamrock Corporation and dividends thereon, plus any
funds transferred by the Company from the ESOP I and ESOP II Accounts;
(h) ESOP I Account, consisting of funds transferred from the Ultramar
Diamond Shamrock Corporation Employee Stock Ownership Plan I;
(i) ESOP II Account, consisting of consisting of funds transferred
from the Ultramar Diamond Shamrock Corporation Employee Stock Ownership Plan II.
Section 9.2. Valuation. A Member's Account Balance shall be valued on a
daily basis, and shall equal the sum of contributions, earnings, gains, losses,
withdrawals, loans, and expenses, on and after the Member's Entry Date and until
distribution (or deemed distribution) of the Account Balance.
Section 9.3. Members' Self-Directed Investments. Except as otherwise
provided in this Article, a Member's Account shall be invested by the Member
according to the procedures set forth in this Section.
(a) Generally. Funds in a Member's Account shall be invested in one
or more investment vehicles selected by the Committee in accordance with
procedures established by the Committee.
(b) Initial Investment Instructions. As soon as practicable after
becoming eligible to participate in the Plan, a Member shall instruct the
Committee, in accordance with procedures set forth by the Committee, concerning
allocation of his Account Balance among the available investment funds. A Member
may instruct allocation of his Account Balance to one investment fund, or in
fractional shares or dollar amounts (to the extent permitted by the Committee)
among different investment funds, as long as the total dollar amounts or
fractional shares do not exceed 100% of his account balance. Procedures
established under this Section by the Committee shall permit a Member's
investment instructions to be transmitted or effective before the Member has
received the information described in subsection (f).
(c) Changes in Investment Instructions. Investment instructions by a
Member shall continue in effect until changed by the Member. A Member may change
his investment instructions at any time, in accordance with procedures
prescribed by the Committee.
(d) Committee's Obligations With Respect to Changes in Investment
Instructions. The Committee will implement investment instructions (including
changes in earlier investment instructions) no later than the first day
following the calendar quarter in which such Committee receives such in-
structions. At its discretion, the Committee may provide for earlier
implementation of changes in investment instructions, and may limit the
frequency with which changes in investment instructions are permitted.
(e) Default Investment Funds. To the extent a Member designates no
investment fund for a portion of his Account Balance, his Account Balance shall
be placed in the Vanguard Retirement Savings Trust.
(f) Information. The Committee shall provide Members sufficient
information to make informed investment decisions with regard to investment
alternatives available under the Plan, including (but not limited to) a
description of those investment alternatives.
(g) Procedures. The Committee shall establish procedures for re-
ceiving and acting on Members' investment instructions. The Committee shall
establish procedures by which Members have the opportunity to obtain written
confirmation of their investment instructions. The Committee may charge
participants' accounts for the reasonable expenses of carrying out investment
and other instructions. In accordance with procedures established by the
Committee, Members will be periodically informed of the actual expenses incurred
with respect to their Employee Accounts.
(h) Assumption of Investment Risk. Each Member shall assume all
investment risks connected with the assets held in his Employee Account, and is
solely responsible for the selection of his investment options. The Trustee,
the Committee, an Affiliate, and any officer, owner, or employee of an
Affiliate, are not empowered to advise a Member as to the manner in which his
Employee Account shall be invested. The fact that an Investment Fund is
available to Members for investment shall not be construed as a recommendation
for investment in that Investment Fund.
Section 9.4. ESOP I and ESOP II Accounts. Funds in the ESOP I and ESOP
II Accounts are invested solely in the shares of Ultramar Diamond Shamrock
Corporation and any other investments determined by Ultramar Diamond Shamrock
Corporation.
<PAGE>
ARTICLE X
DISTRIBUTIONS
Section 10.1. General Rule. If the Member's Vested Account Balance
exceeds the greater of $5,000 or the dollar amount described in Code section
411(a)(11):
(a) His Vested Account Balance shall be distributed to him as soon as
reasonably practical after the later of his Normal Retirement Age or his
Termination from Employment, unless he elects otherwise under (b).
(b) The Member may elect an earlier distribution of his Vested
Account Balance, except with respect to funds in the ESOP I and ESOP II
Accounts. An election under this subsection may be made at any time after the
earlier of Disability, Termination from Employment or his attainment of age
59-1/2, and is subject to the qualifications of Section 10.5 (Limitations on
In-Service Distributions), and 10.6 (Notification and Member Election).
Section 10.2. Timing and Manner of Distributions. Distribution of a
Member's Vested Account Balance under Section 10.1 shall be made under the terms
of this Article to a Member in the form of a single cash lump sum payment except
as otherwise provided under subsections (a), (b) and (c).
(a) The Member may elect distribution of his Vested Account Balance
in monthly installments over a period not to exceed the greater of his life
expectancy (recalculated annually) or 10 years (or any shorter period required
by section 401(a)(9) of the Code).
(b) The Member may elect that funds in his Employer Stock Account,
ESOP I Account or ESOP II Account, be distributed in the form of Ultramar
Diamond Shamrock Corporation Stock (and cash for any fractional shares) as
(1) A single payment; or
(2) Annual installments over a period not to exceed the greater
of his life expectancy (recalculated annually) or 10 years (or any shorter
period required by section 401(a)(9) of the Code).
Section 10.3. Account Balances of $5,000 or Less. If the Member's Vested
Account Balance is equal to or less than $5,000 (or if greater, the dollar
amount described in Code section 411(a)(11)), it shall be distributed as soon as
practicable after the earlier of his Termination from Employment or his Required
Beginning Date.
Section 10.4. Death Benefits. All distributions after the Member's death
are governed by the provisions of Article XIII.
Section 10.5. Limitations on In-Service Distributions. Salary Deferral
Contributions, Qualified Nonelective Contributions and Qualified Matching
Contributions, and the income allocable to such contributions may not be
distributed before a Member's death, disability or separation from service as
defined in section 401(k) of the Code and Treasury regulations thereunder,
except as provided under sections 11.2 (hardship distributions), 11.5 (with-
drawals on or after reaching age-59-1/2), 10.7 (relating to termination of the
Plan), 10.8 (QDROs) and 10.10 (distributions to comply with other Code re-
quirements).
Section 10.6. Notification and Member Election for Distributions Before
Normal Retirement Age. If a Member's Account Balance exceeds $5,000, or, if
higher, the dollar amount set forth in Code section 411(a)(11), then except as
otherwise provided in Section 10.7 (relating to Plan termination) it may not be
distributed to him before his attainment of Normal Retirement Age, unless the
Committee provides the Member with the notice described in this Section and the
Member makes the written election described in this Section.
(a) The notice under this Section must inform the Member of the means
to obtain the value of his distribution, the optional distribution forms
available, and his right to defer distribution, and must be provided by the
Committee no less than 30 days and no more than 90 days before the date the
distribution commences.
(b) The distribution may commence less than 30 days after the notice
described in subsection (a) of this Section is provided, if the notice indicates
that the Member has a right to 30 days to consider whether to consent to the
distribution.
(c) The Member's election must affirmatively elect a distribution,
must be in writing on forms prescribed by the Committee, and must not be made
before the Member receives the notice described in subsection (a) of this
Section.
Section 10.7. Special Rules for Plan Termination and Corporate
Reorganizations.
(a) Upon the termination of the Plan under certain circumstances
specified in Section 16.5 of the Plan, distributions shall be made without
regard to sections 10.5 (relating to in-service distributions) or 10.6 (relating
to Member elections and notification) to the extent specified in Section 16.5.
(b) Upon a disposition of assets described under Code section
401(k)(10)(A)(ii), or the disposition of a subsidiary described under Code
section 401(k)(10)(A)(iii) constituting a line of business as determined by the
Committee, distribution of a Vested Account Balance shall be made without regard
to Section 10.5 (relating to in-service distributions), with respect to a Member
who continues employment with the corporation acquiring such assets or with such
subsidiary, unless the transferor corporation continues as a Company.
Distributions under this subsection (b) will be permitted only to the extent
permitted by Treas. Reg. ss. 1.401(k)-1(d)(4).
Section 10.8. QDROs. A distribution to an alternate payee under a
qualified domestic relations order as defined in section 414(p) of the Code may
be made at any time. A distribution under this Section shall be paid to the
alternate payee in a single lump sum as soon as practicable after determination
that the domestic relations order is a qualified domestic relations order.
However, if the distribution payable to an alternate payee is more than the
greater of $5,000 or the dollar amount described in Code section 411(a)(11), and
the qualified domestic relations order specifies payment according to a schedule
that would be permitted for distributions to a Member under the Plan, then the
payment shall be paid according to such schedule.
Section 10.9. Other Restrictions on Distributions.
(a) The payment of benefits under this Plan to the Member shall
begin not later than the 60th day after the latest of the close of the Plan Year
in which occurs:
(1) The Member's attainment of Normal Retirement Age;
(2) The Member's incurrance of a Termination from Employment;
(3) The 10th anniversary of the Member's Entry Date;
(4) The date specified by the Member in an election under
Section 10.1.
(b) In no event may distribution of a Member's Account Balance
commence later than his Required Beginning Date. All distributions under the
Plan shall comply with section 401(a)(9) of the Code, including subsection (G)
thereof, which are incorporated here by reference.
Section 10.10. Distributions to Comply With Other Code Requirements. A
distribution is not prohibited under any provision of this Article to the extent
the distribution is:
(a) Permitted or required to comply with Code sections 401(k),
401(m), 402(g), or 415;
(b) Made to an alternate payee under a qualified domestic relations
order as defined in section 414(p) of the Code; or
(c) Required to comply with any other provision of the Code.
Section 10.11. Direct Rollovers. Notwithstanding any provision of the
Plan to the contrary that would otherwise limit a Distributee's election under
this Article, a Distributee may elect, at the time and in the manner prescribed
by the Committee, to have any portion of an Eligible Rollover Distribution paid
directly to an Eligible Retirement Plan specified by the Distributee in a Direct
Rollover, except as otherwise provided by the Company's administrative
procedures as permitted by regulations. In addition, a Distributee may not elect
a Direct Rollover of an Offset Amount. The following definitions shall apply:
(a) Direct Rollover: A Direct Rollover is a payment by the plan to
the Eligible Retirement Plan specified by the Distributee.
(b) 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 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.
(c) Eligible Retirement Plan: An Eligible Retirement Plan is an
individual retirement account described in section 408(a) of the Code, an
individual retirement annuity described in section 408(b) of the Code, an
annuity plan described in section 403(a) of the Code, or a qualified trust
described in section 401(a) of the Code, that accepts the Distributee's Eligible
Rollover Distribution. However, in the case of an Eligible Rollover Distribution
to the alternate payee or Surviving Spouse, an Eligible Retirement Plan is an
individual retirement account or an individual retirement annuity.
(d) Eligible Rollover Distribution: An Eligible Rollover Distribu-
tion 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 any
distribution option that is not includible in gross income (determined without
regard to the exclusion for net unrealized appreciation with respect to employer
securities).
(e) Offset Amount: An Offset Amount is the amount by which a Member's
Account is reduced to repay a loan from the Plan (including the enforcement of
the Plan's security interest in the Member's Account).
<PAGE>
ARTICLE XI
PARTIAL AND TOTAL WITHDRAWALS OF ACCOUNT BALANCE
Section 11.1. General Rule. In addition to the distributions described
in Article X, a Member may receive a distribution of part or all of his Vested
Account Balance to the extent permitted by the terms of this Article, in the
form of a:
(a) Hardship Distribution under Section 11.2;
(b) Withdrawal o f any portion of his Rollover Account under Section
11.3;
(c) Withdrawal of a portion of his Frozen After-Tax Contribution
Account under Section 11.4; or
(d) Withdrawal after attainment of age 59 1/2 under Section 11.5.
Section 11.2. Hardship Distributions. Distributions of Salary Deferral
Contributions (but not the income thereon) may be made to a Member in the event
of a hardship. A distribution may be made on account of hardship under this
Section only if the distribution is made on account of an immediate and heavy
financial need of the Employee as specified in subsection (a), is necessary to
satisfy such financial need as set forth in subsection (b), and is limited to
the distributable amount set forth in subsection (c). A Member shall not be
entitled to more than two distributions on account of hardship under this
Section in any Plan Year. A hardship distribution under this Section is not
permitted from the ESOP I or ESOP II Accounts.
(a) The only financial needs considered immediate and heavy for
purposes of this Section are as follows:
(1) Expenses for medical care described in section 213(d) of
the Code previously incurred by the Employee, the Employee's Spouse, or any
dependents of the Employee (as defined in section 152 of the Code) or necessary
for these persons to obtain medical care described in section 213(d) of the
Code;
(2) Payment of tuition and related educational fees for the
next 12 months of post-secondary education for the Employee, his Spouse,
children, or dependents (as defined in section 152 of the Code);
(3) Costs directly related to the purchase of a principal
residence for the Employee (excluding mortgage payments); or
(4) Payments necessary to prevent the eviction of the Employee
from the Employee's principal residence or foreclosure on the mortgage on that
residence.
(b) The standards for determining whether the distribution is
necessary to satisfy the Member's financial need are set forth in this
subsection. A distribution will be considered as necessary to satisfy an
immediate and heavy financial need of the Employee only if all of the following
requirements are satisfied:
(1) The hardship distribution is not in excess of the amount of
the immediate and heavy financial need of the Employee. The amount of an
immediate and heavy financial need may include the amounts necessary to apply
any federal, state, or local income taxes or penalties reasonably anticipated
to result from the distribution.
(2) The Employee had obtained all distributions, other than
hardship distributions, and all nontaxable (at the time of the loan) loans
currently available under all plans maintained by an Affiliate.
(3) A distribution will be treated as necessary to satisfy a
financial need if the Committee relies upon the Employee's written representa-
tion, unless the Committee has actual knowledge to the contrary, that the need
cannot reasonably be relieved:
(A) Through reimbursement or compensation by insurance or
otherwise;
(B) By liquidation of the Employee's assets;
(C) By cessation of Salary Deferral Contributions under
the Plan; or
(D) By other distributions or nontaxable (at the time of
the loan) loans from plans maintained by an Affiliate or by any other employer,
or by borrowing from commercial sources on reasonable commercial terms in an
amount sufficient to satisfy the need.
A need cannot reasonably be relieved by one of the actions listed
above if the effect would be to increase the amount of the need.
(c) The distributable amount is equal to the Employee's total Salary
Deferral Contribution as of the date of distribution, reduced by the amount of
previous distributions of Salary Deferral Contributions on account of hardship.
The Employee's total Salary Deferral Contributions shall not include income
allocable to such Salary Deferral Contributions. The minimum distributable
amount is $100.00.
Section 11.3. Withdrawal of Rollover Contributions. A Member may elect
to withdraw any portion of his Rollover Contribution Account by written
application to the Committee. Distributions under this Section are subject to
the notice and election provisions of Section 10.6. A Member may not elect more
than two withdrawals in any Plan Year under this Section. Withdrawals under this
Section may not be repaid.
Section 11.4. Withdrawals of After-Tax Employee Contribution Amounts. A
Member may elect to withdraw any portion of his Frozen After-Tax Contribution
Account by written application to the Committee. A Member may not elect more
than two withdrawals in any Plan Year under this Section. Withdrawals under this
Section may not be repaid.
Section 11.5. Withdrawals On and After Attainment of Age 59-1/2. A
Participant who has attained age 59-1/2 may withdraw any portion of his Vested
Account Balance upon written notification to the Committee, without regard to
whether he has incurred a Termination from Employment or other separation from
service as defined under section 401(k) of the Code and regulations thereunder.
A Participant may not elect more than two withdrawals in any Plan Year under
this Section. Withdrawals from a Participants ESOP I and ESOP II Account are not
permitted under this Section. Withdrawals under this Section may not be repaid.
<PAGE>
ARTICLE XII
LOANS TO PARTICIPANTS.
Section 12.1. General Availability of Loans
(a) Loans shall be made available on a reasonably equivalent basis
to all Members and beneficiaries who are parties in interest within the meaning
of section 3(14) of ERISA. The individuals described in this subsection are
hereinafter referred to as Eligible Borrowers.
(b) Loans shall not be made available to Highly Compensated Employees
in an amount greater than the amount loans are made available to other Eligible
Borrowers.
(c) Application for a loan must be made to the Committee in writing
and on prescribed forms. The decisions by the Committee on loan applications
shall be made on a reasonably equivalent, uniform, and nondiscriminatory basis.
Notwithstanding the foregoing, the Committee may apply different terms and
conditions for loans to Eligible Borrowers who are not actively employed by the
Company, or for whom payroll deduction is not available, based on economic and
other differences affecting the individual's ability to repay any loan. The
Committee may change the terms of any outstanding loan to the extent required by
applicable law.
(d) If the Committee is in receipt of a domestic relations order with
respect to any Eligible Borrower's account, it may deny any loan to that
Eligible Borrower until the rights of the payee named under such order are
determined, and satisfied, to the extent that the order is a qualified domestic
relations order under section 414(p) of the Code.
(e) The Committee shall limit the number of outstanding loans
permitted for each Eligible Borrower to one outstanding loan at a time, with a
waiting period in between.
<PAGE>
Section 12.2. Amount of Loan.
(a) The minimum loan available is $1,000.
(b) The maximum loan available is the lesser of:
(1) $50,000 less the highest outstanding balance of Plan loans
to such Eligible Borrower during the 12-month period ending on the day before
the loan is made; or
(2) the amount that (when added to the outstanding balance of
all other loans to the Eligible Borrower from the Plan) equals 50% of the
Eligible Borrower's vested interest in his Account Balance.
The Eligible Borrower's vested interest in his Employee Account shall be
based on the most recent account valuation available to the Committee on the
date the loan is approved. Loans are not permitted from the ESOP I or ESOP II
Accounts.
Section 12.3. Terms of Loan.
(a) A loan shall be secured by a lien on the Eligible Borrower's
interest in the Plan, to the maximum extent permitted by the Code and ERISA and
guidance issued thereunder. The Committee may in addition require such other
security as is necessary to assure, as determined within the discretion of the
Committee, that the loan is adequately secured.
(b) The interest rate on a loan shall be a reasonable rate of
interest, as determined by the Committee, and shall be fixed for the term of the
loan.
(c) The principal amount and interest on a loan shall be repaid no
less frequently than quarterly in level amounts, and (except for an Eligible
Borrower who is not employed by an Affiliate, or receiving payments from the
payroll of an Affiliate) by payroll deductions. An Eligible Borrower may pre-pay
the full amount due under the loan at any time without penalty.
(d) Subject to agreement by the Committee, the Eligible Borrower may
elect a repayment term of up to 5 years, except that a repayment term of up to
10 years may apply to a loan used to acquire a dwelling unit which within a
reasonable time is to be used, determined at the time the loan is made, as the
principal residence of the Eligible Borrower.
(e) Notwithstanding subsection (c), a loan may provide that no
payments will be made for up to one year during a period in which an Eligible
Borrower is on approved leave of absence without pay, or being paid at a rate of
pay, after income and employment tax withholding, that is less than the amount
of the installment payments required under the terms of the loan. However, the
loan must be repaid by the latest date permitted under section 72(p)(2)(B) of
the Code, and the amount of each installment due after the individual returns
from leave (or, if earlier, after the first year of the leave) must not be less
than those required under the terms of the original loan.
(f) Each loan shall be evidenced by a promissory note, evidencing the
Eligible Borrower's obligation to repay the borrowed amount to the Plan, in such
form and with such provisions consistent with this Section as are acceptable to
the Committee. All promissory notes shall be deposited with the Trustee.
(g) The Committee may determine a loan to be in default, and may take
necessary and appropriate actions to enforce repayment of the loan, including
any actions set forth in Sections 12.4 and 12.5.
Section 12.4. Nonpayment of Required Installment.
(a) Nonpayment of installment. If an Eligible Borrower does not pay
a required installment of principal or interest under a Plan loan in the amount
and at the time required by the terms of the loan, the loan shall be in default.
(b) Payment of required installment. If payment of the required
installment (plus accrued interest) is made by the Member by the date specified
in (d), the loan is no longer in default.
(c) Upon a default under (a), the Committee may:
(1) Enforce the Plan's lien against the Employee Account by
directing that the Trustee to reduce (offset) the amount of the Member's vested
account balance by the outstanding loan balance (including accrued interest),
unless a distribution is prohibited by section 401, 402 or 401(k) of the Code;
(2) Make demand for repayment of the required installment
(including accrued interest);
(3) Perfect any other security interest held by the Plan;
(4) Direct the Trustee to offset any distribution made to the
Eligible Borrower (including any rollover distribution and any hardship
distribution) by the amount of the outstanding loan balance (including accrued
interest); or
(5) Take any other actions determined by the Committee as
necessary or advisable to prevent the loss of principal and interest.
(d) Deemed distribution at end of grace period. If by the end of the
last day of the first quarter following the date of the default under (a),
neither the required installment (plus accrued interest) has been paid, nor the
loan balance repaid by offset, other perfection of collateral, or otherwise, the
outstanding loan balance (including accrued interest) shall be treated by the
Plan as a deemed distribution on that date (i.e., on the last day of the first
quarter following the date of default) in accordance with section 72(p) of the
Code and guidance thereunder. No further interest shall accrue with respect to a
loan after a deemed distribution of that loan.
Section 12.5. Acceleration of Loan.
(a) Upon an Eligible Borrower's Termination from Employment, the
entire loan balance (including accrued interest) may be treated as due and
payable within a reasonable period of time after such Termination.
(b) The Committee may designate other events (including, but not
limited to, hardship distributions; receipt of a qualified domestic relations
order; and direct transfers under Code section 401(a)(31)) upon which, or within
a reasonable time after which, the entire outstanding loan balance shall become
immediately due and payable.
(c) To enforce collection of the loan the Committee may:
(1) Enforce the Plan's lien against the Account by directing
that the Trustee offset the amount of the Member's Vested Account Balance by the
outstanding loan balance (including accrued interest), unless a distribution is
prohibited by section 401, 402 or 401(k) of the Code;
(2) Make demand for repayment of the outstanding loan balance,
including accrued interest, from the Eligible Borrower or his Beneficiary;
(3) Perfect any other security interest held by the Plan;
(4) Direct the Trustee to offset any distribution made to the
Eligible Borrower (including any rollover distribution and any hardship
distribution) by the amount of the outstanding loan balance (including accrued
interest); or
(5) Take any other actions determined by the Committee as
necessary or advisable to prevent the loss of principal and interest.
(d) On the date on which the loan becomes immediately due and payable
under this Section, to the extent not repaid by offset or otherwise, the loan
balance (including accrued interest) shall be treated as a deemed distribution.
No further interest shall accrue with respect to a loan after a deemed
distribution of that loan.
Section 12.6. Repayment Not Permitted After Deemed Distribution. Repay-
ment of the loan is not permitted after such loan has been treated as a
deemed distribution.
Section 12.7. Alternate Payees. If, before a loan is repaid in full, a
distribution is required to be made from the Plan to an alternate payee under a
qualified domestic relations order (as defined in section 414(p) of the Code),
such distribution shall be made from the vested portion of the Employee Account
that is not attributable to the outstanding loan balance (from the vested
non-loan balance).
If the amount of any distribution required by the qualified domestic
relations order exceeds the vested non-loan balance at the time of such required
distribution, the Committee may provide that:
(a) Such excess will be distributed to the alternate payee from
future additions to the account as soon as reasonably practical after such
future additions are made (whether in the form of repayments under the loan, new
contributions to the account, or other additions); or
(b) The loan is due and payable.
Section 12.8. Fees. The Committee may charge Eligible Borrowers
reasonable fees for loans under this Section.
Section 12.9. USERRA. Loan repayments will be suspended under this plan
as permitted under section 414(u) of the Code.
<PAGE>
ARTICLE XIII
DEATH BENEFITS
Section 13.1. General Rules. After the death of a Member, his Vested
Account Balance shall be paid as soon as reasonably practicable to his
Beneficiary in a single lump sum under the provisions of this Article, which
shall take precedence over any conflicting provision of this Plan.
Section 13.2. Married Members. In the case of a Member who is married at
the time of his death, the Beneficiary is:
(a) The individual designated under a Qualified Beneficiary Designa-
tion as defined in Section 13.5, except that
(b) If a Beneficiary has not been designated under (a), the designa-
tion is not a Qualified Beneficiary Designation, or no Beneficiary so designated
survives the Member, the Beneficiary is the Member's surviving spouse.
Section 13.3. Unmarried Members. In the case of a Member who is not
married at the time of his death:
(a) The Beneficiary is the individual designated by the Member in
beneficiary forms provided by the Committee, or under such procedures as
permitted by the Committee.
(b) In the absence of a specific designation by an unmarried Member,
the Beneficiary shall be the person, trust or other entity designated to receive
any group term life insurance benefits with respect to the Member, or in the
case that there is no such group term life benefit, the Beneficiary shall be the
first surviving person or persons in the following successive classes: (1) the
surviving children of the deceased Member, (2) the surviving parents of the
deceased member, and (3) the Member's estate.
Section 13.4. Divorced or Separated Members. In the case of a Member who
at the time of his death has been married and divorced or separated, the
individual named in a qualifying domestic relations order as defined in section
414(p) of the Code and regulations thereunder shall be treated as a Beneficiary
to the extent specified in such order.
Section 13.5. Qualified Beneficiary Designation. A Member's designation
is a Qualified Beneficiary Designation only if the Member's spouse consents
under the provisions of this Section.
(a) The spouse's consent must be in writing, must acknowledge the
financial effect of the waiver of the spouse's rights, and must be witnessed by
a Plan representative or notary public.
(b) If the spouse's consent specifically acknowledges a Beneficiary
designated by the Member and does not expressly grant the Member the right to
make future changes to this designation without spousal consent, then the Member
may not subsequently designate another Beneficiary without the further written
consent of the Spouse.
(c) Notwithstanding this consent requirement, if the Member
establishes to the satisfaction of a Plan representative that such written
consent may not be obtained because there is no Spouse or the Spouse cannot be
located, then spousal consent in compliance with (a) is deemed, and such deemed
consent is further deemed to qualify as consent to any subsequent changes in the
Member's beneficiary designations.
(d) Any consent under this Section is valid only with respect to the
spouse who signs the consent. Any deemed consent under (c) is valid only with
respect to the designated Spouse.
(e) At any time, and without the consent of his spouse, the Member
may revoke any previous Beneficiary designation if the effect of such revocation
is that his Beneficiary is (1) his spouse; or (2) any other designated
Beneficiary if the consent under subsection (a) of this Section expressly
granted the Member the right to make subsequent changes in his Beneficiary
designations.
<PAGE>
ARTICLE XIV
ADMINISTRATIVE PROCEDURES
Section 14.1. Appointment of Employee Benefits Committee Members. The
Chief Executive Officer of Ultramar Diamond Shamrock Corporation shall appoint a
Committee consisting of not fewer than three members who shall hold office at
the pleasure of the Chief Executive Officer. Any member may resign by giving
notice, in writing, filed with the Trustee and the Chief Executive Officer.
Section 14.2. Officers and Employees of the Employee Benefits
Committee. The Committee shall choose from its members a Chairman and a
Secretary. The Chairman may appoint one or more Assistant Secretaries for the
Committee who may, but need not, be members of the Committee. The Secretary (or
an Assistant Secretary) shall keep a record of the Committee's proceedings and
all dates, records and documents pertaining to the Committee's administration of
the Plan. The Committee may employ and suitably compensate such persons or
organizations to render advice with respect to the duties of the Committee under
the Plan as the Committee determines to be necessary or appropriate.
Section 14.3. Action of the Employee Benefits Committee. Action of the
Committee may be taken with or without a meeting of Committee members, provided,
however, that any action shall be taken only upon the vote or other affirmative
expression of a majority of the Committee's members qualified to vote with
respect to such action. The Chairman or the Secretary of the Committee may
execute any certificate or other written direction on behalf of the Committee.
In the event the Committee members qualified to vote on any question are unable
to determine such question by a majority vote or other affirmative expression of
a majority of the Committee members qualified to vote on such question, such
question shall be determined by the Chief Executive Officer.
Section 14.4. Expenses.
(a) All reasonable and proper expenses of administration of the Plan
and Trust, including, but not limited to, fees of accountants, counsel, and
other specialists and their agents, and other costs of administering the Plan,
shall be paid out of the Fund unless paid by the Company.
(b) The Company may initially pay any expense that normally would be
a charge on the Fund and later obtain reimbursement from the Trust Fund.
(1) This even applies in cases where at the time of the
Company's initial payment of the expense, it is not clear that the Company may
lawfully seek reimbursement from the Trust Fund but the Company's legal right to
reimbursement is later clarified.
(2) It is specifically anticipated that there may be
situations, such as litigation, where the Company might choose to bear costs
initially, but later obtain reimbursement many years after the costs were
incurred. Such delayed reimbursements shall be permissible.
(c) The Company may at the sole discretion of the Board reimburse the
Fund for any administration expense incurred. Any administration expense paid to
the Fund as a reimbursement shall not be considered a Company contribution.
Section 14.5. Indemnification. The Company agrees to indemnify and
reimburse the members of the Committee, to the fullest extent permitted by law,
for any and all liabilities or losses arising out of any act or omission
relating to the rendition of services for or the management and administration
of the Plan.
Section 14.6. General Powers and Duties of the Employee Benefits
Committee. The Committee shall have full power to administer the Plan and the
Trust and to construe and apply their provisions. For purposes of ERISA, the
Committee shall be the named fiduciary with respect to the operation and
administration of the Plan and the Trust. In addition, the Committee shall have
the powers and authority granted by the terms of the Trust.
Section 14.7. Specific Powers of the Employee Benefits Committee. The
Committee shall have all powers necessary or incident to its office as Plan
administrator. Such powers include, but are not limited to, full discretionary
authority to:
(a) Prescribe rules for the operation of the Plan.
(b) Determine eligibility.
(c) Comply with the requirements of reporting and disclosure under
ERISA and any other applicable law and to prepare and distribute other
communications to employees as a part of Plan operations.
(d) Prescribe forms to facilitate the operation of the Plan.
(e) Secure government approvals for the Plan.
(f) Construe and interpret the terms of the Plan, including the power
to remedy possible ambiguities, inconsistencies or omissions.
(g) Determine the facts underlying a claim for benefits by a Member
or Beneficiary.
(h) Determine the amount, manner and timing of benefits and authorize
payments from the Fund.
(i) Maintain records.
(j) Litigate, settle claims, and respond to and comply with court
proceedings and orders on the Plan's behalf.
(k) Enter into contracts on the Plan's behalf.
(l) Exercise all other powers given to the Committee under other
Sections of the Plan.
(m) Engage any administrative, legal, medical, accounting, clerical,
or other services it may deem appropriate to effectuate the Plan or the Trust.
(n) Review the performance of the Trustee with respect to the
Trustee's administrative duties, responsibilities and obligations under the Plan
and the Trust as such administrative duties, responsibilities and obligations
are set forth in the Trust; report to the Board of Directors regarding such
administrative performance of the Trustee; and recommending to the Board of
Directors, if necessary, the removal of the Trustee and the appointment of a
successor Trustee.
Section 14.8. Records and Reports. The Committee shall keep a record of
all its proceedings, which shall be open to inspection by the Board.
Section 14.9. Allocation and Delegation of Fiduciary Responsibility. The
Committee from time to time may allocate to one or more of its members and/or
may delegate to any other persons or organizations any of the rights, powers,
duties and responsibilities of the Committee with respect to the operation and
administration of the Plan and the Trust that are permitted to be so delegated
under ERISA. Any such allocation or delegation shall be reviewed periodically by
the Committee, and shall be terminable upon such notice as the Committee in its
discretion deems reasonable and proper under the circumstances. Any right,
power, duty or responsibility given to the Committee under the Plan shall be
construed as the right, power, duty or responsibility of the person or entity to
whom allocated or delegated under this Section.
Whenever a person or organization has the power and authority under
the Plan or the Trust to delegate discretionary power and authority respecting
the control, management, operation or administration of the Plan or any portion
of the Fund to another person or organization, the delegating party's
responsibility with respect to such delegation is limited to the selection of
the appointee and the periodic review of the appointee's performance and
compliance with applicable law and regulations.
Section 14.10 Claims Procedure. All claims for benefits under the Plan
shall be made in writing and shall be signed by the applicant. Claims shall be
submitted to the Benefit Review Committee. If the applicant does not furnish
sufficient information with the claim for the Benefits Review Committee to
determine the validity of the claim, the Benefit Review Committee shall indicate
to the applicant any additional information which is necessary for the Benefit
Review Committee to determine the validity of the claim.
(a) Appeals Procedure. Any applicant whose claim for benefits is
denied in whole or in part may appeal from such denial to the Benefit Review
Committee for a review of the decision by the Benefit Review Committee. Such
appeal must be made within three months after the denial provided above. An
appeal must be submitted in writing within such period and must:
(1) Request a review by the Benefit Review Committee of the
claim for benefits under the Plan;
(2) Set forth all of the grounds upon which the claimant's
request for review is based and any facts in support thereof; and
(3) Set forth any issues or comments which the claimant deems
pertinent to the appeal. The Benefit Review Committee shall act upon each appeal
within 60 days after receipt thereof unless special circumstances require an
extension of the time for processing, in which case a decision shall be rendered
by the Benefit Review Committee as soon as possible but not later than 120 days
after the appeal is received by the Benefit Review Committee.
The Benefit Review Committee shall review each appeal and any written
materials submitted by therewith. The Benefit Review Committee may require
claimant and/or the Company to submit such additional facts, documents or other
evidence as the Benefit Review Committee in its discretion deems necessary or
advisable in making its review. The claimant shall be given the opportunity to
review pertinent documents or materials upon submission of a written request to
the Benefit Review Committee, provided the Benefit Review Committee finds the
requested documents or materials are pertinent to the appeal.
On the basis of its review, the Benefit Review Committee shall make a
determination of the claimant's eligibility for benefits under the Plan. The
decision of the Benefit Review Committee on any claim for benefits shall be
final and conclusive upon all parties thereto.
In the event the Benefit Review Committee denies an appeal in whole or
in part, the Benefit Review Committee shall give written notice of the decision
to the claimant, which notice shall set forth in a manner calculated to be
understood by the claimant the specific reasons for such denial and which shall
make specific reference to the pertinent Plan provisions on which the Benefit
Review Committee decision was based.
(b) Review of Annual Statement. If a Member, Spouse or Beneficiary
believes a statement he receives regarding his interest in the Plan is
incorrect, such Member or Beneficiary may submit a written request for
correction or verification of such annual statement to the Benefit Review
Committee, and the Benefit Review Committee shall respond in writing to such
request in the same manner as a claim for benefit by an applicant.
(c) Benefit Review Committee. The Chief Executive Officer of Ultramar
Diamond Shamrock Corporation shall appoint a Benefit Review Committee consisting
of not less than three nor more than five persons, having like administrative
responsibilities and discretionary authority as those described in Section 14.7
as appropriate or necessary to review a claim appeal under this Section. The
determinations of the Benefit Review Committee shall be final and binding
subject only to subsection (d) below.
(d) Dialogue. The Plan and any claims arising from the Plan or in any
way related to the Plan, are subject to and governed by the Ultramar Diamond
Shamrock Corporation Dialogue Dispute Resolution Program (Dialogue). If a claim
has been has been appealed from the administrator to the Benefit Review
Committee and the claimant desires to appeal the decision of the Benefit Review
Committee, such appeal must be conducted solely within the limitations and
procedures of Dialogue.
Section 14.11. Service of Process. The Committee may from time to time
designate an agent of the Plan for the service of legal process. The Committee
shall cause such agent to be identified in materials it distributes or causes to
be distributed when such identification is required under applicable law. In the
absence of such a designation, the Company shall be the agent of the Plan for
the service of legal process.
Section 14.12. Payment to Minors or Persons Under Legal Disability. If
any benefit becomes payable to a minor or to a person under a legal disability,
payment of such benefit shall be made only to the conservator or the guardian of
the estate of such person appointed by a court of competent jurisdiction or such
other person or in such other manner as the Committee determines is necessary to
ensure that the payment will legally discharge the Plan's obligation to such
person.
Section 14.13. Mistakes in Plan Administration. From time to time, claims
or issues may arise that involve the Plan, including, among others, claims and
issues raised by Members, those addressed under any of the Internal Revenue
Service's Employee Plans Compliance Resolution System programs or similar
programs, or those permitted under the terms of a qualified domestic relations
order that complies with Code section 414(p). The resolution, settlement or
adjudication of these claims or issues may result in a compliance procedure that
is not expressly permitted under some other Section of the Plan document. Such a
procedure, agreement or order will be respected to the extent that, as
determined in the sole discretion of the Committee, it does not result in
disqualification of the Plan or violate (or cause the Plan to violate) any
applicable statue, government regulation or ruling.
<PAGE>
ARTICLE XV
ADOPTION OF PLAN BY AFFILIATES
Section 15.1. Adoption Procedure. Any corporation or partnership may
become a participating Company under the Plan provided that:
(a) Ultramar Diamond Shamrock Corporation approves the adoption of
the Plan by the corporation or partnership and designates such corporation or
partnership as a participating Company;
(b) The corporation or partnership adopts the Plan together with all
amendments then in effect by appropriate action;
(c) The corporation or partnership adopts the Trust together with all
amendments then in effect by appropriate action; and
(d) The corporation or partnership by action agrees to be bound by
any other terms and conditions which may be required by Ultramar Diamond
Shamrock Corporation, provided that such terms and conditions are not
inconsistent with the purposes of the Plan.
Section 15.2. Effect of Adoption by Affiliate. A corporation or partner-
ship which adopts the Plan pursuant Section 15.1 shall be deemed to be the
Company for all purposes hereunder, unless otherwise specified by Ultramar
Diamond Shamrock Corporation. In addition, Ultramar Diamond Shamrock Corporation
may provide that the Employees of the corporation or partnership shall receive
credit for their employment with the corporation or partnership prior to the
date it became an corporation or partnership for purposes of determining the
eligibility of such Employees to participate in the Plan, the determination of
their Account Balance, and the vested and nonvested interest of such Employees
as Members under Article. By adopting the Plan, a participating Company shall be
deemed thereby to appoint Ultramar Diamond Shamrock Corporation or the Committee
as its exclusive agent to exercise on its behalf all of the powers and authority
conferred upon Ultramar Diamond Shamrock Corporation or the Committee by the
terms of the Plan including, but not by way of limitation, the power to amend
and terminate the Plan and the Trust. The authority of Ultramar Diamond Shamrock
Corporation and the Committee to act as such agent shall continue with respect
to all funds contributed by each participating Company and the income therefrom
until and unless the amount of such funds and income has been distributed by the
Trustee as hereinafter provided in this Section.
Section 15.3. Withdrawal by Participating Company. A participating
Company may withdraw from participation in the Plan only with the approval of
Ultramar Diamond Shamrock Corporation. If any participating Company withdraws
from the Plan, a copy of appropriate documents adopting such action shall be
delivered to the Committee as soon as it is administratively feasible to do so,
and the Committee shall communicate such action to the Trustee and to the
Employees of the participating Company.
<PAGE>
ARTICLE XVI
AMENDMENT, TERMINATION AND MERGER
Section 16.1. Amendment of the Plan. Ultramar Diamond Shamrock
Corporation shall have the right at any time to amend the Plan in any respect,
by written resolution of the Board of Directors. The Committee may by written
resolution amend the Plan to the extent necessary to keep the Plan in compliance
with law, to make clarifying changes, and with respect to administrative and
procedural matters. The participation in the Plan by an adopting corporation or
partnership as provided in Article XV shall not limit the power of Ultramar
Diamond Shamrock Corporation under the foregoing provisions, provided, however,
that Ultramar Diamond Shamrock Corporation shall deliver a copy of each Plan
amendment to each adopting corporation or partnership as soon as practical after
such amendment is adopted. Amendments adopted by the Board of Directors or the
Committee in accordance with this Section 16.1 shall be binding upon each
adopting corporation or partnership.
Section 16.2. Protected Benefits. No amendment shall decrease a
participant's accrued benefit to the extent protected by section 411(d)(6)(a) of
the Code, or any benefit subsidy or optional form of benefit to the extent
protected by section 411(d)(6)(b) of the Code.
Section 16.3. Reduction or Cessation of Contributions. Ultramar Diamond
Shamrock Corporation reserves the right to cease or reduce contributions at any
time by resolution of the Board of Directors.
Section 16.4. Termination of the Plan. Ultramar Diamond Shamrock
Corporation reserves the right to terminate the Plan at any time by resolution
of the Board of Directors.
Section 16.5. Treatment of Account Balances Upon Plan Termination.
(a) Upon termination of the Plan without establishment or maintenance
by an Affiliate of a successor plan (as defined in Treasury regulations under
Code section 401(k)(10)), distributions of a Member's Vested Account Balance,
including the balance of his Salary Deferral Contribution Account, Qualified
Nonelective Contribution Account, and Qualified Matching Contribution Account,
shall be made in a lump sum (as defined in Code section 401(k)(10)(b)) without
regard to any limitations in the Plan relating to in-service distributions.
(b) Upon termination of the Plan without maintenance by an Affiliate
Company of another defined contribution plan (other than an Employee Stock
Ownership Plan as defined in Code section 4975(e)(7)), distribution of the
Member's Vested Account Balance may be made without regard to any limitations in
the Plan relating to notification and Member elections.
Section 16.6. Unfavorable Determination After Initial Qualification. If
Ultramar Diamond Shamrock Corporation is notified subsequent to initial
favorable qualification that the Plan is no longer qualified within the meaning
of section 401(a) of the Code, or that the Trust is no longer entitled to Plan
Sponsor under the provisions of Code section 501(a), and if Ultramar Diamond
Shamrock Corporation shall fail within a reasonable time to make any necessary
changes in order that the Plan and/or Trust shall so qualify, the Members shall
be fully vested in the Accounts, and shall receive a distribution of their
Account Balances.
Section 16.7. Mergers or Transfers. If the Plan shall merge or with, or
transfer its assets or liabilities to, any other plan:
(a) Only to the extent required by section 208 of ERISA and section
401(a)(12) or 414(l) of the Code, each Member shall be entitled to receive a
benefit immediately after such merger, or transfer which is equal to or greater
than the benefit which he or she would have been entitled to receive immediately
before such merger, or transfer (assuming that the Plan had then terminated).
(b) Merely by virtue of such merger or transfer a Member shall not be
entitled to any change in status that would be required by Plan termination,
including, but not limited to, 100% Vesting in his Account Balance.
(c) This section in no way shall be construed as a guaranty of, or
entitlement by, any Member to an Account Balance valued at an amount equal to or
greater than his Account Balance immediately before such merger or transfer.
<PAGE>
ARTICLE XVII
REVERSIONS
Section 17.1. No Reversion Permitted. This Plan has been established by
Ultramar Diamond Shamrock Corporation and maintained by the Companies for the
exclusive benefit of the Members and their Beneficiaries. Except as otherwise
provided in Section 17.2 (relating to approval by the Internal Revenue Service),
Section 17.3 (relating to contribution recapture) and Section 10.8 (relating to
qualified domestic relations orders), under no circumstances shall any funds
contributed hereunder, at any time, revert to or be used by an Affiliate, nor
shall any such funds or assets of any kind be used other than for the benefit of
the Members or Beneficiaries.
Section 17.2. Approval by the Internal Revenue Service.
(a) Notwithstanding any other provisions of this Plan, the adoption
of this Plan by the Companies is subject to the condition precedent that the
Plan shall be approved and qualified by the Internal Revenue Service as meeting
the requirements of section 401(a) of the Code and that the Trust established in
connection herewith shall be entitled to exemption under the provisions of Code
section 501(a). In the event the Plan initially fails to qualify and the
Internal Revenue Service issues a final ruling that the Plan or Trust fails to
so qualify as of the Effective Date, all liability of the Companies to make
further contributions hereunder shall cease.
(b) The Committee, Trustee and any other Named Fiduciary shall be
notified immediately by Ultramar Diamond Shamrock Corporation, in writing, of
such failure to qualify. Upon such notification, the value of the Members'
Accounts shall be distributed in cash to the Companies, subject to the terms and
conditions of Article VI.
(c) That portion of such distribution which is attributable to Roll-
over Contributions, if any, shall be paid to the Member, and the balance of
such distribution shall be paid to the Participating Companies.
Section 17.3. Contribution Recapture. Notwithstanding any other provi-
sions of this Plan,
(a) In the case of a contribution which is made by a Company by a
mistake of fact, Section 17.1. shall not prohibit the return of such
contribution to the Company within one year after the payment of the
contribution, and
(b) If a contribution is conditioned upon the deductibility of the
contribution under section 404 of the Code, then, to the extent the deduction is
disallowed, Section 17.1 shall not prohibit the return to the Company of such
contribution (to the extent disallowed) within one year after the disallowance
of the deduction.
(c) The amount which may be returned to the Company is the excess of
(1) the amount contributed over (2) the amount that would have been contributed
had there not occurred a mistake of fact or a mistake in determining the
deduction. Earnings attributable to the excess contribution may not be returned
to the Company, but losses attributable thereto must reduce the amount to be so
returned. Furthermore, if the withdrawal of the amount attributable to the
mistaken contribution would cause the balance of the individual account of any
Member to be reduced to less than the balance which would have been in the
account had the mistaken amount not been contributed, then the amount to be
returned to the Company would have to be limited so as to avoid such reduction.
<PAGE>
ARTICLE XVIII
TOP HEAVY PROVISIONS
Section 18.1. Purpose of Article. This Article is intended to insure
compliance with section 416 of the Code and shall be effective in any Plan Year
in which this Plan is determined to be a Top-Heavy Plan. If the provisions of
this Article apply to the Plan, such provisions will override any other
inconsistent portion of such Plan.
Section 18.2. Definitions. The terms used in this Article XVIII shall be
defined as follows:
(a) "Determination Date" with respect to any Plan Year shall mean
the last day of the preceding Plan Year; or, in the case of the first Plan Year,
the last day of such Plan Year.
(b) "Determination Period" shall mean the Plan Year containing the
Determination Date and the four preceding Plan Years.
(c) "Employee" shall mean an individual who performs service as an
employee of the Employer.
(d) "Employer" shall mean Ultramar Diamond Shamrock Corporation and
any entity related to it under subsections (b), (c), (m) or (o) of Code section
414.
(e) "Key Employee" shall mean any Employee or former Employee
(including the Beneficiaries of such Employee) who at any time during the
Determination Period is or was an officer of the Employer, if such individual's
annual compensation exceeds 50% of the dollar limitation under section
415(b)(1)(a) of the Code, an owner (or considered an owner under section 318 of
the Code) of one of the ten largest interests in the Employer if such
individual's compensation exceeds the dollar limitation under section
415(c)(1)(a) of the Code, a 5%-owner of the Employer, or a 1%-owner of the
Employer who has an annual compensation of more than $150,000. For purposes of
this subsection, annual compensation means compensation as defined in section
415(q)(4) of the Code. The determination of who is a Key Employee will be made
in accordance with section 416(i)(1) of the Code and the regulations thereunder.
(f) "Non-Key Employee" shall mean any Employer or former Employee who
is not a Key Employee.
(g) "Permissive Aggregation Group" shall mean the Required Aggrega-
tion Group of plans plus any other plan or plans of the Employer, which, when
considered as a group with the Required Aggregation Group, continues to satisfy
the requirements of sections 401(a)(4) and 410 of the Code.
(h) "Required Aggregation Group" shall mean (1) each qualified plan
of the Employer in which at least one Key Employee participates or participated
at any time during the Determination Period regardless of whether the Plan had
terminated, and (2) any other qualified plan of the Employer which enables a
plan in paragraph (1) of this subsection to satisfy the requirements of sections
401(a)(4) and 410 of the Code.
(i) "Super Top-Heavy Plan" shall mean a Top-Heavy Plan for which the
Top Heavy Ratio exceeds 90%.
(j) "Top-Heavy Plan" shall mean a plan determined to be Top-Heavy
under Section 18.3.
(k) "Top-Heavy Ratio" shall mean the ratio defined under Section
18.4.
(l) "Valuation Date" shall mean the same date as the Determination
Date.
Section 18.3. Determination of a Top-Heavy Plan. This Plan is determined
to be Top-Heavy if either (a) the Top-Heavy Ratio for this Plan exceeds 60% and
this Plan is not part of any Required Aggregation Group or Permissive
Aggregation Group of plans, or (b) this Plan is part of a Required Aggregation
Group of plans, but not part of a Permissive Aggregation group, and the
Top-Heavy Ratio for the group of plans exceeds 60%, or (c) this Plan is part of
a Required Aggregation Group and part of a Permissive Aggregation Group of
plans, and the Top-Heavy Ratio for the Permissive Aggregation Group exceeds 60%.
Section 18.4. Determination of the Top-Heavy Ratio. If the Employer
maintains one or more defined contribution plans (including any simplified
employee pension plan but no including a simple retirement account under Code
section 408(p)) and the Employer has never maintained any defined benefit plan
which during the 5-year period ending on the Determination Date has or has had
accrued benefits, the Top-Heavy Ratio for this Plan alone or for the Required or
Permissive Aggregation Group as appropriate, is a fraction, the numerator of
which is the sum of the account balances of all Key Employees as of the
Determination Date (including any part of any account balance distributed in the
5-year period ending on the Determination Date), and the denominator of which is
the sum of all account balances (including any part of any account balance
distributed in the 5-year period ending on the Determination Date), both
computed in accordance with section 416 of the Code and the regulations
thereunder. Both the numerator and denominator of the Top-Heavy Ratio are
increased to reflect any contribution not actually made as of the Determination
Date, but which is required to be taken into account on that date under section
416 of the Code and the regulations thereunder.
If the Employer maintains one or more defined contribution plans
(including any simplified employee pension plan) and the Employer maintains or
has maintained one or more defined benefit plans which during the 5-year period
ending on the Determination Date has or has had any accrued benefits, the
Top-Heavy Ratio for any Required or Permissive Aggregation Group as appropriate,
is a fraction, the numerator of which is the sum of account balances under the
aggregated defined contribution plans for all Key Employees and the present
value of accrued benefits under the aggregated defined benefit plans for all Key
Employees as of the Determination Date, and the denominator of which is the sum
of the account balances under the aggregated defined contribution plans for all
Members and the present value of accrued benefits under the aggregated defined
benefit plans for all Members as of the Determination Date, all determined in
accordance with section 416 of the Code and the regulations thereunder. Both the
numerator and denominator of the Top-Heavy Ratio are increased for any
distribution of an account balance or an accrued benefit made in the 5-year
period ending on the Determination Date.
For purposes of this Section, the value of account balances and the
present value of accrued benefits will be determined as of the most recent
Valuation Date that falls within or ends with the 12-month period ending on the
Determination Date, except as provided in section 416 of the Code and the
regulations thereunder for the first and second years of a defined benefit plan.
The account balances and accrued benefits of a Member who is not a Key Employee
but who was a Key Employee in a prior Determination Period, or who had not
received any Compensation from the Employer maintaining the Plan at any time
during the 5-year period ending on the Determination Date will be disregarded.
The calculation of the Top-Heavy Ratio, and the extent to which distributions,
rollovers, and transfers are taken into account will be made in accordance with
section 416 of the Code and the regulations thereunder. Salary Reduction
Contributions will not be taken into account for purposes of computing the
Top-Heavy Ratio. When aggregating plans the value of account balances and
accrued benefits will be calculated with reference to the Determination Dates
that fall within the same calendar year.
The accrued benefit of a Member other than a Key Employee shall be
determined under (a) the method, if any that uniformly applies for accrual
purposes under all defined benefit plans maintained by the Employer, or (b) if
there is no such method, as if such benefit accrued not more rapidly than the
slowest accrual rate permitted under the fractional rule of section 411(b)(1)(c)
of the Code.
Section 18.5. Vesting Requirements. For any Plan Year in which this Plan
is Top-Heavy, a vesting schedule at least as rapid as the schedule provided in
this Section will automatically apply to the Plan. The minimum vesting schedule
applies to all benefits within the meaning of section 411(a)(7) of the Code,
except those attributable to Employee Contributions, including benefits accrued
before the effective date of Code section 416 and benefits accrued before this
Plan became Top-Heavy. No reduction in vested benefits may occur in the event
the Plan's status as Top-Heavy changes for any Plan Year. This Section does not
apply to the account balances of any Employee who does not have an Hour of
Service after the plan has become Top-Heavy and such Employee's account balance
attributable to Employer Contributions and forfeitures will be determined
without regard to this Section.
Years of Vesting Service Percentage Vested
------------------------ -----------------
Less than 3 0%
3 or more 100%
If this Plan ceases to be Top-Heavy, the Employer will maintain the Top-
Heavy vesting schedule in this Section.
Section 18.6. Minimum Allocation.
(a) Except as otherwise provided in (c) below, the Employer Contribu-
tions and forfeitures allocated on behalf of any Member who is not a Key
Employee shall not be less than the lesser of 3% of such Member's compensation
(as defined in subsection (b)), or in the case where the Employer has no defined
benefit plan which designates this Plan to satisfy section 401 of the Code, the
largest percentage of Employer Contributions and forfeitures, as a percentage of
the first $200,000 of the Key Employee's compensation, allocated on behalf of
any Key Employee for that year. Salary Deferral Contribution to the Plan may not
be included as an Employer Contribution for purposes of satisfying the minimum
allocation requirement. Matching Contributions may only be taken into account
only to the extent allowed under Q&A M-19 of Treas. Reg. ss. 1.416-1. The
minimum allocation is determined without regard to any Social Security
contribution. This minimum allocation shall be made even though, under other
plan provisions, the Member would not otherwise be entitled to receive an
allocation, or would have received a lesser allocation because of the Member's
failure to make Salary Reduction Contributions, if such Contributions are
required to participate in the Plan, or because of Compensation less than a
stated amount.
(b) For purposes of computing the minimum allocation, Compensation
shall mean total Compensation subject to federal income tax withholding.
(c) The provisions in (a) and (b) above shall not apply to any
Member who was not employed by the Employer on the last day of the Plan Year.
Section 18.7. Reduction in Section 415 Limits.
(a) For any Plan Year in which the Employer maintains both a defined
contribution plan and a defined benefit plan which comprise a Top-Heavy group,
the number 100% shall be substituted for the number 125% in determining the
denominators of the defined contribution and defined benefit fractions. This
section shall not apply if (1) the Employer provides a minimum contribution to
the account of each non-key employee, which is 1% greater than the minimum
contribution that would otherwise be allocated under Section 18.6, and (2) this
Plan is not a Super Top-Heavy Plan (i.e., the Top-Heavy Ratio exceeds 90%).
(b) This section shall not be effective for a limitation year
beginning after December 31, 1999.
<PAGE>
ARTICLE XIX
MISCELLANEOUS
Section 19.1. Gender and Number. When necessary to the meaning hereof,
and except when otherwise indicated by the context, either the masculine or the
neuter pronoun shall be deemed to include the masculine, the feminine, and the
neuter, and the singular shall be deemed to include the plural.
Section 19.2. Reference to the Code and ERISA. Any reference to any
section of the Internal Revenue Code, ERISA, or to any other statute or law
shall be deemed to include any successor law of similar import.
Section 19.3. Governing Law. Except as provided by Section 514 of ERISA,
this Plan shall be construed and governed by the laws of the State of Texas.
Section 19.4. Compliance With the Code and ERISA. This Plan is intended
to comply with all requirements for qualification under the Internal Revenue
Code and ERISA, and if any provision hereof is subject to more than one
interpretation or any term used herein is subject to more than one construction,
such ambiguity shall be resolved in favor of that interpretation or construction
which is consistent with the Plan being so qualified. If any provision of the
Plan is held invalid or unenforceable, such invalidity or unenforceability shall
not affect any other provisions, and this Plan shall be construed and enforced
as if such provision had not been included.
Section 19.5. Prohibition Against Assignment or Alienation. The Member's
right to any payments, benefits, and refunds is not transferable or subject to
assignment or alienation, except to the extent required by Code section 414(p)
(relating to qualified domestic relations orders).
Section 19.6. Limitation of Rights. Participation in the Plan shall not
grant any Member the right to be retained in the service of the Employer or any
other rights or interest in the Plan or Trust other than those specifically
herein set forth.
Section 19.7. USERRA Compliance. Notwithstanding any provision of the
Plan to the contrary, contributions, benefits and service credit with respect to
qualified military service will be provided in accordance with section 414(u) of
the Code.
<PAGE>
APPENDIX A
SPECIAL SERVICE COUNTING RULES
Section A.1. General Rule. The special service counting rules of this
Appendix shall apply only for purposes of computing Years of Vesting Service and
Years of Eligibility Service to be credited under the Plan to an Employee who
was credited with service under the Ultramar Energy Inc. U.S. Savings Incentive
Plan before January 1, 1999.
Section A.2. Year of Vesting Service. An Employee's total Years of
Vesting Service shall be computed under this Section as the sum of:
(a) The number of whole one-year periods of service credited (or that
would have been credited) as of January 1, 1999, under the terms of such plan,
plus
(b) For Plan Years beginning on and after January 1, 1999, any Plan
Year in which he is credited with 1000 Hours of Service computed under Section
A.3.
Section A.3. Hours of Service. For purposes of computing Years of
Vesting Service for an Employee described in this
Appendix:
(a) For any service performed on or before December 31, 1998, that
was credited under the terms of the Ultramar Energy Inc. U.S. Savings Incentive
Plan on such date but is not counted as whole Years of Vesting Service under
subsection A.2(a), the Employee shall be credited with 190 Hours of Service for
each month (or fraction of a month) of such service. Hours of Service shall be
credited under this subsection (a) only in the Plan Year beginning January 1,
1999.
(b) For Plan Years beginning on and after January 1, 1999, Hours of
Service shall in addition be credited under the rules of Plan Section 1.27.
Section A.4. Break in Service. An Employee shall be credited under this
Appendix with Breaks in Service on January 1, 1999, equal to the number of
1-Year Periods of Severance that would have been credited to him under the terms
of the Ultramar Energy Inc. U.S. Savings Incentive Plan as of such date.
<PAGE>
Section A.5. Additional Rules.
(a) An individual who is absent from service for purposes of the
Ultramar Energy Inc. U.S. Savings Incentive Plan (for any reason other than
quit, discharge or retirement) on December 31, 1998, and who performs an hour of
service as an Employee on or after the January 1, 1999, will be credited with no
less than the service required by Treas. Reg.ss.1.401(a)-7(a)(ii) and (a)(3)
(iii).
(b) An individual whose service crediting under the Ultramar Energy
Inc. U.S. Savings Incentive Plan terminated before January 1, 1999, by reason of
quit, discharge or retirement, and who performs an hour of service as an
Employee within one year of such termination, will be credited with no less than
the service required by Treas. Reg.ss.1.401(a)-7(a)(3)(vi).
<PAGE>
IN WITNESS WHEREOF, Ultramar Diamond Shamrock Corporation has caused this
Plan to be executed by its duly authorized officer this 31st day of December,
1998 effective as of January 1, 1998, and other dates provided herein, in
accordance with the adoption of the Plan by the Board of Directors on September,
24, 1997.
ULTRAMAR DIAMOND SHAMROCK CORPORATION
ATTEST: /s/ Bill Hamersly /s/ Penelope R. Viteo
Bill Hamersly Penelope R. Viteo
<PAGE>
Second Amendment
To the UDS 401(k) Retirement Savings Plan
Ultramar Diamond Shamrock Corporation hereby amends the UDS 401(k) Retirement
Savings Plan, effective January 1, 1998 ("the Plan"), as follows:
Section 1.27 of the Plan (which defines "Hour of Service") is amended by adding
the following subsection (m):
(m) For any individual who
(1) is an Employee on or after September
30, 2000, and
(2) on September 29, 2000, performed
service as an employee of or on such
date was shown on the relevant payroll as an employee of, but on
approved leave of absence from) Valley Shamrock, Inc., an hour of
service credited under the terms of the Valley Shamrock, Inc.
Employees' 401(k) Plan and performed before September 29, 2000, shall
count as an Hour of Service.
Article II of the Plan (relating to eligibility to participate) shall be amended
by adding new section 2.4 to read in its entirety as follows, and by renumbering
current section 2.4 and all subsequent sections accordingly:
Section 2.4: Valley Shamrock Inc., Employees
Effective September 29, an Eligible Employee shall include any Employee
of Valley Shamrock, Inc. who immediately before that date was eligible
(or on that date would have been eligible) to participate in the Valley
Shamrock, Inc. Employees' 401(k) Plan under the terms of such plan.
Article IV of the Plan (relating to vesting and forfeitures) shall be amended by
adding new Section 4.5:
Section 4.5: Special Vesting Rule for Valley Shamrock, Inc. Employees
Effective September 30, 2000, an Employee of Valley Shamrock, Inc. who
immediately before that date was eligible (or on that date would have
been eligible) to participate in the Valley Shamrock, Inc. Employees'
401(k) Plan under the terms of such plan, shall be 100% vested in his
Account Balance.
Effective Date
This Amendment is effective September 30, 2000.
/s/ Penelope R. Video
Penelope R. Video
ULTRAMAR DIAMOND SHAMROCK CORPORATION
October 3, 2000
DATE
ATTEST: /s/ Todd Walker
Todd Walker
<PAGE>
APPENDIX B
AVON EMPLOYEES
Page
Introduction 1
Article B-I--Definitions......................................................3
Article B-II--Eligibility, Enrollment and Participation.......................6
Article B-III--Contributions..................................................8
Article B-IV--Vesting........................................................11
Article B-V--402(g) Limit....................................................12
Article B-VI--401(k) and 401(m) Limits and Other Nondiscrimination Rules.....13
Article B-VII--Correction of Failures of ADP and ACP Tests...................14
Article B-VIII--Section 415 Limits...........................................15
Article B-IX--Participants' Accounts.........................................16
Article B-X--Distributions...................................................17
Article B-XI--Withdrawals of Account Balances................................18
Article B-XII--Loans.........................................................20
Article B-XIII--Death Benefits...............................................21
Article B-XIV--Other Provisions..............................................22
Introduction
For any payroll period in which an Employee is an Avon Employee (as
defined in this Appendix B) his eligibility for contributions to the Plan shall
be determined solely under the provisions of this Appendix B.
For any payroll period, an Employee who is eligible for contributions
to the Plan by him or on his behalf under the terms of this Appendix B is not
eligible for contributions under Article III of the Plan except as expressly
permitted in this Appendix.
For an Employee who is not an Avon Employee, but whose account balance
is partly attributable to contributions made to the Plan while he was an Avon
Employee, distributions shall be governed by the terms of this Appendix to the
extent of that portion of his Account Balance so attributable.
In the event of a conflict between any other provision of the Plan and
Appendix B with respect to the benefits of an Avon Employee, Appendix B shall
govern.
<PAGE>
Article B-I
Definitions
All terms used in this Appendix B are as defined in Article I of the
Plan, with the following additions and exceptions:
Section B-1.1. Avon After-Tax Contributions shall mean the
contributions by Avon Employees permitted under Section B-3.4 of Appendix B.
Section B-1.2. Avon Early Retirement Eligibility Age shall mean Early
Retirement Eligibility Age as defined in Article I of the Plan except that "5
one-year Periods of Special Avon Service" shall be read in lieu of "5 Years of
Vesting Service" therein.
Section B-1.3. Avon Employee shall mean an Employee who:
(a) Is listed as an Ultramar Avon Employee on the Company's payroll
records;
(b) Is not (i) an Employee who is listed on the Company's payroll
records as an Ultramar Avon salaried transferred employee, or who, without
regard to payroll designation, commenced service for the Company as an Employee
other than an Avon Employee; (ii) or any other individual who commenced
employment for any Affiliate as other than an Avon Employee.
(c) Is not a Union Employee, other than a Union Employee who is
covered by a collective bargaining agreement that expressly provides for
participation in (i) the Tosco CAP or (ii) Appendix B of the Plan.
Section B-1.4. Avon Employment Commencement Date shall mean
The date on which an Employee first performs an Hour of Service as an
Avon Employee, or (if earlier) an Hour of Service (as defined in the Tosco CAP)
for Tosco Corporation or a predecessor thereof.
Section B-1.5. Avon Entry Date shall mean any of the following dates,
but only with respect to an Employee who is an Avon Employee on such date:
(a) For an Avon Employee who is a Tosco CAP Participant, the first
day of the first payroll period on or after Purchase Date on which he becomes an
Avon Employee;
(b) For any other Avon Employee, the first day of the first month
after his Avon Employment Commencement Date.
Section B-1.6. Avon 2%-Profit Sharing Contribution shall mean a Company
Contribution made under Section B-3.5 of Appendix B on behalf of an Avon
Employee who has satisfied the eligibility conditions therefor under Section
B-2.1(c) of Appendix B.
Section B-1.7. Period of Special Avon Service with respect to an Avon
Employee shall mean a period of service performed for the Company by such Avon
Employee beginning on his Avon Employment Commencement Date and ending on his
Termination from Employment Date.
Section B-1.8. Purchase Date shall mean September 1, 2000.
Section B-1.9. Special Avon Rollover Contribution shall mean a Rollover
Contribution by an Avon Employee which is an eligible rollover distribution
under Section 401(a)(31) of the Code, and for which the individual has submitted
such forms as required by the Committee, in such time, place and manner as is
satisfactory to the Committee at its sole discretion, on or before October 9,
2000.
Section B-1.10. Tosco CAP shall mean the Tosco Corporation Capital
Accumulation Plan, as amended and restated, as of January 1, 1993, including all
amendments thereto executed and effective as of the Purchase Date.
Section B-1.11. Tosco CAP Participant shall mean an Avon Employee who
was a Tosco CAP "Participant" as defined in Section 12.62 of such plan,
immediately before the Purchase Date.
<PAGE>
Article B-II
Eligibility, Enrollment and Participation
Section B-2.1. Eligibility to make Employee Contributions and Receive
Company Contributions.
An Avon Employee is eligible to make or have made on his behalf
contributions to the Plan as follows:
(a) An Avon Employee is eligible to make Salary Deferral Contributions
as of first day of the first month beginning after his Avon Employment
Commencement Date.
(b) An Avon Employee is eligible to make Rollover Contributions at
any time.
(c) An Avon Employee shall receive an Avon 2%-Profit Sharing Contribu-
tion under Section B-3.5 of Appendix B, but only if he was eligible to receive
the 2% "Employer Non-Matching Contribution" under Section 3.5.3(ii) of the Tosco
CAP as in effect on the Purchase Date, including the eligibility provisions set
forth in the document entitled "Amendment No. 4" dated January 1, 1998, (whether
or not such document was validly adopted as an amendment to the Tosco CAP).
(d) An Avon Employee who has a one-year Period of Special Avon
Service shall receive Avon Matching Contributions in accordance with the formula
under Section B-3.3 of Appendix B.
(e) An Avon Employee who has a one-year Period of Special Avon
Service is eligible to make Avon After-Tax Contributions as set forth under
Section B-3.4 of Appendix B.
(f) An Avon Employee is eligible to make a Special Avon Rollover
Contribution as set forth under Section B-3.2(b) of Appendix B.
<PAGE>
Article B-III
Contributions
Section B-3.1. Salary Deferral Contributions An Avon Employee who is
eligible therefor under Section B-2.1(a) may make Salary Deferral Contributions
in accordance with the provisions of Section 3.1 of the Plan, in an amount not
less than 2% of Compensation nor greater than 15% of Compensation. Percentage
designations under this Section shall be in whole numbers except that partial
percentages may be permitted to comply with the ADP Test.
Section B-3.2. Rollover Contributions.
(a) An Avon Employee may make a Rollover Contribution under
Article III of the Plan.
(b) In addition, an Avon Employee may make a Special Avon Rollover
Contribution but only if such contribution satisfies the requirements set forth
in Section B-1.8. To the extent not prohibited by the Code or ERISA, or
regulations thereunder, a Special Avon Rollover Contribution may include any
loan still outstanding at the time the Employee's account was rolled over to the
Plan, but not any securities, funds or other investments except those acceptable
to the Committee at its sole discretion. Any loan accepted as part of a Special
Avon Rollover Contribution shall have the same interest rate, final payment date
and any other terms applicable to such loan under the Tosco CAP except as
otherwise decided by the Committee in its sole discretion.
(c) No loans will be accepted by the Plan in any rollover contribution
under this Appendix except as part of a Special Avon Rollover Contribution, and
in accordance with the provisions of this Section.
Section B-3.3. Avon Matching Contributions. The Company shall make
Matching Contributions (subject to the general restrictions of Section 3.2 of
the Plan), to an Avon Employee eligible therefor under Section B-2.1(d) of
Appendix B, in accordance with the following formula:
(a) For an Avon Employee who has credit for at least one but no
more than 5 one-year Periods of Special Avon Service an amount equal to 75% of
the sum of Salary Deferral Contributions and Avon After-Tax Contributions made
by or on behalf of such Employee for the Plan Year, not to exceed 6% of
Compensation;
(b) For an Avon Employee who has credit for 6 or more one-year
Periods Special Avon Service, an amount equal to 100% of the sum of Salary
Deferral Contributions and Avon After-Tax Contributions made by or on behalf of
such Employee for the Plan Year, not to exceed 6% of Compensation.
Section B-3.4. Avon After-Tax Contributions.
(a) By executing an agreement in accordance with procedures
specified by the Committee, an Avon Employee who is eligible therefor under
Section B-2.1(e) may elect to make Avon After-Tax Contributions, in an amount
equal to not less than 2% of Compensation. With respect to an Avon Employee in a
Plan Year, the sum of Avon After-Tax Contributions and Salary Deferral
Contributions may not equal more than 15% of Compensation.
(b) Percentage designations under subsection (a) shall be in whole
numbers except that partial percentages may be permitted to comply with the ACP
Test.
(c) Avon After-Tax Contributions are subject to Articles B-IV
(vesting), B-VI (ACP test), B-VII (correction of violations and potential
violations of ACP Test); B-VIII (Code Section 415 limits); and B-X and B-X1
(distribution limits)
(d) An Avon Employee may elect to change his election under this
Section under procedures specified by the Committee, and in accordance with
rules that may be (but are not required to be) similar to those set forth for
Salary Deferral Contribution elections under Section 3.1(d) of the Plan.
(e) Avon After-Tax Contributions are to be accounted for
separately from other contributions made by or on behalf of an Avon Employee,
and are intended to be treated as a separate contract under Section 72(d)(2) of
the Code.
Section B-3.5. Avon 2%-Profit Sharing Contribution. For an Avon
Employee who is eligible under Section B-2.1(c) of Appendix B, the Company shall
contribute to his Account an amount equal to 2% of his Compensation for the Plan
Year.
Section B-3.6. General Provisions Relating to Contributions. In
addition to the provisions set forth in this Article, Company Contributions on
behalf of an Avon Employee shall be governed by Sections 3.2, 3.3, 3.5, 3.7 and
3.8 of the Plan.
<PAGE>
Article B-IV
Vesting
Section B-4.1. Company Contributions under Appendix B. All Company
Contributions made by or on behalf of an Avon Employee under Sections B-3.1,
B-3.3 and B-3.5 of Appendix B (Salary Deferral Contributions, Avon Matching
Contributions and Avon 2%-Profit Sharing Contributions) are immediately vested.
Section B-4.2. After-Tax and Rollover Contributions. Avon After-Tax
Contributions and Rollover Contributions, including Special Avon Rollover
Contributions, are immediately vested.
Section B-4.3. Other Company Contributions shall be vested in
accordance with Article IV of the Plan.
<PAGE>
Article B-V
402(g) Limit
Section B-5.1. General Rule. The Salary Deferral Contributions of Avon
Employees are subject to Article V of the Plan and Section 204(g) of the Code.
<PAGE>
Article B-VI
401(k) and 401(m) Limits and Other Nondiscrimination Rules
Section B-6.1. General Rule. Salary Deferral Contributions, Avon
Matching Contributions and Avon-After-Tax Contributions made by and for Avon
Employees are subject to the ADP and ACP Tests, and to Article VI of the Plan.
Company Contributions by or on behalf of an Avon Employee are subject to
Sections 401(a) and 410(b) of the Code to the extent required by law.
<PAGE>
Article B-VII
Correction of Failures of ADP and ACP Tests
Section B-7.1. General Rule. The failure or potential failure of any
Company Contribution to satisfy the ADP Test, or of any Avon Matching
Contribution or Avon After-Tax Contribution to satisfy the ACP test, shall be
corrected under Article VII of the Plan. Failure of contributions to satisfy
Sections 401(a) and 410(b) of the Code may be corrected by any means not
prohibited by the Code.
<PAGE>
Article B-VIII
Section 415 Limits
Section B-8.1. General Rule. Company Contributions, Avon After-Tax
Contributions and any other annual additions on behalf of an Avon Employee are
subject to the limitations of Section 415 of the Code as incorporated by
reference under Article VIII of the Plan.
<PAGE>
Article B-IX
Participants' Accounts
Section B-9.1. General Rule. The Account of a Member who is or has been
an Avon Employee shall consist of the contributions set forth in Article B-III
and attributable earnings, plus any other Company Contributions made under this
Plan. Accounts under this Article shall include the following subaccounts:
(a) An Avon After-Tax Contribution account, which shall consist of
a Member's Avon After-Tax Contributions (if any) plus attributable earnings, and
shall be administered as a "separate contract" under Section 72(d)(2) of the
Code, and
(b) Other subaccounts as necessary and appropriate.
Section B-9.2. Valuation. Account Balances under this Article shall be
valued in accordance with Section 9.2 of the Plan.
Section B-9.3. Members' Self-Directed Investments. Funds in Accounts
under this Article shall be invested according to the provisions of Section 9.3
of the Plan.
<PAGE>
Article B-X
Distributions
Section B-10.1. General Rule. Distributions of the Vested Account
Balance of an Avon Employee are governed by Article X of the Plan.
Section B-10.2. Special Rule for Avon-Attributable Account Balances.
In-service distributions of a Member who is or has been an Avon Employee are
governed by Article B-XI of this Appendix to the extent such distributions are
from accounts attributable to contributions described under Sections B-3.3,
B-3.4 or B-3.5 of this Appendix.
<PAGE>
Article B-XI
Withdrawals of Account Balances
Section B-11.1. General Rule. In addition to the distributions
described in Section B-10.1, an Avon Employee who is a Member may receive a
distribution of part or all of his Vested Account Balance under the Plan in
accordance with the following Plan provisions generally applicable to all
Members:
(a) A hardship distribution of his Salary Deferral Contributions
(but not the income thereon) under the provisions of Section 11.2 of the Plan;
(b) A withdrawal of any part of his Rollover Contributions
(including his Special Avon Rollover Contribution) under Section 11.3 of the
Plan, except that a withdrawal of any portion of his Special Avon Rollover
Contribution Account which contains a loan transferred from the Tosco CAP is
subject to the provisions of Article XII of the Plan, regarding administration
of Plan loans.
(c) Withdrawals of any portion of his Account Balance after
attainment of age 59 1/2 under the terms of Section 11.5 of the Plan.
Section B-11.2. Special Rules.
(a) Withdrawals of Avon After-Tax Contributions. A Member may make
withdrawals from his Avon After-Tax Contribution Account at any time.
Withdrawals shall be treated as being made from the Member's After-Tax
Contributions and earnings thereon to the extent prescribed by Section 72 of the
Code. A Member may make no more than 2 withdrawals in a Plan Year under this
Section.
(b) Other In-Service Withdrawals. A Member who has not attained age
59 1/2 may, under this subsection, make withdrawals from his Account Balance
attributable to Avon Matching Contributions, to the extent such Contributions
have been credited to his Account for at least 24 months. A withdrawal is not
permitted under this subsection unless the Member has already made all
withdrawals available to him from his Avon After-Tax Contribution Account. A
Member who makes a withdrawal under this subsection may not make a Salary
Deferral Contribution or an Avon After-Tax Contribution during the 12-month
period following the withdrawal.
<PAGE>
Article B-XII
Loans
Section B-12.1. General Availability of Loans. Loans shall be available
to Members who are Avon Employees under the terms of Section 12.1 of the Plan.
In the case of a loan to a Member whose Account Balance includes an Avon
After-Tax Contributions Account, the loan shall be treated as coming first out
of all other accounts, and only then out of the Avon After-Tax Contribution
Account.
<PAGE>
Article B-XIII
Death Benefits
Section B-13.1. General Rule. After the death of a Member, his Vested
Account Balance, including any accounts attributable to contributions under
Article B-III of this Appendix, shall be paid according to the provisions of
Article XIII of the Plan.
<PAGE>
Article B-XIV
Other Provisions
Section B-14.1. Other provisions. In addition to the foregoing, the
benefits of Avon Employees are governed by Articles XIV, XV, XVI, XVII, XVIII
and XIX of the Plan.
/s/ Penelope R. Video
Penelope R. Video
Ultramar Diamond Shamrock Corporation
October 3, 2000
Date